Justice Department Issues Business Review Letter for Proposed University Technology Licensing Program

The Justice  Department’s Antitrust Division announced today that it has completed its review of a proposed joint patent licensing pool known as the University Technology Licensing Program (UTLP).  UTLP is a proposal by participating universities to offer licenses to their physical science patents relating to specified emerging technologies.

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    In Crime News
    Assistant Attorney General Eric Dreiband for the Civil Rights Division, and U.S. Attorney David L. Anderson for the Northern District of California, and Special Agent in Charge Jack Bennett for the FBI San Francisco Division announced today that a California man has been charged with a federal hate crime for attacking a black man with a knife on a street in Santa Cruz, California.
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  • Nuclear Weapons: NNSA Should Further Develop Cost, Schedule, and Risk Information for the W87-1 Warhead Program
    In U.S GAO News
    The National Nuclear Security Administration (NNSA) did not consider cost estimates in early major design decisions for the W87-1 warhead because it was not required to do so, but NNSA has since changed its guidance to require that cost be considered, according to a May 2019 NNSA review of program documentation. The design decisions that remain for features that would achieve either minimum or enhanced requirements for the W87-1 could affect cost, according to NNSA officials (see table). We found, however, that NNSA did not yet have study plans for assessing the costs and benefits of the remaining decisions consistent with best practices as detailed in NNSA's analysis of alternatives business procedure. NNSA does not require and only recommends that programs such as the W87-1 follow these best practices. By directing the W87-1 program and future weapons programs to follow best practices for design studies, or to justify and document deviations, NNSA would have better assurance that design studies apply consistent, reliable, and objective approaches. NNSA Cost Estimates for W87-1 Warhead Design Variations That Meet Minimum and Enhanced Requirements, as of December 2018 (Dollars in billions) W87-1 design variations Cost estimate rangea Design includes features that meet minimum safety and security requirements 7.7 - 13.3 Design includes enhanced safety and security features 8.6 - 14.8 Difference between the above estimate ranges 0.9 - 1.5 Source: National Nuclear Security Administration (NNSA) documentation | GAO-20-703 aThe cost ranges reflect low and high estimates for a single design variation. The ranges represent technical and production risk and uncertainty. It is not clear that NNSA will be able to produce sufficient numbers of pits—the fissile cores of the primary—to meet the W87-1 warhead's planned production schedule. Recent NNSA and independent studies have cast doubt on NNSA's ability to ready its two planned pit production facilities in time. If one facility is not ready to produce pits in the early 2030s, for example, NNSA would likely produce fewer weapons than planned, according to GAO's analysis of NNSA plans. We were unable to fully assess the extent to which the two pit production facilities will be ready to produce pits for the W87-1 because NNSA's plutonium program—which is managing the facility readiness efforts—has not yet completed an integrated schedule for the overall pit production effort. An integrated schedule is important, according to best practices, because it integrates the planned work, resources, and budget. An NNSA official stated that the program was building a schedule, but could not provide documentation that it would meet best practices. A schedule consistent with best practices would provide NNSA with better assurance that it will have adequate pits to meet planned W87-1 production. This is a public version of a classified report that GAO issued in February 2020. Information that NNSA or DOD deemed classified or sensitive has been omitted. The Department of Defense (DOD) and NNSA restarted a program in fiscal year 2019 to replace the capabilities of the aging W78 nuclear warhead with the W87-1. NNSA made key design decisions for this weapon from 2010 until the program was paused in 2014. NNSA estimated in December 2018 that the W87-1 would cost $8.6 billion to $14.8 billion, which could make it the most expensive warhead modernization program to date. NNSA plans to newly manufacture the entire warhead, including the two major nuclear components, called the primary and secondary, using facilities it is modernizing or repurposing. You asked us to examine plans for the W87-1 warhead. This report examines, among other things, the extent to which NNSA (1) considered cost estimates in prior design decisions for the W87-1 and the potential effects of remaining design decisions on program cost, and (2) will be able to produce sufficient numbers of key nuclear components to meet W87-1 production needs. GAO reviewed NNSA documentation on prior and remaining design decisions and preliminary cost estimates, reviewed warhead and component production schedules, and interviewed NNSA and DOD officials. GAO is making four recommendations, including that NNSA require programs such as the W87-1 to follow analysis of alternatives best practices when studying design options and that the plutonium program build an integrated schedule consistent with schedule best practices. NNSA generally agreed with the recommendations. For more information, contact Allison B. Bawden at (202) 512-3841 or bawdena@gao.gov.
