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    Subject Term: Investments

    16 publications with a total of 54 open recommendations
    Director: Michael J. Sullivan
    Phone: (202) 512-4841

    4 open recommendations
    Recommendation: To help ensure DOD takes a strategic approach for its prototyping and innovation initiatives and overcomes funding and cultural barriers, the Secretary of Defense should direct the Assistant Secretary of Defense for Research and Engineering to develop a high-level DOD-wide strategy, in collaboration with the military services and other appropriate DOD components, to communicate strategic goals and priorities and delineate roles and responsibilities among DOD's prototyping and innovation initiatives.

    Agency: Department of Defense
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: To help ensure DOD takes a strategic approach for its prototyping and innovation initiatives and overcomes funding and cultural barriers, the Secretary of Defense should direct the Assistant Secretary of Defense for Research and Engineering to take steps, such as adopting a "strategic buckets" approach, to help ensure adequate investments in innovation that align with DOD-wide strategy.

    Agency: Department of Defense
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: To help ensure DOD takes a strategic approach for its prototyping and innovation initiatives and overcomes funding and cultural barriers, the Secretary of Defense should direct the Assistant Secretary of Defense for Research and Engineering to expand the Community of Interest working groups to include budget activity 6.4-funded prototyping and innovation initiatives in their science and technology planning and coordination processes or employ a similar coordination mechanism for budget activity 6.4-funded prototyping and innovation initiatives.

    Agency: Department of Defense
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Recommendation: To help ensure DOD takes a strategic approach for its prototyping and innovation initiatives and overcomes funding and cultural barriers, the Secretary of Defense should direct the Assistant Secretary of Defense for Research and Engineering to review budget activity 6.4 funding requests to help maintain a level of investment for budget activity 6.4-funded prototyping and innovation efforts that is consistent with DOD-wide strategy.

    Agency: Department of Defense
    Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
    Director: David A. Powner
    Phone: (202) 512-9286

    12 open recommendations
    Recommendation: In order to improve the accuracy of IT Dashboard incremental development data, the Director of OMB should direct the Federal Chief Information Officer (CIO) to clarify existing guidance regarding what IT investments are and are not subject to requirements on the use of incremental development and how CIOs should report the status of projects that are not subject to these requirements.

    Agency: Executive Office of the President: Office of Management and Budget
    Status: Open

    Comments: The Office of Management and Budget (OMB) has taken initial steps to implement our recommendation. Specifically, OMB's June 2016 annual capital planning guidance for fiscal year 2018 included instructions on what types of investments were required to adhere to incremental development requirements related to the delivery of usable functionality. The guidance stated that all software development projects are required to produce usable functionality at intervals of no more than six months. Further, all major development projects within investments are required to use modular/agile principles. However, OMB's guidance still lacks direction on how CIOs are to report the status of nonsoftware projects, as we recommended. In the absence of our recommended guidance clarification, OMB is at risk of agencies continuing to be unclear about how nonsoftware development investment data are to be reported on the Dashboard, increasing the risk that data on the IT Dashboard will not always be accurate. We will continue to evaluate OMB's progress in clarifying its guidance and considering a change to provide more detailed guidance related to the reporting of nonsoftware development investment data.
    Recommendation: To improve the quality of the seven departments' information on project incremental delivery reported to the IT Dashboard, the Secretaries of Commerce, Defense, Education, Health and Human Services, Homeland Security, Transportation, and the Treasury should direct their CIOs to review major IT investment project data reported on the IT Dashboard and update the information as appropriate in the following areas: (1) whether the project is in-progress or complete; (2) whether the project is a software development project or not; and (3) the status of the delivery of functionality every 6 months, ensuring that these data are consistent across all reporting channels.

    Agency: Department of Homeland Security
    Status: Open

    Comments: The Department of Homeland Security (DHS) concurred with our recommendation and stated that the Enterprise Business Management Office within the Office of the Chief Information Officer will validate each investment reported on the Dashboard and work with program officials to ensure they appropriately update the data for the IT Dashboard. However, after our report was issued in August 2016, the IT Dashboard was not publicly updated from the end of August 2016 until the end of May 2017, during the formulation of the President's budget request. Now that the Dashboard is being publicly updated again, we will continue to analyze and monitor the department's progress in updating investment information on the Dashboard and the implementation of our recommendation.
    Recommendation: To improve the quality of the seven departments' information on project incremental delivery reported to the IT Dashboard, the Secretaries of Commerce, Defense, Education, Health and Human Services, Homeland Security, Transportation, and the Treasury should direct their CIOs to review major IT investment project data reported on the IT Dashboard and update the information as appropriate in the following areas: (1) whether the project is in-progress or complete; (2) whether the project is a software development project or not; and (3) the status of the delivery of functionality every 6 months, ensuring that these data are consistent across all reporting channels.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education (Education) concurred with our recommendation and stated that the department will ensure that the data is kept current using their IT portfolio management process. However, after our report was issued in August 2016, the IT Dashboard was not publicly updated from the end of August 2016 until the end of May 2017, during the formulation of the President's budget request. Now that the Dashboard is being publicly updated again, we will continue to analyze and monitor the department's progress in updating investment information on the Dashboard and the implementation of our recommendation.
    Recommendation: To improve the quality of the seven departments' information on project incremental delivery reported to the IT Dashboard, the Secretaries of Commerce, Defense, Education, Health and Human Services, Homeland Security, Transportation, and the Treasury should direct their CIOs to review major IT investment project data reported on the IT Dashboard and update the information as appropriate in the following areas: (1) whether the project is in-progress or complete; (2) whether the project is a software development project or not; and (3) the status of the delivery of functionality every 6 months, ensuring that these data are consistent across all reporting channels.

    Agency: Department of Commerce
    Status: Open

    Comments: The Department of Commerce (Commerce) concurred with our recommendation and stated that these changes would be incorporated into the department?s Dashboard reporting. However, after our report was issued in August 2016, the IT Dashboard was not publicly updated from the end of August 2016 until the end of May 2017, during the formulation of the President's budget request. Now that the Dashboard is being publicly updated again, we will continue to analyze and monitor the department's progress in updating investment information on the Dashboard and the implementation of our recommendation.
    Recommendation: To improve the quality of the seven departments' information on project incremental delivery reported to the IT Dashboard, the Secretaries of Commerce, Defense, Education, Health and Human Services, Homeland Security, Transportation, and the Treasury should direct their CIOs to review major IT investment project data reported on the IT Dashboard and update the information as appropriate in the following areas: (1) whether the project is in-progress or complete; (2) whether the project is a software development project or not; and (3) the status of the delivery of functionality every 6 months, ensuring that these data are consistent across all reporting channels.

