Assistant Attorney General Makan Delrahim Delivers Remarks at the LeadershIP Virtual Series

Broke. . . but Not No More: Opening Remarks–Innovation Policy and the Role of Standards, IP, and Antitrust

Thank you to LeadershIP for putting together this panel on “Innovation Policy and the Role of Standards, IP, and Antitrust.” Some of you know that I often give my remarks the title of a popular song. Teddy Swims has a wonderful song released within the last few weeks called “Broke” and the first verse contains the lyrics: “Broke . . . but not no more.” These lyrics have special meaning with respect to antitrust law and policy as they relate to patent licensing practices, which for many years were broken, stifling competition, but are now being restored to their proper role of fostering a competitive and innovative economy.[1]

I am honored to join you, Director Kappos, and to discuss with my colleagues, Under Secretaries Iancu and Copan, the role that each of our agencies plays in fostering an innovative, competitive American economy. This is the first time we have been able to get all three of us together since we signed the new joint Policy Statement on Remedies for SEPs Subject to Voluntary F/RAND Commitments in December 2019.

That day marked a milestone in the Antitrust Division’s New Madison approach to the intersection of antitrust and intellectual property law, and so I’d like to use today as an opportunity to point out some additional milestones the Antitrust Division has accomplished related to competition and innovation since that time and to identify challenges on the horizon.

I. The New Madison Approach

I’ll start by briefly reminding everyone of the basics of the Division’s New Madison approach:

As many of you know, some IP and antitrust scholars are concerned about what they call a “hold-up” problem in the licensing of Standards Essential Patents—known as SEPs. Standards Development Organizations—called SDOs—establish standards so that devices and software can interoperate. Standards play an important role in numerous industries, including medical devices, wireless communications, and airlines parts, among others. The standards let consumers seamlessly integrate technology from different manufacturers without the need for complex workarounds. SDOs often require patent holders who want the SDO to consider their technology for use in the standard to agree at the outset that, if their patent is selected, they will license it to implementers on fair, reasonable, and non-discriminatory terms. This is known as a FRAND commitment. The supposed “hold-up” problem is that SEP holders might renege on their FRAND obligations after their patents are incorporated into the standard. They may demand non-FRAND terms from implementers who need to use their technology to be standard-compliant. Furthermore, there is a radical theory that a patent holder who fails to live up to his FRAND commitment can be sued for an antitrust violation for that alone.

The New Madison approach has four core premises: First: hold-up is fundamentally not an “antitrust” injury, but rather a contract or fraud injury, when it is proven. Second, SDOs should not become vehicles for concerted action by market participants to favor implementers over patent holders. Third, a fundamental feature of patent rights is the right to exclude, and courts should be hesitant to limit that right by, say, disfavoring injunctive remedies, absent specific congressional direction. Fourth, consistent with the right to exclude, the antitrust laws ought to regard a unilateral decision not to license a patent as per se legal.[2]

The competitive process in this context takes place in the negotiations between implementers and patent holders.  Negotiating in the shadow of dubious antitrust liability is not only unnecessary, it dramatically shifts bargaining power between patent holders and implementers in a way that distorts the incentives for real competition on the merits through innovation. Giving implementers the threat of treble damages in antitrust increases the perverse likelihood of “hold-out,” which is the other side of the “hold-up” coin. Of course, none of this undermines the importance of the negotiations that took place at the time that an SDO selected competing technologies for inclusion in the standard.  To the extent that implementers bargained for some benefit, contract law already provides a solution to the problem of patent holders failing to live up to that bargain. The parties are on equal terms when they bargain in the shadow of contract law, because there is no threat of treble damages skewing the negotiations in favor of the implementer.

II. New Madison in the Courts, U.S. and Abroad.

In addition to the 2019 Joint Policy Statement, which I know we’ll be discussing as part of the Q&A later, the Antitrust Division has offered our New Madison approach in courts that are currently hearing challenges on these issues. I’ll highlight a few of the cases in which we’ve filed recently.

This past February, we filed a statement of interest in the Northern District of Texas in Continental v. Avanci, a case that presented the question whether a patent holder who has made a FRAND commitment can be sued for violating Section 2 of the Sherman Act.[3] Plaintiff Continental Automotive Systems alleged that defendant Avanci made and then reneged on FRAND commitments. Continental sought treble damages under Section 2 of the Sherman Act, which restricts the conduct in which a monopolist can engage.

Our filing explained that Continental’s Section 2 claims based on alleged breaches of FRAND commitments in the standard setting context do not sound in antitrust law. Using the antitrust laws in this way is both bad policy and inconsistent with Supreme Court precedent that sharply limits any antitrust obligation to deal with a competitor.[4]  We’re currently awaiting the judge’s decision on the defendant’s motion to dismiss.[5]

We made a similar point in our filing in Lenovo v. Interdigital in July in the District of Delaware. Lenovo went so far as to argue that reneging on FRAND commitments violates not only Section 2 of the Sherman Act, but violates Section 1 as well. Our brief explained that Section 1 of the Sherman Act imposes liability only for concerted action, and that making and reneging on a FRAND commitment is unilateral action that involves no coordination with any other party. Interdigital’s motion to dismiss is currently pending. Recently, both Interdigital and DOJ alerted the court of the Ninth Circuit’s holding in Qualcomm that reneging on FRAND commitments is not an antitrust violation.

Another important filing that we made as part of our New Madison project is an amicus brief we filed jointly with the U.S. Patent & Trademark Office last October in the 5th Circuit Case, HTC v. Ericsson. HTC, the implementer that brought the suit, advanced a rule that reasonable licensing rates for SEPs have to be based not on the revenues for the entire product, but somehow on the value of the smallest saleable patent practicing unit—that is, the smallest independent part of the product that could be said to infringe.  HTC also argued that any license that imposed different costs on distinct licensees was unacceptably discriminatory.

We urged the Fifth Circuit to reject both of these rigid rules. The first rule—that licensing fees had to be based on the value of the smallest saleable patent practicing unit—prevents a patent holder from introducing evidence of how actual licensing fees work in practice. Where freely negotiating parties in the market base their licensing arrangements on revenue from the product, there is no reason why courts should categorically exclude such considerations.

The second rule HTC proposed—that a disparate impact makes a licensing fee discriminatory—would make almost any licensing arrangement discriminatory. No implementer is identically situated to its competitors, and any license arrangement is liable to have different effects on differently situated companies. The PTO presented oral argument in May, and we’re now awaiting a decision.

In March we filed a statement of interest in Intel v. Fortress, which is being litigated in district court in the Northern District of California. Plaintiffs Intel and Apple based their complaint on a novel—and problematic—understanding of antitrust law. They argued that Fortress and the other defendants had violated the antitrust laws by acquiring a large portfolio of patents and aggressively enforcing them. Our filing highlighted the absence of any harms to competition in the complaint. The complaint failed, for example, to identify any instances where the defendants had acquired substitute patents; that is, where their acquisitions might have eliminated competition. 

Moreover, in that case, the plaintiffs defined the relevant market as the “Electronics Patent Market.” We explained why the alleged “Electronics Patent Market” is vastly overbroad and could not constitute an antitrust-relevant market. The products in any valid market have to be substitutes for one another; or at least there has to be some cross-elasticity of demand. Electronics patents, of course, cover many unrelated technologies that don’t substitute for one another. The judge agreed with our analysis and dismissed the complaint without prejudice. Apple and Intel have now amended their complaint. We’re watching this case with interest.