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    In Crime News
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  • Rural Hospital Closures: Affected Residents Had Reduced Access to Health Care Services
    In U.S GAO News
    GAO found that when rural hospitals closed, residents living in the closed hospitals' service areas would have to travel substantially farther to access certain health care services. Specifically, for residents living in these service areas, GAO's analysis shows that the median distance to access some of the more common health care services increased about 20 miles from 2012 to 2018. For example, the median distance to access general inpatient services was 3.4 miles in 2012, compared to 23.9 miles in 2018—an increase of 20.5 miles. For some of the less common services that were offered by a few of the hospitals that closed, this median distance increased much more. For example, among residents in the service areas of the 11 closed hospitals that offered treatment services for alcohol or drug abuse, the median distance was 5.5 miles in 2012, compared to 44.6 miles in 2018—an increase of 39.1 miles to access these services (see figure). Median Distance in Miles from Service Areas with Rural Hospital Closures to the Nearest Open Hospital that Offered Certain Health Care Services, 2012 and 2018 Notes: GAO focused its analysis on the health care services offered in 2012 by the 64 rural hospitals that closed during the years 2013 through 2017 and for which data were available. For example, in 2012, 64 closed hospitals offered general inpatient services, 62 offered emergency department services, 11 offered treatment services for alcohol or drug abuse, and 11 offered services in a coronary care unit. To examine distance, GAO calculated “crow-fly miles” (the distance measured in a straight line) from the geographic center of each closed rural hospital's service area to the geographic center of the ZIP Code with the nearest open rural or urban hospital that offered a given service. GAO also found that the availability of health care providers in counties with rural hospital closures generally was lower and declined more over time, compared to those without closures. Specifically, counties with closures generally had fewer health care professionals per 100,000 residents in 2012 than did counties without closures. The disparities in the availability of health care professionals in these counties grew from 2012 to 2017. For example, over this time period, the availability of physicians declined more among counties with closures—dropping from a median of 71.2 to 59.7 per 100,000 residents—compared to counties without closures—which dropped from 87.5 to 86.3 per 100,000 residents. Rural hospitals face many challenges in providing essential access to health care services to rural communities. From January 2013 through February 2020, 101 rural hospitals closed. GAO was asked to examine the effects of rural hospital closures on residents living in the areas of the hospitals that closed. This report examines, among other objectives, how closures affected the distance for residents to access health care services, as well as changes in the availability of health care providers in counties with and without closures. GAO analyzed data from the Department of Health and Human Services (HHS) and the North Carolina Rural Health Research Program (NC RHRP) for rural hospitals (1) that closed and those that were open during the years 2013 through 2017, and (2) for which complete data generally were available at the time of GAO's review. GAO also interviewed HHS and NC RHRP officials and reviewed relevant literature. GAO defined hospitals as rural according to data from the Federal Office of Rural Health Policy. GAO defined hospital closure as a cessation of inpatient services, the same definition used by NC RHRP. GAO defined service areas with closures as the collection of ZIP Codes that were served by closed rural hospitals and service areas without closures as the collection of ZIP Codes served only by rural hospitals that were open. GAO provided a draft of this report to HHS for comment. The Department provided technical comments, which GAO incorporated as appropriate. For more information, contact James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov.
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    Strachans SA in Liquidation pleaded guilty yesterday to conspiring with U.S. taxpayers and others to hide income and assets in offshore entities and bank accounts from the IRS, and was sentenced in accordance with the guilty plea, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney Nicola T. Hanna, and Chief James Lee of the Internal Revenue Service, Criminal Investigation (IRS-CI).
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    An American military contractor pleaded guilty today to her role in a theft ring on a military installation in Kandahar, Afghanistan.
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    The former chief executive officer of a U.S. government contractor was charged today in connection with schemes to defraud the U.S. Department of Defense regarding contracts related to Operation Enduring Freedom in Afghanistan.
