Reports News from the GAO http://www.gao.gov/browse/date/week Wed, 16 May 2012 07:53:37 -0400 GAO http://www.gao.gov/images/title_object.jpg http://www.gao.gov/ Feed provided by GAO. Click to visit. http://gao.gov/products/GAO-12-133?source=ra What GAO FoundSince GAO’s 2007 review, the Army has taken steps to improve its use of reset in targeting equipment shortages. In 2007, GAO noted that the Army’s reset implementation strategy did not specifically target shortages of equipment on hand among units preparing for deployment to Iraq and Afghanistan in order to mitigate operational risk. GAO recommended that the Army act to ensure that its reset priorities address equipment shortages in the near term to ensure that the needs of deploying units could be met. The Department of Defense (DOD) did not concur, and stated that there was no need to reassess its approaches to equipment reset. However, in 2008, the Army issued its Depot Maintenance Enterprise Strategic Plan, noted that filling materiel shortages within warfighting units is a key challenge facing the depot maintenance enterprise, and called for changes in programs and policies to address materiel shortages within warfighting units. Further, recognizing that retrograde operations—the return of equipment from theater to the United States—are essential to facilitating depot level reset and redistribution of equipment, the Army in 2010 developed the retrograde, reset, and redistribution (R3) initiative to synchronize retrograde, national depot-level reset efforts, and redistribution efforts. In March 2011, the Army issued an R3 equipment priority list, and revised and reissued an updated list at the end of fiscal year 2011 with full endorsement from all Army commands. The R3 initiative has only begun to be fully implemented this year, and thus it is too early to tell whether it will provide a consistent and transparent process for addressing the Army’s current or future equipping needs.GAO found that the Army’s monthly reports to Congress do not include expected future reset costs or distinguish between planned and unplanned reset of equipment. GAO has reported that agencies and decision makers need visibility into the accuracy of program execution in order to ensure basic accountability and to anticipate future costs. However, the Army does not include its future reset liability in its reports to Congress, which DOD most recently estimated in 2010 to be $24 billion. Also, the Army reports to Congress include the number of items that it has repaired in a given month using broad categories, such as Tactical Wheeled Vehicles, which may obscure progress on equipment planned for reset. For example, GAO’s analysis of Army data showed that 4,144 tactical wheeled vehicles were planned for reset in fiscal year 2010, while 3,563 vehicles were executed. According to the Army’s current reporting method, this would result in a reported completion rate of 86 percent, but GAO’s analysis showed that only approximately 40 percent of the equipment that was reset had been planned and programmed. This reporting method may also restrict visibility over the Army’s multiyear reset liability. For example, both the M1200 Knight and the M1151 HMMWV are categorized as Tactical Wheeled Vehicles, but anticipated reset costs for the M1200 are significantly higher. In 2010 more M1200s were repaired than planned, thus accounting for a larger share of the budgeted reset funds. With fewer funds remaining, some equipment planned and budgeted for repair was not reset, pushing that workload to future fiscal years. These differences are not captured in the Army’s monthly reports, and thus Congress may not have a complete picture of the Army’s short- and long-term progress in addressing reset.Why GAO Did This StudyFrom 2007 to 2012, the Army received about $42 billion to fund its expenses for the reset of equipment—including more than $21 billion for depot maintenance—in support of continuing overseas contingency operations in Southwest Asia. Reset is intended to mitigate the effects of combat stress on equipment by repairing, rebuilding, upgrading, or procuring replacement equipment. Reset equipment is used to supply non-deployed units and units preparing for deployment while meeting ongoing operational requirements. In 2007, GAO reported that the Army’s reset strategy did not target equipment shortages for units deploying to theater. For this report, GAO (1) examined steps the Army has taken to improve its equipment reset strategy since 2007, and (2) determined the extent to which the Army’s reset reports to Congress provide visibility over reset costs and execution. To conduct this review, GAO reviewed and analyzed DOD and Army documentation on equipment reset strategies and monthly Army reports to Congress, and interviewed DOD and Army officials.What GAO RecommendsGAO recommends that the Army revise its monthly congressional reset reports to include its future reset liability and status information on equipment reset according to the initial reset plan by vehicle type. DOD did not concur. DOD stated that the Army would report its reset liability annually instead of monthly. Because DOD did not agree to report its reset status by vehicle type, GAO included a matter for congressional consideration to direct the Army to report this information.For more information, contact Cary Russell at (404) 679-1808 or russellc@gao.gov. Tue, 15 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-724T?source=ra What GAO FoundUnemployment rates for workers of all ages have risen dramatically since the start of the recent recession in December 2007, and workers age 55 and over have faced particularly long periods of unemployment. The seasonally unadjusted unemployment rate for older workers increased from 3.1 percent in December 2007 to a high of 7.6 percent in February 2010, before it decreased to 6.0 percent in April 2012. As in prior recessions, smaller percentages of workers age 55 and over became unemployed in comparison with younger workers. Some researchers attribute older workers’ lower unemployment rates to the fact that older workers tend to have longer job tenure, and are consequently less likely to be laid off than younger workers.Focus group participants told us that they believed employer reluctance to hire older workers was their primary reemployment challenge, and several cited job interview experiences that convinced them that age discrimination was limiting their ability to find a new job. Moreover, many experts, one-stop career center staff, and other workforce professionals we interviewed said that some employers are reluctant to hire older workers. Because of legal prohibitions against age discrimination, employers are unlikely to explicitly express a lack of interest in hiring older workers; however, one workforce professional told us that local employers had asked her to screen out all applicants over the age of 40.Job loss can result in fewer years of work over a worker’s lifetime, which can lower the worker’s retirement income in several ways. For example, fewer years of work can prevent a worker who is covered by a traditional DB plan from having enough years of work with an employer to vest in (that is, earn a nonforfeitable right to receive) employer-funded retirement benefits. And even if a worker who is covered by a traditional DB plan has enough years of work to earn a right to the benefits, fewer years of work can reduce a worker’s final retirement benefit if the number of years worked is used in the formula for calculating retirement benefits. For workers with DC plans, having fewer years of work can limit the amount of yearly employee and employer contributions that accumulate in a worker’s account. Moreover, Social Security retirement benefits may be reduced as a result of fewer years of work because the benefits are based, in part, on a calculation of the worker’s average monthly earnings over 35 years. The 35 years used for the calculation are those with the worker’s highest earnings, adjusted for changes in wage levels. If a worker has less than 35 years of earnings, then zeros would be used for earnings in the missing years, and this will result in a lower calculated benefit.At the same time, long-term unemployment can motivate older workers to file for early Social Security retirement benefits. Many unemployed older workers in our focus groups said that they were planning to claim Social Security retirement benefits as soon as they were eligible or had already done so because they needed a source of income to help pay for living expenses. Moreover, a 2012 study found that high unemployment increases Social Security retirement claims among men with limited education.Why GAO Did This StudyThis testimony discusses the status of unemployed older workers. The most recent recession, which began in 2007 and ended in 2009, was the worst since the Great Depression, and has been characterized by historically high levels of long-term unemployment. While it is crucial that the nation help people of all ages return to work, long-term unemployment has particularly serious implications for older workers (age 55 and over). Job loss for older workers threatens not only their immediate financial security, but also their ability to support themselves during retirement.Today's testimony summarizes a report that we prepared for this committee and released today. This testimony focuses on (1) how the employment status of older workers age 55 and over has changed since the recession, (2) older workers’ challenges in finding new jobs, (3) how periods of long-term unemployment might affect older workers’ retirement income, and (4) what other policies might help unemployed older workers regain employment and what steps the Department of Labor (Labor) has taken to help unemployed older workers.For more information, contact Charles Jeszeck (202) 512-7215 or jeszeckc@gao.gov. Tue, 15 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-445?source=ra What GAO FoundAs with many other demographic groups, older workers’ unemployment overall and long-term unemployment rates have increased dramatically since the recession began in 2007. In December 2011, the unemployment rate for older workers was 6.0 percent, up from 3.1 at the start of the recession, but down from its peak of 7.6 percent in February 2010. In particular, long-term unemployment rose substantially, and at a greater rate for older than younger workers. By 2011, 55 percent of unemployed older workers had been actively seeking a job for more than half a year (27 weeks or more). Meanwhile, the long-term trend of rising labor force participation rates among older workers has continued, with the recession possibly amplifying this trend.Long-term unemployment can put older workers at risk of deferring needed medical care, losing their homes, and accumulating debt. The experts and staff GAO interviewed at some one-stop career centers, as well as the unemployed older workers who participated in GAO’s focus groups, identified employer reluctance to hire older workers as a key challenge that older workers face in finding reemployment. They also identified out-of-date skills, discouragement and depression, and inexperience with online applications as reemployment barriers for older workers. Some one-stop staff who serve older workers told GAO that providing the type of assistance some older workers need to address these unique challenges can be very time-consuming. (For audio clips from GAO’s focus groups with unemployed older workers, use this link: http://www.gao.gov/multimedia/video/#video_id=590295)Long-term unemployment can substantially diminish an older worker’s future retirement income in several ways. First, it can force a worker to stop working and stop saving for retirement earlier than the worker had planned. Second, long-term unemployment can lead individuals to draw down their retirement savings to cover living expenses while they are unemployed, which was a common life experience described by GAO’s focus group participants. GAO illustrated how a hypothetical worker who had $70,000 in retirement savings at age 55 and withdrew 50 percent of those savings during a 2 year period of unemployment, would need about another 5 ½ years of work and saving to rebuild the retirement account to the level it had been before unemployment began. In addition, long-term unemployment can motivate older workers to claim early Social Security retirement benefits, which will result in lower monthly benefits for workers and their survivors for the rest of their lives.Experts GAO interviewed selected various policies that have been proposed to help address unemployed older workers’ reemployment challenges. Experts selected these policies from a broad list GAO compiled from previous academic studies. For example, two of the policies that experts selected would provide incentives such as temporary wage or training subsidies for employers to hire long-term unemployed older workers. In the current context of high unemployment and slow job creation, the impact of most of these policies is likely to be muted by limited job openings. After an interagency Taskforce issued its report on the aging of the American workforce in 2008, Labor implemented several strategies the report recommended, but since the recession started, Labor shifted focus to responding to increased demand for services. As the economy improves, Labor could refocus on older job seekers and consider what additional strategies would help address their unique reemployment challenges, in light of recent economic and technological changes.Why GAO Did This StudyThe number of workers age 55 and over experiencing long-term unemployment has grown substantially since the recession began in 2007. This raises concerns about how long-term unemployment will affect older workers’ reemployment prospects and future retirement income.In light of these developments, GAO examined (1) how older workers’ employment status has changed since the recession, (2) what risks unemployed older workers face and what challenges they experience in finding reemployment, (3) how long-term unemployment could affect older workers’ retirement income, and (4) what other policies might help them return to work and what steps the Department of Labor (Labor) has taken to help unemployed older workers.To conduct this work, GAO analyzed nationally representative datasets, led focus groups of unemployed older workers, modeled how job loss affects retirement income, and interviewed experts and federal and local officials.What GAO RecommendsTo foster the employment of older workers, we recommend that the Secretary of Labor consider what strategies are needed to address the unique needs of older job seekers, in light of recent economic and technological changes.Labor agreed with our recommendation. GAO received technical comments on a draft of this report from Labor and the Social Security Administration, and incorporated them as appropriate.For more information, contact Charlie Jeszeck at (202) 512-7215 jeszeckc@gao.gov. Tue, 15 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-548?source=ra What GAO FoundMany State Partnership Program stakeholders, including State Partnership Program Coordinators, Bilateral Affairs Officers, and combatant command officials, cited benefits to the program, but the program lacks a comprehensive oversight framework that includes clear program goals, objectives, and metrics to measure progress against those goals, which limits the Department of Defense’s (DOD) and Congress’ ability to assess whether the program is an effective and efficient use of resources. The benefits described by all stakeholders focused on the program’s contributions to meeting their specific missions, such as building security relationships, providing experience to guardsmen, and supporting combatant commands’ missions. Goals, objectives, and