http://www.gao.gov/docsearch/repandtest.html Fri, 03 Sep 2010 10:51:53 +0100 FeedCreator 1.7.2-ppt http://www.gao.gov/images/title_object.jpg http://www.gao.gov/ http://www.gao.gov/products/GAO-10-826?source=ra The recording and broadcast radio industries touch the lives of most Americans through the development and distribution of music. Congress is considering legislation, the proposed Performance Rights Act (H.R. 848), that would expand copyright protection for the public performance of sound recordings. The proposed act would require AM/FM radio stations that broadcast music to pay a royalty, and this royalty would be distributed to the copyright holder, performers, and musicians. This report addresses (1) the benefits received by the recording and broadcast radio industries from their current relationship, (2) the possible effects of the proposed act on the broadcast radio industry, and (3) the possible effects of the proposed act on the recording industry. To address these objectives, GAO analyzed data on music sales, broadcast radio airplay, and broadcast radio stations' revenues; calculated potential royalty payments; and interviewed stakeholders from both industries as well as experts and government officials. The Federal Communications Commission (FCC) and the U.S. Copyright Office of the Library of Congress reviewed a draft of this report. FCC noted that it has an interest in legislation that might have an adverse impact on radio stations. The Copyright Office addressed certain methodological approaches and findings in our draft report. Broadcast radio benefits from the use of sound recordings to generate advertising revenue and the recording industry may benefit from radio airplay that can promote sales. Radio stations use sound recordings to attract listeners and generate revenue from advertisers. GAO found that, on average, radio stations with a music format generate $225,000 more in annual revenues than nonmusic stations, such as talk or sports stations. Stations serving large populations receive more revenue from music content compared to stations serving a small population. Most industry stakeholders believe that radio airplay promotes sales for the recording industry, and past and current business practices support this conclusion. However, GAO found the relationship between airplay and music sales to be unclear. The presence of other promotional outlets, such as the Internet and special events, and growth of music piracy create a more nuanced environment wherein the relationship between airplay and music sales is less clear than in the past. The proposed act would result in additional costs for the broadcast radio industry. Under the proposed act, the royalty paid by a radio station would vary according to the station's gross annual revenues and status as commercial or noncommercial. Because the royalty paid by some radio stations would be negotiated or determined subsequent to passage of the proposed act, the total cost to the broadcast radio industry, including the costs to minority and female radio station owners, cannot be determined at this time. If broadcast radio stations with revenues of $1.25 million or more pay a royalty based on a percentage of station revenues, every 1 percentage point would cost the broadcast radio industry $101 million per year. For example, a 2.35 percent rate paid by these stations would entail total annual costs to the radio industry of over $258 million. GAO also estimated that with a 2.35 percent rate, the 25 percent of stations with revenues of $1.25 million or more would pay over 90 percent of the total royalties. According to broadcast industry stakeholders, these costs could lead some stations to reduce staff, switch to a nonmusic format, or discontinue operations. The proposed act would result in additional revenue for recording industry stakeholders. Several factors would influence the revenues a stakeholder receives, including the total royalty payments, the stakeholder's role (copyright holder, performer, or musician), and the amount of airplay the stakeholder's music receives. Since the total royalty payments cannot be determined at this time, the additional revenue for recording industry stakeholders is also unknown. However, assuming a 2.35 percent royalty rate, GAO estimated that 56 percent of performers would receive $100 or less per year, and fewer than 6 percent of performers would receive $10,000 or more per year in royalties from airplay in the top 10 markets; music radio stations in these markets generate about 21 percent of industry revenues. Some experts and the Copyright Office believe that the additional revenue would promote investment in music and greater employment, although this opinion is not universally held. Fri, 03 Sep 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-1025R?source=ra As an important part of the economic stimulus efforts, Congress enacted the First- Time Homebuyer Credit (FTHBC) to assist the struggling real estate market and encourage taxpayers to purchase their first homes. Congress enacted different versions of the FTHBC--as part of the Housing and Economic Recovery Act of 2008 (Housing Act); the American Recovery and Reinvestment Act of 2009 (Recovery Act); and the Worker, Homeownership, and Business Assistance Act of 2009 (Assistance Act). The dollar amounts that can be claimed and rules associated with the credit, including potential repayment, vary depending on the version. Joint Committee on Taxation estimates suggest that the three FTHBC provisions combined may result in total revenue losses to the federal government of about $22 billion through 2019. In response to the request for updated information on the use of the FTHBC, our objectives were to identify (1) the number of FTHBC claims and dollar amounts claimed for each credit version by state and (2) state rankings, using selected statistics, such as the total dollar amount of FTHBC claimed in each state. Through July 3, 2010, IRS reported the following: (1) About 1 million claimants claimed $7.3 billion in interest-free loans through the Housing Act provision. These claimants will begin repaying their loan beginning next tax filing season, which starts in January 2011. (2) About 2.3 million claimants claimed a total of $16.2 billion using both the Recovery Act and Assistance Act provisions. Of these claimants: (1) About 1.7 million claimed about $12.1 billion using the Recovery Act provision This represents half of all claims, making it the most frequently used version of the FTHBC. (2) Nearly 600,000 claimed about $4.1 billion using the Assistance Act provision. Of these, close to 400,000 claimed about $2.9 billion using the first-time homebuyer option and nearly 200,000 claimed $1.2 billion using the long-time homeowner option. These numbers in particular are likely to increase because IRS is still processing FTHBC returns and this version can be claimed on tax returns filed during the 2011 filing season. State rankings vary depending on the statistic used for analysis and may change as IRS continues to process FTHBC returns. The three statistics we selected--total dollar amount claimed, dollar amount claimed per resident, and average dollar amount claimed per FTHBC claim--illustrate how the results can vary.10 Thus, as the following examples illustrate, care should be taken to select measures appropriate for a particular purpose. (1) California, the most populous state in the country, ranked 1st with the most FTHBC dollars claimed under the Housing Act provision, as well as under the combined provisions of the Recovery and Assistance Acts. However, California ranked 32nd and 29th in the amount of FTHBC claimed per resident under the Housing Act provision and under the combined provisions of the Recovery and Assistance Acts, respectively. (2) Nevada ranked 1st in the amount of FTHBC claimed per resident under the Housing Act provision, as well as under the combined provisions of the Recovery and Assistance Acts. However, Nevada ranked 26th and 24th in the amount of FTHBC dollars claimed under the Housing Act provision and under the combined provisions of the Recovery and Assistance Acts, respectively. (3) Utah ranked 1st in the average dollar amount of FTHBC claimed per claim under the Housing Act provision, as well as under the combined provisions of the Recovery and Assistance Acts. However, Utah ranked 29th and 30th in the amount of FTHBC dollars claimed under the Housing Act provision and under the combined provisions of the Recovery and Assistance Acts, respectively. We are not making any recommendations, as, at our request, IRS took action during our review to segregate data by credit version which should provide more accurate information as a basis for more effective enforcement. Having FTHBC data in this format is critical for effective enforcement, since claimants are subject to different rules and requirements depending on the version of the credit. Thu, 02 Sep 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-807?source=ra The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides $70.3 billion for three education programs--the State Fiscal Stabilization Fund (SFSF), Title I of the Elementary and Secondary Education Act (Title I), and Individuals with Disabilities Education Act (IDEA). The Act requires recipients to be accountable for how these funds are being used and what is being achieved. To help attain the level of transparency needed for accountability, recipients are to report quarterly on their award activities and expected outcomes. This information is available to the public on Recovery.gov, the government's official Recovery Act Web site. This report covers three Education programs funded by the Recovery Act. It (1) describes what the Office of Management and Budget (OMB) and the Department of Education (Education) did to facilitate implementation of requirements for recipients to describe the use of funds and (2) assesses the extent to which award descriptions are transparent It also describes reported fund uses for a sample of subrecipients. GAO reviewed requirements for reporting in the Act as well as guidance provided by OMB and Education. GAO assessed the transparency of descriptions for the three education programs on Recovery.gov. Both OMB and Education provided guidance to recipients on how to meet the Recovery Act requirement that they report quarterly on the amount and use of the funds they have received. OMB's guidance was generic for all agencies and instructed recipients to report narrative information that captures the overall purpose of the award, describes projects or activities, and states the expected results. Education's guidance was supplemental and program specific to its formula grants that pass through states as the prime recipient to subrecipients, which are local educational agencies (LEA) and institutions of higher education. However, the Recovery Act reporting system does not provide specific narrative fields for collecting information on how each subrecipient is using the funds. Instead, the states are tasked with reporting on fund use throughout the state, and the reporting system limits the amount of narrative information states may enter. For states with many subrecipients, including detailed information on how each subrecipient is using the funds would be extremely challenging, if not impossible. To ease the reporting burden for prime recipients, Education's guidance provided recipients with suggested standard language for use in important narrative fields. GAO determined that 9 percent of the descriptions fully met our transparency criteria; that is, they had sufficiently clear and complete information on the award's purpose, scope and nature of activities, location, cost, outcomes, and status of work. Most descriptions did not include sufficient information on local fund use. Specifically, while 13 percent had most but not all information, the remaining 78 percent contained much less information and only partially met attributes for transparency. We did not find any descriptions that did not include at least some of the information needed to inform the public. Descriptions limited to Education's standard language were less transparent than those with specific information on the programs and activities subrecipients conducted in the state. For example, officials from seven Texas LEAs told us they used ESEA Title I Recovery Act funds for technology purchases for at-risk students, although the information in Texas' project description uses only the standard language. Guidance on reporting requirements for Recovery Act grants that pass through a prime recipient to a subrecipient should balance the need for transparency with the reporting burden and these system limitations. While most states cannot provide information on how each subrecipient is using its funds, providing more information than Education's standard language, such as an overview analysis of how localities are spending the funds, could help the public gain a better understanding of how the funds are being used. GAO recommends that the Secretary of Education, in consultation with OMB, remove the suggested language for the project description field from its guidance and instruct states to include information, to the extent possible, on how the funds are being used and potential project outcomes or results. Thu, 