Reports News from the GAO http://www.gao.gov/browse/date/week Thu, 09 Feb 2012 05:22:01 -0500 GAO http://www.gao.gov/images/title_object.jpg http://www.gao.gov/ Feed provided by GAO. Click to visit. http://www.gao.gov/products/GAO-12-188?source=ra What GAO FoundFor the 52 NNSA identified limitations for all weapons in the U.S. nuclear stockpile, 86 percent fall into six types: detonation safety under abnormal conditions, weapon reliability, weapon delivery, more frequent replacement of limited life components, nuclear yield, and worker safety. Some DOD officials expressed concern over the impact that certain weapon limitations have on weapon operation, maintenance, and war planning. According to DOD officials, current DOD mitigation actions, as well as the successful completion of ongoing and planned NNSA efforts, should address most limitations for which the officials raised concerns. DOD officials stated that the current stockpile allows sufficient flexibility to mitigate limitations. However, they told GAO that there may be less flexibility in the future as the stockpile continues to age and decreases in size. For each weapon system, NNSA provides DOD with guidance containing additional information on nuclear weapon limitations. However, GAO found that this guidance does not cover all limitations and some DOD officials said that it may not provide them with relevant information for some limitations. Specifically, the guidance addresses approximately 60 percent of all limitations but does not include limitations based on certain weapon components. In addition, one senior DOD official stated that the guidance did not help clarify the potential impact that a particular limitation may have on weapon operation and maintenance. The applicable military service is now conducting its own analysis of this limitation’s potential impact. Furthermore, the national laboratories identified four existing weapon limitations (8 percent of all limitations) that are no longer valid because, among other reasons, corrective action to address the limitations is complete. In addition, it is uncertain if an ongoing DOD and NNSA review of nuclear weapon military requirements will be used to eliminate limitations based on potentially outdated military requirements.NNSA has begun to implement some recommendations from the agency’s draft October 2010 management review of the nuclear stockpile surveillance program but has not developed a corrective action plan to guide its multiple actions. For example, NNSA (1) created and staffed the position of Senior Technical Advisor for Surveillance in response to the review’s recommendation to establish strong NNSA leadership and (2) established a formal process for setting surveillance testing requirements. National laboratory and DOD officials GAO interviewed generally viewed NNSA’s actions as positive steps to improve the program. However, NNSA has not developed a corrective action plan, as called for by Office of Management and Budget Circular No. A-123. According to this circular on management controls, federal managers are to develop a corrective action plan to address program operations weaknesses identified through management reviews, among other things. Such plans are to include specific dates, assigned responsibilities, and metrics to measure progress and hold management accountable. According to a senior level NNSA official, the agency did not implement many of the recommendations from three prior surveillance program management reviews primarily because there was no specific approach for implementation. Without a corrective action plan, it is unclear how NNSA will (1) ensure that the draft October 2010 management review’s recommendations are fully implemented and (2) demonstrate to key stakeholders, such as Congress and DOD, that NNSA is committed to improving the surveillance program.Why GAO Did This StudyMost weapons in the U.S. nuclear stockpile were produced over 20 years ago and are being sustained beyond original design lifetimes. It is critical to ensure that these weapons are safe, secure, and reliable to perform as the nation’s nuclear deterrent. The National Nuclear Security Administration (NNSA), a semiautonomous agency within the Department of Energy, is responsible for the nation’s nuclear weapons program. NNSA identifies nuclear weapon limitations—areas where military requirements may not be met—and conducts nonnuclear tests to evaluate the condition and reliability of weapons through its nuclear stockpile surveillance program. GAO was asked to determine the (1) number and types of such limitations and any concerns raised by Department of Defense (DOD) officials, and (2) actions NNSA has taken to implement its prior recommendations for the nuclear stockpile surveillance program. GAO reviewed agency documents, analyzed limitations, and interviewed key NNSA and DOD officials.What GAO RecommendsAmong other things, GAO recommends that NNSA, in appropriate collaboration with DOD, expand guidance on weapon limitations to include all limitations, revise this guidance to clearly describe the limitations’ potential impacts, and develop a corrective action plan for implementing surveillance program recommendations. NNSA generally agreed with GAO’s recommendations and outlined planned actions to address them. DOD agreed with GAO’s recommendations.For more information, contact Gene Aloise at (202) 512-3841 or aloisee@gao.gov. Wed, 08 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-395T?source=ra What GAO FoundThis testimony discusses the Small Business Administration’s (SBA) efforts to modernize its Loan Management and Accounting System (LMAS). As discussed in our report, SBA had completed one of the seven LMAS-Incremental Improvement Projects (IIPs) and awarded contracts for work on three others as of October 2011. However, the projects have experienced increasing costs and schedule delays. However, the projects have experienced increasing costs and schedule delays. Specifically, according to the most recent project schedule, dated August 2011, SBA completed one project in May 2011, 2 months later than planned and expects five of the remaining six projects to finish between 4 and 11 months later than the dates reported to Congress in October 2010. Further, according to the agency’s most recent report to Congress, dated March 2011, the total projected cost of the projects increased approximately $5 million since October 2010 and the costs of individual projects had risen between approximately 3 and 53 percent. SBA plans to complete the seven IIPs at a total cost of approximately $28 million by July 2013. Our report also raises concerns about SBA’s inconsistent implementation of key management practices.SBA partially implemented the management practices we reviewed. Specifically:Requirements management–SBA appropriately managed changes to requirements for the two projects for which this process would be appropriate; however, it did not validate the requirements for one of the ongoing IIPs. In addition, requirements were not documented for two of the ongoing projects.Risk management–risks were identified for three of four active projects; however, SBA did not fully prioritize risks related to one IIP or develop plans to mitigate them.IT human capital management–SBA inventoried existing human capital capabilities; however, it did not fully identify gaps in project workforce skills and did not develop strategies to close them.Enterprise architecture–SBA drafted target segment architectures for the IIPs; however, the architectures have not been approved by the appropriate officials. In addition, the agency did not fully implement other basic enterprise architecture practices, including maintaining and prioritizing its segment architectures.IT investment management–the agency had the overall direction of the IIP effort approved by an executive review committee. However, SBA did not address other capital planning requirements for the program, including approving a schedule baseline or reviewing its risk management plan, or provide evidence that it approved the subsequent changes to the budget estimates reported to Congress.Inconsistencies in SBA’s application of IT management practices occurred, in part, because it did not provide adequate executive oversight through its investment management process, even though it is using two executive bodies to oversee the projects. While these bodies have overlapping responsibilities and lines of authority, several basic oversight responsibilities, including executive approval of the project’s schedule, were left unaddressed by either body. In addition, the cost baselines approved by SBA’s executive oversight body differ from the projected costs reported to Congress 2 months later. According to SBA officials, additional oversight was provided through undocumented meetings and reviews of reports to Congress. Nevertheless, these weaknesses in the use of basic management practices make it less likely that SBA will be able to complete the IIPs within the time, budget, and scope parameters originally planned.Why GAO Did This StudyCongress asked us to testify on the status of SBA’s LMAS modernization effort and whether SBA has adequate processes and procedures in place to manage and oversee this effort. This statement is based on our report, Information Technology: SBA Needs to Strengthen Oversight of Its Loan Management and Accounting System Modernization, which is being released today at this hearing. This report summarizes the results of our study—which specifically describes the status of the modernization effort and determines whether SBA has adequate process and procedures in place to manage and oversee its LMAS modernization effort.What GAO Recommends To better ensure that the loan management Incremental Improvement Projects are completed as planned and provide anticipated capabilities, we are making several recommendations to the Administrator of SBA in our report. Specifically, we are recommending that SBA apply the appropriate information technology management practices to the IIPs, by ensuring thatIIP requirements are managed appropriately, including elicitation, documentation, and verification and validation;IT risks to the IIPs are adequately managed, including preparing for risk management, identifying and analyzing risks, mitigating risks, and providing executive oversight of risk management activities;the human capital necessary for the IIPs is managed appropriately, including the determination of human capital needs, the identification of gaps between current capabilities and needs, the development of a strategy to close those gaps, and the documentation of these activities; andthe enterprise architecture segments related to the IIPs are managed appropriately, including the development, prioritization, and maintenance of the segments.In addition, we are recommending that SBA clarify the responsibilities of the executive bodies responsible for the IIPs and ensure they provide the appropriate oversight of the project’s progress. Specifically, these executive bodies should conduct and document executive review and approval of the LMAS modernization’s risk management approach, target segment architectures, and cost and schedule baselines.For more information, contact David A. Powner at (202) 512-9286 or pownerd@gao.gov. Wed, 08 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-295?source=ra What GAO FoundAs of October 2011, SBA had completed one of the seven projects and awarded contracts for work on three others. However, the projects are experiencing increasing costs and schedule delays. Specifically, according to the most recent project schedule, SBA completed one project in May 2011, 2 months later than planned, and SBA expects five of the remaining six projects to finish between 4 and 11 months later than the dates reported to Congress. Further, according to the agency’s most recent report to Congress, dated March 2011, the total cost of the projects increased approximately $5 million since October 2010. SBA plans to complete the seven IIPs at a total cost of approximately $28 million by July 2013.SBA has inconsistently implemented key information technology management practices for successfully managing and overseeing its LMAS modernization efforts; these practices include software requirements management, risk management, IT human capital management, enterprise architecture, and investment management. For example, SBA appropriately managed changes to IIP requirements, identified risks for three of four active projects, inventoried existing human capital capabilities, drafted target segment architectures, and had the overall direction of the IIP effort approved by an executive review committee. However, it has not fully implemented other key aspects of these practices and policies. For example, it did not validate the requirements for one of the ongoing IIPs. Also, the agency did not fully prioritize risks related to one IIP or plan to mitigate them. In addition, it did not fully identify gaps in project workforce skills, and did not fully implement basic enterprise architecture practices, including maintaining and prioritizing its segment architectures, which provide the modernization details needed to develop and implement portions, or segments, of an agency’s IT portfolio. In addition, the cost baselines approved by SBA’s executive oversight body differ from the projected costs reported to Congress 2 months later. Further, there is no evidence that the projects have approved schedule baselines. These weaknesses in basic management practices make it less likely that SBA will be able to complete the projects within the time, budget, and scope parameters originally planned.Inconsistencies in SBA’s application of IT management practices occurred, in part, because it did not provide adequate executive oversight through its investment management process, even though it is using two executive boards to oversee the IIPs. While these boards have overlapping responsibilities and lines of authority, several basic oversight responsibilities, including executive approval of the project’s schedule, were left unaddressed by either body.Why GAO Did This StudyThe Small Business Administration (SBA) performs a range of significant activities intended to strengthen small businesses and relies extensively on information technology (IT) systems to do so. These systems are used to support loan accounting and track loans through origination, servicing, and liquidation. SBA has been attempting to modernize these systems for