http://www.gao.gov/docsearch/repandtest.html Tue, 09 Feb 2010 20:28:33 +0100 FeedCreator 1.7.2-ppt http://www.gao.gov/images/title_object.jpg http://www.gao.gov/ http://www.gao.gov/pdfs/GAO-10-248?source=ra The 2005 Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users authorized the Department of Transportation to establish a highway research program to address future challenges facing the U.S. highway system. In 2006, the Second Strategic Highway Research Program was established to conduct research in four areas--safety, renewal, reliability, and capacity. The Transportation Research Board manages this program in cooperation with the Federal Highway Administration and others. The legislation also required GAO to review the program no later than 3 years after the first research contracts were awarded. This report provides information about the process for selecting the program's projects for funding, the projects' status, and what, if any, research was eliminated because of funding and time constraints. To address our objectives, GAO reviewed the program's authorizing legislation, analyzed studies and reports related to the program and its projects, and interviewed officials from relevant transportation agencies and organizations. GAO is not making recommendations in this report. The Department of Transportation and the Transportation Research Board reviewed a draft of this report and provided technical clarifications, which we incorporated, as appropriate. The program's oversight committee funded research projects based on the recommendations of its four technical coordinating committees of experts (one for each of the four research areas), which considered the input of other experts and factors, such as available program funds and time frames. Prior to the program's establishment, detailed research plans were developed by panels of experts in 2003 that identified 106 possible research projects. However, these research plans were significantly modified on two occasions--in 2006, when less funding and time were provided for completing the program than had been assumed in 2003, and in 2008, when about $20 million in additional program funding became available. On both occasions, the program's oversight committee relied on experts to prioritize and recommend projects for funding. As a result of this process, 56 of the 106 projects either evolved into, or were partially merged with, one or more of the currently funded projects, while 50 projects were eliminated entirely. As of December 31, 2009, the program's oversight committee had allocated about $123 million of the approximately $171 million available to fund 85 projects in the four research areas of highway safety (40 percent), renewal (26 percent), reliability (16 percent), and capacity (17 percent). These funding allocations closely followed the overall funding percentages recommended by the Transportation Research Board in 2001. Of the 85 funded projects, 11 were completed, 52 were ongoing, 22 were anticipated, and all of the projects were expected to be completed by 2013. The outcomes are expected to vary by research area, ranging from useful data sets and related analyses to improved technologies, guidelines, and techniques for advancing the goals of each research area. Among other outcomes, the program staff expects: (1) the safety research will produce the largest, most comprehensive database on driver behavior available to date and, thus, provide the foundation for significant improvements in highway safety; (2) the renewal research will produce a variety of tools and techniques to promote rapid and durable highway renewal; (3) the reliability research will develop methods to provide highway users with relatively more consistent travel times between locations; and (4) the capacity research will provide strategies for better decision making in highway planning processes to increase the capacity of U.S. highways. Because of funding and time constraints, 50 of the 106 research projects identified in 2003 were eliminated entirely from funding, while many of the remaining 56 projects had one or more portions of their planned research eliminated. Overall, most of the funded projects are for applied research, but many of the implementation-related activities identified in 2003 were eliminated. While activities to (1) translate research results into products, (2) train and disseminate research findings, and (3) provide technical support for implementing the research are often needed to widely implement research results, program staff are hopeful that other researchers will initiate some of the eliminated research activities after the program's completion. Fri, 05 Feb 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-25?source=ra The Term Asset-Backed Securities Loan Facility (TALF) was created by the Board of Governors of the Federal Reserve System (Federal Reserve) to help meet consumer and small business credit needs by supporting issuance of asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS). This report assesses (1) the risks TALF-eligible assets pose to the Troubled Asset Relief Program (TARP), (2) Department of the Treasury's (Treasury) role in decision making for TALF, and (3) the condition of securitization markets before and after TALF. GAO reviewed program documents, analyzed data from prospectuses and other sources, and interviewed relevant agency officials and TALF participants. TALF contains a number of risk management features that in turn likely reduce the risk of loss to TARP funds, but risks remain. TALF was designed to reopen the securitization markets in an effort to improve access to credit for consumers and businesses. The Federal Reserve Bank of New York (FRBNY), which manages TALF, is authorized to lend up to $200 billion to certain eligible borrowers in return for collateral in the form of securities that are forfeited if the loans are not repaid. To assist in this effort, Treasury has pledged $20 billion of TARP funds in the form of credit protection to the program in the event the loans are not repaid. As of December 2009, FRBNY has made about $61.6 billion in TALF loans, of which $47.5 billion remained outstanding. For most TALF-eligible collateral, FRBNY will stop providing new TALF loans in March 2010, while new-issue CMBSs will be accepted as collateral on new TALF loans through June 2010. Treasury and FRBNY analyses project minimal, if any, use of TARP funds for TALF-related losses, and Treasury currently anticipates a profit. While GAO found that the overall risks TALF poses to TARP funds are likely minimal, GAO analyses showed that CMBSs potentially pose higher risk of loss than ABSs. As shown in figure 1, ongoing uncertainty in the commercial real estate market and TALF exposure to legacy CMBSs warrant ongoing monitoring. Finally, TALF may present risks beyond the potential risks to TARP, such as the risk that FRBNY might fail to identify material noncompliance with program requirements by TALF participants. Because the Federal Reserve views TALF as a monetary policy tool, however, statutory limitations on GAO's authority prohibited GAO from auditing FRBNY's role in administering TALF. Treasury has not fully documented its rationale, as part of its decision-making processes, for reaching final decisions related to the risks of TALF--including decisions involving other agencies. For example, the outcomes of Treasury's internal analysis of the amount of equity that TALF borrowers should hold in TALF ABS collateral, along with other TALF program terms, sometimes differed from FRBNY's. However, there was no clear documentation or explanation of how the discrepancies were resolved or how final decisions were made with FRBNY. Documenting the rationale and basis for these decisions would increase transparency and strengthen internal controls for TALF decision-making processes. Moreover, a sound decision-making process would help ensure that TALF objectives are being met and that it is functioning as intended. Unless Treasury documents the basis for major program decisions that it made with the Federal Reserve, it cannot demonstrate accountability for meeting the goals of TALF and could unnecessarily place TARP funds at risk. Fri, 05 Feb 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-419T?source=ra Biomonitoring, which measures chemicals in people's tissues or body fluids, has shown that the U.S. population is widely exposed to chemicals used in everyday products. Some of these have the potential to cause cancer or birth defects. Moreover, children may be more vulnerable to harm from these chemicals than adults. The Environmental Protection Agency (EPA) is authorized under the Toxic Substances Control Act (TSCA) to control chemicals that pose unreasonable health risks. One crucial tool in this process is chemical risk assessment, which involves determining the extent to which populations will be exposed to a chemical and assessing how this exposure affects human health This testimony, based on GAO's prior work, reviews the (1) extent to which EPA incorporates information from biomonitoring studies into its assessments of chemicals, (2) steps that EPA has taken to improve the usefulness of biomonitoring data, and (3) extent to which EPA has the authority under TSCA to require chemical companies to develop and submit biomonitoring data to EPA. EPA has made limited use of biomonitoring data in its assessments of risks posed by commercial chemicals. One reason is that biomonitoring data relevant to the entire U.S. population exist for only 212 chemicals. In addition, biomonitoring data alone indicate only that a person was somehow exposed to a chemical, not the source of the exposure or its effect on the person's health. For most of the chemicals studied under current biomonitoring programs, more data on chemical effects are needed to understand if the levels measured in people pose a health concern, but EPA's authorities to require chemical companies to develop such data is limited. However, in September 2009, the EPA Administrator set forth goals for updated legislation to give EPA additional authorities to obtain data on chemicals. While EPA has initiated several research programs to make biomonitoring more useful to its risk assessment process, it has not developed a comprehensive strategy for this research that takes into account its own research efforts and those of the multiple federal agencies and other organizations involved in biomonitoring research. EPA does have several important biomonitoring research efforts, including research into the relationships between exposure to harmful chemicals, the resulting concentration of those chemicals in human tissue, and the corresponding health effects. However, without a plan to coordinate its research efforts, EPA has no means to track progress or assess the resources needed specifically for biomonitoring research. Furthermore, according to the National Academy of Sciences, the lack of a coordinated national research strategy has allowed widespread chemical exposures to go undetected, such as exposures to flame retardants. While EPA agreed with GAO's recommendation that EPA develop a comprehensive research strategy, the agency has not yet done so. EPA has not determined the extent of its authority to obtain biomonitoring data under TSCA, and this