metrics to measure progress are necessary for management oversight, and National Guard Bureau officials told GAO that they recognize the need to update the program’s goals and develop metrics and have initiated efforts in these areas. Officials expect completion of these efforts in summer 2012. Until program goals and metrics are implemented, DOD cannot fully assess or adequately oversee the program.State Partnership Program activity data are incomplete as well as inconsistent and funding data are incomplete for fiscal years 2007 through 2011; therefore GAO cannot provide complete information on the types and frequency of activities or total funding amounts for those years. GAO found that the multiple data systems used to track program activities and funding are not interoperable and users apply varying methods and definitions to guide data inputs. The terminology used to identify activity types is inconsistent across the combatant commands and the National Guard Bureau. Further, funding data from the National Guard Bureau and the combatant commands were incomplete, and while the National Guard Bureau provided its total spending on the program since 2007, it could not provide information on the cost of individual activities. Although the National Guard Bureau has initiated efforts to improve the accuracy of its own State Partnership Program data, without common agreement with the combatant commands on what types of data need to be tracked and how to define activities, the data cannot be easily reconciled across databases.The most prominent challenge cited by State Partnership Program stakeholders involved how to fund activities that include U.S. and foreign partner civilian participants. Activities involving civilians, for example, have included subject-matter expert exchanges on military support to civil authorities and maritime border security. Although DOD guidance does not prohibit civilian involvement in activities, many stakeholders have the impression that the U.S. military is not permitted to engage civilians in State Partnership Program activities and some states may have chosen not to conduct any events with civilians due to the perception that it may violate DOD guidance. DOD and the National Guard Bureau are working on developing additional guidance and training in this area. Until these efforts are completed, confusion may continue to exist and hinder the program’s full potential to fulfill National Guard and combatant command missions.Why GAO Did This StudyThe National Guard’s State Partnership Program is a DOD security cooperation program that matches state National Guards with foreign countries to conduct joint activities—including visits between senior military leaders and knowledge sharing in areas such as disaster management—that further U.S. national security goals. The program has partnerships between 52 U.S. state and territory National Guards and 69 countries. In fiscal year 2011, program expenditures were at least $13.2 million. The 2012 National Defense Authorization Act directed GAO to study the program. GAO determined (1) the extent to which State Partnership Program activities are meeting program goals and objectives; (2) the types and frequency of activities and funding levels of the program; and (3) any challenges DOD faces in the program’s implementation. GAO collected written responses to questions from State Partnership Program Coordinators at the state level, Bilateral Affairs Officers at the U.S. embassies in the partner nations, and officials at the combatant commands, reviewed documents, and interviewed DOD officials.What GAO RecommendsGAO recommends that DOD complete its comprehensive oversight framework for the State Partnership Program, develop guidance to achieve reliable data on the program, and issue guidance and conduct additional training on the appropriate use of funding for program activities, including those involving civilians. DOD concurred with all recommendations.For more information, contact John Pendleton at (202) 512-3489 or pendletonj@gao.gov. Tue, 15 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-575R?source=ra What GAO FoundInformation on the overall effectiveness (or impact) of the CDBG and HOME programs is limited. According to HUD officials, the agency has faced challenges in evaluating the impact of CDBG and HOME because, among other things, such an evaluation would have to compare neighborhoods that received program assistance with those that did not. Our previous work has also identified the difficulties of evaluating the impact of block grant programs that do not represent a uniform package of activities or desired outcomes across the country, as well as the common problem of attributing differences in communities’ outcomes to the effect of a program in the absence of controls for other explanations. As a result, few comprehensive studies on the impact of the CDBG and HOME programs exist, but studies that focused on specific activities have generally found that each of the programs has made positive contributions. We identified two studies that attempted to examine the overall impact of the CDBG program on communities, but both studies encountered evaluation challenges due to the program’s design. For example, a 1995 study that HUD considers the most comprehensive evaluation of CDBG suggests that, at that time, the program played a role in neighborhood stabilization and revitalization in a number of U.S. cities included in the study. However, the study states that it did not attempt to isolate the impact of CDBG-funded activities in these communities, in part because of the variability of CDBG activities at the community level. The three additional CDBG studies we identified focused on specific aspects of the program, such as disaster assistance, rather than the entire program. Similarly, we identified five studies of the HOME program. Two of these studies described implementation in the first 5 years of the program (fiscal years 1992–1996). The remaining three studies examined specific aspects of HOME and suggested some positive contributions of the program but did not evaluate its overall impact. For example, a 2008 study examined the foreclosure and delinquency rates among HOME-assisted homebuyers. It found that compared with homebuyers whose mortgages were insured by the Federal Housing Administration (FHA)—a group with a similar population of lower-income, first-time homebuyers—foreclosure rates were slightly lower for buyers who received HOME assistance from 2001 to 2005.HUD collects performance information for both the CDBG and HOME programs, but the information varies. Using a performance measurement system that HUD activated in 2006, grantees are to select and report the objective, intended outcome, and outputs (direct products or services delivered by the programs) of each activity they undertake. In fiscal years 2007–2011, HUD collected data for the following types of activities funded under the CDBG program: public services, economic development, rehabilitation and construction of rental or homeowner housing, and homebuyer assistance. For example, for CDBG activities related to economic development, grantees reported on the total number of businesses assisted and total number of jobs created or retained. The data HUD collects for the HOME program using this performance measurement system are not as detailed as those it collects for CDBG because, according to HUD officials, the agency already collected accomplishment data for HOME prior to development of the system and there are fewer eligible activities. According to HUD officials, they also use this accomplishment data to assess the performance of the HOME program. Specifically, for fiscal years 2007–2011, HUD used the performance measurement system to report data such as the number of units assisted with HOME funds and the number of units occupied by households with income that is less than 80 percent of the area median income. In addition, HUD has collected other information since program inception, including the amount of other funds leveraged with HOME funds and the per-unit cost of HOME units. According to HUD officials and others, one of the challenges associated with creating outcome-oriented performance measures that can be uniformly applied to all CDBG and HOME activities is the grantees’ flexibility to design and implement activities tailored to meet local needs and priorities. Another challenge for measuring the outcomes of CDBG is grantees’ ability to undertake a broad range of activities.HUD officials and others have identified promising practices for the CDBG and HOME programs that relate to program management practices and use of funds. HUD officials have identified program management practices that they believe assist CDBG and HOME grantees to implement successful programs. These practices include developing a local performance measurement system and internal operating procedures for effectively managing subrecipients. According to HUD officials, the agency has encouraged grantees to develop local performance measurement systems because of challenges in developing outcome-oriented performance measures for the programs as a whole resulting from the wide discretion provided to grantees. For example, a 2005 HUD study on promising practices in grantee performance measurement noted practices such as measuring outcomes as well as outputs and efficiency measures and choosing outcomes that tie to goals. In addition, HUD and national organizations with whom we spoke have identified a number of projects as examples of how grantees have successfully utilized CDBG and HOME funds. For example, in 2005 and 2011, HUD gave awards for a number of HOME-funded projects under various categories, including neighborhood revitalization, innovative design, reaching underserved populations, and producing sustainable housing.Why GAO Did This StudyIn fiscal year 2012, Congress appropriated about $3.4 billion for the Community Development Block Grant (CDBG) program and $1 billion for the HOME Investment Partnerships (HOME) program. The CDBG and HOME programs, which are administered by the Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development (CPD), are the federal government’s largest block grant programs for community development and affordable housing production, respectively. Both programs give grantees discretion to fund a wide range of allowable activities; in particular, CDBG funds can be used for 26 eligible activities. Block grants typically devolve substantial authority for setting priorities to state or local governments, and state and local officials bear the primary responsibility for monitoring and overseeing the planning, management, and implementation of activities financed with federal grant funds. However, federal agencies have oversight responsibilities and are expected to ensure that block grant funds are used effectively.Section 231 of the Consolidated and Further Continuing Appropriations Act for fiscal year 2012 directed us to review the effectiveness of the block grant programs administered by CPD. As part of this review, we were to examine performance metrics used by HUD and best practices utilized by program grantees. This report focuses on the CDBG and HOME programs. Specifically, this report discusses (1) what is known about the effectiveness (or impact) of the CDBG and HOME programs, (2) the performance measures HUD has in place for the CDBG and HOME programs and any challenges HUD faced in developing these measures, and (3) promising practices HUD and others have identified for the CDBG and HOME programs.For more information, please contact William B. Shear at (202) 512-8678 or shearw@gao.gov. Tue, 15 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-682?source=ra What GAO Found In accordance with section 107 of the Congressional Award Act, as amended (2 U.S.C. § 807), we are responsible for conducting audits of the Congressional Award Foundation’s (the Foundation) financial statements. In our audits of the Foundation’s financial statements for fiscal years 2011 and 2010, we foundthe financial statements are presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles;no material weaknessesno reportable noncompliance with laws and regulations we tested.Why GAO Did This StudyThis report presents the results of our audits of the financial statements of the Congressional Award Foundation (the Foundation) as of and for the fiscal years ending September 30, 2011, and 2010. These financial statements are the responsibility of the Foundation. This report contains our (1) unqualified opinions on the Foundation’s financial statements, (2) results of our consideration of the Foundation’s internal control over financial reporting, and (3) conclusion that our tests of the Foundation’s compliance with selected provisions of laws and regulations disclosed no instances of reportable noncompliance during fiscal year 2011. The report also discusses a significant matter related to the Foundation’s fiscal year 2010 annual federal information return filing.For additional information, contact Steven J. Sebastian at sebastians@gao.gov or 202-512-9521. Tue, 15 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-740T?source=ra What GAO FoundIn its October 2010 report, GAO noted that oil shale development presents the following opportunities for the United States:Increasing domestic oil production. Tapping the vast amounts of oil locked within U.S. oil shale formations could go a long way toward satisfying the nation’s future oil demands. Oil shale deposits in the Green River Formation are estimated to contain up to 3 trillion barrels of oil, half of which may be recoverable, which is about equal to the entire world’s proven oil reserves.Socioeconomic benefits. Development of oil shale resources could lead to the creation of jobs, increases in wealth, and increases in tax and royalty payments to federal and state governments for oil produced on their lands. The extent of these benefits, however, is unknown at this time because the ultimate size of the industry is uncertain.In addition to these opportunities and the uncertainty of not yet having an economical and environmentally viable commercial scale technology, the following challenges should also be considered:Impacts on water, air, and wildlife. Developing oil shale and providing power for oil shale operations and other activities will require large amounts of water and could have significant impacts on the quality and quantity of surface and groundwater resources. In addition, construction and mining activities during development can temporarily degrade air quality in local areas. There can also be long-term regional increases in air pollutants from oil shale processing and the generation of additional electricity to power oil shale development operations. Oil shale operations will also require the clearing of large surface areas of topsoil and vegetation which can affect wildlife habitat, and the withdrawal of large quantities of surface water which could also negatively impact aquatic life.Socioeconomic impacts. Oil shale development can bring an influx of workers, who along with their families can put additional stress on local infrastructure such as roads, housing, municipal water systems, and schools. Development from expansion of extractive industries, such as oil shale or oil and gas, has typically followed a “boom and bust” cycle, making planning for growth difficult for local governments. Moreover, traditional rural uses would be displaced by industrial uses and areas that rely on tourism and natural resources would be negatively impacted.GAO’s 2010 report found that federal research efforts on the impacts of oil shale development did not provide sufficient data for future monitoring and that there was a greater need for collaboration among key federal stakeholders to address