GAO-20-625, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts

Issuer: Government Accountability Office
Document type: Report
Date: 2020-05-31

Full text

United States Government Accountability Oﬃce
Report to the Congress
June 2020
COVID-19
Opportunities to Improve Federal
Response and Recovery Eorts
GAO-20-625
www.gao.gov

United States Government Accountability Office

Highlights of GAO-20-625, a report to the
Congress

June 2020
COVID-19
Opportunities to Improve Federal Response and
Recovery Efforts
What GAO Found
In response to the national public health and economic threats caused by
COVID-19, four relief laws were enacted as of June 2020, including the CARES
Act, in March 2020. These laws have appropriated $2.6 trillion across the
government. Six areas—Paycheck Protection Program (PPP); Economic
Stabilization and Assistance to Distressed Sectors; unemployment insurance;
economic impact payments; Public Health and Social Services Emergency Fund;
and Coronavirus Relief Fund—account for 86 percent of the appropriations (see
figure).
Appropriations for COVID-19 Response from COVID-19 Relief Laws Enacted as of May 31,
2020

Note: COVID-19 relief laws enacted as of May 31, 2020 include the Coronavirus Preparedness and
Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146; Families First
Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); CARES Act, Pub. L. No. 116-
136, 134 Stat. 281 (2020); and Paycheck Protection Program and Health Care Enhancement Act,
Pub. L. No. 116-139, 134 Stat. 620 (2020).
These amounts represent appropriation warrants issued as of May 31, 2020, by the Department of
the Treasury to agencies in response to appropriations made by COVID-19 relief laws. A warrant is
an official document issued upon enactment of an appropriation that establishes the amount of
money authorized to be withdrawn from the Treasury. These amounts could increase in the future for
programs with indefinite appropriations. In addition, this figure does not represent transfers of funds
that agencies may make between accounts or transfers of funds they may make to other agencies, to
the extent authorized by law.

Total federal spending data are not readily available because, under Office of
Management and Budget guidance, federal agencies are not directed to report
COVID-19 related obligations (financial commitments) and expenditures until July
2020. It is unfortunate that the public will have waited more than 4 months since
the enactment of the CARES Act for access to comprehensive obligation and
expenditure information about the programs funded through these relief laws.
View GAO-20-625. For more information,
contact A. Nicole Clowers, (202) 512-7114 or
clowersa@gao.gov.
Why GAO Did This Study
The outbreak of COVID-19 quickly
spread around the globe. As of June
17, 2020, the United States had over 2
million reported cases of COVID-19,
and over 100,000 reported deaths,
according to federal agencies. Parts of
the nation have also seen severely
strained health care systems. Also, the
country has experienced a significant
and rapid downturn in the economy.
Four relief laws, including the CARES
Act, were enacted as of June 2020 to
provide appropriations to address the
public health and economic threats
posed by COVID-19. In addition, the
administration created the White
House Coronavirus Task Force.
The CARES Act includes a provision
for GAO to report bimonthly on its
ongoing monitoring and oversight
efforts related to the COVID-19
pandemic. This initial report examines
key actions the federal government
has taken to address the COVID-19
pandemic and evolving lessons
learned relevant to the nation’s
response to pandemics, among other
things.
GAO reviewed data and documents
from federal agencies about their
activities and interviewed federal and
state officials as well as industry
representatives. GAO also reviewed
available economic, health, and
budgetary data.
What GAO Recommends
GAO is making 3 new
recommendations for agencies and 3
matters for consideration for Congress
that are detailed in this Highlights and
in the report.

Highlights of GAO-20-625 (Continued)

In the absence of comprehensive data, GAO collected obligation and expenditure data from agencies, to the extent
practicable, as of May 31, 2020. For the six largest spending areas, GAO found obligations totaled $1.3 trillion and
expenditures totaled $643 billion. The majority of the difference was due to the PPP, for which the Small Business
Administration (SBA) obligated $521 billion. The amounts for loan guarantees will not be considered expenditures until the
loans are forgiven, and for those that are not forgiven, whether they are timely repaid.

GAO also collected expenditure data on other programs affected by the federal response. For example, GAO also found
that the Department of Health and Human Services (HHS) has provided $7 billion in COVID-19 Medicaid funding related
to a temporary increase in the Federal Medical Assistance Percentage (FMAP), the statutory formula the federal
government uses to match states’ Medicaid spending. Based on the information GAO collected, government-wide
spending totals at least $677 billion, as of May 31, 2020.
Given the sweeping and unfolding public health and economic crisis, agencies from across the federal government were
called on for immediate assistance, requiring an unprecedented level of dedication and agility among the federal
workforce, including those serving on the front lines to quickly establish services for those infected with the virus.
Consistent with the urgency of responding to serious and widespread health issues and economic disruptions, agencies
have given priority to moving swiftly where possible to distribute funds and implement new programs. As tradeoffs were
made, however, agencies have made only limited progress so far in achieving transparency and accountability goals.

GAO has identified several challenges related to the federal response to the crisis, as well as recommendations to help
address these challenges, including the following:
Viral testing. The Centers for Disease Control and Prevention (CDC) reported incomplete and inconsistent data from state
and jurisdictional health departments on the amount of viral testing occurring nationwide, making it more difficult to track
and know the number of infections, mitigate their effects, and inform decisions on reopening communities. However, HHS
issued guidance on June 4, 2020, to laboratories that identifies required data elements to collect and how to report it to
CDC. GAO will continue to examine activities related to COVID-19 testing.
Distribution of supplies. The nationwide need for critical supplies to respond to COVID-19 quickly exceeded the quantity of
supplies contained in the Strategic National Stockpile, which is designed to supplement state and local supplies during
public health emergencies. HHS has worked with the Federal Emergency Management Agency (FEMA) and the
Department of Defense (DOD) to increase the availability of supplies. However, federal, state, and local officials have
expressed concerns about the distribution, acquisition, and adequacy of supplies. GAO will continue to examine these
issues as well as the administration’s efforts to mitigate supply gaps.
Paycheck Protection Program. As of June 12, 2020, the Small Business Administration (SBA) had rapidly processed over
$512 billion in 4.6 million guaranteed loans through private lenders to small businesses and other organizations adversely
affected by COVID-19. The $512 billion represents loan obligations for SBA and does not include lender fees. As of May
31, 2020, SBA had expended about $2 billion in lender fees. SBA moved quickly to establish a new nationwide program,
but the pace contributed to confusion and questions about the program and raised program integrity concerns. First,
borrowers and lenders raised a number of questions about the program and eligibility criteria. To address these concerns,
SBA and the Department of the Treasury (Treasury) issued a number of interim final rules and several versions of
responses to frequently asked questions (see figure). However, questions and confusion remained. The Paycheck
Protection Program Flexibility Act of 2020, enacted in June 2020, modified key program components. Second, to help
quickly disburse funds, SBA allowed lenders to rely on borrower certifications to determine borrowers’ eligibility, raising
the potential for fraud. GAO recommends that SBA develop and implement plans to identify and respond to risks in
PPP to ensure program integrity, achieve program effectiveness, and address potential fraud. SBA neither
agreed nor disagreed, but GAO believes implementation of its recommendation is essential.
Timeline for Paycheck Protection Program, as of June 12, 2020

Highlights of GAO-20-625 (Continued)

Economic impact payments. The Internal Revenue Service (IRS) and the Treasury moved quickly to disburse 160.4
million payments worth $269 billion. The agencies faced difficulties delivering payments to some individuals, and faced
additional risks related to making improper payments to ineligible individuals, such as decedents, and fraud. For example,
according to the Treasury Inspector General for Tax Administration, as of April 30, almost 1.1 million payments totaling
nearly $1.4 billion had gone to decedents. GAO recommends that IRS should consider cost-effective options for
notifying ineligible recipients how to return payments. IRS agreed with the recommendation.
Unemployment Insurance (UI). States are implementing three new, federally funded UI programs created by the CARES
Act and, as of May 2020, states have received more than 42 million UI claims. The Department of Labor (DOL) has taken
steps to help states manage demand, but DOL is developing its approach to overseeing the new UI programs. GAO will
be evaluating DOL’s monitoring efforts in future reports. Further, the UI program is generally intended to provide benefits to
individuals who have lost their jobs; under PPP, employers are generally required to retain or rehire employees for full loan
forgiveness. According to DOL, no mechanism currently exists that could capture information in real time about UI claimants
who may receive wages paid from PPP loan proceeds. GAO recommends that DOL, in consultation with SBA and
Treasury, immediately provide help to state unemployment agencies that specifically addresses PPP loans, and
the risk of improper payments associated with these loans. DOL neither agreed nor disagreed with the
recommendation, but noted it was planning forthcoming guidance.
Contract obligations. Government-wide contract obligations in response to the COVID-19 pandemic totaled about $17
billion as of May 31, 2020. Goods procured include ventilators; services contracted for include vaccine development. In
addition, the CARES Act provided $1 billion for Defense Production Act (DPA) purchases—$76 million of which, for
example, was awarded to increase production of N95 respirators.
GAO recommends Congress consider taking legislative action in the following areas:
Aviation-preparedness plan. In 2015, GAO recommended that the Department of Transportation (DOT) work with federal
partners to develop a national aviation-preparedness plan for communicable disease outbreaks. DOT agreed, but as of
May 2020, maintains that HHS and DHS should lead the effort. Thus far, no plan exists. GAO recommends Congress
take legislative action to require DOT to work with relevant agencies and stakeholders to develop a national aviation-
preparedness plan to ensure safeguards are in place to limit the spread of communicable disease threats from abroad
while at the same time minimizing any unnecessary interference with travel and trade.
Full access to death data. The number of economic impact payments going to decedents highlights the importance of
consistently using key safeguards in providing government assistance to individuals. IRS has access to the Social
Security Administration’s full set of death records, but Treasury and its Bureau of the Fiscal Service, which distribute
payments, do not. GAO recommends that Congress provide Treasury with access to the Social Security
Administration’s full set of death records, and require that Treasury consistently use it, to help reduce similar
types of improper payments.
Medicaid. GAO previously found that during economic downturns—when Medicaid enrollment can rise and state
economies weaken—the FMAP formula does not reflect current state economic conditions. GAO previously developed a
formula that offers an option for providing temporary automatic, timely, and targeted assistance. GAO recommends
Congress use this formula for any future changes to the FMAP during the current or any future economic
downturn to help ensure that the federal funding is targeted and timely.
Evolving lessons from the initial response highlight the importance of the following:
•
Establishing clear goals and defining roles and responsibilities for the wide range of federal agencies and other
key players are critically important actions when preparing for pandemics and addressing an unforeseen
emergency with a whole-of-government response.
•
Providing clear, consistent communication in the midst of a national emergency—among all levels of government,
with health care providers, and to the public—is key.
•
Collecting and analyzing adequate and reliable data can inform decision-making and future preparedness—and
allow for midcourse changes in response to early findings.
•
Establishing transparency and accountability mechanisms early on provides greater safeguards and reasonable
assurance that federal funds reach the intended people, are used for the intended purposes, help ensure program
integrity, and address fraud risks.

Contents
Matters for Congressional Consideration.............................................................................. 1
Recommendations for Executive Action................................................................................ 2
Introduction................................................................................................................................... 3
Background.................................................................................................................................... 7
Major Findings............................................................................................................................ 14
Key Federal Actions to Respond to and Recover from COVID-19......................................................... 14
Key Indicators to Facilitate Monitoring of Recovery Following the Federal Pandemic Response................ 55
Evolving Lessons Learned from Initial COVID-19 Response and Past Crises and Emergencies Highlight Areas
for Continued Attention................................................................................................................ 65
Conclusions.................................................................................................................................. 75
Agency Comments and Our Evaluation............................................................................... 77
Congressional Addressees....................................................................................................... 80
Appendixes.................................................................................................................................. 82
Appendix I: Scope and Methodology.............................................................................................. 82
Appendix II: Structures to Lead and Coordinate the Federal Pandemic Response.................................. 87
Appendix III: Report Enclosures..................................................................................................... 95
Relief for Health Care Providers..................................................................................................... 96
Nursing Homes.......................................................................................................................... 102
Federal Eﬀorts to Provide Medical Supplies................................................................................... 106
COVID-19 Testing....................................................................................................................... 112
Vaccine and Therapeutics Development........................................................................................ 119
Medicaid Financing, Waivers, and Flexibilities................................................................................. 125
Medicare Waivers....................................................................................................................... 133
Indian Health Service.................................................................................................................. 138
Veterans Health Care.................................................................................................................. 143
Military Health........................................................................................................................... 148
Medical Surge............................................................................................................................ 153
DOD Support to Civil Authorities.................................................................................................. 158
HHS COVID-19 Funding............................................................................................................... 164
Nutrition Assistance................................................................................................................... 170
Child Care................................................................................................................................. 177
Emergency Financial Aid for College Students................................................................................ 181
Leave Beneﬁts and Tax Relief for Employers.................................................................................. 188
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Department of Housing and Urban Development Programs............................................................ 192
Retirement Accounts.................................................................................................................. 197
Tax Deduction for Charitable Contributions................................................................................... 200
Unemployment Insurance Programs............................................................................................. 203
Federal Student Loans................................................................................................................ 210
Economic Impact Payments......................................................................................................... 217
Housing Protections................................................................................................................... 225
Small Business Programs............................................................................................................ 231
Paycheck Protection Program...................................................................................................... 236
Federal Reserve Emergency Lending Programs.............................................................................. 246
Tax Relief for Businesses............................................................................................................. 251
Aviation Sector Financial Assistance.............................................................................................. 256
Agriculture Spending and Food Safety Inspections.......................................................................... 263
U.S. Department of Agriculture Support for Rural America............................................................... 269
Temporary Financial Regulatory Changes...................................................................................... 272
Department of Commerce Support for Industries and the Economy................................................. 278
Department of Defense Working Capital Funds.............................................................................. 284
Education Stabilization Fund........................................................................................................ 290
Transit Industry.......................................................................................................................... 299
Coronavirus Relief Fund.............................................................................................................. 305
Assistance for Tribal Entities........................................................................................................ 311
Disaster Relief Fund................................................................................................................... 318
International Trade..................................................................................................................... 324
Response Eﬀorts Abroad............................................................................................................ 329
Appendix IV: GAO Indicators for Monitoring Areas of the Economy and Health Care System Supported by the
Federal Pandemic Response........................................................................................................ 334
Appendix V: Internal Control Standards and Fraud Risk Management................................................ 345
Appendix VI: List of Ongoing GAO Work Related to COVID-19, as of June 17, 2020............................... 354
Appendix VII: Comments from the Department of Labor................................................................. 357
Appendix VIII: Comments from the Internal Revenue Service........................................................... 359
Appendix IX: Comments from the Department of the Treasury......................................................... 361
Appendix X: Comments from the Small Business Administration...................................................... 364
Appendix XI: Comments from the U.S. Agency for International Development.................................... 366
Appendix XII: Comments from the Department of Homeland Security............................................... 368
Appendix XIII: Comments from the Department of Veterans Aﬀairs.................................................. 371
Appendix XIV: Comments from the Department of Education.......................................................... 375
Appendix XV: Comments from the Department of Housing and Urban Development........................... 390
Contacts..................................................................................................................................... 392
Tables
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Table 1: Areas in Which the Federal Government Has Taken Action in the Public Health Response to
COVID-19.................................................................................................................................... 24
Table 2: Areas in Which the Federal Government Has Taken Action to Assist Individuals in Response to
COVID-19.................................................................................................................................... 33
Table 3: Federal Reserve Lending Facilities with CARES Act Funding, as of June 8, 2020........................... 39
Table 4: Areas in Which the Federal Government Has Taken Action to Support Industry and the Economy in
Response to COVID-19.................................................................................................................. 40
Table 5: Appropriations and Expenditures for Selected Federal Programs Providing COVID-19 Related Aid to
States, Localities, Territories, and Tribes.......................................................................................... 43
Table 6: Areas in Which the Federal Government Has Taken Action to Assist States, Localities, Territories, and
Tribes in Response to COVID-19..................................................................................................... 45
Table 7: Areas in Which the Federal Government Has Taken Action on the International Response to
COVID-19.................................................................................................................................... 55
Table 8: Indicators for Monitoring Areas of the Economy Supported by the Federal Pandemic
Response.................................................................................................................................... 62
Table 9: Key Areas for Congressional Consideration in Overseeing the Federal Response to the COVID-19
Pandemic.................................................................................................................................... 73
Table 10: Key Provisions of the Federal Response to the Pandemic Intended to Support the Economy and
Potential Economic Eﬀects............................................................................................................ 85
Table 11: Emergency Support Functions (ESF).................................................................................. 89
Table 12: Description of Operational Task Forces and Examples of Actions........................................... 91
Table 13: Selected Examples of Mission Assignments for the COVID-19 Pandemic Response as of May 13,
2020........................................................................................................................................... 94
Summary of Allocations from the Provider Relief Fund, as of May 31, 2020.......................................... 99
Summary of Supplemental Funding Distributed to Health Resources and Services Administration (HRSA)
Grantees, as of May 31, 2020...................................................................................................... 100
Federal Medicaid COVID-19 and Total Expenditures, by State and Territory......................................... 129
Common Types of State Flexibilities Approved by Centers for Medicare & Medicaid Services, March 16, 2020,
to May 31, 2020......................................................................................................................... 131
Allocation of Supplemental Funding Provided to the Indian Health Service (IHS) to Address COVID-19..... 140
Number of COVID-19 Cases Reported by the Department of Defense, as of June 1, 2020...................... 150
Health Protection Guidance and Supplements Issued by the Department of Defense in Response to the
COVID-19 Pandemic, as of June 11, 2020....................................................................................... 151
Supplemental Appropriations to HHS for COVID-19 Response and HHS’s Reported Obligations and
Expenditures, by Law, as of May 31, 2020..................................................................................... 165
HHS Reported Appropriations, Obligations, and Expenditures for COVID-19 Response, by Agency, as of May
31, 2020................................................................................................................................... 166
HHS’s Reported Appropriations, Obligations, and Expenditures for COVID-19 Response, by Selected Key
Response Activity, as of May 31, 2020........................................................................................... 168
Additional Funding and Examples of Program Flexibilities Provided for Nutrition Assistance Programs Due to
COVID-19.................................................................................................................................. 172
Foreclosure, Eviction, and Mortgage Forbearance Protections in the CARES Act................................... 227
Number, Dollar Amount, and Distribution of Paycheck Protection Program Loans, as of June 12, 2020.... 239
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Federal Reserve Lending Facilities with CARES Act Funding, as of June 8, 2020.................................... 248
Federal Reserve Lending Facilities without CARES Act Funding, as of June 8, 2020................................ 249
CARES Act Net Operating Loss (NOL) and Alternative Minimum Tax (AMT) Tentative Refund Cases, as of June
1, 2020..................................................................................................................................... 254
CARES Act Airport Grants............................................................................................................ 258
Approximate Number of Applications Received and Amounts Awarded for the Department of the Treasury’s
Payroll Support Program, as of June 1, 2020a................................................................................ 260
Department of Commerce Bureaus Providing CARES Act Assistance by Appropriation and Purpose........ 280
Components of the Education Stabilization Fund that Provide Funds to States and Territories............... 292
Allocations, Obligations, and Expenditures for the Education Stabilization Fund.................................. 295
FTA Allocations, Obligations and Expenditures for CARES Act Transit Industry Fundinga........................ 302
Examples of Supplemental Appropriations for Programs Serving Tribes and Their Members................. 313
Table 14: Examples of Fraud Risk Management Activities in the Context of Emergency Response........... 351
Figures
Appropriations for COVID-19 Response from COVID-19 Relief Laws Enacted as of May 31, 2020................. 1
Timeline for Paycheck Protection Program, as of June 12, 2020............................................................. 3
Figure 1: Reported Cumulative COVID-19 Cases: United States, as of June 17, 2020.................................. 8
Figure 2: Reported Cumulative COVID-19 Deaths: United States, as of June 17, 2020................................ 9
Figure 3: Signiﬁcant Federal Actions Related to COVID-19, as of June 5, 2020........................................ 11
Figure 4: Appropriations for COVID-19 Response from COVID-19 Relief Laws Enacted, as of May 31, 2020, by
Major Spending Area.................................................................................................................... 15
Figure 5: Timeline for Paycheck Protection Program, as of June 15, 2020.............................................. 35
Figure 6: Estimated Federal Expenditures for Selected Programs That Include COVID-19-Related Assistance to
States, Localities, Territories, and Tribes.......................................................................................... 44
Figure 7: Contract Obligations in Response to COVID-19 by Agency, as of May 31, 2020.......................... 46
Figure 8: Top Products and Services Procured through Federal Contracts in Response to COVID-19, as of May
31, 2020..................................................................................................................................... 47
Figure 9: Key Areas of 2020 Supplemental Funding for International Response to COVID-19, as of June 1,
2020........................................................................................................................................... 51
Figure 10: March 2020 State and USAID Strategy on the Use of Supplemental Funding to Respond to
COVID-19 Abroad......................................................................................................................... 52
Figure 11: CDC Data on Higher Than Expected Weekly Mortality......................................................... 59
Figure 12: Employment-to-Population Ratio, January 2019 to May 2020............................................... 63
Figure 13: Weekly Economic Index, January 2019 to May 16, 2020....................................................... 64
Figure 14: Matters for Congressional Consideration and Recommendations......................................... 76
Figure 15: Organizational Structure of the Uniﬁed Coordination Group................................................ 90
U.S. Army Corps of Engineers Constructed Alternative Care Facilities in Washington, D.C., and Loveland,
Colorado................................................................................................................................... 156
Army Medical Personnel Transport a Patient to Intensive Care Unit at an Alternative Care Facility in New York
During COVID-19 Pandemic......................................................................................................... 161
Georgia National Guard Member Provides Food to Local Schools During COVID-19 Pandemic............... 162
States with Approved Child Care and Development Block Grant Act Waivers, as of June 8, 2020............. 179
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Allocation of Higher Education Emergency Relief Funds Designated for Emergency Student Aid Due to
COVID-19, by Sector................................................................................................................... 182
Status of Supplemental CARES Act Funding Obligations for HUD Programs as of May 31, 2020.............. 194
Total Initial Unemployment Insurance Claims by State, March 21 to May 30, 2020............................... 206
Number of Borrowers Eligible for Relief under the CARES Act Federal Student Loan Provisions and
Department of Education (Education) Actions, April 2020................................................................ 211
Timeline of Treasury and IRS Actions to Deliver Economic Impact Payments....................................... 219
Total Number of Payments Made by Direct Deposit, Paper Check, or Debit Card as of May 31, 2020....... 219
Timeline for the Economic Injury Disaster Loan Program, as of June 15, 2020..................................... 232
Paycheck Protection Program Loans by State and U.S. Territory, as of June 12, 2020............................ 240
Paycheck Protection Program Loans by Industry, as of June 12, 2020................................................ 241
Navy Working Capital Fund Monthly Cash Balances (Oct. 2019-March 2020)....................................... 285
Air Force Working Capital Fund Monthly Cash Balances (Oct. 2019-March 2020).................................. 286
Defense-Wide Working Capital Fund Monthly Cash Balances (Oct. 2019-March 2020)........................... 287
Coronavirus Relief Fund Expenditures, as of May 31, 2020............................................................... 307
Disaster Relief Fund Appropriations, Fiscal Years 2016–2020............................................................ 320
Federal Emergency Management Agency’s $5.8 Billion in Obligations to Respond to COVID-19 by Category, as
of May 31, 2020......................................................................................................................... 320
Federal Emergency Management Agency Obligations for COVID-19 by State and Territory, as of May 31,
2020......................................................................................................................................... 321
The Oﬃce of the U.S. Trade Representative Has Removed Import Tariﬀs from Some Products from China
Related to the COVID-19 Response, as of April 2020....................................................................... 325
March 2020 State and USAID Strategy for Using Supplemental Funding to Respond to COVID-19
Abroad..................................................................................................................................... 330
Department of State and U.S. Agency for International Development Allocations of Supplemental Funding
for COVID-19-Related International Assistance, as of May 20, 2020, by Geographic Region.................... 331
Figure 16: National Weekly Initial Unemployment Claims, January 5, 2019 to May 30, 2020................... 335
Figure 17: Net Percentage of Banks Tightening Standards for Small Business Loans, First Quarter of 2015-
Second Quarter of 2020............................................................................................................. 339
Figure 18: Spreads on Investment Grade Corporate Bonds, January 2019 to May 2020......................... 341
Figure 19: Spreads on Municipal Bonds, January 2019 to May 2020................................................... 342
Figure 20: The Five Components and 17 Principles of Internal Control............................................... 345
Figure 21: Components of the Fraud Risk Framework..................................................................... 347
Figure 22: Examples of Fraud Risks and Possible Schemes Targeting Government and Private Businesses and
Individuals................................................................................................................................. 349
Figure 23: Examples of Antifraud Controls in an Emergency Environment.......................................... 352
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GAO-20-625

Abbreviations
ASPR
Assistant Secretary for Preparedness and Response
CBO
Congressional Budget Office
CDC
Centers for Disease Control and Prevention
CMS
Centers for Medicare & Medicaid Services
COVID-19
Coronavirus Disease 2019
DHS
Department of Homeland Security
DOD
Department of Defense
DOL
Department of Labor
DOT
Department of Transportation
DPA
Defense Production Act
ESF
Emergency Support Function
FEMA
Federal Emergency Management Agency
FDA
Food and Drug Administration
FMAP
Federal Medical Assistance Percentage
FNS
Food and Nutrition Service
HHS
Department of Health and Human Services
HUD
Department of Housing and Urban Development
ICU
Intensive Care Unit
IRS
Internal Revenue Service
NCHS
National Center for Health Statistics
NRCC
National Response Coordination Center
OMB
Office of Management and Budget
PanCAP
COVID-19 Response Plan
PPP
Paycheck Protection Program
PUA
Pandemic Unemployment Assistance
SARS
Severe Acute Respiratory Syndrome
SBA
Small Business Administration
SNAP
Supplemental Nutrition Assistance Program
SNS
Strategic National Stockpile
State
Department of State
Treasury
Department of Treasury
UI
Unemployment Insurance
USAID
U.S. Agency for International Development
USDA
United States Department of Agriculture
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VA
Department of Veterans Affairs
WHO
World Health Organization
GAO’s Mission
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Matters for Congressional Consideration
•
In the absence of eﬀorts to develop a plan, we urge Congress to take legislative action to
require the Secretary of Transportation to work with relevant agencies and stakeholders,
such as the Departments of Health and Human Services and Homeland Security, and
members of the aviation and public health sectors, to develop a national aviation-
preparedness plan to ensure safeguards are in place to limit the spread of communicable
disease threats from abroad while at the same time minimizing any unnecessary
interference with travel and trade. (Matter for Consideration 1)
•
To provide agencies access to Social Security Administration’s more complete set of
death data, we urge Congress to provide the Department of the Treasury with access
to the Social Security Administration’s full set of death records, and to require that the
Department of the Treasury consistently use it. (Matter for Consideration 2)
•
To help ensure that federal funding is targeted and timely, we urge Congress to use GAO’s
Federal Medical Assistance Percentage formula for any future changes to the Federal
Medical Assistance Percentage during the current or any future economic downturn.
(Matter for Consideration 3)
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GAO-20-625

