Assistant Attorney General Makan Delrahim Delivers Remarks on the Future of Antitrust

Remarks as Prepared for Delivery 

“Here I Go Again”*: New Developments for the Future of the Antitrust Division

Good afternoon, I am pleased to join you today at the ABA Antitrust Fall Forum, my fourth as Assistant Attorney General.  I’d like to thank the Chair of the ABA Antitrust Law Section, Gary Zanfagna and the Conference Co-Chairs, Melanie Aitken and Anant Raut for their efforts in organizing this event.

The theme of this conference, “The Future of Antitrust,” raises the important question of where antitrust is headed.  Today, I am announcing three new developments that will continue to improve transparency and future enforcement efforts. As ever, we are looking back at what we’ve learned to forge a better path forward.  First, the Division today will issue new guidance on the use of arbitration to resolve Division matters.  Second, we are launching a Small Business portal to improve accessibility for these businesses which may be interacting with the antitrust laws for the first time. Third, we are expanding Procurement Collusion Strike Force (PCSF) to better safeguard important areas where the government and the American taxpayers are the victim.

  1. Merger Enforcement, Arbitration, and Small Business

To set the stage, I will touch first on our recent learnings and accomplishments in merger enforcement.  About two years ago, we began to modernize the merger review process. As part of those reforms, we published a new model timing agreement, which significantly improved how the Division approached Second Request investigations. Other improvements such as increased dialogue with the parties, pull-and-refile accountability, and CID enforcement have resulted in more effective and transparent merger review process. Our recent modernization of the Merger Remedies Manual reaffirms the Division’s commitment to effective structural relief, which has been a hallmark of my tenure as AAG, and it also incorporates important changes in the merger landscape over the past decade. 

American consumers have benefited recently from these principles.  For instance, the structural remedy in T-Mobile’s acquisition of Sprint required significant divestitures to Dish to expand output significantly by ensuring that large amounts of currently unused and underused spectrum are made available to American consumers in the form of high-quality 5G networks. 

This year, the Division also has crystallized and made more transparent the analytical principles to apply when assessing vertical mergers.  Most recently, the Vertical Merger Guidelines and our closing statement in London Stock Exchange/Refinitiv reflect our approach to identifying likely harms from a change in incentive or ability to harm rivals.  The new Guidelines ensure greater predictability, efficiency, and clarity. 

Another recent win for efficiency was the Division’s use of arbitration to streamline the adjudication of a dispositive issue in United States v. Novelis. Arbitration saved resources for both taxpayers and the merging parties and ensured that competition was preserved.

I am excited to announce today that we will issue new guidance on the use of arbitration to resolve Division matters.  The guidance reflects the Division’s experience using arbitration for the first time in Novelis case.  It outlines case selection criteria that will help identify Antitrust Division cases that would benefit from the application of arbitration and provides guidance on specific practices that may be employed in a future arbitration.  

Additionally, on the subject of transparency and our commitment to the business community, I want to mention briefly that our efforts are not limited to addressing the needs of high-priced antitrust lawyers advising their Fortune 500 clients about how to navigate the merger process. 

Today, we also are launching a Small Business Portal on our website.  The portal will improve accessibility and transparency for folks who are interacting with the antitrust laws for the first time, on a do-it-yourself basis.  Consider it our effort to lower entry barriers.

Fintech and Data

Speaking of entry barriers, earlier this month, the Division filed suit to enjoin Visa’s proposed acquisition of Plaid, the leading financial data aggregation company in the United States.  The Division has filed this lawsuit to enjoin Visa’s proposed acquisition of Plaid because the transaction would eliminate the nascent but significant competitive threat Plaid poses to Visa in the online debit market and unlawfully maintain Visa’s monopoly in online debit.  Today, I would like to focus on another aspect of our challenge: Visa’s acquisition of Plaid’s vast trove of consumer data. 

Plaid powers some of today’s most innovative fintech apps such as Venmo, Acorns, and Betterment.  The data Plaid retrieves allows these fintech apps to offer personal financial management tools, manage bill payments or other expenses, support loan underwriting, and transfer funds, among other uses. Plaid’s services can also be used to reduce fraud by verifying the consumer’s identity and account balance, examining the consumer’s bank account history, assuring that a transaction is bona fide, and confirming that there are sufficient funds to cover a transaction at the time of payment.

The fintech world is just one area where large troves of data are being used in cutting-edge business applications.  Indeed, it is increasingly important that as antitrust lawyers we remain up to speed on the latest technologies and the roles they play in markets today.

 In the last year, the Division launched a novel program to build our expertise by training a handful of our attorneys and economists in blockchain, machine learning, and artificial intelligence.  That program has been a success and is growing.

The foundation of this initiative is academic coursework offered by the MIT Sloan School of Management.  These courses, like other online learning programs, can provide valuable foundational insights into these technologies, while focusing on practical concerns about how they may apply to new and existing business models.  Our goal is for the Division’s attorneys and economists to develop a basic but critical understanding of how businesses implement these technologies and what effect they might have on competition.