02 Sep 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-867?source=ra The United States depends on avast network of pipelines to transport energy. GAO was asked to review the Transportation Security Administration's (TSA) efforts to help ensure pipeline security. This report addresses the extent to which TSA's Pipeline Security Division (PSD) has (1) assessed risk and prioritized efforts to help strengthen pipeline security, (2) implemented agency guidance and requirements of the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Commission Act) regarding pipeline security, and (3) measured its performance in strengthening pipeline security. GAO reviewed PSD's risk assessment process and performance measures and observed 14 PSD reviews and inspections scheduled during the period of GAO's review. Although these observations are not generalizable, they provided GAO an understanding of how PSD conducts reviews and inspections. PSD identified the 100 most critical pipeline systems and developed a pipeline risk assessment model based on threat, vulnerability, and consequence, but could improve the model's consequence component and better prioritize its efforts. The consequence component takes into account the economic impact of a possible pipeline attack, but not other possible impacts such as public health and safety, as called for in the Department of Homeland Security's (DHS) risk management guidance. PSD plans to improve its model by adding more vulnerability and consequence data, but has no time frames for doing so. Establishing a plan with time frames, as called for by standard management practices, could help PSD enhance the data in, and use of, its risk assessment model. Also, PSD procedures call for scheduling Corporate Security Reviews (CSR)--assessments of pipeline operators' security planning--based primarilyon a pipeline system's risk, but GAO's analysis of CSR data suggests a system's risk was not the primary consideration. Documenting a methodology for scheduling CSRs that includes how to balance risk with other factors could help PSD ensure it prioritizes its oversight of systems at the highest risk. PSD has taken actions to implement agency guidance that outlines voluntary actions for pipeline operators and 9/11 Commission Act requirements for pipeline security, but lacks a system for following up on its security recommendations to pipeline operators. PSD established CSR and Critical Facility Inspection (CFI) Programs in 2003 and 2008, respectively, and has completed CSRs of the 100 most at-risk systems, started conducting second CSRs, and completed 224 of 373 one-time CFIs. Both programs result in recommendations, but PSD does not generally send CSR recommendations to operators in writing or follow up to ensure that CSR and CFI recommendations were implemented. Standard project management practices call for plans that define approaches and start dates and Standards for Internal Control in the Federal Government calls for monitoring to ensure review findings are resolved. Developing a plan for how and when PSD will begin transmitting CSR recommendations to operators, and following up on CSR and CFI recommendations could better inform PSD of the state of pipeline security and whether operators have addressed vulnerabilities. PSD has taken steps to gauge its progress in strengthening pipeline security, but its ability to measure improvements is limited. In its pipeline security strategy, PSD does not include performance measures or link them to objectives, which GAO previously identified as desirable in security strategies. In addition, PSD developed performance measures, including one outcome measure to gauge its efforts to help operators reduce vulnerabilities identified in CSRs. However, the outcome measure does not link to all three of PSD's objectives and provides limited information on improvements in areas such as physical security. According to DHS risk management guidance, outcome measures should link to objectives. Including measures linked to objectives in its strategy and developing more outcome measures directly linked to all of its objectives could help PSD improve accountability and assess improvements. GAO recommends that TSA, among other things, establish time frames for improving risk model data, document its method for scheduling reviews, develop a plan for transmitting recommendations to operators, follow up on its recommendations, include performance measures linked to objectives in its pipeline strategy, and develop more outcome measures. DHS concurred with the recommendations and discussed planned actions, but not all will fully address the recommendations, as discussed in the report. Wed, 01 Sep 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-523?source=ra The Navy's Littoral Combat Ship (LCS) is envisioned as a reconfigurable vessel able to meet three missions: surface warfare, mine countermeasures, and anti-submarine warfare. It consists of the ship (seaframe) and the mission package it carries and deploys. The Navy plans to invest over $25 billion through fiscal year 2035 to acquire LCS. However, recurring cost growth and schedule delays have jeopardized the Navy's ability to deliver promised LCS capabilities. Based on a congressional request, GAO (1) identified technical, design, and construction challenges to completing the first four ships within current cost and schedule estimates, (2) assessed the Navy's progress developing and fielding mission packages, and (3) evaluated the quality of recent Navy cost analyses for seaframes and their effect on program progress. GAO's findings are based on an analysis of government and contractor-generated documents, and discussions with defense officials and key contractors. This product is a public version of a For Official Use Only report, GAO-10-1006SU, also issued in August 2010. The Navy faces technical, design, and construction challenges to completing the first four seaframes within current cost and schedule estimates. The Navy and its shipbuilders have learned lessons from construction of the first two seaframes that have positioned them to more effectively construct future vessels. However, technical issues with the first two seaframes have yet to be fully resolved. Addressing these technical issues has required the Navy to implement design changes at the same time LCS 3 and LCS 4 are being built. Incorporating changes during this phase will likely require additional labor hours beyond current forecasts. Together, these challenges may hinder the ability of shipbuilders to apply lessons learned to follow-on ships and could undermine anticipated benefits from recent capital investments in the LCS shipyards. Challenges developing mission packages have delayed the timely fielding of promised capabilities, limiting the ships' utility to the fleet during initial deployments. Until these challenges are resolved, it will be difficult for the Navy to align seaframe purchases with mission package procurements and execute planned tests. Key mine countermeasures and surface warfare systems encountered problems in operational and other testing that delayed their fielding. For example, four of six Non-Line-of-Sight Launch System missiles did not hit their intended targets in recent testing, and the Department of Defense has since canceled the program. Further, Navy analysis of anti-submarine warfare systems has shown the planned systems do not contribute significantly to the anti-submarine warfare mission. These combined challenges have led to procurement delays for all three mission packages. Mission package delays have also disrupted program test schedules--a situation exacerbated by early deployments of initial ships--limiting their availability for operational testing. In addition, these delays could disrupt program plans for simultaneously acquiring seaframes and mission packages. Until mission packages are proven, the Navy risks investing in a fleet of ships that does not deliver promised capability. The Navy entered contract negotiations in 2009 for fiscal year 2010 funded seaframes with an incomplete understanding of LCS program costs. These contract negotiations proved unsuccessful, prompting the Navy to revise its acquisition strategy for the program. The contractors' proposals for construction of the next three ships exceeded the approximate $1.4 billion in funds the Navy had allocated in its fiscal year 2010 budget. In response, the Navy revised its strategy to construct one seaframe design instead of two for fiscal year 2010 ships and beyond in an effort to improve affordability. Navy cost analyses completed prior to the failed negotiations in 2009 lack several characteristics essential to a high-quality cost estimate. These characteristics include the completion of sensitivity and uncertainty analyses and an independent review of the cost estimate. The Navy plans to complete a more comprehensive cost estimate before award of additional ship contracts in 2010. GAO recommends the Secretary of Defense take actions to ensure more realistic cost estimates, timely incorporation of design changes, and coordination of seaframe and mission package acquisition. The Department of Defense concurred with each of these recommendations. Tue, 31 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-874?source=ra Since the recent recession, policymakers have emphasized the role exports can play in strengthening the U.S. economy and in creating higher paying jobs. In March 2010 the President signed an Executive Order creating the National Export Initiative (NEI), with a goal of doubling U.S. exports in 5 years. However, since 2004 the workforce of the U.S. and Foreign Commercial Service (CS) has shrunk, calling into question the ability of this key agency to increase its activities to assist U.S. businesses with their exports. In response to a conference committee mandate, GAO reviewed (1) how well CS managed its resources from 2004 to 2009, and (2) the completeness of CS's workforce plans and the quality of its fiscal year 2011 budget request. GAO analyzed data from the Departments of Agriculture, Commerce, and State; reviewed agency documents; and interviewed agency officials. CS had management control weaknesses over its resources from 2004 to 2009. During this period, CS's budgets remained essentially flat as per capita personnel costs and administrative costs increased. However, CS leadership did not recognize the long-term implications of these changes because it lacked key financial and workforce information and risk analysis necessary for good management control. CS continued to pay fees associated with positions it maintained in U.S. embassies that were vacant but not officially eliminated. As CS's financial constraints grew, officials delayed their impact by using a variety of financial management practices. For example, the International Trade Administration (ITA), CS's parent agency, attributed some of CS's centralized costs to other units. However, as the availability of offsetting funds declined and costs continued growing, CS leadership failed to recognize the risks from these changes in accordance with good management controls, and reached a "crisis" situation in 2009. Officials froze hiring, travel, training, and supplies, compromising CS's ability to conduct its core business. CS's workforce declined by about 14 percent from its peak level in 2004 through attrition--affecting the mix and distribution of personnel. CS intends to rebuild its workforce but lacks key planning elements for doing so, and its budget request has weaknesses that could affect its ability to meet its goals. CS will have a central role in implementing the NEI. The President's 2011 budget requested $321 million for CS, $63 million more than its 2010 appropriation. The budget would fund a major staff increase. CS is allocating $5.2 million of its 2010 appropriation to begin recruiting new staff. However, as new executive-level leadership was arriving, GAO found that CS lacked key planning elements, including a clear sense of strategic direction and an analysis to determine its workforce needs. Also, it had not updated its workforce plans to address staffing gaps since fiscal year 2007. Adding more staff could be delayed because CS's human resources office is itself understaffed and because CS requires up to 2 years to hire and train new Foreign Service Officers. GAO also found that the 2011 budget request, though sound in many respects, has weaknesses; it lacks some documentation, and it lacks risk analysis and contingency plans for highly variable program costs, which could lead to cost overruns. GAO recommends to the Secretary of Commerce that CS (1) strengthen management controls, (2) improve workforce planning, and (3) improve cost estimating related to CS's budget estimate. Commerce agreed with our findings and recommendations. Tue, 31 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-776?source=ra In 2009, the Department of Veterans Affairs (VA) spent nearly $4 billion on prescriptions for veterans. In general, VA provides drugs on its national formulary. However, all VA medical centers must have a nonformulary drug request process that is overseen by their regional Veterans Integrated Service Network (VISN). This report responds to a House Committee on Appropriations report directing GAO to review VA's formulary process