Recommendations for Executive Action
Recommendations for Executive Action
We are making a total of three recommendations—one each to the Department of Labor, Internal
Revenue Service, and Small Business Administration:
•
The Secretary of Labor should, in consultation with the Small Business Administration and
the Department of the Treasury, immediately provide information to state unemployment
agencies that speciﬁcally addresses the Small Business Administration’s Paycheck
Protection Program loans, and the risk of improper payments associated with these loans.
(Recommendation 1)
•
The Commissioner of Internal Revenue should consider cost-eﬀective options for notifying
ineligible recipients on how to return payments. (Recommendation 2)
•
The Administrator of the Small Business Administration should develop and implement
plans to identify and respond to risks in the Paycheck Protection Program to ensure
program integrity, achieve program eﬀectiveness, and address potential fraud, including in
loans of $2 million or less. (Recommendation 3)
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Introduction
June 25, 2020
Congressional Committees
Pandemic outbreaks can lead to catastrophic loss of life, as well as sustained damage to the
economy, societal stability, and global security. The outbreak of Coronavirus Disease 2019
(COVID-19), a strain of coronavirus to which the public does not have immunity, was ﬁrst reported
on December 31, 2019, in Wuhan, China. In the weeks that followed, the virus quickly spread
around the globe. On January 31, 2020, the Secretary of Health and Human Services declared a
public health emergency for the United States, retroactive to January 27.1 On March 11, 2020, the
World Health Organization (WHO) characterized COVID-19 as a pandemic.
Unlike incidents that are discretely bounded in space or time (e.g., most natural or man-made
disasters), a pandemic is not a singular event, but is likely to come in waves, each lasting weeks
or months, and pass through communities of all sizes across the nation and the world at various
times. Health care systems in some U.S. communities were put under severe strain and required
assistance from federal and state governments, which led to the construction of temporary
hospitals in untraditional locations, such as convention centers. And while a pandemic will not
directly damage physical infrastructure such as power lines or computer systems, it threatens the
operation of critical systems by potentially removing the essential personnel needed to operate
them from the workplace for weeks or months.
The nation has already seen the spillover eﬀects of a pandemic on the economy as millions have
lost their jobs due to stay-at-home orders and business closures aimed at “ﬂattening the curve,”
or taking the burden oﬀ the health care system by reducing infections to a manageable level.
From March 21 to May 30, 2020, there was an increase of over 42 million unemployed Americans,
turbulence in the stock market, and an overall downturn in the U.S. economy. As of June 17, the
United States had approximately 2,104,000 reported cases and 103,000 reported deaths.2
In response to this unprecedented global crisis, Congress and the administration have taken
a series of actions to protect the health and well-being of Americans. Notably, in March 2020,
Congress passed, and the President signed into law, the CARES Act, which provides over
$2 trillion in emergency assistance and health care response for individuals, families, and
1A public health emergency triggers the availability of certain authorities under federal law that enable federal agencies
to take actions, such as temporarily reassigning certain state and local personnel and waiving certain administrative
requirements. Subsequently, on March 13, 2020, the President declared COVID-19 a national emergency under the
National Emergencies Act and a nationwide emergency under section 501(b) of the Robert T. Staﬀord Disaster Relief and
Emergency Assistance Act (Staﬀord Act). The President has also approved major disaster declarations under the Staﬀord
Act for all 50 states, the District of Columbia, and ﬁve territories.
2Centers for Disease Control and Prevention (CDC) case counts include both conﬁrmed and probable cases. National
Center for Health Statistics (NCHS) provisional death counts include both conﬁrmed and probable or presumed deaths.
The counts reported are the total number of deaths received and coded as of the date of analysis and do not represent
all deaths that occurred in that period. Provisional counts are incomplete because of the lag in time between when
the death occurred and when the death certiﬁcated is completed, submitted to NCHS, and processed for reporting
purposes. This delay is an average of 1-2 weeks and can range from 1-8 weeks or more, depending on the jurisdiction,
age, and cause of death.
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businesses aﬀected by COVID-19.3 In addition, the Paycheck Protection Program and Health Care
Enhancement Act, enacted in April 2020, provides additional appropriations for small business
loans, grants to health care providers, and COVID-19 testing.4 Moreover, agencies from across
the federal government were called on for assistance while shifting staﬀ to telework, requiring
an unprecedented level of dedication and agility among the federal workforce, including those
serving on the front lines to quickly establish services for those infected with the virus.
The CARES Act also includes a provision for GAO to conduct monitoring and oversight of the use
of funds made available to prepare for, respond to, and recover from the COVID-19 pandemic.5
GAO is to report on, among other things, the pandemic’s eﬀects on the public health, economy,
and public and private institutions of the United States, including the federal government’s public
health and homeland security eﬀorts. Additionally, GAO is to report on loans, loan guarantees, and
other investments and to conduct a comprehensive audit and review of charges made to federal
contracts pursuant to the CARES Act, among other things.
Work on these oversight responsibilities is ongoing. As of June 17, 2020, GAO has 51audits under
way related to the pandemic examining a variety of issues, including small business programs, the
Strategic National Stockpile (SNS), the Defense Production Act (DPA), the Department of Veterans
Aﬀairs’ response to COVID-19, child welfare and education, worker safety, homeowner and renter
protections, and COVID-19 testing.
The CARES Act includes a provision for GAO to submit a report within 90 days of enactment on
its ongoing monitoring and oversight eﬀorts related to the COVID-19 pandemic, with subsequent
reports due every 60 days. This report is the ﬁrst in a series of bimonthly reports that will be
issued between June 2020 and March 2021. GAO also plans to issue additional reports focusing on
speciﬁc topics.
This ﬁrst report examines
1. the key actions the federal government has taken, to date, to respond to and recover from
COVID-19;
2. potential indicators for monitoring the public health system’s preparedness for, response to,
and recovery from COVID-19 and key areas of the economy targeted by federal eﬀorts; and
3. evolving lessons learned relevant to the nation's response to the COVID-19 pandemic.
For this initial work, to examine key actions the federal government has taken to respond to the
COVID-19 pandemic, we examined federal laws and agency documents, guidance, processes, and
3Pub. L. No. 116-136, 134 Stat. 281 (2020).
4Pub. L. No. 116-139, 134 Stat. 620 (2020). As of June 1, 2020, two other relief laws also were enacted in response to
the COVID-19 pandemic. See Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub.
L. No. 116-123, 134 Stat. 146 and Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020).
In this report, we refer to these four laws, each of which was enacted as of May 31, 2020, and provides supplemental
appropriations for the COVID-19 response, as “COVID-19 relief laws.”
5Pub. L. No. 116-136, § 19010, 134 Stat. at 579-81.
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procedures, and available agency budgetary data; and we interviewed federal and state oﬃcials
and industry representatives. Centralized data on federal spending for the pandemic response
were not yet available as of June 2020; therefore, we obtained agency spending data from speciﬁc
agencies that received some of the largest appropriations in the four COVID-19 relief laws. Data
are generally reported as of May 31, 2020 unless otherwise noted in the report. We report the data
as provided by the agencies. We found the data to be suﬃciently reliable for our purposes.
To identify agencies’ contract obligations in response to COVID-19, we reviewed Federal
Procurement Data System-Next Generation data through May 31, 2020. We identiﬁed obligations
related to COVID-19 using the National Interest Action code, as well as the contract description.
We assessed the reliability of federal procurement data by reviewing existing information about
the Federal Procurement Data System-Next Generation and the data it collects—speciﬁcally, the
data dictionary and data validation rules—and performing electronic testing. We determined
that the data were suﬃciently reliable for the purposes of describing agencies’ reported contract
obligations in response to COVID-19.
We also reviewed prior GAO work, information from relevant federal agencies responsible for the
pandemic response and oversight of the health care system, selected studies produced by experts
in public health and epidemiology, data collected by state health departments, and examples
of federal government response to past national emergencies.6 We reviewed testing data and
limitations reported by the Centers for Disease Control and Prevention (CDC) over time, including
the most recent information from CDC’s COVID Data Tracker website as of May 31, 2020. We also
interviewed CDC oﬃcials to obtain information on steps taken to report testing data, and we
reviewed federal laws, other requirements, and CDC guidance related to states’ and laboratories’
submission of testing data. We also visited alternate care facilities constructed by the U.S. Army
Corps of Engineers in Colorado and the District of Columbia. We selected these facilities based on
the type and size of the facility and geographic diversity.
To identify potential indicators for monitoring areas of the economy supported by the federal
response to the pandemic, we reviewed a number of sources, including prior GAO work, releases
from federal statistical agencies, data available on the Bloomberg Terminal, and input from
internal GAO experts.
In carrying out our statutory oversight responsibilities, we generally received good cooperation
from the audited agencies. However, we were not able to obtain timely information from
some agencies, and for that reason we were not able to conduct some of the analyses we had
planned. We encountered the most diﬃculty trying to obtain information from the Small Business
Administration (SBA), and we are continuing to work with SBA to obtain information for our
subsequent reports. See appendix I for additional details on the scope and methodology for this
report.
In carrying out our work, we coordinated with other entities providing oversight of the nation’s
response to COVID-19. Speciﬁcally, the CARES Act created the Pandemic Response Accountability
6Where applicable, GAO plans to use the NCHS COVID-19 death data over time in our reporting for consistency, because
it is considered to be the most reliable source of data since it is based on oﬃcial death records. Diﬀerences between
NCHS data and reports from other sources such as state health department websites should reduce over time as data
are processed and counts are updated.
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Committee within the Council of the Inspectors General on Integrity and Eﬃciency.7 The mission
of the Council of the Inspectors General on Integrity and Eﬃciency is to (1) prevent and detect
fraud, waste, abuse, and mismanagement and (2) mitigate major risks that cut across program and
agency boundaries.8 Within a week of the enactment of the CARES Act, we began coordinating our
work with Pandemic Response Accountability Committee leadership and the inspectors general
of various agencies. This communication and coordination with these entities continues. Working
with the National Association of State Auditors, Comptrollers, and Treasurers, we also established
a working group consisting of inspectors general and auditors from the state and local levels of
government. The CARES Act also established the Special Inspector General for Pandemic Recovery
within the Department of the Treasury (Treasury), and we plan to coordinate with this oﬃce once it
is operational. Finally, we plan to coordinate with the Congressional Oversight Commission, which
was established to oversee implementation of the economic stabilization provisions by Treasury
and the Board of Governors of the Federal Reserve System (Federal Reserve), and with the House
of Representatives’ Select Subcommittee on the Coronavirus Crisis.
We conducted this performance audit from March 2020 to June 2020 in accordance with generally
accepted government auditing standards. Those standards require that we plan and perform
the audit to obtain suﬃcient, appropriate evidence to provide a reasonable basis for our ﬁndings
and conclusions based on our audit objectives. We believe the evidence obtained provides a
reasonable basis for our ﬁndings and conclusions based on our audit objectives.
7The Council of the Inspectors General on Integrity and Eﬃciency is an independent entity within the executive branch
that addresses integrity, economy, and eﬀectiveness issues that transcend individual government agencies. It also
increases the professionalism and eﬀectiveness of personnel by developing policies, standards, and approaches to aid in
the establishment of a well-trained and highly skilled workforce in the oﬃces of the inspectors general.
8Fraud involves obtaining something of value through willful misrepresentation. Whether an act is fraudulent is
determined through the judicial or other adjudicative system. Waste is the act of using or expending resources
carelessly, extravagantly, or to no purpose. Abuse involves behavior that is deﬁcient or improper when compared with
behavior that a prudent person would consider reasonable and necessary operational practice given the facts and
circumstances. This includes the misuse of authority or position for personal gain or for the beneﬁt of another.
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Background
COVID-19 is caused by a new coronavirus named Severe Acute Respiratory Syndrome CoV-2 (SARS-
CoV-2). There are several diﬀerent types of coronaviruses, some of which are responsible for the
common cold, and some of which cause severe respiratory illness and have high mortality rates.9
In addition to COVID-19, other severe outbreaks of respiratory illness caused by coronaviruses in
the past 20 years include SARS and Middle East Respiratory Syndrome.
As of May 2020, researchers generally expect that those individuals who contract COVID-19 will
develop antibodies that may provide some level of immunity. However, according to CDC, it is
currently unknown if such antibodies can protect from reinfection with the same strain of virus or
how long this protective immunity might last. Potential vaccines and therapies for COVID-19 are
in the early stages of a multistep development process, so the timing of vaccine availability is still
unknown.10 The administration has a program to accelerate vaccine development, which aims to
have a vaccine available by January 2021.
Health Eects of COVID-19
As of June 17, 2020, according to the WHO, there had been approximately 8,062,000 reported
cases of COVID-19 that had resulted in 440,000 reported deaths worldwide. As mentioned above,
there had been approximately 2,104,000 reported cases and 103,000 reported deaths in the
United States.11 However, according to CDC, the actual number of COVID-19 cases and deaths is
unknown.12 Figures 1 and 2 show the reported cumulative number of COVID-19 cases and deaths,
respectively, in the United States from March 7 through June 17, 2020.
9For more information, see GAO, Science & Tech Spotlight: Coronaviruses, GAO-20-472SP (Washington, D.C.: March 2020);
and Science & Tech Spotlight: Social Distancing During Pandemics, GAO-20-545SP (Washington, D.C.: May 2020).
10For more information, see GAO, Science and Tech Spotlight: COVID-19 Vaccine Development, GAO-20-583SP (Washington,
D.C.: May 2020)
11CDC case counts include both conﬁrmed and probable cases. CDC deﬁnes a conﬁrmed case as meeting conﬁrmatory
laboratory evidence for COVID-19. According to CDC, a probable case is deﬁned by one of the following: (1) meeting
clinical criteria and epidemiologic evidence with no conﬁrmatory laboratory testing performed for COVID-19; (2) meeting
presumptive laboratory evidence and either clinical criteria or epidemiologic evidence; or (3) meeting vital records
criteria with no conﬁrmatory laboratory testing performed for COVID-19. NCHS provisional death counts include
both conﬁrmed and probable or presumed deaths. The counts reported are the total number of deaths received and
coded as of the date of analysis and do not represent all deaths that occurred in that period. Provisional counts are
incomplete because of the lag in time between when the death occurred and when the death certiﬁcate is completed,
submitted to NCHS, and processed for reporting purposes. This delay is an average of 1-2 weeks and can range from 1-8
weeks or more, depending on the jurisdiction, age, and cause of death. NCHS also notes that COVID-19 deaths may be
misclassiﬁed as deaths due to pneumonia or inﬂuenza in the absence of a positive test result.
12CDC notes that actual numbers of COVID-19 cases and deaths are unknown for a variety of reasons, including that
people who have been infected may have not been tested or may have not sought medical care.
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Figure 1: Reported Cumulative COVID-19 Cases: United States, as of June 17, 2020
Note: Reported COVID-19 counts include conﬁrmed and probable cases. According to CDC, the actual number of cases are
unknown for a variety of reasons, including that people who have been infected may have not been tested or may have not
sought medical care. CDC reports daily case counts. While June 15, 2020, was the last available date for daily cases reported, the
data presented in the ﬁgure were last updated on June 17, 2020.
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Figure 2: Reported Cumulative COVID-19 Deaths: United States, as of June 17, 2020
Note: National Center for Health Statistics (NCHS) provisional death counts include both conﬁrmed and probable or presumed
deaths. The counts reported are the total number of deaths received and coded as of the date of analysis and do not represent
all deaths that occurred in that period. Provisional counts are incomplete because of the lag in time between when the death
occurred and when the death certiﬁcate is completed, submitted to NCHS, and processed for reporting purposes. This delay
is an average of 1-2 weeks and can range from 1 to 8 weeks or more, depending on the jurisdiction, age, and cause of death.
NCHS also notes that COVID-19 deaths may be misclassiﬁed as deaths due to pneumonia or inﬂuenza in the absence of a
positive test result. NCHS reports weekly death counts. While June 13, 2020, was the last available week-ending date for deaths
reported, the data presented in the ﬁgure were last updated on June 17, 2020.
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Economic Eects of COVID-19
The COVID-19 pandemic and related policies that limited certain economic activities have had
a rapid and severe eﬀect on the U.S. and global economies—by many measures, more rapid
and more severe than the December 2007-June 2009 Great Recession. In order to limit social
contact and slow the spread of the pandemic, nearly all U.S. states implemented policies that
had the eﬀect of limiting certain economic activities, in particular closures of nonessential
businesses. Similarly, many other businesses and organizations voluntarily limited, substantially
altered, or ceased operations in response to falling demand or in order to reduce the risk
of contagion among their employees. Widespread business closures led to immediate and
substantial job losses and have led to growing losses in revenue for those businesses. Measured
economic activity has similarly slowed dramatically, as indicated, for example, by falling industrial
production, retail sales, and personal income in the United States.
The pandemic has also led to a considerable degree of uncertainty about future economic activity,
which has caused businesses to delay plans for investment and households both to delay large
expenditures and to shift remaining spending toward essential household needs. Falling incomes
and lower spending will reduce tax revenues to federal, state, and local governments, while
heightened demands on federal and state social programs are likely to increase expenditures.13
While these and other eﬀects have been widespread across the U.S. economy, they have also
disproportionately aﬀected certain industries and households. Businesses that depend on
interpersonal contact for providing goods and services—and others deemed nonessential
under state orders—have been more severely impacted, including businesses in the leisure and
hospitality sector and certain retailers. Moreover, low-income households have few liquid ﬁnancial
assets to assist in weathering even a relatively short economic downturn, and some of the most
aﬀected sectors tend to have signiﬁcantly lower average earnings than other sectors. In addition,
tribal governments are particularly dependent on revenues from tribally owned businesses,
including in the severely aﬀected leisure and hospitality sectors.
Timeline of Key Congressional and Administration Actions
In response to the COVID-19 pandemic and its eﬀects, Congress and the administration have taken
a series of actions. Figure 3 shows signiﬁcant federal actions taken from January to June 2020.
13Federal, state, and local governments already faced a range of ﬁscal challenges and pressures prior to the pandemic.
See GAO, The Nation’s Fiscal Health: Action Is Needed to Address the Federal Government's Fiscal Future, GAO-20-403SP
(Washington, D.C.: Mar. 12, 2020); Intergovernmental Issues: Key Trends and Issues Regarding State and Local Sector
Finances, GAO-20-437 (Washington, D.C.: Mar. 23, 2020); and State and Local Governments’ Fiscal Outlook: 2019 Update,
GAO-20-269SP (Washington, D.C: Dec. 19, 2019).
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Figure 3: Signiﬁcant Federal Actions Related to COVID-19, as of June 5, 2020
aThe Secretary of Health and Human Services may declare a public health emergency if the Secretary determines that (1) a
disease or disorder presents a public health emergency or (2) a public health emergency, including signiﬁcant outbreaks of
infectious disease or bioterrorist attacks, otherwise exists. 42 U.S.C. § 247d.
bThe Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 provides $7.8 billion to agencies for
health emergency prevention, preparedness, and response activities related to COVID-19, with HHS appropriated a majority of
the funds. Pub. L. No. 116-123, 134 Stat. 146 (2020).
cA declaration under the National Emergencies Act authorizes the President to activate existing emergency authorities in other
statutes, and the President must cite the authorities being exercised. 50 U.S.C. § 1621. A governor may request an emergency
declaration under the Staﬀord Act if the situation is of such severity and magnitude that eﬀective response is beyond the
capabilities of the state and the aﬀected local governments, and federal assistance is necessary. 42 U.S.C. § 5191. According to
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the Federal Emergency Management Agency, the President declared a nationwide emergency pursuant to 42 U.S.C. § 5191(b) to
avoid governors needing to request individual emergency declarations.
dThe Families First Coronavirus Response Act provides supplemental appropriations for nutrition assistance programs and
public health services and authorizes the Internal Revenue Service to provide tax credits for paid emergency sick leave and
expanded family medical leave that the act requires certain employers to provide. In addition, the act provided states with
ﬂexibility to temporarily modify provisions of their unemployment insurance laws and policies related to certain eligibility
requirements and provided additional federal ﬁnancial support to the states. Pub. L. No. 116-127, 134 Stat. 178 (2020).
eThe Defense Production Act gives the President broad authority to mobilize domestic industry in service of national defense
(including programs for certain military activities, homeland security, stockpiling, space, and emergency preparedness activities
under the Staﬀord Act, among other things). 50 U.S.C. § 4501 et seq.
fA governor may request a major disaster declaration under the Staﬀord Act if the disaster is of such severity and magnitude
that eﬀective response is beyond the capabilities of the state and aﬀected local governments, and federal assistance is
necessary. 42 U.S.C. § 5170.
gThe CARES Act provides supplemental appropriations for federal agencies to respond to COVID-19. In addition, it also funds
various loans, grants, and other forms of assistance for businesses, industries, states, local governments, and hospitals;
provides tax rebates for certain individuals; temporarily expands unemployment beneﬁts; and suspends payments and interest
on federal student loans. Pub. L. No. 116-136, 134 Stat 281 (2020).
hThe Paycheck Protection Program and Health Care Enhancement Act provides additional appropriations for small business
loans, grants to health care providers, and COVID-19 testing. Pub. L. No. 116-139, 134 Stat. 620 (2020).
iThe Paycheck Protection Program Flexibility Act of 2020 expands the amount of time Paycheck Protection Program borrowers
have to use Program funds and modiﬁes several key program components such as forgiveness eligibility criteria and limits on
the use of funds for non-payroll costs. Pub. L. No. 116-142, 134 Stat. 641.
Structure of the U.S. Government’s Pandemic Response
The COVID-19 pandemic has aﬀected the entire country and required solutions to issues that
have arisen as the event unfolded. As such, the operational response to the pandemic has
required support from all of the nation’s existing systems and structures designed to help manage
the response to both public health emergencies and natural disasters across multiple federal
departments. Overall, the White House Coronavirus Task Force is responsible for coordinating
the whole-of-government response. The U.S. Government COVID-19 Response Plan (PanCAP)
describes the structure and authorities to lead and coordinate this response.14 According to
oﬃcials responsible for supporting the response at the Federal Emergency Management Agency
(FEMA) and the Department of Health and Human Services (HHS), although rapidly evolving
situations have required some adaptation as the response unfolds, the PanCAP generally remains
the operative plan for the federal response.
As described in the PanCAP, the Uniﬁed Coordination Group—made up of the FEMA
Administrator, the HHS Assistant Secretary for Preparedness and Response (ASPR), and a CDC
representative—has responsibility for operational command, leadership, and decision making for
the COVID-19 pandemic response. The three leaders are partners in operational decision-making
for the whole-of-government response and provide input to the White House Coronavirus Task
14According to the PanCAP, the purpose of the White House Coronavirus Task Force is to coordinate a whole-of-
government approach, including with governors, state and local oﬃcials, and with members of Congress, to develop the
best options for the safety, well-being, and health of the American people.
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Force. The National Security Council also provides guidance to the White House Coronavirus Task
Force on matters of policy.
According to FEMA and HHS oﬃcials involved in the response and operational documents used in
response coordination, FEMA, ASPR, and CDC have complementary roles that correspond to their
missions and expertise. The FEMA Administrator, for example, focuses on directing nationwide
operational needs—such as the logistics of moving material, supplies, and personnel to meet
emergent needs and tracking the delivery of these supplies. The ASPR and CDC representatives
focus on issues that require their medical and public health expertise—such as community-based
testing, hospital preparedness, and development and testing of potential therapeutics.
As with any emergency or major disaster triggering the need for a coordinated federal emergency
protective measure response, the National Response Coordination Center (NRCC), which operates
out of FEMA, is the hub for coordinating response actions and resources across federal agencies.
To address the multiple dimensions of a pandemic response, eight operational task forces work
out of the NRCC. For example, a laboratory diagnostic task force is responsible for coordinating
with stakeholders to understand the COVID-19 testing supply chain and rapidly evolving testing
needs. According to FEMA oﬃcials, these task forces bring together federal departments and
agencies with the relevant expertise, authorities, and capabilities necessary to address unmet
needs. Through these task forces, the NRCC can use existing authorities, processes, resources, and
funding for each of the agencies that comprise each Emergency Support Function (ESF) under the
National Response Framework to meet the needs of the response as they arise.15 See appendix II
for more information on federal structures to lead and coordinate the overall pandemic response.
15The National Response Framework is a guide to how the nation responds to all types of disasters and emergencies.
The 15 ESFs provide the structure for coordinating federal interagency support for a response to an incident. They are
mechanisms for grouping functions most frequently used to provide federal support to states and federal-to-federal
support.
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Major Findings
Key Federal Actions to Respond to and Recover from COVID-19
The federal response to COVID-19 has been a whole-of-government eﬀort. In particular, the four
COVID-19 relief laws appropriated about $2.6 trillion to fund response and recovery eﬀorts, as
well as to mitigate the public health, economic, and homeland security eﬀects of COVID-19.16
The Paycheck Protection Program, Economic Stabilization and Assistance to Distressed Sectors,
unemployment insurance, Internal Revenue Service (IRS) economic impact payments, Public
Health and Social Services Emergency Fund, and Coronavirus Relief Fund comprise $2.2 trillion, or
86 percent, of the $2.6 trillion appropriated as of May 31, 2020. Figure 4 shows appropriations for
the COVID-19 response by major spending area.
16An appropriation provides legal authority for federal agencies to incur obligations and make payments out of the
Treasury for speciﬁed purposes. An obligation is a deﬁnite commitment that creates a legal liability of the government
for the payment of goods and services, or a legal duty on the part of the United States that could mature into a legal
liability by virtue of actions on the part of the other party beyond the control of the United States. An expenditure
is the actual spending of money, or an outlay. While these amounts are appropriated by the legislation, actual cash
expenditures may occur over time and some amounts appropriated or obligated may not result in a cost to the federal
government, such as loans that are expected to be paid with interest.
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Figure 4: Appropriations for COVID-19 Response from COVID-19 Relief Laws Enacted, as of May 31, 2020, by Major
Spending Area
Notes: COVID-19 relief laws enacted as of May 31, 2020, include the Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146; Families First Coronavirus Response Act, Pub. L. No. 116-127,
134 Stat. 178 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); and Paycheck Protection Program and Health Care
Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020).
These amounts are based on warrants issued as of May 31, 2020 by Treasury to agencies in response to appropriations made
by COVID-19 relief laws. A warrant is an oﬃcial document issued upon enactment of an appropriation that establishes the
amount of money authorized to be withdrawn from the Treasury. These amounts could increase in the future for programs
with indeﬁnite appropriations, which are appropriations that, at the time of enactment, are for an unspeciﬁed amount. In
addition, this ﬁgure does not represent transfers of funds that agencies may make between accounts or transfers of funds they
may make to other agencies, to the extent authorized by law.
Total federal spending data are not readily available because under Oﬃce of Management and
Budget (OMB) guidance, federal agencies are not directed to report COVID-19 related obligations
(government ﬁnancial commitments) and expenditures until July 2020.17 We will examine these
spending data when they become available and include our analysis in our future reporting.
17Speciﬁcally, monthly reporting by federal agencies that have received COVID-19 supplemental appropriations will
begin in July 2020 for spending during the month of June, and on a monthly basis thereafter. Agencies are required to
report obligations and expenditures on a monthly basis using a speciﬁc code provided by OMB to link these funds to
the supplemental appropriations. Agencies are to report this information to OMB and others, and it will be included
in USASpending.gov, a publicly available website that is intended to provide a greater range of ﬁnancial and non-
ﬁnancial data on federal spending. See http://USAspending.gov. See also Oﬃce of Management and Budget, M-20-21
Implementation Guidance for Supplemental Funding Provided in Response to the Coronavirus Disease 2019 (Apr. 10, 2020).
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In the absence of comprehensive data, we collected obligation and expenditure data from
agencies, to the extent practicable, as of May 31, 2020. For the six largest spending areas, we
found obligations totaled $1.3 trillion and expenditures totaled $643 billion.
GAO also collected expenditure data on other programs impacted by the federal response.
For example, we found that HHS has provided $7 billion in COVID-19 Medicaid funding to
states and territories, most of which is the result of the increased Federal Medical Assistance
Percentage (FMAP), the statutory formula according to which the federal government matches
states’ spending for Medicaid services. Increased spending in Medicaid is not accounted for
in the appropriations provided by the relief laws because they did not include supplemental
appropriations for the FMAP increase.18 Based on the information we collected, government-wide
spending totals at least $677 billion, as of May 31, 2020.
The administration has taken a number of actions to respond to and recover from COVID-19.
While certain federal departments and agencies—including HHS, Treasury, SBA, and FEMA—have
lead roles, the federal response has spanned the government. In examining federal eﬀorts, we
grouped them into the following categories:
• Public health response
• Assistance to individuals
• Industry/economic support
• Assistance to states, localities, and tribes
• Federal contracting
• International response
We examine many of these eﬀorts below, and additional information is provided in enclosures
presented in appendix III.
HHS Took Action but Experienced Substantial Challenges with Its
Initial COVID-19 Public Health Response
The four COVID-19 relief laws appropriated more than $250 billion to HHS to address various
aspects of the public health response. According to HHS, the department has obligated about
$101 billion of these appropriations and expended about $67 billion as of May 31, 2020, through
grants, contracts, loans, direct payments, and other awards. For additional information on
the supplemental appropriations to HHS and related obligations and expenditures, see “HHS
COVID-19 Funding” in appendix III. Examples of obligations and expenditures include the following:
18Appropriations for Medicaid are made in annual appropriations laws based on estimates of Medicaid expenditures for
the ﬁscal year.
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• As of May 31, 2020, HHS expended about $65 billion to provide funding to providers, such
as hospitals, to respond to COVID-19, according to the department.19 This includes funding
for Medicare providers, as well as providers heavily impacted by COVID-19; rural health care
providers; skilled nursing facilities; and Indian Health Service, tribal, and Urban Indian facilities.
• CDC allocated about $12.1 billion for awards to state, local, territorial, and tribal organizations
as of May 31, 2020, according to agency oﬃcials. Of this amount—about $10.3 billion—is
to support COVID-19 testing nationwide.20 CDC awarded the remaining $1.8 billion to these
entities to support activities, including COVID-19 surveillance, epidemiology, laboratory
capacity, infection control, mitigation, communications, and other preparedness and response
activities.21
• As of May 31, 2020, HHS reported obligations of about $3.612 billion to support treatments or
vaccines for COVID-19, of which about $18 million had been expended.
HHS and other agencies have taken a number of actions to respond to the medical and public
health needs of the unprecedented COVID-19 pandemic. However, initial observations of the
public health response have highlighted substantial challenges. These challenges are speciﬁc
to COVID-19 testing and the distribution, acquisition, and adequacy of critical supplies and are
detailed below.
CDC’s Eorts to Collect Testing Data
HHS and its agencies, including CDC, have taken steps to meet the unprecedented need for
COVID-19 testing data, although the data reported through May 31, 2020, have not been complete
or consistent. Testing provides information that is paramount to protecting public health,
according to CDC. HHS agencies faced a number of challenges with regard to testing.22 CDC
developed the ﬁrst COVID-19 test, which was authorized for use on February 4, 2020. However,
19The CARES Act appropriated $100 billion to the Public Health and Social Services Emergency Fund to reimburse
eligible providers for health care related expenses or lost revenues that are attributable to COVID-19 (known as
the Provider Relief Fund). The Paycheck Protection Program and Health Care Enhancement Act appropriated an
additional $75 billion for the Provider Relief Fund.
20The Paycheck Protection Program and Health Care Enhancement Act appropriated $25 billion to HHS through the
Public Health and Social Services Emergency Fund to support COVID-19 testing eﬀorts, and of this amount, at least
$11 billion was designated for state, local, territorial, and tribal organizations. CDC awarded about $10.3 billion to
state, local, and territorial jurisdictions, and the Indian Health Service is administering $750 million in HHS funds to
be distributed to Indian Health Service, tribal, and Urban Indian facilities.
21Of the $1.8 billion, CDC was still in the process of awarding $160 million to tribal organizations as of May 31, 2020,
according to agency oﬃcials. Awards provided to these entities were from appropriations provided to HHS in the
Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, which designated at least $950
million to states, localities, territories, and tribal entities to carry out surveillance, epidemiology, laboratory capacity,
infection control, mitigation, communications, and other preparedness and response activities, and the CARES Act,
which designated at least $1.5 billion to states, localities, territories, and tribal entities for the same purposes.
22See “COVID-19 Testing” in appendix III for additional information on challenges related to COVID-19 testing that HHS
agencies faced.
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this test experienced accuracy and reliability issues that resulted in signiﬁcant delays in testing
nationwide during the critical early weeks of the outbreak.
Performing suﬃcient testing is an important consideration for reopening communities. Viral tests
can detect the virus that causes the disease to identify those who currently have COVID-19, while
serology tests, also known as antibody tests, detect antibodies produced by patients who had
previously been infected and provide information on prevalence of past infections in a community.
According to principles put forward by the White House, CDC, and Food and Drug Administration
on April 27, 2020, states manage COVID-19 testing programs—with federal support—and they
must have systems in place to collect and report critical data.23 Testing data, particularly the total
number of viral tests performed for COVID-19 and the percentage of viral tests with positive
results, should be used to make decisions about reopening communities, according to federal
guidelines.24
CDC—the oﬃcial federal source for testing data—has reported testing data provided by state
and jurisdictional health departments, which, in turn, received these data from laboratories. The
data that CDC reported on the amount of viral testing occurring nationwide was not complete or
consistent, but HHS recently took an initial step intended to improve these data by implementing
its new authority under the CARES Act to prescribe the testing data that all laboratories must
report, as discussed later in this section.
• CDC reported data that were not complete. Initial delays in testing during the early
pandemic stages have resulted in limited information on the spread of COVID-19 in
communities, and the sources of testing data CDC has used have changed with changes
in testing practices over time. CDC initially reported that about 4,000 viral tests had been
conducted nationwide from January 18, 2020, to February 29, 2020. These tests were
performed by CDC, state, and other public health laboratories, which initially conducted
all testing in the United States. Over time, CDC has added testing data from clinical or
commercial laboratories, which CDC collected from states, in order to reﬂect additional types
of laboratories performing tests, but as of May 31, 2020, testing data remained incomplete.25
CDC’s website stated that the data posted there included the majority of, but not all, data on
testing in the United States, as of May 31, 2020. For example, testing data that CDC reported
may not have included all tests performed by laboratories at point-of-care settings, such as
physicians’ oﬃces.26 Reporting all such data will likely become increasingly important because
HHS estimated point-of-care testing will grow to 25 million tests per month by September
2020, or roughly half of the total tests that will be available at that time. According to CDC,
23White House, Centers for Disease Control and Prevention, and Food and Drug Administration, Testing Blueprint:
Opening Up America Again (Apr. 27, 2020).
24For more information, see GAO, Science and Tech Spotlight: COVID-19 Testing, GAO-20-584SP (Washington, D.C.: May
2020) and Science and Tech Spotlight: COVID-19 Modeling, GAO-20-582SP (Washington, D.C.: June 2020).
25CDC initially collected data directly from state public health laboratories and six large commercial laboratories. In
April, the agency collected additional data from state and jurisdictional health departments that reﬂected additional
testing data from clinical and commercial laboratories. CDC has reported these data on its public facing website
COVID Data Tracker.
26According to CMS, tests performed in physician oﬃces are generally considered to be laboratory tests for
purposes of the federal regulation of laboratories.
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collecting point-of-care testing data is crucial and, as of June 4, 2020, it had undertaken
multiple eﬀorts to assist laboratories with reporting these data.
• CDC reported data that were not consistent. CDC reported testing data from diﬀerent
sources that have varied over time and have not been counting the tests the same way. The
agency sought to improve the consistency of testing data by posting guidance on its website
on May 6, 2020, for how the data should be submitted to states from clinical laboratories,
which are one source of laboratory data, but not all sources from which CDC has collected
state data have provided consistent testing data. For example, when states did not report data
for a given day, CDC collected and reported testing data from states’ websites that aggregate
testing data, but some states’ websites count the number of people tested while others count
the number of samples tested, which could include multiple tests of one person.
Further, in May 2020, CDC began reporting testing data it received directly from state health
departments or obtained from other sources—reporting 16.8 million tests as of May 31,
2020.27 CDC’s website initially referred to these data as viral testing data. However, these
data were inaccurate because some state submissions also included antibody tests that
detect prior COVID-19 infections. CDC subsequently changed its website to acknowledge
that the data may include antibody tests from some states. According to CDC, in order to act
quickly, it began collecting data from states on the total number of tests performed in early
April—when antibody tests were not common—and has since taken steps to distinguish viral
and antibody testing data. However, as of June 9, 2020, CDC continued to report these types of
tests together.28
We determined that the testing data that CDC has reported have not provided suﬃciently reliable
information on the amount of COVID-19 viral testing occurring over time because data have been
incomplete and inconsistent, but a recent action could improve the testing data CDC reports. CDC
maintains that these were the best testing data available and they have provided critical insights
into how much testing has occurred. However, CDC acknowledged limitations to these data and
we found that the absence of complete and consistent COVID-19 testing data reported through
May 31, 2020, has made it more diﬃcult to track and know the infection rate, mitigate the eﬀect of
infections, and inform decisions on reopening communities. The CARES Act included a provision
requiring laboratories to submit the result of each COVID-19 test in a manner speciﬁed by the
Secretary of Health and Human Services.29 Accordingly, on June 4, 2020, HHS issued guidance,
pursuant to its new authority under the CARES Act, that requires all laboratories performing viral
tests or other tests to diagnose a possible case of COVID-19 to submit data for these tests.30
Required data include those on point-of-care tests and those that identify whether a viral or
antibody test was performed. Importantly, the guidance also identiﬁes other required data
27CDC did not report the period of time during which these tests were performed.
28According to CDC, national laboratories reported that over 336,000 antibody tests were performed in the 15
states that included antibody tests in the data they provided CDC as of June 9, 2020. Although CDC told us that
these national laboratories conducted the majority of antibody testing, the amount of additional antibody tests
performed by other laboratories in these states was unclear.
29Pub. L. No. 116-136, § 18115, 134 Stat. at 574.
30Department of Health and Human Services, COVID-19 Pandemic Response, Laboratory Data Reporting: CARES Act Section
18115 (June 4, 2020).
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elements, such as patient demographic information, and directs laboratories to use existing
regional, state, or local submission methods to provide these data, which, in turn, are sent to CDC.
Laboratories must submit these data daily, starting as soon as possible and not later than August
1, 2020, according to the HHS guidance. We will continue to conduct work examining HHS and its
component agencies’ data reporting, plans, and activities related to COVID-19 testing.
Distribution, Acquisition, and Adequacy of Critical Supplies
The nationwide need for critical supplies to respond to COVID-19 quickly exceeded the quantity
contained in the SNS, which is designed to supplement state and local supplies during public
health emergencies. According to the President’s budget proposal for ﬁscal year 2021, the SNS
is the largest federally owned repository of pharmaceuticals, critical medical supplies, federal
medical stations, and medical equipment available for rapid delivery to support the response to a
public health emergency when state and local supplies are depleted.31 In such an event, the SNS
can be used as a short-term, stop-gap buﬀer, according to HHS oﬃcials. HHS’s ASPR is responsible
for overseeing the SNS.
According to ASPR oﬃcials we interviewed in April 2020, the SNS did not have the capacity to
provide states with supplies at the scale necessary to respond to a nationwide event such as
the COVID-19 pandemic. For example, according to an ASPR oﬃcial, the SNS did not contain
the number of N95 respirator masks that would be needed in a severe pandemic. In a hearing
before the Senate Committee on Appropriations on February 25, 2020, the Secretary of Health
and Human Services said that the SNS contained 30 million N95 respirator masks; he further
noted that health care workers could need 300 million to respond to the COVID-19 pandemic.32
According to ASPR oﬃcials, HHS did not replenish personal protective equipment to previous
levels following the H1N1 pandemic of 2009, because of a lack of funding. Further, according
to ASPR’s website, the SNS is primarily designed and resourced to address discrete events—for
example, limited displacements or localized disasters, such as hurricanes or terrorist attacks.
Annual appropriations for the SNS over the past decade ranged between $478 million (ﬁscal year
2013) and $705 million (ﬁscal year 2020), exclusive of the supplemental appropriations made
available through the four relief laws enacted to assist the response to COVID-19.33 However,
ASPR oﬃcials told us that annual appropriations have not been suﬃcient to cover the costs
associated with maintaining medical countermeasures necessary to respond to the tremendous
increase in the number of material threats over the same period. In its ﬁscal year 2018-2022
31Department of Health and Human Services, Fiscal Year 2021 Public Health and Social Services Emergency Fund:
Justiﬁcation of Estimates for the Appropriations Committee.
32HHS and Department of Defense oﬃcials’ accounts of the number of N95 respirator masks contained in the SNS
prior to the pandemic have varied. In a hearing before the Senate Committee on Homeland Security and Governmental
Aﬀairs on June 9, 2020, the Department of Defense Vice Director of Logistics noted that the SNS contained less than 18
million N95 respirator masks prior to the pandemic.
33For example, the CARES Act provided that up to $16 billion of the supplemental appropriations under the act are
available for the SNS. Although SNS funding ﬂuctuated between ﬁscal years 2009 and 2012 due to factors such as
sequestration, it experienced relatively steady funding with gradual increases from ﬁscal years 2013 to 2020.
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budget plan for medical countermeasure development, HHS noted the challenge of maintaining
a stockpile of medical countermeasures to use against many low-probability, high-consequence
threats, while also maintaining the capacity to rapidly respond to novel threats, like emerging
infectious diseases.34 In nine of the twelve years during this period (ﬁscal years 2009 through
2020), Congress appropriated to the SNS amounts equal to or more than what the administration
requested. In ﬁscal year 2020, the administration did not make a separate request for SNS
funding.
HHS has worked in coordination with FEMA and the Department of Defense (DOD) to increase
the availability of supplies for COVID-19. For example, HHS, FEMA, and DOD have purchased
additional supplies, which they have distributed to states and others. According to DOD oﬃcials,
distribution was based on allocation guidance provided by HHS and FEMA. However, there have
been reports that the federal acquisition and distribution eﬀorts to supplement SNS supplies
lacked coordination, and resulted in challenges obtaining supplies. For example, in April 2020, the
National Governors Association—whose membership comprises state governors, territories, and
commonwealths—noted in a memorandum to governors’ oﬃces that governors individually and
through the association had called for improved coordination in the federal response to enable
states to obtain critical supplies.35
The National Governors Association further noted that a more coordinated federal role would help
states to obtain personal protective equipment, ventilators, and other critical supplies to protect
responders and save lives without competition between states and with the federal government.
Similarly, the Governors of Colorado and Michigan testiﬁed before the House Committee on
Energy & Commerce in June 2020 that coordination of supplies between the federal government
and states needed to be improved.
In addition, the United States Conference of Mayors surveyed 213 mayors in March 2020 and
found that most cities did not have and could not obtain adequate equipment and supplies such
as test kits, face masks, and ventilators. As a result, the United States Conference of Mayors
asked the administration to “fully enforce” the Defense Production Act (DPA) for the purpose of
increasing medical supplies.36 That same month, the HHS Oﬃce of Inspector General reported
on hospital shortages of personal protective equipment and other supplies, such as nasal swabs
needed to test patients for COVID-19, in part due to supply chain issues or because supplies
received from the SNS were not suﬃcient in terms of quantity or quality. 37 The President has
34Department of Health and Human Services, Public Health Emergency Medical Countermeasures Enterprise Multiyear
Budget: Fiscal Years 2018-2022 (December 2019). The SNS contains countermeasures to respond to biological, chemical,
radiological, and nuclear events.
35National Governors Association, Governor Actions to Address PPE and Ventilator Shortages (Apr. 13, 2020), available at
https://www.nga.org/wp-content/uploads/2020/04/NGA-Medical-Equipment-Memo.pdf.
36The United States Conference of Mayors, Nation’s Mayors Urge President Trump to Fully Enforce the Defense Production
Act (Mar. 30, 2020), available at https://www.usmayors.org/2020/03/30/nations-mayors-urge-president-trump-to-fully-
enforce-the-defense-production-act/.
37Department of Health and Human Services, Oﬃce of Inspector General, Hospital Experiences Responding to the
COVID-19 Pandemic: Results of a National Pulse Survey March 23-27, 2020, OEI-06-20-00300 (Washington, D.C.: April 2020).
In its report, the Oﬃce of Inspector General noted that its ﬁndings were based on the perspectives of the hospital
administrators it collected information from during brief interviews at one point in time during the pandemic, that it did
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taken several actions to allow federal agency use of DPA authorities to mitigate COVID-19 supply
chain issues.
ASPR and FEMA oﬃcials told us that they did not consider the views of the National Governors
Association or the United States Conference of Mayors to be representative or reﬂective of the
entire response eﬀort. Moreover, ASPR oﬃcials noted that many state stockpiles were inadequate,
and that public reporting provides examples of where governors and mayors made unnecessarily
large demands for federal resources. FEMA oﬃcials also noted that states overestimated their
needs for supplies, such as ventilators. Although we requested information on the SNS inventory
prior to the pandemic, the types and amounts of supplies that states requested, as well as what
ASPR and FEMA distributed from the SNS in response to states’ requests, HHS and FEMA had not
provided this information as of June 12, 2020. We plan to continue to seek this information from
the agencies.
Findings from a 2019 pandemic planning exercise conducted by HHS’s ASPR in conjunction with
multiple federal agencies, states, and stakeholders highlighted concerns about supply availability,
as well as the SNS more generally, even before the emergence of COVID-19.38 For example, ASPR’s
ﬁndings noted that domestic manufacturing capacity would be unable to meet the demands for
personal protective equipment and other supplies in the event of a global inﬂuenza pandemic. The
concerns highlighted by the planning exercise echo concerns we raised almost two decades ago.
Speciﬁcally, in 2003, we reported that urban hospitals lacked the necessary equipment, such as
personal protective equipment, to respond to a large inﬂux of patients experiencing respiratory
problems caused by a bioterrorism event requiring a similar response to a naturally occurring
disease outbreak.39
In response to the ﬁndings from the 2019 exercise, ASPR recommended several actions, including
the development of a prioritization strategy for the distribution and allocation of scarce resources,
a report to Congress detailing supply chain shortages, and a legislative proposal to support the
investment in and development of domestic manufacturing capability. HHS oﬃcials told us that
the department had been unable to take action to address these recommendations prior to
the COVID-19 pandemic. However, in comments provided by HHS, the Department said ASPR
oﬃcials had met with key congressional staﬀ in October 2019 to highlight ﬁndings from the
exercise, including supply chain and personal protective equipment shortages, lack of domestic
manufacturing capacity, and potential funding requirements for medical countermeasures
development. Further, HHS oﬃcials told us that they have used lessons learned from the exercise
to inform the ongoing response to the COVID-19 pandemic, but did not provide any speciﬁc
examples.
As a result of ongoing supply issues, in addition to new purchases, FEMA, HHS, and DOD have
provided supplies through other federal inventories and other eﬀorts. For example, the Supply
not independently verify the information, and that it found some evidence of response bias with larger hospitals under-
represented.
38Department of Health and Human Services, Oﬃce of the Assistant Secretary for Preparedness and Response, Crimson
Contagion 2019 Functional Exercise After-Action Report (January 2020). The pandemic planning exercise consisted of
multiple meetings in 2019, which culminated in a four-day functional exercise held in August 2019.
39GAO, Hospital Preparedness: Most Urban Hospitals Have Emergency Plans but Lack Certain Capacities for Bioterrorism
Response, GAO-03-924 (Washington, D.C.: Aug. 6, 2003).
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Chain Task Force—jointly led by detailees from FEMA and DOD—has focused extensively on
identifying and providing personal protective equipment, ventilators, and other resources
requested by states, tribes, and territories, according to FEMA oﬃcials. The Supply Chain Task
Force launched Project Air Bridge on March 29, 2020, to expedite the delivery of critical supplies. 40
Through this project, these agencies transport supplies from oversees manufacturers to distribute
them to areas of need in the United States, reducing shipment time from weeks to days, according
to FEMA’s website.
More recently, on May 14, 2020, the Administration announced plans to restructure the SNS based
on lessons learned from recent pandemics, including COVID-19. The President signed an Executive
Order providing authority to the International Development Finance Corporation to make loans
and take other actions to expand domestic production of strategic resources needed to respond
to the COVID-19 pandemic.41 Following the administration's announcement and Executive Order,
ASPR issued a request for information to gather information from the private sector and other
organizations on how to restructure the SNS and improve supply availability, among other things.
We have ongoing work examining the materials states requested from the SNS for COVID-19; the
alignment of supplies in the SNS with threat risks; coordination and communication with states,
territories, localities, and tribes; and actions taken, if any, to mitigate supply gaps. We are also
examining how federal agencies used authority under the DPA to obtain needed supplies.
Table 1 provides a summary of additional information on the federal public health response
presented in enclosures in appendix III, which also include descriptions of GAO’s future work.
40The Supply Chain Task Force is one of eight task forces run by the Uniﬁed Coordination Group, out of the National
Response Coordination Center.
41Created in 2019 through the Better Utilization of Investments Leading to Development (BUILD) Act, the International
Development Finance Corporation supports development through equity ﬁnancing, debt ﬁnancing, political risk
insurance, and technical assistance.
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Table 1: Areas in Which the Federal Government Has Taken Action in the Public Health Response to COVID-19
Area name
Description
Relief for Health Care Providers
The Department of Health and Human Services is
distributing more than $177 billion to ﬁnancially support
health care providers, ﬁnance care for COVID-19 patients
and underserved populations, and ﬁnance existing Health
Resources and Services Administration programs.
Nursing Homes
The Department of Health and Human Services required
state survey agencies to focus on infection control
inspections as many nursing homes faced outbreaks of
COVID-19, and past inspections show that infection control
deﬁciencies had been widespread and persistent prior to
the pandemic.
Federal Eﬀorts to Provide Medical Supplies
States’ requests for medical equipment and supplies, such
as personal protective equipment, quickly exceeded the
capacity of the Strategic National Stockpile, resulting in a
multiagency response to acquire and distribute material.
COVID-19 Testing
The Department of Health and Human Services plays a key
role in coordinating test development and implementation,
but faces challenges in facilitating testing and reporting
results.
Vaccine and Therapeutics Development
Multiple federal agencies are taking actions to develop
vaccines and therapeutics to prevent and treat COVID-19,
including funding research and clinical trials, but it is not
known when or if a safe and eﬀective vaccine (or vaccines)
and therapeutics will be widely available.
Medicaid Financing, Waivers, and Flexibilities
Federal assistance related to COVID-19 provided increased
federal Medicaid funding for states and territories to
support the costs of their Medicaid programs, including
COVID-19 testing and treatment costs. The Centers for
Medicare & Medicaid Services has also approved waivers
and other ﬂexibilities to help state Medicaid programs
respond to the COVID-19 pandemic.
Medicare Waivers
In response to COVID-19, the Centers for Medicare &
Medicaid Services expanded availability of Medicare
services through widespread use of program waivers,
including for telehealth services. Careful monitoring and
oversight are required to prevent potential fraud, waste,
and abuse that can arise from these new waivers.
Indian Health Service
Indian Health Service received over $1 billion in
supplemental funds to prevent, prepare, and respond.
Veterans Health Care
The Veterans Health Administration has increased its
capacity to deliver COVID-19 care for veterans, through
eﬀorts such as hiring clinical staﬀ and increasing telehealth
services, using existing and supplemental funds.
Military Health
The Department of Defense has taken steps to test and
track COVID-19 cases among servicemembers, provide care
through the military health system, and protect the health
of U.S. military forces.
Medical Surge
Multiple federal agencies have deployed personnel,
alternative care sites, and equipment to help surge
medical and public health capabilities during the COVID-19
response.
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DOD Support to Civil Authorities
The Department of Defense is providing people,
equipment, and supplies to support civil authorities during
the COVID-19 pandemic.
HHS COVID-19 Funding
Congress appropriated more than $250 billion to the
Department of Health and Human Services to address
various aspects of the public health response to COVID-19,
of which about $101 billion had been obligated and
about $67 billion had been expended as of May 31, 2020,
according to department oﬃcials.
Source: GAO. | GAO-20-625
Intergovernmental Coordination, Eciency, and Program Integrity
Pose Challenges in Quickly Delivering Assistance to Individuals and
Households
Multiple agencies provided timely assistance to individuals and households to alleviate the
ﬁnancial hardships faced by many as the country worked to stop the spread of COVID-19. Key
eﬀorts in this area included economic impact payments, unemployment insurance, and nutrition
assistance. Agencies often faced challenges with intergovernmental coordination, eﬃciency, and
program integrity.
Economic Impact Payments
The Internal Revenue Service (IRS) moved quickly to identify eligible recipients of the economic
impact payments. Within 2 weeks after enactment of the CARES Act, Treasury, through its Bureau
of the Fiscal Service (BFS), and IRS disbursed more than 81 million payments totaling more than
$147 billion, all through electronic transfers to recipients’ bank accounts. As of May 31, 2020, IRS
and Treasury had disbursed 160.4 million payments worth $269.3 billion through a combination of
electronic transfers to bank accounts, paper checks, and prepaid debit cards. 42
The agencies faced diﬃculties with (1) identifying and then delivering payments to people who
did not ﬁle tax returns for 2018 or 2019, including recipients with low adjusted gross incomes or
whose sole income is federal beneﬁts, such as Social Security; (2) delivering payments to recipients
42To help individuals and households deal with the ﬁnancial stress caused by the pandemic, the CARES Act included a
credit for tax year 2020 of up to $1,200 per eligible individual or $2,400 for individuals ﬁling a joint tax return, plus up to
$500 per qualifying child (as deﬁned in section 24(c) of the Internal Revenue Code). The act also provided for an advance
refund of the credit. Pub. L. No. 116-136, 134 Stat. 281 at 335–40. The CARES Act refers to the credit and the advance
payments as Recovery Rebates. IRS refers to the advance refunds as Economic Impact Payments. The credit phases out
gradually based on adjusted gross income. Those ineligible for the credit include (1) nonresident aliens, (2) individuals
who can be claimed as a dependent by another taxpayer, and (3) an estate or trust. When spouses ﬁle jointly, both
spouses must have Social Security numbers (SSN) valid for employment to receive the payment unless either spouse is a
member of the U.S. Armed Forces at any time during the taxable year. In that case, only one spouse needs to have a SSN
valid for employment. The Joint Committee on Taxation estimates that in ﬁscal year 2020 the payments will total almost
$270 billion.
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without bank accounts or who have limited or no internet access; and (3) quickly distributing
paper checks, given that Treasury has capacity to deliver 5 to 7 million paper checks a week in
addition to checks for other federal programs.
IRS and Treasury face additional risks related to making improper payments to ineligible
individuals and fraud. 43 For example, IRS typically uses third-party data, such as the death records
maintained by the Social Security Administration (SSA), to detect and prevent erroneous and
fraudulent tax refund claims. Treasury and IRS did not use the death records to stop payments to
deceased individuals for the ﬁrst three batches of payments because of the legal interpretation
under which IRS was operating. The ﬁrst three batches of payments accounted for 72 percent
of the payments disbursed as of May 31. According to the Treasury Inspector General for Tax
Administration, as of April 30, almost 1.1 million payments totaling nearly $1.4 billion had gone to
decedents.44
According to IRS oﬃcials, an IRS working group charged with administering the payments ﬁrst
raised questions with Treasury oﬃcials about payments to decedents in late March as Congress
was drafting legislation. IRS counsel subsequently determined that IRS did not have the legal
authority to deny payments to those who ﬁled a return for 2019, even if they were deceased at the
time of payment. IRS counsel further advised that the agency should exercise discretion provided
for in the CARES Act to apply the same set of processing rules to recipients who had ﬁled a 2018
return but not yet a 2019 return. IRS oﬃcials said on the basis of this determination they did not
exclude decedents in their programming requirements.
According to Treasury oﬃcials, the CARES Act directed payments to taxpayers who ﬁled a 2018 or
2019 return, or allowed IRS to use information from taxpayers’ 2019 Social Security or Railroad
Retirement Beneﬁt Statement. Some of these taxpayers may have been deceased at the time
the payments were delivered. Treasury oﬃcials also stated that the CARES Act mandated the
delivery of the economic impact payments as “rapidly as possible.” To fulﬁll this mandate, Treasury
oﬃcials said Treasury and IRS used many of the operational policies and procedures developed
in 2008 for the stimulus payments, and therefore did not use the death records as a ﬁlter to
halt payments to decedents in the ﬁrst three batches of payments.45 However, in 2013, GAO
identiﬁed weaknesses in IRS processes that allowed payments to deceased individuals and
recommended corrective actions. As a result, IRS implemented a process to use death records
to update taxpayers’ accounts in order to identify and prevent improper payments.46 Bypassing
43An improper payment is deﬁned as any payment that should not have been made or that was made in an incorrect
amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally
applicable requirements. It includes, but is not limited to, any payment to an ineligible recipient. See 31 U.S.C. § 3351(4).
While improper payments may be the results of errors, they may also be the result of fraudulent activities. Fraud
involves obtaining something of value through willful misrepresentation. Whether an act is fraudulent is determined
through the judicial or other adjudicative system.
44According to IRS oﬃcials, these ﬁgures do not reﬂect returned checks or rejected direct deposits, the amount of which
IRS and the Treasury are still determining.
45The Economic Stimulus Act of 2008 mandated that IRS send stimulus payments to over 100 million households. Pub.
L. No. 110-185, 122 Stat. 613.
46GAO, Management Report: Improvements Are Needed to Enhance the Internal Revenue Service's Internal Controls,
GAO-13-420R (Washington, D.C.: May 13, 2013).
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this control for the economic impact payments, which has been in place for the past 7 years,
substantially increased the risk of potentially making improper payments to decedents.
According to a Treasury oﬃcial from the Oﬃce of Tax Policy, Treasury was unaware the payments
may go to decedents. Treasury oﬃcials said that upon learning that payments had been made
to decedents, Treasury and IRS, in consultation with counsel, determined that a person is not
entitled to receive a payment if he or she is deceased as of the date the payment is to be paid.
Such payments are potentially improper payments under the Payment Integrity Information Act of
2019.47 BFS and IRS removed such payments starting with the fourth payment batch.
On May 6, 2020, IRS announced on its website that if a payment was issued to a decedent or
incarcerated individual, the total amount should be returned.48 However, IRS does not currently
plan to take additional steps to notify ineligible recipients on how to return payments. Internal
control standards state that management should communicate the necessary information
to achieve the entity’s objectives. Also, management should select appropriate methods to
communicate, considering factors such as intended audience, availability of information, and cost
to communicate information.49 Ineligible payment recipients who do not visit IRS’s website or do
not have internet access may not be aware of the process to return payments.
IRS should consider cost-eﬀective options for notifying ineligible recipients on how to return
payments. For example, IRS sent letters to payment recipients’ last known address, within 15 days
after the economic impact payments were made, to provide information on how the payment was
made and how to report any failure to receive the payment. IRS could consider sending a similar
letter to all recipients or a subset of ineligible recipients notifying them about the payment return
process. Without exploring cost-eﬀective options to communicate the payment return process,
ineligible recipients who would otherwise want to return the payments may be unaware how to do
so.
The number of economic impact payments going to decedents also highlights the importance of
consistently using safeguards in providing government assistance to individuals. IRS has full access
to the death data maintained by SSA, but Treasury and BFS do not. Starting with the fourth batch
of payments, IRS provided BFS temporary access to the full death data to ﬁlter out decedents until
IRS was able to put in place its own process for ﬁltering out such payments. We have suggested
that Congress consider amending the Social Security Act to explicitly allow SSA to share its full
death data with Treasury for data matching to prevent payments to ineligible individuals.50 Both
47Pub. L. No. 116-117, 134 Stat. 113 (2020). The Payment Integrity Information Act of 2019 repealed improper payment
laws that were previously codiﬁed as amended at 31 U.S.C. 3321 note and enacted a new Subchapter in Title 31 of the
U.S. Code, containing substantially similar provisions. 31 U.S.C. §§ 3351-3358. While the core structure of executive
agency assessment, estimation, analysis, and reporting of improper payments remains consistent with the statutory
framework under the previous improper payment laws, there are some diﬀerences and enhancements under the
Payment Integrity Information Act of 2019.
48BFS also included a checkbox on the envelope that contained an economic impact payment paper check and
instructions for returning the check. These instructions directed individuals who received the check to return the
unopened envelope by mail to the Treasury if the recipient was deceased.
49GAO, Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: September 2014).
50GAO, Improper Payments: Strategy and Additional Actions Needed to Help Ensure Agencies Use the Do Not Pay Working
System as Intended, GAO-17-15 (Washington, D.C.: Oct. 14, 2016).
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Treasury and IRS having full access to death data will help ensure the integrity of direct payments
to individuals if Congress considers this type of assistance in the future.
IRS is also concerned that fraudsters could be using personally identiﬁable information to
receive payments that belong to eligible recipients by accessing the IRS Get My Payment portal
and routing the payment to a fraudster’s bank account. We previously raised concerns about
the authentication safeguards of IRS’s online portals and applications, including the need to
implement updated guidance. 51
Unemployment Insurance
The unprecedented number of unemployment insurance (UI) claims in the wake of the COVID-19
pandemic is posing challenges to states’ capacity to process them, making it diﬃcult for
individuals to access UI beneﬁts52. From March 21 to May 30, 2020, initial UI claims surpassed 42
million—compared to 5.1 million beneﬁciaries in all of ﬁscal year 2019, according to data provided
by the Department of Labor (DOL)—and unemployment is expected to remain elevated. States are
also implementing three new, federally funded programs created by the CARES Act that expand UI
eligibility and beneﬁts:53
• Pandemic Unemployment Assistance, which generally authorizes up to 39 weeks of UI beneﬁts
to those who would not otherwise be eligible, including the self-employed and certain gig
workers, who are unable to work as a direct result of COVID-19; 54
• Federal Pandemic Unemployment Compensation, which generally authorizes an additional
$600 weekly beneﬁt that augments UI beneﬁts through July 2020; 55 and
51GAO, Identity Theft: IRS Needs to Strengthen Taxpayer Authentication Eﬀorts, GAO-18-418 (Washington, D.C.: June 22,
2018). Speciﬁcally, we recommended that IRS develop a plan for implementing changes to its online authentication
programs consistent with new guidance and implement improvements to its systems to fully implement the new
guidance. As of January 2020, IRS had taken steps on these recommendations but had not yet fully implemented them.
52 The UI program is a federal-state partnership, with states responsible for administering the program, and the
Department of Labor’s Employment and Training Administration responsible for overseeing the program. Regular UI
beneﬁts are funded primarily through state payroll taxes on employers, and administrative costs are primarily funded
through a federal payroll tax on employers.
53According to data provided by DOL, as of June 9, 2020, all states had implemented Federal Pandemic Unemployment
Compensation, 51 states had implemented Pandemic Unemployment Assistance, 40 states had implemented Pandemic
Emergency Unemployment Compensation, and 40 states had implemented all three programs. For purposes of these
programs, the District of Columbia and various U.S. territories count as states.
54Pub. L. No. 116-136, § 2102, 134 Stat. at 313.
55Pub. L. No. 116-136, § 2104, 134 Stat. at 318.
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• Pandemic Emergency Unemployment Compensation, which authorizes an additional 13 weeks
of UI beneﬁts to those who exhaust their regular UI beneﬁts. 56
According to DOL oﬃcials and state workforce agency representatives, states face the following
challenges in their eﬀorts to address the needs of unemployed workers:
• Antiquated data systems that cannot process such large volumes of claims. According to
DOL and representatives of state workforce agencies, states with UI information technology
systems that date as far back as the 1970s have reported crashes due to the current claims
volumes. While DOL has assisted states’ eﬀorts to modernize their UI systems in recent years
by, for example, providing grants, technical assistance, and guidance, relatively few states had
load-tested their systems for the current volume of claims, according to representatives of
state workforce agencies.
• Lack of adequate staﬀ with the necessary experience to process claims. DOL oﬃcials and
state workforce agency representatives told us that many states had reduced the number of
staﬀ that manage UI claims before the pandemic, in response to strong economic conditions
and historically low unemployment rates. These oﬃcials also explained that given the complex
nature of the UI program, training staﬀ to process claims can require several months, and the
claims of self-employed and gig workers add another layer of complexity.
• The increased risk of improper payments given the new programs and increased
number of UI claims. Overall, due to its reported level of improper payments, estimated at
over $2.7 billion in overpayments in ﬁscal year 2019, the UI program has been designated as
a high-priority program by DOL’s Oﬃce of Inspector General. Furthermore, DOL’s experience
with temporary UI programs following natural disasters suggests there may be an increased
risk of improper payments associated with CARES Act UI programs. For example, DOL’s
Oﬃce of Inspector General has found improper payments in past audits of the Disaster
Unemployment Assistance program, the regulations for which generally apply to Pandemic
Unemployment Assistance program. Speciﬁcally, improper payments may occur when UI
claimants return to work but fail to report their employment, while continuing to claim
beneﬁts, among other reasons. There is also a risk of improper payments being made as a
result of the new Paycheck Protection Program (PPP),57 designed to provide loans to small
businesses to help them keep their workers on payroll. Improper payments could occur if
certain workers paid with PPP proceeds simultaneously also receive UI beneﬁts.
These challenges have resulted in delays and frustrations for individuals seeking UI beneﬁts. For
example, according to a nationwide Washington Post-Ipsos poll conducted in late April and early
May 2020, 40 percent of respondents who applied for UI beneﬁts were unable to complete their
applications due to technical problems, such as busy phone lines or system failures. 58
56Pub. L. No. 116-136, § 2107, 134 Stat. at 323.
57 See Pub. L. No. 116-136, §§ 1102, 1106 (2020); 85 Fed. Reg. 20811, 20814 (Apr. 15, 2020).
58The Washington Post-Ipsos poll was conducted online April 28-May 4, 2020, among a random national sample of
8,086 U.S. adults ages 18 and over. The sample was drawn through an ongoing survey panel recruited through random
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As businesses reopen and claimants seek reemployment, the UI program and its partners will face
additional challenges, with large numbers of workers returning to work. 59 As of June 3, 2020, DOL
had issued no new information speciﬁc to COVID-19 to states and others regarding reemployment
services, although DOL has reminded states and other partners of existing resources and
ﬂexibilities that can support services for all jobseekers. According to DOL, states already have
full authority to operate the programs that can serve jobseekers. Additionally, according to DOL,
states and local partners are beginning to deliver services both virtually and in person, and are
developing plans to deliver in-person services safely, such as by reconﬁguring physical space.60
Even as individuals are oﬀered the opportunity to return to work, they may choose not to do so.
For example, although the $600 additional weekly beneﬁt under Federal Pandemic Unemployment
Compensation, currently available through July 2020, can help claimants and promote public
health, it may be one of the reasons that individuals chose not to return to work as quickly as they
could. Also, claimants may have health and safety concerns, making them hesitant to return to
work.61 DOL has encouraged states to ask employers to provide information when workers refuse
to return to their jobs for reasons that do not support their continued eligibility for beneﬁts.62
To assist states, DOL issues guidance documents and provides technical assistance and funding.
DOL also conducts oversight of state UI activities, and is continuing to fully develop and implement
its approach for overseeing the new UI programs. DOL began issuing guidance to states in March
2020 to assist them in processing their claims volume and implementing new CARES Act programs,
which included, among other things, guidance to help states identify and prevent improper
payments.
Speciﬁcally, DOL has provided technical assistance to states through webinars and conference
calls; created a COVID-19 website for the UI programs; and created a COVID-19 email account
for states’ questions. Additionally, according to DOL, the department has worked collaboratively
with an association of state workforce agencies to develop training to support implementation of
the Pandemic Unemployment Assistance program and has provided technical assistance by, for
example, leveraging the assistance of its Chief Information Oﬃcer. DOL has disbursed to states
sampling of U.S. households. Overall results have a margin of sampling error of plus or minus 1 percentage point. For
results based on other subgroups, the margin of sampling error may be higher.
59DOL has issued about $222 million in discretionary grants to help address the workforce-related impacts of COVID-19,
according to a press release dated May 27, 2020. Additionally, several existing programs, also overseen by DOL, can
help unemployment insurance claimants ﬁnd reemployment. These include programs authorized under the Workforce
Innovation and Opportunity Act, and the Reemployment Services and Eligibility Assessment program. See Pub. L. No.
113-128, 128 Stat. 1425 (2014) and 42 U.S.C. § 506, respectively.
60Local workforce agencies provide a variety of employment services, including job search, training and other job
preparation activities.
61According to DOL, most state laws allow for refusal of suitable employment for good cause, which may include, but
are not limited to, the degree of risk to an individual’s health and safety. Speciﬁcally related to the COVID-19 pandemic,
DOL has issued guidance stating that if individuals have left an employer due to pandemic health concerns related
to themselves or the care of others and do not return, state law can be used to determine if this was a good cause
separation. Department of Labor, Unemployment Insurance Program Letter, No. 10-20 (Mar. 12, 2020).
62Department of Labor, Unemployment Insurance Program Letter, No. 23-20 (May 11, 2020). Additionally, DOL has
provided guidance to state UI agencies that explains that individuals who refuse to return to work when requested by
their employer or refuse a suitable job oﬀer do not qualify for Pandemic Unemployment Assistance. Department of
Labor, Unemployment Insurance Program Letter, No. 16-20, Change 1, Attachment 1 (April 27, 2020).
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nearly all of the $1.0 billion in emergency administrative funds provided through the Families First
Coronavirus Response Act. 63 This additional funding is expected to assist states by addressing
their capacity to process the massive volume of claims. 64
DOL oﬃcials told us that they are developing comprehensive monitoring materials and training
to guide DOL staﬀ in conducting program reviews of states to help ensure that states have
the necessary processes in place to properly operate the programs and to detect and recover
overpayments. Improper payment prevention and detection for the UI program has long been a
concern identiﬁed by the DOL Oﬃce of Inspector General.
In addition to the UI programs, the CARES Act created some programs through SBA to, among
other things, help small businesses keep workers on their payroll. The new PPP created by the
CARES Act could increase the risk of improper payments in the UI program. The UI program
is generally intended to provide beneﬁts to individuals who have lost their jobs; under PPP,
employers are generally required to retain or rehire employees (or face reductions in loan
forgiveness eligibility).65 According to SBA oﬃcials, consistent with PPP regulations, employers that
take PPP loans must generally rehire laid-oﬀ employees or face loan forgiveness reductions, and
must report to the state UI agency if any of those employees refuse to return to work. 66
In the information DOL has provided to state unemployment agencies, it notes that states are
expected to enforce statutory provisions related to fraud, or risk violating their agreement to
administer the CARES Act UI programs. However, this information does not mention PPP loans
or the risk of improper payments associated with such loans. According to DOL, no mechanism
currently exists that could capture information in real time about UI claimants who may receive
wages paid from PPP loan proceeds. DOL told us it plans to issue questions and answers to
state agencies about this risk in the near future. Federal internal control standards state that
eﬀective information and communication are vital for an entity to achieve its objectives. 67 As
such, the standards state that management should externally communicate the necessary quality
information to achieve its objectives. Given the large number of SBA PPP loans and the millions
applying for UI beneﬁts, such clariﬁcation would call state attention to the potential for fraudulent
or otherwise improper payments.
63Pub. L. No. 116-127, § 4102, 134 Stat. at 192. According to information provided by the DOL, as of May 19, 2020, it had
provided $997,801,232 in emergency administrative funds to states.
64Administrative expenses may include staﬃng and systems costs.
65 See Pub. L. No. 116-136, § 1106(d), 134 Stat. 281, 298-300 (2020); SBA, Business Loan Program Temporary Changes;
Paycheck Protection Program—Requirements—Loan Forgiveness, (May 22, 2020). See also SBA, Paycheck Protection
Program Loans Frequently Asked Questions, Question 36 and 40, pp. 12-13 (May 27, 2020).
66In an interim ﬁnal rule posted on May 22, 2020, SBA required that PPP borrowers inform the applicable state
unemployment insurance oﬃce if an employee rejected an oﬀer of reemployment within 30 days of the employee’s
rejection of the oﬀer in order to qualify for an exemption to a reduction in the loan forgiveness amount due to
decreased employment numbers. 85 Fed. Reg. 33,004, 33,007 (June 1, 2020).
67 GAO-14-704G. See Internal Controls, Principle 15.
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Nutrition Assistance
To help people access grocery and meal assistance and reduce administrative demands on
state agencies due to the pandemic, the U.S. Department of Agriculture’s (USDA) Food and
Nutrition Service (FNS) has approved hundreds of waivers and allowed other ﬂexibilities across the
Supplemental Nutrition Assistance Program (SNAP), child nutrition programs, and other programs.
68 For example, FNS allowed states to provide increased SNAP beneﬁts through emergency
allotments to households not already receiving the maximum amount to purchase food.
However, FNS has also denied some waiver requests from states, including some of which may
aﬀect particularly vulnerable populations. For instance, FNS denied requests from 31 states to
suspend the requirement that college students work at least 20 hours per week or participate in
federal work study to be eligible for SNAP. In letters to FNS, states reported that otherwise eligible
students could not meet these requirements due to campus and business closures. FNS has
also reiterated that states cannot provide emergency allotments to households that are already
receiving the maximum SNAP beneﬁt amount. 69 In a letter explaining these denials and others,
FNS stated that it considered factors outlined in the Families First Coronavirus Response Act. 70
FNS oﬃcials further explained that they did not consider waiving restrictions on students’ eligibility
to be allowable under these factors, and that providing emergency allotments above maximum
SNAP beneﬁt amounts was prohibited based on provisions in the Families First Coronavirus
Response Act and the Food and Nutrition Act of 2008.
Table 2 provides a summary of additional information on federal assistance to individuals
presented in enclosures in appendix III, which also include descriptions of GAO’s future work.
68FNS has provided these waivers and other ﬂexibilities using its authorities under the Families First Coronavirus
Response Act and other existing authorities. For this report, we reviewed federal actions in response to COVID-19 for the
following nutrition assistance programs: SNAP; child nutrition programs (including the National School Lunch Program,
School Breakfast Program, Summer Food Service Program, and the Child and Adult Care Food Program, among other
programs); the Special Supplemental Nutrition Program for Women, Infants, and Children; and the Emergency Food
Assistance Program, which are all administered by USDA; and nutrition services for older adults, which is administered
by HHS. More information on these programs is included in the enclosures of this report.
69These households had incomes averaging 23 percent of federal poverty guidelines (which was about $4,800 annually
for a family of three in 2018), and made up an estimated 37 percent of SNAP households in ﬁscal year 2018, based
on the most recent available data. See U.S. Department of Agriculture, Food and Nutrition Service, Characteristics of
Supplemental Nutrition Assistance Program Households: Fiscal Year 2018 (Alexandria, Va.: 2019).
70U.S. Department of Agriculture, Food and Nutrition Service, RE: Supplemental Nutrition Assistance Program (SNAP)–Denial
of Certain Requests to Adjust SNAP Regulations (Apr. 10, 2020). Section 2302 of the Families First Coronavirus Response Act
allows the Secretary of Agriculture to adjust SNAP issuance methods and application and reporting requirements to be
consistent with what is practicable under actual conditions in aﬀected areas. In making such adjustments, the Families
First Coronavirus Response Act provides that the Secretary shall consider the availability of oﬃces and personnel in state
agencies, any conditions that make reliance on electronic beneﬁt transfer systems impracticable, any disruptions of
transportation and communication facilities, and any health considerations that warrant alternative approaches. Pub. L.
No. 116-127, § 2302(a)(2), 134 Stat. at 188-89.
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Table 2: Areas in Which the Federal Government Has Taken Action to Assist Individuals in Response to COVID-19
Area name
Description
Nutrition Assistance
The federal response to the COVID-19 pandemic included
additional funds and increased ﬂexibilities for state, tribal,
and local agencies to provide nutrition assistance across
various programs; however, some vulnerable populations
may not be able to access assistance, and there are
operational challenges in implementing program changes.
Child Care
The Administration for Children and Families’ Oﬃce
of Child Care is helping states to implement available
ﬂexibilities in the CARES Act and the Child Care and
Development Block Grant Act of 1990, as amended, to
address the impacts of COVID-19, but has not determined
how it will collect data on states’ use of CARES Act
supplemental funding.
Emergency Financial Aid for College Students
The Department of Education awarded schools nearly all
of the initial $6.3 billion designated for college students’
emergency ﬁnancial aid, but the department’s evolving
communications may have delayed schools’ distribution of
funds to students.
Leave Beneﬁts and Tax Relief for Employers
Employers have begun claiming refundable tax credits to
mitigate the cost of paid leave for employees; agreements
between the Internal Revenue Service and the Small
Business Administration to help ensure compliance have
not been ﬁnalized.
Department of Housing and Urban Development Programs The CARES Act appropriated approximately $12.4 billion
to the Department of Housing and Urban Development,
and the agency had obligated approximately 18 percent of
program funds as of May 31, 2020.
Retirement Accounts
Expanded options for withdrawals and loans from
retirement accounts can provide ﬁnancial assistance during
the pandemic, but may aﬀect future retirement security.
Tax Deduction for Charitable Contributions
The CARES Act increases tax beneﬁts for individuals and
corporations that donate to nonproﬁts, but the eﬀect on
charitable giving is uncertain.
Unemployment Insurance Programs
The unprecedented volume of new unemployment
insurance claims in the wake of the COVID-19 pandemic
poses major challenges for federal and state oﬃcials to
provide beneﬁts, help with reemployment, and identify and
prevent improper payments.
Federal Student Loans
The Department of Education quickly suspended interest
accrual and student loan payments but some types of
involuntary collections and communications to borrowers
were more challenging to address quickly.
Economic Impact Payments
As of May 31, the Department of the Treasury and Internal
Revenue Service (IRS) sent over 160 million payments to
recipients for whom IRS has the necessary information.
These payments totaled $269.3 billion. Treasury and IRS
still face challenges to ensure that eligible individuals
receive their payments, to prevent improper payments, and
to combat fraud.
Housing Protections
Agencies have issued guidance on CARES Act housing
protections, but challenges remain in ensuring that
homeowners and renters beneﬁt.
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Source: GAO. | GAO-20-625
While Millions of Loans Were Made Quickly, Limited Safeguards and
Lack of Timely and Complete Guidance Aected Economic and Industry
Support
The CARES Act includes a number of programs to help industries and businesses. SBA’s PPP is the
largest of these programs and one of the ﬁrst to be implemented. However, the limited safeguards
and lack of timely and complete guidance and oversight planning have increased the likelihood
that borrowers may misuse or improperly receive loan proceeds. For example, while SBA planned
to review loans of more than $2 million, as of June 15, 2020, it had not provided details on how
it planned to carry out that work, and it had not provided information on oversight plans for the
more than 4 million loans of less than $2 million each.
The CARES Act authorized and appropriated $349 billion for SBA to guarantee loans to small
businesses and other organizations adversely aﬀected by COVID-19.71 PPP loans, which are made
by lenders but are guaranteed 100 percent by SBA, are low-interest (1 percent) and will be fully
forgiven if certain conditions are met. As originally implemented by SBA, at least 75 percent of
the loan forgiveness amount must have been for payroll costs. However, the Paycheck Protection
Program Flexibility Act of 2020 modiﬁed this limit to at least 60 percent.
Status of Implementation
Lenders and SBA moved quickly to make and process PPP loans. As a result, the CARES Act funding
for the program was exhausted within 2 weeks of its launch. Congress appropriated an additional
$321 billion for PPP through the Paycheck Protection Program and Health Care Enhancement
Act.72 As of June 12, 2020, lenders had made about 4.6 million loans totaling about $512 billion
or approximately 76 percent of the available funds.73 The $512 billion represents loan guarantee
obligations for SBA and does not include lender fees authorized by the CARES Act. The amount
SBA will ultimately expend depends on the number of loans forgiven and, for those that are not
forgiven, whether they are timely repaid. As of May 31, 2020, SBA had obligated about $521 billion
in total for the PPP program and expended about $2.1 billion in lender fees.
71Pub. L. No. 116-136, §§ 1102(b)(1), 1107(a)(1), 134 Stat. at 293, 301. PPP was authorized under SBA’s 7(a) small
business lending program.
72Pub. L. No. 116-139, § 101(a), 134 Stat. at 620.
73Totals reﬂect both rounds of PPP funding and loan cancellations as of June 12, 2020. Some borrowers, including
publicly traded companies, have canceled their loans. According to SBA, more than 170,000 loans totaling about $38.5
billion had been canceled as of May 31, 2020.
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To implement the program, SBA had issued 18 interim ﬁnal rules and 17 updates to its frequently
asked questions, as of June 15, 2020 (see ﬁg. 5). The interim ﬁnal rules and frequently asked
questions address topics such as eligibility, calculating payroll costs, and loan forgiveness.
Figure 5: Timeline for Paycheck Protection Program, as of June 15, 2020
Critical Information on Loan Forgiveness
In its initial interim ﬁnal rule posted on April 2, 2020, SBA provided some information on loan
forgiveness for both borrowers and lenders, such as the percentage that borrowers had to spend
on payroll costs to be eligible for forgiveness.74 However, SBA did not release the loan forgiveness
application until May 15, 2020, and delayed posting key regulations on loan forgiveness until
May 22, 2020.75 In the interim ﬁnal rule, SBA stated that the agency was addressing lenders’
and borrowers’ need for clarity and certainty concerning loan forgiveness requirements. As a
74 See 85 Fed. Reg. 20,811 (Apr. 15, 2020). In addition, SBA provided some information on loan forgiveness in responses
to frequently asked questions posted on April 6, 8, 26, 29, and May 3.
75The CARES Act required SBA to issue guidance and regulations implementing PPP loan forgiveness within 30 days of
enactment (by April 26, 2020). Pub. L. No. 116-136, § 1106(k) 134 Stat. at 301. The interim ﬁnal rule that SBA posted on
May 22, 2020, clariﬁes that lenders are generally responsible for reviewing the loan forgiveness application to make a
decision regarding loan forgiveness. See 85 Fed. Reg. 33,004, 33,005 (June 1, 2020). If the lender determines that the
borrower is entitled to forgiveness of some or all of the amount applied for under the statute and applicable regulations,
the lender must request payment from SBA at the time the lender issues its decision to SBA. SBA may review the loan or
loan application before sending forgiveness funds to the lender.
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result, more than 4 million loans were approved before borrowers received this critical clarifying
information on loan forgiveness.
Under the CARES Act, borrowers originally had 8 weeks after loan disbursement to use the funds
and be eligible for forgiveness.76 Representatives of a lender and a small business association
told us that some borrowers were afraid to close their loans or start using the funds without
additional guidance, resulting in additional economic stress for employees. Similarly, there have
been reports of small businesses returning their loans out of concern that they may not qualify for
loan forgiveness because there has been limited guidance on this topic.
Initial Safeguards
Given the immediate need for PPP loans, SBA worked to streamline PPP so that lenders could
begin distributing funds as quickly as possible. SBA’s initial interim ﬁnal rule allowed lenders to
rely on borrower certiﬁcations to determine the borrower’s eligibility and use of loan proceeds,
and required limited lender review of documents provided by the borrower to determine the
qualifying loan amount and eligibility for loan forgiveness.77
Among other things, as set forth in the CARES Act, borrowers had to certify in good faith that (1)
current economic uncertainty made the loan request necessary to support the applicant’s ongoing
operations and (2) the funds would be used to retain workers and maintain payroll or make
mortgage interest payments, lease payments, and utility payments. To streamline the process, SBA
required minimal loan underwriting from lenders—limited to actions such as conﬁrming receipt
of borrower certiﬁcations and supporting payroll documentation—leaving the program more
susceptible to fraudulent applications.78 As we have previously reported, reliance on applicant
self-certiﬁcations can leave a program vulnerable to exploitation by those who wish to circumvent
eligibility requirements or pursue criminal activities.79
76The Paycheck Protection Program Flexibility Act of 2020, which was enacted on June 5, 2020, extended the “covered
period” during which borrowers can spend forgivable expenses from 8 weeks to 24 weeks or December 31, 2020,
whichever is earlier. On June 11, 2020, SBA posted an interim ﬁnal rule implementing key provisions of the Paycheck
Protection Program Flexibility Act of 2020. See 85 Fed. Reg. 36,308 (June 16, 2020).
77 See 85 Fed. Reg. 20,811 (Apr. 15, 2020). The interim ﬁnal rule stated that lenders would be held harmless for
borrowers’ failure to comply with program criteria.
78 See 85 Fed. Reg. 20,811, 20,815 (Apr. 15, 2020). Because of the limited loan underwriting, lenders and SBA have less
information from applicants to detect errors or fraud. For standard loans under SBA’s 7(a) program, borrowers have
to provide documentation that includes a completed application, personal and business ﬁnancial statements, and
income tax returns. However, the initial interim ﬁnal rule’s requirement that lenders follow applicable Bank Secrecy
Act requirements may require lenders to collect additional identifying information from borrowers before approving
a PPP loan. (The Bank Secrecy Act and its implementing regulations generally require ﬁnancial institutions, including
banks, to collect and retain various records of customer transactions, verify customers’ identities, maintain anti-money
laundering compliance programs, and report suspicious transactions.) In an interim ﬁnal rule posted to SBA’s website on
May 22, 2020, SBA informed lenders that the lender would not receive its lender processing fee if SBA determined that
the borrower was ineligible for a PPP loan. See 85 Fed. Reg. 33,010, 33,014 (June 1, 2020).
79GAO, Aviation: FAA Needs to Better Prevent, Detect, and Respond to Fraud and Abuse Risks in Aircraft Registration,
GAO-20-164 (Washington, D.C.: Mar. 25, 2020).
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In the initial interim ﬁnal rule, SBA also stated that it would direct a small business that used PPP
funds for unauthorized purposes to repay those amounts, and that the applicant could be subject
to additional liability, such as fraud charges, if these funds were knowingly used for unauthorized
purposes.80 The rule also included some safeguards for lenders that were not federally insured
depository institutions or federally insured credit unions, such as requiring that they comply with
Bank Secrecy Act requirements.81
Ongoing Oversight
Because SBA had limited time to implement up-front safeguards for the loan approval process and
assess program risks, ongoing oversight will be crucial. SBA has announced eﬀorts to implement
safeguards after loan approval but has provided limited information on how it will implement
these safeguards. On April 28, 2020, Treasury and SBA announced that SBA would review loans
of more than $2 million (about 30,000 loans that represent about 21 percent of the approved
dollar amount of PPP loans as of June 12, 2020) to conﬁrm borrower eligibility after the borrower
applied for loan forgiveness.82 In an interim ﬁnal rule posted on May 22, 2020, SBA noted that it
may review any PPP loan it deems appropriate.
These reviews may include whether a borrower was eligible for the PPP loan, calculated the loan
amount correctly, used loan proceeds for the allowable uses, or was entitled to loan forgiveness
in the amount claimed.83 However, as of June 15, 2020, SBA had not provided us additional
details—including time frames and speciﬁc review procedures—on how it would conduct its review
of all loans for more than $2 million. Further, SBA had not informed us of any speciﬁc oversight
plans for the more than 4 million loans of less than $2 million, including how it would identify
which loans to review and the number of reviews planned.84
80In addition to SBA, other federal agencies are taking steps to identify potential fraud in PPP. For example, on May 5,
2020, the Department of Justice announced that it was working to address abuse related to CARES Act programs and
had charged two businessmen with allegedly seeking more than $500,000 in PPP loans fraudulently.
81Federally insured depository institutions are already subject to Bank Secrecy Act requirements.
82SBA later announced that PPP borrowers could repay the loan in full by May 18, 2020, and would be considered to
have made their necessity certiﬁcation in “good faith.” That is, SBA would not investigate these borrowers for fraud
related to this certiﬁcation. On May 13, 2020, SBA stated in a response to a frequently asked question that SBA would
deem borrowers who received PPP loans of less than $2 million to have made the required certiﬁcation concerning the
necessity of the loan request in good faith. SBA also stated it would review borrowers with loans greater than $2 million
to determine if they had an adequate basis for making the required good-faith certiﬁcation.
83According to the interim ﬁnal rule, SBA will determine whether a borrower was eligible for a PPP loan based on the
provisions of the CARES Act, the rules and guidance available at the time of the borrower’s PPP loan application, and the
terms of the borrower’s loan application.
84After our cutoﬀ date of June 15, 2020, SBA provided some additional information on its planned reviews of loans.
Regarding the agency’s reviews of loans over $2 million, SBA stated that it expects to facilitate these reviews, in part,
through electronic screening of borrower and loan characteristics that may conﬁrm the validity of the certiﬁcation.
Regarding the agency’s reviews of loans of less than $2 million, SBA stated that loan ﬁles may be selected through
appropriate statistical sampling or in response to speciﬁc reports or evidence of fraud or noncompliance.
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Federal internal control standards state that management should consider the potential for fraud
when identifying, analyzing, and responding to risks.85 Because of the number of loans approved,
the speed with which they were processed, and the limited safeguards, there is a signiﬁcant
risk that some fraudulent or inﬂated applications were approved. In addition, the lack of clear
guidance has increased the likelihood that borrowers may misuse loan proceeds or be surprised
they do not qualify for full loan forgiveness.
As discussed above, Congress has charged SBA with implementing the PPP and other provisions
crucial to the nation’s economic recovery. However, SBA to date has failed to provide information
critical to our review, including a detailed description of data on loans made. 86 The agency
provided primarily publicly available information in response to our inquiries. SBA oﬃcials met
with GAO in the beginning of June to discuss questions we had provided about 6 weeks earlier.
GAO continues to work with SBA oﬃcials to obtain needed data and other information.
Most agencies were generally able to provide GAO timely access to information for this report
while executing their responsibilities during this unprecedented national crisis. In this regard,
they have shown that it is not only possible but imperative to cooperate in a meaningful way with
oversight of the trillions of dollars of public money appropriated in the COVID-19 relief laws as
they carry out their responsibilities.
Federal Reserve Loans
The CARES Act also provides economic and business support by authorizing up to $454 billion
and potentially certain other amounts for Treasury to support the Board of Governors of the
Federal Reserve System (Federal Reserve) in establishing lending programs (or facilities) to provide
liquidity to the ﬁnancial system that provides lending to states, tribes, municipalities, and eligible
businesses. The facilities are authorized under section 13(3) of the Federal Reserve Act and must
be approved by the Secretary of the Treasury.87
In March and April 2020, the Federal Reserve introduced seven lending facilities supported
through Treasury’s CARES Act appropriated funds (see table 3). As of June 8, 2020, Treasury had
committed $195 billion, or about 43 percent, of the $454 billion available from the CARES Act to
support the seven facilities, and Treasury’s funding will allow the facilities to support up to $1.95
trillion of transactions. As of the same date, two of the seven lending facilities—the Secondary
Market Corporate Credit Facility and the Municipal Liquidity Facility—were operational, for which
Treasury had disbursed $37.5 billion and $17.5 billion, respectively.
85 GAO-14-704G.
86Section 19010 of the CARES Act provides GAO with a broad right of access to records pertaining to any federal eﬀort
or assistance related to the pandemic, along with the right to make copies of such records, interview staﬀ, and inspect
facilities. Pub. L. No. 116-136, § 19010(d), 134 Stat. at 580-81.
87Section 13(3) of the Federal Reserve Act permits the Federal Reserve to provide emergency lending.
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Table 3: Federal Reserve Lending Facilities with CARES Act Funding, as of June 8, 2020
Name of facility
Purpose
Facility activity
1. Primary Market Corporate Credit
Facility
2. Secondary Market Corporate Credit
Facility
Support large businesses
Primary market facility: purchase
qualifying bonds directly from and
purchase portions of syndicated loans
made to eligible issuers.
Secondary market facility: purchase
qualifying corporate bonds and U.S.-
listed exchange-traded funds in the
secondary market.
3. Main Street New Loan Facility
4. Main Street Priority Loan Facility
5. Main Street Expanded Loan Facility
Support small- and medium-sized
businesses
New loan and priority loan facilities:
purchase 95 percent participation
interests in newly issued eligible loans
that eligible lenders make to eligible
borrowers.
Expanded loan facility: purchase 95
percent participation interests in a new
extension of credit under an existing
eligible loan made by an eligible lender
to an eligible borrower.
6. Municipal Liquidity Facility
Support states, and certain counties,
cities, multi-state entities, and revenue
bond issuers
Purchase eligible notes directly from
eligible issuers at time of issuance.
7. Term Asset-Backed Securities Loan
Facility
Support consumers and businesses
Provide non-recourse loans to U.S.
companies secured by qualifying asset-
backed securities generally backed
by recently originated consumer and
business loans.
Source: GAO analysis of Board of Governors of the Federal Reserve System (Federal Reserve) documents. | GAO-20-625
Treasury oﬃcials said they are monitoring market conditions to help inform how best to commit
the remaining funds. Federal Reserve and Treasury oﬃcials said they are taking steps to bring the
other ﬁve facilities into operation, but oﬃcials do not have speciﬁc dates for when most of the
other facilities will become active. In its most recent periodic reports to Congress on the lending
facilities, the Federal Reserve Board stated it continues to expect that the facilities will not result in
losses to the Federal Reserve. Based in part on information from the Federal Reserve Board, the
Congressional Budget Oﬃce (CBO) estimates no deﬁcit eﬀect to the federal government.
Table 4 provides a summary of additional information on federal support for industry and the
economy presented in enclosures in appendix III, which also include descriptions of GAO’s future
work.
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Table 4: Areas in Which the Federal Government Has Taken Action to Support Industry and the Economy in
Response to COVID-19
Area name
Description
Small Business Programs
The Small Business Administration approved more than
1 million economic injury disaster loans, but information
technology challenges and processing delays hampered
implementation.
Paycheck Protection Program
The Paycheck Protection Program was designed to give
assistance to small businesses and other organizations that
were aﬀected by COVID-19.
Federal Reserve Emergency Lending Programs
In response to the economic downturn caused by
COVID-19, among other actions, the Board of Governors
of the Federal Reserve System, with the Department of
the Treasury approval, authorized the establishment
of seven emergency lending programs (or facilities)
supported through the Department of the Treasury funding
appropriated under the CARES Act. The facilities are to help
provide credit to eligible businesses, states, tribes, and
municipalities. As of June 8, 2020, only two of the seven
facilities were operational.
Tax Relief for Businesses
It is too early to know the extent businesses are taking
advantage of certain tax relief options—such as carrying
additional losses back to prior tax years—but refunds
may be delayed if businesses who must submit amended
returns do so on paper.
Aviation Sector Financial Assistance
The Department of the Treasury and the Federal Aviation
Administration have begun to provide funding to help
the nation’s aviation industry and airports respond to
and recover from the economic eﬀects of the COVID-19
pandemic.
Agriculture Spending and Food Safety Inspections
The U.S. Department of Agriculture is providing $16 billion
in direct payments to agricultural producers, as well as $3
billion in food purchases for redistribution to food banks,
nonproﬁts, and other entities. Federal inspections of meat
and poultry plants continue.
U.S. Department of Agriculture Support for Rural America
CARES Act funding provides support for U.S. Department
of Agriculture programs to help address the COVID-19
pandemic in rural America.
Temporary Financial Regulatory Changes
Federal agencies have issued rules or statements on
ﬁnancial regulatory changes and have not exercised certain
emergency authorities under the CARES Act.
Department of Commerce Support for Industries and the
Economy
The CARES Act provided additional appropriations for four
Department of Commerce bureaus to aid the economy and
industries aﬀected by the COVID-19 pandemic.
Department of Defense Working Capital Funds
COVID-19 could further impact the Department of
Defense’s working capital fund balances, even with
additional appropriated amounts provided by the CARES
Act.
Source: GAO. | GAO-20-625
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The Four COVID-19 Relief Laws Provide Aid to States, Localities,
Territories, and Tribes through Various Programs
The four COVID-19 relief laws enacted at the time of our review provide an estimated $335 billion
in funds to agencies for assisting U.S. states, localities, territories, and tribes in their responses to
the COVID-19 pandemic. 88 Six programs account for approximately 89 percent, or $299 billion, of
the total estimated funding.
• Coronavirus Relief Fund. This new funding source, administered by Treasury, provides direct
assistance to states, localities, tribal governments, the District of Columbia, and U.S. territories
to help oﬀset costs of their response to the COVID-19 pandemic.
• Medicaid. Medicaid is administered by states and territories according to plans approved
by CMS, which oversees Medicaid at the federal level. This program ﬁnances health care for
certain low-income and medically needy individuals, through federal matching of states’ and
territories’ health care expenses. The Families First Coronavirus Response Act temporarily
increased the federal matching rate for states that meet speciﬁc requirements and increased
the federal Medicaid spending cap for territories. The act also provided an additional coverage
option for the duration of the COVID-19 public health emergency.
• FEMA’s Disaster Relief Fund. This fund is the major source of federal disaster recovery
assistance for state, local, and territorial governments when a disaster occurs. For the
COVID-19 pandemic, recipients can use funds to lessen the immediate threat to public health
and safety, like standing up emergency medical facilities. 89
• Education Stabilization Fund. Administered by the Department of Education, this fund
provides formula and discretionary grants to states for support of educational services.90 For
example, local educational agencies, which receive funds from their state, may use funds for
a variety of purposes in response to COVID-19, including technology acquisition to facilitate
remote learning, activities to address unique needs of low-income students, and mental health
services, among others. U.S. territories and Bureau of Indian Education programs receive
funds under the Education Stabilization Fund as well.
• Transit grants. These are formula grants, administered by the Department of Transportation
(DOT), that provide funding through pre-existing federal grant programs to state and local
transit agencies and are available, among other things, to cover certain eligible operating,
planning, and capital expenses, including administrative leave for workers, in response to
conditions caused by COVID-19.
88This total is based on an analysis of the appropriated amounts in the four COVID-19 relief laws enacted at the time
of our review, along with the Congressional Budget Oﬃce’s estimated outlays for Medicaid increases resulting from
changes in program authorizations made under the laws.
89The CARES Act appropriated funds to the Disaster Relief Fund, which may be used for various disaster assistance
programs, including the Public Assistance program, which provides assistance to states and localities.
90Funds under the Education Stabilization Fund provided through the Governor’s Emergency Education Relief Fund
are provided to the Governor of each state and Puerto Rico, as well as the Mayor of the District of Columbia.
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• Airport grants. These are formula grants, administered by DOT, that provide funds for
airports to prevent, prepare for, and respond to the eﬀects of the COVID-19 pandemic.91
According to agency data, $159 billion of funds from these six programs had been disbursed (i.e.,
expended) as of May 31, 2020 (see table 5 for appropriations and expenditures). One program, the
Coronavirus Relief Fund, has disbursed almost all appropriated funds, although the administering
agency, Treasury, missed a deadline for disbursing these funds to tribal governments. Other
programs have disbursed a smaller portion of available funds.
91Funds are available to eligible sponsors of airports. Nearly all of these airports are under city, state, county, or
public-authority ownership.
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Table 5: Appropriations and Expenditures for Selected Federal Programs Providing COVID-19 Related Aid to
States, Localities, Territories, and Tribes
Program
Appropriations (in dollars)
Expenditures as of May 31, 2020 (in
dollars)
Coronavirus Relief Fund
$150 billion
$147 billion
Medicaid
52 billiona
7 billion
Federal Emergency Management
Agency’s Disaster Relief Fund
45 billion
1 billionb
Transit grants
25 billion
3 billion
Education Stabilization Fund
17 billionc
83 million
Airport grantsd
10 billion
288 million
Source: GAO analysis of federal laws; Congressional Budget Oﬃce (CBO) data and information and data from the Centers for Medicare & Medicaid Services, the Departments of
Education, Homeland Security, and Transportation, and Department of the Treasury. | GAO-20-625
Note: The COVID-19 relief laws appropriating the amounts described in this table are the Families First Coronavirus Response
Act, Pub. L. No. 116-127, 134 Stat. 178 (2020) and the CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020). Some appropriation
amounts include an amount available for administration expenses or for the relevant inspectors general. Numbers are rounded
to the nearest million or billion.
aSeveral provisions in the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020), authorized an
increase in Medicaid funds for states and territories. The largest increase to federal Medicaid spending is based on a formula
change rather than a speciﬁc appropriated amount. The Congressional Budget Oﬃce estimated that federal expenditures from
this change would be approximately $50 billion
bThis amount represents all expenditures as of May 31, 2020, from the Disaster Relief Fund for COVID-19, some of which was
for the Federal Emergency Management Agency’s Public Assistance program, which provides assistance to states, territories,
and tribes. Obligations for the Public Assistance program as of May 31, 2020, were $1.2 billion.
cThis amount is an approximation and includes funds for the Elementary and Secondary School Emergency Relief Fund, the
Governor’s Emergency Education Relief Fund, Education Stabilization Fund discretionary grants, formula grants to other U.S.
territories, and programs operated or funded by the Bureau of Indian Education. It does not include the nearly $14 billion in aid
for institutions of higher education through the Education Stabilization Fund.
dFunds are available to eligible sponsors of airports. Nearly all of these airports are under city, state, county or public-authority
ownership.
According to CBO estimates, over 85 percent of funds provided for these six programs will be
expended in ﬁscal years 2020 and 2021 (see ﬁg. 6). CBO estimates that Treasury will disburse all
funds from the Coronavirus Relief Fund in ﬁscal year 2020 and that increased Medicaid payments
will be made in ﬁscal years 2020 and 2021. 92 From ﬁscal years 2020 to 2030, agencies will expend
funds for the programs that provide aid for disaster relief, education, transit, and airports.
92The increased Medicaid payments will end, by law, at the end of the quarter in which the national emergency ends,
which could be earlier or later than the time frame CBO estimated.
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Figure 6: Estimated Federal Expenditures for Selected Programs That Include COVID-19-Related Assistance to
States, Localities, Territories, and Tribes
Note: The selected programs included are (1) the Coronavirus Relief Fund, (2) Medicaid, (3) the Federal Emergency Management
Agency’s Disaster Relief Fund, (4) the Education Stabilization Fund, (5) transit grants, and (6) airport grants. Estimated
expenditures depicted in the ﬁgure for these programs total $312 billion, of which approximately $299 billion is for assistance
to states, localities, territories, and tribes. The Congressional Budget Oﬃce’s (CBO) estimates for the Education Stabilization
Fund includes $14 billion for institutions of higher education. For the Disaster Relief Fund, CBO estimates expenditures of less
than $500 million in ﬁscal years 2028 to 2030. Data for this ﬁgure come from CBO’s analysis of COVID-19 relief laws, speciﬁcally:
the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020) and the CARES Act, Pub. L. No. 116-136,
134 Stat. 281 (2020).
In addition to these large programs, states, localities, territories, and tribes have access to smaller
amounts of funding through a number of other provisions in the COVID-19 relief laws, such as
homeless assistance grants and economic development assistance. The Paycheck Protection
Program and Health Care Enhancement Act requires HHS, as part of a larger appropriation for the
agency, to provide $11 billion to states, localities, territories, and tribes for expenses associated