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  • Air Pollution: Opportunities to Better Sustain and Modernize the National Air Quality Monitoring System
    In U.S GAO News
    The ambient air quality monitoring system is a national asset that provides standardized information for implementing the Clean Air Act and protecting public health. The Environmental Protection Agency (EPA) and state and local agencies cooperatively manage the system, with each playing different roles in design, operation, oversight, and funding. For example, EPA establishes minimum requirements for the system, and state and local agencies operate the monitors and report data to EPA. Officials from EPA and selected state and local agencies identified challenges related to sustaining the monitoring system. For example, they said that infrastructure is aging while annual EPA funding for state and local air quality management grants, which cover monitoring, has decreased by about 20 percent since 2004 after adjusting for inflation (see fig.). GAO found inconsistencies in how EPA regions have addressed these challenges. GAO's prior work has identified key characteristics of asset management, such as identifying needed resources and using quality data to manage infrastructure risks, which can help organizations optimize limited resources. By developing an asset management framework that includes such characteristics, EPA could better target limited resources toward the highest priorities for consistently sustaining the system. Annual Inflation-Adjusted EPA Funding for State and Local Air Quality Management Grants Air quality managers, researchers, and the public need additional information so they can better understand and address the health risks from air pollution, according to GAO's review of literature and interviews GAO conducted. These needs include additional information on (1) air toxics to understand health risks in key locations such as near industrial facilities; and (2) how to use low-cost sensors to provide real-time, local-scale air quality information. EPA and state and local agencies face persistent challenges meeting such air quality information needs, including challenges in understanding the performance of low-cost sensors. GAO illustrated this challenge by collecting air quality data from low-cost sensors and finding variability in their performance. EPA has strategies aimed at better meeting the additional air quality information needs of managers, researchers, and the public, but the strategies are outdated and incomplete. For example, they do not clearly define roles for meeting additional information needs. GAO's prior work on asset management suggests that a more strategic approach could help EPA modernize the system to better meet the additional information needs. By developing a modernization plan that aligns with leading practices for strategic planning and risk management, such as establishing modernization goals and roles, EPA could better ensure that the system meets the additional information needs of air quality managers, researchers, and the public and is positioned to protect public health. The national ambient air quality monitoring system shows that the United States has made progress in reducing air pollution but that risks to public health and the environment continue in certain locations. The system consists of sites that measure air pollution levels around fixed locations across the country using specific methods. Since the system began in the 1970s, air quality concerns have changed—such as increased concern about the health effects of air toxics. GAO was asked to evaluate the national air quality monitoring system. This report examines the role of the system and how it is managed, challenges in managing the system and actions to address them, and needs for additional air quality information and actions to address challenges in meeting those needs. GAO reviewed literature, laws, and agency documents; conducted a demonstration of low-cost sensors; and interviewed EPA officials, selected state and local officials, representatives from air quality associations, and stakeholders. GAO is making two recommendations for EPA to (1) establish an asset management framework for the monitoring system that includes key characteristics and (2) develop an air quality monitoring modernization plan that aligns with leading practices. In written comments on the report, EPA generally agreed with the recommendations. For more information, contact J. Alfredo Gómez at (202) 512-3841 or gomezj@gao.gov.
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    In Crime News
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    Assistant Attorney General Makan Delrahim of the Justice Department's Antitrust Division announced today that the Antitrust Division has implemented two uniform updates to its Civil Investigative Demand (CID) forms and deposition process: 
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  • Data Security: Recent K-12 Data Breaches Show That Students Are Vulnerable to Harm
    In U.S GAO News
    A cybersecurity incident is an event that actually or potentially jeopardizes a system or the information it holds. According to GAO's analysis of K-12 Cybersecurity Resource Center (CRC) data from July 2016 to May 2020, thousands of K-12 students were affected by 99 reported data breaches, one type of cybersecurity incident in which data are compromised. Students' academic records, including assessment scores and special education records, were the most commonly compromised type of information (58 breaches). Records containing students' personally identifiable information (PII), such as Social Security numbers, were the second most commonly compromised type of information (36 breaches). Financial and cybersecurity experts say some PII can be sold on the black market and can cause students significant financial harm. Breaches were either accidental or intentional, although sometimes the intent was unknown, with school staff, students, and cybercriminals among those responsible (see figure). Staff were responsible for most of the accidental breaches (21 of 25), and students were responsible for most of the intentional breaches (27 of 52), most frequently to change grades. Reports of breaches by cybercriminals were rare but included attempts to steal PII. Although the number of students affected by a breach was not always available, examples show that thousands of students have had their data compromised in a single breach. Responsible Actor and Intent of Reported K-12 Student Data Breaches, July 1, 2016-May 5, 2020 Notes: The actor or the intent may not be discernible in public reports. For this analysis, a cybercriminal is defined as an actor external to the school district who breaches a data system for malicious reasons. Of the 287 school districts affected by reported student data breaches, larger, wealthier, and suburban school districts were disproportionately represented, according to GAO's analysis. Cybersecurity experts GAO spoke with said one explanation for this is that some of these districts may use more technology in schools, which could create more opportunities for breaches to occur. When a student's personal information is disclosed, it can lead to physical, emotional, and financial harm. Organizations are vulnerable to data security risks, including over 17,000 public school districts and approximately 98,000 public schools. As schools and districts increasingly rely on complex information technology systems for teaching, learning, and operating, they are collecting more student data electronically that can put a student's information, including PII, at risk of disclosure. The closure of schools and the sudden transition to distance learning across the country due to the Coronavirus Disease 2019 (COVID-19) pandemic also heightened attention on K-12 cybersecurity. GAO was asked to review the security of K-12 students' data. This report examines (1) what is known about recently reported K-12 cybersecurity incidents that compromised student data, and (2) the characteristics of school districts that experienced these incidents. GAO analyzed data from July 1, 2016 to May 5, 2020 from CRC (the most complete source of information on K-12 data breaches). CRC is a non-federal resource sponsored by an educational technology organization that has tracked reported K-12 cybersecurity incidents since 2016. GAO also analyzed 2016-2019 Department of Education data on school district characteristics (the most recent available), and interviewed experts knowledgeable about cybersecurity. We incorporated technical comments from the agencies as appropriate. For more information, contact Jacqueline M. Nowicki at (617) 788-0580 or nowickij@gao.gov.