authority is untested and may be limited. The TSCA section that authorizes EPA to require companies to develop data focuses on health and environmental effects of chemicals. However, biomonitoring data indicate only the presence of a chemical in the body, not its impact on health. It may be easier for EPA to obtain biomonitoring data under other TSCA sections, which allow EPA to collect existing information on chemicals. For example, TSCA obligates chemical companies to report information that reasonably supports the conclusion that a chemical presents a substantial risk of injury to health or the environment. EPA asserts that biomonitoring data are reportable if a chemical is known to have serious toxic effects and biomonitoring data indicates a level of exposure previously unknown to EPA. EPA took action against a chemical company under this authority in 2004. However, the action was settled without an admission of liability by the company, so EPA's authority to obtain biomonitoring data remains untested. GAO's 2009 report recommended that EPA clarify this authority, but it has not yet done so. The agency did not disagree, but commented that a case-by-case explanation of its authority might be more useful than a global assessment. Thu, 04 Feb 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-387T?source=ra The National Aeronautics and Space Administration (NASA) is in the midst of many changes and one of the most challenging periods in its history. The space shuttle is slated to retire this year, the International Space Station nears completion but remains underutilized, and a new means of human space flight is under development. Most recently, the administration has proposed a new direction for NASA. Amid all this potential change, GAO was asked to review the key issues facing NASA. This testimony focuses on four areas: 1) retiring the space shuttle; 2) utilizing and sustaining the International Space Station; 3) continuing difficulty developing large-scale systems, including the next generation of human spaceflight systems; and 4) continuing weaknesses in financial management and information technology systems. In preparing this statement, GAO relied on completed work. To address some of these challenges, GAO has recommended that NASA: provide greater information on shuttle retirement costs to Congress, take actions aimed at more effective use of the station research facilities, develop business cases for acquisition programs, and improve financial and IT management. NASA concurred with GAO's International Space Station recommendations, and has improved some budgeting and management practices in response. The major challenges NASA faces include: (1) Retiring the Space Shuttle. The impending end of shuttle missions poses challenges to the completion and operation of the International Space Station, and will require NASA to carry out an array of activities to deal with shuttle staff, equipment, and property. This year the shuttle is scheduled to fly its final six missions to deliver hardware, supplies, and an international laboratory to the International Space Station. NASA officials remain confident that the current manifest can be accomplished within the given time, and add that should delays occur, the space station can still function. According to NASA, there are trade-offs the agency can make in what it can take up to support and sustain the station. However, failure to complete assembly would further reduce the station's ability to fulfill its research objectives and short the station of critical spare parts that only the shuttle can currently deliver. Retirement of the shuttle will require disposing of facilities; ensuring the retention of critical skills within NASA's workforce and its suppliers; and disposing of more than 1 million equipment items. (2) Utilizing the International Space Station. The space station, which is nearly complete, faces several significant challenges that may impede efforts to maximize utilization of its research facilities. These include the retirement of the shuttle and the loss of its unmatched capacity to move cargo and astronauts to and from the station; the uncertain future for the station beyond 2015; and the limited time available for research due to competing demands for the crew's time. (3) Developing Systems. A common theme in NASA projects--including the next generation of space flight efforts--is that they cost more and take longer to develop than planned. GAO again found this outcome in a recently completed assessment of NASA's 19 most costly projects--with a combined life-cycle cost of $66 billion. Within the last 3 years, 10 of the 19 projects experienced cost growth averaging $121.1 million or 18.7 percent, and the average schedule growth was 15 months. A number of these projects had experienced considerable cost growth before the most recent baselines were set. (4) Managing Finances and IT. NASA continues to struggle to put its financial house in order. GAO and others have reported for years on these efforts. The NASA Inspector General identified financial management as one of NASA's most serious challenges. In addition, NASA remains vulnerable to disruptions in its information technology network. NASA has made important progress in implementing security controls and aspects of its information security program. However, it has not always implemented sufficient controls to protect information and systems supporting its mission directorates. Wed, 03 Feb 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-257?source=ra The Navy plans to spend about $28 billion to buy 55 Littoral Combat Ships (LCS) and at least 64 interchangeable mission packages to perform one of three missions--mine countermeasures, antisubmarine warfare, and surface warfare--in waters close to shore. The Navy has been developing two different LCS seaframes and plans to select one for production in 2010. Due to the small 78-person crew size--40 core crew, 23 for aviation detachment, and typically 15 for mission packages--the Navy is developing new concepts for personnel, training, and maintenance. GAO was asked to assess the extent to which the Department of Defense (DOD) has (1) estimated LCS long-term operating and support costs and (2) developed plans to operate and support LCS. To do so, GAO compared Navy cost estimates to DOD guidance and GAO best practices; and analyzed Navy plans to implement its concepts for personnel, training, and maintenance and the extent these plans included assessments of program risk. The Navy estimated operating and support costs for LCS seaframes and mission packages in 2009, but the estimates do not fully reflect DOD and GAO best practices for cost estimating and may change due to program uncertainties. GAO's analysis of the Navy's 2009 estimates showed that the operating and support costs for seaframes and mission packages could total $84 billion (in constant fiscal year 2009 dollars) through about 2050. However, the Navy did not follow some best practices for developing an estimate such as (1) analyzing the likelihood that the costs could be greater than estimated, (2) fully assessing how the estimate may change as key assumptions change, and (3) requesting an independent estimate and comparing it with the program estimate. The estimates may also be affected by program uncertainties, such as potential changes to force structure that could alter the number of ships and mission packages required. The costs to operate and support a weapon system can total 70 percent of a system's costs, and the lack of an estimate that fully reflects best practices could limit decision makers' ability to identify the resources that will be needed over the long term to support the planned investment in LCS force structure. With a decision pending in 2010 on which seaframe to buy for the remainder of the program, decision makers could lack critical information to assess the full costs of the alternatives. The Navy has made progress in developing operational concepts for LCS, but faces risks in implementing its new concepts for personnel, training, and maintenance that are necessitated by the small crew size. Specifically, the Navy faces risks in its ability to identify and assign personnel given the time needed to achieve the extensive training required. GAO's analysis of a sample of LCS positions showed an average of 484 days of training is required before reporting to a crew, significantly more than for comparable positions on other surface ships. Moreover, the Navy's maintenance concept relies heavily on distance support, with little maintenance performed on ship. The Navy acknowledges that there are risks in implementing its new concepts and has established groups to address how to implement them. However, these groups have not performed a risk assessment as described in the 2008 National Defense Strategy. The Strategy describes the need to assess and mitigate risks to executing future missions and managing personnel, training, and maintenance. If the Navy cannot implement its concepts as envisioned, it may face operational limitations, have to reengineer its operational concepts, or have to alter the ship design. Many of the concepts will remain unproven until 2013 or later, when the Navy will have committed to building almost half the class. Having a thorough risk assessment of the new operational concepts would provide decision makers with information to link the effectiveness of these new concepts with decisions on program investment, including the pace of procurement. Tue, 02 Feb 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-227SP?source=ra The National Aeronautics and Space Administration (NASA) plans to invest billions in the coming years in science and exploration space fl ight initiatives. The scientifi c and technical complexities inherent in NASA's mission create great challenges in managing its projects and controlling costs. In the past, NASA has had diffi culty meeting cost, schedule, and performance objectives for many of its projects. The need to effectively manage projects will gain even more importance as NASA seeks to manage its wide-ranging portfolio in an increasingly constrained fi scal environment. This report provides an independent assessment of selected NASA projects. In conducting this work, GAO compared projects against best practice criteria for system development including attainment of knowledge on technologies and design. GAO also identifi ed other programmatic challenges that were contributing factors in cost and schedule growth of the projects reviewed. The projects assessed are considered major acquisitions by NASA--each with a life-cycle cost of over $250 million. No recommendations are provided in this report; however, GAO has reported extensively and made recommendations on NASA acquisition management in the past. GAO has designated NASA's acquisition management as a high risk area since 1990. GAO assessed 19 NASA projects with a combined life-cycle cost of more than $66 billion. Of those 19 projects, 4 are still in the formulation phase where cost and schedule baselines have yet to be established, and 5 just entered the implementation phase in fi scal year 2009 and therefore do not have any cost and schedule growth. However, 9 of the 10 projects that have been in the implementation phase for several years