with COVID-19 testing.93 Also, the CARES Act appropriated funding to support loans available to
states, the District of Columbia, and localities through the Federal Reserve’s Municipal Liquidity
Facility.94 According to CBO estimates, these loans would have no eﬀect on the federal budget
deﬁcit.
Table 6 provides a summary of additional information on federal assistance to states, territories,
localities, and tribes presented in enclosures in appendix III, which also include descriptions of
GAO’s future work.
93Pub. L. No. 116-139, div. B., tit. I, 134 Stat. at 624.
94Pub. L. No. 116-136, § 4003, 134 Stat. at 470.
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Table 6: Areas in Which the Federal Government Has Taken Action to Assist States, Localities, Territories, and
Tribes in Response to COVID-19
Area name
Description
Education Stabilization Fund
The Education Stabilization Fund provides emergency
funding to address the eﬀects of the COVID-19 pandemic
on education. It is too early to know how states and school
districts will spend these funds and the eﬀect they may
have, but the understandable desire to spend the money
quickly may increase the risks of noncompliance with
spending and accountability requirements.
Transit Industry
The Federal Transit Administration has begun to distribute
CARES Act funding, with most grants going to operating
expenses.
Coronavirus Relief Fund
Almost the entire $150 billion fund has been disbursed
to states, localities, tribal governments, the District of
Columbia, and U.S. territories to help cover the costs of
responding to the COVID-19 pandemic.
Assistance for Tribal Entities
Federal programs for tribes and their members received
at least $9 billion in supplemental funding to respond
to the COVID-19 pandemic, and tribal entities may be
eligible for funding from other programs; however, federal
agencies have sometimes delayed disbursements to tribal
governments or limited tribal businesses’ eligibility.
Disaster Relief Fund
The CARES Act appropriated $45 billion to the Disaster
Relief Fund—the primary source of federal funding to
provide disaster assistance to state, local, tribal, and
territorial governments, among other things, following
major disasters and emergencies declared by the President
under the Robert T. Staﬀord Disaster Relief and Emergency
Assistance Act.
Source: GAO. | GAO-20-625
Federal Agencies Have Obligated About $17 Billion on Contracts to
Provide Critical Goods and Services
Government-wide Contract Obligations
Government-wide contract obligations in response to the COVID-19 pandemic totaled about $16.9
billion as of May 31, 2020, with HHS accounting for about half of these obligations.95 See ﬁgure 7
95Federal procurement contract obligations are based on data in the Federal Procurement Data System-Next
Generation. In addition to obligating dollars through contracts, the government may obligate funds through other
vehicles, such as grants. This section is focused speciﬁcally on government-wide contract obligations, and obligations
reported in this section do not include grants, cooperative agreements (such as those under Title III of the Defense
Production Act), other transactions, real property leases, requisitions from Federal stock, training authorizations, or
other non-FAR based transactions. We identiﬁed obligations related to COVID-19 using the National Interest Action code,
as well as the contract description. For contract actions over $1 million, we removed obligations that were identiﬁed in
the contract description as not related to COVID-19.
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for total contract obligations broken down by agency and ﬁgure 8 for the top categories of goods
and services procured.
Figure 7: Contract Obligations in Response to COVID-19 by Agency, as of May 31, 2020
Note: Thirty departments and agencies across the federal government are included in the $339.2 million, or about 2 percent of
total obligations, denoted as all other agencies. Federal procurement contract obligations do not include grants, cooperative
agreements (such as those under Title III of the Defense Production Act), other transactions, real property leases, requisitions
from Federal stock, training authorizations, or other non-FAR based transactions.
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Figure 8: Top Products and Services Procured through Federal Contracts in Response to COVID-19, as of May 31,
2020
Note: Federal procurement contract obligations do not include grants, cooperative agreements (such as those under Title III of
the Defense Production Act), other transactions, real property leases, requisitions from Federal stock, training authorizations, or
other non-FAR based transactions.
aAccording to Defense Logistics Agency oﬃcials, many of the items they procured in response to COVID-19 were orders placed
on a certain contract that, due to a system coding limitation, .were coded as marine lifesaving and diving equipment. These
obligations include gowns and critical care decontamination systems for face masks.
According to federal procurement data, examples of goods procured within the two categories of
“medical and surgical equipment” and “hospital and surgical clothing” included about $3 billion
for ventilators and about $2.1 billion for personal protective equipment, like N95 respirators
and gloves. Examples of services included about $1.7 billion for basic and advanced biomedical
research and development, about half of which was for vaccination development.
Federal agencies are tracking contract obligations in response to COVID-19 through the use of
a National Interest Action code in the Federal Procurement Data System-Next Generation. The
COVID-19 National Interest Action code was established on March 13, 2020, to track contract
obligations, and is currently slated to expire on September 30, 2020.96 Our prior work has
reported on the importance of such codes for providing visibility into emergency or contingency
contracting activities, which could have implications for tracking contract obligations in response
96National Interest Action codes were established in 2005 after Hurricane Katrina with the purpose of tracking federal
procurements for speciﬁc disasters, emergencies, or contingency events. Based on a memorandum of agreement,
DOD, the Department of Homeland Security (DHS), and the General Services Administration are jointly responsible for
determining when a National Interest Action code should be established and closed. DOD requests new or extended
National Interest Action codes on behalf of the military departments and defense agencies, DHS requests new or
extended codes on behalf of the civilian agencies, and General Services Administration acts as the servicing agency by
modifying the Federal Procurement Data System-Next Generation.
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to COVID-19 over the longer term.97 We will continue to monitor how long this code should be
maintained.
Defense Production Act
The President has taken several actions to allow federal agency use of DPA authorities to mitigate
COVID-19 supply chain issues, and the CARES Act provided $1 billion for DPA purchases to prevent,
prepare for, and respond to the coronavirus, domestically or internationally.98 In an Executive
Order issued on March 18, 2020, the President delegated to the Secretary of Health and Human
Services authority under the DPA to require preferential performance of contracts with respect to
health and medical resources.99 The President subsequently delegated further authorities under
the DPA to, among other things
1. provide the Secretary of Health and Human Services the authority to prevent hoarding and
price gouging of resources, such as personal protective equipment and disinfecting and
sanitizing products;
2. provide the Secretary of Health and Human Services and the Secretary of Homeland Security
the authority to expand production capacity of resources such as personal protective
equipment and ventilators and to appoint the Assistant to the President for Trade and
Manufacturing Policy as the National Defense Production Act Policy Coordinator during
COVID-19 response;
3. provide the Secretary of Agriculture the authority to ensure that meat and poultry processors
continue operations consistent with the guidance for their operation jointly issued by CDC and
the Occupational Safety and Health Administration;100 and
97GAO, 2017 Disaster Contracting: Actions Needed to Improve the Use of Post-Disaster Contracts to Support Response and
Recovery, GAO-19-281 (Washington, D.C.: Apr. 24, 2019). In April 2019, we identiﬁed inconsistencies in establishing
and closing these codes following previous disasters or emergencies, and recommended that the General Services
Administration, in coordination with DHS and DOD, assess whether the criteria in their current National Interest Action
code agreement meet the long-term needs for high visibility events and of users, such as FEMA, other agencies, and
Congress. The General Services Administration and DOD concurred with our recommendation and took some steps to
revise their agreement.
98See Pub. L. No. 81-774, 64 Stat. 798 (1950) (codiﬁed, as amended, at 50 U.S.C. §§ 4501 et seq.). Enacted in 1950, the
DPA helps ensure the availability of industrial resources to meet national defense needs. DPA authorities allow the
President to (1) require private companies to fulﬁll government contracts or orders the government designated as
priorities before fulﬁlling contracts or orders from other customers, (2) provide ﬁnancial incentives to private companies
to increase production capabilities for critical security needs, and (3) collect information related to domestic industrial
base issues. Over time, Congress has expanded the scope of the DPA to include certain emergency preparedness
activities, and critical infrastructure protection and restoration.
99Exec. Order No. 13909, 85 Fed. Reg. 16,227 (Mar. 23, 2020).
100The Department of Agriculture (USDA) and the Food and Drug Administration established a Memorandum
of Understanding creating a process for the two agencies to communicate and make determinations about
circumstances in which USDA could exercise its authority under the DPA with regard to certain domestic food
resource facilities that manufacture, process, pack, or hold foods, as well as to those that grow or harvest food,
outside of USDA’s exclusive jurisdiction.
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4. provide the Chief Executive Oﬃcer of the United States International Development Finance
Corporation the authority to, among other things, make loans to create, maintain, protect,
expand, and restore the domestic industrial base capabilities, including supply chains within
the United States and its territories.101
Since March 18, 2020, federal agencies have reported various uses of DPA authorities. For
example, HHS announced that it used DPA authority to prioritize at least eight contracts to
produce more than 150,000 ventilators for $2 billion by the end of 2020. Our analysis of agency
data shows that the largest prioritized contract under the DPA was awarded in April 2020, to
Philips for $646.7 million to produce 43,000 ventilators—2,500 of which were to be delivered to
the SNS by the end of May 2020. According to HHS, as of June 12, 2020, Philips has delivered 2,524
ventilators to the SNS.
DOD reported awarding agreements under the DPA to expand domestic production of health
and medical resources, such as N95 respirators and swabs. For example, in April 2020, DOD
announced that it signed a $76 million technology investment agreement with 3M to help produce
an additional 78 million N95 respirators by October 2020. 3M is expected to convert a current
equipment supplier into an N95 producer and will also expand its own production capabilities to
produce the respirators.
Contracting Flexibilities to Aid Response
The CARES Act authorized additional ﬂexibilities for agencies when contracting for critical goods
and services, including the following:
• Undeﬁnitized contract actions. This contracting method allows contractors to begin work
before reaching a ﬁnal agreement with the government on contract terms and conditions. The
CARES Act allows DOD to waive requirements related to time frames and limitations on the
amounts that can be obligated by DOD before the contract action is deﬁned.102 Undeﬁnitized
contract actions can allow the government to fulﬁll requirements that are urgent or need to
be met quickly when there is insuﬃcient time to negotiate all terms. Our prior work has noted
that undeﬁnitized contract actions can pose risks to the government, such as when contractors
lack incentives to control costs before all contract terms and conditions are deﬁned.103
• Other transaction authority. Other transactions enable federal agencies to negotiate terms
and conditions speciﬁc to a project without requiring them to comply with certain federal
regulations. The CARES Act removes certain limitations on the use of other transactions for
101Exec. Order No. 13910, 85 Fed. Reg. 17,001 (Mar. 26, 2020); Exec. Order No. 13911, 85 Fed. Reg. 18,403 (Apr. 1,
2020); Exec. Order No.13917, 85 Fed. Reg. 26,313 (May 1, 2020); and Exec. Order No.13922, 85 Fed. Reg. 30,583 (May
19, 2020).
102Pub. L. No. 116-136, § 13005, 134 Stat. at 522.
103GAO, Defense Contracting: DOD Has Enhanced Insight into Undeﬁnitized Contract Action Use, but Management at
Local Commands Needs Improvement, GAO-10-299 (Washington, D.C.: Jan. 28, 2010).
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HHS and DOD, such as congressional reporting requirements and who can approve certain
transactions.104 Our prior work has noted that other transactions can enable the government
to attract companies it has not typically done business with to perform research, prototyping,
and production of new technologies or products. We have also noted challenges with their use
in terms of a risk of reduced accountability and transparency.105
The Federal Acquisition Regulation also has a variety of acquisition ﬂexibilities to allow the
government to more rapidly respond to its needs. For example, the regulation raises spending
thresholds for using government purchase cards or simpliﬁed acquisition procedures when an
emergency or major disaster is declared under the Staﬀord Act, and allows soliciting from only one
source if, for example, the contracting oﬃcer determines that the circumstances of the contract
action deem only one source reasonably available.106
Finally, the CARES Act included a provision that GAO provide a comprehensive audit and review
of charges made to federal contracts pursuant to authorities provided in the act.107 Our future
work will evaluate agencies’ planning and management of contracts awarded in response to
the pandemic, including agencies’ use of the ﬂexibilities outlined above. Additionally, we plan to
examine agencies’ execution of section 3610 of the CARES Act, which allows federal agencies to
reimburse contractors, subject to certain limitations, for expenses incurred to keep contractors’
employees or subcontracts in a ready state during the public health emergency.108 We also plan to
assess the federal government’s use of DPA authority to obtain the health and medical resources
necessary to combat COVID-19 and to mitigate industrial base risks.
104Pub. L. No. 116-136, §§ 3301, 13006, 134 Stat. at 383, 522.
105GAO, Defense Acquisitions: DOD’s Use of Other Transactions for Prototype Projects Has Increased, GAO-20-84
(Washington, D.C.: Nov. 22, 2019); Department of Homeland Security: Improvements Could Further Enhance Ability
to Acquire Innovative Technologies Using Other Transaction Authority, GAO-08-1088 (Washington, D.C.: Sept. 23,
2008); and Defense Acquisitions: DOD Has Implemented Section 845 Recommendations but Reporting Can Be Enhanced,
GAO-03-150 (Washington, D.C.: Oct. 9, 2002).
106For Federal Acquisition Regulation emergency acquisition ﬂexibilities generally, see FAR Subpart 18.2. Speciﬁcally,
agencies are able to leverage increases to the micropurchase and simpliﬁed acquisition thresholds, and increases to
thresholds for using simpliﬁed acquisition procedures for certain commercial items. In response to COVID-19, HHS,
DOD, DHS, and the Department of Veterans Aﬀairs have issued guidance related to the use of these authorities, which
generally increase the micropurchase thresholds from either $3,500 or $10,000 to $20,000 and the simpliﬁed acquisition
threshold from either $150,000 or $250,000 to $750,000.
107Pub. L. No. 116-136, § 19010(b), 134 Stat. at 580.
108According to section 3610 of the CARES Act, agencies may modify contracts or other agreements to reimburse
contractors at the minimum applicable contract billing rate to keep contractors’ employees or subcontractors in a ready
state until September 30, 2020. This provision only applies to a contractor whose employees or subcontractors cannot
perform work at a government-approved site due to facility closures or other restrictions and cannot telework because
their job duties cannot be performed remotely.
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U.S. Agencies Have Taken Steps to Respond to COVID-19 Abroad with
Existing and Supplemental Funding
Funding for U.S. Agencies’ International Response
Congress appropriated about $3 billion in supplemental funding to support the U.S. government’s
international response to the COVID-19 pandemic. 109 Of this funding the Department of State
(State) and the U.S. Agency for International Development (USAID) received about $2.2 billion for
diplomatic and foreign assistance programming, and Congress designated at least $800 million of
CDC’s COVID-19 supplemental appropriations for CDC’s global disease detection and emergency
response (see ﬁg. 9). As of May 20, 2020, State and USAID reported allocating about $1.2 billion
of the approximately $2.2 billion, while CDC oﬃcials told us that as of May 19, 2020, CDC had
developed plans for $300 million of the $800 million. 110
Figure 9: Key Areas of 2020 Supplemental Funding for International Response to COVID-19, as of June 1, 2020
Note: The supplemental funding also provided $95 million to USAID for operating expenses and $1 million to the USAID Oﬃce
of Inspector General for COVID-19 related work. Pub. L. No. 116-123, tit. IV, 134 Stat. at 152; Pub. L. No. 116-136, div. B, tit. XI,
134 Stat. at 590. We did not include these funds in this ﬁgure.
109This funding was provided through two supplemental appropriations, the Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020, and the CARES Act and directed to speciﬁc accounts. Pub. L. No. 116-123, tit. III
and IV, 134 Stat. at 147 and 152-53; Pub. L. No. 116-136, div. B, tit. VIII and XI, 134 Stat. at 554 and 590. The supplemental
funding also provided $95 million to USAID for operating expenses and $1 million to the USAID Oﬃce of Inspector
General for COVID-19 related work. Pub. L. No. 116-123, tit. IV, 134 Stat. at 152; Pub. L. No. 116-136, div. B, tit. XI,
134 Stat. at 590. We did not include these funds in the $3 billion ﬁgure or any other funding totals for U.S. agencies’
international response that we present in this report.
110More information on the response eﬀorts that State, USAID, and CDC are supporting with these supplemental funds
is included in an enclosure of this report.
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Agency Strategies for Responding to COVID-19
State and USAID joint strategy. State and USAID developed a joint strategy organized under four
pillars to respond to COVID-19 abroad. Each pillar in the strategy is associated with the diﬀerent
accounts managed by State and USAID that received supplemental funding. Figure 10 shows the
strategy’s objectives and planned lines of eﬀort under each pillar.
Figure 10: March 2020 State and USAID Strategy on the Use of Supplemental Funding to Respond to COVID-19
Abroad
CDC strategy. CDC oﬃcials told us that the agency developed a strategy for its global response to
COVID-19 that provides an overarching framework for working to reduce the global burden of the
pandemic while building the global capacity to prevent and control future pandemics. According to
CDC oﬃcials, the agency’s objectives include
• mitigating COVID-19 transmission in the community, across borders, and in healthcare
facilities;
• supporting governments, nongovernmental organizations, and health care facilities in rapidly
identifying, triaging, and diagnosing potential cases;
• addressing crucial unknowns regarding clinical severity and extent of transmission and
infection; and
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• ensuring readiness to implement vaccines and therapeutics when available.
Repatriation of U.S. Citizens and Global Health Assistance
Prior to the appropriation of supplemental funding, State, USAID, and CDC used available
emergency funds to respond to COVID-19 abroad to repatriate U.S. citizens and provide health
assistance. 111
• State’s repatriation eﬀorts. As of May 31, 2020, State reported that it had obligated $159
million in emergency funds for expenses associated with evacuation and repatriation eﬀorts,
primarily on State-funded charter and contract aviation ﬂights. As of May 31, 2020, State
reported it had coordinated the repatriation of 98,726 Americans on 1,080 ﬂights from 139
countries and territories since January 29, 2020, and was tracking some 10,000 additional
people who had indicated an interest in being repatriated. 112
• USAID’s global health assistance. As of April 6, 2020, USAID had obligated nearly $100
million in existing, emergency funding to provide global health assistance in response to
COVID-19 to over 50 countries. According to USAID, this funding supported interventions that
included preventing and controlling infections in health facilities; conducting contact tracing;
improving readiness to rapidly identify and treat cases; raising awareness in populations
through risk communication; screening people at points of entry and exit; and purchasing key
commodities.
• CDC’s global health assistance and repatriation eﬀorts. CDC oﬃcials told us that, before
receiving supplemental funding, they used the Infectious Disease Rapid Reserve Fund to
respond to the most urgent and immediate overseas needs. 113 CDC reported that, as of April
30, 2020, it had obligated more than $91 million of the $105 million available from this fund.
114 Among other things, the funding supported enhanced laboratory capacity, communication
and education materials, training resources, and technical assistance to ministries of health in
partner countries, as well as guidance on diﬀerent aspects of repatriation, including transport,
screening, isolation, and quarantine.
111Repatriation is the process of sending a person back to his or her country of birth or citizenship.
112Approximately half of these ﬂights were instances in which U.S. citizens paid airlines directly for commercial
rescue ﬂights but the U.S. government assisted in some way to make repatriation possible when regularly
scheduled ﬂights were unavailable as countries closed their borders and imposed other restrictions that stopped
normal air travel.
113According to CDC, the Infectious Disease Rapid Reserve Fund provides funding that could be used to prevent,
prepare for, or respond to an infectious disease emergency, domestic or international. See 42 U.S.C. § 247d–4a.
114In addition to using the Infectious Disease Rapid Reserve Fund, CDC also reported obligating $721,000 of $1.6
million in global health security funds carried over from ﬁscal years 2018-2020 that were available for the earliest
stages of its response to COVID-19.
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Table 7 provides a summary of additional information on federal actions related to the
international response presented in enclosures in appendix III, which also includes descriptions of
GAO’s future work.
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Table 7: Areas in Which the Federal Government Has Taken Action on the International Response to COVID-19
Area name
Description
International Trade
U.S. agencies have taken trade-related actions to address
medical supply chain issues and support U.S. international
businesses
Response Eﬀorts Abroad
In response to supplemental appropriations of about $3
billion to respond to COVID-19 abroad, the Department of
State, the U.S. Agency for International Development, and
the Centers for Disease Control and Prevention developed
strategies and began to allocate these new funds.
Source: GAO. | GAO-20-625
Key Indicators to Facilitate Monitoring of Recovery Following
the Federal Pandemic Response
In light of the CARES Act provision directing GAO to examine the eﬀects of the pandemic, we
are developing a series of indicators to monitor key areas of the health care system and the
economy.115 Indicators can be powerful tools both for assessing the overall position and for
monitoring the progress of our nation in key areas. Indicators can help policymakers frame
strategic issues, support public policy choices, and enhance accountability. 116 Indicators also play
an important role in times of crisis. The COVID-19 pandemic and subsequent response have not
only resulted in a signiﬁcant public health crisis that is testing the limits of our health care system,
but also has had a sizeable eﬀect on the U.S. economy.
This ﬁrst report presents several preliminary indicators or concepts for potential indicators. While
these indicators may be suggestive of the ongoing eﬀect of COVID-19 or the federal response, they
are not exhaustive. We will continue to reﬁne and update such indicators as conditions evolve and
better, more timely data become available, especially for those related to public health.
Indicators to Monitor Areas of the Health Care System Supported by the
Federal Pandemic Response
CDC and other federal entities have identiﬁed a framework of capabilities for preparing for,
responding to, and recovering from public health emergencies. Relying on this framework, we
reviewed a number of sources, including prior GAO work, information from relevant federal
115Pub. L. No. 116-136, § 19010(b), 134 Stat. at 580.
116See GAO, Forum on Key National Indicators: Assessing the Nation’s Position and Progress, GAO-03-672SP (Washington,
D.C.: May 2003).
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agencies, and selected studies to begin identifying potential indicators that could be used to
monitor the eﬀect of COVID-19 on the nation’s health care system (see app. I for more details).117
These selected indicators are intended to assess the nation’s immediate response to COVID-19 as
it ﬁrst took hold, gauge its recovery from the eﬀects of the pandemic over the longer term, and
determine the nation’s level of preparedness for future pandemics, involving either subsequent
waves of COVID-19 or other infectious diseases. All of the indicators we identify below can be used
to assess multiple eﬀects with regard to response, recovery, and preparedness and, in most cases,
could be used to measure progress or improvement in all three areas.
For additional GAO reports required under the CARES Act, we will continue to develop and reﬁne
these and other indicators and continue to monitor the eﬀects of the pandemic on the health care
system.118 In particular, we will work to determine what key aspects of the pandemic response
would be most useful to monitor from a federal public health perspective—which will then drive
the development and reﬁnement of indicators, the unit of analysis, and the data needed. The
following describes potential indicators that we will continue to reﬁne.
• Rate of COVID-19 testing performed. An adequate amount of appropriately targeted testing
is critical for informing national responses to the COVID-19 pandemic. Viral tests—such as
polymerase chain reaction tests—provide data on ongoing infections, while antibody tests,
once they are more fully developed and implemented, will provide data on prevalence of
past infections. Results from COVID-19 testing over time can help to determine the extent of
infections across states and localities or other discrete populations and provide an evidence
base for making decisions to either increase or decrease social distancing policies. Moreover,
a suﬃcient rate of testing in states or localities where the number of conﬁrmed cases of
COVID-19 is increasing is needed to implement eﬀective contact tracing and isolation, which is
the established public health method for slowing the spread of an infection.
One metric of the suﬃciency of viral testing for COVID-19 is the proportion of tests in a given
population that are positive for infection. The World Health Organization has recommended
that governments bring their positivity rate to under ﬁve percent over a time period of at
least two weeks.119 A higher rate indicates that testing is focused on those mostly likely to
be infected, which fails to detect other COVID cases, such as individuals who are infected but
asymptomatic. Achieving a suﬃcient rate of testing depends, in part, on ensuring that all the
supplies required to conduct the tests are made available. Thus, these supply requirements
should ﬁgure into preparedness planning for potential future pandemic surges involving
subsequent waves of COVID-19 infections. As noted earlier in this report, CDC obtains
data from state health departments on the number of COVID-19 viral tests conducted, but
117See Centers for Disease Control and Prevention, Public Health Emergency Preparedness and Response Capabilities:
National Standards for State, Local, Tribal, and Territorial Public Health (Atlanta, Ga.: January 2019) and Department of
Homeland Security, National Response Framework, Fourth Edition (Washington, D.C.: October 2019).
118This work will include identifying areas where additional data are needed to ensure timely and accurate
measurement and also working with National Academies and other experts. As more reliable and complete data
become available for reporting, we will include trends for these and other indicators in our future CARES Act reporting.
119World Health Organization, Public health criteria to adjust public health and social measures in the context of
COVID-19 (May 12, 2020), p. 1.
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aggregation to the national level is limited by inconsistencies in how the states report these
data.120
Proportion of intensive care unit beds available. The sickest patients infected with
COVID-19 often require care in hospital intensive care units (ICU), potentially including
respiratory support on a ventilator, to survive. Tracking the proportion of hospital ICU beds
that are available at regular intervals over time in particular geographic areas, such as
states or localities, oﬀers insight on changes in health systems’ capacity to meet this need
over the course of the pandemic. Individual states collect and publish ICU beds available
on public dashboards and as part of their state re-opening plans.
In addition, the Secretary of HHS has requested hospitals to voluntarily submit data
relating to COVID-19, including ICU bed availability data, on a daily basis through one of
several mechanisms.121 Most hospitals—60 percent as of early June 2020—have submitted
their data to CDC’s National Healthcare Safety Network. The data that hospitals submit
through other mechanisms is recorded in a separate HHS data system called HHS Protect.
However, these data are not currently merged with the data in NHSN on state and local
ICU bed availability that CDC shares with state health departments and posts on its
public website. CDC has suggested that participation is needed from 95 to 100 percent of
hospitals to provide for eﬀective analysis.122 In addition, tracking the extent of ICU bed use
over time by patients infected with COVID-19 could support preparedness planning of ICU
surge capacity for potential future outbreaks of COVID-19 or other pathogens. We plan to
examine how CDC and other HHS agencies continue to monitor ICU bed availability across
states and localities in subsequent reports.
• Higher than expected deaths from all causes. Mortality from all causes compared to
historical norms provides a potential indicator of the pandemic’s broad eﬀect on health
care outcomes.123 As the pandemic has aﬀected the care provided to patients across the
continuum of health care services, from primary care visits to emergency treatment of heart
attacks, the full eﬀect of COVID-19 goes beyond those infected with the disease. Of particular
concern is the eﬀect of COVID-related disruptions of the health care system on mortality.
Data on pre-COVID-19 mortality is widely available at the state and local level, as well as
nationally. Seasonally adjusted, these rates have tended to be highly consistent from year to
year. That allows an estimation of how much mortality rose with the onset of the pandemic,
and also provides a baseline by which to judge a return to pre-COVID levels. Notably, by
focusing on mortality from all causes, this indicator is not aﬀected by diﬀerences in how the
states determine which deaths were caused by COVID-19. For example, ﬁgure 11 illustrates
how mortality in the United States has increased since the onset of the COVID-19 pandemic
relative to the rate of expected mortality that the CDC calculates for each week of the year
120In particular, some states have been combining viral and antibody tests in their reporting.
121Alex M. Azar II, Coronavirus (COVID-19) Pandemic: HHS Letter to Hospital Administrators, April 10, 2020.
122Centers for Disease Control and Prevention, CDC Activities and Initiatives Supporting the COVID-19 Response and the
President’s Plan for Opening America Up Again (May 2020), pp. 15-16.
123Epidemiologists generally use the term “excess mortality” to describe deaths that exceed levels that have
occurred over previous time periods in a given population, such as residents of a speciﬁc jurisdiction.
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based on seasonal variations in previous years.124 This means that comparisons across
jurisdictions will not be biased by any such inconsistencies.
124Estimating excess deaths is subject to uncertainty and CDC’s reporting of excess deaths is no exception. For
each jurisdiction, a model is used to generate a set of expected counts, and the upper bound of the 95 percent
conﬁdence intervals of these expected counts is used to determine whether a signiﬁcant increase in deaths has
occurred. For more details on CDC’s approach, see https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm,
accessed on May 26, 2020.
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Figure 11: CDC Data on Higher Than Expected Weekly Mortality
Notes: The ﬁgure shows the number of deaths in a given week that exceeded the upper bound threshold of expected deaths
calculated by CDC on the basis of variation in mortality experienced in prior years. Please refer to https://www.cdc.gov/nchs/
nvss/vsrr/covid19/excess_deaths.htm, accessed on May 26, 2020, for further details on how CDC estimates this upper bound
threshold. Changes in the observed numbers of deaths in recent weeks should be interpreted cautiously as this ﬁgure relies on
provisional data that are generally less complete in recent weeks.
• Contact tracer workforce per capita. In a public health crisis such as the COVID-19
pandemic, it is critical to have a suﬃciently scaled workforce of contact tracers, who trace the
contacts of each case of COVID-19 (or any other contagious) infection and quarantine exposed
contacts in their homes or dedicated facilities. Although state and local public health agencies
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typically maintain an existing capacity to conduct contact tracing for infectious diseases, the
capacity is suﬃcient only to respond to isolated outbreaks or individual cases.
Contact tracing is resource intensive, since as cases rise, more individuals will be needed to
ensure comprehensive contact tracing of all conﬁrmed cases. The particular features of the
COVID-19 pandemic—asymptomatic infected persons, lack of any treatment, and its ability to
spread rapidly—requires a signiﬁcantly larger workforce than currently exists. According to
the National Association of County and City Health Oﬃcials, the benchmark rate is 30 contact
tracers per 100,000 people. This equates to about 98,460 contact tracers needed to cover the
entire U.S. population during the peak of the pandemic.
Although the health care system generates enormous amounts of data, many factors make it
challenging to identify indicators that can appropriately characterize an evolving event such
as a pandemic. For example, although the number of ICU beds is collected through a variety
of sources, there is no national standard for what speciﬁc treatments are made available to
patients who occupy those beds. As a result, ICU bed availability provides a broad indicator of
hospital capacity, but does not identify the speciﬁc areas where hospital resources for treating
COVID-19 patients may be lacking. There are also gaps in reporting on the public health workforce,
including the number of contact tracers currently employed by state and local health departments.
Although many states and localities are actively recruiting for contact tracing personnel, there is no
comprehensive source of continuous data.
Developing a robust system of indicators will require systems to collect standardized data that
can be used to facilitate continuous, real-time data sharing on COVID-19 between health care
providers, as well as among public health authorities at the national, state, and local levels. As part
of our ongoing work, we will continue to examine where there are gaps in the data being collected
and will identify ways to improve such data collection eﬀorts.
Indicators to Monitor Areas of the Economy Supported by the Federal
Pandemic Response
We identiﬁed a number of economic indicators to facilitate ongoing and consistent monitoring of
areas of the economy supported by the federal pandemic response, in particular the COVID-19
relief laws.125 These indicators provide a foundation for more rigorous analytical work over time to
better identify whether federal responses are having their intended eﬀect. They include measures
of labor market stress, household ﬁnancial stress, small business credit markets, corporate credit
markets, and state and local government ﬁnances (see table 8 below). 126 To the extent that
federal pandemic responses are eﬀective, we would expect to see improvements in outcomes
related to these indicators. However, while trends in these indicators may be suggestive of the
125Future legislation may also be considered as the federal response evolves.
126We identify additional indicators and provide more details on each indicator in appendix IV.
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eﬀect of provisions of the CARES Act and related legislation over time, those trends will not on
their own provide deﬁnitive evidence of eﬀectiveness. 127
The Federal Reserve has acted to support the economy as well, by lowering interest rates,
expanding the money supply, and announcing a range of programs to provide liquidity to
businesses of varying sizes—some supported by funds appropriated under the CARES Act through
the Treasury’s Exchange Stabilization Fund. The eﬀect of public health measures against the
pandemic and the decisions of state government oﬃcials to relax policies that limit certain
economic and social activity could also have a signiﬁcant impact on the economy and the
indicators we have identiﬁed. We continue to consider a variety of additional indicators and
qualitative sources of information, and may include them in future reports as more data become
available or as circumstances related to the pandemic and the economy evolve.
127Determining the eﬀect of the federal response to the pandemic, in particular the CARES Act and related legislation
as they are being implemented, will be a challenge. Changes over time in the indicators we have identiﬁed may well be
changes that would have occurred absent federal responses or could be attributed to other policies and interventions,
such as the actions of the Federal Reserve not directly related to the CARES Act, or the actions of states and local
governments.
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Table 8: Indicators for Monitoring Areas of the Economy Supported by the Federal Pandemic Response
Category
Key indicators
Labor market stress
• Initial unemployment insurance claims
• Employment-to-population ratio
Household ﬁnancial stress
• Consumer Credit Default Composite Index
• Supplemental Nutrition Assistance Program (SNAP)
household participation
Small business credit markets
• Small Business Health Index
• Underwriting standards on small business loans
Corporate credit markets
• Spreads on investment grade corporate bonds
State and local government ﬁnances
• Spreads on municipal bonds
• State and local government employment
Health sector
• Health care employment
• Volume of elective procedures
• Hospital operating margins
• Gross domestic product in health care services
Source: GAO. | GAO-20-625
Note: Initial unemployment claims, state and local government employment, and the employment-to-population ratio are
from the Department of Labor. The Consumer Credit Default Index is from S&P/Experian. Supplemental Nutritional Assistance
Program household participation is from the Department of Agriculture. The Small Business Health Index is from Dun &
Bradstreet. Underwriting standards on small business loans are from the Board of Governors of the Federal Reserve System
and Federal Reserve Bank of Kansas City. Spreads on investment grade corporate bonds are from option-adjusted spreads on
dollar-denominated investment grade corporate bonds available through Bloomberg’s Fixed Income Credit Monitoring. Spreads
on municipal bonds are based on the Bloomberg-Barclays Municipal Bond Index. See appendix IV of the report for additional
information.
Available data thus far primarily reﬂect the severity of the pandemic. For example, the
employment-population ratio rose by 1.5 percentage points to 52.8 percent in May, remaining
near its lowest level ever recorded in April (see ﬁg. 12), credit card defaults are at their highest
level since 2012, and banks are tightening standards on loans to small businesses.128 In addition,
investor perceptions of risk increased substantially in corporate and municipal credit markets in
February and March, but have fallen somewhat since the Federal Reserve announced programs
to provide support to these markets. If federal responses are eﬀective, then over time these data
could become more reﬂective of federal eﬀorts. For example, monthly hospital margins may
128While both the employment-to-population ratio and the unemployment rate will be sensitive to how the Bureau of
Labor Statistics measures the number of employed individuals, calculating the employment-to-population ratio requires
fewer assumptions and will be more stable to ﬂuctuating measures of who is in the labor force.
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reﬂect whether federal eﬀorts to increase reimbursement and funding to providers is positively
aﬀecting their bottom line and ﬁnancial health. The indicators and recent trends are discussed in
more detail in appendix IV.
Figure 12: Employment-to-Population Ratio, January 2019 to May 2020
Note: While both the employment-to-population ratio and the unemployment rate will be sensitive to how the Bureau of
Labor Statistics measures the number of employed individuals, calculating the employment-to-population ratio requires fewer
assumptions and will be more stable to ﬂuctuating measures of who is in the labor force.
To complement these indicators, various rigorous analytical methods, along with information
on the implementation of federal responses to the pandemic, can be used to assess program
eﬀect and produce reliable evidence. For example, estimation techniques, such as regression
discontinuity design, diﬀerence-in-diﬀerence, event study, and interrupted time series, can be
used to better identify the eﬀectiveness of a program by comparing observed outcomes to an
estimate of what would have happened in the absence of the program. 129 Impact estimates are a
critical component of a program’s net social beneﬁts, along with program costs, risks borne by the
federal government, and any moral hazard federal actions might induce in private behavior.
Aggregate economic conditions will have a signiﬁcant inﬂuence on the more targeted indicators
that we identiﬁed. We intend to monitor broader economic conditions in order to better
understand their eﬀect on the areas of the economy supported by the federal response to the
129See GAO, Troubled Asset Relief Program: June 2009 Status of Eﬀorts to Address Transparency and Accountability Issues,
GAO-09-658 (Washington, D.C.: June 17, 2009); Program Evaluation: A Variety of Rigorous Methods Can Help Identify
Eﬀective Interventions, GAO-10-30 (Washington, D.C.: Nov. 23, 2009); Troubled Asset Relief Program: Status of Programs
and Implementation of GAO Recommendations, GAO-11-74 (Washington, D.C.: Jan. 12, 2011), and Dodd-Frank Regulations:
Impacts on Community Banks, Credit Unions and Systemically Important Institutions, GAO-16-169 (Washington, D.C.: Dec. 30,
2015) for additional information on these methods.
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pandemic. 130 A range of measures of national economic activity in recent months have made
clear that the economy remains under substantial stress. For example, a measure of weekly
economic activity that aggregates several disparate economic indicators provided further evidence
of a rapid and severe economic contraction in the United States (see ﬁg. 13). 131 In addition, falling
demand has substantially reduced actual and expected inﬂation in the near term, with some
forecasters and market prices predicting deﬂation, a critical economic risk. 132
Figure 13: Weekly Economic Index, January 2019 to May 16, 2020
Note: The level of the Weekly Economic Index corresponds to a year-over-year growth rate in gross domestic product were
conditions to remain at that level for a full quarter.
The ﬁscal response from Congress combined with the severe economic contraction will generate
a substantial increase in federal debt, as expenditures increase and tax revenues fall. Federal
debt held by the public increased by $1.4 trillion in April alone. While interest rates on Treasury
securities are low at the moment, reducing the cost of newly issued debt, the long-term ﬁscal
challenges facing the United States have been exacerbated by the pandemic and will require
attention once the economy has returned to consistent growth and public health goals have been
attained.133
130The aggregate eﬀect of ﬁscal, monetary and public health eﬀorts are also likely to be reﬂected in broader economic
conditions—at least relative to what economic conditions would have been absent those policy measures.
131Daniel J. Lewis, Karel Mertens, and Jim Stock, “U.S. Economic Activity during the Early Weeks of the SARS-Cov-2
Outbreak,” Federal Reserve Bank of New York Staﬀ Report No. 920 (April 2020).
132Sustained deﬂation would make labor market adjustment substantially more diﬃcult—making employers more likely
to lay oﬀ workers—and lead to additional defaults as it raised the real value of debt payments.
133See GAO, The Nation’s Fiscal Health: Action Is Needed to Address the Federal Government's Fiscal Future, GAO-20-403SP
(Washington, D.C.: Mar. 12, 2020).
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Total U.S. imports and exports also fell markedly in March and April relative to a year ago, with
travel and transportation services trade falling at much faster rates than overall trade. Imports
of COVID-19-related products, which include protective garments and medical devices, surged
in March and April relative to a year ago, although COVID-19-related exports fell in April after
increasing in March. 134 Abroad, measures of economic and ﬁnancial risk remain elevated in
advanced and emerging market economies.
Evolving Lessons Learned from Initial COVID-19 Response
and Past Crises and Emergencies Highlight Areas for
Continued Attention
The nation has made some progress in ﬁghting COVID-19. However, the virus continues to pose
risks to all Americans and there is a concern of another wave of infection this fall, which could
coincide with the seasonal inﬂuenza and hurricane season—further straining federal agencies
responsible for responding to these events, as well as the health care system. Additionally,
the nation’s initial response to COVID-19 highlights the challenges presented by an inherent
fragmentation across responsibilities and capabilities in the federal biodefense response and
health care system, which includes private, public (local, state, and federal governments), and
nonproﬁt entities.
Lessons from the initial response, as well as experience from past economic crises, disasters, and
emergencies, highlight areas where continued attention and oversight are needed—with the focus
on improving ongoing response eﬀorts and preparing for potential additional waves of infection.
These lessons include establishing clear goals and deﬁning roles and responsibilities among those
responding to a crisis, providing clear communication, collecting and analyzing data to inform
future decisions, and establishing mechanisms for accountability and transparency.
Establish clear goals and deﬁne roles and responsibilities. The unprecedented scale of the
COVID-19 pandemic and the whole-of-government response required to address it highlights the
critical importance of clearly deﬁning the roles and responsibilities for the wide range of federal
departments and other key players involved when preparing for pandemics and addressing an
unforeseen emergency. Following prior catastrophic events, we have noted challenges related to a
lack of coordination and communication within the federal government.
In February 2020, we issued a report evaluating early implementation eﬀorts of the National
Biodefense Strategy which, among other things, sets goals and objectives to help the nation
prepare for and rapidly respond to biological incidents to minimize their eﬀect. Implementing
134World Customs Organization, HS classiﬁcation reference for Covid-19 medical supplies, 2 nd edition (April 9, 2020). The
import and export values are based on Harmonized Schedule (HS) codes at the 6-digit level identiﬁed by the World
Customs Organization and the World Health Organization. While these are a useful indication of trends in the imports
and exports of COVID-19-related products, because HS 6-digit numbers are broad categories that cover more than one
product, data at the HS 6-digit level may include a mix of COVID-19-related and non-COVID-19- related products. For this
reason, the value reported may over-estimate the imports and exports of COVID-19-related products.
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the strategy could help the federal government prepare for large-scale events like the COVID-19
pandemic by ensuring coordination across federal programs. However, at the time of the
COVID-19 pandemic, implementation eﬀorts were new, and we reported a number of challenges
that could limit the successful implementation of the strategy in the longer term. 135 For example,
we found that the strategy did not provide clear, detailed processes, roles, and responsibilities
for joint decision-making. We recommended, and HHS agreed, that the Secretary of Health
and Human Services should take steps to clearly document agreed-upon processes, roles, and
responsibilities for making and enforcing enterprise-wide decisions.
During the response to Hurricanes Irma and Maria—which hit the U.S. Virgin Islands and Puerto
Rico within 2 weeks of each other in September 2017, causing catastrophic damage—there
was at times a lack of clarity in the roles and responsibilities of the supporting agencies, and
agency capabilities were not always aligned with response needs. 136 For example, in September
2019, we reported that HHS was responsible for leading the federal public health and medical
services response during the disaster, and in that role called upon support agencies, including
the Department of Veterans Aﬀairs (VA), to assist. During the response there were conﬂicting
expectations of VA’s role—VA had expected to run shelter operations, while HHS had expected the
agency to support medical operations. As a result of this work, we made seven recommendations
to HHS to improve its planning for public health emergencies. HHS agreed with ﬁve of the seven
recommendations.
This example from a past federal emergency response eﬀort highlights the importance of clearly
deﬁned federal roles and responsibilities in any newly established programs and activities such
as the federal response to the COVID-19 pandemic. We will draw on these lessons to inform
our ongoing and future audit work in response to our CARES Act oversight responsibilities. See
appendix VI for a list of ongoing work spanning the spectrum of the federal government’s eﬀorts
to respond to and recover from the COVID-19 pandemic, as of June 17, 2020.
Provide clear, consistent communication. In the midst of a nationwide emergency, clear and
consistent communication—among all levels of government, with health care providers, and to
the public—is key. We have reported that uncoordinated communication from federal to state
and local jurisdictions, and to providers and the general public, has contributed to confusion,
frustration, and in some cases, individuals’ failure to seek or receive public health interventions,
such as inﬂuenza vaccination, in the past. 137
135GAO, National Biodefense Strategy: Additional Eﬀorts Would Enhance Likelihood of Eﬀective Implementation, GAO-20-273
(Washington, D.C.: Feb. 19, 2020). At the highest level, the National Biodefense Strategy, issued in 2018, is designed
to help guide the nation’s assessment of, prevention of, preparation for, response to, and recovery from biological
incidents. The Strategy presents an opportunity to identify gaps and consider enterprise-wide risk and resources for
investment trade-oﬀ decisions covering multiple biological threats.
136GAO, Disaster Response: HHS Should Address Deﬁciencies Highlighted by Recent Hurricanes in the U.S. Virgin Islands and
Puerto Rico, GAO-19-592 (Washington, D.C.: Sept. 20, 2019).
137GAO, Inﬂuenza Pandemic: Lessons from the H1N1 Pandemic Should Be Incorporated into Future Planning, GAO-11-632
(Washington, D.C.: June 27, 2011). In response to the global spread of the H1N1 inﬂuenza virus, the United Nations’
World Health Organization declared the ﬁrst human inﬂuenza pandemic in more than 4 decades on June 11, 2009.
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We reported that in the summer of 2009, HHS conveyed to state and local jurisdictions, and to
the public, that a robust H1N1 vaccine supply was expected to be available in October 2009.
Ultimately, however, far fewer doses were made available that month, which fell short of the
expectations of state and local governments and the public. As a result, the credibility of the
federal government was diminished. 138 In addition, before it became apparent that the H1N1
pandemic would require a primarily public health response, some state oﬃcials cited concerns
about the shared federal leadership roles of HHS and the Department of Homeland Security
(DHS). State oﬃcials reported receiving large volumes of information—often through multiple daily
conference calls or via e-mail—from both federal agencies. The amount of information—which
was sometimes the same information and sometimes inconsistent—was overwhelming.
Similarly, in March 2020—in the midst of responding to the COVID-19 pandemic—the federal
government issued inconsistent guidance regarding the safety of group gatherings. On March 15,
2020, CDC published guidance stating that because large gatherings can contribute to the spread
of COVID-19, in-person gatherings should be limited to 50 people or fewer. The next day, the White
House issued guidance—including the CDC logo—encouraging people to avoid social gatherings of
more than 10 people.139
It is important to note that in an emergency, information may change rapidly as a situation
evolves, so some corresponding evolution of messages to the public is understandable.
The continued evolution of events in a crisis places an even greater premium on eﬀective
communication. As more information became known about how COVID-19 spread, federal
guidelines shifted to include new advice to the public on precautions such as wearing face
masks in public and social distancing. However, failure to eﬀectively manage expectations and
communication during a pandemic could undermine the public’s trust in the government at a
time when the government’s responsibility to convey critical health and safety information is
paramount. The lack of clear, consistent communication from the federal government can lead
to a loss of credibility with the public and other stakeholders, which is very important, since
responding eﬀectively to a pandemic requires the public’s participation.
Collect and analyze adequate and reliable data to drive future decisions. Data collection and
analysis eﬀorts during a pandemic can inform decision-making and future preparedness—and
allow for midcourse changes in response to early ﬁndings. Previous GAO work on preparedness
highlights how data collection and analysis could inform the response to COVID-19, and
preliminary data emerging from the initial response could inform preparations for a second wave
of infections.
• Since 2006, HHS has been required to establish and improve upon, in collaboration with
state, local, and tribal public health oﬃcials, a near real-time electronic nationwide public
health situational awareness capability through an interoperable network of systems to
share data and information to enhance early detection, rapid response to, and management
of potentially catastrophic infectious disease outbreaks such as COVID-19, novel emerging
138GAO, Inﬂuenza: Progress Made in Responding to Seasonal and Pandemic Outbreaks, GAO-13-374T (Washington, D.C.: Feb.
13, 2013).
139See CDC’s Interim Guidance for Coronavirus Disease 2019 (COVID-19), March 15, 2020 and The President’s Coronavirus
Guidelines for America, March 16, 2020.
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threats, and other public health emergencies. 140 However, HHS has made little progress in
establishing such a network. 141 We currently have open recommendations to HHS related to
this lack of progress and plan to begin new work evaluating the status of the capability in the
summer of 2020. 142
• Information collected and reported following a pandemic can inform response to future
public health emergencies. FEMA policy requires that after-action reviews be conducted after
presidentially-declared major disasters to identify strengths, areas for improvement, and
potential best practices of response and recovery eﬀorts. However, we reported in May 2020
that, as of January 2020, FEMA had completed after-action reviews for only 29 percent of
disasters since January 2017. 143
Further, we reported that FEMA lacks a formal mechanism for documenting and sharing
best practices, lessons learned, and corrective actions nationwide. We recommended that
FEMA prioritize the completion of after-action reviews, document lessons learned at the
headquarters level, and develop guidance for sharing such reviews with external stakeholders
when appropriate. DHS concurred with our recommendations and stated it is taking steps to
address them, including by implementing a new system for tracking best practices and lessons
learned, among other things. Ensuring that FEMA and all other agencies participating in the
COVID-19 response are consistently identifying best practices and areas of improvement will
be critical to mounting an eﬀective response now and in the future.
• Preliminary information on the eﬀects of COVID-19 highlight the importance of additional
data collection to target response activities to the most aﬀected groups. For example, though
all populations are at risk of COVID-19, early monitoring indicated that certain populations
are more at risk. Preliminary ﬁndings indicate that older adults—those over the age of
65—are more likely to be hospitalized and to die from the virus, and the majority of persons
hospitalized also have underlying medical conditions, such as hypertension, obesity, or
chronic lung disease. 144 Additionally, those ﬁndings indicate that black populations might
be disproportionately aﬀected, representing a larger proportion of hospitalized COVID-19
140See Pandemic and All-Hazards Preparedness Act, Pub. L. No. 109-417, § 202, 120 Stat. 2831, 2847 (2006)
(codiﬁed, as amended, at 42 U.S.C. § 247d-4(c)). The network is to include, for example, data and information
from state, local, and tribal public health entities, including laboratories; federal health agencies; zoonotic disease
monitoring systems; public and private sector health care entities; immunization information systems; and public
environmental health agencies.
141GAO, Public Health Information Technology: Additional Strategic Planning Needed to Establish Electronic Situational
Awareness Capabilities, GAO-11-99 (Washington, D.C.: Dec. 17, 2010); Public Health Information Technology: HHS
Has Made Little Progress toward Implementing Enhanced Situational Awareness Network Capabilities, GAO-17-377
(Washington, D.C.: Sept. 6, 2017).
142HHS has neither concurred nor disagreed with these recommendations.
143GAO, National Preparedness: Additional Actions Needed to Address Gaps in the Nation’s Emergency Management
Capabilities, GAO-20-297 (Washington, D.C.: May 4, 2020).
144Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, Vol. 69, No. 15 (Apr. 17, 2020).
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patients. 145 Nursing homes and other congregate care settings, such as jails and prisons,
have also been severely aﬀected by COVID-19 due to limited capacity to isolate infected
individuals and inability to practice social distancing. 146 More study of these early ﬁndings can
help target a response to appropriate communities.
Establish transparency and accountability mechanisms. In emergency situations, such as the
COVID-19 pandemic, it is understandable, and appropriate, for agencies to want to get funds out
the door quickly. However, without the necessary safeguards in place, funds may not get to the
intended places or be used for the intended purposes.147 Therefore, it is important that agencies
integrate transparency and accountability mechanisms with mission achievement.
For example, clearer explanations of the good faith necessity certiﬁcation in SBA’s initial interim
ﬁnal rule for PPP could have helped avoid uncertainty concerning loan eligibility. To help quickly
disperse funds, SBA’s initial interim ﬁnal rule allowed lenders to rely on borrower certiﬁcations to
determine the borrower’s eligibility; however, the rule provided minimal additional information
to borrowers on the required good faith necessity certiﬁcations.148 On April 23, 2020—20 days
after the program launched—SBA posted an answer to a frequently asked question, stating that
it is unlikely that publicly traded companies with substantial market value and access to capital
markets will be able to make the required good faith necessity certiﬁcation. According to data from
FactSquared as of June 1, 2020, about 70 publicly traded companies that were approved for about
$435 million had returned their PPP loans.149
Agencies need to provide transparent reporting so that Congress and others have assurance
that eﬀective and eﬃcient safeguards over federal funds are established—and that funds are
being used for their intended purposes. Lessons from the Recovery Act demonstrate the value of
having a transparent website for publicly reporting spending, as well as how such data provides a
foundation for identifying fraud, waste, and abuse.150 A key feature of the Recovery.gov website
145Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, Vol. 69, No. 15 (Apr. 17, 2020);
and Vol. 69, No. 18 (May 8, 2020).
146Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, Vol. 69 (May 6, 2020); and
Vol. 69, No. 12 (Mar. 27, 2020). See also Centers for Medicare & Medicaid Services, COVID-19 Nursing Home Data,
accessed June 4, 2020, https://data.cms.gov/stories/s/COVID-19-Nursing-Home-Data/bkwz-xpvg.
147GAO’s Standards for Internal Control in the Federal Government and A Framework for Managing Fraud Risks in Federal
Programs (Fraud Risk Framework) provide standards and leading practices, respectively, in many key areas to help federal
agencies ensure accountability in and transparency of emergency funding and manage any related risks. GAO is also
in the process of reviewing the design of key ﬁnancial management internal controls of agencies that are receiving
COVID-19 funding, and informing such agencies about control weaknesses that need to be remedied. See appendix V for
additional information on standards for internal control and fraud risk management.
148PPP borrowers are required to certify in good faith that “current economic uncertainty makes this loan request
necessary to support the ongoing operations of the Applicant.”
149FactSquared is a data analysis company that reviewed thousands of Securities and Exchange Commission ﬁlings to
identify these loans. We performed keyword searches of Securities and Exchange Commission ﬁlings and identiﬁed a
list of companies very similar to the one reported by FactSquared. SBA oﬃcials told us that any returned funds would
be available to be re-loaned as long as the program was still active. More generally, according to SBA more than 170,000
PPP loans totaling about $38.5 billion had been cancelled as of May 31, 2020.
150The Recovery Act refers to the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115.
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was the ability to allow users to track spending by project and the location where funds were
spent. 151 We also reported on how the Recovery Accountability and Transparency Board’s
Recovery Operation Center eﬀectively served as a centralized location for analyzing data on
Recovery Act spending and its recipients through use of advanced data analytics.
The Pandemic Response Accountability Committee has established a
website—pandemic.oversight.gov—which will eventually serve as a repository of detailed
information on federal spending related to COVID-19.152 The site will include monthly obligations
and expenditures on federal awards and contracts related to COVID-19 funds as reported by
participating agencies. However, as of June 1, 2020, this information is not yet available. The site
will also include reports related to COVID-19 by the Pandemic Response Accountability Committee
itself, individual inspectors general oﬃces, and us.
Early implementation of such capabilities would help ensure real-time oversight and monitoring of
COVID-19 funding and facilitate identifying fraud and errors before payments are made. 153 As we
have previously reported, preventive activities generally oﬀer the most cost-eﬀective investment of
resources. 154 Therefore, eﬀective managers of fraud risks focus their eﬀorts on fraud prevention
in order to avoid a costly “pay-and-chase” model, to the extent possible.
To date, the transparency of the use and distribution of CARES Act funding has been mixed.
According to Treasury, spending information should soon be available and we will examine the
level of transparency of the reported information. In addition, in some cases, agencies have
already released information about where COVID-19 funds are ﬂowing. For example, HHS released
data on all providers that (1) received Provider Relief Fund payments, and (2) certiﬁed they
meet the terms and conditions for those payments. In other cases, such information has not
been released. SBA has not been as transparent in its reporting on the $670 billion PPP. SBA
has regularly published summary data, including on the number and dollar amount of loans
approved, number of lenders and loans by lender type, and loans by state and industry. However,
SBA has not made data on individual loans available on its website as it has done for other
loan guarantee programs, although SBA has stated on its website that it plans to do so at an
unspeciﬁed future date. In an interview on June 1, 2020, SBA oﬃcials declined to comment on
whether they planned to release loan-level data. The oﬃcials later noted concerns about personal
privacy and commercially sensitive business information that they said were not presented by
traditional SBA business loan programs.
Total federal COVID-related spending will be publicly reported using existing reporting
requirements within agency ﬁnancial systems and existing reporting under the Federal Funding
Accountability and Transparency Act of 2006, as amended by the Digital Accountability and
151GAO, Recovery Act: Grant Implementation Experiences Oﬀer Lessons for Accountability and Transparency, GAO-14-219
(Washington, D.C.: Jan. 24, 2014).
152We accessed the Pandemic Response Accountability Committee website—pandemic.oversight.gov—on June 1, 2020.
153See GAO-14-219 and GAO, Federal Spending Accountability: Preserving Capabilities of Recovery Operations Center Could
Help Sustain Oversight of Federal Expenditures, GAO-15-184 (Washington, D.C.: Sept. 14, 2015).
154See GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP (Washington, D.C.: July 28, 2015).
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Transparency Act (DATA Act).155 Federal agencies that have received COVID-19 supplemental
appropriations are required to report obligations and expenditures on a monthly basis using
a disaster emergency fund code provided by OMB to link these funds to the supplemental
appropriations.156 According to OMB, agencies will begin the monthly reporting, as required
by the CARES Act, with June 2020 data to be displayed on USASpending.gov in July 2020.157 It
is unfortunate that the public will have waited more than 4 months since the passage of the
CARES Act for access to spending information presented in a systematic way. GAO will monitor
USASpending.gov regarding the accessibility and transparency of this reporting.
As monthly data related to COVID-19 spending become available on USAspending.gov, Treasury
faces the challenge of ensuring that the data are presented in a way that maximizes their
transparency and usefulness. We have previously identiﬁed several key practices to help ensure
the transparent presentation of federal spending data, including by presenting data in a way that
enables users to easily explore them.158 These practices include tools such as interactive maps
and visualizations and search functions to help users ﬁnd information or display search results
using tables, charts, and maps.
We have also previously reported on the importance of being transparent about the quality of
the information presented on USAspending.gov, including the value of clearly identifying data
limitations. 159 Treasury has made progress related to both of these issues for data displayed on
USAspending.gov. As Treasury moves forward with CARES Act implementation, the inclusion of
COVID-19 spending data on USAspending.gov presents an opportunity to further build on these
eﬀorts. Clear presentation of these data, search functions that provide a roadmap to COVID-19-
speciﬁc data, and information regarding any data limitations will enhance transparency and help
ensure that Congress and the public can quickly and easily ﬁnd, understand, and analyze CARES
Act spending data.
Issues for congressional oversight. While Congress has taken a number of actions to help
address the pandemic, it continues to consider additional actions—both to improve ongoing
eﬀorts and implement new ones—and develop plans for congressional oversight of the nation’s
response to and recovery from COVID-19. As we have previously reported, congressional oversight
plays a vital role in spurring agency progress on matters of national importance. 160 On the basis
of our work on past large scale government responses to economic downturns and other crises,
155Pub. L. No. 109-282, 120 Stat. 1186 (Sept. 26, 2006); Pub. L. No. 113-101, 128 Stat. 1146 (May 9, 2014), codiﬁed at 31
U.S.C. § 6101 note.
156Agencies are to report this information to OMB and others, and it will be displayed on USASpending.gov—a publicly
available website that includes detailed data on federal spending for nearly all accounts across the federal government.
157Quarterly data submitted in August 2020 will include data for April, May and June 2020, and the disaster emergency
fund code designation.
158For a full discussion of all the practices we identiﬁed, see GAO, Open Data: Treasury Could Better Align USAspending.gov
with Key Practices and Search Requirements, GAO-19-72 (Washington, D.C.: Dec. 13, 2018).
159GAO, DATA Act: Quality of Data Submissions Has Improved but Further Action Is Needed to Disclose Known Data Limitations,
GAO-20-75 (Washington, D.C.: Nov. 8, 2019) and GAO-19-72.
160See, for example, GAO, High Risk Series: Substantial Eﬀorts Needed to Achieve Greater Progress on High-Risk Areas,
GAO-19-157SP (Washington, D.C.: Mar. 6, 2019).
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we have identiﬁed several key areas for congressional oversight that are applicable to the current
eﬀorts to combat the pandemic (see table 9).
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Table 9: Key Areas for Congressional Consideration in Overseeing the Federal Response to the COVID-19
Pandemic
Key area
Oversight considerations
Fiscal assistance
How eﬀective are current funding delivery mechanisms
for providing ﬁscal assistance to individuals, states, and
localities, and should they be modiﬁed or supplemented
by other approaches to support the delivery of public
services?
Whole-of-government response and recovery
How eﬀectively is the federal government communicating
and collaborating? How eﬀectively is it implementing
and assessing policy changes enacted in response to the
pandemic? What more needs to be done?
Collaborative governance
What can the federal government do to better partner with
state and local governments and the nonproﬁt and private
sectors to leverage the public investment in addressing the
economic crisis and fostering recovery?
Source: GAO. | GAO-20-625.
While all three key areas are relevant to ongoing discussions about additional action, three
issues in particular—which relate to ﬁscal assistance and whole-of-government response and
recovery and where we have made recommendations that agencies have not implemented—merit
congressional attention and consideration:
• Aviation preparedness. With the recurring threat of communicable diseases quickly
spreading around the globe through air travel, it is imperative that the U.S. aviation system is
suﬃciently prepared to help respond to any future communicable disease threat. In 2015, we
recommended that the Secretary of Transportation work with relevant stakeholders, such as
HHS and DHS, to develop a national aviation-preparedness plan for communicable disease
outbreaks. 161
Such a plan could establish a mechanism for coordination between the aviation
and public health sectors and guide preparation for communicable disease nationally and for
individual airlines and airports.
While the DOT agreed that a plan is needed, as of May 2020, no such plan had been
developed. Since our report, DOT has maintained that because HHS and DHS are responsible
for communicable disease response and preparedness planning, respectively, these
departments should lead any eﬀorts to address planning for communicable disease
outbreaks, including for transportation. GAO maintains that DOT is in the best position
to lead a multiagency eﬀort to develop a national aviation-preparedness plan and that
such a plan is critically needed. Among other reasons, DOT’s Oﬃce of the Secretary is the
liaison to the international aviation organization that has developed standards—including a
national aviation pandemic plan—which member states are obligated to implement under an
international aviation treaty signed by the United States.162
161GAO, Air Travel and Communicable Diseases: Comprehensive Federal Plan Needed for U.S. Aviation System's
Preparedness, GAO-16-127 (Washington, D.C.: Dec. 16, 2015).
162Member states, including the United States, are obligated to establish regulations or take other appropriate
steps to implement the International Civil Aviation Organization standards within their own civil aviation systems.
Additionally, member states are obligated to notify the International Civil Aviation Organization of a “diﬀerence”
from the international standard, if they ﬁnd it impractical to fully comply with an international standard or
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In the absence of a national aviation-preparedness plan, DOT oﬃcials point to ongoing eﬀorts
to engage with interagency partners at HHS and DHS, as well as industry stakeholders, to
better collaborate on communicable disease response and preparedness as they relate to civil
aviation. While these eﬀorts are helpful, the United States will not be prepared to minimize
and quickly respond to future communicable disease events and garner international
cooperation in addressing pandemics without such a plan.
• Full access to death data. According to an analysis by the Treasury Inspector General for
Tax Administration, the number of economic impact payments going to decedents—almost
1.1 million payments totaling nearly $1.4 billion as of April 30—highlights the importance
of consistently using key safeguards in providing government assistance to individuals. The
Social Security Act provides IRS access to SSA’s full set of death records, but does not provide
such access to Treasury and BFS, which distribute payments. We have previously suggested
that Congress consider amending the Social Security Act to explicitly allow SSA to share its full
death data with Treasury for data matching to prevent payments to ineligible individuals. While
having this access would not have prevented the economic impact payments to deceased
individuals based on IRS’s initial legal determination regarding these payments, such access
remains an important safeguard. We maintain that providing Treasury with access to SSA’s full
set of death records, and requiring that Treasury consistently use it, could help reduce similar
types of improper payments in other circumstances.
• Fiscal assistance through Medicaid. In the Families First Coronavirus Response Act,
Congress provided additional Medicaid funding to states temporarily through the FMAP—the
statutory formula according to which the federal government matches states’ spending
for Medicaid services. We have found that during economic downturns—when Medicaid
enrollment can rise and state economies weaken—the FMAP formula, which is based on each
state’s per capita income, does not reﬂect current state economic conditions. In addition,
past eﬀorts to provide states with temporary increases in the FMAP were not as timely or
responsive as they could have been.
To eﬀectively stabilize states' funding of Medicaid programs during such periods, assistance
should be provided—or at least authorized—near the beginning of a downturn. Furthermore,
to be eﬃcient, funds should be targeted to states commensurate with their level of need.
To help ensure that federal funding eﬃciently and eﬀectively responds to states' needs, we
previously developed a formula that oﬀers an option for providing temporary automatic,
timely, and targeted assistance during a national economic downturn through an increased
FMAP. 163 The formula's automatic trigger would use readily available economic data (e.g., the
monthly employment-to-population ratio) to begin assistance. Targeted state assistance would
be calculated based on (1) increases in state unemployment and (2) reductions in total wages
and salaries. Using this formula could help make any future changes to the FMAP during the
current economic downturn timelier and targeted.
otherwise diﬀer from the standard in their regulations or practices. Chicago Convention on International Civil
Aviation art. 38, Apr. 4, 1944, 61 Stat 1180, T.I.A.S. No. 1,591.
163GAO, Medicaid: Prototype Formula Would Provide Automatic, Targeted Assistance to States during Economic
Downturns, GAO-12-38 (Washington, D.C: Nov. 10, 2011).
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Conclusions
The COVID-19 pandemic has had devastating eﬀects on the health and economic well-being of
Americans, and it has necessitated a whole-of-government response on an unprecedented scale.
Both the Congress and the administration have acted to mobilize resources quickly to help the
nation respond to and recover from the pandemic. However, the negative eﬀects of the pandemic
on families, communities, and health care systems and on the long-term economic condition of
millions of Americans and U.S. businesses are likely to persist into the future. Lessons learned
from examining the federal response can be a helpful resource as the nation seeks to rebuild
community health care systems and economies and to make them more resilient in the face of
future disruptions.
Our work for this ﬁrst report identiﬁed initial opportunities to improve the federal government’s
ongoing response and recovery eﬀorts. In particular, we found the following:
• The federal government continues to lack a national aviation-preparedness plan for
communicable disease outbreaks. Until we have a national aviation-preparedness plan, we
risk being unprepared to respond quickly and eﬀectively to communicable disease events,
including the continued spread of COVID-19.
• DOL has not provided information to state unemployment agencies about the risk of improper
payments associated with certain employees potentially simultaneously receiving both pay
funded with PPP funds and unemployment beneﬁts. Confusion about this issue increases the
risk of improper payments to beneﬁciaries and misuse of limited funds.
• IRS does not currently plan to take additional steps to notify ineligible recipients on how to
return payments.
• SBA has not provided details on how it plans to identify and respond to risks in PPP to ensure
program integrity, achieve program eﬀectiveness, and address potential fraud, including in
loans of $2 million or less.
In addition, our work highlights the importance of previous matters for consideration for Congress
that, if implemented, could improve eﬀectiveness and program integrity of the ﬁscal assistance
provided to states and individuals. These include matters related to Treasury’s access to the
full death data, and revising the FMAP formula to be automatically responsive during economic
downturns (see ﬁg. 14).
We will continue to provide real-time, ongoing oversight of the federal response to COVID-19 to
help ensure transparency and accountability and to identify opportunities for improvement, as
appropriate.
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Figure 14: Matters for Congressional Consideration and Recommendations
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Agency Comments and Our Evaluation
We shared a draft of this report with multiple agencies for review and comment.164 Agency
comments speciﬁc to the enclosures in appendix III are included in each enclosure.
In their comment letters, DHS, HHS, Education, IRS, and Treasury noted the unprecedented level
of eﬀort displayed by the federal workforce in responding to the crisis. We agree that the eﬀorts
of the federal workforce to respond quickly and broadly to the public health and economic crises
have been remarkable, and we added language to our report to this eﬀect.
In addition, agencies provided the following comments:
Department of Labor. While DOL oﬃcials neither agreed nor disagreed with our
recommendation, In its comments, reproduced in appendix VII, DOL noted that it is preparing
questions and answers regarding individuals collecting UI beneﬁts while simultaneously receiving
payment from the PPP. DOL also said that it has reached out to SBA to help inform this guidance,
and expects to release it to state UI agencies within the next month.
Internal Revenue Service. In its comments, reproduced in appendix VIII, IRS agreed with our
recommendation to consider additional options to notify ineligible recipients on how to return
payments.
Department of the Treasury. In its comments, reproduced in appendix IX, Treasury highlighted
its role in implementing certain CARES Act provisions, including economic impact payments,
Payroll Support Program, Coronavirus Relief Fund, Federal Reserve lending facilities, and the PPP.
Regarding PPP, Treasury noted the successes of the program, including the speed with which
SBA and Treasury launched the program and how quickly loans were processed. Treasury also
stated that it and SBA took care to introduce safeguards to prevent fraud and misuse of funds.
In the report, we discuss the safeguards that SBA put in place before loan approval. However, we
also note that although Treasury and SBA had announced eﬀorts to implement safeguards after
loan approval, SBA has provided limited information on how it will implement these safeguards.
In its letter and technical comments, Treasury also stated that although our report notes that
some of the loan forgiveness regulations were not issued until May, the CARES Act and other
regulations that SBA released prior to May addressed loan forgiveness requirements. In the report,
we describe SBA’s prior regulations and guidance but note the critical nature of the regulations
posted in May, which state that SBA was addressing lenders’ and borrowers’ need for clarity and
certainty concerning loan forgiveness requirements.
164We shared a draft of this report with the Departments of Defense, Education, Labor, Housing and Urban
Development, Commerce, Health and Human Services, Veterans Aﬀairs, Homeland Security, State, Agriculture,
the Interior, Transportation, and the Treasury. We also shared a draft with the Federal Reserve, Small Business
Administration, Federal Deposit Insurance Corporation, National Credit Union Administration, Oﬃce of the Comptroller
of the Currency, Consumer Financial Protection Bureau, Federal Housing Finance Agency, Farm Credit Administration,
U.S. Agency for International Development, Oﬃce of Management and Budget, and Internal Revenue Service.
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Small Business Administration. SBA provided written comments that are reproduced in
appendix X.165 In those comments, SBA did not state whether it agreed or disagreed with our
recommendation to the agency. However, it commented on our interactions with the agency, as
summarized below:
• SBA stated that we mischaracterized the agency’s interactions with GAO, noting that it had
provided documents to GAO and made staﬀ available for meetings. As noted in the report,
SBA provided primarily publicly available information in response to our inquiries and in the
beginning of June discussed questions we had provided about 6 weeks earlier. In its technical
comments, SBA also said that we had requested interviews by June 1, 2020, and that the
agency had complied with that request. In fact, we ﬁrst asked to meet with agency oﬃcials on
April 13, 2020, and provided a list of questions to discuss on April 15, 2020. We provided June
2, 2020, as the last possible date we could meet with them.
• Regarding the detailed description of data on loans that SBA had made, SBA stated that we
had indicated for the ﬁrst time in a June 1, 2020, interview that we were seeking individual loan
data. In fact, we requested data dictionaries to guide a request for loan-level data on May 21,
2020, and requested loan-level data on May 27, 2020, even though the data dictionaries had
not been provided. SBA had not provided the information as of June 17, 2020, or indicated
when it planned to do so. We remain interested in receiving the requested data dictionaries
and loan-level data and plan to continue to engage with SBA on this matter.
SBA also provided technical comments that we incorporated as appropriate. Some of these
comments were more than technical in nature, as summarized below:
• SBA stated that it was not accurate to suggest that safeguards for PPP are limited or that the
agency had not planned for oversight. Speciﬁcally, it said that GAO ignored safeguards the
agency put in place and interim ﬁnal rules that it had issued on loan review and forgiveness.
In our report, we do discuss the safeguards that SBA put in place before loan approval, and
we cite both interim ﬁnal rules. In an interview on June 1, 2020, we asked SBA for additional
details on the reviews it planned for loans of more than $2 million and any reviews of loans of
less than $2 million; SBA declined to comment.
• SBA said that we make an unsupportable leap in linking lenders’ streamlined obligations
during loan approval to fraudulent applications. As we note in the report, we have previously
reported that reliance on applicant self-certiﬁcations can leave a program vulnerable to
exploitation by those who wish to circumvent eligibility requirements or pursue criminal
activities.
• SBA said that we had not given it enough credit for the extraordinary work the agency had
undertaken to implement the CARES Act. We agree that SBA has signiﬁcant responsibilities
under the CARES Act and has worked quickly to implement new programs such as PPP and to
165SBA provided a cover letter with a 12-page enclosure containing SBA’s comments. The ﬁrst page of the enclosure
presented SBA’s overarching comment. The remainder of the enclosure presented comments that were largely of a
technical nature. Appendix X includes SBA’s cover letter and the ﬁrst page of the enclosure.
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get loans to struggling small businesses quickly. In the report and related enclosures, we note
that SBA moved quickly to process an unprecedented volume of loans.
• SBA questioned our use of testimonial evidence obtained from six lender associations that
represent a variety of lenders and one small business association we interviewed, stating
that it was not representative. In the two report enclosures on SBA, we note that their views
are not generalizable to other lender and small business associations but oﬀered important
perspectives.
U.S. Agency for International Development. USAID provided written comments, reproduced in
appendix XI, highlighting its eﬀorts to respond to COVID-19 abroad.
Department of Homeland Security/Federal Emergency Management Agency. In its
comments, reproduced in appendix XII, DHS outlined the signiﬁcant challenges facing the nation in
responding to the COVID-19 pandemic and FEMA’s lead role in addressing them.
Department of Veterans Aﬀairs. VA provided written comments, reproduced in appendix XIII,
highlighting its eﬀorts to respond to the COVID-19 pandemic.
Technical comments. The following agencies also provided technical comments, which we
incorporated as appropriate: SBA, State, Education, Treasury, IRS, OMB, USAID, the Federal
Reserve, HHS, DHS, DOT, DOD, Department of Commerce, USDA, and VA.
We are sending copies of this report to the appropriate congressional committees, the Acting
Director of the Oﬃce of Management and Budget, White House Coronavirus Task Force, and other
relevant agencies. In addition, the report is available at no charge on the GAO website at https://
www.gao.gov.
If you or your staﬀ have any questions about this report, please contact me at (202) 512-5500
or dodarog@gao.gov. Questions can also be directed to Kate Siggerud, Chief Operating Oﬃcer,
at (202) 512-5600, A. Nicole Clowers, Managing Director, Health Care, at (202) 512-7114 or
clowersa@gao.gov or Orice Williams Brown, Managing Director, Congressional Relations, at (202)
512-4400 or williamso@gao.gov. Contact points for our Oﬃces of Congressional Relations and
Public Aﬀairs may be found on the last page of this report.
Gene L. Dodaro
Comptroller General of the United States
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Congressional Addressees
The Honorable Richard C. Shelby
Chairman
The Honorable Patrick J. Leahy
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable Lamar Alexander
Chairman
The Honorable Patty Murray
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Ron Johnson
Chairman
The Honorable Gary C. Peters
Ranking Member
Committee on Homeland Security and Governmental Aﬀairs
United States Senate
The Honorable Nita M. Lowey
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Greg Walden
Republican Leader
Committee on Energy and Commerce
House of Representatives
The Honorable Bennie Thompson
Chairman
The Honorable Mike D. Rogers
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable Jim Jordan
Ranking Member
Committee on Oversight and Reform
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House of Representatives
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Appendixes
Appendix I: Scope and Methodology
To examine key actions the federal government has taken and identify criteria for assessing those
actions as appropriate, we reviewed our prior work related to federal disaster management;
analyzed the most recent agency data on a range of activities, obligations, and expenditures
related to the Coronavirus Disease 2019 (COVID-19) pandemic response as of May 31, 2020
(unless otherwise noted in the report); reviewed federal laws, agency guidance, processes,
and procedures; and interviewed agency oﬃcials. In addition, we examined publicly released
documents or obtained information from agencies within the Board of Governors of the Federal
Reserve System, Department of Agriculture, Department of Commerce, Department of Defense,
Department of Education, Department of Health and Human Services, Department of Housing and
Urban Development, Department of Labor, Department of State, Department of Transportation,
Department of the Treasury, Department of Veterans Aﬀairs , Federal Aviation Administration,
Federal Emergency Management Agency, Internal Revenue Service, Small Business Administration,
and U.S. Agency for International Development.
Where applicable, GAO plans to use the National Center for Health Statistics (NCHS) COVID-19
death data over time in our reporting for consistency, because it is considered to be the most
reliable source of data since it is based on oﬃcial death records. Diﬀerences between NCHS data
and reports from other sources, such as state health department websites, should reduce over
time as data are processed and counts are updated. To assess the reliability of data related to
public health and agency spending of funds allocated to address the pandemic, we reviewed
information on the sources and methods by which these data were collected and reported,
and we followed up with knowledgeable individuals as needed to answer questions about the
appropriate use and potential limitations of these data. We found these data to be suﬃciently
reliable for our purposes.
We reviewed testing data and limitations reported by the Centers for Disease Control and
Prevention (CDC) over time, including the most recent information from CDC’s COVID Data Tracker
website as of May 31, 2020. We also interviewed CDC oﬃcials to obtain information on steps
taken to report testing data, and we reviewed federal laws, other requirements, and CDC guidance
related to states’ and laboratories’ submission of testing data. We also conducted interviews with
laboratory and public health industry groups to obtain their perspectives on agency actions and
challenges; six associations that represent a variety of lenders and an association that represents
small businesses; representatives from borrower, loan servicer, and private collection agency
stakeholder groups; and representatives of the National Association of State Workforce Agencies.
We reviewed information from selected housing industry experts and housing stakeholder groups,
the Standards for Internal Control in the Federal Government, A Framework for Managing Fraud Risks
in Federal Programs, and GAO’s work on the Internal Revenue Service’s authentication eﬀorts and
other measures to address fraud risk and improper payments.166 In addition, we obtained a listing
166GAO, Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: September 2014) and
GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP (Washington, D.C.: July 28, 2015).
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of all appropriation warrants issued by the Fiscal Service to the respective federal agencies for the
COVID-19 relief laws enacted at the time of our review. 167
We compared each appropriation amount to the respective law or other supporting
documentation. We also obtained the amounts that have been obligated and spent directly
from some federal agencies’ own ﬁnancial records as of May 31, 2020. To identify agencies’
contract obligations in response to COVID-19, we reviewed Federal Procurement Data System-
Next Generation data through June 1, 2020. We identiﬁed obligations related to COVID-19 using
the National Interest Action code, as well as the contract description. We assessed the reliability
of federal procurement data by reviewing existing information about the Federal Procurement
Data System-Next Generation and the data it collects—speciﬁcally, the data dictionary and data
validation rules—and performing electronic testing. We determined that the data were suﬃciently
reliable for the purposes of describing agencies’ reported contract obligations in response to
COVID-19.
To identify indicators for monitoring the economy, we ﬁrst reviewed the federal responses to
the pandemic, in particular the COVID-19 relief laws, and identiﬁed ﬁve key provisions intended
to support the economy, corresponding to ﬁve diﬀerent areas of the economy: labor markets,
households, small business credit markets, corporate credit markets, and markets associated with
state and local government ﬁnances.168 We identiﬁed these key provisions based on their relative
size, in dollars, as well as their potential economic eﬀects. We then identiﬁed economic indicators
corresponding to those ﬁve areas of the economy in order to provide a timely, general sense of
how those areas of the economy were performing.
To identify potential indicators, we reviewed a number of sources, including prior GAO work,
releases from federal statistical agencies, data available on the Bloomberg Terminal, and input
from internal GAO experts. We assessed the reliability of the data we intend to use for monitoring
and reporting on areas of the economy supported by the federal pandemic response, in particular
the COVID-19 relief laws. We took a number of steps to determine the reliability of proposed data
sources and indicators including reviewing relevant documentation, reviewing prior GAO work,
and interviewing data providers. The quality of some available data, and collection methods,
have been inﬂuenced by the COVID-19 pandemic. Nevertheless, we found that, collectively, the
indicators were suﬃciently reliable to provide a general sense of how these areas of the economy
are performing.
Further, we reviewed the federal responses to the pandemic, in particular the COVID-19 relief
laws, and identiﬁed ﬁve key provisions intended to support the economy. We identiﬁed these key
provisions based on their relative size, in dollars, as well as their potential economic eﬀects. We
167The Fiscal Service issues warrants to federal agencies, which reﬂect the dollar amount authorized to be obligated and
expended for the speciﬁed purpose and period of availability provided by law. The four COVID-19 relief laws enacted
at the time of our review include the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020,
Pub. L. No. 116-123, 134 Stat. 146; the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178
(2020); the CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); and the Paycheck Protection Program and Health Care
Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020). In this report, we refer to these four laws as “COVID-19 relief
laws.”
168 Future legislation may also be considered as the federal response evolves.
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reviewed measures of the size of the provisions based on the appropriation speciﬁed in the laws,
when available, or appropriations requested by relevant agencies.169
As a result of this analysis, we identiﬁed the following ﬁve key provisions in support of the U.S.
economy in federal responses to the pandemic thus far:
1. Economic stabilization and assistance to distressed sectors, which provides liquidity to support
lending to eligible businesses, states, municipalities, and tribes related to losses incurred as a
result of the pandemic.
2. The Paycheck Protection Program (PPP), which provides funding to the Small Business
Administration to guarantee loans—that may be forgiven—to small businesses and other
eligible entities to cover payroll and other eligible costs over 8 weeks.170
3. Expanded unemployment insurance, which provides federally funded income support to
unemployed individuals by expanding eligibility for unemployment compensation beneﬁts,
increasing weekly beneﬁt amounts by $600, and extending the number of weeks of beneﬁt
eligibility.
4. Recovery rebates (also known as economic impact payments), which provide direct payments
of up to $1,200 per qualifying adult and up to $500 per qualifying child.
5. Payments to states, local, tribal, and territorial governments for pandemic-related spending
through the Coronavirus Relief Fund.
These provisions and their potential economic eﬀects are summarized in table 10 below. To the
extent that these provisions and their implementation through various programs and agencies
are eﬀective, we might expect a number of outcomes in diﬀerent areas of the economy, including
businesses continuing operations, making timely payments on obligations, and maintaining
employment, as well as reduced ﬁnancial stress for households facing unemployment and state,
local, and tribal governments facing reduced revenues and increased expenditures.
169 We focused on provisions in the CARES Act and Paycheck Protection Program and Health Care Enhancement Act,
which have the largest provisions in dollars.
170The program originally provided loan forgiveness for an 8-week period, however, the Paycheck Protection
Program Flexibility Act of 2020, enacted on June 5, 2020, amended the loan forgiveness period to 24 weeks or
December 31, 2020, whichever is earlier, and modiﬁed several key program components such as forgiveness
eligibility criteria and limits on the use of funds for non-payroll costs. Pub. L. No. 116-142, 134 Stat. 641.
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Table 10: Key Provisions of the Federal Response to the Pandemic Intended to Support the Economy and
Potential Economic Eﬀects
Program
Dollar amount (appropriation or
estimate)
Potential economic eﬀects
Economic
stabilization and
assistance to
distressed sectors
500 billion (appropriation in CARES
Act), including up to 454 billion and
potentially certain other amounts
in funding to the Department of the
Treasury’s Exchange Stabilization Fund
to support facilities established by the
Federal Reserve to provide liquidity
to businesses, states, municipalities,
and tribal governments; and not more
than 46 billion to support, among
other entities, passenger and cargo
air carriers and businesses critical to
maintaining national security
• Providing liquidity to businesses based in the U.S.
• Maintaining employment and preventing household
ﬁnancial stress among workers, as liquidity is
contingent on, among other factors, maintaining
employment through September 2020
• Supporting state, municipal, and tribal government
ﬁnances
Paycheck
Protection
Program (PPP)
670 billion (appropriation)a
• Providing guarantees for loans to small businesses for
payroll and other expenses, including businesses with
fewer than 500 employees and nonproﬁts
• Maintaining employment and preventing household
ﬁnancial stress among workers in small businesses
Unemployment
insurance
293 billion (appropriation requested by
Department of Labor)
• Preventing household ﬁnancial stress
Recovery rebates
(also known as
economic impact
payments by IRS)
282 billion (appropriation requested by
IRS)b
• Preventing household ﬁnancial stress, particularly
among low- and moderate-income households
Coronavirus
Relief Fund
payments
150 billion (appropriation in CARES Act)
• Helping state, local, tribal, and territorial governments
cover the costs of responding to the pandemic
Sources: GAO analysis of Congressional Research Service, Congressional Budget Oﬃce, Internal Revenue Service (IRS), and Joint Committee on Taxation (JCT) documents. |
GAO-20-625
aThe CARES Act appropriated $349 billion, however, this appropriation was amended by the Paycheck Protection Program and
Health Care Enhancement Act to approximately $670 billion. Pub. L. No. 116-139, § 101(a)(2), 134 Stat. 620, 620 (2020).
bAs of May 31, 2020, IRS and Treasury had disbursed 160.4 million payments worth $269.3 billion.
Those aspects of the federal response to the pandemic that are aimed at supporting the economy
may help sustain U.S.-based businesses through the economic stabilization and assistance
to distressed sectors and PPP programs, as both programs provide liquidity intended to keep
businesses viable and allow them to keep employees on payroll. 171 Furthermore, each of these
programs provide incentives for businesses to maintain their employment levels in sectors of the
economy that have been negatively impacted by widespread policies that limit certain economic
activity and falling demand.
171While not aimed at the economy, federal responses focused on public health, to the extent they are successful, are
likely to have a signiﬁcant—perhaps even larger—eﬀect on the economic conditions.
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• Businesses may maintain employment to the extent that they are able to access suﬃcient
liquidity from these programs, which will in turn aﬀect the extent to which households will face
ﬁnancial hardship during the pandemic.
• For those households that do face unemployment and ﬁnancial stress, the unemployment
insurance enhancements and economic impact payments may assist them in paying their bills
while the economy remains weak.
• Like businesses and households, state, local, and tribal governments are also likely to face
growing challenges, in particular from falling tax revenue and higher spending. Along with the
payments provided to these governments in the COVID-19 relief laws, lending facilities set up
by the Federal Reserve—some of which are supported by Department of the Treasury through
funding appropriated under the CARES Act—may reduce state and local government ﬁscal
stress while local economies remain weak.
We focused our review of potential health care indicators on response, recovery, and
preparedness, which we selected as a well-established framework that is typically used to
monitor large-scale, unanticipated adverse events.172 To identify potential indicators, we
reviewed a number of sources, including prior GAO work, information from relevant federal
agencies responsible for the pandemic response and oversight of the health care system,
selected reports produced by experts in public health and epidemiology, data collected by state
health departments, and a review of the re-opening plans for all 50 states and the District of
Columbia.173 We included data to demonstrate how one indicator—number of excess deaths
from all causes—could be used to examine patterns over time. We did not independently assess
the methodology and underlying data reported by the CDC, but note the limitations, as CDC has
reported them, to such an analysis.
172See CDC, Public Health Emergency Preparedness and Response Capabilities: National Standards for State, Local, Tribal, and
Territorial Public Health (Atlanta, GA: January 2019) and DHS, National Response Framework, Fourth Edition, (Washington,
D.C.: October 2019).
173Speciﬁcally, we reviewed information and reports from CDC, the Centers for Medicare & Medicaid Services, and
the Assistant Secretary for Preparedness and Response. We reviewed data, dashboards, and reports published
by the CDC, COVID Tracking project (www.covidtracking.com, accessed on 5/19/2020), and COVID Exit Strategy
(www.covidexitstrategy.org, accessed on 6/3/2020), the World Health Organization, the Harvard Global Health Institute,
and the University of Washington’s Institute for Health Metrics and Evaluation. In addition to reviewing reopening plans
for the 50 states and the District of Columbia, we also reviewed reopening plans and metrics identiﬁed in plans such
as those created by the CDC, the White House Coronavirus Task Force, #Open-Safely, and the American Enterprise
Institute’s National Coronavirus Response: A Road Map to Reopening.
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Appendix II: Structures to Lead and Coordinate the Federal
Pandemic Response
This appendix describes key aspects of the structures in place to help the federal government
lead and coordinate the whole-of-government response. Although, it is too early to conduct a
full evaluation of the extent to which gaps in planning or issues in implementation have posed
response challenges, we are conducting a variety of work that will address such issues.
Response Plans
The COVID-19 Pandemic Crisis Action Plan
The Pandemic Crisis Action Plan Adapted U.S. Government COVID-19 Response Plan (PanCAP),
issued March 13, 2020, was created to outline key federal decisions, federal actions, and
interagency coordination structures that may be used during the Coronavirus Disease 2019
(COVID-19) pandemic response. The mission of the federal response is to leverage available
federal resources to prepare for, respond to, and recover from COVID-19. The plan aims to help
federal departments and agencies to coordinate activities to limit the spread of COVID-19; to
mitigate the eﬀect of illness, suﬀering, and death; and to sustain critical infrastructure and key
resources in the United States.
Response Plans and Structures that Support the PanCAP
According to the PanCAP, the overall response should be conducted under the National Response
Framework and the Biological Incident Annex to the Response and Recovery Federal Interagency
Operational Plans, and federal agencies are to support the response through the Emergency
Support Functions (ESF).
• National Response Framework. The National Response Framework (Fourth Edition October
2019), which builds on over 25 years of emergency management guidance, is a guide to
how the nation responds to all types of incidents. It describes speciﬁc authorities and best
practices for managing incidents that range from the serious but purely local to those that
are catastrophic and national in scope. Within the framework, the term “response” includes
actions to save lives, protect property and the environment, stabilize the incident, and meet
basic human needs following an incident. The National Response Framework is one of ﬁve
planning frameworks (Prevention, Protection, Mitigation, Response, and Recovery) designed to
support the overarching vision for working to create a secure, resilient nation. 174
174These ﬁve frameworks were created in response to Presidential Policy Directive-8, which aims to galvanize
federal action and facilitate an integrated, all-of-nation, capabilities-based approach to preparedness. Published in
March 2011, the directive calls for the establishment of a risk-informed National Preparedness Goal to deﬁne the
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• Federal interagency operational plans. As with the frameworks, these plans are part of the
National Preparedness System. Their purpose is to describe the concept of operations for
integrating and synchronizing existing national-level capabilities to support the corresponding
local, state, tribal, territorial, insular area, and federal plans.
• The Biological Incident Annex to the Response and Recovery Federal Interagency
Operational Plans. This annex was published in August 2008 to outline the actions, roles, and
responsibilities associated with response to a human disease outbreak of known or unknown
origin that requires federal assistance.
• Emergency Support Functions. ESFs are the federal government’s primary coordinating
structure for building, sustaining, and delivering response capabilities. There are 15 ESFs,
organized by speciﬁc functional areas for the most frequently needed capabilities during an
emergency. ESFs are designed to coordinate the provision of related assets and services by
federal departments and agencies. Table 11 details the federal department or agency that
serves as the designated coordinator for each of the 15 ESFs.
capabilities needed to respond to the nation’s greatest risk and a National Preparedness System, consisting of an
integrated set of guidance, programs, and processes that will enable the nation to meet the goal. The frameworks
are the highest level of guidance within the National Preparedness System. They are designed to describe how the
nation is to coordinate, share information, and work together to achieve the goal.
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Table 11: Emergency Support Functions (ESF)
Emergency Support Function
Lead federal agency
ESF #1: Transportation
Department of Transportation
ESF #2: Communications
Department of Homeland Security National
Communication System
ESF #3: Public Works and Engineering
Department of Defense/U.S. Army Corps of Engineers
ESF #4:Fireﬁghting
U.S. Forest Service
ESF #5: Information and Planning
Federal Emergency Management Agency (FEMA)
ESF #6 Mass Care, Emergency Assistance, Housing, and
Human Services
FEMA
ESF #7: Logistics Management
General Services Administration and FEMA
ESF #8: Public Health and Medical Services
Department of Health and Human Services
ESF #9: Search and Rescue
FEMA
ESF #10: Oil and Hazardous Materials Response
Environmental Protection Agency
ESF #11:Agriculture and Natural Resources
Department of Agriculture
ESF #12: Energy
Department of Energy
ESF #13: Public Safety and Security
Department of Justice
ESF #14 Cross-Sector Business Coordination
Department of Homeland Security (DHS) and Cybersecurity
and Infrastructure Security Agency
ESF #15 External Aﬀairs
DHS
Source: GAO analysis of National Response Framework and FEMA documentation. | GAO-20-625
Key Players
The White House Coronavirus Task Force. This task force, led by the Vice President, is
responsible for coordinating a whole-of-government approach, including governors, state and
local oﬃcials, and members of Congress, to develop the best options for the safety, well-being,
and health of the American people. The task force was formed on January 27, 2020, and the Vice
President began leading it on February 26, 2020.
Uniﬁed Coordination Group. The group comprises senior leaders representing state, tribal,
territorial, insular area and federal interests and, in certain circumstances, local jurisdictions, the
private sector, and nongovernmental organizations (see ﬁg. 15). Members must have signiﬁcant
jurisdictional responsibility and authority. The composition of the group varies, depending
on the scope and nature of the disaster. The Uniﬁed Coordination Group leads the uniﬁed
coordination staﬀ. As the primary ﬁeld entity for federal response, the group integrates diverse
federal authorities and capabilities and coordinates federal response and recovery operations.
The Administrator of the Federal Emergency Management Agency (FEMA), the Department of
Health and Human Services’ (HHS) Assistant Secretary for Preparedness and Response (ASPR), and
a representative of the Centers for Disease Control and Prevention (CDC) jointly lead the Uniﬁed
Coordination Group for COVID-19.
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Figure 15: Organizational Structure of the Uniﬁed Coordination Group
Eight operational task forces. These task forces exist to provide operational guidance and secure
resources to coordinate the whole-of-government response to COVID-19. Table 12 describes the
responsibilities of these task forces and examples of their actions.
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Table 12: Description of Operational Task Forces and Examples of Actions
Task force & key federal agencies
Responsibilities and key tasks
Examples of actions taken
Laboratory Diagnostic Task Force
(LDTF)
Department of Health and Human
Services (HHS) and the Federal
Emergency Management Agency
(FEMA)
Coordinate with stakeholders to
understand the COVID-19 testing
supply chain and rapidly evolving
testing needs.
Inform supply, allocation, and
prioritization of resources for testing,
diagnostics, and reporting.
Increase clarity in guidance to
laboratory stakeholders and provide
assistance to enable labs to test at their
full capacity.
Established connection with the
Centers for Disease Control and
Prevention (CDC) on tribal testing
strategies and future support.
Supports states requesting additional
technical assistance.
Community Based Testing Sites Task
Force (CBTSTF)
HHS and FEMA
Create community-based testing
sites that are federally supported,
state managed, and locally executed
to increase provisional nationwide
COVID-19 testing.
From March 20, 2020, through June 8,
2020, 247,616 samples were collected
from CBTSTF locations and 243,145
tests were processed for results.
Supply Chain Task Force (SCTF)
Department of Defense (DOD) and
FEMA
Maximize the nationwide availability
of mission-essential protective and
lifesaving resources and equipment
based on need.
From June 5 – 7, 2020, six Project
Airbridge ﬂights carrying essential
supplies arrived in New York, NY;
Columbus, OH; and Chicago, IL.
As of June 8, 2020, more than 200
of these supply ﬂights had been
completed.
Healthcare Resilience Task Force (HRTF)
HHS and FEMA
Develop and provide guidance and
procedures to build, preserve, and
extend health and medical capacity.
Work to optimize health care delivery,
including the health care workforce,
facilities, and supplies.
Supporting HHS’s Assistant Secretary
for Preparedness and Response (ASPR).
Working with Emergency Medical
Services (EMS) stakeholders and
interagency partners to propose
courses of action and mitigation
options to address funding and the
personal protective equipment (PPE)
needs of EMS agencies.
Community Mitigation Task Force
(CMTF)
HHS and FEMA
Assist state, local, tribal, territorial,
and federal leaders to implement
and continually revise community
mitigation strategies to slow disease
transmission, and reduce morbidity
and mortality.
Keep a particular focus on protecting
individuals at higher risk for severe
illness, while preserving the health
care and public health systems, critical
infrastructure and essential workforce.
Developing new language on risk by
age groups; underlying conditions; and
ethnic and minority populations.
Discussed strategies and CDC
resources on returning workforces
to worksites with the U.S. Pan Asian
American Chamber of Commerce.
Medical Countermeasures Task Force
(MCMTF)
HHS and FEMA
Establish baseline understanding of
current status, needs, and gaps for
COVID-19 medical countermeasures
Emergency Use Authorizations granted
by the Food and Drug Administration
include 61 molecular diagnostic tests,
28 laboratory-developed tests, 12
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(MCM) development across the United
States Government (USG).
Align MCM development and utilization
across department and interagency
partners to avoid duplication of eﬀort,
identify opportunities for synergy, and
ﬁll potential gaps.
Identify and prioritize approaches
and related needs to accelerate MCM
development and address questions
regarding use of currently available
MCMs.
Provide reports to ASPR, MCM lead,
and other USG response managers.
antibody tests, one antigen test, and
one home collection kit.
Supporting development, preclinical
studies, clinical trials, and
manufacturing eﬀorts for vaccines and
therapeutics.
Data and Analysis Task Force
HHS and FEMA
Provide comprehensive data and
analytics to support evidence-based
decisions for COVID-19 response and
recovery operations.
Provides daily situational awareness
reports on COVID-19 indicators and
collects daily hospital data for states
and territories, according to FEMA
oﬃcials.
These oﬃcials also stated that the
task force projects demand, by state,
for ventilators, PPE, and therapeutics
and estimates the potential impact of
community mitigation strategies.
Continuity Task Force (CTF)
FEMA
Maintain situational awareness
and coordination across federal
departments and agencies.
Identify operational risks.
Report on status of activities.
Facilitate opportunities to mitigate
eﬀects to operations.
The CTF is continuing to monitor
COVID-19 related announcements sent
by state and local authorities.
Source: GAO analysis of FEMA documentation. | GAO-20-625
The Department of Defense (DOD). DOD has speciﬁc roles, resources and authorities to bring
to bear on pandemic response. Under the authority, direction, and control of the Under Secretary
of Defense (Policy), the Assistant Secretary of Defense (Homeland Defense Global Security)
provides overall coordination for DOD support to civil authorities. In a health crisis, the Assistant
Secretary serves as the DOD focal point for federal departments and agencies and other entities
on public health and medical support, preparedness, and policy matters for the defense support
of civil authorities. The U.S. Northern Command and U.S. Indo-Paciﬁc Command provide support
to U.S. civil authorities—such as the Department of Homeland Security (DHS) or other federal
agencies—for domestic emergencies and other activities in their respective areas of responsibility,
when authorized or directed to do so by the President or the Secretary of Defense.175 The National
175Both U.S. Northern Command (USNORTHCOM) and U.S. Indo-Paciﬁc Command (USINDOPACOM) are two of six
geographic Uniﬁed Combatant Commands of the United States Armed Forces. USNORTHCOM’s area of responsibility
encompasses the continental United States, Alaska, Canada, Mexico, Puerto Rico, the U.S. Virgin Islands, and the
surrounding water out to approximately 500 nautical miles, to include the North Pole. USINDOPACOM’s area of
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Guard Bureau coordinates the deployment of National Guard resources residing in the U.S.
Northern Command and U.S. Indo-Paciﬁc Command areas of responsibility. 176 In addition, the
U.S. Army Corps of Engineers is the federal government's lead public works and engineering
support agency. The Defense Logistics Agency works with other U.S. government departments and
agencies to facilitate medical logistics support, including the transportation of personal protective
equipment, to and between critical areas.
Coordination and Communication Centers
National Response Coordination Center (NRCC). The NRCC is a multiagency coordination
center located within FEMA Headquarters. By statute and policy, the FEMA Administrator has
overall responsibility and authority for operating the NRCC.177 The NRCC’s staﬀ coordinates
the overall federal support for major incidents and emergencies. These staﬀ consist of FEMA
personnel, appropriate ESFs from various federal agencies, and other appropriate personnel and
agencies. In addition, Regional Response Coordination Centers operate within each of FEMA’s 10
regional oﬃces to facilitate communication between the NRCC and state, local, territorial, and
tribal governments. According to a senior FEMA oﬃcial, these regional oﬃces help to ensure
that state and local governments receive important information and are able to ask questions
regarding COVID-19 response and recovery eﬀorts. Further, the NRCC makes and manages
mission assignments—work orders directing another federal agency to utilize its authorities and
resources under federal law in support of response eﬀorts (see table 13).178 Mission assignments
are a critical way to apply federal resources to the response, and FEMA can reimburse federal
agencies out of the Disaster Relief Fund for carrying them out.
responsibility stretches from the waters oﬀ the west coast of the U.S., including Hawaii and U.S. territories, to the
western border of India, and from Antarctica to the Bering Sea.
176National Guard personnel may be ordered to active duty voluntarily and with the consent of their Governor pursuant
to 10 U.S.C. § 12301(d). Under qualifying circumstances, National Guard personnel may be ordered to active duty
without their consent or the consent of their Governor pursuant to 10 U.S.C. §§ 251, 252, 12301(a), 12302, 12304, and
12310.
177See 6 U.S.C. § 314(a)(17).
17842 U.S.C. § 5170a.
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Table 13: Selected Examples of Mission Assignments for the COVID-19 Pandemic Response as of May 13, 2020
Description of mission assignment
Estimated cost at time of request
(in dollars) a
The Department of Defense (DOD) was tasked with
providing 10 million N95 respirators to FEMA to support
critical equipment shortfalls during COVID-19 response.
10 million
The Department of Veterans Aﬀairs (VA) National
Acquisition Center was tasked with receiving, processing,
and responding to requests from FEMA regions for
deliveries of pharmaceuticals. VA will execute operational
management and oversight of requests and track VA
deliveries of pharmaceuticals to state requestors.
3 million
The U.S. Army Corps of Engineers (USACE) was tasked with
providing enterprise-wide tracking and reporting related
to nationwide eﬀorts to address medical facility shortages
arising from the COVID-19 pandemic.
6.5 million
Source: GAO analysis of Federal Emergency Management Agency (FEMA) data. | GAO-20-625
aThis is a rough estimate entered in the request system—not the ﬁnancial system of record—at the time the request and is not
a reliable indicator of actual costs. Reliable data about actual costs are available later in the process after FEMA reconciles the
mission assignments in its ﬁnancial system.
HHS Secretary’s Operation Center (SOC). The SOC is the primary emergency operations
structure for HHS tasked with protecting the health, safety, and security of the nation. It serves as
the focal point for public health and medical information collection, sharing, and analysis, and it
facilitates the coordination of HHS preparedness, response, recovery, and mitigation. The SOC also
provides strategic situational awareness to support decision-making at the HHS leadership level.
HHS Joint Information Center. The Joint Information Center coordinates incident-related public
information under ESF #8 (public health and medical services) and is authorized to release general
