October 21, 2021


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Secretary Antony J. Blinken And Mexican Foreign Secretary Marcelo Ebrard At a Joint Press Availability

34 min read

Antony J. Blinken, Secretary of State

Mexico City, Mexico

Ministry of Foreign Affairs

FOREIGN SECRETARY EBRARD:  (Via interpreter) Thank you.  We are here today wrapping up a process that has gone on for several months and that allows us to first affirm that we are leaving the Merida Initiative behind, and that starting today, we start with the Bicentennial Agreement.  Why bicentennial?  Because we will be celebrating 200 years of relations between Mexico and the United States.  As you know, they were the first country that recognized us, so that is why we have given it this name.

What is this agreement based on?  You will have a declaration with the details; however, it is based on the incorporation of the visions of President Biden as well as President Lopez Obrador’s and having a more comprehensive approach regarding security, health, and safe communities.

This morning, the President Lopez Obrador was saying that we are inspired and that we coincide in terms of the concepts of freedoms and liberties of President Roosevelt.  So there is an ideological and political affinity between both our presidents, Biden and Lopez Obrador.  What you will see in this document is the translation in terms of security, public health, and safe communities of those points that we agree on, which are crucial.

The second thing I need to say is that we have found from the Secretary of State, the Attorney General, and from the Secretary on all representatives of the U.S. Government that we have a relation in which Mexico’s priorities are the same – have the same level of priority as the ones from the United States.  Today is something – this is something that we can say, something that we did not have before.

For Mexico, we must prioritize violence, homicides, providing opportunity for development for young people.  We are addressing the root causes of all of the issues that we are facing, and these priorities have been taken into account.  In this document, we see a translation of a system, an institutional system, to follow up on this agreement.  This agreement is not a declaration; it’s a path to be taken that is verifiable and that will provide results.

We have to present on December 1st our yearly plan – what are we going to do from December 1st, 2021 to December 1st, 2022.  At the end of January by next year, we have to lay down on paper – write down on paper what we’re going to do in the next three years, so verifiable, transparent towards our citizens.

To summarize, this is not a limited cooperation; this is a partnership that is superior, qualitatively speaking, a partnership with people that you trust and respect.  Partnerships cannot be done otherwise.  So respect, co-responsibility, and reciprocity – these are the basis for this partnership between Mexico and the United States in matters of security, public health, and safe communities.

You will see that there are three broad objectives to protect our people, to prevent crime in the border region, to dismantle criminal organizations, to create immediate memorandums, MOUs to reduce addiction to drugs and the harm related to them.  This is the first time that we do something like this in our history.  An MOU to launch the program for control for control of port containers, a binational working group on chemical precursors, joint work in terms of supporting what Mexico is doing in forensics to locate people who have disappeared.

So this is an agreement that will be memorable due to its content and due to the fact that it translates for our peoples, for our societies, the coincidences that both administrations, both governments have.  Thank you so much to the U.S. delegation, and especially the Secretary of State, Mr. Anthony Blinken, who will now have the floor.

SECRETARY BLINKEN:  Gracias, Marcelo, y buenas tardes a todas y a todos.  It’s a pleasure to be here with you and with your entire delegation and ours.  I think the spirit of collaboration, of teamwork and partnership was as strong as I’ve ever felt it in working with the United States and Mexico.  And it’s wonderful for me to be back in Mexico.  My last visit was actually a virtual one – one of the first visits I did when we first took office.  But I think even a brief time here is a demonstration that there is no substitute for being together in person.

Our two countries, Mexico and the United States, share so much more than a border.  We share a history, parts of which I had the opportunity to see this morning in the incredibly evocative murals of Diego Rivera at the Palacio Nacional.  And I had something I will never forget, which was a personal commentary on the murals and on the history of Mexico by President López Obrador.  It was for me a truly extraordinary moment.  I am so grateful to him for taking the time and sharing so much about his knowledge of Mexico’s history and the history that unites our countries – cultural, economic ties, deep bonds, of course, between our communities and families.

The relationship between our governments is wide-ranging and complex.  Every single day, we are working together on an incredibly broad range of issues, from Congress to climate, from public health to public education, tourism, to regional diplomacy; maintaining that relationship, and strengthening it demands constant, candid dialogue at every level.  It requires seizing opportunities and adapting to new challenges, and that’s exactly what we did today with high-level dialogue.

And I am tempted to say I agree with everything Marcelo said, because I do.  It was a very accurate and important description of what we – of the work we did today.  And I have to say the relationship that we demonstrated today, the trust that is there between us, I’d like to say if I can, Marcelo, I think that’s the kind of relationship we have been able to build these past nine months and for which I am really, really grateful.

