GAO-21-551, COVID-19: Continued Attention Needed to Enhance Federal Preparedness, Response, Service Delivery, and Program Integrity

Summary

GAO-21-551, a report to congressional committees from the United States Government Accountability Office, dated July 2021, on COVID-19 federal preparedness, response, service delivery, and program integrity. It states that as of May 31, 2021, of the $4.7 trillion appropriated by six relief laws for COVID-19 relief, the federal government had obligated a total of $3.5 trillion and expended $3.0 trillion, as reported by federal agencies. GAO makes 15 new recommendations in the areas of federal preparedness and response, delivery of benefits and services, and program integrity. The Highlights include a recommendation that CDC work with appropriate stakeholders to develop a plan to enhance surge capacity for laboratory testing.

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Issuer: Government Accountability Office
Document type: Report
Date: 2021-06-23

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“GAO-21-551, COVID-19: Continued Attention Needed to Enhance Federal Preparedness, Response, Service Delivery, and Program Integrity.” Government Accountability Office, dated 2021-06-23. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-06-23-gao-21-551-covid-19-continued-attention-needed-to-enhance-federal-preparedness/, SHA-256 ca6f9b246e5c636f85b5c012806e81d6cd6d0ce154da11862a67d7b85af96a96.

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United States Government Accountability Oﬃce

Report to Congressional Committees

July 2021

COVID-19
Continued Attention Needed to
Enhance Federal Preparedness,
Response, Service Delivery, and
Program Integrity

GAO-21-551 www.gao.gov
July 2021

COVID-19
Continued Attention Needed to Enhance Federal
Preparedness, Response, Service Delivery, and
Highlights of GAO-21-551, a report to Program Integrity
congressional committees

Why GAO Did This Study What GAO Found
As of mid-June 2021, the U.S. had The nation is concurrently responding to, and recovering from, the COVID-19
about 33.4 million reported cases of pandemic, as the number of cases, hospitalizations, and deaths have declined in
COVID-19 and about 593,000 recent months. Among the factors that have contributed to the decline in these
reported deaths, according to CDC. metrics, the development and administration of multiple vaccines across the
The country also continues to nation have been key. About 53.1 percent of the U.S. population 12 years and
experience serious economic older—almost 150.7 million individuals—had been fully vaccinated as of June 23,
repercussions from the pandemic.
2021, according to the Centers for Disease Control and Prevention (CDC).
Six relief laws, including the CARES
Continuing to deliver “shots in arms” will be a priority for the federal government,
Act, had been enacted as of May 31,
2021, to address the public health and
as individuals yet to be vaccinated remain at risk from COVID-19 and as new
economic threats posed by COVID- variants of the virus continue to emerge. A successful vaccination program is
19. As of May 31, 2021, of the $4.7 seen as essential to further stabilizing the economy and safely returning to
trillion appropriated by these six laws prepandemic activities, such as in-person learning for students in the 2021–22
for COVID-19 relief—including about school year.
$1.6 trillion appropriated by ARPA, The economic and public health recovery from the pandemic and its effects
which was enacted in March 2021— remains fragile. Data from the Department of Labor show that labor market
the federal government had obligated
conditions improved in March, April, May, and June 2021 but remained worse
a total of $3.5 trillion and had
relative to the prepandemic period. Additionally, new reported COVID-19 cases
expended $3.0 trillion, as reported by
federal agencies. from June 5 to June 18, 2021, averaged about 13,000 per day—less than a tenth
of the peak reported in January 2021 (see figure).
The CARES Act includes a provision
for GAO to report on its ongoing Reported COVID-19 Cases per Day in the U.S., Mar. 1, 2020–June 18, 2021
monitoring and oversight efforts
related to the COVID-19 pandemic.
This report examines the federal
government’s continued efforts to
respond to, and recover from, the
COVID-19 pandemic.
GAO reviewed data, documents, and
guidance from federal agencies about
their activities. GAO also interviewed
federal officials; representatives from
organizations for states and localities;
and other stakeholders, including
manufacturers of PPE (e.g., N95
respirators, surgical masks, and nitrile
gloves). Since GAO began reporting on the federal response to the pandemic in June
What GAO Recommends 2020, it has made 72 recommendations. The agencies generally agreed with 57
of these recommendations and are in the process of implementing a majority of
GAO is making 15 new them; 16 of these recommendations have been fully implemented. GAO also
recommendations for agencies that made four matters for congressional consideration, three of which remain open.
are detailed in this Highlights and in In this report, GAO is making 15 new recommendations in the areas of federal
the report. preparedness and response, delivery of benefits and services, and program
integrity. GAO’s recommendations, if effectively implemented, can help improve
the government’s ongoing response and recovery efforts as well as help it to
View GAO-21-551. For more information, prepare for future public health emergencies.
contact A. Nicole Clowers, (202) 512-7114 or
clowersa@gao.gov.

United States Government Accountability Office
Highlights of GAO-21-551 (Continued)

GAO’s new recommendations are discussed below.
COVID-19 Testing
CDC has opportunities to improve collaboration and communication with stakeholders. Prior to the COVID-19 response,
CDC had not developed a plan for enhancing laboratory testing capacity that identifies objectives and outlines agency and
stakeholder roles and responsibilities for achieving these objectives within defined time frames. Doing so would be
consistent with the stated goal of its own memorandum of understanding with public health and private laboratory partners
and would also be consistent with other leading principles on sound planning that GAO has identified in its prior work.
GAO recommends that CDC work with appropriate stakeholders to develop a plan to enhance surge capacity for
laboratory testing. CDC agreed with this recommendation.
CDC initially developed a flawed COVID-19 diagnostic test, which caused challenges for the rollout of testing nationwide.
CDC has taken steps to improve its process for developing tests, but additional actions could help strengthen CDC’s
preparedness and enhance the nation’s testing capacity during a future infectious disease outbreak. For example,
establishing contracts with test kit manufacturers prior to a public health emergency could allow CDC to supplement the
supply produced by CDC and aid in the rapid manufacturing and deployment of test kits during a future public health
emergency. GAO recommends that CDC assess the agency’s needs for goods and services for the manufacturing
and deployment of diagnostic test kits in public health emergencies, including the potential role of establishing
contracts in advance of an emergency. CDC agreed with this recommendation.
Strategic National Stockpile
The Strategic National Stockpile (SNS) contains a multibillion dollar inventory of medical countermeasures—drugs,
vaccines, supplies, and other materials—to respond to a broad range of public health emergencies. The SNS can be used
as a short-term stopgap buffer when the supply of materials may not be immediately available in affected areas during a
public health emergency. The Department of Health and Humans Services’ (HHS) Office of the Assistant Secretary for
Preparedness and Response (ASPR) oversees the SNS.
The Public Health Emergency Medical Countermeasures Enterprise (PHEMCE), an interagency group of experts, advises
the Secretary of Health and Human Services in prioritizing, developing, procuring, deploying, and effectively using medical
supplies and other countermeasures for the SNS. In the years before the COVID-19 pandemic, ASPR began restructuring
the PHEMCE. This led to concerns from interagency partners regarding the effectiveness of interagency collaboration and
transparency, such as a lack of clarity on how ASPR makes decisions about medical countermeasure issues, including for
the SNS inventory. In addition, while the PHEMCE was being restructured, ASPR did not conduct SNS annual reviews
from 2017 through 2019; these reviews result in recommendations to HHS regarding SNS procurement and are provided
to Congress.
According to the former Assistant Secretary who initiated the restructure, although PHEMCE was successful in advancing
the development of medical countermeasures, its consensus-driven process did not reflect the urgency needed and
PHEMCE proceedings created security vulnerabilities. ASPR officials acknowledged that the changes ASPR made to the
PHEMCE from 2018 to 2020 did not fully achieve the desired aims and created other challenges. The office is in the
process of reassessing and reestablishing new organizational processes for the PHEMCE, but it has not yet finalized
planning documents, including an organizational charter and implementation plan, to guide those efforts. GAO
recommends that ASPR develop and document its plans for restructuring the PHEMCE. The plans should
describe how ASPR will ensure a transparent and deliberative process that engages interagency partners in
PHEMCE responsibilities outlined in the Pandemic and All-Hazards Preparedness and Advancing Innovation Act
of 2019, including those related to SNS annual reviews. These plans should also incorporate GAO’s leading
practices to foster more effective collaboration, while ensuring that sensitive information is appropriately
protected. HHS—which includes ASPR—agreed with this recommendation.
PHEMCE interagency partners raised concerns about the transparency of PHEMCE activities and deliberations, and
ASPR lacked documentation of PHEMCE activities and deliberations after 2017. ASPR was unable to provide
documentation to GAO regarding PHEMCE decisions or recommendations made from 2018 to 2020; the rationale for the
changes to the PHEMCE; or PHEMCE meeting agendas and minutes from 2018 to 2020. Not maintaining such
documentation is inconsistent with HHS’s policy for records management and leaves Congress and key stakeholders
without assurance that steps taken are advancing national preparedness for natural, accidental, and intentional threats.
GAO recommends that ASPR implement records management practices that include developing, maintaining,
and securing documentation related to PHEMCE activities and deliberations, including those related to the SNS.
HHS, including ASPR, agreed with this recommendation.
The nationwide need for supplies to respond to COVID-19 quickly exceeded the quantity of supplies contained in the
SNS. Thus, ASPR used procurement processes in addition to its standard process, including direct shipment of supplies
from vendors. Through this direct shipment process, supplies purchased by ASPR were not used to replenish the SNS but
instead were primarily distributed from vendors directly to state, local, territorial, and tribal governments.
Highlights of GAO-21-551 (Continued)

Although ASPR has documented policies and procedures for its standard procurement process, ASPR did not have
documented policies and procedures, including related control and monitoring activities, to address payment integrity risks
for its direct shipment procurement process. Without written policies and procedures documenting how ASPR tracks the
direct shipment and receipt of supplies before issuing payments, there is an increased risk that ASPR may make improper
payments to vendors for incorrect supplies or quantities or for supplies that the intended recipients did not receive. In
addition, it is difficult for management to assess the adequacy of controls over the direct shipment procurement process,
and ASPR lacks assurance that its staff fully understand the process and properly and consistently perform their duties.
GAO recommends that, to strengthen the current procedures for the SNS, HHS update its policies and
procedures for the SNS, including related control and monitoring activities, to document the direct shipment
procurement process and address payment integrity risks. Although HHS, including ASPR, did not agree with GAO
regarding the need to address payment integrity risks, it stated that HHS will update its policies and procedures, including
related control and monitoring activities to document the direct shipment procurement process.
Domestic Medical Supply Manufacturing
Before the pandemic, the U.S. generally depended on foreign suppliers for certain types of personal protective equipment
(PPE), including nitrile gloves and surgical gowns. Multiple stakeholders representing manufacturers, distributors, and
other purchasers noted that meaningful, transparent federal engagement with industry could enhance the resilience of
domestic manufacturing and the supply chain. According to some stakeholders, such engagement with the private sector
could help ramp up private investment in domestic PPE manufacturing, among other things.
In January 2021, GAO reported that HHS had not developed a process for engaging with key nonfederal stakeholders
and Congress for development of a supply chain strategy for pandemic preparedness, including the role of the SNS. GAO
recommended that HHS do so, and the department generally agreed with GAO’s recommendation. However, as of May
2021, HHS had not implemented this recommendation. GAO continues to underscore that engaging with key nonfederal
stakeholders—in meaningful, proactive ways to obtain their business and industry expertise—and with Congress is critical
for developing strategies to build a sustainable domestic medical supply manufacturing base.
HHS COVID-19 Funding
As of May 31, 2021, Congress had appropriated to HHS approximately $484 billion in COVID-19 funds in six relief laws.
The majority of HHS’s appropriations from the first five relief laws had been obligated and about half had been expended.
Specifically, as of May 31, 2021, the department reported the following (see figure):
• Of the $324 billion appropriated in the first five COVID-19 relief laws, about $253 billion had been obligated (about
78 percent) and about $168 billion had been expended (about 52 percent).
• Of the $160 billion appropriated in the sixth law, the American Rescue Plan Act of 2021 (ARPA), about $75 billion
had been obligated (about 47 percent) and about $3 billion had been expended (about 2 percent).
Highlights of GAO-21-551 (Continued)

HHS’s Reported COVID-19 Relief Appropriations, Obligations, and Expenditures from COVID-19 Relief Laws, as of May 31,
2021

The percentage of obligations and expenditures varied across selected COVID-19 response activities for a variety of
reasons, including the nature of the activities, their planned uses, and the timing of the funds provided through the six
COVID-19 relief laws.
HHS uses spend plans to communicate information about its COVID-19 spending. The first five COVID-19 relief laws
generally require the department to develop, update, and provide these spend plans to Congress every 60 days. The sixth
relief law, ARPA, does not require a spend plan, but according to HHS officials, the department is preparing a
consolidated plan that captures the first five relief laws and a separate spend plan for funding provided through ARPA.
The consolidated spend plan is under internal review at HHS and the ARPA spend plan is still being finalized. As of May
2021, GAO had received and reviewed a total of 15 spend plans—the original spend plans and subsequent updates—
provided by HHS. GAO found that the most current spend plans generally do not include time frames for obligating the
remaining funds, which is useful information for oversight and informing future funding decisions by Congress.
Guidance from the Office of Management and Budget to federal agencies, including HHS, noted the importance of
spending transparency and regular reporting to help safeguard taxpayer dollars. GAO recommends that HHS
communicate information about, and facilitate oversight of, the department’s use of COVID-19 relief funds by
providing projected time frames for its planned spending in the spend plans it submits to Congress. HHS partially
concurred with the recommendation and stated that the department would aim to incorporate some time frames on
planned spending where that information may be available such as time frames for select grants to states.
Higher Education Grants
The Department of Education (Education) has faced inherent challenges that increase the risk of improper payments for
its Higher Education Emergency Relief Fund (HEERF) grants to institutions of higher education to prevent, prepare for,
and respond to COVID-19. For example, funding needed to be processed and distributed expeditiously because of health
and economic threats to institutions of higher education posed by the COVID-19 pandemic. GAO tested Education’s
procedures for approving and processing HEERF grants through a sample of obligations and found that the department
had not effectively designed and implemented procedures needed to identify erroneous obligations after awarding the
grants. GAO estimated that for 5.5 percent of schools receiving HEERF grants (about 262 of 4,764 schools in GAO’s
sample), Education awarded grants that exceeded the amounts allocated—including three instances in GAO’s sample for
which Education obligated $20 million more than was allocated.
Officials from Education’s Office of Postsecondary Education stated that because of time and staffing constraints and the
high volume of grants administered, they did not regularly perform quality assurance reviews after obligation to identify
and correct erroneous obligations. GAO recommends Education design and implement procedures for regularly
conducting quality assurance reviews of obligated amounts for higher education grants, including HEERF, to
help identify and correct erroneous obligations in a timely manner. Education agreed with this recommendation.
Highlights of GAO-21-551 (Continued)

Coronavirus State and Local Relief and Recovery Funds
COVID-19 relief laws appropriated $500 billion to the Department of the Treasury (Treasury) to provide direct funding to
states, localities, tribal governments, the District of Columbia, and U.S. territories to help them respond to, and recover
from, the COVID-19 pandemic. This amount includes $150 billion that the CARES Act appropriated to Treasury for the
Coronavirus Relief Fund (CRF) in March 2020 as well as $350 billion that ARPA appropriated to Treasury for the
Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) in March 2021. Recipients can use CRF payments to
offset costs related to either the pandemic’s direct effects (e.g., public health needs) or its indirect effects (e.g., harm to
individuals or businesses as a result of COVID-19-related closures). The CSLFRF provides payments to these recipients
to cover a broader range of costs stemming from the fiscal effects of the COVID-19 pandemic.
The Single Audit Act establishes requirements for states, localities, Indian tribes, the District of Columbia, U.S. territories,
and nonprofit organizations that receive federal awards to undergo single audits of those awards annually when their
expenditures meet a certain dollar threshold. Single audits are critical to the federal government’s ability to help safeguard
the use of the billions of dollars distributed through the CRF and CSLFRF. Auditors who conduct single audits follow
guidance in the Single Audit Act’s Compliance Supplement, which provides guidelines and policy for performing single
audits. After consultation with federal agencies, OMB annually updates and issues the supplement. Auditors have
reported that the timing of the supplement is critical in allowing them to effectively plan their work.
The timely issuance of single audit guidance is critical to ensuring timely completion and reporting of single audits to
inform the federal government about actions needed to help safeguard the use of the billions of dollars distributed through
the CRF and CSLFRF. GAO recommends that OMB, in consultation with Treasury, issue timely and sufficient
single audit guidance for auditing recipients’ uses of payments from the CSLFRF. OMB neither agreed nor
disagreed with this recommendation.
Economic Impact Payments
The CARES Act, the Consolidated Appropriations Act, 2021, and ARPA authorized Treasury and the Internal Revenue
Service (IRS) to issue three rounds of economic impact payments (EIP) as direct payments to help individuals alleviate
financial stress due to the pandemic. (See figure.) To publicize information about how to file a tax return with the IRS to
receive an EIP, IRS partners with organizations that work with communities that may not traditionally interact with IRS,
such as lower-income families, senior citizens, veterans, tribal communities, and families with mixed-immigration status.
According to officials from IRS partner organizations, ensuring eligible nonfilers receive their payments continues to be a
challenge. Partners also told GAO their outreach efforts to nonfilers could be more effective if the partners had current
data that could help identify specific communities of nonfilers who may need assistance.
Total Number and Amount of Economic Impact Payments (EIP) Disbursed, Rounds 1, 2, and 3, as of May 28, 2021

In January 2021, Treasury began analyzing nearly 9 million notices it had sent to nonfilers who may be eligible for the first
round of EIP payments. However, Treasury does not plan to complete this analysis until fall 2021, more than 6 months
after the third round of EIP payments began to be issued. This timing would limit the findings’ usefulness for informing EIP
outreach efforts. By waiting to complete the analysis, Treasury and IRS are missing an opportunity to identify communities
that may have a higher number of nonfilers and to use that information to inform their outreach efforts as well as the
efforts of their outreach partners. GAO recommends that Treasury, in coordination with IRS, release interim findings
on the effectiveness of the notices it sent in September 2020 to potentially EIP-eligible nonfilers; incorporate that
analysis into IRS outreach efforts as appropriate; and then, if necessary, release an update based on new
analysis after the 2021 filing season. Treasury neither agreed nor disagreed with this recommendation.
Highlights of GAO-21-551 (Continued)

Tax Relief for Businesses
To provide liquidity to businesses during the COVID-19 pandemic, the CARES Act and other COVID-19 relief laws
included tax measures to reduce certain tax obligations, including measures related to net operating loss carryback
claims. In some cases, these reductions of obligations led to cash refunds. The Internal Revenue Code and the CARES
Act generally require IRS to issue certain refunds within 90 days from the date when a complete application for a tentative
carryback adjustment is filed or 90 days from the last day of the month in which the return is due, whichever is later. IRS
data show that the agency is not meeting the statutory refund requirement for these relief measures and that as of May 1,
2021, the average processing time for refunds was 154 days, excluding additional time for final processing and
distribution.
IRS officials said it is taking longer to process returns because IRS facilities that process paper returns continue to
operate at reduced capacity to accommodate social distancing. In the meantime, transparent communication about these
issues could help taxpayers know when to expect their refunds. Specifically, an explanation on IRS’s website that
processing times for tentative refunds may exceed the expected 90 days because of service disruptions would provide
taxpayers with more accurate information and expectations for receiving a refund. GAO recommends that IRS clearly
communicate on its website that there are delays beyond the statutory 90-day timeline in processing tentative
refunds. IRS neither agreed nor disagreed with this recommendation.
2021 Tax Filing Season
IRS is experiencing delays in processing certain returns received in 2021, resulting in extended time frames for
processing returns for some taxpayers. IRS reported that it is taking longer than usual to manually review some of these
returns. Specifically, as of the end of the 2021 filing season, IRS had about 25.5 million unprocessed individual and
business returns, including about 1.2 million returns from its 2020 backlog, and 13.7 million returns that it had suspended
because of errors. IRS staff must manually review these returns with errors. IRS typically has unprocessed returns in its
inventory at the end of the filing season, but not to this extent. For example, at the end of the 2019 filing season, IRS had
8.3 million unprocessed individual and business returns, including 2.7 million returns suspended for errors. IRS’s annual
tax filing activities include processing more than 150 million individual and business tax returns electronically or on paper.
With significantly more returns currently being held for manual review than in prior years, more taxpayers are trying to get
information about the status of their returns and refunds. However, taxpayers have had difficulty obtaining status updates
on their refunds from IRS, either by phone or online. IRS’s website does not contain all of the relevant information
regarding delays in processing 2021 returns and issuing taxpayers’ refunds. Additionally, IRS’s automated message on its
toll-free telephone line for individual taxpayers has not been updated to explain refund delays or to include any other
alerts associated with the 2021 filing season. GAO recommends that IRS update relevant pages of its website and, if
feasible, add alerts to its toll-free telephone lines to more clearly and prominently explain the nature and extent of
individual refund delays occurring for returns that taxpayers filed in 2021. IRS neither agreed nor disagreed with this
recommendation.

This report contains additional recommendations related to disseminating information related to leave benefits for
employees.
Contents

Recommendations for Executive Action................................................................................ 1

Introduction................................................................................................................................... 3

Background.................................................................................................................................... 6
Public Health and Economic Eﬀects.................................................................................................. 6
Federal COVID-19 Funding and Spending........................................................................................ 10

Executive Summary................................................................................................................... 17
Overview..................................................................................................................................... 17
COVID-19 Testing......................................................................................................................... 17
Domestic Medical Supply Manufacturing......................................................................................... 18
Strategic National Stockpile........................................................................................................... 19
HHS COVID-19 Funding................................................................................................................. 22
Higher Education Grants............................................................................................................... 23
Coronavirus State and Local Relief and Recovery Funds.................................................................... 24
Economic Impact Payments........................................................................................................... 25
Leave Beneﬁts for Employees........................................................................................................ 26
Tax Relief for Businesses............................................................................................................... 29
2021 Tax Filing Season.................................................................................................................. 30

Conclusions.................................................................................................................................. 31

Closing........................................................................................................................................... 32

Congressional Addressees....................................................................................................... 33

Appendixes and Enclosures..................................................................................................... 35
Appendix I: Enclosures.................................................................................................................. 35
Economic Indicators..................................................................................................................... 35
Vaccine Implementation................................................................................................................ 42
Nursing Homes............................................................................................................................ 58
COVID-19 Testing......................................................................................................................... 68
HHS COVID-19 Funding................................................................................................................. 84
Domestic Medical Supply Manufacturing......................................................................................... 96
DOD Vaccination Eﬀorts for Civilians and Servicemembers.............................................................. 109
Strategic National Stockpile Payment Integrity............................................................................... 117
Strategic National Stockpile......................................................................................................... 123
Federal Contracts and Agreements for COVID-19............................................................................ 137
Unemployment Insurance Programs............................................................................................. 148
Economic Impact Payments......................................................................................................... 166

Page i GAO-21-551
2021 Tax Filing Season................................................................................................................ 178
Nutrition Assistance................................................................................................................... 183
Child Nutrition........................................................................................................................... 197
Employer Tax Relief.................................................................................................................... 206
Leave Beneﬁts for Employees...................................................................................................... 219
Higher Education Grants............................................................................................................. 235
Tax Relief for Businesses............................................................................................................. 242
Loans for Aviation and Other Eligible Businesses........................................................................... 255
Federal Reserve Lending Facilities................................................................................................ 262
Payroll Support Assistance to Aviation Businesses.......................................................................... 267
FEMA’s Disaster Relief Fund......................................................................................................... 272
Airport Grants........................................................................................................................... 283
Coronavirus State and Local Relief and Recovery Funds.................................................................. 293
International Trade..................................................................................................................... 307
Federal Fraud-Related Cases........................................................................................................ 313
Postal Service............................................................................................................................ 321
Appendix II: Highlights Pages from Recently Issued GAO COVID-19 Products...................................... 327
Grant Flexibilities....................................................................................................................... 327
Remdesivir Research.................................................................................................................. 329
Behavioral Health....................................................................................................................... 330
Commuter Rail.......................................................................................................................... 331
Depot Maintenance.................................................................................................................... 332
Global Health Security................................................................................................................ 333
COVID-19 Vaccines..................................................................................................................... 334
Emergency Return of Citizens by HHS........................................................................................... 335
Emergency Student Aid............................................................................................................... 336
COVID-19 Loans......................................................................................................................... 337
Indian Education........................................................................................................................ 338
USPS Changes since COVID-19..................................................................................................... 339
VA COVID-19 Funding................................................................................................................. 340
Nursing Home COVID-19 Outbreaks............................................................................................. 341
Medicare and Medicaid Flexibilities.............................................................................................. 342
VA Civilian COVID-19 Response.................................................................................................... 343
Employee Beneﬁts Security Administration.................................................................................... 344
SBA Administrative Expenses....................................................................................................... 345
Military Health........................................................................................................................... 346
NSF Research Infrastructure........................................................................................................ 347
VA Community Living Centers...................................................................................................... 348
TSA Airport Checkpoints............................................................................................................. 349
CBP's COVID-19 Response........................................................................................................... 350
2020 Census.............................................................................................................................. 351
VA COVID-19 Procurements......................................................................................................... 352
Unemployment Insurance Potential Racial Disparities..................................................................... 353