medical and public health response information to the public. When possible, a recognized
spokesperson from the public health and medical community (state, local, or tribal) delivers
relevant community messages. After consultation with HHS, the lead Public Aﬀairs Oﬃcer from
other relevant centers may also release general medical and public health response information.
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Appendix III: Report Enclosures
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Relief for Health Care Providers
The Department of Health and Human Services is distributing more than $177 billion to ﬁnancially
support health care providers, ﬁnance care for COVID-19 patients and underserved populations,
and ﬁnance existing Health Resources and Services Administration programs.
Entities involved: Department of Health and Human Services, Centers for Medicare & Medicaid
Services, Health Resources and Services Administration
Key Considerations and Future GAO Work
As the Department of Health and Human Services (HHS) works to get funds to providers quickly, it
will be important that robust internal controls are in place to help ensure funds are appropriately
distributed and used. For example, it is important that funds not be provided to ineligible
providers, such as hospitals that have closed, despite the imperative of a quick federal response
to the COVID-19 crisis. We plan to conduct additional work to examine HHS’s eﬀorts to provide
assistance to providers.
Background
The scale of the nationwide COVID-19 pandemic requires a whole-of-government approach to
respond, including multiple federal agencies to support the public health and medical response.
HHS is designated as the lead agency for responding to a public health emergency, including a
pandemic.179 The COVID-19 pandemic has severely strained health care resources in some areas
and severely reduced revenue that hospitals and other health care providers generate from the
provision of nonessential health services.
To respond to these crises, the CARES Act and other laws enacted in response to the pandemic
provided signiﬁcant additional funding for health care providers, including increased Medicare
payments to eligible providers. The Centers for Medicare & Medicaid Services (CMS), within HHS,
administers Medicare. The Health Resources and Services Administration (HRSA), also within HHS,
provides funding and support for a wide variety of programs, most commonly through grants that
serve millions of people each year, that are designed to improve access to health care services for
people who are uninsured, isolated, or medically vulnerable.
The CARES Act appropriated $100 billion to reimburse eligible health care providers for health-
care-related expenses or lost revenues that are attributable to COVID-19, known as the Provider
Relief Fund.180 The Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA)
179Given the nationwide response required to address the COVID-19 pandemic, HHS is designated as the lead federal
agency for the public health and medical portion of the response, while the Department of Homeland Security’s Federal
Emergency Management Agency is designated as the lead agency for coordinating the overall federal response.
180Pub. L. No. 116-136, div. B, tit. VIII, 134 Stat. 281, 563 (2020).
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appropriated an additional $75 billion for the fund.181 The CARES Act also appropriated about
$1.6 billion for HRSA programs.182 In addition, the Coronavirus Preparedness and Response
Supplemental Appropriations Act appropriated $100 million, and the PPPHCEA appropriated $600
million for HRSA programs.183
Overview of Key Issues
Provider Relief Fund. As of May 31, 2020, HHS had allocated almost $77.4 billion from the
Provider Relief Fund, with about $97.6 billion not yet allocated. HHS made about 380,000
payments based on provider billing information by that date, totaling almost $65.2 billion.
Payments range from less than $100 for some medical practices to more than $100 million for
some hospital systems. HHS allocated $50 billion for general relief for health care providers and
almost $27.4 billion targeted for high-impact hospitals, rural providers, Indian Health Service
facilities, and skilled nursing facilities.184
• General relief for health care providers. HHS allocated $50 billion from the Provider Relief
Fund for general distribution to Medicare facilities and providers based proportionally on
eligible providers’ share of 2018 net patient revenue from the Medicare fee-for-service
program.185 These funds were distributed in two waves. The initial $30 billion distribution
began on April 10, 2020, 2 weeks after the enactment of the CARES Act. Distribution of the
remaining $20 billion began on April 24, 2020. Providers were required to sign an attestation
conﬁrming receipt of the funds and agreeing to the terms and conditions within 90 days of
receiving payment or return the funds. The conditions include having active Medicare billing
privileges and treating Medicare patients after January 31, 2020.
• High-impact hospitals. The COVID-19 pandemic has had a particular impact on hospitals in
certain parts of the nation, and therefore, HHS is distributing $12 billion to hospitals on the
front lines. Speciﬁcally, these payments are going to 395 hospitals that, based on information
they submitted to HHS, provided inpatient care for 100 or more COVID-19 patients through
April 10, 2020. Collectively, these facilities accounted for about 130,000 COVID-19 admissions,
roughly 70 percent of the national total reported to CMS. Of the $12 billion allocation, $2
billion of these payments are being distributed among the hospitals based on their Medicare
Disproportionate Share funding. The remaining $10 billion is being distributed based on the
181Pub. L. No. 116-139, div. B, tit. I, 134 Stat. 620, 622 (2020).
182Pub. L. No. 116-136, 134 Stat. 281 (2020)
183Pub. L. No. 116-123, div. A, tit. III, 134 Stat. 146, 149 (2020); Pub. L. No. 116-139, div. B, tit. I, 134 Stat. 620, 626 (2020).
184A portion of the Provider Relief Fund will be used to reimburse health care providers for COVID-related treatment of
the uninsured. In addition, the Families First Coronavirus Response Act and the PPPHCEA each appropriated $1 billion to
reimburse providers for conducting COVID-19 testing for the uninsured.
185One-third of Medicare beneﬁciaries receive care from Medicare Advantage plans, not fee-for-service Medicare.
These plans receive a set, capitated amount to ﬁnance care for each beneﬁciary. Any payments that providers
received from Medicare Advantage plans were not considered in the calculations for this distribution from the
Provider Relief Fund. These providers may be eligible for future distributions.
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number of COVID-19 admissions, with each recipient hospital receiving about $77,000 per
admission. Hospitals in New York and New Jersey received a total of about $6.7 billion of this
funding.
• Rural providers. HHS is distributing $10 billion to rural hospitals, including rural acute care
general hospitals and Critical Access Hospitals, Rural Health Clinics, and Community Health
Centers located in rural areas. HHS said that this funding reﬂects the greater risk of closure of
rural entities due to the reduced patient volumes attributable to COVID-19. According to HHS,
these entities have lower operating margins than providers in more populated areas.
• Skilled nursing facilities. HHS is distributing nearly $4.9 billion to skilled nursing facilities
(SNF). Each SNF is to receive a ﬁxed distribution of $50,000, plus a distribution of $2,500 per
bed. All certiﬁed SNFs with six or more certiﬁed beds are eligible for this targeted distribution.
• Indian health care providers. Another $500 million was allocated for Indian Health Service,
tribal, and Urban Indian organization facilities. Distribution includes a base payment plus an
amount based on operating expenses. This funding complements other funding provided
to Indian Health Service, tribal, and Urban Indian organization facilities for responding to
COVID-19, including but not limited to, expanding capacity for telehealth.
See table below for a summary of Provider Relief Fund allocations.
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Summary of Allocations from the Provider Relief Fund, as of May 31, 2020
Description
Amount (dollars)
When distribution began
General relief to health care providers
50 billion
April 10, 2020
Relief to high-impact hospitalsa
12 billion
May 1, 2020
Relief to rural health care facilities
10 billion
May 1, 2020
Relief to skilled nursing facilities
4.9 billion
May 22, 2020
Relief to Indian health care providers
500 million
May 22, 2020
Unallocated funds
97.6 billion
not applicable
Source: Summary of Department of Health and Human Services funding data. | GAO-20-625
aOf the $12 billion allocation, $2 billion of these payments are being distributed among the hospitals based on their Medicare
Disproportionate Share funding.
HRSA programs. Congress appropriated nearly $2.3 billion in funding for a number of existing
HRSA programs as part of the response to the COVID-19 pandemic. 186 The majority of the funds
appropriated for HRSA programs—$2.02 billion—are for the Health Center Program. This program
makes grants to health centers that provide a comprehensive set of primary and preventative
health care services to individuals regardless of their ability to pay. As of May 31, HHS obligated
$2.00 billion and expended almost $215 million of the funds appropriated for the Health Center
Program. Also as of May 31, approximately one-third of health centers had accessed supplemental
funding under the CARES Act (see table below). According to HRSA oﬃcials, health centers may
wait to access the supplemental funding until they have created a budget that aligns with the
funding requirements, and some may wait until the budget is approved by HRSA.
186Congress appropriated about $1.6 billion for HRSA programs in the CARES Act. See Pub. L. No. 116-136, 134 Stat.
281 (2020). In addition to the CARES Act, Congress appropriated funds for HRSA programs in other COVID-19 laws. For
example, Congress included appropriations for the Health Center Program, administered by HRSA, in the Coronavirus
Preparedness and Response Supplemental Appropriations Act, 2020 ($100 million) and the PPPHCEA ($600 million). See
Pub. L. No. 116-123, div. A, tit. III, 134 Stat. 146, 149 (2020); Pub. L. No. 116-139, div. B, tit. I, 134 Stat. 620, 626 (2020).
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Summary of Supplemental Funding Distributed to Health Resources and Services Administration (HRSA)
Grantees, as of May 31, 2020
Program or activity
Appropriations (source) a
Number of awards and
type of recipient
Number (percentage) of
grantees that accessed
award funds b
$1.32 billion (CARES Act)
1,387 Health Centers
463 (33.3)
$100 million (Coronavirus
Preparedness and Response
Supplemental Appropriations
Act, 2020)
1,381 Health Centers
817 (59.2)
Health Centers Program
$600 million (Paycheck
Protection Program and
Health Care Enhancement
Act)
1,385 Health Centers
33 (2.4 )
Rural Health
$180 million (CARES Act)
46 states for Small Rural
Hospital Improvement
Program
14 Telehealth Resource
Centers
52 tribal organizationsc
16 (34.8)
0 (0.0)
not availabled
Ryan White HIV/AIDS
Program
$90 million (CARES Act)
581 program recipients
33 (5.7)
Health Care Systems’ Poison
Control Activities
$5 million (CARES Act)
52 organizations
representing 55 Poison
Control Centers
1 (1.9)
Source: GAO summary of information from Department of Health and Human Services websites and HRSA oﬃcials. | GAO-20-625
a HRSA has allocated a small proportion of total funding for activities such as program oversight, documenting outcomes, and
technical assistance. Funding sources are CARES Act Pub. L. No. 116-136, 134 Stat. 281 (2020), Coronavirus Preparedness and
Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146 (2020), and Paycheck Protection Program
and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020).
b The percentage of grant recipients accessing funds is as of May 31, 2020.
c The CARES Act directs HRSA to allocate at least $15 million of these funds to tribes, tribal organizations, Urban Indian Health
organizations, or health service providers to tribes. HRSA made these grant awards on May 28, 2020.
d Grants to tribal organizations were awarded a few days before the cutoﬀ date of reporting fund access.
To manage the funds and activities related to the COVID-19 response, HRSA oﬃcials said they plan
to continue to use established controls, such as requiring grantee reporting requirements; HRSA
has also added new protocols speciﬁc to COVID-19 funding. For example, these new protocols
include creating distinct accounting codes to separately track the use of the supplemental funding
by the originating law; analyzing spending data to identify outliers, anomalies, and patterns; and
providing targeted technical assistance to grantees.
Additional relief for Medicare providers. The CARES Act authorized additional ﬁnancial relief to
certain providers. Among those provisions were the following:
• Expansion of the Accelerated and Advance Payment Programs. Section 3719 of the CARES
Act authorized the expansion of the Accelerated and Advance Payment Programs, which are
typically used to make available emergency funding and address cash ﬂow issues for providers
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and suppliers when there is disruption in claims submission or claims processing, including
during a public health emergency or presidentially declared disaster.
Under the expanded programs, active Medicare providers can apply for loans of up to 100 or
125 percent of the payments they received for a prior 3-month or 6-month period, depending
on the type of provider or supplier. Recoupment of the advance and accelerated payments,
through the oﬀsetting of new Medicare claims, begins not more than 120 days after the funds
are disbursed and continues for 3 or 8 months, depending on the type of provider or supplier.
Any remaining balances not recovered through withholding of Medicare claims payments will
be demanded for payment. Provider applications for the Advanced Payment Program were
discontinued beginning on April 26, 2020, in light of grant payments made available through
the Provider Relief Fund. CMS has made accelerated and advance payments of about $100
billion.
• Sequestration adjustment. The CARES Act temporarily suspends a 2-percent reduction in
Medicare payments required under prior law between May 1, 2020, and December 31, 2020.
The Congressional Budget Oﬃce estimated that this will increase Medicare payments to
providers by $6 billion in 2020.
• Prospective payment add-on. For the emergency period, in some circumstances hospitals
will be paid 20 percent more for treating patients with conﬁrmed cases of COVID-19 who are
enrolled in fee-for-service Medicare. The Congressional Budget Oﬃce estimated that the add-
on will apply to about 1 million Medicare beneﬁciaries and increase Medicare payments by
about $2 billion in 2020.
GAO Methodology and Agency Comments
To conduct our work, we examined publicly released HHS documents and obtained information
from CMS and HRSA. We provided a draft of this report to HHS and the Oﬃce of Management and
Budget for review and comment. Both agencies provided technical comments on this enclosure,
which we incorporated as appropriate.
Contact information: James Cosgrove, (202) 512-7114, cosgrovej@gao.gov
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Nursing Homes
The Department of Health and Human Services required state survey agencies to focus on
infection control inspections as many nursing homes faced outbreaks of COVID-19, and past
inspections show that infection control deﬁciencies had been widespread and persistent prior to
the pandemic.
Entities involved: Centers for Medicare & Medicaid Services, Department of Health and Human
Services, Centers for Disease Control and Prevention
Key Considerations and Future GAO Work
Given the number of COVID-19 cases and deaths at nursing homes, we plan to examine Centers
for Medicare & Medicaid Services (CMS) guidance and oversight of infection prevention and
control and emergency preparedness in nursing homes in more depth in future GAO work.
Background
Nationwide, approximately 15,500 nursing homes provide care to about 1.4 million elderly or
disabled residents, who are particularly vulnerable to the spread of infections. Because of this,
the health and safety of nursing home residents—who are often in frail health and living in close
proximity to one another—has been a particular concern during the COVID-19 pandemic.187 One
of the ﬁrst major outbreaks reported in the United States occurred in a Washington State nursing
home in February 2020. Since then, there has been a rapid increase in the number of U.S. nursing
home cases and deaths. According to CMS, nursing homes reported over 95,000 conﬁrmed cases
and almost 32,000 deaths as of May 31, 2020 (based on reporting from 88 percent of nursing
homes).188
CMS, an agency within the Department of Health and Human Services (HHS), is responsible for
ensuring that nursing homes nationwide meet federal quality standards to participate in the
Medicare and Medicaid programs. These standards require, for example, that nursing homes
establish and maintain an infection prevention and control program. To monitor compliance with
187COVID-19 has aﬀected vulnerable populations in other settings beyond nursing homes, including assisted living
facilities. However, as the federal role in oversight of nursing homes is more signiﬁcant than in other settings such as
assisted living facilities, the federal response has been more focused on nursing homes.
188Beginning in May 2020, CMS implemented a new reporting requirement for nursing homes to report COVID-19 cases
and deaths directly to the Centers for Disease Control and Prevention (CDC) on an ongoing basis. Prior to this new
requirement, the Department of Health and Human Services had not collected data from all nursing homes on COVID-19
cases or deaths. According to CMS, as of May 31, approximately 88 percent of nursing homes had reported the required
data to CDC.CMS acknowledged that, because this is a new reporting requirement, there may be inaccuracies in nursing
homes’ initial data submissions. For example, the data reported from the nursing homes’ submissions as of the week
ending May 31 included several records marked as having failed CMS quality assurance checks. For future reports, we
plan to further examine the reliability of CMS data related to COVID-19 in nursing homes.
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these standards, CMS enters into agreements with agencies in each state government—known as
state survey agencies—and oversees the work the state survey agencies do.
CMS’s Center for Clinical Standards and Quality has responsibility for overseeing state survey
agencies’ survey and certiﬁcation activities, among others. In response to the pandemic, the
Centers for Disease Control and Prevention (CDC) has provided infection prevention and control
assessments through on-the-ground deployments and remote technical assistance.189 The HHS
Assistant Secretary for Preparedness and Response has also been involved in the response to
COVID-19 in nursing homes.
Congress speciﬁcally appropriated $100 million in the CARES Act for the survey and certiﬁcation
program, and it directed the agency to prioritize the use of funds for nursing home facilities in
localities with community transmission of COVID-19.190 According to CMS, the agency plans to
provide state survey agencies approximately $81 million through September 30, 2023.
Overview of Key Issue
Through our analysis of CMS data on infection prevention and control deﬁciencies cited in nursing
homes surveyed prior to the pandemic, we found the following:
• Infection prevention and control deﬁciencies were the most common type of deﬁciency
state survey agencies cited, with most nursing homes having an infection prevention and
control deﬁciency cited in 1 or more years from 2013 through 2017 (13,299 nursing homes,
or 82 percent of all surveyed homes). In each individual year from 2013 through 2017, the
percentage of surveyed nursing homes with an infection prevention and control deﬁciency
ranged from 39 percent to 41 percent. In 2018 and 2019, we found that this continued, with
about 40 percent of surveyed nursing homes having an infection prevention and control
deﬁciency cited each year. This is an indicator of persistent problems at these nursing homes.
• Further, in each year from 2013 through 2017, nearly all infection prevention and control
deﬁciencies (about 99 percent in each year) were classiﬁed by surveyors as not severe,
meaning the surveyor determined that residents were not harmed. Our review of CMS
data shows that CMS rarely implemented enforcement actions for these deﬁciencies: from
2013 through 2017, CMS implemented enforcement actions for 1 percent of these infection
prevention and control deﬁciencies classiﬁed as not severe.191
189CDC reported that as of early June, the agency had completed 42 on-the-ground deployments to nursing homes to
support their response to COVID-19 cases and CDC had also performed over 600 remote infection control assessments
for nursing homes.
190Pub. L. No. 116-136, div. B, tit. VIII, 134 Stat. 281, 557 (2020).
191In general, for deﬁciencies with a higher severity CMS may impose certain enforcement actions so that the
enforcement actions are implemented—that is, put into eﬀect—immediately. For other deﬁciencies with a lower
severity, the nursing home may be given an opportunity to correct the deﬁciencies, which, if corrected before
the scheduled eﬀective date, can result in the imposed enforcement action not being implemented. CMS may
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In response to the pandemic, HHS, primarily through CMS and CDC, has taken actions to address
infection prevention and control in nursing homes, and a selected list of these actions is included
below. These actions include, for example, providing guidance and technical assistance to nursing
homes to improve infection control practices, shifting to targeted infection control inspections of
nursing homes, and enhancing reporting requirements for nursing homes. Speciﬁcally:
• On March 1, CDC released infection control and prevention strategies for long-term care
facilities, including nursing homes and assisted living facilities. The strategies encourage long-
term care facilities to actively screen all residents daily for fever and COVID-19 symptoms,
and to notify state or local health departments within 24 hours of suspected or conﬁrmed
COVID-19 cases, severe respiratory infections causing hospitalization or death, and clusters of
respiratory infections. This guidance was updated on May 19.
• On March 4, CMS limited and prioritized the types of survey activities allowed in health care
facilities. On March 20, CMS temporarily suspended state survey agencies’ use of standard
surveys for nursing homes, and instead required state survey agencies to conduct targeted
infection prevention and control surveys of selected providers identiﬁed through collaboration
with CDC and the HHS Assistant Secretary for Preparedness and Response.
• On March 13, CMS issued guidance for nursing homes to improve their infection control
practices in order to help prevent the transmission of COVID-19, including by restricting visitors
and cancelling communal dining and group activities.
• On April 19, CMS notiﬁed state survey agencies about planned requirements for nursing
homes to report COVID-19 cases and deaths through CDC’s National Healthcare Safety
Network and to inform residents, their families, and residents’ representatives of COVID-19
cases in their facilities. On April 25, CDC launched the online nursing home COVID-19 reporting
tool through its National Healthcare Safety Network. On May 8, CMS issued an interim ﬁnal
rule to establish these requirements and make this COVID-19 reporting to CDC mandatory.192
• On April 30, CMS announced that it will convene an independent commission to help guide
nursing homes during the President’s "Opening Up America Again" initiative.
• On May 18, CMS provided recommendations to state and local oﬃcials for reopening nursing
homes. These included criteria for relaxing restrictions as well as survey activities and
visitation considerations for each phase of reopening.
• On May 19, CDC released guidance on CDC recommendations for nursing homes and health
departments related to COVID-19 testing, including recommendations on how to prioritize and
conduct testing.
not implement imposed enforcement actions because the nursing home came into compliance prior to the
implementation date of the enforcement action, among other reasons. Nursing homes are required to submit a
plan of correction that addresses how the home would correct the noncompliance and implement systemic change
to ensure the deﬁcient practice would not recur.
19285 Fed. Reg. 27,550, 27,627 (May 8, 2020) (to be codiﬁed at 42 C.F.R. § 438.80(g)).
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• On June 1, CMS released data as of May 24 on the results of its new federal reporting
requirement for nursing homes to report COVID-19 cases and deaths to CDC. On June 4, these
data were updated with results as of May 31.
• On June 4, CMS released data on the results of the infection control focused surveys state
survey agencies had completed since March.
GAO Methodology and Agency Comments
To conduct this work, we reviewed agency guidance and other relevant information on CMS’s
response to the COVID-19 pandemic. We also summarized information from our May 2020 report
that analyzed data obtained from CMS on nursing home infection control deﬁciencies from 2013
through 2017, as well as similar publicly available data on infection control deﬁciencies in 2018
and 2019.193
We provided a draft of this report to HHS for review and comment. HHS provided technical
comments on this enclosure, which we incorporated as appropriate.
Contact information: John E. Dicken, (202) 512-7114, dickenj@gao.gov
Related GAO Product
Infection Control Deﬁciencies Were Widespread and Persistent in Nursing Homes Prior to COVID-19
Pandemic. GAO-20-576R. Washington, D.C.: May 20, 2020.
193This report is our most recent analysis of CMS nursing home infection prevention and control deﬁciency data, part
of a broader GAO body of work examining oversight of nursing homes including ongoing work examining HHS actions
to address COVID-19. For brief summaries of some GAO reports more generally on the health and welfare of the elderly
in nursing homes and other settings since 2015, including any recommendations, see Nursing Homes: Better Oversight
Needed to Protect Residents from Abuse, GAO-20-259T, (Washington, D.C.: Nov. 14, 2019).
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Federal Eorts to Provide Medical Supplies
States’ requests for medical equipment and supplies, such as personal protective equipment,
quickly exceeded the capacity of the Strategic National Stockpile, resulting in a multiagency
response to acquire and distribute material.
Entities involved: Department of Health and Human Services, Assistant Secretary for
Preparedness and Response, Federal Emergency Management Agency, Department of Defense
Key Considerations and Future GAO Work
While agencies have taken actions to provide medical equipment and supplies, such as personal
protective equipment (PPE) and ventilators, to states and other entities to help health care
workers to respond to the COVID-19 pandemic, concerns have been reported about the
distribution, acquisition, and adequacy of supplies from the Strategic National Stockpile (SNS)
and other sources. For example, in April 2020, the National Governors Association, whose
membership comprises state governors and the leaders of territories and commonwealths, noted
in a memorandum to governors’ oﬃces that the need for PPE, ventilators, and other supplies
was resulting in competition between states and with the federal government.194 We previously
raised concerns about supply gaps. Speciﬁcally, in 2003, we reported that urban hospitals lacked
the necessary equipment, such as PPE, to respond to a large inﬂux of patients experiencing
respiratory problems caused by a bioterrorism event requiring a similar response to a naturally
occurring disease outbreak.
Findings from a 2019 pandemic planning exercise conducted by the Oﬃce of the Assistant
Secretary for Preparedness and Response (ASPR) within the Department of Health and Human
Services (HHS) in conjunction with multiple federal agencies, states, and stakeholders highlighted
similar concerns about supply availability, as well as the SNS more generally.195 For example, the
report noted that domestic manufacturing capacity would be unable to meet the demands for
PPE and other supplies in the event of a global inﬂuenza pandemic. In response to these ﬁndings,
ASPR recommended several actions, including the development of a prioritization strategy for
the distribution and allocation of scare resources, a report to Congress detailing supply chain
shortages, and a legislative proposal to support the investment in and development of domestic
manufacturing capability. HHS oﬃcials told us that the department had been unable to take action
to address these recommendations as of June 2020 due to the COVID-19 pandemic. However, in
comments provided by HHS, the department told us ASPR oﬃcials had met with key Congressional
staﬀ in October 2019 to highlight ﬁndings from the exercise, including supply chain and PPE
shortages, lack of domestic manufacturing capacity, and potential funding requirements for
medical counter measures development. Further, HHS oﬃcials also told us that they have used
194National Governors Association, Governor Actions to Address PPE and Ventilator Shortages, (Apr 13, 2020), available
at https://www.nga.org/wp-content/uploads/2020/04/NGA-Medical-Equipment-Memo.pdf.
195Department of Health and Human Services, Oﬃce of the Assistant Secretary for Preparedness and Response,
Crimson Contagion 2019 Functional Exercise After-Action Report (January 2020). The pandemic planning exercise consisted
of multiple meetings in 2019, which culminated in a four-day functional exercise held in August 2019.
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lessons learned from the exercise to inform the ongoing response to the COVID-19 pandemic, but
did not provide any speciﬁc examples.
We are conducting a comprehensive body of work on the SNS in response to the Pandemic and
All-Hazards Preparedness and Advancing Innovation Act of 2019 and the CARES Act.196 This work
includes examining the materials states requested from the SNS for COVID-19 and, more generally,
the decisions behind purchases for the SNS over time. As part of this work, we plan to review
progress made in restructuring the SNS based on lessons learned from recent pandemics, an
eﬀort the administration announced on May 14, 2020. Further, we also plan to examine the
alignment of supplies in the SNS with threat risks; coordination and communication with states,
territories, localities, and tribes; and actions taken, if any, to mitigate supply gaps. We are also
examining the role that the Federal Emergency Management Agency (FEMA) played in distributing
supplies in conjunction with HHS and others, and how federal agencies used authority under the
Defense Production Act to obtain needed supplies.
Background
The SNS, overseen by ASPR, is the largest federally owned repository of pharmaceuticals, critical
medical supplies, federal medical stations, and medical equipment available for rapid delivery to
support the response to a public health emergency when state and local supplies are depleted,
according to the President’s budget proposal for ﬁscal year 2021.197 In such an event, the SNS
can be used as a short term stop gap buﬀer, according to HHS oﬃcials. Critical equipment and
supplies needed by healthcare workers during the pandemic have included PPE—such as N95
respirator masks, surgical gowns, and gloves—and ventilators to assist critically ill patients with
breathing.
HHS is designated as the lead agency to address the public health and medical portion of the
response, and as the needs of the pandemic increased nationwide, FEMA was designated as
the lead agency for coordinating the overall federal response. At that point, responsibility for
supporting and informing decisions about the allocation, distribution, and procurement of COVID-
related supplies shifted to the Supply Chain Task Force, one of eight task forces run by the Uniﬁed
Coordination Group. 198 The Supply Chain Task Force is jointly led by detailees from FEMA and the
Department of Defense (DOD). In some cases, the White House Task Force—to which the Uniﬁed
Coordination Group provided input—may make ﬁnal decisions about supply issues, according to
ASPR oﬃcials.
196Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019, Pub. L. No. 116-22, § 403(a)(5), 133
Stat. 905, 946-47; CARES Act, Pub. L. No. 116-136, § 19010, 134 Stat. 281, 579-81 (2020).
197Department of Health and Human Services, Fiscal Year 2021 Public Health and Social Services Emergency Fund:
Justiﬁcation of Estimates for the Appropriations Committee.
198The Uniﬁed Coordination Group, run out of the National Response Coordination Center, is led jointly by FEMA and
HHS and works to establish joint priorities and allocate resources, among other activities.
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The four relief laws enacted to assist the response to COVID-19 appropriated funding for HHS
activities that could include but were not limited to the SNS.199 As of May 31, 2020, HHS reported
it plans to use $16.71 billion to purchase PPE and ventilators for immediate use as well as to
replenish SNS inventory, and to purchase supplies to expand testing for COVID-19, among other
purposes. In addition, HHS reported obligations of almost $6.9 billion for the SNS, of which about
$330 million had been expended as of May 31, 2020.
Overview of Key Issues
The nationwide need for critical PPE and supplies to protect responders and to treat Americans
sickened with COVID-19 quickly exceeded quantities contained in the SNS. Speciﬁcally, in March
2020, ASPR began distributing supplies from the SNS to states and other entities, and within 1
month, the inventory of requested supplies was largely exhausted.200
ASPR distributed SNS supplies to states primarily using a pro-rata allocation strategy, an approach
ASPR oﬃcials said the Centers for Disease Control and Prevention—which most recently managed
the stockpile until October 2018—used to distribute materials to states in previous public health
emergencies, including the H1N1 pandemic of 2009. This pro-rata strategy allocated supplies to
states in proportion to their populations. Given the ﬁnite amount of supplies contained in the SNS
and the widespread demand, ASPR oﬃcials told us and information on ASPR’s website noted that
this allocation strategy was the most equitable approach.201
In each of the ﬁrst and second allocations, ASPR distributed 25 percent of available SNS supplies
to 62 areas across all 50 states, four large metropolitan areas, and the eight territories and freely
associated states, according to ASPR oﬃcials.202 In the last substantial distribution of supplies
from the SNS—based on a decision made by the Uniﬁed Coordination Group—ASPR provided
most of the remaining SNS inventory to states, reserving 10 percent for federal health care and
other responders.
ASPR’s website noted that the supplies distributed from the SNS were likely less than states had
requested. According to the Governor of Michigan, who testiﬁed before the House Committee
on Energy & Commerce Congress in June 2020, the supplies the state received from the SNS
were insuﬃcient to meet the state’s needs in the early days of the pandemic. FEMA oﬃcials told
199The four relief laws enacted to assist the response to COVID-19 are the Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146; Families First Coronavirus Response Act,
Pub. L. No. 116-127, 134 Stat. 178 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); and Paycheck Protection
Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020).
200In January 2020, ASPR began distributing SNS supplies to HHS and DOD medical staﬀ assisting in the HHS-led
repatriation eﬀorts of U.S. citizens from cruise ships. The SNS maintains an $8 billion supply of other materials, such as
antibiotics, vaccines, antitoxins, and antivirals, according to HHS oﬃcials
201ASPR also distributed extra supplies to states with a high number of COVID-19 cases.
202The four large metropolitan areas were Chicago, the District of Columbia, Los Angeles County, and New York City.
The eight territories and freely associated states were American Samoa, Federated States of Micronesia, Guam, Marshall
Islands, Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands.
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us, however, that in the early days of the pandemic it was diﬃcult for states to assess their true
resource needs. As such, oﬃcials noted many states submitted requests that over-estimated the
amount of supplies and medical equipment they needed. We requested information on the SNS
inventory prior to the pandemic, the types and amounts of supplies that states requested, as well
as what ASPR and FEMA distributed from the SNS in response to states’ requests; however, HHS
and FEMA did not provide this information as of June 12, 2020. We plan to continue to seek this
information from the agencies.
According to ASPR oﬃcials, the SNS was not designed or funded to provide states with supplies at
the scale necessary to respond to a nationwide event such as the COVID-19 pandemic. According
to ASPR’s website, the SNS is primarily designed and resourced to address discrete events—for
example, limited displacements or localized disasters, such as hurricanes or terrorist attacks.
Annual appropriations for the SNS over the past decade ranged between $478 million (ﬁscal year
2013) and $705 million (ﬁscal year 2020), exclusive of the supplemental appropriations made
available through the four relief laws enacted to assist the response to COVID-19.203 However,
ASPR oﬃcials told us that annual appropriations have not been suﬃcient to cover the costs
associated with maintaining medical countermeasures necessary to respond to the tremendous
increase in the number of material threats over the same period. In its multiyear ﬁscal year
2018-2022 budget plan for medical countermeasure development, HHS noted the challenge of
maintaining a stockpile of medical countermeasures to use against many low-probability, high-
consequence threats, while also maintaining the capacity to rapidly respond to novel threats,
like emerging infectious diseases.204 In nine of the twelve years during this period (ﬁscal years
2009 through 2020), Congress appropriated to the SNS amounts equal to or more than what the
administration requested. In ﬁscal year 2020, the administration did not make a separate request
for SNS funding.
According to an ASPR oﬃcial, the SNS did not contain the number of N95 respirator masks
that would be needed in a severe pandemic. In a hearing before the Senate Committee on
Appropriations on February 25, 2020, the Secretary of Health and Human Services said that the
SNS contained 30 million N95 respirator masks; he further noted that health care workers could
need 300 million to respond to the COVID-19 pandemic.205 According to ASPR oﬃcials, most of the
remaining masks contained in the SNS were purchased in response to the H1N1 pandemic of 2009
and therefore were dated.206 ASPR distributed these masks with a caution to states to inspect
them upon receipt and discard masks that were unusable due to their quality. In May 2020, FEMA
oﬃcials told us that demand for PPE has been greater than ever before.
203For example, the CARES Act provided that up to $16 billion of the supplemental appropriations under the act are
available for the SNS. Although SNS funding ﬂuctuated between ﬁscal years 2009 and 2012 due to factors such as
sequestration, it experienced relatively steady funding with gradual increases from ﬁscal years 2013 to 2020.
204 U.S. Department of Health and Human Services, Public Health Emergency Medical Countermeasures Enterprise Multiyear
Budget: Fiscal Years 2018-2022 (Dec. 2019). The SNS contains countermeasures to respond to biological, chemical,
radiological, and nuclear events.
205 HHS and DOD oﬃcials’ accounts of the number of N95 respirator masks contained in the SNS prior to the pandemic
have varied. In a hearing before the Senate Committee on Homeland Security and Governmental Aﬀairs on June 9, 2020,
the Department of Defense Vice Director of Logistics noted that the SNS contained less than 18 million N95 respirator
masks prior to the pandemic.
206 According to ASPR oﬃcials, HHS did not replenish PPE to previous levels following H1N1, because of a lack of
funding.
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As a result of the near depletion of the SNS, as well as the shift in responsibilities from HHS to the
Supply Chain Task Force, FEMA, HHS, and other federal agencies have taken actions to provide
additional supplies to states and other entities. For example:
• Supplies from other federal inventories. DOD made materials from its own stockpile,
intended to support the military, available for the public health response. For example,
according to FEMA, DOD has distributed almost 14 million N95 respirator masks from its
inventory to cities, states, and the Department of Veterans Aﬀairs (VA). In addition, federal
agencies report any excess personal property, including supplies, to a centralized database
maintained by the General Services Administration (GSA), which provides reports of available
material to FEMA daily, according to GSA oﬃcials.207
• New purchases. HHS, FEMA, and DOD have purchased additional supplies, which they have
distributed to states and others.208 According to HHS and our review of federal procurement
data, in March and April 2020, HHS awarded contracts to purchase approximately 600 million
N95 respirator masks and over 60,000 ventilators. HHS also announced an agreement to
purchase up to 4.5 million protective fabric suits. ASPR oﬃcials told us that they distribute
most of these supplies to states as they are available or that manufacturers distribute them
to their existing customers. However, the manufacture and delivery of some supplies may
take over a year. According to FEMA oﬃcials, in addition to PPE, to aid states in their COVID-19
testing eﬀorts, the agency has purchased and distributed swabs and products used to
preserve collected specimens. According to DOD, as of May 20, 2020, it had purchased 4.6
million N95 respirator masks, 14.1 million other masks, 8,000 ventilators, and 2.6 million
gowns, among other things, for military and federal agencies. FEMA oﬃcials told us in May
2020 that HHS, FEMA, and the Supply Chain Task Force were transitioning some of the
procurement responsibilities—which have largely been led by FEMA—to DOD and that DOD’s
responsibilities would include purchasing materials to reﬁll the SNS. While DOD oﬃcials
said they would purchase some of the materials for the SNS, HHS would determine the
procurement needs.
• Donations. HHS received donations of pharmaceuticals for the SNS, which it then distributed
to several states at their request. HHS also planned to distribute one of these pharmaceuticals
to VA. For example, in March 2020, Sandoz and Bayer Pharmaceuticals donated 30 million
doses of hydroxychloroquine sulfate and 1 million doses of Resochin (chloroquine phosphate),
respectively. On March 28, 2020, the Food and Drug Administration (FDA) granted an
emergency use authorization (EUA) for the use of these two pharmaceutical products for
treatment of certain hospitalized patients.209 However, on June 15, 2020, FDA announced that
it was revoking the EUA, because the agency determined these products were unlikely to be
eﬀective treatments for COVID-19 and that the known and potential beneﬁts of these products
do not outweigh their known and potential risks, which include serious cardiac adverse
207GSAXcess is GSA’s online property system used for reporting, searching, and selecting excess personal property.
208Supplies purchased by FEMA and DOD may be reimbursed by HHS at a later date. According to FEMA oﬃcials, in
April 2020, HHS entered into an agreement with FEMA that allows ASPR to reimburse FEMA for the acquisition and
distribution of supplies, durable goods, and services in response to COVID-19.
209Under an EUA, FDA may allow the use of unapproved medical products or unapproved uses of approved medical
products provided certain legal criteria are met, including a ﬁnding by the FDA that available scientiﬁc evidence
suggests the product’s beneﬁts outweigh the potential risks.
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events. In addition to receiving donations of chloroquine phosphate and hydroxychloroquine
sulfate, in May 2020, Gilead Sciences, Inc., donated quantities of remdesivir to the SNS to treat
approximately 78,000 patients.210
• Project Airbridge. This eﬀort, operated by the Supply Chain Task Force, was created to
reduce the time it takes for six large U.S. medical supply distributors to bring PPE and other
critical supplies from overseas manufacturers into the country for their respective customers.
According to FEMA, the agency pays for the air transportation of the supplies from overseas
into the United States. Once the supplies are in the country, the medical suppliers distribute
50 percent to areas of need, as indicated by Centers for Disease Control and Prevention data.
They then distribute the remaining 50 percent through their normal commercial networks,
although the federal government has purchased some of these supplies to provide to states,
according to FEMA oﬃcials. According to FEMA’s website, this eﬀort reduces shipment time
from weeks to days.
GAO Methodology and Agency Comments
To understand the federal distribution and acquisition of PPE and other supplies from the SNS
and other sources, we reviewed information contained in FEMA daily situation briefs and on HHS,
DOD, and FEMA websites. The information in this enclosure highlights examples of the types of
distribution and acquisition that these entities made; it is not an exhaustive list. In addition, we
interviewed or obtained written responses from ASPR and FEMA about agency actions to increase
supply and how they made distribution decisions. We provided a draft of this report to HHS, DHS,
and DOD for review and comment. HHS, DHS, and DOD provided technical comments on this
enclosure, which we incorporated as appropriate
Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov
Related GAO Product
Hospital Preparedness: Most Urban Hospitals Have Emergency Plans but Lack Certain Capacities for
Bioterrorism Response. GAO-03-924. Washington, D.C.: August 6, 2003.
210FDA issued an EUA for the use of remdesivir in certain hospitalized patients on May 1, 2020.
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COVID-19 Testing
The Department of Health and Human Services plays a key role in coordinating test development
and implementation, but faces challenges in facilitating testing and reporting results.
Entities involved: Department of Health and Human Services, Centers for Disease Control and
Prevention, Food and Drug Administration, National Institutes of Health, Federal Emergency
Management Agency
Key Considerations and Future GAO Work
The Department of Health and Human Services (HHS) and other agencies have taken key actions
to facilitate COVID-19 testing development, but faced several challenges resulting in signiﬁcant
delays in testing nationwide and a dearth of quality information on testing at the federal level.
Speciﬁcally, agencies faced challenges developing accurate tests quickly and coordinating needed
testing supplies. Furthermore, the absence of complete and consistent COVID-19 testing data
reported through May 31, 2020, has made it more diﬃcult to track and know the number of
infections, mitigate their eﬀects, and inform decisions on reopening communities.
We will continue to conduct work examining HHS and its component agencies’ ongoing roles with
regard to testing. This will include an examination of trends and gaps in testing, as well as data
reporting, among other things, to help further identify challenges faced by the federal government
and others in expanding testing capacity. It will also include an examination of federal funding
directed toward COVID-19 testing.
Background
Testing people for COVID-19 and isolating those who test positive are of paramount importance
to help control the virus’s spread in the community, according to the Centers for Disease Control
and Prevention (CDC). The absence of approved drugs to treat COVID-19 and uncertain timing for
a vaccine to prevent the disease underscore the importance of federal eﬀorts to help facilitate
adequate testing to control the spread of the virus and collect complete and standardized testing
data to track and make adjustments to the levels of testing where needed.
The Food and Drug Administration (FDA), the agency in charge of regulating medical device
products (including diagnostic tests) marketed in the United States for use in detecting or
diagnosing COVID-19 infections, has authorized three types of tests for this purpose: molecular
and antigen diagnostic tests to detect the presence of the virus that causes COVID-19 (known as
viral tests), and serology tests to detect antibodies produced in the bodies of patients who have
had COVID-19, even if they did not show symptoms (known as antibody tests).211
211Molecular diagnostic viral tests detect the presence of genetic material from SARS-CoV-2, the virus that causes
COVID-19. The antigen viral test detects the presence of a protein that is part of SARS-CoV and SARS-CoV-2. Antibody
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The CARES Act contains several provisions related to testing, including those providing
appropriations. For example, it requires laboratories that perform or analyze COVID-19 tests to
report the results to HHS in a form and manner as the Secretary prescribes until the end of the
emergency declaration.212 With regard to funding, the CARES Act appropriates $4.3 billion to CDC,
including $1.5 billion for grant funding for state, territorial, local, or tribal organizations, to carry
out surveillance and ensure laboratory capacity, among other things, and provides for continuity
of funding for ﬁscal year 2019 Public Health Emergency Preparedness (PHEP) cooperative
agreement recipients.213 In addition to CARES Act appropriations, funding was appropriated for
testing in other COVID-19 relief laws, including $25 billion in the Paycheck Protection Program
and Health Care Enhancement Act, 2020, of which $11 billion is directed to state, territorial,
local, or tribal organizations.214 Furthermore, $2 billion was appropriated to provide funding for
testing for the uninsured.215 As of May 31, 2020, HHS reported obligations of about $714 million
to speciﬁcally support testing, of which about $44 million had been expended. In addition, HHS
reported over $12 billion in obligations supporting state, local, territorial, and tribal organizations’
response to COVID-19, including testing support, among other things, of which $489 million has
been expended.
Overview of Key Issues
As the coordinating agency for the federal response to public health and medical emergencies,
HHS has a lead role in facilitating and overseeing the development and implementation of
COVID-19 tests.216 According to principles put forward by HHS agencies and the White House,
states manage COVID-19 testing programs with federal support, and federal agencies play a key
role in facilitating the development and implementation of those programs by, among other
tests can provide information on prevalence of past infections in a community. At this time, it is not known whether
the presence of antibodies to SARS-CoV-2 provides immunity to subsequent infections with the virus or, if immunity is
provided, how long that protection will last. See our May 2020 spotlight for more technical information on COVID-19
testing.
212CARES Act, Pub. L. No. 116-136, div. B, tit. VIII, § 18115, 134 Stat. 281, 574 (2020).
213The activities supported by PHEP support the National Response Framework, which guides how the nation responds
to hazards, including infectious disease outbreaks. Recipients of PHEP funding include all 50 states, four major
metropolitan areas, and eight U.S. territories and freely associated states. The CARES Act also appropriated $27.015
billion to the Public Health and Social Services Emergency Fund (PHSSEF), of which at least $3.5 billion is available to
the Biomedical Advanced Research and Development Authority (BARDA) for necessary expenses of manufacturing,
production, and purchase of diagnostics and small molecule active pharmaceutical ingredients, among other things. The
CARES Act appropriated an additional $100 billion to the PHSSEF to reimburse provider entities for expenses for testing
supplies, among other things, and $6 million to the National Institute of Standards and Technology to support science
measurement for viral testing and manufacturing. Pub. L. No. 116-136, div. B, tit. VII, 134 Stat. 511, 554, 560-61, 563.
214Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, div. B, tit. I, 134 Stat. 620,
623-24. This provision also requires states to submit testing plans to HHS.
215See Families First Coronavirus Response Act, div. A, tit. V, Pub. L. No. 116-127, 134 Stat. 178, 182; Paycheck Protection
Program and Health Care Enhancement Act, div. B, tit. I, 134 Stat. 626.
216In late May 2020, HHS submitted a congressionally mandated report detailing its strategic plan for testing, including
the nationwide goals of 12.9 million tests in May and June and 40–55 million tests per month by September. See
Department of Health and Human Services, Report to Congress: COVID-19 Strategic Testing Plan (May 24, 2020).
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things, providing expedited regulatory authorization and guidance and accelerating research. The
Assistant Secretary for Health was appointed by the Secretary of Health and Human Services to
coordinate testing eﬀorts across key HHS agencies, which took the following selected actions:
• FDA authorized COVID-19 viral and serology tests under an Emergency Use Authorization
(EUA) authority that was provided in the Pandemic and All-Hazards Preparedness
Reauthorization Act.217 As of June 16, 2020, FDA had issued 139 EUAs to test kit manufacturers
and commercial and other laboratories; 119 EUAs were for molecular and antigen diagnostic
(viral) tests, and 20 were for antibody tests.
• CDC issued guidance, including priorities for testing and guidance on reopening, and awarded
more than $12 billion to state, territorial, local, and tribal organizations to respond to
COVID-19, such as by expanding laboratory capacity for testing, with CARES Act and other
supplemental appropriations. As of May 31, 2020, CDC had deployed more than 1,000 of its
staﬀ for the COVID-19 response, including joining emergency response teams to assist in local
public health eﬀorts such as providing guidance on laboratory capacity and testing strategies,
according to CDC oﬃcials.
• The National Institutes of Health (NIH) launched a $1.5 billion program to speed the
development of COVID-19 testing called Rapid Acceleration of Diagnostics (RADx). Under the
program, private entities can submit proposals for diagnostic innovations, and NIH can select,
fund, and support certain proposals. NIH also began a study to quantify undetected cases of
COVID-19 through antibody testing, has undertaken the development of new tests, and has
been providing validation support in the development of new antibody testing in collaboration
with CDC and FDA.
Other agencies have taken on important roles in the COVID-19 testing response.218 For example,
the Federal Emergency Management Agency (FEMA) is working to source and procure testing
217See Pub. L. No. 108-136, § 1603, 117 Stat. 1392, 1684 (2003) (codiﬁed as amended at 21 U.S.C. §§ 360bbb-3).
The EUA authority allows for tests that “may be eﬀective” to be made available in a much shorter time frame
than typically would be necessary for approval or clearance because it requires a lower level of evidence than the
“eﬀectiveness” standard that is required for FDA product approvals and clearances. During certain emergencies,
FDA may issue EUAs when the agency determines the tests may be eﬀective, for example, at diagnosing an
infection, among other criteria. To approve a test outside of an emergency, FDA determines whether there is
reasonable assurance that the tests developed for clinical use are safe and eﬀective or that they otherwise meet
the applicable statutory standard. On February 4, 2020, FDA issued the ﬁrst EUA for a COVID-19 test, a viral test
developed by CDC. Based upon the CDC request, use of this test was limited to qualiﬁed laboratories designated
by CDC and, for those laboratories in the United States, certiﬁed under the Clinical Laboratory Improvement
Amendments to perform high-complexity tests.
218Actions from other HHS agencies include the following: the Oﬃce of the Assistant Secretary for Preparedness and
Response worked with the Federal Emergency Management Agency to deploy testing-related assets from the Strategic
National Stockpile. BARDA partnered with and provided funding to 19 test developers using CARES Act funding. The
Centers for Medicare & Medicaid Services (CMS) increased the Medicare payment rate for COVID-19 tests from $51 to
$100, imposed COVID-19 reporting requirements on nursing homes, and recommended that all nursing home residents
and staﬀ receive a baseline test and weekly retesting under certain circumstances. The Health Resources and Services
Administration provided $583 million in funding to health centers to expand testing, with an additional $225 million
speciﬁcally for rural health clinics, and will award $17 million to health center program look-alikes. The Indian Health
Service will administer $750 million in HHS funds to be awarded to Indian Health Service, tribal, and Urban Indian
facilities to support testing capacity.
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supplies that are to be provided to states, territories, localities, and tribes to help increase testing
capacity for a limited duration in support of their individualized reopening and testing plans. HHS
and FEMA are also leading a joint federal Laboratory Diagnostics Task Force focused on increasing
nationwide COVID-19 testing by providing equipment, supplies, and testing resources, and by
establishing community-based testing sites in certain locations prior to turning those over for
state management. In addition, the White House issued a testing blueprint for states in April that
establishes broad roles and principles for states, localities, tribes, the federal government, and the
private sector in facilitating expansion of needed testing capacity.
Nonetheless, federal agencies faced several challenges in facilitating COVID-19 testing
development, resulting in signiﬁcant delays in testing capacity nationwide and a dearth of quality
information on testing at the federal level. Challenges included the following:
• Developing accurate tests quickly. In early February, the sole FDA-authorized COVID-19 viral
test was deployed by CDC to state public health laboratories, and it experienced accuracy and
reliability issues that resulted in signiﬁcant delays in testing nationwide during the critical early
weeks of the outbreak.219 In response to concerns about the availability of COVID-19 tests, FDA
made several policy changes. In late February, FDA announced that it did not intend to object if
certain laboratories began viral testing with their own equipment while they prepared an EUA
request, provided the test was validated and notiﬁcation was provided to FDA, as described
in the guidance document. According to FDA, this helped balance the urgent need to increase
testing capacity in the United States while providing enough oversight to provide assurance
that patients could depend on the results of these tests. Subsequently in mid-March, FDA
revised the policy to apply to manufacturers of commercial test kits. Also in mid-March, testing
increased in commercial laboratories, and the EUA for the initial CDC test was updated to
address the accuracy and reliability concerns.
FDA also announced in mid-March that it did not intend to object to test developers
distributing antibody tests without an EUA, provided that they validated the tests and included
certain statements noting any limitations with the tests. According to FDA, it did so to enable
the initial use of these tests to determine the prevalence of COVID-19 infections in diﬀerent
communities and to aid in research on the extent to which antibodies may protect against
infection. FDA oﬃcials further noted that facilitating the development of tests early on was
necessary to learn more about how best to use antibody tests. Nonetheless, quality and
reliability concerns arose concerning available antibody tests, and FDA reevaluated the
risks and beneﬁts of this approach, announcing on May 4, 2020, that test developers must
submit EUA applications with test validation data. Concerns surrounding the accuracy of
both viral and antibody tests continued into May and June; for example, on May 14, 2020,
FDA announced it was investigating reports of false-negative results with Abbott’s ID NOW
viral test, and on May 21, 2020, FDA announced the removal of 27 antibody tests from the
market, including those for which there was not a pending EUA request or issued EUA and
those voluntarily withdrawn from the market. In addition, on June 16, 2020, FDA revoked the
219According to CDC, by late February, FDA issued CDC an enforcement discretion allowing public health
laboratories to use CDC’s test under diﬀerent guidance, and CDC distributed newly manufactured CDC test kits.
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EUA it had granted for an antibody test developed by Chembio Diagnostic System, Inc. due to
concerns with the accuracy of the test.
• Coordinating suﬃcient testing supplies.Early in the national response to COVID-19,
shortages of key testing supplies became problematic due to unprecedented domestic
demand and overall global competition, which contributed to the delay in broad-scale testing.
There were shortages in test kit supplies such as swabs and testing reagents, which the United
States had not stockpiled, according to FDA oﬃcials, and also shortages in personal protective
equipment needed to administer tests.
According to FDA oﬃcials, the agency has limited authority to address supply shortage issues,
but took steps to encourage increased manufacturing of supplies.220 For example, FDA worked
to seek potential alternatives to key testing components that were in short supply, including
swabs and transport media to keep the sample viable for testing, through publishing and
updating information about these alternatives once they were validated to ensure they
would not adversely aﬀect test performance. CDC oﬃcials told us they worked with FEMA to
expand the items that are supplied through the International Reagent Resource (IRR)—a CDC-
established entity providing public health laboratories with reagents and other resources—to
make it easier for public health laboratories to obtain necessary supplies. However, the IRR
was hampered by a lack of available reagents needed to run the tests, according to CDC
oﬃcials. Laboratory and public health industry groups said they experienced ongoing needs
with regard to supplies, including shortages of federal funding for manufacturing and testing
machines and the need for centralized federal coordination for procurement of needed
supplies.
• Facilitating the collection of complete and consistent testing data. CDC has taken steps
to meet the unprecedented need for COVID-19 testing data, although the data reported on its
website through May 31, 2020, have not been complete or consistent. CDC reports testing data
that it collects from public health, hospital, private, and commercial laboratories, as submitted
to state and jurisdictional health departments. As of May 31, 2020, CDC’s website stated that
the data posted there included the majority of, but not all, data on testing in the United States.
For example, testing data that CDC reported may not have included all tests performed by
laboratories at point of care settings, such as physicians’ oﬃces.221 In addition, CDC reported
testing data from diﬀerent sources that have varied over time and have not been counting
tests the same way. The agency sought to improve the consistency of testing data by posting
guidance on its website on May 6, 2020, for how the data should be submitted to states from
clinical laboratories, which are one source of laboratory data. However, not all sources from
which CDC has collected state data have provided consistent testing data. For example, when
states did not report data for a given day, CDC collected and reported testing data from states’
websites that aggregate testing data, but some states’ websites count the number of people
tested while others count the number of samples tested, which could include multiple tests of
220According to FDA oﬃcials, the agency lacks authority to require medical device manufacturers to notify FDA
of potential shortages or to respond to FDA requests about potential supply chain disruptions. However, we note
that the CARES Act requires such notiﬁcation from manufacturers of devices that are critical to public health or for
which the Secretary determines that information on supply disruptions is needed during a public health emergency.
CARES Act, div. A, tit. III, §3121, 134 Stat. 363 (codiﬁed at 21 U.S.C. §356j).
221According to CMS, tests performed in physician oﬃces are generally considered to be laboratory tests for
purposes of the federal regulation of laboratories.
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one person. Furthermore, some state submissions of viral testing data included in CDC’s data
also included antibody tests. According to CDC, in order to act quickly, it began collecting data
from states on the total number of tests performed in early April—when antibody tests were
not common—and has since taken steps to distinguish viral and antibody tests. However, as of
June 9, 2020, CDC continued to report these types of tests together.222
Further, in June, HHS took an additional step intended to help collect complete and consistent
viral testing data by implementing authority enacted in March as part of the CARES Act.
Speciﬁcally, the CARES Act included a provision requiring laboratories to submit the result of
each COVID-19 test in a manner speciﬁed by the Secretary of Health and Human Services.223
Accordingly, on June 4, 2020, HHS issued guidance that, pursuant to its new authority under
the CARES Act, requires all laboratories to submit data on viral tests and other tests they
perform to diagnose a possible case of COVID-19. Required data include those on point-
of-care tests and those that identify whether a viral or antibody test was performed.224
Importantly, the guidance also identiﬁes other required data elements, such as patient
demographic information, and directs laboratories to use existing regional, state, or local
submission methods to provide these data, which, in turn, are sent to CDC. Laboratories
must submit these data daily, starting as soon as possible and not later than August 1, 2020,
according to the HHS guidance. We will continue to conduct work examining HHS and its
component agencies’ data reporting, plans, and activities related to COVID-19 testing.
GAO Methodology and Agency Comments
To conduct this work, we reviewed testing data and limitations reported by CDC over time,
including the most recent information from CDC’s COVID Data Tracker website as of May 31, 2020.
We also interviewed HHS agency oﬃcials to obtain information on steps taken to develop tests,
coordinate supplies, and report testing data, and we reviewed federal laws, other requirements,
and CDC guidance related to states’ and laboratories’ submission of testing data. Further,
we conducted interviews with laboratory and public health industry groups to obtain their
perspectives on agency actions and challenges with regard to testing.225 We provided a draft
of this report to HHS, FEMA, and the Oﬃce of Management and Budget (OMB) for review and
comment. HHS and OMB provided technical comments on this enclosure, which we incorporated
as appropriate. FEMA did not provide comments on this enclosure.
222According to CDC, national laboratories reported that over 336,000 antibody tests were performed in the 15
states that included antibody tests in the data they provided CDC as of June 9, 2020. Although CDC told us that
these national laboratories conducted the majority of antibody testing, the amount of additional antibody tests
performed by other laboratories in these states was unclear.
223Pub. L. No. 116-136, § 18115, 134 Stat. at 574.
224Department of Health and Human Services, COVID-19 Pandemic Response, Laboratory Data Reporting: CARES Act
Section 18115 (June 4, 2020).
225Speciﬁc groups we interviewed included the American Clinical Laboratory Association, the American Public Health
Association, the Association of Public Health Laboratories, the Association of State and Territorial Health Oﬃcials, the
Council of State and Territorial Epidemiologists, and the National Association of County and City Health Oﬃcials.
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Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov
Related GAO Products
Science & Tech Spotlight: COVID-19 Modeling. GAO-20-582SP. Washington, D.C.: June 4, 2020.
Science & Tech Spotlight: COVID-19 Testing. GAO-20-584SP. Washington, D.C.: May 20, 2020.
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Vaccine and Therapeutics Development
Multiple federal agencies are taking actions to develop vaccines and therapeutics to prevent and
treat COVID-19, including funding research and clinical trials, but it is not known when or if a safe
and eﬀective vaccine (or vaccines) and therapeutics will be widely available.
Entities involved: Department of Health and Human Services, Food and Drug Administration,
Department of Veterans Aﬀairs, Department of Defense, Biomedical Advanced Research and
Development Authority, National Institutes of Health
Key Considerations and Future GAO Work
While multiple federal agencies are taking actions to develop vaccines and therapeutics to prevent
and treat COVID-19, questions remain about their timing and distribution. Even with federal
eﬀorts to accelerate development of numerous vaccine candidates, a vaccine will not be available
for some time and may initially be available for emergency use, meaning it has not yet been
determined to be safe and eﬀective for use. Signiﬁcant manufacturing capacity will be required;
other potential hurdles in the eventual delivery of vaccines include cost, distribution systems, and
special handling called cold chain requirements (i.e., maintaining proper vaccine temperatures
during storage and handling to preserve potency).
The number of vaccine doses that need to be produced to protect more than 300 million
Americans and the global community is unknown, since eﬀective protection against COVID-19 may
require more than one dose per person. In addition, with vaccine development underway at large
manufacturers located in multiple countries, concerns have been raised regarding the extent to
which any vaccine developed or manufactured in one country would be available globally, beyond
the borders in which it is produced.
Following the 2009 H1N1 inﬂuenza pandemic, in June 2011 we reported lessons learned from the
federal response to that pandemic, which could be considered in the current pandemic response.
Speciﬁcally, we found that eﬀective communication on the availability of vaccine is central to
a successful response. Although the federal government was able to purchase and distribute
millions of doses of H1N1 vaccine, the vaccine was not widely available when the public expected
it and at the peak of demand. Because the failure to eﬀectively manage public expectations can
undermine government credibility, it is essential that vaccine production eﬀorts be paired with
eﬀective communication strategies regarding the availability of a vaccine once it is available.
As of May 31, 2020, the Department of Health and Human Services (HHS) reported it had allocated
$5,467 million in supplemental appropriations provided under the COVID-19 relief laws enacted
as of that date to support eﬀorts related to COVID-19 vaccines and therapeutics; of this amount,
$3,612 million has been obligated and $18 million has been expended.226 We plan to conduct
226These laws include (1) the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L.
No. 116-123, 134 Stat. 146; (2) the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); (3)
the CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); and (4) the Paycheck Protection and Health Care Enhancement
Act, Pub. L. No. 116-139, 134 Stat. 620 (2020).
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further work in this area in response to the CARES Act, including work on (1) federal eﬀorts
to accelerate and coordinate development and testing of vaccines and therapeutics and (2)
the process and policies related to development, approval, and distribution of vaccines and
therapeutics.
Background
Vaccination is critical for reducing infection rates and severity of disease and mortality due to
COVID-19, but as of June 2020, there are no COVID-19 vaccines approved by the Food and Drug
Administration (FDA), and developing a vaccine takes time. Vaccine development is a lengthy
process that involves a rigorous series of steps to identify a potential vaccine candidate, conduct
preclinical research and clinical trials to assess safety and eﬀectiveness, and manufacture it.
Because COVID-19 is a novel virus with no documented immunity in the general population, public
health experts say safe and eﬀective vaccines for COVID-19 would provide the most eﬃcient path
for fully resuming normal activities.
Therapeutics to treat COVID-19 are also important, particularly until a vaccine becomes available;
however, no drug has been proven to be safe and eﬀective and approved by FDA for treating
COVID-19 at this time. The time frame for developing and distributing an eﬀective vaccine and
therapeutics is uncertain. Some reports have predicted that distribution of a vaccine may be
12 to 18 months away at the earliest, and initial distribution may be limited (e.g., to health care
providers or ﬁrst responders) until more doses are manufactured.
Numerous federal agencies, including the Departments of Health and Human Services (HHS),
Veterans Aﬀairs (VA), and Defense (DOD), are involved in supporting the development of vaccines
and therapeutics for COVID-19. Within HHS, the Biomedical Advanced Research and Development
Authority (BARDA) and the National Institutes of Health (NIH) generally fund and conduct research
and development, including support for clinical trials.227 FDA is responsible for regulating and
approving vaccines and therapeutics for marketing in the United States, and it may issue an
emergency use authorization to allow the emergency use of unapproved drugs or unapproved
uses of approved drugs if certain criteria are met. DOD and VA also generally fund and conduct
research of candidates for vaccines and therapeutics and can provide testing sites for clinical trials.
The CARES Act and the Coronavirus Preparedness and Response Supplemental Appropriations
Act, 2020, appropriated funding for HHS activities to support the development of vaccines and
therapeutics for COVID-19.228 This funding included the following:
• FDA. The CARES Act appropriated $80 million for activities that include, but are not limited
to, the development of necessary medical countermeasures and vaccines. The Coronavirus
227BARDA is part of the HHS Oﬃce of the Assistant Secretary for Preparedness and Response.
228VA and DOD also received funding to prevent, prepare for, and respond to coronavirus; we are requesting and
reviewing agency information to determine how much of these appropriations the departments are devoting to vaccine
and therapeutic development.
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Preparedness and Response Supplemental Appropriations Act, 2020, appropriated $61 million
to prevent, prepare for, and respond to coronavirus, domestically or internationally, including,
but not limited to, the development of necessary medical countermeasures and vaccines.229
• NIH. The CARES Act appropriated $945.4 million, including $706 million for the National
Institute of Allergy and Infectious Diseases, to prevent, prepare for, and respond to
coronavirus, of which not less than $156 million is provided for vaccine and infectious diseases
research facilities. The Coronavirus Preparedness and Response Supplemental Appropriations
Act, 2020, appropriated $836 million to the National Institute of Allergy and Infectious Diseases
to prevent, prepare for, and respond to coronavirus, domestically or internationally.230
• Public Health and Social Services Emergency Fund. The CARES Act appropriated $27.015
billion to this HHS emergency fund for activities that include, but are not limited to, developing
countermeasures and vaccines and purchasing vaccines and therapeutics. Not less than $3.5
billion of this money is provided to BARDA for manufacturing, producing, and purchasing
vaccines and therapeutics, among other things. The Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020, appropriated a total of $3.4 billion to this fund to
prevent, prepare for, and respond to coronavirus, domestically or internationally, including
the development of necessary medical countermeasures and vaccines, prioritizing platform-
based technologies with U.S.-based manufacturing capabilities, and the purchase of vaccines,
therapeutics, among other things.231
Overview of Key Issues
Numerous federal agencies are facilitating the development of multiple candidates for vaccines
and therapeutics for COVID-19. These eﬀorts include developing vaccines using diﬀerent
mechanisms to prompt the body to produce antibodies and eﬀorts to accelerate the time frame
in which a vaccine could be available. However, the timing of when a vaccine or therapeutic will
be available to the general public is unknown due to the lengthy multistep development process.
Additionally, it is likely that many candidates will fail to complete the multistep process.
229CARES Act, Pub. L. No. 115-136, div. B, tit. I, 134 Stat. 281, 509 (2020); Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, div. A. tit. I, 134 Stat. 146. Medical countermeasures
are drugs, vaccines, and devices to diagnose, treat, prevent, or mitigate potential health eﬀects of exposure to
chemical, biological, radiological, and nuclear agents.
230CARES Act, div. B, tit. VIII, 134 Stat. at 555-56; Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020, div. A, tit. III, 134 Stat. at 148. Of the Coronavirus Preparedness and Response
Supplemental $836 million appropriation to the National Institute of Allergy and Infectious Diseases, the act
provides that not less than $10 million shall be transferred to the National Institute of Environmental Health
Sciences for worker-based training to prevent and reduce exposure of hospital employees, emergency ﬁrst
responders, and other workers who are at risk of exposure to coronavirus through their work duties.
231CARES Act, div. B, tit. VIII, 134 Stat. at 560-61; Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020, div. A, tit. III, 134 Stat. at 149-50.
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NIH, BARDA, FDA, VA, and DOD are all participating in the Accelerating COVID-19 Therapeutic
Interventions and Vaccines (ACTIV) partnership with the European Medicines Agency and
biopharmaceutical companies. This new public-private partnership, which includes senior
scientists representing government, industry, non-proﬁt, philanthropic, and academic
organizations, has four focus areas: preclinical therapeutics, clinical trial therapeutics, clinical
trial capacity, and vaccines. According to NIH, the preclinical therapeutics working group is
standardizing and sharing preclinical evaluation methods. These federal agencies are also
participating in Operation Warp Speed, a public-private partnership to facilitate the development,
manufacturing, and distribution of COVID-19 countermeasures, including vaccines, according to
HHS. The department reported that ﬁnancial resources for this eﬀort include CARES Act and other
supplemental funding.
As of June 1, 2020, there were at least 14 federally funded clinical trials related to COVID-19 vaccine
or therapeutics at various stages, according to NIH’s ClinicalTrials.gov.232 Of these, at least two
were trials of vaccine candidates and at least 12 were trials related to therapeutics. Currently,
drugs or vaccines approved or developed for other purposes, as well as other investigational
therapeutic agents, are being studied for the treatment of COVID-19. Additional planned and
ongoing federally funded trials have not yet been posted on the ClinicalTrials.gov website.
Examples of HHS agencies’ activities include the following:
• BARDA has expanded existing partnerships and established new ones to develop vaccines,
therapeutics, and other medical countermeasures to protect against COVID-19. As of June 1,
2020, BARDA reported funding development activities for ﬁve vaccines and eight therapeutics.
For example, BARDA awarded more than $430 million to one company for late-stage
development of an investigational vaccine the company developed with NIH, with the ultimate
goal of FDA licensure. The agency also awarded about $456 million to support nonclinical
studies and a phase 1 clinical trial for another COVID-19 investigational vaccine using the same
vaccine platform as an investigational Ebola vaccine.233 This clinical trial is set to begin no later
than fall 2020, with the goal of making COVID-19 vaccine available for emergency use in the
United States in early 2021. BARDA is also working with a manufacturer to accelerate advanced
clinical trials and large-scale manufacturing to produce up to 300 million vaccine doses for the
United States.
• FDA is reviewing regulatory submissions related to vaccines, therapeutics, and other medical
countermeasures and is conducting work, such as scientiﬁc and technical evaluation of data,
related to emergency use authorizations for some of those products. Under an emergency use
authorization, FDA may allow therapeutics and vaccines to be used to respond to a declared
232According to NIH, ClinicalTrials.gov provides the best source for up-to-date information on clinical trials and studies
related to COVID-19 in the United States, as the website is updated regularly, and the number of clinical trials related to
COVID-19 is increasing. The website was created to establish a registry of clinical trials information for both federally and
privately funded trials conducted under investigational new drug applications to test the eﬀectiveness of experimental
drugs for serious or life-threatening diseases or conditions.
233Clinical trials are conducted in phases, with phase 1 focused on the safety of the drug. Phase 1 is usually
conducted with a small number of healthy volunteers, and the goal is to determine the drug’s most frequent and
serious adverse events and, often, how the drug is broken down and excreted by the body.
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emergency such as COVID-19 without formal FDA approval, as long as certain conditions are
met and the scientiﬁc evidence suggests the beneﬁts outweigh the potential risks.
According to HHS, FDA’s activities are new or are continuations of activities started under
funding from the Coronavirus Preparedness and Response Supplemental Appropriations
Act, 2020. For therapeutics, FDA has created a special emergency program, the Coronavirus
Treatment Acceleration Program, to move new treatments to patients as quickly as possible,
while at the same time ﬁnding out whether they are helpful or harmful. As of June 1, 2020, FDA
reported 186 active trials of therapeutic agents and another 467 development programs for
therapeutic agents in the planning stages. FDA has also granted emergency use authorization
for one therapeutic to treat COVID-19 as of June 15, 2020.234 The agency has used its authority
to make experimental COVID-19 treatments available through expanded access to patients not
eligible to participate in clinical trials. FDA has not granted emergency use authorization of a
COVID-19 vaccine to date. Under an emergency use authorization, FDA may allow the use of
unapproved therapeutics and vaccines (or unapproved uses of approved products) to respond
to a declared emergency such as the COVID-19 pandemic provided that certain criteria are
met. These include an FDA determination that, based on the available scientiﬁc evidence, the
product’s known and potential beneﬁts outweigh its known and potential risks.
• NIH is expanding upon earlier research on other coronaviruses—for example, severe acute
respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS)—to inform the
development of vaccine and therapeutic candidates for COVID-19. NIH is also conducting and
supporting research on a number of vaccine candidates in various stages of development
and several studies of possible therapeutics for COVID-19, including a number of preclinical
activities. For example, NIH is providing preclinical services such as research to assess diﬀerent
animal models that replicate COVID-19 disease. NIH is also studying whether convalescent
plasma—blood plasma from individuals who have recovered from COVID-19—can help reduce
the progression of the disease in patients with mild symptoms, according to HHS. In addition,
NIH posted on its website treatment guidelines for COVID-19, based on scientiﬁc evidence and
expert opinion, that it plans to update frequently as additional data and information become
available.
DOD and VA are working with HHS agencies and have ongoing activities related to vaccines and
therapeutics for COVID-19. Examples of activities include the following:
• DOD is funding and conducting research on candidates for vaccines and therapeutics. For
example, DOD is conducting research on diﬀerent therapeutic candidates, including a study on
the investigational drug remdesivir.
• VA is conducting and providing sites for clinical trials for vaccine and therapeutic candidates.
For example, VA is conducting a clinical trial to determine if a treatment approved for patients
with prostate cancer (degarelix) is beneﬁcial in treating veterans who have been hospitalized
234On March 28, 2020, FDA granted emergency use authorization for hydroxychloroquine sulfate and chloroquine
phosphate for treatment of certain hospitalized patients. However, on June 15, 2020, FDA announced that it was
revoking the emergency use authorization for these two therapeutics because the agency determined they were
unlikely to be eﬀective treatments for COVID-19 and that the known and potential beneﬁts of these products do not
outweigh their known and potential risks, which include serious cardiac adverse events.
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with COVID-19. VA facilities are also serving as sites for an NIH-led clinical trial studying
remdesivir as a treatment for COVID-19.
GAO Methodology and Agency Comments
To conduct this work, we reviewed the most recent HHS, DOD, and VA information on vaccine and
therapeutic development eﬀorts as of June 2020, including clinical trial information from NIH’s
clinical trial website, ClinicalTrials.gov, (accessed June 1, 2020); relevant federal laws; and agency
documents (e.g., agency strategic plan for COVID-19 research). The information in this enclosure
highlights examples of the types of development activities conducted or supported by these
agencies; it is not an exhaustive list.
We provided a draft of this report to HHS, DOD, VA, and the Oﬃce of Management and Budget
(OMB) for review and comment. HHS and OMB provided technical comments on this enclosure,
which we incorporated as appropriate. DOD and VA did not provide comments on this enclosure.
Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov;
Alyssa M. Hundrup, (202) 512-7114, hundrupa@gao.gov
Related GAO Products
Science & Tech Spotlight: COVID-19 Vaccine Development. GAO-20-583SP. Washington, D.C.: May 26,
2020.
Inﬂuenza: Progress Made in Responding to Seasonal and Pandemic Outbreaks. GAO-13-374T.
Washington, D.C.: February 13, 2013.
Inﬂuenza Vaccine: Federal Investments in Alternative Technologies and Challenges to Development and
Licensure. GAO-11-435. Washington, D.C.: June 27, 2011.
Inﬂuenza Pandemic: Lessons from the H1N1 Pandemic Should Be Incorporated into Future Planning.
GAO-11-632. Washington, D.C.: June 27, 2011.
Inﬂuenza Pandemic: Applying Lessons Learned from the 2004–05 Inﬂuenza Vaccine Shortage.
GAO-06-221T. Washington, D.C.: November 4, 2005.
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Medicaid Financing, Waivers, and Flexibilities
Federal assistance related to COVID-19 provided increased federal Medicaid funding for states
and territories to support the costs of their Medicaid programs, including COVID-19 testing and
treatment costs. The Centers for Medicare & Medicaid Services has also approved waivers and
other ﬂexibilities to help state Medicaid programs respond to the COVID-19 pandemic.
Entities involved: Centers for Medicare & Medicaid Services, Department of Health and Human
Services
Key Considerations and Future GAO Work
We designated Medicaid a high-risk program in 2003 because the size, growth, and diversity of
the program present oversight challenges for states, territories, and the federal government.
These factors, among others, may contribute to the risk of inadequate oversight and reporting on
Medicaid’s COVID-19 funds to states and territories.
• Public reporting of COVID-19 Medicaid spending. The CARES Act requires each agency
administering COVID-19 funds to report monthly to the Oﬃce of Management and Budget
(OMB) and others on the use of those funds. OMB guidance speciﬁes that agencies should
submit spending information for COVID-19 funds to USAspending.gov for public reporting.235
According to oﬃcials from the Centers for Medicare & Medicaid Services (CMS), CMS will not
separately report the COVID-19 components of Medicaid payments through USAspending.gov.
Instead, CMS oﬃcials told us they are coordinating with OMB and are considering ways to
report Medicaid COVID-19 funding publicly through sites other than USAspending.gov.
Exempting large amounts of spending from the standard COVID-19 reporting reduces the
usefulness of that information to the Congress and the public. It will be important for CMS
to report the data in a way that allows Congress and the public to quickly and easily ﬁnd,
understand, and analyze Medicaid spending, including enabling it to be combined with the
USAspending.gov data. We will continue to follow developments related to CMS’s public
reporting, including the timing of that reporting, in future updates.
• Potential for duplicate or overlapping payments. COVID-19 funds are available through
multiple agencies within the Department of Health and Human Services (HHS), as well
as agencies outside of HHS, such as the Small Business Administration. Absent proper
communication and tracking of payments across these diﬀerent entities, there is a risk for
duplicate or overlapping payments.
For example, CMS has authorized at least 35 states to make retainer payments to support
home- and community-based service providers (such as adult day-care centers) to help
ensure their availability once the public health emergency ends. If retainer payments are
made to the centers, as well as to the individuals providing the services (such as personal
235OMB memorandum M-20-21 notes that some provisions may be excluded from this requirement, and in these
instances, agencies should work with their OMB representative to identify an alternative reporting approach to
provide transparency on how the funds are spent.
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care attendants), these payments could duplicate ﬁnancial assistance provided through
unemployment beneﬁts or small business loans. We have work underway looking at eﬀorts
to monitor use of funding activities, including addressing risks and challenges—such as the
potential for duplication—associated with these activities.
• Potential for improper payments. In 2018, over one-third of the $36 billion of estimated
Medicaid improper payments were related to states’ noncompliance with provider screening
and enrollment requirements. States maintain their primary responsibility for screening
providers to ensure that they have not been convicted of program-related fraud and abuse
and are not operating with suspended or revoked medical licenses, among other things.
States may seek CMS approval to waive certain other provider screening and enrollment
requirements during the pandemic, which may increase risks of improper payments and
improper medical care. CMS and states will need to work together to consider how to best
track and identify ineligible providers during this pandemic.
• Ensuring state spending is appropriately matched with federal funds. States and
territories share the costs of Medicaid with the federal government. The federal government
matches states’ spending for Medicaid services, and that match can vary across diﬀerent
groups of individuals. States will need to adjust their information systems to account for the
temporary increase in federal matching funds authorized by the Families First Coronavirus
Response Act (FFCRA), including the optional 100 percent federal matching funds for
uninsured individuals who receive COVID-19 testing or related services. Federal oversight will
be important to help ensure that these diﬀerent matching rates are appropriately applied.
CMS is modifying the system used by states to report quarterly Medicaid expenditures.
This includes labeling expenditures matched at the increased federal matching rate and
expenditures for COVID-19 testing or related services with a 100 percent federal matching
rate. CMS oﬃcials also reported they are modifying oversight to include reviews of these
expenditures reported at higher or increased federal matching rates speciﬁc to the COVID-19
relief laws.
In August 2018, we found that CMS had not consistently reviewed expenditures with higher
matching rates when reviewing states’ use of federal matching funds. While CMS has taken
some steps to improve its oversight, we have outstanding recommendations aimed at further
actions, including clarifying guidance for reviewers to better ensure appropriate matching
rates are used. Taking action to more systematically review states’ use of diﬀerent matching
rates could help ensure that COVID-19 funds are being used appropriately.
Background
Medicaid is one of the nation’s largest sources of funding for health care services for low-
income and medically needy individuals, covering an estimated 76 million people and spending
approximately $667 billion in ﬁscal year 2019. Medicaid oﬀers a wide range of beneﬁts, including
inpatient and outpatient hospital care, physician services, laboratory testing, and x-ray services.
Medicaid is also the largest source of coverage for long-term care services and supports, which
provide assistance for low-income individuals who are elderly or disabled. These services totaled
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over $167 billion in 2016 and were provided in institutional facilities, such as nursing homes and
intermediate care facilities, or through home- and community-based care.236
States and territories administer their Medicaid programs within broad federal rules and according
to state plans approved by CMS, which oversees Medicaid at the federal level. The federal
government matches states’ spending for Medicaid services according to a statutory formula
known as the Federal Medical Assistance Percentage (FMAP).237
Additionally, states may request approval from CMS to waive certain Medicaid requirements. If
approved, such waivers can allow states to limit the availability of services geographically, to target
services to speciﬁc populations or conditions, or to limit the number of persons served—actions
not generally allowed for state plan services.
The Families First Coronavirus Response Act (FFCRA) made a few key changes to the Medicaid
program.238 These changes increase federal funding available to states and territories to help
them respond to the COVID-19 pandemic.
• FMAP increase. FFCRA provides for a temporary 6.2 percentage point increase in the
FMAP—retroactive to January 1, 2020—for states that meet speciﬁc requirements. The
Congressional Budget Oﬃce (CBO) estimates spending on these increases to be approximately
$50 billion, occurring over ﬁscal years 2020–2021.239
• Diagnostic testing for the uninsured. FFCRA creates an option for states to provide Medicaid
coverage of COVID-19 diagnostic testing and related services to uninsured individuals. This
coverage, if elected by the state, is eligible for a 100 percent federal match. CBO estimates that
federal expenditures on this provision will total approximately $2 billion in 2020 and 2021.
Overview of Key Issues
Medicaid spending. As of May 31, 2020, COVID-19-related federal Medicaid expenditures totaled
approximately $7.2 billion, or 7 percent of total federal spending on Medicaid services for this
236According to CMS, services for home- and community-based care totaled approximately $94 billion in ﬁscal year
2016.
237The FMAP is calculated based on each state’s per capita income relative to national per capita income. For the District
of Columbia and U.S. territories, the FMAP is set by statute regardless of their per capita incomes. Additionally, federal
law speciﬁes a speciﬁc maximum amount, or allotment, for federal contributions to Medicaid spending in U.S. territories,
in contrast to the states and the District of Columbia, for which federal Medicaid spending is open-ended.
238Pub. L. No. 116-127, 134 Stat. 178 (2020).
239CBO’s estimate does not account for additional Medicaid costs associated with evaluation and treatment
of COVID-19, nor any increased Medicaid enrollment resulting from the economic disruption brought about by
COVID-19. CBO notes that actual federal spending on Medicaid is likely to be greater.
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time period.240 The table below provides a breakout by state and territory of the federal Medicaid
spending for COVID-19-related and total Medicaid services.241
240The most recent available payment information is for the second quarter of ﬁscal year 2020 (January 1, 2020,
through March 31, 2020). States can report payments and adjustments to payments up to 2 years after a quarter ends.
241As of May 31, 2020, CMS had not provided states with guidance or training for reporting federal spending increases
as a result of the FMAP increase provided under FFCRA. The agency plans to provide guidance and training by mid-June.
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Federal Medicaid COVID-19 and Total Expenditures, by State and Territory
State or territory
COVID-19-related federal Medicaid
expenditures a
($ in millions)
Total federal Medicaid services
expenditures in 2020 a
($ in millions)
Alabama
98
1,248
Alaska
18
389
Arizona
145
2,901
Arkansas
79
1,365
California
538
14,639
Colorado
126
1,475
Connecticut
105
1.270
Delaware
33
426
District of Columbia
41
612
Florida
428
4,423
Georgia
166
1,941
Hawaii
26
352
Idaho
33
468
Illinois
279
3,741
Indiana
190
3,038
Iowa
68
972
Kansas
58
612
Kentucky
125
2,457
Louisiana
150
2,568
Maine
45
567
Maryland
1
10
Massachusetts
267
3,138
Michigan
212
3,286
Minnesota
6
73
Mississippi
88
1,185
Missouri
156
1,879
Montana
16
330
Nebraska
35
340
Nevada
43
746
New Hampshire
22
286
New Jersey
197
2,480
New Mexico
66
1,385
New York
1,088
11,851
North Carolina
180
2,111
North Dakota
17
210
Ohio
323
4,572
Oklahoma
82
951
Oregonb
less than $1millionb
1,899
Pennsylvania
400
4,520
Rhode Island
31
434
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South Carolina
103
1,260
South Dakota
14
160
Tennessee
176
1,958
Texas
632
7,280
Utah
43
614
Vermont
24
294
Virginiac
--
2
Washingtonc
--
--
West Virginia
51
865
Wisconsin
245
1,791
Wyoming
8
96
States total d
7,195
101,468
American Samoac
--
--
Guam
1
25
Northern Mariana Islands
1
9
Puerto Rico
21
550
Virgin Islands
1
20
Territories total d
24
604
Legend: -- = not applicable
Source: GAO analysis of data from the Centers for Medicare & Medicaid Services. | GAO-20-625
Note: Federal Medicaid payments were available for the second quarter of ﬁscal year 2020—January 1, 2020, through March 31,
2020—and do not include expenses for program administration. Five states (Delaware, Maryland, Massachusetts, Minnesota,
and Nevada) and two territories (Puerto Rico and Virgin Islands) reported uncertiﬁed state expenditures. Certiﬁed state
expenditures have been reviewed by states and are certiﬁed as being Medicaid allowable expenditures. Both certiﬁed and
uncertiﬁed state expenditures are preliminary, as they are subject to further review and are likely to be updated as states
continue to report their expenditures and receive federal matching funds. States can report payments and adjustments to
payments up to 2 years after a quarter ends.
aExpenditures from January 1, 2020, through March 31, 2020.
bOregon reported $29,707 in COVID-19 expenditures.
cVirginia, Washington, and America Samoa had no reported COVID-19 expenditures.
dTotals may not sum exactly due to rounding.
State waivers and ﬂexibilities. In addition to its normal waiver authority, CMS has additional
authorities in certain emergency circumstances to waive Medicaid requirements to help ensure
the availability of care. As of May 31, 2020, CMS had approved 200 diﬀerent waivers to provide
states with ﬂexibility to respond to the pandemic. Common types of ﬂexibilities that states sought
and CMS approved are shown in the table below.
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Common Types of State Flexibilities Approved by Centers for Medicare & Medicaid Services, March 16, 2020, to
May 31, 2020
Purpose of flexibility
Number of specific flexibilities approved
Maintain beneﬁciary eligibility for services
• Forty-three states suspended fee-for-service prior
authorizations, which are normally required before
beneﬁciaries can obtain certain services.a
• Forty-two states extended the dates for reassessing
and reevaluating beneﬁciaries’ needs, which are
normally required for beneﬁciaries to retain eligibility
for some home- and community-based services.b
Expand beneﬁciary eligibility
• Forty-four states permitted virtual evaluations,
assessments, and person-centered planning normally
conducted in person.b
• Sixteen states expanded coverage to uninsured
individuals for COVID-19 testing.c
Remove obstacles to beneﬁciary access to care
• Forty-four states allowed telehealth to continue to
provide some services that were previously provided in
person.c
• Ten states were approved to allow early reﬁlls of
certain medications to avoid interruption in care.c
Increase the availability of providers
• Fifty-one states waived some requirements to allow
licensed out-of-state providers to enroll in their
programs—to provide needed services without being
licensed in the state or enrolled in another state
Medicaid program or Medicare—to maintain provider
capacity.a,d
• Eleven states authorized payments changed or added
for telehealth services.c
Source: GAO analysis of Centers for Medicare & Medicaid Services approval documentation for states and District of Columbia. | GAO-20-625
aStates received approval under section 1135 of the Social Security Act, which authorizes the Secretary of Health and Human
Services to temporarily waive or modify certain federal health care program requirements, including Medicaid requirements, to
ensure that suﬃcient health care items and services are available to meet the needs of enrollees during an emergency.
bStates received approval to make changes to their section 1915(c) home- and community-based services waivers under an
Appendix K amendment in order to respond to the emergency.
cStates received approval to revise policies in their Medicaid state plan related to eligibility, enrollment, beneﬁts, premiums and
cost sharing, and payments. To make these changes, states must submit a State Plan Amendment to the Centers for Medicare
& Medicaid Services for approval.
dStates approved to temporarily enroll licensed out-of-state providers must follow certain requirements, which include
screening providers to ensure they are licensed in another state and are not on the Department of Health and Human Services
Oﬃce of the Inspector General’s list of providers excluded from participating in the Medicaid or Medicare program.
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GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws, the most recently available CMS data, CMS
Medicaid guidance, OMB guidance, CBO spending estimates, and our prior work related to
Medicaid. We also discussed CBO estimates with CBO oﬃcials. We discussed CMS’s Medicaid
expenditure reporting system with CMS oﬃcials and conducted data reliability checks on state-
reported expenditure data.
We provided a draft of this report to HHS and OMB for review and comment. HHS provided
technical comments on this enclosure, which we incorporated as appropriate. OMB did not
provide comments on this enclosure.
Contact information: Jeﬀ Arkin, (202) 512-6806, arkinj@gao.gov; Carolyn L. Yocom, (202)
512-7114, yocomc@gao.gov
Related GAO Product
Medicaid: CMS Needs to Better Target Risks to Improve Oversight of Expenditures. GAO-18-564.
Washington, D.C.: August 6, 2018.
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Medicare Waivers
In response to COVID-19, the Centers for Medicare & Medicaid Services expanded availability of
Medicare services through widespread use of program waivers, including for telehealth services.
Careful monitoring and oversight are required to prevent potential fraud, waste, and abuse that
can arise from these new waivers.
Entities involved: Centers for Medicare & Medicaid Services, Department of Health and Human
Services
Key Considerations and Future GAO Work
The Medicare program has longstanding requirements and safeguards to help ensure that
beneﬁciaries receive only medically necessary services and quality care. Despite these safeguards,
our past work has shown that Medicare’s improper payments—payments that were either
incorrect or should not have been made at all—reached an estimated $46 billion in ﬁscal year
2019. As the Centers for Medicare & Medicaid Services (CMS) approves waivers and ﬂexibilities
to expand the availability of Medicare services during the COVID-19 pandemic, it will need to
carefully monitor such services to identify potential fraud, waste, and abuse given the temporary
suspension of some of these program safeguards.
Telehealth services can enable beneﬁciaries to receive and providers to furnish services in a safe
environment, but they also raise several challenges. For example, the transmission of patients’
medical information over potentially unsecure systems such as cell phones raises challenges
involving patient privacy and cybersecurity. Moreover, telehealth services may not alleviate all
access concerns since many beneﬁciaries lack the technical capability to utilize some of these
services.
Whether CMS will have complete and accurate data to track utilization and spending on services
furnished under the new ﬂexibilities and waivers is not clear. Speciﬁcally, while CMS is requiring
the use of certain identiﬁers to be included on claims for these services, the extent to which
providers will actually be using the identiﬁers is not clear.
GAO plans to conduct additional work on the processes CMS used to determine which waivers to
issue and their eﬀects on Medicare providers and beneﬁciaries.
Background
Section 1135 of the Social Security Act authorizes the Secretary of Health and Human Services to
temporarily waive or modify certain federal health care requirements, including in the Medicare
program, to increase access to medical services when both a public health emergency and a
disaster or emergency have been declared. The Administrator of CMS typically implements section
1135 waivers, which apply only to federal requirements. CMS was authorized to begin issuing
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section 1135 waivers on March 13, 2020, as a result of the Secretary’s declaration of a public
health emergency in response to COVID-19 on January 31, 2020, and the President’s declaration
of a disaster or emergency under both the Robert T. Staﬀord Act Disaster Relief and Emergency
Assistance Act and the National Emergencies Act on March 13, 2020.
The 1135 waivers are generally retroactive to March 1, 2020, and will end no later than the
termination of one of the underlying emergencies or 60 days from the date the waiver is
published, unless the Secretary extends it for additional periods of up to 60 days. For the purposes
of this enclosure, we refer to the duration of the waiver as the “emergency period.”
There are two types of Medicare 1135 waivers:
• Blanket waivers apply automatically to all applicable providers and suppliers in the
emergency area, which encompasses the entire United States in the case of the COVID-19
pandemic. Providers and suppliers do not need to apply individually or notify CMS that they
are acting upon the waiver. They are required to comply with normal rules and regulations as
soon as it is feasible to do so.
• Provider/supplier individual waivers may be issued upon application for states, providers,
or suppliers only if an existing blanket waiver is not suﬃcient.
In response to the pandemic, Congress also enacted legislation to expand the Secretary’s
authority to waive certain Medicare requirements. The Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020, amends section 1135 of the Social Security Act to allow
the Secretary to waive certain Medicare telehealth payment requirements during the emergency
period.242
The CARES Act further expands the Secretary’s authority to approve telehealth ﬂexibilities under
section 1135 waivers as well as providing other ﬂexibilities. For example:
• Section 3705 authorizes the Secretary of Health and Human Services to temporarily waive the
requirement for face-to-face visits between home dialysis patients and physicians during the
emergency period.
• Section 3706 allows physicians and nurse practitioners to conduct face-to-face visits required
to recertify patients’ ongoing eligibility for hospice care via telehealth during the emergency
period.
• Section 3708 allows nurse practitioners, clinical nurse specialists, and physician assistants to
order home health services for Medicare beneﬁciaries in accordance with state law.243
242Pub. L. No. 116-123, Div. B, § 102, 134 Stat. 146, 156-57 (2020).
243Pub. L. No. 116-136, §§ 3705, 3706, 3708, 134 Stat. 281, 418-19. CMS issued an interim ﬁnal rule to implement
section 3708. See 85 Fed. Reg. 27,550 27,599 (May 8, 2020). The changes under this provision are permanent and
not limited to the emergency period.
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Overview of Key Issues
As of May 15, 2020, CMS had issued over 200 blanket waivers after receiving thousands of
individual requests. The blanket waivers cover ﬂexibilities for hospitals, skilled nursing facilities,
home health agencies, and hospices, among others. They also cover provider licensing and
enrollment, enforcement activities, and documentation requirements. Providers may use
ﬂexibilities provided under the blanket waivers to the extent they are consistent with applicable
state laws, state emergency preparedness plans, and state scope of practice rules.
In addition to waivers of statutory requirements, CMS has also used its authority to waive
or modify its policies or regulations in order to allow providers greater ﬂexibility in treating
beneﬁciaries during the emergency period.
The following are examples of changes that CMS has approved, including under blanket
waivers.244
Expansion of telehealth services. Typically in Medicare, telehealth services may only be
furnished under limited circumstances—for example, in certain (largely rural) areas, to patients
located in certain medical facilities. Changes that CMS has approved include the following:
• Telehealth services may be furnished to patients in any part of the country (including nonrural
areas) and at any location, including patient homes.
• Telehealth services may be furnished to both new and established patients.
• Additional nonphysicians (including physical/occupational therapists and speech language
pathologists) may also furnish telehealth services.
• More than 130 new service types were added to the approximately 100 existing telehealth
service types, and frequency limits on several types of services were lifted.
Increased capacity. CMS approved a number of ﬂexibilities that expand the capacity of hospitals
and health care systems to treat COVID-19 patients in nontraditional sites. For example:
• Expansion of hospital capacity. Hospitals typically must meet certain requirements to
participate in Medicare, including providing services within their own buildings. Changes that
CMS has approved include the following:
•
Hospitals may provide patient care at nonhospital buildings or spaces provided that
the location is approved by the state.
244For more information on all COVID-19 related waivers approved by CMS, see https://www.cms.gov/about-cms/
emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers (downloaded on 5/15/20).
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•
Rural Health Clinics and other health centers may expand service locations without the
new locations being independently approved by Medicare.
• Emergency Medical Treatment and Active Labor Act (EMTALA). By law, any Medicare-participating
hospital with a dedicated emergency department must provide a medical screening
examination and, if necessary, stabilizing treatment to any individual who arrives in its
emergency department for examination or treatment, regardless of the ability to pay for the
services.
•
CMS is allowing hospitals to set up alternative screening sites on campus to perform
medical screening examinations as a triage function, as well as allowing hospitals to
redirect, relocate, and screen individuals at a location other than the hospital campus
for the medical screening examination in accordance with a state emergency or
pandemic preparedness plan.
• Physician Self-Referral Law (Stark Law). Federal law generally prohibits a physician from
making referrals for certain health care services to an entity with which the physician (or an
immediate family member) has a ﬁnancial relationship, unless an exception applies. Entities
that submit claims for services furnished pursuant to a prohibited referral are subject to
ﬁnancial sanctions.
•
CMS issued blanket waivers of sanctions for certain referrals that would otherwise
violate the Stark Law as long as they are solely for COVID-19 purposes. For example,
a physician may refer, without penalty of sanctions, a Medicare beneﬁciary to a home
health agency owned by the physician’s immediate family member that does not meet
the requirements for the rural provider exception.
Workforce expansion. CMS is making it easier for physicians and other practitioners to enroll and
provide services in Medicare. Once the public health emergency is lifted, providers will be required
to come into full compliance with all screening and enrollment requirements.
• Expedited process for provider enrollment in Medicare. Changes that CMS has approved include
the following:
•
Expediting any pending or new applications and waiving criminal background checks
associated with ﬁngerprint-based criminal background checks.
•
Allowing physicians whose privileges to practice at a hospital will expire to continue
practicing at the hospital and allowing new physicians to begin practicing before full
approval.
• Use of nonphysicians. Federal regulations require that certain services can only be furnished
by physicians and may not be delegated to nonphysicians such as nurse practitioners or
physician assistants. Changes that CMS has approved include the following:
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•
Physicians in skilled nursing facilities may delegate tasks to nonphysicians, although
the physician must continue to provide supervision.
• In-person or on-site visits. Federal regulations require providers to conduct certain in-person or
on-site visits for patients in certain settings such as skilled nursing facilities. Changes that CMS
has approved include the following:
•
Allowing in-person visits for skilled nursing facility patients to be conducted via
telehealth, as appropriate.
Reducing administrative burdens. CMS is temporarily eliminating certain reporting and other
paperwork requirements that providers must complete in order to be paid by Medicare. For
example, CMS is delaying scheduled program audits that may require additional information from
providers, such as additional documentation to support the billing of services.
GAO Methodology and Agency Comments
To conduct this work we reviewed agency materials, applicable federal laws, and agency
guidance, and obtained written answers to questions from CMS oﬃcials. HHS and the Oﬃce of
Management and Budget provided technical comments on this enclosure, which we incorporated
as appropriate.
Contact information: Jessica Farb, (202) 512-6991, farbj@gao.gov
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Indian Health Service
Indian Health Service received over $1 billion in supplemental funds to prevent, prepare, and
respond.
Entities involved: Indian Health Service, Department of Health and Human Services
Key Considerations and Future GAO Work
We plan to monitor the Indian Health Service’s (IHS) use of CARES Act-related funds going forward
and the agency’s response and recovery eﬀorts. Separately, we also plan to examine disparities in
health outcomes related to COVID-19 among diﬀerent populations, including the American Indian
and Alaska Native (AI/AN) population, and the behavioral health impacts of COVID-19.
Background
IHS, an agency within the Department of Health and Human Services (HHS), is charged with
providing health care services to over 2 million AI/AN people who are members or descendants of
federally recognized tribes.245 IHS provides health care services either directly through a system
of facilities such as hospitals, health clinics, and health stations that are federally operated by IHS,
or indirectly through facilities that are operated by tribes or others.246 In addition, IHS awards
contracts and grants to Urban Indian Organizations that provide health care to AI/AN people
residing in urban centers.
The AI/AN people tend to experience health disparities when compared to other Americans.
As of October 2019, AI/AN people had a life expectancy that was 5.5 years less than all other
races or ethnicities in the United States and died at higher rates than other Americans from
many preventable causes, including diabetes mellitus and chronic lower respiratory diseases.
Such health disparities underscore the importance of access to quality health care, particularly
given that individuals with these health conditions are at greater risk of developing serious
complications from COVID-19. As of May 31, 2020, IHS had reported 11,220 conﬁrmed cases of
COVID-19, with the Navajo Nation experiencing more cases per capita than most U.S. states.247
245Federally recognized tribes have a government-to-government relationship with the United States and are eligible to
receive certain protections, services, and beneﬁts by virtue of their status as Indian tribes. The Secretary of the Interior
publishes annually in the Federal Register a list of all tribal entities that the Secretary recognizes as Indian tribes. As of
January 30, 2020, there were 574 federally recognized tribes. See 85 Fed. Reg. 5462 (Jan. 30, 2020).
246As of February 2019, IHS, tribes, and tribal organizations operated 46 hospitals and 353 health centers as well as a
range of other health facilities—of which 24 hospitals and 50 health centers were federally operated IHS facilities. IHS
also enters into agreements with 41 Urban Indian Organizations.
247For more information on the number of reported COVID-19 cases, see https://www.ihs.gov/coronavirus, accessed
May 21, 2020.
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Congress provided IHS supplemental funding for its COVID-19 eﬀorts in two of the four enacted
COVID-19 relief acts, including $64 million in the Families First Coronavirus Response Act and
$1.032 billion in the CARES Act.248 The table below provides more information on the sources of
these funds and how IHS allocated them.
248In addition to funds Congress speciﬁcally appropriated for IHS, HHS allocated supplemental appropriations to IHS,
tribal, and Urban Indian facilities. For example, HHS allocated $500 million to IHS, tribal, and Urban Indian facilities
from the Provider Relief Fund, for which Congress provided funding to reimburse eligible health care providers for
health care related expenses and lost revenues attributable to coronavirus. See, e.g., Pub. L. No. 116-136, div. B, tit.
VIII, 134 Stat. 281, 563 (2020). HHS also allocated $70 million to IHS—$30 million of which went to IHS-operated health
programs and $40 million of which went to IHS National Supply Service Center—from the Coronavirus Preparedness
and Response Supplemental Appropriations Act, 2020. In addition, Congress appropriated funding speciﬁcally for tribes,
tribal organizations, Urban Indian Health Programs, and health care service providers to tribes, including $750 million for
testing in the Paycheck Protection Program and Health Care Enhancement Act. Pub. L. No. 116-139, div. B, tit. I, 134 Stat.
620, 624 (2020).
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Allocation of Supplemental Funding Provided to the Indian Health Service (IHS) to Address COVID-19
Funding source
Purpose
Amount ($)
Families First Coronavirus Response
Act
COVID-19 testing
64 million
IHS, tribal, and Urban Indian
Organization COVID-19 prevention and
response activities
515 million
Purchased/referred care
155 million
Expansion of telehealth
95 million
Medical equipment needs
74 million
Electronic health record stabilization
and support
65 million
Facilities maintenance and
improvement
41 million
Unanticipated needs
30 million
Support Tribal Epidemiology Centers
and national surveillance coordination
activities at IHS headquarters
26 million
Public health support and federal staﬀ
support
16 million
Sanitation and potable water
10 million
CARES Act
COVID-19 test kits and materials
5 million
Total a
1.096 billion
Source: GAO review of federal laws and agency documents. | GAO-20-625
aThe total does not include allocations by the Department of Health and Human Services (HHS) to IHS, tribal, or Urban Indian
Health Programs. For example, it does not include $70 million HHS allocated to IHS—$30 million of which went to IHS-operated
health programs and $40 million of which went to IHS National Supply Service Center—from the Coronavirus Preparedness and
Response Supplemental Appropriations Act, 2020. It also does not include $500 million HHS allocated to IHS, tribal, and Urban
Indian facilities from the Provider Relief Fund, for which Congress provided funding to reimburse eligible health care providers
for health care related expenses and lost revenues attributable to coronavirus. See, e.g., Pub. L. No. 116-136, div. B, tit. VIII,
134 Stat. 281, 563 (2020). It also does not include appropriations speciﬁc to tribes, tribal organizations, or Urban Indian Health
Programs. For example, it does not include $750 million Congress appropriated speciﬁcally for tribes, tribal organizations,
Urban Indian Health Programs, and health care service providers to tribes for testing in the Paycheck Protection Program and
Health Care Enhancement Act. Pub. L. No. 116-139, div. B, tit. I, 134 Stat. 620, 624 (2020).
Overview of Key Issues
As of April 23, 2020, IHS had allocated all $1.096 billion in supplemental funding to support IHS-
identiﬁed priorities related to COVID-19, including prevention, detection, treatment, and recovery.
Of this amount, $515 million was allocated to federal, tribal, and Urban Indian programs for
prevention and response activities.249
249According to IHS oﬃcials, they consulted with tribal and Urban Indian Organization leaders when making decisions to
ensure that funding would meet the needs of their populations. IHS oﬃcials agreed to allocate resources using existing
distribution methodologies, distribute resources to all without any set-asides for hotspots, and allow maximum ﬂexibility
to allow each tribal and Urban Indian community to respond to its unique needs.
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Examples of additional eﬀorts supported by the supplemental funds include the following:
• Access to testing. IHS allocated a total of $69 million in supplemental funds to support
testing. This included $64 million from the Families First Coronavirus Response Act that was
used to purchase rapid point-of-care tests for IHS and tribal health facilities ($61 million) and
Urban Indian Organizations ($3 million). IHS also reported that it allocated an additional $5
million from the CARES Act for testing. As of April 13, 2020, IHS reported that it had received
250 rapid testing machines and distributed them to select locations to ensure remote and
rural populations are being reached. According to IHS, as of April 27, 2020, the agency had
expanded testing capacity from 98 to 298 sites primarily due to the distribution of these
machines.
• Telehealth services. IHS allocated $95 million to expanding telehealth services to help ensure
AI/AN people can access health care they need from home without putting themselves or
others at risk.250 IHS reported that it conducted a pilot project with six IHS sites using a secure
meeting system already in place in certain locations for behavioral health services. After
addressing lessons learned, IHS began training employees across the agency on how to use its