Machine Learning and Antitrust

Today, I would like to say a few words about machine learning, a form of data analysis that uses sophisticated algorithms that continuously learn as they are exposed to new data.  Machine learning is used in many applications that we all recognize.  Machine learning can be used to refine natural language search results.  It can provide personalized, contextualized recommendations based on previous purchases or activity.  Financial institutions can use its power to detect anomalies or outliers to detect fraudulent or suspicious transactions in real time.  Machine learning can also analyze continuous streams of data from machinery, and be used to predict outages before they occur. 

This technology could have significant implications for many industries and issues the Division analyzes.  Increasingly, many transactions involve the acquisition of large troves of data.  Understanding how that data may be used – and the potential competitive implications – is becoming more and more important in merger analysis. 

There may be potential efficiencies stemming from machine learning applied to data that is merged in an acquisition.  The technology can power better recommendations, or increase manufacturers’ productivity, or reduce losses through more accurate fraud detection.

There also may be anticompetitive effects to consider.  For example, companies that have amassed large troves of data may be able to use it to exclude competitors or to make it more difficult for customers to switch providers. 

We also must be attuned to those situations where access to and the permissioned use of customer data constitutes a unique competitive advantage that forms a barrier to entry. One could envision this being true in a variety of cases where the customer data enables its holder to offer a unique service to the consumer. Examples of these unique types of data include: taxpayer information, medical health care records, or customer bank account information. In cases where incumbents with a dominant market share use their market power to block or otherwise stymie new competitors – particularly new competitors that are able to overcome these data barriers to entry, and are thus uniquely situated to enter, compete, or facilitate another company’s entry – we must be willing to take action to preserve competition. 

Even if the “data competitor” does not currently offer the relevant product or service for sale, antitrust enforcers must act to preserve the opportunity for entry in those markets that are concentrated because of the impact data accumulation has on competition today.

It is vital that we as antitrust enforcers understand both the potential value of the technology and the potential for its misuse.  To this end, the Division’s new training initiative helps ensure that we are well-equipped to assess the competitive implications of the next transaction or course of conduct where these cutting-edge business technologies may be pivotal.

  1. Criminal Enforcement and the Procurement Collusion Strike Force

Finally, I want to turn to our criminal program: over the past three years, we have obtained convictions in significant trials against high-level executives, the second- and third-ever extraditions on Sherman Act charges, significant prison sentences, and the four highest fines or penalties ever imposed for domestic cartels.  Under my leadership, the Division secured $529 million in criminal fines and penalties in FY2020—the highest total in the last five years, announced a significant policy change to incentivize and potentially reward corporate compliance efforts, and launched a first-of-its-kind Strike Force to bolster our efforts to protect the public purse from collusion. 

It is that Strike Force I want to focus on with you today. The Procurement Collusion Strike Force, or the PCSF, celebrated its first anniversary week ago today, and as it continues to grow and expand, it’s worth reflecting on its activities over the last year. 

The PCSF is an interagency partnership among the Antitrust Division, 13 United States Attorneys’ Offices, the FBI, and four federal Offices of Inspectors General.  Leveraging the combined capacity and expertise of the partners, the PCSF has two core objectives.  The first is to deter and prevent antitrust and related crimes on the front end of the procurement process through outreach and training.  This includes providing training to the “buy side” of the procurement, i.e., federal, state, and local procurement officials, on spotting the “red flags” of collusion and fraud, as well as to the “sell side,” i.e., general contractors, trade associations, and the procurement bar, on antitrust criminal violations and potential penalties.  The second objective is to effectively detect, investigate, and prosecute procurement collusion and fraud through better coordination and partnership in the law enforcement and inspector general communities.

As I mentioned when I announced the Department initiative alongside Deputy Attorney General Jeffrey A. Rosen last year, by forming the PCSF, we are looking to use all the enforcement tools in our arsenal to protect taxpayers’ funds.  The premise and promise of the PCSF was to increase collaboration among federal prosecutors and law enforcement agencies to protect the public purse and hold accountable those who corrupt the competitive process to rob taxpayers of the benefits of free competition. 

The Past Year of the PCSF

Since launching, our dedicated PCSF members have been hard at work.  The PCSF’s prosecutors, including those in the Antitrust Division and AUSAs across the country, and federal agents from various law enforcement agencies, have made incredible strides.  The pandemic—which I’ll discuss in more detail in a moment—didn’t shut down our efforts.  Indeed, the PCSF didn’t miss a beat. 

The first year was about proving the concept, and about standing up the in-district teams, building relationships, and getting the word out. Our initial in-district teams had six to eight members each—and our in-district teams now include over 360 federal, state, and local in-district working partners spread all across the country and actively participating in the 13 PCSF districts.

We have processed more than 50 requests from a diverse mix of federal, state, and local government agencies for training, assistance with safeguarding their procurement processes, and seeking opportunities to work with the PCSF on investigations.  We’ve trained thousands of criminal investigators, certified fraud examiners, auditors, data scientists, and procurement officials from nearly 500 federal, state, and local government agencies on recognizing collusion risks in the procurement process, including more than five dozen local and state inspectors general. 