    Agency: Department of Defense
    Status: Open

    Comments: The Department of Defense (Defense) partially concurred with our recommendation and stated that the department is taking action to update the Dashboard data as appropriate. However, after our report was issued in August 2016, the IT Dashboard was not publicly updated from the end of August 2016 until the end of May 2017, during the formulation of the President's budget request. Now that the Dashboard is being publicly updated again, we will continue to analyze and monitor the department's progress in updating investment information on the Dashboard and the implementation of our recommendation.
    Recommendation: To improve the quality of the seven departments' information on project incremental delivery reported to the IT Dashboard, the Secretaries of Commerce, Defense, Education, Health and Human Services, Homeland Security, Transportation, and the Treasury should direct their CIOs to review major IT investment project data reported on the IT Dashboard and update the information as appropriate in the following areas: (1) whether the project is in-progress or complete; (2) whether the project is a software development project or not; and (3) the status of the delivery of functionality every 6 months, ensuring that these data are consistent across all reporting channels.

    Agency: Department of Health and Human Services
    Status: Open

    Comments: The Department of Health and Human Services (HHS) concurred with our recommendation. However, after our report was issued in August 2016, the IT Dashboard was not publicly updated from the end of August 2016 until the end of May 2017, during the formulation of the President's budget request. Now that the Dashboard is being publicly updated again, we will continue to analyze and monitor the department's progress in updating investment information on the Dashboard and the implementation of our recommendation.
    Recommendation: To improve the quality of the seven departments' information on project incremental delivery reported to the IT Dashboard, the Secretaries of Commerce, Defense, Education, Health and Human Services, Homeland Security, Transportation, and the Treasury should direct their CIOs to review major IT investment project data reported on the IT Dashboard and update the information as appropriate in the following areas: (1) whether the project is in-progress or complete; (2) whether the project is a software development project or not; and (3) the status of the delivery of functionality every 6 months, ensuring that these data are consistent across all reporting channels.

    Agency: Department of Transportation
    Status: Open

    Comments: The Department of Transportation (Transportation) concurred with our recommendation and stated the department was committed to ensuring the information on the IT Dashboard reflects up to date information. However, after our report was issued in August 2016, the IT Dashboard was not publicly updated from the end of August 2016 until the end of May 2017, during the formulation of the President's budget request. Now that the Dashboard is being publicly updated again, we will continue to analyze and monitor the department's progress in updating investment information on the Dashboard and the implementation of our recommendation.
    Recommendation: To improve the quality of the seven departments' information on project incremental delivery reported to the IT Dashboard, the Secretaries of Commerce, Defense, Education, Health and Human Services, Homeland Security, Transportation, and the Treasury should direct their CIOs to review major IT investment project data reported on the IT Dashboard and update the information as appropriate in the following areas: (1) whether the project is in-progress or complete; (2) whether the project is a software development project or not; and (3) the status of the delivery of functionality every 6 months, ensuring that these data are consistent across all reporting channels.

    Agency: Department of the Treasury
    Status: Open

    Comments: The Department of the Treasury (Treasury) did not comment on our recommendation. However, after our report was issued in August 2016, the IT Dashboard was not publicly updated from the end of August 2016 until the end of May 2017, during the formulation of the President's budget request. Now that the Dashboard is being publicly updated again, we will continue to analyze and monitor the department's progress in updating investment information on the Dashboard and the implementation of our recommendation.
    Recommendation: To improve the certification of adequate incremental development, the Secretaries of Defense, Education, Health and Human Services, and the Treasury should direct their CIOs to establish a department policy and process for the certification of major IT investments' adequate use of incremental development, in accordance with OMB's guidance on the implementation of the Federal Information Technology Acquisition Reform Act.

    Agency: Department of Education
    Status: Open

    Comments: The Department of Education (Education) concurred with our recommendation to establish a departmentwide certification policy. Education officials reported in March 2017 that the department will complete changes to its guidance by November 2017. However, until this guidance is finalized, Education will not be able to fully ensure adequate implement of, or benefit from, incremental development practices. We will continue to evaluate Education's progress in implementing this recommendation.
    Recommendation: To improve the certification of adequate incremental development, the Secretaries of Defense, Education, Health and Human Services, and the Treasury should direct their CIOs to establish a department policy and process for the certification of major IT investments' adequate use of incremental development, in accordance with OMB's guidance on the implementation of the Federal Information Technology Acquisition Reform Act.

    Agency: Department of Defense
    Status: Open

    Comments: The Department of Defense (Defense) did not concur with our recommendation, stating that its existing guidance was adequate in this area. However, in August 2016, Defense issued its fiscal year 2018 budget submission guidance which required each component CIO to certify that IT investments were adequately implementing incremental development. The component CIOs were to document the certification in a statement of compliance memorandum, using their agency's letterhead, and submit the memorandum to the Defense CIO. Defense officials report that this same guidance will be added to the Financial Management Regulations during summer 2017. Until this annual guidance has been updated and incorporated into the department's standing policies, Defense is at risk of overlooking this requirement in subsequent years. We will continue to evaluate Defense's progress in implementing this recommendation.
    Recommendation: To improve the certification of adequate incremental development, the Secretaries of Defense, Education, Health and Human Services, and the Treasury should direct their CIOs to establish a department policy and process for the certification of major IT investments' adequate use of incremental development, in accordance with OMB's guidance on the implementation of the Federal Information Technology Acquisition Reform Act.

    Agency: Department of Health and Human Services
    Status: Open

    Comments: The Department of Health and Human Services (HHS) concurred with our recommendation to establish a departmentwide certification policy. However, HHS officials reported in April 2017 that they did not have a timeframe for when the department's new certification guidance would be completed. Until this guidance is finalized, HHS will not be able to fully ensure adequate implement of, or benefit from, incremental development practices. We will continue to evaluate HHS's progress in implementing this recommendation.
    Recommendation: To improve the certification of adequate incremental development, the Secretaries of Defense, Education, Health and Human Services, and the Treasury should direct their CIOs to establish a department policy and process for the certification of major IT investments' adequate use of incremental development, in accordance with OMB's guidance on the implementation of the Federal Information Technology Acquisition Reform Act.

    Agency: Department of the Treasury
    Status: Open

    Comments: The Department of the Treasury (Treasury) did not comment on our recommendations. Further, Treasury officials reported in March 2017 that it had no plans to revise its policies, as we recommended. Until the department establishes a CIO certification policy, Treasury will not be able to fully ensure adequate implement of, or benefit from, incremental development practices. We will continue to evaluate Treasury's progress in implementing this recommendation.
    Director: Andrew Von Ah
    Phone: (213) 830-1011

    4 open recommendations
    Recommendation: To ensure the quality of the risk assessments used to inform its future QHSR processes, the Secretary of Homeland Security should direct the Assistant Secretary for Policy to ensure future QHSR risk assessment methodologies reflect key elements of successful risk assessment methodologies, such as being: (1) Documented, which includes documenting how risk information was integrated to arrive at the assessment results, (2) Reproducible, which includes producing comparable, repeatable results, and (3) Defensible, which includes communicating any implications of uncertainty to users of the risk results.

