Testimony issued by the General Accounting Office with an abstract that begins "Medicare has paid higher than market rates for various medical equipment and supplies and often considerably higher than provider acquisition costs for Medicare-covered outpatient drugs. Congress has enacted a series of legislative changes affecting payment methods and payment adjustment authority for medical equipment and supplies and outpatient drugs since the late 1980s. However, progress in setting appropriate rates has been mixed, owing, in part, to various constraints faced by the agency responsible for administering Medicare--the Centers for Medicare and Medicaid Services (CMS). Because of the program's size, scope, and role as a public payer, Medicare has limited options to set and adjust payments for medical equipment, supplies and outpatient drugs. Medicare's method of paying for medical equipment and supplies is through fee schedules that remain tied to suppliers' historical charges to Medicare rather than market prices. Medicare's payment approaches lack flexibility to keep pace with market changes, and, as a result, Medicare often pays higher prices than other public payers. Previous efforts to lower Medicare's overly generous payments suggest several lessons. First, payment changes are most effectively implemented when the process used to set or adjust a rate …

Testimony issued by the General Accounting Office with an abstract that begins "The federal government has spent billions of dollars attempting to reduce the consumption of petroleum in the transportation sector for over 25 years. Throughout the period, the government has tried tax incentives, mandates to use vehicles that run on alternative fuels, and laws designed to enhance fuel efficiency. More recently, the federal government conducted a $1.2 billion partnership between industry and government, the Partnership for a New Generation of Vehicle, to develop a highly fuel-efficient car. The administration has proposed a new initiative, known as FreedomCAR, focused on developing hydrogen fuel cells that will provide the technology necessary to create cars and trucks that do not require petroleum and have no polluting emissions--without sacrificing safety or convenience. FreedomCAR will operate as a cooperative research effort between the Department of Energy and General Motors, Daimler-Chrysler, and the Ford Motor Company. The FreedomCAR initiative should make sure that it (1) performs research that private industry would not do on its own, (2) specifies a clear and measurable goal, (3) devises a strategy to directly address that goal, and (4) considers whether consumers will buy the products resulting from the research …

A letter report issued by the General Accounting Office with an abstract that begins "Identity theft or identity fraud generally involves "stealing" another person's personal identifying information--such as Social Security Number (SSN), date of birth, and mother's maiden name--and then using the information to fraudulently establish credit, run up debt, or take away existing financial accounts. The Identity Theft and Assumption Deterrence Act of 1998 made identity theft a separate crime against the person whose identity was stolen, broadened the scope of the offense to include the misuse of information as well as documents and provided punishment--generally a fine or imprisonment or both. GAO found no comprehensive or centralized data on enforcement results under the federal Identity Theft Act. However, according to a Deputy Assistant Attorney General, federal prosecutors are using the 1998 federal law. As with the federal act, GAO found no centralized or comprehensive data on enforcement results under state identity theft statutes. However, officials in the 10 states selected for study provided examples of actual investigations or prosecutions under these statutes. Generally, the prevalence of identity theft and the frequently multi- or cross-jurisdictional nature of such a crime underscore the importance of promoting cooperation or coordination among …

A letter report issued by the General Accounting Office with an abstract that begins "During World War I, the U.S. Army operated a large research facility to develop and test chemical weapons and explosives in the area that became the Spring Valley neighborhood in Washington, D.C. Buried ordnance, discovered there in 1993, led to the designation by the Department of Defense (DOD) of 61 acres as a formerly used defense site. Through fiscal year 2001, DOD had spent over $50 million to identify and remove hazards at the site. The government entities involved have identified and removed a large number of hazards, but the number remaining is unknown. The health risks influencing cleanup activities at Spring Valley are the possibility of injury or death from exploding or leaking ordnance and containers of chemical warfare agents and potential long-term health problems from exposure to arsenic-contaminated soil. As of April 2002, the U.S. Army estimated that the remaining cleanup activities would cost $7.1 million and take 5 years. But these estimates are unreliable. GAO summarized this report in congressional testimony (See GAO-02-836T)."