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  • Small Business Contracting: Better Documentation and Reporting Needed on Procurement Center Representatives
    In U.S GAO News
    The Small Business Administration (SBA) does not maintain complete documentation to support data on the activities of procurement center representatives (PCR), which is information used to oversee PCRs and assess their performance. PCRs are responsible for helping small businesses gain access to federal contracting and subcontracting opportunities—for example, by making set-aside recommendations to federal agency contracting officers. SBA area offices generate a monthly report that summarizes data on PCRs' activities and accomplishments, and SBA procedures require PCRs to maintain these reports and the supporting documentation. GAO found that they do not consistently do either. According to SBA officials, in some cases the supporting documentation, which PCRs store on their individual computers or in their offices, either was destroyed or was not maintained after PCRs left their positions. Officials told GAO that SBA recently implemented a new database and established a policy requiring the monthly reports to be maintained in the database. However, SBA has not established a centralized means of maintaining the supporting documentation. A central repository for PCRs to store their supporting documentation would provide greater assurance that the documentation is maintained as required and help SBA verify the accuracy of the data PCRs report on their activities. SBA assigns PCRs to buying activities, divisions in federal agencies that purchase goods and services based on geographic coverage and other factors. Specifically, PCRs are assigned within one of six regional areas to ensure geographic coverage, at specific federal agencies, and at buying activities that have significant opportunities for small business contracting. However, SBA has not submitted required reports to Congress on its rationale for assigning PCRs to cover buying activities. The Small Business Act, as amended, requires that SBA submit a report (1) identifying each area for which SBA has assigned a PCR, (2) explaining why SBA selected the areas for assignment, and (3) describing the activities performed by PCRs. SBA was required to submit the first report to Congress by December 26, 2010, and subsequent reports every 3 years thereafter. SBA officials told GAO they were not aware of the reporting requirement. As a result, Congress lacks the information these reports were intended to provide, information that could be useful for its oversight of PCRs. The Small Business Act establishes tools to enhance procurement opportunities for small businesses, such as set-asides and requirements that large contractors set goals for using small business subcontractors. SBA's PCRs advocate for the inclusion of small businesses during the procurement process. GAO was asked to examine how PCRs help small businesses gain access to federal contracting and subcontracting opportunities. This report addresses, among other objectives, (1) documentation SBA maintains on the activities of PCRs and (2) how SBA assigns PCRs to cover buying activities and its requirement to report to Congress on these assignments. GAO reviewed SBA policies and procedures, data on PCR assignments, and selected data reported by PCRs and related documentation. GAO also interviewed agency officials. GAO recommends that SBA (1) develop a central repository for PCRs to store the supporting documentation for the data they report on their activities and (2) ensure that it submits required reports to Congress on PCRs' assignments and activities. SBA concurred with both recommendations. For more information, contact William B. Shear at (202) 512-8678 or shearw@gao.gov.