    Agency: Department of Homeland Security
    Status: Open

    Comments: In April 2016, the Office of Policy's Office of Strategy, Plans, Analysis and Risks completed initial meetings with government and non-government subject matter experts to refine risk analyses for the upcoming 2018 QHSR. Representatives from the department's component and headquarters staff are to take part in the Department's Risk Modeling and Analysis Steering Committee by reviewing, documenting and approving proposed new methodologies planned to help identify and prioritize threats and hazards. This effort is intended to lead to a documented, reproducible, and defensible assessment, according to the DHS officials. As of November 2017, this recommendation remains open until DHS provides information allowing us to verify that the risk analysis contains these elements.
    Recommendation: To enable the use of risk information in supporting resource allocation decisions, guiding investments, and highlighting the measures that offer the greatest return on investment, the Secretary of Homeland Security should direct the Assistant Secretary for Policy to refine its risk assessment methodology so that in future QHSRs it can compare and prioritize homeland security risks and risk mitigation strategies.

    Agency: Department of Homeland Security
    Status: Open

    Comments: As of June 2016, the Office of Policy's Office of Strategy, Plans, Analysis, and Risk, with support from the RAND Corporation, proposed a methodology to assess threats, hazards, and vulnerabilities impacting U.S. homeland security. In addition, the department's Risk Modeling and Analysis Executive Steering Committee was to review and approve the proposed methodology. The methodology is intended to enable the Department of Homeland Security to compare and prioritize homeland security risks and risk mitigation strategies, according to DHS officials. As of November 2017, the recommendation will remain open until DHS provides information that enables us to verify that the methodology allows such comparisons.
    Recommendation: To ensure proper management of the QHSR stakeholder consultation process, the Secretary of Homeland Security should direct the Assistant Secretary for Policy to identify and implement stakeholder meeting processes to ensure that communication is interactive when project planning for the next QHSR.

    Agency: Department of Homeland Security
    Status: Open

    Comments: As of June 2016, the Office of Policy's Office of Strategy, Plans, Analysis, and Risk finalized a draft stakeholder outreach plan to include use of the Office of Management and Budget's Max electronic collaboration website to engage with federal, state, and local stakeholders. The OMB-MAX website is available to government and non-government offices and allows the posting of documents, articles, and links, as well as facilitating collaborative editing of documents and participant interaction threads, according to DHS officials. In addition, the Office of Policy's Office of Strategy, Plans, Analysis, and Risk is exploring the use of different tools to facilitate more interactive stakeholder engagement. For example, DHS's Office of Partnerships and Engagement is to facilitate additional engagement with external subject matter experts, arrange interagency coordination, and organize review and approval with parties of the homeland security enterprise in order to coordinate and approve the development of the 2018 QHSR. As of November 2017, this recommendation remains open until DHS provides information enabling us to verify that interactive communication approaches are implemented.
    Recommendation: To ensure proper management of the internal QHSR stakeholder consultation process, the Secretary of Homeland Security should direct the Assistant Secretary for Policy to clarify component detailee roles and responsibilities when project planning for the next QHSR.

    Agency: Department of Homeland Security
    Status: Open

    Comments: As of June 2016, the Office of Policy's Office of Strategy, Plans, Analysis, and Risk (SPAR) drafted a memorandum for the Deputy Secretary to solicit Component subject matter experts. The memorandum specifies component detailee roles and responsibilities, to include serving in an advisory, consultation, and coordination role, according to DHS officials. SPAR was to lead an integrated group of analysts and strategic planners that are to be supported and augmented by the subject matter experts. The experts and detailees were to serve as members of study teams analyzing key threats, trends, and strategy and policy alternatives associated with issues and challenges relating to DHS's mission and objectives. A second memorandum requesting additional detailee support was to be issued in November 2016, prior to the formal review phase of the new QHSR which was to begin in January 2017. As of November 2017, this recommendation will remain open until DHS provides information allowing us to verify that clarified detailee roles and responsibilities are finalized and implemented.
    Director: Cristina T. Chaplain
    Phone: (202) 512-4841

    1 open recommendations
    Recommendation: To improve technology planning and ensure planning efforts are clearly aligned with the SBIRS follow-on, the Secretary of the Air Force should establish a technology insertion plan as part of the SBIRS follow-on acquisition strategy that identifies obsolescence needs as well as specific potential technologies and insertion points.

    Agency: Department of Defense: Department of the Air Force
    Status: Open

    Comments: In providing comments on this report, the agency concurred with this recommendation. DOD's planned action on the scope and focus of technology insertion will be based on the direction provided in the Space Based Infrared System (SBIRS) Follow-on Analysis of Alternatives (AoA) and will be executed through the SBIRS Space Modernization Initiative (SMI). The SBIRS AoA was completed in March 2016; however, as of June 2017, the SMI schedule has yet to show how technology will be inserted into the follow-on system.
    Director: James R. McTigue, Jr.
    Phone: (202) 512-9110

    4 open recommendations
    Recommendation: To promote retirement savings without creating permanent tax-favored accounts for a small segment of the population, Congress should consider revisiting the use of IRAs to accumulate large balances and consider ways to improve the equity of the existing tax expenditure on IRAs. Options could include limits on (1) the types of assets permitted in IRAs, (2) the minimum valuation for an asset purchased by an IRA, or (3) the amount of assets that can be accumulated in IRAs and employersponsored plans that get preferential tax treatment.

    Agency: Congress
    Status: Open

    Comments: In its October 2014 report, GAO found that individuals with limited, occupationally related opportunities could engage in sophisticated investment strategies and accumulate considerable tax-preferred wealth in IRAs and subsequently suggested to Congress legislative options. As of March 2017, legislation had not been introduced on any aspect of this suggestion, although the Senate Finance Committee held a hearing on IRA policy in September 2014 for which GAO provided a statement for the record.
    Recommendation: To improve IRS's ability to detect and pursue noncompliance associated with undervalued assets sheltered in IRAs and prohibited transactions, the Commissioner of Internal Revenue should conduct research using the new Form 5498 data to identify IRAs holding nonpublic asset types, such as profits interests in private equity firms and hedge funds, and use that information for an IRSwide strategy to target enforcement efforts.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: As of March 2017, IRS had taken some action to develop a research plan using the new information on types of nonpublic IRA assets reported on Form 5498. Previously, IRS searched terms in Form 5498 filings to identify IRAs holding assets with the greatest risk of noncompliance. In January 2016, IRS started a research project to examine a sample of tax returns based on certain nonpublic IRA asset types. IRS plans to use the research results due in June 2018 to develop an IRS-wide strategy to target enforcement efforts to those IRAs where the beneficiary of the IRA has caused his or her IRA to engage in a prohibited transaction. Once IRS completes electronically compiling the new Form 5498 information for tax year 2016 that is filed in 2017, IRS researchers plan to use the asset type data to streamline the process of identifying those IRAs. As of March 2017, IRS examination officials did not have a date on when the new IRA asset type data will be available for further analysis.
    Recommendation: To improve IRS's ability to detect and pursue noncompliance associated with undervalued assets sheltered in IRAs and prohibited transactions, the Commissioner of Internal Revenue should work in consultation with the Department of the Treasury on a legislative proposal to expand the statute of limitations on IRA noncompliance to help IRS pursue valuation-related misreporting and prohibited transactions that may have originated outside the current statute's 3-year window.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS agreed with GAO's October 2014 recommendation on IRAs with large balances and said it had discussed the recommendation with Treasury's Office of Tax Policy and Benefits Tax Counsel. Consequently, IRS said Treasury is aware of IRS's willingness to support legislative efforts in this area. However, Treasury and IRS have not drafted a legislative proposal as of March 2017.
    Recommendation: To help taxpayers better understand compliance risks associated with certain IRA choices and improve compliance, the Commissioner of Revenue should, building on research data on IRAs holding nonpublic assets, identify options to provide outreach targeting taxpayers with nonpublic IRA assets and their custodians, such as reminder notices that engaging in prohibited transactions can result in loss of the IRA's tax-favored status.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS has taken some action to provide general outreach but has not yet compiled data to target outreach to taxpayers with nonmarketable IRA assets at greater risk of noncompliance, as GAO recommended in October 2014. In June 2016, IRS published information on IRS.gov outlining the new information to be reported for nonmarketable IRA assets and included a general caution that IRAs with nonmarketable investments or assets under direct taxpayer control may be subject to a heightened risk of committing prohibited transactions. This caution, similar to those that IRS added to its publications about IRA contributions and distributions, is a step toward helping taxpayers better understand which investments pose greater risks. IRS said results from an ongoing compliance research project may help in targeting outreach to taxpayers holding certain IRA assets at greater risk of noncompliance. IRS said it could refine its outreach to those taxpayers with nonpublic IRA assets using the new asset type data once compiled electronically. As of March 2017, IRS was compiling the IRA assets data for tax year 2016 that is filed in 2017, but IRS had not provided a date on when the new IRA asset type data will be available for further analysis.
    Director: John Pendleton
    Phone: (404) 679-1816