So as you all know, this morning, together with Attorney General Garland, Secretary of Homeland Security Mayorkas, Deputy Treasury Secretary Adeyemo, and other senior officials from our administration, we started the day with the chance to meet with President López Obrador.  We touched on, again, a very broad range of issues that are so crucial to our relationship, including security, including migration, the economy, COVID-19, the climate crisis.  And after that, with Foreign Secretary Ebrard and our colleagues, we had a very productive first meeting at the High-Level Security Dialogue, where we launched the U.S.-Mexico Bicentennial Framework on Security, Public Health, and Communities.

Now, that might sound like a mouthful, and it is, but it is rooted in the idea that we have a shared responsibility, as neighbors and as partners, to improve security for the people of our nations.  That is what it boils down to.  And it marks the beginning of a new chapter in Mexico-U.S. security cooperation, one that will see us working as equal partners in defining and tackling shared priorities, one that seeks to address the root causes of the security challenges that we face, including inequity, corruption, impunity, and one that does that not only by modernizing law enforcement, but also strengthening public health, the rule of law, and broader-based economic opportunity.

There are three pillars to this framework which I just want to very briefly describe.  The first is protecting the health and safety of the people of our nations.  Often in the past, we tried to do this by relying too much on security forces and too little on other tools in our kit.  Of course, law enforcement has a critical role to play in reducing homicides and other serious crimes.  But its efforts have to be matched by investments in growing economic opportunity, particularly for underserved communities and regions.  That happens to be a central focus of the high-level economic dialogue that we launched a few weeks ago in Washington, and it is crucial to giving Mexican and American workers the tools they need to compete in the 21st century economy.

Our efforts also have to include substance abuse prevention, treatment, recovery support to help those struggling with addiction, to reduce the profound harm that illicit drugs inflict on our communities, and to reduce demand.  And our governments agreed that protecting our people means protecting human rights.

And that means establishing effective mechanisms to ensure that abusers are held accountable, which is critical to earning the trust of communities, shoring up again the rule of law, and giving victims the justice they deserve.  As Marcelo noted, we are expanding through our partnership efforts for resolving tens of thousands of cases of disappearances and missing persons in Mexico.  That is one example of how we can work toward this broader goal together.  It could help bring closure to families as they search for their loved ones and end impunity for offenders.

The second pillar is on preventing trafficking across borders.  We know that reducing arms trafficking is a priority for Mexico, as many of the illicit weapons in this country come from the United States.  And we’re committed to deepening our collaboration on arms tracing, on investigations, on prosecutions to disrupt the supply.  We’re also collaborating on fighting human smuggling and trafficking organizations as well as drug trafficking organizations, which perpetuate cycles of violence and human suffering.

Finally, the third pillar of the framework focuses on pursuing transnational criminal networks.  We will deepen our collaboration to combat money laundering and other forms of corruption.  Particularly as these illicit organizations are growing more nimble in exploiting financial systems, we’ll be making our justice systems more effective at investigating and prosecuting organized crime and increasing cooperation on extraditions.

We agreed to build better metrics as well so that we can track all of these goals and hold ourselves accountable to them.  The delegation that represented the United States Government in today’s High-Level Dialogue, including the Attorney General, the Secretary of Homeland Security, the Deputy Secretary of the Treasury, in and of itself reflects how seriously we take our shared responsibility to deliver security for our people and the comprehensive tools that we are bringing to bear to do that.

But crucial as this new framework is, we want the Mexico-U.S. relationship to be about more, much more, than migration and security.  Instead, it has to reflect the full range of issues where we share interests and we share values, including the environment, agriculture, technology, energy, trade, supply chains, and the innovative ideas that we came up with at the first High-Level Economic Dialogue.

The next months and years could be transformational in realizing the full potential of the Mexico-U.S. relationship and delivering in concrete ways for our people.  We’re committed to working with our Mexican partners to make that happen.

Thank you very, very much.

MODERATOR:  (Via interpreter) We have time for two questions from members of the Mexican press and two from the U.S. press.

Sarahí Méndez from Televisa.

QUESTION:  (Via interpreter) Secretary Blinken, as a part of this bicentennial understanding, I wanted to know if border security will be reinforced on behalf of the United States, if it will be harder for migrants and criminal organizations to cross over.  Will more resources be sent to Central America to apply in programs such as Jóvenes Construyendo el Futuro, Youth Building the Future, from a program of López Obrador?  And will the MPP program be applied in Mexico?