The Division’s filings in these cases—Continental v. Avanci, Lenovo v. Interdigital, HTC v. Ericsson, and Intel v. Fortress—are examples of how the Division can advance a carefully balanced pro-innovation approach and be useful to courts. The intersection of intellectual property and antitrust is a highly technical area of law. When we weigh in on these issues, we aim to improve courts’ understanding of the law which, ultimately, will benefit consumers and competition. 

Importantly, courts have been echoing our concern for the proper balancing of the interests of patent holders and implementers. Furthermore, courts have rejected antitrust lawsuits premised solely on the violation of FRAND commitments.

            The Ninth Circuit’s recent decision in FTC v. Qualcomm is a strong and important pronouncement of the correct approach to antitrust in the standard setting context.[6] As the Court put it, “the FTC . . . does not satisfactorily explain how Qualcomm’s alleged breach of [the] contractual [FRAND] commitment itself impairs the opportunities of rivals.”[7] Moreover, the Ninth Circuit emphasized that it did not want to go beyond the Aspen Skiing case in establishing a duty to deal with rivals.[8]  It is encouraging that the Ninth Circuit understood these important but highly complex issues, and explained them clearly.

We have also seen strong international recognition of the New Madison approach’s fundamental principles. In this past spring’s Sisvel v. Haier decision from the German Federal Court of Justice, the Court made clear that implementers have to do their part in negotiations over SEPs.[9] Under Sisvel, implementers have to be willing to take a license on any terms that are fair, reasonable, and nondiscriminatory.

Implementers also must take an active role in negotiations. In the Sisvel case, Haier, the implementer, did not make counter-offers during negotiations, but merely repeatedly rejected Sisvel’s offers, stating that the terms were not FRAND. This behavior indicated that Haier was not negotiating in good faith, and the German high court indicated that implementers have to make offers of their own; they cannot just reject successive offers claiming that no offer has been made on FRAND terms.

            The Federal Court of Justice also held that the mere fact that the patent holder had offered better licensing terms to a different entity didn’t make the offered terms discriminatory. Sisvel had offered a large discount to Haier’s competitor Hisense, but didn’t offer the same discount to Haier. Sisvel argued that it had been pressured by the Chinese government to offer the discount to Hisense, but that shouldn’t mean that any higher offer to Haier was discriminatory. The German High Court held that pressure from a foreign government was a valid reason for offering different rates.

            The UK Supreme Court’s recent decision in Unwired Planet International v. Huawei Technologies is another foreign court decision that largely aligns with New Madison principles and, in particular, with the 2019 Joint Policy Statement.  This example of convergence around a principle that was already starting to emerge as consensus in the United States is especially welcome to me, since one of my other priorities as Assistant Attorney General has been seeking international convergence for the rules governing competition around the world. 

In Unwired Planet, the UK Supreme Court held that SEP holders may be entitled to injunctive relief and are not limited to seeking monetary damages. The defendants argued that injunctive relief should be categorically unavailable with regard to Standards Essential Patents, but the UK Supreme Court noted that this would severely disadvantage patent holders. Here is what the Court said:

“[I]f the patent-holder were confined to a monetary remedy, implementers who were infringing the patents would have an incentive to continue infringing until, patent by patent, and country by country, they were compelled to pay royalties. It would not make economic sense for them to enter voluntarily into FRAND licences. In practice, the enforcement of patent rights on that basis might well be impractical . . . . An injunction is likely to be a more effective remedy, since it does not merely add a small increment to the cost of products which infringe the UK patents, but prohibits infringement altogether.”[10]

            The UK Supreme Court took another position that we welcome—and that aligns with the German high court’s Sisvel decision: A patent holder is not required to offer to each implementer the best terms that it has offered to any previous implementer in order to comport with FRAND obligations. In Unwired Planet, Huawei, the implementer, argued that it should not be forced to pay more for the technology in dispute than Samsung, another implementer, had paid. But the Court pointed to the economic literature on the benefits of price discrimination, and held that differential pricing is not necessarily discriminatory pricing. The holder of an SEP has to negotiate with all comers, but is not required to offer all implementers precisely identical terms.  This reasoning recognizes the principle I mentioned earlier: competition is taking place when patent holders and implementers negotiate.  Courts are increasingly aware that they should respect those competitive dynamics and limit their own distortionary effects.

            It is this recognition from courts, as well as watching these negotiations and litigations play out over the last several years, that led us to the most recent milestone in the Antitrust Division’s New Madison approach: just earlier today we announced an updated supplement to the Antitrust Division’s 2015 IEEE Business Review Letter.           

We took this step to address the updated legal and policy landscape, as well as incorrect uses of the 2015 letter both at home and abroad. The letter we issued today reiterates that SDO policies and procedures must balance the interests of SEP holders and implementers and consider incentives for hold-up and hold-out behavior, and afford parties the flexibility needed to arrive at license terms (like royalty rates) that encourage participation in the SDO process. Our newly issued letter will help end any misuses of the 2015 Letter and, in doing so, establish more accurate antitrust policies both at home and abroad.

III. Future Challenges: China Standards 2035 and Beyond

While the New Madison approach has seen important successes for a free-market and innovation-driven antitrust policy, challenges remain on the horizon. One potential concern that is especially relevant to this audience is the recently revealed China Standards 2035 initiative, which is slated for release later this year. It appears that China Standards 2035, like Made in China 2025 before it, aims to promote Chinese interests—perhaps even if doing so means forgoing selection of superior technologies in the development of standards that will govern consumer experiences throughout the world. Critics have noted that this approach has led to market access barriers and other harms.[11] This approach may also ignore obligations China has to evolve or conform to international standards.[12] 

Made in China 2025, to achieve its stated goals, is criticized for tending to subordinate free market principles. Instead, it reinforced government control and intervention, preferential policies, and financial support for domestic innovation and for acquisition of foreign technology.[13] While the final China Standards 2035 document has yet to be released, it is largely expected to take a similar approach and to accelerate China’s efforts to establish itself as a key decision maker and influencer of global standards.[14]  This would likely include efforts to exert greater control over both processes and outcomes.

Standards processes can be susceptible to capture by specialized interests. This capture comes at the expense of consumers. The Division has seen the negative effects of biased processes firsthand. Where they arise, we will not hesitate to investigate and bring an enforcement action.  Our GSMA investigation relating to the use of eSIMs, which culminated last year in the organization revising its standard-setting processes, demonstrates that the Antitrust Division will act where a preference for certain stakeholders’ interests tend to result in diminished innovation and worse consumer experiences.

When global private standards processes are competitive and merits-based, they benefit consumers both domestically and abroad. The Antitrust Division, along with numerous domestic and international partners, has worked diligently for many years to foster a global standards development environment that promotes competition and innovation.

Earlier this week, we at the Antitrust Division encouraged American National Standards Institute to consider strengthening its commitment to globally accepted principles for standards development—like transparency, openness, and impartiality—in its revision to the U.S. Standards Strategy.[15] ANSI has played an important role in helping to foster a procompetitive environment for global standards development, and it can continue doing so by warning of the dangers from allowing special interests to dominate SDO processes and outcomes.

IV. Conclusion

            I will conclude by emphasizing the considerable success we have seen from the proper interpretation of antitrust enforcement. We’ve assisted courts by filing amicus briefs, and we have seen important judicial decisions both at home and abroad that make sure that patent holders and implementers are on an even playing field in negotiating licensing rates that both reward innovation and encourage new applications of technologies. There are certainly challenges, both domestic and international, that remain. It is, however, my hope that the Antitrust Division’s innovative responses to 21st century legal problems will maintain important incentives to innovate and help ensure continued technological progress.   