several years through its Loan Management and Accounting System (LMAS) modernization effort. The most recent iteration of this effort is a series of more focused development efforts, known as the LMAS-Incremental Improvement Projects (IIP).GAO was asked to describe the status of SBA’s LMAS modernization effort and determine whether SBA has adequate processes and procedures in place to manage and oversee its LMAS modernization effort. In performing this work, GAO reviewed cost and schedule reports to Congress and assessed SBA’s current management of the projects against best practices and relevant guidance.What GAO RecommendsGAO is recommending that the Administrator of SBA ensure that appropriate IT management practices are applied to the projects as described in this report and clarify the responsibilities of the executive bodies with purview over the LMAS-IIPs and ensure they provide the appropriate oversight of the projects’ progress.For more information, contact David A.Powner at (202) 512-9286 or pownerd@gao.gov. Wed, 08 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-359?source=ra What GAO FoundThe Department of Defense’s (DOD) management of its key humanitarian assistance programs reflects both positive practices and weaknesses:Alignment with strategic goals. DOD aligns its humanitarian assistance project planning with the goals outlined in U.S. and departmental strategies, and has clearly established processes for implementing its projects.Interagency project coordination. DOD has taken steps to coordinate with the Department of State (State) and the United States Agency for International Development (USAID) on projects, such as seeking concurrence on project proposals and embedding representatives from their agencies at its combatant commands, but coordination challenges remain.Poor data management. DOD does not have complete information on the status or actual costs of the full range of its Overseas Humanitarian, Disaster, and Civic Aid (OHDACA) projects. In addition, Humanitarian and Civic Assistance project data in DOD’s database differ from what DOD reports to Congress.Limited program evaluations. From fiscal years 2005 through 2009, DOD had not completed 90 percent of the required 1-year post-project evaluations for its OHDACA projects, and about half of the required 30-day evaluations for those projects, and thus lacks information to determine projects’ effects.Limited program guidance. DOD’s primary guidance for the OHDACA humanitarian assistance program is limited, is not readily accessible to all DOD personnel, and has not been updated for several years.Furthermore, DOD, State, and USAID do not have full visibility over each others’ assistance efforts, which could result in a fragmented approach to U.S. assistance. There are several initiatives under way to improve information sharing, including one directed by the National Security Council. However, no framework, such as a common database, currently exists for the agencies to readily access information on each others’ efforts. Moreover, the potential for overlap exists among agencies’ efforts in four areas: (1) health, (2) education, (3) infrastructure, and (4) disaster preparation. For example, both USAID and DOD are conducting health care projects in Yemen and building schools in Azerbaijan. Overlap may be appropriate in some instances, especially if agencies can leverage each others’ efforts. However, given the agencies’ information-sharing challenges, there are questions as to whether DOD’s efforts are an efficient use of resources since USAID serves as the lead U.S. development agency. State and USAID officials said that DOD’s humanitarian assistance efforts can be beneficial, especially when responding to disasters or supporting foreign militaries. However, officials said DOD’s efforts can have negative political effects, particularly in fragile communities where even small gestures, such as distributing soccer balls to a particular population, can be interpreted as exhibiting favoritism. While DOD’s funding for humanitarian assistance is small relative to the billions spent by State and USAID, its programs are expanding. Given interagency information challenges, the fiscally-constrained environment, and the similarity of agencies’ assistance efforts, DOD and the other agencies involved in foreign assistance could benefit from additional direction from Congress on DOD’s role in performing humanitarian assistance in peacetime environments.Why GAO Did This StudyIn recent years, the Department of Defense (DOD) has increased its emphasis and spending on humanitarian assistance efforts outside of war and disaster environments. From fiscal years 2005 through 2010, DOD obligated about $383 million on its key humanitarian assistance programs. Because civilian agencies, such as the Department of State and United States Agency for International Development (USAID) also carry out many assistance efforts, DOD’s efforts require close collaboration with these agencies. This report was conducted as part of GAO’s response to a statutory mandate and reviewed (1) DOD’s management of two key humanitarian assistance programs—the humanitarian assistance program funded through its Overseas Humanitarian, Disaster, and Civic Aid (OHDACA) appropriation and its Humanitarian and Civic Assistance program—and (2) the extent to which DOD, State, and USAID have visibility over each others’ efforts. To conduct this review, GAO analyzed funding and program information, and interviewed officials at DOD, State, USAID, nongovernment organizations, and 12 U.S. embassies.What GAO RecommendsGAO recommends that DOD update its humanitarian assistance program guidance, improve data management, and conduct project evaluations, and that DOD, State, and USAID improve information sharing. GAO also suggests that Congress consider clarifying DOD’s role in humanitarian assistance efforts. DOD partially agreed with the recommendations, and State and USAID agreed with the recommendations addressed to them.For more information, contact John Pendleton at (202) 512-3489 or pendletonj@gao.gov. Wed, 08 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-156?source=ra What GAO FoundA significant amount of water is produced daily as a byproduct from drilling of oil and gas. A 2009 Argonne National Laboratory study estimated that 56 million barrels of water are produced onshore every day, but this study may underestimate the current total volume because it is based on limited, and in some cases, incomplete data generated by the states. In general, the volume of produced water generated by a given well varies widely according to three key factors: the hydrocarbon being produced, the geographic location of the well, and the method of production used. For example, some gas wells typically generate large volumes of water early in production, whereas oil wells typically generate less. Generally, the quality of produced water from oil and gas production is poor, and it cannot be readily used for another purpose without prior treatment. The specific quality of water produced by a given well, however, can vary widely according to the same three factors that impact volume—hydrocarbon, geography, and production method.Oil and gas producers can choose from a number of practices to manage and treat produced water, but underground injection is the predominant practice because it requires little or no treatment and is often the least costly option. According to federal estimates, more than 90 percent of produced water is managed by injecting it into wells that are designated to receive produced water. A limited amount of produced water is disposed of or reused by producers in other ways, including discharging it to surface water, storing it in surface impoundments or ponds so that it can evaporate, irrigating crops, and reusing it for hydraulic fracturing. Managing produced water in these ways can require more advanced treatment methods, such as distillation. How produced water is ultimately managed and treated is primarily an economic decision, made within the bounds of federal and state regulations.The management of produced water through underground injection is subject to the Safe Drinking Water Act’s Underground Injection Control program, which is designed to prevent contamination of aquifers that supply public water systems by ensuring the safe operation of injection wells. Under this program, the Environmental Protection Agency (EPA) or the states require producers to obtain permits for their injection wells by, among other things, meeting technical standards for constructing, operating, and testing and monitoring the wells. EPA also regulates the management of produced water through surface discharges under the Clean Water Act. Other management practices, such as disposal of the water into surface impoundments, irrigation, and the reuse of the water for hydraulic fracturing, are regulated by state authorities.Several federal agencies, including EPA; the Department of Interior’s Bureau of Reclamation and U.S. Geological Survey; and a number of Department of Energy national laboratories, have undertaken research and development efforts related to produced water. These efforts have included sponsoring and issuing studies that describe the volume and quality of produced water, options for managing produced water and associated regulatory issues, as well as options for improving existing technologies for treating produced water and developing new technologies, such as more cost-effective filters.Why GAO Did This StudyWater is a significant byproduct associated with oil and gas exploration and production. This water, known as “produced water,” may contain a variety of contaminants. If produced water is not appropriately managed or treated, these contaminants may present a human health and environmental risk.GAO was asked to describe (1) what is known about the volume and quality of produced water from oil and gas production; (2) what practices are generally used to manage and treat produced water, and what factors are considered in the selection of each; (3) how produced water management is regulated at the federal level and in selected states; and (4) what federal research and development efforts have been undertaken during the last 10 years related to produced water. To address these objectives, GAO reviewed studies and other documents on produced water and interviewed federal and state regulatory officials, federal scientists, officials from oil and gas companies and water treatment companies, and other experts. GAO focused its review on the nine states that generate nearly 90 percent of the produced water, and conducted site visits in three states.What GAO RecommendsGAO is not making any recommendations. A draft was provided to the Departments of Energy and the Interior, and EPA for review. None of these agencies provided written comments. EPA and Interior provided technical comments, which we incorporated as appropriate.For more information, contact Anu Mittal or Frank Rusco at (202) 512-3841 or mittala@gao.gov or ruscof@gao.gov. Wed, 08 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-294?source=ra What GAO FoundThe United States and other G-7 countries have ECAs that support domestic exports, but Ex-Im differs from other ECAs in several important ways, including its explicit mission to promote domestic employment. The G-7 ECAs range from government agencies to private companies contracted by governments. Most of these ECAs, including Ex-Im, are expected to supplement, not compete with, the private market. Ex-Im offers direct loans, which were increasingly utilized during the recent financial crisis, while European ECAs do not.Ex-Im has specific mandates in areas where other G-7 ECAs have broad directives. Ex-Im has specific mandates to support small business and environmentally beneficial exports, while other ECAs are broadly directed to support such exports. In addition, Ex-Im has other mandates and legal requirements, such as shipping certain exports on U.S.-flagged carriers and conducting economic impact assessments for large transactions, which other G-7 ECAs do not.Ex-Im’s requirements for the level of domestic content in the exports it fully finances are higher and generally less flexible than those of other G-7 ECAs. Ex-Im requires 85 percent domestic content for medium- and long-term transactions to receive full financing, while other ECAs’ domestic content requirements generally range between zero and 51 percent. Ex-Im’s policy on supporting local costs can result in more foreign content support in some transactions. While Ex-Im has modified its method for calculating domestic content, its threshold for receiving full financing for medium- and long-term transactions has not changed since 1987, and the policy and its overall impact on jobs has not been studied systematically. Other ECAs have modified their policies in recent years, citing increasing global content of industrial production. In its charter, Ex-Im is directed to provide financing competitive with that of other ECAs, as well as to support U.S. jobs.The OECD Arrangement has expanded to regulate additional aspects of officially supported export credits, but increasing activity of nonmembers threatens its ability to provide a level playing field for exporters. Several agreements have been made that decrease subsidies and increase transparency among ECAs. However, these agreements apply only to participant ECAs, and important emerging countries, including China, are not part of the Arrangement. Officials from several G-7 ECAs and other institutions identified effective engagement with these countries on export credit issues as being increasingly important and presenting challenges for the OECD Arrangement and its participants.Why GAO Did This StudyThe U.S. Export-Import Bank (Ex-Im), the United States’ official export credit agency (ECA), helps U.S. firms export goods and services by providing a range of financial products. Ex-Im, whose primary mission is to support jobs through exports, has a range of policy requirements, including support of small business. The Organisation for Economic Cooperation and Development (OECD) Arrangement governs aspects of U.S. and some foreign countries’ ECAs. GAO examined (1) Ex-Im’s mission and organization compared with ECAs from other Group of Seven (G-7) countries (major industrialized countries that consult on economic issues), (2) Ex-Im’s policy requirements compared with other G-7 ECAs, (3) Ex-Im’s domestic content policy compared with other G-7 ECAs, and (4) the OECD Arrangement’s role in governing ECA activities.What GAO RecommendsGAO recommends (1) that Ex-Im conduct a systematic review to assess how well its domestic content policy continues to support Ex-Im’s mission, and (2) that the Department of the Treasury, with Ex-Im and international counterparts, develop strategies for further engagement on export credit issues with emerging economy countries. Ex-Im stated it considers content policy in its annual competitiveness assessments, but did not comment directly on the recommendation. Treasury stated it supports encouraging emerging market economies’ participation concerning export credit issues and is engaged in that activity, but did not state whether it agreed with the recommendation.For more information, contact Loren Yager at (202) 512-4347 or yagerl@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-422T?source=ra What GAO FoundAs part of its efforts to identify high-risk cargo for inspection, CBP uses various sources of information to screen containers in advance of their arrival in the United States. For example, in 2009, CBP implemented the Importer Security Filing and Additional Carrier Requirements to collect additional information for targeting. The additional cargo information required, such as country of origin, is to be provided to CBP in advance of arrival of the cargo containers at U.S. ports. In September 2010, GAO recommended that CBP establish milestones and time frames for updating its targeting criteria to include additional information. In response, CBP updated its targeting criteria in January 2011.DHS has made some progress in developing and implementing container security technologies to protect the integrity of containers and to scan them. GAO reported in September 2010 that DHS’s Science and Technology Directorate initiated four container security technology projects to detect and report intrusions into cargo containers. However, operational testing had not occurred to ensure the prototypes would function as intended. Therefore, GAO recommended that testing and evaluation occur in all environments in which DHS planned to implement the technologies. DHS concurred and has made progress implementing this recommendation. To prevent the smuggling of nuclear and radiological materials, CBP, in coordination with the Domestic Nuclear Detection Office (DNDO), has deployed over 1,400 radiation portal monitors (RPM) at U.S. ports of entry to detect the presence of radiation in cargo containers. Since 2006, GAO reported on problems with DNDO’s efforts to deploy a more-advanced and significantly more-expensive type of RPM. Among other things, GAO reported that an updated cost-benefit analysis might show that DNDO’s program to replace existing equipment with the advanced technology was not justified. After spending more than $200 million, DHS ended the program in July 2011.Uncertainty persists over how DHS and CBP will fulfill the mandate for 100 percent scanning given that the feasibility remains unproven in light of the challenges CBP has faced implementing a pilot program for 100 percent scanning. In response to the SAFE Port Act requirement to implement a pilot program to determine the feasibility of 100 percent scanning, CBP, the Department of State, and the Department of Energy announced the formation of the Secure Freight Initiative (SFI) pilot program in December 2006. However, logistical, technological, and other challenges prevented the participating ports from achieving 100 percent scanning and CBP has since reduced the scope of the SFI program from six ports to one. In October 2009, GAO recommended that CBP perform an assessment to determine if 100 percent scanning is feasible, and if it is, the best way to achieve it, or if it is not feasible, present acceptable alternatives. However, to date, CBP has not conducted such an assessment or identified alternatives to 100 percent scanning. Further, as GAO previously reported, DHS acknowledged it will not be able to meet the 9/11 Act’s July 2012 deadline for implementing the 100 percent scanning requirement, and therefore, it expects to grant a blanket extension to all foreign ports pursuant to the statute, thus extending the target date to July 2014. To do so, DHS is required to report to Congress by May 2, 2012, of any extensions it plans to grant.Why GAO Did This StudyCargo containers that are part of the global supply chain—the flow of goods from manufacturers to retailers–are vulnerable to threats from terrorists. The Maritime Transportation Security Act (MTSA) of 2002 and the Security and Accountability For Every (SAFE) Port Act of 2006 required the Department of Homeland Security (DHS) to take actions to improve maritime transportation security. Also, the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Act) required, among other things, that by July 2012, 100 percent of all U.S.-bound cargo containers be scanned. Within DHS, U.S. Customs and Border Protection (CBP) is responsible for container security programs to address these requirements. This testimony addresses, among other things, (1) efforts to gather advance information about container shipments to assess risks, (2) technologies used to protect the integrity of containers and scan them, and (3) the status of efforts to scan 100 percent of U.S.-bound containers. GAO’s statement is based on products issued from April 2005 through July 2011, along with selected updates conducted from January to February 2012. Updates involved collecting information from CBP on the status of efforts to address GAO’s prior recommendations on these issues and its plans to implement 100 percent scanning.What GAO RecommendsGAO has made recommendations in past reports to DHS to strengthen its container security efforts. DHS concurred with GAO’s recommendations and has either addressed them or is undertaking efforts to address them.For more information, contact Stephen L. Caldwell at (202) 512-9610 or caldwells@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-443T?source=ra What GAO FoundGovernmentwide fraud prevention control weaknesses over the SDVOSB program leave it vulnerable to fraud and abuse. In October 2009, GAO reported on 10 selected firms that misrepresented their status as SDVOSBs, which allowed them to win approximately $100 million in SDVOSB set-aside and sole-source contracts. Cases like this happen because the SDVOSB program relies on firms to self-certify annually in the federal government’s contractor registry that they are owned and controlled by service-disabled veterans, but most agencies do not validate this information. In fact, GAO found that the program lacks key fraud prevention framework elements, which include preventing firms from fraudulently entering the program, detecting and monitoring for continuing compliance, and investigating firms that abuse the program.For example, the only governmentwide fraud prevention control in place is SBA’s bid-protest process, in which interested parties can contest contract awards. In prior work, GAO found that the process lacked effective controls because firms could complete contracts even after SBA found them ineligible, rendering the process ineffective. In July 2011 GAO testified that the 10 firms cited in the 2009 report had received another $100 million dollars in new federal contract obligations despite their fraudulent history. SBA and VA had taken some actions against firms by July 2011, including suspending 2 of the firms, and requesting that all firms change their status in federal contracting databases to show they were not eligible for SDVOSB contracts. However, as of July 2011, several of the firms continued to self-certify themselves as SDVOSBs.VA has made progress implementing a verification program for firms seeking SDVOSB contracts from VA. GAO testified in November 2011 that VA’s program includes an initial verification process involving document reviews, site visits to contractor offices, and a risk assessment for each applicant firm. In addition, VA has instituted a status protest process and a debarment committee designed to ensure only eligible firms receive contracts and that ineligible firms face consequences for misrepresenting their status. Those improvements may help VA reduce the risk that ineligible firms will gain access to VA SDVOSB contract dollars. Nonetheless, GAO also made 13 recommendations to VA for improving its verification program and further reducing the risk of fraud and abuse. VA concurred with the recommendations and outlined plans to improve the program. To improve governmentwide fraud prevention controls, GAO suggested that Congress consider expanding the VA verification program to all agencies.Why GAO Did This StudyIn fiscal year 2010, federal agencies awarded $10.8 billion to Service-Disabled Veteran-Owned Small Businesses (SDVOSB), according to the Small Business Administration (SBA). The Department of Veterans Affairs (VA) awarded $3.2 billion, or approximately 30 percent of governmentwide SDVOSB awards. The SDVOSB program, established by the Veterans Benefit Act of 2003, is designed to honor disabled veterans’ service by providing them with exclusive contracting opportunities. Since 2009, GAO has issued seven reports or testimonies on the SDVOSB program, focusing on its vulnerability to fraud and abuse and agencies’ actions to prevent contracts from going to firms that misrepresent themselves as SDVOSBs.For this testimony, GAO was asked to (1) summarize the status of governmentwide fraud prevention controls over the SDVOSB program and (2) discuss GAO’s recent assessment of fraud prevention control improvements instituted by VA over its verification program.This testimony is based on prior GAO products on the SDVOSB program. GAO also reviewed applicable laws, regulations, and guidance including the Comptroller General’s Standards for Internal Controls in the Federal Government and related findings from VA’s and SBA’s Inspector General.For more information about this testimony, please contact Richard J. Hillman at (202) 512-6722 or hillmanr@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-405T?source=ra What GAO FoundFederal agencies reported an estimated $115.3 billion in improper payments in fiscal year 2011, a decrease of $5.3 billion from the prior year reported estimate of $120.6 billion. The $115.3 billion estimate was attributable to 79 programs spread among 17 agencies. Ten programs accounted for about $107 billion or 93 percent of the total estimated improper payments agencies reported for fiscal year 2011. The reported decrease in fiscal year 2011 was primarily related to three programs—decreases in program outlays for the Department of Labor’s Unemployment Insurance program, and decreases in reported error rates for the Earned Income Tax Credit program and the Medicare Advantage program. Further, the Office of Management and Budget reported that agencies recaptured $1.25 billion in improper payments to contractors, vendors, and healthcare providers in fiscal year 2011. Over half of this amount, $797 million, can be attributed to the Medicare Recovery Audit Contractor program which identifies Medicare overpayments and underpayments.The federal government continues to face challenges in determining the full extent of improper payments. Some agencies have not yet reported estimates for all risk-susceptible programs, such as the Department of Health and Human Services’ Temporary Assistance for Needy Families program. Internal control weaknesses continue to exist, heightening the risk of improper payments. Some agencies’ estimating methodologies need to be refined. For example, two Department of Defense commercial payment programs were not included in the total governmentwide error rate because the estimation methodologies for these programs were still under development.A number of actions are under way across government to help advance improper payment reduction goals. These actions and future initiatives will be needed to enhance federal government efforts to reduce improper payments. For example,Additional information and analysis on the root causes of improper payment estimates would help agencies target effective corrective actions and implement preventive measures. Although agencies were required to report the root causes of improper payments in three categories beginning in fiscal year 2011, of the 79 programs with improper payment estimates for fiscal year 2011, 42 programs reported the root cause information using the required categories. In addition, because the three categories are general, additional analysis is critical to understanding the root causes.Implementing strong preventive controls can help defend against improper payments, increasing public confidence and avoiding the difficult “pay and chase” aspects of recovering improper payments. Preventive controls involve activities such as upfront validation of eligibility using electronic data matching, predictive analytic tests, and training programs. Further, addressing program design issues, such as complex eligibility requirements, may also warrant further consideration.Effective detection techniques to quickly identify and recover improper payments are also important to a successful reduction strategy. Detection activities include data mining and recovery audits. Another area for further exploration is the broader use of incentives to encourage and support states in efforts to implement effective preventive and detective controls.Why GAO Did This StudyOver the past decade, GAO has issued numerous reports and testimonies highlighting improper payment issues across the federal government as well as at specific agencies. Fiscal year 2011 marked the eighth year of implementation of the Improper Payments Information Act of 2002 (IPIA), as well as the first year of implementation for the Improper Payments Elimination and Recovery Act of 2010 (IPERA). IPIA requires executive branch agencies to annually identify programs and activities susceptible to significant improper payments, estimate the amount of improper payments for such programs and activities, and report these estimates along with actions taken to reduce them. IPERA, enacted July 22, 2010, amended IPIA and expanded requirements for recovering overpayments across a broad range of federal programs.This testimony addresses (1) federal agencies’ reported progress in estimating and reducing improper payments, (2) remaining challenges in meeting current requirements to estimate and report improper payments and (3) actions that can be taken to move forward with improper