For Secretary Ebrard, we know that for Mexico arms trafficking is very important.  Secretary Blinken has talked about this issue.  Have you foreseen this topic on tracing weapons in Mexico that came from the United States?

SECRETARY BLINKEN:  Thank you, I’m happy to start.  We are determined to have a border that is vibrant, that is a connector between our countries, between our people, commerce – a truly living thing – because these connections are so important to both of us.  But it also has to be safe, orderly, humane in terms of the way we deal with illegal migration.

We’re doing a lot of things together and also on our part to move more effectively in that direction, including working to strengthen our own asylum system so that we can deal much more effectively, rapidly, and humanely with those who have – are putting forward asylum claims.  We’re also working to expand legal pathways which are so critical to migration, and of course, we will uphold the rule of law.

So much of what we’ve been doing as well has been in collaboration and cooperation with Mexico, and I have to tell you how grateful we are for that, because we face a challenge that in many ways is, I think, unique with tremendous pressure from illegal migratory flows coming in different ways, different parts of the hemisphere, irregular migration, again, for very – for understandable reasons, which I’ll come to in a minute.  We see not only in the Northern Triangle but also, of course, recently Haiti, countries in the region that have had large Haitian-origin populations, Venezuela, and potentially other challenges to come, so much of this driven by economic challenges which have been exacerbated by COVID-19 as well as security challenges and other challenges.

I think as we’ve been working so closely together on this, one of the understandings that we have that we share – two things.  Even as we’re making sure that we have an approach that ensures that it’s safe, it’s orderly, it’s humane, that we uphold the law, we have to do two things.  And this is what the United States and Mexico are working on together.

One, we have to tackle the root causes of irregular migration.  Even as we’re dealing with the immediate challenges, ultimately the only solution is to deal with the root causes, because, again, it is not as if most people from wherever they are wake up one morning and say, “Wouldn’t it be a great thing to leave everything I know behind – my family, my community, my culture, my language, everything – and make this incredibly hazardous journey and come to – try to come to the United States, and also, by the way, not be able to get there.”  There are very powerful drivers that give people a sense that they have no choice.  We have to be able to address that.

I think fundamentally it’s about economic opportunity and demonstrating to people that they can have a livelihood, that they can have the possibility of providing for themselves, for their families, for their futures at home.  And we are working on that together.

The second thing I’ll say is that I think Mexico and the United States also believe strongly that we have to have a stronger regional approach to this challenge, that there has to be a greater sense and a greater practical application of the notion of shared responsibility.  And there too, our countries are working together to do that.

FOREIGN SECRETARY EBRARD:  (Via interpreter) As we have commented, President Lopez Obrador during our breakfast mentioned the importance of launching an immediate employment program in Central America that has the shape of Sowing Lives or Youth Building the Future.  The president mentioned that part of this was done by President Roosevelt with the so-called New Deal.

And so there is a great impact that the pandemic has had in Central America and in countries and in other regions, and as Secretary Blinken pointed out, there are critical situations going on around the world, such as in Haiti, for example.  And we believe that short-term we could carry out joint action, especially in Central America, inspired on employment opportunities.  That could be the most relevant kind of response.

Mexico is doing so to the best of our abilities.  We could have possibly in these three countries 40,000 people working by the month of January.  And we think it’s a good path to take, and we hope to do so with the United States as well.  They have been very receptive to this proposal, and hopefully we would soon be stating what steps we will be taking and how far they range.

Regarding arms trafficking, tracking – when you talk about these weapons – means that you can know the serial number, know where that weapon was sold, know the manufacturer.  It doesn’t refer to us tracking physically these weapons on behalf of the United States.  It means that among both countries we decide to track where it was sold, how it was transported into Mexico, et cetera, and how it was used.  That is what we’re going to do, and that is what we’re going to work on as a priority because, for us, reducing the number of weapons in Mexico implies reducing the level of violence.  You cannot reduce one without reducing the other.  It’s like a rule of thumb.

So we have found that they have been receptive.  There is interest within the delegation.  Today the Attorney General was here, CBP, and representatives from several authorities in DHS that have to do with these matters.  And on December 1st when we present the plan, you will see clearly the actions that will be taken.  Because there is a common denominator here: to reduce the arms trafficking as much as possible and as soon as possible.

QUESTION:  (Off-mike.)

INTERPRETER:  The interpreter apologizes; that microphone was not used.

FOREIGN SECRETARY EBRARD:  (Via interpreter) Today we did not deal with this topic, or we have not fixed a date for that.  We will inform on that as soon as we can.

MODERATOR:  The next question comes from Courtney McBride of The Wall Street Journal.