experienced cost growth ranging from 8 to 68 percent, and launch delays of 8 to 33 months, in the past 3 years. These 10 projects had average development cost growth of almost $121.1 million--or 18.7 percent--and schedule growth of 15 months, and a total increase in development cost of over $1.2 billion, with over half of this total--or $706.6 million--occurring in the last year. In some cases, cost growth was higher than is reported because it occurred before project baselines were established in response to the statutory requirement in 2005 for NASA to report cost and schedule baselines for projects and implementation with estimated life-cycle cost of more than $250 million. Additionally, NASA was recently appropriated over $1 billion through the American Recovery and Reinvestment Act of 2009. Many of the projects GAO reviewed experienced challenges in developing new or retrofi tting older technologies, stabilizing engineering designs, managing the performance of their contractors and development partners, as well as funding and launch planning issues. Reducing the kinds of problems this assessment identifi es in acquisition programs hinges on developing a sound business case for a project. Based, in part, on GAO's previous recommendations, NASA has acted to adopt practices that would ensure programs proceed based on a sound business case and undertaken initiatives aimed at improving program management, cost estimating, and contractor oversight. Continued attention to these efforts and effective, disciplined implementation should help maximize NASA's acquisition investments. Mon, 01 Feb 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-350R?source=ra The Department of Defense (DOD) is the federal government's largest purchaser of contractor-provided services and relies on contractors to support its varied missions. DOD's contractors provide a range of services, such as consulting and administrative support, information technology services, and weapon system and base operations support. However, DOD contract management has been on our high-risk list since 1992, and our recent work continues to identify weaknesses in DOD's management and oversight of services contracts. In particular, we have reported on the need for reliable data on how service acquisition dollars are spent to make informed contract management decisions and achieve positive acquisition outcomes. Congress has enacted legislation in recent years to increase the availability of information on services acquisitions to improve DOD's ability to manage these purchases. As part of those efforts, the National Defense Authorization Act for Fiscal Year 2008 amended 10 U.S.C. 2330a to require DOD to submit an annual inventory of the activities performed pursuant to contracts for services for or on behalf of DOD during the preceding fiscal year. These inventories are to contain a number of different elements for the service contracts listed, including information on the functions and missions performed by the contractor, the funding source for the contract, and the number of contractor full-time equivalents (FTE) working under the contract. Once compiled, the inventories are to be reviewed by senior DOD officials and used to inform a variety of acquisition and workforce decisions. In July 2009, DOD transmitted a report to Congress containing the inventories for fiscal year 2008, in which the Departments of the Army, Navy, and Air Force identified $96 billion spent to acquire contractor services and 596,219 contractor FTEs providing services. In compiling their respective inventories, the military departments used different methodologies, relying on a mixture of existing data systems, contractor-entered data, manual compilation of some data elements, or estimates. Key differences between the departments' methodologies include how they identified service contracts, the categories of services included in each inventory, and how they determined the number of contractor FTEs. Furthermore, the data reported in each of the inventories were not complete. DOD has acknowledged limitations associated with the methodologies used and currently has an effort under way to develop a new, more consistent approach for compiling future inventories. Mon, 01 Feb 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-243?source=ra With current rising unemployment rates and the need for a more skilled workforce, it is important for the Department of Labor's (Labor) Employment and Training Administration (ETA) to invest in sound research that identifies the most effective and efficient ways to train and employ workers for 21st century jobs. While ETA traditionally has played an important role in providing job training, employment assistance, and labor market information for the nation's workers, the current unemployment crisis has made this role more critical. The Bureau of Labor Statistics estimates that jobless rates have increased over the past year in all 50 states and the District of Columbia. In particular, several states have reported unemployment rates well over 10 percent. As ETA's new leadership works to help the nation meet these economic challenges, it must have solid information that is supported by sound research to guide decision-making. Since 2002, GAO and others have criticized ETA for not focusing sufficient attention on its research program, particularly with regard to complying with congressional mandates, conducting policy-relevant research, and disseminating key research findings in a timely way. In this context, we have examined the structure and processes of ETA's research and evaluation center in terms of the elements that leading national research organizations cite as essential to a sound program; that is, research independence, transparency and accountability, and policy relevance. Based on these elements, we addressed the following questions: (1) How does ETA's organizational structure provide for research independence? (2) What steps has ETA taken to promote transparency and accountability in its research program? (3) How does ETA ensure that its research is relevant to workforce development policy and practice? In summary, we found that ETA's research center lacks independent authority for research, has limitations with regard to transparency and accountability processes, has not routinely involved stakeholders in developing its research agenda, and has been slow to evaluate the programs and activities carried out under the Workforce Investment Act of 1998 (WIA). (1) ETA is currently in the process of revising its organizational structure. Previously, its research and evaluation center, within the Office of Policy Development and Research (OPDR), was several levels removed from the Office of the Assistant Secretary and lacked independent authority for conducting research. Under ETA's revised structure, it is unclear whether OPDR will report directly to the Assistant Secretary or the Deputy Assistant Secretary. Furthermore, unlike the heads of some other research and evaluation centers, the head of ETA's research and evaluation center does not have the authority to set the research agenda, to approve requests for funded projects, or to disseminate research and evaluation reports. (2) While ETA has recently made improvements to its research program, some limitations remain with regard to its accountability processes and timely dissemination of research products. In 2007, ETA documented all stages of its research process from project selection to dissemination. ETA also began coordinating its research process with the Office of Management and Budget (OMB) and renewed its practice of sponsoring biennial research conferences to address a range of policy and program issues. Despite these recent changes, ETA's research processes lack specificity, including specific time frames for key milestones and an established criteria for peer review. In addition, ETA's research program lacks an information system to track its research from completion to dissemination and does not have a mechanism to ensure that research findings are disseminated in a timely manner. In 2008, ETA disseminated 34 research products to the public. However, 20 of these products, which had a combined cost of about $28 million, were delayed for between 2 and 5 years. (3) Labor, consistent with recent efforts of OMB, has taken steps to emphasize the value of research and evaluation, but ETA does not have sufficient mechanisms to ensure that its research can inform policy decisions. OMB currently has efforts underway to help agencies to enhance their research and evaluation programs. Labor also announced plans to create a position of chief evaluation officer and a new evaluation center within the Office of the Assistant Secretary for Policy to foster research relevant to policy. However, ETA has been slow to comply with a congressional mandate to evaluate WIA1 and it also lacks a standard process and advisory bodies to consistently involve stakeholders in the development of its research agenda. Similarly, ETA has no formal process in place to ensure that research findings are used to inform strategic planning and policy. Fri, 29 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-334?source=ra The Treasury Department's Community Development Financial Institutions (CDFI) Fund awarded $26 billion in New Markets Tax Credits (NMTC) through 2009 for investment in low-income communities. The NMTC allows investors to claim a tax credit totaling 39 percent of their investment in Community Development Entities (CDE) over 7 years which CDEs reinvest in qualified communities. This mandated report (1) describes where and how CDEs are using NMTCs, (2) assesses how CDEs use NMTCs to offer favorable financing terms to low-income community businesses and describes options for simplifying the NMTC, (3) describes how, if at all, NMTC investments support low-income community development, and (4) determines how effective IRS and the CDFI Fund have been in monitoring NMTC compliance. GAO analyzed CDFI Fund and CDE data, did case studies of CDEs, and interviewed relevant experts. Since 2003, CDEs have made NMTC investments in all 50 states, the District of Columbia, and Puerto Rico, with about 65 percent for real estate. NMTCs are often used as "gap financing," accounting for a portion of total project costs. NMTC investments in low-income community businesses generally use leveraged structures, where equity is left in the businesses, or subsidized interest rate structures, where below-market interest rate loans are offered. Recently, investors appear to be paying less for tax credits than in previous years and they made fewer NMTC investments in 2009 than in previous years. The CDFI Fund does not collect data that could identify the portion of the subsidy channeled to businesses, such as data on credit pricing, transaction fees, and the amount of equity left in businesses. Two potential options (i.e., changing related parties tests or converting the NMTC to a grant program) could simplify the program and make additional funds available to businesses. CDEs have used the NMTC program to support a variety of investments, but project impacts are difficult to measure and likely vary depending on the project. GAO identified NMTC-supported projects for mixed-use facilities, housing developments, and