payment reduction strategies. This testimony is primarily based on prior GAO reports, including GAO’s fiscal year 2011 audit of the Financial Report of the United States Government. The testimony also includes improper payment information recently presented in federal entities’ fiscal year 2011 financial reports. For more information, contact Beryl H. Davis at (202) 512-2623 or davisbh@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-455T?source=ra This testimony discusses the U.S. Government Accountability Office’s (GAO) budget request for fiscal year (FY) 2013. GAO very much appreciates the confidence Congress has shown in the efforts to help support the Congress in carrying out its constitutional responsibilities and to help improve government performance and accountability for the benefit of the American people.GAO is requesting an appropriation of $526.2 million for FY 2013 to support a staffing level of 3,100. This funding level represents a modest increase of 2.9 percent over FY 2012, and is 5.4 percent below our FY 2010 level. The majority of the requested increase represents the first step in rebuilding our staff capacity to a level that will enable us to optimize the benefits we yield for the Congress and the nation.We have carefully reviewed every aspect of our operations from a zero base to identify opportunities to reduce costs without sacrificing the quality of our work and preserving our ability to assist the Congress in addressing the most important priorities facing the nation. However, given that staff costs now represent about 81 percent of our budget and the deep reductions already taken in our infrastructure programs, reducing the size of our workforce could not be avoided. By the end of FY 2012, for the first time in over 75 years, GAO’s staffing level will drop below 3,000 staff, resulting in a net reduction of 11 percent in our staff capacity, or 365 people, in only a 2-year period.GAO’s work directly contributes to improvements in a broad array of federal programs affecting Americans everywhere and remains one of the best investments across the federal government. With this committee’s support, in FY 2011, GAO provided assistance to every standing congressional committee and about 70 percent of their subcommittees. GAO issues hundreds of products annually in response to congressional requests and mandates. Our work yielded significant results across the government, including financial benefits of $45.7 billion—a return on investment of $81 for every dollar invested in GAO. Our findings and recommendations produce measurable financial benefits for the federal government, enabled through the actions of Congress and Executive Branch agencies, ultimately making funds available to reduce government expenditures, reallocate funds to more productive areas, or increase revenues. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-84?source=ra What GAO FoundFederal dollars obligated to tribal 8(a) firms grew from $2.1 billion in fiscal year 2005 to $5.5 billion in 2010, a greater percentage increase than non-tribal 8(a) obligations (160 percent versus 45 percent). Obligations to 8(a) firms owned by Alaska Native Corporations (ANC) represented the majority of tribal obligationsevery year during the period, rising to $4.7 billion in 2010. While tribal 8(a) firms comprised 6.2 percent of total 8(a) firms, their obligations accounted for almost a third of total 8(a) obligations in fiscal year 2010. Over the 6 years, the percentage of competitively awarded obligations to tribal 8(a) firms rose; however, solesource contracts remained the primary source of growth, representing at least 75 percent of all tribal 8(a) obligations in a given year.Consistent with GAO’s 2006 review of ANC 8(a) contracting, contracting officials said that awarding contracts to tribal firms under the 8(a) program allows officials to award sole-source contracts for any value quickly, easily, and legally, and helps agencies meet their small business goals. However, the officials added that the program offices’ push for awarding follow-on contracts to the same firm also plays a role. GAO’s review of noncompetitive tribal 8(a) contracts shows the methods used to determine price reasonableness in a sole-source environment. In some cases, when agencies moved away from sole-source tribal 8(a) contracts toward competition, agency officials estimated savings as a result.To ensure that 8(a) firms do not pass along the benefits of their contracts to their subcontractors, regulations limit the amount of work that can be performed by the subcontractors. Of the 87 contracts in GAO’s review, 71 had subcontractors. GAO found that required monitoring of limitations on subcontracting by procuring agencies was not routinely occurring. Similar to what GAO reported in 2006, some contracting officers do not understand that ensuring compliance is their responsibility under partnership agreements with SBA, and the regulations do not make this clear. Further, agency officials did not know how to monitor subcontracting limitations, particularly for indefinite-quantity contracts, as the data are not readily available. Not monitoring the limits on subcontracting can pose a major risk that an improper amount of work is being done by large firms.In March 2011, SBA revised 8(a) regulations to clarify program rules, correct misinterpretations, and address program issues. Although a positive step, SBA will have difficulty enforcing new regulations pertaining to tribal 8(a) follow-on contracts and joint ventures given the information currently available. SBA told GAO it is currently in the process of developing the requirements for a new 8(a) tracking database. Further, the new regulations do not address some issues GAO has previously raised, such as ANC 8(a) firms under the same parent corporation generating a majority of revenue in the same line of business. SBA regulations do not allow a tribal organization to have more than one 8(a) subsidiary perform most of its work under the same primary business line. GAO also discusses practices that highlight how some tribal 8(a) firms operate, in effect, as large businesses because of their parent corporation’s backing and interconnectedness with sister subsidiaries. SBA has not reviewed these practices to determine whether they are congruent with the business development purpose of the 8(a) program.Why GAO Did This StudyTribal firms—those owned by Alaska Native Corporations, Native Hawaiian Organizations, and Indian tribes—are afforded special advantages within the Small Business Administration’s (SBA) 8(a) business development program. GAO was asked to (1) identify trends in government 8(a) contracting with tribal firms; (2) determine why the government awarded sole-source contracts to tribal 8(a) firms and the methods used to make price determinations; (3) assess the procuring agencies’ oversight of contracts for compliance with subcontracting requirements; and (4)examine SBA’s new 8(a) regulation, intended to clarify program rules, to determine how the changes could affect oversight of tribal 8(a) firms. GAO reviewed non-generalizable samples of 87 contracts (based on dollar value and location) and 62 tribal 8(a) firms’ SBA files and spoke with SBA headquarters and district officials as well as officials from 9 agencies.What GAO RecommendsGAO recommends that the Office of Federal Procurement Policy (OFPP) amend acquisition regulations and provide guidance (including data collection) on monitoring the limits on subcontracting. OFPP generally agreed with the recommendations. GAO’s recommendations also include that SBA include specific capabilities in its 8(a) database to improve tribal 8(a) tracking and that it examine tribal participation to determine whether certain practices align with the 8(a) program’s business development goal. SBA questioned GAO’s methodology, which GAO continues to believe is appropriate, but did not address GAO’s recommendations.For more information, contact John Hutton at (202) 512-4841 or huttonj@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-261?source=ra What GAO FoundFederal grant and loan funding for activities that reduce mobile source diesel emissions is fragmented across 14 programs at the Department of Energy (DOE), the Department of Transportation (DOT), and the Environmental Protection Agency (EPA). From fiscal years 2007 through 2011, the programs obligated at least $1.4 billion for activities that have the effect of reducing mobile source diesel emissions. The programs have varying goals and purposes; nevertheless, each program allows or requires a portion of its funding to support activities that reduce mobile source diesel emissions, such as replacing fleets of older diesel trucks or school buses with natural gas vehicles. In addition, each of the 14 programs overlaps with at least one other program in the specific activities they fund, the program goals, or the eligible recipients of funding. GAO also identified several instances of duplication where more than one program provided grant funding to the same recipient for the same type of activities. However, GAO was unable to determine whether unnecessary duplication exists because of limited information on program administrative costs, among other things. GAO did not find any gaps among the programs, such as mobile sources that are not eligible for funding.The effectiveness of federal funding for activities that reduce mobile source diesel emissions is unknown because agencies vary in the extent to which they have established performance measures. DOE and EPA have established performance measures for the strategic goals related to their programs that reduce mobile source diesel emissions. DOT has established such measures for two of its administrations—the Federal Aviation Administration and Federal Highway Administration—but has not established such measures for the Federal Transit Administration for two of the four strategic goals that link to its programs that fund diesel emissions reduction activities. Instead, agency officials said they collect information on the current condition of the nation’s transit fleet, among other things, to measure the performance of its programs. As GAO has previously reported, principles of good governance indicate that agencies should establish quantifiable performance measures to demonstrate how they intend to achieve their goals and measure the extent to which they have done so. In addition, 13 of the 14 programs have purposes other than decreasing diesel emissions, and diesel reductions are a side benefit of efforts to achieve these other goals. As a result, few programs collect diesel-related performance information. Incomplete performance information may limit the ability of agencies to assess the effectiveness of their programs and activities that reduce diesel emissions.The programs that fund activities that reduce diesel emissions generally do not collaborate because of the differing purposes and goals of each program, according to senior DOE, DOT, and EPA officials. The officials also were sometimes unaware of other programs that fund similar activities and said that any existing collaboration was on a case-by-case basis. GAO’s previous work has shown that although federal programs have been designed for different purposes, coordination among programs with related responsibilities is essential to efficiently and effectively meet national concerns. Further, without a coordinated approach, programs can waste scarce funds, confuse and frustrate program customers, and limit the overall effectiveness of the federal effort.Why GAO Did This StudyExhaust from diesel engines is a harmful form of air pollution. EPA has issued emissions standards for new diesel engines and vehicles, but older mobile sources of diesel emissions—such as trucks and buses—continue to emit harmful pollution. Programs at DOE, DOT, and EPA provide funding for activities that reduce diesel emissions, such as retrofitting existing diesel engines and vehicles. The existence of these programs at multiple agencies has raised questions about the potential for unnecessary duplication. In response to a mandate in the Diesel Emissions Reduction Act of 2010, GAO examined the (1) extent of duplication, overlap, fragmentation, or gaps, if any, among federal grant, rebate, and loan programs that address mobile source diesel emissions; (2) effectiveness of federal funding for activities that reduce mobile source diesel emissions; and (3) extent of collaboration among agencies that fund these activities. GAO analyzed program data, documents, and relevant laws and regulations and interviewed agency officials. GAO also reviewed three diesel-related tax expenditures.What GAO RecommendsGAO recommends that DOT’s Federal Transit Administration develop performance measures for its two relevant strategic goals and that DOE, DOT, and EPA establish a strategy for collaboration among their programs that fund activities that reduce diesel emissions. DOE and EPA agreed with the relevant recommendation, and DOE questioned several findings. DOT questioned several findings and both recommendations and neither agreed nor disagreed with the recommendations. GAO continues to believe in the need for the performance measures and collaboration. For more information, contact David Trimble at (202) 512-3841 or trimbled@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-320?source=ra What GAO FoundBOP’s use of authorities to reduce a federal prisoner’s period of incarceration varies. BOP primarily utilizes three authorities—the Residential Drug Abuse Treatment Program (RDAP), community corrections, and good conduct time.(1) Eligible inmates can participate in RDAP before release from prison, but those eligible for a sentence reduction are generally unable to complete RDAP in time to earn the maximum reduction (generally 12 months). During fiscal years 2009 through 2011, of the 15,302 inmates who completed RDAP and were eligible for a sentence reduction, 2,846 (19 percent) received the maximum reduction and the average reduction was 8.0 months. BOP officials said that participants generally do not receive the maximum reduction because they have less than 12 months to serve when they complete RDAP.