A letter report issued by the General Accounting Office with an abstract that begins "Historically, utility monopolies have generated electricity and sold it to customers at prices set by state regulators. Today, private companies in 24 states compete to sell electricity at market prices determined by supply and demand. California is part of a broader western market in which electricity is routinely bought and sold across state and national boundaries. GAO found evidence that wholesale electricity suppliers exercised market power by raising prices above competitive levels during the summer of 2000 and at other times after the restructuring. Neither GAO's analysis nor other studies addressed whether market power exercised in California violated federal or other laws. The design of California's electricity market enabled individual wholesale electricity suppliers to exercise market power. Once prices rose, the design was ineffective in returning prices to competitive levels. Prominent experts on market design and industry experts generally agree that two principal market designs flaws increased wholesale suppliers' incentive and ability to raise prices above competitive levels: (1) retail prices were frozen and (2) the California Public Utilities Commission generally prohibited or discouraged long-term contracts between utilities and wholesale suppliers."

A letter report issued by the General Accounting Office with an abstract that begins "The issue of homeland security crosscuts numerous policy domains, impinging on the expertise and resources of every level of government, the private sector, and the international community. GAO found that although combating terrorism crossed organizational boundaries, it did not sufficiently coordinate the activities of the 40 federal entities involved, resulting in duplication and gaps in coverage. The homeland security efforts of public and private entities do not yet represent a unified approach, although key supporting elements for such an approach are emerging. Progress has been made in developing a framework to support a more unified effort. Other remaining key elements--a national strategy, establishment of public and private sector partnerships, and the definition of key terms--are either not in place yet or are evolving. At the same time, key terms, such as "homeland security," have not been defined officially; consequently, certain organizational, management, and budgetary decisions cannot currently be made across agencies. In the interim, the potential exists for an uncoordinated approach to homeland security that may lead to duplication of efforts or gaps in coverage, misallocation of resources, and inadequate monitoring of expenditures."

A letter report issued by the General Accounting Office with an abstract that begins "On April 9, 2002, GAO testified on the Internal Revenue Service's (IRS) fiscal year 2003 budget request. Although IRS had adequately justified its $450 million Business Systems Modernization request, it did not develop its $1.63 billion information systems operations and maintenance request in accordance with the best practices of leading private- and public-sector information technology organizations. See GAO-02-580T."

A letter report issued by the General Accounting Office with an abstract that begins "In examining the efforts of the Departments of Education, Housing and Urban Development, and Transportation to ensure that recipients corrected single audit report findings, GAO found that each agency had procedures for obtaining and distributing the audit reports to appropriate officials for action. However, they often did not issue the required written management decisions or have documentary evidence of their evaluations of and conclusions on recipients' actions to correct the audit findings. In addition, program managers did not summarize and communicate information on single audit results and recipient actions to correct audit findings to agency management."

A letter report issued by the General Accounting Office with an abstract that begins "Senior Department of Defense (DOD) and military service officials have testified that they face increasing difficulties in carrying out realistic training at military installations. There are eight "encroachment" issues that affect or have the potential to affect military training and readiness. The eight encroachment issues are: endangered species habitat on military installations, unexploded ordnance and munitions constituents, competition for radio frequency spectrum, protected marine resources, competition for airspace, air pollution, noise pollution, and urban growth around military installations. Whenever possible, the services work around these issues by modifying the timing, tempo, and location of training, as well as the equipment used. However, these workarounds are becoming increasingly difficult and costly and they compromise the realism essential to effective training. Over time, the military services report they have increasingly lost training range capabilities because of encroachment. Each of the four installations and two major commands GAO visited reported having lost some capabilities in terms of the time training ranges were available or the types of training that could be conducted. Higher-than-average population growth around installations makes further encroachment losses likely. Despite the loss of some capabilities, service …

A letter report issued by the General Accounting Office with an abstract that begins "Foreign service employees often experience difficult environmental and living conditions while assigned to U.S. embassies and consulates that are designated as "hardship posts." These conditions include inadequate medical facilities, few opportunities for spousal employment, poor schools, high levels of crime, and severe climate. Because the State Department is understaffed, both in terms of the number and types of employees, it is difficult to ensure that it has the right people in the right place at the right time. The impact of these staffing shortfalls is felt most strongly at hardship posts, some of which are of strategic importance to the United States. As a result, diplomatic programs and management controls at hardship posts could be vulnerable and the posts' ability to carry out U.S. foreign policy objectives effectively could be weakened. State's assignment system is not effectively meeting the staffing needs of hardship posts. Although American Foreign Service employees are obligated to serve anywhere in the world, State rarely directs employees to serve in locations for which they have not shown interest by bidding on a position. Because few employees bid on these positions, State has …