system.
• Public health support eﬀorts. According to IHS oﬃcials, they used funds to support various
public health eﬀorts. For example, IHS developed a reporting system that provides information
on available hospital beds, intensive care unit beds, tests, ventilators, and personal protective
equipment. IHS oﬃcials told us they will be using funds from the $26 million allocated for
Tribal Epidemiology Centers and to expand national surveillance coordination activities. In
addition, IHS oﬃcials told us they switched to a web-based reporting system to make it easier
for tribes and Urban Indian Organizations to report and tabulate data. IHS oﬃcials told us that
federal facilities are required to report data and tribes and Urban Indian Organizations can
do so voluntarily. According to oﬃcials, IHS is receiving more reports from tribes and Urban
Indian Organizations than it was prior to this change.
IHS oﬃcials described several challenges as they work to implement these eﬀorts. For example,
IHS oﬃcials noted they faced challenges obtaining personal protective equipment and material
for IHS, tribal organizations, and Urban Indian Organizations.251 In another example, IHS reported
that the increased use of telehealth services is pushing or exceeding the limits of broadband
availability in remote and rural areas. Oﬃcials told us they are assessing bandwidth at IHS facilities
to identify ways to address issues. IHS oﬃcials also reported that the agency is seeing staﬃng
shortages associated with personnel who have health conditions that put them at high-risk of
250Oﬃcials noted that regulatory ﬂexibilities from the Centers for Medicare & Medicaid Services, along with
information from the Oﬃce of the Inspector General, regarding billing visits that would normally be required in
person and the enforcement of certain Health Insurance Portability and Accountability Act rules, allow providers to
use everyday technologies to hold appointments.
251IHS oﬃcials told us they have a liaison working to facilitate requests from IHS and tribal health sites to the Federal
Emergency Management Agency (FEMA). Although Urban Indian Organizations are unable to request personal
protective equipment directly through FEMA, they can access the IHS National Supply Service Center as more supplies
are successfully acquired. The National Supply Service Center—a program that provides advice, consultation, and
assistance to IHS and any tribal facilities on supply management issues—coordinates and manages the purchase and
distribution of medical/health-care-related supplies for IHS and tribal health care facilities nationwide.
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COVID-19 and other related sick leave, or are experiencing impacts of school closures. In addition,
IHS oﬃcials said that federal, tribal, and Urban Indian facilities are reporting surges in behavioral
health issues, including domestic violence, which the oﬃcials said will have long-lasting eﬀects on
the AI/AN population.
GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws and agency documents, including weekly letters
sent from IHS to tribes and Urban Indian Organizations that summarize the agency’s actions to
date, and interviewed agency oﬃcials. We provided a draft of this report to HHS for review and
comment. HHS did not provide comments on this enclosure.
Contact information: Jessica Farb, (202) 512-7114, farbj@gao.gov
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Veterans Health Care
The Veterans Health Administration has increased its capacity to deliver COVID-19 care for
veterans, through eﬀorts such as hiring clinical staﬀ and increasing telehealth services, using
existing and supplemental funds.
Entities involved: Department of Veterans Aﬀairs, Veterans Health Administration
Key Considerations and Future GAO Work
We have previously reported shortcomings in staﬃng capacities and human capital management
at the Department of Veterans Aﬀairs (VA). For example, in October 2017, we recommended
that the Veterans Health Administration (VHA) develop and implement a process to accurately
count all physicians providing care at each medical center. As of January 2020, VHA continued to
disagree with this recommendation and previously asserted that the ability to count physicians
does not aﬀect its ability to assess workload. We maintain that an accurate count of all physicians
is necessary for eﬀective workforce planning, and we have identiﬁed this recommendation as
warranting priority attention from the head of the department. While VA is currently reporting
suﬃcient staﬃng at all facilities, it will be important to monitor the extent to which VHA has
the staﬃng capacity to respond to the evolving medical needs of veterans during the COVID-19
pandemic.
We have also previously reported shortcomings in VA’s oversight of its nursing home care.252
Speciﬁcally, in July 2019, we found that VA did not conduct the quarterly monitoring of contractor
performance for community living center and state veterans home inspections. We also found
that VA did not require the state veterans home contractor to identify all failures to meet quality
standards as deﬁciencies during its inspections. We recommended that the Under Secretary of
Health develop a strategy to regularly monitor the contractors’ performance in conducting these
inspections. We also recommended that the Under Secretary of Health require that all failures
to meet quality standards be cited as deﬁciencies in state veterans home inspections. In light
of these prior concerns, as well as the high incidence of COVID-19 in nursing homes, we have
additional work planned to review VA’s oversight of nursing home care provided to veterans
during the COVID-19 pandemic.
In addition, Congress raised concerns in April 2020 about personal protective equipment (PPE)
shortages at VA medical centers, concerns that were also cited in a VA Oﬃce of Inspector General
report and multiple media reports based on accounts by VA employees and others. VHA oﬃcials
reported on May 6, 2020, they had a suﬃcient PPE supply to allow them to distribute equipment
among sites based on need and they followed CDC guidance for conservation and prioritization of
equipment. Ensuring an adequate supply of PPE is essential to the safety and well-being of both
employees and veterans. Given the importance of this issue, we will be examining the acquisition
and management of PPE, among other COVID-19 supply chain and acquisition management
matters.
252VA provides nursing home care through VA-owned community living centers and pays for care in veterans’ homes
that are owned and operated by states.
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Given these concerns, we plan to examine, among other things, VA’s support of the civilian public
health response to COVID-19; VA’s use and oversight of the supplemental funds for COVID-19;
infectious disease prevention in VA’s long-term care programs; and VA’s management and
expenditure of COVID-19 emergency funds to procure necessary, time-critical medical supplies,
such as PPE.
Background
VA administers one of the largest health care systems in the United States and is charged, through
VHA, with providing health care services to the nation’s eligible veterans and beneﬁciaries. VHA
provides health care to more than 9 million veterans through VA medical centers, community-
based outpatient clinics, and community living centers.253
VA received approximately $20 billion in supplemental funding to support its eﬀorts to address
COVID-19.254 VHA plans to use these supplemental funds, along with existing funds, to deliver
care for veterans in response to COVID-19. According to VA documents, VHA reported 14,140
cumulative veteran cases of COVID-19, including 1,440 active veteran cases, 11,329 convalescent
veteran cases, and 1,371 veteran deaths as of June 12, 2020.255
Overview of Key Issues
In response to COVID-19, VHA oﬃcials told us that they increased capacity, tested both veterans
and staﬀ, and expanded telehealth services to care for veterans, among other actions. In addition,
VHA supports the civilian public health response as part of VA’s statutory mission to fulﬁll its
obligations during times of national public health emergency, including providing support to the
Department of Defense and the Public Health Service.
Health care capacity. VHA announced it had increased capacity for COVID-19 patients by taking a
number of steps:
• postponing elective admission or procedures, such as dental care or nonemergency surgeries;
253A community living center is a VA-owned and -operated nursing home.
254Families First Coronavirus Response Act, Pub. L. No. 116-127, div. A, tit. VI, 134 Stat. 178, 183 (2020) ($60M) and the
CARES Act, Pub. L. No. 116-136, div. B, tit. X, 134 Stat. 281, 583 (2020) ($19.6B). Funds appropriated to VA under the
Families First Coronavirus Response Act are available until September 30, 2022. Funds appropriated for VA programs
under the CARES Act are available until September 30, 2021, except those for the VA Oﬃce of the Inspector General
(OIG). Funds for the OIG are available until September 30, 2022.
255VA deﬁnes convalescent cases as those patients tested or treated at a VA facility for known or probable COVID-19
who are either post-hospital discharge or 14 days after their last positive test, whichever comes later.
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• discharging patients who did not need continued hospitalization;
• providing outpatient care for veterans through telehealth services when possible;
• separating inpatient care into two zones, one for patients who have been diagnosed with or
suspected of COVID-19 and one for those who have not; and
• activating new or nonclinical areas, such as repurposing specialty care areas, operating rooms,
and administrative spaces, to increase bed capacity for potential surge of COVID-19 patients.
According to VHA documents, VA medical centers had occupancy rates of 54 percent or less for its
acute care beds, its intensive care unit beds, and its negative pressure beds as of June 12, 2020.256
VHA oﬃcials told us achieving such capacity better positions them to provide support to veteran
and civilian public health response.
Testing and screening. VHA oﬃcials told us they follow Centers for Disease Control and
Prevention (CDC) guidance to determine when to test veterans for COVID-19.257 According to VA
documents, VHA tested 230,846 patients, which primarily includes veterans and may also include
tests for employees or civilians being treated at VA as part of its public health emergency response
as of June 12, 2020. VHA oﬃcials told us that they test patients both at VA facilities and by sending
specimens to oﬀ-site labs for processing.
VHA told us it is screening its employees, contractors, and visitors for COVID-19 symptoms
when they enter the grounds of a VA facility. If they screen positive for symptoms, employees or
contractors are referred for COVID-19 testing at the VA facility or through private providers.
PPE. According to oﬃcials, VHA has issued protocols for PPE usage that align with CDC
guidance.258 VHA oﬃcials also told us they created a national tracking tool for PPE supplies. As of
April 20, 2020, medical center staﬀ are required to manually enter PPE quantities in the tracking
tool daily, and the tool allows VHA to reallocate supplies if a facility is expected to have a shortage.
VHA uses its national supply to rebalance PPE supplies if it anticipates shortages.
Telehealth services. VHA oﬃcials told us they have increased network bandwidth to support
telework and telehealth video connections between physicians and patients. VHA oﬃcials also
said they are well within their network bandwidth capacity based upon bandwidth expansion
performed during the early phase of VA’s response to COVID-19. VHA told us it has increased its
telehealth video visits from 2,400 a day prior to COVID-19 to approximately 26,000 a day as of May
21, 2020. According to VHA oﬃcials, VHA increased its telephone visits from 20,000 a day prior to
COVID-19 to approximately 170,000 a day as of early May 2020.
256Negative pressure beds are used to contain airborne contaminants within the room, thereby reducing the risk of
disease transmission.
257The CDC guidance for testing prioritizes individuals based on conditions such as their symptoms, type of
employment (i.e., health care workers or workers in congregate settings), and type of residence (i.e., long-term care
facilities or other congregate living settings).
258The CDC issued optimization strategies for PPE shortages in health care facilities.
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Staﬃng. VHA told us it is using various strategies for staﬃng, recruiting, and retaining employees
in response to COVID-19. VHA oﬃcials told us that all facilities have adequate staﬃng, and
hiring was ramped up between March 29 and May 28, 2020, to bring on 3,410 nurses and 539
physicians. VHA also noted that overall staﬀ absenteeism between April and May 2020 was lower
than average. To help ensure adequate staﬃng, VHA told us that it has recruited staﬀ by oﬀering
beneﬁts such as dual compensation waivers to retirees (primarily nurses), expanding child care
subsidies, and decreasing onboarding times.259 VHA is supplementing staﬀ in areas harder hit
by the pandemic through its VA Travel Nurse Corps Program and deploying VHA staﬀ through its
Disaster Emergency Medical Personnel System.260
Community living centers. As of March 10, VHA required community living centers to implement
safeguards aimed at limiting COVID-19 exposure risk for two of its most susceptible patient
populations: nursing home residents and spinal-cord injury patients. These requirements include
no visitors except for end-of-life hospice patients, suspension of new patient admissions, and daily
screening of staﬀ.261 VHA oﬃcials told us that centers nationwide conducted testing of all patients
and staﬀ for COVID-19, although this testing is not performed on a recurring basis due to limited
testing supplies. VHA oﬃcials told us that they isolate patients in these centers who test positive
for COVID-19.
Community care. When veterans need health care services that are not available at VA medical
facilities or within required driving distances or time frames, VHA may purchase care from non-VA
providers through its community care program.262 On March 24 and March 30, 2020, VHA issued
guidance for community care in response to COVID-19, which advised providers to weigh the
need for a community care authorization for routine care against the risks of exposing veterans
to COVID-19. VHA told us that urgent visits in the community decreased by 50 percent in March
2020.263 However, VHA told us that other referrals to community care, such as home health
authorizations and inpatient care, have increased. VHA told us that urgent and emergency care in
the community is available and is being utilized.
259When employees retire, assuming they qualify under the federal retirement system statutes administered by the
Oﬃce of Personnel Management (OPM), they receive an annuity. Generally, when an agency rehires a retired civil service
employee who receives an annuity, that employee’s salary rate is subject to a reduction (oﬀset) by the amount of the
annuity. By law, agencies may request a waiver of the salary oﬀset—known as a dual compensation waiver—from OPM
for speciﬁc purposes, such as emergency hiring or other unusual circumstances.
260The Disaster Emergency Medical Personnel System is VHA’s main program for deploying clinical and nonclinical
staﬀ to an emergency or disaster. The Travel Nurse Corps program is a VA-operated internal pool of registered nurses
available for temporary short-term assignments at VA medical centers throughout the country.
261On June 2, 2020, VHA oﬃcials told us community living centers with COVID-19 isolated areas were permitted to take
new patient admissions.
262On June 6, 2019, the VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018
(VA MISSION Act) established the Veterans Community Care Program, which consolidated the Veterans Choice Program
along with several other community care programs. The Veterans Community Care Program uses regional networks of
licensed health care community providers called Community Care Networks to provide medical, dental, and pharmacy
services to eligible veterans who are unable to receive care at local VA medical facilities. As of May 29, 2020, two
Community Care Networks were fully implemented, while the others were at varying stages of implementation.
263Eligible veterans may seek urgent care in the community care program without prior authorization.
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GAO Methodology and Agency Comments
To conduct this work, we reviewed VHA guidance and documents, reviewed federal laws, and
interviewed VHA oﬃcials. We provided a draft of this report section to VA for review and comment.
In its comments, VA noted that it has been open, throughout the pandemic, for all care where
clinical urgency outweighed the risk of COVID-19. VA said it began expanding services on May
18, 2020 at 20 sites, using a phased approach centered on veteran safety, in alignment with
White House and CDC guidance. VA also provided technical comments, which we incorporated as
appropriate.
Contact information: Debbie Draper, (202) 512-7114, draperd@gao.gov; Sharon Silas, (202)
512-7114, silass@gao.gov
Related GAO Products
VA Nursing Home Care: VA Has Opportunities to Enhance Its Oversight and Provide More
Comprehensive Information on Its Website. GAO-19-428. Washington, D.C.: July 3, 2019.
Veterans Health Administration: Better Data and Evaluation Could Help Improve Physician Staﬃng,
Recruitment, and Retention Strategies. GAO-18-124. Washington, D.C.: October 19, 2017.
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Military Health
The Department of Defense has taken steps to test and track COVID-19 cases among
servicemembers, provide care through the military health system, and protect the health of U.S.
military forces.
Entities involved: Department of Defense, Defense Health Agency
Key Considerations and Future GAO Work
We plan to examine the Department of Defense’s (DOD) actions to provide care within the military
health system and to protect the health of U.S. military forces in response to COVID-19 in future
work.
Background
The COVID-19 global pandemic has the potential to aﬀect DOD’s ability to accomplish its mission
and impair the military’s readiness. In addition to supporting the national response to the
COVID-19 pandemic, DOD must also maintain the medical readiness of the U.S. military force.
To that end, the department must continue to provide health care for servicemembers, among
others, as well as institute measures to protect the health of military servicemembers. To do this,
DOD has taken steps to provide testing and treatment through the military health system, among
other actions.
DOD received approximately $10 billion in funding from the CARES Act, including $3.8 billion for
the Defense Health Program to prevent, prepare for, and respond to COVID-19.264 The Defense
Health Program was also appropriated $82 million by the Families First Coronavirus Response Act
for health services consisting of COVID-19 related items and services.265
Overview of Key Issues
In 2019, DOD provided health care for approximately 9.6 million individuals, including
servicemembers and their dependents, and operated 475 military Medical Treatment Facilities
264Coronavirus Aid, Relief, and Economic Security (CARES) Act, Pub. L. No. 116-136, div. B, title III, 134 Stat. 281, 518
(March 27, 2020). The military health system supports medical readiness and provides medical care for servicemembers,
retired servicemembers, and their dependents. The Defense Health Program is one component of DOD’s Uniﬁed
Medical Budget and includes funding for servicemembers’ health care.
265Families First Coronavirus Response Act (FFCRA), Pub. L. No. 116-127, title II, 134 Stat. 178, 181 (March 18, 2020).
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(MTF) across the military health system.266 Since 2017, DOD has been reforming the military health
system, including consolidating the administration of the MTFs under the Defense Health Agency
(DHA). However, DOD and the DHA have temporarily paused reform eﬀorts to prioritize their
response to COVID-19. Key aspects of DOD’s response to COVID-19 include the following:
COVID-19 testing in the military health system. DOD has shifted its COVID-19 testing eﬀorts
from an initial diagnostic testing focus on individuals with symptoms to include screening of
asymptomatic individuals. On April 22, 2020, DOD announced a tiered approach to testing,
prioritizing diagnostic testing for personnel in the following order:
• Tier 1: personnel responsible for critical national defense capabilities;
• Tier 2: engaged ﬁelded forces around the world;
• Tier 3: forward-deployed and redeploying forces; and
• Tier 4: remaining DOD personnel.
In April 2020, DOD oﬃcials stated the department’s goal of testing 60,000 personnel by early June
2020, and then 200,000 per month thereafter. DOD reported in early May that it had completed
Tier 1 testing. As of May 21, 2020, DOD oﬃcials stated that the department had performed 93,536
tests in DOD labs. As of June 1, 2020, DOD had identiﬁed 9,885 conﬁrmed cases of COVID-19
within the department (see table). The Navy accounts for approximately 38 percent of cases
among servicemembers.
266DOD provides health care to active-duty and retired servicemembers and their families, dependent survivors, and
certain reserve component members and their families.
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Number of COVID-19 Cases Reported by the Department of Defense, as of June 1, 2020
Cumulative cases
Hospitalized
Deaths
Military
6,596
189
3
Civilian
1,516
145
19
Dependent
1,124
51
5
Contractor
649
63
9
Total
9,885
448
36
Source: GAO analysis of Department of Defense data. | GAO-20-625
DOD has taken steps to advance testing capability in the military health system for its personnel.
For example:
• DOD leveraged an existing contract to develop a COVID-19 test that can be processed on the
diagnostic system currently used throughout the military health system.
• Army oﬃcials stated that the Army is working to develop high-throughput tests for COVID-19,
which would increase processing capacity from approximately 60 patient tests every 8 hours to
275 or more patient tests every 8 hours.
• DHA established procedures for MTFs that lack in-house testing capacity, including a goal of
ensuring all tests are processed in 72 hours or less.
COVID-19 treatment in the military health system. DOD has taken steps to advance treatment
of COVID-19 patients in the military health system. For example:
• DOD oﬃcials stated that the department obtained treatment courses of the antiviral drug
remdesivir, originally in development by DOD to counter the Ebola virus. The Army signed a
cooperative agreement with an industry partner to provide the drug for treatment of COVID-19
patients in the military health system. Currently, 13 MTFs have this capability, and several
patients have received the treatment.
• DHA has issued periodic guidance to the MTFs, including interim guidance on topics such as
medical countermeasures and personal protective equipment, among others.
Protecting the health and medical readiness of U.S. military forces. DOD Instruction 6200.03,
Public Health Emergency Management (PHEM) Within the DOD (March 28, 2019), establishes policy,
assigns responsibilities, and provides direction to ensure mission assurance and readiness for
public health emergencies. In addition, the department issued initial health protection guidance
speciﬁc to COVID-19 on January 30 and has issued 11 supplemental guidance documents since
(see table).
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Health Protection Guidance and Supplements Issued by the Department of Defense in Response to the COVID-19
Pandemic, as of June 11, 2020
Guidance
Issue date
Subject
Initial guidance
January 30, 2020
Force Health Protection Guidance for the
Novel Coronavirus Outbreak
Supplement 1
February 7, 2020
Monitoring Personnel Returning from
China During the Novel Coronavirus
Outbreak
Supplement 2
February 25, 2020
Military Installation Commanders’ Risk-
Based Measured Responses to the Novel
Coronavirus Outbreak
Supplement 3
March 10, 2020
Use of Personal Protective Equipment and
Non-Pharmaceutical Interventions during
the Coronavirus Disease 2019 Outbreak
Supplement 4
March 11, 2020
Personnel Traveling During the Novel
Coronavirus Outbreak
Supplement 5
April 7, 2020
Movement and Medical Treatment of
COVID-19 Patients, Symptomatic Persons
Under Investigation, or Potentially
Exposed COVID-19 Persons
Supplement 6
April 7, 2020
Coronavirus Disease 2019 Laboratory
Diagnostic Testing Services
Supplement 7
April 8, 2020
Use of Cloth Face Coverings, Personal
Protective Equipment, and Non-
Pharmaceutical Interventions During the
Coronavirus Disease 2019 Pandemic
Supplement 8
April 13, 2020
Protecting Personnel in Workplaces
during the Response to the Coronavirus
Disease 2019 Pandemic
Supplement 9
May 26, 2020
Deployment and Redeployment of
Individuals and Units during the Novel
Coronavirus Disease 2019 Pandemic
Supplement 10
June 11, 2020
Coronavirus Disease 2019 Clinical
Laboratory Diagnostic Testing Services
Supplement 11
June 11, 2020
Coronavirus Disease 2019 Surveillance
and Screening with Testing
Source: GAO analysis of DOD information. | GAO-20-625
Note: The issuance of Supplement 7 on April 8, 2020, rescinded the guidance provided by Supplement 3.
DOD has taken steps designed to prevent infection and spread of COVID-19. For example, DOD
issued travel restrictions in March 2020 and later extended them through June 30, including
permanent changes of station, work-related travel, and servicemember leave.
In addition, DOD agencies have been encouraged to maximize telework, and oﬃcials estimated
that 970,000 active-duty and civilian personnel were teleworking.267 However, DOD oﬃcials
stated that some personnel, such as new recruits or Navy sailors deployed on ships, are unable
267The Defense Manpower Data Center reported that as of March 31, 2020, there were approximately 1.4 million active-
duty servicemembers and approximately 760,000 DOD civilian employees.
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to telework or maintain social distancing due to mission requirements. DOD oﬃcials announced
guidelines on April 22 to prevent infection in those cases:
• screening with questionnaires and temperature checks to identify at-risk individuals;
• mandating a 14 to 21 day quarantine, depending on a risk assessment;
• requiring additional testing and temperature checks prior to leaving quarantine;
• limiting interaction outside of the unit; and
• observing protective measures such as face covering and hand washing.
GAO Methodology and Agency Comments
To conduct this work, we reviewed DOD guidance and documentation and the most recent
DOD data available as of June 11, 2020. We also interviewed DOD oﬃcials knowledgeable about
COVID-19 response eﬀorts and reviewed publicly available DOD media reports, statements, and
documents. We provided a draft of this report to DOD for review and comment. DOD provided
technical comments on the report, but had no comments related to this enclosure.
Contact information: Brenda Farrell, (202) 512-3604, farrellb@gao.gov
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Medical Surge
Multiple federal agencies have deployed personnel, alternative care sites, and equipment to help
surge medical and public health capabilities during the COVID-19 response.
Entities involved: Department of Health and Human Services, Oﬃce of the Assistant Secretary
for Preparedness and Response, U.S. Public Health Service, Centers for Disease Control and
Prevention, Department of Defense, Department of Veterans Aﬀairs, Department of Homeland
Security, Federal Emergency Management Agency
Key Considerations and Future GAO Work
In June 2020, we reported on shortcomings related to the Department of Health and Human
Services’ (HHS) Oﬃce of the Assistant Secretary for Preparedness and Response’s (ASPR) planning
for, and training of, its National Disaster Medical System (NDMS) responder workforce. We
found that these shortcomings hinder ASPR’s ability to ensure that it has an adequate number
of responders, with the right skill sets, enrolled in NDMS to respond eﬀectively to public health
emergencies, such as COVID-19. We made ﬁve recommendations, including that HHS develop an
NDMS responder workforce target that accounts for the critical skills and competencies needed
to meet current and future programmatic results, and develop a process to better evaluate the
training provided to NDMS responders. HHS agreed with our recommendations but has not yet
taken action to address them.
Further, in September 2019, we identiﬁed several deﬁciencies in HHS’s leadership in the
public health and medical response to Hurricanes Irma and Maria in 2017, including that HHS
experienced shortages of responders and relied on the Department of Defense (DOD) to provide
medical response personnel, which could create vulnerability if DOD is needed for its primary
missions. In that report, we also identiﬁed concerns about coordination and misalignment of
federal resources, including resources from DOD, the Department of Veteran’s Aﬀairs (VA), and the
Department of Homeland Security (DHS). We recommended that HHS develop agreements with
support agencies that include response capability and limitation information. HHS has yet to take
action to address this recommendation.
In light of these prior concerns, and in response to the CARES Act, in our future work we plan to
monitor the extent to which HHS and other agencies are coordinating deployments and ensuring
resources are being used most eﬀectively to respond to the medical and public health needs
during the COVID-19 response. As part of our work, we plan to examine HHS’s and DHS’s response
and recovery eﬀorts to COVID-19 and related coordination among supporting agencies.
Background
The scale of the nationwide COVID-19 pandemic requires a whole-of-government approach to
respond, including multiple federal agencies to support the public health and medical response.
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HHS is designated the lead agency for responding to a public health emergency, including a
pandemic.268 As part of this role, HHS provides resources such as surge personnel and equipment
to support the public health and medical needs of the response. Additionally, HHS may work with
its federal partners, including DOD, DHS, and VA, which can also deploy related supports to help
surge medical and public health capabilities during a response to a public health emergency.
Overview of Key Issues
Since January 2020, HHS and its federal partners—DOD, VA, DHS—have deployed personnel to
surge the national public health and medical response to the COVID-19 pandemic. Several of
these agencies also supported the response by providing alternative care sites or equipment to
supplement state and local health systems.
Examples of HHS agencies’ personnel and equipment deployed for the medical and public health
response to COVID-19 between January and May 2020 include the following:
• ASPR. ASPR deployed more than 135 of its staﬀ to assist in the COVID-19 response, as well as
about 1,200 public health and medical responders enrolled in its NDMS, according to ASPR
oﬃcials. These individuals, such as physicians, nurses, and paramedics, work outside the
federal government but are placed in an intermittent employee status when deployed to
respond to public health emergencies.269
ASPR deployed some of these responders to help American citizens who were potentially
infected with COVID-19 disembark from cruise ships to quarantine locations in the United
States, as well as repatriate citizens returning from China. In addition to personnel, ASPR also
deployed more than 40 Federal Medical Stations, a form of alternative care site and medical
equipment, to provide additional bed capacity and related equipment to local health systems
across the country.270 For example, these Stations were used to augment state medical
response resources in Louisiana.
268Given the nationwide response required to address the COVID-19 pandemic, HHS is designated as the lead agency
to address the public health and medical portion of the response, while DHS’s Federal Emergency Management Agency
(FEMA) is designated as the lead agency for coordinating the overall federal response, according to HHS oﬃcials.
269According to ASPR oﬃcials, responding to a pandemic is outside the primary scope for NDMS, because NDMS
responders should be primarily working in their civilian jobs within the traditional health care system during a
pandemic.
270A Federal Medical Station is a deployable health care facility and is one resource maintained in the Strategic
National Stockpile. Each Federal Medical Station is equipped with a 3-day supply of medical and pharmaceutical
resources to sustain up to 250 stable, primary, or chronic care patients. Federal Medical Stations are not
freestanding but require a building in which to operate and can be staﬀed with federal, state, or local medical
personnel. The HHS spend plan for appropriations provided under the CARES Act allocates funding to procure high-
acuity kits to expand the capability of Federal Medical Stations to provide high levels of care to patients severely
impacted by disease and respiratory distress. Speciﬁcally, the HHS spend plan states that the agency anticipates
using $525 million to support surge personnel and alternate care sites and equipment.
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• U.S. Public Health Service. U.S. Public Health Service, within HHS, deployed more than
4,100 Commissioned Corps Oﬃcers to support the COVID-19 response, according to U.S.
Public Health Service oﬃcials. Overseen by the U.S. Surgeon General, the Commissioned
Corps is a team of public health oﬃcers whose duty stations are typically within federal
agencies, including the Centers for Disease Control and Prevention (CDC), Food and Drug
Administration, Indian Health Service, and National Institutes of Health. However, these
oﬃcers can be temporarily assigned to assist with a federal response.
Many of these oﬃcers include physicians, nurses, pharmacists, and others who can provide
public health and medical care. For the COVID-19 response, these oﬃcers were deployed to
provide surge capacity to support ﬁeld hospitals and other public health and medical missions.
For example, agency oﬃcials reported that Commissioned Corps Oﬃcers were deployed to
assist American citizens returning from China and Japan and to provide clinical care at a long-
term care nursing facility in Kirkland, Washington, and at alternative care sites in New York City
and Detroit. In addition, Commissioned Corps Oﬃcers have deployed to provide assistance in
community-based testing sites across the country, according to agency oﬃcials.271
• CDC. CDC deployed more than 1,000 of its staﬀ for the COVID-19 response, according to the
agency. For example, CDC oﬃcials stated that the agency deployed personnel to staﬀ domestic
quarantine stations established to prevent, delay, and mitigate the introduction of additional
cases and transmission to the United States. At the request of state health departments,
CDC also deployed emergency response teams to provide services, including implementing
infection control measures, supporting laboratories, establishing surveillance systems, and
investigating outbreaks in high-risk settings, such as long-term care facilities.
Examples of DOD, DHS, and VA personnel; alternative care sites; and equipment deployed for
the medical and public health response to COVID-19 between January and May 2020 include the
following:
• DOD. DOD deployed over 60,000 personnel, including more than 4,000 medical personnel,
to respond to COVID-19 through its Defense Support of Civil Authorities Mission, which
allows other federal agencies, such as HHS, to call on DOD for support during disasters
and declared emergencies. For example, to assist with COVID-19, DOD medical personnel
have provided medical support at alternative care facilities and worked alongside civilian
medical staﬀ at medical hospitals and facilities in various states. In addition, the U.S. Army
Corps of Engineers, which serves as the primary federal agency for engineering-related
response eﬀorts, supported the response to the pandemic by leading the construction of
38 alternative care sites that supplied more than 15,000 additional beds for patients with
COVID-19, according to agency oﬃcials (see ﬁgure). (For more information see “DOD Support
for Civilian Authorities” in appendix III.)
271Agencies where Commissioned Corps Oﬃcers are stationed (referred to as their “duty station”), such as CDC, can
deploy their oﬃcers internally for certain purposes. The deployed Commissioned Corps oﬃcers included oﬃcers
deployed outside of their duty stations as well as oﬃcers internally deployed to programs or sites of greatest need
within their respective duty station (i.e., agency) to respond to COVID-19, according to U.S. Public Health Service
Oﬃcials.
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U.S. Army Corps of Engineers Constructed Alternative Care Facilities in Washington, D.C., and Loveland, Colorado
• Federal Emergency Management Agency (FEMA). Within DHS, FEMA’s workforce is designed
to scale up and deploy to help support response to and recovery from all types of disasters,
including during a pandemic. FEMA deployed more than 3,100 employees across all states and
territories to support the COVID-19 response. According to FEMA oﬃcials, these employees
provided support for response coordination and communication. For example, at state
request, FEMA deployed Incident Management Assistance Teams to serve as initial responders
to assess state and local needs and facilitate local response to COVID-19.
• VA. In addition to its role providing health care and beneﬁts to veterans, the VA’s “Fourth
Mission” is to serve as a health care backup to the general public during times of war,
terrorism, national emergencies, and natural disasters through requests from other agencies,
such as HHS. In response to COVID-19, VA deployed personnel and equipment and provided
beds in its medical facilities as surge capacity to care for nonveterans. For example, VA
reported that it had deployed more than 540 staﬀ to support state and community nursing
homes. VA also provided more than 240 beds to civilians in at least 10 of its medical centers.
VA also loaned a mobile pharmacy unit and deployed VA staﬀ to assist an alternative care site
in Michigan and deployed Veterans Health Administration clinical staﬀ to Connecticut to help
treat COVID-19 patients who were experiencing homelessness.
GAO Methodology and Agency Comments
To conduct this work, we collected deployment information and interviewed oﬃcials from
HHS and three of its federal partners—DOD, DHS, and VA—which had provided personnel and
alternative care sites during the medical and public health response to Hurricanes Irma and
Maria in the U.S. Virgin Islands and Puerto Rico (see our September 2019 report). Deployment
information includes examples of personnel deployed to support the public health and medical
response to COVID-19, as well as alternative care sites and equipment deployed for that purpose.
Dates for deployment information vary by agency.
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Further, the information in this enclosure highlights examples of the types of medical and public
health personnel, alternative care sites, and equipment supports provided by these agencies; it is
not an exhaustive list of all supports provided by HHS, DOD, DHS, and VA during the response to
COVID-19. For example, for additional information on medical supplies and equipment provided
by federal agencies from the Strategic National Stockpile, see “Federal Eﬀorts to Provide Medical
Supplies” in appendix III.
We provided a draft of this report to HHS, DOD, DHS, and VA for review and comment. HHS and
DOD provided technical comments on this enclosure, which we incorporated as appropriate. DHS
and VA did not comment on this enclosure.
Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov
Related GAO Products
Public Health Preparedness: HHS Should Take Actions to Ensure It Has an Adequate Number of
Eﬀectively Trained Emergency Responders. GAO-20-525. Washington, D.C.: June 18, 2020.
Disaster Response: HHS Should Address Deﬁciencies Highlighted by Recent Hurricanes in the U.S. Virgin
Islands and Puerto Rico. GAO-19-592. Washington, D.C.: September 20, 2019.
2017 Hurricanes and Wildﬁres: Initial Observations on the Federal Response and Key Recovery
Challenges. GAO-18-472. Washington, D.C.: September 4, 2018.
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DOD Support to Civil Authorities
The Department of Defense is providing people, equipment, and supplies to support civil
authorities during the COVID-19 pandemic.
Entities involved: Department of Defense, including active duty, reserve and National Guard
forces, the U.S. Army Corps of Engineers, and the Defense Logistics Agency
Key Considerations and Future GAO Work
In February 2017, we reported that severe infectious disease would likely limit the Department
of Defense’s (DOD) ability to provide support to civil authorities as part of the broader national
response. At that time we recommended that DOD use existing coordination mechanisms with
the Department of Health and Human Services (HHS) and the Federal Emergency Management
Agency (FEMA) to explore opportunities to improve preparedness and response to a pandemic if
DOD’s capabilities are limited. DOD concurred with this recommendation and implemented it by
expanding interagency coordination and exercises with HHS and FEMA. The COVID-19 pandemic
will test the eﬀectiveness of these coordination mechanisms.
We plan to examine the support DOD provides to civil authorities as part of the response to and
recovery from COVID-19 and related coordination among the supporting agencies.
Background
While DOD’s primary mission is to defend the nation, the department is often asked to play a
prominent role supporting civil authorities and must be prepared to provide rapid response when
called upon during disasters and declared emergencies (natural or man-made). DOD provides
such support through its Defense Support of Civil Authorities mission.
Consistent with the National Response Framework—a guide to how the federal government,
states, and localities, and other public and private-sector institutions should respond to disasters
and emergencies—DOD is authorized to provide support to civil authorities when requested
by another federal agency and approved by the Secretary of Defense, or when directed by the
President. Requesting agencies could include, for example, FEMA, HHS, or U.S. Department of
Agriculture. DOD provides such support through federal military forces, DOD civilians, DOD
contract personnel, or DOD component assets—to include the National Guard and the U.S. Army
Corps of Engineers.
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National Guard forces may provide support to civil authorities when ordered to active
duty—commonly referred to as Title 10 duty status.272 When ordered to active duty, National
Guard forces are funded and commanded by DOD. National Guard personnel may also be
ordered in a duty status pursuant to Title 32 U.S.C. § 502(f)—commonly referred to as Title 32 duty
status—by the President or Secretary of Defense and with the consent of the Governor.273 When
operating in a Title 32 duty status, National Guard forces are funded by DOD and commanded by
the state.274
Overview of Key Issues
Multiple federal agencies, including FEMA, HHS, and the U.S. Secret Service, have requested
assistance from DOD for the COVID-19 pandemic. Speciﬁcally, as of June 5, 2020, DOD had
responded to more than 253 FEMA mission assignments. To conduct that assistance, as of May
2020, more than 57,200 military personnel, including more than 41,000 National Guard personnel
in Title 32 status, had supported the COVID-19 response. Initially DOD supported multiple
requests for assistance from HHS and U.S. Secret Service—including providing temporary housing
for U.S. citizens who were evacuated from China and the Grand Princess cruise ship and medical
support to the White House. After the COVID-19 emergency declaration on March 13, 2020, FEMA
assumed its role as the lead federal agency for the federal government’s response to COVID-19,
while HHS is continuing to lead the public health and medical response.
In responding to these requests for assistance and mission assignments, DOD organizations,
units, and personnel (including active duty and reserves) have provided a number of capabilities,
such as medical supplies (including personal protective equipment (PPE), ventilators, and testing
materials); medical units and personnel; mobile medical facilities (including hospitals and ships);
support personnel (e.g., planners and public aﬀairs); access to and use of military bases; and
transportation capabilities. For example:
• Medical personnel have supported civil authorities in a variety of capacities, including
providing medical support at personal housing units for patients awaiting COVID-19 test
results, providing medical support at alternative care facilities, and working alongside civilian
medical staﬀ at medical hospitals and facilities. As of May 27, 2020, more than 500 DOD
medical personnel, including doctors, nurses, respiratory therapists, and medical support
personnel, remained in support of COVID-19 operations.
272National Guard personnel may be ordered to active duty voluntarily and with the consent of their Governor pursuant
to 10 U.S.C § 12301(d). Under qualifying circumstances, National Guard personnel may be ordered to active duty without
their consent or the consent of their Governor pursuant to 10 U.S.C. §§ 251, 252, 12301(a), 12302, 12304, and 12310.
273Title 32 of the United States Code governs the National Guard. National Guard members may be placed in a duty
status pursuant to 32 U.S.C. § 502(f)(2)(A) to support operations or missions undertaken by the member's unit at the
request of the President or the Secretary of Defense.
274DOD reports that National Guard forces typically operate in response to domestic disasters or emergencies in a State
or Territorial Active-duty Status, funded by and under the command of their state or territory. These operations are not
defense support of civil authorities.
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• The Navy deployed the medical ships USNS Comfort and USNS Mercy, which provided medical
care to COVID-19 and non-COVID-19 patients in New York and California, respectively. The
USNS Comfort treated 182 patients while docked in Manhattan, New York, from March 30, 2020
to April 30, 2020. The USNS Mercy docked in Los Angeles, California, on March 27, 2020, and
treated 77 non-COVID patients before departing on May 15, 2020. Both ships were initially
tasked with providing trauma, emergency, and other care to non-COVID patients, to provide
relief to shore-based civilian hospitals and allow them to focus on the treatment of COVID-19
patients. However, on April 6, 2020, the USNS Comfort began accepting COVID-19 patients to
admit more patients and relieve pressure on New York City hospitals.
• The Defense Logistics Agency has provided a number of medical supplies and equipment
to federal agencies, including N95 masks, ventilators, more than 1 million commercial-shelf
meals, hand sanitizer, 100,000 human remains bags, and $10 million in pharmaceutical
items. The agency also delivered 11,000 face shields to New York ﬁrst responders, which it
produced using 3D printing. In addition, the agency provided excess vehicles to state oﬃcials
for delivering school lunches. (For more information on federal distribution and acquisition of
PPE and other supplies, see "Federal Eﬀorts to Provide Medical Supplies" in appendix III.
• The U.S. Army Corps of Engineers responded to 64 mission assignments from FEMA, totaling
$1.8 billion, and an additional $4.5 million from the National Emergencies Preparedness
Program. The U.S. Army Corps of Engineers conducted 1,155 assessments for alternate care
facilities and awarded 38 construction contracts to add 15,074 beds to the nation’s health
care system. The construction of these facilities includes modifying 21 existing sports arena
and convention centers, and 17 existing hotels and dormitories in 18 states, the District of
Columbia, and the Virgin Islands. The design of these alternate care facilitates can allow for
treatment of both COVID-19 and other patients.
• More than 80 military laboratories performed certiﬁed clinical COVID-19 testing, and DOD is
involved in ﬁve diﬀerent vaccine research and development eﬀorts.
• On April 20, 2020, the Defense Logistics Agency procured and distributed 6.8 million N95
respirators from a private manufacturer.
• DOD provided 20 million N95 respirators to FEMA and HHS.
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Army Medical Personnel Transport a Patient to Intensive Care Unit at an Alternative Care Facility in New York
During COVID-19 Pandemic
As of May 2020, more than 40,000 National Guard members from almost all 50 states, the
District of Columbia, the U.S. Virgin Islands, Puerto Rico, and Guam had provided support in
State or Territorial Active-duty, Title 32, or Title 10 status to support the COVID-19 pandemic
response eﬀorts.275 These eﬀorts include activating National Guard personnel from their civilian
occupations, as well as employing National Guard teams in each state and territory speciﬁcally
created to respond to chemical, biological, radiological, and nuclear incidents.276
National Guard personnel have supported their state, tribal, and local authorities in a variety of
manners, including the following:
• Supporting COVID-19 testing eﬀorts. For example, the Nebraska National Guard supported
three mobile testing sites, the Florida National Guard provided personnel for testing teams to
assist nursing homes and veterans’ nursing facilities, and the Rhode Island National Guard is
providing over half of the state’s testing capacity.
• Supporting the production, delivery, and training of PPE supplies. For example, the Texas
National Guard assisted in the production of medical PPE masks, the Arizona National Guard
275According to DOD oﬃcials, a majority of the National Guard support provided under Title 32 status was reimbursable
support provided under a FEMA mission assignment.
276The National Guard maintains 57 civil support teams—one in each state, territory, and the District of Columbia, with
two teams in California, New York, and Florida—whose primary mission is to identify and assess potential biological,
chemical, and radiological agents and provide recommendations on ways to counter or neutralize the eﬀects. These
specialized teams receive training speciﬁc to their functional areas of expertise, such as HAZMAT operations or
technician certiﬁcations, in addition to traditional required military education.
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provided PPE supplies to the Navajo Nation, and the Kansas National Guard provided PPE
training to inmates and staﬀ at the Lansing Correctional Facility.
• Supporting food distribution eﬀorts. For example, the Maryland National Guard prepared
and delivered meals to emergency encampments for homeless people displaced due to
COVID-19, the North Carolina National Guard supported community food banks, and the
Louisiana National Guard delivered over 2 million pounds of food.
• Other support and missions. For example, when ﬁrst responders were overtasked, the New
York National Guard provided daily support at the Rotterdam call center, vetting incoming calls
as well as decreasing wait times for the New York State Coronavirus Hotline.
Georgia National Guard Member Provides Food to Local Schools During COVID-19 Pandemic
GAO Methodology and Agency Comments
To conduct this work, we reviewed documentation and the most recent data available from DOD
through June 5, 2020, interviewed DOD oﬃcials, and obtained information from military websites
(e.g., Defense Visual Information Distribution Service photos). We provided a draft of this report
to DOD for review and comment. DOD provided technical comments on this enclosure, which we
incorporated as appropriate.
Contact information: Diana Maurer, 202-512-9627, maurerd@gao.gov
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Related GAO Products
2017 Hurricanes and Wildﬁres: Initial Observations on the Federal Response and Key Recovery
Challenges. GAO-18-472. Washington, D.C.: September 4, 2018.
Defense Civil Support: DOD, HHS, and DHS Should Use Existing Coordination Mechanisms to Improve
Their Pandemic Preparedness. GAO-17-150. Washington, D.C.: February 10, 2017.
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HHS COVID-19 Funding
Congress appropriated more than $250 billion to the Department of Health and Human Services
to address various aspects of the public health response to COVID-19, of which about $101 billion
had been obligated and about $67 billion had been expended as of May 31, 2020, according to
department oﬃcials.
Entities involved: Department of Health and Human Services
Key Considerations and Future GAO Work
As part of our monitoring and oversight responsibilities in the CARES Act, we are conducting
work examining the Department of Health and Human Services’ (HHS) use of appropriations
contained in four relief laws enacted to help fund the response to COVID-19. Speciﬁcally, we will
be examining the status of obligations and expenditure of these funds; the activities funded,
including how those activities were determined; and eﬀorts to monitor funding use and any
related challenges.
Background
HHS received approximately $250.6 billion in supplemental appropriations from four relief laws
enacted to assist the response to COVID-19.277 The following table provides HHS appropriations
and HHS’s reported obligations and expenditures, by COVID-19 relief law.
277Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146;
Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); CARES Act, Pub. L. No. 116-136, 134
Stat. 281 (2020); Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620
(2020).
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Supplemental Appropriations to HHS for COVID-19 Response and HHS’s Reported Obligations and Expenditures,
by Law, as of May 31, 2020
Legislation
Appropriations
($ millions)
Obligations
($ millions)
Expenditures
($ millions)
Coronavirus Preparedness
and Response Supplemental
Appropriations Act, 2020
(Pub. L. No. 116-123)
6,497.0
4,398.9
484.4
Families First Coronavirus
Response Act (Pub. L. No.
116-127)
1,314.0
351.2
152.1
CARES Act (Pub. L. No.
116-136)
142,833.4
55,733.6
38,197.2
Paycheck Protection
Program and Health Care
Enhancement Act (Pub. L. No.
116-139)
100,000.0
40,247.9
28,555.8
Total
250,644.4
100,731.5
67,389.5
Source: Department of Health and Human Services (HHS) data and GAO analysis of appropriation warrant information provided by the Department of the Treasury. | GAO-20-625
Note: HHS reported that of its total COVID-19 supplemental appropriations, the agency transferred $289 million to the
Department of Homeland Security, and $300 million in appropriations are not available until future actions by HHS.
Overview of Key Issues
Of the $250.6 billion appropriated, HHS reported that it had obligated about $100.7 billion and
expended about $67.4 billion, as of May 31, 2020. The following table provides HHS’s reported
appropriations, obligations, and expenditures by HHS agency.
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HHS Reported Appropriations, Obligations, and Expenditures for COVID-19 Response, by Agency, as of May 31,
2020
Agency or key fund
Appropriations
($ millions)
Obligations
($ millions)
Expenditures
($ millions)
Administration for Children
and Families
6,274.0
5,410.9
256.9
Administration for
Community Living
1,205.0
1,204.7
69.0
Agency for Toxic Substances
and Disease Registry
12.5
1.4
0.5
Centers for Disease Control
and Prevention
6,500.0
1,998.6
231.1
Centers for Medicare &
Medicaid Servicesa
200.0
11.5
0.0
Food and Drug
Administration
141.0
8.0
0.4
Health Resources and
Services Administration
1,320.0
1,317.8
167.2
Indian Health Service
1,096.0
611.2
567.6
National Institutes of Health
1,781.4
247.2
7.9
Public Health and Social
Services Emergency Fund
(PHSSEF)b
231,689.5
89,536.1
66,088.6
Oﬃce of the Assistant
Secretary for Preparedness
and Response
19,323.0
8,128.4
492.4
Biomedical Advanced
Research and Development
Authority
6,190.0
3,658.3
19.9
Provider Relief Fundc
177,000.0
65,360.6
65,204.0
Other PHSSEF
29,176.5
12,388.8
372.3
Substance Abuse and
Mental Health Services
Administration
425.0
384.2
0.5
Total
250,644.4
100,731.5
67,389.5
Source: Department of Health and Human Service (HHS) data. | GAO-20-625
Note: The COVID-19 relief laws included provisions for HHS to transfer appropriated funds to various HHS agencies. HHS also
reported that of its total COVID-19 appropriation, the agency transferred $289 million to the Department of Homeland Security,
and $300 million in appropriations are not available until future actions by HHS.
aThese amounts do not reﬂect Medicaid and Medicare expenditures. As of May 31, 2020, COVID-19 related federal Medicaid
expenditures totaled approximately $7.2 billion or 7 percent of total spending on Medicaid services for this time period. In
addition, the Congressional Budget Oﬃce estimated that some provisions of the CARES Act will increase Medicare payments to
providers by $8 billion in 2020 and 2021.
bThe Public Health and Social Services Emergency Fund (PHSSEF) is an account HHS generally uses to provide appropriations
to certain HHS oﬃces, such as the Oﬃce of the Assistant Secretary for Preparedness and Response. Congress has
appropriated amounts to this fund for the COVID-19 response to support certain HHS agencies and response activities. PHSSEF
appropriations transferred to other HHS agencies or key funds not speciﬁcally listed are included under “Other PHSSEF.” For
example, the Health Resources and Services Administration received $975 million in transfers from the PHSSEF, and this is
represented in the table in “Other PHSSEF.”
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cThe Provider Relief Fund reimburses eligible health care providers for health care related expenses or lost revenues that are
attributable to COVID-19. The CARES Act and Paycheck Protection Program and Health Care Enhancement Act appropriated
$175 billion in funding for provider relief. In addition, the Families First Coronavirus Response Act and the Paycheck Protection
Program and Health Care Enhancement Act designated up to $2 billion to reimburse providers for COVID-19 testing for
uninsured individuals.
HHS’s reported obligations and expenditures have been for a variety of COVID-19 selected
response activities, including activities to support testing, the development of vaccines or
therapeutics, and the acquisition of critical supplies. The following table provides HHS’s reported
appropriations, obligations, and expenditures by key response activity.
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HHS’s Reported Appropriations, Obligations, and Expenditures for COVID-19 Response, by Selected Key Response
Activity, as of May 31, 2020
Key activity
Total HHS appropriations
($ in millions)
Total HHS obligations
($ in millions)
Total HHS expenditures ($
in millions)
Health Centersa
2,020.0
2,000.5
214.7
Head Start
750.0
1.8
0.0
Provider Relief Fundb
177,000.0
65,360.6
65,204.0
Support to state, local,
territorial, and tribal
organizations for
preparedness
13,980.1
12,209.8
489.4
Strategic National Stockpile
16,710.0
6,880.6
330.2
Telehealth
159.5
35.0
0.0
Testing
3,094.8
714.5
43.7
Vaccines or therapeutics
5,467.2
3,612.4
18.1
Other response activities
31,462.8
9,916.3
1,089.5
Total
250,644.4
100,731.5
67,389.5
Source: Department of Health and Human Service (HHS) data. | GAO-20-625
Note: HHS reported appropriations, obligations, and expenditures for these activities based on the primary programmatic
recipient organization of the funds, although some activities apply to multiple categories. For example, certain funds in the
“support to state, local, territorial, and tribal organizations for preparedness” category were provided for testing but are not
reﬂected in the “testing” category.
aHealth Centers provide a comprehensive set of primary and preventative health care services to individuals regardless of their
ability to pay. Approximately $17 million of this funding is for Health Center Program look-alikes, which are centers that do not
receive Health Center Program funding but meet program requirements.
bThe Provider Relief Fund reimburses eligible health care providers for health care related expenses or lost revenues that are
attributable to COVID-19. The CARES Act and Paycheck Protection Program and Health Care Enhancement Act appropriated
$175 billion in funding for provider relief. In addition, the Families First Coronavirus Response Act and the Paycheck Protection
Program and Health Care Enhancement Act designated up to $2 billion to reimburse providers for COVID-19 testing for
uninsured individuals.
GAO Methodology and Agency Comments
We requested, and HHS provided, data on appropriations, obligations, and expenditures by
HHS agency and by key response activity, as of May 31, 2020. We also obtained and analyzed
appropriation warrant information provided by the Department of the Treasury as of May 31,
2020. To assess the data provided by HHS, we compared them with the federal spending database,
USASpending.gov, as well as HHS’s spending database, taggs.hhs.gov, and HHS’s website, but
we did not independently validate the data.278 We also reviewed the four relief laws enacted
to assist the response to COVID-19. We provided a draft of this report to HHS and the Oﬃce
278We searched HHS’s Tracking Accountability in Government Grants System website and USASpending.gov—a publicly
available website developed and operated by the Department of the Treasury that includes detailed data on federal
spending, including obligations, across the federal government. See https://taggs.hhs.gov/coronavirus (accessed June 1,
2020) and https://USAspending.gov (accessed June 1, 2020).
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of Management and Budget (OMB) for review and comment. HHS did not comment on this
enclosure. OMB provided technical comments, which we incorporated as appropriate.
Contact information: Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov
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Nutrition Assistance
The federal response to the COVID-19 pandemic included additional funds and increased
ﬂexibilities for state, tribal, and local agencies to provide nutrition assistance across various
programs; however, some vulnerable populations may not be able to access assistance, and there
are operational challenges in implementing program changes.
Entities involved: Department of Agriculture, Food and Nutrition Service; Department of Health
and Human Services, Administration for Community Living
Key considerations and Future GAO Work
We will continue to monitor these issues in ongoing and planned work regarding the eﬀect of
COVID-19 on nutrition assistance programs.
Background
Several long-standing nutrition programs provide assistance to diﬀerent populations in need,
including the following:
• The Supplemental Nutrition Assistance Program (SNAP), the largest nutrition assistance
program, is intended to help low-income individuals and households obtain a more nutritious
diet by supplementing their income with beneﬁts to purchase allowed food items.
• Child nutrition programs, including the National School Lunch Program, the School Breakfast
Program, Summer Food Service Program, the Child and Adult Care Food Program, and other
programs provide paid, free, or reduced-price meals and snacks to eligible children in child
care centers and schools, or during the summer or when schools are otherwise closed.
• The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides
beneﬁts to purchase food packages, such as infant formula and vegetables, to low-income
pregnant, breastfeeding and nonbreastfeeding postpartum women, infants, and children up to
age 5 who are at nutritional risk, as well as health and nutritional support services.
• The Emergency Food Assistance Program (TEFAP) provides groceries to low-income individuals
through food banks.
• Older Americans Act (OAA) nutrition services provide meals and other nutrition services for
older adults delivered either at home or in a congregate setting.
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In ﬁscal year 2019, these programs received $103.7 billion in federal funds, of which SNAP
accounted for $73.5 billion, and child nutrition programs accounted for $23.1 billion.279 SNAP, child
nutrition programs, WIC, and TEFAP are administered by the Department of Agriculture’s Food and
Nutrition Service (FNS), while nutrition services provided under the OAA are administered by the
Department of Health and Human Services’ Administration for Community Living (ACL).
Overview of Key Issues
In response to COVID-19, the Families First Coronavirus Response Act (FFCRA) and the CARES Act
provided additional funding for these nutrition assistance programs to meet the needs of existing
and new recipients of these beneﬁts.280 Federal oﬃcials anticipate much of the additional funding
will be used for new recipients. For example, unoﬃcial 2020 data from FNS show weekly SNAP
applications increasing in most states in the period from mid-March through April, compared with
the month of January, with 16 states experiencing an average increase of 100 percent or more.281
(see table). Some of these program ﬂexibilities were provided on a nationwide basis, while others
were provided on a state-by-state basis, in some cases subject to federal approval or notiﬁcation.
279Funding levels for Older Americans Act nutrition services include nutrition services for Title III programs and nutrition
and supportive services for Title VI programs.
280See generally FFCRA, Pub. L. No. 116-127, 134 Stat. 178 (2020) and the CARES Act, Pub. L. No. 116-136, 134 Stat. 281
(2020).
281For reporting purposes in this enclosure, the District of Columbia is referred to as a state.
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Additional Funding and Examples of Program Flexibilities Provided for Nutrition Assistance Programs Due to
COVID-19
Program name
Additional funding provided (in
dollars) a
Examples of program ﬂexibilities
provided in response to COVID-19
under authorities in FFCRA, the
CARES Act, or other authorities b
Supplemental Nutrition Assistance
Program (SNAP)
15.5 billionc
• Time limits for SNAP beneﬁts
for certain working-age adults
without disabilities or dependents
and who are not meeting
speciﬁed work requirements are
suspended.
• Current SNAP recipients may
receive emergency allotments up
to the maximum amount allowed
per household size.
• Applicant or recipient interview
requirements can be waived or
adjusted.
Child nutrition programs
(e.g., school and summer meals
programs)
8.8 billion
• Meals can be served outside
meal times and in noncongregate
settings.
• Parents or guardians can pick up
meals to bring home to eligible
children without the child needing
to be present.
• Summer meals programs can
serve areas that do not meet the
requirement that at least half of
the children are in low-income
households.
The Emergency Food Assistance
Program (TEFAP)
850 million
Of this amount, 250 million can be used
for costs associated with the distribution
of commodities.
• States may adjust TEFAP income
eligibility guidelines to expand
participant eligibility at any
time, consistent with program
regulations.
• States have the ﬂexibility to collect
addresses to account for social
distancing, such as over the phone
or by photographing a written
address as an individual maintains
a safe distance.
• Eligible recipient agencies can
utilize a drive-through model,
or deliver foods to central pick-
up locations or to participants’
homes.
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Nutrition services under the Older
Americans Act (OAA)
750 million
Of this amount , 30 million are for Native
American nutrition services.
• Meals provided at congregate sites
can be packaged to take home.
• States can transfer 100 percent
of OAA nutrition services funds
between the congregate and
home-delivered meal programs to
address identiﬁed needs.
• Nutrition requirements can be
waived for meals to address
limited food availability.
Special Supplemental Nutrition
Program for Women, Infants, and
Children (WIC)
500 million
• Beneﬁciaries do not need to
be physically present to enroll
or reenroll in WIC or to pick up
electronic beneﬁt cards or paper
coupons.
• Substitutions are allowed for
types and amounts of certain
WIC-prescribed foods if their
availability is limited.
• State agencies may issue up to
4 months of beneﬁts on beneﬁt
cards at one time to reduce need
for contact with WIC staﬀ.
Source: GAO analysis of relevant provisions of the Families First Coronavirus Response Act (FFCRA) and the CARES Act (funding information), and information from the Department
of Agriculture’s Food and Nutrition Service and the Department of Health and Human Services’ Administration for Community Living. | GAO-20-625
aThe funding shown in this table only includes funds provided under FFCRA, the CARES Act, or both, depending on the program.
Other funding may have been separately provided for these programs, such as through annual appropriations acts.
bSome of these program ﬂexibilities were provided on a nationwide basis, while others were provided on a state-by-state basis,
in some cases subject to federal approval or notiﬁcation. All of the ﬂexibilities described in the table, whether nationwide or on
a state-by-state basis, are temporary in nature, and the duration varies depending on the program and the speciﬁc ﬂexibility.
cThe Department of Agriculture received an indeﬁnite appropriation of necessary amounts for Pandemic EBT (Electronic
Beneﬁts Transfer). The Oﬃce of Management and Budget subsequently apportioned $8.9 billion for Pandemic EBT for ﬁscal
year 2020. This amount is not included in the $15.5 billion for SNAP shown in this table.
FNS has also denied some states’ waiver requests for certain nutrition programs, including some
which may aﬀect particularly vulnerable populations. For example:
• For SNAP, as of June 1, 2020, FNS had approved 97 requests from states for waivers and
denied 128, including denying requests from 31 states asking to suspend the requirement that
college students work at least 20 hours per week or participate in federal work study to be
eligible for SNAP.282 In letters to FNS, states reported that otherwise eligible students could
282Counts in this section include requests from states, tribes, and U.S. territories, and do not include extensions of
earlier approved requests. For SNAP, these counts include approvals for emergency allotments, but do not include
adjustments that states have made under SNAP’s state options or blanket waivers, which FNS oﬃcials indicated
require FNS notiﬁcation rather than approval. As of June 1, 2020, states had notiﬁed FNS of making over 400 such
adjustments for SNAP (excluding extensions of earlier adjustments).
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not meet these requirements due to campus and business closures. In a letter explaining
this denial and others, FNS stated that it considered factors outlined in FFCRA, which allows
the Secretary of Agriculture to adjust SNAP issuance methods and application and reporting
requirements to be consistent with what is practicable under actual conditions in aﬀected
areas.283 FNS oﬃcials said that the agency did not consider waiving restrictions on students’
eligibility to be allowable under FFCRA’s factors for adjustments. In the same denial letter,
FNS reiterated that states are not able to provide emergency allotments to households that
are already receiving the maximum SNAP beneﬁt amount.284 FNS oﬃcials told us this was
prohibited based on provisions in the Food and Nutrition Act of 2008 as well as FFCRA.
• For WIC, as of June 1, 2020, FNS had approved over 600 waiver requests and denied or
deemed not waivable 60 waiver requests from states. For example, FNS denied requests
related to waiving certain food package items. The agency also deemed not waivable requests
to permit recipients to roll over unused beneﬁts into subsequent months. FNS oﬃcials
explained that the agency does not have authority to waive this requirement or to approve
requests that do not meet criteria for WIC waivers laid out in FFCRA.285
For other programs, such as child nutrition programs and OAA nutrition services, agency oﬃcials
told us that states or localities could exercise most program waivers or ﬂexibilities provided under
FFCRA or the CARES Act without ﬁrst obtaining federal agency approval.286
Federal agencies have faced various challenges in their eﬀorts to respond to the pandemic. FNS
and ACL oﬃcials said the volume of requests and questions from states during this period has
been unprecedented, and providing guidance in an ever-changing and uncertain environment has
been challenging. For example, FNS oﬃcials told us that it was challenging to integrate aspects
of SNAP and the school meals programs for “Pandemic EBT” (Electronic Beneﬁts Transfer), but
that FNS did so in order to quickly issue guidance for this new program. This program, authorized
under FFCRA, provides supplemental allotments to households already receiving SNAP beneﬁts
and new issuances to households not already receiving beneﬁts through the EBT card system
for families with children who would have received free or reduced-price school meals, if not
283U.S. Department of Agriculture, Food and Nutrition Service, “RE: Supplemental Nutrition Assistance Program
(SNAP)–Denial of Certain Requests to Adjust SNAP Regulations,” April 10, 2020. Speciﬁcally, section 2302 of FFCRA
provides that, in making such adjustments, the Secretary shall consider the availability of oﬃces and personnel
in state agencies, any conditions that make reliance on electronic beneﬁt transfer systems impracticable, any
disruptions of transportation and communication facilities, and any health considerations that warrant alternative
approaches. Pub. L. No. 116-127, § 2302(a)(2), 134 Stat. at 188-89.
284These households had incomes averaging 23 percent of federal poverty guidelines (which was about $4,800
annually for a family of three in 2018), and made up an estimated 37 percent of SNAP households in ﬁscal year
2018, based on the most recent available data. See U.S. Department of Agriculture, Food and Nutrition Service,
Characteristics of Supplemental Nutrition Assistance Program Households: Fiscal Year 2018 (Alexandria, VA: 2019).
285For example, section 2204 of FFCRA authorizes the Secretary of Agriculture, if requested by a state agency, to
modify or waive any WIC regulatory requirement that the Secretary determines (a) cannot be met by a state agency
due to COVID-19; and (b) the modiﬁcation or waiver of which is necessary to provide assistance under WIC. Pub. L.
No. 116-127, § 2204, 134 Stat. at 187.
286See, e.g., Pub. L. No. 116-127, § 2202(a), 134 Stat. at 185 and Pub. L. No. 116-136, § 3222(b), 134 Stat. at 379.
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for school closures due to COVID-19.287 Also, ACL oﬃcials discussed, for example, the challenge
of providing guidance to help keep older adults, staﬀ, and volunteers safe from exposure to
COVID-19, and the need for additional considerations as some states began to reopen.
Federal oﬃcials said that state and local agencies are facing operational challenges due to having
to operate in the new pandemic environment that is aﬀecting business processes, staﬀ capacity,
and technology. For instance, federal oﬃcials said the ability to easily modify data systems to
incorporate new ﬂexibilities varies among state and local agencies, and agencies are concerned
with associated costs. In the case of Pandemic EBT, federal oﬃcials noted that states are needing
to coordinate across data systems for SNAP and school meals in order to serve existing SNAP
households alongside a new population of non-SNAP households, and such coordination may
be challenging. As of June 1, 2020, 39 states had approved plans to issue Pandemic EBT beneﬁts
in their states, according to information provided by FNS. In addition, federal oﬃcials said that
state or local capabilities to provide assistance remotely vary widely. For WIC, for example,
while providing assistance online or by phone rather than in person has resulted in fewer
missed appointments for some WIC recipients, limited technology at local WIC clinics can create
challenges to delivering services, FNS oﬃcials said.
GAO Methodology and Agency Comments
To conduct our work, we reviewed the most recent data available from FNS on states’ requests
for ﬂexibilities as of June 1, 2020, as well as unoﬃcial data collected by FNS on states’ SNAP
applications for January through April 2020. We also reviewed relevant federal laws and agency
guidance and interviewed agency oﬃcials at FNS and ACL. We provided a draft of this enclosure to
FNS and ACL for review and comment. FNS provided technical comments, which we incorporated
as appropriate. ACL did not provide comments on this enclosure.
Contact Information: Kathryn A. Larin, (202) 512-7215 or larink@gao.gov
Related GAO Products
Nutrition Assistance Programs: Agencies Could Do More to Help Address the Nutritional Needs of Older
Adults. GAO-20-18. Washington, D.C.: November 21, 2019.
Food Insecurity: Better Information Could Help Eligible College Students Access Federal Food Assistance
Beneﬁts. GAO-19-95. Washington, D.C.: December 21, 2018.
287The Department of Agriculture received an indeﬁnite appropriation of necessary amounts for Pandemic EBT. Pub. L.
No. 116-127, § 1101(i), 134 Stat. at 180. The Oﬃce of Management and Budget subsequently apportioned $8.9 billion for
this program for ﬁscal year 2020.
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Supplemental Nutrition Assistance Program: More Complete and Accurate Information Needed on
Employment and Training Programs. GAO-19-56. Washington, D.C.: November 20, 2018.
Summer Meals: Actions Needed to Improve Participation Estimates and Address Program Challenges.
GAO-18-369. Washington, D.C.: May 31, 2018.
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Child Care
The Administration for Children and Families’ Oﬃce of Child Care is helping states to implement
available ﬂexibilities in the CARES Act and the Child Care and Development Block Grant Act of
1990, as amended, to address the impacts of COVID-19, but has not determined how it will collect
data on states’ use of CARES Act supplemental funding.
Entity involved: Oﬃce of Child Care, Administration for Children and Families, Department of
Health and Human Services
Key Considerations and Future GAO Work
In March 2020, we found issues with the Oﬃce of Child Care’s (OCC) oversight of State Plans, and
we made several relevant recommendations to help strengthen Child Care and Development Fund
(CCDF) program integrity, with which the Department of Health and Human Services (HHS) agreed.
Implementing these recommendations could also help OCC to improve states’ accountability in
overseeing the use of CCDF and CARES Act funds received after our March 2020 report. These
recommendations include, among others, that the Director of OCC (1) establish internal written
policies to eﬀectively implement and document the State Plan review and approval process for
future review and approval periods, (2) deﬁne informational needs related to the results of state
program-integrity activities, and (3) communicate externally to the states its informational needs
related to the results of states’ program-integrity activities.
In related work, we will review OCC’s plans to oversee spending of the CARES Act monies and to
support states in their eﬀorts to address the child care impacts of COVID-19.
Background
The Child Care and Development Block Grant (CCDBG) Act authorizes discretionary funding for
the federal child care subsidy program known as CCDF, which was appropriated more than $8
billion in federal funds in 2019, and, on average, assists about 1.3 million eligible children from
low-income families on a monthly basis. The CCDF is administered as a block grant to the states by
OCC, an oﬃce within HHS’s Administration for Children and Families (ACF).288
The CARES Act provides an additional $3.5 billion for the Child Care and Development Block Grant,
the discretionary funding portion of CCDF, to help states prevent, prepare for, and respond to
288For reporting purposes, in this enclosure we use “states” to also refer to U.S. territories and tribes. Discretionary
CCDF funds are entirely federal funds that are allocated to states based on a statutory formula. See 42 U.S.C. § 9858m.
Under the program, these discretionary funds do not require a state match. CCDF is also made up of mandatory
and matching funding, which is authorized under the Social Security Act (42 U.S.C. § 618) and administered by the
Department of Health and Human Services.
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coronavirus.289 For example, under the provisions of the CARES Act, states may use funds to
provide child care assistance to health care sector employees and other essential workers without
regard to the CCDBG Act’s income eligibility requirements. States may also use funds to provide
payments and assistance to child care providers facing decreased enrollment or related closures,
and, further, are encouraged to place conditions on payments to child care providers that ensure
providers continue to pay their staﬀ’s salaries and wages.290
Overview of Key Issues
OCC ﬁnalized and provided CARES Act supplemental funding allocations to states on April 14,
2020. Funds were allocated to states based on the CCDF discretionary funding formula in the
CCDBG Act.291 OCC has also developed and updated a variety of CCDF-speciﬁc guidance and
resources to help states implement program ﬂexibilities in the CARES Act and the CCDBG Act that
may help address the impacts of COVID-19.292 OCC oﬃcials said their most pressing priority has
been to help states understand the federal ﬂexibilities that already exist under the CCDBG Act for
using the child care funding available to them and how to use these ﬂexibilities appropriately. To
do so, OCC oﬃcials have held calls with state CCDF administrators and developed several guidance
documents that summarize applicable provisions of the CARES Act and highlight available
ﬂexibilities in the CCDBG Act.
According to OCC, if states cannot meet certain CCDF program requirements—such as for
comprehensive background checks for child care providers—due to a national emergency, for
instance—or wish to substantially change elements of their State Plans that are required to receive
CCDF funding, they can submit a waiver request or a Plan amendment.293 In a tip sheet for states,
OCC describes conditions under which states may choose to submit a request to waive certain
federal requirements or amend their State Plans and time frames for doing so. As of June 8, 2020,
289Pub. L. No. 116-136, div. B, tit. VIII, 134 Stat. 281, 557 (2020). The funds are to remain available through September 30,
2021, and are to supplement, not supplant, state general revenue funds for child care assistance for low-income families
without regard to requirements in sections 658E(c)(3)(D)–(E) or 658G of the CCDBG Act. Further, payments made under
the CARES Act may be obligated by the states in ﬁscal year 2020 or the succeeding 2 ﬁscal years.
290Id. at 557-558.
291Generally, the discretionary funding formula is based on three primary factors: (1) ratio of the number of children
under age 5 in the state to the number of children under age 5 in the country; (2) ratio of the number of children in the
state who receive free or reduced price school lunches under the Richard B. Russell National School Lunch Act to the
number of such children in the country; and (3) a weighting factor determined by dividing the 3-year average national
per capita income by the 3-year average state per capita income (as calculated every 2 years). See 42 U.S.C. § 9858m(b).
292For example, OCC initially developed answers to CCDF Frequently Asked Questions in Response to COVID-19 and held
a nationwide state CCDF administrators call in March 2020—prior to enactment of the CARES Act—to share available
resources from the CCDBG Act to address the pandemic. OCC has continued to update its resources to include CARES
Act-speciﬁc information (e.g., guidance issued on April 9, 2020, that discusses CARES Act ﬂexibilities).
293The CCDBG Act allows the Secretary of Health and Human Services to waive any provision of the act under certain
circumstances. 42 U.S.C. § 9858g(c)(1). In order to receive CCDF funding, states are required to develop and submit to
OCC for approval a State Plan that includes assurances and certiﬁcations regarding state licensing requirements, the use
of block grant funds, and health and safety standards, among other things. 42 U.S.C. § 9858c(c).
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HHS had approved waiver requests from 35 states, most frequently related to health and safety
inspections (see ﬁgure).
States with Approved Child Care and Development Block Grant Act Waivers, as of June 8, 2020
Upon requesting a waiver, states must certify and describe how the health, safety, and well-being
of children served through CCDF would not be compromised as a result of the waiver.294 OCC
oﬃcials said they expect states to satisfy the intentions of CCDBG Act requirements, to the extent
possible. For example, an OCC oﬃcial noted that it is currently diﬃcult, if not impossible, for child
care providers in some locations to obtain and process ﬁngerprint checks—one component of
a state’s background check requirements—due to COVID-19. In such cases, they said, HHS may
grant a waiver for the ﬁngerprint requirement speciﬁcally, but not for the background check more
generally, which states could still conduct using a provider’s name, Social Security number, or
other identifying information.
OCC oﬃcials have not yet determined speciﬁcally how they will monitor and oversee CARES Act
supplemental funding. These oﬃcials said they envision using certain existing CCDF practices, such
as quarterly ﬁnancial reports and reviews of State Plans, but are still considering what additional
steps or modiﬁcations to current data collection will be needed. Without modiﬁcations, current
CCDF reporting requirements will not necessarily capture complete information on the use of
CARES Act funds, such as the number of essential workers that are provided child care subsidies
regardless of income, the number of child care providers that receive assistance while closed to
aid in their possible reopening, and the number of child care providers that receive assistance
that had not done so prior to the pandemic. An OCC oﬃcial did note that OCC will probably need
to track CARES Act funding separately because it has a diﬀerent obligation period for the states
than CCDBG Act funding; however, the oﬃcial expressed concern about states’ current capacity to
make internal changes to their data management systems. Additionally, OCC oﬃcials said they will
need to consider whether additional reporting requirements would require Oﬃce of Management
29442 U.S.C. § 9858g(c)(2)(C).
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and Budget clearance and the additional burden such requirements may place on states as they
respond to the pandemic.
GAO Methodology and Agency Comments
To conduct this work, we reviewed relevant federal laws and the most recent agency guidance as
of June 8, 2020, and interviewed OCC oﬃcials.
ACF provided technical comments, which we incorporated as appropriate.
Contact information: Kathryn A. Larin, (202) 512-7215, larink@gao.gov
Related GAO Products
Child Care and Development Fund: Oﬃce of Child Care Should Strengthen Its Oversight and Monitoring
of Program-Integrity Risks. GAO-20-227. Washington, D.C.: March 2, 2020.
Child Care and Development Fund: Subsidy Receipt and Plans for New Funds. GAO-19-222R.
Washington, D.C.: February 15, 2019.
Child Care: States Report Child Care and Development Funds Beneﬁt All Children in Care. GAO-19-261.
Washington, D.C.: April 25, 2019.
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Emergency Financial Aid for College Students
The Department of Education awarded schools nearly all of the initial $6.3 billion designated for
college students’ emergency ﬁnancial aid, but the department’s evolving communications may
have delayed schools’ distribution of funds to students.
Entities Involved: Department of Education
Key Considerations and Future GAO Work
GAO plans to conduct additional work on the needs of college students during the pandemic and
how the Department of Education (Education) and institutions of higher education are working to
address these needs.
Background
Institutions of higher education (schools) throughout the country have faced unprecedented
disruptions due to COVID-19. In March 2020, schools across the nation closed their physical
campuses and began exclusively providing online classes. As a result, students may have incurred
additional unexpected expenses, such as the purchase of a laptop or a last-minute ﬂight home.
For students with limited ﬁnancial resources, these unplanned expenses, in combination with
a declining economy, could potentially disrupt their educational pursuits. In fact, some higher
education associations predict that college enrollment in academic year 2020–2021 will generally
decrease as a result of COVID-19’s eﬀects on the economy and changes to instruction delivery and
campus operations.
The CARES Act appropriated about $14 billion for the Higher Education Emergency Relief Fund
(HEERF), of which about $12.6 billion was appropriated for grants to schools to prevent, prepare
for, and respond to the coronavirus.295 The CARES Act directed Education to allocate these
funds to eligible schools using a funding formula.296 Schools are required to distribute at least
295The remaining HEERF funds were appropriated for the following purposes: about $1 billion for additional awards
under parts A and B of title III, parts A and B of title V, and subpart 4 of part A of title VII of the Higher Education Act to
address needs directly related to coronavirus; and about $349 million for part B of title VII of the Higher Education Act
for schools that the Secretary of Education determines have the greatest unmet needs related to coronavirus. Pub. L.
No. 116-136, §§ 18001(b)(3), 18004(a), 134 Stat. 281, 564, 567-68 (2020).
296Speciﬁcally, by law, Education is required to apportion these funds using the following formula: 75 percent based
on a school’s relative share of full-time equivalent enrollment of Federal Pell Grant recipients who were not exclusively
enrolled in distance education prior to the coronavirus emergency; and 25 percent based on a school’s relative share
of full-time equivalent enrollment of students who were not Federal Pell Grant recipients and who were not exclusively
enrolled in distance education prior to the coronavirus emergency. Pub. L. No. 116-136, § 18004(a)(1), 134 Stat. at 567.
Because the statutory funding formula uses full-time equivalents instead of student headcounts, schools receive less
funding for part-time students than they do for full-time students, although both types of students may incur the same
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50 percent of the funds they receive—about $6.3 billion—to students as emergency ﬁnancial
aid grants (emergency student aid) for expenses related to disrupted campus operations due
to the coronavirus.297 Schools can use the remaining funds for additional student grants, or to
cover institutional costs associated with signiﬁcant changes in instruction delivery due to the
coronavirus.
Education decided to award the $12.6 billion to schools in two stages, starting with $6.3 billion
designated for emergency student aid. In the 2 weeks after the CARES Act was enacted, Education
got the new grant program up and running, which included determining how to apply the funding
formula, calculating the amounts allocated to each school, and developing procedures needed
to operationalize the program. Education oﬃcials told us that applying the funding formula was
time consuming because it required data the department does not collect, including student
enrollments calculated in full time equivalents and the number of students enrolled in online
programs. They also said that Education immediately coordinated with the Department of
the Treasury to determine whether the grants could be disbursed to students as “emergency
assistance,” and therefore be exempt from taxation and consideration in future ﬁnancial aid
determinations.298 Education’s application of the funding formula resulted in more than two-thirds
of the $6.3 billion designated for emergency student aid being allocated to public 2-year and 4-
year schools (see ﬁgure).
Allocation of Higher Education Emergency Relief Funds Designated for Emergency Student Aid Due to COVID-19,
by Sector
Notes: Schools of less than 2 years are included in the 2-year school categories above. The Department of Education also
allocated about $25 million to 2-year private, nonproﬁt schools and about $1.7 million to the Commonwealth of Puerto Rico
Department of Education.
On April 9, 2020, Education notiﬁed schools of their individual allocations to help inform their
planning and provided them with the paperwork required to apply for the emergency student aid
funds. About 1 week later, on April 17, 2020, Education began to award HEERF emergency student
aid funds to schools.
types of expenses. Thus, schools with a larger percentage of part-time students, such as public 2-year schools, may have
received less funding per student than other schools.
297Pub. L. No. 116-136, § 18004(c), 134 Stat. at 568. These expenses may include eligible expenses under a student's cost
of attendance, such as food, housing, course materials, technology, health care, and child care.
298The Department of the Treasury subsequently issued guidance clarifying that emergency ﬁnancial aid grants under
the CARES Act were exempt from federal taxation. Internal Revenue Service, FAQs: Higher Education Emergency Relief
Fund and Emergency Financial Aid Grants under the CARES Act, accessed June 17, 2020, https://www.irs.gov/newsroom/
faqs-higher-education-emergency-relief-fund-and-emergency-ﬁnancial-aid-grants-under-the-cares-act. Also Education
encouraged schools to exclude emergency ﬁnancial aid grants from the calculation of a student’s expected family
contribution on a case-by-case basis, according to the grant’s funding certiﬁcation and agreement.
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Overview of Key Issues
As of May 31, 2020, Education had awarded more than $6 billion in HEERF emergency student
aid to more than 4,000 schools, according to Education’s data.299 However, representatives from
ﬁve of the seven higher education associations we contacted said that Education’s evolving
communications created diﬃculties that contributed to delays in schools’ disbursing emergency
student aid. Education introduced new information about student eligibility nearly 2 weeks after
schools began to submit the required paperwork for funding and also took subsequent actions on
the issue of eligibility.
Evolving communications. In a letter provided to schools on April 9, 2020, concurrent with
the grant announcement, Education stated that the CARES Act provides schools with signiﬁcant
discretion on how to award the emergency aid to students. The letter also stated that each school
may develop its own system and process for determining how to allocate these funds. On April
21, 2020—when half of eligible schools had already applied for funds—Education released a
“Frequently Asked Questions” (FAQ) document that provided new information about student
eligibility. Speciﬁcally, it stated that only students who are, or could be, eligible for federal student
aid programs under section 484 of the Higher Education Act of 1965, as amended, may receive
emergency ﬁnancial aid grants.300 The document further speciﬁed that the criteria to participate
in such programs include, among other things, U.S. citizenship or eligible noncitizen status; a
valid Social Security number; registration with Selective Service (if the student is male); and a high
school diploma, GED, or completion of high school in an approved homeschool setting. Students
who are not eligible for federal student aid programs include undocumented students, including
those with Deferred Action for Childhood Arrivals (DACA) status, among others.301
These changes created challenges for schools, according to representatives of ﬁve higher
education associations we contacted. Representatives from one association told us that some
schools had already developed their plans for how to distribute the funds prior to the release of
Education’s FAQ document, so they had to start their planning process over in response to the
new information provided on student eligibility. This association also conducted a survey of its
members in May and reported that more than half of its respondents said the new information
about student eligibility greatly altered schools’ plans for distributing funds.302 Absent Education’s
FAQ document, more than three-quarters of respondents indicated they would not have restricted
funds to students eligible to participate in federal student aid programs.
299Some schools, including some with signiﬁcant endowments, have decided not to pursue the grant funds allocated to
them. Education oﬃcials stated that such schools will have to inform Education that they are declining their allocated
amount by a yet to be determined date. They also said they are still determining how these funds will be reallocated to
other schools.
300See 20 U.S.C. § 1091. Litigation challenging Education’s actions related to student eligibility for emergency student aid
is currently pending in federal court. See Oakley v. DeVos, No. 20-3215 (N.D. Cal. ﬁled May 11, 2020) and Washington v.
DeVos, No. 20-182 (E.D. Wash. ﬁled May 19, 2020).
301See Federal Student Aid, “Financial Aid and Undocumented Students: Questions and Answers” (February 2019).
302Responses were based on surveys from 587 schools of varying sectors and accounted for a 23 percent response rate.
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To conﬁrm students’ eligibility for federal student aid for purposes of awarding student emergency
aid grants, schools generally plan to use the federal student aid application (Free Application
for Federal Student Aid or FAFSA), according to representatives of all seven higher education
associations we contacted. Representatives of four associations told us that schools were
uncertain about how else they could verify student eligibility, and two of them said that as of May
2020 schools were awaiting further direction from Education as to whether students could self-
attest to meeting the eligibility requirements. Given this uncertainty, some schools only planned
to award grants to students currently veriﬁed as eligible for federal student aid, according to four
associations. This approach may exclude potentially eligible students who are also in need. For
example, it may limit emergency aid to veterans, who are less likely to have applied for federal
student aid, according to one veterans’ education organization.
In late May and June, Education took additional actions related to student eligibility for emergency
student aid. On May 21, 2020, Education posted an update to its website reiterating the
statements in its FAQ document about student eligibility for emergency aid, and also stating that
the agency would not initiate any enforcement action based solely on the statements because
they lack the force and eﬀect of law.303 On June 17, 2020, Education published an interim ﬁnal rule
in the Federal Register to formalize its interpretation that eligibility for emergency student aid is
limited to those students who are eligible for federal student aid.304 In the rule, Education also
states that it will not enforce this eligibility interpretation against schools that distributed HEERF
funds to students prior to the publication of the rule. The rule also describes processes schools
could use to verify the eligibility of students who are not currently receiving federal student aid.305
Two federal courts have issued preliminary injunctions, temporarily prohibiting Education from
enforcing the student eligibility provisions in its April 21, 2020 FAQ document and the interim ﬁnal
rule with respect to certain schools in Washington and California.306
303See https://www2.ed.gov/about/oﬃces/list/ope/caresact.html. In this same update, Education further stated that “[i]n
contrast, the underlying statutory terms in the CARES Act are legally binding, as are any other applicable statutory terms,
such as the restriction in 8 U.S.C. § 1611 on eligibility for Federal public beneﬁts including such grants.”
304Eligibility of Students at Institutions of Higher Education for Funds Under the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, 85 Fed. Reg. 36,494 (June 17, 2020) (amending 35 C.F.R. § 668.2). Speciﬁcally, the rule provides that
“Student, for purposes of the phrases ‘grants to students’ and ‘emergency ﬁnancial aid grants to students’ in sections
18004(a)(2), (a)(3), and (c) of the [CARES Act], is deﬁned as an individual who is, or could be, eligible under section 484 of
the [Higher Education Act], to participate in programs under title IV of the [Higher Education Act].”
305For example, Education states in the rule that “Students who choose not to ﬁll out a FAFSA but otherwise meet the
title IV eligibility criteria may verify their eligibility by completing an application designed by the institution in which the
student attests under the penalty of perjury to meeting the requirements of section 484 of the [Higher Education Act].”
306See Washington v. DeVos, No. 20-182 (E.D. Wash. June 12, 2020) (order granting plaintiﬀ’s motion for preliminary
injunction) (prohibiting Education from “implementing or enforcing the provisions in the April 21, 2020 guidance and the
Interim Final Rule that restricts the discretion of higher education institutions in the State of Washington to determine
which students will receive CARES Act student emergency ﬁnancial assistance grants to only those students who are
eligible for federal ﬁnancial aid under Title IV, section 484 of the Higher Education Act, in any manner or in any respect,
and shall preserve the status quo” until further order of the court. See also Oakley v. DeVos, No. 20-3215 (N.D. Cal.
June 17, 2020) (order granting plaintiﬀ’s motion for preliminary injunction) (prohibiting Education from “[i]mposing or
enforcing any eligibility requirement for students to receive HEERF assistance,” including those set forth in the April 21,
2020, FAQ document and the interim ﬁnal rule, with respect to any community college in California while the lawsuit is
pending).
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Distribution approaches. Schools are using various approaches to determine generally who
receives emergency student aid, according to representatives of all seven higher education
associations we contacted. These representatives also said that schools may be using multiple
approaches, which could include the following:
• Applications: Representatives of all seven associations said some schools are using
applications, and four associations noted that the applications they have seen were short and
generally asked students to identify the expenses they incurred due to COVID-19’s disruption
of their studies.
• Formulas: Representatives of six associations said some schools are using formulas to
distribute funds based on students’ level of ﬁnancial need. For example, some schools
are awarding a greater amount to students who qualify for Pell Grants because they have
demonstrated exceptional ﬁnancial need.
• Identifying student groups: Representatives of four associations said some schools are
identifying groups of eligible students with demonstrable expenses and distributing funds
based on those expenses without requiring an application. For example, they said a group
could include students in a certain course who must purchase supplies to continue their
studies.
Reporting requirements. Representatives from ﬁve of the seven higher education associations
we contacted said the reporting requirements described in Education’s April 9, 2020, funding
certiﬁcation and agreement were not suﬃciently clear.307 On May 6, 2020, Education issued a
letter to schools that modiﬁed the timing, scope, and format of these reporting requirements. The
May 6 letter temporarily instructed schools to post spending information on their school websites.
Required information includes the estimated number of students eligible for aid, the method for
determining which students received aid and how much, and the total amount of funds awarded,
among other things. It is unclear how long schools will report in this manner, as Education oﬃcials
told us they are still determining how schools will report to Education and when such reporting will
occur.
Timing of aid. With regard to timing, Education’s April 9 letter to schools emphasized the goal
of getting money to students in need as quickly as possible. While schools have 1 year to spend
the funds, representatives from three higher education associations told us that most schools
plan to distribute the majority of their funds before the fall term begins.308 Representatives from
the other four associations noted varying trends among schools, with some schools planning
307Section 18004(e) of the CARES Act requires schools receiving HEERF funds to submit a report to Education (at such
time and in such manner as the Secretary may require), that describes the use of such funds. See Pub. L. No. 116-136,
§ 18004(e), 134 Stat. at 568. The funding certiﬁcation and agreement directed each recipient to report to Education 30
days from the date of the agreement, and every 45 days thereafter, on: how grants were distributed to students, the
amount of each grant awarded to each student, how the amount of each grant was calculated, and any instructions or
directions given to students about the grants.
308The funding certiﬁcation and agreement generally requires that schools spend their funds within 1 year of the date of
their funding certiﬁcation and agreement.
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to distribute the majority of their funds before the fall 2020 term begins and others planning to
retain some funds for distribution later in the year.
GAO Methodology and Agency Comments
To conduct this work, we reviewed Education documents and its most recent obligation data,
available as of the end of May 2020, as well as relevant federal laws and regulations. We
interviewed oﬃcials from Education. We also interviewed or received written responses from
representatives of seven higher education associations, whose collective membership includes
thousands of schools. We selected these associations to reﬂect a range of school sectors and
relevant school administrators. We conducted these interviews in late April and received written
responses from all seven associations in early May.
We provided a draft of this report to Education for review and comment. In its written comments,
Education stated that the report sections related to Education’s actions in response to the
pandemic were inaccurate, ﬂawed, incomplete, and unfair. We disagree with this characterization
and note that Education did not identify any speciﬁc statement in this enclosure as inaccurate.
We believe that we accurately described the key facts relating to Education’s implementation
of the emergency student aid grants under the CARES Act. Education also raised questions
about certain information sources. In developing our methodology, we followed our quality
assurance framework, and we developed criteria to select higher education associations that are
knowledgeable, credible, and provide diverse views.
Education commented that the draft report and enclosures are unfair and incomplete because
GAO did not mention the Department's diligence enough. More speciﬁcally, for this enclosure,
Education noted that GAO did not convey the magnitude and speed under which its CARES Act
grant work was completed. We acknowledge Education’s broader eﬀorts to administer its sizable
grant portfolio and note that this enclosure credits Education with taking steps to implement the
HEERF emergency student aid grant program within 2 weeks of the enactment of the CARES Act,
speciﬁcally mentioning the need for Education to apply the funding formula, calculate individual
school allocations, and develop operational procedures in that time. Further, we also noted
that Education began to award funds about a week after schools could apply. In response to
Education’s comments, we added details about Education’s work with the Department of the
Treasury as well as the diﬃculties Education faced in implementing the funding formula. Further,
Education noted that our enclosure was incomplete because we did not compare Education's work
under the CARES Act to the prior administration's work in implementing the American Recovery
and Reinvestment Act of 2009. Such a comparison was beyond the scope of our work for this
enclosure.
In its comments, Education also stated that developing guidance in anticipation of every question
any school could have would have resulted in delays in disbursing funds, noting that it did
not want to hold up the disbursement of funds because some schools would need additional
explanation on which students are eligible for this aid. Education further stated that there should
have been no question about which students were eligible for emergency aid. Education stated
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that it nonetheless provided additional clariﬁcation, including in FAQ documents, in response to
an increasing number of questions about student eligibility. Education noted that our example
of some schools discarding their initial distribution plans after Education released its April 21
FAQ document ignored the ﬂexibility of its communications not being legally binding at that time.
However, Education did not clarify that its interpretation of student eligibility was not legally
binding until May 21, 1 month after the release of the FAQ document. Further, Education appears
to intend its interpretation to be legally binding, as indicated by the issuance of the interim ﬁnal
rule. Education also provided technical comments, which we incorporated as appropriate.
Contact Information: Melissa Emrey-Arras, (617) 788-0534, emreyarrasm@gao.gov
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Leave Beneﬁts and Tax Relief for Employers
Employers have begun claiming refundable tax credits and deferring employer payroll taxes to
mitigate the cost of paid leave for employees; agreements between the Internal Revenue Service
and the Small Business Administration to help ensure compliance have not been ﬁnalized.
Entities involved: Department of the Treasury, Internal Revenue Service, Small Business
Administration, Department of Labor
Key Considerations and Future GAO Work
Establishing controls, and using data to test those controls, helps the Internal Revenue Service
(IRS) ensure compliance with tax laws. Obtaining Small Business Administration (SBA) data
to identify Paycheck Protection Program (PPP) loan recipients is an important step to ensure
employers comply with requirements for the Employee Retention Credit. We have ongoing work
examining PPP and will continue to monitor the establishment of controls and collaboration and
data sharing eﬀorts between IRS and SBA.
Background
As the COVID-19 pandemic contributed to a fall in the employment-population ratio, Congress
passed and the President has signed into law legislation intended to help employers support and
retain aﬀected employees.309 Speciﬁcally, the enacted legislation generally allows employers to use
tax credits and payroll tax deferrals to oﬀset certain paid sick leave and other employee-related
expenses. IRS is responsible for administering and ensuring compliance with the tax aspects
of these provisions. The Department of Labor (DOL) oversees leave policy compliance under
this legislation. IRS’s general capacity to implement new initiatives such as these is an ongoing
challenge cited in our High Risk Report.
The Families First Coronavirus Response Act (FFCRA), as amended by the CARES Act, requires
covered employers to provide emergency paid sick leave and expanded family and medical leave
to eligible employees aﬀected by COVID-19 through December 31, 2020. Covered employers
generally must provide eligible employees (1) up to 80 hours of emergency paid sick leave, subject
to an aggregate payment cap, and (2) up to 12 weeks of emergency family and medical leave,
including 2 weeks unpaid and 10 weeks paid at no less than two-thirds the eligible employee’s
regular rate of pay, subject to an aggregate payment cap.310 Covered employers generally face
309The employment-population ratio represents the percentage of the population that is currently working. In April 2020
the ratio dropped from 60 percent to about 51 percent. In May 2020, the ratio increased to 52.8 percent.
310Pub. L. No. 116-127, §§ 3101–3106, 5101–5111, 134 Stat. 178, 189-192, 195-201 (2020); Pub. L. No. 116-136, §§ 3601,
3602, 134 Stat. 281, 410 (2020).The emergency paid sick leave may be used for quarantine and other situations related
to COVID-19 that leave employees unable to work, and both leave provisions cover care for a minor child whose school
or care provider is unavailable due to COVID-19.
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liability for not oﬀering the leave or discharging, disciplining, or discriminating against any
employee for taking paid leave.311
FFCRA and the CARES Act include provisions for tax credits to mitigate the cost of this leave for
smaller employers and to provide other tax relief. The Joint Committee on Taxation estimates that
these provisions will lead to about $172 billion in foregone revenue for ﬁscal years 2020–2030.
• Paid leave credits. Businesses and tax-exempt organizations with fewer than 500 employees,
as well as self-employed individuals are eligible for refundable FFCRA credits.312 The credits
are equal to the qualiﬁed leave wages, plus the employer share of Medicare taxes paid with
respect to the qualiﬁed wages and allocable health plan expenses, from April 1 through
December 31, 2020. Credit recipients who receive a PPP loan cannot count the wages paid for
by the credit as payroll costs toward loan forgiveness.313
The payroll tax credits may be claimed on the employer’s employment tax return, typically
Form 941, Employer’s Quarterly Federal Tax Return. To receive immediate relief, employers may
reduce their semiweekly or monthly payroll tax deposits by the amount of their credit. If an
anticipated credit amount remains after reducing deposits, the employer may receive an up-
front refund by ﬁling Form 7200, Advance Payment of Employer Credits Due to COVID-19.
• Employee Retention Credit. Under the CARES Act, employers of any size—including tax-
exempt entities and self-employed individuals with employees—can receive the refundable
Employee Retention Credit. The credit equals 50 percent of qualiﬁed wages (up to $10,000
per employee) paid from March 13 through December 31, 2020, including certain health care
expenses.314 Eligible employers are those who experience, in calendar year 2020, either (1)
full or partial suspension of operation during any calendar quarter due to government orders
limiting activity in response to COVID-19, or (2) a decline in gross receipts of more than 50
percent, compared with the same quarter in 2019.
PPP recipients are not eligible for the Employee Retention Credit, unless they repaid the loan
by May 18, 2020. Wages for which the FFCRA credits are allowed are not included in wages for
311Covered employers that fail to provide emergency paid sick leave to eligible employees are considered to have
committed minimum wage violations under the Fair Labor Standards Act of 1938, as amended, and they are subject
to penalties described therein in addition to being liable to the aﬀected employees. Covered employers are subject
to additional penalties for discharging, disciplining, or discriminating against any employee for taking paid leave. The
prohibitions and enforcement provisions in the Family and Medical Leave Act of 1993, as amended, apply to leave under
the expanded family and medical leave provisions. Employees may also bring civil action against covered employers that
violate the expanded family and medical leave provisions.
312FFCRA, § 7001–7004, 134 Stat. at 210–219; CARES Act § 3606, 134 Stat. at 411–412. A refundable tax credit
reduces tax liability, dollar for dollar; if the credit exceeds tax liability, a refund is due. Full-time and part-time
employees are counted. Both credits have maximum payouts. Self-employed individuals may not ﬁle for an advance
on their credit refund.
31315 U.S.C. § 636(a)(36)(A)(viii)(II)(dd), (ee). PPP recipients must meet certain criteria for loan forgiveness; see
”Paycheck Protection Program” in appendix III.
314CARES Act, § 2301, 134 Stat. at 347–351. For employers with more than 100 full time employees in 2019, the
credit is calculated on wages paid to employees who are not providing services. For smaller employers, all wages
are countable.
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the Employee Retention Credit, among other exclusions from wages.315 Employers can claim
the credit on Form 941 and may reduce payroll tax deposits by the credit amount, or ﬁle Form
7200 for an advance refund.
• Deferred payroll tax payments. The CARES Act granted all employers the option to defer
deposits and payments of the employer share of Social Security tax that they would otherwise
be required to make during the period beginning March 27 through December 31, 2020.316
Self-employed individuals may defer half of their Social Security tax due.317 Deferred deposits
are to be reported on Form 941.
Overview of Key Issues
The Wage and Hour Division (WHD) within DOL began enforcement actions related to the leave
implementation on April 18, 2020, after a limited stay of enforcement.318 Employees who believe
their covered employer violated FFCRA may call a toll-free number for technical assistance or to
ﬁle a complaint. As of May 29, 2020, WHD reported it had resolved over 700 compliance actions
and had hundreds more underway. WHD investigators are conducting investigations remotely due
to COVID-19 health concerns, and the agency reports it remains fully operational. According to
DOL, covered employers must document the name of the employee, the dates of requested leave,
a statement from the employee that he or she is unable to work, and the reason. For example, in
the case of an employee’s request to self-quarantine, DOL recommends that employers document
the name of the health care provider who gave that advice.
For the employer tax credits, IRS began releasing guidance and is processing refunds. As of May
31, 2020, IRS said it had received 8,754 e-fax submissions, reviewed 7,185 Form 7200s, and issued
$54.2 million in refunds.319 More information will be available, including amounts of payroll tax
deferrals and the number of employees of credit recipients, after second quarter Form 941s are
due on July 31, 2020.
315 Employees counted under a Work Opportunity Tax Credit are not counted for purposes of the Employee
Retention Credit.
316CARES Act, § 2302, 134 Stat. at 351–352. To be considered timely, deferred payments of 50 percent of tax are to
be made by December 31, 2021, with the remainder due December 31, 2022. The employer share of social security
tax is 6.2 percent of taxable earnings up to the cap on taxable income, which ﬁnances the Social Security trust
funds.
317Self-employed individuals pay the employer and employee tax share, which is 12.4 percent of taxable earnings,
up to the cap on taxable income.
318During the limited stay of enforcement period starting April 1, 2020, the date the FFCRA leave provisions became
eﬀective, WHD reserved its right to exercise its enforcement authority if the employer violated FFCRA willfully, failed to
provide a written commitment to future compliance with FFCRA, or failed to remedy a violation upon notiﬁcation by
DOL. After April 17, 2020, this limited stay of enforcement was lifted.
319Multiple forms may be included in each e-fax submission. This may include duplicate submissions and aggregate
submissions from the same employer. Per credit information is not available until employers ﬁle Form 941 for the
second quarter.
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IRS released Form 7200 and its instructions on April 1, 2020. In late March IRS began posting, and
has updated, online information for each of the credits, followed by information in early April on
the payroll tax deferrals. IRS also released draft revisions to Form 941 and its instructions, with
ﬁnal versions expected by the end of June 2020, according to IRS oﬃcials. When second quarter
paper Form 941s with credit claims are ﬁled, IRS oﬃcials said they will be grouped by date received
and processed as IRS employees are available and facilities reopen.
For each of the credits, IRS shared with us its initial plans on ensuring compliance, addressing
outreach, revising forms, updating technology, and training. IRS also provided staﬀ with guides
for reviewing and processing Form 7200, including steps to verify ﬁler identity and signatures.
IRS oﬃcials said they have met with SBA to develop a memorandum of understanding for SBA
to provide data on PPP recipients to help ensure employers comply with requirements. They
anticipated ﬁnalizing the memorandum this summer.
GAO Methodology and Agency Comments
To conduct this work, we reviewed DOL and IRS data as of May 31, 2020; reviewed federal laws,
agency guidance and plans; and interviewed agency oﬃcials. IRS and Treasury provided technical
comments, which we integrated as appropriate. DOL and SBA did not have any comments on this
enclosure.
Contact information: Cindy Brown-Barnes, (202) 512-7215, brownbarnesc@gao.gov; Jessica
Lucas-Judy, (202) 512-9110, lucasjudyj@gao.gov
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Department of Housing and Urban Development Programs
The CARES Act appropriated approximately $12.4 billion to the Department of Housing and Urban
Development, and the agency had obligated approximately 18 percent of program funds as of May
31, 2020.
Entities involved: Department of Housing and Urban Development
Key Considerations and Future GAO Work
When disasters occur, Congress often appropriates additional Community Development Block
Grant funding for disaster recovery (CDBG-DR) through supplemental appropriations. These
appropriations often provide HUD the authority to waive or modify many of the statutory and
regulatory provisions governing the CDBG program, thus providing states with ﬂexibility and
discretion to address recovery needs. Congress provided HUD the same broad authority to
waive statutory and regulatory requirements for the HUD programs that received CARES Act
supplemental appropriations.320 We reported in March 2019 that both HUD and CDBG-DR
grantees have encountered administrative challenges, such as issues with grantee capacity,
procurement, and improper payments. We recommended that HUD develop and implement
a comprehensive monitoring plan to eﬀectively manage the CBDG-DR grant portfolio. HUD
agreed with this recommendation.321 Such comprehensive monitoring plans could be beneﬁcial
to the HUD programs responsible for carrying out the additional administrative and oversight
responsibilities under the CARES Act.322 HUD oﬃcials noted that CDBG-DR grants are higher
risk due to their scale and the types of permitted activities and that they believe CDBG funding
provided by the CARES Act does not pose the same risk. Further, HUD oﬃcials also noted that
extending hiring ﬂexibilities and lengthening temporary positions would help the agency achieve
the full beneﬁts of the comprehensive monitoring program, as most of the CARES Act grants will
last and require monitoring beyond 2021.
Additionally, we and HUD’s Oﬃce of Inspector General have reported on persistent management
challenges at HUD, which could aﬀect the agency’s management and oversight of the funding
provided by the CARES Act.323 Speciﬁcally, in July 2016, we found that HUD had not consistently
incorporated key practices into its operations requirements to help ensure eﬀective management,
320Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. 281, 601-13 (2020).
321HUD has submitted information on steps the agency has taken in response to the recommendation, including
completing risk analyses for the four largest 2017 CDBG-DR grantees and developing a pilot risk assessment to inform
its broader risk management eﬀorts. We are evaluating the information. As of June 8, 2020, this recommendation
remains open.
322The HUD Oﬃce of Inspector General included administration of disaster recovery assistance on its list of top
management challenges facing HUD. See HUD Oﬃce of Inspector General, Top Management Challenges Facing the U.S.
Department of Urban Development in 2020 and Beyond (Washington, D.C.: Oct. 18, 2019).
323In addition to administration of disaster recovery assistance, the HUD Oﬃce of Inspector General listed human
capital, providing adequate monitoring and oversight of operations and program participants, and modernizing
technology and management and oversight of information technology as top management challenges facing HUD. See
HUD Oﬃce of Inspector General, Top Management Challenges Facing the U.S. Department of Urban Development in 2020 and
Beyond.
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including in the areas of performance planning and reporting, information technology, and
human capital. Turnover among senior leadership, shifting priorities, and resource constraints
had contributed to diﬃculties implementing needed changes at the agency. We made eight
recommendations for HUD to more fully implement key practices; three remain open, including