water resources and research issues. Specifically, Interior and DOE officials generally have not shared information on their oil shale research efforts, and there was a need for the federal agencies to improve their collaboration and develop more comprehensive baseline information related to water resources in the region. GAO made three recommendations to Interior, which the department generally concurred with and has already begun to take actions to address.Why GAO Did This StudyFossil fuels are important to both the global and U.S. economies, and “unconventional” oil and gas resources—resources that cannot be produced, transported, or refined using traditional techniques—are expected to play a larger role in helping the United States meet future energy needs. With rising energy prices one such resource that has received renewed domestic attention in recent years is oil shale. Oil shale is a sedimentary rock that contains solid organic material that can be converted into an oil-like product when heated. About 72 percent of this oil shale is located within the Green River Formation in Colorado, Utah, and Wyoming and lies beneath federal lands managed by the Department of the Interior’s Bureau of Land Management, making the federal government a key player in its potential development. In addition, the Department of Energy (DOE), advances energy technology, including for oil shale, through its various offices, national laboratories, and arrangements with universities.GAO’s testimony is based on its October 2010 report on the impacts of oil shale development (GAO-11-35). This testimony summarizes the opportunities and challenges of oil shale development identified in that report and the status of prior GAO recommendations that Interior take actions to better prepare for the possible future impacts of oil shale development.For more information, contact Anu K. Mittal at (202) 512-3841 or mittala@gao.gov. Thu, 10 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-556?source=ra What GAO FoundThe Department of Defense (DOD) has taken steps to establish its concept for conducting security force assistance, including broadly defining the term and identifying actions needed to plan for and prepare forces to execute these activities. For example, in October 2010, the department issued an instruction that broadly defines security force assistance and outlines responsibilities for key stakeholders, including the geographic combatant commands and military services. DOD also identified gaps in key areas of doctrine, organization, and training related to the implementation of security force assistance and tasks needed to address those gaps. The tasks include reviewing joint and service-level doctrine to incorporate security force assistance as needed and developing measures to assess progress in partner nations. Citing a need to clarify the definition of security force assistance beyond the DOD Instruction, DOD published a document referred to as a Lexicon Framework in November 2011 that included information to describe how security force assistance relates to other existing terms, such as security cooperation.The geographic combatant commands conduct activities to build partner nation capacity and capability, but face challenges planning for and tracking security force assistance as a distinct activity. Notwithstanding DOD’s efforts to present security force assistance as a distinct and potentially expansive activity and clarify its terminology, the commands lack a common understanding of security force assistance, and therefore some were unclear as to what additional actions were needed to meet DOD’s intent. Specifically, officials interviewed generally viewed it as a recharacterization of some existing activities, but had different interpretations of what types of activities should be considered security force assistance. Further, some command officials stated that they were not clear as to the intent of DOD’s increased focus on security force assistance and whether any related adjustments should be made in their plans and scope or level of activities. As a result, they do not currently distinguish security force assistance from other security cooperation activities in their plans. DOD intended the Lexicon Framework to provide greater clarity on the meaning of security force assistance and its relationship to security cooperation and other related terms. However, some officials said that they found the distinctions to be confusing and others believed that additional guidance was needed. GAO’s prior work on key practices for successful organizational transformations states the necessity to communicate clear objectives for what is to be achieved. Without additional clarification, the geographic combatant commands will continue to lack a common understanding, which may hinder the department’s ability to meet its strategic goals. Moreover, the system that the commands are directed to use to track security force assistance activities does not include a specific data field to identify those activities. The commands also face challenges planning for and executing long-term, sustained security force assistance plans within existing statutory authorities, which contain some limitations on the types of activities that can be conducted.The services are taking steps and investing resources to organize and train general purpose forces capable of conducting security force assistance based on current requirements. For example, to conduct activities with partner nation security forces, the Army and the Air Force are aligning certain units to geographic regions, and the Marine Corps has created tailored task forces. However, the services face certain challenges. Due to a lack of clarity on how DOD’s increased emphasis on security force assistance will affect future requirements, they are uncertain whether their current efforts are sufficient or whether additional capabilities will be required. Further, services face challenges in tracking personnel with security force assistance training and experience, particularly in identifying the attributes to track.Why GAO Did This StudyDOD is emphasizing security force assistance (e.g., efforts to train, equip, and advise partner nation forces) as a distinct activity to build the capacity and capability of partner nation forces. In anticipation of its growing importance, DOD has identified the need to strengthen and institutionalize security force assistance capabilities within its general purpose forces. Accordingly, a committee report accompanying the Fiscal Year 2012 National Defense Authorization Act directed GAO to report on DOD’s plans. GAO evaluated: (1) the extent to which DOD has established its concept for conducting security force assistance, including defining the term and identifying actions needed to plan for and prepare forces to execute it; (2) the extent to which the geographic combatant commands have taken steps to plan for and conduct security force assistance, and what challenges, if any, they face; and (3) what steps the services have taken to organize and train general purpose forces capable of conducting security force assistance, and what challenges, if any, they face. GAO reviewed relevant documents, and interviewed officials from combatant commands, the services, and other DOD organizations.What GAO RecommendsGAO recommends DOD clarify its intent for security force assistance, including how combatant commands should adjust their current planning efforts and provide a means to track activities. DOD partially concurred, stating that recent guidance addresses planning requirements. GAO continues to believe that more specific direction is needed.For more information, contact Sharon Pickup, (202) 512-9619, pickups@gao.gov. Thu, 10 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-663R?source=ra What GAO FoundPCORI received an unqualified audit opinion on its 2011 and 2010 financial statements. In its audit of PCORI’s financial statements, the IPA found that the financial statements were presented fairly, in all material respects, and there was no reportable noncompliance with selected provisions of laws and regulations the IPA tested as part of its audit. However, the IPA identified a deficiency in PCORI’s internal control over financial reporting related to PCORI reporting on its receipt of appropriated funds. The IPA determined the deficiency to be significant enough to constitute a material weakness. We found no instances in which the IPA did not comply, in all material respects, with U.S. generally accepted auditing standards and generally accepted government auditing standards in the conduct of the financial statement audit. In e-mailed comments from PCORI’s Director of Finance, PCORI stated that the identified deficiency in financial reporting related to appropriations received resulted from uncertainty over differences between the federal government’s and PCORI’s fiscal years and cited action taken to adjust its records to correct the deficiency.Why GAO Did This StudyThis report presents the results of our review of the Patient-Centered Outcomes Research Institute’s (PCORI) 2011 and 2010 financial statement audit. PCORI was created by the Patient Protection and Affordable Care Act (PPACA) as a federally funded, nonprofit corporation that is neither an agency nor establishment of the United States government. PCORI’s purpose is to assist patients, clinicians, purchasers, and policymakers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and other items. PPACA requires PCORI to provide for the conduct of its financial audits on an annual basis by a private entity with expertise in conducting financial audits, and requires the Comptroller General of the United States to annually perform a review of the audit of such financial statements. We are required to report the results of our review to the Congress annually. This is the first year PCORI has prepared financial statements and contracted with an independent public accountant (IPA) to conduct the financial statement audit, and consequently, the first year in which we have reviewed the audit.For more information, contact Steven J. Sebastian at (202) 512-3406 or sebastians@gao.gov. Thu, 10 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-491?source=ra What GAO FoundHomelessness programs are fragmented across multiple agencies and some show evidence of overlap. In fiscal year 2010, eight federal agencies obligated roughly $2.8 billion to administer 26 homelessness programs. Three agencies—the Departments of Health and Human Services (HHS), Housing and Urban Development (HUD), and Veterans Affairs (VA)—are responsible for the majority of programs and dollars, 22 of 26 programs, and 89 percent of total funds. GAO found that these agencies and the Department of Labor (Labor) have multiple programs that offer similar services to similar beneficiaries. Fragmentation of services and overlap in some programs is partly due to their legislative creation and partly due to programs evolving to offer services that meet the variety of needs of persons experiencing homelessness. Fragmentation and overlap can lead to inefficient use of resources. For example, both HHS and VA have programs that provide similar services, but each agency separately manages its programs under different administrative units. In addition, some local service providers told us that managing multiple applications and reporting requirements was burdensome, difficult, and costly. Moreover, according to providers, persons experiencing homelessness have difficulties navigating services that are fragmented across agencies.While almost all targeted programs maintain performance information (including data on the number of homeless served), few targeted programs have conducted evaluations to assess how effectively the programs are achieving their objectives. While performance information can be helpful for monitoring whether programs were achieving desired results, evaluations allow for comprehensive assessments. According to GAO’s questionnaire, 2 of the 26 programs reported they had a program evaluation within the last 5 years. Information from program evaluations can help agencies fully assess what is working and how improvements can be made. Moreover, understanding program performance and effectiveness is key to determining in which programs and interventions to strategically invest limited federal funds.The U.S. Interagency Council on Homelessness (Interagency Council) is required to coordinate the federal response to homelessness and has taken several steps to coordinate efforts and promote initiatives across federal agencies. Federal coordination efforts have increased in recent years and included issuing the first federal strategic plan, increasing coordination at the state and local levels by focusing on the creation of state interagency councils on homelessness, and taking steps to develop a common vocabulary for discussing homelessness and related terms. The strategic plan serves as a useful and necessary step in increasing agency coordination and incorporates some elements of an effective strategy, but lacks key characteristics desirable in a national strategy. For example, the plan does not list priorities or milestones and does not discuss resource needs or assign clear roles and responsibilities to federal partners. In order for the Interagency Council and its members to effectively translate the goals and objectives of the plan into actions and measure their own progress in implementing them, these elements must be made transparent to help ensure accountability and measure the plan’s progress.Why GAO Did This StudyFederal programs for those experiencing or at risk for homelessness generally are designed to provide housing assistance and other services such as health care, job training, or food assistance. This report responds to the statutory requirement that GAO identify federal programs, agencies, offices, and initiatives that have duplicative goals or activities and addresses (1) the number of and funding levels for federal homelessness programs and the extent to which fragmentation, overlap, and duplication exists; (2) whether the programs have been evaluated; and (3) actions of the Interagency Council and federal agencies to coordinate efforts and the extent to which the federal strategic plan to prevent and end homelessness is an effective strategy. To address these objectives, GAO sent questionnaires to10 federal agencies and obtained and analyzed data for a range of programs.What GAO RecommendsThe Interagency Council and the Office of Management and Budget––in conjunction with HHS, HUD, Labor, and VA, should further analyze the degree and effects of overlap and fragmentation. VA agreed with this recommendation. HHS, HUD, Labor, and the Council did not explicitly agree or disagree. We also recommended that the Council incorporate additional elements into updates to the federal strategic plan or in implementation and planning documents. The Council stated it has been setting priorities and measuring progress, but was unable to provide documentation. GAO maintains its position and that the implementation of the federal strategic plan be made more transparent.For more information, contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao.gov. Thu, 10 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-480R?source=ra What GAO FoundDOD is estimating and publishing approximate costs for selected types of internally and externally required reports, but in some cases its approach is not fully consistent with relevant cost estimating best practices and cost accounting standards. Specifically, DOD entities have been directed to use the cost estimating tool to capture marginal costs of activities associated with completing a report or study that would not have been performed otherwise. These costs consist of certain manpower costs (such as the prorated salaries of military and civilian personnel based on the time they spent) and nonlabor costs (such as contract services, travel, or printing). In comparing DOD’s approach to (1) GAO’s Cost Estimating and Assessment Guide—which states that high-quality, reliable cost estimates should be comprehensive, well documented, and accurate—and (2) relevant accounting standards, we found the following.Comprehensive. GAO’s cost guide states that cost estimates should include all costs, but allows flexibility for the estimates to exclude costs where information is limited as long as steps are taken to clearly define and document what costs are included or excluded. DOD’s guidance on using the tool defines and documents decisions to include certain manpower and all nonlabor costs in its calculation. In addition, it documents the decision to exclude other manpower costs, such as those for health care and training expenses. It also provides broad examples of some types of activities to consider in estimating costs, but leaves it up to the discretion of the individuals generating the cost estimate to decide which types of activities to include or exclude. As a result, based on the nine reports we reviewed, we found inconsistencies in the types of activities individuals decided to include when developing their cost estimates. For example, we found that for six of the nine reports we reviewed, some individuals calculated the manpower costs for activities associated with coordinating the report through the final review while others did not. In addition, according to relevant accounting standards, appropriate procedures and practices should be established to enable, among other things, the interpretation and communication of cost information. However, when presenting the cost estimate on the front cover of a report or study, the language DOD uses does not provide information on what costs are included or excluded. Specifically, it does not indicate that the estimate reflects only certain marginal manpower and nonlabor costs. Without further explanation, this wording could be subject to misinterpretation such that recipients of the reports or studies may assume that all costs are included in the estimate when that is not the case.Well documented. GAO’s Cost Estimating and Assessment Guide states that cost estimates should be easily traceable to source documents. While DOD’s guidance on using the tool states that individuals should be prepared to explain how they developed the cost estimate, it does not include a requirement for individuals to retain source documentation. In practice, we found that of the nine reports we reviewed, individuals were able to easily retrieve documentation for the estimates prepared for three reports, but not for the other six. As a result, DOD may not have the information needed so that others can understand how a cost estimate was derived and readily replicate it.Accurate. GAO’s Cost Estimating and Assessment Guide further states that cost estimates should have all cost inputs checked to verify that they are accurate. However, we found that DOD’s guidance on using the tool has no requirement to independently verify the costs used to generate the cost estimate. In practice, the individual generating the cost estimate is responsible for ensuring its accuracy. As a result, without independent verification, DOD cannot ensure that cost estimates are accurate and reliable.DOD currently lacks a means to ensure that organizations are developing cost estimates for all required types of reports and studies, but is taking steps to enhance its ability to monitor the preparation of reports and studies to satisfy reporting requirements, including those for which a cost estimate is required to be generated. DOD’s guidance on using the tool identified 10 specific types of reports or studies that require a cost estimate. The guidance states that the DOD component preparing a report or study is responsible for ensuring that a cost estimate, if required, is included. However, the guidance does not include any process or requirement to track whether organizations are developing required cost estimates. According to CAPE officials who developed the tool, they were not directed to ensure that cost estimates have been developed for all required reports and studies, and they added that the cost estimating tool was not designed to track reports and studies that require a cost estimate. These same officials noted that the magnitude of DOD’s reporting requirements makes it challenging to identify the universe of these requirements and to track the completion of reports and studies to meet them, including whether cost estimates have been generated. In the past year, DOD has initiated efforts to improve its visibility over its internal and external reporting requirements. In March 2011, the Secretary of Defense issued a memorandum requiring the Assistant Secretary of Defense for Legislative Affairs to enhance that office’s database capability and further automate the process of tracking external reports to Congress and required the Office of the Director of Administration and Management to track internal reports. The Office of Legislative Affairs enhanced its Congressional Hearings and Reporting Requirements Tracking System by adding a data field to record the estimated costs of reports or studies generated by DOD components. To gain greater visibility of internal reporting requirements, the Office of the Director of Administration and Management tasked Washington Headquarters Services with developing a repository for tracking internal reports. According to a Washington Headquarters Services official, the repository has a field to capture whether an internal report or study has a cost estimate. Currently, the repository is in development and has been populated with reports that date back 3 years.DOD has not evaluated and currently does not plan to evaluate the usefulness of its efforts to estimate the costs of selected reports and studies as one of the means for achieving the Secretary of Defense’s intended purpose of increasing the transparency of costs, reducing or eliminating reporting requirements, and instilling a culture of cost consciousness across DOD. According to GAO’s Standards for Internal Control in the Federal Government, activities such as assessments need to be established to monitor performance, and managers need to compare actual performance against targets and then analyze any significant differences so that appropriate action can be taken to ensure that organizational goals are met. However, under current guidance, no requirement exists for DOD to evaluate the impact of its cost estimating efforts, such as whether these efforts have prompted internal or external decision makers to consider cost as a factor in deciding whether to establish a reporting requirement for DOD. Without evaluating the impact of its efforts, including seeking the views of internal and external decision makers, DOD does not have the information it needs to assess whether the time and effort it is investing to develop cost estimates is having the desired effect of achieving greater transparency, reducing reporting requirements, and raising cost consciousness, as intended by the Secretary.Why GAO Did This StudyCiting long-term fiscal challenges affecting the federal government, in May 2010, the Secretary of Defense directed the Department of Defense (DOD) to undertake a departmentwide initiative to assess how the department is staffed, organized, and operated with the goal of reducing excess overhead costs and reinvesting these savings in sustaining DOD’s current force structure and modernizing its weapons portfolio. The Secretary’s initiative targeted both shorter- and longer-term improvements and set specific goals and targets for achieving cost savings and efficiencies. The initiative was organized along four tracks, each of which had a different focus. The fourth track focused on specific areas where DOD could take immediate action to reduce inefficiencies and overhead, in particular, to reduce headquarters and support bureaucracies and to instill a culture of cost consciousness and restraint in the department. As part of the fourth track, the Secretary of Defense announced a number of specific initiatives, including actions intended to address the need to reduce or eliminate reporting requirements for DOD reports and studies. For example, in his August 9, 2010, speech announcing the overall efficiency initiative, the Secretary of Defense stated that the department is “awash in taskings for reports and studies” and directed several specific actions that, according to the press release accompanying the announcement, were intended to “combat the enormous amounts of taskings for reports and studies.” In his remarks, the Secretary noted that there is little basis to determine whether the value gained is worth the considerable time and resources expended to generate reports and studies. With respect to specific actions, the Secretary directed DOD and its components to track the approximate cost of preparing DOD reports and studies and publish the cost on the front cover of each report or study. He also called for a comprehensive review of all oversight reports and use of the results to reduce the volume of reports and studies generated internally while engaging with Congress on ways to meet their needs while working together to reduce the number of reports.In September 2010, the Secretary of Defense tasked DOD’s Cost Assessment and Program Evaluation (CAPE) office with implementing the Secretary’s requirement to publish the cost of preparing DOD reports and studies. By November 2010, the CAPE office had developed a cost estimating tool and corresponding guidance on using the tool, which described the categories of costs to be estimated and identified the types of reports and studies for which costs were to be estimated. The following month, the Secretary of Defense issued a memorandum requiring the use of the tool beginning on February 1, 2011.In House Report Number 112-78, which accompanied a bill for the National Defense Authorization Act for Fiscal Year 2012, the House Committee on Armed Services commended DOD for implementing a process for collecting an estimate of resources required to generate internally and externally required reports and agreed that additional transparency would be useful for decision makers when determining the utility of various reporting requirements. The committee also observed that any tool used to collect costs was only as useful as the inputs received and directed GAO to conduct an assessment of DOD’s methodology and tools for collecting cost data on both internally and externally required reports and to submit a report, including any recommendations needed to improve the data collection, transparency, and utility of the tool. Specifically, we evaluated DOD’s approach to estimate the costs of selected reports and studies, including (1) whether DOD entities are capturing and presenting costs in a manner consistent with relevant cost estimating best practices; (2) the status of DOD’s efforts to track whether organizations are developing cost estimates for all required types of reports and studies; and (3) whether DOD has evaluated the usefulness of its efforts to estimate the costs of reports and studies as one of the means for achieving the Secretary’s intended purpose of increasing the transparency of costs, reducing or eliminating reporting requirements, and instilling a culture of cost consciousness across DOD.What GAO RecommendsWe are making a recommendation to the Secretary of Defense to take steps to evaluate DOD’s effort to estimate costs to determine whether that effort is having the desired effect of achieving greater transparency, reducing or eliminating reporting requirements, and raising cost awareness. Based on the results of this evaluation, if DOD plans to continue the effort to estimate costs for selected reports and studies, we recommend that the Secretary modify the current guidance or otherwise take steps to improve DOD’s cost estimating approach. In commenting on a draft of our report, DOD partially concurred with our recommendations, except it disagreed with one of the steps we recommended to improve its cost estimating approach.For more information, please contact Sharon L. Pickup at (202) 512-9619 or pickups@gao.gov. Thu, 10 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-329?source=ra What GAO FoundLittle research exists on the effect of workplace safety incentive programs and other workplace safety policies on workers' reporting of injuries and illnesses, but several experts identified a link between certain types of programs and policies and reporting. Researchers distinguish between rate-based safety incentive programs, which reward workers for achieving low rates of reported injuries or illnesses, and behavior-based programs, which reward workers for certain behaviors, such as recommending safety improvements. Of the six studies GAO identified that assessed the effect of safety incentive programs, two analyzed the potential effect on workers’ reporting of injuries or illnesses, but they concluded that there was no relationship between the programs and injury and illness reporting. Experts and industry officials, however, suggest that rate-based programs may discourage reporting of injuries and illnesses. Experts and industry officials also reported that certain workplace polices, such as post-incident drug and alcohol testing, may discourage workers from reporting injuries and illnesses. Researchers and workplace safety experts also noted that how safety is managed in the workplace, including employer practices such as fostering open communication about safety issues, may encourage reporting of injuries and illnesses. In 2010, from its survey, GAO estimated that 25 percent of U.S. manufacturers had safety incentive programs, and most had other workplace safety policies that, according to experts and industry officials, may affect injury and illness reporting. GAO estimated that 22 percent of manufacturers had rate-based safety incentive programs, and 14 percent had behavior-based programs. Almost 70 percent of manufacturers also had demerit systems, which discipline workers for unsafe behaviors, and 56 percent had post-incident drug and alcohol testing policies according to GAO’s estimates. Most manufacturers had more than one safety incentive program or other workplace safety policy and more than 20 percent had several. Such programs and policies were more common among larger manufacturers.Although the Occupational Safety and Health Administration (OSHA) is not required to regulate safety incentive programs, it has taken limited action to address the potential effect of such programs and other workplace safety policies on injury and illness reporting. These programs and policies, however, are not addressed in key guidance such as OSHA's field operations manual for inspectors. OSHA has cooperative programs that exempt employers with exemplary safety and health management systems from routine inspections. One such program prohibits participants from having rate-based safety incentive programs, but guidance on OSHA’s other cooperative programs does not address safety incentive programs. Similarly, OSHA inspectors and outreach specialists provide information to employers about the potential benefits and risks of safety incentive programs, but the guidance provided to inspectors in its field operations manual does not address these programs.Why GAO Did This StudyOSHA relies on employer injury and illness records to target its enforcement efforts. Questions have been raised as to whether some safety incentive programs and other workplace safety policies may discourage workers' reporting of injuries and illnesses. GAO examined (1) what is known about