 


[1] See Makan Delrahim, Assistant Attorney General – Antitrust Division, “The times they are a’changin’”:

The Nine No-No’s in 2019 (Oct. 21, 2019), available at https://www.justice.gov/opa/speech/file/1213831/download.

[2] Makan Delrahim, Assistant Attorney General – Antitrust Division, The “New Madison” Approach to Antitrust and Intellectual Property Law 5 (Mar. 16, 2018), available at https://www.justice.gov/opa/speech/file/1044316/download.

[3] Continental Auto. Sys., Inc. v. Avanci, LLC, No. 19-CV-02933-M (N.D. Tex.).

[4] See Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004).

[5] On September 11, 2020, as this speech was being prepared for publication, the court granted defendant’s motion to dismiss, holding “[i]t is not anticompetitive for an SEP holder to violate its FRAND obligations” and explaining it disagreed with “those cases concluding that deception of an SSO constitutes the type of anticompetitive conduct required to support a § 2 claim.”

[6] FTC v. Qualcomm Inc., No. 19-16122, 2020 WL 4591476 (9th Cir. Aug. 11, 2020).

[8] Id. at *15.

[9] Sisvel Int’l S.A. v. Haier Deutschland GmbH, [BGH] [Federal Court of Justice] May 5, 2020, KZR 36/17.

[11] See, e.g., Naomi Wilson, Testimony before the U.S.-China Economic and Security Review Commission, Hearing on A ‘China Model?’ Beijing’s Promotion of Alternative Global Norms and Standards, at 5-7 (March 13, 2020), https://www.uscc.gov/sites/default/files/testimonies/March%2013%20Hearing_Panel%203_Naomi%20Wilson%20ITI.pdf.

[12] See, e.g., id. at 5-6 (March 13, 2020), (“Following WTO accession in 2001, China was required to conduct significant review of its many domestic standards with a view to either adopting international standards or otherwise revising existing standards to bring them in line with international standards.  However, China still continues to favor ‘China-unique’ standards, which contravene World Trade Organization (WTO) commitments on Technical Barriers to Trade (TBT).”).  The Tokyo Round sections on Technical Barriers to Trade also provides mandates regarding “technical regulations and standards.” See https://www.wto.org/english/docs_e/legal_e/tokyo_tbt_e.pdf.

[13] See, e.g., U.S. Chamber of Commerce, Made in China 2025:  Global Ambitions Built on Local Protections, (2017), https://www.uschamber.com/sites/default/files/final_made_in_china_2025_report_full.pdf.

[14] See Arjun Kharpal, Power is ‘up for grabs’: Behind China’s plan to shape the future of next-generation tech, CNBC (Apr. 26, 2020), https://www.cnbc.com/2020/04/27/china-standards-2035-explained.html (“China is set to release an ambitious 15-year blueprint that will lay out its plans to set the global standards for the next-generation of technologies.”); Emily de La Bruyere & Nathan Picarsic, China’s next plan to dominate international tech standards, TechCrunch (Apr. 11, 2020), https://techcrunch.com/2020/04/11/chinas-next-plan-to-dominate-international-tech-standards/ (“Beijing is about to launch China Standards 2035, an industrial plan to write international rules.”); Emily de La Bruyere & Nathan Picasric, China Standards 2035: Beijing’s Platform and Geopolitics ‘Standardization Work in 2020’, Horizon Advisory, China Standards Series, at 11 (2020) (“Beijing’s standardization plan is not just about China. The China Standards outline is explicit about its intentions to proliferate standards internationally – and to do so by integrating with, and co-opting, global standard-setting bodies.”).

[15] U.S. Dep’t of Justice, Antitrust Div., Comments on the U.S. Standards Strategy (Sept. 8, 2020), https://www.justice.gov/atr/page/file/1314196/download.