and to an additional congressional request. Specifically, GAO reviewed (1) the process VA uses to review drugs for its national formulary, (2) the approaches VISNs and medical centers take to implementing the nonformulary drug request process, (3) the extent to which VA ensures the timely adjudication of nonformulary drug requests, and (4) the mechanisms VA has in place to obtain beneficiary input on the national formulary and make the drug review process transparent. GAO reviewed VA policy guidance and VA's pharmacy-related information technology (IT) initiatives, analyzed 2008 and 2009 drug review data and 2009 nonformulary drug request data, and interviewed VA officials from the national level, each VISN, and a judgmental sample of four medical centers. VA uses a standardized process to review drugs for its national formulary that is coordinated at the national level by its Pharmacy Benefits Management Services (PBM). The Chief Consultant from VA's PBM told us that most drug reviews are initiated in response to FDA's approval of drugs for use on the market. To begin the process of deciding whether to include a drug on the national formulary, PBM develops evidence-based drug monographs that include information on safety, efficacy, and cost. PBM seeks comments on these monographs from VISN and medical center staff and, when appropriate, subject-matter experts. Once a monograph is complete, PBM sends it to its Medical Advisory Panel and the VISN Pharmacist Executive Committee, which review the monograph and vote on whether to add the drug to the national formulary. According to information provided by PBM, reviews for a majority of the drugs VA considered for addition to the national formulary in 2008 and 2009 were completed within a year of FDA approval, but there were a number of factors, such as safety concerns, that caused some to take longer. VISNs and medical centers vary in how they implement the nonformulary drug request process, including how they adjudicate nonformulary drug requests, collect and report required data to VA's PBM, and address appeals of denied requests. GAO found that IT enhancements could help facilitate more consistent implementation of the process. Although VA is working on replacing its pharmacy IT system, officials could not tell GAO whether components that would support the nonformulary drug request process will be implemented. VA requires that nonformulary drug requests be adjudicated within 96 hours, but it is unable to determine the total number of adjudications that exceed this standard due to limitations in the way data are collected, reported, and analyzed. While the total number of nonformulary drug request adjudications that exceed 96 hours is unknown, GAO found that data reported to VA's PBM on quarterly average adjudication times for medical centers are sufficient to demonstrate that not all requests are adjudicated within this time frame. Additionally, PBM does not have the framework in place to ensure that appeals of denied nonformulary drug requests are resolved in a timely fashion. VA obtains input from beneficiaries on the national formulary mainly through Veterans Service Organization meetings and complaints, though some VISNs have taken additional steps to seek this input. Officials from VA's PBM told GAO that they make the drug review process transparent to veterans through national formulary information available on PBM's Web site, and some VISN and medical center officials described undertaking other activities to educate beneficiaries. At the national level, VA officials are considering options for increasing beneficiary input on the national formulary and improving the transparency of the drug review process, and most VISN and medical center officials told us there could be benefit to doing so. GAO recommends that VA establish additional mechanisms to ensure nonformulary drug requests are adjudicated in a timely fashion. VA concurred with this recommendation. Tue, 31 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-800?source=ra Residents of the Gulf Coast continue to struggle to recover almost 5 years after Hurricanes Katrina and Rita devastated the area in August and September of 2005. In many cases the federal government coordinates with, and provides support to, nonprofit organizations in order to deliver recovery assistance to impacted residents. A better understanding of how the federal government works with nonprofit organizations to provide such assistance may be helpful for recovery efforts on the Gulf Coast as well as for communities affected by major disasters in the future. GAO was asked to describe (1) how the federal government has worked with nonprofit organizations to facilitate Gulf Coast recovery following the 2005 hurricanes and (2) steps the federal government has taken to address challenges to strengthen relationships with nonprofits in the future. Toward this end, GAO reviewed the applicable disaster recovery literature and relevant supporting documents. GAO also interviewed officials from federal, state, and local governments as well as a wide range of nonprofit officials involved in Gulf Coast recovery. The federal government used a variety of direct and indirect funding programs to support the delivery of human recovery services by nonprofit organizations following Hurricanes Katrina and Rita in areas such as housing, long-term case management, and health care. These programs included well-established grants such as the Department of Health and Human Services' (HHS) Temporary Assistance for Needy Families and its Social Services Block Grant, as well as the Department of Housing and Urban Development's (HUD) Community Development Block Grant. Programs established in the wake of the 2005 hurricanes also provided funding to nonprofits offering recovery services. These included HHS's Primary Care Access and Stabilization Grant and HUD's Disaster Housing Assistance Program. The federal government also supported nonprofit organizations through coordination and capacity building. For example, the Federal Emergency Management Agency (FEMA) used Voluntary Agency Liaisons (VAL) to help establish and maintain working relationships between nonprofits and FEMA as well as other federal, state, and local agencies. The Office of the Federal Coordinator for Gulf Coast Rebuilding in the Department of Homeland Security provided a variety of assistance to nonprofits including problem identification, information sharing, and networking. Other federal agencies also worked to bolster the capacity of nonprofits by providing temporary staff, training, and technical assistance to nonprofit organizations. The federal government is taking steps to address several challenges and strengthen its relationship with nonprofit organizations providing recovery assistance. For example, nonprofit officials GAO spoke with cited challenges with the federal disaster grant process including what they viewed to be complicated record keeping and documentation procedures as well as other requirements to obtain aid. A report issued earlier this year by the President's Advisory Council for Faith-Based and Neighborhood Partnerships recognized the need to ease the administrative burden on nonprofits and contains specific recommendations for action. In an effort to make it easier for nonprofits with limited financial resources to obtain the services of AmeriCorps workers, the Corporation for National and Community Service waived the usual matching requirements in the wake of the 2005 hurricanes. In addition, FEMA is taking steps to address challenges regarding the training of its VAL staff. Following an earlier GAO recommendation that VALs could benefit from additional training regarding federal recovery resources, FEMA issued a VAL handbook and is developing several VAL training courses that it expects to implement by the end of 2010. Finally, although there has been a lack of specific guidance regarding the role of nonprofits in disaster recovery, the federal government has taken steps to address this gap. FEMA and HUD have led a multi-agency effort that resulted in the development of a draft National Disaster Recovery Framework. Among other things, this framework contains specific information about the roles and responsibilities of nonprofits in disaster recovery. GAO is not making new recommendations in this report but discusses the implementation status of a relevant prior recommendation. Mon, 30 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-798?source=ra Before approving a new drug, the Food and Drug Administration (FDA)--an agency of the Department of Health and Human Services (HHS)--assesses a drug's effectiveness. To do so, it examines information contained in a new drug application (NDA), including data from clinical trials in humans. Several types of trials may be used to gather this evidence. For example, superiority trials may show that a new drug is more effective than an active control--a drug known to be effective. Non-inferiority trials aim to demonstrate that the difference between the effectiveness of a new drug and an active control is small--small enough to show that the new drug is also effective. Drugs approved on this basis may provide important benefits, such as improved safety. Because non-inferiority trials are difficult to design and interpret, they have received attention within the research community and FDA. FDA has issued guidance on these trials. GAO was asked to examine FDA's use of non-inferiority trial evidence. This report (1) identifies NDAs for new molecular entities--potentially innovative new drugs not FDA-approved in any form--that included evidence from non-inferiority trials, (2) examines the characteristics of these trials, and (3) describes FDA's guidance on these trials. GAO reviewed NDAs submitted to FDA between fiscal year 2002 (the first full year that FDA documentation was available electronically) and fiscal year 2009 (the last full year of submissions), examined FDA's guidance, and interviewed agency officials. Evidence from non-inferiority trials was included in about one-quarter, or 43, of the 175 NDAs for new molecular entities that were submitted to FDA for review from fiscal years 2002 through 2009. Many of these applications were for antimicrobial drugs, such as those treating bacterial, viral, and fungal infections. As of December 31, 2009, FDA approved 18 of the 43 NDAs on the basis of evidence from non-inferiority trials. Of the remaining 25 NDAs, FDA approved 11 based on other evidence, such as proof that the new drug was more effective than a placebo (no treatment), and decided not to approve 14. The non-inferiority trials included in these NDAs varied with respect to their characteristics. FDA generally requires sponsors to provide evidence of a drug's effectiveness as shown in more than one trial. For the 18 NDAs that were approved based on evidence from non-inferiority trials, the number of non-inferiority trials used to provide primary support for approval ranged from one to four, with an average of 2 such trials per NDA. Half of these applications included non-inferiority trials that tested the effectiveness of the new drug against more than one active control. The non-inferiority margins--the maximum clinically acceptable extent to which the new drug can be less effective than the active control and still show evidence of an effect--ranged from 5 to 20 percent among trials that supported approval. Among the other 25, FDA identified nine NDAs that included poorly designed non-inferiority trials which did not provide primary evidence for approval. Some of these problems included an inappropriate selection of an active control and an improper calculation of a non-inferiority margin. FDA notified sponsors of its concerns with the poorly designed trials prior to the sponsors' submissions of all NDAs that included such trials. In March 2010 FDA issued draft guidance which focused solely on the use of non-inferiority trials. This guidance presents detailed and comprehensive recommendations on how non-inferiority trials may be used to provide evidence of a drug's effectiveness. For example, it provides advice on how to select an active control and how to set the non-inferiority margin, as well as how to interpret the trials. This guidance offers broad, generally applicable recommendations to supplement indication-specific guidance documents that FDA had previously issued. These indication-specific guidance documents include FDA's advice on many issues related to the development of drugs for particular indications, some of which are related to the use of non-inferiority trials. GAO's review of FDA's guidance showed that the agency has become more conservative in allowing evidence from non-inferiority trials to demonstrate a drug's effectiveness. First, FDA has limited the indications for which these trials may be used. Second, the agency has also become more rigorous in its review of evidence from non-inferiority trials. We sent a draft of this report to HHS for review. HHS provided us with technical comments, which we incorporated as appropriate. Mon, 30 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-670?source=ra The development of oil and natural gas resources on federal lands contributes to domestic energy production but also results in concerns over potential impacts on those