community facilities, among other qualified business activities. The CDFI Fund does not collect data on incomplete or failed projects, which might be used, for instance, to improve credit allocation selections. Projects with NMTC financing likely contribute employment and other outcomes to low-income communities. Limitations with available data make it difficult to isolate project impacts and GAO's analysis does not allow it to determine whether the projects supported by NMTCs would have taken place absent the credit. Continued improvements could be made in collecting project-level data (e.g., removing double-counting of some outcomes). IRS monitors CDE and investor compliance with applicable laws, while the CDFI Fund monitors CDEs' compliance with their allocation agreements. IRS and CDFI Fund officials weighed the costs and benefits of options to monitor compliance and selected controls on that basis. Fri, 29 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-275?source=ra The September 11, 2001, terrorist attacks raised concerns about the security of Department of Energy's (DOE) sites with weapons-grade nuclear material, known as Category I Special Nuclear Material (SNM). To better protect these sites against attacks, DOE has sought to transform its protective forces protecting SNM into a Tactical Response Force (TRF) with training and capabilities similar to the U.S. military. DOE also has considered whether the current system of separate contracts for protective forces at each site provides sufficiently uniform, high-quality performance across its sites. Section 3124 of PL 110-181, the fiscal year 2008 National Defense Authorization Act, directed GAO to review protective forces at DOE sites that possess Category I SNM. Among other things, GAO (1) analyzed information on the management and compensation of protective forces, (2) examined the implementation of TRF, and (3) assessed DOE's two options to more uniformly manage DOE protective forces. Over 2000 contractor protective forces provide armed security for DOE and the National Nuclear Security Administration (NNSA) at six sites that have long-term missions to store and process Category I SNM. DOE protective forces at each of these sites are covered under separate contracts and collective bargaining agreements between contractors and protective force unions. As a result, the management and compensation--in terms of pay and benefits--of protective forces vary. Sites vary in implementing important TRF requirements such as increasing the tactical skills of protective forces so that they can better "move, shoot, and communicate" as a unit. While one site has focused on implementing TRF requirements since 2004, other sites do not plan to complete TRF implementation until the end of fiscal year 2011. In addition, broader DOE efforts to manage postretirement and pension liabilities for its contractors have raised concerns about a negative impact on retirement eligibility and benefits for protective forces. Specifically, protective force contractors, unions, and DOE security officials are concerned that the implementation of TRF's more rigorous requirements and the current protective forces' personnel systems threaten the ability of protective forces--especially older members--to continue their careers until retirement age. Efforts to more uniformly manage protective forces have focused on either reforming the current contracting approach or creating a federal protective force (federalization). Either approach might provide for managing protective forces more uniformly and could result in effective security if well-managed. Although DOE rejected federalization as an option in 2009 because it believed that the transition would be costly and would yield little, if any, increase in security effectiveness, the department recognized that the current contracting approach could be improved by greater standardization and by addressing personnel system issues. As a result, NNSA began a standardization initiative to centralize procurement of equipment, uniforms, and weapons to achieve cost savings. Under a separate initiative, a DOE study group developed a number of recommendations to enhance protective forces' career longevity and retirement options, but DOE has made limited progress to date in implementing these recommendations. Fri, 29 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-281?source=ra The Institute of Medicine (IOM) estimated in 1999 that preventable medical errors cause as many as 98,000 deaths a year among hospital patients in the United States. Congress passed the Patient Safety and Quality Improvement Act of 2005 (the Patient Safety Act) to encourage health care providers to voluntarily report information on medical errors and other events--patient safety data--for analysis and to facilitate the development of improvements in patient safety using these data. The Patient Safety Act directed GAO to report on the law's effectiveness. This report describes progress by the Department of Health and Human Services, Agency for Healthcare Research and Quality (AHRQ) to implement the Patient Safety Act by (1) creating a list of Patient Safety Organizations (PSO) so that these entities are authorized under the Patient Safety Act to collect patient safety data from health care providers to develop improvements in patient safety, and (2) implementing the network of patient safety databases (NPSD) to collect and aggregate patient safety data. These actions are important to complete before the law's effectiveness can be evaluated. To do its work, GAO interviewed AHRQ officials and their contractors. GAO also conducted structured interviews with officials from a randomly selected sample of PSOs. AHRQ has made progress listing 65 PSOs as of July 2009. However, at the time of GAO's review, few of the 17 PSOs randomly selected for interviews had entered into contracts to work with providers or had begun to receive patient safety data. PSO officials told GAO that some PSOs were still establishing aspects of their operations; some were waiting for AHRQ to finalize a standardized way for PSOs to collect data from providers; and some PSOs were still engaged in educating providers about the confidentiality protections offered by the Patient Safety Act. AHRQ is in the process of developing the NPSD and its associated components--(1) the common formats PSOs and providers will be required to use when submitting patient safety data to the NPSD and (2) a method for making patient safety data non-identifiable, or removing all information which could be used to identify a patient, provider, or reporter of patient safety information. If each of these components is completed on schedule, AHRQ officials expect that the NPSD could begin receiving patient safety data from hospitals by February 2011. AHRQ officials could not provide a time frame for when they expect the NPSD to be able to receive patient safety data from other providers. AHRQ also has preliminary plans for how to allow the NPSD to serve as an interactive resource for providers and PSOs and for how AHRQ will analyze NPSD data to help meet certain reporting requirements established by the Patient Safety Act. According to AHRQ officials, plans for more detailed analyses that could be useful for identifying strategies to reduce medical errors will be developed once the NPSD begins to receive data. Fri, 29 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-213?source=ra For years, the disability compensation claims process has been the subject of concern and attention by the Department of Veterans Affairs (VA), Congress, and veteran service organizations (VSO), due in part to long waits for decisions and the large number of claims pending a decision. As GAO and other organizations have reported over the last decade, VA has also faced challenges in improving the accuracy and consistency of disability decisions. GAO was asked to examine (1) trends in VA's disability compensation claims processing at the initial claims and appeals levels and (2) actions that VA has taken to improve its disability claims process. To do this, GAO reviewed and analyzed VA performance data, budget submissions, program documents, and external studies and interviewed VA officials and VSO representatives. VA's disability claims and appeals processing has improved in some aspects and worsened in others. In recent years, the number of claims completed annually by VA has increased but not by enough to keep pace with the increasing number of compensation claims received, resulting in more claims awaiting a decision. In addition, the average days that VA took to complete a claim--196 days in fiscal year 2008--has varied over time, but was about the same in fiscal years 2000 and 2008. Several factors have challenged claims processing improvements, such as the increase in the number and complexity of claims submitted to VA, laws, and regulatory changes. VA has reduced the number of pending appeals and improved the accuracy of some appellate work, but the time that it takes to resolve appeals has worsened in recent years. For example, in fiscal year 2008, VA took on average 776 days to process appeals; 78 days longer than in fiscal year 2004. One factor that has contributed to worsening appeals timeliness is the increase in the number of appeals received by VA. VA has taken several steps to improve claims and appeals processing, but their impact is not yet known. VA has hired a significant number of disability claims staff to process disability workloads. VA's Veterans Benefits Administration (VBA) has also expanded its practice of workload redistribution, which could improve the timeliness and quality of its decisions. VA is also testing new claims processing approaches--such as shortening response periods for certain claims and appeals through Expedited Claims Adjudication (ECA) and reorganizing its claims processing units. However, VBA has not established plans to evaluate the effect of some initiatives. In addition, VA has taken other steps to improve claims and appeals processing, such as expanding its quality assurance program; upgrading claims processing software; and moving toward paperless processing, which remains elusive in part due to technical challenges. Fri, 29 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-284?source=ra The Department of Defense (DOD) is the federal government's largest purchaser of contractor-provided services, obligating more than $207 billion on services contracts in fiscal year 2009. DOD contract management has been on GAO's high-risk list since 1992, in part because of continued weaknesses in DOD's management and oversight of contracts for services. The National Defense Authorization Act for Fiscal Year 2008 directed DOD to issue guidance providing for independent management reviews for services acquisitions. The Act required that the guidance provide a means to evaluate specific contracting issues and to address other issues, including identifying procedures for tracking recommendations and disseminating lessons learned. The Act also directed GAO to report on DOD's implementation of its guidance. GAO (1) assessed the extent to which DOD's guidance addressed the Act's requirements and how the guidance was implemented and (2) determined the status of actions taken by the military departments