Page ii GAO-21-551
Fourth of July 2020 Event Costs................................................................................................... 354
DOD Software Development........................................................................................................ 355
Air Marshals.............................................................................................................................. 357
HHS Cybersecurity Collaboration.................................................................................................. 358
VA Community Care................................................................................................................... 359
Immigration Detention Facilities................................................................................................... 360
VA COVID-19 Preparedness......................................................................................................... 361
Mortgage Forbearance and Foreclosure........................................................................................ 362
State Fiscal Conditions in Pandemic............................................................................................. 364
Coast Guard COVID-19 Response................................................................................................. 365
Appendix III: List of Ongoing GAO Work Related to COVID-19, as of June 23, 2021............................... 366
Appendix IV: Status of Our Matters for Congressional Consideration and Recommendations for Executive
Action, as of June 2021............................................................................................................... 370
Appendix V: Comments from the Department of Education............................................................. 403
Appendix VI: Comments from the Department of Health and Human Services.................................... 405
Appendix VII: Comments from the Department of Homeland Security............................................... 409
Appendix VIII: Comments from the Internal Revenue Service........................................................... 412
Appendix IX: Comments from the Department of Labor.................................................................. 415
Appendix X: Comments from the Social Security Administration....................................................... 417
Appendix XI: Comments from the Department of the Treasury......................................................... 418
Appendix XII: Comments from the United States Postal Service........................................................ 420
Appendix XIII: Comments from the Department of Veterans Aﬀairs.................................................. 422

Contacts..................................................................................................................................... 423

Tables
Table 1: COVID-19 Relief Appropriations, Obligations, and Expenditures, as of May 31, 2021................... 13
Table 2: Federal Programs and Funds Receiving $10 Billion or More in COVID-19 Pandemic-Related Aid for
States, the District of Columbia, Localities, U.S. Territories, Tribes, and Tribal Governments, as of May 31,
2021........................................................................................................................................... 15
COVID-19 Vaccines FDA Authorized for Emergency Use, as of June 15, 2021......................................... 44
Department of Health and Human Services Centers for Disease Control and Prevention (CDC) COVID-19
Vaccine Implementation Funding for 64 Jurisdictions, as of April 2021................................................. 48
Description of Federal COVID-19 Vaccine Distribution Channels, as of June 2021................................... 50
Prior GAO Recommendations Related to COVID-19 Vaccines.............................................................. 56
CDC Data on COVID-19 Vaccinations Conducted through the Pharmacy Partnership for Long-Term Care
Program by Recipient Type, as of May 12, 2021............................................................................... 63
Prior GAO Recommendations Related to COVID-19 Outbreaks in Nursing Homes.................................. 65
Prior GAO Recommendations Related to COVID-19 Testing................................................................ 82
Department of Health and Human Services Reported COVID-19 Relief Appropriations, Obligations, and
Expenditures, by Relief Law, as of May 31, 2021............................................................................... 86

Page iii GAO-21-551
Department of Health and Human Services Reported COVID-19 Relief Appropriations, Obligations, and
Expenditures, by Agency or Key Fund, as of May 31, 2021................................................................. 87
Department of Health and Human Services (HHS) Reported Allocations, Obligations, and Expenditures by
Selected COVID-19 Response Activity, as of May 31, 2021.................................................................. 89
Prior GAO Recommendations Related to Domestic Medical Supply Manufacturing during COVID-19....... 107
Department of Health and Human Services’ Strategic National Stockpile Obligations from Appropriations
Provided by the Six COVID-19 Relief Laws as of May 31, 2021.......................................................... 119
Prior GAO Recommendation Related to the Strategic National Stockpile............................................ 136
Prior GAO Recommendations Related to Federal Contracts and Agreements for COVID-19................... 145
Prior GAO Recommendations Related to Unemployment Insurance (UI) Programs.............................. 164
GAO’s Prior Recommendations Related to Economic Impact Payments.............................................. 176
COVID-19 Funding and Expenditures for Selected Federal Nutrition Assistance Programs as of May 31,
2021......................................................................................................................................... 185
Examples of Risk Factors Listed in the Payment Integrity Information Act of 2019 (PIIA) Compared with
Characteristics of the Pandemic Electronic Beneﬁts Transfer Program (Pandemic EBT)......................... 188
Prior GAO Recommendation Related to COVID-19 Nutrition Assistance............................................. 196
Comparison of Tax Credits for Paid Leave under the Families First Coronavirus Response Act, as amended
and extended by the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act, 2021.... 208
Selected Changes to the Employee Retention Credit in the American Rescue Plan Act, 2021 and Previous
Legislation................................................................................................................................. 210
Number and Amount of Leave Credits and Employee Retention Credits Claimed, as of May 2021.......... 215
Prior GAO Recommendations Related to Employer Tax Relief........................................................... 218
Type and Number of Families First Coronavirus Response Act Outreach Events, Mar. 17, 2020–Dec. 31,
2020......................................................................................................................................... 223
Number and Percentage of Concluded Families First Coronavirus Response Act Paid Leave Cases, by
Compliance Action, as of Mar. 31, 2021........................................................................................ 228
Number and Percentage of Concluded Families First Coronavirus Response Act Paid Leave Cases, by Priority
Level, as of Mar. 31, 2021........................................................................................................... 230
Net Operating Loss Carryback and Alternative Minimum Tax Credit Refund Requests Received as of April 29,
2021......................................................................................................................................... 245
Approved Corporate Refunds for Net Operating Loss (NOL) and Alternative Minimum Tax (AMT) Credit by
Industry, Mar. 27, 2020–Apr. 29, 2021........................................................................................... 248
Estimated Reported Usage of CARES Act Net Operating Loss Provision Based on a Sample of 185 Public
Company Filings, Mar. 27, 2020–Mar. 26, 2021............................................................................... 250
Sampled Public Company Filings Mentioning CARES Act Net Operating Loss by Industry, From Mar. 27, 2020–
Mar. 26, 2021............................................................................................................................ 251
Prior GAO Recommendations Related to Tax Relief for Businesses.................................................... 254
Loans for the CARES Act Loan Program for Aviation and Other Eligible Businesses.............................. 256
Prior GAO Recommendation Related to Payroll Support Assistance for Aviation Businesses.................. 271
Prior GAO Recommendations Related to COVID-19......................................................................... 281
FAA Obligations and Expenditures for CARES Act Airport Grants, as of May 14, 2021............................ 284
FAA Obligations and Expenditures for the Consolidated Appropriations Act, 2021 Airport Grants, as of May
14, 2021................................................................................................................................... 286

Page iv GAO-21-551
The American Rescue Plan Act, 2021 Airport Grant Allocations......................................................... 287
Prior GAO Recommendation Related to Single Audits..................................................................... 306
Value of U.S. Trade of COVID-19 Vaccines with European Union Member Countries and United Kingdom in
Jan. and Feb. 2021 (U.S. dollars in millions)................................................................................... 310
Amounts Requested by USPS Under the CARES Act, as Amended, for COVID-19-Related Operating Expenses
Incurred Mar. 2020–Feb. 2021..................................................................................................... 324

Figures
Reported COVID-19 Cases per Day in the U.S., Mar. 1, 2020–June 18, 2021............................................H1
HHS’s Reported COVID-19 Relief Appropriations, Obligations, and Expenditures from COVID-19 Relief Laws,
as of May 31, 2021........................................................................................................................H4
Total Number and Amount of Economic Impact Payments (EIP) Disbursed, Rounds 1, 2, and 3, as of May 28,
2021............................................................................................................................................H5
Figure 1: Report Enclosures by Topic Area......................................................................................... 4
Figure 2: Higher-Than-Expected Weekly Mortality in the U.S., January 2020–May 29, 2021......................... 7
Figure 3: Reported COVID-19 Cases per Day in the U.S., Mar. 1, 2020–June 18, 2021................................ 8
Figure 4: Daily Count of COVID-19 Vaccine Doses Administered in the U.S. and Reported to CDC, Dec. 14,
2020–June 23, 2021........................................................................................................................ 9
Figure 5: Employment-to-Population Ratio, January 2019–May 2021.................................................... 10
Figure 6: COVID-19 Relief Laws Enacted as of May 31, 2021............................................................... 10
Figure 7: Percentage of COVID-19 Relief Appropriations Obligated and Expended, July 31, 2020–May 31,
2021........................................................................................................................................... 12
Indicators for Areas of the Economy Supported by the Federal COVID-19 Pandemic Response, Feb.–May
2021, Cumulative Changes since Feb. 2020..................................................................................... 36
Employment-to-Population Ratio, Jan. 2019–May 2021...................................................................... 39
Serious Delinquency Rates on Single-Family Residential Mortgages, Jan. 2019–Apr. 2021........................ 40
State and Local Government Employment, Jan. 2019–May 2021......................................................... 40
Number of COVID-19 Vaccine Doses Administered by Month in the United States, as of June 10, 2021...... 45
Percentage of Age Group That Was Fully Vaccinated, by Age Group, in the U.S., as of June 10, 2021.......... 46
Percentage of COVID-19 Vaccine Doses Distributed, by Federal Distribution Channel, as of June 10,
2021........................................................................................................................................... 53
New Weekly Conﬁrmed COVID-19 Cases and Deaths among U.S. Nursing Home Residents and Staﬀ, as
Reported by Medicare- and Medicaid-Certiﬁed Nursing Homes, Weeks Ending May 31, 2020, through May 16,
2021........................................................................................................................................... 61
Timeline of the Development and Distribution of CDC and WHO COVID-19 Diagnostic Tests in 2020......... 70
HHS’s Reported COVID-19 Relief Appropriations, Obligations, and Expenditures from COVID-19 Relief Laws,
as of May 31, 2021...................................................................................................................... 85
Department of Health and Human Services (HHS) Obligated and Unobligated COVID-19 Relief Funds, as of
May 31, 2021.............................................................................................................................. 93
Estimated Domestic Production Capacity and Domestic Demand for Select Personal Protective Equipment
Types, March 2020 through May 2021............................................................................................ 97

Page v GAO-21-551
Summary of Information from the U.S. International Trade Commission (USITC) and Other Stakeholders
on Key Challenges Aﬀecting Domestic Production for Certain Types of Personal Protective Equipment
(PPE)......................................................................................................................................... 100
DOD Personnel Supporting the Federal Government’s COVID-19 Response, Mar. 2020–May 2021.......... 110
Locations Where Active-Duty Servicemembers Provided COVID-19 Vaccine Support at Federally Supported
Community Vaccination Centers, Feb. 14, 2021–June 22, 2021.......................................................... 111
COVID-19 Vaccinations in the Department of Defense (DOD), as of June 9, 2021................................. 113
Example of Department of Defense Social Media Graphic............................................................... 115
Public Health Emergency Medical Countermeasures Enterprise (PHEMCE) Organization....................... 127
Contract Obligations in Response to COVID-19 by Federal Agency, as of May 31, 2021.......................... 139
Government-wide COVID-19-Related Contract Obligations and Conﬁrmed COVID-19 Cases by Month,
February 2020–May 2021............................................................................................................ 140
Contract Obligation Amounts for Top Five Goods and Services Procured in Response to COVID-19 by month,
Feb. 2020–May 2021................................................................................................................... 141
Weekly Initial Claims Submitted Nationwide for Regular Unemployment Insurance (UI) and Pandemic
Unemployment Assistance (PUA) Beneﬁts, Mar. 1, 2020–June 19, 2021.............................................. 152
Weekly Continued Claims Submitted Nationwide for Regular Unemployment Insurance, Pandemic
Emergency Unemployment Compensation, and Extended Beneﬁts, Mar. 1, 2020–June 5, 2021.............. 154
Timeliness of First Payments of Regular Unemployment Insurance (UI) Beneﬁts, Jan. 2020–May 2021..... 156
Total Number and Amount of Economic Impact Payments (EIP) Disbursed, Rounds 1, 2, and 3, as of May 28,
2021......................................................................................................................................... 167
Internal Revenue Service (IRS) Web Page for Taxpayers on Refund Expectations.................................. 181
Total Meals Served by Key Federal Child Nutrition Programs, Mar.–Nov. 2019 and Mar.–Nov. 2020......... 200
Department of Education (Education) Procedures for Approving and Processing Higher Education Emergency
Relief Fund (HEERF) Grants.......................................................................................................... 237
Outstanding Assets of Federal Reserve Lending Facilities Supported by CARES Act Funding, June 2020–June
2021......................................................................................................................................... 263
Cumulative Transaction Volume of Federal Reserve Lending Facilities Not Supported by CARES Act Funding,
Apr. 2020–May 2021................................................................................................................... 264
FEMA’s Disaster Relief Fund Balance by Month, Feb. 2020–May 2021................................................. 272
FEMA’s Disaster Relief Fund Obligations and Projections for COVID-19 by Program and Activity through June
2021......................................................................................................................................... 275
FEMA’s Funeral Assistance by State and Territory as of June 28, 2021................................................ 278
Percentages of Coronavirus Relief Fund (CRF) Payments Recipients Reported Having Spent as of March 31,
2021......................................................................................................................................... 296
Coronavirus Relief Fund (CRF) Recipient Spending as of March 31, 2021, by Spending Category............. 297
Impact of Extended Deadline for Single Audit Reports on Audit Findings and Development of Corrective
Action Plans for Entities Whose Fiscal Year Ends on June 30............................................................. 303
Monthly U.S. Imports of COVID-19-Related Products, by Product Type, Jan. 2018–Mar. 2021.................. 308
Number of Individuals or Entities Who Have Pleaded Guilty to or Faced Federal Charges for Consumer Fraud,
as of April 30, 2021.................................................................................................................... 317
Examples of Consumer Warnings about COVID-19 Vaccine Scams.................................................... 319
Figure 8: Status of Prior GAO Recommendations by Department or Agency....................................... 370

Page vi GAO-21-551
Abbreviations

AMT alternative minimum tax
ARPA American Rescue Plan Act of 2021
ARP ESSER American Rescue Plan Elementary and Secondary School Emergency
Relief
ASPR Office of the Assistant Secretary for Preparedness and Response
CDC Centers for Disease Control and Prevention
CMS Centers for Medicare & Medicaid Services
COVID-19 Coronavirus Disease 2019
CSLFRF Coronavirus State and Local Fiscal Recovery Funds
CRF Coronavirus Relief Fund
DHS Department of Homeland Security
DOD Department of Defense
DOL Department of Labor
Education Department of Education
EIP economic impact payment
EUA emergency use authorization
EWEP Essential Workers, Essential Protections
FDA Food and Drug Administration
FEMA Federal Emergency Management Agency
FFCRA Families First Coronavirus Response Act
GTAS Governmentwide Treasury Account Symbol Adjusted Trial Balance
System
HEERF Higher Education Emergency Relief Fund
HHS Department of Health and Human Services
IRS Internal Revenue Service
NOL net operating loss
OMB Office of Management and Budget
OPE Office of Postsecondary Education
OSHA Occupational Safety and Health Administration
PHEMCE Public Health Emergency Medical Countermeasures Enterprise
PPE personal protective equipment
PPP Paycheck Protection Program
PSP Payroll Support Program
PUA Pandemic Unemployment Assistance

Page vii GAO-21-551
SBA Small Business Administration
SNS Strategic National Stockpile
Treasury Department of the Treasury
UI Unemployment Insurance
VA Department of Veterans Affairs
WHD Wage and Hour Division

GAO’s Mission

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Page viii GAO-21-551
Recommendations for Executive Action
Recommendations for Executive Action

We are making a total of 15 recommendations to federal agencies:

• The Director of the Centers for Disease Control and Prevention should work with
appropriate stakeholders—including public health and private laboratories—to develop
a plan to enhance laboratory surge testing capacity. This plan should include timelines,
deﬁne agency and stakeholder roles and responsibilities, and address any identiﬁed gaps
from preparedness exercises. See the COVID-19 Testing enclosure. (Recommendation 1)
• The Director of the Centers for Disease Control and Prevention should assess the agency’s
needs for goods and services for the manufacturing and deployment of diagnostic test kits
in public health emergencies. This assessment should evaluate how establishing contracts
in advance of an emergency could help the Centers for Disease Control and Prevention
quickly and cost-eﬀectively acquire these capabilities when responding to future public
health emergencies, including those caused by novel pathogens, and should incorporate
lessons learned from the COVID-19 emergency. See the COVID-19 Testing enclosure.
(Recommendation 2)
• To improve the nation’s preparedness for a wide range of threats, including pandemics,
the Oﬃce of the Assistant Secretary for Preparedness and Response should develop and
document plans for restructuring the Public Health Emergency Medical Countermeasures
Enterprise. These plans should describe how the Assistant Secretary will ensure a
transparent and deliberative process that engages interagency partners in the full range
of responsibilities for the Public Health Emergency Medical Countermeasures Enterprise
outlined in the Pandemic and All-Hazards Preparedness and Innovation Act of 2019,
including the annual Strategic National Stockpile Threat-Based Reviews. These plans
should also incorporate GAO’s leading practices to foster more eﬀective collaboration,
while ensuring that sensitive information is appropriately protected. See the Strategic
National Stockpile enclosure. (Recommendation 3)
• To improve organizational accountability, the Oﬃce of the Assistant Secretary for
Preparedness and Response should implement records management practices that
include developing and maintaining, and securing documentation related to Public
Health Emergency Medical Countermeasures Enterprise activities and deliberations,
including those related to the Strategic National Stockpile. Documentation should include
information such as the factors considered, the rationale for the action or decision, and
the ﬁnal outcomes of the Public Health Emergency Medical Countermeasures Enterprise
processes. See the Strategic National Stockpile enclosure. (Recommendation 4)
• To strengthen the current procedures, the Assistant Secretary for Preparedness
and Response should update policies and procedures, including related control and
monitoring activities, for the Strategic National Stockpile to document the direct shipment
procurement process and to address payment integrity risks. See the Strategic National
Stockpile Payment Integrity enclosure. (Recommendation 5)
• To communicate information about and facilitate oversight of the agency’s use of
COVID-19 relief funds, the Secretary of Health and Human Services should provide
projected time frames for the planned spending of COVID-19 relief funds in the
Department of Health and Human Services’ spend plans submitted to Congress. See the
HHS COVID-19 Funding enclosure. (Recommendation 6)

Page 1 GAO-21-551
• The Assistant Secretary for Postsecondary Education should design and implement
procedures for regularly conducting quality assurance reviews of obligated amounts for
higher education grants, including the Higher Education Emergency Relief Fund, to help
identify and correct erroneous obligations in a timely manner. See the Higher Education
Grants enclosure. (Recommendation 7)
• The Director of the Oﬃce of Management and Budget, in consultation with the Secretary
of the Treasury, should issue timely and suﬃcient single audit guidance for auditing
recipients’ uses of payments from the Coronavirus State and Local Fiscal Recovery
Funds. See the Coronavirus State and Local Relief and Recovery Funds enclosure.
(Recommendation 8)
• The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue,
should release interim ﬁndings on the eﬀectiveness of the notices it sent in September
2020 to nonﬁlers who are potentially eligible for economic impact payments; incorporate
that analysis into Internal Revenue Service outreach eﬀorts as appropriate; and then, if
necessary, release an update based on new analysis after the 2021 ﬁling season. See the
Economic Impact Payments enclosure. (Recommendation 9)
• The Administrator of the Department of Labor’s Wage and Hour Division should better
monitor data across all statutes that the Wage and Hour Division enforces to ensure
the division’s case management is consistent with established policies for assigning and
prioritizing cases. See the Leave Beneﬁts for Employees enclosure. (Recommendation 10)
• The Administrator of the Department of Labor’s Wage and Hour Division should ensure
that the new data system under development includes mechanisms to prevent staﬀ from
assigning and prioritizing cases in a manner inconsistent with established policies. See the
Leave Beneﬁts for Employees enclosure. (Recommendation 11)
• The Administrator of the Department of Labor’s Wage and Hour Division should expand
the Essential Workers, Essential Protections initiative on pandemic-related worker protections
to include information about ﬁling a complaint related to paid leave provided under the
Families First Coronavirus Response Act. See the Leave Beneﬁts for Employees enclosure.
(Recommendation 12)
• The Administrator of the Department of Labor’s Wage and Hour Division should engage in
a comprehensive and timely eﬀort to consult with employers, workers, and organizations
that represent them, to identify and document lessons learned from the Wage and Hour
Division’s administration and enforcement of COVID-19-related paid leave. See the Leave
Beneﬁts for Employees enclosure. (Recommendation 13)
• The Commissioner of Internal Revenue should clearly communicate on the Internal
Revenue Service’s website that there are delays, beyond the statutory 90-day timeline, in
processing net operating loss and alternative minimum tax tentative refunds. See the Tax
Relief for Businesses enclosure. (Recommendation 14)
• The Commissioner of Internal Revenue should direct the appropriate oﬃcials to update
relevant pages of irs.gov and, if feasible, add alerts to the Internal Revenue Service’s toll-
free telephone lines to more clearly and prominently explain the nature and extent of
individual refund delays occurring for returns taxpayers ﬁled in 2021. See the 2021 Tax
Filing Season enclosure. (Recommendation 15)

Page 2 GAO-21-551
Introduction
July 19, 2021

Congressional Committees

The nation is concurrently responding to, and recovering from, the Coronavirus Disease 2019
(COVID-19) pandemic, as the number of cases, hospitalizations, and deaths have seen overall
declines nationally in recent months. While the decline in these metrics is attributable to a number
of factors, the development and administration of multiple vaccines across the nation have been
key among them.

About 53.1 percent of the U.S. population age 12 and over—almost 150.7 million individuals—had
been fully vaccinated as of June 23, 2021, according to the Centers for Disease Control and
Prevention (CDC).1 Continuing to get “shots in arms” will be a priority for the federal government,
as those yet to be vaccinated remain at higher risk from COVID-19 and as new variants of the virus
continue to emerge. A successful vaccination program is seen as essential to further stabilizing the
economy and safely returning to prepandemic activities, such as in-person learning for students
for the 2021–22 school year.

As part of its recovery eﬀorts, Congress passed, and the President signed into law, the American
Rescue Plan Act of 2021 (ARPA) in March 2021.2 The law provided, among other things, about $1.6
trillion to address the continued impact of COVID-19 on the economy, public health, state and
local governments, individuals, and businesses. Since March 2020, Congress has provided about
$4.7 trillion through ARPA as well as ﬁve other laws, including the CARES Act, that were previously
enacted to fund eﬀorts to help the nation respond to, and recover from, the COVID-19 pandemic
(COVID-19 relief laws).3

As the administration implements the provisions in the COVID-19 relief laws, the size and scope
of these eﬀorts—from distributing the funding to implementing new programs—demand strong
accountability and oversight. Furthermore, the government must remain vigilant and agile to
address new COVID-19 variants and potential unexpected events or unintended consequences of
recovery and response eﬀorts while concurrently preparing for future public health emergencies.

Recognizing the need for robust monitoring and oversight of new authorities and funding, the
CARES Act includes a provision for us to report regularly on the federal response to the pandemic.
Speciﬁcally, the act requires us to monitor and oversee the federal government’s eﬀorts to
prepare for, respond to, and recover from the COVID-19 pandemic.4 To date, we have issued
seven recurring oversight reports in response to this provision; in these reports, we have made 72

1Centers for Disease Control and Prevention, “COVID Data Tracker: COVID-19 Vaccinations in the United States,”
accessed June 28, 2021, https://covid.cdc.gov/covid-data-tracker/#vaccinations.
2Pub. L. No. 117-2, 135 Stat. 4.
3The ﬁve previously enacted COVID-19 relief laws are the Consolidated Appropriations Act, 2021, Pub. L. No. 116-620,
134 Stat. 1182 (2020); Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat.
620 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); Families First Coronavirus Response Act, Pub. L. No.
116-127, 134 Stat. 178 (2020); and the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020,
Pub. L. No. 116-123, 134 Stat. 146.
4Pub. L. No. 116-136, § 19010, 134 Stat. at 579–81.

Page 3 GAO-21-551
recommendations to federal agencies, and raised four matters for congressional consideration
to improve the federal government’s response eﬀorts.5 The agencies generally agreed with
57 of these recommendations, and are in the process of implementing a majority of those
recommendations.

This report examines the federal government’s continued eﬀorts to respond to, and recover from,
the COVID-19 pandemic. We are making 15 new recommendations to federal agencies in areas
including COVID-19 testing, the Strategic National Stockpile, tax relief, higher education grants,
leave beneﬁts for employees, and state and local funding.

This report also includes 28 enclosures about a range of federal programs and activities across the
government concerning public health and the economy (see app. I). Figure 1 lists these enclosures
by topic area and highlights those with new recommendations.

Figure 1: Report Enclosures by Topic Area

Given the government-wide scope of this report, we undertook a variety of methodologies
to complete our work, including examining a wide range of data sources and conducting
interviews with federal oﬃcials, representatives from organizations for state and local entities,

5GAO, COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year, GAO-21-387 (Washington, D.C.:
Mar. 31, 2021); COVID-19: Critical Vaccine Distribution, Supply Chain, Program Integrity, and Other Challenges Require Focused
Federal Attention, GAO-21-265 (Washington, D.C.: Jan. 28, 2021); COVID-19: Urgent Actions Needed to Better Ensure an
Eﬀective Federal Response, GAO-21-191 (Washington, D.C.: Nov. 30, 2020); COVID-19: Federal Eﬀorts Accelerate Vaccine
and Therapeutics Development, but More Clarity Needed, GAO-21-207 (Washington D.C.: Nov. 17, 2020); COVID-19: Federal
Eﬀorts Could Be Strengthened by Timely and Concerted Actions, GAO-20-701 (Washington, D.C.: Sept. 21, 2020); COVID-19:
Brief Update on Initial Federal Response to the Pandemic, GAO-20-708 (Washington, D.C.: Aug. 31, 2020); and COVID-19:
Opportunities to Improve Federal Response and Recovery Eﬀorts, GAO-20-625 (Washington, D.C.: June 25, 2020).