QUESTION:  Thank you.  A question for each secretary.

To Secretary Ebrard, what is your government seeking from the United States in exchange for the resumption of the MPP or the “Remain in Mexico” policy?  And you described this agreement, the bicentennial agreement, as a path to be taken, and you said it shared visions for the future of the relationship.  What specifically is Mexico seeking from the United States as part of this framework?

And to Secretary Blinken, how does the Biden administration expect migrants to remain in Mexico when the Mexican Government is issuing fewer visas to migrants, leaving a mass of people with nowhere to go?  And if you could also share what the U.S. Government’s key asks are of Mexico as part of the framework, I would appreciate it.

FOREIGN SECRETARY EBRARD:  (Via interpreter) Today we did not discuss the MPP or Title 42.  It was not a meeting about the border.  It was a meeting about a common vision that implies many topics.  We do have direct contact with CBP, DHS, et cetera with regards to – I’ll repeat so that you can hear the interpretation.  Is it working?

Once again, I was saying that today’s meeting did not include a session on Title 42 or the MPP.  It was not done this way.  We have direct contact with DHS on this issue.  When it comes to migration, let’s say that this has its own space for discussions with the United States.  And border security includes, of course, people smuggling, but today we did not meet to that end.  The U.S. will communicate what they’re going to propose in their own time.  We work every day because when it comes to Title 42, we have thousands of people repatriated, and we have been able to work jointly along these last few months.  So whenever we have something to inform, I’ll be able to comment on that specific question regarding MPP.

SECRETARY BLINKEN:  Thank you, Marcelo.  And I don’t have much to add because, as Marcelo said, this is not something that came up today.  I would just simply say that U.S. immigration law, of course, remains in effect.  We continue to work very closely with Mexico to promote a safe, orderly, and humane process along the shared border and to address the myriad challenges of irregular migration.  DHS will have more on the specifics, but as I said earlier, just broadly speaking, I think the collaboration we have on working this incredibly challenging issue together – at least in my experience – has never been stronger.

But we both recognize that even as we’re dealing with the immediate challenge and pressures, which we’re in almost daily contact across our governments to do that, we also have to focus on some of the – again, the long-term drivers and – more to come on this – fostering greater regional collaboration and cooperation.  And that’s what – that is what we talked a little bit about today.

MODERATOR:  Gracias.  (Via interpreter) Arturo Páramo from Grupo Imagen.

QUESTION:  (Via interpreter) Thank you, and good afternoon, everyone.  Secretary Ebrard, I would like to ask if there is already a set date or a schedule for this investment project for development in Central America and southern Mexico.  You talk about measuring, things being able to be quantifiable.  Does this project have a chronogram that has been established?  And has some investment been made, given the fact that during the Trump administration an amount had been offered but nothing became concrete?  For this time around, do we have the commitment of the Government of the United States for that kind of investment?

And on the other hand, what differences are there?  We’re talking about ending the Merida Initiative and a new era in our bilateral relations.  In this sense, how can we see the difference between both agreements, meaning on behalf of the U.S. Government, will there no longer be ease of access to weapons, or will there be further exchange between agencies, between our countries to work in one country or another?  Is this modified?  Is this going to continue?  Are there going to be new rules?  How has the situation changed?

And you said that you did not talk about reopening the border or dates for anything about – regarding reopening the borders between Mexico and the United States.

FOREIGN SECRETARY EBRARD:  (Via interpreter) I would say the following:  The border is an everyday topic.  I – when I gave the floor to Secretary Mayorkas, I called him Alejandro because he has been here twice or thrice already, and I think that we speak every day about this.  Secretary Blinken and I only speak on Sundays.  (Laughter.)

And so I think it’s very clear that for Mexico, it is a priority to reopen activities at the border.  We had the health issue regarding the Delta variant at some point in the United States and in Mexico as well, and that’s why it was delayed.  As soon as the United States makes its decision, they will communicate that to us.  They know it’s a priority.  It was already mentioned this morning.  However, it was not the objective of today’s meeting.

What would be the difference with the Merida Initiative?  Now, let me explain:  The first substantial difference would be that the Merida Initiative was based, from the Mexican perspective, on the fact that we had to capture drug lords and with that it would be enough.  That was the essence of it saying, “Please, the United States, send helicopters, send equipment.  Please, provide assistance so that I can detain these drug lords and solve these issue.”  In the essence, that’s what Mexico thought at that time.

Today, what we have on our hands is a joint strategy which is much more complex.  We know that it’s not going to be enough to just detain or capture some drug lords.  We have to be concerned with addiction, with providing youths with employment opportunities, because if not they resort to crime activities.  We want to avoid the proliferation of consumption of cheaper drugs that is on the rise in both our nations.