We have been nimble and able to adapt our tactics to better respond to the global COVID-19 pandemic.  During any crisis, be it a hurricane or market crash or a pandemic, public spending skyrockets to meet the moment, and too often guardrails go down during the peak of emergency response.  We know that as the government responds to moments of crisis with increased spending to protect lives and livelihoods, bad actors far too often respond with new schemes to secure a bigger piece of the pie for themselves. 

Established as a virtual Strike Force, the PCSF was uniquely well-positioned to deploy interactive technology, and we have trained more than 8,000 agents, investigators, and auditors over the last 8 months on the heightened risks of collusion and fraud due to the COVID-19 pandemic.  We’ve gone to where the need is greatest, including training customized to the unique needs of the contract management and procurement professionals responsible for CARES Act spending at the Centers for Disease Control and Prevention (CDC), the Federal Emergency Management Agency (FEMA), and the United States Army Corps of Engineers (USACE). 

The PCSF also supported the Department’s COVID-19 response by creating a dedicated reporting portal for procurement collusion tips and referring hundreds of price gouging and hoarding tips to the COVID-19 task force.  And we’re working with the Pandemic Response Accountability Committee (PRAC) to ensure that tax dollars spent to respond to this crisis are used appropriately.

The PCSF has opened over two dozen grand jury investigations across the United States.  These active and ongoing investigations span the range of procurement collusion and fraud matters from defense and national security to public works projects, and from domestic investigations into conduct occurring primarily within a single PCSF district to international investigations into conduct affecting U.S. government procurement overseas. 

I should also note that our investigations are not limited to only those districts that have stood up PCSF teams.  In fact, about one fourth of our investigations are located outside of PCSF districts, which demonstrates the breadth of our investigative efforts and that this is truly a nationwide Strike Force. 

Finally, in the past year, the PCSF established its Data Analytics Project.  This is something I’m really focused on, because data is an asset—it is something to be used, not just collected.  We in the enforcement space can use data to advance the goal of maximizing taxpayer value and detecting wrongdoing. 

To do this, the PCSF has supported OIG data teams focused on developing Collusion Analytics models that proactively identify red flags of antitrust crimes and related fraud schemes in bid and award data.  We’ve hosted data analytics events for data scientists, and we’re working to build out this important toolkit.  This data will be used not only to provide evidence of conspiracies we already know about (which is something prosecutors and agents already do, to great effect), but to develop leads proactively for further inquiry. 

The Future of the PCSF

We’ve accomplished a lot in the last year, and I’d like to turn now to our announcement today and our plans for the next year of the PCSF. 

First, we’re adding new partners.  Today, two new national law enforcement partners are joining the PCSF: The Department of Homeland Security’s Office of Inspector General and the Air Force Office of Special Investigations.  Both agencies are already deeply invested in, and have been working with, our in-district teams.  Adding these agencies to the roster of national partners is a natural next step. 

Second, I am also announcing today that nine U.S. Attorneys will joining our effort.  These U.S. Attorneys’ Offices are located in areas of strategic importance with critical spending.  The new PCSF U.S. Attorney partners are:

  • David L. Anderson, Northern District of California
  • Robert K. Hur, District of Maryland
  • Erica H. MacDonald, District of Minnesota
  • D. Michael Hurst, Jr., Southern District of Mississippi
  • Seth D. DuCharme, Eastern District of New York
  • Matthew G.T. Martin, Middle District of North Carolina
  • W. Stephen Muldrow, District of Puerto Rico
  • Stephen J. Cox, Eastern District of Texas
  • Ryan Patrick, Southern District of Texas

Our existing national law enforcement partners are also contributing to this expansion by assigning agents to these new squads. 

  • FBI (by its International Corruption Unit and its field offices)
  • Department of Defense Office of Inspector General
  • Defense Criminal Investigative Service,
  • General Services Administration, Office of Inspector General
  • Department of Justice, Office of the Inspector General
  • U.S. Postal Service, Office of Inspector General

Third, I’m happy to announce that I’ve appointed Daniel Glad to be the Director of the PCSF.  Dan is the first permanent director the PCSF, and by making this a permanent position, I am ensuring that the PCSF is woven into the fabric and structure of the Antitrust Division.  Dan was an Assistant Chief in our Chicago Office, and he’s worked as a line prosecutor in that office and at USAO-N.D. Ill., and in the City of Chicago’s OIG.  Suffice it to say he has experience combatting collusion and fraud.

Relatedly, and as a reflection of the PCSF’s growing footprint, I’ve appointed the first-ever Assistant Director of the PCSF, Sandra Talbott.  Like Dan, Sandra has worked in our Chicago Office, and she has experience as a prosecutor at the local, state, and federal levels, as well as in the compliance space at a large financial institution. 

Fourth, our efforts to deter and detect are not limited to the shores of United States.  Indeed, the PCSF has several partners with oversight responsibility for U.S. government spending abroad that represent a diverse mix of federal agencies.  These partners play a critical role in deterring, detecting, investigating, and prosecuting those who undermine competition for U.S. government contracts and grants abroad.  As evident in past investigations, such as the South Korea Fuel Supply investigation contracts in South Korea, and from current pandemic spending patterns, U.S. government procurement is not limited by borders, and neither can the PCSF’s efforts to deter, detect, and prosecute misconduct.  In the coming year, the PCSF expects to continue its focus on protecting U.S. funds spent beyond our borders and coordinating with international counterparts.