(2) To facilitate inmates’ reintegration into society, BOP may transfer eligible inmates to community corrections locations for up to the final 12 months of their sentences. Inmates may spend this time in contract residential re-entry centers (RRCs)—also known as halfway houses—and in detention in their homes for up to 6 months. Based on the most recently available data, almost 29,000 inmates completed their sentences through community corrections in fiscal year 2010, after an average placement of about 4 months; 17,672 in RRCs, 11,094 in RRCs then home detention, and 145 in home detention only. RRCs monitor inmates in home detention and charge BOP 50 percent of the daily RRC cost to do so. However, BOP does not require RRC contractors to separate the price of home detention services from the price of RRC beds and thus, does not know the actual costs of home detention. BOP officials stated that they are developing a process to review and amend existing RRC contracts and require new contractors to submit proposals separating out RRC and home detention prices, but did not document the specifics of the review process or establish time frames or milestones for the review. Thus, BOP does not have a roadmap for how it will achieve this goal.(3) Most eligible inmates receive all of their potential good conduct time credit for exemplary compliance with institutional disciplinary regulations—54 days taken off their sentence, per year served, if an inmate has earned or is earning a high school diploma; 42 days if not. As of the end of fiscal years 2009, 2010, and 2011, about 87 percent of inmates had earned all of their available credit.BOP also has other authorities, such as releasing prisoners early for very specialized reasons, but has used these less frequently for various reasons.Inmate eligibility and lack of capacity impact BOP’s use of certain flexibilities and programs that can reduce an inmate’s time in prison. BOP officials cited inmate ineligibility for RRC placement (e.g., inmates who are likely to escape or be arrested or with sentences of 6 months or less, among other things) as the primary reason that some inmates are not released through community corrections and one of the main reasons that some inmates are not able to participate in RDAP. BOP’s lack of additional RRC space has prevented it from increasing the length of its RRC placements. According to BOP, lack of program capacity also prevents eligible inmates from entering and completing RDAP early enough to earn their maximum allowable sentence reductions, which prevents BOP from maximizing the cost savings provided by the authority.Why GAO Did This StudyThe Department of Justice’s Federal Bureau of Prisons (BOP) is responsible for the custody and care of federal offenders. BOP’s population has increased from about 145,000 in 2000 to about 217,000 in 2011 and BOP is operating at 38 percent over capacity. There is no longer parole for federal offenders and BOP has limited authority to affect the length of an inmate's prison sentence. BOP has some statutory authorities and programs to reduce the amount of time an inmate remains in prison, which when balanced with BOP’s mission to protect public safety and prepare inmates for reentry, can help reduce crowding and the costs of incarceration. GAO was asked to address: (1) the extent to which BOP utilizes its authorities to reduce a federal prisoner’s period of incarceration; and (2) what factors, if any, impact BOP's use of these authorities. GAO analyzed relevant laws and BOP policies; obtained nationwide data on inmate participation in relevant programs and sentence reductions from fiscal years 2009 through 2011; conducted site visits to nine BOP institutions selected to cover a range of prison characteristics and at each, interviewed officials responsible for relevant programs; and visited four community-based facilities serving the institutions visited. Though not generalizable, the information obtained from these visits provided insights.What GAO RecommendsGAO recommends that BOP establish a plan, including time frames and milestones, for requiring contractors to submit prices of RRC beds and home detention services. BOP concurred with this recommendation.For more information, contact David C. Maurer at (202) 512-9627 or maurerd@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-281R?source=ra What GAO FoundContracting officials from Air Force and Interior generally did not perform lease versus purchase analyses for selected contracts. Based on contract file reviews and discussions with contracting officials, we found that analyses were not performed and that contracting officials had not considered the alternative acquisition method for 24 of the 32 selected contracts. For the 8 contracts with lease versus purchase analyses, 5 were documented in the contract files and 3 were performed but were not documented, according to contracting officials. In most cases, contract files did not contain basic information to make lease or purchase decisions, such as the length of time the equipment would be used. Even files containing documentation of analyses generally did not address the full range of criteria specified in the FAR. For example, the analyses typically lacked a discussion of the financial and operating advantages of alternate approaches that would help contracting officials determine the appropriate acquisition method. Contracting officials noted that their decision to lease or purchase equipment often depends on the nature of the requirement, such as a short-term need for equipment, based on documents or other correspondence from the requester. Further, these officials generally stated that while they are familiar with the FAR guidance, they typically do not know how or when to perform the analyses and are not provided training on how to do so.GSA officials said they are able to assist agencies in making lease versus purchase decisions, as discussed in the FAR, but could not identify any case when a federal agency had requested this assistance and do not have current information on whom agencies can contact at GSA. Air Force and Interior contracting officials stated they had not sought this assistance and more than half were unaware that GSA could provide such assistance. The two GSA offices listed in the FAR as the offices from which agencies can request assistance in making lease versus purchase decisions no longer exist.Why GAO Did This StudyFederal agencies spend more than $200 billion per year, on average, to lease or purchase equipment, with purchases accounting for nearly all of this spending. With agencies facing new fiscal austerity challenges, it is increasingly important that every dollar is spent cost effectively. The Federal Acquisition Regulation (FAR) provides that when agencies are seeking to obtain equipment, they should consider whether it is more economical to lease equipment rather than purchase it as a component of acquisition planning. This is known as a lease versus purchase analysis.Congress requested that we examine how this process is working. As agreed with your staff, we focused on one defense and one civilian agency, the Department of the Air Force (Air Force) and the Department of the Interior (Interior). We determined (1) the extent to which these agencies perform lease versus purchase analyses for equipment, and (2) the role the General Services Administration (GSA) plays in assisting agencies with making lease versus purchase decisions.What GAO RecommendsWe are recommending that both the Air Force and Interior develop and provide guidance and training to their contracting officials on performing lease versus purchase analyses and that GSA take steps to update the FAR to identify the offices agencies should contact for assistance in conducting these analyses.For more information, contact William T. Woods at (202) 512-4841 or woodsw@gao.gov. Tue, 07 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-309R?source=ra What GAO FoundIn 2010, 31,880—or 10 percent—of all FECA beneficiaries were long-term, full-time beneficiaries and 10,873 of those—or 34 percent—were at full retirement age, as defined under the Social Security Act. Of the $1.9 billion total in cash benefits paid to FECA beneficiaries, over half (58 percent) went to long-term, full-time beneficiaries. Of that half, long-term, full-time beneficiaries at or above full Social Security retirement age received 21 percent. This analysis covered all FECA beneficiaries, including USPS and non-USPS employees.Compared to their federal CSRS retired counterparts, non-USPS long-term, full-time FECA beneficiaries typically received higher benefits in 2010. The median annual FECA benefit of $35,614 was about 26 percent higher than the median annual annuity received by retirees, which was $28,289, after adjusting for the effects of taxes. The difference between FECA benefits and CSRS annuities is typically larger when the FECA beneficiary was injured after fewer years of service. The differences between annual FECA and Civil Service Retirement System (CSRS) benefits in our comparison are largely explained by the benefit calculation formulas used for each set of benefits. The CSRS formula generally awards a smaller percentage of salary than the FECA formula for most workers, except those with long tenure.It is important to note that our finding regarding the difference in benefits levels does not allow us to conclude whether such a difference exists for USPS employees or for current or future annuitants under FERS, a population that is increasing given that FERS covers federal employees first hired in 1984 or later. USPS employees were not included in this analysis because USPS could not provide sufficient data to reliably determine its employees’ work histories for the years covered by our analysis.We examined the experiences of four states that limit state workers’ compensation benefits based on retirement age: Kentucky, Minnesota, Montana, and Tennessee. State officials and attorneys in those states highlighted several aspects of their experiences with these provisions, including cost savings, legal challenges, and financial hardships for some beneficiaries. For example, a workers’ compensation board official from Kentucky stated there has been a decrease in workers’ compensation costs since the retirement-age limitation went into effect; however, their office could not attribute the savings to this provision because they lack statistical data since private insurance carriers pay the benefits rather than the state.Why GAO Did This ReportIn 2010, the Federal Employees Compensation Act (FECA) program paid approximately $2.8 billion in total cash and medical benefits to federal employees who sustained injuries or illnesses while performing federal duties; about $1.9 billion of that was for cash benefits. U.S. Postal Service (USPS) has the largest number of FECA beneficiaries. The Department of Labor (Labor), which oversees the program, categorizes FECA beneficiaries into groups based on their ability to work, length of time receiving benefits, and type of injury. There are some beneficiaries who have been receiving benefits for longer than 90 days, and are completely unable to work. We refer to this group as long-term, full-time beneficiaries. Because there are no time or age limits for receiving FECA benefits, long-term, full-time beneficiaries include people at or older than retirement age.We examined (1) the characteristics and associated compensation costs of long-term, full-time FECA beneficiaries, for USPS and non-USPS employees; (2) how wage compensation benefits for retirement-age, long-term, full-time FECA beneficiaries compare with federal retirees’ annuities (not including USPS employees); and (3) the experiences of states that limit state workers’ compensation benefits for workers at retirement age. For the first question, we could include USPS employees because Labor provided us with data on FECA beneficiaries for all federal agencies, including USPS. However, we could not include USPS employees in answering the second question. Our analysis required determining the work histories for FECA beneficiaries and retired annuitants, using an Office of Personnel Management (OPM) database to obtain these work histories. USPS employees are not included in the OPM database. We subsequently obtained data from USPS; however, the data were missing a significant amount of information necessary to determine the work histories employees for the years covered by our analysis. According to USPS officials, they changed data systems in 1995 and some key data were not available.For more information, contact Andrew Sherrill at (202) 512-7215 or sherrilla@gao.gov or Phillip Herr at (202) 512-2834 or herrp@gao.gov. Mon, 06 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-21?source=ra What GAO FoundOut-of-pocket costs for military families who use DOD-subsidized child care are largely driven by policies that vary by service. DOD establishes income-based fee ranges for on-installation child care, but each service sets its own fees and discounts within these parameters. As a result, in school year 2010 the per-child costs that families from the same income categories paid for on-installation care varied by service and installation. For example, the monthly per-child cost for a family with an income of $50,000 could have ranged from $335 to $518. Families’ costs for off-installation child care through private providers are also affected by policy differences among the services. All services offer subsidies for off-installation care that are intended to make families’ costs comparable to those for on-installation care. In an effort to offer benefits to more families, some services use a fixed cap to limit the subsidy amount. In school year 2010, the Air Force and Navy capped their subsidies at $200 per child per month, and families in these services had higher average monthly costs for off-installation care than Army and Marine Corps families, and also had higher costs than what they would have paid for on-installation care. For example, on average, Navy families using off-installation care paid $87 more per month than they would have paid for on-installation care, while Army families paid $63 less. Other factors, such as the number of children in care, also contributed to families’ costs for off-installation care. DOD and the services’ recent policy changes reduced differences among and within services in families’ costs for on-installation care, and DOD plans to further reduce these differences in the next 3 to 5 years. While the effects of these policy changes on individual families’ costs for off-installation care vary by family, families in services with fixed subsidy caps will likely continue to have higher average costs than families in services that do not.Military families face two main barriers to