A letter report issued by the General Accounting Office with an abstract that begins "The Department of Defense (DOD) Defense Working Capital Fund was used to buy $70 billion in commodities in fiscal year 2001. This amount is estimated to grow to $75 billion for fiscal year 2003. The department's financial management regulation states that fund activities will operate in a business-like fashion and incorporate full costs in determining the pricing of their products. The National Defense Authorization Act for Fiscal year 2001 requires that GAO review the working capital fund activities to identify any potential changes in current management processes or policies that would result in a more efficient and economical operation. The act also requires that GAO review the Defense Logistics Agency's (DLA) efficiency, effectiveness, and flexibility of operational practices and identify ways to improve services. One such DLA activity, the Defense Energy Support Center, sold $4.7 billion of various petroleum-related products to the military services in fiscal year 2001. DOD's fuel prices have not reflected the full cost of fuel as envisioned in the working capital fund concept because cash movements to the fund balance and surcharge inaccuracies have affected the stabilized annual fuel prices. Over $4 …

A letter report issued by the General Accounting Office with an abstract that begins "The Department of Defense (DOD) estimates that 168,000 military family housing units are inadequate, lack modern amenities, and are in need of major renovation and replacement. According to DOD, completing this work using traditional military construction methods would take more than 20 years and cost $16 billion. To improve housing faster and more economically, Congress authorized the Military Housing Privatization Initiative in 1996. Although DOD has awarded contracts to construct or improve 16,000 units and has plans to privatize an additional 96,000 units by the end of fiscal year 2006, privatization projects are not supported by reliable or consistent needs assessments, and the overall requirement for military housing is not well-defined. The department has achieved two key financial goals for the privatization program--leveraging of government funds and lower project life-cycle costs. Although DOD has included provisions designed to protect the government's interests, GAO found areas where DOD could further enhance protections to the government. First, some contracts did not fully anticipate the increased rent to be paid to project developers as a result of a DOD initiative to increase housing allowances for service members. Second, although …

A letter report issued by the General Accounting Office with an abstract that begins "The Department of Defense reports that is has been faced with difficulties adequately maintaining its facilities to meet mission requirements. Facilities have been aging and deteriorating as funds needed to sustain and recapitalize the facilities have fallen short of requirements. GAO's review of the services' condition assessments in conjunction with visits to the basic training locations showed that most barracks were in need of significant repair, although some barracks were in better condition than others. GAO found that the exteriors of each service's barracks were generally in good condition and presented an acceptable appearance, but the barracks' infrastructure often had persistent repair problems because of inadequate maintenance. The services' approaches to recapitalize their recruit barracks vary and are influenced by their overall priorities to improve all facilities. Although the Navy, Air Force, and Marine Corps are addressing many of their recapitalization needs in the near-term, most of the Army's plans are longer term."

A letter report issued by the General Accounting Office with an abstract that begins "Following the 1991 Gulf War, reservists and employers flooded the government with questions and complaints concerning the reemployment rights of reservists who had been away from their jobs during the war. The Uniformed Services Employment and Reemployment Rights Act of 1994 grants service members reemployment rights following military duty and addresses the rights and responsibilities of both reservists and their employers. Despite increases in operations since 1992, the average operational tempo of reserves department-wide increased only slightly between 1992 and 2001--from 43 to 46 days a year. Normal required training periods accounted for the bulk of this total. Several factors hamper Department of Defense (DOD) outreach efforts to both employers and reservists. DOD lacks complete information on who the reservists' employers are, and it has viewed the Privacy Act as a constraint that prevents it from requiring reservists to provide this information. DOD relies on volunteers in the field to carry out many of its outreach activities. However, these volunteers do not always report their contacts with reservists and employers, and, as a result, DOD does not know the full extent of problems that arise and …