lands. Numerous public protests about oil and gas lease sales have been filed with the Bureau of Land Management (BLM), which manages these federal resources. GAO was asked to examine (1) the extent to which BLM maintains and makes publicly available information related to protests, (2) the extent to which parcels were protested and the nature of protests, and (3) the effects of protests on BLM's lease sale decisions and on oil and gas development activities. To address these questions, GAO examined laws, regulations, and guidance; BLM's agencywide lease record-keeping system; lease sale records for the 53 lease sales held in the four BLM state offices of Colorado, New Mexico, Utah, and Wyoming during fiscal years 2007-2009; and protest data from a random sample of 12 of the 53 lease sales. GAO also interviewed BLM officials and industry and protester groups. While BLM has taken steps to collect agency-wide protest data, the data it maintains and makes publicly available are limited. Although in 2007 BLM required its staff to begin using a module, added to its lease record-keeping system, to capture information related to lease sale protests, GAO found that the information BLM collected was incomplete and inconsistent across the four reviewed BLM state offices and, thus, of limited utility. Moreover, in the absence of a written BLM policy on protest-related information the agency is to make publicly available during the leasing process, each state office developed its own practices, resulting in state-by-state variation in what protest-related information was made available. As a result, protester groups expressed frustration with both the extent and timing of protest-related information provided by BLM. In May 2010, the Secretary of the Interior announced several agency-wide leasing reforms that are to take place at BLM. Some of these reforms may address concerns raised by protester groups, by providing earlier opportunities for public input in the lease sale process, thereby potentially giving stakeholders more time to assess parcels and decide whether to file a protest. A diverse group of entities protested the majority of parcels BLM identified in its lease sale notices during fiscal years 2007 through 2009 in the four states, for a variety of reasons. GAO found that 74 percent of parcels whose leases were sold competitively during this period by BLM state offices in Colorado, New Mexico, Utah, and Wyoming were protested. In examining a random sample of lease sales, GAO found that protests came from various entities, including nongovernmental organizations representing environmental and hunting interests, state and local governments, businesses, and private individuals. Their reasons for protesting ranged from concerns over wildlife habitat to air or water quality to loss of recreational or agricultural land uses. The extent to which protests influenced BLM's leasing decisions could not be measured because BLM's information does not include the role protests played in its decisions to withdraw parcels from lease sale. Regardless, BLM officials stated that the protest process can serve as a check on agency decisions to offer parcels for lease. In reviewing BLM's lease sale data in the four selected states during fiscal years 2007 through 2009, GAO found that 91 percent of the time, BLM was unable to issue leases on protested parcels within the 60-day window specified in the Mineral Leasing Act. Industry groups expressed concern that these delays increased the cost and risk associated with leasing federal lands. GAO found that, despite industry concerns, protest activity and delayed leasing have not significantly affected bid prices for leases; if protests or subsequent delays added significantly to industry cost or risk, it would be expected that the value of, and therefore bids for, protested parcels would be reduced. In addition, because federal lands account for a small fraction of the total onshore and offshore nationwide oil and gas output, the effects of protests to BLM leasing decisions on U.S. oil and gas production are likely to be relatively modest. GAO recommends that BLM (1) revisit the way it tracks protest information and in so doing ensure that complete and consistent information is collected and made publicly available and (2) improve the transparency of leasing decisions and the timeliness of lease issuance. Interior concurred with GAO's recommendations. Mon, 30 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-779?source=ra Americans increasingly rely on wireless phones, with nearly 40 percent of households now using them primarily or solely. Under federal law, the Federal Communications Commission (FCC) is responsible for fostering a competitive wireless marketplace while ensuring that consumers are protected from harmful practices. As requested, this report discusses changes in the wireless industry since 2000, stakeholders' perceptions of regulatory policies and industry practices, and the strategies FCC uses to monitor competition. To conduct this work, GAO collected and analyzed data and documents from a variety of government and private sources; conducted case studies in both rural and urban areas of four states; and interviewed stakeholders representing consumers, local and state agencies and officials, and various segments of the industry. The biggest changes in the wireless industry since 2000 have been consolidation among wireless carriers and increased use of wireless services by consumers. Industry consolidation has made it more difficult for small and regional carriers to be competitive. Difficulties for these carriers include securing subscribers, making network investments, and offering the latest wireless phones necessary to compete in this dynamic industry. Nevertheless, consumers have also seen benefits, such as generally lower prices, which are approximately 50 percent less than 1999 prices, and better coverage. While views differed among stakeholders, some carriers and consumer groups perceive certain FCC wireless policies as having prevented the entry and growth of small and regional carriers, though it is difficult to assess some of these issues without better data. In particular, many stakeholders outside of the top national carriers who we spoke with noted that policies for making spectrum available for commercial use, as well as policies governing some essential elements of wireless networks, favor large national carriers, potentially jeopardizing the competitiveness of the wireless industry. One such essential element is special access to infrastructure that connects cell phone towers to wireline phone networks. Better data on rates governing those elements would clarify the extent to which competition is hindered. Additional data are also necessary to determine whether consumers are hindered from moving between wireless carriers by particular industry practices. Many small carriers and consumer groups perceive early termination fees associated with wireless service contracts and exclusive handset arrangements as creating switching costs that serve as barriers to consumer movement. FCC uses three strategies to oversee and monitor competition in the wireless phone industry: reviews of proposed mergers, investigations of competitive challenges, and its annual wireless competition report to Congress. In assessing mergers, FCC balances potential public interest benefits and harms. FCC has also undertaken a variety of investigations and inquiries related to competitive challenges, generally in response to complaints. The primary tool that FCC uses is the annual wireless competition report. While FCC recently undertook steps that significantly improved this report, it still does not fully assess some key industry inputs and outputs. FCC generally has not collected data on many industry investments or consumer switching costs because of the complexity and burden associated with gathering these data. However, FCC has recently undertaken ad hoc inquiries to collect such data and, despite challenges and costs, this information could help FCC better fulfill its statutory reporting requirement. In particular, additional data could help assess the competitiveness of small and regional carriers, as well as shed light on the impact of switching costs for consumers. FCC should assess whether expanding original data collection of wireless industry inputs and outputs--such as prices, special access rates, capital expenditures, and equipment costs--would help the Commission better satisfy its requirement to review competitive market conditions with respect to commercial mobile services. FCC took no position on GAO's recommendation, but provided technical changes to this report that were incorporated as appropriate. Thu, 26 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-833?source=ra Competition is a critical tool for achieving the best return on the government's investment. While federal agencies are generally required to award contracts on the basis of full and open competition, they are permitted to award noncompetitive contracts in certain situations. Agencies are also required to establish competition advocates to promote competition. GAO assessed (1) trends in noncompetitive contracts and those receiving only one offer when competed; (2) exceptions to and factors affecting competition; (3) whether contracting approaches reflected sound procurement practices; and (4) how agencies are instituting the competition advocate role. GAO reviewed federal procurement data and 107 randomly selected contracts at the departments of Defense, Interior, and Homeland Security (which had among the highest noncompetitive obligations in fiscal year 2008) and interviewed contracting and program officials, competition advocates, and contractors. From fiscal years 2005 to 2009, reported obligations for noncompetitive contracts decreased from about 36 to 31 percent of total obligations, while obligations under contracts competed with only one offer received were steady, at about 13 percent of the total in each year. In comparing the data in the federal procurement data system to the information in contract files, we found that about 18 percent of the contracts sampled were coded incorrectly--as either not competed when they had been, or as competed with one offer received when they had not been competed at all. Agencies used a variety of exceptions to competition for the contracts and orders in our sample, with the two most common being "only one responsible source" and sole-source awards under the Small Business Administration's 8(a) business development program. For services supporting DOD weapons programs, the government's lack of access to proprietary technical data and decades-long reliance on specific contractors for expertise limit--or even preclude the possibility of--competition. In other cases, program offices may press for contracts to be awarded to the incumbent contractor without competition, largely due to their relationship and the contractor's understanding of program requirements. For competitive procurements where only one offer is received, factors include a strong incumbent, sometimes coupled with overly restrictive government requirements, or vendors forming large teams to submit one offer for broader government requirements, whereas previously several vendors may have competed. Contracting approaches for nine contracts reviewed did not reflect sound procurement practices and in some instances sound management practices, in some cases not leveraging the effectiveness of the market place. These approaches included ambiguously written justifications for noncompetitive contracts, very limited documentation of the reasonableness of contractors' proposed prices, instances where the contract's cost grew significantly or where labor categories were improperly authorized, and undefinitized contract actions that did not meet definitization requirements. Agencies have much discretion regarding where in the organization the competition advocates should be placed, who should be appointed to this position, and how they should carry out their responsibilities. As a result, agencies have taken a range of approaches regarding the placement of the competition advocates, their skills and expertise, and the methods they use to carry out their responsibilities. Some advocates cited their experience in program offices as helping them to question requirements that may be overly restrictive, while others had been contracting officers or procurement policy officials before assuming the position. Some agency officials said that regulations are vague regarding the role of the competition advocate, and that given the Office of Federal Procurement Policy's (OFPP) recent emphasis on competition, they would like to see more guidance on competition advocate roles and methods of implementing their duties. GAO recommends that OFPP take actions regarding assessment of the reasons only one offer is received and issue guidance on competition advocate roles, including their direct involvement with program offices to seek opportunities for competition. OFPP agreed with the recommendations, and DOD generally agreed with our findings and recommendations. Other agencies provided technical comments. Wed, 25 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-853G?source=ra This letter describes the process