Hits: 6

News Network

  • Weapon System Sustainment: Aircraft Mission Capable Rates Generally Did Not Meet Goals and Cost of Sustaining Selected Weapon Systems Varied Widely
    In U.S GAO News
    Mission Capable Rates for Selected Department of Defense Aircraft GAO examined 46 types of aircraft and found that only three met their annual mission capable goals in a majority of the years for fiscal years 2011 through 2019 and 24 did not meet their annual mission capable goals in any fiscal year as shown below. The mission capable rate—the percentage of total time when the aircraft can fly and perform at least one mission—is used to assess the health and readiness of an aircraft fleet. Number of Times Selected Aircraft Met Their Annual Mission Capable Goal, Fiscal years 2011 through 2019 aThe military departments did not provide mission capable goals for all nine years for these aircraft. Aggregating the trends at the military service level, the average annual mission capable rate for the selected Air Force, Navy, and Marine Corps aircraft decreased since fiscal year 2011, while the average annual mission capable rate for the selected Army aircraft slightly increased. While the average mission capable rate for the F-35 Lightning II Joint Strike Fighter showed an increase from fiscal year 2012 to 2019, it trended downward from fiscal year 2015 through fiscal year 2018 before improving slightly in fiscal year 2019. For fiscal year 2019, GAO found only three of the 46 types of aircraft examined met the service-established mission capable goal. Furthermore, for fiscal year 2019: six aircraft were 5 percentage points or fewer below the goal; 18 were from 15 to 6 percentage points below the goal; and 19 were more than 15 percentage points below the goal, including 11 that were 25 or more percentage points below the goal. Program officials provided various reasons for the overall decline in mission capable rates, including aging aircraft, maintenance challenges, and supply support issues as shown below. Sustainment Challenges Affecting Some of the Selected Department of Defense Aircraft aA service life extension refers to a modification to extend the service life of an aircraft beyond what was planned. bDiminishing manufacturing sources refers to a loss or impending loss of manufacturers or suppliers of items. cObsolescence refers to a lack of availability of a part due to its lack of usefulness or its no longer being current or available for production. Operating and Support Costs for Selected Department of Defense Aircraft Operating and support (O&S) costs, such as the costs of maintenance and supply support, totaled over $49 billion in fiscal year 2018 for the aircraft GAO reviewed and ranged from a low of $118.03 million for the KC-130T Hercules (Navy) to a high of $4.24 billion for the KC-135 Stratotanker (Air Force). The trends in O&S costs varied by aircraft from fiscal year 2011 to 2018. For example, total O&S costs for the F/A-18E/F Super Hornet (Navy) increased $1.13 billion due in part to extensive maintenance needs. In contrast, the F-15C/D Eagle (Air Force) costs decreased by $490 million due in part to a reduction in the size of the fleet. Maintenance-specific costs for the aircraft types we examined also varied widely. Why This Matters The Department of Defense (DOD) spends tens of billions of dollars annually to sustain its weapon systems in an effort to ensure that these systems are available to simultaneously support today's military operations and maintain the capability to meet future defense requirements. This report provides observations on mission capable rates and costs to operate and sustain 46 fixed- and rotary-wing aircraft in the Departments of the Army, Navy, and Air Force. How GAO Did This Study GAO was asked to report on the condition and costs of sustaining DOD's aircraft. GAO collected and analyzed data on mission capable rates and O&S costs from the Departments of the Army, Navy, and Air Force for fiscal years 2011 through 2019. GAO reviewed documentation and interviewed program office officials to identify reasons for the trends in mission capability rates and O&S costs as well as any challenges in sustaining the aircraft. This is a public version of a sensitive report issued in August 2020. Information on mission capable and aircraft availability rates were deemed to be sensitive and has been omitted from this report. For more information, contact Director Diana Maurer at (202) 512-9627 or maurerd@gao.gov.
    [Read More…]
  • Global Entry for Panamanian Citizens
    In Travel
    How to Apply for Global [Read More…]
  • This Hopping Robot Could Explore the Solar System’s Icy Moons
    In Space
    SPARROW, a steam-powered [Read More…]
  • DRL Supporting Sudan’s Democratic Transition
    In Human Health, Resources and Services
    Bureau of Democracy, [Read More…]
  • VA Research: Opportunities Exist to Strengthen Partnerships and Guide Decision-Making with Nonprofits and Academic Affiliates
    In U.S GAO News
    The Department of Veterans Affairs' (VA) extramural research spending totaled about $510 million in fiscal year 2019—nearly half of the $1.1 billion in total spending on VA research. Of the $510 million, federal sources, such as National Institutes of Health, funded $382 million (75 percent), and nonfederal sources, including private entities, academic institutions, state and local governments, and foundations, funded $128 million (25 percent). Spending at the 92 VA medical centers that conducted extramural research in fiscal year 2019 ranged from less than $2 million to more than $10 million (see figure). VA medical centers' nonprofit research and education corporations (NPC) and academic affiliate partners administered the grants that accounted for 91 percent of the spending. Figure: Extramural Research Spending by VA Medical Centers that Conducted Extramural Research in Fiscal Year 2019 VA has made efforts to promote and support VA medical centers' partnerships with academic affiliates—for example, by coordinating a mentoring program for local VA research officials—and considers effective affiliations as an enhancement to research. However, VA's Central Office officials have not provided examples of successful practices for strengthening research partnerships with academic affiliates. Having such practices would promote collaborative opportunities for VA medical centers with academic affiliates, particularly for medical centers that have poor communication with affiliates. Additionally, VA's Central Office has provided general guidance but not specific tools to VA medical centers for determining when an NPC or an academic affiliate should administer a project's extramural funds. Having specific decision-making tools could help medical centers make more informed decisions to provide optimal support for the research. VA research, which has contributed to many medical advances, may be funded by VA's appropriation or extramurally by other federal agencies and nonfederal sources. To access extramural funding, investigators at VA medical centers usually work with an NPC or academic affiliate partner to submit a grant proposal. Once a grant is awarded, medical centers' partners administer the grant by distributing funding, fulfilling reporting requirements, and performing other administrative activities. GAO was asked to review VA's extramural research. This report examines, among other objectives, (1) how much VA spent on extramural research in fiscal year 2019 and (2) the efforts VA has made to support medical centers' partnerships for extramural research. GAO analyzed VA policies, documents, and data. It also conducted site visits and interviewed officials from VA's Central Office and from a nongeneralizable sample of VA medical centers, NPCs, and academic affiliates, which GAO selected to represent variation in geographic location and funding. GAO recommends that VA (1) provide more information to VA medical centers on strengthening research relationships with academic affiliates and (2) develop decision tools to help VA medical centers determine whether NPCs or academic affiliates should administer extramural grants. VA agreed with GAO's recommendations. For more information, contact John Neumann at (202) 512-6888 or neumannj@gao.gov.
    [Read More…]
  • Philippines Travel Advisory
    In Travel
    Reconsider travel to the [Read More…]
  • Small Business Loans: SBA Generally Incorporated Key Elements for Estimating Subsidy Cost of 7(a) Program
    In U.S GAO News
    The Small Business Administration (SBA) develops its subsidy cost estimates for the 7(a) loan guarantee program—that is, estimates of the program's net long-term cost to the government—using a cash flow model. The model uses historical data, econometric equations, and macroeconomic projections to estimate cash flows—such as guarantee fees, SBA purchases of defaulted loans, and recoveries on those loans—for the loans SBA expects to guarantee in the next fiscal year. The net present value of the cash flows (value in current dollars) is the subsidy cost estimate. SBA generally incorporated key elements of subsidy cost estimation into its estimates for the 7(a) program for the fiscal year 2020 budget. Specifically, GAO found that SBA's estimation process was largely consistent with eight key elements GAO previously identified that help ensure subsidy estimates are supported, reliable, and reasonable. For example, SBA generally validated historical data, documented the cash flow model and key assumptions, analyzed the sensitivity of estimates to alternative assumptions, and had documented policies and procedures. SBA made changes in its estimation process that collectively increased the 7(a) program's subsidy cost to $99 million for fiscal year 2020 (a 0.33 percent subsidy rate when expressed as the cost per dollar of credit assistance) from $0 for fiscal year 2019 (0 percent subsidy rate). Some of these changes were routine updates to data and economic assumptions used in the cash flow model, while others were revisions to the estimation process. Additionally, some individual changes increased the subsidy