Page 4 GAO-21-551
and other stakeholder groups such as manufacturers of personal protective equipment (e.g., N95
respirators, surgical masks, and nitrile gloves). We examined federal laws and agency documents
and guidance, among other things. In each enclosure, we include a summary of the methodology
speciﬁc to the work conducted.

We have issued other targeted COVID-19-related reports in areas such as biomedical research,
emergency ﬁnancial aid for college students, and global health security, and we have reviews
ongoing in other areas.6 See appendix II for highlights pages from our recently issued work on
COVID-19. See appendix III for a list of our ongoing work related to COVID-19, and see appendix
IV for the status of matters for congressional consideration and recommendations for executive
action presented in our June 2020, September 2020, November 2020, January 2021, and March
2021 CARES Act reports and in our November 2020 report on vaccines and therapeutics.

We conducted this performance audit from February 2021 to July 2021 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.

6For a complete list of our COVID-related products, see https://www.gao.gov/coronavirus.

Page 5 GAO-21-551
Background

Public Health and Economic Eects
The eﬀects of the COVID-19 pandemic on public health and the economy over the past 17 months
have been devastating, and recovery from the pandemic and its eﬀects remains fragile. As of mid-
June 2021, about 33.4 million cases and about 593,000 deaths had been reported in the U.S.7 Since
the pandemic began, the country has also continued to experience higher unemployment. As of
May 2021, about 9.3 million individuals were unemployed, compared with nearly 5.8 million at the
beginning of 2020.8

According to data from CDC’s National Center for Health Statistics, about 584,000 more deaths
occurred from all causes (i.e., COVID-19 and other causes) in the U.S. from January 2020, through
May 29, 2021, than would normally be expected (see ﬁg. 2).

7Data on case counts are through June 18, 2021. Data on COVID-19 cases in the U.S. are based on aggregate case
reporting to CDC and include probable and conﬁrmed cases as reported by states and jurisdictions. CDC COVID-19
counts are subject to change due to delays or updates in reported data from states and territories. According to
CDC, the actual number of COVID-19 cases is 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. See CDC, “COVID Data Tracker: Trends in
Number of COVID-19 Cases and Deaths in the U.S. Reported to CDC, by State/Territory,” accessed June 24, 2021, https://
covid.cdc.gov/covid-data-tracker/#trends_dailytrendscases. The number of deaths (about 593,000) include total deaths
that occurred through the week ending June 19, 2021. CDC’s National Center for Health Statistics COVID-19 death
counts in the U.S. are based on provisional counts from death certiﬁcate data, which do not distinguish between
laboratory-conﬁrmed and probable COVID-19 deaths. Provisional counts are incomplete due to an average delay of 2
weeks (a range of 1–8 weeks or longer) for death certiﬁcate processing. See CDC, National Center for Health Statistics,
“Provisional Death Counts for Coronavirus Disease 2019 (COVID-19),” accessed June 24, 2021, https://www.cdc.gov/
nchs/nvss/vsrr/covid19/index.htm. Worldwide, there were more than 179 million cases and about 3.9 million deaths as
of June 24, 2021. Worldwide data from the World Health Organization reﬂect laboratory-conﬁrmed cases and deaths
reported by countries and areas. A preliminary assessment from the World Health Organization suggests that the total
number of global deaths attributable to the COVID-19 pandemic may be more than oﬃcially reported (see World Health
Organization, “The True Death Toll of COVID-19: Estimating global excess mortality,” accessed June 24, 2021, https://
www.who.int/data/stories/the-true-death-toll-of-covid-19-estimating-global-excess-mortality).
8Bureau of Labor Statistics, “Unemployment Level (UNEMPLOY)," retrieved from FRED, Federal Reserve Bank of St. Louis,
accessed June 23, 2021, https://fred.stlouisfed.org/series/UNEMPLOY.

Page 6 GAO-21-551
Figure 2: Higher-Than-Expected Weekly Mortality in the U.S., January 2020–May 29, 2021

Note: The data shown represent the number of deaths from all causes in a given week through May 29, 2021, reported in
the U.S. that exceeded the upper-bound threshold of expected deaths calculated by CDC’s NCHS on the basis of variation in
mortality in prior years. For further details of CDC’s methodology for estimating this upper-bound threshold, see CDC, National
Center for Health Statistics, “Excess Deaths Associated with COVID-19,” accessed June 24, 2021, https://www.cdc.gov/nchs/nvss/
vsrr/covid19/excess_deaths.htm. The number of deaths in recent weeks should be interpreted cautiously, as this ﬁgure relies on
provisional data that are generally less complete.

However, recent trends in reported new cases indicate that the country is making progress in its
response to the pandemic. The number of new reported COVID-19 cases has decreased since
the peak in January 2021. From June 5 to June 18, 2021, new reported COVID-19 cases averaged
about 13,000 per day—less than a tenth of the peak reported in January 2021 (see ﬁg. 3).9 During
the same 2-week period, reported new COVID-19 cases per day, on average, increased in four
jurisdictions, held steady in 11 jurisdictions, and decreased in 37 jurisdictions.10 Further, deaths
from all causes were within the estimated upper bound of expected variation in March 2021 for
the ﬁrst time since March 2020.

9CDC’s COVID-19 case counts are subject to change due to delays or updates in reported data from states and
territories. We compared the average number of new cases per day between June 5 and June 18, 2021, with the average
number of new cases per day during the 14-day window around the peak in January 2021.
10The 52 states and jurisdictions include all 50 states, Washington, D.C., and New York City. COVID-19 case counts for
New York City are reported separately from New York State. We deﬁned states as holding steady if they had less than a
1 percent increase or decrease in average daily new cases over the time frame. The average percentage change in daily
new cases was calculated as the average of the daily rates of change of the 7-day moving average from June 5 to June
18, 2021. (See CDC, “COVID Data Tracker: Trends in Number of COVID-19 Cases and Deaths in the U.S. Reported to CDC,
by State/Territory,” accessed June 24, 2021, https://covid.cdc.gov/covid-data-tracker/#trends_dailytrendscases.) These
COVID-19 case counts may change as new or updated data are reported by states.

Page 7 GAO-21-551
Figure 3: Reported COVID-19 Cases per Day in the U.S., Mar. 1, 2020–June 18, 2021

Note: Reported COVID-19 cases include conﬁrmed and probable cases. Beginning April 14, 2020, states could include probable
as well as conﬁrmed COVID-19 cases in their reports to CDC. Previously, counts included only conﬁrmed cases. According to
CDC, the actual number of cases is unknown for a variety of reasons, including the fact that people who have been infected
may not have been tested or may not have sought medical care. See CDC, “COVID Data Tracker: Trends in Number of COVID-19
Cases and Deaths in the U.S. Reported to CDC, by State/Territory,” accessed June 24, 2021, https://covid.cdc.gov/covid-data-
tracker/#trends_dailytrendscases.

Providing the public with safe and eﬀective vaccines to protect people from getting sick with
COVID-19 is crucial to mitigating the public health and economic impacts of the virus and ending
the pandemic. Two COVID-19 vaccines using a two-dose regimen were authorized for emergency
use in December 2020 and a third, one-dose vaccine was authorized in February 2021.11 Doses
of COVID-19 vaccine administered each day have decreased from a peak in early April 2021, with
a temporary dip in February due to severe weather across the country (see ﬁg. 4). As of June 23,
2021, about 323 million doses had been administered, according to data reported to CDC. See the
Vaccine Implementation enclosure in appendix I for more information.

11Pﬁzer’s two-dose COVID-19 vaccine was authorized for emergency use on December 11, 2020, and Moderna’s two-
dose COVID-19 vaccine was authorized on December 18, 2020. Janssen’s (Johnson & Johnson) one-dose COVID-19
vaccine was authorized for emergency use on February 27, 2021.

Page 8 GAO-21-551
Figure 4: Daily Count of COVID-19 Vaccine Doses Administered in the U.S. and Reported to CDC, Dec. 14, 2020–
June 23, 2021

Notes: The data shown reﬂect COVID-19 vaccine doses administered in the U.S. as reported to CDC by state, territorial, and
local public health agencies and by federal entities since the national vaccine program began on December 14, 2020. The data
include doses administered through all vaccine partners, including jurisdictional partner clinics, retail pharmacies, long-term
care facilities, Federal Emergency Management Agency and Health Resources and Services Administration partner sites, and
federal entity facilities. See CDC, “COVID Data Tracker: COVID-19 Vaccinations in the United States,” accessed on June 28, 2021,
https://covid.cdc.gov/covid-data-tracker/#vaccinations.
As of June 23, 2021, three COVID-19 vaccines were authorized for emergency use; two of these vaccines are two-dose regimens
and the third vaccine requires one dose. The number of doses administered on a given day may be aﬀected by several factors,
such as weekend days, holidays, weather, and vaccine availability. The most recent days of reporting may be more impacted by
reporting delays, and all reported numbers may change over time as historical data are reported to CDC.

In addition to aﬀecting public health, the pandemic continues to cause economic challenges,
particularly for the labor market, though the economy has improved in recent months. Monthly
and weekly data from the Department of Labor (DOL) indicate that labor market conditions
improved in March, April, May, and June 2021 but remained worse relative to the prepandemic
period. Weekly initial unemployment insurance claims fell from March to June 2021, indicating
improvements in the labor market in recent months. For example, in May 2021, the employment-
to-population ratio, which measures the share of the population employed, was 58.0 percent—a
slight increase from the previous month, but 3.1 percentage points lower than in the prepandemic
period (see ﬁg. 5).12 See the Economic Indicators enclosure in appendix I for more information.

12The employment-to-population ratio represents the number of employed people as a percentage of the civilian
noninstitutional population 16 years and older. The ratio is subject to a misclassiﬁcation error with respect to
consistently identifying workers as employed and absent from work or as unemployed on temporary layoﬀ.

Page 9 GAO-21-551
Figure 5: Employment-to-Population Ratio, January 2019–May 2021

Federal COVID-19 Funding and Spending
In response to the far-reaching public health and economic crises resulting from the COVID-19
pandemic, Congress has passed, and the President has signed, six COVID-19 relief laws. Figure 6
shows the COVID-19 relief laws enacted from March 2020, through May 31, 2021.

Figure 6: COVID-19 Relief Laws Enacted as of May 31, 2021

Note: The laws shown are those providing comprehensive COVID-19 relief. Additional COVID-19 relief legislation, such as
legislation providing limited and targeted relief to certain individuals, also was enacted during this period. Amounts shown
for the six COVID-19 relief laws are based on appropriation warrant information provided by the Department of the Treasury
as of May 31, 2021. These amounts have increased over time and could increase in the future for programs with indeﬁnite
appropriations, which are appropriations that, at the time of enactment, are for an unspeciﬁed amount.
a
The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, provided $7.8 billion to agencies for
health emergency prevention, preparedness, and response activities related to the COVID-19 pandemic, with the Department of
Health and Human Services receiving a majority of the funds. Pub. L. No. 116-123, 134 Stat. 146.
b
The Families First Coronavirus Response Act provided supplemental appropriations for nutrition assistance programs and
public health services and authorized the Internal Revenue Service to provide tax credits for paid emergency sick leave and
expanded family medical leave that the act required 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).
c
The CARES Act provided supplemental appropriations for federal agencies to respond to the COVID-19 pandemic. In addition,
the act funded various loans, grants, and other forms of federal ﬁnancial assistance for businesses, industries, states, local

Page 10 GAO-21-551
governments, and hospitals; provided tax rebates for certain individuals; temporarily expanded unemployment beneﬁts; and
suspended payments and interest on federal student loans. Pub. L. No. 116-136, 134 Stat. 281 (2020).
d
The Paycheck Protection Program and Health Care Enhancement Act provided additional appropriations for small business
loans, grants to health care providers, and COVID-19 testing. Pub. L. No. 116-139, 134 Stat. 620 (2020).
e
The Consolidated Appropriations Act, 2021, expanded or extended several CARES Act programs, including unemployment
insurance programs, economic impact payments, and Paycheck Protection Program loans and rescinded unobligated funds for
certain programs. Pub. L. No. 116-260, 134 Stat. 1182 (2020).
f
The American Rescue Plan Act of 2021 provided additional relief to address the continued impact of the COVID-19 pandemic on
the economy, public health, state and local governments, individuals, and businesses. Pub. L. No. 117-2, 135 Stat. 4.

As of May 31, 2021, about $4.7 trillion had been appropriated to fund response and recovery
eﬀorts for—as well as to mitigate the public health, economic, and homeland security eﬀects
of—the COVID-19 pandemic.13 As of May 31, 2021, the most recent date for which government-
wide information was available at the time of our analysis, the federal government had obligated a
total of $3.5 trillion and expended $3.0 trillion of the COVID-19 relief funds as reported by federal
agencies to the Department of the Treasury’s (Treasury) Governmentwide Treasury Account
Symbol Adjusted Trial Balance System (GTAS).14 Obligations and expenditures relative to the
amounts appropriated through COVID-19 relief laws have varied over time, as new relief laws have
been enacted, appropriating additional relief funds, and as the federal government has obligated
and expended these relief funds (see ﬁg. 7).

13An appropriation provides legal authority for federal agencies to incur obligations and make payments out of the U.S.
Treasury for speciﬁed purposes.
14An obligation is a deﬁnite commitment that creates a legal liability of the U.S. government for the payment of goods
and services ordered or received, or a legal duty on the part of the U.S. government that could mature into a legal
liability by virtue of actions on the part of the other party beyond the control of the U.S. government. An expenditure
is the actual spending of money, or an outlay. Expenditures include some estimates, such as estimated subsidy
costs for direct loans and loan guarantees. Increased spending in Medicaid and Medicare is not accounted for in the
appropriations provided by the COVID-19 relief laws. Federal agencies use GTAS to report proprietary ﬁnancial reporting
and budgetary execution information to Treasury.

Page 11 GAO-21-551
Figure 7: Percentage of COVID-19 Relief Appropriations Obligated and Expended, July 31, 2020–May 31, 2021

Note: The percentages shown represent the portions of appropriated funds available as of each date shown that had been
obligated and expended. An appropriation provides legal authority for federal agencies to incur obligations and make payments
out of the U.S. Treasury for speciﬁed purposes. Appropriation amounts are based on appropriation warrant information
provided by the Department of the Treasury as of July 31, 2020; September 30, 2020; November 30, 2020; January 31, 2021; and
May 31, 2021, for the six COVID-19 relief laws, four of which were enacted before July 2020. These amounts have increased over
time and could increase in the future for programs with indeﬁnite appropriations, which are appropriations that, at the time of
enactment, are for an unspeciﬁed amount.
An obligation is a deﬁnite commitment that creates a legal liability of the U.S. government for the payment of goods and
services ordered or received, or a legal duty on the part of the U.S. government that could mature into a legal liability by virtue
of actions on the part of the other party beyond the control of the U.S. government. An expenditure is the actual spending of
money, or an outlay. Expenditures reﬂected in the percentages shown include some estimates, such as estimated subsidy costs
for direct loans and loan guarantees. Increased spending in Medicaid and Medicare is not accounted for in the appropriations
provided by the COVID-19 relief laws. Under Oﬃce of Management and Budget (OMB) guidance, federal agencies were not
directed to report COVID-19 related obligations and expenditures until July 2020.

The 13 major spending areas shown in table 1 represent $4.1 trillion, or 87 percent, of the total
amounts appropriated. For these 13 spending areas, agencies reported obligations totaling $3.2
trillion and expenditures totaling $2.8 trillion as of May 31, 2021. Table 1 provides additional
details on appropriations, obligations, and expenditures of government-wide COVID-19 relief
funds, including the 13 major spending areas.

Page 12 GAO-21-551
Table 1: COVID-19 Relief Appropriations, Obligations, and Expenditures, as of May 31, 2021
Total Total
b c c
Total appropriations obligations expenditures
a
Major spending area ($ billions) ($ billions) ($ billions)

Unemployment Insurance 858.6 575.6 566.2
(Department of Labor)

Economic Impact Payments 855.3 829.9 829.9
(Department of the Treasury)

Business Loan Programs 838.0 834.6 805.4
d
(Small Business Administration)

Public Health and Social Services Emergency Fund 350.1 228.7 154.5
(Department of Health and Human Services)

Coronavirus State and Local Fiscal Recovery Funds 350.0 140.2 131.0
e
(Department of the Treasury)

Education Stabilization Fund 278.6 224.0 30.9
(Department of Education)

Coronavirus Relief Fund 150.0 149.9 149.5
(Department of the Treasury)

Disaster Relief Fund
f 97.0 58.1 2.2
(Department of Homeland Security)

Transit Infrastructure Grants 69.5 27.1 19.6
(Department of Transportation)

Supplemental Nutrition Assistance Programs 69.4 26.9 26.8
(Department of Agriculture)

Emergency Economic Injury Disaster Loan (EIDL) Grants 55.0 21.4 21.1
(Small Business Administration)

Payment to States for the Child Care and Development 52.5 51.9 3.9
Block Grant
(Department of Health and Human Services)

Disaster Loans Programs 51.0 27.1 25.5
d
(Small Business Administration)

Other areas
g,h 630.6 303.6 233.3

Total
i 4,705.6 3,499.0 2,999.8

Source: GAO analysis of data from the Department of the Treasury (Treasury) and applicable agencies. | GAO-21-551

a
Major spending areas shown are based on federal accounts in Treasury’s Governmentwide Treasury Account Symbol Adjusted
Trial Balance System (GTAS). Each spending area may include multiple programs.
b
COVID-19 relief appropriations shown reﬂect amounts appropriated under the American Rescue Plan Act of 2021 (ARPA), Pub.
L. No. 117-2, 135 Stat. 4; Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182 (2020); Paycheck Protection

Page 13 GAO-21-551
Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat.
281 (2020); Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); and Coronavirus Preparedness
and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146. These amounts are based on
appropriation warrant information provided by Treasury as of May 31, 2021. These amounts have increased over time
and could increase in the future for programs with indeﬁnite appropriations, which are appropriations that, at the time of
enactment, are for an unspeciﬁed amount. The amounts shown do not include transfers of funds that federal agencies may
make between appropriation accounts or transfers of funds they may make to other agencies.
c
Obligation and expenditure data shown are based on data reported by applicable agencies. An obligation is a deﬁnite
commitment that creates a legal liability of the U.S. government for the payment of goods and services ordered or received,
or a legal duty on the part of the U.S. government that could mature into a legal liability by virtue of actions on the part of
the other party beyond the control of the U.S. government. An expenditure is the actual spending of money, or an outlay.
Expenditures shown include some estimates, such as estimated subsidy costs for direct loans and loan guarantees.
d
The Small Business Administration’s Business Loan Program account includes activity for the Paycheck Protection Program
loan guarantees and certain other loan subsidies, and the Disaster Loans Program account includes activity for direct loans.
Both of these expenditures relate mostly to the loan subsidy costs (i.e., the loan’s estimated long-term costs to the U.S.
government).
e
The Coronavirus State and Local Fiscal Recovery Funds were established by section 9901 of ARPA, enacted on March 11, 2021,
and are codiﬁed at 42 U.S.C. §§ 802, 803.
f
Appropriations to the Disaster Relief Fund are generally not speciﬁc to individual disasters or events, including the COVID-19
response. The Disaster Relief Fund’s COVID-19-related spending includes funding from appropriations in addition to those in
the six COVID-19 relief laws. Treasury’s methodology for determining COVID-19-related obligations and expenditures does not
include obligations and expenditures from these other appropriations. In its Disaster Relief Fund Monthly Report dated June
10, 2021, the Department of Homeland Security reported COVID-19-related obligations totaling $75.2 billion and expenditures
totaling $52.9 billion as of May 31, 2021.
g
We previously included Treasury’s Economic Stabilization and Assistance to Distressed Sectors in the major spending areas.
Economic Stabilization and Assistance to Distressed Sectors programs received $500 billion in appropriations from the CARES
Act, of which approximately $478.8 billion was rescinded in response to the Consolidated Appropriations Act, 2021. Therefore,
Economic Stabilization and Assistance to Distressed Sectors is no longer included in our list of major spending areas.
h
Several provisions in the Families First Coronavirus Response Act and ARPA authorized increases in Medicaid payments to
states and U.S. territories. The Congressional Budget Oﬃce estimated that federal expenditures from these provisions would
total approximately $76.9 billion through ﬁscal year 2030. The largest increase to federal Medicaid spending is based on a
temporary formula change rather than a speciﬁc appropriated amount. Some of the estimated costs in this total are for the
Children’s Health Insurance Program, permanent changes to Medicaid, and changes not speciﬁcally related to COVID-19. This
increased spending is not accounted for in the appropriations provided by the COVID-19 relief laws and therefore not included
in this table.
i
The sum of amounts shown may not agree due to rounding.

The COVID-19 relief laws provided more than $1 trillion to federal agencies to provide assistance
related to the COVID-19 pandemic to U.S. states, the District of Columbia, localities, U.S. territories,
Indian tribes (tribes), and tribal governments through existing and newly created programs and
funds.15Table 2 lists programs and funds that each received $10 billion or more—exclusively or
primarily for states, D.C., localities, U.S. territories, tribes, and tribal governments—in at least one
of the six laws.

15This total is based on (1) an analysis of the appropriated amounts in the American Rescue Plan Act of 2021, Divisions
M and N of the Consolidated Appropriations Act, 2021, the Paycheck Protection Program and Health Care Enhancement
Act, the CARES Act, the Families First Coronavirus Response Act, and the Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020 that are available to agencies for assistance to states, D.C., localities, U.S.
territories, tribes, and tribal governments, and (2) the Congressional Budget Oﬃce’s estimated outlays for Medicaid
increases resulting from authorized increases in payments to states and U.S. territories under those laws.

Page 14 GAO-21-551
Table 2: Federal Programs and Funds Receiving $10 Billion or More in COVID-19 Pandemic-Related Aid for States,
the District of Columbia, Localities, U.S. Territories, Tribes, and Tribal Governments, as of May 31, 2021
Appropriations
Program/fund and description ($ in billions)

Coronavirus State and Local Fiscal Recovery Funds 350.0
Administered by the Department of the Treasury (Treasury), these funds provide payments
to states, the District of Columbia (D.C.), U.S. territories, tribal governments, and localities to
mitigate the ﬁscal eﬀects stemming from the COVID-19 pandemic, among other things.

Elementary and Secondary School Emergency Relief Fund 190.3
Administered by the Department of Education, this fund generally provides formula grants
to states (including D.C. and Puerto Rico) for education-related needs to address the impact
of the COVID-19 pandemic.

Coronavirus Relief Fund 150.0
Administered by Treasury, this fund provides payments to states, D.C., localities, U.S.
territories, and tribal governments to help oﬀset costs of their response to the COVID-19
pandemic.

Disaster Relief Fund 95.0
Administered by the Federal Emergency Management Agency, this fund provides federal
disaster recovery assistance for state, local, and territorial governments when a major
a
disaster occurs.

Medicaid 76.9
b

Administered by states and U.S. territories according to plans approved by the Centers for
Medicare & Medicaid Services, 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 U.S. territories’ health care expenditures. The Families First
Coronavirus Response Act and American Rescue Plan Act of 2021 temporarily increased
federal Medicaid matching rates under speciﬁed circumstances, among other changes.

Transit grants 69.5
Administered by the Federal Transit Administration, these funds are distributed through
existing grant programs to provide assistance to states, localities, U.S. territories, and tribes
to prevent, prepare for, and respond to the COVID-19 pandemic.

Child Care and Development Block Grant 52.5
Administered by the Department of Health and Human Services (HHS), this block grant
provides funds to states, D.C., territories, and tribes to subsidize the cost of child care for
low-income families. Funding permits assistance to health care and other essential workers
without regard to income eligibility requirements. Additional child care stabilization funding
was provided for subgrants to eligible child care providers to support the stability of the
child care sector during and after the COVID-19 pandemic.

Emergency Rental Assistance 46.6
Administered by Treasury, this program provides grants to states, D.C., U.S. territories,
localities, and tribes to provide rental assistance to eligible households.

Public Health and Social Services Emergency Fund 33.4

Page 15 GAO-21-551
Appropriations
Program/fund and description ($ in billions)

Administered by HHS, this fund provides for grants to states, U.S. territories, localities, and
tribal governments to support COVID-19 testing, surveillance, and contact tracing, among
other uses.

Airport grants 20.0
Administered by the Federal Aviation Administration, these grants provide funds for eligible
c
airports to prevent, prepare for, and respond to the eﬀects of the COVID-19 pandemic.

Highway infrastructure programs 10.0
Administered by the Federal Highway Administration, these programs provide funds to
states, D.C., U.S. territories, and tribes for highway construction and authorize the use of
these funds for maintenance, personnel, and other purposes to prevent, prepare for, and
respond to the COVID-19 pandemic.

Coronavirus Capital Projects Fund 10.0
Administered by Treasury, this fund provides payments to states, D.C., U.S. territories, and
tribal governments for critical capital projects that directly enable work, education, and
health monitoring, in response to the COVID-19 pandemic.

State Small Business Credit Initiative 10.0
Administered by Treasury, this program provides funds to states, D.C., U.S. territories, tribal
governments, and eligible localities to fund small business credit support and investment
programs.

Source: GAO analysis of federal laws and data from the Congressional Budget Oﬃce. | GAO-21-551.

