GAO-20-659T, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts

PDF source document — GAO-20-659T, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts, dated 2020-06-26, issued by Government Accountability Office.

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COVID-19
Opportunities to Improve
Federal Response and
Recovery Efforts
Statement of Gene L. Dodaro,
Comptroller General of the United States

Testimony
Before the Select Subcommittee on the
Coronavirus Crisis, Committee on
Oversight and Government Reform,
House of Representatives
For Release on Delivery
Expected at 10:00 a.m. ET
Friday, June 26, 2020
GAO-20-659T

United States Government Accountability Office

 United States Government Accountability Office

Highlights of GAO-20-659T, a testimony
before the Select Subcommittee on the
Coronavirus Crisis, Committee on Oversight
and Reform, House of Representatives

June 26, 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 that appropriated $2.6
trillion. This funding provided support to individuals, health care providers,
businesses, and state and local government.
While complete government-wide data will not be available until July, GAO
determined that as of May 31, 2020, a total of about $1.2 trillion of assistance
has been provided—close to $700 billion in expenditures and over $500 billion in
loan guarantees. Consistent with the urgency of responding to widespread health
issues and economic disruptions, agencies have worked hard to give priority to
moving swiftly. In moving quickly, however, agencies made trade-offs; thus, only
limited progress has been made so far in achieving transparency and
accountability goals.
GAO also identified challenges with the federal response to the crisis, including:
Paycheck Protection Program (PPP). The Small Business Administration
(SBA) moved quickly to establish a new nationwide program, but the pace
contributed to confusion and questions and raised program integrity concerns.
GAO recommends that SBA develop and implement plans to identify and
respond to risks in PPP to better ensure program integrity. SBA neither agreed
nor disagreed. Implementing GAO’s recommendation is essential.
Economic impact payments. The Internal Revenue Service (IRS) and the
Department of the Treasury (Treasury) faced difficulties delivering payments to
some individuals, and made some payments to ineligible individuals, such as
decedents. GAO recommends that IRS should consider cost-effective options for
notifying ineligible recipients how to return payments. IRS agreed.
Unemployment Insurance (UI). The program could have an unintentional
overlap with benefits provided under PPP. GAO recommends that the
Department of Labor (DOL) immediately provide help to state unemployment
agencies that specifically addresses PPP loans, and the risk of improper
payments associated with these loans. DOL is planning additional guidance.
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. Thus far, no plan
exists. GAO recommends Congress require DOT to produce a plan.
Full access to death data. It is important to consistently use safeguards when
providing assistance to individuals. The Treasury and Bureau of Fiscal Service
do not have access to the Social Security Administration’s full set of death
records. GAO recommends that the Congress give Treasury that access and
require that Treasury consistently use it.
Medicaid. GAO previously found that during economic downturns, the Federal
Medical Assistance Percentage (FMAP) formula does not reflect current state
economic conditions. GAO recommends that, during an economic downturn,
Congress use a formula to provide timely and targeted assistance during
economic downturns.
View GAO-20-659T. 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 seen severely strained
health care systems. The country has
also 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 regularly on its
ongoing monitoring and oversight
efforts related to the COVID-19
pandemic. Yesterday, GAO issued its
first report (GAO-20-625).
Like the report, this testimony focuses
on key actions the federal government
has taken to address the COVID-19
pandemic, GAO recommendations for
improvement, 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
In the report, GAO makes three new
recommendations for agencies and
three matters for consideration for
Congress that address these issues.

Letter

Page 1
GAO-20-659T
Chairman Clyburn, Ranking Member Scalise, and Members of the
Subcommittee:
Thank you for the opportunity to discuss the federal government’s
response to Coronavirus Disease 2019 (COVID-19). As the virus has
spread around the globe and within the United States, it has left a
devastating wake of human and economic loss. On behalf of my
colleagues, I want to express my condolences for those who have lost
loved ones to COVID-19. Additionally, I want to commend the heroic
efforts of health care workers across the country who have cared for
those individuals infected with the virus. I also want to recognize the
dedication and agility of the federal, state and local workforces and others
throughout our society.
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. It provides over $2 trillion
in emergency assistance and health care response for individuals, health
care providers, businesses, and state and local governments affected by
COVID-19. Agencies across the federal government have acted quickly to
execute the law, including standing up new programs, while also
responding to the pandemic.
The CARES Act includes a provision for us to conduct monitoring and
oversight of the use of funds made available to prepare for, respond to,
and recover from the COVID-19 pandemic. 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. The act
requires us to submit a report within 90 days of enactment on our ongoing
monitoring and oversight efforts related to the COVID-19 pandemic, with
subsequent bimonthly reports.
Yesterday we issued the first of these reports, which will continue on a
bimonthly basis through March 2021.1 My comments today will
summarize the key findings from this report. Specifically, I will discuss

1See GAO, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts,
GAO-20-625 (Washington, D.C.: June 25, 2020).
Letter

Page 2
GAO-20-659T
1. the key actions the federal government has taken, to date, to respond
to and recover from COVID-19, recommendations for executive
action, and matters for legislative action by the Congress; and
2. evolving lessons learned relevant to the nation’s response to the
COVID-19 pandemic.
To conduct the work for our initial report, we examined federal laws and
agency documents, guidance, processes, and procedures, and available
agency budgetary data. In addition, we interviewed federal and state
officials and industry representatives. We also 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 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. To monitor areas of
the economy supported by federal response to the pandemic, we also
reviewed prior GAO reports, releases from federal statistical agencies,
and input from internal GAO experts. More detailed information on our
objectives, scope, and methodology for that work can be found in the
issued report.
We conducted the work on which this statement is based 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 that the evidence obtained
provides a reasonable basis for our findings and conclusions based on
our audit objectives.