So we have agreed on a joint strategy with the three components that we have already explained in which Mexico’s and the U.S.’s priorities are established.  It’s much more complex.  It’s broader.  It’s not only about just one straightforward action.  The success of this agreement is not going to be measured by how many drug lords we put in jail and how many press conferences we hold.  It will be seen through the reduction of the homicide rates in Mexico and the reduction of drug consumption. And there is also reciprocity and co-responsibility, so it’s more egalitarian, it’s more balanced.  That is, in essence, what we mean.  It’s not little.  It’s very much – it’s a lot, because we had not had something like this.

Regarding investments in Central America, you might ask, “Why don’t we have that yet?”  Because the U.S. is going through their budgetary process.  I think I’m answering something that – maybe I am stealing that answer.  But that question that you made, we posed that same question to our colleagues from the United States, and they said, “We’re in the middle of decision-making processes when it comes to our budgets.”  So the United States cannot but wait until that process is over to determine what they can invest so that we can achieve the objectives that we are proposing.

And we are also going through budgetary processes, but we were talking about the U.S.’s participation.  So when they are done with that, we will know.  Remember that it’s different, because on that occasion we talked about private sector investment, and here we’re talking about a more – an investment of a more social nature with government resources.

SECRETARY BLINKEN:  And just to add very, very quickly, first, Marcelo is right.  I know that when the phone rings in his house on a Sunday, he thinks, “Oh, it must be Tony,” because we have a track record for some reason of speaking on Sundays.

And yes, to your – to your point or question, Marcel is exactly right:  We’re in our budgetary process.  But just to be very clear, President Biden has made a commitment to budget significant assistance for Central America, and in particular for Honduras and El Salvador and Guatemala, in order to address the drivers of irregular migration and to hopefully have an impact on people’s lives so that they feel that they can remain in their own countries.  And we have talked about investing $4 billion over the four years of our administration, and the budget proposals that we are making reflect that commitment.

MODERATOR:  The last question from Nike Ching of Voice of America.

QUESTION:  Good afternoon.  Secretary Blinken.  Several U.S. senators today wrote you a letter to express disappointment over the inhumane treatment of Haitian migrants at the U.S.-Mexico border.  If I may, a question for you:  Is the U.S. providing Mexico assistance to fly those migrants back to their homeland?  What specific assurances has the Government of Mexico has given you that they are treating those Haitian migrants humanely, as you have asked?  And – or have they – will they help to facilitate Haiti’s long-term stability?

Good afternoon, Mr. Foreign Secretary.  What assurances are you giving the Haitian migrants in Mexico that they are – they will be treated humanely?  And how is Mexico working with the U.S. to discourage people from heading to the border?  And if they do make it to the border, should they expect the same treatment that sparked criticism worldwide?  Thank you very much, both gentlemen.

SECRETARY BLINKEN:  Thank you.  We are determined that as we enforce our laws, we do so fully respecting the human rights and the dignity of all people, including those who may be seeking to enter the United States as irregular migrants.  That is the fundamental basis upon which we’re proceeding, and we are determined to do that.  We’re in very close daily contact with our colleagues in Mexico on the question of the irregular Haitian migration, some of which is coming from Haiti itself, some of which is coming from other countries in our hemisphere where Haitians have resided for some time and now seek to come to the United States.

We also are trying to be very clear that if they seek to make that journey in an irregular manner, they put themselves at tremendous risk along the entire route, and they will not be able to enter the United States.  So we’re working to make sure that we’re communicating that effectively. Unfortunately, one of the things that’s happened is various groups are spreading false information about what possibilities exist for those coming to the United States irregularly, and trying to misinform people that they will be able to enter the United States.  The danger – the journey is profoundly dangerous and it will not succeed, and we are working to make sure that people understand that.

But we’re also working closely together and working ourselves to make sure that people are treated with dignity, with decency, and that their rights are fully protected.

FOREIGN SECRETARY EBRARD:  (Via interpreter) Yes, thank you. I can tell you that we have not transported people coming in this case not from Haiti but from Brazil and Chile who started migrating up north.  We have not provided transportation of those people or origins that go to the United States back to Haiti.  That has not happened.

What are we doing?  What is Mexico doing?  First, those who – for those who it applies, we have offered refuge.  Why?  Because approximately 90 percent of those people already have that in other countries, in Brazil or in Chile.  However, those who do not, we can provide them with it.  Not all of them ask for it for many reasons.