the effect of workplace safety incentive programs and other workplace safety policies on injury and illness reporting, (2) the prevalence of safety incentive programs as well as other policies that may affect reporting, and (3) actions OSHA has taken to address how safety incentive programs and other policies may affect injury and illness reporting. GAO reviewed academic literature, federal laws, regulations, and OSHA guidance; surveyed a nationally representative sample of manufacturing worksites; and interviewed federal and state occupational safety and health officials, union and employer representatives, and researchers.What GAO RecommendsGAO recommends that OSHA provide guidance about safety incentive programs and other workplace safety policies consistently across the agency's cooperative programs, and add language about safety incentive programs and other workplace safety policies to the guidance provided to inspectors in its field operations manual. OSHA agreed with the recommendations, and noted its plans to address them.For more information, contact Revae Moran at (202) 512-7215 or moranr@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-723T?source=ra What GAO FoundSince 2001, SSA has reported spending more than $5 billion on the development, modernization, and enhancement of its IT systems and capabilities. SSA officials identified 120 initiatives undertaken from 2001 to 2011 that the agency considered to be key investments in modernization. These comprise a subset of the hundreds of projects and modernization activities SSA undertakes yearly, which vary greatly in level of effort, scope, and cost. These initiatives affected all of the agency’s main program areas:According to managers within SSA’s Office of Disability Systems, in an effort to reduce backlogs of disability hearings, the agency implemented a process for creating electronic “folders” for each applicant, to replace the existing paper-based process. This initiative included capabilities for electronically viewing an applicant’s folder, electronic screening for faster disability determinations, and Internet access to information on disability hearings and determinations.The Office of Retirement and Survivors Insurance Systems took steps to improve outdated legacy systems and respond to legislation or other mandates requiring new system functionality. These efforts included integrating stand-alone “post-entitlement” processes, facilitating online application for benefits, and conversion of a key database to a more modern, industry-standard one.Managers from the Office of Applications and Supplemental Security Income described initiatives to modernize large legacy databases and facilitate data sharing to streamline the claims process. These included enhancements to the electronic death registration process and the development of a Web application enabling access to data from multiple systems.SSA officials described initiatives in the area of electronically exchanging data with external partners, including states and private-sector partners such as banks and credit bureaus.SSA also noted efforts to streamline the process for administering Social Security cards, such as introducing safeguards against counterfeiting and replacing its legacy printers.Comprehensive strategic planning is essential for successfully carrying out large-scale efforts such as SSA’s IT modernizations. Key elements of such planning include developing an IT strategic plan and an enterprise architecture that, together, outline modernization goals, measures, and timelines.An IT strategic plan serves as an agency’s vision and helps align its information resources with its business strategies and investment decisions. As such, it provides a high-level perspective of the agency’s goals and objectives, enabling the agency to prioritize how it allocates resources; proactively respond to changes; and communicate its vision and goals to management, oversight bodies, and external parties. The enterprise architecture helps to implement the strategic vision by providing a focused “blueprint” of the organization’s business processes and technology that supports them. It includes descriptions of how the organization operates today, how it intends to operate in the future, and a plan for transitioning to the target state. It further helps coordinate the concurrent development of IT systems to limit unnecessary duplication and increase the likelihood that these systems will inter-operate.SSA developed an IT strategic plan in 2007 to guide its modernization efforts; however, the plan is outdated and may not be aligned with the agency’s overall strategic plan. Specifically, because it has not been updated since 2007, the plan contains elements that are no longer relevant to SSA’s ongoing modernization efforts.As mentioned earlier, in 2011, SSA realigned the functions of its Office of the CIO, consolidating major responsibilities for the management and oversight of IT in its Office of Systems. Federal law, specifically the Clinger-Cohen Act of 1996, requires the heads of executive branch agencies to designate a CIO with key responsibilities for managing an agency’s IT resources. As we have previously reported, to carry out these responsibilities effectively, CIOs require sufficient control over IT investments, including control over the IT budget and workforce.Under the realignment, key responsibilities of the CIO and Deputy Commissioner for Systems were merged into the Office of Systems. Specifically, this arrangement gave the Office for Systems responsibility for, among other things,oversight and management of IT budget formulation;systems acquisition, development, and integration;the IT capital planning and investment control process;workforce planning and allocation of resources to IT projects;IT strategic planning;enterprise architecture;IT security; andIT operations.Why GAO Did This StudyThis hearing is on the Social Security Administration’s (SSA) efforts to modernize its information technology (IT) systems and environment. As you know, SSA is responsible for delivering services that touch the lives of virtually every American, and the agency relies heavily on IT to do so. Its computerized information systems support a range of activities, from the processing of Disability Insurance and Supplemental Security Income payments to the calculation and withholding of Medicare premiums, and the issuance of Social Security numbers and cards. Last fiscal year, the agency spent nearly $1.6 billion on IT.As SSA’s systems have aged and its workload has increased, the agency has committed to investing in the capacity and modern technologies needed to update its strained IT infrastructure. In addition, the agency has recently undertaken a realignment of its IT governance structure, including the responsibilities of its Chief Information Officer (CIO).At your request, over the past year, we have been examining SSA’s modernization efforts. The specific objectives of our study were to (1) determine SSA’s progress in modernizing its IT systems and capabilities; (2) evaluate the effectiveness of SSA’s plans and strategy for modernizing its systems and capabilities; and (3) assess whether the realignment of the agency’s CIO responsibilities allows for effective oversight and management of the systems modernization efforts.For more information, please contact Valerie C. Melvin at (202) 512-6304 or melvinv@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-495?source=ra What GAO FoundThe Social Security Administration (SSA) has undertaken numerous modernization efforts, but it lacks effective measurement tools to determine progress. Since 2001, SSA has reported spending about $5 billion on the modernization of its systems. Specifically, the agency has undertaken hundreds of modernization projects each year from 2001 to 2011, and officials identified 120 such initiatives that they considered to be key investments in modernization. About two-thirds of these projects were for modernizing and enhancing existing systems, while other efforts were aimed at moving from manual to electronic processes and online access, and the development of new or redesigned system software. These efforts also enhanced work processes, automated notices to beneficiaries, and modified systems to accommodate legislation, among other things. Nonetheless, SSA still has major efforts under way to transition from its aging systems to a more modernized IT environment. Specifically, in order to help meet the agency’s key strategic goal of strengthening its infrastructure and further enhancing its online services, SSA intends to streamline its operations and reduce duplication in databases to allow for more efficient maintenance. The agency also intends to complete its conversion to a modern database; support the increasing demands to store, process, and share data with public- and private-sector partners; and transition to Web-based online access for its data and services. While the Office of Management and Budget requires agencies to establish performance measures to gauge modernization progress, SSA has not fully established quantifiable performance measures for all its modernization projects or performed post-implementation reviews, which GAO has previously recommended and which would enable the agency to effectively measure its progress.SSA lacks updated and comprehensive plans to guide its modernization efforts. Strategic planning is essential for an organization to define what it seeks to accomplish, identify strategies to achieve the desired results, and measure progress. SSA developed an IT strategic plan in 2007 to guide its modernization efforts, but that plan has not been updated to reflect the agency’s revised strategic goals. In addition, the agency has an enterprise architecture, which is important for guiding the execution of IT strategic goals, but it is missing important elements, such as performance milestones and a road map to guide the agency. Consequently, SSA has been making investments in modernization without the guidance of long-term plans and risks that these investments may not align with the agency’s priorities.The agency’s realignment of its Chief Information Officer (CIO) responsibilities, if appropriately implemented, could allow for effective oversight and management of the agency’s IT systems, as required by the Clinger-Cohen Act. Specifically, the major functions and responsibilities of the CIO were transferred to the Office of Systems, including oversight of the agency’s entire IT budget and workforce and responsibility for IT strategic planning and the development and implementation of an enterprise architecture. However, SSA did not conduct an analysis of this significant organizational change, including goals and strategies for an effective transition and clarification of roles and responsibilities, as called for by best practices. In addition, the agency has not updated its guidance for IT oversight to reflect the realignment.Why GAO Did This StudyServices provided by the Social Security Administration (SSA) touch the lives of virtually every American. To support the delivery of these services, the agency uses information technology (IT) systems that are increasingly costly and difficult to maintain. To meet these challenges, SSA has committed to modernizing its IT environment. In addition, SSA recently realigned most of the responsibilities of its Chief Information Officer (CIO) to its Office of Systems. GAO was asked to (1) determine SSA’s progress in modernizing its IT systems and capabilities, (2) evaluate the effectiveness of the agency’s plans and strategy for modernizing its systems and capabilities, and (3) assess whether the realignment of the agency’s CIO responsibilities allows for effective oversight and management of the systems modernization efforts. To accomplish these objectives, GAO evaluated relevant agency program plans and documentation and interviewed agency officials.What GAO RecommendsGAO is recommending, among other things, that SSA develop comprehensive metrics to effectively gauge modernization progress; complete comprehensive strategic planning, including its enterprise architecture; and define the new roles and responsibilities of the Office of Systems to help ensure effective oversight. SSA neither agreed nor disagreed with GAO’s recommendations, but described steps it is taking that would address elements of the recommendations related to planning, enterprise architecture, and IT oversight.For more information, contact Valerie C. Melvin at (202) 512-6304 or melvinv@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-733T?source=ra What GAO FoundOur work on the outcomes of the CBP round 1 rebid found that the number of bidding suppliers and the number of contracts awarded in the CBP round 1 rebid were very similar to the CBP round 1 and about a third of the 1,011 suppliers that bid in the rebid were awarded at least one CBP contract. CMS made improvements to the bidding process for the CBP round 1 rebid—such as providing additional information about disqualification reasons—and significantly fewer bids were disqualified than in round 1. However, many suppliers still had difficulty meeting bid requirements. Of the bids that were disqualified during the initial bid review, 73 percent were disqualified because suppliers failed to provide the required financial documentation or did not meet CMS’s minimum financial standard threshold for suppliers. The number of bids disqualified for missing financial documentation in the CBP round 1 rebid would have been higher if many suppliers had not benefited from a MIPPA provision that required that CMS provide suppliers the opportunity to be notified of and to submit missing required financial documentation—a process not available during CBP round 1. As a result, 93 of the 321 suppliers—about 29 percent—that were notified by CMS that they had missing financial documentation, and subsequently provided correct documentation, were ultimately awarded one or more CBP contracts. In the CBP round 1 rebid, as in CBP round 1, CMS determined that some suppliers’ bids had been disqualified incorrectly. CMS told us it received bid inquiries from 99 suppliers that had bids disqualified in the CBP round 1 rebid and subsequently extended contracts to 7 of those suppliers that were found to have incorrectly disqualified bids.During CBP’s first year, few contract suppliers—those awarded CBP contracts—had their contracts terminated by CMS, voluntarily canceled their contracts, or were involved in ownership changes. Under the CBP, many non-contract suppliers—those that were not awarded CBP contracts—exercised the option to grandfather certain CBP-covered rental DME items for beneficiaries they were furnishing prior to the implementation of the CBP. Many grandfathered suppliers, for example, continued to furnish the CBP-covered oxygen product category to their beneficiaries. The number of these suppliers generally decreased steadily throughout the first year as CBP-covered beneficiaries’ rental periods expired or as beneficiaries chose contract suppliers. Some contract suppliers entered into subcontracting agreements with non-contract suppliers to furnish certain services to CBP-covered beneficiaries. As the CBP allows, some contract suppliers were awarded contracts for product categories that they did not have prior experience in, or for competitive bidding areas where they did not have a prior business location.CMS’s on-going monitoring activities generally indicate that beneficiary DME access and satisfaction have not been affected by the CBP. Although some of these efforts have limitations, in the aggregate, they provide useful information to CMS regarding beneficiary access and satisfaction. CBP-related calls to 1-800-MEDICARE declined during the first year of CBP implementation. Two percent of calls were from beneficiaries with