Note: The COVID-19 relief laws providing the amounts shown are the American Rescue Plan Act of 2021 (ARPA), Pub. L. No.
117-2, 135 Stat. 4 (2021), the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, div. M and N, 134 Stat. 1182 (2020),
the Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020), the CARES Act,
Pub. L. No. 116-136, 134 Stat. 281 (2020), and the Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178
(2020). The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 did not provide any speciﬁed
amounts for these programs or funds for states, D.C., localities, territories, tribes, or tribal governments. The amounts shown
are the cumulative amounts for each program or fund under the other ﬁve laws. Some appropriation amounts include an
amount available for administration expenses or for the relevant inspectors general. Numbers are rounded to the nearest
hundred million.
a
The Disaster Relief Fund may be used for various disaster assistance programs, including the Public Assistance program, which
provides assistance to states, U.S. territories, and localities.
b
Several provisions in the Families First Coronavirus Response Act and ARPA authorized increases in Medicaid payments to
states and U.S. territories. The Congressional Budget Oﬃce estimated that federal expenditures from these provisions would be
approximately $76.9 billion through ﬁscal year 2030. The largest increase to federal Medicaid spending is based on a temporary
formula change rather than a speciﬁc appropriated amount. Some of the estimated costs in this total are for the Children’s
Health Insurance Program, permanent changes to Medicaid, and changes not speciﬁcally related to COVID-19.
c
Funds are available to eligible sponsors of airports. Nearly all of these airports are under city, state, county, or public-authority
ownership.

Page 16 GAO-21-551
Executive Summary

Overview
As COVID-19 case and death counts decline and the nation looks toward fully reopening, we
identify key considerations for the federal government moving forward. In this report, we are
making 15 new recommendations across the federal government in the areas of public health and
the economy, speciﬁcally aimed at enhancing pandemic preparedness and response, program
integrity, and the delivery of beneﬁts and services to the public.

In our prior seven CARES Act reports, we made 72 recommendations to agencies. Agencies
have fully implemented 16 of these recommendations in areas such as inspections of state
veterans homes, data on nursing home vaccination rates, and guidance on reassessing schools’
operating status.16 As Congress and the administration carry out the federal government’s
ongoing COVID-19 response, including the use of funding from ARPA, we urge action on our
prior 55 recommendations that have not been fully implemented, as well as our 15 new
recommendations. We continue to believe that these recommendations would enhance
transparency and accountability over the federal government’s response to, and recovery from,
the COVID-19 pandemic. For a summary and the status of all prior recommendations from these
reports, see appendix IV.

COVID-19 Testing
CDC developed a COVID-19 test, which received an emergency use authorization (EUA) from the
Food and Drug Administration (FDA) on February 4, 2020, and was distributed to public health
and Department of Defense laboratories from February 6 to 10, 2020.17 However, immediately
after receiving the CDC test, many public health laboratories reported to CDC that the test was
not working properly.18 Following these reports, CDC worked to correct the issue and, by February
28, 2020, began distributing new test kits to the laboratories. The failure of CDC’s COVID-19 test
limited testing capacity in the U.S. during the critical early weeks of the pandemic, when the nation
needed to understand the spread of the novel virus.

16We closed one additional recommendation as unimplemented. This recommendation was for the Department
of Veterans Aﬀairs to develop preliminary targets for their phased vaccination rollout. We determined that the
recommendation was no longer relevant as the department has discontinued their phased vaccination approach in light
of the increased supply of COVID-19 vaccines.
17FDA may temporarily allow unapproved products to be used in an emergency through the issuance of EUAs, provided
there is evidence that the product may be eﬀective and that the known and potential beneﬁts of the product outweigh
known and potential risks, among other statutory criteria. See 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 less certainty of eﬀectiveness than is required for FDA product approvals and
clearances. Based upon the CDC EUA request, use of the test was limited to qualiﬁed laboratories designated by CDC.
18According to CDC, before laboratories use a new test on samples from patients, they must verify the test performance
to make sure it works as expected. According to CDC, about half of the 93 laboratories had reported the status of their
veriﬁcation of the test to CDC by February 21, 2020, and of these laboratories, 85 percent reported problems with the
test. The remaining laboratories did not report their veriﬁcation status to CDC.

Page 17 GAO-21-551
CDC’s was the only COVID-19 test available in the U.S. until February 29, 2020, when FDA
announced that it did not intend to object if certain laboratories began using their own tests
while they prepared EUA requests. According to CDC, by February 29, 2020, its laboratory had
tested a total of 3,291 specimens, representing approximately 1,195 individuals. In contrast,
other countries around the world quickly scaled up testing in late January and early February. For
example, the South Korean government reported that South Korea was conducting about 20,000
tests each day by the middle of February 2020.19

While CDC has begun making improvements to its process for developing diagnostic tests,
additional actions could help strengthen CDC’s preparedness and enhance the nation’s testing
capacity during a future infectious disease outbreak. For example, CDC has opportunities to
improve communication and collaboration. The agency collaborated with public health and private
stakeholders—including public health and private laboratories—beginning in 2018 to identify
potential opportunities to enhance laboratory capacity to respond to a needed surge in testing.
However, CDC has not yet developed a plan for enhancing laboratory surge testing capacity that
identiﬁes objectives and outlines agency and stakeholder roles and responsibilities for achieving
these objectives within deﬁned time frames.

We are recommending that CDC work with appropriate stakeholders to develop a plan to
enhance surge capacity for laboratory testing. This plan should include timelines, deﬁne agency
and stakeholder roles and responsibilities, and address any identiﬁed gaps from preparedness
exercises. CDC agreed with this recommendation.

The COVID-19 pandemic demonstrated potential opportunities for CDC to improve its testing
capacity for future public health emergencies by improving test kit manufacturing capacity. For
example, if surge testing is required at the beginning of a future emergency, CDC could beneﬁt
from establishing contracts for the manufacturing of test kits before a public health emergency
occurs. Establishing contracts with test kit manufacturers in advance of a public health emergency
could allow CDC to supplement the supply produced by CDC and aid in the rapid manufacturing
and deployment of test kits during a future public health emergency. CDC oﬃcials told us that
responding to COVID-19 required surge capacity for additional laboratory testing. However, the
agency did not have manufacturing contracts in place prior to the COVID-19 pandemic that could
have supported the testing response.

We are recommending that CDC assess the agency’s needs for goods and services for the
manufacturing and deployment of diagnostic test kits in public health emergencies. This
assessment should evaluate how establishing contracts in advance of an emergency could help
CDC quickly and cost-eﬀectively acquire these capabilities when responding to future public health
emergencies and incorporate lessons learned from the COVID-19 emergency. CDC agreed with this
recommendation. See the COVID-19 Testing enclosure in appendix I for more information.

Domestic Medical Supply Manufacturing
Personal protective equipment (PPE)—safety products designed to help prevent the spread of
infectious disease—has been critical to the COVID-19 response. Before the pandemic, the U.S.

19Government of the Republic of Korea, All about Korea’s Response to COVID-19 (Seoul, Republic of Korea: Oct. 13, 2020).

Page 18 GAO-21-551
generally depended on foreign suppliers for certain PPE types, including nitrile gloves and surgical
gowns. U.S. dependence on foreign manufacturers has increased over the past several decades in
part because foreign manufacturers can produce their products at a lower cost.20 Federal agencies
have identiﬁed this dependence as a national security issue.

Multiple stakeholders representing manufacturers, distributors, and other purchasers we
interviewed noted that meaningful, transparent federal engagement with industry could enhance
domestic manufacturing and supply chain resilience and help ensure these perspectives are
considered in strategies to support and sustain the domestic PPE industry. According to some
stakeholders, such engagement with the private sector could help ramp up private investment in
domestic PPE manufacturing, among other things.

In January 2021, we reported that the Department of Health and Human Services (HHS) had
not developed a process for engaging with key nonfederal stakeholders and Congress for
development of a supply chain strategy for pandemic preparedness, including the role of the
Strategic National Stockpile (SNS). We recommended that HHS do so, and the department
generally agreed with our recommendation. However, as of May 2021, the HHS Oﬃce of the
Assistant Secretary for Preparedness and Response (ASPR)—which leads the nation’s medical
and public health preparedness for, response to, and recovery from disasters and public health
emergencies—had not proactively engaged any private or public partners in strategic discussions
to implement this recommendation. However, ASPR oﬃcials told us that such discussions are
important and that they are considering how to better engage their public and private partners.

We continue to underscore that engaging with key nonfederal stakeholders in meaningful,
proactive ways to obtain their business and industry expertise, as well as engaging with Congress,
is critical for developing strategies to build a sustainable domestic medical supply manufacturing
base. See the Domestic Medical Supply Manufacturing enclosure in appendix I for more
information.

Strategic National Stockpile
The SNS contains a multibillion dollar inventory of medical countermeasures—drugs, vaccines,
supplies, and other materials—to respond to a broad range of public health emergencies. The SNS
can be used as a short-term stopgap buﬀer when the supply of materials may not be immediately
available in aﬀected areas during a public health emergency. ASPR oversees the SNS. As of May 31,
2021, HHS reported it had obligated about $10.2 billion of the $13.9 billion it planned to use for
the SNS and had expended about $6.3 billion.

ASPR leads an interagency group of experts, the Public Health Emergency Medical
Countermeasures Enterprise (PHEMCE). The PHEMCE advises the Secretary of Health and
Human Services in prioritizing, developing, procuring, deploying, and eﬀectively using medical
countermeasures held in the SNS. Comprising representatives from multiple agencies within HHS
and other federal departments such as the Departments of Defense and Homeland Security,

20PPE is typically considered to be a low-margin commodity—that is, the selling price is not much higher than the cost
to produce. Low-margin commodities like PPE are not highly unique or highly specialized products, making the PPE
industry more competitive.

Page 19 GAO-21-551
the PHEMCE also manages the SNS annual review, a year-long, multistep process that starts with
an examination of the SNS inventory and results in recommendations to HHS on SNS medical
countermeasure procurements and a report to Congress.

The Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 speciﬁed
that the PHEMCE is to use a process to make recommendations to the Secretary of Health and
Human Services regarding research, procurement, and stockpiling of medical countermeasures.21
The PHEMCE is also to assist the Secretary in developing strategies for logistics, deployment,
distribution, dispensing, and use of countermeasures that may be applicable to SNS activities.

In the years before the COVID-19 pandemic, ASPR began restructuring the PHEMCE. The changes,
which began after December 2017, narrowed the scope of PHEMCE deliberations about medical
countermeasures from a comprehensive range of issues to a focus on development and
procurement. According to the former Assistant Secretary, in future iterations of the PHEMCE
restructure, ASPR planned to broaden the PHEMCE’s scope to also focus on issues such as the
deployment and utilization of medical countermeasures. The changes also shifted the structure of
the deliberation process from bottom up to top down. According to the former Assistant Secretary,
this shift was made to make the process more eﬃcient and ensure medical countermeasure
development focused on national security vulnerabilities.

However, the restructuring has led to concerns about:

• the eﬀectiveness of interagency collaboration and transparency and

• lapses in SNS annual reviews, as ASPR did not complete statutorily required annual reviews for
2017, 2018, and 2019.22

ASPR is in the process of reassessing and reestablishing new organizational processes for the
PHEMCE but, has not yet ﬁnalized planning documents, including an organizational charter
and implementation plan, to guide those eﬀorts. ASPR oﬃcials acknowledged that the changes
made to the PHEMCE from 2018 to 2020 did not fully achieve the desired aims and created other
challenges.

We are recommending that ASPR develop and document plans for restructuring the PHEMCE.
These plans should describe how ASPR will ensure a transparent and deliberative process that
engages interagency partners in the full range of responsibilities for the PHEMCE outlined in the
Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019, including those
related to the SNS annual reviews. These plans should also incorporate GAO’s leading practices
to foster more eﬀective collaboration, while ensuring that sensitive information is appropriately
protected. HHS—which includes ASPR—agreed with this recommendation. See the Strategic
National Stockpile enclosure in appendix I for more information.

21Pub. L No. 116-22, § 402(a), 133 Stat. 905, 942–43 (codiﬁed at 42 U.S.C. § 300hh-10a(c)(1)).
22See 42 U.S.C. § 247d-6b(a)(2).

Page 20 GAO-21-551
ASPR lacked documentation of PHEMCE activities and deliberations after 2017, raising concerns
about its records management practices. For example, ASPR was unable to provide us with
documentation related to PHEMCE decisions or recommendations made from 2018 to 2020;
the rationale for the changes to the PHEMCE; or PHEMCE meeting agendas and minutes from
2018 to 2020. Not maintaining such documentation is inconsistent with HHS’s policy for records
management and also leaves Congress and key stakeholders without assurances that steps taken
are advancing national preparedness for natural, accidental, and intentional threats.23

We are recommending that ASPR implement records management practices that include
developing, maintaining, and securing documentation related to PHEMCE activities and
deliberations, including those related to the SNS. Documentation should include information
such as the factors considered, the rationale for the action or decision, and the ﬁnal outcomes
of PHEMCE processes. HHS, including ASPR, agreed with this recommendation. See the Strategic
National Stockpile enclosure in appendix I for more information.

ASPR procures supplies to maintain SNS inventory in preparation for bioterrorist attacks and other
public health emergencies, using a standard procurement process. Because the nationwide need
for critical supplies to respond to COVID-19 quickly exceeded the quantity of supplies contained in
the SNS, ASPR also used additional procurement processes, including direct shipment of supplies
from vendors. Under this direct shipment procurement, supplies purchased by ASPR were not
used to replenish the SNS but instead were primarily distributed from vendors directly to state,
local, territorial, and tribal governments.

Without written policies and procedures documenting how ASPR tracks the direct shipment and
receipt of supplies prior to issuing payments, there is an increased risk that ASPR may make
improper payments to vendors for incorrect supplies or quantities or for supplies the intended
recipients did not receive. In addition, it is diﬃcult for management to assess the adequacy of
controls over the direct shipment procurement process, and ASPR lacks assurance that its staﬀ
fully understand the process and properly and consistently perform their duties.

We are recommending that, to strengthen the current procedures, ASPR update policies and
procedures for the SNS, including related control and monitoring activities, to document the direct
shipment procurement process and address payment integrity risks. Although HHS, including

23See Department of Health and Human Services, HHS Policy for Records Management, HHS-OCIO-PIM-2020-06-004, May
2020.
24Oﬃce of Management and Budget, Appendix C to OMB Circular A-123, Requirements for Payment Integrity Improvement,
OMB Memorandum M-18-20 (Washington, D.C.: June 26, 2018). In March 2021, OMB issued a revised version of OMB
Circular A-123, Appendix C, eﬀective starting in ﬁscal year 2021. Oﬃce of Management and Budget, Appendix C to OMB
Circular A-123, Requirements for Payment Integrity Improvement, OMB Memorandum M-21-19 (Washington, D.C.: Mar. 5,
2021).

Page 21 GAO-21-551
ASPR, did not agree with us regarding the need to address payment integrity risks, it stated that
HHS will update its policies and procedures, including related control and monitoring activities to
document the direct shipment procurement process. See the Strategic National Stockpile Payment
Integrity enclosure in appendix I for more information.

HHS COVID-19 Funding
As of May 31, 2021, Congress had appropriated HHS approximately $484 billion in COVID-19 funds
in six relief laws. The majority of HHS’s appropriations from the ﬁrst ﬁve relief laws have been
obligated and about half have been expended. Speciﬁcally, as of May 31, 2021, the department
reported the following:

• Of the $324 billion appropriated in the ﬁrst ﬁve COVID-19 relief laws, about $253 billion had
been obligated (about 78 percent) and about $168 billion had been expended (about 52
percent).

• Of the $160 billion appropriated in the sixth law, ARPA, about $75 billion had been obligated
(about 47 percent) and about $3 billion had been expended (about 2 percent).

HHS uses “spend plans” to communicate information about its COVID-19 spending. The ﬁrst ﬁve
COVID-19 relief laws generally require the department to develop, update, and provide these
spend plans to Congress every 60 days.25 The sixth relief law, ARPA, does not require a spend
plan; however, according to HHS oﬃcials, the department is preparing a consolidated plan that
captures the ﬁrst ﬁve relief laws and a separate spend plan for funding provided through ARPA.
The consolidated spend plan is under internal review at HHS, and the ARPA spend plan is still
being ﬁnalized. As of May 2021, we had received and reviewed a total of 15 spend plans—the
original spend plans and subsequent updates—provided by HHS. However, we found that the
most current spend plans generally do not include time frames for obligating the remaining relief
funds, which is useful information for oversight and for informing Congress’s future funding
decisions.

Guidance from OMB encouraged federal agencies, including HHS, to act quickly to disburse
relief funds and noted the importance of spending transparency and regular reporting to help
safeguard taxpayer dollars.26 To communicate information about, and facilitate oversight of, the
department’s use of COVID-19 relief funds, we are recommending that HHS provide projected
time frames for the planned spending of COVID-19 relief funds in the spend plans it submits to

25The ﬁrst ﬁve COVID-19 relief laws include the Coronavirus Preparedness and Response Supplemental Appropriations
Act, 2020, the Families First Coronavirus Response Act, the CARES Act, the Paycheck Protection Program and Health Care
Enhancement Act, and the Consolidated Appropriations Act, 2021.
26See Oﬃce of Management and Budget, COVID Reporting Implementation Guidance for Supplemental Funding Provided in
Response to the Coronavirus Disease 2019 (COVID-19), OMB M-20-21 (Apr. 10, 2020).

Page 22 GAO-21-551
Congress. HHS partially concurred with the recommendation and stated that the department
would aim to incorporate some time frames on planned spending where that information may
be available such as time frames for select grants to states. However, HHS oﬃcials stated that the
department would not be able to provide speciﬁc time frames for all relief funds since the evolving
environment requires the department to remain ﬂexible in responding to incoming requests for
response activities. See the HHS COVID-19 Funding enclosure in appendix I for more information.

Higher Education Grants
Since March 2020, approximately $76.2 billion in relief funding has been appropriated for the
Higher Education Emergency Relief Fund (HEERF), which provides grants to institutions of higher
education to prevent, prepare for, and respond to COVID-19.27 The Department of Education’s
(Education) Oﬃce of Postsecondary Education (OPE) is responsible for administering HEERF.

In April 2020, Education notiﬁed schools of their individual funding allocations provided by the
CARES Act and also began awarding HEERF grants to schools.28 As of May 31, 2021, 14 months
after the enactment of the CARES Act, OPE had obligated $66 billion in HEERF funding provided by
the COVID-19 relief laws—more than 33 times the average of $2 billion in grants that OPE normally
administers annually.

To administer HEERF grants, OPE relied primarily on existing staﬃng levels and its existing grant
policies and procedures, including those documented in its Guide for Managing Formula Grant
Programs. This guide establishes the structure and oversight responsibility for grant funding,
including the requirement that OPE staﬀ review the accuracy of award information, such as
allocation information, before awarding the grants and recording the obligations.

Although OPE had policies and procedures in place, Education faced inherent challenges that
increase the risk of improper payments—speciﬁcally, an unusually large volume of funding
and a needed urgency to process and distribute the funding expeditiously because of health
and economic threats posed by the COVID-19 pandemic. We tested Education’s procedures for
approving and processing HEERF grants through a sample of obligations and determined that
Education did not eﬀectively design and implement procedures needed to identify erroneous
obligations. We estimate that for 5.5 percent of schools receiving HEERF grants, (about 262 of
the 4,764 schools included in our sample population), Education awarded grants in excess of the
amounts allocated to those schools. We identiﬁed three such instances, totaling $20 million, in our
sample of obligations.

OPE oﬃcials stated that because of time constraints and having the same staﬃng level to
administer a signiﬁcantly higher volume of grants, they did not regularly perform quality

27The total appropriation comprises $13.9 billion from the CARES Act, $22.7 billion from the Consolidated
Appropriations Act, 2021, and $39.6 billion from ARPA.
28The CARES Act directed the Department of Education (Education) to allocate HEERF funding to eligible schools based
on a funding formula. Education used the Oﬃce of Postsecondary Education (OPE) Identiﬁcation Number as the unique
identiﬁer for each school that was allocated funding per Education’s formula allocation tables for HEERF, published on
OPE’s website. Education subsequently notiﬁed schools of additional allocations provided by the other COVID-19 relief
laws.

Page 23 GAO-21-551
assurance reviews after obligating funding to identify and correct erroneous obligations, such as
additional quality assurance reviews of HEERF grants. OPE oﬃcials told us that in some instances,
schools have identiﬁed and self-reported discrepancies in their awards. Once noted, OPE then
veriﬁed those errors and corrected them.

We are recommending that Education design and implement procedures for regularly
conducting quality assurance reviews of obligated amounts for higher education grants, including
HEERF grants, to help identify and correct erroneous obligations in a timely manner. Education
agreed with this recommendation. See the Higher Education Grants enclosure in appendix I for
more information.

Coronavirus State and Local Relief and Recovery Funds
COVID-19 relief laws appropriated $500 billion to Treasury to provide direct funding to states,
localities, tribal governments, the District of Columbia, and U.S. territories to help them respond
to, and recover from, the COVID-19 pandemic. This amount includes $150 billion that the CARES
Act appropriated to Treasury for the Coronavirus Relief Fund (CRF) in March 2020, as well as $350
billion that ARPA appropriated to Treasury for the Coronavirus State and Local Fiscal Recovery
Funds (CSLFRF) in March 2021.29

As of July 31, 2020, Treasury had disbursed $149.5 billion of the $150 billion appropriated for
the CRF—$142 billion to states, localities, the District of Columbia, and U.S. territories and
approximately $7.5 billion to tribal governments.30 These recipients can use CRF payments
to oﬀset costs related to either the pandemic’s direct eﬀects (e.g., public health needs) or its
indirect eﬀects (e.g., harm to individuals or businesses as a result of COVID-19 pandemic-related
closures).31 The CSLFRF provides payments to these recipients to cover a broader range of costs
stemming from the ﬁscal eﬀects of the COVID-19 pandemic.32

29CARES Act, Pub. L. No. 116-136, div. A, tit. V, § 5001, 134 Stat. at 501–04; ARPA, Pub. L. No. 117-2, tit. IX, § 9901, 135
Stat. at 223–36. This section of ARPA appropriated $350 billion for two funds—the Coronavirus State Fiscal Recovery
Fund and the Coronavirus Local Fiscal Recovery Fund—as well as $10 billion for the Coronavirus Capital Projects Fund
and $2 billion for the Local Assistance and Tribal Consistency Fund, which are codiﬁed, respectively, at 42 U.S.C. §§ 802,
803, 804, 805. We focus only on the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery
Fund, which we discuss as one for the purposes of this report. Further, this ARPA section appropriated an additional $50
million to the Secretary of the Treasury to administer these four funds as well as the Coronavirus Relief Fund enacted by
the CARES Act, as amended. See 42 U.S.C. § 802(a)(2).
30Approximately $450 million of the $8 billion Tribal Set-Aside has not been disbursed because of litigation. In 2020,
several Indian tribes sued Treasury over its interpretation that Alaska Native regional and village corporations are Indian
tribes eligible to receive disbursements from the CRF Tribal Set-Aside. On June 25, 2021, the United States Supreme
Court held that Alaska Native regional and village corporations are Indian tribes under the Indian Self-Determination
and Education Assistance Act and thus are eligible for disbursements from the CRF Tribal Set-Aside. Yellen v. Confederated
Tribes of the Chehalis Reservation, 594 U.S. __ (2021).
31The CARES Act established that CRF recipients could use CRF funds to cover costs that they had incurred between
March 1, 2020, and December 30, 2020, and had not accounted for in their most recent budget prior to the law’s
enactment. Pub. L. No. 116-136, § 5001, 134 Stat. at 503. This time frame was extended to December 31, 2021, by the
Consolidated Appropriations Act, 2021. Pub. L. No. 116-260, tit. X, § 1001, 134 Stat. at 2145. Beginning in April 2020,
Treasury published guidance on its interpretation of the permissible uses of CRF funds. For example, Treasury stated
in guidance to CRF recipients that they may not use the funds to ﬁll shortfalls in government revenue. See 86 Fed. Reg.

Page 24 GAO-21-551
The Single Audit Act establishes requirements for states, localities, Indian tribes, the District
of Columbia, U.S. territories, and nonproﬁt organizations that receive federal awards to
undergo single audits of those awards annually (unless a speciﬁc exception applies) when
their expenditures meet a certain dollar threshold.33 Single audits are critical to the federal
government’s ability to help safeguard the use of the billions of dollars distributed through
the CRF and CSLFRF. Speciﬁcally, a single audit may identify deﬁciencies in an award recipient’s
compliance with applicable provisions of laws, regulations, contracts, or grant agreements and in
its ﬁnancial management and internal control systems. Correcting such deﬁciencies can help to
reasonably assure award recipients’ appropriate use of federal funds and reduce the likelihood of
federal improper payments.

Auditors who conduct single audits follow guidance in the Single Audit Act’s Compliance
Supplement, which provides guidelines and policy for performing single audits. After consultation
with federal agencies, OMB annually updates and issues the supplement.34 Auditors have
reported that the timing of the supplement is critical in allowing them to plan their work
eﬀectively.

The timely issuance of single audit guidance is critical to ensuring timely completion and reporting
of single audits to inform the federal government about actions needed to help safeguard the
use of the billions of dollars distributed through the CRF and CSLFRF. We are recommending
that OMB, in consultation with Treasury, issue timely and suﬃcient single audit guidance for
auditing recipients’ uses of payments from the CSLFRF. OMB neither agreed nor disagreed with
this recommendation. For more information about state and local relief and recovery funds, see
the Coronavirus State and Local Relief and Recovery Funds enclosure in appendix I.