costs, while others decreased it. Some of the changes that had the largest impact on the subsidy rate included the following: Incorporating the President's economic assumptions for fiscal year 2020 decreased the rate by 0.27 percentage points. Updating the basis for the size and composition of the loan cohort SBA expected to guarantee in fiscal year 2020 increased the rate by 0.21 percentage points. Revising the methodology for estimating purchase amounts for defaulted loans to better reflect the outstanding loan balance at the time of purchase increased the rate by 0.21 percentage points. The 7(a) program is SBA's largest loan guarantee program for small businesses, with about $95 billion in outstanding loan principal as of the end of fiscal year 2019. Federal agencies that provide credit assistance are generally required to estimate the net long-term cost to the government—known as the subsidy cost—for each annual cohort of loans. SBA initially estimated a zero subsidy cost for each cohort from fiscal years 2014 through 2019, but estimated that the fiscal year 2020 cohort would have a positive subsidy cost and require appropriations. GAO was asked to evaluate SBA's subsidy estimation process for the 7(a) program. This report examines (1) how SBA estimates 7(a) subsidy costs, (2) the extent to which SBA incorporated key elements of subsidy cost estimation into its estimation process for the fiscal year 2020 budget, and (3) the changes SBA made in its estimation process for the fiscal year 2020 budget. GAO reviewed SBA documentation on its estimation process, including information on SBA's cash flow model, and compared SBA's process to key elements that GAO previously identified ( GAO-16-269 ). GAO also interviewed officials from SBA, the Office of Management and Budget, and outside auditors and contractors that annually review SBA's process and model. For more information, contact William B. Shear at (202) 512-8678 or shearw@gao.gov.
    [Read More…]
  • Attorney General William P. Barr Announces Results of Operation Legend
    In Crime News
    Earlier today, Attorney General William P. Barr announced the results of Operation Legend, which was first launched in Kansas City, Missouri, on July 8, 2020, and then expanded to Chicago and Albuquerque, New Mexico, on July 22, 2020; to Cleveland, Ohio, Detroit, Michigan, and Milwaukee, Wisconsin, on July 29, 2020; to St. Louis, Missouri, and Memphis, Tennessee, on August 6, 2020; and to Indianapolis, Indiana, on August 14, 2020.
    [Read More…]
  • Major New Human Rights-Related Listings and Accompanying Sanctions on Iran 
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Helicopter Crash in Egypt
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Japan Travel Advisory
    In Travel
    Reconsider travel to [Read More…]
  • U.S. Department of State and National Park Service Partner to Strengthen Fulbright Exchanges and Increase Global Environmental Awareness
    In Crime Control and Security News
    Office of the [Read More…]
  • Covid-19 Contracting: Observations on Federal Contracting in Response to the Pandemic
    In U.S GAO News
    Government-wide contract obligations in response to the COVID-19 pandemic totaled $17.8 billion as of June 11, 2020. Four agencies accounted for 85 percent of total COVID-19 contract obligations (see figure). This report provides available baseline data on COVID-19 federal contract obligations. Contract Obligations in Response to COVID-19 by Department, as of June 11, 2020 About 62 percent of federal contract obligations were for goods to treat COVID-19 patients and protect health care workers—including ventilators, gowns, and N95 respirators. Less than half of total contract obligations were identified as competed (see figure). Top Five Goods and Services and Percentage of Obligations Competed, as of June 11, 2020 According to the Centers for Disease Control and Prevention, as of June 30, 2020, the United States has documented more than 2.5 million confirmed cases and more than 125,000 deaths due to COVID-19. To facilitate the U.S. response to the pandemic, numerous federal agencies have awarded contracts for critical goods and services to support federal, state, and local response efforts. GAO's prior work on federal emergency response efforts has found that contracts play a key role, and that contracting during an emergency can present unique challenges as officials can face pressure to provide goods and services as quickly as possible. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) included a provision for GAO to provide a comprehensive review of COVID-19 federal contracting. This is the first in a series of GAO reports on this issue. This report describes, among other objectives, key characteristics of federal contracting obligations awarded in response to the COVID-19 pandemic. Future GAO work will examine agencies' planning and management of contracts awarded in response to the pandemic, including agencies' use of contracting flexibilities provided by the CARES Act. GAO analyzed data from the Federal Procurement Data System-Next Generation on agencies' reported government-wide contract obligations for COVID-19 through June 11, 2020. GAO also analyzed contract obligations reported at the Departments of Health and Human Services, Defense, Homeland Security, and Veterans Affairs—the highest obligating agencies. For more information, contact Marie A. Mak at (202) 512-4841 or MakM@gao.gov.
    [Read More…]
  • Science & Tech Spotlight: Consumer Electronics Recycling
    In U.S GAO News
    Why This Matters Consumer electronics contain critical materials whose supplies are limited, including gold, platinum, and rare earth metals. Domestic recycling of consumer electronics could extend the supply and reduce the current U.S. reliance on imports. New technologies are becoming available, but electronics recycling is complex and faces challenges, such as narrow profit margins. The Technology What is it? Recycling of consumer electronics—including smartphones, televisions, and computers—generally involves separating high-value metals from plastics and other low-value materials. Precious metals and rare earth metals are the economic driving force for consumer electronic recycling technology. These metals have high market values and limited supplies, and they can be reused across many industries, including the defense and energy sectors. Consumer electronic devices can also contain personally identifiable information (PII), including medical and financial data, which could be improperly disclosed if they are not destroyed prior to recycling. According to a study of selected consumer electronics, about 2.8 million tons were disposed of in the U.S. in 2017, of which about 36 percent was recycled. Figure 1. Selected valuable, hazardous, and digital materials contained within consumer electronics that can be recovered, disposed, or destroyed There is no federal standard requiring consumer electronics recycling. Some states have enacted electronics recycling laws requiring electronics producers to pay fees or contract with businesses to ensure electronic waste is collected for recycling. The U.S. recycles electronics domestically and also exports electronics for recycling abroad. How does it work? The high concentration of valuable material in certain consumer electronics is key to the economic viability of recycling these products. Cell phones, as one example, have more precious metal by weight than raw ore does. According to the EPA, 35,274 pounds of copper, 772 pounds of silver, and 75 pounds of gold can be recovered from a million recycled cell phones. Based on commodity market prices on August 12, 2020, these weights of metals are worth approximately $100,000, $290,000, and $2.1 million for copper, silver, and gold, respectively. In contrast, cathode ray tube (CRT) displays in older televisions and computer monitors have little recycling value, but they contain leaded glass and may be considered hazardous waste. In addition, recovery of certain valuable materials from consumer electronics is limited due to the high costs of technology and processing. Electronics recycling companies disassemble devices by shredding, which also destroys PII, or by hand. These companies then separate valuable materials for reuse (including gold, silver, platinum, and rare earth metals) from toxic materials for disposal (including brominated materials and lead). Traditional methods include burning to remove non-metal parts and separation using strong acids. New separation technologies are being used or piloted to recover precious and rare earth metals. For example, robotic disassembly uses machine learning and computer vision to more rapidly pick and sort items. Another new technology uses ultrasound to speed up the chemical removal of gold from cell phone SIM cards. Figure 2. Emerging separation technologies for recycled electronics Other technologies are emerging, like biometallurgy, which uses microorganisms to separate high-value metals from other materials, such as plastics, glass, and glue. For example, naturally occurring bacteria can oxidize gold in acidic solutions, making it soluble and thus easier to separate from other materials. Other advanced techniques, such as magnetic or electrochemical separation, are showing promise in the laboratory with existing technology. For example, in one study, researchers used ultrasound to dissolve nickel and gold within a SIM card. They then used a magnetic field to separate the dissolved nickel, which is magnetic, from the gold, which is not. Similarly, other techniques use electric fields to separate dissolved metals based on their weight and electric charge. How mature is it? Recycling technology is well established for some traditional single-stream processes, such as aluminum recycling. However, electronic devices are more complex and require disassembly and separation. At least one consumer electronics manufacturer is piloting robotic disassembly for its products. Emerging separation technologies such as ultrasound have come to market in the past decade and are being used. Manual disassembly and