an urgent need for CBP-covered DME. Of 127,466 inquiries in 2011, CMS classified 151 as complaints Seventy-seven percent of CBP complaints—or 116 complaints—occurred in the first half of 2011. CMS’s pre-and post-implementation beneficiary satisfaction survey did not reveal systemic beneficiary access or satisfaction problems with the CBP, although the survey’s questions were limited. For all six questions regarding the CBP, nearly 90 percent of beneficiaries reported their service as being “good” or “very good”. Beneficiary satisfaction survey results within competitive bidding areas show a drop of one to three percentage points on each of the six questions from pre-implementation in 2010 to post-implementation in 2011. CMS tracks health outcomes including, for example, hospitalizations, physician visits, and deaths, for beneficiaries potentially affected by the CBP. While the data do not show directly whether outcomes were caused by problems accessing CBP-covered DME, CMS reports no changes in health outcomes for beneficiaries living in competitive bidding areas in 2011.Why GAO Did This StudyThis testimony discusses the Medicare competitive bidding program for selected durable medical equipment (DME) and certain other items. This testimony is focused on our review of the Centers for Medicare & Medicaid Services (CMS) implementation of the competitive bidding program (CBP) round 1 rebid that began on January 1, 2011.Most Medicare beneficiaries participate in Medicare Part B, which helps pay for DME items, such as oxygen, wheelchairs, hospital beds, walkers, as well as prosthetics, orthotics, and related supplies. Medicare beneficiaries typically obtain DME items from suppliers, which submit claims for payment to Medicare on behalf of beneficiaries. Both we and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) have reported that Medicare and its beneficiaries have sometimes paid higher-than-market rates for various medical equipment and supply items. These overpayments increase costs to both Medicare and its beneficiaries.This testimony is based on our report, released today, Medicare: Review of the First Year of CMS’s Durable Medical Equipment Competitive Bidding Program’s Round 1 Rebid. In that report, to examine CBP outcomes and effects, we analyzed data from CMS and its feedback provided to bidding suppliers, analyzed 2011 CBP data about different types of suppliers, and interviewed CMS and CBP contractor officials, DME industry groups, and suppliers. To examine the CBP’s effects on beneficiary access, we analyzed Medicare claims data for the first 6 months of 2011, because claims data for those months were the most complete, and compared that data to the same months in 2010. Our findings on the first year of the round 1 rebid are based on the limited evidence available at the time we did our work; more data will become available as the CBP continues. CMS officials commented on a draft of our report. Our work was performed in accordance with generally accepted government auditing standards from May 2011 through May 2012 for both the report and for this statement.For more information, contact Kathleen King at (202) 512-7114 or kingk@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-693?source=ra What GAO FoundThe Centers for Medicare and Medicaid Services (CMS), within the Department of Health and Human Services (HHS), implemented the durable medical equipment (DME) competitive bidding program’s (CBP) bidding process for the round 1 rebid. Nearly the same number of suppliers submitted a similar number of bids for both the CBP round 1 rebid and round 1. Many suppliers continued to have difficulty complying with financial documentation requirements; however, the number of bids disqualified in the round 1 rebid was significantly less than for round 1. After being notified of their bid results, some suppliers were found to have bids that were disqualified incorrectly and were subsequently offered round 1 rebid contracts. About one-third of the bidding suppliers were awarded CBP contracts.Relatively few CBP contract suppliers (those awarded CBP contracts) had their contracts terminated by CMS, voluntarily canceled their contracts, or were involved in ownership changes. Under the CBP, non-contract suppliers (those not awarded CBP contracts) can grandfather certain rental DME for beneficiaries they were servicing prior to the implementation of CBP until CBP-covered beneficiaries’ rental periods expire. Also, some CBP contract suppliers entered into subcontracting agreements with non-contract suppliers to furnish certain services to CBP-covered beneficiaries in the round 1 rebid.CMS’s ongoing multiple monitoring activities generally indicate that beneficiary DME access and satisfaction have not been affected by CBP. Although some of these efforts have limitations, in the aggregate, they provide useful information to CMS regarding beneficiary access and satisfaction.Early data indicate that utilization has decreased in some CBP-covered DME categories. GAO’s review of Medicare claims data found that fewer beneficiaries in competitive bidding areas received some CBP-covered items in any of the first six months of 2011 than in the same month of 2010.Although the first year of the CBP round 1 rebid has been completed, it is too soon to determine its full effects on Medicare beneficiaries and DME suppliers. GAO found that, in general, the round 1 rebid was successfully implemented. GAO also found that utilization of selected DME declined in the CBP areas; while there are many possible reasons for this, it does not necessarily indicate that beneficiaries have not had access to needed DME. GAO does not assume that all pre-CBP utilization was appropriate and the CBP may have reduced unnecessary utilization of DME. More experience with DME competitive bidding is needed, particularly to see if evidence of beneficiary access problems emerges. For that reason, it is important to continue monitoring changes in the number of suppliers serving CBP-covered beneficiaries.In commenting on a draft of this report, HHS noted that the CBP round 1 rebid resulted in savings of more than $200 million in its first year. HHS also cited the results of CMS’s monitoring of beneficiaries’ access to DME in CBP areas as evidence that the CBP did not affect beneficiaries adversely.Why GAO Did This StudyTo achieve Medicare savings for DME, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) required that CMS implement the CBP for certain DME. In 2008, the Medicare Improvements for Patients and Providers Act (MIPPA) terminated the first round of supplier contracts and required CMS to repeat the CBP round 1—referred to as the round 1 rebid, resulting in the award of contracts to suppliers with payments that began January 1, 2011. CMS has estimated that the rebid will lead to significant savings for Medicare.MIPPA requires GAO to examine certain aspects of the CBP. In this report, GAO reviews (1) the outcomes of the CBP round 1 rebid process; (2) the effect of the CBP round 1 rebid on DME suppliers; (3) how the CBP round 1 rebid has affected Medicare beneficiary access to and satisfaction with selected DME; and (4) the extent to which the CBP round 1 rebid has affected the utilization of selected DME items.To examine CBP outcomes and effects, GAO analyzed data from CMS and its feedback provided to bidding suppliers, analyzed 2011 CBP data about different types of suppliers, and interviewed CMS and CBP contractor officials, DME industry groups, and suppliers. To examine CBP’s effects on beneficiary access, GAO analyzed Medicare claims data for the first six months of 2011 because the data for those months were the most complete, and compared it to the same months in 2010.For more information, contact Kathleen M. King at (202) 512-7114 or kingk@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-569?source=ra What GAO FoundThe Department of Justice (DOJ) administered 13 grant programs from fiscal years 2005 through 2010 that recipients could use to support indigent defense, 4 of which required recipients to use all or part of the funding for this purpose. DOJ also provides training to indigent defense providers, among other things.From fiscal years 2005 through 2010, recipients of the 4 grants that required spending for indigent defense allocated or planned to use $13.3 million out of $21.2 million in current dollars for indigent defense. However, among the 9 grants that did not require allocations or awards for indigent defense, two-thirds or more of state, local, and tribal respondents to GAO’s surveys reported that they did not use funds for this purpose, partly due to competing priorities. DOJ has listed the grants on its website. However, no more than 54 percent of grantees or public defender offices responding to GAO’s surveys were aware that such funding could be used to support indigent defense. Taking steps to increase awareness would better position DOJ to help ensure that eligible grantees are aware that they can access federal funding to help address their needs. DOJ officials acknowledged that opportunities exist to enhance grantees’ awareness.When recipients allocated funding for indigent defense, the amount was generally small relative to the total award and most commonly used for personnel and training. For instance, among grant recipients who reported in GAO’s surveys that they had allocated funding for indigent defense, allocations as a percentage of total awards ranged from 2 percent to 14 percent.DOJ generally collects data on funding allocated for indigent defense when the grant program requires such funding or identifies it as a grant priority, but does not do so in two juvenile-focused grants. According to DOJ, it does not collect such data in these two programs because indigent defense is 1 of 17 purposes for which grant funds can be used. GAO has previously reported that agencies should collect data to support decision making, and the Attorney General has committed to focusing on indigent defense issues. Collecting data on the amount of funding from these two grants that is used to support indigent defense would position DOJ to better assess if it is meeting the Attorney General’s commitment.DOJ assesses the impact of indigent defense grant funding and has mechanisms to help indigent defense providers evaluate services. All 9 of the DOJ grant programs that required or prioritized funding to be used for indigent defense included output measures that described the level of grant activity, such as the number of defenders hired, and 7 of the 9 included outcome measures that described the intended results of the funds, such as the percent increase in defendants served. Nine of the 118 public defender offices or agencies that responded to GAO’s survey provided GAO with a copy of an evaluation that had been conducted of their office; those that did not most frequently cited lack of personnel (28 of 62) and lack of expertise or the need for technical assistance (26 of 62) as the reasons. DOJ has mechanisms that could address these challenges. For instance, DOJ provides technical assistance through a website.Why GAO Did This StudyThe Sixth Amendment to the U.S. Constitution guarantees every person accused of a crime the right to counsel. States and localities generally fund indigent defense services, and the Department of Justice (DOJ) also provides funding that can be used for these services. GAO was asked to review federal support for indigent defendants. This report addresses, for fiscal years 2005 through 2010, the (1) types of support DOJ provided for indigent defense; (2) extent to which eligible DOJ funding was allocated or awarded for indigent defense, the factors affecting these decisions, and DOJ’s actions to address them; (3) percentage of DOJ funding allocated for indigent defense and how it was used; (4) extent to which DOJ collects data on indigent defense funding; and (5) extent to which DOJ assesses the impacts of indigent defense grants, indigent defense programs have been evaluated, and DOJ has supported evaluation efforts. GAO surveyed (1) all 4,229 grant recipients about funding allocations and (2) a sample of 253 public defender offices about factors influencing their decisions to apply for funding. Though not all survey results are generalizable, they provide insights. GAO also analyzed grant related documents and interviewed relevant officials.What GAO RecommendsGAO recommends that DOJ increase grantees’ awareness that funding can be allocated for indigent defense and collect data on such funding.DOJ concurred with the recommendations.For more information, contact Eileen R. Larence at (202) 512-8777 or larencee@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-348?source=ra What GAO FoundOf the approximately 400 non-federally recognized tribes that GAO identified, 26 received funding from 24 federal programs during fiscal years 2007 through 2010. Most of the 26 non-federally recognized tribes were eligible to receive this funding either because of their status as nonprofit organizations or state-recognized tribes. Similarly, most of the 24 federal programs that awarded funding to non-federally recognized tribes during the 4-year period were authorized to fund nonprofit organizations or state-recognized tribes. In addition, some of these programs were authorized to fund other entities, such as tribal communities or community development financial institutions.For fiscal years 2007 through 2010, 24 federal programs awarded more than $100 million to the 26 non-federally recognized tribes. Most of the funding was awarded to a few non-federally recognized tribes by a small number of programs. Specifically, 95 percent of the funding was awarded to 9 non-federally recognized tribes, and most of that funding was awarded to the Lumbee Tribe of North Carolina. Similarly, 95 percent of the funding was awarded by seven programs in four agencies, and most of that funding was awarded by one Department of Housing and Urban Development program.During the course of its review, GAO identified some instances where federal agencies had provided funding to non-federally recognized tribes for which grant eligibility is disputed and one instance where an agency was in the process of better enforcing federal financial reporting requirements with one tribe. Specifically:The Department of Education awarded American Indian Vocational Rehabilitation Services Program funding to the United Houma Nation, the Lumbee Tribe of North Carolina, and a consortium consisting of the Choctaw-Apache Tribe of Ebarb and the Four Winds Cherokee. Each of these four tribes is state recognized, but it appears that none of them has a “reservation” as required by the statute establishing the program. GAO has substantial questions about whether Education’s interpretation of the term “reservation” is broader than the statutory definition supports.The Department of Health and Human Services (HHS) awarded funding to the Nanticoke Lenni-Lenape Indians of New Jersey and the Powhatan Renape Nation—two non-federally recognized tribes in New Jersey—under programs authorized to fund state-recognized tribes. The state of New Jersey, however, does not consider these entities to be state recognized.HHS has initiated action to enforce federal financial reporting requirements for the Accohannock Indian Tribe. The Accohannock Indian Tribe has not filed its required financial report for 2009 that was due no later than September 30, 2010. In 2009, the Accohannock Indian Tribe reported spending over $1 million in federal funds from three different federal programs administered by the department. The department sent letters of inquiry about the delinquent financial report on March 8, 2011, and more recently, after GAO inquired about the issue, on February 7, 2012.Why GAO Did This StudyAs of January 3, 2012, the United States recognized 566 Indian tribes. Federal