Economic Impact Payments
The CARES Act, the Consolidated Appropriations Act, 2021, and ARPA authorized Treasury and the
Internal Revenue Service (IRS) to issue economic impact payments (EIP) as direct payments to help
individuals address ﬁnancial stress due to the pandemic. Starting on March 17, 2021, Treasury
and IRS quickly issued a third round of direct payments (EIP 3) to most eligible individuals.35 IRS

4,182, 4,183 (Jan. 15, 2021). For more information on the allocation and disbursement of CRF funds, see GAO, COVID-19:
Opportunities to Improve Federal Response and Recovery Eﬀorts, GAO-20-625 (Washington, D.C.: June 25, 2020).
32Recipients may use the CSLFRF payments to cover costs incurred by December 31, 2024, to, for example, respond to
the COVID-19 pandemic or its negative economic impacts, including assistance to households; small businesses; and
nonproﬁts or aid to impacted industries, such as tourism, travel, and hospitality. ARPA, Pub. L. No. 117-2, § 9901, 135
Stat. at 223.
33The Single Audit Act is codiﬁed, as amended, at 31 U.S.C. §§ 7501-06, and implementing OMB guidance is reprinted in
2 C.F.R. Part 200. Nonfederal entities (states, U.S. territories, tribes, local governments, or nonproﬁt organizations) that
expend $750,000 or more in federal awards in a ﬁscal year are required to undergo a single audit—that is, an audit of an
entity’s ﬁnancial statements and federal awards, or a program-speciﬁc audit, for the ﬁscal year. 31 U.S.C. § 7502; 2 C.F.R.
§ 200.501.
34To help administer the new COVID-19 relief funding, many federal awarding agencies also issued new guidance to
award recipients regarding how those funds should be reported and spent.
35In March 2020 and December 2020, respectively, the CARES Act and the Consolidated Appropriations Act, 2021,
authorized Treasury and IRS to issue EIP 1 and EIP 2 as direct payments to help individuals address ﬁnancial stress due
to the pandemic. Pub. L. No. 116-136, § 2201, 134 Stat. at 335–340; Pub. L. No. 116-260, § 272, 134 Stat. at 1965–1976.

Page 25 GAO-21-551
reported that as of May 28, 2021, it had disbursed over 168.2 million payments totaling more than
$394.3 billion.

To publicize information about how to ﬁle a tax return with IRS to receive an EIP, IRS partners
with other organizations that work with communities that may not traditionally interact with
IRS, such as lower-income families, senior citizens, veterans, tribal communities, and families
with mixed-immigration status.36 According to oﬃcials from IRS partner organizations, ensuring
that eligible nonﬁlers—particularly among hard-to-reach groups such as those experiencing
homelessness—receive their payments continues to be a challenge. Partners also told us their
outreach eﬀorts to nonﬁlers could be more eﬀective if the partners had current data that helped
identify speciﬁc communities of nonﬁlers who may need assistance. Treasury and IRS could also
ensure any partial data releases were structured to not disclose taxpayer data.

Following our November 2020 recommendation, in January 2021, Treasury began analyzing nearly
9 million notices it had sent to nonﬁlers who may be eligible for an earlier round of EIPs. However,
Treasury does not plan to complete this analysis until fall 2021, more than 6 months after the ﬁrst
EIP 3 payments were issued. This timing will limit the usefulness of the analysis for informing EIP 3
outreach eﬀorts. By waiting to complete the analysis, Treasury and IRS are missing an opportunity
to identify communities that may have a higher number of nonﬁlers and to use that information
to inform their outreach eﬀorts as well as the eﬀorts of their outreach partners, and distribute
payments to qualiﬁed individuals in a more timely manner.

We are recommending that Treasury, in coordination with IRS, release interim ﬁndings on
the eﬀectiveness of the notices it sent in September 2020 to potentially EIP-eligible nonﬁlers;
incorporate that analysis into IRS outreach eﬀorts as appropriate; and then, if necessary, release
an update based on new analysis after the 2021 ﬁling season. Treasury neither agreed nor
disagreed with this recommendation and stated that it shares the underlying goal of reaching
as many non-ﬁlers as possible to encourage them to claim economic impact payments online.
However, Treasury does not plan to release any interim ﬁndings until it completes its analysis. See
the Economic Impact Payments enclosure in appendix I for more information.

Leave Beneﬁts for Employees
The Families First Coronavirus Response Act (FFCRA), as amended by the CARES Act, required
employers covered under the act (covered employers) to provide emergency paid sick leave and
expanded family and medical leave to eligible employees aﬀected by COVID-19.37 DOL’s Wage

ARPA, enacted in March 2021, authorized a third round of direct payments to individuals. Pub. L. No. 117-2, § 9601, 135
Stat. at 138–44.
36IRS partners with nationwide and local organizations by providing outreach material, training, and tax preparation
products for taxpayer assistance and education. IRS partner organizations are meant to serve low- to moderate-income
populations, older Americans, students, military service members, people with disabilities, and other populations. IRS
refers to these organizations as outreach partners.
37Pub. L. No. 116-127, §§ 3101-3106, 5101-5111, 134 Stat. at 189–192, 195–201 (2020), as amended by Pub. L. No.
116-136, §§ 3601, 3602, 134 Stat. at 410 (2020). The Family and Medical Leave Act of 1993, as amended, generally
requires covered employers to provide up to 12 weeks of unpaid leave per year for eligible employees to, among other
things, care for a spouse, child, or parent with a serious health condition or for their own serious health condition.
Employees are generally eligible if they meet certain requirements related to length of employment and size of

Page 26 GAO-21-551
and Hour Division (WHD) administers and enforces FFCRA paid leave requirements for most
employees. Covered employers generally face liability if they did not provide or improperly denied
emergency paid sick leave or expanded family and medical leave or if they discharged, disciplined,
or discriminated against any employee for taking either type of leave.38 The requirements to
provide paid leave beneﬁts under the law were in eﬀect from April 1, 2020, through December 31,
2020. Though the requirement for covered employers to provide paid leave has ended, employees
can ﬁle a complaint against their employer up to 2 years after the date of an alleged violation or
up to 3 years after an alleged willful violation. We identiﬁed several areas where WHD can improve
its enforcement of FFCRA paid leave requirements:

• WHD oﬃcials did not design or monitor its data system to support enforcement. WHD oﬃcials
said they monitor the time taken to process FFCRA cases, but this monitoring did not include
whether oﬃce audits and limited investigations were properly prioritized.39 In addition, WHD
did not include controls in its data system to prevent staﬀ from incorrectly assigning cases
to themselves or from assigning cases to an incorrect priority level. As a result, we identiﬁed
cases that either were not assigned to a priority level because staﬀ incorrectly assigned cases
to themselves, or were assigned to an incorrect priority level. WHD oﬃcials said that all of the
cases not assigned to a priority level or incorrectly assigned were ultimately investigated and
concluded. The oﬃcials also said that nearly all of the cases were isolated to three oﬃces in
one region. The oﬃcials added that as of May 12, 2021, they had not yet determined whether
any ongoing cases had also been assigned incorrectly.

In addition, although the number of aﬀected FFCRA paid leave cases may be relatively small,
WHD oﬃcials acknowledged there may be cases under other statutes enforced by WHD
that have not been assigned to a priority level because staﬀ incorrectly assigned cases to
themselves. In addition, cases under other statutes enforced by WHD may have been assigned
to an incorrect priority level. By not regularly examining data on the assignment of cases or
including controls to prevent errors in case assignment and prioritization, WHD may have
failed to prioritize ongoing cases under FFCRA and other statutes and may continue making
such errors in future cases. Cases that were not assigned to a priority level or were assigned to
the wrong priority level may not have been investigated or concluded as rapidly as other cases
that were properly assigned.

employer. Some state laws also provide paid sick or family leave, with eligibility rules varying by state. Under FFCRA,
covered employers included most public employers and private employers with fewer than 500 employees. Small
businesses—those with fewer than 50 employees—may have qualiﬁed for an exemption from providing leave to an
employee who needed to care for a child because of closure or unavailability of the child’s school, place of care, or child
care provider if the requested leave would have jeopardized the viability of the business.
38Covered employers that failed 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 are subject to
penalties described therein, including being liable to the aﬀected employees. See Pub. L. No. 116-127, § 5105(a), 134
Stat. at 197. Covered employers are subject to additional penalties for discharging, disciplining, or discriminating against
any employee for taking emergency paid sick leave. See Pub. L. No. 116-127, § 5105(b), 134 Stat. at 197. The prohibitions
and enforcement provisions in the Family and Medical Leave Act apply to leave under the expanded family and medical
leave provisions. See 29 U.S.C. §§ 2615, 2617. Employees may also bring a civil action against covered employers that
have violated the expanded family and medical leave provisions. See 29 U.S.C. § 2617(a).
39WHD generally has three priority levels for cases it investigates—tier I, tier II, and tier III. Tier I cases have the
highest priority, and tier III cases have the lowest priority.

Page 27 GAO-21-551
• WHD lacks data that it can easily aggregate to identify the reasons FFCRA complaints were
ﬁled with no compliance action and the reasons FFCRA cases were dropped.40 In December
2020, we reported the same concern with respect to Fair Labor Standards Act of 1938
complaint data and recommended that WHD develop a method for systematically collecting
this information to ensure complaints are handled consistently and resources are allocated
appropriately. WHD oﬃcials agreed with our recommendation and said that WHD’s new
case management system will incorporate the ability to categorize, aggregate, and review
data on the types of cases that are not investigated. According to the oﬃcials, changes to the
enforcement database will apply to future cases ﬁled under all statutes WHD enforces but will
not apply retroactively.

• WHD has done some outreach to stakeholders, including employers and employees, since
the FFCRA paid leave requirements expired. However, WHD’s new Essential Workers, Essential
Protections (EWEP) initiative about pandemic-related worker protections does not include
information on ﬁling a complaint related to FFCRA paid leave, even though employees can
continue to ﬁle complaints for up to 2 years from the date of an alleged violation, or up to
3 years from the date of an alleged willful violation. According to WHD documents, WHD
promotes compliance with the statutes it enforces by conducting education and outreach to
ensure that employers are aware of their responsibilities and that employees understand and
exercise their rights. By not including information about how to ﬁle a complaint about FFCRA
paid leave in the scope of its EWEP initiative, WHD may be missing an opportunity to reach
employees who did not obtain paid leave to which they were entitled but who could still ﬁle a
complaint and receive beneﬁts.

• WHD oﬃcials said they had not actively sought information from stakeholders about their
experiences with FFCRA paid leave. As a result, the information WHD is obtaining about
stakeholder experiences with FFCRA paid leave will not be comprehensive. By not engaging
with stakeholder organizations speciﬁcally about their experiences with FFCRA paid leave
in a comprehensive and timely manner, WHD may be missing an opportunity to improve
its administration and enforcement—including its education and outreach—for future
emergencies that might require a rapid response.

We are recommending that DOL’s WHD (1) better monitor data across all statutes that WHD
enforces, to ensure the division’s case management is consistent with established policies for
assigning and prioritizing cases; (2) ensure that the new data system under development includes
mechanisms to prevent staﬀ from assigning and prioritizing cases in a manner inconsistent
with established policies; (3) expand the EWEP initiative on pandemic-related worker protections
to include information about ﬁling a complaint related to paid leave provided under FFCRA;
and (4) engage in a comprehensive and timely eﬀort to consult with employers, workers, and
organizations that represent them, to identify and document lessons learned from WHD’s
administration and enforcement of COVID-19-related paid leave. DOL’s WHD agreed with these

40WHD ﬁled 14 percent of FFCRA complaints with no compliance action and dropped 16 percent of FFCRA cases
that were accepted for investigation.

Page 28 GAO-21-551
recommendations. See the Leave Beneﬁts for Employees enclosure in appendix I for more
information.

Tax Relief for Businesses
To provide liquidity to businesses during the COVID-19 pandemic, the CARES Act and other
COVID-19 relief laws included tax measures to help businesses—including sole proprietors,
estates, and trusts—by reducing certain tax obligations, which, in some cases, led to cash
refunds.41 These tax measures included expanded net operating loss (NOL) carrybacks and the
acceleration of alternative minimum tax (AMT) credit refunds.42

The Internal Revenue Code and the CARES Act generally require IRS to issue certain refunds within
a period of 90 days from the date on which a complete application for a tentative carryback
adjustment is ﬁled or 90 days from the last day of the month in which the return is due, whichever
is later.43

According to IRS data, the agency is not meeting the statutory refund requirement and, as of May
1, 2021, the average processing time in 2021 was 154 days, excluding additional time for ﬁnal
processing and distribution. IRS oﬃcials said it is taking longer to process returns because IRS
facilities that process paper returns continue to operate at reduced capacity to accommodate
social distancing. IRS had about 11.7 million unprocessed returns as of May 11, 2021, and its
processing backlog of tentative refund claims was about 15,000. Delays in processing refunds may
continue until the backlog has reduced further.

In the meantime, transparent communication about these issues and delays could help the IRS
follow the Taxpayer Bill of Rights and help taxpayers know when to expect their refunds. According
to IRS’s Taxpayer Bill of Rights, taxpayers are entitled to clear explanations of the laws and IRS
procedures. An explanation on IRS’s website that processing times for tentative refunds may
exceed the expected 90 days because of service disruptions would provide taxpayers with more
accurate information and expectations for receiving a refund.44

41Pub. L. No. 116-136, §§ 2301–2307, 134 Stat. at 347–359 (2020). The other COVID-19 relief laws include the
Consolidated Appropriations Act, 2021, and the American Rescue Plan Act of 2021. Pub. L. No. 116-260, 134 Stat. 1182
(2020); Pub. L. No. 117-2, 135 Stat. 4 (2021).
42An NOL occurs when a taxpayer's allowable deductions exceed its gross income for a tax year. The CARES Act requires,
unless waived, carrybacks for 5 years for NOLs arising in tax years beginning in 2018, 2019, and 2020, which may provide
a cash refund for certain taxpayers. Tax years prior to 2018 generally had a higher tax rate, so the ability of businesses
to carryback post-2018 NOLs to earlier tax years tends to increase the relative value of the carryback amounts. In
general, AMT was an alternative tax regime which applied a lower tax rate to a broader tax base by limiting the use of
tax preferences and disallowing credits and deductions. The corporate AMT was repealed in 2017, but most corporations
could claim their remaining unused minimum tax credits as a refundable credit for tax years 2018 through 2021. Under
the CARES Act, corporations with AMT credits may claim a refund for tax years beginning in 2018 and 2019.
4326 U.S.C. § 6411(b), (d)(2); Pub. L. No. 116-136, § 2305(d)(1), 134 Stat. at 357.
44For other ﬁlings, IRS has shared information on its website on what time frames taxpayers can expect when ﬁling
a form when IRS faces service disruptions. For example, see https://www.irs.gov/newsroom/irs-operations-during-
covid-19-mission-critical-functions-continue.

Page 29 GAO-21-551
We are recommending that IRS clearly communicate on its website that there are delays beyond
the statutory 90-day timeline in processing NOL and AMT tentative refunds. IRS neither agreed nor
disagreed with this recommendation. However, IRS did say it would review messaging addressing
tentative refund processing times and update it as necessary. See the Tax Relief for Businesses
enclosure in appendix I for more information.

2021 Tax Filing Season
IRS’s annual tax ﬁling activities include processing more than 150 million individual and business
tax returns electronically or on paper; issuing hundreds of billions of dollars in refunds; and
providing customer service to tens of millions of taxpayers on return processing issues, such as
suspected identity theft and math errors. IRS is experiencing delays in processing certain returns
received in 2021, resulting in extended time frames for some taxpayers. Speciﬁcally, as of the
end of the 2021 ﬁling season, IRS had about 25.5 million unprocessed individual and business
returns, including about 1.2 million returns from its 2020 backlog, and 13.7 million returns that
it had suspended because of errors. IRS staﬀ must manually review these returns with errors.
IRS typically has unprocessed returns in its inventory at the end of the ﬁling season, but not to
this extent. For example, at the end of the 2019 ﬁling season, IRS had 8.3 million unprocessed
individual and business returns, including 2.7 million returns suspended for errors. IRS reported
that it is taking longer than usual to manually review some of the returns received in 2021.

Because IRS is holding signiﬁcantly more returns for manual review than in prior years, more
taxpayers are trying to get information about the status of their returns and refunds. However,
taxpayers have had diﬃculty obtaining status updates on their refunds from IRS, either by
telephone or online. For example, IRS’s website (https://www.irs.gov) does not provide all of
the relevant information regarding delays in processing 2021 returns and in issuing taxpayers’
refunds. Additionally, IRS’s automated message on its toll-free telephone line for individual
taxpayers has not been updated to explain refund delays or to include any other alerts associated
with the 2021 ﬁling season.

We are recommending that IRS update relevant pages of its website and, if feasible, add alerts
to its toll-free telephone lines to more clearly and prominently explain the nature and extent
of individual refund delays occurring for returns taxpayers ﬁled in 2021. IRS neither agreed
nor disagreed with our recommendation; however, IRS made some changes to its website and
telephone line after it provided comments on our report. We will follow up with IRS on other
planned updates to its website and taxpayer telephone line to determine if the agency’s actions
are suﬃcient to fully address our recommendation. See the 2021 Tax Filing Season enclosure in
appendix I for more information.

Page 30 GAO-21-551
Conclusions

The last 17 months of the COVID-19 pandemic have shown the devastating eﬀects that a
pandemic can have on public health and the economy. As the administration continues to
respond to, and the nation recovers from, the current pandemic, the administration also needs
to simultaneously prepare for the next public health emergency. We are pleased to see that
16 of our recommendations have been implemented. Our 70 remaining recommendations to
federal agencies and three matters for congressional consideration, if swiftly and eﬀectively
implemented, can help further enhance these eﬀorts.45 We will continue to monitor the status of
these recommendations as part of our ongoing oversight of the federal government’s COVID-19
response and recovery eﬀorts.

45As previously mentioned, we closed one recommendation as not implemented.

Page 31 GAO-21-551
Closing

We are sending copies of this report to the appropriate congressional committees, the Oﬃce of
Management and Budget, 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

Page 32 GAO-21-551
Congressional Addressees
The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate

The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate

The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable Gary C. Peters
Chairman
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Aﬀairs
United States Senate

The Honorable Rosa L. DeLauro
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives

The Honorable Frank Pallone, Jr.
Chair
The Honorable Cathy McMorris Rodgers
Republican Leader
Committee on Energy and Commerce
House of Representatives

The Honorable Bennie G. Thompson
Chair
The Honorable John Katko
Ranking Member
Committee on Homeland Security

Page 33 GAO-21-551
House of Representatives

The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives

The Honorable Richard Neal
Chair
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives

Page 34 GAO-21-551
Appendixes and Enclosures
Appendix I: Enclosures

Economic Indicators
Based on data available in June 2021, the national economy continued to recover, and areas of
the economy we are monitoring saw broad-based improvement in recent months. Gross domestic
product (GDP) grew at a 6.4 percent annual rate in the 1st quarter of 2021, to a level that was
about 1 percent smaller than the size of the economy in 4th quarter 2019. Indicators for areas
of the economy supported by the federal pandemic response saw broad-based improvement in
recent months, with notable gains in employment, particularly in the leisure and hospitality sector,
and in state and local government ﬁnances (see table).46 The strength of the economic recovery
will continue to depend on the success of public health measures against the COVID-19 pandemic,
particularly vaccinations.

46We identiﬁed a number of economic indicators to facilitate ongoing and consistent monitoring of areas of the
economy supported by the federal pandemic response, namely labor markets, household ﬁnances, small business credit
and ﬁnancial conditions, corporate credit market conditions, and state and local government ﬁnances. 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 eﬀect of provisions of the COVID-19 relief
laws over time, those trends will not on their own provide deﬁnitive evidence of eﬀectiveness.

Page 35 GAO-21-551
Indicators for Areas of the Economy Supported by the Federal COVID-19 Pandemic Response, Feb.–May 2021,
Cumulative Changes since Feb. 2020

a
The employment-to-population ratio represents the number of employed people as a percentage of the civilian
noninstitutional population 16 years and over. The ratio is subject to a misclassiﬁcation error with respect to identifying workers
as employed and absent from work who are likely unemployed on temporary layoﬀ.
b
Higher levels in the Consumer Credit Default Composite Index rate indicate more defaults on consumer loans, including auto
loans, bank cards, and mortgages. The Consumer Credit Default Composite Index could be subject to seasonal variation but is
not seasonally adjusted.
c
Seriously delinquent loans are 3 months or more past due or in foreclosure, based on mortgages insured by the Federal
Housing Administration (FHA). Increases in serious delinquency rates on FHA loans could, to some extent, reﬂect borrowers
taking advantage of mortgage forbearance provisions of the CARES Act, but may also indicate ﬁnancial challenges facing the
minority and low-to-moderate income households that disproportionately take out mortgages insured by FHA. We excluded
February 2021 data from the ﬁgure because the delinquency rates for February 2021 are likely understated due to late
reporting by a large servicer, according to FHA.
d
Lower levels of the small business credit card delinquency index indicate more delayed payments on credit. The small
business credit card delinquency index is published under license and with permission from Dun & Bradstreet, and no
commercial use can be made of these data.
e
Corporate bond spreads are option-adjusted spreads on dollar-denominated investment grade corporate bonds from
Bloomberg and are measured in basis points or 1/100th of a percentage point. Higher spreads reﬂect higher perceived risk
among corporate borrowers by investors.
f
Spreads on municipal bonds are calculated relative to interest rates on Treasury securities based on the Bloomberg-Barclays
Municipal Bond Index and are measured in basis points or 1/100th of a percentage point. Higher spreads reﬂect higher
perceived risk among municipal borrowers by investors.
g
State and local government employment data from April 2021 and May 2021 are preliminary.

Page 36 GAO-21-551
Key drivers of the economic outlook. The American Rescue Plan Act (ARPA), enacted in March
2021, includes economic provisions that are likely to inﬂuence supply and demand throughout
the economy. Similar to the CARES Act, ARPA includes assistance for the unemployed and low-to-
moderate income families through expanded unemployment beneﬁts (see the Unemployment
Insurance Programs enclosure in appendix I) and economic impact payments (see the Economic
Impact Payments enclosure in appendix I), while oﬀering further income support through child tax
credits starting in July 2021.47 These provisions of ARPA may reduce household ﬁnancial stress and
could increase demand for goods and services.

The act also includes ﬁnancial support to state and local governments (see the Coronavirus State
and Local Fiscal Recovery Funds enclosure in appendix I) to spend on services and infrastructure,
which may boost demand and supply, as well as employment in this sector of the economy.48
Other provisions of the act may reduce supply-chain disruptions in the agricultural and health care
sectors. To the extent that these provisions are eﬀective or that ARPA increases overall economic
growth, we could see these eﬀects reﬂected in the economic indicators we are monitoring.

The increasing availability of COVID-19 vaccinations has become a key aspect of the public
health response to the pandemic and is likely to be an important driver of economic activity. The
International Monetary Fund increased its 2021 forecast for the U.S. gross domestic product by 1.3
percentage points relative to the previous forecast, reﬂecting in part the impact of vaccinations on
economic activity in the year.49 For example, widespread vaccinations could increase consumer
demand as concerns about COVID-19 decline.50 In addition, as the number of people vaccinated
has increased and COVID-19 cases and hospitalizations have declined, many states have lifted
pandemic-related restrictions, including indoor capacity limitations.51 Altogether, the easing of
pandemic-related restrictions, declining health concerns, and the opening of schools and daycare
centers following more widespread vaccinations could increase the number of individuals able
to return to work and allow businesses to more eﬀectively supply goods and services.52 See the
Vaccine Implementation enclosure in appendix I for more information on COVID-19 vaccinations.

The impact of ARPA and more widespread vaccinations against COVID-19 on supply and demand
will have an important inﬂuence on the average level of prices in the economy and how fast those
prices grow, known as inﬂation. A number of measures of actual and expected inﬂation have risen
notably in recent months. For example, inﬂation forecasted for 2021 has risen from 1.7 percent

47The largest provision of ARPA in terms of dollars provided was the economic impact payments, which totaled $385
billion. In addition, the Congressional Budget Oﬃce projects that the budgetary eﬀects of the unemployment insurance
provisions will be $195 billion in 2021, while the child tax credit provisions will be $19 billion in 2021 and $65 billion in
2022.
48ARPA appropriated $350 billion for the state and local ﬁscal recovery fund.
49Greater progress with vaccinations, for example, can increase expected growth, while new virus variants that evade
vaccines can lead to a sharp decrease in expected growth.
50As we noted in our November 2020 report, researchers consistently found that a decline in consumer demand related
to concerns about COVID-19 had a signiﬁcant impact on the economy during the initial stages of the pandemic.
51As we noted in our November 2020 report, researchers found consistent evidence that the impact of state and local
government-mandated restrictions further reduced economic activity.
52According to the Bureau of Labor Statistics, past recessions have disrupted employment almost entirely from the
demand side, but the COVID-19 pandemic also disrupts labor supply. Health concerns, family demands, and government
policies all play roles in who can work and when.

Page 37 GAO-21-551
to 3.5 percent over the last year.53 Public debate is ongoing regarding whether such increases
in inﬂation will be transitory or longer lasting, and how to address any persistent increases in
inﬂation. If demand grows considerably faster than supply for an extended period of time, for
example, then inﬂation could rise to levels that reduce long-term economic growth and exacerbate
economic challenges facing low-income households.54 While the level of inﬂation that is currently
expected is unlikely to cause such problems, additional monitoring is warranted. Federal Reserve
oﬃcials told us that the Federal Open Market Committee (FOMC) is acutely aware of the issues
and has stated it feels well-prepared to act as necessary to achieve its monetary policy objectives.
The FOMC is charged with conducting monetary policy to attain stable prices and maximum
employment, and, in doing so, expects to achieve a rate of inﬂation that averages 2 percent over
time.

Key trends in economic indicators. Federal debt held by the public rose to $22.0 trillion in May
2021 from $21.6 trillion in December 2020, but fell slightly as a share of GDP, from 100.6 percent
in the 4th quarter of 2020 to 99.7 percent of GDP in 1st quarter 2021. Interest rates on 3-month
Treasury securities were relatively stable, falling to 0.02 percent in May 2021 from 0.04 percent
in February 2021. Interest rates on 10-year Treasury securities, in contrast, increased from 1.26
percent to 1.62 percent over the same period. As we have noted in previous CARES Act reports,
the long-term ﬁscal challenges facing the U.S. 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.