    4 open recommendations
    Recommendation: To improve DOD's ability to identify and resolve implementation issues, to improve budgeting for long-term operating and support costs of BMD elements in Europe, and to ensure that BMD capabilities can be used as intended when they are delivered, the Secretary of Defense should, in coordination with the Chairman of the Joint Chiefs of Staff, direct U.S. Strategic Command to identify and develop a plan to resolve implementation issues prior to deploying and operating future BMD capabilities in Europe. U.S. Strategic Command should work in consultation with U.S. European Command and the services to resolve implementation issues such as infrastructure, resolving policies and procedures to address potential overlapping operational priorities if radars are integrated across geographic combatant commands, completing host-nation implementing arrangements, and any other key implementation issues.

    Agency: Department of Defense
    Status: Open

    Comments: DOD partially concurred with this recommendation stating that U.S. Strategic Command does not have the authority or mission to resolve implementation issues, but the services and MDA will work to identify and resolve implementation issues for future BMD capabilities in Europe. DOD stated in July 2015 that, due to the ongoing BMDS development, MDA continues to engage on materiel, logistics, and operational support even beyond the fielding and capability delivery phase. Also, DOD stated that U.S. Strategic Command continues to advise cross-Geographic Combatant Command capability optimization/sharing through several venues. Finally, DOD indicated that U.S. European Command may have developed operational criteria for EPAA Phase 2. In December 2015, DOD reached Technical Capability Declaration (TCD) based, in part, on meeting specified operational criteria. We will continue to follow up with DOD to identify and assess what additional steps, if any, have been taken to support a US European Command/US Strategic Command warfighter acceptance of EPAA Phase 2 which may complete implementation of this recommendation
    Recommendation: To improve DOD's ability to identify and resolve implementation issues, to improve budgeting for long-term operating and support costs of BMD elements in Europe, and to identify resources needed to support its plans for providing BMD capabilities in Europe and to support budget development, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to require and set a deadline for completing a business-case analysis for the forward-based radar to support a decision on the long-term support strategy, and updating the joint MDA and Army estimate for long-term operating and support costs after a decision on the support strategy is made.

    Agency: Department of Defense
    Status: Open

    Comments: DOD concurred with this recommendation. MDA contracted with the Army and Missile Command Logistic Center to conduct a business case analysis (BCA) to identify the most cost effective long term support strategy. As of July 2015, DOD stated that the BCA has been completed and is being reviewed by MDA with an estimated completion in the 4th quarter of fiscal year 2015. As of March 2016, DOD stated that, as the BCA was going through review, it was determined that additional efforts were required. The [revised] BCA completion date is now the first quarter fiscal year 2017. After the projected completion date, we will follow up with DOD and assess whether the Army and DOD have updated the joint cost estimate for long-term operating and support costs based on the results of the BCA and whether their actions meet the intent of this recommendation.
    Recommendation: To improve DOD's ability to identify and resolve implementation issues, to improve budgeting for long-term operating and support costs of BMD elements in Europe, and to identify resources needed to support its plans for providing BMD capabilities in Europe and to support budget development, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to require and set a deadline for completing a business-case analysis for Terminal High Altitude Area Defense (THAAD) to support a decision on the long-term support strategy, and updating the joint MDA and Army long-term operating and support cost estimate after this and other key program decisions, such as where the THAAD batteries are likely to be forward-stationed, are made.

    Agency: Department of Defense
    Status: Open

    Comments: DOD concurred with this recommendation. As of July 2015, DOD stated that the Army and MDA will initiate an independent business case analysis (BCA) to explore the transfer of THAAD from MDA to the Army. DOD also stated that the BCA is expected to be completed in the 2nd quarter of fiscal year 2016. As of March 2016, DOD stated that the Army and MDA initiated an independent BCA joint study in July 2015 to be completed in March 2016 by RAND Corporation. The study was expanded to include transfer of the AN/TPY-2 radar. The study is now tentatively scheduled to end with a final review between the MDA and the Army Acquisition Executive in late first quarter fiscal year 2017. After the projected completion date, we will follow up with DOD and assess whether the Army and MDA have updated the joint cost estimate for long-term operating and support costs based on the results of the BCA and whether their actions meet the intent of this recommendation.
    Recommendation: To improve DOD's ability to identify and resolve implementation issues, to improve budgeting for long-term operating and support costs of BMD elements in Europe, and to identify resources needed to support its plans for providing BMD capabilities in Europe and to support budget development, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to require and set a deadline for completing a joint MDA and Navy estimate of the long-term operating and support costs for the Aegis Ashore two sites, and updating the estimates after key program decisions are made.

    Agency: Department of Defense
    Status: Open

    Comments: DOD concurred with this recommendation. As of July 2015, DOD stated that MDA and the Navy have developed a joint operating and support cost estimate for the Aegis Ashore operational sites which is awaiting Navy approval. In January 2016, the Navy and MDA approved a joint cost estimate for the long-term operating and support costs for the first Aegis Ashore site in Romania. The completion of this estimate partially meets the intent of this recommendation. We will keep this recommendation open until we obtain documentation that DOD has taken action to complete a joint cost estimate of the long-term operating and support costs of the second Aegis Ashore site in Poland. A completed cost estimate for both sites would meet the intent of this recommendation.
    Director: David Gootnick
    Phone: (202) 512-3149

    1 open recommendations
    Recommendation: To improve policymakers' and the public's understanding of progress through bilateral dialogues in increasing access to China's markets, the U.S. Trade Representative, in conjunction with the Secretary of Commerce and the Secretary of the Treasury, should work to provide clearer and more comprehensive reporting on the status of China's implementation of its JCCT and S&ED trade and investment commitments. This reporting should include more complete information on the status of implementation of these commitments, as well as a more clearly identified source for consolidated information, which could be an existing report.