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  • Information Technology: Federal Agencies Need to Take Urgent Action to Manage Supply Chain Risks
    In U.S GAO News
    Few of the 23 civilian Chief Financial Officers Act agencies had implemented seven selected foundational practices for managing information and communications technology (ICT) supply chain risks. Supply chain risk management (SCRM) is the process of identifying, assessing, and mitigating the risks associated with the global and distributed nature of ICT product and service supply chains. Many of the manufacturing inputs for these ICT products and services originate from a variety of sources throughout the world. (See figure 1.) Figure 1: Examples of Locations of Manufacturers or Suppliers of Information and Communications Technology Products and Services None of the 23 agencies fully implemented all of the SCRM practices and 14 of the 23 agencies had not implemented any of the practices. The practice with the highest rate of implementation was implemented by only six agencies. Conversely, none of the other practices were implemented by more than three agencies. Moreover, one practice had not been implemented by any of the agencies. (See figure 2.) Figure 2: Extent to Which the 23 Civilian Chief Financial Officers Act Agencies Implemented Information and Communications Technology (ICT) Supply Chain Risk Management (SCRM) Practices As a result of these weaknesses, these agencies are at a greater risk that malicious actors could exploit vulnerabilities in the ICT supply chain causing disruption to mission operations, harm to individuals, or theft of intellectual property. For example, without establishing executive oversight of SCRM activities, agencies are limited in their ability to make risk decisions across the organization about how to most effectively secure their ICT product and service supply chains. Moreover, agencies lack the ability to understand and manage risk and reduce the likelihood that adverse events will occur without reasonable visibility and traceability into supply chains. Officials from the 23 agencies cited various factors that limited their implementation of the foundational practices for managing supply chain risks. The most commonly cited factor was the lack of federal SCRM guidance. For example, several agencies reported that they were waiting for federal guidance to be issued from the Federal Acquisition Security Council—a cross-agency group responsible for providing direction and guidance to executive agencies to reduce their supply chain risks—before implementing one or more of the foundational practices. According to Office of Management and Budget (OMB) officials, the council expects to complete this effort by December 2020. While the additional direction and guidance from the council could further assist agencies with the implementation of these practices, federal agencies currently have guidance to assist with managing their ICT supply chain risks. Specifically, the National Institute of Standards and Technology (NIST) issued ICT SCRM-specific guidance in 2015 and OMB has required agencies to implement ICT SCRM since 2016. Until agencies implement all of the foundational ICT SCRM practices, they will be limited in their ability to address supply chain risks across their organizations effectively. Federal agencies rely extensively on ICT products and services (e.g., computing systems, software, and networks) to carry out their operations. However, agencies face numerous ICT supply chain risks, including threats posed by counterfeiters who may exploit vulnerabilities in the supply chain and, thus, compromise the confidentiality, integrity, or availability of an organization's systems and the information they contain. For example, in September 2019, the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency reported that federal agencies faced approximately 180 different ICT supply chain-related threats. To address threats such as these, agencies must make risk-based ICT supply chain decisions about how to secure their systems. GAO was asked to conduct a review of federal agencies' ICT SCRM practices. The specific objective was to determine the extent to which federal agencies have implemented foundational ICT SCRM practices. To do so, GAO identified seven practices from NIST guidance that are foundational for an organization-wide approach to ICT SCRM and compared them to policies, procedures, and other documentation from the 23 civilian Chief Financial Officers Act agencies. This is a public version of a sensitive report that GAO issued in October 2020. Information that agencies deemed sensitive was omitted and GAO substituted numeric identifiers that were randomly assigned for the names of the agencies due to sensitivity concerns. The foundational practices comprising ICT SCRM are: establishing executive oversight of ICT activities, including designating responsibility for leading agency-wide SCRM activities; developing an agency-wide ICT SCRM strategy for providing the organizational context in which risk-based decisions will be made; establishing an approach to identify and document agency ICT supply chain(s); establishing a process to conduct agency-wide assessments of ICT supply chain risks that identify, aggregate, and prioritize ICT supply chain risks that are present across the organization; establishing a process to conduct a SCRM review of a potential supplier that may include reviews of the processes used by suppliers to design, develop, test, implement, verify, deliver, and support ICT products and services; developing organizational ICT SCRM requirements for suppliers to ensure that suppliers are adequately addressing risks associated with ICT products and services; and developing organizational procedures to detect counterfeit and compromised ICT products prior to their deployment. GAO also interviewed relevant agency officials. In the sensitive report, GAO made a total of 145 recommendations to the 23 agencies to fully implement foundational practices in their organization-wide approaches to ICT SCRM. Of the 23 agencies, 17 agreed with all of the recommendations made to them; two agencies agreed with most, but not all of the recommendations; one agency disagreed with all of the recommendations; two agencies neither agreed nor disagreed with the recommendations, but stated they would address them; and one agency had no comments. GAO continues to believe that all of the recommendations are warranted, as discussed in the sensitive report. For more information, contact Carol C. Harris at (202) 512-4456 or harrisCC@gao.gov.