used by GAO for revising GAGAS, summarizes the proposed major changes, discusses proposed effective dates, and provides instructions for submitting comments on the proposed standards. The proposed revision to GAGAS will be the sixth since GAO first issued the standards in 1972. The proposed changes contained in the 2010 Exposure Draft update GAGAS to reflect major developments in the accountability and audit profession and emphasize specific considerations applicable to the government environment. The major changes in the proposed revision were made to: 1) consolidate and reorganize the foundation and ethical principles for government audits and the standards for use and application of GAGAS; 2) add a conceptual framework approach for independence; 3) update the financial audit standards to (1) reflect recent updates to the auditing standards issued by the American Institute of Certified Public Accountants (AICPA), where applicable, (2) more clearly identify the GAGAS requirements and guidance that supplement AICPA requirements for financial audits, and (3) consolidate the financial audit standards into a single chapter; 4) further clarify application of the attestation engagement standards to clearly distinguish the requirements related to each type of attestation work; 5) update the performance audit standards to (1) limit the fraud reporting requirement to occurrences that are significant within the context of the audit objectives, with a requirement to communicate other instances of fraud in writing to those charged with governance, and (2) revise the discussion of validity as an aspect of the quality of evidence; and 6) clarify language throughout the document. Mon, 23 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-723?source=ra Hurricanes Katrina and Rita wreaked havoc on small businesses in the Gulf Coast, and much federal assistance has been provided to help these businesses. GAO was asked to describe (1) the amount of assistance provided to Gulf Coast small businesses through the Small Business Administration's (SBA) disaster and Gulf Opportunity (GO) loans, state-administered business assistance programs funded by the Department of Housing and Urban Development's (HUD) Community Development Block Grants (CDBG), and the Economic Development Administration's (EDA) Revolving Loan Fund (RLF) program; (2) the extent to which Gulf Coast small businesses received federal contract funds; and (3) the current state of and improvements in the region's economy. GAO analyzed data on SBA and EDA loans and states' use of supplemental CDBG appropriations, data on prime and subcontracts awarded for hurricane recovery activities, and economic indicators both before and after the hurricanes. Several federal programs provided assistance to Gulf Coast small businesses after the 2005 hurricanes; however, despite this assistance, some small businesses still face recovery challenges. Of the programs we reviewed, SBA provided the greatest amount of assistance to small businesses. SBA approved about $1.4 billion in loans through its Disaster Loan and GO Loan programs to assist with the repair or replacement of damaged property and to address economic losses suffered after the hurricanes. In addition, Louisiana expended about $179 million and Mississippi targeted $3 million in CDBG disaster relief funds for small business assistance grant, loan, and other programs to further assist businesses that in some or all cases, may not have been eligible for SBA loans. EDA did not receive supplemental appropriations after the hurricanes, but Gulf Coast small businesses did receive about $36 million in loans from EDA's RLF grantees, which provide gap financing to small businesses to start or expand their business. Even with federal assistance, however, some small business owners with whom GAO met have encountered recovery challenges. For example, a few of these small business owners told GAO that they had problems applying for SBA loans because the hurricanes destroyed needed financial records. Other owners face higher expenses, especially the cost of commercial insurance and added debt from these loan programs, which has made recovering difficult. Gulf Coast small businesses received almost $2.9 billion in federal contracts awarded in response to the hurricanes. The Federal Acquisition Regulation requires that agency contracting officials monitor prime contractors' performance under subcontracting plans. However, the U.S. Army Corps of Engineers (Corps) and the rest of the Department of Defense (DOD)--two of four agencies that awarded the most in federal contracts for hurricane recovery--could not demonstrate that they were consistently monitoring subcontracting accomplishment data for 13 of the 43 construction contracts for which subcontracting plans were required. Without such monitoring, the Corps and the rest of DOD are limited in their ability to determine the extent to which contractors are following their subcontracting plans. Indicators--including population estimates, number of small businesses, unemployment rates, and housing prices--suggest that the hurricanes' effects on local economies varied across the Gulf Coast. From 2005 to 2006, some heavily damaged areas experienced steep declines in population and number of small businesses, while less-damaged areas experienced steady increases in these indicators. Since that time, the population and number of small businesses in heavily damaged areas have increased, but they both still remain below prehurricane levels. House prices have shown some steady increases from 2005 to 2008 in heavily damaged metropolitan areas. The impact of the recent oil spill in the Gulf of Mexico on small businesses is uncertain. GAO recommends that the Secretary of Defense should take steps to ensure that contracting officials with the Corps and other DOD departments consistently comply with requirements to monitor the extent to which contractors are meeting subcontracting plan goals. DOD did not concur with the implication that its contracting personnel do not enforce requirements. Mon, 16 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-616?source=ra Consumer-directed health plans (CDHP) combine a high-deductible health plan with a tax-advantaged account, such as a health reimbursement arrangement (HRA), that enrollees can use to pay for health care expenses. In an effort to restrain cost growth, several employers, including the federal government through its Office of Personnel Management (OPM), have offered HRAs for several years. For enrollees in HRAs compared with those in traditional plans such as preferred provider organization (PPO) plans, GAO assessed (1) differences in health status, and (2) changes in spending and utilization of health care services. GAO analyzed data from two large employers--one public and one private--that introduced an HRA option in 2003. GAO compared changes in health spending and utilization before and after 2003 for enrollees who switched from a PPO into an HRA (the HRA group) with those who stayed in a PPO (the PPO group). At the time GAO made its data requests to each employer, 2007 data from the public employer and 2005 data from the private employer were the most current and complete data available. GAO also reviewed published studies that included an assessment of the health status, spending, or utilization of HRA and other CDHP enrollees compared with traditional plan enrollees. Results are not generalizable beyond the enrollees, health plans, and employers GAO reviewed and also cannot be compared between the public and private employers. On average, enrollees in the HRA groups of both employers GAO reviewed spent less and generally used fewer health care services before they switched into the HRA in 2003 than those who remained in the PPO, suggesting that the HRA groups were healthier. Average annual spending per enrollee for the public employer's HRA group was $1,505 lower than the PPO group for the 2-year period prior to switching. (Spending for the public employer was based on analysis of both medical and pharmacy claims.) Likewise, the private employer's HRA group spent $566 less per enrollee for the 2-year period prior to switching than the PPO group (we were not able to examine pharmacy claims for the private employer). Similarly, of the 21 studies GAO reviewed that assessed the health status of HRA and other CDHP enrollees, 18 found they were healthier than traditional plan enrollees based on utilization of health care services, self-reported health status, or the prevalence of certain diseases or disease indicators. Other demographic differences may also explain spending and utilization differences including that policyholders in the HRA group were younger than those in the PPO group. Spending and utilization for enrollees in HRAs generally increased by a smaller amount or decreased compared with those in traditional plans that GAO reviewed. (1) Public employer. From the 2-year period before switching--2001 to 2002--to the 5-year period after switching--2003 to 2007--average annual spending for the HRA group increased by $478 per enrollee compared with $879 for the PPO group. This smaller increase for the HRA group was partially driven by decreases in spending for prescription drugs. Additionally, average annual utilization of services per enrollee increased by a smaller amount or decreased for the HRA group compared with the PPO group for six out of eight services GAO reviewed. (2) Private employer. From the 2-year period before switching--2001 to 2002--to the 3-year period after switching--2003 to 2005--average annual spending for the HRA group increased by $152 per enrollee compared with $206 for the PPO group. This smaller increase for the HRA group was partially driven by smaller increases in spending for physician office visits and decreases in spending for emergency room services. Additionally, average annual utilization of services per enrollee increased by a smaller amount or decreased for the HRA group compared with the PPO group for four out of seven services GAO reviewed. Similarly, GAO's review of published studies found that seven out of eight students that examined spending and controlled for differences in health status or other characteristics reported lower spending among HRAs and other CDHP enrollees relative to traditional plans. OPM did not provide comments on the draft report. Representatives of the two employers whose health plans GAO reviewed did not comment on the draft report. Mon, 16 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-628?source=ra Pervasive and sustained computer-based attacks pose a potentially devastating impact to systems and operations and the critical infrastructures they support. Addressing these threats depends on effective partnerships between the government and private sector owners and operators of critical infrastructure. Federal policy, including the Department of Homeland Security's (DHS) National Infrastructure Protection Plan, calls for a partnership model that includes public and private councils to coordinate policy and information sharing and analysis centers to gather and disseminate information on threats to physical and cyber-related infrastructure. GAO was asked to determine (1) private sector stakeholders' expectations for cyber-related, public-private partnerships and to what extent these expectations are being met and (2) public sector stakeholders' expectations for cyber-related, public-private partnerships and to what extent these expectations are being met. To do this, GAO conducted surveys and interviews of public and private sector officials and analyzed relevant policies and other documents. Private sector stakeholders reported that they expect their federal partners to provide usable, timely, and actionable cyber threat information and alerts; access to sensitive or classified information; a secure mechanism for sharing information; security clearances; and a single centralized government cybersecurity organization to coordinate government efforts. However, according to private sector stakeholders, federal partners are not consistently meeting these expectations. For example, less than one-third of private sector respondents reported that they were receiving actionable cyber threat information and alerts to a great or moderate extent. Federal partners are taking steps that may address the key expectations of the private sector, including developing new information-sharing arrangements. However, while the ongoing efforts may address the public sector's ability to meet the private sector's expectations, much work remains to fully implement improved information sharing. Public sector stakeholders reported that they expect the private sector to provide a commitment to execute plans and recommendations, timely and actionable cyber threat information and alerts, and appropriate staff and resources. Four of the five public sector councils that GAO held structured interviews with reported that their respective private sector partners are committed to executing plans and recommendations and providing timely and actionable information. However, public sector council officials stated that improvements could be made to the partnership, including improving private sector sharing of sensitive information. Some private sector stakeholders do not want to share