Based on monthly and weekly data from the Department of Labor, labor market conditions
improved in March, April, May, and June 2021 but remained worse relative to the prepandemic
period. Weekly initial unemployment insurance claims fell from March to June 2021, indicating
improvements in the labor market in recent months. The employment-to-population ratio in May
2021 was 58.0 percent, which was a slight increase from the previous month, but 3.1 percentage
points lower than the prepandemic period (see ﬁgure).

53This forecast measures expected consumer price inﬂation in 2021 based on forecasts collected by Bloomberg.
54See, for example, M. Khan and A. Senhadji, “Threshold Eﬀects in the Relationship between Inﬂation and Growth,” IMF
Staﬀ Papers, vol. 48 (2001): 1–21, and William Easterly and Stanley Fischer, “Inﬂation and the Poor,” Journal of Money,
Credit and Banking, vol. 33 (May 2001): 160–178.

Page 38 GAO-21-551
Employment-to-Population Ratio, Jan. 2019–May 2021

Job growth across sectors continues to reﬂect the diﬀerential impact of the pandemic on diﬀerent
parts of the economy. For example, the industry responsible for much of the improvement in the
labor market in March through May 2021 was the leisure and hospitality sector. Interest in leisure
activities has improved as vaccinations have become more widespread, cases have fallen, and
state and local governments have relaxed restrictions. However, despite job growth in the industry
in the last few months, employment in the leisure and hospitality sector is still 15.0 percent lower
than it was in February 2020.

Serious delinquency rates—loans that are 90 or more days past due or in foreclosure—for
single-family mortgage loans insured by the Federal Housing Administration (FHA) decreased
slightly from March to April 2021, to 10.58 percent of loans, but remained much higher than
rates prior to the pandemic (see ﬁgure). FHA loans disproportionately serve minority and low-to-
moderate income borrowers.55 Falling delinquencies may to some extent reﬂect fewer borrowers
taking advantage of mortgage forbearance provisions of the CARES Act.56 In addition, falling
delinquencies may indicate that FHA borrowers have seen some improvement in household
ﬁnances in recent months.

55According to the January 2021 COVID-19 Survey of Consumers conducted by the Federal Reserve Bank of Philadelphia,
Black borrowers reported the highest forbearance rate, at 13.4 percent of borrowers in forbearance at some point
during the pandemic. In ﬁscal year 2020, 34.2 percent of all FHA purchase and reﬁnance borrowers were minorities, 50.4
percent of FHA forward mortgage borrowers were of low-to-moderate income, and 83.1 percent of home purchasers
under the FHA forward mortgage insurance program were ﬁrst-time homebuyers. See Department of Housing and
Urban Development, FHA Annual Management Report Fiscal Year 2020.
56The CARES Act provided temporary protections for millions of households against foreclosure and eviction, as well as
temporary forbearance, suspending mortgage payments for up to 360 days. In addition, FHA allows mortgage servicers
to initiate new forbearance through June 30, 2021, and it allows borrowers who requested an initial forbearance on or
before June 30, 2020, to request up to two additional 3-month forbearance extensions.

Page 39 GAO-21-551
Serious Delinquency Rates on Single-Family Residential Mortgages, Jan. 2019–Apr. 2021

Note: Seriously delinquent single-family loans are 3 months or more past due or in the foreclosure process. We excluded
February 2021 data from the ﬁgure because the delinquency rates for February 2021 are likely understated due to late
reporting by a large servicer, according to FHA.

Employment by state and local governments increased in March through May 2021 (see ﬁgure),
and spreads on municipal bonds fell over the same period, suggesting some improvement in state
and local government ﬁnances.57

State and Local Government Employment, Jan. 2019–May 2021

57Spreads 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). We report spreads calculated based on the Bloomberg Barclays Municipal Bond
Index. Spreads are calculated using yield to worst, which results in a conservative—that is, lower—estimate of potential
returns on callable bonds.

Page 40 GAO-21-551
Methodology
To identify indicators for monitoring areas of the economy supported by the federal response to
the COVID-19 pandemic, in particular by the six COVID-19 relief laws, we reviewed prior GAO work,
data from federal statistical agencies, information from the Board of Governors of the Federal
Reserve System (Federal Reserve) and relevant federal agencies responsible for the pandemic
response and oversight of the health care system, data available on the Bloomberg Terminal, and
input from internal GAO experts. We reviewed the most recent data from these sources as of April,
May, or June 2021, depending on availability.

We assessed the reliability of the economic indicators we used through a number of steps,
including reviewing relevant documentation, reviewing prior GAO work, and interviewing data
providers. Collectively, we determined the indicators were suﬃciently reliable to provide a general
sense of how the areas of the economy supported by the federal pandemic response were
performing.

Agency Comments
We provided the Department of Housing and Urban Development (HUD), the Department of
Labor (Labor), the Department of the Treasury (Treasury), the Federal Reserve, and the Oﬃce of
Management and Budget (OMB) with a draft of this enclosure. Labor and the Federal Reserve
provided technical comments, which we incorporated as appropriate. HUD, Treasury, and OMB did
not provide comments on this enclosure.

GAO’s Ongoing Work
We plan to monitor and report on changes in economic indicators, including developments in
inﬂation, in future quarterly reports.

Contact information: Lawrance L. Evans, Jr., (202) 512-8678, evansl@gao.gov

Page 41 GAO-21-551
Vaccine Implementation
To increase access to COVID-19 vaccination, the federal government has expanded the number of
vaccine distribution channels and administration sites since COVID-19 vaccination began, and as of
June 10, 2021, more than 372 million vaccine doses had been distributed in the United States.

Entities involved: Department of Defense; Department of Health and Human Services, including
the Centers for Disease Control and Prevention, Food and Drug Administration, and Health
Resources and Services Administration; Federal Emergency Management Agency within the
Department of Homeland Security; and the White House COVID-19 Response Team.

Background
Since the pandemic’s start, the federal government has played a key role in the development
and manufacturing of COVID-19 vaccines and the implementation of a vaccination program.
Federal eﬀorts to support vaccine development, manufacturing, and distribution to states and
other jurisdictions have been led at the federal level by a partnership between the Department of
Defense (DOD) and the Department of Health and Human Services (HHS). This partnership was
formerly known as Operation Warp Speed, but since May 2021 it has been called the HHS-DOD
COVID-19 Countermeasures Acceleration Group.58

COVID-19 vaccine implementation, which involves the prioritization, allocation, distribution,
and administration of vaccine doses, relies on communication and coordination among
various stakeholders. Stakeholders include federal agencies, private industry, states and other
jurisdictions, local health departments, tribal oﬃcials, and health care providers, among others.

Since January 2021, the White House COVID-19 Response Team has been responsible for
coordinating across the U.S. government on the COVID-19 response, including COVID-19 vaccine
implementation, and for communicating to the public, state and local public health oﬃcials, and
other stakeholders about these eﬀorts. For example, since January 27, 2021, members of the
Response Team have held regular public brieﬁngs to provide updates on the status of COVID-19
vaccine implementation, among other information on the federal response.

Status of COVID-19 vaccines. As of June 15, 2021, three COVID-19 vaccines were available in the
U.S. under an emergency use authorization (EUA), which allows for the temporary use of vaccines
without Food and Drug Administration (FDA) licensure, provided certain statutory criteria are met.
59 Two of the three vaccines—those from Moderna and Janssen—were authorized for individuals

18 years and older; the Pﬁzer vaccine was authorized for individuals aged 12 years and older.60

58To accelerate the availability of a vaccine to prevent COVID-19, DOD, on behalf of HHS, awarded contracts and other
transaction agreements in 2020 to six vaccine companies for diﬀerent types of activities, including clinical development
and manufacturing activities or the purchase of COVID-19 vaccine doses. There are 64 jurisdictions implementing
COVID-19 vaccination, including all 50 states, the District of Columbia, ﬁve major U.S. cities (Chicago, Houston, New York
City, Philadelphia, and San Antonio), and eight territories (American Samoa, Guam, the Marshall Islands, the Federated
States of Micronesia, the Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands).
59The Secretary of Health and Human Services may declare that circumstances, prescribed by statute, exist justifying
the emergency use of certain medical products, such as vaccines. Once a declaration of an emergency has been made,
FDA may temporarily allow use of unlicensed vaccines through an EUA. For FDA to issue an EUA for a vaccine, it must
be reasonable to believe that the vaccine may be eﬀective and that the known and potential beneﬁts of the vaccine

Page 42 GAO-21-551
On May 7, 2021, the ﬁrst biologics license application (BLA) for a COVID-19 vaccine was submitted
to FDA, when Pﬁzer applied for licensure of its vaccine to prevent COVID-19 in individuals 16 years
of age and older.61 On June 1, 2021, Moderna submitted a BLA to FDA for its vaccine to prevent
COVID-19 in individuals 18 years of age and older.62

All three companies with authorized vaccines have announced clinical trials for children and
adolescents. On May 10, 2021, FDA granted Pﬁzer’s request to amend its EUA to expand use of its
vaccine to adolescents 12 through 15 years of age.63 Moderna submitted a similar request on June
10, 2021, asking FDA to amend the EUA for its COVID-19 vaccine to expand its use to adolescents
12 through 17 years of age, and as of June 15, 2021, was awaiting a decision from FDA.

The three authorized vaccines have varying storage requirements that may aﬀect the type of
setting where each vaccine can be administered. For example, some vaccine administration
settings may not have equipment such as freezers that have the capability to store vaccine doses
at ultra-cold temperatures, the recommended storage method for the Pﬁzer vaccine prior to use.64
Additional research continues on storage and handling requirements to improve the vaccines’
stability and ease storage requirements, such as by increasing the amount of time the vaccine can
be stored at a refrigerated temperature.65 See table.

outweigh the known and potential risks, among other statutory criteria. See 21 U.S.C. § 360bbb-3. Typically, FDA must
license a vaccine before it can be marketed in the U.S. See 42 U.S.C. § 262. Any COVID-19 vaccine that initially receives
an EUA from FDA is expected to ultimately be reviewed and receive licensure through a biologics license application,
according to FDA guidance. See FDA, Emergency Use Authorization for Vaccines to Prevent COVID-19: Guidance for Industry
(May 2021).
60For the purposes of this report, we refer to the COVID-19 vaccine that Pﬁzer and BioNTech developed together, as
the Pﬁzer vaccine. In addition, Janssen Pharmaceutical Companies are a part of Johnson & Johnson. On April 23, 2021,
the Centers for Disease Control and Prevention (CDC) recommended that pregnant people receive COVID-19 vaccines
following publication of preliminary ﬁndings of post-COVID-19 vaccine surveillance of about 35,000 pregnant persons.
This study found that pregnant people experienced the same side eﬀects as others following vaccination and that no
safety concerns were observed for people vaccinated in the third trimester or for their babies. See T.T. Shimabukuro, et
al., “Preliminary Findings of mRNA COVID-19 Vaccine Safety in Pregnant Persons” New England Journal of Medicine. (2021)
https://www.nejm.org/doi/full/10.1056/NEJMoa2104983.
61According to Pﬁzer, it has requested priority review for its COVID-19 vaccine. A priority review designation directs
FDA resources to applications for products that, if approved, would provide signiﬁcant improvements in the safety or
eﬀectiveness of the treatment, diagnosis, or prevention of serious conditions when compared to standard applications.
According to FDA, its goal is to take action on a priority BLA within 6 months following a 60-calendar-day ﬁling review
period that begins on the date of FDA’s receipt of the BLA (so the goal is a total of 8 months from receipt). For standard
BLAs, FDA’s goal is to take action within 10 months following the 60-day ﬁling date (so the goal is a total of 12 months
from receipt).
62Moderna has also requested priority review for its COVID-19 vaccine BLA.
63After FDA’s authorization, CDC’s Advisory Committee on Immunization Practices (ACIP) voted to recommend use of
the Pﬁzer vaccine for adolescents 12 through 15 years of age, and the CDC Director adopted ACIP’s recommendation on
May 12, 2021.
64Alternatively, Pﬁzer vaccine vials may be stored frozen prior to use at a slightly higher temperatures of -13 to 5
degrees Fahrenheit for up to 2 weeks.
65For example, on May 19, 2021, FDA authorized an increased refrigerated storage time of Pﬁzer’s vaccine for thawed
vials prior to dilution. Thawed, undiluted vials can be stored in the refrigerator at 35 to 46 degrees Fahrenheit for up to 1
month. Previously, such vials could be stored in the refrigerator for up to 5 days.

Page 43 GAO-21-551
COVID-19 Vaccines FDA Authorized for Emergency Use, as of June 15, 2021
Individuals
Date FDA for whom
initially issued vaccine is
emergency use permitted for
authorization emergency Storage requirements
Vaccine Dosing and
a
company (EUA) use schedule (doses per vial and minimum lot size)

Pﬁzer
b 12/11/2020 12 years of age 2 doses, 3 weeks Stored frozen at ultra-cold temperatures.
and older
c apart Once thawed and diluted, must be used within 6
hours.
(6 doses per vial, minimum lot size 450 doses)

Moderna 12/18/2020 18 years of age 2 doses, 1 month Stored frozen, but may be refrigerated for up to
and older
d apart 30 days once thawed.
Once ﬁrst dose is withdrawn from vial, other
doses must be used within 12 hours.
(2 vial sizes: maximum 11 doses per vial (range
10-11) or 15 doses per vial (range 13-15),
minimum lot size 10-multi-dose vials)

Janssen
e
2/27/2021
f 18 years of age 1 dose Refrigerated, but may be stored at room
and older temperature for up to 12 hours.
After ﬁrst dose is withdrawn may be stored at 36
to 46 degrees Fahrenheit for up to 6 hours or at
room temperature for up to 2 hours.
(5 doses per vial, minimum lot size 100 doses)

Source: GAO analysis of vaccine company and Food and Drug Administration (FDA) information. | GAO-21-551

a
During an emergency, as declared by the Secretary of Health and Human Services under 21 U.S.C. § 360bbb-3(b), FDA may
temporarily authorize unlicensed vaccines through an EUA, provided certain statutory criteria are met. FDA has indicated
that issuance of an EUA for a COVID-19 vaccine for which there is adequate manufacturing information would require a
determination by FDA that the vaccine’s beneﬁts outweigh its risks based on data from at least one well-designed phase 3
clinical trial that demonstrates the vaccine’s safety and eﬃcacy in a clear and compelling manner. Any COVID-19 vaccine that
initially receives an EUA from FDA is expected to ultimately be reviewed and receive licensure through a biologics license
application (BLA), according to FDA guidance. As of June 15, 2021, Pﬁzer and Moderna had submitted BLAs for their COVID-19
vaccines.
b
Pﬁzer and BioNTech developed a COVID-19 vaccine together; for the purposes of this report we refer to it as the Pﬁzer vaccine.
c
On December 11, 2020, FDA authorized the Pﬁzer vaccine for emergency use in individuals 16 years of age and older, and on
May 10, 2021, FDA amended the EUA to include adolescents 12 through 15 years of age.
d
On June 10, 2021, Moderna requested that FDA amend the EUA for its vaccine to include adolescents 12 through 17 years of
age.
e
Janssen Pharmaceutical Companies are a part of Johnson & Johnson.
f
On April 13, 2021, the Centers for Disease Control and Prevention (CDC) and FDA recommended a pause in use of the Janssen
COVID-19 vaccine so the agencies could review data involving six reported U.S. cases of a rare and severe type of blood clot in
individuals after receiving this vaccine. CDC and FDA lifted the pause on April 23, 2021, following a safety review, and revised the
Janssen COVID-19 vaccine fact sheets for vaccination providers and recipients and caregivers to include information about the
risk.

Page 44 GAO-21-551
As we have previously reported, the federal government has also contracted to purchase
COVID-19 vaccine doses from three other vaccine companies. As of June 15, 2021, none of these
companies had submitted an EUA request to FDA.66

COVID-19 vaccine administration. COVID-19 vaccinations began on December 14, 2020, in the
United States. As of June 10, 2021, data from the Centers for Disease Control and Prevention (CDC)
showed the federal government had distributed about 372.8 million COVID-19 vaccine doses, and
about 305.7 million doses had been administered, including both ﬁrst and second doses of the
three vaccines authorized for emergency use.67 About 61 percent of the U.S. population aged 12
and older had received at least one dose of a COVID-19 vaccine and about 50 percent were fully
vaccinated, as of June 10, 2021.68See ﬁgure for the number of vaccine doses administered each
month since COVID-19 vaccine implementation began.

Number of COVID-19 Vaccine Doses Administered by Month in the United States, as of June 10, 2021

Note: Data show the number of COVID-19 vaccine doses administered in the U.S. as reported to CDC by state, territorial, and
local public health agencies; and federal entities, since the national vaccine program began on December 14, 2020, and include
doses administered through all vaccine partners including jurisdictional partner clinics, retail pharmacies, long-term care

66As of June 15, 2021, AstraZeneca and Novavax had both announced ﬁndings from phase 3 clinical trials for their
COVID-19 vaccine candidates, while Sanoﬁ announced on May 27, 2021, that it had started enrollment in a global phase
3 clinical trial for its vaccine candidate.
67Vaccine doses distributed is the total number that have been delivered to jurisdictions, retail pharmacies, long-term
care facilities, dialysis centers participating in the Federal Dialysis Center Program, Federal Emergency Management
Agency partner sites, Health Resources and Services Administration-supported health centers, and federal entities. For
states; Washington, D.C.; the U.S. Virgin Islands; and Puerto Rico; total counts of COVID-19 vaccine doses distributed
include doses delivered since December 14, 2020. However, for Palau, Micronesia, Marshall Islands, Guam, American
Samoa, and Northern Marianas Islands, total counts of COVID-19 vaccine doses distributed include doses marked as
shipped in CDC’s Vaccine Tracking System since December 13, 2020. The most recent days of reporting for vaccine
administrations may be more impacted by reporting delays, and all reported numbers may change over time as
historical data are reported to CDC.
68As of June 10, 2021, of the three COVID-19 vaccines authorized for emergency use, two vaccines were two-dose
regimens and the third vaccine required one dose. For the purpose of this report, fully vaccinated is deﬁned as having
received the second dose in a two-dose COVID-19 vaccine regimen or one dose of the single-dose vaccine.

Page 45 GAO-21-551
facilities, dialysis centers participating in the Federal Dialysis Center Program, Federal Emergency Management Agency partner
sites, Health Resources and Services Administration-supported health centers, and federal entity facilities. According to CDC
the most recent days of reporting may be more impacted by reporting delays, and all reported numbers may change over time
as historical data are reported to CDC. As of June 10, 2021, three COVID-19 vaccines were authorized for emergency use; two
vaccines were two-dose regimens and the third vaccine required one dose.

More than 70 percent of people in two age groups –those aged 75 and older and those aged
65 through 74–were fully vaccinated as of June 10, 2021. For those under 65, the percentage of
people in each age group who were fully vaccinated decreased as age decreased. See ﬁgure.

Percentage of Age Group That Was Fully Vaccinated, by Age Group, in the U.S., as of June 10, 2021

Notes: Texas does not report demographic-speciﬁc dose number information to CDC, so data for Texas are not represented in
this ﬁgure. As of June 10, 2021, the only COVID-19 vaccine authorized for emergency use in individuals under age 18 years of
age was the Pﬁzer vaccine. On December 11, 2020, FDA authorized the Pﬁzer vaccine for emergency use in individuals 16 years
of age and older, and on May 10, 2021, FDA expanded the emergency use authorization to include adolescents 12 through 15
years of age. As of June 10, 2021, of the three COVID-19 vaccines authorized for emergency use, two vaccines were two-dose
regimens and the third vaccine required one dose. In this ﬁgure, fully vaccinated is deﬁned as having received the second dose
in a two-dose COVID-19 vaccine regimen or one dose of the single-dose vaccine.

CDC data, though incomplete, showed disparities in vaccine administration by race and ethnicity.
Data on race and ethnicity were limited to about 61 percent of the individuals who were fully
vaccinated as of June 10, 2021, or about 87 million people. These data indicated that of those who
were fully vaccinated:

• 62.7 percent were non-Hispanic White (compared to 61.2 percent of the U.S. population),

• 13.4 percent were Hispanic or Latino (compared to 17.2 percent of the U.S. population),

• 8.7 percent were non-Hispanic Black (compared to 12.4 percent of the U.S. population), and

• 6 percent were non-Hispanic Asian (compared to 5.8 percent of the U.S. population).69

69Data from CDC’s COVID Data Tracker also indicated that 0.9 percent of fully vaccinated individuals whose race
and ethnicity was known as of June 10, 2021, were non-Hispanic American Indian/Alaska Native (compared to 0.8
percent of the U.S. population), 0.3 percent were non-Hispanic Native Hawaiian or Other Paciﬁc Islander (compared

Page 46 GAO-21-551
Funding for COVID-19 vaccine implementation. As of April 2021, CDC had awarded about $6.8
billion in funding, provided in three COVID-19 relief laws, to 64 jurisdictions for COVID-19 vaccine
preparedness.70 (See table.)

to 0.3 percent of the U.S. population), and 8 percent were non-Hispanic Multiple/Other races (compared to 2.3
percent of the U.S. population).
70The 64 jurisdictions, included all 50 states, the District of Columbia, ﬁve major U.S. cities (Chicago, Houston, New York
City, Philadelphia, and San Antonio), and eight territories (American Samoa, Guam, the Marshall Islands, the Federated
States of Micronesia, the Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin Islands). See HHS COVID-19
Funding enclosure for more information on COVID-19 funding.

Page 47 GAO-21-551
Department of Health and Human Services Centers for Disease Control and Prevention (CDC) COVID-19 Vaccine
Implementation Funding for 64 Jurisdictions, as of April 2021
Amount
awarded ($
Legislation Description of award Month funds awarded millions)

CARES Act To plan for and implement COVID-19 September 2020 340
(Pub. L. No. 116-136) vaccine programs. ($200M)
December 2020 ($140M)

Consolidated Appropriations Act, To support a range of COVID-19 January 2021 ($3B) 4,290
2021 vaccination activities. According to CDC, April 2021 ($1.29B)
(Pub. L. No. 116-260) it allocated funds using the population-
based formula speciﬁed in the act.

American Rescue Plan Act of 2021 To support COVID-19 vaccine April 2021 2,189
a
(ARPA) distribution, access, and administration
(Pub. L. No. 117-2) eﬀorts and to increase vaccine uptake.
According to CDC, these funds are
intended to ensure health equity as
guided in the CDC COVID-19 Health
Equity Strategy and expanded access
b
to COVID-19 vaccines. For example,
funds could be used to identify and
train trusted community members to
conduct outreach to raise awareness
about COVID-19 vaccines and help
individuals sign up for appointments.

Total 6,819

Source: GAO analysis of CDC information and data. | GAO-21-551.

Notes: Total may not sum to exact amount awarded due to rounding. CDC awarded funds to 64 jurisdictions, including all 50
states, the District of Columbia, ﬁve major U.S. cities (Chicago, Houston, New York City, Philadelphia, and San Antonio), and eight
territories (American Samoa, Guam, the Marshall Islands, the Federated States of Micronesia, the Northern Mariana Islands,
Palau, Puerto Rico, and the U.S. Virgin Islands).
a
This total includes about $329.1 million in funding awarded to certain immunization grant recipients by using an alternative
allocation formula established under ARPA, which is to be applied in addition to the base formula speciﬁed in the Consolidated
Appropriations Act, 2021.This funding was awarded to 39 jurisdictions.
b
See CDC. “CDC Awards $3 Billion to Expand COVID-19 Vaccine Programs,” April 6, 2021, accessed on April 20, 2021 at https://
www.cdc.gov/media/releases/2021/p0407-covid-19-vaccine-programs.html.

In addition to the awards provided by CDC to the 64 jurisdictions, other funding related to
COVID-19 vaccination has been made available and includes but is not limited to the following
examples:

• In April 2021, HHS, through the Health Resources and Services Administration (HRSA), awarded
about $6.1 billion in funds appropriated under the American Rescue Plan Act of 2021 to

Page 48 GAO-21-551
1,377 health centers nationwide to expand COVID-19 vaccinations, testing, and treatment for
vulnerable populations.71

• As of June 1, 2021, the Federal Emergency Management Agency (FEMA) had provided more
than $4.85 billion from the Disaster Relief Fund to states, Washington D.C., tribes, and
territories for expenses related to COVID-19 vaccination.72

Overview of Key Issues
When COVID-19 vaccination began in December 2020, the federal government allocated and
distributed nearly all available vaccine doses primarily to jurisdictions; some of the vaccine doses
that went to jurisdictions were used to vaccinate residents and staﬀ of long-term care facilities.
The federal government also distributed vaccine doses to select federal entities, including the
Department of Defense, Indian Health Service, and Veterans Health Administration. Beginning
in February 2021, the federal government started distributing COVID-19 vaccine doses through
additional channels, including directly allocating and distributing doses to retail pharmacies
and to HRSA-supported health centers.73 See the table below for a description of these federal
distribution channels.

71HRSA’s Bureau of Primary Health Care administers the Health Center Program and makes grants to health
centers that primarily serve low-income populations. The majority of health centers serve the general population
within a designated area, while other types of health centers provide care to more speciﬁc populations, including
the homeless, residents of public housing, and migrant and seasonal farmworkers.
72See the enclosure on FEMA’S Disaster Relief Fund for more information on FEMA’s COVID-19 response.
73The Federal Retail Pharmacy Partnership was initially outlined in CDC’s COVID-19 interim playbook, while the Health
Center COVID-19 Vaccine Program was described in the White House’s National Strategy. See Department of Health and
Human Services, Centers for Disease Control and Prevention, COVID-19 Vaccination Program Interim Operational Guidance
for Jurisdictions Playbook, version 2 (Atlanta, Ga.: Oct. 29, 2020) and White House, National Strategy for the COVID-19
Response and Pandemic Preparedness (Washington, D.C.: Jan. 21, 2021).