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  • Drug Misuse: Agencies Have Not Fully Identified How Grants That Can Support Drug Prevention Education Programs Contribute to National Goals
    In U.S GAO News
    The Department of Education (Education), the Department of Health and Human Services (HHS), and the Office of National Drug Control Policy (ONDCP) manage six key federal grant programs that can support drug prevention activities in schools. The flexibility of these grants supports a variety of drug prevention education programs. The agencies generally monitor grantees' compliance with grant requirements through periodic reporting. The aim of the National Drug Control Strategy (Strategy) is to reduce drug misuse, but HHS, and ONDCP have not fully defined how several key grant programs support the Strategy. ONDCP's guidance directs agencies to report, for each grant program, performance measures that relate to the Strategy's goals. However, some performance measures for several programs did not relate to drug prevention, did not link directly to the Strategy's prevention goals, or were not reported at all. For example: A $372 million set-aside for HHS's Substance Abuse Prevention and Treatment Block Grant program must be used on drug prevention, but HHS did not link the program's performance measures to the Strategy's prevention education goal.   ONDCP did not report on any performance measures in the Strategy or document how its $100 million Drug-Free Communities Support program contributes to achieving specific goals in the Strategy. GAO also found that the approximately $10 million grants to states component of Education's School Climate Transformation Grant program could more fully provide performance information related to the Strategy's prevention education goal. Fully understanding these programs' contributions to the goals of the National Drug Control Strategy could help Congress and the public better understand and assess how the nation's significant investments in drug prevention education programs help address the drug crisis. Most people who develop a substance use disorder begin using substances as adolescents. To reach adolescents, drug prevention programs are frequently provided in schools. Education, HHS, and ONDCP manage most federal programs that support school-based drug prevention activities. This report (1) describes how Education, HHS, and ONDCP support drug prevention activities in schools, and monitor those efforts and (2) examines the extent to which these agencies identify how their prevention activities support the National Drug Control Strategy. GAO reviewed agency documentation, the 2019 and 2020 National Drug Control Strategy documents which ONDCP identified as being most relevant to our review including the fiscal year 2019 drug control budget, ONDCP guidance, relevant federal laws, and GAO's prior work on attributes of successful performance measures that can help achieve agency goals. GAO also interviewed federal and state officials. GAO is making four recommendations, including that Education, HHS, and ONDCP clarify how grants that can include drug prevention education programs support related goals of the National Drug Control Strategy. HHS and ONCP agreed with the recommendation and Education partially concurred, saying it would explore collecting and reporting related performance data. For more information, contact Jacqueline M. Nowicki at (617) 788-0580 or nowickij@gao.gov.
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    A Pemberton, New Jersey, man appeared in court yesterday on a federal grand jury indictment charging him with conspiring to defraud the United States, assisting in the filing of false tax returns, obstructing the internal revenue laws, and failing to file a tax return, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. The Sept. 2, 2020 indictment was unsealed following the court appearance.
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    In Crime News
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    The Judicial Conference of the United States expressed its opposition to the version of a bill passed by the House this week, saying it “will have devastating budgetary and operational impact on the Judiciary and our ability to serve the public” by imposing radical and costly changes on the Third Branch’s electronic case management system without adequate funding.
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  • Defense Health Care: Implementation of Value-Based Initiatives in TRICARE
    In U.S GAO News
    The Defense Health Agency (DHA)—the agency within the Department of Defense (DOD) that administers DOD's health care program, TRICARE—has identified a number of value-based initiatives for potential implementation with civilian providers and hospitals under the TRICARE program. These initiatives aim to help DHA build a value-based health care delivery system, in which providers are rewarded for value of services provided instead of volume of services provided. For these initiatives, value is generally measured in terms of improved health outcomes, enhanced experience of care for the patient, and reduced health care costs over time. GAO found that DHA has identified 20 value-based initiatives, including a program that makes incentive payments for hospitals that meet certain quality metrics for maternity services and a program that promotes adherence to medication regimens by waiving co-payments, among others. According to DHA officials, the 20 initiatives include five that have been implemented (two complete, three underway); three that will be implemented in the future—two with anticipated 2020 start dates are currently on hold due to the department's need to focus on the response to the Coronavirus Disease (COVID-19) pandemic and one that is expected to be implemented in January 2021; eight that are still under review, but no decisions have been made about whether and when they might be implemented; and four that were considered but will not be implemented. In fiscal year 2019, DOD offered health care services to approximately 9.6 million eligible beneficiaries worldwide through TRICARE, its regionally structured health care program. Beneficiaries may obtain health care services through DOD's direct care system of military hospitals and clinics or from its purchased care system of civilian providers. DOD contracts with private sector companies—referred to as managed care support contractors—to develop and maintain networks of civilian providers and perform other customer service functions for its purchased care system. The National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017) required DOD to develop and implement value-based incentive initiatives in its TRICARE contracts. The NDAA 2017 also included a provision that required GAO to review these initiatives. This correspondence describes the initiatives DHA has developed and the status of each, as of June 2020. To do this work, GAO interviewed knowledgeable DHA officials and analyzed available documentation on each initiative, including decision papers, congressional reports, and Federal Register notices. For more information, contact Debra A. Draper at (202) 512-7114 or draperd@gao.gov.
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    A U.S. accountant was sentenced in the Southern District of New York to 39 months in prison for wire fraud, tax fraud, money laundering, aggravated identity theft, and other charges, announced Acting Assistant Attorney General Brian C. Rabbitt and Acting U.S. Attorney Audrey Strauss of the Southern District of New York.
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    In Crime News
    A federal grand jury in Richmond, Virginia, returned an indictment charging a return preparer with tax evasion and failure to file individual income tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia.