How many people coming from Brazil, Chile, Colombia, or other countries are in Mexico right now?  Approximately 14,000.  What are we doing with these people?  Most of them even speak Spanish.  And we are trying to provide them with employment opportunities with the help of the private sector.  We have already started that; it has not been easy either.

And what have we realized?  That many people lie to them.  Usually they’re told that if they get to the U.S. in time, they can apply for TPS, which is a program designed for Haitians who live in the United States, not for people living outside the United States.  So starting August 3rd with an announcement of broadening the dates – the date limit for that program, they thought that they needed to get to the United States faster and they thought that they would be able to remain there.  That is what – the information we have gotten from those people that we have made contact with.  Obviously right now we’re getting information that we did not have before.  The National Migration Institute has now hired people who speak not only French but also Creole so that they can communicate better.

So what are we doing?  In half a year, we have received that number of people.  We estimate that there are another 14,000 at least out there in different situations within our country that have not requested refugee status.  So what is Mexico’s position?  Those are the facts.

What I find reproachable is that they are lied to.  That is a really serious situation because those people have already suffered so much.  Can you imagine coming from Brazil and Chile, and going through the entire continent, and getting to the United States thinking that you are going to get a residency just by getting there?  And that’s why this movement was generated recently.

So thank you for that question, because it allows us to clarify these things.  This doesn’t happen that easily.  The people who come to Mexico invariably will be offered the same status.  We have the – that capability.  We are a country of over 120 million people.  If 15,000 people from Haiti come to Mexico and want to work and want to remain here, it’s not a problem for Mexico.  What is a problem is to tell these people that if they get to the United States, they’re going to get a residency.  So we’re working very hard for them to get trustworthy information.

MODERATOR:  (Via interpreter) Thank you very much.  That will be all.  Thank you, Secretary Ebrard, Secretary Blinken.