two designed to improve agency governance and operations.324 By implementing these
recommendations, HUD will be better positioned to address the challenges posed by COVID-19.
We plan to continue to monitor HUD’s use of CARES Act-related funds going forward.
Background
The CARES Act appropriated funds to HUD programs for purposes of providing additional
resources to prevent, prepare for, and respond to housing needs related to COVID-19.325 The act
included more than $9 billion for grant programs (CDBG, homeless assistance grants, and Housing
Opportunities for Persons with AIDS); $3.3 billion for rental housing assistance and public and
Native American housing (Tenant-Based Rental Assistance, Project-Based Rental Assistance, Public
Housing Operating Fund, Native American programs, and rental assistance for the elderly and
disabled); and $2.5 million for fair housing programs (see ﬁgure).
324HUD agreed with the report’s recommendations. Of those that remain open, two address key management practices.
Speciﬁcally, one of the recommendations is to establish a process and schedule for regularly reviewing, revising, and
updating HUD’s human capital strategic plan, strategic workforce plan, and succession plan. The other recommendation
is to establish a process and schedule for reviewing and updating policies and procedures to help ensure that those
for key management functions remain current and complete. As of October 2019, HUD had developed an internal
management calendar and associated standard operating procedures in response to the recommendations. The
purpose of the management calendar is to document recurring processes of program oﬃces across the agency, assist
in planning and managing the agency’s deliverables to ensure that critical deadlines are met, and provide information
on ongoing reporting requirements occurring across the agency. We will determine whether HUD has fully implemented
the two recommendations when the agency provides documentation showing how the management calendar is used
for updating (1) human capital, workforce, and succession plans; and (2) policies and procedures for key management
functions.
325Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. at 601-13.
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Status of Supplemental CARES Act Funding Obligations for HUD Programs as of May 31, 2020
aThe CARES Act also appropriated $50 million to HUD for management and administration of CARES Act funding and $5 million
to the HUD Oﬃce of the Inspector General for audits and investigations. Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. at 601, 612.
bFunding for permanent supportive housing competitive grantees ($10 million) is to remain available until September 30, 2022.
Under the CARES Act, HUD must develop new formulas for allocating the appropriated funds for
certain programs based on need or other metrics.326 Tenant-Based Rental Assistance funds will be
allocated based on need, as determined by the HUD Secretary, to provide additional subsidy for
tenants facing higher rental costs due to the pandemic. In addition, funds designated for CDBG
and Emergency Solutions Grants (homeless assistance) require new allocation formulas.
Further, the CARES Act included funding to help support HUD’s administration and oversight
of the programs, including $50 million for management and administration.327 The $50 million
comprises $35 million for administrative support—which includes information technology needs
and telework support—and $15 million for the program oﬃces administering most of the funding.
Further, the act appropriated $5 million to the HUD Oﬃce of Inspector General for audits and
investigations.328
326Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. at 601-602, 604-610.
327Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. at 601.
328Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. at 612. Oﬃcials from HUD’s Oﬃce of the Inspector General said they are
developing a COVID-19-related audit plan.
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Overview of Key Issues
• Implementation challenges. The CARES Act provided HUD with broad authority to waive
statutes and regulations related to many of its programs.329 Accordingly, HUD published
a waiver notice on April 10, 2020, that encouraged public housing authorities to continue
using available funding to house families, keep families in their homes, and conduct critical
operations that can be done remotely and safely. However, a few industry groups have
cautioned that because the thousands of local agencies that administer HUD programs are
not required to seek waivers for these and other eligible activities, they may not use them.
Inconsistent use or implementation of these waivers may result in many households not
receiving needed subsidy increases, losing their subsidies, or being evicted.
• Oversight challenges. Since HUD received CARES Act funding for several of its programs,
the agency designed an approach to help manage resources across the agency, strengthen
data and technology systems in support of additional processing and reporting, and monitor
program performance, among other goals. Speciﬁcally, HUD established the HUD Cares Act
Compliance Response Team, which is tasked with implementing an oversight plan that focuses
on the impact of the CARES Act on HUD people, processes, and technology. In addition,
HUD established a central website with CARES Act funding information, guidance, and other
information for grantees and other entities. While some program oﬃcials noted that they
had not encountered any challenges to implementing the CARES Act provisions to date,
another noted that administering the funds during an agency-wide shift to telework had been
challenging.330 In addition, oﬃcials from two program oﬃces noted that they anticipated
ongoing challenges with monitoring and reporting using HUD’s databases and technology
resources.
GAO Methodology and Agency Comments
To conduct this work, we reviewed HUD guidance and other documentation on the agency’s
website, written responses from HUD oﬃcials, our past work on the identiﬁed programs, and
information from selected housing industry experts.
We provided a draft of this report section to HUD for review and comment. In its comments,
reproduced in appendix XV, HUD noted that its Cares Act Compliance Response Team had
identiﬁed reporting-related challenges to implementing the CARES Act. The agency said that it
would continue putting processes in place to overcome challenges, and the CARES Act Compliance
329Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. at 601-13. This authority did not apply to fair housing,
nondiscrimination, labor standards, and environmental requirements.
330The HUD Oﬃce of Inspector General reported in June 2020 that based on a survey of selected HUD employees,
the agency was generally well prepared for mandatory telework, but network connection issues and limited
access to information technology resources disrupted operations to varying degrees, among other ﬁndings. See
Department of Housing and Urban Development Oﬃce of Inspector General, Telework Impact on HUD’s Operations
Due to the COVID-19 Pandemic (Washington, D.C.: June 1, 2020).
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Response Team would continue working to provide comprehensive and timely compliance
monitoring. HUD also noted that top leadership is providing oversight and governance through
a steering committee. In addition, HUD provided technical comments, which we incorporated as
appropriate.
Contact information: John Pendleton, (404) 679-1816, pendletonj@gao.gov
Related GAO Products
Priority Open Recommendations: Department of Housing and Urban Development. GAO-20-500PR.
Washington, D.C.: April 23, 2020.
Disaster Recovery: Better Monitoring of Block Grant Funds Is Needed . GAO-19-232. Washington, D.C.:
March 25, 2019.
Department of Housing and Urban Development: Actions Needed to Incorporate Key Practices into
Management Functions and Program Oversight. GAO-16-497. Washington, D.C.: July 20, 2016.
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Retirement Accounts
Expanded options for withdrawals and loans from retirement accounts can provide ﬁnancial
assistance during the pandemic, but may aﬀect future retirement security.
Entities involved: Department of the Treasury, Department of Labor, the Federal Retirement
Thrift Investment Board
Key Considerations and Future GAO Work
We will continue to monitor these issues in additional work regarding the eﬀect of COVID-19 on
retirement accounts.
Background
Federal law both encourages workers to save for retirement and allows early access to retirement
account assets. In the case of employer-sponsored retirement plans, such as 401(k) plans, early
access to assets is allowed under certain circumstances, such as ﬁnancial hardship. In addition,
owners of individual retirement accounts (IRA) can access savings from their IRA at any time for
any reason, though early withdrawals (before age 59 ½) from both IRAs and employer-sponsored
retirement plans may be subject to an additional 10 percent tax and are generally included in
taxable income. IRAs and employer-sponsored deﬁned contribution plans, like 401(k) plans,
contained more than $19 trillion at the end of 2019, according to data from the Investment
Company Institute. In March 2019 we reported that individuals in their prime working years (ages
25 to 55) removed about $69 billion of their retirement savings early, according to 2013 data.
The Internal Revenue Service, within the Department of the Treasury, is primarily responsible
for enforcing IRA tax laws and works together with the Department of Labor to enforce laws
governing 401(k) plans.
To provide assistance to those aﬀected ﬁnancially by the pandemic, the CARES Act temporarily
expanded options for withdrawals from retirement accounts—for example, by waiving the 10
percent additional tax on some early withdrawals.331 The act also expanded loan options for
employer-sponsored retirement accounts and allowed for repayment of assets withdrawn from
IRAs related to COVID-19.332 It also temporarily suspended the requirement that individuals with
certain retirement accounts must begin taking withdrawals in retirement (known as required
minimum distributions) at a certain age, typically 72.333 The Joint Committee on Taxation estimates
331See CARES Act, Pub. L. No. 116-136, § 2202(a), 134 Stat. 281, 340-42 (2020).
332Loans are not permitted from IRAs. However, under the CARES Act, individuals that take a COVID-19 related
distribution from eligible retirement accounts, including 401(k)s and IRAs, are generally able to repay all or part of the
distribution within three years after the date that the distribution was received without owing federal income tax on the
distribution amount that was repaid. See Pub. L. No. 116-136, § 2202(a)(3), 134 Stat. at 340-41.
333The age for required minimum distributions is 70 ½ for individuals who turned 70 ½ before January 1, 2020.
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that these CARES Act provisions will reduce federal tax revenues by about $7 billion over the
2020–2030 period, primarily in the ﬁrst few years.
Overview of Key Issues
Withdrawals and loans from retirement plans. The CARES Act waives the 10 percent additional
tax for certain early withdrawals from eligible retirement accounts for amounts up to $100,000
taken between January 1, 2020, and December 31, 2020.334 The act also allows loans of up to
$100,000 from employer-sponsored retirement accounts within 180 days of enactment and
extended due dates of current loans by 1 year.335 These changes apply to individuals aﬀected
by COVID-19. This includes individuals (or their spouse or dependent) who tested positive for
COVID-19, or who face adverse ﬁnancial consequences due to COVID-19—for example, from
being quarantined, losing child care, being furloughed or laid oﬀ, or having reduced work hours.
Retirement plan sponsors may rely on self-certiﬁcation that the individual is aﬀected by COVID-19.
While such withdrawals or loans can help workers facing ﬁnancial diﬃculties, they can also aﬀect
a worker’s long-term retirement security by reducing account assets and investment gains that
could have been realized if those assets had remained in the account. While data on the number
of COVID-19-related withdrawals or loans are not currently available, the Federal Retirement Thrift
Investment Board anticipates being able to track such data for federal workers by July 2020. While
federal workers have generally had more employment stability than private-sector workers during
the pandemic, they may still have experienced child care loss, spousal employment loss, or other
COVID-19-related situations, so their future withdrawal and loan activity patterns may give an
indication of potential trends nationwide.
Some situations may aﬀect the process of withdrawing retirement account assets or paying them
back.
• Some individuals with employer-sponsored retirement plans may have trouble accessing their
account savings during the pandemic if their employer goes out of business or is temporarily
closed.
• While loans from employer-sponsored retirement accounts may be repaid through payroll
deduction, repayment of IRA assets that are withdrawn may be handled diﬀerently because
individuals do not typically contribute to IRAs through payroll deduction.
Required minimum distributions. Required minimum distributions from certain retirement
accounts were also suspended by the CARES Act through December 31, 2020, which eﬀectively
makes the tax for failing to make such withdrawals inapplicable for this period.336 This ﬂexibility
334See Pub. L. No. 116-136, § 2202(a), 134 Stat. at 340-42.
335See Pub. L. No. 116-136, § 2202(b), 134 Stat. at 342.
336See Pub. L. No. 116-136, § 2203, 134 Stat. at 343-44.
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could allow individuals with such accounts to avoid making withdrawals during a period of
depressed ﬁnancial market conditions. In such conditions, the required minimum distribution may
be proportionally larger than it would be in typical market conditions because the distribution
amount is calculated based on the account balance at the end of the prior year. Suspending the
required minimum distributions may also allow individuals to maintain their current tax bracket by
eliminating an income stream that could have otherwise increased their taxable income.
GAO Methodology and Agency Comments
To conduct this work we reviewed federal laws, agency guidance, and relevant data and
publications, and interviewed agency oﬃcials. The Department of the Treasury provided technical
comments, which we incorporated as appropriate. The Department of Labor and the Federal
Retirement Thrift Investment Board did not provide comments on the enclosure.
Contact information: Charles Jeszeck, (202) 512-7215, jeszeckc@gao.gov
Related GAO Products
Retirement Savings: Additional Data and Analysis Could Provide Insight into Early Withdrawals.
GAO-19-179. Washington, D.C.: March 28, 2019.
The Nation’s Retirement System: A Comprehensive Re-evaluation Is Needed to Better Promote Future
Retirement Security. GAO-18-111SP. Washington, D.C.: October 18, 2017.
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Tax Deduction for Charitable Contributions
The CARES Act increases tax beneﬁts for individuals and corporations that donate to nonproﬁts,
but the eﬀect on charitable giving is uncertain.
Entities Involved: Internal Revenue Service
Key Considerations and Future GAO Work
We plan to monitor the Internal Revenue Service’s (IRS) implementation of the new provisions as
part of our annual IRS Filing Season work and our oversight of business-related provisions of the
CARES Act.
Background
Our nation depends on charitable organizations to provide vital services to citizens. The nonproﬁt
sector comprises a signiﬁcant part of our economy. Researchers estimated that giving to
charitable organizations totaled $428 billion in 2018.337 Federal tax law permits individual
and corporate taxpayers to reduce their tax liability by deducting contributions to charitable
organizations on their income tax returns. Individual taxpayers may deduct the amount of a
contribution to a charitable organization from their gross income if they itemize their deductions.
Charitable contributions are generally limited to 10 percent of a corporation’s taxable income and
to 50 percent of an individual’s contribution base (generally, adjusted gross income).338
The statute known as the Tax Cuts and Jobs Act, indirectly reduced the scope of this tax beneﬁt,
among other things.339 The act increased the standard deduction amount for individuals and
limited the deduction for state and local taxes and the mortgage interest deduction.340 These
changes caused more individuals to claim the standard deduction instead of itemizing their
deductions. As a result, many individuals who previously deducted charitable contributions no
longer itemized their deductions and therefore no longer claimed the charitable contributions
deduction.
The CARES Act made a number of changes to the charitable contributions deduction, including the
following:
337Donation totals were reported by Giving USA in June, 2019.
33826 U.S.C. 170(b)(1), (2). For 2018 through 2025, the limit on deductions for cash contributions from individuals to
charitable organizations is increased to 60 percent. 26 U.S.C. 170(b)(1)(G).
339Pub. L. No. 115-97.
340Pub. L. No. 115-97, §§ 11021, 11042, 11043, 131 Stat. 2054, 2072–2073, 2085–2087 (2017).
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• allowing individuals who do not itemize to deduct up to $300 from their adjusted gross
income. The deduction is available for cash contributions made only during 2020,341
• suspending the limit on the tax deduction for charitable contributions of cash made by
individuals in 2020,
• increasing the limit to 25 percent of the corporation’s taxable income for the tax deduction for
charitable contributions of cash made by corporations in 2020, and342
• increasing the limit to 25 percent of the contribution base for the tax deduction for charitable
contributions of food inventory in 2020
The Joint Committee on Taxation estimates these provisions will lead to more than $2.5 billion in
reduced federal revenue in ﬁscal years 2020 to 2030. However, the eﬀect of these changes will
likely not be known until after the end of the 2020 ﬁling season.
Overview of Key Issues
According to IRS oﬃcials, IRS is in the process of updating guidance related to these changes.
However, IRS has not yet issued that guidance or updated the forms on which the charitable
tax deductions are claimed. In our 2019 report on tax-exempt entities, we found that taxpayers
may engage in abusive tax schemes that take advantage of charitable deductions. However, IRS
audits of all abusive tax schemes were trending downward between 2008 and 2017. We also
found that IRS could better leverage data it already collected on abusive tax schemes involving
tax-exempt entities. In response, we made a number of recommendations to IRS to enhance its
eﬀorts to identify and combat abusive tax schemes that involve tax-exempt entities. IRS has not
yet implemented those recommendations.
GAO Methodology and Agency Comments
To review how IRS administered the deduction, we examined federal laws, agency guidance, and
GAO’s work on tax-exempt organizations.
341Pub. L. No. 116-136, § 2204, 134 Stat. 281, 345 (2020).
342CARES Act, § 2205, 134 Stat. at 345–346 (2020). These changes apply only to cash contributions to public
charities and do not apply to contributions to supporting organizations or for the establishment of a new, or
maintenance of an existing, donor advised fund.
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We provided a draft of this enclosure to Treasury, OMB, and IRS for review and comments. In
written comments, IRS provided technical comments, which we incorporated as appropriate. OMB
and Treasury did not comment on this enclosure.
Contact Information: James R. McTigue Jr.,(202) 512-9110, mctiguej@gao.gov
Related GAO Products
Tax-Law Enforcement: IRS Could Better Leverage Existing Data to Identify Abusive Schemes Involving Tax-
Exempt Entities. GAO-19-491. Washington, D.C.: September 5, 2019.
Tax-Exempt Organizations: Better Compliance Indicators and Data, and More Collaboration with State
Regulators Would Strengthen Oversight of Charitable Organizations. GAO-15-164. Washington, D.C.:
December 17, 2014.
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Unemployment Insurance Programs
The unprecedented volume of new unemployment insurance claims in the wake of the COVID-19
pandemic poses major challenges for federal and state oﬃcials to provide beneﬁts, help with
reemployment, and identify and prevent improper payments.
Entity involved: Department of Labor
Key Considerations and Future GAO Work
As the nation begins to recover from the COVID-19 crisis, the workforce system and the
unemployment insurance (UI) program will face challenges with reemployment and program
integrity eﬀorts.343 Reemployment eﬀorts could be slowed by, among other things: (1) minimal
information from the Department of Labor (DOL) to its UI partners to date on how to assist
millions of Americans in returning to work, and (2) enhanced UI beneﬁts that could discourage
certain individuals from returning to work when their workplaces reopen because their UI
beneﬁts are greater than their regular wages. Also, experiences with previous temporary UI
expansions—such as disaster-related UI programs—and eﬀorts to identify those claimants who
return to work while improperly receiving UI beneﬁts suggest that the CARES Act programs may be
at an increased risk of improper payments.
One such program that could expose the UI program to improper payments is the new Paycheck
Protection Program (PPP), designed to provide loans to small businesses to help them keep their
workers on payroll. Improper payments could result if certain workers paid with PPP proceeds
simultaneously receive UI beneﬁts. The Small Business Administration (SBA), which administers
the PPP, has stated that, consistent with PPP regulations, employers that take PPP loans must
generally rehire laid-oﬀ employees or face loan forgiveness reductions, and must report to the
state UI agency if any of those employees refuse to return to work. For its part, DOL has an
opportunity to address this risk, in coordination with SBA. Although DOL plans to issue questions
and answers to state unemployment agencies about this risk in the near future, it has not yet
provided such information.
To ensure that proper controls are in place to prevent and detect certain individuals from
simultaneously receiving pay funded with PPP and UI payments, we recommend that DOL, in
consultation with the SBA and Treasury, immediately provide information to state unemployment
agencies that speciﬁcally addresses SBA’s PPP loans, and the risk of improper payments
associated with these loans. Challenges stemming from such program integrity issues could result
in the loss of millions of dollars that may be diﬃcult to recover.
343The nation’s public workforce system, overseen by the Department of Labor, refers to a network of state and local
partners that provide services to jobseekers, including unemployment insurance claimants, through programs primarily
administered by the departments of Labor and Education. Services such as job search assistance, career counseling,
skills assessments, and certain training services are provided at the local level through nearly 2,400 American Job
Centers.
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We are starting work that will examine, among other issues, states’ challenges in processing the
record level UI claims and addressing program integrity, as well as DOL’s related assistance in
these areas.
Background
The need for UI beneﬁts has rarely been greater than during the COVID-19 pandemic. The UI
program is a federal-state partnership that, among other things, provides temporary ﬁnancial
assistance to eligible workers who become unemployed through no fault of their own.344 The
regular UI program is funded primarily through federal and state taxes levied on employers. States
design and administer their own UI programs within federal parameters, and DOL oversees states’
compliance with federal requirements, such as ensuring that states pay beneﬁts when they are
due. To be eligible for UI beneﬁts, applicants generally must be able and available to work, and
actively seeking work.345
In addition to the regular UI program, the CARES Act created three new, federally funded
temporary UI programs that expand UI beneﬁt eligibility and enhance beneﬁts:346
1. Pandemic Unemployment Assistance (PUA) generally authorizes up to 39 weeks of UI beneﬁts
to individuals not otherwise eligible for UI beneﬁts, such as the self-employed and certain gig
economy workers, who are unable to work as a result of COVID-19;347
2. Federal Pandemic Unemployment Compensation (FPUC) generally authorizes an additional
$600 beneﬁt that augments weekly UI beneﬁts available under the regular UI program, as well
as CARES Act UI programs;348 and
3. Pandemic Emergency Unemployment Compensation (PEUC) authorizes an additional 13 weeks
of UI beneﬁts to those who exhaust their regular UI beneﬁts.349
344We refer to the UI program as the regular UI program and the beneﬁts paid under the program as regular UI beneﬁts.
345Federal law requires states to have, as a condition of eligibility for UI administrative grants, laws that require
claimants to be able to work, available to work, and “actively seeking work” as a condition of eligibility for UI beneﬁts. 42
U.S.C. § 503(a)(12).
346According to data provided by DOL, as of June 9, 2020, all states had Federal Pandemic Unemployment
Compensation, 51 states had implemented Pandemic Unemployment Assistance, 40 states had implemented Pandemic
Emergency Unemployment Compensation, and 40 states had implemented all three programs. For purposes of these
programs, the District of Columbia and various U.S. territories count as states.
347Pub. L. No. 116-136, § 2102, 134 Stat. at 313.
348Pub. L. No. 116-136, § 2104, 134 Stat. at 318.
349Pub. L. No. 116-136, § 2107, 134 Stat. at 323. In addition, the act also addressed other elements of the
unemployment insurance system. For example, the act also authorized certain ﬂexibilities for states in hiring
additional state agency staﬀ.
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In addition to the CARES Act, the Families First Coronavirus Response Act (FFCRA) provided up to
$1 billion in emergency grant funding to states in ﬁscal year 2020 for administrative purposes.
The ﬁrst half of the funding is available to states that meet requirements related to notiﬁcations
related to UI and access to the application process. The second half of the funding is available to
states that experience at least a 10 percent increase in quarterly UI claims over the same quarter
of the previous calendar year, and meet, among others, certain requirements related to easing UI
eligibility requirements for individuals, such as waiving work search requirements.
Overview of Key Issues
Record new UI claims and CARES Act program implementation. In the wake of the COVID-19
pandemic, new claims have reached historic levels, posing challenges for states’ capacity to
process them and for state and federal implementation of the CARES Act programs. In ﬁscal year
2019, the most recent year of data available, the UI program paid about $27.3 billion in beneﬁts
for 5.1 million beneﬁciaries, according to information provided by DOL. However, over the 3-
month period from March through May 2020, the number of initial UI claims had surpassed 42
million, compared to about 2 million claims in all programs as of the end of February 2020, and
unemployment is expected to remain elevated. For the period from March 21 to May 30, 2020,
eleven states each had over 1 million initial UI claims (see ﬁgure).
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Total Initial Unemployment Insurance Claims by State, March 21 to May 30, 2020
Note: Data reﬂect information on initial regular unemployment insurance claims, reported weekly by the Department of Labor
and are subject to change. Data presented in the ﬁgure are not seasonally adjusted. Additionally, according to the Department
of Labor, although the department instructed states to report Pandemic Unemployment Assistance claims separately, it is
possible that some states included data for such claims in their regular claims data. Data retrieved on June 8, 2020.
According to DOL oﬃcials, state UI programs face challenges with antiquated data systems and
an insuﬃcient level of staﬀ with the necessary experience to process claims, especially those
involving claims for gig and other non-traditional workers who ordinarily would not qualify for
UI beneﬁts. For example, DOL oﬃcials told us that states with older information technology (IT)
systems—that in some cases date as far back as the 1970s—have reported crashes with the
current claims volumes. In addition, some individuals have reported having diﬃculty accessing UI
beneﬁts.
While DOL has assisted states’ eﬀorts to modernize their IT systems in recent years by, for
example, providing grants, technical assistance, and guidance, relatively few states had load-
tested their systems for the volume of claims they have been receiving, according to the National
Association of State Workforce Agencies (NASWA).350 To support states’ implementation of the
CARES Act UI programs, DOL has provided technical assistance by, for example, leveraging the
350The National Association of State Workforce Agencies represents agencies from all 50 states, the District of Columbia,
and U.S. territories that deliver training, employment, career services, certain employer services, and labor market
information, and that administer unemployment insurance and veteran reemployment programs.
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assistance of its Chief Information Oﬃcer, according to DOL. Regarding states’ challenges with
insuﬃcient staﬃng, NASWA oﬃcials told us that many states had reduced the number of staﬀ that
manage UI claims in response to strong economic conditions and historically low unemployment
rates that prevailed before the pandemic. NASWA oﬃcials also explained that given the complex
nature of the UI program, training staﬀ to process claims can require several months of training.
Additionally, NASWA and DOL Oﬃce of Inspector General (OIG) oﬃcials said that even for staﬀ
experienced in processing UI claims, learning to process claims for gig and other nontraditional
workers presents an added layer of complexity. To address the processing of such workers’ claims,
DOL has collaborated with NASWA to develop training, according to DOL.
DOL has disbursed to states nearly all of the emergency administrative funding under FFCRA. DOL
oﬃcials provided information that they had disbursed all of the $500 million for the ﬁrst half of
administrative funding, and disbursed about $498 million of the $500 million authorized for the
second half of the funding. As of June 3, 2020, Puerto Rico is the only state or territory that has not
applied for the second allotment.
Reemployment challenges. The UI program and public workforce system will face the challenge
of large numbers of workers returning to their job as businesses reopen, with little information
to date from DOL on reemployment eﬀorts. Although as of June 3, 2020, DOL has reminded
states and workforce system partners of existing resources and ﬂexibilities that can support
services for jobseekers overall, DOL had issued no new information to workforce system partners
regarding reemployment of UI claimants aﬀected by the COVID-19 pandemic. According to DOL,
states already have full authority to operate the programs that can serve jobseekers. Additionally,
according to DOL, states and local partners are beginning to deliver services both virtually and
in person, and are developing plans to deliver in-person services safely, such as by reconﬁguring
physical space.
Even as individuals are oﬀered the opportunity to return to work, they may choose not to do so.
While the $600 additional weekly beneﬁt under FPUC, currently available through July 2020, may
help claimants by, for example, helping them avoid taking on debt or accessing their retirement
funds351 and may play a role in promoting public health, it could pose challenges to eﬀorts
to rehire certain workers—especially minimum-wage earners and others with lower paying
jobs—throughout its duration. Also, claimants may have health and safety concerns, making them
hesitant to return to work.352 DOL has encouraged states to ask employers to provide information
when workers refuse to return to their jobs for reasons that do not support their continued
eligibility for beneﬁts.353
351For information about the implications of the CARES Act on retirement security, see “Retirement Accounts” in
appendix III.
352According to DOL, most state laws allow for refusal of suitable employment for good cause, which may include, but
are not limited to, the degree of risk to an individual’s health and safety. Speciﬁcally related to the COVID-19 pandemic,
DOL has issued guidance stating that if a person has left an employer due to pandemic health concerns related to
that person or to the care of others and does not return, state law can be used to determine if this was a good cause
separation. Department of Labor, Unemployment Program Insurance Letter No. 10-20, March 12, 2020.
353 Unemployment Insurance Program Letter, No. 23-20 (May 11, 2020). Additionally, DOL has provided guidance to state
UI agencies that explains that individuals who refuse to return to work when requested by their employer or refuse a
suitable job oﬀer do not qualify for Pandemic Unemployment Assistance. Unemployment Insurance Program Letter, No.
16-20, Change 1, Attachment 1 (April 27, 2020).
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Program integrity eﬀorts. State UI agencies are expected to face challenges with eﬀorts to
identify and detect improper payments.354 To assist states with these eﬀorts, DOL has provided
guidance to state UI agencies that the CARES Act UI programs operate in tandem with the regular
UI program’s existing eligibility requirements. In addition, DOL stated that it will work with its OIG,
which received appropriations under the CARES Act to conduct certain oversight activities.
Program integrity will likely remain an ongoing concern for DOL and the states with the
implementation—and cessation—of CARES Act UI programs. Due to its level of reported improper
payments, UI has been designated as a high priority program for addressing this issue by the DOL
OIG. Experience with temporary UI programs following natural disasters suggests there may be
an increased risk of improper payments associated with CARES Act UI programs. For example, the
DOL OIG has found improper payments in past audits of the Disaster Unemployment Assistance
program, the regulations for which generally apply to PUA. DOL reported that 32 percent of
the over $2.7 billion in estimated beneﬁts overpaid to claimants in ﬁscal year 2019 was due
to them returning to work while continuing to claim regular beneﬁts. Moreover, according to
the Secret Service, multiple states appear to be experiencing organized fraud targeting the UI
program involving the misuse of personally identiﬁable information, with potential losses in the
hundreds of millions of dollars. Additionally, the new Paycheck Protection Program (PPP) created
by the CARES Act could increase the risk of the UI program for improper payments. The program,
administered by the Small Business Administration (SBA) provides guarantees for forgivable loans
to assist small businesses in, among other things, keeping their workers on payroll.355 The UI
program is generally intended to provide beneﬁts to individuals who have lost their jobs, while
under PPP employers are generally required to retain or re-hire employees (or face reductions in
loan forgiveness eligibility).
According to SBA oﬃcials, consistent with PPP regulations, employers that take PPP loans must
generally rehire laid-oﬀ employees or face loan forgiveness reductions, and must report to the
state UI agency if any of those employees refuse to return to work.356 In its guidance to state
unemployment agencies, DOL notes that states are expected to enforce statutory provisions
related to fraud, or risk violating their agreement to administer the CARES Act UI programs.
However, it does not address PPP loans speciﬁcally, or the risk of improper payments associated
with such loans, although DOL told us it plans to issue questions and answers about this risk in
the near future. According to DOL, although UI claimants’ income and reemployment are both
reportable, no mechanism currently exists that could capture information in real time about UI
claimants who may receive wages paid from PPP loan proceeds. Federal internal control standards
state that eﬀective information and communication are vital for an entity to achieve its objectives.
354An improper payment is deﬁned as any payment that should not have been made or that was made in an incorrect
amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally
applicable requirements. It includes, but is not limited to, any payment to an ineligible recipient. See 31 U.S.C. § 3321
note. While improper payments may be the results of errors, they may also be the result of fraudulent activities.
355 See Pub. L. No. 116-136, §§ 1102, 1106, 134 Stat. 281, 286, 297; 85 Fed. Reg. 20,811 (Apr. 15, 2020).
356In an Interim Final Rule posted on May 22, 2020, SBA required that PPP borrowers inform the applicable state
unemployment insurance oﬃce if an employee rejected an oﬀer of reemployment within 30 days of the employee’s
rejection of the oﬀer in order to qualify for an exemption to a reduction in the loan forgiveness amount due to
decreased employment numbers. See 85 Fed. Reg. 33,004, 33,007 (June 1, 2020).
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357 As such, the standards state that management should externally communicate the necessary
quality information to achieve its objectives. Given the large number of SBA loans and the millions
applying for unemployment beneﬁts, additional information would call state attention to the
potential for improper payments.
GAO Methodology and Agency Comments
To conduct this work, we reviewed information DOL provided as of May 2020; reviewed relevant
federal laws, agency guidance, and DOL Oﬃce of Inspector General reports; and interviewed DOL
and SBA oﬃcials, DOL Oﬃce of Inspector General oﬃcials, and representatives of the National
Association of State Workforce Agencies.
We shared a draft of this report with DOL and SBA oﬃcials. While DOL neither agreed nor
disagreed with our recommendation, it noted that DOL is preparing questions and answers
regarding individuals collecting UI beneﬁts while simultaneously receiving payment from the
PPP. DOL also said that it has reached out to SBA to help inform this guidance, and expects to
release it to state UI agencies within the next month. SBA provided technical comments that we
incorporated as appropriate.
Contact information: Thomas Costa, (202) 512-7215, costat@gao.gov
357 GAO-14-704G. See Internal Controls Principle 15.
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Federal Student Loans
The Department of Education quickly suspended interest accrual and student loan payments but
some types of involuntary collections and communications to borrowers were more challenging to
address quickly.
Entities involved: Department of Education
Key Considerations and Future GAO Work
As the Department of Education (Education) continues to implement applicable CARES Act
provisions and other agency actions to oﬀer student loan relief and to address areas of borrower
confusion, it must also plan for returning to normal operations, currently scheduled to begin after
September 30, 2020. It will be critical to ensure that borrowers are fully informed and prepared
for federal student loan interest accrual, payments, and collections when they resume. We will
continue to review Education’s implementation and communication eﬀorts.
Background
Federal student loans are an important resource to help individuals access higher education. As
of March 31, 2020, student borrowers had a combined $1.5 trillion in outstanding federal student
loan debt, according to data from Education. The majority of these loans are part of the William D.
Ford Federal Direct Loan (Direct Loan) program and are owned by Education. However, some older
federal student loans were made under the Federal Family Education Loan (FFEL) and Federal
Perkins Loan programs, and may not be owned by Education. Loan servicers under contract with
Education are responsible for maintaining federal student loan records, communicating with
borrowers about the status of their loans, and processing payments. Education also contracts with
private collection agencies to collect payments from borrowers who have defaulted on their loans.
The CARES Act and actions taken by Education provided several types of relief to borrowers with
federal student loans owned by Education. These included suspending: (1) interest accrual, (2)
all payments due, and (3) involuntary collections for any such loans in default.358 According to
358 On March 27, 2020, the CARES Act was enacted, which suspended payments due, interest accrual, and involuntary
collections for Direct Loans and FFEL loans held by Education, through September 30, 2020. See Pub. L. No. 116-136,
§ 3513(a), (b), (e), 134 Stat. 281, 404-05 (2020). Involuntary collections may include wage garnishments and oﬀsets
of tax refunds or federal beneﬁt payments. In addition, Education has taken several actions, including some prior to
the enactment of the CARES Act, to implement similar relief to borrowers, including those with other federal loans
held by Education, such as Perkins loans. In this enclosure, we do not diﬀerentiate between actions Education took
independently of the CARES Act and actions Education took under the CARES Act. In addition, the CARES Act requires the
Secretary of Education to ensure that, for the purpose of reporting loan information to consumer reporting agencies,
any payment that has been suspended under the CARES Act is treated as if it were a regularly scheduled payment made
by a borrower. The CARES Act also provides that, for the purpose of federal student loan rehabilitation or forgiveness
programs for which a borrower is otherwise qualiﬁed, the Secretary shall deem each month for which a loan payment
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Education, this relief applies to the period between March 13, 2020, and September 30, 2020. See
ﬁgure for more information about the number of borrowers eligible for this relief. Private student
loans and federal loans owned by commercial lenders or schools (rather than Education) are not
eligible for this relief.
Number of Borrowers Eligible for Relief under the CARES Act Federal Student Loan Provisions and Department of
Education (Education) Actions, April 2020
Note: According to Education, the numbers of borrowers whose loans were in default and borrowers whose loans were not in
default do not add to 40.7 million due to rounding.
Overview of Key Issues
Suspending interest accrual and payments. Education reported that, as of mid-April 2020,
it had suspended federal student loan interest accrual and payments for all eligible borrowers,
eﬀective through September 30, 2020. This included suspending interest accrual for all 40.7
million borrowers with loans owned by Education and suspending payments for 32.6 million of
those borrowers whose loans were not in default, according to Education. Education implemented
these suspensions retroactively to March 13, 2020, the date a national emergency was declared.359
Suspending involuntary collections for defaulted loans. Some types of involuntary collections,
particularly wage garnishments, were more challenging to halt. Given that some involuntary
collections occurred on or after March 13, 2020, Education implemented processes to provide
refunds to borrowers.
was suspended under the CARES Act as if the borrower had made a payment. Pub. L. No. 116-136, § 3513(c)-(d), 134 Stat.
at 404.
359 According to Education, the 32.6 million borrowers it described as eligible for suspended loan payments through
the CARES Act and agency actions include borrowers who did not owe any payments for a variety of reasons including
because they were in school or were in the grace period—usually 6 months—after completing school. They also include
less than 1 percent of borrowers who opted to continue making payments, as of May 2020. In addition, Education
oﬃcials said that the portfolio of loans continues to change due to a variety of factors including new loans entering loan
servicers' systems and loans moving from in-school status to grace period status. Education said that as such changes
occur during the time period covered by the CARES Act and agency actions, the loans are updated to zero percent
interest as well as to suspended payment status (forbearance), when appropriate.
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• Some borrowers continued to have their wages garnished as of early June 2020, according
to Education. Education oﬃcials said halting garnishment of wages on defaulted loans
has been challenging because Education must ﬁrst notify employers in writing, and then
employers must stop the garnishments. Education reported that its designated servicer began
sending notiﬁcations to employers who were garnishing wages in mid-April, after the servicer
established a new automated process for notifying employers.360 Once notiﬁcations were sent,
Education oﬃcials, as well as a private collection agency group and a borrower group, noted
that some employers may have experienced delays in receiving these notiﬁcations due to
telework operations, suspended operations, or outdated contact information. Given continued
wage garnishments, Education reported that it started to issue refunds to borrowers in mid-
April and it has since reduced the time it takes to process a refund. Education said that it was
conducting additional outreach to employers that continue to garnish wages.361
• Education reported that, as of March 2020, it had ordered other collections on defaulted loans
taken from Social Security payments and federal tax refunds by the Department of Treasury
(Treasury), as well as collection activities such as phone calls to borrowers by private collection
agencies, to be halted for borrowers who were subject to such collections on or after March
13, 2020. Education stated in June 2020, that Treasury collected over $2.3 billion from over
1 million borrowers before halting collections and that most of these collections occurred
on or after March 13, 2020 and before March 20, 2020 when Education ordered that those
collections be halted. Education also reported that it had requested that Treasury refund
involuntary payments collected on or after March 13, 2020.362 Similarly, Education reported
working with its collection contractors to issue refunds for any collections they made on or
after March 13, 2020.363
Ineligible loans. For at least 6.9 million borrowers with federal student loans, one or more of their
loans were ineligible for relief under the CARES Act provisions or Education’s actions because they
are not owned by Education. This includes more than 50 percent of borrowers with FFEL loans
(about 6.9 million borrowers) and about 80 percent of borrowers with Perkins Loans (about 1.6
million borrowers), according to Education as of April 2020.364 Federal loans that are ineligible for
the pandemic-related relief under the CARES Act provisions or Education’s actions may be eligible
360 Before Education’s designated servicer sent notiﬁcations in writing to employers, Education reported that its
servicer also called some employers with the largest number of borrowers under wage garnishment orders to
instruct them to cease all wage garnishments for eligible borrowers.
361 A class-action lawsuit was ﬁled in federal district court against the Department of Education on April 30, 2020,
alleging that Education failed to suspend wage garnishment in violation of the CARES Act. Barber v. DeVos, No.
20-1137 (D. D.C. ﬁled Apr. 30, 2020).
362 In its comments on the draft enclosure, Education stated that it has transmitted such requests for 99.8 percent
of refunds and is working with Treasury to identify borrower mailing addresses for the remaining 0.2 percent of
outstanding refunds. Education also stated that more than 85 percent of the oﬀset payments that were ultimately
refunded were collected prior to the passage of the CARES Act.
363 A class-action lawsuit was ﬁled in federal district court against the Departments of Education and Treasury on
May 29, 2020, alleging that they failed to suspend oﬀsets from tax refunds in violation of the CARES Act. Cole v.
Mnuchin, No. 20-1423 (D. D.C. ﬁled May 29, 2020).
364 Education noted that these numbers should not be added because some borrowers have both FFEL and Perkins
Loans that are not owned by Education.
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for other types of relief, such as income-driven repayment plans or emergency forbearance.365
Some loan holders have voluntarily suspended payments or interest accrual for ineligible federal
or private loans. Examples of relief being oﬀered include:
• One state university system that holds over $90 million in Perkins Loans announced in April
2020 that it would (1) suspend interest accrual for all loans and (2) suspend loan payments for
borrowers with overdue payments and for others upon request, through September 30, 2020.
• Some private student loan lenders—including at least two that also service a large proportion
of federal student loans—are oﬀering borrowers relief options such as 90 days of suspended
payments.
Communicating with borrowers. Education faced challenges in providing borrowers with timely
and accurate information during the initial weeks of implementing the CARES Act provisions and
agency actions to provide relief to borrowers. Implementing this relief involved Education quickly
making changes to its contracts with servicers to include the new policies and servicers quickly
reprogramming their loan processing systems in order to apply the provisions retroactively.
Education and a servicer stakeholder group noted that these steps were occurring at the same
time that staﬀ were moving to remote work during the pandemic. While these changes were
occurring, some borrowers may have received incorrect information. For example, Education
reports and borrower groups described instances in which loan records did not initially reﬂect
suspended payments and interest accrual or were incorrectly marked as delinquent. In addition,
Education identiﬁed instances in which call centers experienced high rates of dropped calls or
representatives provided incorrect information. For example, three of nine servicers responded
incorrectly to at least 40 percent of Education’s “secret shopper” questions on April 7, 2020.
By mid-April 2020, Education and servicers had increased communication to borrowers about
student loan relief by updating and expanding their websites and sending out individual borrower
communications. Speciﬁcally, Education updated its website about available relief to expand and
revise the information it began posting on March 13, 2020. It also veriﬁed that servicer websites
included a prominent link to their frequently asked questions web pages. Servicers varied in the
extent to which they chose to provide supplementary information to help borrowers understand
how the available student loan relief applied to their circumstances. For example, one servicer
included multiple pages of information on various borrower scenarios, and another provided
more general information and advised borrowers to refer to Education guidance. Once certain
types of relief had been implemented, servicers were also required to distribute notiﬁcation letters
to borrowers, using a template provided by Education.
Education has tracked implementation and communication of student loan relief through daily
monitoring reports and other communications with servicers.366 Among other information, these
365 Income-driven repayment plans allow eligible borrowers to make payments based on their income and family size.
Education also issued guidance on April 3, 2020, stating that it considered the President's March 13, 2020, declaration
of a national emergency concerning the COVID-19 outbreak to be equivalent to a federally declared major disaster, as
deﬁned in the Robert T. Staﬀord Disaster Relief and Emergency Assistance Act. The guidance provided information on
additional emergency ﬂexibilities and regulatory relief available to institutions of higher education and their students.
366Education stated that recent changes to its quality assurance process helped with this oversight.
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daily reports track call center traﬃc and wait times; the results of Education’s “secret shopper”
calls to servicer call centers; and borrower opinions on social media. Oﬃcials told us that they
worked with servicers to address identiﬁed issues. In mid-April 2020, Education sent servicers
letters outlining their speciﬁc strengths and areas of needed growth, based on its daily monitoring
reports. For example, on April 10, 2020, Education instructed one servicer to improve its call center
operations because its wait times were longer than most other servicers, and about 10 percent of
borrower calls were dropped during the reviewed time period.
While the availability and accuracy of information on the CARES Act provisions and agency actions
to provide student loan relief generally improved over time, some areas of confusion or inaccuracy
persisted into late April and May. Education monitoring reports identiﬁed fewer instances of
inaccurate responses by call center staﬀ, and borrower advocacy groups told us that many initial
areas of confusion improved by mid-April 2020. However, Education and stakeholder groups
identiﬁed continuing challenges or additional actions needed, which Education has worked to
address. For example:
• Loan forgiveness: Throughout April 2020, Education monitoring reports identiﬁed
inconsistencies in the information the agency provided to servicers regarding how borrower
relief aﬀected the Public Service Loan Forgiveness program.367 The agency found that this
led servicers to provide some borrowers with inaccurate information. Education reported
taking actions in May to address it, such as by revising servicer contracts to include consistent
information to servicers about this issue.
• Credit reports: Borrower stakeholder groups identiﬁed concerns about how suspended
payments could aﬀect the credit scores of some borrowers. According to Education, it
identiﬁed challenges related to credit reporting through its monitoring eﬀorts. For example,
it identiﬁed an issue with one of its loan servicers incorrectly reporting suspended loan
payments to credit service companies as a deferred payment due to a coding error, which
negatively aﬀected borrower credit information reported by at least one credit service
company. Education reported that the servicer has updated its coding and sent corrected
ﬁles to credit service companies.368 Education also reported coordinating with the Consumer
Financial Protection Bureau to reach out to a credit service company about its approach to
factoring suspended student loan payments into its credit reporting.
• Loans in Default: Education monitoring reports continued to identify challenges related to
private collection agency call centers for borrowers with defaulted loans, such as long wait
times and dropped calls. In late April 2020, Education oﬃcials said they were developing plans
to improve private collection agency customer service. Education also identiﬁed a need to
develop default loan servicer procedures speciﬁcally related to rehabilitating defaulted loans
367 For example, Education oﬃcials said that the department provided inconsistent information to servicers about
the need for borrowers to meet the Public Service Loan Forgiveness program employment requirements during the
period when borrower loan payments are suspended.
368 A class-action lawsuit was ﬁled on May 20, 2020, alleging one of the loan servicers furnished inaccurate
information about borrowers to consumer reporting agencies, and that consumer reporting agencies failed to
ensure accurate reporting, in violation of state and federal law. See Sass v. Great Lakes Educational Loan Services,
No. 20-3424 (N.D. Cal. ﬁled May 20, 2020).
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during the period of student loan relief and communicate this information to borrowers.369 In
mid- to late April, the agency updated its default loan servicer contract and issued guidance to
provide such information.
GAO Methodology and Agency Comments
To conduct this work, we reviewed data reported by Education; reviewed relevant federal laws and
agency guidance, and interviewed Education oﬃcials, as well as representatives from borrower,
loan servicer, and private collection agency stakeholder groups. We assessed the reliability of data
reported by Education by reviewing documents and responses from oﬃcials.
We provided a draft of this report to Education for review and comment. In its written comments,
Education stated that report sections related to Education’s actions in response to the pandemic
were inaccurate, ﬂawed, incomplete, and unfair. In its comments on this enclosure, Education
stated that GAO did not correctly describe the actions taken by the agency or the role of its
monitoring eﬀorts in identifying and addressing challenges that arose. We disagree with this
characterization and believe we accurately described and characterized the key facts relating to
Education’s implementation of applicable CARES Act provisions and Education’s actions to provide
relief to student borrowers. The enclosure notes that the agency was facing a signiﬁcant task in
quickly implementing wide-ranging relief to borrowers. For example, we noted that Education
quickly made changes to its contracts with servicers to include the new policies, while servicers
quickly reprogrammed their loan processing systems in order to apply the provisions retroactively.
We describe these steps to provide context about the work involved in implementing student
loan relief. While recognizing these eﬀorts by Education, we also noted that the process of quickly
implementing these changes involved some instances of temporary or ongoing confusion for
borrowers, as well as cases where Education’s own monitoring reports found that servicers were
providing incorrect information. This is an important part of illustrating the complex process of
implementing the CARES Act provisions and related agency actions to provide student loan relief,
including the impact on borrowers.
Education also objected to our use of the phrase “challenges” to describe aspects of implementing
and communicating about student loan relief provided under the CARES Act and agency actions.
We continue to believe that “challenges” is an appropriate term because it encapsulates both the
complex tasks required of Education and servicers to implement far-reaching relief quickly and the
impact on borrowers who were waiting to obtain complete information, see the relief reﬂected in
their loan records, and receive refunds, where appropriate, during a time where many people are
facing economic challenges.
Further, Education stated that we referenced ﬁndings from its monitoring reports without
acknowledging that the monitoring reports themselves allowed Education to identify issues and
369One way borrowers can get their loans out of default is through loan rehabilitation, a repayment option in which
borrowers who make nine on-time monthly payments within 10 months have the default removed from their credit
reports.
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act to address them. We disagree with this characterization. We described Education’s oversight
in several places, including a full paragraph that highlights Education’s monitoring eﬀorts, as well
as references throughout the enclosure noting that Education took action when challenges were
identiﬁed. We did not provide detailed descriptions of Education’s eﬀorts to improve its overall
monitoring processes prior to the implementation of student loan relief related to the pandemic
because that is outside the scope of this review. While recognizing the value of Education’s daily
monitoring reports and noting that Education employed them to take action, ﬁndings from the
reports are important to include because they illustrate borrowers’ experiences during a stressful
time as well as the ongoing work needed to fully and accurately implement borrower relief for a
variety of types of loans and repayment scenarios.
In a few instances, we modiﬁed text in the enclosure to provide additional context or clarity or
to add information provided by Education in its response. For example, we added contextual
information noting that Education and servicers were implementing relief while working remotely
during the pandemic, and provided additional details about involuntary collections that Education
provided in its comment letter. We also modiﬁed our description of Education’s new guidance
and contract changes regarding loan rehabilitation to clarify that these actions were taken to
provide additional information rather than to correct existing information. Education also provided
technical comments, which we incorporated as appropriate.
Contact Information: Melissa Emrey-Arras, (617) 788-0534, emreyarrasm@gao.gov
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Economic Impact Payments
As of May 31, the Department of the Treasury and Internal Revenue Service (IRS) sent over 160
million payments to recipients for whom IRS has the necessary information. These payments
totaled $269.3 billion. Treasury and IRS still face challenges to ensure that eligible individuals
receive their payments, to prevent improper payments, and to combat fraud.
Entities Involved: Department of the Treasury, Internal Revenue Service, and Bureau of the
Fiscal Service, Social Security Administration, U.S. Department of Veterans Aﬀairs, and Railroad
Retirement Board.
Key Considerations and Future GAO Work
The Department of the Treasury (Treasury) has stated that certain barriers currently prevent
it from identifying and preventing payments to ineligible recipients. For example, Treasury
and the Internal Revenue Service (IRS) sent almost 1.1 million payments totaling nearly $1.4
billion to deceased individuals.370 IRS announced that if a payment was issued to a deceased or
incarcerated individual, the total amount should be returned. However, IRS does not currently
plan to take additional steps to notify ineligible recipients on how to return payments. IRS should
consider cost eﬀective options for notifying ineligible recipients on how to return payments;
without which, ineligible recipients who would otherwise want to return the payments may be
unaware how to do so. Also, IRS has full access to the death data maintained by the Social Security
Administration (SSA), but Treasury and its Bureau of the Fiscal Service (BFS), which distribute the
payments, do not. We have suggested that Congress consider amending the Social Security Act
to explicitly allow the SSA to share its full death data with Treasury for data matching to prevent
payments to ineligible individuals.371 We are currently doing additional work evaluating IRS’s
administration of the Economic Impact Payments.
Background
The CARES Act included direct payments for eligible individuals to address ﬁnancial stress due to
the pandemic. These Economic Impact Payments provide up to $1,200 per eligible individual or
$2,400 for individuals ﬁling a joint tax return, plus up to $500 per qualifying child.372 The payment
370According to IRS oﬃcials, these ﬁgures, which were reported by the Treasury Inspector General for Tax
Administration, do not reﬂect returned checks or rejected direct deposits—the amount of which IRS and the Treasury are
still determining.
371SSA maintains two sets of death data. SSA’s complete ﬁle of death records that includes state-reported death data as
“full death data” (or “full death ﬁle”) as distinguished from the limited, publicly available ﬁle that excludes state-reported
records, commonly referred to as the “Death Master File.”
372Pub. L. No. 116-136, 134 Stat. 281, 335–340 (2020) (to be codiﬁed at 26 U.S.C. § 6428). These payments are in an
advance refund for a tax year 2020 tax credit. The CARES Act refers to this credit and the advance refund as Recovery
Rebates for Individuals. IRS refers to the advance refunds as Economic Impact Payments.
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phases out gradually based on adjusted gross income (AGI).373 The payments can be oﬀset by the
federal government only to collect delinquent child support obligations.374 The Joint Committee on
Taxation estimates that in ﬁscal year 2020, the payments will total almost $270 billion.
Treasury and IRS are working together to quickly identify eligible recipients and process
payments.375 As of May 31, 2020, Treasury and IRS disbursed 160.4 million payments totaling
$269.3 billion.
Overview of Key Issues
On April 10, two weeks after passage of the CARES Act, IRS and Treasury disbursed the ﬁrst batch
of more than 81 million payments, totaling more than $147 billion. They deposited payments
directly into taxpayers’ bank accounts using information from Tax Years 2019 or 2018 tax
returns.376 On April 17, IRS and Treasury also began sending paper checks to eligible individuals
for whom banking information was unavailable. The ﬁrst batch of checks was sent to 7 million
individuals. Starting on May 15, BFS also sent debit cards to nearly 4 million qualiﬁed recipients for
whom the IRS has no bank account information on ﬁle. See ﬁrst ﬁgure for a timeline of Treasury
and IRS actions and second ﬁgure for number of payments made by direct deposit, paper check,
and debit card as of May 31.
373For individuals with a tax return ﬁling status of single or married ﬁling separately, the 5 percent phase out begins at
$75,000 AGI. For individuals using the head of household ﬁling status, the phase out begins at $112,500. For married
couples ﬁling jointly, the phase out begins at $150,000 AGI. For taxpayers with no qualifying children, the payment
is fully phased out if AGI is at or above $99,000 for single and married ﬁling separately taxpayers, $136,500 for head
of household taxpayers, and $198,000 for married ﬁling jointly taxpayers. Those ineligible for the credit include (1)
nonresident aliens, (2) individuals who can be claimed as a dependent by another taxpayer, and (3) an estate or trust.
When spouses ﬁle jointly, both spouses must have Social Security numbers (SSN) valid for employment to receive a
payment, unless either spouse is a member of the U.S. Armed Forces at any time during the taxable year. In that case,
only one spouse needs to have a SSN valid for employment.
374The Economic Impact Payments can be oﬀset through the Treasury Oﬀset Program (TOP) only to collect delinquent
child support obligations that have been referred by the state to TOP.
375IRS sends payment ﬁles to Treasury’s Bureau of the Fiscal Service, which then processes the payments.
376As permitted by the statute, if the individual had not ﬁled a Tax Year 2019 return, the IRS used information from the
individual's Tax Year 2018 return, if such a return had been ﬁled.
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Timeline of Treasury and IRS Actions to Deliver Economic Impact Payments
a IRS does not begin payments to representative payees for Social Security, Railroad Retirement Board, and Supplemental
Security Income beneﬁts until May 22; payments to representative payees for Veterans' Administration beneﬁts begin May 29.
Total Number of Payments Made by Direct Deposit, Paper Check, or Debit Card as of May 31, 2020
a Individual payment types may not sum to total due to rounding.
IRS and Treasury faced a number of challenges to distribute the payments quickly:
• Limited paper check capacity: According to Treasury oﬃcials, Treasury can distribute 5
to 7 million paper checks a week in addition to the checks it distributes for other Federal
programs. IRS and Treasury initially prioritized mailing checks to people with low AGI, starting
with individuals with an AGI of less than $20,000, then mailed checks to individuals with
progressively higher AGI amounts IRS plans to continue issuing payments through December
10; the majority of these payments will be corrections of returned payments. On June 3,
Treasury announced that payments had been sent to all eligible individuals for whom the IRS
has the necessary information to make a payment.
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• No, or incorrect, bank information: IRS does not have bank account information for all
taxpayers. For example, some taxpayers chose to receive a paper check refund for 2019 and
2018. Also, some tax ﬁlers use temporary accounts during the ﬁling season; these accounts
are typically opened by a tax preparation service and closed after the ﬁling season ends.
Any payments made to inactive or closed accounts are rejected by the bank, returned to
Treasury, and converted to a paper check. On April 15, IRS launched Get My Payment (GMP), an
online portal that allows taxpayers to enter their bank account information to receive a direct
deposit.377 As of May 15, IRS reported 434 million visits to GMP, 14.2 million bank accounts
received, and 179 million taxpayers who received conﬁrmation of their payment status.
• Non-ﬁlers: IRS had to ﬁgure out how to deliver payments to people who did not ﬁle tax
returns for 2019 or 2018. Individuals with gross income below a certain amount, including
some individuals who receive federal beneﬁts, such as Social Security that is not subject to
tax, are among those who do not generally need to ﬁle a tax return. IRS announced it would
automatically deliver payments to eligible non-ﬁlers using data provided by the SSA, U.S.
Department of Veterans Aﬀairs (VA) and the Railroad Retirement Board (RRB). However, the
data did not include information on qualifying children.378 To get a payment for a qualifying
child, SSA, RRB, and VA beneﬁt recipients, who did not ﬁle a tax return for tax years 2018 or
2019, needed to use an online non-ﬁler tool to enter information about a qualifying child by
certain dates.379 Otherwise, IRS said these recipients will have to ﬁle a Tax Year 2020 return (in
2021) to receive a payment for a qualifying child.
According to IRS oﬃcials, from April 10 to May 17, 2020, payment calculations did not include
additional money for qualifying children claimed on returns submitted through the online
non-ﬁler tool. IRS oﬃcials estimate up to 450,000 recipients did not receive a payment that
included additional money for their qualifying children. IRS oﬃcials said they are working to
identify and adjust the accounts of these ﬁlers to recognize the number of qualifying children
claimed and provide supplemental payments by the end of July. IRS oﬃcials said that returns
received after May 17 marked the qualifying children correctly and they were included in the
payment computation.
• Hard-to-reach populations: IRS recognized it would have challenges reaching individuals
without bank accounts (unbanked), who are homeless, who have limited or no internet
access, or who have limited English proﬁciency. To assist these populations, IRS is working
with other federal agencies and community partners such as the United States Interagency
Council on Homelessness and Men of Valor, which works with newly released prisoners. IRS
also produced outreach materials, such as social media posts, in multiple languages and IRS
launched a Spanish version of the Get My Payment tool on May 4, 2020. Treasury and IRS also
377The tool also allowed individuals to check on their eligibility and the status of their payment.
378Among other requirements, a qualifying child must be under age 17 at the end of the taxable year and younger
than the individual eligible for the payment or permanently or totally disabled.
379Social Security retirement, survivor or disability insurance (SSDI) beneﬁts and Railroad Retirement beneﬁt
recipients had to complete the application by April 22, 2020, and Supplemental Security Income and Department of
Veterans Aﬀairs beneﬁt recipients had to enter the same information by May 5, 2020.
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began sending prepaid debit cards to nearly 4 million qualiﬁed recipients for whom the IRS has
no bank account information on ﬁle starting on May 15.
• U.S. territories: Residents of the ﬁve U.S. territories who meet income thresholds and
other CARES Act eligibility requirements are eligible for the Economic Impact Payments.380
According to IRS oﬃcials, IRS and Treasury do not directly oversee the administration of
payments to residents in the U.S. territories. Each territory developed a plan to disburse
payments to eligible residents. IRS and Treasury reviewed and approved these plans to ensure
they comport with the CARES Act and then provided funding to the local tax authority.381 In
return, local tax authorities are responsible for distributing payments and for reconciling any
payments made to ineligible recipients, such as decedents. IRS oﬃcials reported that as of May
18, territories received 80 percent of their total funds approved.382 According to IRS oﬃcials,
there have been instances where territory residents submitted their bank information through
the IRS’s online tools. IRS oﬃcials are coordinating with local tax authorities to avoid making
duplicative payments.
Treasury and IRS sent some payments to households with deceased individuals. Typically, IRS uses
third-party data, such as the death records maintained by the SSA to detect and prevent erroneous
and fraudulent tax refund claims. However, Treasury and IRS did not use the death records to stop
payments to deceased individuals for the ﬁrst three batches of payments because of the legal
interpretation under which IRS was operating. The ﬁrst three batches of payments accounted for
72 percent of the payments disbursed as of May 31. According to the Treasury Inspector General
for Tax Administration, as of April 30, almost 1.1 million payments totaling nearly $1.4 billion went
to decedents.383
According to IRS oﬃcials, an IRS working group charged with administering the payments ﬁrst
raised questions with Treasury oﬃcials about payments to decedents in late March as Congress
was drafting legislation. IRS Counsel subsequently determined that IRS did not have the legal
authority to deny payments to those who ﬁled a return for 2019, even if they were deceased
at the time of payment. IRS Counsel further advised—exercising discretion provided for in the
statute—to apply the same set of processing rules to recipients who had ﬁled a 2018 return but
not yet a 2019 return. IRS oﬃcials said on the basis of this determination, they did not exclude
decedents in their programming requirements.
380The ﬁve U.S. territories are Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth
of the Northern Mariana Islands.
381IRS, Treasury, and the IRS Chief Counsel (International) approved Puerto Rico’s plan on May 1, 2020, and the
remaining four territories’ plans on May 4, 2020.
382As of May 18, 2020, the total appropriations (U.S. dollars) for each territory is as follows: American Samoa, $32.8
million; Guam, $134.8 million; the Northern Mariana Islands, $47.1 million; Puerto Rico, $3.1 billion; the U.S. Virgin
Islands, $84.7 million. Because these appropriations are estimates based on the number of eligible recipients,
territories are able to request additional funds if needed. For example, Northern Mariana Islands and Guam were
appropriated an additional $7.6 million and $24.1 million, respectively.
383 According to IRS oﬃcials, these ﬁgures do not reﬂect returned checks or rejected direct deposits—the amount of
which IRS and the Treasury are still determining.
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According to Treasury oﬃcials, the CARES Act directed payments to taxpayers who ﬁled a 2019
return, or 2018 return, or allowed IRS to use information from their 2019 Social Security or
Railroad Retirement Beneﬁt Statement. Some of these taxpayers may have been deceased at the
time the payments were delivered. Treasury oﬃcials also stated that the CARES Act mandated
the delivery of the economic impact payments as “rapidly as possible.” To fulﬁll this mandate,
Treasury oﬃcials said that for the ﬁrst three batches of payments, Treasury and the IRS used many
of the operational policies and procedures developed in 2008 for the stimulus payments which
did not include using death records as a ﬁlter to halt payments to decedents.384 However, in 2013
GAO identiﬁed weaknesses in IRS processes that allowed payments to deceased individuals and
recommended corrective actions. As a result, IRS implemented a process to use death records
to update taxpayers’ accounts in order to identify and prevent improper payments.385 Bypassing
this control for the economic impact payments, which has been in place for the past seven years,
substantially increases the risk of potentially making improper payments to decedents.
According to a Treasury oﬃcial from the Oﬃce of Tax Policy, Treasury was unaware the payments
would go to decedents until it was reported in various media outlets. Treasury oﬃcials said that
upon learning that payments had been made to decedents, Treasury and the IRS in consultation
with counsel, determined that a person is not entitled to receive a payment if he or she is
deceased as of the date the payment is to be paid. Therefore, Treasury instructed IRS and the
Bureau of the Fiscal Service to remove decedents from receiving the payments, consistent with
Treasury’s and the IRS’s legal determination. Such payments are potentially improper payments
under the Payment Integrity Information Act of 2019.386 BFS and IRS removed such payments
starting with the fourth payment batch.
On May 6, 2020, IRS announced that if a payment was issued to a deceased or incarcerated
individual, the total amount should be returned. IRS also published guidance on its website
instructing such individuals on how to return the payments. According to IRS oﬃcials, IRS also
worked with federal and state prison oﬃcials to assist in the return of payments made to
incarcerated individuals. BFS also included a checkbox on the envelope that contained an EIP
paper check and instructions for returning the check. These instructions directed individuals
who received the check to return the unopened envelope by mail to the Treasury if the recipient
were deceased. However, IRS does not currently plan to take additional steps to notify ineligible
recipients on how to return payments.
Internal control standards state that management should communicate the necessary information
to achieve the entity’s objectives. Also, management should select appropriate methods to
communicate, considering factors such as intended audience, availability of information, and cost
384The Economic Stimulus Act of 2008 mandated that IRS send stimulus payments to over 100 million households. Pub.
L. No. 110-185 (2008).
385GAO, Management Report: Improvements Are Needed to Enhance the Internal Revenue Service's Internal Controls,
GAO-13-420R (Washington, D.C.: May 13, 2013).
386Pub. L. No. 116-117, 134 Stat. 113 (2020). The Payment Integrity Information Act of 2019 repealed improper payment
laws that were previously codiﬁed as amended at 31 U.S.C. 3321 note and enacted a new Subchapter in Title 31 of the
U.S. Code, containing substantially similar provisions. 31 U.S.C. §§ 3351-3358. While the core structure of executive
agency assessment, estimation, analysis, and reporting of improper payments remains consistent with the statutory
framework under the previous improper payment laws, there are some diﬀerences and enhancements under the
Payment Integrity Information Act of 2019.
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to communicate information.387 Ineligible payment recipients who do not visit IRS’s website or do
not have internet access may not be aware of the process to return payments. IRS should consider
cost eﬀective options for notifying ineligible recipients on how to return payments. For example,
for the economic impact payments, IRS sent letters to payment recipients’ last known address,
within 15 days after the payment was made, to provide information on how the payment was
made and how to report any failure to receive the payment. IRS could consider a similar letter to
all recipients or a subset of ineligible recipients notifying them about the payment return process.
Without exploring cost eﬀective options to communicate the payment return process, ineligible
recipients who would otherwise want to return the payments may be unaware how to do so.
IRS is also concerned about fraud risks related to identity theft. For example, if fraudsters have
acquired someone’s personally identiﬁable information, they could use this information to access
IRS’s Get My Payment and the Free-Filer/Non-Filer Return portals to enter their own bank account
information, and receive a fraudulent payment. In addition, fraudsters who ﬁled a false tax
return for 2019 or 2018, evaded IRS’s fraud detection, and received a refund may receive another
payment from IRS. In June 2018, GAO raised concerns about IRS’s inability to securely authenticate
taxpayers online, including that IRS had not yet implemented security controls for authenticating
taxpayers consistent with updated guidance from the National Institute of Standards and
Technology. For example, we recommended that IRS develop a plan for implementing changes to
its online authentication programs consistent with new guidance and implement improvements
to IRS's systems to fully implement the new guidance. As of January 2020, IRS had taken steps
on these recommendations but not yet fully implemented them. In addition, full access to the
death data by Treasury and BFS as GAO has previously suggested, along with consistent use of the
full death data when making payments, by both IRS and Treasury, should help reduce fraudulent
payments.
GAO Methodology and Agency Comments
To review how IRS and Treasury administered the payments, we reviewed the most recent IRS data
as of May 31, 2020, examined federal laws and agency guidance, outreach and communication
plans; and interviewed IRS and Treasury oﬃcials. We also reviewed the Standards for Internal
Control in the Federal Government, GAO’s fraud risk framework, and GAO’s work on IRS
authentication eﬀorts and other measures to address fraud risk and improper payments.
We provided a draft of this enclosure to Treasury, OMB, and IRS for review and comments. In
written comments, IRS agreed with our recommendation to consider additional options to notify
ineligible recipients on how to return payments. Treasury, OMB, and IRS also provided technical
comments which we incorporated as appropriate.
Contact Information: James R. McTigue Jr., (202) 512-9110, mctiguej@gao.gov
387GAO, Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: September 2014).
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Related GAO Products
Improper Payments: Strategy and Additional Actions Needed to Help Ensure Agencies Use the Do Not Pay
Working System as Intended, GAO-17-15 Washington, D.C.: Oct. 14, 2016.
Identity Theft: IRS Needs to Strengthen Taxpayer Authentication Eﬀorts, GAO-18-418 Washington, D.C.,
June 22, 2018.
Financial Audit: IRS’s Fiscal Years 2018 and 2017 Financial Statements, GAO-19-150 Washington, D.C.:
Nov. 9, 2018.
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Housing Protections
Agencies have issued guidance on CARES Act housing protections, but challenges remain in
ensuring that homeowners and renters beneﬁt.
Entities involved: Federal Housing Finance Agency, Department of Housing and Urban
Development, Department of Veterans Aﬀairs, Department of Agriculture, Consumer Financial
Protection Bureau, Fannie Mae and Freddie Mac (the enterprises).
Key Considerations and Future GAO Work
As the COVID-19 pandemic continues, it will be important for the agencies and government-
sponsored housing enterprises to sustain eﬀorts to provide clear and accessible information to
aﬀected parties about the CARES Act’s homeowner and renter protections. Individuals lacking
internet access or having diﬃculty determining whether the protections apply to them are among
those for whom continued outreach will be critical.
Given the broad reach and time-limited nature of the act’s housing protections, the agencies also
will need to ensure that their compliance monitoring is comprehensive and timely as possible.
Accomplishing this goal during the COVID-19 pandemic may require adjusting standard practices
or schedules, particularly if compliance monitoring is typically conducted on-site or infrequently.
Also, because the act did not deﬁne speciﬁc oversight responsibilities, agencies will need to be
proactive in developing or directing monitoring eﬀorts.
Finally, the agencies and enterprises will need to carefully manage information on mortgage
forbearances granted under the act. The rapid implementation of new loan status codes has the
potential to introduce errors and reduce the reliability of data for reporting purposes.
We plan to conduct additional work on the implementation of the CARES Act’s homeowner and
renter protections, including the extent to which compliance with these protections is being
monitored and enforced.
Background
Many mortgage borrowers and renters either are, or are at risk of, falling behind on housing
payments as a result of lost income due to COVID-19. The CARES Act provides temporary
protections for millions of households against foreclosure and eviction, as well as temporary
forbearance on mortgage payments. These provisions apply to single-family (one-to-four unit)
and multifamily (ﬁve-or-more unit) properties with federally backed mortgages and renters living
in properties with federally backed mortgages or that receive certain types of federal housing
assistance.388
388The CARES Act deﬁnes federally backed mortgages as those purchased or securitized by the housing enterprises
Fannie Mae and Freddie Mac; insured by the Department of Housing and Urban Development, a component of which
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As of the second quarter of calendar year 2020, there were more than 40 million federally
backed single-family mortgages and more than 80,000 federally backed multifamily mortgages
outstanding.389 In addition, there were more than 10 million rental units in properties with
federally backed multifamily mortgages and millions of additional rental units ﬁnanced with Low-
Income Housing Tax Credits or that receive various types of federal rental housing assistance
(public housing, for example).390 The table provides more information on the CARES Act housing
protections.
is the Federal Housing Administration; guaranteed or insured by the Department of Veterans Aﬀairs or Department of
Agriculture (USDA), a component of which is the Rural Housing Service; or directly made by USDA. The enterprises are
currently under the conservatorship of the Federal Housing Finance Agency.
389Industry estimates suggest that the total number of outstanding single-family mortgages in the United States was
roughly 50 million as of May 2020.
390Estimating the total number of rental units covered by the CARES Act is diﬃcult for a number of reasons. For
example, rental properties can be assisted by multiple federal programs, so adding up program totals results in double-
counting. For perspective, however, there were about 44 million occupied rental units in the United States in 2018 (the
most recent nationwide data available), according to data from the U.S. Census Bureau’s American Community Survey.
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Foreclosure, Eviction, and Mortgage Forbearance Protections in the CARES Act
Covered population
CARES Act protection
Property owners with federally backed single-family
mortgages
Section 4022 prohibits foreclosures and foreclosure-
related evictions for 60 days beginning on March 18, 2020,
and provides up to 180 days of mortgage forbearance
(with potential extensions of up to an additional 180
days) for borrowers who have experienced a ﬁnancial
hardship related to the COVID-19 emergency. Borrowers
are not required to document ﬁnancial hardship to receive
forbearance.
Property owners with federally backed multifamily
mortgages
Section 4023 provides up to 90 days of mortgage
forbearance for borrowers who have experienced a
ﬁnancial hardship related to the COVID-19 emergency.
Borrowers receiving forbearance may not evict tenants
for nonpayment of rent or charge fees to tenants for late
payment of rent for the duration of the forbearance period.
Tenants in properties with federally backed mortgages or
assisted by speciﬁed federal housing programs.
Section 4024 prohibits landlords for a 120-day period,
beginning March 27, 2020, from (1) initiating legal action
to recover possession of a rental unit due to nonpayment
(i.e., evict a tenant) or (2) charging fees to tenants for
nonpayment of rent.
Source: Coronavirus Aid, Relief, and Economic Security Act (CARES Act). | GAO-20-625
Note: Vacant or abandoned properties are not covered by the foreclosure moratorium. In May 2020, federal agencies and the
enterprises extended moratoriums on foreclosures and foreclosure-related evictions for property owners with federally backed
single-family mortgages through June 30, 2020.
As of early June 2020, federal agencies were still compiling information from mortgage servicers
on the number of forbearances granted under the CARES Act through May 2020. However,
industry estimates provide some perspective on the number of single-family borrowers struggling
with mortgage payments due to the COVID-19 pandemic. According to estimates from the
Mortgage Bankers Association (MBA), the percentage of single-family mortgages in forbearance
grew from 0.25 percent as of March 8, 2020 (about 3 weeks prior to the enactment of the CARES
Act) to 8.46 percent as of May 24, 2020 (about 8 weeks after enactment).391 According to MBA, the
8.46 percent ﬁgure represents about 4.2 million homeowners.
Overview of Key Issues
The federal rollout of guidance to aﬀected parties about the CARES Act housing protections was
initially fragmented and uneven, but has improved over time with the development of more
centralized and comprehensive information sources, including the launch of a joint Consumer
Financial Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA), and Department
391MBA’s estimates are based on a weekly survey of mortgage servicers. According to MBA, the survey for the March 8,
2020, ﬁgure covered about 45 percent of the primary mortgages serviced in the single-family mortgage market, while
the survey for the May 24, 2020, ﬁgure covered about 75 percent. Accordingly, the diﬀerence between the two ﬁgures
should be interpreted with some caution.
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of Housing and Urban Development (HUD) website in May 2020.392 As discussed below, federal
agencies and the government-sponsored housing enterprises have issued guidance or made
information available to housing stakeholders.
Guidance to servicers. Agency and enterprise guidance to servicers includes, among other
things, the moratorium periods for foreclosures and evictions, the length of initial and any renewal
forbearance periods, and loan status codes to use for reporting CARES Act forbearances. Agency
and enterprise oﬃcials said that, in addition to formal written notices, they provided or clariﬁed
guidance through other means, such as web-based training and conference calls. The enterprises
also issued scripts for single-family mortgage servicers to guide their discussions with borrowers
about CARES Act forbearances. Although not speciﬁcally required by the act, guidance from the
agencies and enterprises states that borrowers will not be required to repay missed mortgage
payments in one lump sum after the forbearance period ends.
Information for borrowers and renters. The agencies and enterprises have information on their
websites to help renters and mortgage borrowers (including landlords) understand the protections
and responsibilities that apply to them. They also have disseminated information in other ways.
For example, HUD developed ﬂyers or brochures for HUD-assisted public housing agencies and
multifamily property owners to distribute to tenants on the eviction moratorium and what to do if
they are having trouble paying rent. Additionally, the enterprises created online loan lookup tools
that allow renters in multifamily properties to determine whether the property they live in has a
mortgage purchased or securitized by Fannie Mae or Freddie Mac and is therefore covered by the
CARES Act protections.393
A number of implementation and oversight challenges will need to be overcome to help ensure
that homeowners and renters receive the CARES Act protections.
• Helping borrowers and renters. Given the complexity of the provisions and the multiple
types of federal housing assistance, a key challenge is helping borrowers and renters
understand whether the act’s protections apply to them and what the protections are. The
act did not require covered borrowers and renters to be directly notiﬁed of their rights
and options, and much of the information available to these individuals is on agency and
enterprise websites. As a result, individuals lacking internet access or having diﬃculty
determining whether they live in a covered property may not be exercising protections
they are entitled to. Tenants in single-family properties in particular could have diﬃculty
determining whether their residence has a federally backed mortgage.394 Existing loan lookup
tools for single-family properties are designed for property owners and require inputting
information a tenant likely would not have.395
392The website includes information on the housing programs of the Department of Veterans Aﬀairs—which
provided input to the website, according to agency oﬃcials—and the Department of Agriculture. See https://
www.consumerﬁnance.gov/coronavirus/mortgage-and-housing-assistance/.
393The enterprises also have loan lookup tools that existed prior to the CARES Act for single-family property owners.
394According to data from the U.S. Census Bureau’s American Housing Survey, over one-half of renter-occupied
housing units were in single-family properties as of 2018.
395Users must enter the last four digits of the property owner’s Social Security number. A tenant also would have to
conﬁrm that they have the property owner’s consent to look up the loan.
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Representatives of a housing advocacy group we spoke with said they were aware of reported
cases where renters covered by the CARES Act protections had wrongly received notices of
eviction. They also expressed concern that homeowners who were misinformed about or
unaware that lump-sum repayment of missed mortgage payments is not required after a
forbearance might choose to forgo a forbearance and end up in default. These scenarios
illustrate the importance of timely and accessible information for aﬀected parties about the
act’s housing protections.
• Managing data and ﬁnancial implications. The rapid implementation of the CARES Act
created challenges in recording forbearances in agency and enterprise loan monitoring
systems used by mortgage servicers. The agencies and enterprises repurposed existing
loan status codes or made changes to their loan monitoring systems to capture CARES Act
forbearances. Additionally, HUD and USDA instructions to servicers in May 2020 acknowledged
that servicers may previously have been using more than one code to record the forbearances,
but should use a single designated code going forward. Because these changes may increase
the potential for miscoding and misinterpretation of data, careful management and analysis of
loan information will be needed to ensure accurate reporting on CARES Act forbearances.
Additionally, while the forbearances may help stabilize the mortgage market and potentially
mitigate long-term credit losses, actions to manage the back end of the forbearance periods
will require signiﬁcant ﬁnancial commitments by the agencies and the enterprises. For
example, HUD’s Federal Housing Administration (FHA) developed a new foreclosure mitigation
option for the COVID-19 pandemic. For eligible borrowers, FHA will eﬀectively fund no-interest,
no-fee loans subordinate to the original mortgage. These loans will cover payments missed
during the forbearance period and will not come due until the borrower reﬁnances, pays
oﬀ the mortgage, or sells the home. The size of the associated ﬁnancial commitments will
depend, in part, on the ultimate number and length of forbearances granted under the CARES
Act, which is not yet known.
• Overseeing implementation. Overseeing servicer and landlord implementation of CARES
Act provisions also will present challenges. The act does not deﬁne speciﬁc oversight
responsibilities or contain reporting requirements for servicers and landlords, so detection of
any noncompliance with the act’s protections will depend on monitoring programs developed
or directed by each agency. Agency oﬃcials described steps they are taking to update their
oversight tools in light of the CARES Act housing protections, including changes to information
systems and servicer quality assurance and compliance reviews. However, monitoring and
enforcing protections for millions of households during the COVID-19 pandemic could strain
the capacity of the agencies to provide timely and comprehensive oversight, particularly if
compliance monitoring is typically performed on-site or only once a year.396 Additionally,
enterprise oﬃcials said that while they will respond to any reported violations of CARES Act
protections, their compliance monitoring is focused on their own policies. Further, agencies
may not have information needed to monitor protections for all renters. For example, agency
396For example, HUD’s Oﬃce of Public and Indian Housing noted that its annual reviews of public housing agencies
are generally conducted on-site but that review staﬀ are currently not traveling. According to HUD oﬃcials, on-
site reviews facilitate the audit of tenant ﬁles (to evaluate compliance with eviction policies, for example) and allow
housing agency staﬀ to be available to provide certain information required for the reviews.
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oﬃcials said they do not have information on rental agreements for or tenants in single-family
properties with federally backed mortgages.
GAO Methodology and Agency Comments
To conduct this work, we reviewed agency and enterprise data, guidance, and other
documentation, including information on their websites. We also interviewed or reviewed written
responses from agency and enterprise oﬃcials and selected housing stakeholder groups.
We provided a draft of this enclosure to HUD, FHFA, USDA, CFPB, the Department of Veterans
Aﬀairs, the Oﬃce of Management and Budget, Fannie Mae, and Freddie Mac for review and
comment. In its comments, reproduced in appendix XV, HUD noted its eﬀorts to inform aﬀected
parties about the CARES Act’s housing protections and said it was working to provide timely and
comprehensive compliance monitoring. Additionally, HUD, FHFA, the Oﬃce of Management and
Budget, and Freddie Mac provided technical comments, which we incorporated as appropriate.
USDA, CFPB, the Department of Veterans Aﬀairs, and Fannie Mae did not provide comments.
Contact information: John Pendleton, (404) 679-1816, pendletonj@gao.gov
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Small Business Programs
The Small Business Administration approved more than 1 million economic injury disaster loans,
but information technology challenges and processing delays hampered implementation.
Entities Involved: Small Business Administration
Key Considerations and Future GAO Work
As COVID-19 continues, it will be important for the Small Business Administration (SBA) to address
the following as it implements the Economic Injury Disaster Loan (EIDL) program: information
technology challenges, transparency around loan and advance amounts, processing delays, and
communication issues, among other issues.
We will soon begin additional work on the EIDL program, including on SBA guidance, policies, and
procedures, and on the types of borrowers using the program.
Background
A majority of the more than 30 million small businesses in the United States have been adversely
aﬀected by COVID-19. In response, the CARES Act expanded existing SBA programs and
appropriated additional funding to help impacted businesses. The CARES Act also created the
Paycheck Protection Program (PPP). (A separate enclosure covers PPP.)
The CARES Act temporarily expanded eligibility for SBA’s EIDL program and appropriated funds
for related emergency EIDL advances.397 The EIDL program provides low-interest loans of up to $2
million for expenses—such as operating expenses—that cannot be met because of a disaster.398
The CARES Act expanded EIDL program eligibility to include additional small business entities
and relaxed some approval requirements, such as demonstrating that the business could not
obtain credit elsewhere.399 It also appropriated $10 billion to create a program to provide small
businesses up to $10,000 in advances toward payroll, sick leave, and other business obligations.
Borrowers do not have to repay these advances, even if they are subsequently denied the EIDL.
397 See Pub. L. No. 116-136, §§ 1107(a)(6), 1110, 134 Stat. 281, 302, 306.
398Prior to the CARES Act’s enactment, SBA had about $1.1 billion in disaster loan credit subsidy available to support
about $7 billion to $8 billion in disaster loans. Loan credit subsidy covers the government’s cost of extending or
guaranteeing credit and is used to protect the government against the risk of estimated shortfalls in loan repayments.
The loan credit subsidy amount is about one-seventh of the cost of each disaster loan.
399Prior to CARES Act changes, eligible businesses included small businesses, most private non-proﬁts of any size, small
aquaculture enterprises, and small agricultural cooperatives.
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The CARES Act also provided $17 billion in funding to SBA to cover the principal, interest, and any
associated fees that small businesses owe on certain loans for a 6-month period.400 Further, it
provided $240 million in grants for selected SBA resource partners to provide counseling, training,
and education on SBA resources and business practices related to COVID-19.
Overview of Key Issues
The CARES Act created new SBA programs and expanded existing ones, but some experienced
implementation challenges. These programs include the following:
EIDL and EIDL Advances. SBA closed its application portal and stopped accepting new EIDL
applications on April 15, 2020 (see ﬁgure below). The next day the agency announced that the
lending authority for EIDLs and the funding for EIDL advances had been exhausted. In the
Paycheck Protection Program and Health Care Enhancement Act enacted on April 24, 2020,
Congress appropriated an additional $50 billion in loan subsidy for EIDLs and $10 billion for EIDL
advances.401 With this additional funding, on May 4, 2020, SBA resumed processing previous
applications and accepting new applications from agricultural enterprises only.
Timeline for the Economic Injury Disaster Loan Program, as of June 15, 2020
As of June 11, 2020, SBA had approved about 1.3 million EIDLs totaling about $91 billion, or an
average of about $68,000 for each loan. According to SBA oﬃcials, this was more EIDLs than SBA
400Pub. L. No. 116-136, §§ 1107(a)(7), 1112, 134 Stat. 281, 302, 309.
401The Act also made small agricultural enterprises who were previously ineligible for EIDL temporarily eligible for a
loan.
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had approved for all previous disasters combined. As of June 11, 2020, SBA had processed about
3.2 million advances totaling about $11 billion, or an average of about $3,300 for each advance.
Both the EIDL and EIDL advance programs encountered various challenges, including:
• Information technology: SBA’s application portal exposed applicant data, and some
applicants had to reapply to the program when SBA transitioned to a new application system.
Prior to the CARES Act, SBA accepted EIDL applications on its Disaster Loan Application Portal.
SBA shut down this portal on March 25, 2020, after the data incident.402 The next day, SBA
provided a temporary solution that allowed applications to be submitted via a document-
hosting service. Subsequently, SBA launched a new application portal with a streamlined
application. According to SBA oﬃcials, the agency asked applicants that had not yet been
processed in the old system to reapply through the new portal because their applications
would be processed faster and they would be able to request an EIDL advance. SBA oﬃcials
also told us that those that reapplied kept their original position in the application queue.
• Size of loans and advances: SBA placed limits on the size of both EIDLs and EIDL advances.
SBA’s standard operating procedures for EIDL state that the legislative limit of $2 million
applies to EIDLs, depending on the ﬁnancial eﬀect of the disaster.403 According to SBA oﬃcials,
when SBA ﬁrst began to provide EIDLs related to COVID-19, it limited the loans to 6 months
of working capital up to a maximum of $500,000. They then noted that as SBA began to
process thousands of applications, the agency lowered the cap to $15,000 for several days as
it monitored available funding before restoring the maximum to $500,000. The oﬃcials told
us that when SBA reopened its EIDL application portal on May 4, 2020, the agency established
the maximum loan amount at $150,000 where it has remained. In addition, SBA announced on
April 13, 2020, that all advances would be limited to $1,000 per employee up to a maximum of
$10,000.404 According to SBA oﬃcials, they took these steps to provide assistance to as many
small businesses as possible with the funds available. SBA oﬃcials also said that the change
in the applicant’s ﬁnancial condition attributable to the eﬀect of the disaster is often less than
the loan limits. However, the U.S. Chamber of Commerce, for example, has stated that low
limits would result in insuﬃcient funding for many small businesses.
• Processing times: Businesses reported delays in receiving loans and advances from SBA.
For example, representatives from a small business association we interviewed stated that
some applicants had not received their loans or advances more than a month after submitting
an application. SBA oﬃcials said that as loan requests reached historical levels, it eliminated
projections for EIDL processing times. The CARES Act requires SBA to provide EIDL advances
to applicants within 3 days after receiving an application. However, SBA oﬃcials stated that
the agency faced challenges in processing the advances in the 3 days required by the CARES
402It has been reported that about 8,000 applicants’ personal identifying information, including Social Security
numbers and ﬁnancial and contact information, was potentially visible to other applicants. In response to the
breach, SBA reportedly alerted applicants whose information was compromised, temporarily disabled the portal,
and oﬀered a year of free credit monitoring.
403The size of a given borrower’s loan is based on the change in the borrower’s ﬁnancial condition attributable to
the eﬀect of the disaster. This change must result in the inability of the borrower to meet its obligations or to pay
ordinary and necessary operating expenses.
404SBA stated that the amount of the advance is determined by the number of employees as of January 31, 2020.
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Act. But they noted that they established the new advance program in 7 business days and
were able to disburse over $10 billion in advances in about a month. To improve processing
of both loans and advances, the oﬃcials told us that SBA increased its staﬃng, made process
improvements, and improved its technology.
• Lack of communication: Business owners have reported a lack of communication from
SBA, contributing to their uncertainty about future planning. For example, representatives
from a small business association said that its members were frustrated with the lack of
communication from SBA regarding their application status. SBA oﬃcials said that although
the application portal does not show an applicant’s status, applicants could contact SBA call
center agents for status updates and that SBA sends emails at diﬀerent stages of the process
to applicants. Additionally, SBA has not provided important program information, such as
the maximum amounts it has imposed on the loans, on its website or in announcements.
However, SBA oﬃcials said that applicants become aware of such information when they
engage with a SBA loan oﬃcer or are preliminarily oﬀered a loan amount.
Other SBA programs. The CARES Act supported other SBA programs such as:
• Debt relief for certain 7(a) loans, 504 loans, and microloans: The CARES Act appropriated
$17 billion to pay the principal, interest, and any associated fees that small businesses owe
on these loans for a 6-month period.405 SBA has issued implementation notices for these
programs.
• Funding for Small Business Development Centers and Women’s Business Centers: The
CARES Act appropriated $240 million for grants to SBA resource partners for small business
education and counseling and $25 million for resource partner associations to establish
a centralized hub for information related to COVID-19 disruptions and a related training
program.406 SBA published funding opportunities in April 2020.
GAO Methodology and Agency Comments
To conduct this work, we reviewed SBA documentation on the programs and interviewed SBA
oﬃcials. In addition, we interviewed oﬃcials from six associations that represent a variety of
lenders and an association that represents small businesses. Their views are not generalizable to
other lender and small business associations but oﬀered important perspectives.
4057(a) loans are loans for working capital and other general business purposes, while 504 loans support
investment in major assets such as real estate and heavy equipment. SBA’s Microloan Program integrates micro-
level ﬁnancing with training and technical assistance for women, low-income individuals, minority entrepreneurs,
and other small businesses that need a small amount of assistance.
406Small Business Development Centers provide technical assistance (business counseling and training) to small
businesses and aspiring entrepreneurs. Women’s Business Centers provide counseling and training to assist
women in starting and growing small businesses.
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SBA provided written comments on the draft report, which we summarize in the agency
comments section of the report. The agency also provided technical comments that we
incorporated as appropriate.
Contact Information: William B. Shear, (202) 512-4325, shearw@gao.gov
Related GAO Products
Small Business Administration: Disaster Loan Processing Was Timelier, but Planning Improvements and
Pilot Program Evaluation Needed, GAO-20-168. Washington, D.C.: February 7, 2020.
Small Business Administration: Agency Has Controls to Comply with Paperwork Reduction Act but Could
Improve Accessibility and Consistency of Disaster Loan Information, GAO-17-67. Washington, D.C.:
November 21, 2016.
Small Business Administration: Additional Steps Needed to Help Ensure More Timely Disaster Assistance,
GAO-14-760. Washington, D.C.: September 29, 2014.
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Paycheck Protection Program
The Paycheck Protection Program was designed to give assistance to small businesses and other
organizations that were aﬀected by COVID-19.
Entities involved: Small Business Administration, Department of the Treasury
Key Considerations and Future GAO Work
To ensure program integrity, achieve program eﬀectiveness, and address potential fraud in the
program, we recommend that the Small Business Administration (SBA) develop and implement
plans to identify and respond to risks in the Paycheck Protection Program (PPP), including in loans
of $2 million or less.
We have additional work underway on PPP, including on the types of lenders making PPP loans,
the borrowers receiving the loans, and the safeguards that SBA has implemented to help ensure
that lenders and borrowers complied with program requirements.
Background
There are more than 30 million small businesses in the United States, many of which have been
adversely aﬀected by COVID-19. The CARES Act appropriated $349 billion for PPP under SBA’s 7(a)
small business lending program.407 PPP loans are low-interest loans that will be forgiven if certain
conditions are met.408 Key features of PPP loans include:
• Eligibility. In addition to 7(a) eligible businesses, the following are eligible: a business, 501(c)
(3) nonproﬁt organization, 501(c)(19) veteran's organization, or tribal business that has 500 or
fewer employees or, if applicable, the SBA's size standard for the number of employees for the
industry in which they operate; sole proprietors; independent contractors; and eligible self-
employed individuals.409
407Pub. L. No. 116-136, §§ 1102(b), 1107(a)(1), 1112, 134 Stat. 281, 293, 301. The 7(a) program is SBA’s largest guaranteed
loan program.
408The CARES Act includes other provisions for SBA, including an expansion of its Economic Injury Disaster Loan
program. Borrowers can apply for both PPP and disaster loans to cover diﬀerent expenses. (A separate enclosure
discusses the Economic Injury Disaster Loan program.)
409Businesses must also meet certain other eligibility criteria such as being in business as of February 15, 2020, and
not engaged in any illegal activity. In addition, under the CARES Act, businesses assigned a North American Industry
Classiﬁcation System code in the Accommodation and Food Services sector with no more than 500 employees per
physical location are eligible to receive a PPP loan. To be eligible for the standard 7(a) program, a business must
be an operating for-proﬁt small ﬁrm (according to SBA’s size standards) located in the United States and must be
unable to obtain conventional credit at reasonable terms elsewhere.
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• Rate and terms. PPP provides loans with a 100 percent SBA loan guarantee. As implemented
by SBA, PPP loans have a maximum term of 2 years and a 1 percent interest rate.410
• Usage. Loans can be used for payroll and non-payroll costs. Payroll costs include
compensation to employees; payments for vacation, parental, family medical, or sick leave;
and payments for the provision of employee health and retirement beneﬁts. Non-payroll
expenses include costs related to the continuation of group health care beneﬁts during
periods of paid sick, medical, or family leave; mortgage interest payments; rent payments;
utility payments; and interest payments on any other debt obligations that were incurred
before February 15, 2020. As originally implemented by SBA, at least 75 percent of the loan
proceeds must have been used for payroll costs. However, the Paycheck Protection Program
Flexibility Act of 2020 modiﬁed this limit to at least 60 percent.
• Participating lenders. In addition to approved 7(a) lenders, additional authorized lenders
determined by SBA and the Department of the Treasury (Treasury) to have the necessary
qualiﬁcations to process, close, disburse, and service loans under PPP can participate.411
Overview of Key Issues
Implementation status. On April 3, 2020, SBA began administering PPP in collaboration with
Treasury, and the $349 billion originally appropriated in the CARES Act for the program was
obligated by April 16, 2020.412 On April 24, 2020, Congress appropriated an additional $321 billion
for PPP through the Paycheck Protection Program and Health Care Enhancement Act, for a total of
$670 billion.413 On April 27, 2020, SBA resumed accepting new applications for the program.
410Loan maturity and interest rate are only relevant to the portion of the loan not forgiven. The Paycheck
Protection Program Flexibility Act of 2020 was enacted on June 5, 2020. Pub. L. No. 116-142, 134 Stat. 641 (2020).
The act extended the minimum loan maturity date for new loans to 5 years. It also, among other things, extended
the “covered period” during which borrowers can spend forgivable expenses from 8 weeks to 24 weeks and
automatically extended the loan deferral period until SBA renders a decision on forgiveness. On June 11, 2020, SBA
posted an interim ﬁnal rule implementing key provisions of the Paycheck Protection Program Flexibility Act of 2020.
See 85 Fed. Reg. 36,308 (June 16, 2020).
411For example, under PPP certain Farm Credit System lenders were approved to participate.
412SBA published an initial interim ﬁnal rule on April 2, 2020, to establish PPP terms, such as interest rate, maturity
date, and payment deferral period. See 85 Fed. Reg. 20,811 (Apr. 15, 2020). The interim ﬁnal rule indicated that SBA had
consulted with Treasury on aspects of the program’s design.
413Of the second round of funding, Congress set aside $30 billion to be lent by insured depository institutions or
credit unions with consolidated assets of between $10 billion and $50 billion, and $30 billion to be lent by community
ﬁnancial institutions and insured depository institutions and credit unions with consolidated assets of less than $10
billion. On May 28, 2020, SBA and Treasury announced that an additional $10 billion would be set aside for community
development ﬁnancial institutions.
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Approved loans. As of June 12, 2020, lenders had made about 4.6 million loans totaling about
$512 billion, using up about 76 percent of the available funds.414 This greatly exceeded all of SBA’s
lending under the 7(a) program in ﬁscal years 1990-2019 combined.415
Lenders. As of June 12, 2020, about 5,500 lenders had made PPP loans.416 About 65 percent of the
lenders were banks with less than $1 billion in assets, and about 17 percent were nonbanks.417
Loan amounts. As shown in the table below, about 86 percent of loans (about $137 billion) were
for loans of $150,000 or less; however, the almost 2 percent of loans that were greater than $1
million (about $180 billion) accounted for 35 percent of funds, as of June 12, 2020.
414Totals reﬂect loan cancellations as of June 12, 2020. As discussed later, some borrowers, including publicly traded
companies, have canceled their loans. According to SBA, more than 170,000 loans totaling about $38.5 billion had been
canceled as of May 31, 2020. SBA oﬃcials told us that cancellations were still being reported to the agency.
415From ﬁscal year 2000 to ﬁscal year 2019, SBA made about 1.2 million 7(a) loans totaling about $333 billion. On
average, SBA made about 62,000 loans totaling about $16.7 billion annually.
416In ﬁscal year 2019, about 1,600 lenders made 7(a) loans.
417Nonbanks are broadly deﬁned as institutions other than banks that oﬀer ﬁnancial services.
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Number, Dollar Amount, and Distribution of Paycheck Protection Program Loans, as of June 12, 2020
Amount of loan
(dollars)
Number of approved
loans
Approved dollars ($)
Percent of approved
loans (%)
Percent of approved
dollars (%)
150,000 and less
3,926,477
136,683,699,300
85.8
26.7
150,001 - 350,000
370,507
83,240,884,629
8.1
16.2
350,001 - 1,000,000
197,277
112,238,433,258
4.3
21.9
1,000,001 - 2,000,000
52,586
72,856,742,215
1.1
14.2
2,000,001 - 5,000,000
24,734
73,523,496,712
0.5
14.4
More than 5 million
4,807
33,728,428,031
0.1
6.6
Total
4,576,388
512,271,684,145
100
100
Source: Small Business Administration | GAO-20-625
Distribution of funds. As of June 12, 2020, businesses in six states had received $20 billion or
more in loans totaling 33 percent (or about $218 billion) of the appropriated funds.418 (See ﬁgure
below.)
418The six states are California, Florida, Illinois, New York, Pennsylvania, and Texas. Economists at the Federal Reserve
Bank of New York conducted research on the ﬁrst round of PPP funding, examining the allocation of credit. They focused
on whether PPP loans had gone to the areas of the country and sectors of the economy hardest hit by COVID-19.
They found that there was no statistically signiﬁcant relationship between the severity of the economic eﬀect of
COVID-19—measured both in terms of cases and unemployment claims—and the share of small businesses getting PPP
loans, after excluding New York and New Jersey. See Haoyang Liu and Desi Volker, Where Have the Paycheck Protection
Loans Gone So Far? (New York, NY: May 6, 2020).
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Paycheck Protection Program Loans by State and U.S. Territory, as of June 12, 2020
Note: According to SBA, the location had not been conﬁrmed for 173 approved loans in the amount of $6,409,358 as of June 12,
2020.
Loan recipients by industry. As of June 12, 2020, of the $670 billion authorized for PPP, the top
three industries in terms of loan dollars were health care and social assistance (12.9 percent);
professional, scientiﬁc, and technical services (12.7 percent); and construction (12.4 percent) (see
ﬁgure below).
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Paycheck Protection Program Loans by Industry, as of June 12, 2020
PPP experienced challenges related to information technology issues; rules and guidance issued
on a rolling basis; initial concerns about lender participation and borrower access; and loans to
publicly traded companies.
Information technology issues. Information technology issues related to SBA’s loan processing
system caused delays for both new and established lenders trying to access the system. SBA’s loan
system for its standard 7(a) program was not built to process the volume of loans SBA received. In
addition, three associations that represent lenders told us that lenders encountered delays trying
to obtain access to the system for new users. According to one association, it took between 48
hours and 2 weeks for lenders to get access to the system. To help increase access, SBA created a
separate portal for lenders that were not familiar with SBA’s existing loan processing system and
provided a customer service number to assist lenders with information technology issues. SBA
oﬃcials also told us that they increased the processing system’s memory, expanded the number
of telecommunication lines, established a pacing mechanism that limits the number of loans any
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one lender can enter into the system per hour, and established batch ﬁle processing for lenders
with more than 5,000 applications.
Rolling rules and guidance and diﬃculty reaching SBA. SBA has issued rules and guidance
on PPP on a rolling basis. Although this was necessary to some extent given the need to get
funds to small businesses quickly, the frequently updated guidance sometimes left lenders and
borrowers confused. For example, SBA issued an interim ﬁnal rule providing key program terms
the night before the program launched along with a number of subsequent interim ﬁnal rules on
topics such as loan disbursement.419 The agency also has published answers to frequently asked
questions on a rolling basis.420 According to SBA oﬃcials, they frequently updated their guidance
to be responsive to lender and borrower feedback and concerns. In addition, Treasury oﬃcials
noted that most of the additional rules and guidance enhanced borrower or lender ﬂexibility.
• Regularly updated guidance. Lenders have struggled to keep up with the latest program
rules due to the continually evolving nature of this guidance. For example, representatives
of two lender associations informed us that lenders were initially told in a conference call
with SBA that they must disburse loan funds within 5 days of loan approval. According to SBA
oﬃcials, they have no recollection of such a conference call taking place. A later response to
a frequently asked question on a diﬀerent topic (published online on April 8, 2020) stated
that lenders must disburse loan funds no later than 10 days from loan approval. On April 28,
2020, SBA posted an interim ﬁnal rule on disbursements that reiterated this requirement and
provided more details.421
• Lack of time stamp on responses to frequently asked questions. The responses to
frequently asked questions are dated but no time is listed. The responses note that the U.S.
government will not challenge lender actions that conformed to the guidance and rules in
eﬀect at the time.422 Without the time listed, lenders cannot know the guidance that is in place
when they make loans. Representatives of a lender group told us that their members had
expressed concerns that they might process a loan shortly after SBA released a policy change
of which they were unaware, possibly resulting in the loan being challenged.
• Diﬃculty reaching SBA. Representatives of two lender associations and a small business
association we interviewed told us that their members indicated that it was diﬃcult to
reach anyone at SBA to get clariﬁcation on guidance. Although SBA established numbers
for borrowers and lenders to call with questions about PPP, it encouraged borrowers to
contact their lenders with questions about their application, and for lenders to contact staﬀ
in SBA’s district oﬃces. However, representatives of lender and small business associations
we interviewed told us that often no one answered when members called the district oﬃce;
419SBA posted the initial interim ﬁnal rule deﬁning key program terms 6 days after the CARES Act was enacted.
420SBA started providing responses to frequently asked questions on April 3, 2020, and had updated them 17 times as
of June 15, 2020. The responses provided clariﬁcation on topics such as calculating payroll costs.
421 See 85 Fed. Reg. 26,321, 26,322-23 (May 4, 2020).
422In a subsequent answer to a frequently asked question and in the loan forgiveness and loan review procedures