obtaining DOD-subsidized child care: lack of awareness and insufficient availability. According to DOD officials and based on GAO’s group discussions, some families remain unaware of subsidized child care, particularly off-installation care, despite DOD’s efforts to provide information at pre-deployment briefings, and through other outreach efforts. Families who are geographically isolated from an installation, such as reservists and recruiters, may be less likely to be aware of subsidized care. The individual services have taken steps to increase awareness of DOD-subsidized child care, such as establishing positions for professionals who educate families about child care options. However, even families who are informed about DOD-subsidized child care may face barriers obtaining it due to a lack of available space at on-installation centers and a scarcity of eligible child care providers off installation. The shortage of on-installation child care spaces resulted, in part, from heavy deployment demands, and DOD has responded by approving construction projects that it anticipates will provide over 21,000 new child care spaces using fiscal year 2008 through 2010 funding. DOD and the services have initiatives under way to increase the availability of eligible off-installation providers. In addition, DOD is developing an agencywide system that will provide servicemembers a central place to request both on-installation and off-installation child care. DOD plans to pilot the system in the spring of 2012 and intends to market it DOD-wide to servicemembers once it is fully implemented. The agency is in the process of contracting for the development of a marketing plan.Why GAO Did This StudyAbout a million military servicemembers serve the United States while raising a family, and many need reliable, affordable child care. Paying for high-quality child care can be challenging for these families, so the Department of Defense (DOD) offsets costs by subsidizing on-installation child care centers and offering subsidies for approved off-installation care providers. Deployments related to the wars in Iraq and Afghanistan increased the demand for child care. The extent of military families’ out-of-pocket child care costs for those using subsidized care are not known, and families may face barriers to obtaining DOD-subsidized care. GAO was mandated to examine: (1) the out-of-pocket child care costs paid by military families who use DOD-subsidized care; and (2) the barriers, if any, to obtaining DOD-subsidized care, and what has DOD done in response.To address these objectives, GAO reviewed DOD policies and guidance; interviewed officials from DOD, its contractor that administers DOD’s off-installation child care subsidies, and organizations that support military families; reviewed DOD fee data for school year 2009-2010 (school year 2010) and school year 2010-2011 (school year 2011); and analyzed child care costs for a random probability sample of 338 families using off-installation care in school year 2010. GAO conducted nongeneralizable discussion groups with military parents at two large military installations.GAO is not making recommendations in this report.DOD generally agreed with the report’s findings and also provided additional information on several specific points in the report.For more information, contact Kay E. Brown at (202) 512-7215 or brownke@gao.gov. Fri, 03 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-126?source=ra What GAO FoundFrom 2004 through 2009, expenditures for hospital IMD procedures increased from $16.1 billion to $19.8 billion, an increase of 4.3 percent per year—a rate equal to that of Medicare spending for other hospital procedures. While cardiac and orthopedic procedures accounted for nearly all IMD-related expenditures, orthopedic procedures accounted for most of the increase in such expenditures during this period. Utilization increased at a faster rate for orthopedic devices and accounted for the majority of changes in expenditures for IMD procedures during the period.The information GAO obtained on the amounts hospitals paid for selected IMDs showed substantial variation. For a number of reasons, the detailed information needed to accurately compare prices across hospitals—both the specific model and sale price net of discounts and rebates—was not reported by all respondents for all IMDs in our study. However, data from 31 hospitals indicated substantial variation in reported prices for cardiac devices. For example, the difference between the lowest and highest price hospitals reported paying for a particular automated implantable cardioverter defibrillator (AICD) model was $6,844. The difference between the highest and lowest price reported for another AICD model was $8,723. The price differences for the remaining two AICD models in our study fell in between $6,844 and $8,723. The median prices across the four AICD models ranged from $16,445 to $19,007. A factor particular to the IMD market that affects prices hospitals pay is the influence of physicians on hospitals’ IMD purchasing. Although physicians are not involved in price negotiations, they often express strong preferences for certain manufacturers and models of IMDs. To the extent that physicians in the same hospital have different preferences for IMDs, it may be difficult for the hospital to obtain volume discounts from particular manufacturers. Also, confidentiality clauses barring hospitals from sharing price information make it difficult to inform physicians about device costs and thereby influence their preferences. Other factors that influence IMD prices include the degree of seller competition and a hospital’s market share.These data suggest that some hospitals have substantially less bargaining power with the small group of companies that manufacture particular IMDs and consequently face challenges in obtaining more favorable prices. The lack of price transparency and the substantial variation in amounts hospitals pay for some IMDs raise questions about whether hospitals are achieving the best prices possible. Any excess or unnecessary costs that hospitals incur through IMD pricing may be passed onto the Medicare program.The Department of Health and Human Services, VA, and DOD reviewed a draft of this report and had no general comments.Why GAO Did This StudyImplantable medical devices (IMD)—including a variety of cardiac and orthopedic devices provided to Medicare beneficiaries in inpatient or outpatient hospital settings—represent a significant share of hospitals’ supply costs. Hospitals purchase IMDs directly from manufacturers or through group purchasing organizations (GPO) and their purchasing agreements often contain confidentiality clauses restricting them from revealing to third parties the prices they pay for such devices. Policymakers are concerned that the lack of price transparency inhibits competition in the device market, leading to higher costs for hospitals, and ultimately higher Medicare spending. GAO was asked to examine (1) Medicare spending and utilization trends for procedures involving IMDs provided to beneficiaries, and (2) what available information shows about the prices hospitals pay for IMDs and any factors particular to the IMD market that influence those prices. GAO analyzed the most recently available Medicare inpatient and outpatient hospital claims from fiscal years 2004 through 2009. GAO requested price information on five devices from 60 hospitals, 6 GPOs, Department of Defense (DOD) medical centers, and the Department of Veterans Affairs (VA) health system. GAO interviewed officials from GPOs, device manufacturers, large hospital systems, and small hospitals about the factors that affect the prices hospitals pay for IMDs.For more information, contact James C. Cosgrove at (202) 512-7114 or cosgrovej@gao.gov. Fri, 03 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-382T?source=ra What GAO Found DHS’s primary strategic planning effort in recent years has been the QHSR. In September 2011, GAO reported on the extent to which DHS consulted with stakeholders in developing the QHSR. DHS solicited input from various stakeholder groups in conducting the first QHSR, but DHS officials, several stakeholders GAO contacted, and other reviewers of the QHSR noted concerns with time frames provided for stakeholder consultations and outreach to nonfederal stakeholders. Specifically, DHS consulted with stakeholders—federal agencies; department and component officials; state, local, and tribal governments; the private sector; academics; and policy experts—through various mechanisms, such as the solicitation of papers to help frame the QHSR. DHS and these stakeholders identified benefits from these consultations, such as DHS receiving varied perspectives. However, stakeholders also identified challenges in the consultation process, such as concerns about the limited time frames for providing input into the QHSR or BUR and the need to examine additional mechanisms for including more nonfederal stakeholders in consultations. By providing more time for obtaining feedback and examining mechanisms to obtain nonfederal stakeholders’ input, DHS could strengthen its management of stakeholder consultations and be better positioned to review and incorporate, as appropriate, stakeholders’ input during future reviews. DHS considered various factors in identifying high-priority BUR initiatives for implementation in fiscal year 2012 but did not include risk information as one of these factors, as called for in GAO’s prior work and DHS’s risk-management guidance. Through the BUR, DHS identified 43 initiatives aligned with the QHSR mission areas to serve as mechanisms for implementing those mission areas. According to DHS officials, DHS did not consider risk information in prioritizing initiatives because of differences among the initiatives that made it difficult to compare risks across them, among other things. In September 2011, GAO reported that consideration of risk information during future implementation efforts could help strengthen DHS’s prioritization of mechanisms for implementing the QHSR. Further, GAO reported that DHS established performance measures for most of the QHSR objectives and had plans to develop additional measures. However, with regard to specific programs, GAO’s work has shown that a number of programs and efforts lack outcome goals and measures, hindering the department’s ability to effectively assess results. In 2003, GAO designated the transformation of DHS as high risk because DHS had to transform 22 agencies—several with major management challenges—into one department, and failure to effectively address DHS’s management and mission risks could have serious consequences for U.S. national and economic security. DHS has taken action to implement, transform, and strengthen its management functions, such as developing a strategy for addressing this high-risk area and putting in place common policies, procedures, and systems within individual management functions, such as human capital, that help to integrate its component agencies. However, DHS needs to demonstrate measurable, sustainable progress in implementing its strategy and corrective actions to address its management challenges. Why GAO Did This StudyThe Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Commission Act) requires that beginning in fiscal year 2009 and every 4 years thereafter the Department of Homeland Security (DHS) conduct a review that provides a comprehensive examination of the homeland security strategy of the United States. In February 2010, DHS issued its first Quadrennial Homeland Security Review (QHSR) report, outlining a strategic framework for homeland security. In July 2010 DHS issued a report on the results of its Bottom-Up Review (BUR), a departmentwide assessment to implement the QHSR strategy by aligning DHS’s programmatic activities, such as inspecting cargo at ports of entry, and its organizational structure with the missions and goals identified in the QHSR. This testimony addresses DHS’s efforts to (1) strategically plan its homeland security missions through the QHSR, (2) set strategic priorities and measure performance, and (3) build a unified department. This testimony is based on GAO reports issued in December 2010, February 2011, and September 2011.What GAO RecommendsGAO made recommendations in prior reports for DHS to, among other things, provide more time for consulting with stakeholders during the QHSR process, examine additional mechanisms for obtaining input from nonfederal stakeholders, and examine how risk information could be used in prioritizing future QHSR initiatives. DHS concurred and has actions planned or underway to address them.For more information, contact David C. Maurer at (202) 512-9627 or maurerd@gao.gov. Fri, 03 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-436T?source=ra What GAO FoundGAO identified 56 contracts and task orders that were active during fiscal year 2010 and the first three quarters of fiscal year 2011 under which contracting offices obligated roughly $35.2 million on Arlington’s behalf. These contracts supported cemetery operations, construction and facility maintenance, and new efforts to enhance information-technology systems for the automation of burial operations. The Army has taken a number of steps since June 2010 at different levels to provide for more effective management and oversight of contracts, establishing new support relationships, formalizing policies and procedures, and increasing the use of dedicated contracting staff to manage and improve its acquisition processes. However, GAO found that ANCP does not maintain complete data on its contracts, responsibilities for contracting support are not yet fully defined, and dedicated contract staffing arrangements still need to be determined. The success of Arlington’s acquisition outcomes will depend on continued management focus from ANCP and its contracting partners to ensure sustained attention to contract management and institutionalize progress made to date. GAO made three recommendations to continue improvements in contract management. The Department of Defense (DOD) partially concurred and noted actions in progress to address these areas.The Army has taken positive steps and implemented improvements to address other management deficiencies and to provide information and assistance to families. It has implemented improvements across a broad range of areas at Arlington, including developing procedures for ensuring accountability over remains and improving its