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  • 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.
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  • 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.
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  • U.S. Postal Service: Volume, Performance, and Financial Changes since the Onset of the COVID-19 Pandemic
    In U.S GAO News
    What GAO Found In 2020, the majority of which was affected by the COVID-19 pandemic, the U.S. Postal Service (USPS) experienced a 9 percent drop in total mail volume when compared to 2019. The overall drop was primarily due to a 4 percent dip in First-Class Mail and a 14 percent decline in Marketing Mail (such as advertisements). Despite a drop in total volume, 2020 package volume rose by 32 percent. A surge of election-related mail caused a temporary spike in total mail volume in September and October 2020, before falling again by year end. Overall, USPS's nationwide on-time performance fell in 2020. Average monthly on-time performance for First-Class Mail decreased from 92 percent in 2019 to 87 percent in 2020. However, decreases were more significant in certain USPS districts at different times, and nationally in December 2020. On-time performance was 48 percent in New York in April and 61 percent in Baltimore in September—both of which were nearly 90 percent prior to the pandemic (see figure). Further, national on-time performance dipped to 69 percent in December. In February 2021, the Postmaster General stated that on-time performance was affected by employees' decreased availability in COVID-19 hot spots and a surge in holiday package volume. 2020 Average Monthly On-Time Performance for First-Class Mail in Baltimore, Detroit, and New York Postal Districts USPS's revenue increased in 2020 but not enough to avoid a net loss of $8.1 billion. Rapid growth and price increases for packages, resulted in a net revenue increase of $4.3 billion. However, USPS's expenses grew by $4.4 billion, including COVID-19 related expenses, such as personal protective equipment. USPS took some cost-reduction actions in 2020 and released a new strategic plan in March 2021 that also has cost-reduction actions. In May 2020, GAO concluded that absent congressional action to transform USPS, USPS's financial problems would worsen, putting its mission and financial solvency in greater peril. The further deterioration of USPS's financial position since the start of the pandemic makes the need for congressional action even more urgent. Why GAO Did This Study USPS plays a critical role in the nation's communications and commerce. However, USPS's financial viability is not on a sustainable path and has been on GAO's High Risk List since 2009. The COVID-19 pandemic has highlighted the role of USPS in the nation's economy as well as USPS's financial difficulties. Responding to these concerns, the CARES Act, as amended in late 2020, provided USPS up to $10 billion in additional funding. The CARES Act included a provision for GAO to report on its monitoring and oversight efforts related to the COVID-19 pandemic. This report examines changes in USPS's (1) mail volume, (2) on-time performance, and (3) revenue and expenses from January through December 2020. GAO analyzed USPS mail volume, on-time performance, revenue, and expense data by month for 2020, and compared these data to similar data for 2019. GAO also reviewed its prior work, including its May 2020 report. That report had three matters for congressional consideration on: (1) determining the level of postal services, (2) the extent to which those services should be financially self-sustaining, and (3) the appropriate institutional structure of USPS. GAO also reviewed reports by USPS and the USPS Inspector General. Finally, GAO interviewed USPS officials, two package delivery companies that compete with USPS, and representatives from four mailing associations whose members send the types of mail with the highest volumes in 2020. For more information, contact Jill Naamane at (202) 512-2834 or naamanej@gao.gov.
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  • Rebuilding Iraq: Status of Competition for Iraq Reconstruction Contracts
    In U.S GAO News
    Since 2003, Congress has appropriated more than $20 billion through the Iraq Relief and Reconstruction Fund (IRRF) to support Iraq rebuilding efforts. The majority of these efforts are being carried out through contracts awarded by the Departments of Defense (DOD) and State and the U.S. Agency for International Development (USAID). When awarding IRRF-funded contracts for $5 million or more noncompetitively, agencies are required by statute to provide notification and justification to Congress. In June 2004, GAO found that agencies generally complied with laws and regulations governing competition to award new contracts, but did not always comply with competition requirements when issuing task orders under existing contracts. As mandated by Congress, this report (1) describes the extent of competition in Iraq reconstruction contracts awarded by DOD, USAID, and State since October 1, 2003, based on available data, and (2) assesses whether these agencies followed applicable documentation and congressional notification requirements regarding competition for 51 judgmentally selected Iraq reconstruction contract actions. In written comments, State and USAID concurred with the report findings. DOD provided a technical comment.While no single, comprehensive system currently tracks governmentwide Iraq reconstruction contract data, available data showed that from October 1, 2003, through March 31, 2006, DOD, USAID, and State collectively awarded the majority of Iraq reconstruction contracts competitively. Based on competition information we obtained on $10 billion of the total $11.6 billion in IRRF obligations by these agencies during the period of our review, we found that about $9.1 billion--or 91 percent--was for competitively awarded contracts. While our ability to obtain complete competition data for all DOD Iraq reconstruction contract actions was limited because not all DOD components consistently tracked or fully reported this information, we obtained information on approximately $7 billion, or 82 percent, of DOD's total Iraq reconstruction contract obligations, and of this, we found that competition occurred for nearly all of the obligations. Additionally, based on complete data for the period of our review we found that USAID competitively awarded contract actions for 99 percent of its obligations, while State awarded contract actions competitively for only 10 percent of its obligations. GAO reviewed the files for 51 contract actions totaling $1.55 billion--22 of which were awarded noncompetitively and 29 of which were awarded competitively--almost all of which contained proper documentation. One contract file--for a noncompetitively awarded task order issued by State--did not contain justifications or other required documentation. DOD was also unable to provide documentation for 4 of the competitively awarded contract actions. Of the 22 noncompeted contract actions in GAO's review, State should have notified Congress of 2 actions awarded using other than full and open competition in accordance with notification requirements but did not. State officials told GAO that they have taken steps to address the problem. GAO did not identify any DOD or USAID contract actions within the sample that required notification.
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  • Contingency Contracting: DOD Has Taken Steps to Address Commission Recommendations, but Should Better Document Progress and Improve Contract Data [Reissued with revisions on Oct. 1, 2021.]
    In U.S GAO News