I had very high expectations for the PCSF, but I have been blown away by what the district teams were able to accomplish over the last twelve months.  They were not satisfied with merely sustaining the early momentum generated for the Strike Force, and despite the challenges posed by the pandemic, they have managed to generate even more momentum by conducting virtual outreach and training, and opening new investigations at a steady clip. 

As the PCSF enters its second year, it will continue to investigate aggressively cases of price fixing, bid rigging, and market allocation that target American taxpayer dollars, using the full range of criminal and civil tools available to the federal government, including the Clayton Act’s Section 4A authority to pursue treble damages, to recover damages for the taxpayer.

I look forward to seeing the Strike Force continue to succeed as it pursues its mission. 

  1. Conclusion

In conclusion, the Antitrust Division is committed to enforcement that occurs in a transparent manner that fosters innovation.  These hallmarks are essential for our mission of serving the American people in the pursuit of justice.  Over the past three plus years, I am very proud of all we have achieved in support of this goal.

As many of you may know, I have great admiration for former Antirust AAG and Supreme Court Justice, Robert H. Jackson, naming a lecture series and a conference room in his honor.  When addressing the future of antitrust whether the laws should be revised, he stated that the solution “must be in terms of our ideals—the ideals of political and economic democracy” and that “we must keep our economic system under the control of the people who live by and under it.”  It is impossible to guarantee what the future of antitrust holds, but I know the Antitrust Division will continue to be unwavering as it enforces the law for the benefit of the American consumer.

___________________

*Whitesnake, Saints & Sinners (Geffen, 1982).