pursuant to DOD's guidance. GAO compared DOD's guidance with the Act's requirements; obtained data on the number of reviews conducted as of September 2009; and analyzed memoranda of 29 acquisitions valued at over $1 billion. In its written comments, DOD noted it planned to refine its processes to better share the lessons learned and best practices identified during peer reviews. To meet the legislative requirement regarding independent management reviews, DOD issued guidance in September 2008 and February 2009 providing for a peer review process for services acquisitions. DOD's guidance generally addresses requirements in the Act to issue guidance designed to evaluate specified contracting issues, but according to officials, DOD has not yet determined how it plans to disseminate lessons learned or track recommendations that result from the newly instituted reviews. Under this guidance, the Office of Defense Procurement and Acquisition Policy (DPAP) is responsible for conducting pre- and post-award peer reviews for services acquisitions with an estimated value of over $1 billion. Peer review teams include senior contracting officials from the military departments and defense agencies as well as legal advisors. As of September 30, 2009, DPAP had conducted 29 reviews of 18 services acquisitions, including 3 post-award reviews. DOD has also conducted peer reviews on two task orders but has not yet determined if it will do so on individual task orders in the future. The peer review teams made a number of recommendations and identified some best practices. DOD officials expect to refine their processes, including developing a more formal means for disseminating lessons learned and tracking recommendations, as DOD assesses its initial experiences with peer reviews. Each of the military departments has issued guidance establishing peer review processes for services acquisitions valued at less than $1 billion although the guidance is still evolving. The departments' guidance identifies the offices or commands tasked with conducting peer reviews based on various dollar thresholds. The military departments reported conducting hundreds of peer reviews for services acquisitions as of September 30, 2009, but could not provide exact numbers because of the lack of comprehensive reporting processes. Further, as peer review processes evolve, the military departments are considering ways to disseminate lessons learned and track recommendations. Thu, 28 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-299?source=ra To meet urgent needs, DOD can issue undefinitized contract actions (UCA), which authorize contractors to begin work before reaching a final agreement on contract terms. Such actions are considered to be a risky contract vehicle for the government because contractors lack incentives to control costs during this period. Defense regulations provide that the government determination of contractors' allowable profit or fee should reflect any reduced cost risk. Pursuant to the 2008 National Defense Authorization Act, GAO assessed whether DOD actions taken as required by the act have (1) improved departmental insight and oversight of UCA use and (2) resulted in local commands meeting DOD's standards for documenting the basis for negotiating the contractor profit or fee, definitization timelines, and obligation amounts. GAO reviewed relevant DOD regulations and policies, and contract files for 83 randomly-selected UCAs totaling $6.1 billion at eight local commands. The findings from this contract file review can not be generalized across DOD. DOD has taken several actions since August 2008 to enhance departmental insight into and oversight of UCAs; however data limitations hinder its full understanding of the extent to which they are used. DOD issued policy that requires centralized, semi-annual reporting of undefinitized actions to gain insight in UCA use, including information on reason for award, obligation amounts at award, and definitization timelines. Over time, reporting requirements have evolved as DOD has taken steps to clarify guidance on the types of contract actions to be reported. DOD has also required components to submit management plans to describe actions taken for improved UCA use. Although these actions have helped enhance insight and oversight of UCA use, not all UCAs are included in the reports. Of the 24 UCAs GAO reviewed that should have been included in the April 2009 semi-annual report, 8 actions valued at $439 million were unreported by the local commands to DOD. Implementation of DOD's recent policies and guidance on the use of UCAs has varied at the local commands GAO visited and the associated management standards were not fully met. For the 66 UCAs GAO reviewed that were eventually definitized, contracting officers generally did not document their consideration of cost risk to the contractor during the undefinitized period of work as required. In 34 cases, the weighted guideline worksheets were not used when required, nor any other documentation of how any reduced cost risk during the undefinitized period of performance was considered in determining the negotiation objective. This was particularly the case for cost-plus-award fee contracts where defense regulations are not clear about how any cost risks are to be considered and documented. Even for the remaining 32 cases in which weighted guideline worksheets were used, the contracting officers' basis for risk calculations were often not clear due to limitations of the weighted guideline documentation. Other management standards were not always met. Only 41 UCAs--about 50 percent of the actions GAO reviewed--met the 180-day definitization requirement. Moreover, 66 of the 83 UCAs GAO reviewed were awarded with obligations near or above the 50 percent maximum. Thu, 28 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-332?source=ra The National Defense Authorization Act for Fiscal Year 2008 required the Department of Defense (DOD) and the Department of Veterans Affairs (VA) to accelerate their exchange of health information and to develop capabilities that allow for interoperability (generally, the ability of systems to exchange data) by September 30, 2009. It also required compliance with federal standards and the establishment of a joint interagency program office to function as a single point of accountability for the effort. Further, the act directed GAO to semiannually report on the progress made in achieving these requirements. For this fourth report, GAO determined the extent to which (1) DOD and VA developed and implemented electronic health record systems or capabilities that allowed for full interoperability by September 30, 2009, and (2) the interagency program office established by the act is functioning as a single point of accountability. To do so, GAO analyzed agency documentation on project status and conducted interviews with agency officials. DOD and VA previously established six objectives that they identified as necessary for achieving full interoperability; they have now met the remaining three interoperability objectives that GAO previously reported as being partially achieved--expand questionnaires and self-assessment tools, expand DOD's inpatient medical records system, and demonstrate initial document scanning. As a result of meeting the six objectives, the departments' officials, including the co-chairs of the group responsible for representing the clinician user community, believe they have satisfied the September 30, 2009, requirement for full interoperability. Nevertheless, DOD and VA are planning additional actions to further increase their interoperable capabilities and address clinicians' evolving needs for interoperable electronic health records. Specifically, (1) DOD and VA plan to meet additional needs that have emerged with respect to social history and physical exam data; (2) DOD plans to further expand the implementation of its inpatient medical records system to sites beyond those achieved as of September 2009; and (3) DOD and VA plan to test the capability to scan documents, in follow-up to their demonstration of an initial document scanning capability. Additionally, in response to a Presidential announcement, the departments are beginning to plan for the development and implementation of a virtual lifetime electronic record, which is intended to further increase their interoperable capabilities. The interagency program office is not yet positioned to function as a single point of accountability for the implementation of interoperable electronic health record systems or capabilities. The departments have made progress in setting up their interagency program office by hiring additional staff, including a permanent director. In addition, consistent with GAO's previous recommendations, the office has begun to demonstrate responsibilities outlined in its charter in the areas of scheduling, planning, and performance measurement. However, the office's effort in these areas does not fully satisfy the recommendations and are incomplete. Specifically, the office does not yet have a schedule that includes information about tasks, resource needs, or relationships between tasks associated with ongoing activities to increase interoperability. Also, key IT management responsibilities in the areas of planning and performance measurement remain incomplete. Among the reasons officials cited for not yet completing a schedule, plan, or performance measures were the office's need to focus on verifying achievement of the six interoperability objectives and participating in the departments' efforts to define the virtual lifetime electronic record. Nonetheless, if the program office does not fulfill key management responsibilities as GAO previously recommended, it may not be positioned to function as a single point of accountability for the delivery of future interoperable capabilities, including the development of the virtual lifetime electronic record. Thu, 28 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-254?source=ra To sustain a viable military force, the Department of Defense (DOD) depends on recruiting several hundred thousand qualified individuals into the military each year. The service components rely on their recruiters to act with the utmost integrity because even a single incident of wrongdoing on the part of a recruiter--a recruiter irregularity--can adversely affect the service components' ability to recruit qualified individuals. GAO was asked to (1) analyze data on reported cases of recruiter irregularities across the service components, (2) review the extent to which the service components have guidance and procedures to address recruiter irregularities, and (3) review the extent to which the Office of the Secretary of Defense (OSD) has oversight over recruiter irregularities. GAO analyzed the data on recruiter irregularities reported to OSD by the service components; reviewed the service components' recruiter irregularity case files; examined relevant guidance and procedures from the service components; and interviewed service components' recruiting command personnel, recruiters, and OSD officials. From fiscal year 2006 through 2008, the total number of substantiated cases of recruiter irregularities across the service components represented a small percentage of overall