their proprietary information with the federal government for fear of public disclosure and potential loss of market share, among other reasons. Without improvements in meeting private and public sector expectations, the partnerships will remain less than optimal, and there is a risk that owners of critical infrastructure will not have the information necessary to thwart cyber attacks that could have catastrophic effects on our nation's cyber-reliant critical infrastructure. GAO recommends that the national Cybersecurity Coordinator and DHS work with their federal and private sector partners to enhance information-sharing efforts. The national Cybersecurity Coordinator provided no comments on a draft of this report. DHS concurred with GAO's recommendations. Mon, 16 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-787?source=ra One of the most devastating aspects of the current financial crisis for homeowners is the prospect of losing their homes to foreclosure, and many homeowners have fallen victim to foreclosure rescue and loan modification schemes. In 2009, the administration created the Financial Fraud Enforcement Task Force (FFETF), which is led by the Department of Justice (DOJ), to combat these and other financial crimes. This report examines (1) the nature and prevalence of these schemes, (2) federal efforts coordinated to combat these schemes and other major efforts, and (3) factors that may affect federal efforts' success in combating these schemes. To address these objectives, GAO obtained information from federal agencies participating in the FFETF and interviewed representatives of five states with high exposure to potential foreclosures and nonprofit organizations undertaking related activities. Although data that would establish the prevalence of foreclosure rescue and loan modification schemes are limited, officials told GAO that these schemes can take several forms--the most active scheme is one in which individuals or companies charge a fee for services not rendered. Agency and nonprofit officials said that the perpetrators of these schemes are likely to be former mortgage industry employees, professional scam artists, and unethical attorneys and that the range of potential victims is wide. Law enforcement officials said that the nature of the schemes makes them difficult to combat because they can easily be conducted by Internet or across state lines. While law enforcement agencies and nonprofits have information, such as research studies and consumer complaints, that supports their belief that these schemes are widespread, there are no nationwide data that can reliably be used to describe their prevalence. Collaborative federal law enforcement efforts and other coordinated efforts involving federal and private organizations are under way to combat foreclosure rescue and loan modification schemes. The FFETF was established in November 2009 to strengthen the efforts of federal, state, and local agencies to investigate and prosecute a variety of financial crimes, including foreclosure rescue and loan modification schemes. Prior to the FFETF, the administration announced a multiagency effort to combat these schemes in April 2009, for which agencies, notably the Financial Crimes Enforcement Network and the Federal Trade Commission, took supporting actions. The FFETF's Mortgage Fraud Working Group, which has primary responsibility for coordinating activities related to these schemes, has focused on facilitating communication and exchanging information among law enforcement agencies by sponsoring training sessions and conferences. In addition to the FFETF, there are other major coordinated efforts aimed at combating these schemes, such as a public-private effort that focuses primarily on consumer education and outreach. Several factors may affect federal efforts to combat foreclosure rescue and loan modification schemes, and lack of a clear, long-term strategy could limit the FFETF's effectiveness. Key factors affecting federal success in combating these schemes include educating consumers about them and coordinating federal and state law enforcement efforts. The Mortgage Fraud Working Group has created an action plan that partly addresses these factors but does not fully incorporate certain key practices to enhance and sustain interagency collaboration. In particular, the plan largely focuses on short-term strategies, does not clearly identify members' roles and responsibilities, and does not clearly identify performance indicators that would allow it to measure progress over time. In addition, the plan outlines strategies for addressing mortgage fraud as a whole and identifies few specific approaches to combating foreclosure schemes. Without long-term strategies and performance measures specific to foreclosure schemes, the working group may be limited in its ability to combat these schemes. GAO is recommending that the U.S. Attorney General direct DOJ to develop clear, long-term strategies and performance measures that DOJ can use to evaluate its progress toward combating mortgage fraud, and consider developing strategies specific to foreclosure rescue schemes. DOJ concurred with these recommendations. Mon, 16 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-348?source=ra Before the passage of federal environmental legislation in the 1970s and 1980s, Department of Defense (DOD) activities contaminated millions of acres of soil and water on and near DOD sites. The Environmental Protection Agency (EPA) has certain oversight authorities for cleaning up contaminants on federal property, and has placed 1,620 of the most contaminated sites--including 141 DOD installations--on its National Priorities List (NPL). As of February 2009, after 10 or more years on the NPL, 11 DOD installations had not signed the required interagency agreements (IAG) to guide cleanup with EPA. GAO was asked to examine (1) the status of DOD cleanup of hazardous substances at selected installations that lacked IAGs, and (2) obstacles, if any, to cleanup at these installations. GAO selected and visited three installations, reviewed relevant statutes and agency documents, and interviewed agency officials. EPA and DOD use different terms and metrics to report cleanup progress; therefore, the status of cleanup at Fort Meade Army Base, McGuire Air Force Base (AFB), and Tyndall AFB is unclear. EPA reports that cleanup at all three installations is in the early investigative phases, while DOD's data suggest that cleanup is further along and, in some cases, in mature stages. EPA and DOD have differing interpretations of cleanup progress because they describe and assess cleanup differently. In particular, while both agencies divide installations into smaller cleanup projects, DOD divides them into units generally smaller than EPA's; therefore, DOD measures its progress in smaller increments. Further, because DOD did not obtain EPA's approval for key cleanup decisions, EPA does not recognize them. Unless key cleanup decisions are justified, documented, and available to the public for review and comment, they are not sufficient under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), and once an IAG is in place, some DOD cleanup work may have to be redone. When an agency refuses to enter into an IAG and cleanup progress lags, because of statutory and other limitations, EPA cannot take steps--such as issuing and enforcing orders--to compel CERCLA cleanup as it would for a private party. A variety of obstacles have delayed cleanup progress at these installations. First, DOD's persistent failure to enter IAGs, despite reaching agreement with EPA on the basic terms, has made managing site cleanup and addressing routine matters challenging at these installations. For example, in the absence of IAGs, DOD may fund work at other sites ahead of these NPL sites. Second, DOD failed to disclose some contamination to EPA and the public in a timely fashion, including lead shot on a playground, delaying cleanup and putting human health at risk. Third, the extensive use of performance-based contracts at these installations has created pressure to operate within price caps and fixed deadlines. In some cases, these pressures may have contributed to installations not exploring the full range of cleanup remedies, or relying on nonconstruction remedies, such as allowing contaminated groundwater to attenuate over time rather than being cleaned up. In particular, Tyndall AFB's long-standing lack of full compliance with environmental cleanup requirements, such as notification of hazardous releases and EPA's 2007 administrative order, has been an obstacle to verifiable cleanup of that installation. GAO is recommending, among other things, that EPA and DOD identify options that would provide a uniform method for reporting cleanup progress at the installations and allow for transparency to Congress and the public. EPA and DOD agreed with the recommendations directed at them. GAO is also suggesting that Congress may want to consider giving EPA certain tools to enforce CERCLA at federal facilities without IAGs. DOD disagreed with this suggestion. GAO believes EPA needs additional authority to ensure timely and proper cleanup at such sites. Mon, 16 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-875?source=ra Formaldehyde--one of the most widely produced chemicals in the world--is used in many products, including disinfectants, pressed-wood, and clothing and other textiles. Exposure to this chemical, which has been linked to adverse health effects for more than 30 years, typically occurs through inhalation and dermal (skin) contact. Formaldehyde can be used to enhance wrinkle resistance in some clothing and textiles, especially those made of cotton. The Consumer Product Safety Commission reviewed formaldehyde in clothing in the 1980s and determined that the levels found did not pose a public health concern. At that time, most clothing sold in the United States was made here--but the market has changed such that most U.S. clothing is now made in other countries. This market change has raised anew questions about the levels of formaldehyde in clothing. In response to a mandate in the Consumer Product Safety Improvement Act of 2008, this report provides information on what is known about (1) the health risks of exposure to formaldehyde, particularly from clothing, and (2) the levels of formaldehyde in clothing sold in the United States. GAO analyzed government reviews and the medical literature, as well as studies on levels of formaldehyde in clothing, and had a sample of 180 textiles--primarily clothing--tested for formaldehyde by an accredited laboratory. While illustrative of formaldehyde levels that may be found in clothing, the test results from GAO's sample cannot be projected to all clothing sold in the United States. The potential health risks associated with formaldehyde vary,depending largely on the means of exposure (e.g., inhalation or dermal contact), the concentration of the formaldehyde, and the duration of exposure. Inhaled formaldehyde may cause such effects as nausea, exacerbation of asthma, and cellular changes that may lead to the development of tumors. In fact, comprehensive reviews by the Department of Health and Human Services, the Environmental Protection Agency, and the World Health Organization have found that chronic inhalation exposure to formaldehyde may cause cancer. However, the health risk of greatest concern associated with formaldehyde in clothing--allergic contact dermatitis--stems from dermal exposure. A form of eczema, allergic contact dermatitis affects the immune system and produces reactions characterized by rashes, blisters, and flaky, dry skin that can itch or burn. Another potential health effect from dermal exposure to formaldehyde--irritant contact dermatitis--is also a form of eczema and has similar symptoms; however, this condition does not affect the immune system. Avoiding clothing containing formaldehyde is typically effective at preventing allergic and irritant contact dermatitis and relieving symptoms, but doing so can be difficult as clothing labels do not identify items treated with or containing formaldehyde. Washing clothing before it is worn often reduces formaldehyde levels but is not always successful. In some cases, avoiding or relieving allergic contact dermatitis requires more drastic measures, such as taking medications with potentially serious side effects. Finally, consumers may also experience dermal exposure to formaldehyde by using some cosmetics and skin care products, such as shampoos and sunscreens that contain formaldehyde. Comprehensive data on formaldehyde levels in clothing sold in the United States are not publicly available. While formaldehyde levels in clothing are not regulated in the United States, the apparel industry reports that 13 countries have laws or regulations that limit formaldehyde levels in clothing. Most of the 180 items GAO had tested had formaldehyde levels that were below the most stringent of these industry-identified regulatory limits. GAO's test results are similar to those of recent studies of formaldehyde levels in clothing by the European Union, New Zealand, and Australia--that is, most items were found to meet the most stringent limits. Moreover, government studies we reviewed showed a decline in the formaldehyde levels in clothing since