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GAO also analyzed the National Cyber Strategy and Implementation Plan to determine if they aligned with the desirable characteristics of a national strategy. GAO is making one matter for congressional consideration, that Congress should consider legislation to designate a leadership position in the White House with the commensurate authority to implement and encourage action in support of the nation's cybersecurity. GAO is also making one recommendation to the National Security Council to work with relevant federal entities to update cybersecurity strategy documents to include goals, performance measures, and resource information, among other things. The National Security Council neither agreed nor disagreed with GAO's recommendation. For more information, contact Nick Marinos at (202) 512-9342 or marinosn@gao.gov.
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    In U.S GAO News
    The Department of Defense (DOD) has made progress in establishing valid and reliable cost baselines for its enterprise business operations and has additional efforts ongoing. DOD's January 2020 report responding to section 921 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 addressed most of the key requirements from that section but also had some limitations, which DOD acknowledged. For example, the baselines included only labor and information technology costs because DOD's financial data do not attribute costs to other specific activities required under section 921. However, DOD officials told GAO they have developed and are continuing to refine baselines for all of the department's enterprise business operations, such as financial and human resource management, to enable DOD to better track the resources devoted to these operations and the progress of reform. While still in progress, this effort shows promise in addressing the weaknesses in DOD's section 921 report and in meeting the need for consistent baselines for DOD's reform efforts that GAO has previously identified. GAO found that DOD's reported savings of $37 billion from its reform efforts and a Defense-Wide Review to better align resources are largely reflected in its budget materials; however, the savings were not always well documented or consistent with the department's definitions of reform. Specifically: DOD had limited information on the analysis underlying its savings estimates, including (1) economic assumptions, (2) alternative options, and (3) any costs of taking the actions to realize savings, such as opportunity costs. Therefore, GAO was unable to determine the quality of the analysis that led to DOD's savings decisions. Further, some of the cost savings initiatives were not clearly aligned with DOD's definitions of reform, and thus DOD may have overstated savings that came from its reform efforts rather than other sources of savings, like cost avoidance. For example, one initiative was based on the delay of military construction projects. According to DOD officials, this was done to fund higher priorities. But if a delayed project is still planned, the costs will likely be realized in a future year. Without processes to standardize development and documentation of savings and to consistently identify reform savings based on reform definitions, decision makers may lack reliable information on DOD's estimated reform savings. In coordinating its reform efforts, DOD has generally followed leading practices for collaboration, but there is a risk that this collaboration may not be sustained in light of any organizational changes that Congress or DOD may make. This risk is increased because the Office of the Chief Management Officer (OCMO) and other offices have not formalized and institutionalized these efforts through written policies or agreements. Without written policies or formal agreements that define how organizations should collaborate with regard to DOD's reform and efficiency efforts, current progress may be lost, and future coordination efforts may be hindered. DOD spends billions of dollars each year to maintain key business operations. Section 921 of the NDAA for FY 2019 established requirements for DOD to reform these operations and report on their efforts. DOD has also undertaken additional efforts to reform its operations in recent years. Section 921 called for GAO to assess the accuracy of DOD's reported cost baselines and savings, and section 1753 of the NDAA for FY 2020 called for GAO to report on the OCMO's efficiency initiatives. This report assesses the extent to which DOD has (1) established valid and reliable baseline cost estimates for its business operations; (2) established well-documented cost savings estimates reflecting its reforms; and (3) coordinated its reform efforts. GAO assessed documents supporting costs, savings estimates, and coordination efforts; interviewed DOD officials; observed demonstrations of DOD's reform tracking tools; and assessed DOD's efforts using selected criteria. GAO is making three recommendations—specifically, that DOD establish formal processes to standardize development and documentation of cost savings; ensure that reported savings are consistent with the department's definition of reform; and formalize policies or agreements on its reform efforts. DOD concurred with GAO's recommendations. For more information, contact Elizabeth Field at (202) 512-2775 or fielde1@gao.gov.
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    The Department of Defense (DOD) screens for eating disorders for all applicants entering into the military but does not specifically screen servicemembers for eating disorders after entrance. However, after joining the military, servicemembers receive annual health screenings, and medical personnel may be able to diagnose eating disorders during in-person physical exams. Service branch behavioral health specialists told GAO that DOD medical personnel are trained to notice signs of eating disorders, such as changes in vital signs and emaciated appearance. DOD is examining ways to improve its screening of eating disorders in the military and recently expanded the available research funding for eating disorders in its Peer-Reviewed Medical Research Program (PRMRP). DOD provides health care services to approximately 9.5 million eligible beneficiaries, including services to treat those diagnosed with eating disorders, through TRICARE, DOD’s regionally structured health care system. Servicemembers can obtain these services at military treatment facilities—referred to as direct care—or receive care purchased from civilian providers—referred to as purchased care. DOD officials told us that the specialized level of care necessary to treat eating disorders is available to TRICARE beneficiaries through purchased care, rather than direct care. The Defense Health Agency (DHA), which oversees the TRICARE program, uses two contractors to develop regional provider networks. According to the two TRICARE contractors’ data for purchased care, as of spring 2020, there were 166 eating disorder facilities located in 32 states throughout the country and the District of Columbia. The facilities vary by geographic location, population served, and level of treatment provided: Geography: About half of the 166 facilities (79) are located in the following five states: California (24), Florida (18), Illinois (15), Texas (13), and Virginia (nine).  