shredding are decades old. Biometallurgy is being tested in pilot plants, and new microorganisms are being developed in laboratories to treat electronic waste. Opportunities Increase supply and reduce imports. Recycling could increase the domestic supply of precious and rare earth metals and reduce the current U.S. reliance on overseas sources. Grow the green economy. Developing advanced recycling technologies could promote domestic business and employment. Reduce hazardous practices. A significant amount of recycling currently occurs in the developing world, where methods include open-pit burning. New technology could reduce the use of such methods, which are hazardous to the environment and human health. Lessen environmental impacts. Developing advanced recycling technologies could reduce the environmental impacts of raw ore mining and landfill disposal of hazardous materials such as lead and brominated materials. Challenges Market challenges. Markets for recovered materials may be limited, and the value of recovered materials may not be enough to cover the costs of equipment for collection, sorting, disassembly, and separation. Secure destruction of personal information. Many electronic devices contain PII. Shredding them may effectively destroy PII but may also make high-value material harder to recover. Counterfeit electronic parts. Exported used electronics may serve as a source of counterfeit electronic parts, which, as GAO previously reported, could disrupt parts of the Department of Defense supply chain and threaten the reliability of weapons systems. (See GAO-16-236, linked below.) Rapid technological development. As consumer electronics made with new materials get smaller, new technologies for separation may be needed to recycle valuable materials. Policy Context and Questions With the volume of electronic waste expected to grow, questions include: How can programs to support technological innovation, economic development, and advanced manufacturing be leveraged to promote a more robust domestic electronics recycling industry? What efforts can the federal government, states, and others make to incentivize recycling rather than disposal? What are the potential benefits and challenges of such policies? What strategies can the public and private sectors implement to address the risk that exports of used electronics will contribute to unsafe recycling practices, disclosure of PII, and counterfeit electronics? How can reductions in exports bolster job growth? For more information, contact Karen Howard at (202) 512-6888 or HowardK@gao.gov.
    [Read More…]
  • United States Unseals Superseding Indictment Charging Nationwide Money Laundering Network
    In Crime News
    The Justice Department today announced the unsealing of a superseding indictment charging six individuals with participating in a conspiracy to launder millions of dollars of drug proceeds on behalf of foreign cartels.  This superseding indictment is the result of a nearly four-year investigation into the relationship between foreign drug trafficking organizations and Asian money laundering networks in the United States, China, and elsewhere.
    [Read More…]
  • Justice Department Files Race Discrimination Lawsuit Against Housing Authority in Oklahoma
    In Crime News
    The Justice Department announced today that it has filed a lawsuit alleging that the Housing Authority of the Town of Lone Wolf, Oklahoma, along with its former employees, David Haynes and Myrna Hess, violated the Fair Housing Act and Title VI of the Civil Rights Act of 1964 when they denied housing to an African-American applicant and her young child because of their race. 
    [Read More…]
  • Disaster Response: Agencies Should Assess Contracting Workforce Needs and Purchase Card Fraud Risk
    In U.S GAO News
    The efforts of selected agencies to plan for disaster contracting activities and assess contracting workforce needs varied. The U.S. Forest Service initiated efforts to address its disaster response contracting workforce needs while three agencies—the U.S. Army Corps of Engineers (USACE), the U.S. Coast Guard, and Department of the Interior (DOI)—partially addressed these needs. The Environmental Protection Agency indicated it did not have concerns fulfilling its disaster contracting responsibilities. Specifically, GAO found the following: USACE assigned clear roles and responsibilities for disaster response contracting activities, but has not formally assessed its contracting workforce to determine if it can fulfill these roles. The Coast Guard has a process to assess its workforce needs, but it does not account for contracting for disaster response activities. DOI is developing a strategic acquisition plan and additional guidance for its bureaus on how to structure their contracting functions, but currently does not account for disaster contracting responsibilities. Contracting officials at all three of these agencies identified challenges executing their regular responsibilities along with their disaster-related responsibilities during the 2017 and 2018 hurricane and wildfire seasons. For example, Coast Guard contracting officials stated they have fallen increasingly behind since 2017 and that future disaster response missions would not be sustainable with their current workforce. GAO's strategic workforce planning principles call for agencies to determine the critical skills and competencies needed to achieve future programmatic results. Without accounting for disaster response contracting activities in workforce planning, these agencies are missing opportunities to ensure their contracting workforces are equipped to respond to future disasters. The five agencies GAO reviewed from above, as well as the Federal Emergency Management Agency (FEMA), collectively spent more than $20 million for 2017 and 2018 disaster response activities using purchase cards. GAO found that two of these six agencies—Forest Service and EPA—have not completed fraud risk profiles for their purchase card programs that align with leading practices in GAO's Fraud Risk Framework. Additionally, five of the six agencies have not assessed or documented how their fraud risk for purchase card use might differ in a disaster response environment. DOI completed such an assessment during the course of our review. An Office of Management and Budget memorandum requires agencies to complete risk profiles for their purchase card programs that include fraud risk. GAO's Fraud Risk Framework states managers should assess fraud risk regularly and document those assessments in risk profiles. The framework also states that risk profiles may differ in the context of disaster response when managers may have a higher fraud risk tolerance since individuals in these environments have an urgent need for products and services. Without assessing fraud risk for purchase card programs or how risk may change in a disaster response environment, agencies may not design or implement effective internal controls, such as search criteria to identify fraudulent transactions. The 2017 and 2018 hurricanes and California wildfires affected millions of people and caused billions of dollars in damages. Extreme weather events are expected to become more frequent and intense due to climate change. Federal contracts for goods and services play a key role in disaster response and recovery, and government purchase cards can be used by agency staff to buy needed items. GAO was asked to review federal response and recovery efforts related to recent disasters. This report examines the extent to which selected agencies planned for their disaster response contracting activities, assessed their contracting workforce needs, and assessed the fraud risk related to their use of purchase cards for disaster response. GAO selected six agencies based on contract obligations for 2017 and 2018 disasters; analyzed federal procurement and agency data; reviewed agencies' policies on workforce planning, purchase card use, and fraud risk; and analyzed purchase card data. FEMA was not included in the examination of workforce planning due to prior GAO work. GAO is making 12 recommendations, including to three agencies to assess disaster response contracting needs in workforce planning, and to five agencies to assess fraud risk for purchase card use in support of disaster response. For more information, contact Marie A. Mak at (202) 512-4841 or makm@gao.gov.
    [Read More…]
  • Genetics, Diagnosis, Treatment: NIH Takes On Sickle Cell Disease
    In Human Health, Resources and Services
    Each year, some 150,000 [Read More…]
  • Young Giant Planet Offers Clues to Formation of Exotic Worlds
    In Space
    Jupiter-size planets [Read More…]
  • Secretary Pompeo Approves New Cyberspace Security and Emerging Technologies Bureau
    In Crime Control and Security News
    Office of the [Read More…]
  • Joint Statement of the 47th U.S.-Israel Joint Political-Military Group
    In Crime Control and Security News
    Office of the [Read More…]
  • West Virginia Doctor Found Guilty of Unlawfully Distributing Opioids
    In Crime News
    A federal jury found a West Virginia doctor guilty today of unlawfully distributing opioids to his patients. The defendant was charged in a September 2019 indictment as part of the second Appalachian Regional Prescription Opioid (ARPO) Strike Force Takedown, a coordinated effort by the Justice Department’s Fraud Section to target unlawful drug diversion activities in areas of the country particularly hard-hit by the opioid epidemic.
    [Read More…]
  • Meet the People Behind NASA’s Perseverance Rover
    In Space
    These are the scientists [Read More…]
  • DOD Financial Management: Continued Efforts Needed to Correct Material Weaknesses Identified in Financial Statement Audits
    In U.S GAO News