the 1980s, and the levels reported in these studies are generally consistent with the decline in levels reported in the medical literature. This decline is associated with the development and use of low-formaldehyde technologies (resins) in manufacturing clothing, which has been encouraged by such factors as the identification of formaldehyde as a probable human carcinogen via inhalation; the promulgation of federal regulations protecting workers from inhalation exposure to formaldehyde; and limits on formaldehyde levels that some U.S. retailers have established for clothing they sell. This report contains no recommendations. Fri, 13 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-871?source=ra The Integrated Postsecondary Education Data System (IPEDS) is the federal government's core postsecondary data collection program. Approximately 6,800 postsecondary schools are required to complete annual IPEDS surveys on topics including enrollment, graduation rates, and finances. As policymakers have sought additional data to increase accountability in postsecondary education, the number and complexity of questions on the IPEDS surveys have increased. GAO was mandated to examine: (1) the time and cost burden for schools completing the IPEDS surveys, (2) options for reducing this burden, and (3) the potential benefits and challenges of collecting additional graduation rate data. To do this, GAO interviewed staff from 22 postsecondary schools, reviewed existing estimates of the IPEDS time and cost burden, interviewed officials at the Department of Education (Education) and Office of Management and Budget, and interviewed higher education associations and higher education software providers. The IPEDS burden reported by schools to GAO varies widely but was greater than Education's estimates for 18 of the 22 schools interviewed. Over half of these institutions reported time burdens that were more than twice Education's estimates. Schools reported time burdens ranging from 12 to 590 hours, compared with the 19 to 41 hours Education estimated for this group of institutions. Staff experience and school characteristics such as organizational structure appear to affect the burden. Education's official burden estimates may be lower than those reported to GAO because officials rely on potentially outdated baseline estimates and consult with few survey respondents (known as keyholders) about the impact of survey changes. Training, software, and administrative supports can reduce the IPEDS reporting burden and would be enhanced by increased coordination among institutions, Education, and software providers. Education is developing training modules targeting new keyholders, but some keyholders at career and technical schools are unaware of available training, which may be due to challenges Education faces in reaching these types of schools. Campus data systems may also reduce the burden through automated reporting features; however, few schools GAO interviewed use these features due to concerns that they do not always work correctly. One factor contributing to this is the lack of direct and timely coordination between software providers and Education to incorporate changes to the IPEDS surveys. Collecting additional graduation rate data disaggregated by race, ethnicity, and income could be useful but would increase the IPEDS burden. Graduation rates could be used to study achievement gaps, but they are a limited measure because they only account for first-time, full-time students. All 4- and 2-year schools are already required to report some graduation rates disaggregated by race and ethnicity to IPEDS, and staff at all types of schools told GAO they could do so at a modest additional burden. Reporting graduation rates by income is more challenging because income data are available only for the 71 percent of full-time students that apply for federal student aid. Keyholders said calculating graduation rates by income for these students would add a considerable burden by potentially requiring institutions to merge separate student records and financial aid databases. GAO recommends that Education reevaluate official IPEDS burden estimates, communicate IPEDS training opportunities to a wider range of schools, and coordinate with education software providers to help improve the quality and reliability of IPEDS reporting features. Education agreed with GAO's recommendations and plans to address these issues. Fri, 13 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-899?source=ra State and local governments work in partnership with the federal government to implement numerous intergovernmental programs. Fiscal pressures for state and local governments may exist when spending is expected to outpace revenues for the long term. GAO was asked to examine (1) the long-term fiscal pressures facing state and local governments and historical spending and revenue trends, (2) spending and revenue trends to identify patterns among states, and (3) what is known about the implications of these fiscal pressures for federal policies. Using aggregate data from the Bureau of Economic Analysis's National Income and Product Accounts, this analysis draws on results from the March 2010 update to GAO's state and local government fiscal model. GAO's model uses historical data to simulate expenditures and revenues for the sector for the next 50 years. Data from the U.S. Census Bureau are used to analyze patterns of state and local government expenditures and revenues among the states from 1977 to 2007, the most recent 30-year period for which these data were available. A review of GAO and other reports synthesizes what is known about the implications of these long-term fiscal pressures for future federal policies. Understanding patterns in state and local government expenditures and revenues is crucial for identifying and analyzing potential future fiscal pressures for the sector. The March 2010 update to GAO's state and local fiscal model updates simulations that state and local governments' long-term fiscal position will steadily decline through 2060 absent policy changes. The primary driver of the fiscal pressure confronting the state and local sector is the continued growth in health-related costs. Over the last 30 years, health care spending has increased as a share of state and local spending, growing from 12 percent of overall state and local expenditures in 1978 to 20 percent in 2008. While the temporary infusion of funds from the American Recovery and Reinvestment Act of 2009 helped cushion near-term revenue shortfalls, states will continue to be fiscally stressed. The rates of growth in expenditures and revenues varied among the states during the past 30 years, both overall and within specific categories. Current expenditures grew faster than own-source revenues in almost all states between 1977 and 2007. Average annual growth rates of state and local government expenditures and revenues varied substantially by category and among states. For example, public welfare (which includes Medicaid) was one of the fastest growing expenditure categories. In the aggregate, inflation-adjusted spending on public welfare grew at an average annual rate of 5.3 percent per year and growth rates in individual states ranged from 2.3 percent to 10.9 percent. The growth of intergovernmental revenue from the federal government (grants) also varied among the states. State and local current expenditures grew faster than federal grant revenues in more than half of the states. Despite these trends, the sector in the aggregate usually remained in surplus during this 30-year period. The sector avoided operating deficits, in part because of federal grant growth, and in part because, from 1995 to 2007, the sector increasingly financed capital purchases by issuing debt, rather than with revenues, which left more revenues available to pay for current expenditures. However, if the overall trend of state and local government expenditure growth in excess of revenue growth persists, this growth will put increasing pressure on state and local governments going forward. All levels of government face long-term fiscal challenges which could affect future federal funding of intergovernmental programs, as well as the potential capacity of state and local governments to help fund and implement these programs. The interconnectedness which defines intergovernmental programs requires that officials at all levels of government remain aware of and ready to respond to fiscal pressures. These pressures have implications for a wide range of federal, state, and local programs, policies, and activities, and include costs associated with health care, physical infrastructure, state and local employee pensions and retiree health benefits, and education, among other areas. Actions to address the nation's long-term fiscal outlook will be needed at all government levels in coming years and the challenges cannot be adequately met by shifting burdens from one level of government to another. GAO does not make recommendations in this report. Fri, 13 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-792?source=ra The Federal Home Loan Bank System is a government-sponsored enterprise comprising 12 regionally-based Federal Home Loan Banks (FHLBank), the primary mission of which is to support housing finance and community and economic development. Each FHLBank makes loans (advances) to member financial institutions in its district, such as banks, which traditionally are secured by single-family mortgages. In 1999, the Gramm-Leach-Bliley Act (GLBA) authorized FHLBanks to accept alternative forms of collateral, such as agricultural and small business loans, from small members. GAO was asked to assess (1) factors that may limit the use of alternative collateral; and (2) selected aspects of the Federal Housing Finance Agency's, (FHFA) related regulatory oversight practices. GAO reviewed FHLBank policies and FHFA documentation; and interviewed FHLBank and FHFA officials, and a nongeneralizable random sample of 30 small lenders likely to have significant levels of agricultural or small business loans in their portfolios. FHLBank and FHFA officials cited several factors to help explain why alternative collateral represents about 1 percent of all collateral that is used to secure advances. These factors include a potential lack of interest by small lenders in pledging such collateral to secure advances or the view that many such lenders have sufficient levels of single-family mortgage collateral. Officials from two FHLBanks said their institutions do not accept alternative collateral at all, at least in part for these reasons. Further, FHLBank officials said alternative collateral can be more difficult to evaluate than single-family mortgages and, therefore, may present greater financial risks. To mitigate these risks, the 10 FHLBanks that accept alternative collateral generally apply higher discounts, or haircuts, to it than any other form of collateral, which may limit its use. For example, an FHLBank with a haircut of 80 percent on alternative collateral generally would allow a member to obtain an advance worth 20 percent of the collateral's value. While GAO's interviews with 30 small lenders likely to have significant alternative collateral on their books found that they generally valued their relationships with their local FHLBanks, officials from half said the large haircuts on alternative collateral or other policies limited the collateral's appeal. FHFA's oversight of FHLBank alternative collateral policies and practices has been limited. For example, FHFA guidance does not direct its examiners to assess the FHLBanks' alternative collateral policies. As a result, the FHLBanks have wide discretion to either not accept alternative collateral or apply relatively large haircuts to it. While the FHLBanks may view these policies as necessary to mitigate potential risks, 9 of the 12 FHLBanks did not provide documentation to GAO to substantiate such policies. Further, the documentation provided by three FHLBanks suggests that, in some cases, haircuts applied to alternative collateral may be too large. Also, the majority of the FHLBanks have not developed quantitative goals for products related to agricultural and small business lending, such as alternative collateral, as required by FHFA regulations. FHFA officials said that alternative collateral has not been a focus of the agency's oversight efforts because it does not represent a significant safety and soundness concern. However, in the absence of more proactive FHFA oversight from a mission standpoint, the appropriateness of FHLBank alternative collateral policies is not clear. FHFA should revise its examination guidelines to include periodic analysis of alternative collateral, and enforce its regulation pertaining to quantitative goals for products related to agricultural and small business lending. FHFA agreed with these recommendations. Wed, 11 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-626?source=ra Low recycling rates for used televisions, computers, and other electronics result in the loss of valuable resources, and electronic waste exports risk harming human health and the environment in countries that lack safe recycling and disposal capacity. The Environmental Protection Agency (EPA) regulates the management of used electronics