Population: Of the 166 eating disorder facilities, over three-quarters provide treatment to both adult (132 facilities) and child and adolescent (132 facilities) populations. Level of Treatment: Most facilities provide inpatient hospitalization programs, which are for serious cases requiring medical stabilization (81 facilities); partial hospitalization, which are day programs providing treatment 5 to 7 days a week (133 facilities); or intensive outpatient programs, which are treatment programs providing therapy 2 to 6 days a week (107 facilities). About one-fifth of the facilities (35) provide residential treatment services, which are living accommodations providing intensive therapy and 24-hour supervision. TRICARE contractors have met with some challenges entering into contracts with eating disorder treatment facilities in certain areas of the country, according to DHA officials and both contractors. However, both contractors told GAO they consider it their responsibility to ensure beneficiaries receive the care they need regardless of the location of the facility. No access-to-care complaints related to eating disorder treatment were reported by TRICARE beneficiaries, according to the most recent DHA data for years 2018 through 2019. Eating disorders are complex conditions affecting millions of Americans and involve dangerous eating behaviors, such as the restriction of food intake. They can have a severe impact on heart, stomach, and brain functionality, and they significantly raise the risk of mortality. Many with eating disorders also experience co-occurring conditions such as depression. Research has yielded a range of estimates of the number of servicemembers with an eating disorder, due to differences in research methods. For example, a 2018 DOD study concluded that servicemembers likely experienced eating disorders at rates that are comparable to rates in the general population, while other survey-based research suggested the number of servicemembers with eating disorders may be higher than those with a medical diagnoses of such disorders. The potential effects that eating disorders can have on the health and combat readiness of servicemembers and their dependents underscores the importance of screening and treating this population. GAO was asked to provide information on eating disorders among servicemembers and their dependents. To describe how DOD screens for eating disorders among servicemembers, GAO reviewed DOD policies related to health screening and interviewed behavioral health specialists from the military branches. To understand approaches and challenges with implementing screening in a military environment, any planned or ongoing DOD-sponsored research related to this topic, and available eating disorder treatment, GAO interviewed representatives from the Eating Disorder Coalition, Uniformed Services University of Health Sciences, and the University of Kansas. To describe how DOD provides eating disorder treatment to servicemembers and their dependents, GAO interviewed DHA officials and TRICARE contractors and reviewed the TRICARE policy manual to identify the types of eating disorder diagnoses and treatments that are covered through direct and purchased care. GAO received data from the two TRICARE contractors related to the availability of eating disorder treatment services as of spring 2020. For more information, contact Sharon Silas at (202) 512-7114 or Silass@gao.gov.
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    Most state Adult Protective Services (APS) agencies have been providing data on reports of abuse to the Department of Health and Human Services (HHS), including data on financial exploitation, although some faced challenges collecting and submitting these data. Since states began providing data to HHS's National Adult Maltreatment Reporting System (NAMRS) in 2017, they have been voluntarily submitting more detailed data on financial exploitation and perpetrators each year (see figure). However, some APS officials GAO interviewed in selected states said collecting data is difficult, in part, because victims are reluctant to implicate others, especially family members or other caregivers. APS officials also said submitting data to NAMRS was challenging initially because their data systems often did not align with NAMRS, and caseworkers may not have entered data in the system correctly. HHS has provided technical assistance and grant funding to help states address some of these challenges and help provide a better picture of the prevalence of the various types of financial exploitation and its perpetrators nationwide. Number of States That Provide Data on Financial Exploitation and Perpetrators to NAMRS Studies estimate some of the costs of financial exploitation to be in the billions, but comprehensive data on total costs do not exist and NAMRS does not currently collect cost data from APS agencies. The Consumer Financial Protection Bureau found actual losses and attempts at elder financial exploitation reported by financial institutions nationwide were $1.7 billion in 2017. Also, studies published from 2016 to 2020 from three states—New York, Pennsylvania, and Virginia—estimated the costs of financial exploitation could be more than $1 billion in each state alone. HHS does not currently ask states to submit cost data from APS casefiles to NAMRS, though officials said they have begun to reevaluate NAMRS with state APS agencies and other interested parties, including researchers, and may consider asking states to submit cost data moving forward. Adding cost data to NAMRS could make a valuable contribution to the national picture of the cost of financial exploitation. Recognizing the importance of these data, some APS officials GAO interviewed said their states have developed new data fields or other tools to help caseworkers collect and track cost data more systematically. HHS officials said they plan to share this information with other states to make them aware of practices that could help them collect cost data, but they have not established a timeframe for doing so. Elder financial exploitation—the fraudulent or illegal use of an older adult's funds or property—has far-reaching effects on victims and society. Understanding the scope of the problem has thus far been hindered by a lack of nationwide data. In 2013, HHS worked with states to create NAMRS, a voluntary system for collecting APS data on elder abuse, including financial exploitation. GAO was asked to study the extent to which NAMRS provides information on elder financial exploitation. This report examines (1) the status of HHS's efforts to compile nationwide data through NAMRS on the extent of financial exploitation and the challenges involved, and (2) what is known about the costs of financial exploitation to victims and others. GAO analyzed NAMRS data from fiscal year 2016 through 2019 (the most recent available); reviewed relevant federal laws; and interviewed officials from HHS, other federal agencies, elder abuse prevention organizations, and researchers. GAO also reviewed APS documents and spoke with officials in eight states, selected based on their efforts to study, collect, and report cost data; and reviewed studies on financial exploitation. GAO recommends that HHS (1) work with state APS agencies to collect and submit cost data to NAMRS, and (2) develop a timeframe to share states' tools to help collect cost data. HHS did not agree with the first recommendation, but GAO maintains that it is warranted, as discussed in the report. HHS agreed with the second recommendation. For more information, contact Kathryn A. Larin at (202) 512-7215 or larink@gao.gov.