Page 49 GAO-21-551
Description of Federal COVID-19 Vaccine Distribution Channels, as of June 2021
Federal channel for vaccine distribution
(responsible agency)
a
Number of doses delivered, as of June 10, 2021 Description

States and other jurisdictions
b Allocations of vaccine provided directly from the federal
(HHS and DOD) government to 50 states, the District of Columbia, three major cities,
and eight territories based on the 62 jurisdictions’ adult population
First doses delivered: Dec. 2020 (i.e., those 18 years and older). States and other jurisdictions
Doses delivered: 243.8 million determine which providers in their jurisdictions are to receive the
allocated doses. Vaccine doses may be further redistributed; for
example, a state may redistribute its vaccine doses to a local health
department or to a health care facility, such as a hospital.
Vaccine doses allocated to states and other jurisdictions may
be directed to CDC’s Pharmacy Partnership for Long-Term Care
c
Program or to FEMA-supported community vaccination centers.
Some states also received additional doses in their state allocations
as “sovereign nation” supplements. These additional doses were
allocated for American Indian/Alaskan Native populations that
elected to receive vaccine doses through the state in which they are
located instead of through the Indian Health Service.

Selected federal entities Allocations of vaccine provided directly from the federal
(HHS and DOD) government to selected federal entities—including the Bureau of
Prisons, the Departments of Defense and State, the Indian Health
First doses delivered: Dec. 2020
Service, and the Veterans Health Administration—to administer to
d their respective populations.
Doses delivered: 12.2 million

Federal Retail Pharmacy Program Allocations of vaccine provided directly from the federal
(CDC) government to 21 national pharmacy and independent pharmacy
networks—representing over 40,000 locations nationwide—through
First doses delivered: Feb. 2021
a collaboration with the federal government, states, and territories.
e CDC made recommendations of which pharmacy partners to
Doses delivered: 103.4 million
initially include in the program. States and territories then made the
ﬁnal selections.
Initially, when the program began, allocations were provided on a
weekly basis, based on the available vaccine supply and determined
on a per capita basis for each jurisdiction, according to CDC. The
allocation was then divided among the selected pharmacy partners
based on each partner’s number of stores and the store’s reach (the
percent of the total U.S. population living within 5 miles of a store
f
location).
As of June 2021, weekly allocations were based on vaccine
availability, with more than half of each pharmacy partner’s vaccine
supply proportional to each jurisdiction’s population, according
to CDC. As the program has expanded and as vaccine supply has
become more readily available, pharmacy partners are able to make
additional adjustments to their allocations, according to CDC.

Community Vaccination Center Pilot Site and Allocations of additional vaccine doses are provided to FEMA
Mobile Vaccination Program and FEMA transfers its allocated vaccine doses to the states with
(FEMA and CDC) pilot community vaccination centers for ordering vaccine doses.

Page 50 GAO-21-551
Federal channel for vaccine distribution
(responsible agency)
a
Number of doses delivered, as of June 10, 2021 Description
According to FEMA, allocations are determined by the size of the
First doses delivered: Feb. 2021
g
particular vaccination center being planned.
Doses delivered: 6.6 million
Pilot vaccination centers are a partnership between FEMA, in
coordination with CDC and other federal agencies, and states,
tribes, territories, and local governments.
Locations for pilot community vaccination centers were chosen
based on social vulnerability factors and population, according to
FEMA.
As of June 4, 2021, a total of 39 FEMA pilot vaccination centers and
226 satellite sites had been established across the country since the
beginning of the initiative, according to FEMA.

Health Center COVID-19 Vaccine Program Allocations are provided directly from the federal government
(HRSA and CDC) to HRSA-supported health centers. This program is to increase
access to vaccines to the nation’s underserved communities and
First doses delivered: Feb. 2021
disproportionately aﬀected populations. Vaccines distributed
Doses delivered: 6.9 million through HRSA supplement the vaccine supply to the HRSA-
supported health centers provided by the state or other
jurisdictions, according to CDC.
Allocations are made on a weekly basis and HRSA determines
the number of doses that can be ordered by participating health
centers based on factors such as the weekly allocation of vaccine
the program receives, the number of participating health centers,
the number of newly added participating health centers, and
health center vaccine distribution capacity data, according to HRSA.
Vaccine doses distributed by the program are sent directly to
individual health center sites.
Initially 25 health centers were selected based on criteria such as
h
the populations the facility serves, according to HRSA. The program
grew to include 500 health centers as of April 3, 2021, according to
HRSA.
On April 7, 2021, HRSA and CDC invited all HRSA-supported health
centers, including Health Center Program look-alikes, to participate
in the program, increasing its reach to up to 1,470 health centers
i
nationwide.

Source: GAO analysis of data and information from oﬃcials from the Department of Health and Human Services (HHS), the Department of Defense (DOD), the Centers for Disease
Control and Prevention (CDC), the Health Resources and Services Administration (HRSA), and the Federal Emergency Management Agency (FEMA). | GAO-21-551

Notes: In addition to the federal channels listed in the table, the federal government also allocates vaccine to two other
programs: the HHS/National Institutes of Health Program, which is a small program managing doses allocated to federal
departments and agencies for administration to critical federal infrastructure personnel and the Federal Dialysis Center
Program, which began on March 29, 2021, and has made allocations directly to participating dialysis center participants to
vaccinate patients on dialysis.
Additionally, some providers receiving vaccine doses through one of the federal channels may also receive vaccine allocations
from their state or other jurisdiction. For example, health centers participating in the Health Center COVID-19 Vaccine Program
might receive doses that have been allocated to their jurisdiction, in addition to a direct allocation of vaccine doses from the
federal government.
a
The Pﬁzer vaccine is provided in 1,170 dose and 450 dose lots, Moderna’s vaccine is provided in 140 dose lots, and Janssen’s
vaccine is provided in 100 dose lots.

Page 51 GAO-21-551
b
For COVID-19 vaccination, the federal government allocates vaccine doses to 62 jurisdictions, including all 50 states, the
District of Columbia, three major cities (Chicago, New York City, and Philadelphia), and eight territories (American Samoa, Guam,
the Marshall Islands, the Federated States of Micronesia, the Northern Mariana Islands, Palau, Puerto Rico, and the U.S. Virgin
Islands). Although there are 64 jurisdictions implementing COVID-19 vaccination and receiving federal funding for these eﬀorts,
allocations of vaccine doses are being made to 62 jurisdictions because two major cities considered jurisdictions—Houston and
San Antonio—have their vaccine allocation consolidated with Texas.
c
For the Pharmacy Partnership for Long-Term Care Program, states and other jurisdictions allocated some of their doses to
pharmacy partners including CVS and Walgreens, which then administered more than 8.3 million vaccine doses to staﬀ and
residents of eligible nursing homes and other long-term care facilities between December 2020 and May 2021, according to
CDC. Additionally, between February 2021 and as of May 5, 2021, FEMA has supported a total of 1,779 community vaccination
centers managed and operated by states and other jurisdictions by providing federal personnel, funding, and material, such as
medical equipment and supplies, according to FEMA. See the enclosures on Nursing Homes and FEMA’S Disaster Relief Fund for
more information.
d
Data on the number of doses delivered to and administered by these federal entities are available at https://www.cdc.gov/
coronavirus/2019-ncov/vaccines/distributing/jurisdiction-portfolios.html, accessed on June 15, 2021.
e
This number also includes deliveries provided from states’ and other jurisdictions’ allocations, including as part of the
Pharmacy Partnership for Long-Term Care Program.
f
According to CDC, the goal is to have nearly 40,000 pharmacies participating in the program. As the Federal Retail Pharmacy
Program expands and supply becomes more readily available, the allocation of vaccine doses to pharmacies may be adjusted
to reﬂect the number of store locations nationwide, the percent of the total U.S. population living within 5 miles of a store
location, and the store’s ability to vaccinate.
g
Pilot vaccination centers range in capacity from being able to administer approximately 3,000 vaccinations per day or 6,000
vaccinations per day. According to FEMA oﬃcials, one-third of the vaccines allocated to a pilot vaccination center can be
redistributed to satellite sites such as mobile vaccination centers.
h
For example, HRSA initially included those health centers that served a large volume of disproportionally aﬀected populations,
such as individuals experiencing homelessness, public housing residents, migrant or seasonal agricultural workers, or patients
with limited English proﬁciency.
i
Health Center Program look-alikes are community-based health care providers that meet the requirements of the HRSA Health
Center Program, but do not receive Health Center Program funding.

As of June 10, 2021, CDC data showed that about 65 percent of vaccine doses had been allocated
to states and other jurisdictions, and about 35 percent of the doses distributed had been provided
through other federal distribution channels.74 See ﬁgure.

74CDC. “U.S. COVID-19 Vaccination Program: Vaccine Channel Portfolio by Jurisdiction”, accessed on June 15, 2021.
https://www.cdc.gov/coronavirus/2019-ncov/vaccines/distributing/jurisdiction-portfolios.html.

Page 52 GAO-21-551
Percentage of COVID-19 Vaccine Doses Distributed, by Federal Distribution Channel, as of June 10, 2021

Note: Percentages in ﬁgure may not total 100 due to rounding. Vaccine doses distributed include the approximately 373.1
million doses shipped and recorded through the CDC’s vaccine ordering system, Vaccine Tracking System (VTrckS), reported
through June 10, 2021.
a
This distribution channel includes doses distributed to jurisdictions. Although there are 64 jurisdictions implementing
COVID-19 vaccination and receiving federal funding for these eﬀorts, allocations of vaccine doses are being made to 62
jurisdictions because two major cities considered jurisdictions—Houston and San Antonio—have their vaccine allocation
consolidated with Texas. For this metric, the three major cities that do receive their own allocations—Chicago, New York City,
and Philadelphia—are reported with their respective states. This distribution channel excludes additional doses transferred to
jurisdictions by the Federal Emergency Management Agency (FEMA) for use within the Community Vaccination Center Pilot Sites
and mobile vaccination program.
b
The Federal Retail Pharmacy Program includes vaccine allotments to 21 national pharmacy chains and independent pharmacy
networks that represent approximately 48,000 potential vaccination sites across the country. It also includes deliveries provided
from the jurisdiction allocations as part of the Pharmacy Partnership for Long-Term Care Program to vaccinate staﬀ and
residents of nursing homes and assisted living facilities. Jurisdictions may transfer doses directly to a pharmacy partner, and
those doses are included in this category. Doses for states that have allowed vaccine provider pharmacies to order directly from
the state are excluded here and included in the jurisdictions total.
c
The Health Center COVID-19 Vaccine Program provides allocations directly from the federal government to participating health
centers for administration.
d
For the FEMA Community Vaccination Center Pilot Site and Mobile Vaccination Program, FEMA receives additional allocations
of vaccine doses and transfers these doses to the states with pilot community vaccination centers for ordering and
administration. FEMA provides logistical, ﬁnancial, and other support for vaccination clinics.
e
The Other category includes two programs (1): the Department of Health and Human Services/National Institutes of Health
Program, which is a small program managing doses allocated to federal departments and agencies for administration to critical
federal infrastructure personnel; and (2) the Federal Dialysis Center Program, which began on March 29, 2021, and has made
allocations directly to participating dialysis center participants to vaccinate patients on dialysis.
f
This distribution channel includes the allocations made to the Bureau of Prisons, Department of Defense, Indian Health
Service, and Veterans Health Administration.

Representatives of state, territorial, and local stakeholders we interviewed said they appreciated
the extra allocations of vaccine coming into jurisdictions through these diﬀerent federal
distribution channels. However, at the same time, they expressed concern about the level of
coordination and communication between the federal government and states and providers
regarding these other federal distribution channels for COVID-19 vaccine. For example, in February
2021, the National Governors Association stated that federal decisions to deliver vaccine doses

Page 53 GAO-21-551
directly to pharmacies and federally qualiﬁed health centers should be coordinated with state
governments.

Additionally, representatives of state, territorial, and local health oﬃcials we interviewed said
some pharmacies and health centers receiving direct allocations of vaccine doses from the federal
government were also receiving vaccine allocations from their state and local jurisdictions. They
said they were unaware when new federal channels were being initiated, resulting in confusion
at the state and local levels. Not knowing when or how much vaccine was being distributed to a
particular pharmacy or health center prevented state and local health oﬃcials from taking that
information into consideration when making decisions on how to distribute their own vaccine
supply to areas in need.

Vaccine implementation has continued to evolve as the supply of vaccine doses has increased and
new distribution channels and groups eligible for vaccination have been added. For example, on
May 4, 2021, the President announced plans to ship vaccine doses directly to rural health clinics to
increase access to vaccine in rural areas.75 And on May 10, 2021, FDA granted Pﬁzer’s request to
expand authorized use of its COVID-19 vaccine to adolescents aged 12 through 15 years.76

Also, many of the people eligible in the U.S. who wanted to be vaccinated have been, according to
some stakeholders we interviewed. These stakeholders said outreach and communication eﬀorts
now need to focus on those who remain unvaccinated, such as by targeting messaging to build
vaccine conﬁdence among those who may be facing vaccine hesitancy or by making vaccines more
accessible.77 The federal government has expanded its eﬀorts to make COVID-19 vaccinations
more accessible. For example, on May 4, 2021, the President announced additional eﬀorts to
make it easier for people to get vaccinated. These included plans to direct pharmacies in the
Federal Retail Pharmacy Program to oﬀer walk-in appointments and redirecting FEMA resources to
support additional smaller vaccination sites and more mobile clinics.

Addressing these continuing changes in COVID-19 vaccine implementation—including vaccinating
newly eligible adolescent populations and reaching those who have not yet been vaccinated
despite increasing supply—will require continued coordinated eﬀorts across federal, state,
territorial, and local governments, and others. Stakeholder representatives we interviewed
indicated that overall communication eﬀorts with the federal government, such as calls between
the White House COVID-19 Response Team, federal agencies, and state oﬃcials have facilitated
the exchange of information related to federal vaccine distribution eﬀorts, but often after
they were publicly announced. The evolving challenges around COVID-19 vaccination and
stakeholder concerns about coordination, reinforce the need for a national plan that clearly

75Rural health clinics are intended to increase access to primary care services to patients in rural communities and can
include public, nonproﬁt, or for-proﬁt health care facilities.
76On May 12, 2021, CDC’s ACIP voted to recommend the use of the Pﬁzer vaccine for this age group, and the CDC
Director adopted ACIP’s recommendation. See https://www.cdc.gov/media/releases/2021/s0512-advisory-committee-
signing.html, accessed May 21, 2021, for the statement from the CDC Director.
77For the purposes of this report, vaccine hesitancy refers to a delay in acceptance of vaccines despite availability of
vaccination services. Those who are vaccine hesitant are a middle group along a continuum that ranges between those
who fully accept vaccines on one end and those who are strongly opposed to vaccines on the other. An individual’s level
of vaccine hesitancy can vary over time. See also National Academies of Sciences, Engineering, and Medicine, The Critical
Public Health Value of Vaccines: Tackling Issues of Access and Hesitancy: Proceedings of a Workshop (Washington, D.C.: 2021).

Page 54 GAO-21-551
outlines how eﬀorts are being coordinated across federal agencies and nonfederal entities, as we
recommended in September 2020.

Methodology
To conduct this work, we reviewed CDC’s reported data on the distribution and administration of
COVID-19 vaccine doses and reviewed relevant federal laws, agency guidance, and documentation
from the DOD and HHS partnership, CDC, FDA, HRSA, and FEMA regarding COVID-19 vaccines and
eﬀorts to distribute these vaccines. Documentation we reviewed includes EUA fact sheets for the
authorized COVID-19 vaccines, other agency fact sheets and advisories, and information posted
on agency websites. We obtained written responses from oﬃcials at CDC, HRSA, and FEMA, and
reviewed press releases from the vaccine companies. We also conducted interviews in April and
May 2021, with organizations that represent state, territorial, and local stakeholders involved in
vaccination eﬀorts.78 To report data on COVID-19 vaccine distribution and administration, we used
data from CDC’s COVID Data Tracker. We assessed the reliability of this data by reviewing related
documentation and reviewing the data to identify any obvious errors or omissions. We determined
that the data were suﬃciently reliable for the purpose of analyzing COVID-19 vaccine distribution
and administration.

Agency Comments
We provided DOD; CDC, FDA, and HRSA within HHS; FEMA within the Department of Homeland
Security; and the Oﬃce of Management and Budget (OMB) with a draft of this enclosure. DOD and
OMB did not provide comments on this enclosure. CDC, FDA, HRSA, and FEMA provided technical
comments, which we incorporated as appropriate.

GAO’s Ongoing Work
We will continue to monitor federal eﬀorts related to COVID-19 vaccines, including the federal
government’s COVID-19 vaccine distribution and administration eﬀorts and its communication
about these eﬀorts.

GAO’s Prior Recommendations
The table below presents our recommendations on COVID-19 vaccines from prior CARES Act
bimonthly/quarterly reports.

78For perspectives of state, territorial, and local health oﬃcials, we interviewed representatives from the Association
of State and Territorial Health Oﬃcials, Association of Immunization Managers, and the National Association of County
and City Health Oﬃcials. We also interviewed oﬃcials from the National Governors Association. For perspectives of
providers, we interviewed representatives from the American Hospital Association, American Medical Association, and
the National Association of Community Health Centers.

Page 55 GAO-21-551
Prior GAO Recommendations Related to COVID-19 Vaccines
Recommendation Status

The Secretary of Health and Human Services, with support from Open. The Department of Health and Human
the Secretary of Defense, should establish a time frame for Services (HHS) neither agreed nor disagreed
documenting and sharing a national plan for distributing and with our recommendation. In September and
administering COVID-19 vaccines, and in developing such a plan October 2020, HHS’ Centers for Disease Control
ensure that it is consistent with best practices for project planning and Prevention (CDC) released initial planning
and scheduling and outlines an approach for how eﬀorts will documents, and in January 2021 the White House
be coordinated across federal agencies and nonfederal entities issued a national COVID-19 response strategy
(September 2020 report). that broadly outlined various channels for vaccine
distribution. In addition, CDC provided a high-
level description of its activities in a March 2021
COVID-19 vaccine distribution strategy and its
June 2021 update. While these documents provide
general information on federally supported vaccine
distribution activities, they do not outline the
approach the federal government is taking to
coordinate its eﬀorts or roles of the federal agencies
and non-federal entities. We continue to maintain
that it is important for HHS to have a national plan
that outlines such an approach. We will continue to
monitor HHS’ eﬀorts in this area.

The Secretary of Health and Human Services should direct Closed. In response to our recommendation, FDA
the Commissioner of the Food and Drug Administration said it would explore approaches to achieve the
(FDA) to identify ways to uniformly disclose to the public the goal of transparency. On November 17, 2020,
information from FDA’s scientiﬁc review of safety and eﬀectiveness FDA made an announcement on the agency’s
data—similar to the public disclosure of the summary safety and ongoing commitment to transparency for COVID-19
eﬀectiveness data supporting the approval of new drugs and EUAs. FDA also developed a process to disclose its
biologics—when issuing emergency use authorizations (EUA) for scientiﬁc review documents for therapeutic EUAs
therapeutics and vaccines, and, if necessary, seek the authority and released such summaries for one previous
to publicly disclose such information (November 2020 report on therapeutic EUA and the two additional therapeutic
vaccine and therapeutics). EUAs issued from November 2020—when we made
our recommendation—through January 2021. These
summaries disclosed information similar to what
FDA releases to support new drug approvals and
biologic licensures. Additionally, for the two vaccine
EUAs FDA issued from November 2020—when we
made our recommendation—through January 2021,
FDA released decision memorandums containing
detailed information about FDA’s review of safety
and eﬀectiveness data. FDA’s actions meet the
intent of our recommendation and will improve
transparency.

Source GAO. I GAO-21-551

Related GAO Product
COVID-19: Eﬀorts to Increase Vaccine Availability and Perspectives on Initial Implementation.
GAO-21-443. Washington, D.C.: April 14, 2021.

Page 56 GAO-21-551
Contact information: Alyssa M. Hundrup, 202-512-7114, hundrupa@gao.gov

Page 57 GAO-21-551
Nursing Homes
Nursing homes reported steep declines in COVID-19 cases and deaths starting in mid-December
2020, which generally coincided with the start of federal vaccination eﬀorts through the
Partnership for Long-Term Care Program.

Entities involved: Centers for Disease Control and Prevention and Centers for Medicare &
Medicaid Services, both within the Department of Health and Human Services.

Background
The health and safety of the 1.4 million elderly or disabled residents in the nation’s more than
15,000 Medicare- and Medicaid-certiﬁed nursing homes—who are often in frail health and living in
close proximity to one another—has been a particular concern during the COVID-19 pandemic.79

The Centers for Medicare and Medicaid Services (CMS), an agency within the Department of
Health and Human Services (HHS), is responsible for ensuring that nursing homes meet federal
quality standards to participate in the Medicare and Medicaid programs. To monitor compliance
with these standards, CMS enters into agreements with state survey agencies within each state
to conduct inspections, including recurring comprehensive standard surveys and as-needed
investigations.

The CARES Act appropriated $100 million for this oversight, and it directed CMS to prioritize the
use of funds for nursing home facilities in localities with community transmission of COVID-19.80
HHS also designated about $10 billion from the Provider Relief Fund, which was established
with funds provided under COVID-19 relief laws, as direct payments to assist nursing homes
with responding to COVID-19.81 Additionally, the American Rescue Plan Act of 2021 appropriated
$250 million for the creation of state strike teams that will be deployed to nursing facilities with
diagnosed or suspected cases of COVID–19 among residents or staﬀ for the purposes of assisting
with clinical care, infection control, or staﬃng during the COVID-19 emergency period and the
following year.82

79COVID-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.
80Pub. L. No. 116-136, div. B, tit. VIII, 134 Stat. 281, 557 (2020).According to CMS, of this amount, the agency plans to
provide state survey agencies approximately $81 million through September 30, 2023, to be used to ensure that all
nursing homes receive targeted infection control surveys, among other things. CMS has set aside the remaining $19
million to enhance survey system technology, to fund purchase of personal protective equipment (PPE) for federal
surveyors, and to implement improvements recommended by the Nursing Home Commission, according to the agency.
81Speciﬁcally, the CARES Act appropriated $100 billion, the Paycheck Protection Program and Health Care Enhancement
Act appropriated $75 billion, and the Consolidated Appropriations Act, 2021, appropriated $3 billion for this purpose.
Pub. L. No. 116-260, div. M, tit. III, 134 Stat. 1182, 1920 (2020); Pub. L. No. 116-139, div. B, tit. I, 134 Stat. 620, 622 (2020);
Pub. L. No. 116-136, div. B, tit. VIII, 134 Stat. 281, 563 (2020). Additionally, the American Rescue Plan Act of 2021, signed
into law on March 11, 2021, appropriated $8.5 billion for payments to eligible rural health care providers for health care-
related expenses and lost revenues that are attributable to COVID–19. Pub. L. No. 117-2, § 9911, 135 Stat. 4, 236-38.
82Pub. L. No. 117-2, § 9818, 135 Stat. 4, 218.

Page 58 GAO-21-551
In response to the pandemic, HHS, primarily through CMS and the Centers for Disease Control
and Prevention (CDC), has taken a range of actions to address infection prevention and control in
nursing homes, which we reported on in ﬁve prior reports from June 2020 through March 2021.
One of its actions was establishing the Pharmacy Partnership for Long-Term Care Program in
October 2020 and agreeing with pharmacy partners to conduct COVID-19 vaccination clinics for
residents and staﬀ of long-term care facilities, including nursing homes, beginning in December
2020.83

In February 2021, CDC launched the Federal Retail Pharmacy Program for COVID-19 Vaccination,
a collaboration between the federal government, pharmacy partners, and states and territories
to increase access to COVID-19 vaccination across the U.S., including increased access to vaccines
through long-term care pharmacy partners.84

COVID-19 cases and deaths in nursing homes. According to CDC case-reporting data, as of
May 16, 2021, more than 99 percent of Medicare- and Medicaid-certiﬁed U.S. nursing homes had
reported at least one conﬁrmed resident or staﬀ case, and more than 80 percent had reported
at least one resident or staﬀ COVID-19 death.85 As we reported in May 2021, nursing homes
commonly experienced multiple COVID-19 outbreaks, with 44 percent (5,943 of 13,380 reviewed
nursing homes) having experienced four or more outbreaks between May 2020 and January
2021.86

New weekly conﬁrmed cases of COVID-19 in nursing homes peaked in December and have since
declined by more than 96 percent. The decline in cases for both residents and staﬀ generally
coincided with the initiation of the federal government’s nursing home vaccination program, the
Pharmacy Partnership for Long-Term Care program, on December 21, 2020.87 (See ﬁgure below.)