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  • Aviation Consumer Protection: Increased Transparency Could Help Build Confidence in DOT’s Enforcement Approach
    In U.S GAO News
    The Department of Transportation's (DOT) enforcement approach generally uses a range of methods to encourage compliance with consumer protection regulations, including conducting outreach and information-sharing, issuing guidance, and sending non-punitive warning letters for those violations that do not rise to the level that warrants a consent order. DOT usually enters into consent orders when it has evidence of systematic or egregious violations. Such orders are negotiated between DOT and violators (e.g., airlines) and typically include civil penalties. DOT officials see benefits from using consent orders, which can include credits for actions taken to benefit consumers or to improve the travel environment. Annual consent orders increased from 20 in 2008 to 62 in 2012, but then generally declined to a low of eight in 2019. GAO's analysis showed that the decline in consent orders was most marked among those issued against non-air carrier entities (e.g., travel agents), those addressing certain types of violations such as advertising, and orders containing smaller civil penalty amounts. DOT officials said that the agency did not change its enforcement practices during this time. Examples of DOT's Compliance Promotion and Enforcement Efforts Airlines and consumer advocates GAO interviewed said that DOT's enforcement process lacked transparency, including into how investigations were conducted and resolved and about when and why DOT takes enforcement actions. Moreover, DOT publishes limited information related to the results of its enforcement activities, notably information about the number and type of consumer complaints it receives as well as issued consent orders. DOT does not publish other information such as aggregated data about the number or nature of open and closed investigations or issued warning letters. DOT is taking some actions to increase transparency, such as developing a publicly available handbook, but none of those actions appears to fully address the identified information gaps such as information about the results of investigations. Some other federal agencies provide more information about enforcement activities, including publishing warning letters or data about such letters. Publishing additional information about how DOT conducts investigations and enforcement, and about the results of enforcement activities, could improve stakeholders' understanding of DOT's process and help build confidence in its approach. Consumer advocates, airlines, and other stakeholders have raised concerns about how DOT enforces aviation consumer protection requirements. DOT has the authority to enforce requirements protecting consumers against unfair and deceptive practices, discrimination on the basis of disability or other characteristics, and other harms. The FAA Reauthorization Act of 2018 contained a provision for GAO to review DOT's enforcement of consumer protection requirements. This report examines: (1) DOT's approach to the enforcement of aviation consumer protections and the results of its efforts, and (2) selected stakeholder views on this approach and steps DOT has taken to address identified concerns. GAO reviewed DOT data on consent orders and consumer complaints; reviewed other DOT documentation related to its enforcement program; interviewed DOT officials and selected industry and consumer stakeholders, including advocacy organizations, which we identified from prior work and a literature review; and identified leading practices for regulatory enforcement. GAO is making two recommendations, including: that DOT publish information describing the process it uses to enforce consumer protections, and that DOT take additional steps to provide transparency into the results of its efforts. DOT concurred with these recommendations. For more information, contact Andrew Von Ah at (202) 512-2834 or vonaha@gao.gov.
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  • Prescription Drugs: Department of Veterans Affairs Paid About Half as Much as Medicare Part D for Selected Drugs in 2017
    In U.S GAO News
    GAO found that the Department of Veterans Affairs (VA) paid, on average, 54 percent less per unit for a sample of 399 brand-name and generic prescription drugs in 2017 as did Medicare Part D, even after accounting for applicable rebates and price concessions in the Part D program. GAO also found that 233 of the 399 drugs in the sample were at least 50 percent cheaper in VA than in Medicare, and 106 drugs were at least 75 percent cheaper. Only 43 drugs were cheaper in Medicare than in VA. The percent difference in price between the two programs was greater on average for generic drugs. Specifically, VA's prices were 68 percent lower than Medicare prices for the 203 generic drugs (an average difference of $0.19 per unit) and 49 percent lower for the 196 brand-name drugs (an average difference of $4.11 per unit). Average Per-Unit Net Prices Paid by Department of Veterans Affairs and Medicare Part D for Selected Drugs, 2017 Note: GAO's sample of 399 drugs included the top 100 brand-name and generic drugs in Medicare Part D in 2017, by: (1) highest expenditures; (2) highest utilization (by quantities dispensed); and (3) highest cost-per use. Per-unit prices are weighted to reflect differences in utilization in the two programs. Medicare prices reflect expenditures after accounting for rebates and other price concessions. While there are many factors that impact prices in the complex drug market, GAO identified several key program features that may contribute to the consistent price differential between VA and Medicare Part D. For example, Medicare's beneficiaries are divided among numerous prescription drug plans, which