accessions (i.e., number of individuals entering military service), and the service components have taken various actions against the recruiters responsible for these irregularities. Specifically, the number of substantiated cases of recruiter irregularities as a percentage of overall accessions was 0.26 percent in fiscal year 2006, 0.22 percent in fiscal year 2007, and 0.18 percent in fiscal year 2008. The most common types of recruiter irregularity reported involved concealment or falsification of documents or information, sexual misconduct, and quality control measures (e.g., valid parental signatures). The action most commonly applied against recruiters who committed irregularities varied by service component. Removal from recruiting was the most commonly applied action in the Marine Corps while adverse administrative action (e.g., a letter of reprimand in the recruiter's personnel file) was most commonly applied in the Army. All service components have guidance and procedures on addressing recruiter irregularities and have improved oversight over them, but the manner in which data on recruiter irregularities are shared within the service components varied. Although some differences exist, the service components are similar in how they identify, investigate, and adjudicate recruiter irregularities. In addition, the service components have taken steps to identify and prevent recruiter irregularities, including establishing quality control checks to help identify recruiter irregularities and providing training for recruiters to help prevent recruiter irregularities. However, in most service components, not all levels of command have regular access to information on recruiter irregularities that occur. Without regular access to information, commanders may not be able to take full advantage of servicewide recruiter irregularity data and opportunities to learn from their peers. Although OSD has implemented requirements for the service components to regularly report on recruiter irregularities, it does not have complete oversight over the recruiter irregularities that occur. In December 2006, OSD issued a memorandum for the service components on tracking and reporting recruiter irregularities, and the service components have been providing recruiter irregularity data to OSD. However, because some of the reporting requirements lack clarity, the service components do not interpret the reporting requirements in the same way. Further, the data provided to OSD by the National Guard are incomplete and the relevant offices within the National Guard Bureau do not provide appropriate caveats regarding these data, such as including information on the States and Territories that did not submit recruiter irregularity data. Unless OSD clarifies the reporting requirements in its memorandum and directs the service components to provide transparency in the data they report, it will be unable to maintain complete oversight over the extent to which recruiter irregularities are occurring and make determinations on whether corrective action is needed. Thu, 28 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-401T?source=ra The December 25, 2009, attempted bombing of flight 253 raised questions about the federal government's ability to protect the homeland and secure the commercial aviation system. This statement focuses on the government's efforts to use the terrorist watchlist to screen individuals and determine if they pose a threat, and how failures in this process contributed to the December 25 attempted attack. This statement also addresses the Transportation Security Administration's (TSA) planned deployment of technologies for enhanced explosive detection and the challenges associated with this deployment. GAO's comments are based on products issued from September 2006 through October 2009 and selected updates in January 2010. For these updates, GAO reviewed government reports related to the December 25 attempted attack and obtained information from the Department of Homeland Security (DHS) and TSA on use of the watchlist and new technologies for screening airline passengers. The intelligence community uses standards of reasonableness to evaluate individuals for nomination to the consolidated terrorist watchlist. In making these determinations, agencies are to consider information from all available sources. However, for the December 25 subject, the intelligence community did not effectively complete these steps and link available information to the subject before the incident. Therefore, agencies did not nominate the individual to the watchlist or any of the subset lists used during agency screening, such as the "No Fly" list. Weighing and responding to the potential impacts that changes to the nomination criteria would have on the traveling public will be an important consideration in determining what changes may be needed. Also, screening agencies stated that they do not check against all records in the watchlist, partly because screening against certain records may not be needed to support a respective agency's mission or may not be possible because of the requirements of computer programs used to check individuals against watchlist records. In October 2007, GAO reported that not checking against all records may pose a security risk and recommended that DHS and the FBI assess potential vulnerabilities, but they have not completed these assessments. TSA is implementing an advanced airline passenger prescreening program--known as Secure Flight--that could potentially result in the federal government checking passengers against the entire watchlist under certain security conditions. Further, the government lacks an up-to-date strategy and implementation plan--supported by a clearly defined leadership or governance structure--which are needed to enhance the effectiveness of terrorist-related screening and ensure accountability. In the 2007 report, GAO recommended that the Homeland Security Council ensure that a governance structure exists that has the requisite authority over the watchlist process. The council did not comment on this recommendation. As GAO reported in October 2009, since TSA's creation, 10 passenger screening technologies have been in various phases of research, development, procurement, and deployment, including the Advanced Imaging Technology (AIT)--formerly known as the Whole Body Imager. TSA expects to have installed almost 200 AITs in airports by the end of calendar year 2010 and plans to install a total of 878 units by the end of fiscal year 2014. In October 2009, GAO reported that TSA had not yet conducted an assessment of the technology's vulnerabilities to determine the extent to which a terrorist could employ tactics that would evade detection by the AIT. Thus, it is unclear whether the AIT or other technologies would have detected the weapon used in the December 25 attempted attack. GAO's report also noted the problems TSA experienced in deploying another checkpoint technology that had not been tested in the operational environment. Since GAO's October report, TSA stated that it has completed the testing as of the end of 2009. We are currently verifying that all functional requirements of the AIT were tested in an operational environment. Completing these steps should better position TSA to ensure that its costly deployment of AIT machines will enhance passenger checkpoint security. Thu, 28 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-366T?source=ra The National Transportation Safety Board (NTSB), whose reauthorization is the subject of today's hearing, plays a vital role in advancing transportation safety by investigating accidents, determining their causes, issuing safety recommendations, and conducting safety studies. To support the agency's mission, NTSB's Training Center provides training to NTSB investigators and others. NTSB's 2006 reauthorization legislation mandates an annual review by GAO, and from 2006 through 2008, GAO made 21 recommendations to NTSB that address its management, information technology (IT), accident investigation criteria, safety studies, and Training Center use. This testimony addresses NTSB's progress in implementing GAO's recommendations that it (1) follow leading management practices, (2) conduct aspects of its accident investigations and safety studies more efficiently, and (3) increase the use of its Training Center. The testimony also discusses (4) changes NTSB seeks in its 2010 reauthorization proposal. This testimony is based on GAO's assessment from July 2009 to January 2010 of plans and procedures NTSB developed to address these recommendations. NTSB provided technical comments that GAO incorporated as appropriate. NTSB has fully implemented or made significant progress in adopting leading management practices in all areas where GAO made prior recommendations. Since 2008, NTSB has revised several of its planning documents, including its agencywide strategic plan; improved information security; and obligated money to implement a full cost accounting system. NTSB has also taken steps to improve the diversity of its workforce and management. However, women and minorities were less well represented in NTSB's fiscal year 2008 workforce than in the federal government, and no minorities are among NTSB's 15 senior executives. A lack of diversity among top managers can limit the variety of perspectives and approaches to policy development and decision making at an agency. With the adoption of criteria for selecting highway and marine accidents to investigate, NTSB has established criteria for all transportation modes. NTSB is also streamlining and increasing its use of technology in closing out recommendations. NTSB has three safety studies in progress and would like to broaden the term "safety studies" to include not only its current studies of multiple accidents, but also the research it does for other, smaller safety-related reports and data inquiries. NTSB has continued to increase the use of its Training Center--from 10 percent in fiscal year 2006 to 80 percent in fiscal year 2009. As a result, revenues have increased and the center's overall deficit has declined from about $3.9 million in fiscal year 2005 to about $1.9 million in fiscal year 2009. In its 2010 reauthorization proposal, NTSB seeks substantive changes to its existing authorizing legislation, including explicit statutory authority to investigate incidents in all modes and reduced statutory requirements for investigating rail and maritime accidents. Both changes would increase NTSB's investigatory discretion. Such discretion would allow NTSB to select incidents with the greatest potential to improve safety, yet decisions based on discretion may be less transparent than those based on criteria. Striking the right balance between discretionary and criteria-based investigations will be important to ensure that NTSB's resources can be used for the work with the greatest potential to enhance transportation safety. Wed, 27 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-327?source=ra Many federal contractors establish offshore subsidiaries to take advantage of labor and market conditions. GAO has found that they also use offshore subsidiaries to reduce their U.S. tax burdens. In 2008, Congress passed the Heroes Earnings Assistance and Relief Tax (HEART) Act which resulted in