    Agency: Executive Office of the President: Office of the U.S. Trade Representative
    Status: Open

    Comments: USTR has taken steps to implement this recommendation, but additional information on the status of specific commitments would further improve understanding of progress in these bilateral dialogues. USTR made changes to the Chinese trade barriers reporting in its 2014 National Trade Estimate Report on Foreign Trade Barriers (NTE report) to align more closely with other Congressional reports prepared by USTR on related issues. USTR also provided updated information in that NTE report on China's compliance with a commitment that had not been reported on in earlier reports. Further, USTR identified the Report to Congress on China's WTO Compliance as the one report among the various annual reports prepared by USTR that provides comprehensive information on the status of the trade and investment commitments that China has made through the U.S.-China Joint Commission on Commerce and Trade (JCCT) and the U.S.-China Strategic and Economic Dialogue (S&ED). As of July 2017, GAO is continuing to track agency progress in reporting on these commitments.
    Director: Marcia Crosse
    Phone: (202) 512-7114

    1 open recommendations
    Recommendation: To enhance its oversight of drug shortages, particularly as the agency fine-tunes the manner in which it gathers data on shortages and transitions from its database to a more robust system, the Commissioner of FDA should conduct periodic analyses using the existing drug shortages database (and, eventually, the new drug shortages information system) to routinely and systematically assess drug shortage information, and use this information proactively to identify risk factors for potential drug shortages early, thereby potentially helping FDA to recognize trends, clarify causes, and resolve problems before drugs go into short supply.

    Agency: Department of Health and Human Services: Food and Drug Administration
    Status: Open

    Comments: In August 2017, FDA reported that it had not conducted any rigorous analysis of predictors of drug shortages nor have new drug risk factors been identified. Although FDA adopted a new, commercially developed data system, the "Shortage Tracker" to track drug shortages in March 2016, it is used to help the Drug Shortage Staff manage their workload. FDA reported that this system has now been fully operational for over a year. However, no trend analysis relating to drug shortages has been conducted and the agency has no plans to conduct such analyses at this time.
    Director: St James, Lorelei
    Phone: (202) 512-2834

    3 open recommendations
    Recommendation: To strengthen USPS's capital investment process related to USPS policy and consistent application of leading practices, the Postmaster General and executive leaders should establish a time frame for developing a clear, detailed, single-source, standard set of policies and procedures that reflect the capital investment selection phase.

    Agency: United States Postal Service: Office of the Postmaster General
    Status: Open

    Comments: In June 2017, the U.S. Postal Service (USPS) informed GAO that its Handbook F-66 General Investment Policies and Procedures is undergoing revisions that will make the capital investment selection process more clear, detailed, and standardized. The revised draft of the F-66 handbook is currently in the review and clearance process and may be finalized in 2017. USPS added that it will inform GAO of further updates as they develop.
    Recommendation: To strengthen USPS's capital investment process related to USPS policy and consistent application of leading practices, the Postmaster General and executive leaders should modify capital investment policies to more closely align with the following leading practices, including: (1) for planning capital investments, consider whether an external entity could better support all or part of a desired function when evaluating alternative capital investment options; (2) for selecting capital investments, use a portfolio approach for developing business cases and finalizing and allocating resources; and (3) for evaluating capital investments, seek and leverage external oversight and review, from a consultant or peer reviewer, and require that best practices and lessons learned be incorporated into the review process.

    Agency: United States Postal Service: Office of the Postmaster General
    Status: Open

    Comments: In June 2017, USPS informed GAO and provided documentation that its Handbook F-66 General Investment Policies and Procedures is to incorporate all leading practices. The F-66, however, is not yet finalized. In particular, the draft F-66 states that for planning investments, USPS is to conduct an analysis to identify the most economically beneficial resolution to a problem--the alternative that will result in the highest net present value, lowest costs, or greatest savings. For selecting investments, USPS is to use a portfolio approach organized by agency goals, sub-goals, indicators, and targets. For evaluating investments, USPS is to evaluate the need to hire consultants when applicable to assess the investment. The revised F-66 indicates that USPS will also is require project managers to submit an analysis of investment performance and lessons learned as part of its post-deployment steps.
    Recommendation: To strengthen USPS's capital investment process related to USPS policy and consistent application of leading practices, the Postmaster General and executive leaders should regularly examine the extent to which executives and program managers consistently follow all leading practices, particularly for: (1) identifying problems and reassessing risk while managing a project; and (2) evaluating the cost, schedule, and performance results of completed projects.

    Agency: United States Postal Service: Office of the Postmaster General
    Status: Open

    Comments: In June 2017, USPS informed GAO and provided documentation that its revised Handbook F-66 General Investment Policies and Procedures is to include a management step to regularly review the progress and benefits of its capital investments, as well as its affordability and achievability, and make adjustments as necessary to meet the investment's goals. In addition, once a project is completed, USPS will require capital investment managers to present on the investment's performance, return-on-investment, and lessons learned.
    Director: Powner, David A
    Phone: (202) 512-9286

    3 open recommendations
    Recommendation: To better ensure that the Dashboard provides meaningful ratings and reliable investment data, the Director of OMB should direct the Federal CIO to make accessible regularly updated portions of the public version of the Dashboard (such as CIO ratings) independent of the annual budget process.

    Agency: Executive Office of the President: Office of Management and Budget
    Status: Open

    Comments: Although the Federal CIO did not agree or disagree with our recommendation, OMB has taken initial steps to implement it. Specifically, OMB recently updated the Dashboard with a number of changes, and OMB officials stated in 2015 that they intended for the Dashboard to be able to show updates throughout the year. That said, OMB has yet to implement this recommendation. Specifically, OMB did not publish updates to the public version of the Dashboard during the fiscal year 2018 budget formulation process, starting at the end of August 2016. We will continue to monitor the Dashboard to determine if portions of the public version of the Dashboard (such as CIO ratings) are available throughout the year. Maintaining the availability of these data is important for increasing the utility of the Dashboard as a tool for greater IT investment oversight and transparency.
    Recommendation: To better ensure that the Dashboard provides accurate ratings, the Secretary of Commerce should direct the department CIO to ensure that the department's investments are appropriately categorized in accordance with existing statutes and that major IT investments are included on the Dashboard.

    Agency: Department of Commerce
    Status: Open

    Comments: The Department of Commerce disagreed with this recommendation. In written correspondence, the Department noted that, although it is no longer reporting three of the 10 investments reviewed for this engagement on the IT Dashboard, it is maintaining oversight through monthly Dashboard-like assessments. As of July 28, 2016, the Department stated that it did not have plans to re-categorize these three particular investments as IT and report the data on the IT Dashboard. We continue to believe that this recommendation has merit and will monitor the Department's efforts to maintain oversight for these investments.
    Recommendation: To better ensure that the Dashboard provides accurate ratings, the Secretary of Energy should direct the department CIO to ensure that the department's investments are appropriately categorized in accordance with existing statutes and that major IT investments are included on the Dashboard.