A letter report issued by the General Accounting Office with an abstract that begins "For decades, the Navy has been striving to improve its ability to detect potential enemy submarines before they can get within effective weapons range of U.S. forces. In 1985, the Navy established the Surveillance Towed Array Sensor System (SURTASS) Low Frequency Active (LFA) sonar program to develop a long-range capability for detecting a new generation of quieter Soviet nuclear and diesel submarines operating principally in the open ocean. However, as the Navy conducted testing of the system in the mid-1990s, some public interest groups and scientists raised concerns that SURTASS/LFA may cause harm to marine mammals. The Navy discontinued operational testing of the system and initiated an environmental impact statement process. The Navy will not begin testing or operating the system until it receives a Letter of Authorization from the National Marine Fisheries Service. A decision on the authorization is expected later in 2002. SURTASS/LFA will increase the Navy's capability to detect submarines in the open ocean, where the system was originally intended to operate. The Navy has considered a number of existing alternatives to SURTASS/LFA and found that the system provides long-range detection capabilities not …

A letter report issued by the General Accounting Office with an abstract that begins "The U.S. tax system is based on taxpayers voluntarily complying with the tax laws. However, the Internal Revenue Service (IRS) last measured taxpayers' rate of compliance using 1988 tax returns. As time has passed, IRS has become concerned that its ability to understand the effectiveness of its programs and target audits on noncompliant returns has deteriorated, potentially resulting in poorer service to taxpayers, reduced confidence in the fairness of the tax system, and unnecessary audits of compliant taxpayers. IRS is now planning a new compliance study called the National Research Program (NRP). NRP is designed to review 49,000 individual tax returns randomly selected from the population of over 129 million. According to the NRP plan, IRS will review each sampled return to determine whether the taxpayer has complied with statutory income, expense, and tax reporting requirements. Unlike past compliance studies, not all of the reviews will include contacting taxpayers. Based on GAO's assessment of the NRP in light of government guidance on performance measurement and data reliability, research design guidelines, and IRS's goals for the program, NRP's design is likely to yield the sort of detailed …

A letter report issued by the General Accounting Office with an abstract that begins "The United Nations (U.N.) General Assembly defines conflict diamonds as rough diamonds used by rebel movements to finance their military activities, including attempts to undermine or overthrow legitimate governments. The United States and much of the international community are trying to sever the link between conflict and diamonds while ensuring that no harm is done to the legitimate diamond industry, which is economically important in many countries. The principal international effort to address these objectives, known as the Kimberley Process, aims to develop and implement an international diamond certification scheme that will deter conflict diamonds from entering the legitimate market. The nature of diamonds and the operations of the international diamond industry create opportunities for illicit trade, including trade in conflict diamonds. Diamonds are mined in remote areas around the world and are virtually untraceable back to their original source once mixed and polished. The United States cannot detect diamonds that might come from conflict sources because the current diamond import control system does not require certification of the country of extraction. At present, there is no international system to certify the source of extraction. The …

A letter report issued by the General Accounting Office with an abstract that begins "The Army's purchase card program--the largest within the Defense Department--offers significant benefits, but weak internal controls have left the Army vulnerable to fraudulent, improper, and abusive purchases. The Army has yet to issue servicewide regulations or operating procedures, instead relying on ad hoc memoranda and other informal guidance. The Army also does a poor job of overseeing the purchase card program. The Army lacks the infrastructure--guidance and human capital--needed for effective program oversight. GAO identified several improper transactions involving clothing, food, and other items. GAO also identified improper purchases in which cardholders made a large number of purchases of similar items to circumvent the mandated limit of $2,500 for a single purchase."

A letter report issued by the General Accounting Office with an abstract that begins "The military services face significant challenges in addressing facility sustainment, restoration, and modernization needs with limited funds. These challenges are magnified by the 20 to 25 percent of the Department of Defense's (DOD) real property that it views as not being needed to meet current mission requirements, but that adds to costs. To reduce these costs and acquire additional resources to maintain its facilities, DOD has developed a multi-part strategy involving base realignment and closure, housing and utility privatization, competitive sourcing of non-inherently governmental functions, and demolition of facilities that are no longer needed. Although the services continue to use the leasing authority provided for traditional type of leases, they have made limited efforts to use the expanded leasing authority enacted by Congress in fiscal year 2001. The services have identified a number of impediments that have limited the use of the expanded leasing authority and that could adversely affect the program in the future."