contractor offshore subsidiaries paying certain payroll taxes for U.S. personnel working abroad. Fiscal year 2009's National Defense Authorization Act required GAO to report on the rationales, implications, and costs and benefits of defense contractors' use of offshore subsidiaries. We (1) assessed trends and purposes for contractors' offshore subsidiaries; (2) identified how contractors use subsidiaries to support defense contracts; (3) assessed DOD's oversight of contractors' use of offshore subsidiaries. To conduct our work, we reviewed data for the 29 U.S. publicly traded contractors with at least $1 billion in DOD spending in fiscal year 2008, reviewed several illustrative contracts selected based on categories of DOD services most often performed overseas, reviewed audit documents, and interviewed DOD officials about oversight. Many of the top 29 U.S. publicly traded defense contractors--those with $1 billion or more in DOD contracts in fiscal year 2008--have created offshore subsidiaries to facilitate global operations. Between fiscal years 2003 and 2008, they increased their use of these subsidiaries by 26 percent, maintaining at least 1,194 in 2008. We interviewed 13 of the 29 contractors based on a range of the amount of government work, locations of subsidiaries, and industry types; they reported that 97 percent of the subsidiaries generally supported global commercial and foreign government clients, while the remaining 3 percent supported DOD contracts performed overseas. These subsidiaries also helped the 29 contractors reduce taxes, with about one-third decreasing their effective U.S. corporate tax rates in 2008 in part through the use of foreign affiliates, lower foreign tax rates, and indefinite reinvestment of foreign income outside of the United States. For five of the DOD contracts we reviewed, companies principally used offshore subsidiaries to hire U.S. workers providing services overseas on U.S. government contracts in order to avoid Social Security, Medicare--known as Federal Insurance Contributions Act (FICA)--and other payroll taxes. This practice allowed contractors to offer lower bids when competing for certain services and thereby reduce costs for DOD. Our analysis of two contracts showed that the use of offshore subsidiaries saved DOD at least $110 million annually prior to the HEART Act, through payroll tax avoidance. While this practice provided contract cost savings for DOD, it resulted in these companies avoiding payroll taxes that would have contributed to the Social Security and Medicare Trust Funds. The 2008 HEART Act resulted in offshore subsidiaries of U.S. companies paying FICA taxes for U.S. workers performing services overseas on U.S. government contracts. As a result, in fiscal year 2009, four of the case study contractors using offshore subsidiaries to support DOD work requested reimbursement from DOD of at least $140 million for new FICA payments. Federal and state unemployment payroll taxes, however, were not covered by the HEART Act, and several contractors that used offshore subsidiaries have continued to avoid these taxes. In one state, we reviewed documentation for about 140 former employees of several contractors who were denied unemployment benefits in 2009. State workforce officials indicated these benefits were denied because the employees worked for a foreign subsidiary and not an American employer. DOD officials were aware of the roles offshore subsidiaries played in the DOD contracts we reviewed and stated that oversight mechanisms, such as the Defense Contract Audit Agency's reviews of incurred costs and oversight documents, inform them of the activities of offshore subsidiaries. In contracts we reviewed, evidence of offshore subsidiaries was present in contractor labor rates, cost accounting disclosures, and contractor price proposals. Contracting officials stated that the use of offshore subsidiaries did not negatively impact contract schedule or performance. Tue, 26 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-120?source=ra The Federal Aviation Administration (FAA) predicts that the national airspace system will become increasingly congested over time, imposing costs of delay on passengers and regions. While transforming the current air-traffic control system to the Next Generation Air Transportation System (NextGen) may provide additional en route capacity, many airports will still face constraints at their runways and terminals. In light of these forecasts, the Government Accountability Office (GAO) was asked to evaluate regional airport planning in metropolitan regions with congested airports. GAO (1) identified which airports are currently or will be significantly congested and the potential benefits of regional airport planning, (2) assessed how regions with congested airports use regional airport planning in decision making, and (3) identified factors that hinder or aid in the development and implementation of regional airport plans. GAO reviewed studies; interviewed FAA, airport, and other aviation and transportation officials; and conducted case studies in selected regions. A number of airports are or will be significantly capacity constrained and thus congested within the next 16 years. However, many of them face environmental and other obstacles to developing additional airport capacity. In 2007, FAA identified 14 airports (in 10 metropolitan regions) that will be significantly capacity constrained by 2025, even assuming all currently planned improvements occur (see figure). Planned improvements include airport construction projects and implementation of NextGen technologies. Without these improvements, FAA predicts that 27 airports will be congested. According to the FAA assessment and other studies, regional airport planning may identify additional solutions, such as the increased use of alternate airports or other modes of travel, to help relieve airport congestion. From 1999 through 2008, 9 of the 10 metropolitan regions with airports forecast to be significantly capacity constrained by 2025 have received a total of $20 million in FAA funding for regional airport planning. Of those regions, 6 have developed or will develop regional airport system plans (RASP), which we found largely followed FAA's guidance for airport system planning. The remaining 4 regions have engaged in less comprehensive planning. FAA does not formally review RASPs, and they have been used selectively by FAA and airports in decision making for the planning and funding of individual airport projects. A few airport sponsors have pursued select strategies outlined in plans, while one airport sponsor rejected the RASP for its decision making. Because regional airport planning is advisory, competing interests can derail development and implementation. Metropolitan planning organizations generally develop RASPs but have no authority over airport development. That authority rests with airports, which are not required to incorporate planning recommendations into their capital plans, and with FAA, which makes funding decisions on the basis of national priorities. In addition, airport, community, and airline interests may conflict in a region. For example, Philadelphia International does not support planning efforts that may divert traffic from its airport to alternate regional airports. By contrast, aligned interests and FAA involvement may aid regional planning and implementation, as has occurred in the Boston region. Tue, 26 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-381T?source=ra Potential terrorist attacks and the possibility of naturally occurring disease outbreaks have raised concerns about the "surge capacity" of the nation's health care systems to respond to mass casualty events. The statement GAO is issuing today summarizes a June 2008 report, Emergency Preparedness: States Are Planning for Medical Surge, but Could Benefit from Shared Guidance for Allocating Scare Medical Resources (GAO-08-668). In that report, GAO was asked to examine the assistance the federal government had provided to help states prepare for medical surge and what states had done to prepare for medical surge. To do this GAO reviewed documents from the 50 states and federal agencies and interviewed officials from a judgmental sample of 20 states and from federal agencies, as well as emergency preparedness experts. In its June 2008 report, which is summarized in this statement, GAO found that following a mass casualty event that could involve thousands, or even tens of thousands, of injured or ill victims, health care systems would need the ability to "surge," that is, to adequately care for a large number of patients or patients with unusual medical needs. The federal government has provided funding, guidance, and other assistance to help states prepare for medical surge in a mass casualty event. From fiscal years 2002 to 2007, the federal government awarded the states about $2.2 billion through HHS's Office of the Assistant Secretary for Preparedness and Response's Hospital Preparedness Program to support activities to meet their preparedness priorities and goals, including medical surge. Further, the federal government provided guidance for states to use when preparing for medical surge, including Reopening Shuttered Hospitals to Expand Surge Capacity, which contains a checklist that states can use to identify entities that could provide more resources during a medical surge. Based on a review of state emergency preparedness documents and interviews with 20 state emergency preparedness officials, GAO found that many states had made efforts related to three of the four key components of medical surge that GAO had identified--increasing hospital capacity, identifying alternate care sites, and registering medical volunteers. But fewer had implemented the fourth: planning for altering established standards of care. More than half of the 50 states had met or were close to meeting the criteria for the five medical-surge-related sentinel indicators for hospital capacity reported in the Hospital Preparedness Program's 2006 midyear progress reports. In a 20-state review, GAO found that ? all 20 were developing bed reporting systems and most were coordinating with military and veterans hospitals to expand hospital capacity, ? 18 were selecting various facilities for alternate care sites, ? 