    Agency: Department of Energy
    Status: Open

    Comments: While the Department of Energy had agreed with this recommendation, in subsequent written correspondence, it explained that five of the eight investments noted by GAO as being IT were no longer being reported in the IT Portfolio on the Dashboard. Instead, the Department was reporting these data to OMB via an alternative reporting mechanism specific to high performance computing. In addition, the Department noted that the remaining three investments were deconsolidated or downgraded into non-major investments, or eliminated by funding and, as such, these investments will not be included on the Dashboard. However, we continue to believe that this recommendation has merit and that the remaining investments are more properly classified as IT. We will continue to monitor the Department's efforts to maintain oversight for these investments.
    Director: Mak, Marie A
    Phone: (202) 512-2527

    3 open recommendations
    Recommendation: To better position the Department of Defense (DOD) as it continues pursuing more affordable GPS options, and to have the information necessary to make decisions on how best to improve the GPS constellation, the Secretary of Defense should direct the Secretary of the Air Force to affirm the future GPS constellation size that the Air Force plans to support, given the differences in the derived requirement of the 24-satellite constellation and the 30-satellite constellations called for in each of the space segment options in the Air Force's report.

    Agency: Department of Defense
    Status: Open

    Comments: In providing comments on this report, the agency concurred with this recommendation, noting that the numbers of satellites required are affirmed annually in the President's Budget request. However, DOD continues to support a 30-satellite constellation, as established in each of the options its GPS study considered. Since the time of the report, DOD has not taken any action to reassess their approach to support a 24 or 30 GPS satellite constellation. Until they do, we believe this recommendation remains open.
    Recommendation: To better position the DOD as it continues pursuing more affordable GPS options, and to have the information necessary to make decisions on how best to improve the GPS constellation, the Secretary of Defense should direct the Secretary of the Air Force to ensure that future assessments of options include full consideration of the space, ground control, and user equipment segments, and are comprehensive with regard to their assessment of costs, technical and programmatic risks, and schedule.

    Agency: Department of Defense
    Status: Open

    Comments: In providing comments on this report, the agency concurred with this recommendation, noting that, while consideration of the space and ground control segments should be comprehensive in these areas, the user equipment segment should be included in future assessments when those assessments include the fielding of new user equipment capability. Since the time of our report, DOD has not conducted a comprehensive assessment of future GPS options that includes all segments. Until they do, we cannot determine if they will include full consideration of the space, ground control, and user equipment segments, and are comprehensive with regard to their assessment of costs, technical and programmatic risks, and schedule.
    Recommendation: To better position the DOD as it continues pursuing more affordable GPS options, and to have the information necessary to make decisions on how best to improve the GPS constellation, the Secretary of Defense should direct the Secretary of the Air Force to engage stakeholders from the broader civilian community identified in positioning, navigation, and timing (PNT) policy in future assessments of options. This input should include civilian GPS signals, signal quality and integrity, which signals should be included or excluded from options, as well as issues pertaining to other technical and programmatic matters.

    Agency: Department of Defense
    Status: Open

    Comments: In providing comments on this report, the agency concurred with this recommendation, noting that stakeholders from the broader civilian community identified in PNT policy should be engaged in future assessment of options that include changes to the Standard Positioning System performance standard or to agreements or commitments the DOD has already made with civil stakeholders. Until DOD conducts future assessments of options for GPS constellations, we cannot determine if they will include the views of stakeholders from the broader civilian GPS user community with respect to civilian GPS signals, signal quality and integrity, and other technical and programmatic matters.
    Director: Powner, David A
    Phone: (202) 512-9286

    2 open recommendations
    Recommendation: The Secretary of Transportation should designate a senior agency official who has departmentwide responsibility, accountability, and authority for geospatial information issues. The Secretary of Transportation direct the designated senior official for geospatial information to prepare, maintain, publish, and implement a strategy for advancing geographic information and related geospatial data activities appropriate to its mission.

    Agency: Department of Transportation
    Status: Open

    Comments: In July 2016, a Transportation official told GAO that the department had completed a draft of the geospatial strategic plan that month. According to a Transportation official, as of March 1, 2017, the draft was under review. On September 8, 2017, a Transportation official stated that the department plans to issue the plan by November 1, 2017.
    Recommendation: To improve OMB oversight of geospatial information and assets, and minimize duplication of federal geospatial investments, the Director of OMB should develop a mechanism, or modify existing mechanisms, to identify and report annually on all geospatial related investments, including dollars invested and the nature of the investment.

    Agency: Executive Office of the President: Office of Management and Budget
    Status: Open

    Comments: OMB has made progress in developing a way to identify and report annually on all geospatial-related investments, but has not completed its efforts. In March 2014, the Federal Geographic Data Committee (FGDC) issued its National Geospatial Data Asset (NGDA) Management Plan. The plan was developed in conjunction with OMB officials. One of the objectives of the plan is to develop and apply a standard definition of a geospatial investment in order to facilitate reporting on budgeted geospatial data investments, due to the fact that different definitions are being used by OMB, the FGDC community, and individual agencies. There are two supporting actions for this objective. The first action was completed with the finalization and issuance of the FGDC's Geospatial Investment Definitions for Tracking and Reporting Geospatial Investment Costs document in April 2016. The document contains a set of geospatial definitions with specific examples for each. The second action is for the geospatial community to apply the definitions in submissions to OMB during the annual federal government budget planning and reporting process. According to FGDC officials, they expect this to be challenging for a number of reasons, including the need for agencies to determine how they can align their investment tracking systems to accommodate the new definitions and the extent to which agencies will be able to use a common reporting capability. As a result, a two-pronged approach is being used. First, FGDC developed a reporting method using the theme implementation plans to support federal geospatial data investment tracking. For example, in February 2017, an official provided an implementation plan from January 2017 which included an estimate of the amount of time federal employees spent on NGDA work, and reported this as a percentage of full-time equivalents. Second, OMB worked with FGDC to revise geospatial investment reporting guidance found in OMB Circular No. A-11. Starting with fiscal year 2018 allocations (Circular No. A-11 revised July 2016), agencies are required to report on annual aggregated geospatial data investments of $100,000 or greater using the Marketplace feature of the Geospatial Platform. According to an agency official, this approach leverages existing, federal government-wide reporting methods already in place and minimizes the potential for agencies to implement separate, potentially duplicative reporting mechanisms that are not integrated with existing OMB reporting procedures. According to OMB officials as of September 7, 2017, OMB anticipates that since fiscal year 2018 will be the first year of implementation, some agencies may have challenges identifying and reporting their data. As a result, OMB states that the content and completeness of the reported information will need to be evaluated prior to determining its fitness and application for overseeing geospatial investments.
    Director: Gambler, Rebecca S
    Phone: (202)512-3000

    2 open recommendations
    Recommendation: To increase the likelihood of successful implementation of the Arizona Border Surveillance Technology Plan and maximize the effectiveness of technology already deployed, the Commissioner of CBP should take the following step in planning the agency's new technology approach: determine the mission benefits to be derived from implementation of the plan and develop and apply key attributes for metrics to assess program implementation.