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    From October 2019 to March 2020, the Department of Homeland Security (DHS), in coordination with the Department of Justice's (DOJ) Executive Office for Immigration Review (EOIR), implemented expedited fear screening pilot programs. Under the Prompt Asylum Claim Review (for non-Mexican nationals) and Humanitarian Asylum Review Process (for Mexican nationals), DHS sought to complete the fear screening process for certain individuals within 5 to 7 days of their apprehension. To help expedite the process, these individuals remained in U.S. Customs and Border Protection (CBP) custody during the pendency of their screenings rather than being transferred to U.S. Immigration and Customs Enforcement (ICE). From October through December 2019, DHS implemented the programs in the El Paso, Texas, sector and expanded them to nearly all other southwest border sectors before pausing them in March 2020 due to COVID-19. DHS data indicate that CBP identified approximately 5,290 individuals who were eligible for screening under the pilot programs. About 20 percent of individuals were in CBP custody for 7 or fewer days; CBP held about 86 percent of individuals for 20 or fewer days. Various factors affect time in CBP custody such as ICE's ability to coordinate removal flights. U.S. Citizenship and Immigration Services (USCIS) data indicate that the majority of individuals (about 3,620) received negative fear determinations from asylum officers (see figure). About 1,220 individuals received positive credible fear determinations placing them into full removal proceedings where they may apply for various forms of protection such as asylum. However, as of October 2020, DHS and EOIR could not account for the status of such proceedings for about 630 of these individuals because EOIR's data system does not indicate that a Notice to Appear—a document indicating someone was placed into full removal proceedings before an immigration judge—has been filed and entered into the system, as required. Specifically, DHS and EOIR officials could not determine whether DHS components had filed the notices for these cases with EOIR, nor could they determine if EOIR staff had received but not yet entered some notices into EOIR's data system, per EOIR policy. Ensuring that DHS components file Notices to Appear with EOIR and that EOIR staff enter them into EOIR's data system in a timely manner, as required, would help ensure that removal proceedings move forward for these individuals. Outcomes of Screenings Under Expedited Fear Screening Pilot Programs, October 2019 through March 2020 (as of August 11, 2020) Note: Percentages do not total 100 due to rounding. Individuals apprehended by DHS and placed into expedited removal proceedings are to be removed from the U.S. without a hearing in immigration court unless they indicate a fear of persecution or torture, a fear of return to their country, or express an intent to apply for asylum. Asylum officers conduct such “fear screenings,” and EOIR immigration judges may review negative USCIS determinations. In October 2019, DHS and DOJ initiated two pilot programs to further expedite fear screenings for certain apprehended noncitizens. GAO was asked to review DHS's and DOJ's management of these pilot programs. This report examines (1) actions DHS and EOIR took to implement and expand the programs along the southwest border, and (2) what the agencies' data indicate about the outcomes of individuals' screenings and any gaps in such data. GAO analyzed CBP, USCIS, EOIR, and ICE data on all individuals processed under the programs from October 2019 to March 2020; interviewed relevant headquarters and field officials; and visited El Paso, Texas—the first pilot location. GAO is making two recommendations, including that DHS ensure components file Notices to Appear with EOIR for all those who received positive determinations under the programs, and that EOIR ensure staff enter all such notices in a timely manner, as required, into EOIR's case management system. DHS concurred and DOJ did not concur. GAO continues to believe the recommendation is warranted. For more information, contact at (202) 512-8777 or gamblerr@gao.gov.
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  • K-12 Education: U.S. Military Families Generally Have the Same Schooling Options as Other Families and Consider Multiple Factors When Selecting Schools
    In U.S GAO News
    What GAO Found Traditional public schools were the most commonly available schooling option for military families near military installations, similar to schools available to U.S. families in general, according to GAO's analysis of Department of Education 2018-19 data. Over 90 percent of installations had at least one public schooling option nearby—such as a charter or magnet school—in addition to traditional public schools (see figure). Similar to U.S. schools in general, rural installations generally had fewer schooling options compared to their more highly populated urban counterparts. In addition, about one-half of the military installations GAO analyzed are in states that offer private school choice programs that provide eligible students with funding toward a non-public education. At least two of these states have private school choice programs specifically for military families. Public School Options within Average Commuting Distance of Military Installations, School Year 2018-19 Note: According to GAO's analysis of the Department of Transportation's 2017 National Household Travel Survey, the average commuting distance for rural and urban areas is 20 miles and 16 miles, respectively. For the purposes of this report, the term “military installations” refers to the 890 DOD installations and Coast Guard units included in GAO's analysis. Military families in GAO's review commonly reported considering housing options and school features when choosing schools for their children; however, they weighed these factors differently to meet their families' specific needs. For example, one reason parents said that they accepted a longer commute was to live in their preferred school district, while other parents said that they prioritized a shorter commute and increased family time over access to specific schools. Military families also reported considering academics, perceived safety, elective courses, and extracurricular activities. To inform their schooling decisions, most parents said that they rely heavily on their personal networks and social media. Why GAO Did This Study Approximately 650,000 military dependent children in the U.S. face various challenges that may affect their schooling, according to DOD. For example, these children transfer schools up to nine times, on average, before high school graduation. Military families frequently cite education issues for their children as a drawback to military service, according to DOD. GAO was asked to examine the schooling options available to school-age dependents of active-duty servicemembers. This report describes (1) available schooling options for school-age military dependent children in the U.S.; and (2) military families' views on factors they consider and resources they use when making schooling decisions. GAO analyzed data on federal education, military installation locations, and commuting patterns to examine schooling options near military installations. GAO also conducted six discussion groups with a total of 40 parents of school-age military dependent children; and interviewed officials at nine military installations that were selected to reflect a range of factors such as availability of different types of schooling options, rural or urban designation, and geographic region. In addition, GAO reviewed relevant federal laws and guidance, and interviewed officials from DOD, the Coast Guard, and representatives of national advocacy groups for military children. For more information, contact Jacqueline M. Nowicki at (617) 788-0580 or nowickij@gao.gov.