recognition confers specific legal status on tribes and imposes certain responsibilities on the federal government, such as an obligation to provide certain benefits to tribes and their members. Some tribes are not federally recognized but have qualified for and received federal funding. Some of these non-federally recognized tribes are state recognized and may be located on state reservations.GAO was asked to address (1) the key means by which non-federally recognized tribes have been eligible for federal funding and (2) the amount of federal funding awarded to non-federally recognized tribes for fiscal years 2007 through 2010. GAO also identified some eligibility and federal financial reporting issues related to non-federally recognized tribes. GAO compiled a list of about 400 non-federally recognized tribes and reviewed information from federal agencies, USAspending.gov, states, and other sources to identify tribes’ federal funding and eligibility.What GAO RecommendsGAO recommends that Education and HHS take specific actions to ensure that they are not making grants to ineligible tribes and to enforce federal financial reporting requirements. HHS agreed. Education stated its commitment to review its practices, but disagreed with GAO’s finding on the statutory eligibility for the American Indian Vocational Rehabilitation Services Program, which is discussed more fully in the report.For more information, contact Anu K. Mittal at (202) 512-3841 or mittala@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-644T?source=ra What GAO FoundGAO’s past work has found that the Department of Homeland Security (DHS) and the Transportation Security Administration (TSA) have faced challenges in developing and meeting program requirements when acquiring screening technologies. GAO’s past work has demonstrated that program performance cannot be accurately assessed without valid baseline requirements established at the program start. In June 2010, GAO reported that more than half of the 15 DHS programs GAO reviewed awarded contracts to initiate acquisition activities without component or department approval of documents essential to planning acquisitions, setting operational requirements, or establishing acquisition program baselines. At the program level, in January 2012, GAO reported that TSA did not fully follow DHS acquisition policies when acquiring advanced imaging technology (AIT)—commonly referred to as a full body scanner that identifies objects or anomalies on the outside of the body—which resulted in DHS approving full AIT deployment without full knowledge of TSA’s revised specifications. In July 2011, GAO reported that in 2010 TSA revised its explosive detection systems (EDS) requirements to better address current threats and planned to implement these requirements in a phased approach; however, GAO reported that some number of the EDSs in TSA’s fleet were configured to detect explosives at the levels established in 2005 while the remaining ones were configured to detect explosives at 1998 levels and TSA did not have a plan with time frames needed to deploy EDSs to meet the current requirements.GAO also reported DHS and TSA challenges in overseeing and testing new technologies. For example, in January 2012, GAO reported that TSA began deploying AIT before it received approval for how it would test AIT. Contrary to DHS’s acquisition guidance, TSA approved AIT for deployment prior to DHS’s approval of the AIT testing and evaluation plan. In July 2011, GAO also reported that TSA experienced challenges collecting data on the properties of certain explosives needed by vendors to develop EDS detection software and needed by TSA before testing EDS prior to procurement and deployment to airports. TSA and the DHS Science and Technology Directorate experienced these challenges because of problems safely handling and consistently formulating some explosives. The challenges related to data collection for certain explosives resulted in problems carrying out the EDS procurement as planned.DHS and TSA have experienced challenges identifying acquisition program baselines, program schedules, and costs. GAO’s prior work has found that realistic acquisition program baselines with stable requirements for cost, schedule, and performance are among the factors that are important to successful acquisitions delivering capabilities within cost and schedule. GAO also found that program performance metrics for cost and schedule can provide useful indicators of the health of acquisition programs. In April 2012 GAO reported that TSA’s methods for developing life-cycle cost estimates for the Electronic Baggage Screening Program did not fully adhere to best practices for developing these estimates.DHS has efforts underway to strengthen oversight of technology acquisitions. In part due to the problems GAO highlighted in DHS’s acquisition process, the implementation and transformation of DHS remains on GAO’s high-risk list.Why GAO Did This StudyWithin DHS, TSA is responsible for developing and acquiring new technologies to address transportation-related homeland security needs. TSA’s acquisition programs represent billions of dollars in life-cycle costs and support a wide range of aviation security missions and investments, including technologies used to screen passengers and checked baggage such as AIT and EDS, among others. GAO’s testimony addresses three key DHS and TSA challenges identified in past work: (1) developing and meeting technology program requirements, (2) overseeing and conducting testing of new screening technologies, and (3) identifying acquisition program baselines (or starting points), program schedules, and costs. This statement will also discuss recent DHS and TSA efforts to strengthen TSA’s investment and acquisition processes. This statement is based on reports and testimonies GAO issued from October 2009 through April 2012 related to TSA’s efforts to manage, test, and deploy various technology programs.What GAO RecommendsGAO is not making any new recommendations. In prior work, GAO made recommendations to address challenges related to deploying AIT, EDS, and other screening technology to meet requirements; overseeing and conducting testing of AIT and EDS technologies; and incorporating information on costs and schedules, among other things, in making technology acquisition decisions. DHS and TSA concurred and have actions underway to address these recommendations.For more information, contact Steve Lord at (202) 512-4379 or lords@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-719T?source=ra What GAO FoundOver the past several years, GAO has made a number of recommendations to the Centers for Medicare & Medicaid Services (CMS)—an agency within the Department of Health and Human Services (HHS)—to increase savings in Medicare fee-for-service and Medicare Advantage (MA), which is a private plan alternative to the traditional Medicare fee-for-service program. Open recommendations that could yield billions of dollars in savings remain in many areas, such as the following:Minimizing improper payments and fraud in Medicare. GAO recommended that CMS require contractors to automate prepayment controls to identify potentially improper claims for medical equipment and supplies, expand current regulations to revoke billing privileges for home health agencies with improper billing practices, designate authorized personnel to evaluate and address vulnerabilities in payment systems, and enhance payment safeguards for physicians who use advanced imaging services.Aligning coverage with clinical recommendations. GAO recommended that CMS provide coverage for services recommended by clinical experts, as appropriate, given cost-effectiveness and other criteria.Better aligning payments to MA plans. To ensure that payments to MA plans reflect the health status of beneficiaries, GAO recommended that CMS more accurately adjust for differences between MA plans and traditional Medicare providers in reporting beneficiary diagnoses. GAO also recommended that CMS cancel the MA Quality Bonus Payment Demonstration because its design precludes it from yielding meaningful results.GAO has made recommendations to CMS regarding Medicaid program oversight. Open recommendations remain in many areas, such as the following:Improving oversight of Medicaid payments. GAO recommended that CMS adopt transparency requirements and a strategy to ensure that supplemental payments to providers have been reviewed by CMS. These supplemental payments are separate from and in addition to those made at states’ regular Medicaid rates.Ensuring Medicaid demonstrations do not increase federal liability. GAO recommended that CMS revise its approval process for demonstrations to ensure they are budget neutral, which GAO subsequently referred to Congress as a matter for consideration.The size of Medicare and Medicaid requires CMS to focus continually on the appropriateness of the methodology for payments that these programs make and the pre- and postpayment checks that can help ensure that program spending is appropriate, overpayment recovery is expedient, and agency practices with regard to operations for these programs are efficient. Therefore, GAO urges HHS to ensure action is taken on open recommendations to advance its performance and accountability.Why GAO Did This StudyHHS manages hundreds of complex programs benefiting the health and well-being of Americans, accounting for a quarter of all federal outlays. For fiscal year 2012, HHS is responsible for approximately $76 billion in discretionary spending and for an estimated $788 billion in mandatory spending. The size and critical mission of the two largest HHS programs, Medicare and Medicaid, make it imperative that HHS is fiscally prudent yet vigilant in protecting the populations that depend on these programs. In recent years, GAO has identified shortcomings and recommended actions to enhance operations and correct inefficiencies in Medicare and Medicaid, and HHS has implemented many recommendations, resulting in billions of dollars in savings. Because agencies now must do more with less, recommendations not yet implemented are opportunities for further conserving HHS funds and strengthening oversight of programs serving the nation’s most vulnerable populations.GAO was asked to testify on issues related to HHS’s budget. This statement draws from GAO’s prior work, including work on these two high-risk programs, in which GAO made recommendations related to (1) the management of Medicare and (2) the need for additional oversight of Medicaid. To the extent information was available, GAO updated the status of these recommendations.For more information, contact James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov or Carolyn L. Yocom at (202) 512-7114 or yocomc@gao.gov. Wed, 09 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-557?source=ra What GAO FoundIn the last 8 years, the Department of Homeland Security’s (DHS) Science and Technology Directorate has used its special acquisition authority to enter into 58 “other transaction” agreements. Use of the authority has declined since 2005. DHS officials said the decline is due to uncertainty about the agency’s continuing authority to enter into these agreements, among other things.DHS has made progress in addressing challenges and prior GAO recommendations related to its use of other transaction agreements in five areas.GAO’s analysis of DHS’s files and reports to Congress found gaps in the collection and reporting of information on other transactions. Specifically:DHS does not consistently document the rationale for entering into an other transaction agreement in the agreement analysis document, although DHS guidance requires it to do so.Recent annual reports to Congress did not contain information on all other transaction agreements.DHS does not collect information on the circumstances that permit the use of other transaction authority throughout the life of the agreement.Without complete information about the universe of other transaction agreements, neither Congress nor DHS can have full visibility into the use of this authority.Why GAO Did This StudyWhen DHS was created in 2002, Congress granted it special acquisition authority to use “other transaction” agreements, which are special vehicles used for research and development or prototype projects. Unlike conventional contracts, other transaction agreements offer flexibilities to reach entities that traditionally have not done business with the government. They have risks, however, because they are exempt from the Federal Acquisition Regulation and other requirements.The Homeland Security Act of 2002 required GAO to report on the use of other transactions by DHS. In 2004 and 2008, GAO reported on challenges DHS faced. This report covers (1) the DHS Science and Technology Directorate’s use of other transactions, (2) DHS’s progress in addressing challenges, and (3) the information collected on the use of the authority and reported to Congress. GAO examined all 27 available other transaction agreement files, reviewed DHS’s other transaction policies and procedures, and interviewed cognizant officials.What GAO RecommendsGAO recommends that DHS (1) develop an action plan with specific time frames for fully implementing GAO’s prior recommendation on data collection and congressional reporting, (2) ensure full implementation of its guidance regarding documentation, and (3) establish a policy for reviewing the circumstances that permit the use of other transaction authority throughout the life of the agreement. DHS agreed with these recommendations.For more information, contact William T. Woods at (202) 512-4841 or woodsw@gao.gov. Tue, 08 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-688T?source=ra What GAO FoundGAO’s prior work has highlighted progress and challenges in various areas related to Border Patrol’s implementation of its 2004 National Strategy, which could provide insights as Border Patrol transitions to its 2012 Strategic Plan. Border Patrol officials stated that the 2012 Strategic Plan will rely on Border Patrol and federal, state, local, tribal, and international partners working together to use a risk-based approach to secure the border, and include the key elements of “Information, Integration, and Rapid Response” to achieve objectives. These elements were similar to those in the 2004 Strategy and GAO’s past work highlighted the progress and challenges the agency faced obtaining information necessary for border security; integrating security operations with partners; and mobilizing a rapid response to security threats. Border Patrol successfully used interagency forums and joint operations to counter threats, but challenges included assessing the benefits of border technology and infrastructure to, among other things, provide information on situational awareness. For example, in May 2010 GAO reported that the Department of Homeland Security’s (DHS) U.S. Customs and Border Protection (CBP) had not accounted for the effect of its investment in border fencing and infrastructure on security. GAO recommended that CBP conduct an analysis of the effect of tactical infrastructure on border security, with which CBP concurred. Further, GAO identified challenges in DHS efforts to coordinate with partners that help to secure the border. For example, in December 2010 GAO reported that various northern border security partners cited ongoing challenges sharing information and resources for border security operations and investigations, and that DHS did not have mechanisms for providing oversight. GAO recommended that DHS provide oversight, to which DHS concurred and stated that in January 2012 the department established an intercomponent Advisory Council to provide oversight of compliance with interagency agreements.GAO’s prior work showed that as of September 30, 2010, Border Patrol reported