interim ﬁnal rules, SBA stated that borrowers and lenders may rely on—and SBA would review applications based
on—the rules and guidance “available” at the time of the loan application.
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when someone did answer, members noted that the person did not always know the answer
or provided incorrect information.
Initial lender concerns about access, liquidity, and liability. According to representatives from
four lender associations we talked to, their members were initially concerned about accessing
the program, maintaining liquidity, or being held liable. SBA and Treasury subsequently released
additional rules and guidance on these topics.
• Access. Some lenders, particularly nonbank lenders, initially experienced challenges accessing
the program. While SBA provided the lender agreement for depository institutions, federally
insured credit unions, and Farm Credit System institutions prior to the program’s launch, it
did not provide the agreement for nonbank lenders until 5 days after the program started.
According to SBA and Treasury oﬃcials, this additional time was necessary because SBA was
required by the CARES Act to conﬁrm that these new categories of lenders were capable of
participating in the program. SBA also reached out to groups such as community development
ﬁnancial institutions and minority deposit institutions to encourage their participation
as lenders. In addition, the requirement that certain lenders have a certain portfolio size
precluded some lenders from participating, such as community development ﬁnancial
institutions that lend to small businesses that mainstream lenders consider too risky. On April
30, 2020, SBA posted an interim ﬁnal rule lowering portfolio requirements for community
development ﬁnancial institutions, majority minority-, women-, or veteran/military-owned
ﬁnancial institutions, and certain other nonbank lenders.
• Liquidity. Due to high borrower demand, lenders—particularly smaller banks and nonbank
lenders—initially expressed concerns about having enough liquidity to provide loans prior
to funding reimbursement from SBA. On April 9, 2020, the Federal Reserve announced the
creation of a PPP Liquidity Facility to supply liquidity to participating ﬁnancial institutions
through term ﬁnancing backed by PPP loans to small businesses.423 However, until April 30,
2020—approximately 2 weeks after the initial PPP funds were exhausted—nonbank lenders
could not access the additional liquidity oﬀered by this facility. As noted previously, Congress
appropriated more funds for PPP on April 24, 2020.
• Liability. Representatives of two lender associations said that prior to the program’s
launch, lenders expressed concerns about being held liable for loan application errors or
misinterpretation of established program parameters. In response to these concerns, SBA
stated in the initial interim ﬁnal rule that lenders could rely on borrower certiﬁcations to
determine eligibility and use of loan proceeds—that is, attestations from borrowers in their
applications that they needed the loan and had provided accurate information, among other
things.
Borrower access. Some borrowers experienced challenges, including banks giving preference
to existing customers and independent contractors and the self-employed requiring additional
regulations and guidance.
423The PPP Liquidity Facility allows Federal Reserve Banks to lend to borrowers eligible to originate PPP loans and
take PPP loans as collateral. The PPP Liquidity Facility was launched on April 16, 2020.
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• Preference for lenders’ existing customers. Some lenders reportedly gave preference to
applicants who had borrowed from them before because of concerns about complying with
Bank Secrecy Act requirements.424 This preferential treatment resulted in delayed participation
by certain small businesses.
• Independent contractors and self-employed required additional guidance. Although,
according to SBA, independent contractors and the self-employed could apply on April 3,
2020, SBA did not post guidelines for these two groups until 2 days before the ﬁrst round of
PPP funding was exhausted. Treasury oﬃcials told us that additional guidance was required
because the concept of payroll costs does not naturally apply to these types of individuals and
businesses.
Loans to publicly traded companies. According to analysis by FactSquared as of June 1, 2020,
more than 400 publicly traded companies were approved for about $1.4 billion in loans.425 On
April 23, 2020, SBA issued guidance stating that borrowers should carefully review the required
certiﬁcation to ensure that they qualify.426 In the same guidance, SBA reiterated that borrowers
must self-certify that their PPP loan is necessary, and stated that it is unlikely that many publicly
traded companies will be able to make this certiﬁcation in good faith.427 In subsequent rules
and guidance, SBA announced that borrowers who had previously applied for a PPP loan could
repay the loan in full by May 18, 2020, and would be considered to have made their certiﬁcations
in “good faith.” According to FactSquared, about 70 public companies had returned about $435
million in PPP loans as of June 1, 2020.
GAO Methodology and Agency Comments
To conduct this work, we reviewed SBA data on the program, reviewed interim ﬁnal rules and
guidance issued by SBA and Treasury, and interviewed SBA and Treasury oﬃcials. In addition, we
interviewed oﬃcials from six associations that represent a variety of lenders and an association
that represents small businesses. Their views are not generalizable to other lender and small
business associations but oﬀered important perspectives.
424The Bank Secrecy Act requires banks and other ﬁnancial institutions to take precautions against money
laundering and other illicit ﬁnancial activities by conducting due diligence activities and informing Treasury of
suspicious activity by their customers.
425FactSquared is a data analysis company. It had reviewed 14,667 Securities and Exchange Commission ﬁlings
since April 3, 2020, the ﬁrst day to apply for PPP loans. We performed keyword searches of Securities and Exchange
Commission ﬁlings and identiﬁed a list of companies very similar to the list reported by FactSquared.
426Borrowers must certify in good faith that the“[c]urrent economic uncertainty makes this loan request necessary to
support the ongoing operations of the Applicant.”
427Speciﬁcally, SBA noted that it is unlikely that a public company with substantial market value and access to capital
markets will be able to make the required certiﬁcation in good faith, and such a company should be prepared to
demonstrate to SBA, upon request, the basis for its certiﬁcation.
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SBA and Treasury provided written comments on the draft report, which we summarize in the
agency comments section of the report. Both agencies also provided technical comments that we
incorporated as appropriate.
Contact information: William B. Shear, (202) 512-4325, shearw@gao.gov
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Federal Reserve Emergency Lending Programs
In response to the economic downturn caused by COVID-19, among other actions, the Board
of Governors of the Federal Reserve System, with the Department of the Treasury approval,
authorized the establishment of seven emergency lending programs (or facilities) supported
through the Department of the Treasury funding appropriated under the CARES Act. The facilities
are to help provide credit to eligible businesses, states, tribes, and municipalities. As of June 8,
2020, only two of the seven facilities were operational.
Entities Involved: The Federal Reserve System; Department of the Treasury.
Key Considerations and Future GAO Work
During the 2007-2009 ﬁnancial crisis, the Board of Governors of the Federal Reserve System
(Federal Reserve) established emergency lending programs (or facilities) to stabilize ﬁnancial
markets. The facilities were operated by Federal Reserve Banks. In July 2011, we recommended
that the Federal Reserve (1) strengthen procedures in place to guide the Federal Reserve Banks’
eﬀorts to manage access to the programs by high-risk borrowers and (2) document a plan to
estimate and track losses that could occur within and across all emergency lending activities and
to use this information to inform policy decisions. Because the Federal Reserve created similar
facilities that are supported by CARES Act funds to respond to the COVID-19 pandemic, both
recommendations remain relevant. Federal Reserve oﬃcials told us that they have taken actions to
address these recommendations for the recently established facilities. We will review these actions
and provide a more detailed review of the Federal Reserve facilities in a separate study mandated
in the CARES Act.
Background
To provide economic relief, the CARES Act appropriated $500 billion to the Department of
the Treasury (Treasury) to provide loans, loan guarantees, and investments to states, tribes,
municipalities, and eligible businesses through the Exchange Stabilization Fund (ESF).428 The
CARES Act authorized up to $454 billion and potentially certain other amounts for Treasury to
support the Federal Reserve in establishing lending facilities. The facilities are authorized under
section 13(3) of the Federal Reserve Act and approved by the Secretary of the Treasury.429
428Pub. L. No. 116-136, § 4003, 134 Stat. 281, 470 (2020). Treasury’s ESF was mandated under the Gold Reserve Act of
1934 to help maintain an orderly system of currency exchange rates. The CARES Act appropriated $500 billion to the
ESF to support loans, loan guarantees, and investments for businesses aﬀected by COVID-19. The act deﬁnes eligible
businesses as those created or organized in the United States with signiﬁcant operations in and a majority of employees
based in the United States.
429Section 4003(b) of the CARES Act also made up to $46 billion available to support passenger and cargo air carriers,
and other eligible businesses, as well as businesses critical to maintaining national security. Any amount left from this
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Section 13(3) facilities must comply with requirements relating to loan collateralization and
taxpayer protection, among others. In addition to incorporating these Section 13(3) requirements,
the CARES Act also placed certain restrictions—for example, related to corporations’ stock
repurchases, dividends, and executive compensation—for certain facilities supported with
Treasury’s CARES Act funding.
Overview of Key Issues
CARES Act facilities . In March and April 2020, the Federal Reserve introduced seven lending
facilities supported through Treasury’s CARES Act appropriated funds. (See table below.) To
implement these seven facilities, the Federal Reserve is using or will use legal entities known as
special purpose vehicles (SPV) to purchase qualifying assets from or initiate lending to eligible
institutions, and a Reserve Bank, which is part of the Federal Reserve System, commits to lending
to the SPV. Treasury has also made or will make equity investments in the SPVs with CARES Act
funds. According to Federal Reserve oﬃcials, designing a program structure for each facility to
meet the needs of the targeted market segment while balancing measures to protect taxpayers
requires several considerations and steps in the design phase. As of June 8, 2020, Treasury had
committed $195 billion, or about 43 percent, of the $454 billion from the CARES Act available to
support the seven facilities. Treasury oﬃcials said they are monitoring market conditions to help
inform how best to commit the remaining funds. Treasury’s funding will allow the facilities to
support up to $1.95 trillion of transactions. In the most recent periodic reports to Congress on
the lending facilities, the Federal Reserve Board stated it continues to expect that the facilities will
not result in losses to the Federal Reserve. Based in part on information from the Federal Reserve
Board, CBO estimates no deﬁcit eﬀect to the federal government.
As of June 8, 2020, two of the seven lending facilities—the Secondary Market Corporate Credit
Facility and the Municipal Liquidity Facility—were operational, for which Treasury disbursed $37.5
billion and $17.5 billion, respectively. Based on the most recent publicly available Federal Reserve
data for the Secondary Market Corporate Credit facility, the total outstanding amount of loans
provided by the Federal Reserve Bank of New York, as of May 19, 2020, was about $1.3 billion.430
Federal Reserve and Treasury oﬃcials said they are taking steps to bring the other ﬁve facilities
into operation. The Term Asset-Backed Securities Loan Facility is scheduled to begin operating
on June 17, 2020, but oﬃcials do not have speciﬁc dates for when the other facilities will become
active. Almost all of these facilities will cease purchasing eligible assets by September 30, 2020 (the
Municipal Liquidity Facility will cease purchases on December 31, 2020), unless extended by the
Federal Reserve and Treasury.431
$46 billion in assistance will be available to the Federal Reserve to support lending to eligible businesses, states, tribes,
and municipalities. Section 13(3) of the Federal Reserve Act permits the Federal Reserve to provide emergency lending.
430As of June 8, 2020, the Federal Reserve had not published data on the Municipal Liquidity Facility.
431For most facilities that include an SPV, the responsible Federal Reserve Banks will continue to fund the SPV after the
facility’s termination date until the SPV’s underlying assets mature or are sold.
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Federal Reserve Lending Facilities with CARES Act Funding, as of June 8, 2020
Name of Facility
Purpose
Facility Activity
1. Primary Market Corporate Credit
Facility
2. Secondary Market Corporate Credit
Facility
Support large businesses
Primary market facility: purchase
qualifying bonds directly from and
purchase portions of syndicated loans
made to eligible issuers.
Secondary market facility: purchase
qualifying corporate bonds and U.S.-
listed exchange-traded funds in the
secondary market.
3. Main Street New Loan Facility
4. Main Street Priority Loan Facility
5. Main Street Expanded Loan Facility
Support small- and medium-sized
businesses
New loan and priority loan facilities:
purchase 95 percent participation
interests in newly issued eligible loans
that eligible lenders make to eligible
borrowers.
Expanded loan facility: purchase 95
percent participation interests in a new
extension of credit under an existing
eligible loan made by an eligible lender
to an eligible borrower.
6. Municipal Liquidity Facility
Support states, and certain counties,
cities, multi-state entities, and revenue
bond issuers
Purchase eligible notes directly from
eligible issuers at time of issuance.
7. Term Asset-Backed Securities Loan
Facility
Support consumers and businesses
Provide non-recourse loans to U.S.
companies secured by qualifying asset-
backed securities generally backed
by recently originated consumer and
business loans.
Source: GAO analysis of Federal Reserve documents. | GAO-20-625
Design of CARES Act facilities. In designing the CARES Act facilities, the Federal Reserve has
created term sheets, agreements, and related documents for each facility, and solicited and taken
steps to address public comments. For example, for the Main Street lending facilities, the Federal
Reserve received over 2,000 comments on the initial design of the facilities and, in response to the
comments, expanded the loan options and eligibility for businesses.432
Non-CARES Act facilities. The Federal Reserve also established four facilities that do not receive
support through CARES Act appropriated funds. These facilities aim to provide liquidity to the
ﬁnancial sector and businesses. As of June 8, 2020, all four of these facilities were operational and
will terminate on speciﬁc dates in 2020 or 2021, unless extended.433 (See table.)
432It also created a third loan facility option—the Main Street Priority Loan Facility—targeting borrowers with higher
debt.
433The Primary Dealer Credit Facility will terminate on September 17, 2020, the Money Market Mutual Fund Liquidity
Facility and the Paycheck Protection Program Liquidity Facility will terminate on September 30, 2020, and the
Commercial Paper Funding Facility will terminate on March 17, 2021, unless extended.
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Federal Reserve Lending Facilities without CARES Act Funding, as of June 8, 2020
Name of Facility
Purpose
Facility Activity
1. Commercial Paper Funding Facility
Serve as funding backstop to provide
liquidity for U.S. issuers of commercial
paper.
Purchase commercial paper from
eligible companies. Eligible issuers
include U.S. issuers of commercial
paper, including municipal issuers
and U.S. issuers with a foreign parent
company.
2. Money Market Mutual Fund Liquidity
Facility
Assist money market mutual funds in
meeting demands for redemption by
investors.
Make non-recourse loans available
to eligible ﬁnancial institutions that
are secured by high-quality assets
purchased by the ﬁnancial institution
from money market mutual funds.
3. Paycheck Protection Program (PPP)
Liquidity Facility
Facilitate lending by eligible borrowers
that provide loans to small businesses
under the Paycheck Protection
Program.
Lend to institutions eligible for making
PPP loans on a non-recourse basis,
taking PPP loans as collateral.a
4. Primary Dealer Credit Facility
Provide support to primary dealers
to facilitate the availability of credit to
businesses and households.
Provide loans to primary dealers in
exchange for collateral.
Source: GAO analysis of Federal Reserve documents. | GAO-20-625
aThe Federal Reserve established the PPP Liquidity Facility under its section 13(3) authority to encourage participation in the
PPP established under the CARES Act. See “Paycheck Protection Program” in appendix III for more information on the PPP.
Oversight of all facilities. According to an oﬃcial from the Federal Reserve’s Division of Reserve
Bank Operations and Payment Systems (RBOPS)—a division that oversees the policies and
operations of the Federal Reserve Banks, RBOPS plans to conduct reviews of the 11 facilities and
has formed oversight teams to check for consistency in controls across the facilities. The RBOPS
oﬃcial also said initial reviews will focus on the facilities’ design, and after facilities are operational,
will include operations and risk management.
In addition to establishing lending facilities, the Federal Reserve took regulatory and monetary
policy actions to support the ﬂow of credit to households, businesses, and the U.S. economy.
GAO Methodology and Agency Comments
To conduct this work, we reviewed Federal Reserve documentation on each facility, including
term sheets and related press releases, reports to Congress on the facilities, and the most recent
agency transaction data on the facilities available, as of June 8, 2020. We also interviewed Federal
Reserve and Treasury oﬃcials. We provided a copy of this enclosure to the Federal Reserve and
Treasury for review. They provided technical comments that we incorporated, where appropriate.
Contact Information: Michael E. Clements, (202) 512-8678, clementsm@gao.gov
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Related GAO Product
Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing
Emergency Assistance, GAO-11-696 Washington D.C.: July 21, 2011.
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Tax Relief for Businesses
It is too early to know the extent businesses are taking advantage of certain tax relief
options—such as carrying additional losses back to prior tax years—but refunds may be delayed if
businesses who must submit amended returns do so on paper.
Entities Involved: Department of the Treasury, Internal Revenue Service
Key Considerations and Future GAO Work
As the Internal Revenue Service (IRS) receives net operating loss (NOL) refund requests, it is
important that it consider the implications of not allowing amended income tax returns for sole
proprietors to be ﬁled by some means other than paper, such as electronic fax (e-fax). For some
refunds, an amended return is required to be processed before issuing a tentative refund. Also,
continued outreach to businesses, issuance of guidance, and updated forms are key steps to
help businesses correctly leverage CARES Act tax relief. We will continue to monitor the status
and content of IRS’s plans for processing and reviewing returns, conducting outreach, and issuing
guidance.
Background
In anticipation of business losses resulting from the pandemic, the CARES Act includes tax
measures to help businesses receive cash refunds or other reductions to tax obligations.434 The
Joint Committee on Taxation estimates these measures will lead to about $174 billion in foregone
revenue in ﬁscal years 2020-2030. The IRS general capacity to implement new initiatives, such
as the CARES Act, and to carry out enforcement and taxpayer service programs is an ongoing
challenge cited in our High Risk Report.
The tax law changes in the CARES Act modify several provisions of the law known as the Tax Cuts
and Jobs Act (TCJA):435
• NOL carrybacks: The CARES Act allows carrybacks for up to 5 years for NOLs in tax years
beginning 2018-2020, which may provide a cash refund for certain taxpayers.436 Tax
years prior to 2018 had a higher tax rate, increasing the likelihood of a carryback refund.
The use of a carryback is optional and may aﬀect other tax obligations. Carrybacks, and
434Pub. L. No. 116-136, 134 Stat. 281 (2020).
435 Pub. L. No. 115-97, 131 Stat. 2054 (2017).
436CARES Act, § 2303, 134 Stat. at 352–356. An NOL occurs when a corporation's allowable deductions exceed
its gross income for a tax year. During an NOL year, a corporation generally does not owe any income taxes.
TCJA generally repealed NOL carrybacks and required NOLs to be carried over indeﬁnitely. The NOL oﬀsets the
corporation's taxable income in other tax years.
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carryforwards—which TCJA allowed a deduction for up to 80 percent of taxable income—can
reduce 100 percent of taxable income for tax years 2018-2020 under the CARES Act.437
Taxpayers that elected to spread over multiple years payments of a transitional repatriation
tax established in the TCJA (referred to as “section 965” tax), can make an election to exclude
those years from the carryback period to produce a refund in other years.438 NOL refunds
are typically claimed on an amended income tax return or paper Forms 1139 and 1045.
However, IRS issued temporary procedures to allow for e-fax of Forms 1139 and 1045 for a
quick tentative refund.439
• Acceleration of alternative minimum tax (AMT): Corporations with AMT credits may claim
a refund for tax years beginning in 2018 and 2019 and ﬁle Form 1139 for 2018 to receive
a tentative refund for some or all of these credits.440 The TCJA repealed the AMT, but most
corporations could claim their remaining unused minimum tax credits through 2021.
• Increased limits on business interest: For tax years 2019 and 2020, taxpayers may generally
deduct business interest expense in amounts not to exceed the sum of interest income, 50
percent of their adjusted taxable income.441 Taxpayers may also use 2019 adjusted taxable
income in computing their 2020 business interest expense deduction. Businesses may elect
not to use 2019 adjusted taxable income in 2020, to take the deduction, as it may aﬀect other
credits or deductions.
• Excess business losses: For non-corporate businesses—such as partnerships and sole-
proprietors—the limit that TCJA enacted on deductions for excess losses is removed for tax
years 2018-2020.442 Businesses can amend returns for 2018 or 2019 to claim refunds.
437Losses carried forward can reduce future taxable income and tax, but cannot reduce taxable income below zero.
438As a result of provisions of TCJA, some businesses with deferred foreign income were paying a transition tax that
could be spread in installments over 8 years. 26 U.S.C. § 965. Corporations that elect to exclude the transition tax
years from the carryback period may receive a higher refund. 26 U.S.C. § 172(b)(1)(D)(iv), (v).
439Corporations ﬁle Form 1139, Corporation Application for Tentative Refund. Individuals, estates and trusts ﬁle
Form 1045, Application for Tentative Refund. See: IRS, Temporary procedures to fax certain Forms 1139 and 1045
due to COVID-19, accessed June 3, 2020, https://www.irs.gov/newsroom/temporary-procedures-to-fax-certain-
forms-1139-and-1045-due-to-covid-19.
440CARES Act, § 2305, 134 Stat. at 357. Prior to TCJA, corporations were required to calculate their tax liability under
two sets of rules – they compute their regular tax liability and their tentative AMT liability and pay whichever is
greater. If the tentative AMT is more than the regular tax, the diﬀerence between them is AMT. The purpose of the
AMT is to prevent companies from eliminating their tax liability from over use of certain corporate tax preferences.
In general, AMT applies a lower tax rate to a broader tax base by limiting the use of tax preferences and disallowing
credits and deductions. Under the CARES Act, corporations may get a 50 percent refundable credit for tax year 2018
and 100 percent for tax year 2019, or claim the entire refundable amount for its ﬁrst tax year beginning with 2018.
441CARES Act, § 2306, 134 Stat. at 358. TCJA limited the business interest expense deduction to the sum of interest
income, 30 percent of adjusted taxable income and ﬂoor plan ﬁnancing interest expense. TCJA, § 13301, 131
Stat. at 2117. The higher limitation does not apply to partnerships until tax year 2020, and special rules apply to
partnerships for tax years beginning in 2019.
442CARES Act, § 2304, 134 Stat. at 356. An excess business loss is the amount by which the total deductions from
all trades or businesses exceed a taxpayer’s total gross income and gains from those trades or businesses, plus
$250,000 ($500,000 for a joint return). 26 U.S.C. § 461(i)(3)(A).
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Overview of Key Issues
Complete data on the number of businesses taking advantage of these provisions, and the
associated dollar amounts, will not be available until after tax year 2020 income tax returns are
processed. The table shows information on e-fax cases, as of June 1, 2020. Data on refund dollar
amounts is being captured, according to IRS oﬃcials, but it was not available in time for this
report.
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CARES Act Net Operating Loss (NOL) and Alternative Minimum Tax (AMT) Tentative Refund Cases, as of June 1,
2020
Form and provision
E-fax cases a
Number of businesses
ﬁling
Number of forms in
suspense b
Form 1139, AMT only
558
547
17
Form 1139, NOL or AMT
2,440
2,175
133
Form 1045, NOL
1,799
1,656
284
Source: GAO analysis of Internal Revenue Service data. | GAO-20-265
aA single case may include multiple fax submissions. Submissions for the same identiﬁcation number, form and tax period
generally are one case. Submissions for the same number and form, but diﬀerent tax periods, are separate cases.
bSuspense indicates additional information is needed and/or the case is being held because notices and letters cannot be
issued currently.
In early April, IRS began releasing guidance for taxpayers, following later with Frequently Asked
Questions (FAQs). In a FAQ on NOL carrybacks, IRS indicated that although the current instructions
stated otherwise, taxpayers who carry back NOLs to year in which they had section 965 inclusions
may use Forms 1139 and 1045 to apply for refunds for these years . In a separate FAQ, IRS
provided instructions for claiming an AMT refund on Form 1139 and for recalculating the credit
on Form 8827.443 IRS oﬃcials said an updated Form 1139 is anticipated in October 2020, and
instructions for Form 1045 will precede that release.
Some businesses will need to ﬁle an amended income tax return prior to using e-fax to ﬁle Forms
1139 and 1045. IRS oﬃcials told us they do not have immediate plans for updating the forms
used to ﬁle an amended return and their instructions. For sole proprietors, amended returns
can only be ﬁled on paper. IRS oﬃcials said they are unsure how many businesses would need
to have an amended return processed prior to receiving a refund. They said they chose to not
provide e-fax capabilities for amended returns because of a need to prioritize computer system
and staﬀ capacities. 444 IRS oﬃcials anticipated they will meet the statutory 90-day time frame for
processing NOL and AMT refunds ﬁled on Forms 1139.445 IRS oﬃcials said adjusting to e-fax and
the need to shift employees to telework has been a challenge.
Once a form is received through e-fax, IRS is using existing procedures—with some
modiﬁcations—for processing and reviewing tentative refunds. These procedures include controls
to ensure proper and accurate refund amounts. Our assessment of these controls will be part of
future work.
443Form 8827, Credit for Prior Year Minimum Tax—Corporations, is used to calculate the minimum tax credit for AMT, the
refundable amount, and any to be carried forward.
444Amended corporate income tax returns may be electronically ﬁled. IRS plans to oﬀer electronic ﬁling for Form 1040X,
Amended U.S. Individual Tax Return, this summer. See: IRS, announcement, accessed June 15, 2020, https://www.irs.gov/
newsroom/irs-announces-form-1040-x-electronic-ﬁling-options-coming-this-summer-major-milestone-reached-for-
electronic-returns.
44526 U.S.C. § 6411(d)(2); CARES Act, § 2305(d)(1), 134 Stat. at 357.
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IRS released transition guidance regarding elections that aﬀect the business interest expense
deduction. 446 The IRS Notice also extended the time to make an election for tax years 2018-2020,
or taxpayers may withdraw a prior election.
IRS oﬃcials said FAQs speciﬁc to excess business loss may be necessary.
GAO Methodology and Agency Comments
To conduct this work, we reviewed IRS data as of June 1, 2020; reviewed federal laws, agency
guidance; and interviewed IRS oﬃcials. IRS and Treasury provided technical comments, which we
integrated as appropriate.
Contact Information: Jessica Lucas-Judy, (202) 512-9110, lucasjudyj@gao.gov
446Revenue Procedure 2020-22, April 10, 2020, allows certain real property trade or business or a farming business,
which can elect to not be subject to the limitation, to make late elections and to withdraw previously made elections.
This transition guidance was necessary, in part, because the CARES Act amended provisions which had been previously
amended by TCJA and for which there were proposed, but not ﬁnal regulations. 83 Fed. Reg. 67490 (Dec. 28, 2018).
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Aviation Sector Financial Assistance
The Department of the Treasury and the Federal Aviation Administration have begun to provide
funding to help the nation’s aviation industry and airports respond to and recover from the
economic eﬀects of the COVID-19 pandemic.
Entities involved: U.S. Department of Transportation, Federal Aviation Administration;
Department of the Treasury.
Key Considerations and Future GAO Work
We will continue to monitor CARES Act ﬁnancial assistance to the aviation sector in ongoing and
planned work.
Background
The U.S. aviation industry—including passenger air carriers, cargo air carriers, and aviation
manufacturers and contractors—is vital to the U.S. economy, generating billions of dollars in
revenues each year, catalyzing economic growth, and inﬂuencing the quality of peoples’ lives
around the globe. The nation’s airports are also important contributors to the U.S. economy,
roughly 3,300 of which are eligible to receive federal Airport Improvement Program (AIP) grants
to fund infrastructure projects. As we reported in February 2020, from ﬁscal years 2013 through
2017, airports received an average of $3.2 billion annually in federal AIP grants.447
In 2019, U.S. air carriers transported a record-level nearly 811.5 million domestic passengers,
according to the Bureau of Transportation Statistics. Additionally, air transportation contributed
almost $149 billion to the U.S. economy in 2019 and accounted for approximately 507,000
jobs in 2018, according to the Bureau of Economic Analysis. However, the COVID-19 pandemic
has dramatically diminished passenger demand for air travel. In May 2020, the Department of
Transportation (DOT) reported that 51 percent fewer passengers ﬂew on scheduled ﬂights with
U.S. air carriers in March 2020 compared to March 2019.
The CARES Act authorized the Department of the Treasury (Treasury) to provide up to $78 billion in
ﬁnancial assistance to the aviation industry, including:
• Payroll support program: $32 billion in payroll support to passenger air carriers, cargo air
carriers, and contractors to continue paying employee wages, salaries, and beneﬁts;448 and
447GAO, Airport Infrastructure: Information on Funding and Financing for Planned Projects, GAO-20-298, (Washington, D.C.:
Feb. 13, 2020).
448Pub. L. No. 116-136, § 4112, 134 Stat. 281, 498 (2020).
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• Loan program: Up to $46 billion in loans, loan guarantees, and other investments to provide
liquidity to passenger and cargo air carriers, businesses certiﬁed to perform inspection, repair,
replace, or overhaul services, ticket agents, and businesses critical to maintaining national
security.449
Conditions of these two ﬁnancial assistance programs include prohibitions against reductions
in pay rates and beneﬁts and involuntary layoﬀs or furloughs through September 30, 2020.450
Recipients of payroll support must also refrain from stock share buybacks and dividend payments
until September 30, 2021, and for the loan program, through the term of the loan or loan
guarantee plus an additional 12 months. The CARES Act requires Treasury to receive a warrant
or equity interest in recipients of loans or loan guarantees451 for liquidity, but gives Treasury
the discretion to require recipients of payroll support to issue ﬁnancial instruments to Treasury
as compensation452 to protect the ﬁnancial interests of the federal government, among other
things.453 Additionally, as authorized by the CARES Act,454 DOT is requiring passenger air carriers
receiving ﬁnancial assistance to maintain minimum scheduled passenger service to points in the
United States served by those carriers before March 1, 2020, with some exemptions.455
The CARES Act also provides $10 billion to support U.S. airports of all sizes experiencing severe
economic disruption caused by the COVID-19 pandemic (see table).456 This funding is being
provided to airports to prevent, prepare for, and respond to the eﬀects of the COVID-19 pandemic
using aspects of the Federal Aviation Administration’s (FAA) AIP program. Certain airport
owners—also known as airport sponsors—accepting CARES Act grant funds must continue to
employ, through December 31, 2020, at least 90 percent of the number of individuals employed
as of March 27, 2020. However, nonhub and nonprimary airports are exempt from this workforce
retention requirement.457
449CARES Act, § 4003(b)(1)-(3), 134 Stat. at 470.
450Under the CARES Act, air carriers receiving payroll support must refrain from conducting involuntary furloughs or
reducing pay rates and beneﬁts until September 30, 2020. Air carriers receiving loans and loan guarantees are required,
until September 30, 2020, to maintain employment levels as of March 24, 2020, to the extent practicable, and in any case
shall not reduce their employment levels by more than 10 percent from the levels on such date.
451Pub. L. No. 116-136, § 4003(d), 134 Stat. at 474.
452CARES Act, § 4117, 134 Stat. at 500-501.
453Treasury is requiring passenger carriers that receive payroll support of more than $100 million, cargo air carriers
receiving more than $50 million, and contractors receiving more than $37.5 million to provide ﬁnancial instruments as
appropriate compensation.
454Pub. L. No. 116-136, § 4114(b), 134 Stat. at 499.
455DOT has been exempting carriers from serving certain points where it is not reasonable or practicable to serve
all points or all frequencies in their service obligations. The CARES Act also provided $56 million in for the Essential
Air Service (EAS) program to maintain existing air service to rural communities. Pub. L. No. 116-136, 134 Stat. at 596.
According to DOT, carrier obligations under EAS take primacy over their service obligations related to CARES Act ﬁnancial
assistance.
456Pub. L. No. 116-136, 134 Stat. at 596-597. The CARES Act gives the FAA the authority to retain up to 0.1 percent of the
$10 billion (equaling up to $10 million) provided for Grants-in-Aid for Airports to fund the award and oversight by FAA of
grants made under the CARES Act.
457According to FAA, this means that the 130 largest U.S. airports are subject to this requirement, each of which serves
at least 0.05 percent of all passenger traﬃc in the United States.
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CARES Act Airport Grants
Funding groups
Funds appropriated
(in dollars) a
Formula applied
Increase federal share for 2020 Airport
Improvement Program (AIP) grants
At least 500 million
Increase the federal share to 100
percent for grants awarded for airport
infrastructure projects under ﬁscal
year 2020 AIP and supplemental
discretionary grants.b
Commercial service airports (i.e.,
publicly owned airports with at
least 2,500 passengers per year and
scheduled air service)
At least 7.4 billion
The total allocation to an airport
is determined by a formula that
considers an airport’s passenger
boardings, the airport sponsor’s debt
service, and the sponsor’s ratio of
unrestricted reserves to debt service
for 2018.c
Primary airports (i.e., large, medium,
and small hub and non-hub airports
with more than 10,000 passenger
boardings per year)
Up to 2 billion
Allocated based upon statutory AIP
entitlement formulas.
General aviation airports (i.e., airports
with less than 2,500 passenger
boardings per year and no scheduled
air service)
At least 100 million
This funding is allocated based on the
categories these airports are placed in
given activity measures (e.g., volume
and type of ﬂights) and other factors
in the most current National Plan of
Integrated Airport Systems (NPIAS).
Source: GAO analysis of CARES Act. | GAO-20-265
aThe CARES Act gives the Federal Aviation Administration (FAA) the authority to retain up to 0.1 percent of the $10 billion
(equaling up to $10 million) provided for Grants-in-Aid for Airports to fund the award and oversight by FAA of grants made
under the CARES Act.
bNational system airports are eligible to receive federal funding from AIP grants for infrastructure development. The
distribution of federal AIP grants is based on a combination of formula funds—also referred to as entitlement funds—that are
available to national system airports, and discretionary funds that FAA awards for selected eligible projects. Entitlement funds
are apportioned by formula to airports and may generally be used for any eligible airport improvement or planning project.
Discretionary funds are approved by FAA based on FAA selection criteria and a priority system, which FAA uses to rank projects
based on the extent to which they reﬂect FAA’s nationally identiﬁed priorities. The federal share for AIP grants generally ranges
from 75 percent to 95 percent.
cThe Federal Aviation Administration used ﬁscal year 2018 Certiﬁcation Activity Tracking System (CATS) data, reported as of
March 14, 2020, to calculate allocations under the CARES Act formulas. More speciﬁcally, the total allocation to an airport is
determined by a formula that considers an airport’s passenger boardings for calendar year 2018 (50 percent), the airport
sponsor’s debt service (25 percent), and the sponsor’s ratio of unrestricted reserves to debt service (25 percent), both for ﬁscal
year 2018.
While AIP grants are used to fund infrastructure projects, airport sponsors may use CARES
Act funds for any purpose for which airport revenues may be lawfully used, including airport
operating expenses.
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Overview of Key Issues
Treasury has awarded the majority of the $32 billion in payroll support authorized by the CARES
Act and is in the process of reviewing applications for the loan program, while the FAA has ﬁnalized
airport grant allocation amounts and obligated over $6.5 billion in CARES Act airport grant funds.
As of June 1, 2020, Treasury has approved applications representing approximately $27 billion
of the $32 billion in payroll support for 350 applicants—primarily to passenger carriers—and
made some initial installment payments (see table). Treasury has required 13 passenger carriers
to provide ﬁnancial instruments to the U.S. government in the form of 10-year senior unsecured
promissory notes equal to 30 percent of the payroll support provided that exceeds $100 million,
and warrants for shares of common stock.
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Approximate Number of Applications Received and Amounts Awarded for the Department of the Treasury’s
Payroll Support Program, as of June 1, 2020a
Recipient type
Number of
applications
received b
Application
versus
authorized
amount
(in dollars)
Number of
applicants
approved
Approved
prorated
awards
(in dollars)
Number of
applicants paid
Amount
disbursed
in initial
installments
(in dollars)
Passenger
Carriers
Total
511
32 billion / 25
billion
310
24 billion
258
17 billion
Large Carriers
13
Not applicable.
13
23 billion
13
17 billion
Other Carriers
498
Not applicable.
297
950 million
245
300 million
Air Cargo
Carriers
51
<1 billion / 4
billion
32
710 million
23
60 million
Aviation
Contractors
451
4 billion / 3
billion
140
2 billion
69
120 million
Total
1013
37 billion/ 32
billion
482
27 billion
350
17 billion
Source: GAO analysis of U.S. Department of the Treasury data. | GAO-20-265
aThe CARES Act authorizes Treasury to use $100 million of these funds for costs and administrative expenses associated with
providing ﬁnancial assistance.
bAccording to Treasury, the total number of applications received includes duplicates and fake applications.
Applicants that Treasury has not required to provide ﬁnancial instruments to the U.S. government
as appropriate compensation for the provision of ﬁnancial assistance received assistance in
installments. Applicants that are required to provide ﬁnancial instruments could elect to receive
assistance in a lump sum into a separate account or in installments. Treasury oﬃcials told us
that most applicants required to provide ﬁnancial instruments opted to receive assistance in
installments because installments were preferable from a liquidity management perspective and a
lump sum required executing a control agreement for the separate account.
According to Treasury oﬃcials, the main challenges in implementing the payroll support payments
have been related to standing up a time-sensitive economic relief program while staﬀ are
working remotely, and processing applications from smaller aviation businesses. Oﬃcials noted
that applications from the large passenger air carriers have been relatively easy to review and
approve since the data on salaries and employment levels required for Treasury to approve the
applications are the same data that these carriers regularly submit to DOT. However, the majority
of applications are from smaller carriers and businesses—which do not report the same kind
of employment information to DOT—and often feature incomplete or incorrect information
on the applicant’s corporate structure or employee workforce. Treasury staﬀ have to seek
additional information, which can delay approval of applications. Treasury oﬃcials said that they
are continuing to work through applications and anticipate awarding the remaining funds in the
coming months.
For the loan program, Treasury oﬃcials told us they received approximately 200 applications
requesting more than $34 billion and are analyzing applicant ﬁnancial data against the market to
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establish the parameters of the program, such as loan terms.458 Oﬃcials said that the terms of
loans to large passenger air carriers will likely diﬀer from those that apply to smaller applicants.
According to oﬃcials, implementation of the loan program has followed that of the payroll support
program because the CARES Act directs Treasury to prioritize implementation of the payroll
support program, and because the loan program presents a number of complexities not found
in the payroll support program.459 For example, the statute requires a number of terms and
conditions for loans, including regarding eligibility, commercial terms of the loans, and market
conditions. Treasury’s next steps in implementing the loan program include ﬁnalizing form loan
documentation, determining appropriate commercial terms of the loans, and executing initial
loans.
For airports, as of May 31, 2020, FAA ﬁnalized airport grant allocation amounts and has processed
grant applications from 2,940 U.S. airports, totaling over $8.5 billion, according to FAA oﬃcials.
Subsequently, FAA has obligated over $6.5 billion and reimbursed more than $288 million to
airports for eligible airport costs. The grant formula in the CARES Act and available data for
calculating the awards for commercial service airports (i.e., passenger boardings, debt service, and
the ratio of unrestricted reserves to debt service) resulted in some small airports being allocated
large amounts relative to their passenger activity or annual operating budgets. For example,
some airports that reported unrestricted reserves but no debt service, and relatively few annual
passenger boardings in 2018, were allocated nearly $17 million; amounts that greatly exceeded
annual operating budgets. According to FAA, 31 of 3,283 total airports receiving funds had an
initial grant allocation of over four times their annual operating expenses. Further, if airports did
not report any debt service or unrestricted reserves in 2018, their allocation amounts could be
aﬀected. Airports were not allowed by FAA to amend their ﬁnancial data ﬁlings that had been
previously certiﬁed by airports as complete and correct, according to FAA. In other cases, the
formula and available data resulted in some airports with large annual passenger boardings being
awarded less funding than airports with fewer annual passenger boardings.
In response, FAA stated that, based on the CARES Act allocation formula for commercial service
airports (i.e., 50 percent of the funds based on passenger boardings and the remaining funds
allocated based on debt service and unrestricted reserves), it is expected that some airports may
get allocated higher amounts despite handling fewer passengers, and vice versa. FAA oﬃcials
also noted that they have limited each airport’s initial CARES Act airport grant to no more than
four times its annual operating expenses, unless the remaining amount would be less than $1
million. As such, according to FAA, the initial grants for 27 airports will not exceed four times
the airport’s annual operating expenses, unless the airport provides justiﬁcation for accessing
additional allocated funds and expending them within the 4-year performance period. According
to FAA oﬃcials, FAA continues to process grant oﬀers, obligate funds for those grants, and process
invoices to reimburse airport sponsors. In addition, FAA is conducting stakeholder outreach and
458As of June 1, 2020, Treasury reported receiving 90 applications from passenger air carriers requesting $26.6 billion; 39
applications from eligible businesses certiﬁed under 14 C.F.R. part 145 requesting $1.5 billion; 48 applications from ticket
agents requesting $5.8 billion; nine applications from cargo air carriers requesting $779 million; and 27 applications
from businesses critical to maintaining national security requesting $750 million.
459Treasury is required to provide ﬁnancial assistance and make initial payments to air carriers and contractors that
submit approved requests within 10 days of enactment.
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developing additional guidance, as needed, as well as developing audit policies and procedures to
ensure lawful payment and use of CARES Act airport grant funds.
GAO Methodology and Agency Comments
To conduct this work, we reviewed passenger air carrier ﬁlings with the Securities and Exchange
Commission, Treasury data on airline ﬁnancial assistance, and FAA data on airport funding
as of May 31, 2020; reviewed federal laws and agency guidance related to the CARES Act; and
interviewed Treasury, DOT, and FAA oﬃcials. We provided a draft of this product to Treasury and
DOT for comment. In its comments, reproduced in appendix IX, Treasury noted the speed with
which it implemented the payroll support program. Treasury and DOT also provided technical
comments, which we incorporated as appropriate.
Contact Information: Heather Krause, (202) 512-2834, or krauseh@gao.gov
Related GAO Product
Air Travel and Communicable Diseases: Comprehensive Federal Plan Needed for U.S. Aviation System's
Preparedness. GAO-16-127. Washington, D.C.: Dec. 16, 2015.
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Agriculture Spending and Food Safety Inspections
The U.S. Department of Agriculture is providing $16 billion in direct payments to agricultural
producers, as well as $3 billion in food purchases for redistribution to food banks, nonproﬁts, and
other entities. Federal inspections of meat and poultry plants continue.
Entities Involved: U.S. Department of Agriculture: Agricultural Marketing Service, Farm Service
Agency, and Food Safety and Inspection Service; Food and Drug Administration
Key Considerations and Future GAO Work
In future reports, we plan to discuss U.S. Department of Agriculture’s (USDA) implementation and
oversight of a range of CARES Act funds, including any implementation challenges. Speciﬁcally, we
plan to address the department’s
• self-certiﬁcation process, veriﬁcation of eligibility, and disbursement of direct payments to
producers;
• contracting processes and decisions for the purchase and redistribution of food products; and
• capacity to ensure the continuity of food safety inspections.
We also plan to conduct work on the Food and Drug Administration’s (FDA) response to COVID-19
in the areas of food safety inspections and other activities, although FDA did not receive CARES Act
funding for inspections.460
Background
COVID-19 has caused disruptions in the U.S. food supply chain, from the farms where raw
agricultural commodities are produced, to the food processing and distribution network that
enables these commodities to be used by consumers.461 As a result of COVID-19, prices for many
major agricultural commodities, including livestock (cattle, hogs, poultry, and dairy), signiﬁcantly
decreased, which has meant a loss in income for many producers. In addition, the closure
of institutions (schools, restaurants, hotels, for example) has made it diﬃcult for agricultural
460Nearly 4,000 inspectors within the Food and Drug Administration also have a role in inspections of the food supply.
In a March 18, 2020, statement, FDA stated that the agency would postpone (1) most foreign facility inspections through
April 2020; and, (2) all domestic routine surveillance facility inspections the FDA traditionally conducts every few years
based on a risk analysis. According to FDA, the Center for Food Safety and Applied Nutrition received $2.8 million in
funding through the CARES Act and subsequent COVID-19 relief, which it will use to conduct research on virus response
eﬀorts and the impact on the food supply.
461COVID-19 has also aﬀected consumer prices for food. In May 2020, the U.S. Bureau of Labor Statistics reported that
April 2020 saw the sharpest increase in grocery store prices since 1974.
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producers to market their commodities, leading to the spoilage of crops, dumping of milk, and
euthanization of livestock. USDA referred us to the Food & Agricultural Policy Research Institute
which estimated a decline of $20 billion in net farm income due to COVID-19, as of April 2020.462
An April 2020 Executive Order deemed meat and poultry processing plants as essential to the
national defense during the COVID-19 pandemic and directed the Secretary of Agriculture
to ensure their continuity of operations. This order not only has implications for the food
supply chain, and the health and well-being of workers in these plants, but also for the federal
government’s role in ensuring food safety.463
About 7,850 inspectors and other staﬀ from the USDA’s Food Safety and Inspection Service work
in 6,458 federally inspected meat and poultry plants, and other establishments. These inspectors
help ensure the safety and wholesomeness of meat and poultry that enter interstate commerce.
As we reported in April 2016, these inspectors are generally exposed to the same types of hazards
as plant employees, such as respiratory irritation and injuries from working closely together.
According to an April 2020 interim guidance from the Centers for Disease Control and Prevention
and the Occupational Safety and Health Administration, close conditions may also contribute to
potential exposures to COVID-19. According to USDA oﬃcials, USDA is tracking USDA inspectors’
absences because of COVID-19 related illness or quarantine.
To address the eﬀects of the COVID-19 pandemic on agricultural producers464 and food safety
inspectors, USDA received funding from the CARES Act and accessed funding generally available
to the agency through its Commodity Credit Corporation Charter Act authorities,465 as described
below:
• The CARES Act included $9.5 billion to provide support for agricultural producers of specialty
crops (such as fruits, vegetables, and tree nuts), producers that supply local food systems
(such as farmers markets, restaurants, and schools), and livestock producers, including dairy
462Food & Agricultural Policy Research Institute, University of Missouri, Early Estimates of the Impacts of COVID-19 on U.S.
Agricultural Commodity Markets, Farm Income and Government Outlays, FAPRI-MU Report #02-20 (Columbia, MO :April 13,
2020).
463In May 2020, USDA and FDA established a Memorandum of Understanding creating a process for the two agencies
to communicate and make determinations about circumstances in which USDA could exercise its authority under the
Defense Production Act with regard to certain domestic food resource facilities that manufacture, process, pack, or hold
foods, as well as to those that grow or harvest food, outside of USDA’s exclusive jurisdiction.
464The CARES Act, as amended by the Paycheck Protection Program and Health Care Enhancement Act, also provided
funds for the agriculture sector through the Small Business Administration’s Economic Injury Disaster Loan (EIDL) and
EIDL Advance programs, Pub. L. No. 116-136, div. A, tit. I, §1110(a), 134 Stat. 281, 306 (2020) as amended by Pub. L. No.
116-139, div. I §101(c), 134 Stat. 620, 621 (2020). For a limited time, applications were not accepted from agricultural
businesses. However, following changes to the law, agricultural businesses with 500 or fewer employees engaged in
the production of food and ﬁber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural
related industries, were eligible).
465See Commodity Credit Corporation Charter Act, 15 U.S.C. §§ 714-714p. The Congressional Research Service provides
a detailed description of the federal funding for the agriculture sector as a result of COVID-19. Congressional Research
Service, COVID-19, U.S. Agriculture, and USDA's Coronavirus Food Assistance Program (CFAP), R46347 (Washington, D.C.: May
8, 2020).
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producers, to respond to COVID-19.466 USDA added $6.5 billion from its Commodity Credit
Corporation for a total of $16 billion in direct payments to producers.467
• In addition, USDA announced that it would purchase and distribute up to $3 billion in
agricultural products using authorities outlined in the Commodity Credit Corporation Charter
Act and the Families First Coronavirus Response Act to provide for families in need.468
• To address food safety inspections, the CARES Act provided USDA’s Food Safety and Inspection
Service with $33 million to, among other things, hire temporary and intermittent workers,
relocate inspectors, and cover the costs of overtime.469
The CARES Act also provided USDA with $14 billion to reimburse the Commodity Credit
Corporation fund for realized losses.470 According to USDA, the funding gives the agency ﬂexibility
to extend repayment of certain farm loans, and funds to cover departmental operational costs
such as the loss of user fees, salaries, and other expenses.471
USDA’s new responsibilities under the CARES Act and COVID-19 focused activities it has taken may
add to pre-existing federal oversight challenges in government-wide coordination. For more than
4 decades, we have reported on the fragmented federal food safety oversight system, which has
caused inconsistent oversight, ineﬀective coordination, and ineﬃcient use of resources. We added
federal food safety oversight to the High-Risk List in 2007 because of risks to the economy, public
health, and safety.
Overview of Key Issues
Direct payments and food purchases. USDA created a new program—Coronavirus Food
Assistance Program (CFAP)—to encompass the agency’s response to COVID-19. This program
includes activities funded through the CARES Act and existing USDA authorities. The two primary
components of this program are (1) direct payments to producers and (2) purchases of produce,
466CARES Act, Pub. L. No. 116-136, div. B, tit. I, 134 Stat. at 505.
467The Commodity Credit Corporation is a government-owned and operated entity created to stabilize, support,
and protect farm income and prices, among other things. It has no operating personnel, and its domestic
agricultural and income price support programs are carried out primarily through the personnel and facilities of
USDA’s Farm Service Agency (FSA).
468Pub. L. No. 116-127, div. A, tit. I §1101(g), 134 Stat. 178, 179 (2020).
469Pub. L. No. 116-136, div. B, tit. I, 134 Stat. at 506.
470Pub. L. No. 116-136, div. B, tit. I, 134 Stat. at 509.
471In addition, the CARES Act provided individual agencies within USDA with appropriations for the purpose of
preventing, preparing for, and responding to coronavirus. For example, the CARES Act provided $55 million for the
Animal and Plant Health Inspection Service and $45 million for the Agricultural Marketing Service. Pub. L. No. 116-136,
div. B, tit. I, 134 Stat. at 506.
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meat, and dairy products for redistribution to food banks, nonproﬁts, and other entities. USDA has
begun work to implement these components, as described below:
• In May 2020, USDA published a ﬁnal rule in the Federal Register outlining eligibility, rates, and
payment limits for direct payments to producers, among other things.472 The rule indicates
that the limit on the payment that producers can receive from the program is $250,000 per
producer.473 This represents an increase over the payment limits under the 2014 farm bill
which is $125,000. According to the rule, the ﬁrst payments cover 80 percent of each total
payment to producers to ensure payments are distributed among all eligible producers. USDA
will disburse the remaining funds after the initial payments. In June 2020, USDA announced
that it had issued the ﬁrst direct payments to producers.
Because of the speed with which USDA intends to disburse payments, USDA oﬃcials said that
they would ensure eligibility through producers’ self-certiﬁcation with certain documentation
requirements (for example, submission of a farm operating plan and certiﬁcation of adjusted
gross income), followed by a review of a statistically representative sample of producer
applications after funds are disbursed. USDA oﬃcials did not indicate when these reviews
would begin.
• By May 8, 2020, USDA had approved $1.2 billion in contracts for the food purchase program,
which it calls the “Farmers to Families Food Box” program.474 According to USDA, contracted
distributors will package the products USDA purchases into family-sized boxes and transport
them to food banks, community and faith-based organizations, and other non-proﬁts from
May 15 through June 30, 2020. According to USDA, the program plans to purchase $461
million in fresh fruits and vegetables; $317 million in dairy products; $258 million in meat
products; and $175 million for combination boxes of fresh produce, dairy, or meat products.
According to USDA, as of June 10, 2020, the program had delivered over 11.4 billion food boxes
throughout the country.
USDA stated on its website that it would oversee the program throughout the contract period
by conducting audits of, among other things, contractors’ plans for ensuring that the food
deliveries are safe for consumption.
Components of both programs include activities beyond the scope of those conducted under pre-
existing USDA programs, according to USDA. For example:
• The direct payment program widens the eligibility of producers to those who may not have
previously received ﬁnancial assistance from USDA, such as specialty crop producers of fruits,
vegetables, and tree nuts. As such, USDA will have to create new records for these producers
in the department’s electronic management system.
472Coronavirus Food Assistance Program, 85 Fed. Reg. 30,825 (May 21, 2020).
473According to USDA, for a corporation with three shareholders (the maximum allowed under the program), total
payments could be up to $750,000.
474According to USDA, contracts were awarded to almost 200 entities.
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• USDA’s food purchase program represents a completely diﬀerent way of doing business for
USDA, according to a USDA oﬃcial on an April 29, 2020, webinar. Speciﬁcally, the Farmers
to Families Food Box program is structured diﬀerently than USDA’s existing food purchase
program, in which distributors are pre-approved, the variety of products is deﬁned, and the
destination for the food is pre-determined and limited to certain nonproﬁts or other entities.
The new Farmers to Families Food Box program, according to these oﬃcials, includes products
that USDA may not normally purchase (for example, certain fresh fruits and vegetables) and
works with distributors and nonproﬁts or other entities with which USDA did not have a prior
relationship.
After the ﬁrst awards were announced, USDA terminated at least one contract after re-
evaluating the contractor’s ability to provide services. In addition, an organization representing
the produce industry and members of Congress have raised questions about USDA’s selection
of contractors and contractors’ ability to meet their award obligations.
Food safety inspections. USDA oﬃcials told us that, as of May 2020, they had used CARES Act
funds to cover additional hours for part-time inspectors; costs to bring in additional inspectors
from other USDA oﬃces, and associated travel costs; and costs for nonreimbursable overtime that
may increase during the response to COVID-19. USDA oﬃcials also anticipated spending additional
funds for transportation, increased costs for mailing, and additional supplies. USDA oﬃcials
said in May 2020 that they ordered and received about 1.4 million face masks and coverings for
inspectors and other Food Safety and Inspection Service (FSIS) staﬀ. USDA oﬃcials said that prior
to receiving the masks (and in response to Centers for Disease Control and Prevention guidance),
USDA provided a one-time reimbursement to inspectors of up to $50 each for the purchase of
face coverings, such as masks or materials to make their own masks. USDA’s reimbursement
policy ended on May 31, 2020 and the agency reported spending about $12,000 on face coverings.
According to FSIS, FSIS inspection personnel are required to wear face coverings or masks and face
shields.
USDA oﬃcials said that absentee rates due to COVID-19 have not aﬀected USDA’s ability to
conduct inspections because the agency already plans for a certain level of absenteeism due to
annual leave, sick leave, training, and other absences by inspectors. In addition, USDA oﬃcials
said that the agency identiﬁed additional qualiﬁed staﬀ throughout USDA who would conduct
inspection work, if necessary. According to FSIS, the agency is also working to prioritize inspections
at establishments based on local conditions and resources available. As of May 1, 2020, 258
FSIS employees (including inspectors) had a COVID-19 diagnosis conﬁrmed by test or medical
professional and three employees had died, according to USDA documentation. USDA oﬃcials said
that as of June 2020, there were no establishments that had to close because of a lack of available
USDA inspectors.
GAO Methodology and Agency Comments
To conduct this work, we reviewed the most recent USDA data as of June 1, 2020; reviewed federal
laws, agency policy and other guidance, and expenditure data; and interviewed USDA oﬃcials
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in the Agricultural Marketing Service, Animal and Plant Health Inspection Service, Farm Service
Agency, and Food Safety and Inspection Service.
We provided a draft of the report and this enclosure to USDA for review and comment. In technical
comments, USDA generally concurred with the language presented in the draft report regarding
the department’s COVID-19 eﬀorts to date. In addition, USDA acknowledged GAO’s work to
examine key actions the federal government has taken to address the COVID-19 pandemic and
evolving lessons learned relevant to the nation’s response to pandemics. The technical comments,
according to USDA, were to provide additional context to both GAO and readers of the report; and,
we incorporated them, as appropriate.
Contact Information: Steve D. Morris, (202) 512-3841, morriss@gao.gov
Related GAO Products:
High-Risk Series: Substantial Eﬀorts Needed to Achieve Greater Progress on High-Risk Areas.
GAO-19-157SP. Washington, D.C.: March 6, 2019.
Workplace Safety and Health: Additional Data Needed to Address Continued Hazards in the Meat and
Poultry Industry. GAO-16-337. Washington, D.C.: April 25, 2016.
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U.S. Department of Agriculture Support for Rural America
CARES Act funding provides support for U.S. Department of Agriculture programs to help address
the COVID-19 pandemic in rural America.
Entities involved: U.S. Department of Agriculture, Rural Utility Service, Rural Business-
Cooperative Service
Key Considerations and Future GAO Work
In April 2017, we reviewed the extent to which the Rural Utility Service’s (RUS) rural broadband
loan and grant program procedures and activities were consistent with leading practices and
how, if at all, its management practices could be improved. We found that RUS’s procedures and
activities were consistent with four leading practices and partially consistent with six leading
practices.
We made ﬁve recommendations to the U.S. Department of Agriculture (USDA) to improve the
management of the program. USDA agreed with the recommendations and has implemented
two of them regarding risk assessment and program goals and measures. The remaining
recommendations relate to evaluating project outcomes, implementing a data system for
managing the program, and developing policies and procedures as a way to retain and
communicate knowledge among agency staﬀ. In May 2020, USDA oﬃcials said they are still
working to implement the three open recommendations and plan to complete their eﬀorts by
the end of 2020. Having written policies and procedures could be even more important during a
pandemic in which an organization’s normal operating procedures may be disrupted.
We plan to continue monitoring RUS’s use of CARES Act funding.
Background
USDA Rural Development agencies support economic development and essential services to help
improve the economy and quality of life in rural America. These agencies include RUS, which works
to address rural infrastructure needs, and the Rural Business-Cooperative Service (RBCS), which
oﬀers programs to support businesses and job training.
The CARES Act provided funding for three existing Rural Development programs:475
• RUS received $100 million to provide additional grants through ReConnect, its program that
provides grants and loans to support broadband deployment in rural areas that lack access to
broadband.
475 Pub. L. No. 116-136, 134 Stat. 281, 507, 510 (2020).
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• RUS also received $25 million for its Distance Learning and Telemedicine grants program.
This program provides ﬁnancial assistance to enable and improve distance learning and
telemedicine services in rural areas.
• RBCS received $20.5 million for loans for rural business development programs authorized in
section 310B of the Consolidated Farm and Rural Development Act.
Overview of Key Issues
USDA has begun work to implement the provisions of the CARES Act:
• Prior to the passage of the CARES Act, RUS issued a Funding Opportunity Announcement and
solicitation of applications for the ReConnect program in the Federal Register on December
12, 2019.476 RUS then published a notice informing the public of an additional $100 million
for ReConnect grants from the CARES Act in the Federal Register on April 10, 2020.477 RUS
prioritized using the $100 million CARES Act funding for applicants that were previously
unsuccessful in obtaining funds through the program. However, these applicants were
required to reapply during the program’s second round, which closed April 15, 2020. RUS staﬀ
said they expect to award funding by late summer 2020.
• Prior to receiving CARES Act funding, RUS also issued a funding notice for its Distance Learning
and Telemedicine grants programs, with applications due April 10, 2020. With its $25 million
in CARES Act funding for this program, RUS announced a second round of funding on April 3,
2020. Applications are due July 13, 2020. RUS staﬀ said they expect to award funding toward
the end of 2020.
• RBCS published a notice in the Federal Register on May 22, 2020, announcing the availability
of funding through its Business and Industry (B&I) CARES Act Guaranteed Loan Program as
part of its existing B&I Guaranteed Loan Program.478 Under the program, RBCS plans to use
the $20.5 million provided through the CARES Act to support approximately $951 million
in guaranteed loans to rural businesses in response to economic conditions associated
with COVID-19. It is the agency’s stated intent that guaranteed loans will be directed toward
working capital loan purposes to support business operations and facilities in rural areas
including agricultural producers. The agency stated that funding amounts will be based on
cash ﬂow analysis and must be limited to the amount needed to cure problems caused by
COVID–19. Additionally, according to the notice, RBCS will extend loan authority to support
agricultural production (limited to 50 percent of program funding), simplify the application
procedures for smaller loans, and adjust various program requirements.
476 ReConnect Pilot Program, 84 Fed. Reg. 67913 (Dec. 12, 2019).
477 Broadband Pilot (ReConnect) Program, 85 Fed. Reg. 20240 (Apr. 10, 2020).
478 Notice of Funding Availability, 85 Fed. Reg. 31139 (May 22, 2020).
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USDA staﬀ reported few challenges with implementing these provisions of the CARES Act, in part
because the funds were provided for existing programs. Where staﬀ did identify challenges, they
said they were similar to the challenges with the existing programs, such as validating that the
proposed service area to be funded with a ReConnect grant is unserved by broadband.
GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws and agency documents, including program funding
notices, and interviewed USDA oﬃcials about how their agencies would implement provisions of
the CARES Act.
We provided a draft of this enclosure to USDA for review and comment. USDA did not provide
comments on the enclosure.
Contact Information: Andrew Von Ah, (202) 512-2834, vonaha@gao.gov
Related GAO Product
Rural Broadband Deployment: Improved Consistency with Leading Practices Could Enhance
Management of Loan and Grant Programs, GAO-17-301 Washington, D.C.: April 13, 2017.
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Temporary Financial Regulatory Changes
Federal agencies have issued rules or statements on ﬁnancial regulatory changes and have not
exercised certain emergency authorities under the CARES Act.
Entities involved: Consumer Financial Protection Bureau, Board of Governors of the Federal
Reserve System, Oﬃce of the Comptroller of the Currency, Federal Deposit Insurance Corporation,
National Credit Union Administration, Department of the Treasury
Key Considerations and Future GAO Work
The CARES Act includes a provision to protect the credit of consumers who reach an agreement
with their lender to delay or otherwise modify payments because of the COVID-19 pandemic.479
On April 1, 2020, the Consumer Financial Protection Bureau (CFPB) issued a policy statement
outlining the responsibilities of companies that furnish credit information under the CARES Act.
This statement also informed furnishers and credit reporting agencies that CFPB will take a ﬂexible
approach during the pandemic regarding compliance with credit reporting laws, taking into
account the challenges that entities face as a result of the pandemic and their eﬀorts to comply.
In July 2019, we recommended that CFPB communicate its supervisory expectations to consumer
reporting agencies (CRAs) regarding (1) reasonable procedures for assuring maximum possible
accuracy of consumer report information, and (2) reasonable investigations of consumer disputes.
CRAs—which include credit reporting companies—collect data from various sources, such as
banks and mortgage lenders, to create consumer reports that they sell to third parties. In its
written comments, while CFPB did not state that it disagreed with these recommendations, it
described actions it had taken to provide information to CRAs. We maintained that providing
additional guidance to CRAs would be beneﬁcial. CFPB oversight and attention to compliance
with the CARES Act requirements on credit reporting will be critical to help ensure that consumers
do not suﬀer undue damage to their credit or experience diﬃculties trying to resolve disputed
information with consumer reporting agencies.
We plan to continue following CFPB’s oversight of credit reporting issues. Our ﬁndings from this
work will appear in future reports.
Background
The goals of federal ﬁnancial regulation include monitoring the safety and soundness of ﬁnancial
institutions, ensuring adequate consumer and investor protections, and acting to ensure the
stability of the ﬁnancial system, among others.
479Pub. L. No. 116-136, § 4021, 134 Stat. 281, 489 (2020).
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The U.S. ﬁnancial regulatory structure is complex, with responsibilities fragmented among multiple
agencies that have overlapping authorities. For example, four federal prudential regulators—the
Board of Governors of the Federal Reserve System (Federal Reserve), Oﬃce of the Comptroller
of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and National Credit Union
Administration (NCUA)—as well as state banking regulators oversee their respective depository
institutions for safety and soundness. In addition, while the CFPB regulates the oﬀering and
provision of consumer ﬁnancial products and services, the four prudential regulators retain
supervisory responsibilities in this area for smaller depository institutions ($10 billion or less in
assets). We have previously identiﬁed “Modernizing the U.S. Financial Regulatory System” as a
high-risk area because this complex and fragmented regulatory structure presents challenges to
eﬃcient and eﬀective oversight of ﬁnancial institutions and activities.
Title IV of Division A of the CARES Act includes provisions designed to stabilize the U.S. economy in
response to COVID-19. In addition to the measures described in the Enclosures on Federal Reserve
Emergency Lending Programs and Aviation Industry Financial Assistance, the Act includes other
measures that relate to the oversight responsibilities or authorities of the ﬁnancial regulators and
the Department of the Treasury (Treasury). These measures can be grouped into three categories:
• Consumer credit protection. As mentioned above, the CARES Act includes a provision
(Section 4021) to protect the credit of consumers who reach an agreement with their lender
to delay or otherwise modify payments because of the COVID-19 pandemic. Speciﬁcally, if a
lender or other creditor agrees to defer payments, accept partial payments, or provide other
relief to a consumer on a credit obligation or account, the creditor must report the obligation
or account as current (or other status reported prior to the agreement) to credit reporting
agencies, as long as the consumer abides by the relief agreement.
• Temporary changes to regulatory and other requirements for regulated ﬁnancial
institutions. These temporary changes generally support federal ﬁnancial regulators’
eﬀorts to encourage ﬁnancial institutions to provide credit and ﬂexibility on loan repayment
terms to borrowers facing disruptions because of COVID-19 (see Overview of Key Issues for
additional details on these changes).480 These temporary changes generally expire the earlier
of December 31, 2020, or a date tied to the termination of the national emergency.
• Emergency authorities for FDIC, NCUA, and Treasury. The CARES Act authorizes FDIC
and NCUA to temporarily guarantee or insure certain obligations of ﬁnancial institutions
(Section 4008), and authorizes Treasury to temporarily guarantee money market funds under
Treasury's Economic Stabilization Fund (ESF) (Section 4015). Section 4008 provides FDIC
with necessary Congressional approval to create an emergency debt guarantee program
for insured depository institutions or their holding companies. However, the Dodd-Frank
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires additional steps,
including a determination by FDIC and the Federal Reserve that market conditions warrant the
creation of the program, and written consent from the Secretary of the Treasury.481 Section
480CARES Act, Pub. L. No. 116-136, §§ 1102(a)(2)(O)(i), 4011-14, 4016, 134 Stat. at 292, 478-82.
481The Dodd-Frank Act also requires GAO to review and report to Congress on the basis for the determination and
the likely eﬀects of the actions taken. Pub. L. No. 111-203, §§ 1104-6, 124 Stat. at 2020-26 (codiﬁed at 12 U.S.C. §
5611-13).
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4008 of the CARES Act also authorizes FDIC and NCUA to temporarily guarantee or insure
certain uninsured deposits at the institutions they regulate. NCUA must coordinate with FDIC
in exercising this temporary authority.
Overview of Key Issues
Status of implementation. On April 1, 2020, CFPB issued a policy statement outlining the
responsibilities of furnishers of credit information under Section 4021 of the CARES Act. On April
6, 2020, CFPB updated an earlier blog post to help consumers understand this provision.482
In addition, ﬁnancial regulators’ April 7, 2020, joint statement on loan modiﬁcations discussed
consumer protection considerations for ﬁnancial institutions and mortgage servicers. In a May
2020 statement, the CFPB Director said the CFPB has also developed a new, targeted supervisory
approach to focus on those markets and institutions that pose the greatest risk of consumer harm
as a result of pandemic-related issues.
Federal ﬁnancial regulators have issued interim ﬁnal rules related to the following three provisions
under the CARES Act:
• Reduced community bank leverage ratio: Section 4012 requires the temporary lowering of
the community bank leverage ratio from 9 percent to 8 percent. Interim ﬁnal rules issued by
banking regulators became eﬀective on April 23, 2020.
• NCUA’s liquidity facility: Section 4016 includes various changes to temporarily expand
access to the facility and increase the amount the facility can borrow. The interim ﬁnal rule
to implement these changes became eﬀective on April 29, 2020. NCUA also issued a letter to
credit unions to explain the changes.
• Regulatory capital treatment for Paycheck Protection Program loans: Section 1102
includes a requirement that loans under this program carry a zero percent risk weight for
purposes of regulatory capital requirements. An interim ﬁnal rule issued by banking regulators
became eﬀective on April 13, 2020.
For other changes to requirements for ﬁnancial institutions, agency oﬃcials said that a rulemaking
was not necessary. For two of these three provisions, the responsible ﬁnancial regulators issued a
joint statement to supervised institutions to clarify their interpretation of the CARES Act provisions.
• Troubled debt restructurings: Section 4013 allows ﬁnancial institutions to temporarily
suspend certain accounting requirements for loan modiﬁcations related to the COVID-19
pandemic that would otherwise constitute troubled debt restructurings.483 In April 2020,
482L. Fiano, “Protecting your credit during the coronavirus pandemic,” Consumer Financial Protection Bureau Blog. https://
www.consumerﬁnance.gov/about-us/blog/protecting-your-credit-during-coronavirus-pandemic/
483 This provision does not apply to modiﬁcations of loans that were already delinquent as of December 31, 2019.
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federal ﬁnancial regulators issued a joint statement to clarify the interaction between relief
under this CARES Act provision and an earlier joint statement they had issued on this topic on
March 22, 2020.
• Current expected credit losses: Section 4014 provides temporary relief to insured depository
institutions and bank holding companies from having to comply with an accounting
requirement to record anticipated credit losses earlier than previously required. On March
31, 2020, banking regulators issued a joint statement to clarify the interaction between relief
under this CARES Act provision and regulatory capital relief under an interim ﬁnal rule they
had issued on March 27, 2020.
• National bank lending limits: Section 4011 temporarily expands the OCC’s authority to
exempt loans and extensions of credit from statutory limits on the amount that a national
bank can lend to a single person. In April 2020, OCC oﬃcials said they were consulting with
OCC bank supervisors as they consider this temporary authority.
Outside of these CARES Act provisions, ﬁnancial regulators have taken other actions to encourage
ﬁnancial institutions to provide credit to households and businesses aﬀected by COVID-19. For
example, on May 15, 2020, the Federal Reserve, FDIC, and OCC issued an interim ﬁnal rule making
temporary changes to the supplementary leverage ratio to provide additional ﬂexibility to aﬀected
institutions to support credit provision.
As of June 3, 2020, Treasury, FDIC and NCUA had not announced any plans to exercise the
emergency authorities under Sections 4015 and 4008 of the CARES Act. In May 2020, FDIC oﬃcials
said that they had not yet seen evidence of a signiﬁcant liquidity event—such as large deposit
outﬂows or other liquidity strains on depository institutions—that would be needed to support
a determination to use FDIC’s emergency authority. In April 2020, NCUA oﬃcials noted that they
must coordinate with FDIC on whether such a liquidity event exists before NCUA exercises its
authority to temporarily increase its insurance coverage for certain credit union deposits. In May
2020, in written comments, Treasury noted that it will continue to evaluate whether a guarantee
program would be appropriate for money market funds.484
Key oversight and implementation issues. Continued attention and coordination among federal
ﬁnancial regulators will be important in the following areas:
• Overseeing compliance with CARES Act requirements: Section 4021 contains new
requirements for companies that furnish credit information. In April 2020, CFPB oﬃcials noted
that CFPB plans to monitor compliance with these requirements as part of its supervisory
process, which will prioritize activities that pose the greatest risks to consumers.
• Monitoring the eﬀectiveness of the CARES Act provisions: For example, federal ﬁnancial
regulators have taken steps to encourage lenders to oﬀer ﬂexibility to borrowers, such
as by issuing a statement to clarify the CARES Act provision related to accounting for loan
modiﬁcations. OCC and Federal Reserve oﬃcials noted that agencies plan to collect data on
484In these comments, Treasury noted that other policy actions taken to date, such as Federal Reserve liquidity facilities,
have helped to stabilized money markets.
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the number and dollar amount of loan modiﬁcations that supervised ﬁnancial institutions
provide for borrowers under Section 4013 of the Act. These data could help agencies
understand the extent to which supervised institutions are oﬀering loan modiﬁcations, as
appropriate, and could help to identify areas where agencies or Congress may need to take
additional steps.
• Balancing safety and soundness concerns with eﬀorts to encourage credit provision:
Regulated banks generally entered the start of COVID-19 with substantially stronger capital
and liquidity levels than a decade ago. Financial regulators have taken actions to encourage
banks to use this strength to support households and businesses. As market conditions
evolve, regulatory attention to safety and soundness will continue to be important to identify
and respond to any emerging issues early.
• Determining whether and how to exercise emergency authorities: It will be important
for FDIC, NCUA and Treasury to coordinate with other agencies as appropriate and to provide
transparency to the public about any use of their emergency authorities under Sections 4008
and 4015 of the CARES Act.
• Communicating with regulated institutions and the public : External communication
about ﬁnancial regulatory matters related to COVID-19—including interagency coordination on
these communications—will continue to be important, including to address any areas where
additional guidance or clariﬁcation is needed and to manage issues around expiration of the
temporary changes.
GAO Methodology and Agency Comments
To conduct this work, we reviewed relevant federal laws, regulations, and regulators’ statements
issued to supervised entities to clarify changes under the CARES Act. We also interviewed oﬃcials
from federal ﬁnancial regulators with responsibilities for the relevant CARES Act provisions. In
addition, we obtained written responses to our questions from Treasury.
We provided a draft of this report section to the CFPB, Federal Reserve, FDIC, NCUA, OCC,
and the Department of the Treasury for review and comment. NCUA and OCC did not provide
any comments. The other agencies provided technical comments, which we incorporated, as
appropriate.
Contact information: John Pendleton, (404) 679-1816, pendletonj@gao.gov
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Related GAO Products
Consumer Reporting Agencies: CFPB Should Deﬁne Its Supervisory Expectations. GAO-19-459.
Washington, D.C.: July 16, 2019.
Modernizing the U.S. Financial Regulatory System, High-Risk Series: Substantial Eﬀorts Needed to Achieve
Greater Progress on High-Risk Areas. GAO-19-157SP. Washington, D.C. March 6, 2019.
Financial Regulation: Complex and Fragmented Structure Could Be Streamlined to Improve
Eﬀectiveness. GAO-16-175. Washington, D.C.: February 25, 2016.
Bank Regulation: Lessons Learned and a Framework for Monitoring Emerging Risks and Regulatory
Response. GAO-15-365. Washington, D.C.: June 25, 2015.
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Department of Commerce Support for Industries and the
Economy
The CARES Act provided additional appropriations for four Department of Commerce bureaus to
aid the economy and industries aﬀected by the COVID-19 pandemic.
Entities involved: Economic Development Administration, Minority Business Development
Agency, National Institute of Standards and Technology, and National Oceanic and Atmospheric
Administration
Key Considerations and Future GAO Work
The magnitude and breadth of CARES Act funding to the Department of Commerce
(Commerce)—about $1.87 billion across multiple programs with widely varying purposes—has
created challenges in distributing the funding. Many of these programs are in the early stages
of implementation. Looking forward, the Commerce bureaus will need to ensure approaches
to distribute funding in a timely and transparent way that allows oversight. We plan to conduct
additional work on Commerce’s implementation of selected CARES Act provisions.
Background
In an eﬀort to mitigate the signiﬁcant economic consequences of COVID-19 on industries and
localities, the CARES Act appropriated additional funding for four bureaus within Commerce:
Economic Development Administration (EDA). EDA’s primary focus is to help regions
experiencing long-term economic distress or sudden economic dislocation (brought about by
plant closure or natural disaster, for example) through public infrastructure investments, technical
assistance and research, and the development and implementation of comprehensive economic
development strategies. The CARES Act appropriated $1.5 billion to administer grants through
EDA’s Economic Adjustment Assistance program.485
Minority Business Development Agency (MBDA). MBDA is dedicated to supporting the
development and expansion of the minority business community. Through a network of business
centers, the agency delivers technical and management services to minority businesses, among
other assistance. The CARES Act appropriated $10 million for MBDA’s minority business centers to
provide technical assistance to small businesses.486
485 Pub. L. No. 116-136, 134 Stat. 281, 510-511 (2020).
486 Pub L. No. 116-136, § 1107(a)(5), 134 Stat. at 302. MBDA understands this appropriation to allow for the
administration of grants to business centers for activities pursuant to the authority provided in Section 1108 of the
CARES Act (which we describe later).134 Stat. at 302-4.
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National Institute of Standards and Technology (NIST). NIST’s mission is to promote U.S.
innovation and industrial competitiveness by advancing measurement science, standards, and
technology in ways that enhance economic security and improve quality of life. The CARES Act
appropriated $60 million for Industrial Technology Services, of which $50 million was for the
Hollings Manufacturing Extension Partnership (MEP) program,487 and $10 million was for the
National Network for Manufacturing Innovation (Manufacturing USA).
National Oceanic and Atmospheric Administration (NOAA). NOAA oversees a variety of
activities including weather forecasting, climate monitoring, coastal restoration, and ﬁsheries
management. NOAA’s National Marine Fisheries Service (NMFS) is the lead federal agency
responsible for managing commercial and recreational marine ﬁsheries. The CARES Act
appropriated $300 million to the Department of Commerce to assist ﬁshery participants who
have incurred, as a direct or indirect result of COVID-19, certain economic revenue losses or other
negative impacts.488
The table below provides a more detailed explanation of the purpose of these appropriated funds.
487 Pub. L. No. 116-136, 134 Stat. at 511. MEP utilizes a national network of MEP extension partnership centers (MEP
Centers) to provide companies with services and access to public and private resources to enhance growth, improve
productivity, reduce costs, and expand capacity.
488 Pub. L. No. 116-136, § 12005(d), 134 Stat. at 518.
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Department of Commerce Bureaus Providing CARES Act Assistance by Appropriation and Purpose
Commerce Bureau
Appropriation in dollars
Purpose of CARES Act Appropriation
and Use of Funds
Economic Development Administration
(EDA)
1.5 billion
For grants under EDA’s Economic
Adjustment Assistance program to help
communities prevent, prepare for, and
respond to coronavirus.
Up to 2 percent of these funds may
be used for salaries and expenses
for related administration and
oversight activity, and $3 million
will be transferred to the Oﬃce of
the Inspector General to carry out
investigations and audits related to
appropriated funding.
Commerce oﬃcials told us that as of
May 31, 2020, EDA had awarded $5.2
million to Economic Development
Districts.
National Oceanic and Atmospheric
Administration (NOAA)
300 million
To assist ﬁshery participants, which
include tribes, persons, ﬁshing
communities, aquaculture businesses
not otherwise eligible for certain
assistance, processors, or other
ﬁshery-related businesses, who have
incurred, as a direct or indirect result of
COVID-19, certain speciﬁed economic
revenue losses or other negative
impacts.
This funding will be awarded to
three Interstate Marine Fisheries
Commissions, which will work with
states, tribes, and territories in
their region to develop spend plans
for NOAA approval and eventual
implementation. Puerto Rico and
the U.S. Virgin Islands will submit
applications and spend plans directly to
NOAA for their allocated funding.
As of May 31, 2020, $300 million had
been allocated to states, tribes, and
territories, though funds have not
yet been made available to ﬁshery
participants. Up to 2 percent of these
funds may be used for administration
and oversight activities.
National Institute of Standards and
Technology (NIST)
60 million
For Industrial Technology Services
to prevent, prepare for and respond
to COVID-19 including $50 million
for the Hollings Manufacturing
Extension Partnership (MEP) (which
provides companies with services
and access to public and private
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resources to enhance growth, improve
productivity, reduce costs, and expand
capacity through MEP Centers),
and $10 million for the National
Network for Manufacturing Innovation
(Manufacturing USA) (a network of
manufacturing innovation centers
established by the Department of
Commerce and other federal agencies).
The act eliminates the federal cost
share requirements for CARES Act
funding received by MEP Centers
and federal cost share requirements
for federal funding received by MEP
Centers under the Consolidated
Appropriations Act, 2020.
Commerce oﬃcials told us that as
of May 31, 2020, $19.51 million had
been allocated via 16 awards to MEP
Centers. Manufacturing USA has
awarded $8.9 million.a
Minority Business Development Agency
(MBDA)
10 million
For MBDA’s minority business centers
to provide technical assistance to small
business concerns.
The act also authorizes MBDA to
provide grants to minority business
centers and minority chambers of
commerce for the purpose of providing
minority-owned businesses with
counseling, training, and education
on accessing federal resources
and business practices to mitigate
the eﬀects of COVID-19 or similar
occurrences. MBDA plans to distribute
non-competitive awards to minority
business centers and minority
chambers of commerce in an award
period beginning June 1, 2020. Oﬃcials
told us that these non-competitive
awards are distributed in less time than
the competitive process.
Source: GAO analysis of CARES Act and agency information. | GAO-20-625
aOﬃcials told us that as of May 31st, 2020 awards have been made to MEP Centers in AR, FL, HI, IA, ID, IL, IN, KY, MO, OH, OR,
PA, SC, TN, WI and WV.
Overview of Key Issues
Status of implementation. Bureaus are responding to challenges and have either started
distributing funds or have taken steps to distribute funds:
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• EDA received $1.5 billion—which is almost 5 times its ﬁscal year 2020 annual
appropriation—and oﬃcials told us that the national scope of the pandemic diﬀers from their
localized response to previous disasters. To address its CARES Act responsibilities, EDA oﬃcials
said that they are increasing the number of staﬀ to manage and oversee markedly increased
grant volume. Oﬃcials also noted that they have made speciﬁc determinations in an eﬀort to
expedite funding to impacted communities and regions, including nationwide eligibility based
on economic injury from COVID#19 and use of CARES Act funding to make supplemental
awards to recipients of certain existing EDA awards. EDA began accepting applications from
eligible grantees using funds authorized under the CARES Act in early May 2020 and oﬃcials
told us they began awarding their ﬁrst grants in late May 2020.489
• NOAA has allocated its $300 million to states, tribes, and territories with coastal and marine
ﬁshery participants and is now working with the Interstate Marine Fisheries Commissions,
along with states, territories, and tribes, to develop applications and complete the award
process that will be used to distribute the allocated funds to ﬁshery participants. Grants to the
Interstate Marine Fisheries Commissions are expected to be executed by July 1, 2020.
• NIST oﬃcials told us they had awarded $28.41 million of its $60 million appropriation for
manufacturing-related projects as of May 31, 2020, and have taken steps to begin awarding
additional CARES Act funding by early June 2020.
• MBDA oﬃcials told us that they plan to issue non-competitive awards to minority chambers
of commerce and minority business centers. According to MBDA oﬃcials, they have held
preliminary calls with the minority business centers and minority chambers of commerce.
GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws and agency documents, including program funding
notices, and interviewed Department of Commerce oﬃcials about how their agencies would
implement CARES Act provisions.
We provided a draft of this report section to Commerce for review and comment. Commerce
oﬃcials provided technical comments, which we incorporated as appropriate.
Contact information: John Pendleton, (404) 679-1816, pendletonj@gao.gov
489EDA can make grants to state and local governmental entities, institutions of higher education, non-proﬁt
entities, and federally recognized Indian tribes. Businesses may be eligible for various types of assistance provided
by EDA grantees including loans from an EDA-funded Revolving Loan Fund (RLF). EDA has announced that RLF
grant recipients may provide additional ﬂexibilities to borrowers due to the eﬀect of COVID-19 on small businesses,
including waiving requirements to demonstrate that credit is not otherwise available and requirements to leverage
additional capital, among others.
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Related GAO Products
Advanced Manufacturing: Innovation Institutes Have Demonstrated Initial Accomplishments, but
Challenges Remain in Measuring Performance and Ensuring Sustainability. GAO-19-409. Washington,
D.C.: May 23, 2019.
Manufacturing Extension Partnership: Centers Cite Beneﬁts from Funding Changes, but Impacts Hard to
Distinguish from Other Factors. GAO-19-219. Washington, D.C.: March 7, 2019.
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Department of Defense Working Capital Funds
COVID-19 could further impact the Department of Defense’s working capital fund balances, even
with additional appropriated amounts provided by the CARES Act.
Entities involved: Department of Defense
Key Considerations and Future GAO Work
In June 2017, we reported that monthly cash balances for the Defense-Wide Working Capital
Fund had been outside the Financial Management Regulation-deﬁned upper and lower cash
requirements for 87 of 120 months during ﬁscal years 2007 through 2016.490 We recommended
that the Department of Defense (DOD) provide guidance in its regulation on when DOD managers
should use available tools to help ensure that monthly cash balances remain within the upper and
lower requirements. DOD concurred with, but has not implemented the recommendation. In light
of the eﬀect that COVID-19 is having on the military services’ working capital fund monthly cash
balances, this recommendation continues to have merit, particularly in light of the risks facing
these working capital funds when cash balances fall below the lower cash requirements for long
periods of time. Those risks may include (1) not paying bills on time, or (2) making a disbursement
in excess of available budget authority, which could potentially result in an Antideﬁciency Act
violation.
We plan to continue to monitor the eﬀects of COVID-19 on the working capital funds and will
examine the military depots’ response to COVID-19.
Background
DOD uses working capital funds to provide various goods and services to its components. This
includes, for example, acquisition of parts and supplies, equipment maintenance, transportation,
and research and development.
DOD’s working capital funds are a type of revolving fund that operates as a self-supporting
entity that conducts businesslike activities on a regular cycle.491 Ongoing working capital fund
activities are ﬁnanced through customer payments, such as from the military services, for goods
or services provided. Unlike businesses, working capital funds operate on a break-even basis,
neither incurring gains nor losses over time. DOD’s current cash management policy requires the
working capital funds to maintain a positive cash balance necessary to meet operating, capital
490GAO, Defense-Wide Working Capital Fund: Action Needed to Maintain Cash Balances within Required Levels. GAO-17-465
(Washington, D.C.: June 30, 2017).
491DOD’s working capital funds received their initial working capital through an appropriation or transfer of amounts
from existing appropriations to ﬁnance the initial cost of products or services.
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investment, and other justiﬁed requirements throughout the year and to support continuing
requirements into the subsequent year.492
The CARES Act appropriated $1.45 billion to Defense Working Capital Funds to prevent, position,
prepare for, and respond to the coronavirus, domestically or internationally.493 More speciﬁcally,
Congress appropriated $475 million to the Navy Working Capital Fund; $475 million to the Air
Force Working Capital Fund; and $500 million to the Defense-Wide Working Capital Fund.
In the ﬁgures below, we show that for the October 2019 through February 2020 time
frame—before the CARES Act was enacted in March 2020—none of the three funds had
maintained a monthly cash balance that met their respective lower cash requirements. Upon
receiving amounts appropriated by the CARES Act, all but the Navy’s working capital fund met the
lower monthly cash balance requirement.
Navy Working Capital Fund Monthly Cash Balances (Oct. 2019-March 2020)
Note: DOD 7000. 14-R, Financial Management Regulation, vol.2B, chapter 9, (July 2017 draft) deﬁnes the minimum cash
balance—known as the lower cash requirement— as the balance necessary to meet operating, capital investment, and other
justiﬁed requirements throughout the year and to support continuing requirements into the subsequent year.
492 See DOD 7000. 14-R, Financial Management Regulation, vol. 2B, chap. 9, (July 2017 Draft). Although this updated
guidance has not yet been oﬃcially published, DOD WCF fund managers are implementing the cash management
policies in the draft regulation, as instructed by the Oﬃce of the Under Secretary of Defense (Comptroller).
493CARES Act, Pub. L. No. 116-136, div. B, title III, 134 Stat. 281, 520 (March 27, 2020).
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Air Force Working Capital Fund Monthly Cash Balances (Oct. 2019-March 2020)
Note: DOD 7000. 14-R, Financial Management Regulation, vol.2B, chapter 9, (July 2017 draft) deﬁnes the minimum cash
balance—known as the lower cash requirement—as the balance necessary to meet operating, capital investment, and other
justiﬁed requirements throughout the year and to support continuing requirements into the subsequent year.
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Defense-Wide Working Capital Fund Monthly Cash Balances (Oct. 2019-March 2020)
Note: DOD 7000. 14-R, Financial Management Regulation, vol.2B, chapter 9, (July 2017 draft) deﬁnes the minimum cash
balance—known as the lower cash requirement— as the balance necessary to meet operating, capital investment, and other
justiﬁed requirements throughout the year and to support continuing requirements into the subsequent year.
Overview of Key Issues
Oﬃcials from the Navy Working Capital Fund, the Air Force Working Capital Fund, and the
Defense-Wide Working Capital Fund have expressed concern that the COVID-19 pandemic could
put additional strain on their respective fund’s cash balances. The oﬃcials told us that they expect
to earn less-than-planned revenue in ﬁscal year 2020 because of issues related to the COVID-19
pandemic. See below for information speciﬁc to each fund.
• Navy Working Capital Fund. As of March 31, 2020, the fund’s cash balance was below its
lower cash requirement even after receiving $475 million from the CARES Act. Navy oﬃcials
stated they plan to use the amounts provided by the CARES Act to help maintain the solvency
of the fund. Oﬃcials stated, however, that they expect revenue-generating activities, such
as repairs of aircraft and amphibious assault vehicle overhauls performed by Navy and
Marine Corps depots supported through the Navy Working Capital fund, to decrease as
a result of COVID-19 because reduced personnel levels will slow down or stop work. For
example, reductions in operations at the Albany, Georgia and Barstow, California production
plants—both Marine Corps depots––have decreased operating capacity to less than 20
percent, reducing revenue generated by the depots.
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Further, oﬃcials stated that stay-at home requirements for DOD personnel who support
and maintain weapon systems will reduce the amount of work and parts ordered. According
to oﬃcials, the cash balance is expected to fall to $63 million by the end of ﬁscal year 2020.
Oﬃcials told us that this amount is not suﬃcient to cover payroll expenses for one pay period
for about 83,000 people working at Department of the Navy working capital fund depot
activities in ﬁscal year 2020.
• Air Force Working Capital Fund. As of March 31, 2020, the fund’s cash balance was above
the lower cash requirement after receiving $475 million from the CARES Act. Air Force oﬃcials
stated they will use the $475 million to maintain solvency in the account. Oﬃcials also stated
that air logistics complexes are completing less maintenance because half the workforce
is on leave due to COVID-19, reducing the ability to generate revenue through completed
orders. In addition, Air Force oﬃcials expect working capital fund revenue to decrease because
squadrons are reducing ﬂying hours and are paying for fewer spare parts than planned.
Furthermore, Air Force supply activities ordered items with long lead times to support pre-
COVID-19 demand levels for these items. These items must be paid for by the working capital
fund upon delivery. However, Air Force oﬃcials stated that they expect that the military
services will order fewer items for maintenance operations and, as a result, the working capital
fund supply activities are expected to generate less revenue through completed orders. .
• Defense-Wide Working Capital Fund. As of March 31, 2020, the fund’s cash balance was
above the lower cash requirement after receiving $500 million from the CARES Act. Oﬃcials
stated that the $500 million will help address anticipated eﬀects on the cash balance resulting
from expected increases in customer transactions related to the prevention of, preparation
for, and response to COVID-19.
GAO Methodology and Agency Comments
To conduct this work, we analyzed the most recent monthly cash balances from Treasury for the
Navy, Air Force, and Defense-Wide Working Capital Funds; reviewed federal laws on the COVID-19
pandemic and DOD cash management policies; and obtained written responses to questions from
Navy, Air Force, and Defense-Wide oﬃcials. We provided a draft of this report to DOD for review
and comment. DOD provided technical comments on this enclosure, which we incorporated as
appropriate.
Contact Information: Diana Maurer, (202) 512-9627, maurerd@gao.gov
Related GAO Product
Defense-Wide Working Capital Fund: Action Needed to Maintain Cash Balances within Required Levels.
GAO-17-465. Washington, D.C.: June 30, 2017.
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Education Stabilization Fund
The Education Stabilization Fund provides emergency funding to address the eﬀects of the
COVID-19 pandemic on education. It is too early to know how states and school districts will spend
these funds and the eﬀect they may have, but the understandable desire to spend the money
quickly may increase the risks of noncompliance with spending and accountability requirements.
Entities Involved: Department of Education
Key Considerations and Future GAO Work
Oversight and transparency will be critical to ensuring that Education Stabilization Fund (ESF)
payments are used appropriately. Providing oversight and accountability of the ESF payments
poses signiﬁcant challenges because it is a large new program designed to provide funding quickly.
Speciﬁcally,
• The Department of Education (Education) quickly had to establish procedures for allocating
and disbursing ESF funds, as well as guidance to recipients, which included information about
record-keeping and reporting; and
• Education has obligated approximately 89 percent of ESF payments for states and territories
as of May 31, 2020. Recipients’ understandable desire to spend the money quickly may
increase the risks of noncompliance with spending and accountability requirements.
These challenges underscore the importance of internal controls in ensuring ESF payments
are used appropriately. In April 2009, we reported that a robust system of internal control
speciﬁcally designed to deal with these kinds of extraordinary funding increases are key to
helping management of the states and localities achieve accountability. Internal controls include
management and program policies, procedures, and guidance that help ensure eﬀective and
eﬃcient use of resources; compliance with laws and regulations; prevention and detection of
fraud, waste, and abuse; and the reliability of ﬁnancial reporting.
We plan to continue following the Education’s oversight of and recipients’ use of ESF funds. Our
ﬁndings on this work will appear in future reports.
Background
The CARES Act created the ESF in the wake of the COVID-19 pandemic.494 The approximately $31
billion appropriated to the ESF is subdivided as follows:
494CARES Act, Pub. L. No. 116-136, § 18001, 134 Stat. 281, 564 (2020).
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• Approximately $17 billion in aid to states, the District of Columbia, and Puerto Rico across two
emergency relief funds, the Elementary and Secondary School Emergency Relief Fund (ESSER
Fund) and the Governor's Emergency Education Relief Fund (GEER Fund), as well as allocations
for ESF discretionary grants and for formula grants to other U.S. territories (see table below for
detailed information about each component).495
• Approximately $14 billion in aid to institutions of higher education through the Higher
Education Emergency Relief Fund. See “Emergency Financial Aid for College Students” in
appendix III for further information on this component.
• Approximately $154 million allocated for programs operated or funded by the Bureau of
Indian Education (BIE). See “Assistance for Tribal Entities” in appendix III for more information.
495Pub. L. No. 116-136, §§ 18001(a)(1) (formula grants to U.S. territories, referred to in the law as outlying areas),
18001(a)(3) (ESF discretionary grants), 18002 (GEER Fund), 18003 (ESSER Fund), 134 Stat. at 564-567.
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Components of the Education Stabilization Fund that Provide Funds to States and Territories
Component of Education
Stabilization Fund
Purpose and distribution
Appropriation amount (in dollars)
Elementary and Secondary School
Emergency Relief Fund (ESSER Fund)
Purpose: For states to allocate at
least 90 percent for sub-grants to
their local educational agencies,
including charter schools that are local
educational agencies, for a wide range
of activities to support continuity of
services in local educational agencies
in response to COVID-19. Activities
include purchasing educational
technology and providing professional
development and training for staﬀ
on sanitation and minimizing the
spread of infectious diseases, and
activities to address the unique needs
of disadvantaged or at-risk students.
States may reserve up to 10 percent
of awards for emergency needs as
determined by the state to address
issues responding to COVID-19.
Allocation: Awarded to states based
on their proportion of funds received
under Part A of Title I of the Elementary
and Secondary Education Act for
ﬁscal year 2019. Part A, Title I funds
are allocated based primarily on U.S.
Census Bureau poverty estimates and
the cost of education in each state.
13.23 billion
Governor’s Emergency Education Relief
Fund (GEER Fund)
Purpose: To provide support through
sub-grants to local educational
agencies and institutions of higher
education within each state that
are most signiﬁcantly impacted by
COVID-19. Also, to provide support
to any other institution of higher
education, local education agency, or
education related entity within the
state that a state’s governor deems
essential for carrying out emergency
educational services to students,
such as for activities described in
certain federal education legislation
and providing social and emotional
support.
Allocation: 60 percent awarded to
states based on each state’s share
of individuals between 5 and 24
years of age as of 2018; remaining 40
percent awarded to states based on
the number of children counted for
the purposes of making Title I, Part
A formula grants to local educational
2.95 billion
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agencies, based on preliminary ﬁscal
year 2020 allocations.
Education Stabilization Fund
Discretionary Grants
The Department of Education
(Education) has sub-divided this fund
into two grant programs:
(1) Reimagining Workforce Preparation
grants (127.5 million dollars)
Purpose: To provide support to states
to create new short-term educational
opportunities and career pathways
programs that help adults return to
work.
Allocation: To determine award
recipients, Education will use highest
COVID-19 burden as one criterion, with
additional criteria to be announced,
according to Education oﬃcials.
Education has based highest COVID-19
burden on four equally-weighted
key factors: (1) percent of population
without broadband access as of 2018,
(2) percent of students ages 5-17 in
poverty as of 2018, (3) percent share of
conﬁrmed COVID-19 cases per capita
as of April 25, 2020, and (4) percent
of students in rural local educational
agencies.
(2) Rethink K-12 Education Models
grants (180 million dollars)
Purpose: To address speciﬁc
educational needs of students, their
parents, and teachers in public and
non-public elementary and secondary
schools.
Allocation: To determine award
recipients, Education will assess
COVID-19 burden, the quality of
proposed project services and
project plan, and the quality of the
management plan and adequacy of
resources.
307.50 million
Formula Grants to U.S. Territories
Purpose: To assist with response to
COVID-19 in the U.S. Virgin Islands,
Guam, the Northern Mariana Islands,
and American Samoa.
Allocation: According to guidance from
Education, 80 percent to a territory’s
state educational agencies based on
the formula used for the ESSER Fund
and 20 percent to a territory’s governor
based on the formula used for the
GEER Fund.
153.75 million
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Source: GAO analysis of federal law and Department of Education information. | GAO-20-625.
Note: For the purposes of the Education Stabilization Fund, the term “state” includes the 50 states, the District of Columbia, and
Puerto Rico.
Overview of Key Issues
Allocations, obligations, and expenditures. A total of $15 billion had been obligated through
the ESF for states and territories and $83 million had been expended, as of May 31, 2020. Per
component of the fund,
• 97 percent of the ESSER Fund had been obligated and 1 percent had been expended;
• 67 percent of the GEER Fund had been obligated and less than 1 percent had been expended;
• No ESF discretionary grants had been awarded;
• 67 percent of formula grants to territories had been obligated and 3 percent had been
expended.
See table below for a breakout by recipient states and territories of Education Stabilization Fund
allocations, obligations, and expenditures.
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Allocations, Obligations, and Expenditures for the Education Stabilization Fund
State or Territory
Allocations
($ in millions)
Obligations,
as of May 31, 2020
($ in millions)
Expenditures,
as of May 31, 2020
($ in millions)
Alabama
266
266
0.05
Alaska
45
45
0
Arizona
347
277
0
Arkansas
159
129
0
California
2,003
2,003
0
Colorado
165
165
0
Connecticut
139
111
0
Delaware
51
51
0
District of Columbia
48
48
0
Florida
944
944
0
Georgia
563
457
0.62
Hawaii
53
53
0
Idaho
64
48
0
Illinois
678
678
0
Indiana
276
276
0
Iowa
98
72
64
Kansas
111
85
0.01
Kentucky
237
237
0
Louisiana
337
337
0
Maine
53
53
0.12
Maryland
253
253
0
Massachusetts
266
266
0
Michigan
479
479
0.07
Minnesota
184
184
0
Mississippi
205
170
0
Missouri
263
263
13
Montana
50
41
0
Nebraska
81
65
0
Nevada
144
144
0
New Hampshire
47
47
0
New Jersey
379
379
0
New Mexico
131
131
0
New York
1,201
1,201
0
North Carolina
492
492
0
North Dakota
39
33
0
Ohio
594
489
0
Oklahoma
201
201
0
Oregon
154
121
0
Pennsylvania
628
628
0
Puerto Rico
397
0
0
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Rhode Island
55
55
0
South Carolina
265
265
0
South Dakota
49
49
0
Tennessee
323
323
0
Texas
1,593
1,286
0
Utah
97
97
0
Vermont
36
36
0
Virginia
305
239
0
Washington
274
274
0
West Virginia
103
103
0
Wisconsin
221
175
0
Wyoming
37
33
0
States Total a
16,579
14,856
78
American Samoa
46
38
0
Guam
54
42
0
Northern Mariana Islands
28
23
4
Virgin Islands
26
0
0
Territories Total
154
103
4
Source: GAO analysis of Department of Education data. | GAO-20-625.
Note: Education Stabilization Fund Discretionary Grants are not included in the table because no awards, obligations, or
expenditure of those funds have been made as of May 31, 2020. Totals are rounded to the nearest million.
aThe Education Stabilization Fund includes the District of Columbia and Puerto Rico as states for purposes of calculating
assistance through the two emergency relief funds.
Reporting requirements. Education has established some initial reporting requirements for
recipients under the ESF. For example, for the GEER Fund, governors must report within 45 days of
receiving funds on their state’s process for awarding funds to sub-grantees (e.g., local educational
agencies, institutions of higher education, or other education-related entities) and the criteria used
to determine which entities are eligible for the funds, as well as a description of the process and
deliberations involved in formulating those criteria. According to Education oﬃcials, the agency
is in the process of developing an approach to assess the extent to which grantees meet these
initial reporting requirements to inform monitoring and technical assistance activities. Pursuant
to requirements of the CARES Act, recipients of ESSER Fund and GEER Fund awards are generally
required to submit quarterly reports to Education on the use of these funds.496 Education has not
yet announced how it plans to implement this provision.
Waivers and ﬂexibilities. Although unrelated to the ESF, the CARES Act gives the Secretary
of Education waiver authority to provide states and local educational agencies with ﬂexibility
in responding to the COVID-19 pandemic. This new waiver authority is in addition to waiver
authority the Secretary already had under the Elementary and Secondary Education Act of 1965,
as amended (ESEA). The Secretary has provided waivers of several ESEA requirements using these
waiver authorities. For example:
496Pub. L. No. 116-136, § 15011(b)(2), 134 Stat. at 541.
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• Under the existing ESEA waiver authority, the Secretary provided waivers for requirements
under Title I, Part A of the ESEA regarding statewide assessments, accountability and school
identiﬁcation, and some reporting requirements for the 2019-2020 school year. All 50 states,
the District of Columbia (D.C.), Puerto Rico, and BIE submitted requests and received approval
for these waivers from Education.
• Under the new CARES Act waiver authority, the Secretary provided waivers to requirements
related to ESEA funding—for example, waiving carryover limitations and spending restrictions
on technology infrastructure. According to Education oﬃcials, all 50 states, the District of
Columbia, Puerto Rico, and BIE generally submitted requests for all waivers for which they
were eligible and Education approved all requests.497
The CARES Act did not grant the Secretary any waiver authority with respect to the Individuals with
Disabilities Education Act (IDEA), but it directs the Secretary to provide Congress, within 30 days of
enactment, with recommendations of any waivers under the IDEA necessary to provide ﬂexibility
to meet the needs of students during the public health emergency.498 Under the IDEA, states
must ensure that school districts make a free appropriate public education available to all children
with disabilities who qualify for special education services.499 In its required report to Congress
on April 27, 2020, Education indicated that it had decided not to request waiver authority for any
of the core tenets of the IDEA, including the right to a free appropriate public education, but did
request waiver authority for several requirements, including provisions regarding early childhood
transition timelines.500
GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws and Education guidance. We also analyzed
Education spending data and interviewed Education oﬃcials regarding program implementation,
challenges, and recipient reporting. We provided a draft of this report to Education for review and
comment. In its written comments, Education noted that it published notices of funding availability
for the ESF within 30 days of enactment of the CARES Act and made almost all awards, in terms
of number of awards, for the ESSER and GEER Funds as of May 30, 2020. We are reporting agency
data on dollars obligated for these funds, which diﬀers from awards made, and therefore we
made no change to the draft. Education also provided technical comments, which we incorporated
as appropriate.
497In one exception, Vermont chose to request some but not all available waivers from Education. States, the
District of Columbia, Puerto Rico, and BIE were not eligible for certain waivers if they were not eligible to receive
funds or did not receive funds under relevant portions of the ESEA.
498Pub. L. No. 116-136, § 3511(d)(4), 134 Stat. at 403.
49920 U.S.C. § 1412(a)(1).
500See, Report to Congress of U.S. Secretary of Education Betsy DeVos : Recommended Waiver Authority Under Section 3511(d )
( 4) of Division A of the Coronavirus Aid, Relief, and Economic Security (‘CARES Act’). April 27, 2020.
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Contact Information: Jeﬀ Arkin, (202) 512-6806, arkinj@gao.gov, and Jacqueline M. Nowicki, (617)
788-0580, nowickij@gao.gov
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Transit Industry
The Federal Transit Administration has begun to distribute CARES Act funding, with most grants
going to operating expenses.
Entities involved: U.S. Department of Transportation, Federal Transit Administration
Key Considerations and Future GAO Work
In our January 2020 review of rural transit services, we recommended that the Federal Transit
Administration (FTA) develop a communication plan that will eﬀectively share information with
state transportation agencies and rural and tribal transit providers on coordination opportunities
and leading coordination practices in an accessible and informative way. The Department of
Transportation (DOT) partially concurred with the recommendation and provided examples of
its communication eﬀorts with stakeholders on coordination opportunities, including its plans to
reorganize technical assistance center web pages to centralize information and best practices.
We continue to believe that a comprehensive communication plan is needed to ensure that
DOT is reaching all intended stakeholders and informing them of opportunities to enhance
rural transit services. Given FTA’s statement that CARES Act funds may be distributed to public
transportation systems, including those in rural areas that have not previously received FTA funds,
communication between agencies is needed for eﬀective coordination.
In our November 2019 review of emergency relief program funding, we recommended that
FTA and the Federal Emergency Management Agency (FEMA) identify and develop controls to
address the risk of duplicate funding, such as methods to more easily identify transit expenses
in applications submitted to FEMA by larger entities like cities and counties. DOT and FEMA
agreed with our recommendation and noted that both agencies plan to have improved controls
in place by the fall of 2020. During this public health emergency, FEMA disaster assistance may be
available to transit agencies to purchase personal protective equipment for operations personnel,
to sanitize public and certain private non-proﬁt facilities, and to assist with grocery and meal
delivery.501 Given that COVID-19 may continue to aﬀect the transit industry after CARES Act funds
have been exhausted, it is possible that transit agencies may apply for additional funding from
multiple FTA and agency programs in the future.
We will continue to monitor these issues and the status of these recommendations.
501The Disaster Relief Fund is the primary source of federal funding to provide disaster assistance to state, local, tribal,
and territorial governments following major disasters and emergencies declared by the President under the Robert T.
Staﬀord Disaster Relief and Emergency Assistance Act (Staﬀord Act), as amended. See 42 U.S.C. §§ 5170, 5191. On March
13, 2020, the President declared a nationwide emergency for COVID-19 under the Staﬀord Act and later approved major