A letter report issued by the General Accounting Office with an abstract that begins "The U.S. Army Corps of Engineers' February 1992 Final Interim Feasibility Study and Environmental Impact Statement reported that deepening the Delaware River ship channel from 40 to 45 feet was economically justified and environmentally feasible. However, GAO found that it does not provide a reliable basis for deciding whether to proceed with the project. GAO identified several miscalculations, invalid assumptions, and the use of significantly outdated information on the Corps' benefits estimate. In addition, several unresolved issues and uncertainties were not factored into the Corps' economic analysis, the outcome of which could either increase or decrease the benefits and costs of the project. Because of these shortcomings, the actual economic merits of the project will be unclear until the Corps reanalyzes it. The Corps of Engineers has largely addressed the environmental concerns of federal and state environmental agencies. However, several unresolved issues remain, including the issuance of a permit from the state of Delaware governing construction projects that affect state waters."

A letter report issued by the General Accounting Office with an abstract that begins "The Federal Courts Administration Act of 1992 requires GAO to review certain aspects of the Judicial Survivors' Annuities System (JSAS), one of several survivor benefit plans applicable to federal employees. JSAS provides annuities to surviving spouses and dependent children of deceased Supreme Court Justices, judges of the United States, and other participating judicial officials. For the 3 years covered by GAO's review, the judges' contributions represented more than 50 percent of the JSAS normal costs for fiscal year 1999, but less than 50 percent for fiscal years 2000 and 2001. To cover 50 percent of JSAS estimated future normal costs, the judges' contributions would need to increase by 0.1 percentage point above the 2.2 percent of salaries paid by retired judges. However, increasing required contributions could reduce the judges' rate of participation even though increasing participation was one of the main reasons for enhancing JSAS benefits and reducing judges' contributions in 1992."

A letter report issued by the General Accounting Office with an abstract that begins "GAO reviewed whether the Office of Federal Housing Enterprise Oversight (OFHEO) should incorporate new business assumptions into the stress test used to establish risk-based capital requirements. The stress test is designed to estimate, for a 10-year period, how much capital the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) would be required to hold to withstand potential economic shocks, such as sharp movements in interest rates or adverse credit conditions. Incorporating new business assumptions into the stress test would mean specifying details about the types and quality that would be acquired during the 10-year stress period, the types of funding that would be used to acquire such mortgages, and other operating and financial strategies that would be implemented by Fannie Mae's and Freddie Mac's managements. GAO found that data for the enterprises show that new business conducted over a 10-year period accounts for a large share of their on- and off-balance sheet holdings of assets and liabilities at the end of each 10-year period. Because new business represents such a large share of enterprise holdings over time, it would …

A letter report issued by the General Accounting Office with an abstract that begins "In response to concerns about the length of time children were spending in foster care, Congress enacted the Adoption and Safe Families Act of 1997 (ASFA). The act contained two key provisions intended to help states more quickly move the more than 800,000 children estimated to be in foster care each year to safe and permanent homes. One of these provisions, referred to as "fast track," allows states to bypass efforts to reunify families in certain egregious situations. The other provision, informally called "15 of 22," requires states to file a petition to terminate parental rights when a child has been in foster care for 15 of the most recent 22 months. Although the number of adoptions has increased by 57 percent since the act was enacted, changes in other foster care outcomes and the characteristics of children in foster care cannot be identified due to the lack of comparable pre- and post-ASFA data. Although data on states' use of the act's two key performance provisions are limited, some states described circumstances that hinder their use. Survey data suggest that a few states used the fast …

A letter report issued by the General Accounting Office with an abstract that begins "The Personal Responsibility and Work Opportunity Reconciliation Act (PRWPRA) of 1996 changed the nation's cash assistance program for needy families with children. The former program, Aid to Families with Dependent Children (AFDC), was replaced with the Temporary Assistance for Needy Families (TANF) block grant, which provides states with $16.5 billion each year through 2002 to serve this population. TANF's goals include ending the dependence of needy families on government benefits by promoting job preparation, work, and marriage; preventing and reducing the incidence of nonmarital pregnancies; and encouraging two-parent families. PRWORA expanded the scope of services that could potentially be contracted out, such as determining eligibility for TANF, which had traditionally been done by government employees. Moreover, with the large drop in TANF caseloads nationally, a greater share of federal TANF block grant funds and state funds is now devoted to various support services that are typically contracted out. Although PRWORA expanded the flexibility of states to design and administer TANF programs, its also limited the ability of the Department of Health and Human Services (HHS) to regulate states' TANF programs. Contracting with nongovernmental entities to provide …