    Agency: Department of Homeland Security: United States Customs and Border Protection
    Status: Open

    Comments: As GAO recommended in November 2011, CBP has identified mission benefits to be derived from implementing the Arizona Border Surveillance Technology Plan (Plan). In April 2013, CBP issued its Multi-Year Investment and Management Plan for Border Security Fencing, Infrastructure, and Technology for Fiscal Years 2014 through 2017, which identifies mission benefits to be achieved by all surveillance technologies (e.g., cameras or sensors) to be deployed under the Plan. According to CBP, the majority of these technologies will provide the mission benefits of improved situational awareness and agent safety. Furthermore, according to CBP's Multi-Year Investment and Management Plan for Border Security Fencing, Infrastructure, and Technology for Fiscal Years 2014 - 2017, the technologies deployed or planned for deployment as part of the Plan are intended to help enhance the ability of Border Patrol agents to detect, identify, deter, and respond to threats along the border. CBP's identification of mission benefits will help position CBP to assess its progress in implementing the Plan and the effectiveness of the Plan's technologies in achieving their intended goals. CBP has made some progress in identifying key attributes for metrics to assess implementation of the Arizona Border Surveillance Technology Plan (Plan), as GAO recommended in November 2011, but it has not yet fully identified and applied attributes for metrics for all technologies under the Plan. Since August 2010, CBP has operated multiple technology systems under the Secure Border Initiative Network (SBInet), which preceded the Plan and is a combination of surveillance technologies aimed at creating a "virtual fence" along the southwest border. Specifically, CBP has operated two surveillance systems under SBInet's initial deployment in high-priority regions of the Arizona border. In October 2012, CBP officials stated that these operations identified examples of key attributes for metrics that can be useful in assessing the implementation for technologies. For example, according to CBP, to help measure whether illegal activity has decreased, examples of key attributes include decreases in arrests, complaints by citizens and ranchers, and destruction of public and private lands and property. In November 2014, CBP identified a set of potential key attributes for performance metrics for all technologies to be deployed under the Plan. While CBP has yet to apply these measures, it established a timeline for developing performance measures for each technology. CBP initially expected baselines for each performance measure to be developed by the end of fiscal year 2015. However, in October 2015, CBP officials stated that CBP had modified its time frame for developing baselines and that additional time would be needed to implement and apply key attributes for metrics. In March 2016, CBP officials stated that CBP had planned to use the baseline data to establish a tool by the end of fiscal year 2016. In addition, CBP officials stated these performance measures would profile levels of situational awareness in various areas of the border. In September 2016, CBP provided GAO a case study that assessed technology assist data along with other measures such as field-based assessments of capability gaps, to determine the contributions of surveillance technologies to its mission. While this is a start to developing and applying performance metrics, the case study was limited to one border location and the analysis was limited to select technologies. Until CBP completes its efforts to fully develop and apply key attributes for performance metrics for all technologies to be deployed under the Plan, it will likely not be able to fully assess its progress in implementing the Plan and determine when mission benefits have been fully realized.
    Recommendation: To increase the reliability of CBP's Cost Estimate for the Arizona Border Surveillance Technology Plan, the Commissioner of CBP should update its cost estimate for the Plan using best practices, so that the estimate is comprehensive, accurate, well-documented, and credible. Specifically, the CBP's Office of Technology Innovation and Acquisition (OTIA) program office should (1) fully document data used in the cost model; (2) conduct a sensitivity analysis and risk and uncertainty analysis to determine a level of confidence in the estimate so that contingency funding can be established relative to quantified risk; and (3) independently verify the new life-cycle cost estimate with an independent cost estimate and reconcile any differences.

    Agency: Department of Homeland Security: United States Customs and Border Protection
    Status: Open

    Comments: As GAO recommended in 2011, CBP provided cost estimates for the IFT and RVSS programs, the two highest cost programs in the Arizona Border Surveillance Technology Plan (Plan), in February and March 2012, respectively, and updated the cost estimate for the Plan in June 2013. However, these estimates do not fully meet cost-estimating best practices. In November 2011, GAO reported that the Plan's original cost estimate met some, but not all, cost-estimating best practices. Specifically, CBP had not conducted a sensitivity analysis and a risk and uncertainty analysis to determine a level of confidence in the original estimate, nor did CBP compare the original cost estimate with an independent estimate. For the cost estimate that CBP provided for the IFT in February 2012 and RVSS in March 2012, CBP partially documented the data used in the cost model for the IFT's LCCE (but needs to provide additional data and document management approval) and fully documented the cost model for the RVSS' LCCE. Developing a well-documented cost estimate is a best practice. CBP also conducted a sensitivity analysis and risk and uncertainty analysis to determine the level of confidence in both LCCEs so that contingency funding could be established relative to quantified risk. In addition, CBP's June 2013, CBP revised the cost estimate for the Plan does not fully address our concerns. For example, the IFT and RVSS compose over 90 percent of the Plan's cost in the June 2013 cost estimate; however, CBP has not independently verified its cost estimates for these two programs with independent cost estimates and reconciled any differences. Such action would help CBP better ensure the reliability of each system's cost estimate. Furthermore, the remainder of the June 2013 cost estimate is not fully documented for the Plan's other five programs, consistent with best practices. For example, the estimates for the other five programs are not fully documented because they are provided as summary program costs without detailed descriptions, such as including back-up documentation for labor hours. In November 2015, CBP had yet to update its LCCEs for two of its highest cost programs under the plan. In May 2016, CBP officials stated that the DHS's Cost Analysis Division had started piloting DHS's Independent Cost Estimate capability on the RVSS program in fiscal year 2016. According to CBP officials, this pilot test within CBP is an opportunity to assist DHS in developing its Independent Cost Estimate capability and that CBP selected the RVSS program for the pilot because the RVSS program is at a point in its planning and execution process where it can benefit most from having an independent cost estimate performed as these technologies are being deployed along the southwest border, beyond Arizona. As of October 2016, CBP officials stated that the RVSS schedule and analysis, as well as the results of the independent program cost estimate pilot is expected to be completed at the end of fiscal year 2017. CBP officials stated that they will provide information on the final reconciliation of the independent cost estimate and the RVSS program cost estimate once the pilot has been completed. Further, CBP officials have yet to detail similar plans for the IFT program. As updated life-cycle cost estimates have yet to be completed and independent cost estimates have not been conducted, GAO cannot determine the extent to which the agency is following best practices when updating the life-cycle cost estimates. Moreover, to fully address our recommendation, a LCCE for the Plan that fully addresses best practices is needed to ensure that the estimate is comprehensive, accurate, well-documented, and credible to help the agency and Congress fully understand the impacts of integrating the Plan's various programs.
    Director: Powner, David A
    Phone: (202)512-9286