Page 3
GAO-20-659T
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 2020.2 These laws have appropriated $2.6 trillion
across the government. Six areas—the Paycheck Protection Program
(PPP), Economic Stabilization and Assistance to Distressed Sectors,
unemployment insurance, economic impact payments, the Public Health
and Social Services Emergency Fund, and the Coronavirus Relief Fund—
account for 86 percent of the appropriations (see fig. 1).
Figure 1: Appropriations for COVID-19 Response from COVID-19 Relief Laws
Enacted as of May 31, 2020

Notes: COVID-19 relief laws enacted as of May 31, 2020 includes 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); 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

2 Pub. L. No. 116-136, 134 Stat. 281 (2020). The other three COVID-19 relief laws
included in the scope of our review 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); and Paycheck
Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat.
620 (2020).
Key Federal Actions
to Respond to and
Recover from COVID-
19 and Our
Recommendations for
Executive Action and
Matters for Legislative
Action

Page 4
GAO-20-659T
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 planned to be readily available 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 published by
federal agencies about the programs funded through these relief laws.
In the absence of comprehensive data, we collected obligation
(government financial commitments) and expenditure data from agencies,
to the extent practicable, as of May 31, 2020. For the six largest spending
areas, we found that obligations totaled $1.3 trillion and expenditures
totaled $643 billion. The majority of the difference was due to 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.
We also collected spending data on other programs affected by the
federal response. For example, we 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 we collected, government-wide spending totaled at least $677
billion, as of May 31, 2020.
Given the sweeping and evolving 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. In moving quickly, however, agencies made trade-offs, and
they have made only limited progress so far in achieving transparency
and accountability goals.
In particular, we identified several challenges related to the federal
response to the crisis, as well as recommendations to help address these
challenges, including the following:

Page 5
GAO-20-659T
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 them to
CDC.
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 and the Department of
Defense to increase the availability of supplies. However, concerns
remain about the distribution, acquisition, and adequacy of supplies.
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. 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. However, questions and confusion remained. In June
2020, Congress passed, and the President signed into law, the
Paycheck Protection Program Flexibility Act of 2020, which 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.
We recommend 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 we believe implementing this recommendation is essential.

Page 6
GAO-20-659T
Economic impact payments. The Internal Revenue Service (IRS) and
Treasury moved quickly to disburse 160.4 million payments worth $269
billion. The agencies faced difficulties delivering payments to some
individuals, and they face 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. We recommend that IRS consider
cost-effective options for notifying ineligible recipients how to return
payments. IRS agreed.
Unemployment insurance (UI). States are implementing three new,
federally funded UI programs created by the CARES Act and, as of May
2020, states had received 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. We 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. 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. We recommend 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, and services contracted for include
vaccine development. In addition, the CARES Act provided $1 billion for
Defense Production Act purchases—$76 million of which was awarded to
increase production of N95 respirators.

Page 7
GAO-20-659T
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. This 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 the following:
•
Establishing clear goals and defining roles and responsibilities for the
wide range of federal departments 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 and are used for the intended
purposes. Such mechanisms also help ensure program integrity and
address fraud risks.
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. Congressional oversight plays a vital role in spurring agency
progress on matters of national importance.3 On the basis of our work on

3See, 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).
Evolving Lessons
Learned from Initial
COVID-19 Response
and Past
Emergencies
Highlight Areas for
Continued Attention

Page 8
GAO-20-659T
past large-scale government responses to economic downturns and other
crises, we recommend Congress consider taking legislative action in the
following areas:
Aviation-preparedness plan. In 2015, we 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, maintained that HHS and
DHS should lead the effort. Thus far, no plan exists. We recommend that
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
made 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. We recommend 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. We 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. We previously
developed a formula that offers an option for providing temporary
automatic, timely, and targeted assistance.4 We recommend that
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.
In the report we issued yesterday, we also describe potential indicators
that could be used to monitor public health and economic recovery. The
report also contains 41 enclosures that contain information about a wide

4GAO, 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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GAO-20-659T
range of federal programs or initiatives that were created, expanded, or
funded in the COVID-19 relief laws.
In conclusion, both Congress and the administration have acted to
respond to public health and economic threats posed by COVID-19.
Federal agencies and personnel acted quickly to stand up new programs
or expand existing programs to, among other things, aid individuals,
states, and businesses. But much work remains in protecting the health
and well-being of Americans, both today and in the coming months, as
the nation may be forced to simultaneously confront new waves of
COVID-19 infections and seasonal influenza.
In our initial report we make recommendations to help improve the
effectiveness of the federal government’s ongoing response. Our ongoing
oversight will continue to focus on improving the government’s response
and recovery efforts as well as the nation’s preparedness for future
outbreaks. Chairman Clyburn, Ranking Member Scalise, and Members of
the Subcommittee, this concludes my prepared statement. I would be
pleased to respond to any questions that you may have at this time.
For further information about this testimony, please contact A. Nicole
Clowers, Managing Director, Health Care, at (202) 512-7114 or
clowersa@gao.gov; Katherine Siggerud, Chief Operating Officer, at (202)
512-5600 or siggerudk@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.

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