    What GAO Found The Department of Defense (DOD) has taken steps to implement the 16 of 30 recommendations it agreed to address and that were made by the Commission on Wartime Contracting in Iraq and Afghanistan (Commission). The Commission was established by law to develop recommendations to improve various aspects of contingency contracting, which is the process of obtaining goods, services, and construction and comprises contractor personnel that provided support to operations that may include combat and other activities that are considered contingency operations. However, DOD's documentation on the status of half of the 16 recommendations as part of an action plan it issued in 2013 was inconsistent or incomplete. By fully documenting the progress of the department's efforts to implement the recommendations, DOD could help achieve the Commission's vision for improving the oversight and management of contingency contracting operations. DOD's information system—Synchronized Predeployment and Operational Tracker-Enterprise Suite (SPOT-ES)—tracks and reports information about contracts and contractor personnel supporting applicable contingency operations. However, GAO found that SPOT-ES is not able to track and report information by the type of applicable contingency operations that DOD contracts and contractors have supported. DOD officials told GAO that there is no definitive list of such contingencies from one authoritative source. In addition, DOD has not designated a single office responsible for monitoring and reporting which operations, exercises, and other activities are associated with an applicable contingency operation in SPOT-ES. Without the ability to identify data on operations, exercises, and other activities that are considered applicable contingency operations within SPOT-ES, DOD planners may find it more difficult to identify and make decisions on contractor personnel or capabilities to support them. Additionally, an office that is designated with the responsibility could provide additional oversight to DOD by better monitoring and reporting on the department's contractor personnel. GAO also found that information on the status of thousands of quarterly deployment records on contractor personnel supporting applicable contingency operations was missing in SPOT-ES at the time of our review. DOD guidance requires various SPOT-ES users to enter or review information related to contracts and contractor personnel supporting applicable contingency operations. However, it does not clearly specify who is responsible for resolving missing information. Without clarifying the responsibility for resolving missing or inaccurate data in SPOT-ES within DOD guidance, communicating such information to contracting organizations, and taking steps to improve data completeness and accuracy, the reliability of data in SPOT-ES is at risk. Further, DOD's ability will be hindered when there is a need to locate the whereabouts of contractor personnel during an emergency or when contractors exit at a contingency location. Why GAO Did This Study DOD has relied on contingency contracting to conduct a wide range of activities worldwide. DOD projects that factors, such as the use of high-tech equipment and military force structure reductions, will require contract support in most future operations. The National Defense Authorization Act for Fiscal Year 2020 includes a provision for GAO to review the use of contractors in contingency operations, exercises, and other activities since 2009. This report evaluates the extent to which DOD 1) documented its actions to implement the recommendations made by the Commission on Wartime Contracting, and 2) tracked and reported on contracts and contractor personnel supporting contingencies. GAO performed a content analysis of DOD actions to address the Commission's recommendations, reviewed laws and DOD guidance, and analyzed contract and personnel data reported from calendar years 2009 through 2020.
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  • Small Business Administration: Physical Disaster Loan Performance Before and After Changes in Statutory Collateral Requirements
    In U.S GAO News
    Why GAO Did This Study SBA assists most types of businesses regardless of size and others affected by natural and other declared disasters through its Disaster Loan Program. The Rebuilding Small Businesses After Disasters Act included a provision for GAO to review the performance of SBA's physical disaster loan portfolio and compare the performance of loans made before changes to the collateral requirements because of the RISE After Disaster Act of 2015 to loans made after the changes were in effect. To perform this work, GAO obtained and analyzed loan data made under SBA disaster declarations from January 1, 2000, to September 30, 2020; reviewed relevant federal laws and regulations; and interviewed SBA officials. What GAO Found When disaster strikes, the Small Business Administration's (SBA) Disaster Loan Program provides direct assistance in the form of low-interest loans. Physical disaster loans can be used to rebuild and replace uninsured or underinsured property damaged in a declared disaster area, helping homeowners, renters, businesses, and nonprofit organizations. But in order for an applicant to qualify for SBA's physical disaster loans, the property damage must occur in a federally declared disaster area. The President can issue a major disaster declaration in response to a request by the governor of a state or territory or the chief executive of a tribal government. For an event that does not rise to the level of a presidential disaster declaration, the SBA Administrator can issue an agency disaster declaration in response to a timely request by a state governor. The Recovery Improvements for Small Entities (RISE) After Disaster Act of 2015 temporarily modified collateral requirements for loans approved under SBA disaster declarations. Specifically, the act temporarily raised the limit for loans without collateral from $14,000 to $25,000. The increase expires on November 25, 2022, when, absent further revision of the statute, the amount will revert back to $14,000. GAO reviewed SBA's $855 million of approved physical disaster loans made under SBA disaster declarations from January 1, 2000, to September 30, 2020. GAO found that default and charge-off rates were higher for loans that were approved before the collateral changes that the RISE After Disaster Act of 2015 made when compared to loans approved after these changes were in effect. However, as the loans made after the RISE After Disaster Act of 2015 have more time to mature, their default and charge-off rates may increase. Loans made before the RISE After Disaster Act of 2015 have had approximately 5 to 20 years to mature, while the loans made after have all had less than 5 years. GAO's analysis did not isolate the contribution the collateral changes made to the difference in loan performance from other contributing factors, such as the state of the economy or changes in SBA lending practices. To minimize the effect of the difference in time of performance of the two groups of loans, GAO assessed the performance for the initial 4 years following loan disbursement of subsets of loans made approximately 5 years before and after the RISE After Disaster Act of 2015. GAO found that for these subsets of loans, the default and charge-off rates varied by less than one percentage point for each of the years. In addition, GAO compared the performance of loans with collateral to the performance of loans without collateral and found that loans with collateral did not necessarily perform better than those without collateral. For more information, contact Cheryl Clark at (202) 512-9377 or clarkce@gao.gov.
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