    The Department of Defense (DOD) continues to face financial management issues and challenges that have prevented it from obtaining a clean audit opinion on the fair presentation of its financial statements. Specifically, financial statement auditors issued disclaimers of opinion on DOD's and the military services' fiscal year 2018 and 2019 financial statements. These disclaimers resulted from numerous material weaknesses based on thousands of notices of findings and recommendations (NFR) that the auditors issued. Of the 2,409 NFRs issued to DOD and its components in fiscal year 2018, DOD's auditors were able to close 623 (26 percent) in fiscal year 2019; the remaining 1,786 (74 percent) remained open. These results provide useful insights on DOD's remediation progress since beginning department-wide full audits in fiscal year 2018; it is important for DOD to equal or exceed this progress in the future. Financial statement audits have value beyond the audit opinion and can help management save resources and improve military readiness. DOD leadership identified a number of benefits that resulted from these financial statement audits. For example, the Navy identified a warehouse that was not in its property records that contained approximately $126 million in aircraft parts. The Navy was able to fill over $20 million in open orders for these parts. By using these parts, aircraft were repaired quicker and made available for use, which improved military readiness. To help guide and prioritize department-wide efforts, DOD identified eight audit remediation priority areas (four in 2019 and four in 2020), seven of which specifically related to material weaknesses that its auditor reported. The military services also developed methodologies to prioritize NFRs and determined that over half of their fiscal year 2018 NFRs are high priority and significant to their financial statement audits. DOD and its components have taken steps to develop corrective action plans (CAP) to address NFRs. However, most of the CAPs that GAO tested did not include at least one data element or evidence that a root-cause analysis was performed, as directed by Office of Management and Budget (OMB) and other related guidance, in part, because DOD guidance and monitoring efforts did not clearly identify the need for such documentation. As a result, DOD and its components may lack sufficient information and assurance that their remediation efforts will resolve the underlying causes associated with the NFRs and related material weaknesses. Based on these issues, DOD and its components are at increased risk that their actions may not effectively address identified deficiencies in a timely manner. DOD developed an NFR Database that contains useful information on deficiencies that financial auditors identified and actions to address them, which has improved its ability to monitor and report on audit remediation efforts using dashboard reports based on real-time data contained in the database. However, certain database information on which these reports are based may not be accurate, reliable, and complete. For example, although DOD reviews NFR Database information monthly, it does not follow up on instances of outdated information or other exceptions identified to ensure components resolve them timely. Without complete and reliable information on DOD's audit remediation efforts, internal and external stakeholders may not have quality information to effectively monitor and measure DOD's progress. DOD is responsible for about half of the federal government's discretionary spending, yet it remains the only major federal agency that has been unable to receive a clean audit opinion on its financial statements. After years of working toward financial statement audit readiness, DOD underwent full financial statement audits in fiscal years 2018 and 2019. This report, developed in connection with fulfilling GAO's mandate to audit the U.S. government's consolidated financial statements, examines the (1) actions taken by DOD and the military services to prioritize financial statement audit findings; (2) extent to which DOD and its components developed CAPs to address audit findings in accordance with OMB, DOD, and other guidance; and (3) extent to which DOD improved its ability to monitor and report on audit remediation efforts. GAO reviewed documentation and interviewed officials about DOD's and the military services' audit remediation prioritization, monitoring, and reporting. GAO selected a generalizable sample of 98 NFRs to determine whether CAPs to address them were developed according to established guidance. GAO is making five recommendations to DOD to improve the quality of CAPs to address audit findings and information in the NFR Database and related reports provided to internal and external stakeholders to monitor and assess audit remediation efforts. DOD concurred with three of GAO's recommendations, partially concurred with one recommendation, and disagreed with one recommendation. GAO continues to believe that all the recommendations are valid. For more information, contact Asif A. Khan at (202) 512-9869 or khana@gao.gov.
    [Read More…]
  • NASA’s ECOSTRESS Monitors California’s Apple Fire From Space
    In Space
    NASA’s Ecosystem [Read More…]
  • Man Who Worked At Local Research Institute For 10 Years Pleads Guilty To Conspiring To Steal Trade Secrets, Sell Them In China
    In Crime News
    A former Dublin, Ohio, man pleaded guilty in U.S. District Court today to conspiring to steal exosome-related trade secrets concerning the research, identification and treatment of a range of pediatric medical conditions. Yu Zhou, 50, also pleaded guilty to conspiring to commit wire fraud.
    [Read More…]
  • Justice Department Announces Two Million Dollar Settlement of Race Discrimination Lawsuit Against Baltimore County, Maryland
    In Crime News
    The Justice Department announced today that it has reached a settlement, through a court-supervised settlement agreement, with Baltimore County, Maryland, resolving the United States’ claims that the Baltimore County Police Department (BCPD) discriminated against African American applicants for employment in violation of Title VII of the Civil Rights Act of 1964. Title VII is a federal law that prohibits discrimination in employment on the basis of race, color, religion, sex, and national origin.
    [Read More…]
  • Joint Statement on the Signing of the U.S.-Taliban Agreement
    In Crime News
    Office of the [Read More…]
  • Former Chattanooga Police Officer Sentenced to 20 Years in Prison for Sexual Assault
    In Crime News
    Desmond Logan, 35, a former officer with the Chattanooga Police Department (CPD), was sentenced by the Honorable Curtis L. Collier, U.S. District Court Judge in the Eastern District of Tennessee at Chattanooga.
    [Read More…]
  • Two Bizarre Brown Dwarfs Found With Citizen Scientists’ Help
    In Space
    Data from NASA’s [Read More…]
  • Russian Influence in the Mediterranean
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Seattle Software Developer Pleads Guilty to Wire Fraud for COVID-Relief Fraud Scheme
    In Crime News
    A Seattle man pleaded guilty today to one count of wire fraud for carrying out a scheme to defraud several COVID-19 relief programs.
    [Read More…]
  • Bank Supervision: FDIC Could Better Address Regulatory Capture Risks
    In U.S GAO News
    The Federal Deposit Insurance Corporation (FDIC) has designed policies to address the risk of regulatory capture by reducing the potential benefit to industry of capturing the examination process, reducing avenues of inducement, and promoting a culture of independence and public service (see figure). Framework for Reducing Risk and Minimizing Consequences of Regulatory Capture FDIC has several policies for documenting bank examination decisions that help promote transparent decision-making and assign responsibility for decisions. Such policies are likely to help reduce benefits to industry of capturing the examination process. However, GAO found that some examinations were not implemented consistent with FDIC policies and that gaps in FDIC policies limited their effectiveness. For example, GAO found that managers sometimes did not clearly document how they concluded that banks had addressed recommendations. By improving adherence to agency policies, FDIC management could better address threats to capture in the examination process. GAO found that FDIC has policies to address potential conflicts of interest that could help block or reduce avenues of inducement. For example, FDIC has post-employment conflict-of-interest policies designed to prevent former employees from exerting undue influence on FDIC and to reduce industry's ability to induce current FDIC employees with prospective employment arrangements. One such policy requires the agency to review the workpapers of examiners-in-charge who accept employment with banks they examined in the prior 18 months. However, FDIC has not fully implemented a process for identifying when to review the workpapers of departing examiners to assess whether independence has been compromised. In particular, FDIC does not have a process for collecting information about departing employees' future employment. By revising its examiner-departure processes, the agency could better identify when to initiate workpaper reviews. FDIC has identified regulatory capture as a risk as part of its enterprise risk management process. The agency has documented 11 mitigation strategies that could help address that risk. Identified mitigation strategies include rotating examiners-in-charge, national examination training, and ethics requirements. FDIC supervises about 3,300 financial institutions to evaluate their safety and soundness. Some analyses by academic researchers have identified regulatory capture in supervision as one potential factor contributing to the 2007–2009 financial crisis. Regulatory capture is defined as a regulator acting in the interest of the regulated industry rather than in the public interest. GAO was asked to review regulatory capture in financial regulation. This report examines FDIC's (1) processes for encouraging transparency and accountability in the bank examination process, (2) processes to minimize potential conflicts of interest among examination staff, and (3) agency-wide efforts to address the risks of regulatory capture and compromised independence. GAO reviewed FDIC's policies and enterprise risk management framework, analyzed bank examination workpapers, and interviewed supervisory staff. GAO is making four recommendations to FDIC related to managing the risk of regulatory capture, including improving documentation of banks' progress at addressing FDIC recommendations and revising examiner-departure processes. FDIC neither agreed nor disagreed with these recommendations, but described actions it would take in response to them. FDIC's actions, if fully implemented, would address two of the four recommendations. For more information, contact Michael Clements at (202) 512-8678 or clementsm@gao.gov.