capability to respond to the public and to families’ inquiries. Nevertheless, the Army has remaining management challenges in several areas—managing information-technology investments, updating workforce plans, developing an organizational assessment program, coordinating with key partners, developing a strategic plan, and developing guidance for providing assistance to families. GAO made six recommendations to help address these areas. DOD concurred or partially concurred and has begun to take some corrective actions.A transfer of jurisdiction for the Army’s two national cemeteries to VA is feasible based on historical precedent for the national cemeteries and examples of other reorganization efforts in the federal government. However, several factors may affect the advisability of making such a change, including the potential costs and benefits, potential transition challenges, and the potential effect on Arlington’s unique characteristics. In addition, given that the Army has taken steps to address deficiencies at Arlington and has improved its management, it may be premature to move forward with a change in jurisdiction, particularly if other options for improvement exist that entail less disruption. GAO identified opportunities for enhancing collaboration between the Army and VA that could leverage their strengths and potentially lead to improvements at all national cemeteries. GAO recommended that the Army and VA develop a mechanism to formalize collaboration between these organizations. DOD and VA concurred with this recommendation.Why GAO Did This StudyArlington National Cemetery (Arlington) is the final resting place for many of our nation’s military servicemembers, their family members, and others. In June 2010, the Army Inspector General identified problems at the cemetery, including deficiencies in contracting and management, burial errors, and a failure to notify next of kin of errors. In response, the Secretary of the Army issued guidance creating the position of the Executive Director of the Army National Cemeteries Program (ANCP) to manage Arlington and requiring changes to address the deficiencies and improve cemetery operations. In response to Public Law 111-339, GAO assessed several areas, including (1) actions taken to improve contract management and oversight, (2) the Army’s efforts to address identified management deficiencies and provide information and assistance to families regarding efforts to detect and correct burial errors, and (3) factors affecting the feasibility and advisability of transferring jurisdiction for the Army’s national cemeteries to the Department of Veterans Affairs (VA). The information in this testimony summarizes GAO’s recent reports on Arlington contracting (GAO-12-99) and management (GAO-12-105). These reports are based on, among other things, analyzing guidance, policies, plans, contract files, and other documentation from the Army, Arlington, and other organizations and interviews with Army and VA officials.What GAO RecommendsIn the reports, GAO made several recommendations to help Arlington sustain progress made to date.For more information, contact Belva Martin at (202) 512-4841 or martinb@gao.gov or Brian Lepore at (202) 512-4523 or leporeb@gao.gov. Fri, 03 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-340?source=ra What GAO FoundDOD’s reports to Congress on estimated weapon system O&S costs are often inconsistent and sometimes unreliable, limiting visibility needed for effective oversight of these costs. The SAR statute requires that life-cycle cost reporting for major weapon systems be uniform, to the extent practicable, across the department, but GAO found a number of inconsistent practices in how program offices were reporting life-cycle O&S cost estimates in the SAR. Program offices were inconsistent in (1) the explanatory information they included with the cost estimates; (2) the source of the cost estimate they cited as the basis for the reported costs; (3) the unit of measure they used to portray average costs; (4) the frequency with which they updated reported costs; and (5) the reporting of costs for an antecedent system being replaced by the new weapon system. For example, 35 (42 percent) of the 84 programs that reported O&S costs in the 2010 SAR did not cite a source of these data, contrary to DOD’s guidance, and 57 (68 percent) of the programs did not report O&S costs for an antecedent system. Also, O&S cost submissions in the SAR did not always incorporate best practices for presenting cost estimates, such as tracking cost changes over time and identifying cost drivers. In addition, 11 systems did not provide O&S cost estimates in the 2010 SAR.Although SARs are intended to provide Congress with authoritative program information on major weapon systems, 7 of the 15 sample programs GAO reviewed submitted unreliable O&S cost estimate data in the 2007, 2009, or 2010 SARs. For example, an Air Force program underreported O&S costs by $2.1 billion (fiscal year 2002 dollars), or 18 percent. While some of the program offices did not provide an explanation for the errors in the submitted data, others cited specific reasons. For example, one Navy program office underreported O&S costs in the SAR and explained that it excluded certain costs that were not under its control, such as externally funded spare parts and military personnel. However, excluding such costs is contrary to the SAR statute. An Air Force program reported current and projected funding for the program rather than estimated life-cycle O&S costs. This practice also had the effect of underreporting these costs.DOD’s reports to Congress on estimated weapon system O&S costs were often inconsistent and sometimes unreliable due to a lack of (1) detailed implementation guidance for reporting these costs and (2) an effective process for reviewing the O&S cost sections of the SAR before final submission to Congress. DOD’s guidance collectively provides minimal instructions for O&S cost reporting. The guidance also does not incorporate some of the best practices GAO has identified for presenting cost estimates. Further, although the SAR data submitted by program offices are subject to multiple reviews within the military services and by the Office of the Secretary of Defense, this review process has not provided assurance that O&S costs are reported consistently and reliably. In the absence of improvements to the SAR guidance and to the review process, deficiencies in reporting O&S costs are likely to continue. Improved reporting of O&S costs in the SAR could help to place more emphasis on assessing, managing, and controlling long-term weapon system O&S costs.Why GAO Did This StudyWith the nation facing fiscal challenges and the potential for tighter defense budgets, Congress and the Department of Defense (DOD) have placed more attention on controlling the billions of dollars spent annually on weapon system operating and support (O&S) costs. These costs include, costs for repair parts, maintenance, and personnel, and account for about 70 percent of the total costs of a weapon system over its life cycle. The selected acquisition report (SAR) is DOD’s key recurring status report on the cost, schedule, and performance of major defense acquisition programs and is intended to provide authoritative information for congressional oversight of these programs. Oversight of O&S costs is important because many of the key decisions affecting these life-cycle costs are made during the acquisition process. GAO reviewed weapon system O&S cost estimates that DOD submits in the SAR. Specifically, GAO determined the extent to which the SARs provide consistent and reliable O&S cost estimate information that enables effective oversight of these weapon system costs. To conduct its review, GAO analyzed SAR data for 84 major systems that submitted O&S cost estimates in the 2010 SAR and selected a nonprobability sample of 15 systems for more in-depth review.What GAO RecommendsTo enhance visibility of weapon system O&S costs during acquisition, GAO recommends that DOD improve its guidance to program offices on cost reporting and also improve its process for reviewing these costs prior to final submission of the SAR to Congress. DOD concurred with GAO’s recommendations.For more information, contact Cary B. Russell at (404) 679-1808 or russellc@gao.gov. Thu, 02 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-430T?source=ra What GAO FoundIn a series of reviews, GAO found that OPM’s retirement modernization efforts were hindered by weaknesses in key management practices that are essential to successful IT modernization projects. For example, in 2005, GAO made recommendations to address weaknesses in the following areas:Project management: While OPM had defined major components of its retirement modernization effort, it had not identified the dependencies among them, increasing the risk that delays in one activity could have unforeseen impacts on the progress of others.Risk management: OPM did not have a process for identifying and tracking project risks and mitigation strategies on a regular basis. Thus, OPM lacked a mechanism to address potential problems that could adversely impact the cost, schedule, and quality of the modernization effort.Organizational change management: OPM had not adequately prepared its staff for changes to job responsibilities resulting from the modernization by developing a detailed transition plan. This could lead to confusion about roles and responsibilities and hinder effective system implementation.In 2008, as OPM was on the verge of deploying an automated retirement processing system, GAO reported deficiencies in and made recommendations to address additional management capabilities:Testing: The results of tests 1 month prior to the deployment of a major system component revealed that it had not performed as intended. These defects, along with a compressed testing schedule, increased the risk that the system would not work as intended upon deployment.Cost estimating: The cost estimate OPM developed was not fully reliable. This meant that the agency did not have a sound basis for formulating budgets or developing a program baseline.Progress reporting: The baseline against which OPM was measuring the progress of the program did not reflect the full scope of the project; this increased the risk that variances from planned performance would not be detected.In 2009, GAO reported that OPM continued to have deficiencies in its cost estimating, progress reporting, and testing practices and made recommendations to address these deficiencies, as well as additional weaknesses in the planning and oversight of the modernization effort. OPM agreed with these recommendations and began to address them, but the agency terminated the modernization effort in February 2011.More recently, in January 2012, OPM released a new plan to improve retirement processing that aims at targeted, incremental improvements rather than a largescale modernization. Specifically, OPM plans to hire new claims-processing staff, take steps to identify potential process improvements, and work with other agencies to improve data quality. Further, OPM intends to make IT improvements that allow retirees to access and update their accounts and automate the retirement application process. However, the plan reflects a less ambitious retirement processing timeliness goal and does not address improving or eliminating the legacy systems that support retirement processing.Why GAO Did This StudyThe Office of Personnel Management (OPM) is the central human resources agency for the federal government and, as such, is responsible for ensuring that the government has an effective civilian workforce. As part of its mission, OPM defines recruiting and hiring processes and procedures; provides federal employees with various benefits, such as health benefits; and administers the retirement program for federal employees. OPM’s use of information technology (IT) is critical in carrying out its responsibilities; in fiscal year 2011 the agency invested $79 million in IT systems and services. For over 2 decades, OPM has been attempting to modernize its federal employeeretirement process by automating paper-based processes and replacing antiquated information systems. However, these efforts have been unsuccessful, and OPM canceled its most recent large-scale retirement modernization effort in February 2011.GAO was asked to summarize its work on challenges OPM has faced in attempting to modernize the federal employee retirement process. To do this, GAO relied on previously published work in addition to reviewing OPM’s recent plan for retirement services.What GAO RecommendsGAO is not making new recommendations at this time. GAO has previously made numerous recommendations to address IT management challenges OPM has faced in carrying out its retirement modernization efforts. Fully addressing these challenges remains key to the success of OPM’s efforts.For more information, contact Valerie C. Melvin at (202) 512-6304 or melvinv@gao.gov. Wed, 01 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-321R?source=ra What GAO FoundIran’s involvement in illicit nuclear activities, support for terrorism, and abuse of human rights has led the United States, as well as other nations, to impose sanctions in an attempt to curb these activities. According to the Department of State (State), the sanctions are intended to, among other things, target sectors of the Iranian economy that are relevant to Iran’s proliferation activities and block the transfer of weapons and technology related to Iran’s missile and nuclear programs. One of the measures enacted by the United States, intended to limit resources available for proliferation and support for terrorism, imposes sanctions on firms that sell refined petroleum products to Iran.According to the Department of Energy (DOE), Iran has limited refinery capacity and has been reliant on imports of refined petroleum products to meet domestic demand for gasoline. Foreign commercial activity in Iran’s energy sector has also declined in recent years, limiting Iran’s ability to produce gasoline to meet demand, much less to export refined petroleum products on world markets. However, according to State and DOE officials, Iran has attempted to reduce its dependence on foreign refined petroleum products by reducing gasoline subsidies to its citizens in order to reduce demand, converting petrochemical facilities to produce gasoline, as well as expediting the construction of new refineries or the expansion of