each negotiate drug prices with manufacturers. In contrast, VA is a single integrated health system with a unified list of covered drugs—thereby possibly strengthening its bargaining position when negotiating. In addition, VA has access to significant discounts defined by law, and can then negotiate further for lower prices. These discount prices are not available to Medicare Part D plans. GAO provided a draft of this product to HHS and VA for comment. Both agencies provided technical comments, which GAO incorporated as appropriate. In 2017, combined, Medicare Part D and VA accounted for approximately $105 billion in prescription drug sales—nearly one-third of total U.S. expenditures—and covered nearly 52 million individuals. The two programs use different methods to pay for prescription drugs. Medicare reimburses Part D plan sponsors, which in turn pay pharmacies to dispense drugs. VA primarily uses a direct purchase approach to acquire drugs from manufacturers. GAO was asked to examine differences in the amounts major federal programs paid for prescription drugs. This report: (1) compares average unit prices for prescription drugs in Medicare Part D to those in the VA; and (2) describes factors affecting prices in the two programs. GAO analyzed (1) CMS data for Medicare Part D payments to retail pharmacies as well as rebates and other price concessions Part D plans received and (2) VA drug purchasing data. These data were from 2017, the most recent data available at the time of GAO's analysis. To select a sample of drugs GAO identified the top 100 brand-name and 100 generic drugs in Medicare Part D in 2017 for three categories: (1) highest expenditure, (2) highest utilization, and (3) highest cost-per use. In total, this yielded 399 non-duplicate drugs (203 generic and 196 brand-name), which represented 44 percent of Medicare Part D spending in 2017. GAO compared weighted average unit prices for these drugs. GAO interviewed CMS and VA officials, and reviewed academic and government reports to understand factors that may affect prices in the two programs. For more information, contact John Dicken at (202) 512-7114 or dickenj@gao.gov.
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  • Oil and Gas: Onshore Competitive and Noncompetitive Lease Revenues
    In U.S GAO News
    Pursuant to federal law, the Department of the Interior's (Interior) Bureau of Land Management (BLM) offers leases competitively through auction or noncompetitively for a fee if an adequate bid is not received. Competitive leases for oil and gas development on federal lands produced greater revenues, on average, than noncompetitive leases for fiscal years 2003 through 2019, according to GAO's analysis of revenues reported by Interior's Office of Natural Resources Revenue (ONRR) and leases from BLM. For this period, about 72,800 competitive leases produced about $14.3 billion in revenues—while total of 100,300 leases produced $16.1 billion. Average revenues from competitive leases over this time period were nearly 3 times greater than revenues from noncompetitive leases; about $196,000 and $66,000, respectively. Based on GAO's analysis of leases that started in fiscal years 2003 through 2009, competitive leases produced oil and gas more often than noncompetitive leases during the leases' 10-year primary term. Further, competitive leases with high bonus bids (bids above $100 per acre) were more likely to produce oil and gas in their 10-year primary terms than both competitive leases with lower bonus bids and noncompetitive leases. Specifically, about 26 percent of competitive leases that sold with bonus bids above $100 per acre produced oil and gas and generated royalties in their primary term compared with about 2 percent for competitive leases that sold at the minimum bid of $2 per acre and about 1 percent for noncompetitive leases. GAO's analysis showed that competitive leases with high bonus bids generated over 3 times the amount of cumulative, or total, royalties by the end of their primary term than all other competitive and noncompetitive leases combined (see fig.). Cumulative Royalties from Competitive Leases, by Bonus Bid, and Noncompetitive Leases That Started in Fiscal Years 2003 through 2009 According to BLM, federal onshore oil and gas leases generate about $3 billion annually in federal revenues, including royalties, one-time bonus bid payments, and rents. The Federal Onshore Oil and Gas Leasing Reform Act of 1987 requires that public lands available for oil and gas leasing first be offered under a competitive bidding process. BLM offers leases with 10-year primary terms competitively through auction or, if the tract of land does not receive an adequate bid, noncompetitively for a fee. The minimum bid is $2 per acre, and bids at or above the minimum are called bonus bids. ONRR is to collect revenues from oil and gas leases in accordance with the specific terms and conditions outlined in the leases, including revenues from rents and royalties. Lessees are to pay rent annually until production begins on the leased land and then pay royalties as a percentage of oil and gas production. Lease terms may be extended beyond the primary term if, for example, the lease is producing oil or gas. GAO was asked to review oil and gas leasing on federal lands. This report describes oil and gas revenues from competitive and noncompetitive leases for fiscal years 2003 through 2019. GAO analyzed federal lease and revenue data and interviewed Interior officials and four experts knowledgeable about federal oil and gas leasing. To consistently compare leases over their lifecycle, GAO analyzed revenues that occurred within the leases' primary term (first 10 years) for leases that started in fiscal years 2003 through 2009. For more information, contact Frank Rusco at (202) 512-3841 or RuscoF@gao.gov.
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