    [Read More…]
  • History, Ambition, and Technology: The Chinese Communist Party’s Challenges to U.S. Export Control Policy
    In Crime Control and Security News
    Dr. Christopher Ashley [Read More…]
  • Removal Order Upheld Against Tennessee Man Who Served as Nazi Concentration Camp Guard During WWII
    In Crime News
    The Board of Immigration Appeals (BIA) has dismissed the appeal of Tennessee resident Friedrich Karl Berger, a German citizen who was ordered removed from the United States earlier this year on the basis of his service in Nazi Germany in 1945 as an armed guard of concentration camp prisoners in the Neuengamme Concentration Camp system (Neuengamme).
    [Read More…]
  • Wisconsin-Based Nonprofit To Pay $1.9 Million To Settle Allegations Of False Claims And Kickbacks On Federal Contracts For Blind Workers
    In Crime News
    Industries for the Blind and Visually Impaired Inc. (IBI) has agreed to pay the United States $1,938,684.09 to resolve allegations that IBI violated the False Claims Act and the Anti-Kickback Act in connection with certain federal contracts set aside to employ blind workers, the Justice Department announced today. 
    [Read More…]
  • Secretary Pompeo’s Call with Australian Prime Minister Morrison
    In Crime Control and Security News
    Office of the [Read More…]
  • Warsaw Process Humanitarian Issues and Refugees Working Group Convenes in Brasilia
    In Human Health, Resources and Services
    Office of the [Read More…]
  • CEO of Medical Device Company Charged in COVID-19 Related Securities Fraud Scheme
    In Crime News
    The chief executive officer (CEO) of a California-based medical device company was indicted by a federal grand jury in connection with an alleged scheme to defraud investors by making false and misleading statements about the purported development of a new COVID-19 test, leading to millions of dollars in investor losses.
    [Read More…]
  • Former Government Contractor Sentenced for Role in Bribery and Kickback Scheme
    In Crime News
    A former government contractor was sentenced today for his role in a bribery and kickback scheme where he paid bribes to secure U.S. Army contracts.
    [Read More…]
  • The United States Sanctions Libyan Individual and Militia Connected to Serious Human Rights Abuse in Libya
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Department of State Offers Reward for Information to Bring Mexican Transnational Criminal to Justice
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Secretary Pompeo’s Quad Meeting with Japanese Foreign Minister Motegi, Indian Foreign Minister Jaishankar, and Australian Foreign Minister Payne
    In Crime Control and Security News
    Office of the [Read More…]
  • Kazakhstan Travel Advisory
    In Travel
    Do not travel to [Read More…]
  • Department of Justice Invests More than $87 Million in Grants to Address School Violence
    In Crime News
    The Department of [Read More…]
  • Timor-Leste Travel Advisory
    In Travel
    Reconsider travel [Read More…]
  • Finland National Day
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Utah Man Posing As Medical Doctor To Sell Baseless Coronavirus Cure Indicted On Fraud Charges
    In Crime News
    Utah resident Gordon H. Pedersen has been indicted for posing as a medical doctor to sell a baseless treatment for coronavirus (COVID-19). According to the indictment returned by a federal grand jury in Salt Lake City late last week, Pedersen fraudulently promoted and sold ingestible silver-based products as a cure for COVID-19 despite having no evidence that his products could treat or cure the disease. Pedersen is also alleged to have claimed to be a physician and worn a stethoscope and white lab coat in videos and photos posted on the Internet to further his alleged fraud scheme.
    [Read More…]
  • Kansas Man Indicted on Federal Child Pornography Charges
    In Crime News
    A resident of Topeka, Kansas, has been indicted by a federal grand jury in the U.S. District Court for the District of Kansas on federal child pornography charges, Acting Assistant Attorney General Brian Rabbitt of the Justice Department’s Criminal Division announced today.
    [Read More…]
  • U.S. Welcomes First Meeting of the Afghanistan High Council for National Reconciliation Leadership Committee
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Terra MISR Used to Visualize Cloud-top Heights From Tropical Storm Laura in 3D
    In Space
    This perspective can [Read More…]
  • The United States Supports the Voices of the Venezuelan People
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Aryeh Lightstone Designated as U.S. Special Envoy for Economic Normalization
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • South Africa Travel Advisory
    In Travel
    Reconsider travel to [Read More…]
  • Organ Donation and Transplantation: We’re All Needed
    In Human Health, Resources and Services
    As the Nation’s Doctor, [Read More…]
  • Identifying Organizations Engaged in Anti-Semitic BDS Activities
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Cambodia National Day
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • U.S.-Greenland Technical Engagement on Mining Sector Education and Training
    In Crime Control and Security News
    Office of the [Read More…]
  • Military Health Care: Defense Health Agency Processes for Responding to Provider Quality and Safety Concerns
    In U.S GAO News
    The Defense Health Agency (DHA) within the Department of Defense (DOD) has established processes for preventing and responding to quality and safety concerns about individual providers delivering health care in military treatment facilities (MTF). Specifically, DHA's August 2019 policy standardized processes for managing health care quality in the Military Health System, which superseded the policies of each of the military services (Air Force, Army, and Navy). These processes include 1) initial and ongoing monitoring of providers; 2) taking action to deny, limit, or remove individual providers' ability to practice, known as adverse privileging action; and 3) reviewing the care delivered by individual providers involved in certain patient safety events, known as potentially compensable event reviews. For example, DHA policy establishes requirements for taking adverse privileging actions against a provider that either limit the care a provider is allowed to deliver at a facility or prevent the provider from delivering care altogether, when warranted. In particular, DHA policy specifies that the provider's privileges should be placed in summary suspension—a temporary removal of all or a portion of the provider's privileges—while a peer conducts an investigation of the concerns. DHA policy also specifies that summary suspensions lasting greater than 30 days, as well as any final adverse privileging actions, must be reported to the National Practitioner Data Bank (NPDB). The NPDB is an electronic repository that collects and releases information on certain adverse actions and medical malpractice payments related to providers. According to DOD officials, 27 DOD providers were reported to the NPDB for a summary suspension lasting greater than 30 days between February 1, 2020—when this requirement was implemented—and September 30, 2020. DHA supports the delivery of health care to servicemembers and their families throughout the Military Health System. As in all health care delivery settings, concerns may arise about the quality and safety of care delivered by individual health care providers at MTFs. For example, patient safety events—incidents that could have resulted or did result in harm to a patient—may occur during the course of providing health care services and may raise questions about the quality and safety of care delivered. DHA is responsible for ensuring the quality and safety of health care delivered by military and civilian health care providers, including contractors, through its clinical quality management program. The National Defense Authorization Act for Fiscal Year 2020 included a provision for GAO to review aspects of DOD's clinical quality management program, including its processes for reviewing the quality and safety of providers' care. This report describes DHA's processes for preventing and responding to quality and safety concerns about individual health care providers at MTFs. In future work, GAO will examine the implementation of these processes at MTFs. GAO reviewed documentation that contains policy and guidance for these processes, including DHA's August 2019 procedure manual for managing clinical quality management in the Military Health System. GAO also interviewed officials from DHA and each of the military services. We provided a draft of this report to DOD for review and comment. DOD concurred with our report and provided technical comments, which we incorporated as appropriate. For more information, contact Sharon M. Silas at(202)512-7114 or Silass@gao.gov.
    [Read More…]
  • Fugitive Charged with Leading Multimillion Dollar Fraud Scheme, Falsifying Evidence, and Tax Crimes
    In Crime News
    An American citizen was charged in two indictments unsealed this week for his alleged participation in an investment fraud scheme in which he allegedly misappropriated $6.1 million in investor-funds, manufactured evidence to mislead an investigation by the Securities and Exchange Commission (SEC) and concealed the proceeds of his fraudulent scheme from the IRS.
    [Read More…]