    1 open recommendations
    Recommendation: The Commissioner of Internal Revenue should direct the appropriate officials to define and implement a process, including defined criteria, for reselecting ongoing projects.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: Since we made the recommendation, IRS has been working to redesign its investment management process. In June 2016, we reported that the agency had defined and implemented a repeatable process for selecting (and reselecting) operations support activities, though it had not fully documented the process, but did not have a similar process for its business systems modernization activities (GAO-16-545). We recommended that IRS document its process for operations support activities and establish, document, and implement policies and procedures for selecting new and reselecting ongoing business systems modernization activities. IRS agreed with our recommendations and, in January 2017, stated it expected to have an internal draft document of the operations support activities process completed by the end of February 2017 with a draft ready to share with GAO a month later. In addition, for the business systems modernization process, IRS noted several improvements underway and stated it would document the process as it improved by December 2017. We will continue to monitor IRS's efforts to define and implement processes, including criteria, for reselecting ongoing projects.
    Director: White, James R
    Phone: (202)512-9039

    1 open recommendations
    Recommendation: Should the program be extended beyond 2009, to ensure that the maximum amount of capital ends up in low-income community businesses, Congress may wish to consider offering grants to CDEs that would provide the funds to low-income community businesses. If it does so, Congress may wish to require Treasury to gather appropriate data to assess whether and to what extent the grant program increases the amount of federal subsidy provided to low-income community businesses compared to the NMTC; whether the grant program otherwise affects the success of efforts to assist low-income communities; and how costs for administering the program incurred by the CDFI Fund, CDEs, and investors would change. One option may be for Congress to set aside a portion of funds to be used as grants and a portion to be used as tax credit allocation authority under the current structure of the program in a future allocation round to facilitate comparison of the two program structures.

    Agency: Congress
    Status: Open

    Comments: The Consolidated Appropriations Act of 2016 extended the NMTC through 2019 (Public Law 114-113). However, the act did not modify the program to include grants in lieu of credits, as GAO suggested in January 2010. The Joint Committee on Taxation estimates the cost of this extension to be approximately $2.6 billion. As of June 2017, Congress has not taken additional action that would address this matter for consideration.
    Director: White, James R
    Phone: (202)512-3000

    8 open recommendations
    Recommendation: In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should issue regulations clarifying the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury issued proposed regulations clarifying the definition of gross receipts on December 13, 2013 and solicited public comments. During the course of 2014 tax practitioners and business executives submitted comments criticizing the regulations and asking for them to be withdrawn. As of April 2017, Treasury has yet to issue final regulations that would include responses to these criticisms. The regulations would not become effective until tax year beginning after the date on which the regulations are published in final form.
    Recommendation: In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should provide additional guidance to more clearly identify what types of activities are considered to be qualified support activities.

    Agency: Department of the Treasury
    Status: Open

    Comments: As of February 2017, Treasury has not issued regulations to clarify what types of activities are considered to be qualified support activities.
    Recommendation: In order to significantly reduce the uncertainty that some taxpayers have about their ability to earn credits for their research activities, the Secretary of the Treasury should provide additional guidance to more clearly identify when commercial production of a qualified product is deemed to begin.

    Agency: Department of the Treasury
    Status: Open

    Comments: As of February 2017, Treasury has not issued regulations to more clearly identify when commercial production of a qualified product is deemed to begin.
    Recommendation: In order to reduce economic inefficiencies and excessive revenue costs resulting from inaccuracies in the base of the research tax credit, Congress should consider eliminating the regular credit option for computing the research credit.

    Agency: Congress
    Status: Open

    Comments: As of February 2017, Congress had not enacted legislation to eliminate the regular computation option for the research tax credit or add a minimum base to the ASC option, as GAO suggested in November 2009. Section 121 of division Q of the Consolidated Appropriations Act, 2016 made permanent the research tax credit (Public Law 114-113). The credit designed to encourage business innovation by providing a subsidy to new research has historically been a temporary provision. However, neither this act nor other enacted legislation has adopted GAO's suggested change to the research tax credit's design. Continued use of the regular computation credit option, which arbitrarily distributes subsidies across taxpayers, can distort investment decisions so that research spending and economic activity are not allocated to sectors that offer the highest returns to society. These misallocations may reduce economic efficiency and, thereby, diminish any economic benefits of the credit.
    Recommendation: In order to reduce economic inefficiencies and excessive revenue costs resulting from inaccuracies in the base of the research tax credit, Congress should consider adding a minimum base to the ASC that equals 50 percent of the taxpayer's current-year qualified research expenses.

    Agency: Congress
    Status: Open

    Comments: As of February 2017, Congress had not enacted legislation to eliminate the regular computation option for the research tax credit or add a minimum base to the ASC option, as GAO suggested in November 2009. Section 121 of division Q of the Consolidated Appropriations Act, 2016 made permanent the research tax credit (Public Law 114-113). The credit designed to encourage business innovation by providing a subsidy to new research has historically been a temporary provision. However, neither this act nor other enacted legislation has adopted GAO's suggested change to the research tax credit's design. Continued use of the regular computation credit option, which arbitrarily distributes subsidies across taxpayers, can distort investment decisions so that research spending and economic activity are not allocated to sectors that offer the highest returns to society. These misallocations may reduce economic efficiency and, thereby, diminish any economic benefits of the credit.
    Recommendation: If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by updating the historical base period that regular credit claimants use to compute their fixed base percentages.

    Agency: Congress
    Status: Open

    Comments: No action taken by Congress as of February 2017 to update the historical base period that regular credit claimants use to compute their fixed base percentages.
    Recommendation: If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by eliminating base period recordkeeping requirements for taxpayers that elect to use a fixed base percentage of 16 percent in their computation of the credit.

    Agency: Congress
    Status: Open

    Comments: No action taken by Congress as of February 2017 to eliminate base period recordkeeping requirements for taxpayers that elect to use a fixed base percentage of 16 percent in their computation of the credit.
    Recommendation: If Congress nevertheless wishes to continue offering the regular research credit to taxpayers, it may wish to consider reducing inaccuracies in the credit's base and to reduce taxpayers' uncertainty and compliance costs and IRS's administrative costs by clarifying for Treasury its intent regarding the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations. In particular it may want to consider clarifying that the regulations generally excluding transfers between members of controlled groups apply to both gross receipts and QREs and specifically clarifying how it intended sales by domestic members to foreign members to be treated. Such clarification would help to resolve open controversies relating to past claims, even if the regular credit were discontinued for future years.

    Agency: Congress
    Status: Open

    Comments: No action taken by Congress as of February 2017 to clarify for Treasury its intent regarding the definition of gross receipts for purposes of computing the research credit for controlled groups of corporations. In particular, it may want to consider clarifying that the regulations generally excluding transfers between members of controlled groups apply to both gross receipts and QREs and specifically clarifying how it intended sales by domestic members to foreign members to be treated. Such clarification would help to resolve open controversies relating to past claims, even if the regular credit were discontinued for future years.