achieving its 2004 goal of operational control—where Border Patrol has the ability to detect and interdict illegal activity—for 1,107 (13 percent) of 8,607 miles across U.S. northern, southwest, and coastal borders. DHS transitioned at the end of fiscal year 2010 from using operational control as its goal and outcome measure for border security to using an interim measure of apprehensions on the southwest border. DHS reported that this interim measure would be used until such time as DHS developed a new goal and measure for border security that will reflect a more quantitative methodology across border locations and the agency’s evolving view of border security. As GAO previously testified, this interim measure, while providing useful information on activity levels, is an output measure that does not inform on program results. Therefore, it limits oversight and accountability and has reduced information provided to Congress and the public on program results. DHS stated that it had several efforts underway to establish a new measure used to assess efforts to secure the border but as this measure is under development, it is too early to assess it.Why GAO Did This StudyBorder Patrol, within DHS’s CBP, is the federal agency with primary responsibility for securing the national borders between the U.S. ports of entry (POE). DHS has completed a new 2012-2016 Border Patrol Strategic Plan (2012-2016 Strategic Plan) that Border Patrol officials stated will emphasize risk management instead of increased resources to achieve border security and continue to build on the foundation of the 2004 National Border Patrol Strategy (2004 Strategy). This statement highlights key issues from prior GAO reports that discuss Border Patrol’s progress and challenges in (1) implementing key elements of the 2004 Strategy and (2) achieving the 2004 strategic goal to gain operational control of the border. This statement is based on GAO reports issued since 2007 on border security, with selected updates from April and May 2012 on Border Patrol resource needs, actions taken to address prior GAO recommendations, and efforts to develop performance measures. To conduct these updates, GAO reviewed agency documents such as operational assessments and interviewed DHS officials.What GAO RecommendsIn prior reports, GAO made recommendations to, among other things, strengthen border security technology, infrastructure, and partnerships. DHS concurred with the recommendations and has reported actions planned or underway to address them. CBP reviewed a draft of information contained in this statement and provided comments that GAO incorporated as appropriate.For more information, contact Rebecca Gambler at (202) 512-8777 or gamblerr@gao.gov. Tue, 08 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-574?source=ra What GAO FoundSince GAO’s last report in July 2011, more of the assistance provided by the Department of the Treasury (Treasury) and the Board of Governors of the Federal Reserve System (Federal Reserve) to benefit American International Group, Inc. (AIG) has been repaid. As of March 22, 2012, the remaining assistance to AIG was $46.3 billion, including unpaid dividends and accrued interest. This amount includes Treasury’s $35.9 billion investment in AIG common stock and a balance of $8.3 billion owed by Maiden Lane III to the Federal Reserve Bank of New York (FRBNY). This remaining assistance was down from $92.5 billion in March 2011 and $154.7 billion in December 2010. Several indicators show that as of March 2012, the government’s remaining outstanding assistance to AIG has continued to be reduced, mostly because of repayments on the FRBNY loan to Maiden Lane II; repayment of AIA Aurora, LLC, a special purpose vehicle; and sales of Treasury’s common stock in AIG. The government’s outstanding assistance to AIG is largely composed of Treasury’s common stock in AIG. Treasury’s sales of AIG stock in May 2011 and March 2012 have yielded total proceeds of $11.8 billion and reduced Treasury’s ownership to 70 percent of the company. Based on the $30.83 closing share price of AIG common stock on March 30, 2012, Treasury could recoup the total value of assistance extended to AIG and take in an additional $2.7 billion including dividends. The remaining assistance through Maiden Lane III will likely be repaid in full and net additional returns to the government. When all the assistance is considered, the amount the federal government ultimately takes in could exceed the total support extended to AIG by more than $15.1 billion. This analysis is primarily based on repayments and recoveries and market valuation of AIG’s stock and does not include estimates of subsidy costs associated with the assistance. The actual repayment of the remaining assistance continues to depend on AIG’s long-term health, the timing of Treasury’s sale and the share price of AIG stock, among other things. As Treasury arranges to sell its stock in AIG to exit the company, several indicators suggest that the most likely buyers will be institutions, many of whom already have considerable holdings in other insurance companies.Several indicators show that in 2011, AIG had positive net income and its insurance operations were stable and profitable. AIG had a net income for 2011 of $18.5 billion, primarily attributable to an income tax benefit and divested businesses. AIG’s operating cash flows declined in 2011, which was mostly due to cash payments covering several years of accrued interest and fees on the FRBNY revolving credit facility and reduction in cash flows from the absence of a full year of operating cash flows of foreign life subsidiaries that were sold during the year. Also, payments on catastrophic loss claims and asbestos liabilities reduced operating cash flows. The indicator on AIG’s quarterly insurance operating performance shows that AIG was profitable in most quarters and that investment income contributed considerably to that profitability, including several quarters when insurance underwriting by itself was not profitable. The sustainability of any positive trends in AIG’s operations will depend on how well it manages its business in the current economic environment. GAO will continue to monitor these issues.Why GAO Did This StudyAssistance provided by Treasury under the Troubled Asset Relief Program (TARP) and by the Federal Reserve to AIG represented one of the federal government’s largest investments in a private-sector institution. AIG is a holding company that, through its subsidiaries, engages in a broad range of insurance and insurance-related activities in the United States and abroad.As part of GAO’s statutory oversight of TARP, this report updates a set of indicators GAO last reported in July 2011. Specifically, GAO discusses (1) the status of the government’s exposure to AIG and (2) trends in the financial condition of AIG and its insurance companies. To update the indicators, GAO primarily used available public filings as of December 31, 2011, and other publicly available information as of March 31, 2012; reviewed rating agencies’ reports; and identified critical activities and discussed them with elevant agency officials.Treasury, the Federal Reserve, and AIG provided technical comments that GAO incorporated, as appropriate.For more information, contact Lawrance L. Evans at (202) 512-4802 or evansl@gao.gov. Mon, 07 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-258?source=ra What GAO FoundThe Nuclear Regulatory Commission (NRC) periodically reviews licensees’ decommissioning funds and related licensee data to determine if licensees have provided reasonable assurance that they will accumulate adequate funds for decommissioning. For example, licensees must submit estimates to NRC of decommissioning costs throughout the life of the reactor and submit fund status reports at least every 2 years while the reactor is operating. Licensees typically accumulate such funds over time through trust fund investments. The minimum amount of funds considered adequate is established by NRC’s decommissioning funding formula, which is based on information collected more than 30 years ago.NRC has taken actions to strengthen its oversight of licensees’ decommissioning funds by (1) creating guidance and other documents related to criteria for reviewing licensees’ 2-year reports and by using its enforcement process when deficiencies are identified, (2) conducting reviews at licensee offices to verify that fund balances licensees reported in their 2-year reports match their year-end bank statements in response to a 2006 NRC Office of the Inspector General (OIG) recommendation, (3) reevaluating the decommissioning funding formula to determine if it should be updated, and (4) improving decommissioning planning. However, several weaknesses may limit NRC’s ability to ensure that licensees have provided reasonable assurance. Specifically:NRC’s formula may not reliably estimate adequate decommissioning costs. According to NRC, the formula was intended to estimate the “bulk” of the decommissioning funds needed, but the term “bulk” is undefined, making it unclear how NRC can determine if the formula is performing as intended. In addition, GAO compared NRC’s formula estimates for 12 reactors with these reactors’ more detailed site-specific cost estimates calculated for the same period. GAO found that for 5 of the 12 reactors, the NRC formula captured 57 to 76 percent of the costs reflected in each reactor’s site-specific estimate; the other 7 captured 84 to 103 percent.The results of more than one-third of the fund balance reviews that NRC staff performed from April 2008 to October 2010 to verify that the amounts in the 2-year reports match year-end bank statements were not always clearly or consistently documented. As an example of inconsistent results, some reviewers provided general information, such as “no problem,” while others provided more detail about both the balance in the year-end bank statement and the 2-year report. As of October 2011, NRC did not have written procedures describing the steps that staff should take for conducting these reviews, which likely contributed to NRC staff not always documenting the results of the reviews clearly or consistently.NRC has not reviewed licensees’ compliance with the investment standards the agency has set for decommissioning trust funds. These standards specify, among other things, that fund investments may not be made in any reactor licensee or in a mutual fund in which 50 percent or more of the fund is invested in the nuclear power industry. As a result, NRC cannot confirm that licensees are avoiding conditions described in the standards that may impair fund growth. Without awareness of the nature of licensees’ investments, NRC cannot determine whether it needs to take action to enforce the standards.Why GAO Did This StudyAbout 20 percent of U.S. electricity is generated by 104 nuclear reactors. NRC, which regulates reactors, requires their owners (licensees) to reduce radioactive contamination after reactors permanently shut down. This process, called decommissioning, costs hundreds of millions of dollars per reactor. NRC requires licensees to provide reasonable assurance that they will have adequate funds to decommission, in part, by accumulating funds that are greater than or equal to NRC’s decommissioning funding formula. GAO and NRC’s OIG have identified concerns about NRC’s oversight of decommissioning funds. GAO was asked by Representative Markey in his former capacity as Chairman of the House Subcommittee on Energy and Environment to (1) describe how NRC ensures that licensees provide reasonable assurance of adequate decommissioning funds and (2) identify any improvements or weaknesses in NRC’s oversight of this area. GAO analyzed NRC’s formula and reviews of licensee information and interviewed NRC officials, licensees, and others.What GAO RecommendsGAO recommends, among other things, that NRC define what it means by the “bulk” of the funds needed for decommissioning and consider reviewing a sample of licensees’ investments to determine if they comply with standards. NRC agreed to consider reviewing a sample of investments, but disagreed that defining bulk is needed because of the comprehensiveness of NRC’s regulatory system. GAO continues to believe that this definition is needed.For more information, contact Frank Rusco, 202-512-3841, ruscof@gao.gov. Mon, 07 May 2012 13:00:00 -0400 http://gao.gov/products/GAO-12-577R?source=ra What GAO FoundIn summary, we found the following:The ATS report was supported by generally acceptable methods for developing transportation options and evaluating safety, security, and operational requirements for these options. The assessment of safety risk from a possible airplane crash transporting nuclear weapons was the key factor supporting the report’s conclusions to maintain the current balance of air and ground transportation of nuclear weapons. In addition, the majority of the nuclear weapons in the active nuclear stockpile require special DOD approval to be transported by air.The ATS report was supported by an acceptable methodology to develop relative costs among the different transportation options under review and included selected costs, such as per-weapon, per-mile operating costs for transportation of nuclear weapons via current air and ground approaches. However, it did not analyze all costs—for example life cycle costs—or developing infrastructure, such as airfields, necessary to support some air transportation options.According to stakeholders, changes in operational requirements for transporting nuclear weapons, new technologies that have improved security and safety, or reassessments of potential threats of future attacks since the report’s completion in 2009 would probably not mitigate the safety risk of air transportation and would be unlikely to alter the report’s conclusions.Why GAO Did This StudyTransporting nuclear weapons, components, and materials represents a safety and security risk. House Report 110-652, which accompanied the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. No. 110-417), directed the National Nuclear Security Administration (NNSA) and the Air Force to conduct a feasibility study on increasing the use of aircraft to transport nuclear weapons, components, and materials and to report back to Congress by December 31, 2008. In turn, House Report 112-78, which accompanied the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. No. 112-81), directed us to conduct an independent evaluation of the air transportation study (ATS) jointly issued by the Administrator of NNSA and the Secretary of the Air Force in September 2009. The conclusions of the 2009 ATS report supported maintaining the current balance of air and ground transportation of nuclear weapons.We provided a classified briefing of our preliminary observations to staff of the Subcommittee on Strategic Forces, Committee on Armed Services, House of Representatives, on February 2, 2012. On March 13, 2012, we provided classified briefing slides to the House Armed Services Committee.This report provides information on whether (1) acceptable methodologies were used in the ATS report to develop nuclear weapons transportation options that considered safety, security, and operational requirements, (2) acceptable methodologies were used in the report to develop cost estimates for nuclear weapons transportation options identified in the report, and (3) recent changes to nuclear weapons transportation operations, technologies, or threat information might alter the conclusions reached in the report.What GAO RecommendsWe are not making any recommendations for congressional consideration or agency action.For more information, please contact either Gene Aloise at (202) 512-3841 or aloisee@gao.gov or John Pendleton at (202) 512-3489 or pendletonj@gao.gov. Fri, 04 May 2012 13:00:00 -0400