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    Fiscal year 2015 was the first time that the Food and Drug Administration (FDA) conducted more inspections of foreign drug manufacturers than domestic manufacturers, with the majority conducted in China and India. However, in June 2020, GAO reported that from fiscal year 2016 through fiscal year 2018, both foreign and domestic inspections decreased, in part due to staffing vacancies. While foreign inspections increased in 2019, since March 2020, FDA has largely paused foreign and domestic inspections due to the Coronavirus Disease 2019 (COVID-19) pandemic, conducting only those deemed mission critical. In January 2021, GAO reported that FDA conducted three foreign inspections in fiscal year 2020 following the pause—significantly less than in recent years. Number of FDA-Conducted Foreign Drug Manufacturing Establishment Inspections, Fiscal Years 2019–2020, by Month FDA has used alternative inspection tools to maintain some oversight of drug manufacturing quality while inspections are paused. These tools include relying on inspections conducted by foreign regulators, requesting and reviewing records and other information, and sampling and testing drugs. FDA has determined that inspections conducted by certain European regulators are equivalent to and can be substituted for an FDA inspection. Other tools provide useful information but are not equivalent. In addition, FDA was unable to complete more than 1,000 of its planned fiscal year 2020 inspections and will likely face a backlog of inspections in future years. In January 2021, GAO recommended that FDA ensure that inspection plans for future fiscal years respond to the issues presented by the backlog and that FDA fully assess the agency's alternative inspection tools. FDA concurred with both recommendations. Even before the COVID-19 pandemic, FDA faced persistent challenges conducting foreign inspections. GAO found in December 2019 that there continued to be vacancies among the investigators who conduct foreign inspections. GAO further found that FDA's practice of preannouncing foreign inspections up to 12 weeks in advance could give manufacturers the opportunity to fix problems ahead of the inspection and raised questions about their equivalence to domestic inspections. In light of COVID-19, FDA is now preannouncing both foreign and domestic inspections for the safety of its staff and manufacturers. GAO also found that language barriers can create challenges during foreign inspections as FDA generally relies on the establishment for translation services. The outbreak of COVID-19 has called greater attention to the United States' reliance on foreign drug manufacturers. FDA reports that 74 percent of establishments manufacturing active ingredients and 54 percent of establishments manufacturing finished drugs for the U.S. market were located overseas, as of May 2020. FDA is responsible for overseeing the safety and effectiveness of all drugs marketed in the United States, regardless of where they are produced, and it conducts inspections of both foreign and domestic manufacturing establishments. GAO has had long-standing concerns about FDA's ability to oversee the increasingly global pharmaceutical supply chain, an issue highlighted in GAO's High Risk Series since 2009. This statement is largely based on GAO's Drug Manufacturing Inspections enclosure in its January 2021 CARES Act report, as well as GAO's December 2019 and June 2020 testimonies. Specifically, it discusses (1) the number of FDA's foreign inspections, (2) FDA's response to the COVID-19 pandemic pause in inspections, and (3) persistent foreign inspection challenges. For that work, GAO examined FDA data from fiscal years 2012 through 2020, interviewed FDA investigators, and reviewed documents related to drug oversight during the COVID-19 pandemic, among other things. For more information, contact Mary Denigan-Macauley at (202) 512-7114 or deniganmacauleym@gao.gov.
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    Eight federal programs addressing chemical safety or security from four departments or agencies that GAO reviewed contain requirements or guidance that generally align with at least half of the Department of Homeland Security's (DHS) 18 Chemical Facility Anti-Terrorism Standards (CFATS) program standards. At least 550 of 3,300 (16 percent) facilities subject to the CFATS program are also subject to other federal programs. Analyses of CFATS and these eight programs indicate that some overlap, duplication, and fragmentation exists, depending on the program or programs to which a facility is subject. For example, six federal programs' requirements or guidance indicate some duplication with CFATS. CFATS program officials acknowledge similarities among these programs' requirements or guidance, some of which are duplicative, and said that the CFATS program allows facilities to meet CFATS program standards by providing information they prepared for other programs. more than 1,600 public water systems or wastewater treatment facilities are excluded under the CFATS statute, leading to fragmentation. While such facilities are subject to other programs, those programs collectively do not contain requirements or guidance that align with four CFATS standards. According to DHS, public water systems and wastewater treatment facilities are frequently subject to safety regulations that may have some security value, but in most cases, these facilities are not required to implement security measures commensurate to their level of security risk, which may lead to potential security gaps. The departments and agencies responsible for all nine of these chemical safety and security programs—four of which are managed by DHS, three by the Environmental Protection Agency (EPA), and one each managed by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Department of Transportation (DOT)—have previously worked together to enhance information collection and sharing in response to Executive Order 13650, issued in 2013. This Executive Order directed these programs to take actions related to improving federal agency coordination and information sharing. However, these programs have not identified which facilities are subject to multiple programs, such that facilities may be unnecessarily developing duplicative information to comply with multiple programs. Although CFATS allows facilities to use information they prepared for other programs, CFATS program guidance does not specify what information facilities can reuse. Finally, DHS and EPA leaders acknowledged that there are differences between CFATS requirements and the security requirements for public water systems and wastewater treatment facilities, but they have not assessed the extent to which potential security gaps may exist. By leveraging collaboration established through the existing Executive Order working group, the CFATS program and chemical safety and security partners would be better positioned to minimize unnecessary duplication between CFATS and other programs and better ensure the security of facilities currently subject to fragmented requirements. Facilities with hazardous chemicals could be targeted by terrorists to inflict mass casualties or damage. Federal regulations applicable to chemical safety and security have evolved over time as authorizing statutes and regulations established programs for different purposes, such as safety versus security, and with different enforcement authorities. GAO has reported that such programs may be able to achieve greater efficiency where overlap exists by reducing duplication and better managing fragmentation. GAO was asked to review issues related to the effects that overlap, duplication, and fragmentation among the multiple federal programs may have on the security of the chemical sector. This report addresses the extent to which (1) such issues may exist between CFATS and other federal programs, and (2) the CFATS program collaborates with other federal programs. GAO analyzed the most recent available data on facilities subject to nine programs from DHS, EPA, ATF, and DOT; reviewed and analyzed statutes, regulations, and program guidance; and interviewed agency officials. GAO is making seven recommendations, including that DHS, EPA, ATF, and DOT identify facilities subject to multiple programs; DHS clarify guidance; and DHS and EPA assess security gaps. Agencies generally agreed with six; EPA did not agree with the recommendation on gaps. GAO continues to believe it is valid, as discussed in the report. For more information, contact Nathan Anderson at (206) 287-4804 or AndersonN@gao.gov.
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