current refineries. In 2009, Iran imported approximately 130,000 barrels of gasoline per day, but, according to DOE, in 2010 the amount of gasoline shipped to Iran declined to an estimated 78,000 barrels per day, and by July 2011 it had declined to 50,000 barrels per day, according to "Petroleum Intelligence Weekly."The United States has imposed multiple sanctions through various legislation and executive orders, including the Iran Sanctions Act of 1996 (ISA). On July 1, 2010, the President signed into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010, which amends ISA, among other provisions. ISA, as amended, provides for sanctions to be imposed against persons, including foreign firms, who engage in certain activities in Iran’s energy sector, including selling or providing Iran with refined petroleum products. In 2010, we identified, in open sources, 16 firms that reported having sold refined petroleum products to Iran from January 1, 2009, to June 30, 2010. This report updates the findings of the 2010 report.As Congress requested, this report (1) provides a list of firms reported to have sold refined petroleum products to Iran from July 1, 2010, through December 31, 2011, and firms reported to have stopped sales to Iran since the 2010 report, and (2) identifies which of those firms have contracts with the U.S. government. We defined the sale of refined petroleum products as receiving payment for the provision of any such products through direct sale, shipment, or brokering (i.e., trading) of these products to Iran.Why GAO Did This StudyBased on open source information, four firms—Petróleos de Venezuela S.A., China Oil, Unipec, and Zhuhai Zhenrong—were reported to have sold refined petroleum products to Iran between July 1, 2010, and December 31, 2011. Of the four firms, Petróleos de Venezuela S.A. was not identified in our 2010 report. According to open sources, the number of firms selling refined petroleum products to Iran has decreased since the release of our 2010 report. Eleven of the 16 firms that we listed in our 2010 report were reported in open sources and/or indicated in letters to us that they had stopped sales of refined petroleum products to Iran, and we did not find any open sources that reported the firms having sold refined petroleum products to Iran since June 30, 2010. For two firms that our 2010 report listed as having been reported to have sold refined petroleum products to Iran—Emirates National Oil Company and Hin Leong Trading Corporation—we did not find sufficient open source information that reported whether the firms had continued or ceased sales of refined petroleum products to Iran since June 30, 2010. According to DOE and open source reports, as well as a State official, sanctions have made it difficult for Iran to import gasoline as many suppliers of refined petroleum products stopped shipments after the passage of CISADA. According to DOE and State officials, Iran has attempted to increase its ability to refine its own gasoline and to reduce domestic demand.The U.S. government did not have contracts with the three Chinese firms or Petróleos de Venezuela S.A., which were reported in open sources to have sold Iran refined petroleum products between July 1, 2010, and December 31, 2011.For more information, contact Thomas Melito at (202) 512-9601 or melitot@gao.gov. Wed, 01 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-208G?source=ra This publication supersedes PEMD-10.1.4, Designing Evaluations, May 1, 1991. GAO assists congressional decision makers in their deliberations by furnishing them with analytical information on issues and options. Many diverse methodologies are needed to develop sound and timely answers to the questions the Congress asks. To provide GAO evaluators with basic information about the more commonly used methodologies, GAO’s policy guidance includes documents such as methodology transfer papers and technical guides.This methodology transfer paper addresses the logic of program evaluation designs. It introduces key issues in planning evaluation studies of federal programs to best meet decision makers’ needs while accounting for the constraints evaluators face. It describes different types of evaluations for answering varied questions about program performance, the process of designing evaluation studies, and key issues to consider toward ensuring overall study quality.To improve federal program effectiveness, accountability and service delivery, the Congress enacted the Government Performance and Results Act of 1993 (GPRA), establishing a statutory framework for performance management and accountability, including the requirement that federal agencies set goals and report annually on progress towards those goals and program evaluation findings. In response to this and related management reforms, federal agencies have increased their attention to conducting program evaluations. The GPRA Modernization Act of 2010 raised the visibility of performance information by requiring quarterly reviews of progress towards agency and governmentwide priority goals. Designing Evaluations is a guide to successfully completing evaluation design tasks. It should help GAO evaluators—and others interested in assessing federal programs and policies—plan useful evaluations and become educated consumers of evaluations.Designing Evaluations is one of a series of papers whose purpose is to provide guides to various aspects of audit and evaluation methodology and indicate where more detailed information is available. It is based on GAO studies and policy documents and program evaluation literature. To ensure the guide’s competence and usefulness, drafts were reviewed by selected GAO, federal and state agency evaluators, and evaluation authors and practitioners from professional consulting firms. This paper updates a 1991 version issued by GAO’s prior Program Evaluation and Methodology Division. It supersedes that earlier version and incorporates changes in federal program evaluation and performance measurement since GPRA was implemented. Wed, 01 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-316R?source=ra What GAO FoundSince the fall of 2010, State has sanctioned 13 foreign firms under the ISA—2 for investments in Iran’s energy sector and 11 for supplying refined petroleum products.State imposed various sanctions on each firm, listed 10 in EPLS making them ineligible to receive U.S. government contracts, and was in the process of listing the remaining 3 firms in EPLS at the time of this report. To enforce the ISA, State has increased its staff to review available information on companies’ activities in Iran’s energy sector, including information indicating whether affiliated parent companies should be held accountable, relying heavily on the intelligence community and U.S. embassies to corroborate the information. The final decision on whether to apply sanctions is made by the Secretary of State or a delegee after the information and evidence of potentially sanctionable activity is vetted through State and other agencies when applicable. In addition to sanctions, State officials told us that they have been successful in persuading firms to end their business dealings with Iran, and that the number of foreign firms involved in Iran’s energy sector has declined. However, they acknowledged that some firms are still operating in Iran’s energy sector, and they are continuing their efforts to enforce the ISA.In September 2010, the administration revised the FAR, as required by CISADA, to include a requirement for prospective contractors to certify that they or any firm owned or controlled by them are not engaging in activities for which sanctions may be imposed under section 5 of the ISA. The certification was subsequently added to the governmentwide electronic system for maintaining various certifications and representations that are required for contractors to do business with the government. The FAR was also revised to include remedies upon determination of false certification and procedures for obtaining waivers to the certification requirement, which would be needed if it was in the national interest for an agency to contract with a firm that has engaged in sanctionable activity.However, none of the 13 firms sanctioned by State under the ISA held government contracts or were registered to respond to solicitations for contracts, or submitted an offer after the certification requirement went into effect, so there is no evidence of false certifications or the need for waivers.Why GAO Did This StudyIt is the policy of the United States to deter Iran from developing its nuclear program, supporting terrorism, and abusing human rights by limiting the development of Iran’s energy sector, which is vital to its economy and government. The Iran Sanctions Act of 1996 (ISA), as amended, provides for sanctions against firms determined to have made certain investments in Iran’s energy sector.While the ISA applies to all firms, U.S. firms were already prohibited from investing in Iran under a U.S. trade embargo, and the ISA was enacted to encourage foreign firms to withdraw from the Iranian market. However, no sanctions have been imposed under the ISA by any prior administration.The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) amended the ISA by expanding the energy-related activities for which sanctions could be applied to include firms determined to have provided to Iran or invested in Iran’s development of refined petroleum products.Sanctions include excluding firms from receiving U.S. government contracts. CISADA also directed that the Federal Acquisition Regulation (FAR) be revised to require firms seeking U.S. government contracts to certify that neither they nor any firms owned or controlled by them are engaged in activities for which sanctions may be imposed under section 5 of the ISA. If a contractor submits a false certification, agencies may terminate the contract, or suspend or debar the contractor, in accordance with procedures in the FAR, from government contracts. The certification requirement may be waived in the interest of national security. The Department of State (State) is responsible for enforcing the energy-related sanctions under the ISA, as amended.In response to your request, this report (1) identifies State actions and processes to enforce energy sector-related sanctions under the ISA and (2) describes the implementation of the contractor certification requirement and identifies any indications of false certifications or the need for waivers of the certification requirements. We are issuing a separate report covering firms identified in open sources as selling refined petroleum products to Iran from July 2010 through December 2011.For more information, contact Belva M. Martin at (202) 512-4841 or martinb@gao.gov. Wed, 01 Feb 2012 12:00:00 -0500 http://www.gao.gov/products/GAO-12-59?source=ra What GAO FoundThe 2011 Information Reporting and Document Matching (IRDM) cost estimate, used to justify the program’s projected budgets of $115 million for fiscal years 2012 through 2016, generally does not meet best practices for reliability. The cost estimate did not fully meet any of the four best practices for a reliable cost estimate.For example, the cost estimate minimally meets best practices for a well documented estimate because the Internal Revenue Service (IRS) did not provide detailed support for staff resources, and the cost estimate documentation only justified about 6 out of the 86 requested full time equivalent staff for IRDM, among other things. If documentation does not provide source data or cannotexplain the calculations underlying the cost elements, the estimate’s credibility may suffer. Although IRS has an independent office of cost estimators that can develop and update cost estimates using cost modeling software that generally follows GAO’s best practices, this office did not develop the 2011 IRDM cost estimate. IRS policy does not require project teams to work with the office to update cost estimates. Additionally, IRS’s cost estimation guidance for project managers is inconsistent regarding how cost estimates should be related to a budget, an inconsistency that could lead to budget requests that do not accurately estimate program funding needs.The IRDM program’s earned value management (EVM) data did not meet data reliability criteria in the areas GAO reviewed. For example, the IRDM project schedule was not properly sequenced—meaning activities were not properly linked in the order in which they are to be carried out. In addition, surveillance was not conducted on IRDM’s EVM system, as required by the Office of Management and Budget and the Department of the Treasury. Surveillance involves having qualified staff review an EVM system. Because IRDM’s 2011 cost estimate is based on unreliable EVM data, it does not provide adequate support for IRDM’s budget requests. Until IRS addresses deficiencies in the EVM data, it cannot provide a reliable cost estimate for IRDM.Why GAO Did This StudyThe Internal Revenue Service (IRS) began developing the Information Reporting and Document Matching (IRDM) program in fiscal year 2009 to enhance IRS’s ability to automatically compare different sources of tax information and thus improve its capacity to identify and address taxpayer noncompliance. GAO’s May 2011 report recommended that IRS follow best practices from the GAO’s Cost Estimating and Assessment Guide if IRS updated the cost estimate for building IRDM systems. IRS provided a new cost estimate for IRDM in August 2011. In this report, GAO assessed the extent to which (1) the IRDM funding request is supported by a reliable cost estimate and, if not reliably supported, why not; and (2) IRS’s practices for capturing data on IRDM’s actual costs and comparing them to estimated costs—known as earned value management (EVM)—generate reliable performance data. GAO compared IRS’s 2011 IRDM cost estimate to criteria in GAO’s cost guide and analyzed IRDM’s earned value management data.What GAO RecommendsGAO recommends that IRS ensure that IRDM has a reliable cost estimate, require certain project teams to work with its Estimation Program Office, improve cost estimation guidance, and improve the reliability of IRDM’s EVM data. IRS agreed with one, partially agreed with one, and disagreed with two of GAO’s recommendations. GAO generally disagrees with IRS’s concerns, and still believes the recommendations have merit.For more information, contact Michael Brostek at (202) 512-9110 or brostekm@gao.gov. Tue, 31 Jan 2012 12:00:00 -0500