that qualify as hazardous waste and promotes voluntary efforts among electronics manufacturers, recyclers, and other stakeholders. However, in the absence of a comprehensive national approach, a growing number of states have enacted electronics recycling laws, raising concerns about a patchwork of state requirements. In this context, GAO examined (1) EPA's efforts to facilitate environmentally sound used electronics management, (2) the views of various stakeholders on the state-by-state approach, and (3) considerations to further promote environmentally sound management. GAO reviewed EPA documents, interviewed EPA officials, and interviewed stakeholders in five states with electronics recycling legislation. EPA's efforts to facilitate the environmentally sound management of used electronics consist largely of (1) enforcing its rule for the recycling and exporting of cathode-ray tubes (CRT), which contain significant quantities of lead, and (2) an array of partnership programs that encourage voluntary efforts among manufacturers and other stakeholders. EPA has improved enforcement of export provisions of its CRT rule, but issues related to exports remain. In particular, EPA does not specifically regulate the export of many other electronic devices, such as cell phones, which typically are not within the regulatory definition of hazardous waste despite containing some toxic substances. In addition, the impact of EPA's partnership programs is limited or uncertain, and EPA has not systematically analyzed the programs to determine how their impact could be augmented. The views of stakeholders on the state-by-state approach to managing used electronics have been shaped by the increasing number of states with electronics recycling legislation. To varying degrees, the entities typically regulated under the state laws--electronics manufacturers, retailers, and recyclers--consider the increasing number of state laws to be a compliance burden. In contrast, in the five states GAO visited, state and local solid waste management officials expressed overall support for states taking a lead role in the absence of a national approach. The officials attributed their varying levels of satisfaction more to the design and implementation of individual state recycling programs, rather than to the state-by-state approach. Options to further promote the environmentally sound management of used electronics involve a number of policy considerations and encompass many variations, which generally range from a continued reliance on state recycling programs to the establishment of federal standards via legislation. The first approach provides the greatest degree of flexibility to states, but does not address stakeholder concerns that the state-by-state approach is a compliance burden or will leave some states without electronics recycling programs. Moreover, EPA does not have a plan for coordinating its efforts with state recycling programs or articulating how EPA's partnership programs can best assist stakeholders to achieve the environmentally sound management of used electronics. Under the second approach, a primary policy issue is the degree to which federal standards would allow for stricter state standards, thereby providing states with flexibility but also potentially worsening the compliance burden from the standpoint of regulated entities. As a component of any approach, a greater federal regulatory role over exports could address limitations on the authority of states to regulate exports. GAO previously recommended that EPA submit to Congress a legislative proposal for ratification of the Basel Convention, a multilateral environmental agreement that aims to protect against the adverse effects resulting from transboundary movements of hazardous waste. EPA officials told GAO that the agency had developed a legislative proposal under previous administrations but had not finalized a proposal with other federal agencies. GAO recommends that the Administrator, EPA, (1) examine how EPA's partnership programs could be improved to contribute more effectively to used electronics management and (2) work with other federal agencies to finalize a legislative proposal on ratification of the Basel Convention for congressional consideration. EPA agreed with the recommendations. Wed, 11 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-860?source=ra The Department of Homeland Security's (DHS) U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) program is to control and monitor the entry and exit of foreign visitors by storing and processing biometric and biographic information. The entry capability has operated since 2006; an exit capability is not yet implemented. In September 2008, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, directed DHS to pilot air exit scenarios with the U.S. Customs and Border Protection (CBP) and airlines, and to provide a report to congressional committees. DHS conducted CBP and Transportation Security Administration (TSA) pilots and issued its evaluation report in October 2009. Pursuant to the act, GAO reviewed the evaluation report to determine the extent to which (1) the report addressed statutory conditions and legislative directions; (2) the report aligned with the scope and approach in the pilot evaluation plan; (3) the pilots were conducted in accordance with the evaluation plan; and (4) the evaluation plan satisfied relevant guidance. To do so, GAO compared the report to statutory conditions, the evaluation plan, and relevant guidance. The evaluation report partially addressed statutory conditions and legislative directions and expectations. Specifically, the report addressed the statutory condition for CBP to collect biometric information on exiting foreign nationals and four legislative directions and expectations for conducting the pilots. However, DHS was unable to address the statutory condition for an airline scenario because no airline was willing to participate. Also, the report did not meet a legislative expectation for gathering information on the security of information collected from visitors subject to US-VISIT. DHS officials told us that DHS did not view the expectation in the House report as a requirement. Moreover, they said that security requirements were tested prior to the pilots and there were no reported security incidents. However, DHS did not supply documentation that demonstrated the operational verification of pilot security requirements. The evaluation report generally aligned with the scope and approach in the evaluation plan. Specifically, the objectives and operational conditions described in the evaluation report were generally consistent with the evaluation plan. However, the report did not fully align with the evaluation plan because certain metrics, observations, and costs (e.g., percentage of system downtime or inoperability, costs for requirements analysis) were not reported as planned. Also, the reported scope and approach of the pilots included limitations not defined in the plan, such as suspending exit screening at departure gates to avoid flight delays. Such divergence was due, in part, to a desire to minimize the pilot's impact on the airports, airlines, and travelers. The pilots were not conducted in accordance with the evaluation plan, in that they did not meet the plan's stated purpose of operationally evaluating the air exit requirements. More specifically, about 30 percent of the requirements were not operationally tested, either as part of the pilots or as part of another exit project. Rather, they were tested, for example, prior to commencement of pilot operations or as part of another exit project that has yet to complete operational testing. DHS officials considered such testing of requirements to be sufficient. The evaluation plan did not satisfy relevant guidance, such as defining standards for gauging the pilots' performance, defining a comprehensive methodology for selecting airports and flights, and planning data analysis to ensure that the results of the evaluation support air exit decision making. The evaluation plan diverged from such guidelines, in part, because DHS viewed reporting on how the pilot results would be used to be outside the scope of its report. Collectively, the above limitations in scope, approach, and reporting restrict the pilots' ability to inform a decision for a long-term air exit solution and point to the need for DHS to leverage compensating sources of information on air exit's operational impacts in making air exit solution decisions. GAO recommends that the Secretary of Homeland Security identify additional sources of information beyond the pilots to inform a strategic air exit solution decision. DHS agreed with the recommendation. Tue, 10 Aug 2010 00:00:00 +0100 http://www.gao.gov/products/GAO-10-789?source=ra From 2011 through 2015, DOD plans to spend over $336 billion to operate, maintain, modernize, and recapitalize its tactical air forces. Since DOD projects tactical aircraft inventory shortfalls over the next 15 years, it must effectively balance resources between an increasingly expensive Joint Strike Fighter program and the need to keep its legacy aircraft viable. GAO was asked to assess DOD's tactical aircraft requirements, the extent to which plans for upgrading and retiring legacy aircraft and acquiring new aircraft are likely to meet the requirements, and how changes in strategic plans and threat assessments have affected requirements. GAO analyzed tactical aircraft requirement and inventory data, key plans and threat assessments. DOD's current combined tactical aircraft requirement is around 3,240 aircraft. The requirement includes a mix of various types of Air Force, Navy, and Marine Corps fixed-wing fighter and attack aircraft. The Air Force requirement is 2,000 aircraft, and the combined Navy and Marine Corps requirement is about 1,240 aircraft. To achieve national security objectives, however, DOD not only needs the right quantity of aircraft to adequately equip each service's force structure, but must also have the right organization and mix of aircraft capabilities. The services have reduced required quantities by a combined total of around 900 aircraft since 2002. Service officials believe that the current numbers provide sufficient capabilities to carry out assigned missions with manageable risk, but are not at optimal levels. Although officials also stated that current requirements account for capabilities provided by other weapon systems, such as unmanned aircraft and bombers, it is unclear exactly how and to what extent. DOD expects to encounter shortfalls in both Air Force and Navy tactical aircraft inventories, but the timing and magnitude of these shortfalls largely depend on assumptions about Joint Strike Fighter (JSF) acquisitions and the viability of legacy aircraft. The JSF program has continued to experience cost and schedule problems and is in the process of being restructured. In addition, DOD's investments in legacy systems have generally been assigned lower priority in the budgeting process. As a result, many legacy aircraft systems are becoming increasingly difficult to maintain as parts needed to support key subsystems age and become obsolete. The Navy and Air Force are exploring various options for closing their projected inventory shortfalls--including upgrading and extending the service lives of hundreds of legacy aircraft, and making modifications to how tactical air forces are used. Many of these options may be funded in future budgets and could cost billions of dollars. The services have not fully reconsidered tactical aircraft requirements in light of recent changes in strategic planning and threat assessments, but according to service officials, the 2010 Quadrennial Defense Review (QDR) affirmed the existing force structure in the near-term, principally the next 5 years. Similarly, DOD's recent Aircraft Investment Plan, which was required by Congress, and fiscal year 2011 budget decisions did not directly affect tactical aircraft requirements, but did make some changes in near-term aircraft investments. The QDR reflected a change in how DOD views future national security challenges, examined expected challenges in various combinations, and recognized the need to plan for and acquire adaptive and agile systems, including unmanned aircraft. The department is still in the process of establishing the analytical foundation for its future requirements. Until requirements analyses and JSF restructuring are complete and capabilities provided by unmanned aircraft and bombers are more clearly accounted for, it will be difficult for DOD to make informed investments in legacy aircraft upgrades and modernizations, and new aircraft procurements. GAO suggests that Congress consider requiring that costs associated with modernizing and sustaining the legacy fleet be included in future investment plans, and recommends that DOD 1) better define requirements and the size and severity of projected shortfalls, 2) clearly articulate how systems like unmanned aircraft are accounted for, and 3) complete a comprehensive cost and benefit analysis of options for addressing expected shortfalls. DOD agreed with the second recommendation and partially agreed with the others, citing current and planned actions. GAO believes its recommendations remain valid. Mon, 09 Aug 2010 00:00:00 +0100