15 had begun electronic registering of medical volunteers, and ? fewer of the states--7 of the 20--were planning for altered standards of medical care to be used in response to a mass casualty event. State officials in GAO's 20-state review reported that they faced challenges relating to all four key components in preparing for medical surge. For example, some states reported concerns related to maintaining adequate staffing levels to increase hospital capacity. According to some state officials, volunteers were concerned that if state registries became part of a national database they might be required to provide services outside their own state. Some states reported that they had not begun work on or completed altered standards of care guidelines due to the difficulty of addressing the medical, ethical, and legal issues involved in making life-or-death decisions about which patients would get access to scarce resources. While most of the states that had adopted or were drafting altered standards of care guidelines reported using federal guidance as they developed these guidelines, some states also reported that they needed additional assistance. Mon, 25 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-264R?source=ra This letter responds to the requirement of the Competition in Contracting Act of 1984, 31 U.S.C. 3554(e)(2) (2006), that the Comptroller General report to Congress each instance in which a federal agency did not fully implement a recommendation made by our Office in connection with a bid protest decided the prior fiscal year. There was one such occurrence in fiscal year 2009, regarding our recommendation in Mission Critical Solutions, B-401057, May 4, 2009, 2009 CPD 93, recon. denied, Small Business Administration-Recon., B-401057.2, July 6, 2009, 2009 CPD 148. We reported the matter to Congress on October 23,2009, pursuant to 31 U.S.C. 3554(e)(1). Mon, 25 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-104?source=ra The Department of Defense (DOD) consumes about 60 percent of all energy used at federal government facilities. To encourage an increased use of energy from renewable sources, such as solar and wind power, (1) the Energy Policy Act of 2005 (the 2005 Act) directs DOD to consume at least 3 percent of its total electricity from renewable resources starting in fiscal year 2007; (2) Executive Order 13423 (the 2007 Executive Order) directs that an amount equal to half of the statutorily required renewable energy be generated by sources placed into service in 1999 or later; and (3) the 2007 Defense Authorization Act directed that at least 25 percent of electricity consumed by DOD come from renewable sources in fiscal year 2025. The Government Accountability Office (GAO) was asked to examine (1) DOD's progress toward these three key goals for consuming renewable energy in fiscal years 2007 and 2008, (2) challenges to DOD meeting those goals, and (3) DOD's plans to meet the goals. GAO reviewed relevant laws and DOD and Department of Energy (DOE) policy, plans, and data; interviewed agency officials; and visited DOD facilities. DOD has three key goals for its installations' consumption of renewable energy, contained in the 2005 Act, the 2007 Executive Order, and the fiscal year 2007 National Defense Authorization Act. DOD met the goals in the 2005 Act and 2007 Executive Order in fiscal year 2007. However, in fiscal year 2008, DOD fell just short of the 2005 Act goal. Moreover, in fiscal years 2007 and 2008, DOD overstated its progress toward the goal in the 2007 Defense Authorization Act, counting nonelectric renewable energy. In these 2 fiscal years, the 2007 Defense Authorization Act goal allowed only electric renewable energy to be counted. According to amendments in the fiscal year 2010 Defense Authorization Act--which became law in October 2009--DOD is now able to count nonelectric renewable energy toward this goal. In fiscal years 2007 and 2008, when calculating progress toward the 2007 Defense Authorization Act goal, DOD included renewable electricity produced on DOD land, but not consumed by DOD. According to DOD, it has "facilitated production," but has not "directly consumed" this electricity. It is unclear whether such renewable energy should be included in the Office of the Secretary of Defense's (OSD) calculations of progress toward this goal. Moreover, OSD has not published guidance clarifying key terms in the language of the goal. With such guidance specifying how the services are to implement this goal, DOD will have greater assurance that it can accurately assess progress toward the goal and accurately report on this progress to Congress. DOD faces three key challenges in meeting the renewable energy goals. First, renewable energy projects may sometimes be incompatible with installations' need to use land for primary mission objectives. For example, wind turbines may conflict with aircraft operations during training. Second, renewable energy is often more expensive than nonrenewable energy. Therefore, using renewable energy can be at odds with DOD and DOE guidance that calls for DOD to invest in energy projects when cost-effective. In response, DOD plans to obtain additional funds by joining with private industry, such as local electric utilities, to develop renewable energy projects. Third, however, the use of those private sector approaches can be constrained by several factors. For example, energy produced by the projects may not count toward the renewable energy goals. By addressing these challenges, DOD would strengthen its ability to fully realize the potential of its renewable energy resources, improving its chances of meeting the goals in the most cost-effective way. OSD has not developed a long-term, DOD-wide plan to help ensure that DOD meets the renewable energy goals. Such a plan that identifies and addresses key challenges, has strategies for coordinating the services' renewable energy activities, sets realistic performance measures for achieving the goals, and aligns DOD resources will better enable DOD to meet the renewable energy goals. Mon, 25 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-235SP?source=ra This report presents the highlights of GAO's fiscal year 2009 Performance and Accountability Report. The Government Accountability Office, the audit, evaluation, and investigative arm of the Congress, exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help the Congress make informed oversight, policy, and funding decisions. To fulfill its mission, GAO organizes and manages its resources to support four broad strategic goals. These include helping to address challenges to the well-being and economic security of the American people, U.S. national and homeland security efforts, and modernizing government to meet current and emerging issues. Strategic goal 4 is an internal goal that focuses on enhancing GAO's business and administrative processes through investments in human capital, financial management, information technology, and various processes and systems needed to support the agency and the Congress. GAO maintains a workforce of highly trained professionals across a breadth of academic and scientific disciplines. About three-quarters of our approximately 3,100 employees are based at our headquarters in Washington, D.C.; the rest are deployed in 11 field offices across the country. In fiscal year 2009, GAO met or exceeded all of its performance targets by, for example, identifying $43 billion in financial benefits--a return of $80 for every dollar GAO spent--and over 1,300 improvements in laws and government programs and operations. The rate at which GAO's recommendations were implemented by federal agencies or the Congress was 80 percent, and over two-thirds of the products issued contained recommendations. GAO testified at over 200 hearings before the Congress on a variety of topics, including nonprime home loans, efforts to stimulate the national economy, and federal programs and areas considered at high risk for fraud, waste, abuse, and mismanagement. Also, results from our employee feedback survey--the source for several of our people measures, such as staff development and organizational climate--were the highest in the last 5 years. Thu, 21 Jan 2010 00:00:00 +0100 http://www.gao.gov/pdfs/GAO-10-66?source=ra Due to the federal government's role as guarantor, floods impose an enormous potential financial burden on the federal government. Consequently, decision makers at the Department of Homeland Security (DHS), the Federal Emergency Management Agency (FEMA), and the Congress need accurate and timely financial information to assess the effectiveness of the National Flood Insurance Program (NFIP). This report assesses whether controls in place during the 2005 to 2007 time frame were effective and whether actions to improve controls are likely to address identified weaknesses. The Government Accountability Office (GAO) reviewed and analyzed FEMA/NFIP guidance, data, and financial reports, reviewed prior audit reports, interviewed FEMA officials and contractors, and selected a sample of claim losses paid to determine whether claim files contained key documents. Weaknesses in internal controls impaired FEMA's ability to maintain effective transaction-level accountability. These weaknesses limited FEMA's ability to assure accurate NFIP financial data during the 3-year period from fiscal year 2005 through 2007, which included the financial activity related to the 2005 Gulf Coast hurricanes. FEMA relies heavily on Write Your Own (WYO) insurance companies to carry out NFIP financial activities such as documenting and maintaining claim files. FEMA's Bureau and Statistical Agent (BSA) serves as a liaison between the government and WYO insurance companies. GAO identified weaknesses at three levels of the NFIP transaction accountability and financial reporting process. First, at the WYO level, our internal control testing of a statistical sample determined that almost 71 percent of WYO company claims loss files did not have the necessary documents to support the claims, or reports were filed late. Second, incomplete BSA-level premium data files (lacking key information such as insureds' names and addresses) prevented an assessment of the reliability of reported NFIP premium amounts. Further, BSA-level internal control activities were ineffective in verifying the accuracy of WYO-submitted data. Lastly, FEMA's financial reporting process uses summary data that is overly reliant on error-prone manual data entry. GAO found that FEMA's broader oversight structures were also of limited effectiveness. Specifically, GAO found weaknesses in three key structures FEMA relies on to provide oversight over NFIP and monitor financial activity: (1) WYO company audits--specifically, we found that FEMA did not collect the results of state insurance department audits related to flood insurance activity and did not perform any audits for cause; (2) triennial operational reviews of WYO insurance companies--we found that FEMA did not perform operational reviews at almost one third of all WYO companies over the 3-year period; and (3) FEMA's claims reinspection program--we found that FEMA used flawed sampling procedures in the claims reinspection program. These findings are consistent with weaknesses GAO has previously identified. These oversight weaknesses limited FEMA's ability to identify and address financial transaction control breakdowns resulting from the 2005 hurricanes. FEMA's initiatives to improve specific internal control weaknesses and the overall NFIP control environment since the 2005 Gulf Coast hurricanes have done little to address many of the NFIP financial data deficiencies highlighted by these catastrophic events. FEMA has made improvements such as revising its claim reinspection selection methodology to provide for review of a random selection of a statistically representative sample of claim files. However, the modified reinspection methodology still does not include all claims. FEMA has also implemented a tracking system to monitor the number of WYO biennial audits obtained and reviewed. Further, FEMA has a system modernization development and implementation effort under way. It is too soon to determine the extent to which these efforts will achieve program efficiencies. Thu, 21 Jan 2010 00:00:00 +0100