disaster declarations for all 50 states, the District of Columbia, and four territories.
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Background
Millions of Americans rely on public transportation systems for mobility and access to jobs,
education, and essential services, such as medical care and grocery shopping. Within DOT, the FTA
provides grants to state Departments of Transportation, local public transit systems, and tribes to
support and expand services. These services may include buses, subways, light rail, commuter rail,
trolleys and ferries in urban, rural, and tribal areas.
The CARES Act appropriates $25 billion to the FTA to support the transit industry through its
Urbanized Area and Rural Area formula programs.502
• Funding to large and small urban areas ($22.7 billion) and rural areas ($2.2 billion) is provided,
with no required local funding.503
• Funds issued may be used to cover all costs normally eligible within the formula programs as
well as operating costs to maintain service, including administrative leave for employees due
to service reductions and the COVID-19 pandemic.
• There is no limit on the amount of funds recipients may use for operating expenses.
• Any expenses incurred related to COVID-19 on or after January 20, 2020, are eligible for CARES
Act funds, and there is no deadline by which funds must be used.
All normal Urbanized Area and Rural Area program requirements apply to CARES Act funds,
with the exception that operating and certain capital expenses do not need to be included in
a transportation improvement program, long-range transportation, statewide transportation
plan, or a statewide transportation improvement program.504 According to FTA, recipients may
distribute funds to public transportation systems that may not previously have received FTA
formula funding, provided the operator meets the eligibility criteria for the Urban Area or Rural
Area formula programs.
Overview of Key Issues
FTA has begun to implement the transit assistance provisions of the CARES Act:
502Pub. L. No. 116-136, 134 Stat. 281, 599 (2020).
503Within the funds appropriated to the Rural Area formula program, $30 million is set aside for tribal transit
programs. An additional $75 million is set aside for administration and oversight of the funds.
504Each metropolitan planning organization is required by federal law to develop a transportation improvement
program (TIP) listing upcoming transportation projects over at least 4 years, in consultation with the state and public
transit providers. Each TIP should include all regionally signiﬁcant projects receiving Federal Highway Administration or
FTA funds. Similarly, each state is required to develop a statewide transportation improvement plan that is consistent
with its TIPs and other planning processes.
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• FTA allocated the $25 billion dollars in CARES Act funding on April 2, 2020. Funding is
available to recipients of Urbanized Area and Rural Area formula funds, including tribal transit
recipients. FTA posted information on allocation amounts to its website.
• As of May 31, 2020, FTA had awarded 291 grants, and obligated about 58 percent of CARES Act
transit funding (see table). In addition, the agency has disbursed $3.2 billion to transit agencies
for 80 project awards. Of the $30 million allocated to tribal transit funding, about $8 million
has been obligated and about $100,000 disbursed. FTA oﬃcials reported that an additional
288 grants were in progress. Oﬃcials said that the majority of funds have gone to operating
expenses, though capital and planning expenses are also eligible.
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FTA Allocations, Obligations and Expenditures for CARES Act Transit Industry Fundinga
State or Territoryb
Allocations
($ in millions)
Obligations
as of May 31, 2020
($ in millions)
Expendituresc
as of May 31, 2020
($ in millions)
Alabama
131
80
0
Alaska
145
0
0
Arizona
314
286
17
Arkansas
83
24
2
California
3,738
861
85
Colorado
325
243
73
Connecticut
489
18
0
Delaware
67
6
0
District of Columbia
536
877
113
Florida
959
35
15
Georgia
522
139
0
Hawaii
108
91
18
Idaho
62
55
0
Illinois
1,618
1,337
8
Indiana
238
86
0
Iowa
107
49
2
Kansas
92
7
1
Kentucky
139
84
0
Louisiana
163
78
2
Maine
85
20
2
Maryland
696
0
0
Massachusetts
1,044
988
171
Michigan
353
238
3
Minnesota
310
290
0
Mississippi
75
50
0
Missouri
256
219
0
Montana
52
0
0
Nebraska
63
25
0
Nevada
162
159
10
New Hampshire
39
24
0
New Jersey
1,752
1,424
200
New Mexico
134
39
0
New York
4,151
4,208
2,139
North Carolina
320
41
1
North Dakota
34
18
0
Ohio
478
382
86
Oklahoma
114
29
0
Oregon
286
268
0
Pennsylvania
1,140
115
13
Rhode Island
104
0
0
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South Carolina
124
37
1
South Dakota
37
4
0
Tennessee
230
54
1
Texas
1,180
855
201
Utah
220
5
0
Vermont
21
6
0
Virginia
456
87
0
Washington
699
343
10
West Virginia
59
49
2
Wisconsin
210
60
0
Wyoming
29
12
0
States Totalb
24,747
14,402
3,175
American Samoa
1
0
0
Guam
3
0
0
Northern Mariana Islands
1
0
0
Puerto Rico
169
0
0
Virgin Islands
4
0
0
Territories Total
178
0
0
TOTALd
24,925 e
14,402
3,175
Source: GAO analysis of data from the Federal Transit Administration | GAO-20-625.
aFTA’s CARES Act funds for operating costs are on a reimbursable basis, therefore for several states, no funds have been
obligated or expended.
bFunding to localities or lower-level government entities within each state is included in that state’s total. [if applicable]
cFTA allocates funding to urbanized areas greater than 200,000 in population directly to urbanized areas, not states. As some
urbanized areas cross state boundaries, the amounts identiﬁed by state are the amount of the formula funds attributable to
transit service within the state. These funds are awarded directly to transit agencies and obligations are recorded where the
transit agency is headquartered. Therefore obligations in a state may exceed the amount allocated to a state.
dNumbers may not add up due to rounding.
eOf the total $25 billion appropriated to FTA for responding to coronavirus, up to $75 million is set aside in the CARES Act for
administration and oversight of the funds.
• FTA has provided grantee and stakeholder support by holding webinars, establishing and
updating the agency’s COVID-19 web page, and posting frequently asked questions as they are
raised. FTA’s next steps include further outreach and ongoing grant assistance.
• FTA is working with the Centers for Disease Control and Prevention and other federal partners
to provide guidance to the public transportation industry in response to the COVID-19
pandemic.
FTA staﬀ reported few challenges with implementing these provisions of the CARES Act, in part
because the funds were provided for existing programs. Oﬃcials noted they have experienced the
normal challenges of executing a large project quickly and correctly. FTA oﬃcials said they had all
the tools they needed in place already to oversee the distribution of these funds.
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GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws and agency documents, including program funding
notices, and interviewed DOT and FTA oﬃcials about how they are implementing provisions of the
CARES Act. DOT and FEMA provided technical comments to this enclosure, which we incorporated
as appropriate.
Contact information: Andrew Von Ah, (202) 512-2834, vonaha@gao.gov
Related GAO Products
Public Transportation: Enhanced Federal Information Sharing on Coordination Could Improve Rural
Transit Services. GAO-20-205. Washington, D.C.: January 7, 2020.
Emergency Transportation Relief: Federal Transit Administration and FEMA Took Actions to Coordinate,
but Steps Are Needed to Address Risk of Duplicate Funding. GAO-20-85. Washington D.C.: November
13, 2019.
DOT Discretionary Grants: Problems with Hurricane Sandy Transit Grant Selection Process Highlight the
Need for Additional Accountability. GAO-17-20. Washington, D.C.: December 14, 2016.
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Coronavirus Relief Fund
Almost the entire $150 billion fund has been disbursed to states, localities, tribal governments,
the District of Columbia, and U.S. territories to help cover the costs of responding to the COVID-19
pandemic.
Entities Involved: Department of the Treasury
Key Considerations and Future GAO Work
As of May 31, 2020, the Department of the Treasury (Treasury) had disbursed almost $147
billion of the $150 billion appropriated to the Coronavirus Relief Fund (CRF).505 Oversight and
transparency will be critical to ensuring that CRF payments are used appropriately. Providing
oversight and accountability of the CRF payments poses signiﬁcant challenges because it is a large
new program designed to provide funding quickly. Speciﬁcally,
• Treasury quickly had to establish methods and procedures for allocating and disbursing the
CRF payments, as well as guidance to recipients, including record-keeping and reporting
requirements, which are not yet ﬁnalized.
• Recipients of the CRF payments may have to revise their management controls and
accounting systems to help ensure that funds are distributed and used in accordance with CRF
requirements; and
• The requirement for recipients to spend CRF funds on relevant costs incurred no later
than December 30, 2020, may increase the risks of noncompliance with spending and
accountability requirements.
These challenges underscore the importance of internal controls in ensuring CRF payments
are used appropriately. In April 2009, we reported that a robust system of internal controls
speciﬁcally designed to deal with these kinds of extraordinary federal funding increases is key
to helping management of the states and localities achieve accountability. Internal controls
include management and program policies, procedures, and guidance that help ensure eﬀective
and eﬃcient use of resources; compliance with laws and regulations; prevention and detection
of fraud, waste, and abuse; and the reliability of ﬁnancial reporting. Treasury distributed CRF
payments to recipients while the agency was still developing recipient accountability measures,
which may increase the risk of noncompliance with spending and accountability requirements.
We plan to continue following the use of the CRF payments. Our ﬁndings on this work will appear
in future reports.
505Treasury made obligations and expenditures from the CRF concurrently and in the same amounts. Obligations and
expenditures from the CRF as of May 31, 2020 were both almost $147 billion.
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Background
The CRF, created by the CARES Act, provides funding to states, localities, tribal governments, the
District of Columbia, and ﬁve U.S. territories to help cover costs of responding to the COVID-19
pandemic.506 As required by the act, CRF payments may only be used to oﬀset costs that
• are necessary expenditures incurred due to the COVID-19 pandemic;
• were not accounted for in the budget most recently approved for the states or other eligible
governments prior to enactment of the CARES Act on March 27, 2020; and
• were incurred from March 1, 2020 to December 30, 2020.
The CARES Act allocates CRF payments as follows:
• $139 billion for the 50 states and eligible localities, based on their populations, with no state
receiving less than $1.25 billion; 507
• $8 billion for tribal governments, with the payment to each tribal government based on
increases in its expenditures relative to expenditures in ﬁscal year 2019, as determined by the
Secretary of the Treasury, in consultation with the Secretary of the Interior;508 and
• $3 billion for the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, the
Commonwealth of the Northern Mariana Islands, and American Samoa, with each entity
receiving an amount based on its share of the total population across all six entities, as
determined by the Secretary of the Treasury.
506CARES Act, Pub. L. No. 116-136, § 5001, 134 Stat. 281, 501 (2020).
507Populations as measured by the U.S. Census Bureau in 2019. Localities with populations of at least 500,000 may
opt to receive disbursements directly from Treasury. These direct disbursements are then deducted from the state’s
allocation, and are equal to the product of (1) the state or territory allocation amount, (2) the share of the state or
territory population served by the local government, and (3) 45 percent.
508Pub. L. No. 116-136, § 5001, 134 Stat. at 502-03. Payments may be made to eligible tribal governments or to
tribally owned entities of the tribal governments. On May 5, 2020, the Secretary of the Treasury and the Secretary
of the Interior issued a joint statement in which they stated how the funds would be distributed to the tribal
governments.
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Overview of Key Issues
Distribution of funds. The CARES Act required that Treasury distribute the funds no later
than 30 days after its enactment, or April 26, 2020. 509 In April and May 2020, Treasury issued
implementing guidance deﬁning the eligibility requirements for localities and tribal governments
and its methodology for calculating CRF payment amounts.
As of May 31, 2020, Treasury had disbursed 98 percent, or almost $147 billion, of the total $150
billion in the CRF, as illustrated below.
Coronavirus Relief Fund Expenditures, as of May 31, 2020
Note: Funding to the 50 states and eligible localities is based on their populations, with a minimum of $1.25 billion to each
state. In this map, funding, if any, to eligible localities within each state is included in that state’s total. As of May 31, 2020, the
Department of the Treasury had also disbursed $4.6 billion of the $8 billion of Coronavirus Relief Fund payments set aside for
tribal governments.
By the statutory deadline, Treasury initiated payment of the $142 billion allocated to states, the
District of Columbia, territories, and eligible units of local governments.
In May, after the statutory deadline, Treasury distributed $4.6 billion of the $8 billion set aside
for tribal governments. On June 12, 2020, Treasury began distributing the remaining portion
of the CRF set aside for tribal governments. As of June 17, 2020, Treasury announced that all
509Pub. L. No. 116-136, § 5001, 134 Stat. at 502.
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such payments, other than payment of amounts allocated to Alaska Native regional and village
corporations, had been made. 510
Guidance on use of CRF payments. In April, Treasury published guidance on its interpretation
of the permissible use of CRF payments. Eligible costs must be for actions taken to respond
to the pandemic, including both direct eﬀects—such as addressing public health needs—and
secondary eﬀects—such as providing economic support to individuals or businesses hurt by
COVID-19-related business closures. According to Treasury, CRF payments can be used to meet
payroll expenses for public safety, public health, health care, human services, and employees
whose services are substantially dedicated to mitigating or responding to the COVID-19 pandemic,
among other things. Treasury explained that states may also transfer CRF payments to a local
government, as long as the locality uses the funds for eligible expenses.
The Treasury guidance emphasized that recipients may not use the funds to ﬁll shortfalls in
government revenue, and included examples of ineligible expenses, such as payroll or beneﬁts
for employees whose work duties are not substantially dedicated to COVID-19 mitigation or
response.511 Organizations representing state and local governments expressed concern to
Congress that the economic contraction resulting from the pandemic and related closures of non-
essential businesses is substantially aﬀecting their revenues and, without more ﬂexible federal
funding, state and local governments will be forced to drastically cut services, which could prolong
the economic downturn.512
Treasury oversight and monitoring of CRF funds. Treasury is working with Treasury OIG
on accountability measures for CRF payments. The CARES Act directs the Treasury’s Oﬃce of
Inspector General (Treasury OIG) to monitor and conduct oversight of the receipt, disbursement,
and use of funds made available to CRF recipients. 513
On May 28, 2020, Treasury posted guidance explaining that CRF payments are considered federal
ﬁnancial assistance subject to the Single Audit Act (SAA) and the related provisions of OMB’s
510Several tribes sued Treasury over its interpretation of the CARES Act deﬁnitions of tribal government and Indian tribe
as including Alaska Native regional and village corporations (ANC) and thus eligible for CRF Tribal Set-Aside payments.
On April 27, 2020, the presiding judge granted a preliminary injunction against Treasury disbursing CRF payments to
ANCs. For more information, see “Assistance for Tribal Entities” in appendix III.
511CARES Act, Pub L. No. 116-136, § 5001, 134 Stat. at 503, which sets out a three-part test for eligible expenses. The
CARES Act also provided other sources of funding for states and localities that allow greater ﬂexibilities in the purposes
for which funds can be used. In particular, the CARES Act appropriated additional funding for the Exchange Stabilization
Fund established under 31 U.S.C. § 5302. Pub. L. No. 116-136, § 4027, 134 Stat. at 496-97. In response, and with Treasury
approval, the Federal Reserve established the Municipal Liquidity Facility to support lending to U.S. states and the
District of Columbia, U.S. cities with a population exceeding 250,000 residents, counties with a population exceeding
500,000 residents, and multistate entities. These entities may use the loans to help manage the cash ﬂow eﬀect of
income tax deferrals resulting from an extension of an income tax ﬁling deadline; deferrals or reductions of tax and
other revenues or increases in expenses related to or resulting from the COVID-19 pandemic; and requirements for the
payment of principal and interest on obligations of its political subdivisions or other governmental entities. For more
information, see “Federal Reserve Emergency Loan Programs” in appendix III.
512These organizations included the National Governors Association, Council of State Governments, National
Conference of State Legislatures, National Association of Counties, and the U.S. Conference of Mayors.
513Pub. L. No. 116-136, § 5001, 134 Stat. at 503.
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Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance).514 The applicable Uniform Guidance requirements relate to internal controls,
subrecipient monitoring and management, and audit requirements.515 Further, the Treasury
guidance states that Treasury and OMB determined that the CRF payments are not subject
to other provisions of the Uniform Guidance that apply to federal grants, because Treasury
determined the CRF payments are not grants.
As of late May, Treasury and the Oﬃce of Management and Budget (OMB) had not issued
guidance on a number of key implementation issues.
• The CARES Act requires Treasury to recoup CRF payments if Treasury OIG determines that
recipients did not use them in accordance with the CARES Act. 516 Treasury issued guidance
stating that recipients that do not use CRF payments by December 30, 2020, as required by the
act, must return them to the Treasury of the U.S. government. However, the Treasury guidance
has not yet clariﬁed whether recipients must expend the CRF payments by the deadline, or
merely obligate them. Treasury oﬃcials told us that Treasury plans to clarify this issue in
upcoming guidance.
• Treasury oﬃcials told us they are currently working with the Treasury OIG to determine
recipient record-keeping and reporting requirements for the CRF payments. They said they
expect to publish additional guidance on the Treasury website but do not have a timeframe for
when they will publish the guidance.
• OMB expects to issue supplementary implementing guidance on Single Audit Act
requirements for COVID-19 funding later in 2020, according to OMB oﬃcials.
Public reporting of CRF payments. The CARES Act requires each agency administering COVID-
relief funds to report monthly to OMB and others on the use of those funds. OMB guidance
speciﬁes that the information agencies and recipients of COVID-19 relief funds are required
to report should be available on USAspending.gov. According to Treasury oﬃcials, Treasury
will report CRF payments through USAspending.gov, but recipients of CRF payments will not
report on their use of the CRF payments through USAspending.gov. According to Treasury
oﬃcials, CRF payments are not subject to recipient reporting because the payments are not
grants, and therefore, Treasury did not establish grant agreements containing recipient reporting
requirements with CRF recipients.
514The Single Audit Act, codiﬁed, as amended, at 31 U.S.C. §§ 7501-7506, establishes oversight requirements for
federal agencies that make federal awards to nonfederal entities (state, local, or tribal government entities or private,
nonproﬁt organizations) and audit requirements for nonfederal entities receiving federal awards. The Uniform Guidance
establishes requirements that apply to federal agencies that make federal awards to non-federal entities. Some
requirements, apply only to certain types of awards, including grants. Other requirements, including the requirement
for the non-federal entity to establish and maintain eﬀective internal controls of the federal award, apply to all types of
awards. 2 C.F.R. § 200.
5152 C.F.R. § 200.303; 2 C.F.R. §§ 200.330-200.332; and 2 C.F.R. § 200.500.
516Pub. L. No. 116-136, § 5001, 134 Stat. at 504.
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GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws; Department of the Treasury data, guidance, and
documentation; Congressional Research Service memoranda and reports; Congressional Budget
Oﬃce spending estimates; and our prior work related to emergency funding to states, localities,
territories and tribes. We interviewed Treasury oﬃcials regarding program implementation,
challenges, and monitoring and oversight plans for the CRF. We also interviewed oﬃcials from
Treasury’s Oﬃce of Inspector General regarding their monitoring and oversight responsibilities of
the CRF.
We provided a draft of this enclosure to Treasury, OMB, and the Department of the Interior
(Interior) for review and comments. Treasury provided technical comments, which we
incorporated, as appropriate. OMB and Interior did not provide comments on this enclosure.
Contact Information : Jeﬀ Arkin, (202) 512-6806, arkinj@gao.gov and Michelle Sager, (202)
512-6806, sagerm@gao.gov
Related GAO Product
Recovery Act: As Initial Implementation Unfolds in States and Localities, Continued Attention to
Accountability Issues is Essential. GAO-09-580. Washington, D.C.: Apr. 23, 2009.
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Assistance for Tribal Entities
Federal programs for tribes and their members received at least $9 billion in supplemental
funding to respond to the COVID-19 pandemic, and tribal entities may be eligible for funding
from other programs; however, federal agencies have sometimes delayed disbursements to tribal
governments or limited tribal businesses’ eligibility.
Entities involved: Government-wide
Key Considerations and Future GAO Work
Challenges identiﬁed in our past work could impede the federal government’s ability to eﬀectively
support tribes’ COVID-19 response. For example:
• Tribal consultation. In March 2019, we reported on challenges that tribes and agencies
believe hinder eﬀective consultation on infrastructure projects, including tribes’ concerns
about delayed tribal consultation and inadequate consideration of their input. As of May 31,
2020, 19 recommendations to improve federal tribal consultation processes from this report
remain unimplemented.
• Infrastructure in tribal communities. We have previously reported on infrastructure
challenges faced by tribal communities, including challenges related to broadband internet
and drinking water infrastructure. As of May 31, 2020, 16 recommendations to improve
federal activities related to infrastructure on tribal lands from two reports issued in May and
November 2018 remain unimplemented.
In future work, we plan to examine in greater depth the federal government’s delivery of funding
to tribal recipients in response to the COVID-19 pandemic and any challenges that tribes and tribal
entities have faced in accessing funds.
Background
The COVID-19 pandemic is having a disproportionate economic eﬀect on tribal communities.
Tribal governments have many of the same responsibilities as state and local governments, but
they generally cannot levy property taxes to the same extent as state and local governments
and face challenges accessing capital markets. Further, many tribal governments depend heavily
on funding from enterprises in sectors that have been adversely aﬀected by COVID-19, such as
gaming, leisure and hospitality, and energy. Closures of tribal casinos and hotels to prevent the
spread of coronavirus, and a concurrent decline in oil prices, have reduced critical sources of
revenue that tribal governments use to support health care, public safety, and other essential
services. These circumstances have also limited tribes’ ability to contribute to surrounding
economies.
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The Indian Trust Asset Reform Act states that “through treaties, statutes, and historical relations
with Indian tribes, the United States has undertaken a unique trust responsibility to protect and
support Indian tribes and Indians.”517 Excluding health care-related appropriations, which are
covered elsewhere in this report (for example, see “Indian Health Service” in appendix III), our
review of supplemental appropriations enacted in response to the COVID-19 pandemic found at
least $9 billion in appropriations for federal programs that serve tribes and their members (see
table).
517Pub. L. No. 114-178, § 101(3) (2016)(c odiﬁed at 25 U.S.C. § 5601(3)).
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Examples of Supplemental Appropriations for Programs Serving Tribes and Their Members
Department
Appropriation
Amount
(dollars in millions)
Agriculture
Food Distribution Program on Indian
Reservations
100
Education
Education Stabilization Fund allocation
for Bureau of Indian Education
programs
154
Family Violence Prevention and
Services Grants for Indian tribesa
5
Health and Human Services
Nutrition Services for Native
Americansb
30
Native American Housing Block Grants
programc
200
Housing and Urban Development
Indian Community Development Block
Grant programc
100
Bureau of Indian Aﬀairs Operation of
Indian Programsd
453
Interior
Bureau of Indian Education Operation
of Indian Education Programs
69
Treasury
Coronavirus Relief Fund Tribal
Government Set-Aside
8,000
Total
9,111
Source: Pub. L. No. 116-123, 134 Stat. 146 (2020); Pub. L. No. 116-127, 134 Stat. 178 (2020). | GAO-20-625
Notes: Values have been rounded to the nearest million.
aThe CARES Act has a $45 million line item appropriation for Family Violence Prevention and Services Formula Grants
authorized by section 303(a) of the Family Violence and Prevention and Services Act. Section 303(a)(2)(B) of the Family Violence
and Prevention and Services Act requires not less than 10% of the amount authorized for these formula grants to be used for
grants to Indian tribes.
bThe Families First Coronavirus Response Act appropriated $10 million for Nutrition Services for Native Americans, and the
CARES Act appropriated $20 million for nutrition services under Title VI of the Older Americans Act of 1965. The Nutrition
Services for Native Americans program, authorized by Title VI of the Older Americans Act of 1965 as amended, includes
nutrition services for Native Hawaiians, who are not members of federally recognized tribes.
cWithin a $300 million lump sum appropriation for HUD Native American Programs, the CARES Act appropriated not less
than $200 million for the Native American Housing Block Grants program and up to $100 million for the Indian Community
Development Block Grant program.
dNot less than $400 million of this appropriation is to be made available to meet the direct needs of tribes.
Two key sources of funding for tribal governments are as follows:
• The CARES Act created the Coronavirus Relief Fund (CRF), to be administered by the
Department of the Treasury (Treasury), and set aside $8 billion of the fund for tribal
governments, which may use these funds to cover certain costs incurred because of the
COVID-19 pandemic.
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• The Bureau of Indian Aﬀairs (BIA) received a $453 million appropriation for “Operation of
Indian Programs” to prevent, prepare for, and respond to COVID-19. Not less than $400 million
of this appropriation is to be made available to meet the direct needs of tribes.
Congress also made appropriations for other federal programs that are not exclusively for tribal
recipients, but through which tribes, tribal businesses, and organizations serving tribes may be
eligible to apply for ﬁnancial assistance to respond to the pandemic. Two key sources of funding
are as follows:
• The CARES Act established the Paycheck Protection Program and appropriated $349 billion
for the program’s initial round of funding. Congress subsequently appropriated an additional
$321 billion for the program, with $310 billion available for the Small Business Administration
(SBA) to make loans to eligible small businesses and other entities, including tribal businesses.
Recipients can use funds to cover costs including payroll, rent, and utilities.
• The CARES Act appropriated up to $454 billion and potentially certain other amounts for
Treasury to support lending programs or facilities to be established by the Board of Governors
of the Federal Reserve System (Federal Reserve) to help provide credit to eligible businesses,
states, tribes, and municipalities. According to Treasury oﬃcials, as of June 3, 2020, two of
the seven lending facilities supported with Treasury’s CARES Act funding were operational,
for which Treasury had disbursed $55 billion. According to oﬃcials from the Federal Reserve,
the Federal Reserve is not currently isolating tribally owned businesses in its reporting. (For
more information on federal facilities, see “Federal Reserve Emergency Lending Programs” in
appendix III.)
Overview of Key Issues
Although complete data are not available on disbursements of funds to tribal governments and
tribal-serving organizations to address COVID-19, as of mid-June 2020, tribal governments and
businesses had received billions in federal assistance through the CRF Tribal Set-Aside and other
sources. However, Treasury delayed disbursements to tribal governments from the Tribal Set-
Aside, and SBA initially limited some tribal businesses’ eligibility for the Paycheck Protection
Program.
• CRF Tribal Set-Aside. To determine how to allocate the Tribal Set-Aside, Treasury initially
requested that tribes submit data on population, land base, employees and expenditures
by April 17, 2020. After consultations with Indian tribes and the Department of the Interior
(Interior) and reviews of the data submitted by tribes, Treasury announced it would allocate 60
percent of the Tribal Set-Aside based on population data used for the Department of Housing
and Urban Development’s Indian Housing Block Grant program. Treasury also announced it
would distribute the remaining 40 percent at a later time based on additional employment and
expenditures data of tribes and tribally owned entities that were to be submitted to Treasury
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by May 29, 2020.518 Treasury oﬃcials we interviewed said that, in the absence of other reliable
data, population size provides a reasonable approximation of tribal expenditures related to
COVID-19.519 These oﬃcials also said that using pre-existing population data would facilitate
faster disbursement of the initial 60 percent of funding.
Additionally, in consultation with oﬃcials from Interior’s Oﬃce of the Solicitor, Treasury
interpreted the CARES Act deﬁnitions of tribal government and Indian tribe as including Alaska
Native regional and village corporations (ANCs), so they were eligible to receive payments from
the CRF Tribal Set-Aside. 520 Several tribes sued Treasury over this interpretation, and on April
27, 2020, the presiding judge granted a preliminary injunction against such disbursements. 521
As of June 17, 2020, the lawsuit is still pending.
Treasury began distributions based on population on May 5, 2020—9 days after the statutory
April 26, 2020 deadline for making payments from the CRF and 20 days after Treasury began
making payments to nontribal governments.522 According to Treasury oﬃcials, as of May 31,
2020, Treasury had distributed approximately $4.6 billion of the CRF Tribal Set-Aside to tribal
governments. On June 12, 2020, Treasury began distributing the remaining portion of the CRF
Tribal Set-Aside based on employment and expenditure data, and as of June 17, 2020, Treasury
announced that all such payments, other than payment of amounts allocated to ANCs, had
been made.523
518On June 12, 2020, Treasury announced that it would distribute 30 percent of the CRF Tribal Set-Aside based on
employment data of tribes and tribally owned entities and 10 percent based on ﬁscal year 2019 tribal government
expenditures.
519The CARES Act requires the amount of disbursements to tribal governments from the CRF Tribal Set-Aside
to be determined by the Secretary of the Treasury, in consultation with the Secretary of the Interior and Indian
tribes, based on increased expenditures of each tribal government or tribally owned entity relative to its aggregate
expenditures in ﬁscal year 2019. In contrast, the amount of CRF disbursements to states is to be based on relative
population proportion, as deﬁned in the CARES Act.
520ANCs are for-proﬁt corporations established pursuant to the Alaska Native Claims Settlement Act as vehicles for
distributing the settlement’s land and monetary beneﬁts to Alaska Natives. See GAO-13-121 for more information
about ANCs.
521The tribes challenged Treasury’s interpretation of the statutory deﬁnitions of tribal government and Indian
tribe including ANCs as contrary to the CARES Act. On April 27, 2020, the judge granted a preliminary injunction
enjoining the Secretary of the Treasury from making disbursements to ANCs from the CRF Tribal Set-Aside but
allowing Treasury to make allocations to the ANCs. Confederated Tribes of the Chehalis Reservation v. Mnuchin , Case
No. 20-cv-01002 (D.D.C. April 27, 2020).
522On April 30, 2020, several Indian tribes sued the Secretary of the Treasury over the delay in payments. On May
1, 2020, the tribes asked the court to issue an order directing the Secretary to immediately disburse the CRF Tribal
Set-Aside. On May 11, 2020, the judge declined to issue such an order but did not dismiss the lawsuit. Agua Caliente
Band of Cahuilla Indians v. Mnuchin, Case No. 20cv-01136 (D.D.C.).
523Treasury withheld $679 million from the June 12, 2020, distribution because of a lawsuit challenging the
Secretary of the Treasury’s use of Department of Housing and Urban Development’s Indian Housing Block Grant
program data to determine the amount of the CRF Tribal Set-Aside allocated to each tribe based on population
as arbitrary and capricious. Prairie Band of Potawatomi Nation v. Mnuchin, Case No. 20cv01491 (D.D.C.). However,
on June 15, 2020, the judge presiding over all the lawsuits regarding the CRF Tribal Set-Aside ordered Treasury to
disburse the $679 million no later than June 17, 2020, because the withholding to resolve any potentially adverse
decision in the Prairie Band litigation “simply cannot be justiﬁed.” Agua Caliente Band of Cahuilla Indians v. Mnuchin,
Case No. 20cv-01136 (D.D.C. June 15, 2020).
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During two April 2020 consultation sessions, several tribal leaders cited tribal governments’
unique reliance on revenue from tribally owned enterprises to fund government services and
asked Treasury oﬃcials to consider allowing tribes to use CRF funds to replace lost revenue for
government services. However, according to Treasury oﬃcials, the CARES Act prohibits using
CRF funds for revenue replacement, and Treasury subsequently issued guidance for state,
local, and tribal governments clarifying permissible uses of CRF funds. (For more information
on general CRF funds, see “Coronavirus Relief Fund” in appendix III.)
• Paycheck Protection Program. As of June 12, 2020, lenders had made approximately 4.6
million loans totaling about $512 billion, but information is not yet available on the portion of
loans that went to tribally owned businesses. In conjunction with Treasury, SBA consulted with
tribal leaders about this program on April 14, 2020. However, this was 11 days after the agency
started accepting applications and 2 days before the ﬁrst round of funding was exhausted,
which limited tribal leaders’ input on the ﬁrst round of funding. In addition, tribal gaming
businesses—an important source of employment and income for many tribes—were initially
ineligible for paycheck protection loans because of restrictions in SBA’s interim ﬁnal rule.
SBA updated its eligibility guidelines to allow legal gaming businesses to apply for paycheck
protection loans beginning on April 28, 2020, for the second round of funding. (For more
information on the Paycheck Protection Program, see “Paycheck Protection Program” in
appendix III.)
• Bureau of Indian Aﬀairs (BIA) “Operation of Indian Programs.” As of May 31, 2020, BIA
had obligated approximately $390 million and expended approximately $316 million of the
CARES Act appropriation for BIA "Operation of Indian Programs." According to BIA oﬃcials
we interviewed, most of these expenditures were distributed to tribes as “Aid to Tribal
Governments” because such aid is a relatively ﬂexible source of funding that tribes can use to
address their varied COVID-19 response needs. These oﬃcials said that the bureau is using
data on tribal enrollment to determine allocations. In addition, some of the expenditures
were distributed to tribes as welfare assistance. Furthermore, the bureau has held $20 million
of this appropriation in reserve to address unexpected contingencies as conditions warrant
additional support. BIA oﬃcials do not have a time frame for distribution of this reserve.
GAO Methodology and Agency Comments
To conduct this work, we reviewed federal laws, agency documents, documents ﬁled in federal
court, and summaries of appropriations provisions relevant to tribes and their members. We also
reviewed guidance and interviewed oﬃcials from Treasury, BIA, SBA, and other agencies. Treasury,
BIA, and SBA did not provide comments on this enclosure. The Federal Reserve provided technical
comments, which we incorporated as appropriate.
Contact information: Anna Maria Ortiz, (202) 512-3841, ortiza@gao.gov
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Related GAO Products
Tribal Consultation: Additional Federal Actions Needed for Infrastructure Projects. GAO-19-22.
Washington, D.C.: March 20, 2019.
Tribal Broadband: FCC Should Undertake Eﬀorts to Better Promote Tribal Access to Spectrum.
GAO-19-75. Washington, D.C.: November 14, 2018.
Drinking Water and Wastewater Infrastructure: Opportunities Exist to Enhance Federal Agency Needs
Assessment and Coordination on Tribal Projects. GAO-18-309. Washington, D.C.: May 15, 2018.
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Disaster Relief Fund
The CARES Act appropriated $45 billion to the Disaster Relief Fund—the primary source of federal
funding to provide disaster assistance to state, local, tribal, and territorial governments following
major disasters and emergencies declared by the President under the Robert T. Staﬀord Disaster
Relief and Emergency Assistance Act.524
Entities involved: Federal Emergency Management Agency, Department of Homeland Security
Key Considerations and Future GAO Work
The Federal Emergency Management Agency (FEMA) has yet to take action to fully implement
recommendations that could help to manage the high costs associated with providing disaster
assistance while also ensuring that disaster funding is achieving its intended results, including
in responding to the COVID-19 pandemic. For example, in September 2012, we reported that
FEMA primarily relied on a single criterion, the per capita damage indicator, to determine a
jurisdiction’s eligibility for Public Assistance program funding.525 We recommended that FEMA
update the methodology for assessing jurisdictions’ capability to respond to and recover from a
disaster without federal assistance. The Department of Homeland Security concurred, and in 2016,
FEMA proposed establishing a disaster deductible, but it abandoned this eﬀort in August 2018 in
response to public comments.
FEMA is currently exploring alternative options to update its methodology, but it has not provided
a timetable for their implementation. In June 2020, agency oﬃcials told us that FEMA had initiated
a rulemaking to update the factors considered when evaluating requests for major disaster
declarations, and that the agency plans to propose an increase in the per capita damage indicator.
FEMA now faces the diﬃcult task of eﬀectively administering major disaster declarations for
the same disaster in every state and territory while providing assistance for other disasters. To
uphold its responsibly as good steward of taxpayer money, it will be even more important than
ever for FEMA to have a sound basis for determining what kind of aid it administers. Updating its
methodology is critical to helping ensure that FEMA has an accurate assessment of a jurisdiction’s
capability to respond and recover from disasters without federal assistance.
A further key issue to consider is FEMA’s ability to deploy its workforce in response to other
disasters in addition to COVID-19. In May 2020, we reported that FEMA faced staﬃng shortages
during the 2017 and 2018 disaster seasons, 2 years that were particularly challenging due to the
number and severity of disasters experienced. We further reported that FEMA’s qualiﬁcation and
deployment processes did not provide reliable and complete staﬃng information to ﬁeld oﬃcials
524CARES Act, Pub. L. No. 116-136, div. B, tit. VI, 134 Stat. 281, 543 (2020). The Disaster Relief Fund is appropriated no-
year funding. Under the Staﬀord Act, the President may declare that a major disaster or emergency exists in response to
a governor’s or tribal chief executive’s request if the disaster is of such severity and magnitude that eﬀective response is
beyond the capabilities of a state, tribe, or local government and federal assistance is necessary. See 42 U.S.C. §§ 5170,
5191.
525The Public Assistance program provides ﬁnancial assistance to state, tribal, territorial, and local governments for
activities including debris removal; emergency protective measures; and the repair, replacement, or restoration of
disaster damaged, publicly owned facilities.
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to ensure eﬀective use of the deployed workforce. We made recommendations on this issue,
among others, which FEMA agreed to implement.
The large number of declared disasters for the COVID-19 pandemic and the lack of disaster
management experience in this area adds additional layers of complexity to FEMA’s response.
Therefore, it is critical that FEMA give leaders and managers in the ﬁeld information to help them
respond ﬂexibly and eﬀectively.
While the unprecedented nationwide use of the Disaster Relief Fund is applied to the COVID-19
response, FEMA and the federal government must also be prepared to respond when the
next disaster inevitably strikes. We will continue to monitor federal eﬀorts to respond to the
pandemic—including FEMA’s role in coordinating response and recovery eﬀorts nationwide and
federal eﬀorts to prepare for large-scale biological events—as well as challenges FEMA and other
federal agencies face in ensuring they are able to respond to major disasters and emergencies
eﬀectively and equitably.
Background
Through the Disaster Relief Fund, FEMA funds, directs, coordinates, and manages preparedness,
response, and recovery eﬀorts associated with domestic major disasters and emergencies
declared under the Robert T. Staﬀord Disaster Relief and Emergency Assistance Act (Staﬀord
Act). For example, for the COVID-related declarations, states can use FEMA’s Public Assistance
program grant funding for actions that lessen the immediate threat to public health and safety,
like standing up emergency medical facilities. In addition, FEMA’s Individual Assistance program
can also reinforce state and local services provided to help individuals cope with the pandemic,
such as for crisis counseling.526 Further, FEMA can also issue mission assignments directing
another federal agency to utilize its authorities and the resources granted to it under federal law
to provide direct assistance to state, local, tribal, and territorial governments. For example, FEMA
issued a mission order to the Department of Defense to provide 10 million N95 respirators to
FEMA to support critical equipment shortfalls during the COVID-19 response.
While the Staﬀord Act and Disaster Relief Fund have historically primarily been used to provide
assistance following natural disasters, the President has issued major disaster declarations for the
COVID-19 pandemic, and the CARES Act included an appropriation of $45 billion to the Disaster
Relief Fund, which FEMA may use to support the federal government’s public health response to
the COVID-19 pandemic. The ﬁgure below provides information on appropriations to the Disaster
Relief Fund during the last 5 ﬁscal years, including the CARES Act appropriation.
526The Individual Assistance program provides assistance to help individuals and households recover following a
disaster.
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Disaster Relief Fund Appropriations, Fiscal Years 2016–2020
FEMA had obligated about $5.8 billion for the COVID-19 response as of May 31, 2020 (see ﬁgure
below).
Federal Emergency Management Agency’s $5.8 Billion in Obligations to Respond to COVID-19 by Category, as of
May 31, 2020
Notes: Mission Assignments are work orders the Federal Emergency Management Agency (FEMA) issues that direct another
federal agency to utilize its authorities and the resources granted to it under federal law to provide direct assistance to state,
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local, tribal, and territorial governments. The Public Assistance program provides assistance to state, tribal, territorial, and
local governments for activities including debris removal; emergency protective measures; and the repair, replacement, or
restoration of disaster damaged, publicly owned facilities. The Individual Assistance program provides assistance to help
individuals and households recover following a disaster. Administrative costs for FEMA’s delivery of disaster assistance include
salary and travel costs for the disaster workforce, rent and security expenses associated with ﬁeld operation locations, and
supplies and information technology for ﬁeld operation staﬀ, among other things.
Of the $5.8 billion FEMA had obligated for responding to the COVID-19 pandemic, the state of
New York received the most—more than $1.1 billion—as of May 31, 2020. The ﬁgure below details
FEMA obligations for all states and territories as of May 31, 2020.
Federal Emergency Management Agency Obligations for COVID-19 by State and Territory, as of May 31, 2020
Notes: Funding to localities or lower-level government entities within each state is included in that state’s total.
Overview of Key Issues
The Staﬀord Act and Disaster Relief Fund have never before been used to provide assistance
in responding to a nationwide public health emergency on the scale required by the COVID-19
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pandemic. Speciﬁcally, 57 major disaster declarations have been issued simultaneously for all U.S.
states, the District of Columbia, and U.S. territories—the ﬁrst time in history this has occurred.527
The scale and scope of federal eﬀorts and funding required to address COVID-19 will continue to
increase federal disaster spending for the foreseeable future and test FEMA’s and other federal
agencies’ capacity to mount an equitable and eﬀective nationwide response. In our prior work,
we have made recommendations to FEMA and other federal agencies regarding the eﬀective and
eﬃcient use of disaster assistance funding. In response, FEMA has taken steps to address some of
these recommendations.
For example, in December 2014, we reported that while FEMA had taken steps to better control
and reduce administrative costs that support the delivery of disaster assistance, the agency lacked
an integrated plan to achieve its goals of reducing and more eﬀectively controlling costs. FEMA
took steps to implement our related recommendation, including developing an integrated plan
to better control and reduce its administrative costs for major disasters and assessing the costs
versus the beneﬁts of diﬀerent approaches to tracking administrative cost data. As of September
2019, FEMA was continuing to reﬁne its ability to track administrative costs, which will continue to
be important as FEMA obligates billions of dollars as part of the COVID-19 response.
However, as previously discussed, concerns persist in several key areas where FEMA could help
to manage the high costs associated with providing disaster assistance while also ensuring
that disaster funding is achieving its intended results, including in responding to the COVID-19
pandemic.
• Understanding jurisdictions’ capability to respond and recover from a disaster
without federal assistance. In September 2012, we reported that the per capita damage
indicator—the criterion FEMA primarily relies on when determining a jurisdiction’s eligibility
for disaster assistance through the Public Assistance program—was artiﬁcially low. Further,
we reported that FEMA’s process to determine eligibility for federal assistance does not
comprehensively assess a jurisdiction’s capability to respond to and recover from a disaster
on its own. Until FEMA takes steps to more comprehensively assess the capability of disaster-
aﬀected jurisdictions, it runs the risk of recommending that the President award federal
disaster assistance to jurisdictions that have the capacity to respond and recover on their own.
• FEMA’s ability to deploy its workforce. FEMA’s ability to deploy its workforce in response
to disasters is critical to achieving its mission. However, in May 2020, we reported that FEMA
faced staﬃng shortages due to the number and severity of recent disasters experienced and
that it was not able to provide ﬁeld oﬃcials with accurate and complete information on the
knowledge, skills, and abilities of agency personnel necessary to respond eﬀectively. Without
such information, FEMA oﬃcials faced challenges in eﬃciently providing disaster assistance,
managing staﬀ workload, and assigning responsibilities.
527Major disaster declarations include all 50 states, the District of Columbia, ﬁve territories, and the Seminole Tribe of
Florida. In addition, 32 tribal entities are working directly with FEMA under the March 13, 2020, nationwide emergency
declaration.
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GAO Methodology and Agency Comments
To conduct this work, we reviewed FEMA documentation on its disaster assistance programs and
relevant federal law, including the March 2020 CARES Act and the Staﬀord Act. We also analyzed
the most recent data on congressional appropriations and FEMA obligations for federal activities
in response to the COVID-19 pandemic. We interviewed FEMA oﬃcials regarding federal disaster
assistance eﬀorts and challenges the agency faced in eﬀectively helping aﬀected state and local
governments to respond and recover from disasters. We provided a draft of this product to
DHS for review and comment. In its comments, reproduced in appendix XII, DHS outlined the
signiﬁcant challenges facing the nation in responding to the COVID-19 pandemic and FEMA’s
lead role in addressing them. DHS also provided technical comments on this enclosure, which we
incorporated as appropriate.
Contact information: Chris Currie, (202) 512-8777, curriec@gao.gov
Related GAO Products
FEMA Disaster Workforce: Actions Needed to Address Deployment and Staﬀ Development Challenges.
GAO-20-360. Washington, D.C.: May 4, 2020.
Priority Open Recommendations: Department of Homeland Security. GAO-20-355PR. Washington, D.C.:
April 23, 2020.
Federal Emergency Management Agency: Opportunities Exist to Strengthen Oversight of Administrative
Costs for Major Disasters. GAO-15-65. Washington, D.C.: December 17, 2014.
Hurricane Sandy Relief: Improved Guidance on Designing Internal Control Plans Could Enhance
Oversight of Disaster Funding. GAO-14-58. Washington, D.C.: November 26, 2013.
Federal Disaster Assistance: Improved Criteria Needed to Assess a Jurisdiction's Capability to Respond
and Recover on Its Own. GAO-12-838. Washington, D.C.: September 12, 2012.
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International Trade
U.S. agencies have taken trade-related actions to address medical supply chain issues and support
U.S. international businesses.
Entities involved: Oﬃce of the U.S. Trade Representative, Small Business Administration,
U.S. International Trade Commission, General Services Administration, Federal Emergency
Management Agency, Export-Import Bank of the United States
Key considerations and Future GAO Work
We plan to monitor the eﬀect of COVID-19 on the medical supply chain and international trade.
Background
The World Trade Organization (WTO) warned on April 8, 2020, that global trade could drop as
much as 32 percent in 2020 as the COVID-19 pandemic disrupts the world economy. The WTO
also said that many countries are restricting exports of essential products such as face masks,
ventilators, gloves, and hand sanitizers and are not reporting these restrictions to the WTO,
making product procurement diﬃcult.
Several U.S. agencies, including the Oﬃce of the U.S. Trade Representative (USTR), have taken
steps to address trade-related issues that aﬀect the U.S. supply of such essential products and
trade in general. Agencies’ actions include easing import restrictions, such as tariﬀs on COVID-19
related products from China (see ﬁgure below); imposing export restrictions on essential products;
and providing ﬁnancing assistance to facilitate trade.
The CARES Act changed the allowed uses of the Small Business Administration’s (SBA) State Trade
Expansion Program (STEP) funds and provided relief for speciﬁed SBA 7(a) loans, including those to
help small businesses export.528
528CARES Act, Pub. L. No. 116-136, §§ 1104, 1112, 134 Stat. 281, 297 and 286 (2020).
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The Oﬃce of the U.S. Trade Representative Has Removed Import Tariﬀs from Some Products from China Related
to the COVID-19 Response, as of April 2020
Note: Categories in this ﬁgure refer to statistical reporting numbers the U.S. International Trade Commission (USITC) identiﬁed
based on the Harmonized Tariﬀ Schedule (HTS). USITC identiﬁed 112 statistical reporting numbers in total for products that are
related to the COVID-19 response. The HTS comprises a hierarchical structure for describing all goods in trade for duty, quota,
and statistical purposes; the 10-digit level is referred to as the statistical reporting number. Some HTS numbers represent
basket categories that cover more than one product. For example, HTS 6307.90.9889 includes single-use face masks made of
textile fabrics, as well as products not related to the COVID-19 response, according to USITC. The product exclusions granted
by the U.S. Trade Representative (USTR) are temporary. For example, USTR stated that the product exclusions announced in a
December 17, 2019, Federal Register notice will apply as of September 24, 2018, to August 7, 2020. See 84 Fed. Reg. 69,012 at
69,013 (Dec. 17, 2019). Pursuant to USTR guidance, interested parties can submit comments on whether USTR should extend
these exclusions for up to 12 months. See, for example, 85 Fed. Reg. 27011 (May 6, 2020).
Overview of Key Issues
• Easing import restrictions to increase the supply of COVID-19 related products
•
Easing tariﬀs on medical-care products from China. USTR—in response to the
threat of COVID-19, and in consultation with the Department of Health and Human
Services—is taking a two-fold approach to minimize the eﬀect tariﬀs on imports
from China have on the public-health response to the pandemic.529 First, USTR has
prioritized the review of existing product exclusion requests that address medical-
care products related to the U.S. response to COVID-19.530 Second, it has opened a
529Starting in July 2018, the United States levied tariﬀs, currently at 7.5 and 25 percent, on an eventual total
of $550 billion worth of imports from China, covering a wide variety of products, as part of an ongoing trade
action under Section 301 of the Trade Act of 1974. Under Section 301, USTR found that certain acts, policies,
and practices of the government of China related to technology transfer, intellectual property, and innovation
are unreasonable or discriminatory, and burden or restrict U.S. commerce.
530USTR has a process for U.S. importers to obtain tariﬀ relief on speciﬁc products from China—known as
product exclusions—if the request meets certain criteria. If granted, these product exclusions are temporary.
For example, USTR stated that the product exclusions announced in a December 17, 2019, Federal Register
notice will apply as of September 24, 2018, to August 7, 2020. See 84 Fed. Reg. 69,012 at 69,013 (Dec. 17, 2019).
Pursuant to USTR guidance, interested parties can submit comments on whether to extend these exclusions
for up to 12 months. See, for example, 85 Fed. Reg. 27011 (May 6, 2020).
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new regulations.gov docket to receive public comments at least until June 25, 2020,
on possible further modiﬁcations to remove the section 301 tariﬀs from additional
medical-care products.531 In March 2020, USTR granted approximately 200 exclusion
requests for medical-care products related to the COVID-19 response, including
personal protective equipment (PPE) such as certain disposable gloves and masks
and other medical-care-related products. Unless extended, these exclusions are
scheduled to expire between August and September 2020. The U.S. International
Trade Commission (USITC) identiﬁed 112 statistical reporting numbers representing
categories of products related to COVID-19 response based on the Harmonized Tariﬀ
Schedule (HTS) at the 10-digit level.532 According to a USITC report, 55 of the 112 were
subject to the section 301 tariﬀs on imports from China; of the 55, 28 were either
wholly or partially excluded from the tariﬀ, and the other 27 were still entirely subject
to 301 tariﬀs, as of April 2020. (See ﬁgure). Eliminating these tariﬀs may reduce the
price of imports.
•
Waiving restrictions on government purchases of certain foreign products.
On April 3, 2020, the General Services Administration’s (GSA) Senior Procurement
Executive determined that certain supplies to combat COVID-19 may be acquired
by U.S. government agencies without regard to the domestic preference restrictions
imposed by the Trade Agreements Act of 1979 (TAA) and the Buy American Act of
1933, as amended (BAA). The BAA prohibits U.S government agencies from buying
foreign products unless certain exceptions apply. There are a number of U.S. trade
agreements with foreign countries that waive the BAA restrictions for certain products.
In addition, as a matter of U.S. trade policy under the TAA, certain procurements are
restricted to U.S.-made or designated country products and services. The restrictions
imposed by the TAA and BAA are implemented in the Federal Acquisition Regulation.
GSA concluded that waivers of these domestic preference restrictions were warranted
based on the scarcity of domestic supply of N95 masks; sodium hypochlorite (i.e.,
bleach); disinfectants, including cleaners, sprays, and wipes; cleaners including
sanitizing surface and ﬂoor cleaners; hand sanitizers; soaps; and dispensers.
•
Imposing export restrictions to maintain U.S. supply of key medical goods. On
April 10, 2020, the Federal Emergency Management Agency (FEMA) issued a temporary
rule restricting the U.S. export of certain medical equipment through August 10, 2020,
without the agency’s explicit approval. The restrictions apply to scarce or threatened
medical supplies critical to COVID-19 response eﬀorts such as certain facepiece
respirators, surgical masks, and gloves. Under the rule, U.S. Customs and Border
Protection will temporarily detain shipments of these items while FEMA determines
531According to USTR, certain critical medical products—such as ventilators, oxygen masks, and
nebulizers—were never subject to Section 301 tariﬀs on products from China. For those health-related
products that were subject to Section 301 tariﬀs on products from China, USTR stated that it has assessed
medical necessity in reviewing product exclusion requests.
532The HTS is a hierarchical structure for describing all goods in trade for duty, quota, and statistical purposes.
The U.S. government tracks goods being imported into the country at the HTS 10-digit level, also referred to
as statistical reporting numbers. Some HTS numbers represent basket categories that cover more than one
product. See United States International Trade Commission, COVID-19 Related Goods: U.S. imports and Tariﬀs,
Investigation No. 332-576, USITC Publication 5047 (Washington, D.C.: April 2020).
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whether to allow the shipment, return the items for domestic use, or purchase the
items for the U.S. government. According to the rule, FEMA will consider various
factors in its decision-making, including the need to ensure the appropriate allocation
of scarce or threatened items for domestic use, minimize supply chain disruptions, and
consider humanitarian and diplomatic concerns. On April 21, 2020, FEMA announced
a number of exemptions to the export restrictions, including shipments to certain
destinations, intracompany transfers, and merchandise transiting the United States.
• Financing assistance to maintain international trade
•
Easing Export-Import Bank of the United States (EXIM) funding. As part of the
government’s response to the COVID-19 pandemic and to help American businesses
facilitate international sales and compete in the global marketplace, EXIM has taken
temporary measures to provide relief to exporters and ﬁnancial institutions, as well
as restrict its export support for certain scarce medical supplies.533 In March 2020,
EXIM announced several new or expanded ﬁnancing initiatives, eﬀective through
April 2021, to support U.S. exporters by addressing temporary liquidity problems
caused by the pandemic. These initiatives include new short-term bridge ﬁnancing
for foreign customers of U.S. exporters, expanded pre-export ﬁnancing to support
progress payments on manufactured capital goods, expanded supply chain ﬁnancing
for suppliers, and increased ﬂexibility in EXIM’s working capital guarantees. Both the
supply chain and working capital programs are primarily used by small businesses.
Additionally, for certain loan guarantee and insurance programs, EXIM has waived
reporting requirements, extended certain reporting and payment deadlines, and
streamlined insurance policy renewal processing, among other ﬂexibilities, through
the end of August 2020. EXIM has also temporarily restricted export support for U.S.
medical supplies and equipment, such as PPE, that the government has designated as
being in short supply and required for the domestic response to the pandemic. These
temporary exclusions of COVID-19 related medical supplies from EXIM’s loan, loan
guarantee, and insurance programs will remain in place through September 30, 2020,
unless the EXIM Board of Directors votes to lift them earlier.
•
Changes in allowed uses of SBA’s STEP grant funds. The CARES Act allows for grants
made with funding available in ﬁscal years 2018 and 2019 to continue until the end
of ﬁscal year 2021.534 The act also directs SBA to reimburse recipients of STEP funds
for ﬁnancial losses due to the cancellation of foreign trade missions or trade show
exhibitions solely due to a public health emergency declared due to COVID-19, as
long as the reimbursement does not exceed the recipient’s grant funding.535 The
STEP program provides grants to states to help develop local small businesses’ export
capacity. In ﬁscal years 2018 and 2019, SBA announced that the program awarded $18
533EXIM’s mission is to support the export of U.S. goods and services overseas through loans, loan guarantees,
and insurance, thereby supporting U.S. jobs.
534Pub. L. No. 116-136, § 1104, 134 Stat. at 297.
535 Id.
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million each year in grants to state grantees, and reported providing grants to 47 and
41 states, respectively.
•
Providing SBA Export loan relief. The CARES Act provides temporary relief related to
SBA’s 7(a) loans, which include loans intended to help small businesses export.536 The
act requires SBA to pay the principal, interest, and any associated fees that are owed
on certain 7(a) loans for a 6-month period.537
GAO Methodology and Agency Comments
To conduct this work, we reviewed the most recent agency data as of May 2020; reviewed agency
announcements and guidance from the USTR, USITC, GSA, FEMA, EXIM, and SBA; and reviewed
applicable federal laws and regulations and our related past work. We incorporated technical
comments from agencies as appropriate.
Contact information: Kimberly Gianopoulos, (202) 512-8612, gianopoulosk@gao.gov
Related GAO Products
International Trade: Foreign Sourcing in Government Procurement. GAO-19-414. Washington, D.C.:
May 30, 2019.
Small Business Administration: Export Promotion Grant Program Should Better Ensure Compliance with
Law and Help States Make Full Use of Funds. GAO-19-276. Washington, D.C.: March 12, 2019.
Buy American Act: Actions Needed to Improve Exception and Waiver Reporting and Selected Agency
Guidance. GAO-19-17. Washington, D.C.: December 18, 2018.
536Pub. L. No. 116-136, § 1112(c), 134 Stat. at 309. The 7(a) loan program is SBA’s primary program for
providing ﬁnancial assistance to small businesses. The terms and conditions, like the guaranty percentage
and loan amount, may vary by the type of loan. SBA’s 7(a) programs that support international trade include
the Export Express program, the Export Working Capital program, and the International Loan program. These
loans are available to U.S. small businesses that export directly overseas, or those that export indirectly by
selling to a customer that then exports their products.
537Pub. L. No. 116-136, § 1112(c), 134 Stat. at 309.
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Response Eorts Abroad
In response to supplemental appropriations of about $3 billion to respond to COVID-19 abroad,
the Department of State, the U.S. Agency for International Development, and the Centers for
Disease Control and Prevention developed strategies and began to allocate these new funds.
Entities involved: Department of State, U.S. Agency for International Development, Centers for
Disease Control and Prevention.
Key Considerations and Future GAO Work
We have ongoing work reviewing U.S. agencies’ pre-COVID-19 eﬀorts to build other countries’
capacity to prevent, detect, and respond to infectious disease threats. We also have ongoing work
reviewing the services and support that the Department of State (State) provides to American
citizens abroad, including repatriation during the recent COVID-19 crisis.
Background
COVID-19 has reached every country around the globe. The United Nations reported that although
the peak of the disease in the world’s poorest countries is not expected until the late summer
or fall of 2020, there is already evidence of severe economic and public health impacts. State
and the U.S. Agency for International Development (USAID) warn that COVID-19 is expected to
cause signiﬁcant economic and social disruption, and could overwhelm health care institutions
and lead to a multisector emergency. Longer-term impacts could reverse valuable economic and
development gains made over many years.
The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, and the
CARES Act provided about $2.2 billion in supplemental funding to accounts for diplomatic and
foreign assistance programs, administered by State and USAID, to respond to COVID-19 abroad.538
Through the same two acts, Congress also designated at least $800 million of the Centers for
Disease Control and Prevention’s (CDC) COVID-19 supplemental appropriations for CDC’s global
538See Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat.
146 (2020); and CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020). The Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020, and the CARES Act also granted State and USAID additional authorities,
including the authority to transfer certain funds and to provide additional paid leave to address employee hardships
resulting from COVID-19. See e.g. Pub. L. No. 116-123, § 402, 134 Stat. at 153; and Pub. L. No. 116-136, § 21007, 134 Stat.
at 592. In addition, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, increased
the amount of certain previously appropriated Diplomatic Programs funds that State can transfer for emergency
evacuations and rewards. Pub. L. No. 116-123, § 403, 134 Stat. at 154. The supplemental funding also provided $95
million to USAID for operating expenses and $1 million to the USAID Oﬃce of Inspector General for COVID-19 related
work. Pub. L. No. 116-123, tit. IV, 134 Stat. at 152; Pub. L. No. 116-136, div. B, tit. XI, 134 Stat. at 590. We did not include
these funds in the $2.2 billion total of supplemental funding for State and USAID for diplomatic and foreign assistance
programs.
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disease detection and emergency response.539 State and USAID developed a strategy for the
use of the $2.2 billion, which is organized under four pillars (see ﬁgure below). Similarly, CDC
developed a strategy for its global response to COVID-19 that will focus on supporting priority
countries, multilateral institutions, and vulnerable populations to mitigate the global impact of the
pandemic. As discussed earlier in this report, all three agencies also undertook COVID-19 response
activities prior to receiving supplemental funds, including State eﬀorts to repatriate U.S. citizens
and USAID and CDC eﬀorts to help other countries respond to the pandemic.
March 2020 State and USAID Strategy for Using Supplemental Funding to Respond to COVID-19 Abroad
Overview of Key Issues
State and USAID reported allocating about $1.2 billion in supplemental funding, as of May 20,
2020, to respond to COVID-19 across the four pillars in their strategy including both diplomatic and
foreign assistance programs. Pillar 1 focuses on U.S. citizens and operations, whereas Pillars 2 to 4
focus on helping other countries respond to the COVID-19 pandemic. Of the $1.2 billion allocated,
State and USAID allocated about $800 million in foreign assistance for more than 100 countries, as
of May 20, 2020. (See ﬁgure below.)
539Pub. L. No. 116-123, tit. III, 134 Stat. at 147; Pub. L. No. 116-136, div. B, tit. VIII, 134 Stat. at 554.
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Department of State and U.S. Agency for International Development Allocations of Supplemental Funding for
COVID-19-Related International Assistance, as of May 20, 2020, by Geographic Region
Note: “Other” funding includes global assistance, central operating units, and monitoring and evaluation. Total may not add up
due to rounding.
• Pillar 1: Protecting U.S. Citizens and Maintaining U.S. Operations. State reported allocating
$398 million of $588 million in supplemental funding under Pillar 1 as of May 6, 2020. Among
other things, this included
•
approximately $141 million to maintain consular operations, which faced lost revenues
from a drop in visa and passport applications;
•
approximately $54 million to increase the department’s domestic and overseas
telework capacity; and
•
almost $106 million for the Bureau of Medical Services, for multiple eﬀorts to continue
eﬀectively and safely achieving State’s mission overseas. Such eﬀorts included
purchasing personal protective and testing equipment, targeted hiring, and adding
capacity for medical evacuation travel to the United States.
• Pillar 2: Global Health Assistance. USAID reported allocating $200 million in supplemental
funding to provide health assistance for 83 countries, as of May 20, 2020.540 Planned
interventions in countries aﬀected by and at risk of COVID-19 include preventing and
controlling infections in health facilities; conducting contact tracing; improving readiness to
rapidly identify and treat cases; raising awareness in populations through risk-communication;
screening people at points of entry and exit; and purchasing key commodities.
• Pillar 3: Humanitarian Assistance. State and USAID reported allocations of nearly $460
million in supplemental funding for humanitarian assistance, as of May 2020. This included
$300 million in International Disaster Assistance (IDA) account funds, managed by USAID,
540USAID also provided health assistance in response to COVID-19 to additional countries with nonsupplemental
emergency funds.
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for 29 countries and nearly $160 million in Migration and Refugee Assistance (MRA) account
funds, managed by State, for 52 countries.
•
IDA. IDA allocations will focus on mitigating widespread transmission of COVID-19;
addressing public health consequences; and maintaining essential health services for
crisis-aﬀected populations, particularly displaced people. To accomplish this, USAID
aims to augment ongoing health; water, sanitation, and hygiene; and protection
interventions in existing humanitarian contexts. Future allocations will aim to
address emergency food assistance needs and the economic impact of COVID-19 in
humanitarian settings in order to prevent further deterioration of pre-existing crises,
according to USAID oﬃcials.
•
MRA. MRA allocations will aid international organizations and nongovernmental
organization partners in addressing challenges posed by the pandemic. Of the nearly
$160 million allocated, as of May 20, 2020, State reported obligating $64 million to
the United Nations High Commissioner for Refugees for its multisectoral COVID-19
response in 30 countries worldwide. Activities funded with MRA funds are similar
to those funded with IDA funds, but focus on the needs of speciﬁc populations of
concern, including refugees, victims of conﬂict, internally displaced persons, and
stateless persons.541
• Pillar 4: Economic and Development Assistance. According to USAID, State and USAID have
allocated about $150 million in supplemental funding under Pillar 4 for 18 countries, as of May
20, 2020.542 While the Pillar 4 objective includes addressing second-order economic, civilian-
security, stabilization, and governance eﬀects of COVID-19, State oﬃcials told us that the
initial focus is on emergency and short-term needs. Examples of initial activities identiﬁed by
USAID and State for the allocation include distance and alternative education while schools are
closed, cash assistance to vulnerable families, job skills training, and child protection services.
The allocations under Pillar 4 included $50 million for Italy to mitigate the social, economic,
and community eﬀects of the pandemic there; procure health supplies; and support Italian
businesses that are engaged in the research, development, or manufacture of therapeutics,
vaccines, and medical equipment and supplies for COVID-19.
With respect to CDC, the agency had developed plans for $300 million of its $800 million in
supplemental funding designated for global eﬀorts and, as of May 19, 2020, had obligated
nearly $37 million, according to CDC oﬃcials. CDC’s plans encompass several technical areas,
including laboratory, surveillance, and epidemiology; border health and community mitigation;
infection prevention, control, and preparedness in health care facilities; and pandemic and vaccine
preparedness planning. CDC oﬃcials noted that the agency has also identiﬁed nearly 60 priority
countries to which to target this assistance and that the list of priority countries will continue to
541USAID and State have a memorandum of understanding to share and concur on funding plans in contexts
where both provide humanitarian assistance to help ensure that assistance is not duplicative, according to
State oﬃcials.
542The total of 18 countries supported under Pillar 4 does not include additional countries that may have received
assistance through regional allocations.
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grow. As of June 1, 2020, CDC stated that it was still developing plans for the use of its remaining
$500 million in supplemental funding.
GAO Methodology and Agency Comments
To conduct this work, we reviewed the agencies’ strategy and guidance documents on the use of
supplemental funding; interviewed State, USAID, and CDC oﬃcials; and reviewed congressional
notiﬁcations and agency fact sheets related to COVID-19 response eﬀorts.
We provided a draft of this enclosure to State, USAID, and CDC for their review and comments.
USAID provided written comments, reproduced in appendix XI, highlighting the agency’s use
of supplemental funding to date to respond to COVID-19 abroad. In addition, State and USAID
provided technical comments, which we incorporated as appropriate. CDC did not provide
comments.
Contact information: David Gootnick, (202) 512-3149, gootnickd@gao.gov
Related GAO Products
Emergency Assistance for Zika: USAID Supported Activities Overseas but Could Improve Funds Tracking
and Response Planning. GAO-19-356. Washington, D.C.: May 13, 2019.
Ebola Recovery: USAID Has Initiated or Completed Most Projects, but a Complete Project Inventory Is
Still Needed for Evaluating Its Eﬀorts. GAO-18-350. Washington, D.C.: March 28, 2018.
Embassy Evacuations: State Department Should Take Steps to Improve Emergency Preparedness.
GAO-17-714. Washington, D.C.: July 17, 2017.
State Department: Wide Range of Emergency Services Provided to American Citizens Overseas, but
Improved Monitoring Is Needed. GAO-09-989. Washington, D.C.: September 24, 2009.
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Appendix IV: GAO Indicators for Monitoring Areas of the
Economy and Health Care System Supported by the Federal
Pandemic Response
This appendix provides additional information on the economic indicators on which we plan to
report going forward. The indicators are intended to facilitate ongoing and consistent monitoring
of areas of the economy and health care system supported by the federal pandemic response,
including (1) labor markets, (2) households, (3) small business credit markets, (4) corporate credit
markets, and (5) markets related to state and local government ﬁnances, and (6) the ﬁnancial
condition of the health care sector.
Indicators of Labor Market Stress
We plan to monitor and report on various indicators related to labor market stress and
employment conditions. A number of factors will likely inﬂuence trends in these indicators over
time, requiring more rigorous methods to assess the role of any one factor.
• Initial unemployment insurance claims. Initial unemployment insurance claims are a
measure of emerging unemployment. An initial claim is a claim ﬁled by an unemployed
individual after a separation from an employer. 543 Initial unemployment insurance
claims data are produced weekly by the Department of Labor’s Employment and Training
Administration. Changes in the initial unemployment insurance claims over time provide a
general indication of stress in labor markets, particularly as workers not typically covered
by unemployment insurance, including self-employed workers, have been granted potential
unemployment insurance eligibility under the CARES Act.
• Two key aspects of the federal pandemic response may inﬂuence initial unemployment
insurance claims. One provision enhances unemployment insurance beneﬁts by expanding
eligibility for unemployment compensation beneﬁts, increasing weekly beneﬁt amounts by
$600, and extending the number of weeks of beneﬁt eligibility. The second, the Paycheck
Protection Program (PPP), is aimed at small businesses and provides funding to guarantee
loans to small businesses and other eligible entities, which may be forgiven up to the amount
borrowed if recipients meet criteria such as maintaining employee and compensation levels
during the loan’s covered period. Both of these programs aim to ﬁnancially support workers
and the economy, but businesses may have varied reactions when weighing the decision to
lay oﬀ their workers. While some businesses may receive a PPP loan and keep employees on
543Pub. L. No. 116-136, 124 Stat. 281 (2020). The individual claiming unemployment insurance requests a
determination of basic eligibility for the program. When an initial claim is ﬁled with a state, each state generates
counts of initial claims. According to the Department of Labor, each state sets its own unemployment insurance
beneﬁts eligibility guidelines, but generally an individual qualiﬁes if the individual is unemployed through no fault of
his or her own. In most states, this means an individual has to have separated from his or her last job due to a lack
of available work.
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their payrolls, others may be inclined to lay oﬀ employees, making them potentially eligible for
enhanced unemployment beneﬁts.
• To the extent that these programs inﬂuence businesses’ decisions to remain in operation
and maintain employment, trends over time in initial unemployment insurance claims could
to some degree reﬂect the eﬀect of these programs. In the last two weeks of March, before
the enactment of the CARES Act, over 10 million individuals ﬁled initial unemployment
insurance claims, indicating signiﬁcant emerging labor market stress. Since the enhanced
unemployment insurance and other provisions of the CARES Act and related legislation have
been implemented, over 32 million additional initial unemployment insurance claims have
been ﬁled (see ﬁg. 16). 544
Figure 16: National Weekly Initial Unemployment Claims, January 5, 2019 to May 30, 2020
Notes: National initial unemployment insurance claims data include the 50 states, the District of Columbia, Puerto Rico, and
the Virgin Islands. Figure includes data retrieved on June 6, 2020, and covers weekly claims from January 5, 2019 through May
30, 2020. Recent initial unemployment insurance claims totals may understate emerging unemployment due to capacity issues
that may have limited or delayed successful claim ﬁling in many states. Initial unemployment claim totals may also understate
emerging unemployment of workers who qualify for the Pandemic Unemployment Assistance (PUA) program, as states have
diﬀerent processes for processing claims under this program since its implementation in May 2020. According to Department
of Labor, in some states, workers eligible for PUA may ﬁrst submit an unemployment insurance claim, but in other states, these
workers can apply directly for the PUA program, which are not counted as initial unemployment claims.
• Employment-to-population ratio. The employment-to-population ratio measures the
share of the civilian labor force currently employed relative to the civilian noninstitutional
population over 16 years old. This ratio provides information on the ability of the economy to
provide employment, making it a particularly useful indicator of labor market stress during
the pandemic. This indicator may have advantages in the current economic environment
compared to the oﬃcial unemployment rate, which excludes unemployed individuals who are
not actively searching for work. 545 The employment-to-population ratio is produced monthly
544Recent initial unemployment insurance claims totals may understate emerging unemployment due to capacity
issues that may have limited or delayed successful claim ﬁling in many states.
545 Given health concerns related to the pandemic and widespread state-level policies that limit certain economic
activity, work search requirements have largely been relaxed resulting in a signiﬁcant segment of the workforce
not actively searching for employment. As a result, traditional measures of unemployment will be less reliable
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by the Bureau of Labor Statistics (BLS), including demographic breakdowns by age, sex, race
and ethnicity, education, as well as geographic breakdowns by region and state. 546 BLS also
produces monthly data on total employment by industry. 547 To the extent that the federal
response to the pandemic inﬂuences the likelihood that businesses maintain their levels of
employment, trends in the employment-to-population ratio could be useful in assessing the
eﬀect of the federal response to some degree. In May 2020, the employment-to-population
ratio was 52.8 percent meaning that 52.8 percent of the civilian noninstitutional population
was employed, an increase of 1.5 percentage points from April when the series hit an all-time
low. Percent declines in the employment-to-population ratios from March to May were larger
for African-American and Hispanic workers compared to white workers, and were also larger
for those without a bachelor’s degree. Leisure and hospitality had the largest decreases in
employment between March and May 2020.
Indicators of Household Financial Stress
We plan to monitor and report on a number of indicators related to household ﬁnancial stress. A
number of factors will likely inﬂuence trends in these indicators over time, requiring more rigorous
methods to assess the role of any one factor.
• S&P/Experian Consumer Credit Default Composite Index. The S&P/Experian Consumer
Credit Default Composite Index measures the proportion of consumer credit account balances
that enter default across auto loans, ﬁrst and second mortgages and bank cards each month.
548 This index is a timely measure of households’ ability to make scheduled payments and
tends to ﬂuctuate over time based on economic activity. It previously spiked in 2009 during the
Great Recession.
We plan to monitor and report on this index, as well as its sub-indices that independently
track auto loans, mortgages, and bank cards. Changes in these indices over time should
provide a general indication of changes in the ﬁnancial condition of households. To the extent
enhanced unemployment insurance and other programs inﬂuence households’ ability to
indicators of labor market stress. While both the employment-to-population ratio and the unemployment rate will
be sensitive to how BLS measures the number of employed individuals, calculating the employment-to-population
ratio requires fewer assumptions and will be more stable to ﬂuctuating measures of who is in the labor force.
546 BLS produces state-level estimates of employment-to-population ratios, as a part of its Local Area
Unemployment Statistics program. While the national employment-to-population ratio is based on the household
survey, the state-level employment-to-populations ratios are synthetic estimates using modeling to estimate
unemployment at smaller geographic areas than the household survey.
547 BLS employment statistics are primarily based on two monthly surveys. A survey of households is used to
measure labor force status, including unemployment, by demographic characteristics. A survey of establishments is
used to measure nonfarm employment, hours, and earnings by industry.
548Default is deﬁned as 90 days past due or worse for auto loans, ﬁrst and second mortgages, and 180 days
past due or worse for bank cards. Bankruptcy, repossession, and write-oﬀs also constitute default. This index is
calculated based on data extracted from a representative sample of 14 million loan-level payment data sourced
directly from lenders included in Experian's consumer credit database.
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make scheduled payments, trends over time in these indices could, to some degree, reﬂect the
eﬀect of these programs. In recent years, the proportion of consumer credit account balances
that enter default across auto loans, ﬁrst and second mortgages and bank cards have been
relatively stable. However, as of April 2020, bank card defaults are rising and are currently at
their highest level since 2012.
• Supplemental Nutrition Assistance Program (SNAP) Household Participation. U.S.
Department of Agriculture’s Food and Nutrition Service reports the number of low-income
families who participate in SNAP (formerly the Food Stamp program), the largest food
assistance program and one of the largest safety net programs in the United States. The
program serves a wide range of low-income households, including families with children, the
elderly, and individuals with disabilities. While the SNAP program is intended to reduce food
insecurity, the number of households participating in SNAP can be interpreted as a measure
of the demand for food assistance. Historically, the number of households that participate in
SNAP has tended to decrease as household ﬁnancial conditions improve.
We plan to monitor and report the number of households participating in SNAP based on
monthly data, including diﬀerences across states. Changes in the number of households
participating in SNAP over time should provide a general indication of changes in the ﬁnancial
condition of households. To the extent that enhanced unemployment insurance, recovery
rebates, and other programs provide ﬁnancial support to households, trends over time in
SNAP participation could to some degree reﬂect the eﬀect of these programs. Available
data on the number of households participating in SNAP do not yet cover a time period that
would include the eﬀect of Coronavirus Disease 2019 (COVID-19) or federal responses to the
pandemic, in particular actions taken under the four COVID-19 relief laws enacted at the time
of our review.549 However, since 2012, SNAP participation has declined, which suggests an
increase in food security in recent years. 550
Indicators of Small Business Credit Market Conditions
We plan to monitor and report on a number of indicators related to small businesses and their
ability to access credit markets. A number of factors will likely inﬂuence trends in these indicators
over time, requiring more rigorous methods to assess the role of any one factor.
• Small Business Health Index. The Small Business Health Index (SBHI), produced by Dun &
Bradstreet, combines information on the timeliness of payments, failure rates, and utilization
549The four COVID-19 relief laws enacted at the time of our review include the Coronavirus Preparedness and
Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146; the Families First Coronavirus
Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); the CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020);
and the Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020).
In this report, we refer to these four laws as “COVID-19 relief laws.”
550 Changes in SNAP ﬂexibilities could also inﬂuence SNAP participation.
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of credit of a large sample of active small businesses with fewer than 100 employees. 551
The index is a timely measure of the ﬁnancial condition of small businesses. The index tends
to increase as economic conditions improve. We plan to monitor and report on changes in
the SBHI based on Dun and Bradstreet’s monthly index for the United States as a whole. 552
Changes in this index over time should provide a general indication of changes in the ﬁnancial
condition of small businesses.
To the extent that the PPP and other aspects of the federal pandemic response inﬂuence the
ﬁnancial condition and credit available to small businesses, trends over time in this index
could to some degree reﬂect the eﬀect of these programs. The SBHI has been falling gradually
over the last year, and in April 2020, the index fell at a faster rate than any time over the last
year.553
• Spreads on small business loans. Spreads on small business loans relative to benchmark
interest rates (e.g., Treasury interest rates) measure the premium small business borrowers
must pay to compensate lenders for taking a number of risks. For example, the risk of loss due
to default (risk premium) and the risk that investors will be unable to exit their investments
in a timely manner or at low cost (liquidity premium). These spreads are a key measure of the
cost and availability of credit and tend to ﬂuctuate over time based on economic conditions.
That is, spreads tend to increase as perceived economic risk increases—lenders demand
greater returns to compensate for increased risk—and spreads tend to shrink as perceived
economic risk falls. We plan to calculate these spreads based on survey data collected by the
Federal Reserve Bank of Kansas City via its quarterly Small Business Lending Survey. 554
Changes in these spreads over time should provide a general indication of changes in credit
conditions facing small business borrowers. Spreads on small business loans have increased
substantially in the ﬁrst quarter of 2020, which signals an increase in perceived risk associated
with making those loans.
• Underwriting standards on small business loans. Underwriting standards on small
business loans measure the selectivity of lenders in determining to which small business
borrowers they should extend credit. Given that lenders may ration credit, changing the
composition of borrowers as economic conditions change, interest rate spreads may not
provide a complete picture of the availability of credit. Loan underwriting standards therefore
provide additional information on the availability of credit. Underwriting standards tighten as
perceived economic risk increases—lenders focus on higher quality borrowers as the economy
weakens—and underwriting standards loosen as perceived economic risk falls. We plan to
report changes in loan underwriting standards on bank loans to small businesses based on
551 The SBHI is calculated based on a sample of 10 million business with fewer than 100 employees, based on
an average of four components: failure rates, credit card utilization, and the percentage of credit card and other
outstanding balances that are past due. The index level is set relative to 2004 as the base year with a level of 100.
552Additional information from the index is available for diﬀerent Metropolitan Statistical Areas and industries. The
major industry groups are manufacturing, transportation, retail, real estate, business services, personal services,
construction and automotive.
553GAO is reporting these data under license and permission from Dun & Bradstreet and no commercial use can be
made of these data.
554 In this survey, small businesses are deﬁned as those with $5 million or less in annual gross revenue.
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survey data collected by the Board of Governors of the Federal Reserve System via its Senior
Loan Oﬃcer Opinion Survey and by the Federal Reserve Bank of Kansas City via its quarterly
Small Business Lending Survey. 555
Changes in these underwriting standards over time should provide a general indication
of changes in credit conditions facing small business borrowers. Between 2017 and 2019,
underwriting standards on small business loans made by banks were relatively stable, with
relatively few banks making signiﬁcant changes to standards. However, substantially more
banks tightened loan standards in the ﬁrst quarter of 2020 (see ﬁg. 17).
Figure 17: Net Percentage of Banks Tightening Standards for Small Business Loans, First Quarter of 2015-Second
Quarter of 2020
Note: We report results from the Board of Governors of the Federal Reserve System’s Senior Loan Oﬃcer Opinion Survey, which
summarizes changes in underwriting by the “net percentage” of banks tightening underwriting standards on various classes of
loans—that is, the percentage of banks reporting that they have tightened standards minus the percentage of banks reporting
that they have loosened standards. A positive number indicates that more banks are tightening than loosening standards.
Based on the timing of survey completion, each quarter of the survey generally corresponds to the past quarter. For example,
the second quarter of 2020 of the survey corresponds to the ﬁrst quarter of 2020.
• Other indicators. We also plan to monitor other measures of small business ﬁnancial
conditions, including proprietor’s income from the Bureau of Economic Analysis and monthly
measures of small business sentiment and credit availability from the National Federation of
Independent Business.
Indicators of Corporate Credit Market Conditions
We plan to monitor and report on a number of indicators related to corporations and their ability
to access credit markets. A number of factors will likely inﬂuence trends in these indicators over
time, requiring more rigorous methods to assess the role of any one factor.
555 In this survey, small business are deﬁned as those with $50 million or less in annual sales.
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• Spreads on corporate bonds. Spreads on corporate bonds relative to benchmark interest
rates (e.g., Treasury interest rates) measure the premium corporate borrowers must pay
to compensate lenders for taking on the risk of loss due to default (risk premium) and
for foregoing investments in more liquid assets (liquidity premium). These spreads are a
key measure of the cost and availability of credit and tend to ﬂuctuate over time based
on economic conditions. That is, spreads tend to increase as perceived economic risk
increases—lenders demand greater returns to compensate for increased risk—and spreads
tend to shrink as perceived economic risk falls.
We plan to monitor and report spreads on aggregations of dollar-denominated investment
grade corporate bonds available via Bloomberg, including diﬀerences in spreads across
various industries. 556 Changes in these spreads over time provide a general indication of
changes in credit conditions facing corporations in those various industries. To the extent that
the Federal Reserve’s lending facilities—some supported by funds appropriated under the
CARES Act to the Treasury’s Exchange Stabilization Fund—and other aspects of the federal
pandemic response, inﬂuence the cost and availability of credit to corporations, trends over
time in these spreads could to some degree reﬂect the eﬀect of these programs.
Investment grade corporate bonds spreads increased substantially from late February until
March 23, 2020, falling signiﬁcantly after the Federal Reserve announced facilities principally to
purchase investment grade corporate bonds and lend directly to corporations with investment
grade credit ratings (see ﬁg. 18).
556 We will also monitor changes in spreads on high yield or so-called “junk” bonds, including relative to changes in
spreads on investment grade bonds.
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Figure 18: Spreads on Investment Grade Corporate Bonds, January 2019 to May 2020
Note: Corporate bond spreads are measured in basis points or 1/100th of a percentage point.
Indicators of State and Local Government Finances
We plan to monitor and report on a number of indicators related to the ﬁscal health of state and
local governments. A number of factors will likely inﬂuence trends in these indicators over time,
requiring more rigorous methods to assess the role of any one factor.
• Spreads on municipal bonds. Spreads on municipal bonds relative to benchmark interest
rates (e.g., Treasury interest rates) incorporate the favorable tax treatment received
by municipal debt and may also reﬂect any premium state and local borrowers pay to
compensate lenders for taking on the risk of loss due to default (risk premium) and for tying
up their investment funds for a period of time (liquidity premium). These spreads are a timely
measure of the cost and availability of credit to state and local governments and previously
spiked in late 2008 at the height of the 2007-2009 ﬁnancial crisis. We plan to monitor and
report spreads calculated based on the Bloomberg Barclays Municipal Bond Index.557
557Municipal bond spreads are calculated using yield to worst on the Bloomberg Barclays Municipal Bond Index
which results in a conservative—that is, lower—estimate of potential returns on callable bonds.
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Changes in these spreads over time should provide a general indication of changes in ﬁscal
stress facing many state and local governments. To the extent that the Federal Reserve’s
lending facilities—some supported by funds appropriated under the CARES Act to the
Treasury’s Exchange Stabilization Fund—and grants to state and local governments inﬂuence
the cost and availability of credit to state and local governments, spreads could to some
degree reﬂect the eﬀect of the federal pandemic response. 558 Municipal bonds spreads
increased substantially from late February until March 23, 2020, falling moderately after the
Federal Reserve expanded two of its lending facilities to include municipal securities (see ﬁg.
19).
Figure 19: Spreads on Municipal Bonds, January 2019 to May 2020
Note: Municipal bond spreads are measured in basis points or 1/100th of a percentage point. Spreads are calculated using yield
to worst on the Bloomberg Barclays Municipal Bond Index which results in a conservative—that is, lower—estimate of potential
returns on callable bonds.
• State and local government employment. State and local government employment,
measured monthly by BLS, is a timely measure of ﬁscal stress facing state and local
governments as well as an indicator of the capacity of state and local governments to provide
services to the public. States and localities experiencing large declines in revenues may
layoﬀ government employees to reduce expenditures and help close budget gaps, or cut
non-essential public services due to the pandemic. Changes in state and local government
employment over time should provide a general indication of changes in ﬁscal stress facing
558State and local economic conditions that drive tax revenues will be among the myriad of other important factors
inﬂuencing trends in these spreads.
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many state and local governments. During and after the Great Recession, state and local
governments substantially reduced employment. In May 2020, state and local government
employment fell by 571,000, following the largest single-month decline in April since data have
been collected.
• Other indicators. We also plan to monitor measures of state and local economic conditions,
including gross state product, state and local tax revenues, and measures related to the leisure
and hospitality sector, a key industry and source of revenue for tribal governments.
Indicators of Financial Condition of the Health Care Sector
We plan to monitor and report on various indicators related to the economic condition of the
health care sector. A number of factors will likely inﬂuence trends in these indicators over time,
requiring more rigorous methods to assess the role of any one factor.
• Monthly change in health care employment. As the COVID-19 pandemic spread throughout
the United States, it took a severe toll on the health care sector, not only in terms of the
sharp rise in demand for services to care for COVID-19 patients, but also the disruption of
care and services for non-COVID-19 patients due to social distancing guidelines. As a result,
many health care establishments such as private physician oﬃces curtailed their services,
and in the process laid oﬀ a considerable number of people. As the United States recovers,
the employment changes will be positive and trend upward. This measure describes the
net seasonally-adjusted total health care sector (ambulatory health care services, hospitals,
and nursing and residential care facilities) employment change from one month to the next
reported by BLS’ Current Employment Surveys of establishments, most recently released on
May 8, 2020. Data reported for the months of March and April 2020 are preliminary estimates.
• Change in volume of elective procedures across settings. As the inﬂux of COVID-19
patients begins to level oﬀ across geographic locations, there will be less need for providers to
prioritize treatment of COVID-19 infections over other health care services. Elective procedures
such as hip and knee replacements can be tracked, as well as procedures for more emergent
conditions, such as coronary artery bypass grafting to treat patients suﬀering from heart
attacks due to coronary artery disease. As the rates of these procedures approaches pre-
COVID levels, this will indicate that the pandemic’s disruption of patient access to care across
the health care system as a whole will have eased. Preliminary data on these procedures may
be available from the Medicare fee-for-service claims or from clinical data registries.
• Median monthly change in hospital operating margin. Since hospitals across the country
ﬁrst encountered the COVID-19 pandemic, income has dropped due to sharp volume declines,
while expenses have largely remained ﬂat or increased (largely due to treatment of COVID-19
patients), leading many hospitals, a portion of whom were just above the breakeven line prior
to the pandemic, to post negative operating margins. Two months into the pandemic, the
ﬁnancial distress of some hospitals is becoming more acute, prompting some hospitals to lay
oﬀ staﬀ, consider merging with larger health care systems, and to apply for funds provided by
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the CARES Act. In spite of these measures, ﬁnancially weak hospitals may not survive, leading
to a signiﬁcant change in hospital market structure. Median monthly change in hospital
operating margin is currently collected by a private entity.
• Quarterly change in the health care services portion of personal consumption
expenditures, one component of Gross Domestic Product. Due to the COVID-19 pandemic
and immediate state and local responses (shelter-in-place mandates), provision of consumer
health care services has declined since health care establishments rely on patient visits
and hospital/facility stays for non-COVID-19 related medical conditions or impairments. As
recovery gains momentum, the personal consumer health care services is likely to improve
and, barring any signiﬁcant changes in health care service delivery, prospectively be restored
to pre-pandemic levels. This measure is the seasonally adjusted percent change from
preceding quarter in real (inﬂation-adjusted) Gross Domestic Product from the Bureau of
Economic Analysis, most recently released on May 28, 2020.
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Appendix V: Internal Control Standards and Fraud Risk
Management
Federal Standards for Internal Control
While some level of risk may be acceptable in an emergency environment, strong internal control
helps ensure that emergency relief funds are appropriately safeguarded. An eﬀective internal
control system improves accountability and transparency, provides feedback on how eﬀectively
an entity is operating, and helps reduce risks aﬀecting the achievement of the entity’s objectives.
Our Standards for Internal Control in the Federal Government (the Green Book) sets the standards for
an eﬀective internal control system for federal agencies and provides managers with criteria for
designing, implementing, and operating an eﬀective internal control system.559 The Green Book
deﬁnes the standards through components and principles and explains why they are integral to an
entity’s internal control system as depicted in ﬁgure 20 below. Management’s ongoing monitoring
of the internal control system is essential in helping internal control remain aligned with changing
objectives, environments, laws, resources, and risks.
Figure 20: The Five Components and 17 Principles of Internal Control
559GAO, Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: September 2014).
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We are in the process of reviewing relevant internal controls of agencies that are receiving
signiﬁcant COVID-19 funding. We will inform agencies about any identiﬁed control deﬁciencies that
need to be remediated from our reviews.
Fraud Risk Management
The public health crisis, economic instability, and increased ﬂow of federal funds associated with
the COVID-19 pandemic present increased pressures and opportunities for fraud.560 Recognizing
fraud risks, and thoughtfully and deliberately managing them in an emergency environment, can
help federal managers safeguard public resources while providing needed relief.561 Managers
may perceive a conﬂict between their priorities to fulﬁll the program’s mission—such as eﬃciently
disbursing funds or providing services to beneﬁciaries, particularly during emergencies—and
taking actions to safeguard taxpayer dollars from improper use. However, the purpose of
proactively managing fraud risks, even during emergencies, is to facilitate, not hinder, the
program’s mission and strategic goals by ensuring that taxpayer dollars and government services
serve their intended purposes. The eﬀects of not addressing fraud risks can be ﬁnancial as well as
nonﬁnancial, such as harm to human health from fraudulent COVID-19 treatments. Fraud can also
undermine public trust in government.
To help federal program managers combat fraud and preserve integrity in government agencies
and programs, in 2015 GAO published A Framework for Managing Fraud Risks in Federal Programs
(Fraud Risk Framework), which provides a comprehensive set of leading practices for agency
managers to develop or enhance eﬀorts to combat fraud in a strategic, risk-based manner.562 (See
ﬁg. 21 below.) The Fraud Risk Framework helps managers meet their responsibilities to assess
and manage fraud risks, as required by federal internal control standards.563 In its Circular A-123
guidelines, the Oﬃce of Management and Budget (OMB) has directed agencies to adhere to the
Fraud Risk Framework’s leading practices as part of their eﬀorts to eﬀectively design, implement,
and operate an internal control system that addresses fraud risks.564 The leading practices of
the Fraud Risk Framework are also required to have been incorporated into OMB guidelines and
agency controls under the Fraud Reduction and Data Analytics Act of 2015 and its successor
provisions in the Payment Integrity Information Act of 2019.565
560Fraud involves obtaining something of value through willful misrepresentation. Whether an act is fraudulent is
determined through the judicial or other adjudicative system.
561Fraud risk exists when individuals have an opportunity to engage in fraudulent activity, have an incentive or are
under pressure to commit fraud, or are able to rationalize committing fraud. When fraud risks can be identiﬁed and
mitigated, fraud may be less likely to occur.
562GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP (Washington, D.C.: July 28, 2015).
563 GAO-14-704G.
564Oﬃce of Management and Budget, Management’s Responsibility for Enterprise Risk Management and Internal Control,
OMB Circular A-123 (Washington, D.C.: July 15, 2016).
565The Fraud Reduction and Data Analytics Act of 2015 (FRDAA), enacted in June 2016, required OMB to establish
guidelines for federal agencies to create controls to identify and assess fraud risks and to design and implement
antifraud control activities. Pub. L. No. 114-186, 130 Stat. 546 (2016). The act further required OMB to incorporate the
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Figure 21: Components of the Fraud Risk Framework
The Fraud Risk Framework’s leading practices apply during the “steady state” of operations, as
well as during emergencies.566 Emergency-related considerations and adjustments, as described
below, facilitate fraud risk management in an emergency environment.
Heightened fraud risk in an emergency environment. Due to the very nature of the
government’s need to quickly provide funds and other assistance to those aﬀected by COVID-19
and its economic eﬀects, federal relief programs are vulnerable to signiﬁcant risk of fraudulent
activities. The schemes used to defraud government, as well as private businesses and individuals,
leading practices from the Fraud Risk Framework in the guidelines. Although FRDAA was repealed in March 2020, the
Payment Integrity Information Act of 2019 requires these guidelines to remain in eﬀect, subject to modiﬁcation by OMB
as necessary and in consultation with GAO. Pub. L. No. 116-117, 134 Stat. 113 (2020).
566“Steady state” is a broad term referring to nonemergency conditions.
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are endless, and many have already emerged during the COVID-19 pandemic. However, whether
in times of emergency or during the steady state, fraud risks and schemes generally originate
from, and target, certain groups. Illustrative examples of fraud risks and schemes applicable to an
emergency environment are shown in ﬁgure 22.
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Figure 22: Examples of Fraud Risks and Possible Schemes Targeting Government and Private Businesses and
Individuals
Note: These fraud risks and variations on the schemes may also be present during non-emergency conditions. Some categories
and examples may overlap.
aWhile fraud is by deﬁnition a criminal act, fraud by criminal organizations refers to nefarious activities associated with
deliberate, organized, and sometimes large-scale schemes to liquidate credit accounts, launder money, or fraudulently obtain
government beneﬁts. Criminals use these large-scale schemes to fund organized crime, terrorism, and other illicit activities.
Need to assess fraud risks and adjust risk tolerance. Managing fraud risks in an emergency
or a steady state requires a fraud risk assessment—one of the leading practices identiﬁed in the
Fraud Risk Framework—which details how the program could be defrauded, what existing controls
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address risks based on likelihood and eﬀect of fraud, and what risks remain, documented in a
fraud risk proﬁle. Changes in operating environment, such as government response to a pandemic
and associated funds, are important to consider when planning fraud risk assessments. In an
emergency situation, environmental or structural program changes necessitate conducting a new
or revised fraud risk assessment.
Federal managers administering emergency response should be aware of the threat posed by
fraud and make informed decisions about which risks can be tolerated. Fraud risk tolerance does
not mean that managers tolerate fraud. Rather, it means that managers accept a certain degree
of risk, based on an assessment of the likelihood and eﬀect of fraud. Determining a fraud risk
tolerance can help federal managers establish appropriate and cost-eﬀective controls that are
commensurate with fraud risk.
During times of emergency, guided by an understanding and assessment of how a program is
likely to be defrauded, program managers can and likely would need to adjust fraud risk tolerance
and related controls. Once the immediate emergency response has passed, program managers
should reassess fraud risk tolerance, particularly for programs with signiﬁcant expenditures. If
managers maintain limited preventive fraud countermeasures that had been appropriate during
the initial emergency response, fraudsters are likely to take advantage of them going forward.
Fraud Risk Management Activities and Controls in Emergency Response. GAO’s Fraud Risk
Framework, our prior work, and reports by the International Public Sector Fraud Forum, oﬀer
examples of fraud risk management activities relevant in an emergency environment.567 For
example, actively using data analytics can help prevent and detect fraud. For agencies, predictive
analytic technologies can be used to identify potential fraud and errors before payments are
made. Other techniques can identify fraud or improper payments that have already been
disbursed, thus assisting agencies in recovering these dollars. Table 14 presents examples of
activities in fraud risk management that are particularly relevant in an emergency environment.
567International Public Sector Fraud Forum, Fraud in Emergency Management and Recovery: Principles for Eﬀective Fraud
Control, February 2020. The Forum was established in 2017 by government oﬃcials from Australia, Canada, New
Zealand, the United Kingdom, and the United States. The goal of the forum is to use shared knowledge to reduce the
risk and harm of fraud and corruption in the public sector across the world. For examples of prior GAO work, see
2017 Hurricanes and Wildﬁres: Initial Observations on the Federal Response and Key Recovery Challenges, GAO-18-472
(Washington, D.C.: Sep 4, 2018); Medicare and Medicaid: CMS Needs to Fully Align Its Antifraud Eﬀorts with the Fraud Risk
Framework, GAO-18-88 (Washington, D.C.: Dec. 5, 2017).
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Table 14: Examples of Fraud Risk Management Activities in the Context of Emergency Response
Fraud risk management activity
Description
Integrate antifraud control specialists into the policy and
process design to build awareness of fraud risks
When program managers develop emergency management
policies and processes, skilled antifraud specialists should
participate. The antifraud specialists’ role is to identify
how the system could be defrauded (by carrying out a
fraud risk assessment), to record this information, and to
communicate it to the key managers.
Establish formal and informal mechanisms and information
sharing with relevant stakeholders to facilitate ﬂow of fraud
information
Formal and informal mechanisms for sharing and receiving
information from key stakeholders, such as partnerships
with law enforcement agencies or task forces with state
government oﬃcials, can provide relevant and timely
information related to fraud risks.
Use data-analytic tools and techniques to prevent and
detect fraud
Data mining and data matching techniques can enable
programs to identify potential fraud or improper payments
that are about to be or have already been awarded—for
example, mining beneﬁciary data for fraud indicators
or matching new program data to existing data to verify
eligibility for emergency relief beneﬁts.
Program and antifraud controls should work together to
implement low-friction countermeasures to prevent fraud
risk where possible
The preferred response is to include some up-front controls
that signiﬁcantly reduce fraud risk without delaying
payments or services. Where it is not feasible to implement
controls to mitigate established vulnerabilities, the fraud
control specialist should record the risks that result so they
can be considered later.
Collect and analyze data from reporting mechanisms for
real-time monitoring of fraud trends and identiﬁcation of
potential control deﬁciencies.
Reporting mechanisms include hotlines, whistleblower
policies, and other mechanisms for receiving tips. These
mechanisms help managers detect instances of potential
fraud and can also deter individuals from engaging in
fraudulent behavior.
Carry out targeted post-event assurance to look for fraud,
ensuring access to fraud investigation resources
Post-event assurance consists of considering the fraud
risk assessment and reviewing a sample of payments and
services, in light of the risks, to see if any instances of fraud
can be identiﬁed. The focus should be on actively looking
for fraud in the system.
Use the results of monitoring, evaluations, and
investigations to improve fraud prevention, detection, and
response in post-emergency steady state
Analysis of identiﬁed instances of fraud and fraud trends
can help adapt and improve fraud risk management
activities after the emergency. The results of monitoring
and evaluations should be communicated to stakeholders.
Source: GAO analysis based on GAO and International Public Sector Fraud Forum fraud risk management publications. | GAO-20-625
Eﬀective fraud risk management emphasizes fraud prevention rather than a more costly “pay-
and-chase” approach whereby resources are spent detecting and responding to instances
of fraud after the funds or beneﬁts have been provided. In emergency response situations,
when preventive controls may be limited, detective controls, such as through data collection
and analysis, can be introduced to help identify potential fraud more easily and to assist
response and recovery. Antifraud controls for agency processes and systems, as well as antifraud
communications, can help mitigate and manage fraud risks during emergency situations, as
shown in the examples in ﬁgure 23.
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Figure 23: Examples of Antifraud Controls in an Emergency Environment
aDepartment of the Treasury’s Do Not Pay is an analytics tool that helps federal agencies detect and prevent improper
payments made to vendors, grantees, loan recipients, and beneﬁciaries. Agencies can check multiple data sources in order to
make payment eligibility decisions.
Fraud-related communications in an emergency environment can be achieved through a variety
of reporting mechanisms for frontline employees, program beneﬁciaries, and the public at large.
For example, GAO’s FraudNet oﬀers reporting mechanisms for allegations of fraud, waste, and
abuse, including those related to COVID-19. Additionally, the Pandemic Response Accountability
Committee, established by the CARES Act to conduct oversight of the federal government's
pandemic response and recovery eﬀort, provides online reporting mechanisms (see text box).
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Report Fraud, Waste, and Abuse
GAO’s FraudNet supports accountability across the federal government. Allegations of fraud, waste, or abuse can be
submitted via the FraudNet portal or by calling the hotline at 1-800-424-5454.
Allegations of fraud, waste, abuse, or whistleblower reprisal can also be reported to the Pandemic Response
Accountability Committee’s (PRAC) Hotline website.
We are currently reviewing the fraud risk management eﬀorts of the federal programs involved in
COVID-19 response to identify areas for further inquiry.
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Appendix VI: List of Ongoing GAO Work Related to COVID-19,
as of June 17, 2020
Repatriation Program COVID-19 Response
Oversight of Unemployment Insurance During COVID-19
Higher Education Aid and Student Loan Flexibilities in Response to COVID-19
Early Care and Education and the Coronavirus Pandemic Response
Agency IT Preparedness in Response to Coronavirus Pandemic
Nursing Home Infection Control
Tracking Funds and Associated Activities Related to Federal Response to COVID-19
Diagnostic Testing
Strategic National Stockpile
Worker Safety in the Pandemic
Distance Learning for Students with Disabilities and English Learners
Contract Obligations
Business/Employer Tax Provisions
Assessment of Nutrition Assistance Programs during the Pandemic
Agencies' Telework Readiness and Use of Telework for Employees
IRS Administration of Economic Impact Payments
Housing Finance System in the Pandemic
Military Health System COVID Response
OMB Guidance on COVID-19 Grant Flexibilities
Prisons' Preparedness & Response to Natural Disasters and COVID-19
Transportation Security Oﬃcer Health and Safety
Biodefense Preparedness and Response for COVID-19
Agencies' Use of Continuity of Operations Plans in Response to Coronavirus Pandemic
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Agencies' Human Capital Flexibilities in Response to Coronavirus Pandemic
Immigration Detention Facilities and Operations
Federal Emergency Management Agency Operational Response to COVID-19
VA's COVID-19 Procurements
Elections and COVID-19
Defense Production Act
Eﬀects of COVID-19 on Dedicated Fees
School Meals During Pandemic
COVID-19 Section 3610 Paid Leave Contractor Reimbursement Implementation
Data and Modeling for COVID-19
VA's Fourth Mission and COVID-19 Pandemic
CARES Act Homeowner and Renter Protections
Bureau of Indian Education COVID Response
Child Welfare During the COVID-19 Pandemic
Department of the Interior and Treasury's Actions for Tribal Governments in Response to the
Pandemic
State Department Repatriation
SBA's Implementation of the Paycheck Protection Program
IHS Response to COVID-19
Vaccine Development
Nurse Loan Repayment Programs
Science and Tech Spotlight: Herd Immunity
Science and Tech Spotlight: Contact Tracing
Coronavirus Economic Stabilization Act Loans and Investments Programs
Coast Guard COVID-19 Response Eﬀorts
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Human Pandemic Preparedness Plan for Food Safety Inspections
Farmer Food Purchases and Redistribution Program
CARES Act assistance to farmers
Customs and Border Patrol
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Appendix VII: Comments from the Department of Labor
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Appendix VIII: Comments from the Internal Revenue Service
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Appendix IX: Comments from the Department of the Treasury
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Appendix X: Comments from the Small Business
Administration
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Appendix XI: Comments from the U.S. Agency for
International Development
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Appendix XII: Comments from the Department of Homeland
Security
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Appendix XIII: Comments from the Department of Veterans
Aairs
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Appendix XIV: Comments from the Department of Education
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Appendix XV: Comments from the Department of Housing and
Urban Development
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Contacts
Report Director(s)
A. Nicole Clowers
Managing Director, Health Care, (202) 512-7114, clowersa@gao.gov
Congressional Relations
Orice Williams Brown, Managing Director, williamso@gao.gov, (202) 512-4400
Public Aairs
Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800
Strategic Planning and External Liaison
James-Christian Blockwood, Managing Director, spel@gao.gov, (202) 512-4707
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