83As part of the program, vaccines were provided with no out-of-pocket costs for residents or staﬀ or costs to the
facilities. The pharmacy partners—including CVS, Walgreens, and Managed Health Care Associates, Inc.— scheduled
and coordinated on-site vaccination clinic dates; ordered vaccines and associated supplies; ensured cold chain
management for the vaccine; provided on-site administration; reported required vaccination data to local, state, and
federal jurisdictions; while adhering to all applicable CMS COVID-19 testing requirements for facility staﬀ.
84According to CDC, a long-term care pharmacy is a specialized pharmacy that is designed speciﬁcally to support people
living in a long-term care community.
85CDC deﬁnes a conﬁrmed case as having a positive COVID-19 test resulting from a molecular test, a nucleic acid test,
or an antigen test, including antigen point-of-care test results. The percentage of nursing homes reporting at least one
conﬁrmed case or death is calculated based on the number of nursing homes that both reported data and passed
quality checks for the week ending May 16, 2021.
86According to CDC, an outbreak starts the week a nursing home reports a new resident or staﬀ COVID-19 case and
ends when there are 2 weeks with no new cases.
87According to CDC, some of the decline in resident cases occurred before vaccinations were administered through the
partnership program. New weekly resident cases peaked the week ending December 20, 2020, at more than 33,300
resident cases and new weekly staﬀ cases peaked one week prior at more than 28,500 staﬀ cases for the week ending
December 13, 2020. New weekly resident cases declined to 700 cases and new weekly staﬀ cases declined to 1,469 cases
for the week ending May 16, 2021. New weekly and cumulative case and death counts are likely underreported because
they do not include data for the nursing homes that did not report COVID-19 data to CDC for that week or from nursing
homes that submitted data that failed data quality assurance checks. Additionally, as we previously reported, CMS does
not require nursing homes to report data prior to May 2020, although nursing homes may do so voluntarily. According
to CDC, data used in this analysis are part of a live data set, meaning that facilities can make corrections to the data at
any time. Data presented in this enclosure reﬂect the data downloaded as of May 27, 2021, which includes data through
the week ending May 16, 2021.

Page 59 GAO-21-551
Similarly, new weekly resident deaths have steeply declined since peaking in the week ending
December 20, 2020, again generally coinciding with the launch of federal vaccination eﬀorts.88
Combined nursing home resident and staﬀ deaths from COVID-19, as a percentage of total
COVID-19 deaths in the U.S., consistently represented about 30 percent of all COVID-19 deaths in
the U.S., from May 2020 through February 2021. As of May 16, 2021, the combined percentage of
total COVID-19 nursing home resident and staﬀ deaths declined to 22 percent, indicating that the
trajectory for nursing home COVID-19 related deaths had declined more than the decline in deaths
in the country as a whole. (See ﬁgure below.)

88New weekly resident deaths reached a peak of 5,979 for the week ending December, 20, 2020, and have since
declined to 197 deaths as of the week ending May 16, 2021—about a 97 percent decline in new weekly deaths since the
peak in December 2020.

Page 60 GAO-21-551
New Weekly Conﬁrmed COVID-19 Cases and Deaths among U.S. Nursing Home Residents and Staﬀ, as Reported
by Medicare- and Medicaid-Certiﬁed Nursing Homes, Weeks Ending May 31, 2020, through May 16, 2021

Notes: Dates refer to the end of a week (e.g., May 31 refers to the entire week from May 25 through May 31).
CDC deﬁnes a conﬁrmed case as having a positive COVID-19 test resulting from a molecular test, a nucleic acid test, or an
antigen test, including antigen point-of-care test results.
According to CDC, data used in this analysis are part of a live data set, meaning that facilities can make corrections to the data
at any time. Data presented in this enclosure reﬂect the data downloaded as of May 27, 2021, which includes data through the
week ending May 16, 2021. We excluded data for the week ending May 24, 2020, because it is the ﬁrst week for which data are
available from CDC and could include cases and deaths from multiple weeks dating back to January 1, 2020.
Weekly and cumulative case and death counts are likely underreported because they do not include data for the nursing homes
that did not report COVID-19 data to CDC for that week or from nursing homes that submitted data that failed data quality
assurance checks. Additionally, as we previously reported, the Centers for Medicare and Medicaid Services (CMS) does not
require nursing homes to report data prior to May 2020, although nursing homes may do so voluntarily. We recommended that

Page 61 GAO-21-551
the Secretary of Health and Human Services—in consultation with CMS and CDC—develop a strategy to capture more complete
data on conﬁrmed COVID-19 cases and deaths in nursing homes retroactively to January 1, 2020.
Weekly staﬀ deaths reported for the weeks ending May 31, 2020 through May 16, 2021, ranged from 5 (week ending May 16,
2021) to 59 (week ending May 31, 2020).
Certain individual nursing homes received their vaccinations outside of the Pharmacy Partnership for Long-
Term Care Program. Facilities were not required to participate in the program and could opt to have vaccine supply and
management services coordinated by a pharmacy provider of its choice. According to the Department of Health and Human
Services (HHS), 2 percent (374 out of 15,727) of nursing homes chose not to enroll in the program, in addition to the state of
West Virginia, which opted to use other local pharmacy providers to administer nursing home vaccines starting the week of
December 14, 2020.

Two CDC analyses of COVID-19 testing data released in April 2021 showed that vaccination
generally protected individuals from COVID-19 infection and symptoms, but both studies identiﬁed
post-vaccination (breakthrough infections) in a small number of Illinois and Kentucky nursing
home residents and staﬀ members.89 Given that such breakthrough infection can occur, the
studies emphasized the need for continued focus on infection prevention and control measures in
nursing homes and vaccinating residents and staﬀ.

Nursing home vaccinations through the Pharmacy Partnership for Long-Term Care Program.
Vaccination clinics for nursing home residents and staﬀ oﬀered through the pharmacy partnership
program, which began in mid-December, were completed in all participating nursing homes as of
March 30, 2021. According to CDC, as of March 30, 2021, the program had completed 13,590 ﬁrst
vaccination clinics, 13,521 second vaccination clinics, and 13,145 third vaccination clinics in nursing
homes.90 Further, CDC reported that approximately 3.8 million vaccine doses were administered
to residents and staﬀ in nursing homes through the Pharmacy Partnership for Long-Term Care
Program—45 percent of all doses administered through the program.91 See table below.

89See A. Cavanaugh et al., “COVID-19 Outbreak Associated with a SARS-CoV-2 R.1 Lineage Variant in a Skilled Nursing
Facility After Vaccination Program — Kentucky, March 2021,” Centers for Disease Control and Prevention Morbidity and
Mortality Weekly Report, vol. 70 (Apr. 21, 2021) and R. Teran et al., “Postvaccination SARS-CoV-2 Infections Among Skilled
Nursing Facility Residents and Staﬀ Members — Chicago, Illinois, December 2020–March 2021,” Centers for Disease
Control and Prevention Morbidity and Mortality Weekly Report, vol. 70 (Apr. 21, 2021).
90Pharmacies participating in the Pharmacy Partnership for Long-Term Care Program are contracted to provide three
vaccination clinics in each long-term care facility enrolled in the program to facilitate safe vaccination of the long-
term care population. Certain individual nursing homes are receiving their vaccinations outside of the pharmacy
partnership program. Facilities were not required to participate in the program and could opt to have vaccine supply and
management services coordinated by a pharmacy provider of its choice. According to HHS, 2 percent (374 out of 15,727)
of nursing homes chose not to enroll in the program. CDC does not have complete data on vaccines administered to
residents and staﬀ members of nursing homes outside of the Pharmacy Partnership for Long-Term Care Program.
91According to CDC, the remaining doses were administered in other long-term care settings, such as assisted living
facilities. CDC oﬃcials said that when reporting vaccination data, nursing homes generally self-reported their facility
type as CMS certiﬁed skilled nursing facility, which CDC indicated was the category generally inclusive of nursing
homes. CDC’s vaccine distribution and administration tracking website notes that doses administered refers to vaccine
administered to long-term care facility residents and staﬀ, as reported to CDC by the pharmacy partners participating
in the Pharmacy Partnership for Long-Term Care Program. These data do not include doses administered to long-term
care facility residents and staﬀ outside this partnership. A total of 54 out of 55 eligible jurisdictions, including 49 states,
four cities, and one territory, participated in the program. Participating jurisdictions did not include West Virginia. The
55 eligible jurisdictions are among a total of 64 jurisdictions which include all U.S. states and territories and some local
health programs.

Page 62 GAO-21-551
CDC Data on COVID-19 Vaccinations Conducted through the Pharmacy Partnership for Long-Term Care Program
by Recipient Type, as of May 12, 2021
Number of vaccine doses Number of vaccine doses administered in
Recipient administered in nursing homes all long-term care facility types

Residents 1,926,170 4,564,290

Staﬀ members 1,810,220 3,776,119

Total 3,736,390 8,341,409

Source: Centers for Disease Control and Prevention. | GAO-21-551

Note: According to the Centers for Disease Control and Prevention (CDC), data used in this table are part of a live data set,
meaning that data can be corrected by CDC and the pharmacies participating in the pharmacy partnership program at any
time. Data presented in this enclosure were reported to us by CDC as of May 12, 2021. Although CDC reports that all nursing
home clinics have been completed, as CDC and its participating pharmacies review the data for accuracy, the exact numbers of
doses may change. CDC said that the agency anticipates producing ﬁnal data on the pharmacy partnership program at the end
of May.

CDC states that ensuring steady access to vaccine will be necessary after the partnership program
ends in order to vaccinate new residents, new staﬀ, and residents or staﬀ who may have initially
been hesitant and now wish to be vaccinated.92 To support these further vaccinations, in mid-
March 2021, the federal government started providing a direct allocation of COVID-19 vaccine to
long-term care pharmacies participating in the Federal Retail Pharmacy Program through four
companies across the country — Managed Health Care Associates, Inc., GeriMed, Innovatix, and
Omnicare.93 These companies receive a proportion of vaccine through the program to distribute
to their member long-term care pharmacies that can be accessed by individual facilities.

Methodology
To conduct this work, we reviewed CMS and CDC data, agency guidance, and other relevant
information on HHS’s response to the COVID-19 pandemic. We also reviewed written responses
from CMS and CDC.

In addition, we analyzed CDC data on COVID-19 reported by nursing homes through the week
ending May 16, 2021.94 We analyzed the CDC data as they were reported by nursing homes to CDC
and publicly posted by CMS.

92CDC data show that during the week ending May 16, 2021, 243 facilities (about 2 percent) requested assistance related
to vaccine access.
93The Federal Retail Pharmacy Program for COVID-19 Vaccination, launched on February 11, 2021, is a collaboration
between the federal government, states and territories, and 21 national pharmacy partners and independent pharmacy
networks to increase access to COVID-19 vaccination across the United States. This program is one component of the
federal government’s strategy to expand access to vaccines for the American public.
94We analyzed the most recent data available on May 27, 2021. The CDC data on COVID-19 in nursing homes were
accessed on May 27, 2021, for the week ending May 16, 2021, from https://data.cms.gov/Covid19-nursing-home-data.
For the data on COVID-19 in nursing homes, we analyzed and reported data that had been determined by CDC and CMS
to pass quality assurance checks for data entry errors. According to CDC, data used in this analysis are part of a live data
set, meaning that facilities can make corrections to the data at any time.

Page 63 GAO-21-551
We did not otherwise independently verify the accuracy of the information with these nursing
homes. We assessed the reliability of the data sets used in our analyses by checking for missing
values and obvious errors and reviewing relevant CMS and CDC documents. We determined the
data were suﬃciently reliable for the purposes of our reporting objective.

Agency Comments
We provided HHS with a draft of this enclosure. HHS did not provide comments on this enclosure.

GAO’s Ongoing Work
We have released a recent report describing the frequency and duration of COVID-19 outbreaks in
nursing homes from May 2020 through January 2021. We also continue to examine the oversight
of infection prevention and control as well as emergency preparedness in nursing homes.

GAO’s Prior Recommendations
The table below presents our recommendations on nursing homes from prior bimonthly and
quarterly CARES Act reports.

Page 64 GAO-21-551
Prior GAO Recommendations Related to COVID-19 Outbreaks in Nursing Homes
Recommendation Status

The Secretary of Health and Human Services should ensure that Closed. The Department of Health and Human
the Director of the Centers for Disease Control and Prevention Services (HHS) neither agreed nor disagreed with
collects data speciﬁc to the COVID-19 vaccination rates in nursing our recommendation. In March 2021, HHS said it
homes and makes these data publicly available to better ensure was working towards better data transparency and
transparency and that the necessary information is available to noted that nursing homes have an opportunity
improve ongoing and future vaccination eﬀorts for nursing home to voluntarily report data through the National
residents and staﬀ. (March 2021 report). Healthcare Safety Network tracking system.
On May 13, 2021, the Centers for Medicare &
Medicaid Services (CMS) issued an interim ﬁnal
rule establishing Long-Term Care Facility Vaccine
Immunization Requirements for Residents and
Staﬀ, including for nursing homes. The rule requires
facilities to report COVID-19 vaccination status
of residents and staﬀ to the Centers for Disease
Control and Prevention (CDC). According to CDC,
the new vaccination reporting requirement will not
only assist in monitoring vaccine uptake amongst
residents and staﬀ, but will also aid in identifying
facilities that may be in need of additional resources
and assistance to respond to the COVID-19
pandemic. As of June 10, 2021, CMS has posted
resident and staﬀ vaccination rates for over 15,000
Medicare and Medicaid certiﬁed nursing homes
on a public COVID-19 Nursing Home Data tracking
website.

The Secretary of Health and Human Services should ensure Open. HHS neither agreed nor disagreed with
that the Administrator of the Centers for Medicare & Medicaid our recommendation at the time of publication.
Services, in consultation with the Centers for Disease Control and However, on April 15, 2021, CMS issued a proposed
Prevention, requires nursing homes to oﬀer COVID-19 vaccinations rule that includes, among other things, a proposal
to residents and staﬀ and design and implement associated to adopt a new quality measure for skilled nursing
quality measures (March 2021 report). facilities. The measure would require facilities
to submit data on COVID-19 staﬀ vaccination
beginning October 1, 2021 and would be used as
part of CMS’s quality reporting program beginning
in ﬁscal year 2023.
On May 13, 2021, CMS also issued an interim
ﬁnal rule that establishes new requirements for
nursing homes to develop and implement policies
and procedures for educating residents, their
representatives, and staﬀ members about the
COVID-19 vaccine and for oﬀering these vaccines
to each resident and staﬀ member. Facilities
will be assessed for compliance with the new
requirements, which are eﬀective on May 21, 2021.
We will continue to monitor HHS’s progress towards
implementing this recommendation.

The Administrator of CMS should quickly develop a plan that Closed. HHS neither agreed nor disagreed with
further details how the agency intends to respond to and our recommendation. HHS oﬃcials highlighted
implement, as appropriate, the 27 recommendations in the ﬁnal actions that CMS has taken related to Commission
report of the Coronavirus Commission on Safety and Quality in recommendations and said it would refer to and

Page 65 GAO-21-551
Recommendation Status

Nursing Homes, which CMS released on September 16, 2020.
a act upon the Commission's recommendations, as
Such a plan should include milestones that allow the agency to appropriate.
track and report on the status of each recommendation; identify As of May 2021, CMS has developed an internal
actions taken and planned, including areas where CMS determined tracking document that notes the status of
not to take action; and identify areas where the agency could each of the Nursing Home Commission’s
coordinate with other federal and nonfederal entities (November recommendations, the responsible agency for each
2020 report). recommendation, and planned actions for CMS-
related recommendations. According to CMS, the
agency will be: conducting quarterly reviews of
the tracking document, holding interim meetings
to discuss the recommendations, and conducting
outreach to other Federal agencies to engage them
in this work.

The Secretary of Health and Human Services, in consultation Open. HHS partially agreed with our
with the Centers for Medicare & Medicaid Services (CMS) and the recommendation. As of May 2021, no speciﬁc action
Centers for Disease Control and Prevention (CDC), should develop had been taken by HHS, although according to
a strategy to capture more complete data on conﬁrmed COVID-19 HHS it continues to consider how to implement
cases and deaths in nursing homes retroactively back to January 1, our recommendation. We will continue to monitor
2020, and clarify the extent to which nursing homes had reported HHS’s progress towards implementing this
data before May 8, 2020. To the extent feasible, this strategy to recommendation.
capture more complete data should incorporate information
nursing homes previously reported to CDC or to state or local
public health oﬃces (September 2020 report).

Source: GAO. I GAO-21-551

a
MITRE, Coronavirus Commission on Safety and Quality in Nursing Homes: Commission Final Report, PRS Release Number
20-2382, September 2020.

Related GAO Products
COVID-19 in Nursing Homes: Most Homes Had Multiple Outbreaks and Weeks of Sustained Transmission
from May 2020 through January 2021. GAO-21-367. Washington, D.C.: May 19, 2021.

COVID-19 in Nursing Homes: HHS Has Taken Steps in Response to Pandemic, but Several GAO
Recommendations Have Not Been Implemented. GAO-21-402T. Washington, D.C.: March 17, 2021.

Infection Control Deﬁciencies Were Widespread and Persistent in Nursing Homes Prior to COVID-19
Pandemic. GAO-20-576R. Washington, D.C.: May 20, 2020.

Science & Tech Spotlight: COVID-19 Testing. GAO-20-584SP. Washington, D.C.: May 20, 2020.

Nursing Homes: Better Oversight Needed to Protect Residents from Abuse. GAO-20-259T. Washington,
D.C.: November 14, 2019.

Health Care Transparency: Actions Needed to Improve Cost and Quality Information for Consumers,
GAO-15-11. Washington, D.C.: October 20, 2014.

Page 66 GAO-21-551
Contact information: John E. Dicken, (202) 512-7114, dickenj@gao.gov

Page 67 GAO-21-551
COVID-19 Testing
The Centers for Disease Control and Prevention initially developed a ﬂawed COVID-19 diagnostic
test in January and February 2020, which contributed to the delayed rollout of testing nationwide.
The agency has taken steps to improve its process for developing tests, but additional actions
could help strengthen its preparedness and enhance the nation’s testing capacity during a future
infectious disease outbreak.

Entities involved: The Centers for Disease Control and Prevention and the Food and Drug
Administration within the Department of Health and Human Services

Recommendations for Executive Action
The Director of the Centers for Disease Control and Prevention should work with appropriate
stakeholders—including public health and private laboratories—to develop a plan to enhance
surge capacity for laboratory testing. This plan should include timelines, deﬁne agency and
stakeholder roles and responsibilities, and address any identiﬁed gaps from preparedness
exercises.

The Director of the Centers for Disease Control and Prevention should assess the agency’s needs
for goods and services for the manufacturing and deployment of diagnostic test kits in public
health emergencies. This assessment should evaluate how establishing contracts in advance of an
emergency could help CDC quickly and cost-eﬀectively acquire these capabilities when responding
to future public health emergencies, including those caused by novel pathogens, and should
incorporate lessons learned from the COVID-19 emergency.

The Centers for Disease Control and Prevention agreed with both of these recommendations.

Background
According to the Centers for Disease Control and Prevention (CDC), one of its roles during
an emergency response to an emerging infectious disease is to aid and equip public health
laboratories around the country to conduct testing during the early stages of a response. CDC
typically develops a diagnostic test for an emerging pathogen when no diagnostic test has been
cleared by the Food and Drug Administration (FDA) and no adequate alternative is available, as it
had during past emergencies, such as with the 2009 H1N1 inﬂuenza and Zika.

The FDA issued an emergency use authorization (EUA) for CDC’s COVID-19 test on February
4, 2020.95 The EUA process allowed CDC to distribute its COVID-19 test kits to public health

95During an emergency, as declared by the Secretary of Health and Human Services, FDA may temporarily authorize
unapproved medical products or unapproved uses of approved medical products through an EUA, provided certain
statutory criteria are met. See 21 U.S.C. §§ 360bbb-3.CDC submitted its EUA request for the test to FDA on February 3,
2020.

Page 68 GAO-21-551
laboratories more quickly than would typically be necessary for FDA approval or clearance.96 CDC
distributed COVID-19 test kits to 93 public health and Department of Defense (DOD) laboratories
between February 6 and 10, 2020.97

Immediately after receipt of the CDC test, many public health laboratories reported to CDC that
the test was not working properly.98 Speciﬁcally, a number of public health laboratories reported
to CDC that they could not validate two of the test’s three primer-probe sets, short fragments of
genetic code that can be used to detect a virus’s genetic code, speciﬁcally its N1 and N3 primer-
probe sets. Following these reports, CDC worked to correct the issue and, by February 28, 2020,
began distributing new test kits to the laboratories.

CDC’s was the only COVID-19 test available in the U.S. until February 29, 2020, when FDA
announced that it did not intend to object if certain laboratories began using their own tests while
they prepared EUA requests, provided the tests were validated and the laboratories notiﬁed FDA.99
FDA played an important role in increasing access to testing during this public health emergency;
we have ongoing work examining FDA’s role in authorizing and monitoring COVID-19 tests.

According to CDC, CDC’s laboratory tested 3,291 total specimens, representing approximately
1,195 individuals, on behalf of public health laboratories in January and February, 2020. In
contrast, other countries around the world quickly scaled up testing in late January and early
February. For example, the South Korean government reported that South Korea was conducting
about 20,000 tests each day by the middle of February 2020.100

The failure of CDC’s COVID-19 test limited testing capacity in the U.S. during the critical early weeks
of the pandemic when the nation needed to understand the spread of the novel virus. In addition,
we previously reported that shortages of key testing supplies, such as swabs and testing reagents,
also contributed to the delay in broad-scale testing early in the emergency response. These
shortages were due to the unprecedented domestic demand and overall global competition.

Overview of Key Issues
The CDC’s test and the test adopted by the World Health Organization were developed
concurrently. CDC began work on its ﬁrst COVID-19 diagnostic test on January 10, 2020—the day
that Chinese researchers publicly posted the COVID-19 virus’s genetic code—and had completed

96One of the statutory criteria for EUA issuance—evidence that the product “may” be eﬀective—requires less certainty of
eﬀectiveness than is required for approval. See 21 U.S.C. § 360bbb-3(c)(2)(A). This allows for products such as tests to be
made available through EUAs more quickly than if they were subject to approval.
97Based upon the CDC EUA request, use of the test was limited to qualiﬁed laboratories designated by CDC.
98According to CDC, before laboratories use a new test on samples from patients, they must verify the test performance
to make sure it works as expected. According to CDC, about half of the 93 laboratories had reported the status of their
veriﬁcation of the test to CDC by February 21, 2020, and of these laboratories, 85 percent reported problems with the
test. The remaining laboratories did not report their veriﬁcation status to CDC.
99Also on February 29, 2020, FDA issued an EUA for the New York State Department of Health’s COVID-19 test.
100Government of the Republic of Korea, All about Korea’s Response to COVID-19 (Seoul, Republic of Korea: Oct. 13, 2020).

Page 69 GAO-21-551
the test’s design by January 18.101 At the same time, a research laboratory in Germany was also
designing a diagnostic test. The World Health Organization (WHO) published the protocol of this
German test online on January 13, 2020.102 On January 24, 2020, CDC published its test protocol
online. CDC oﬃcials told us they did this so that the global laboratory community, including private
laboratories in the U.S., could use CDC’s design when developing their own tests. (See ﬁgure
below.)

Timeline of the Development and Distribution of CDC and WHO COVID-19 Diagnostic Tests in 2020

Although the German laboratory made its test design public on January 13, 2020, CDC oﬃcials
told us that any eﬀort to use the test designed by the German laboratory would have further
delayed testing in the U.S. due to the need to fully validate and manufacture all of the necessary
components and obtain the required authorization from FDA. CDC oﬃcials told us that CDC
developed its own test, in part, to ensure that distribution was not limited by the exercise of
intellectual property rights.

On February 3, 2020, WHO announced that it would ship test kits using the German laboratory’s
design to qualiﬁed laboratories around the world that lacked the materials to produce the test
themselves. WHO’s eﬀort helped to quickly scale up testing in some countries, particularly in
Africa. However, because CDC possessed the materials to make tests, its laboratories were not
among those targeted for assistance by WHO. CDC oﬃcials told us that WHO did not raise with
CDC the possibility of WHO providing test kits to CDC.

101Chinese researchers posted the virus’s genetic code to the National Institute of Health’s GenBank. CDC’s ﬁrst
COVID-19 test was called the CDC 2019-Novel Coronavirus (2019-nCoV) Real-Time RT-PCR Diagnostic Panel. CDC
developed a second COVID-19 test in July 2020 called the CDC Inﬂuenza SARS-CoV-2 (Flu SC2) Multiplex Assay.
102The German laboratory, Charite-Universitatsmedizin Berlin, published a revised version of its test design on January
17, 2020.

Page 70 GAO-21-551
Three primary factors contributed to the failure of CDC’s initial test. According to CDC, the
agency’s failure to detect the problems with its test prior to distribution was a “quality process
failure of incalculable cost.” The failure of CDC’s ﬁrst diagnostic test for COVID-19 can largely be
attributed to three primary factors, according to information we collected from CDC’s own internal
review and interviews with CDC oﬃcials: laboratory quality control deﬁciencies, a lack of clearly
deﬁned approval criteria for test release and distribution, and poor communication within CDC
about test performance problems.

1. Laboratory quality control deﬁciencies. According to CDC’s internal review, the CDC laboratory
that developed the test had multiple quality control deﬁciencies and used incorrect quality
control procedures throughout the development process.103

For example, according to CDC, because the laboratory used an incorrect testing procedure
when it conducted its ﬁnal quality control check on February 3, 2020, it did not detect
problems then. Rather, by February 6, 2020, when problems with the test’s performance were
identiﬁed, CDC had already manufactured and prepared kits for distribution to public health
laboratories. At that time, although laboratory staﬀ had discovered that one of the test’s
three primer-probe sets produced some false results, the laboratory accepted the results and
approved the test for distribution to public health laboratories that same day.104
According to CDC, its laboratory that developed the COVID-19 test had never manufactured
a diagnostic test before that one and had not implemented all quality system requirements
that pertain to laboratories developing such tests.105 CDC added that, although the laboratory
operated under a quality system that was largely consistent with the requirements under the
Clinical Laboratory Improvement Amendments of 1988 (CLIA), the laboratory did not have
eﬀective procedures or controls in place to assure that the test kit was ﬁt for its intended
purpose, according to the agency.106 In an internal agency report, CDC acknowledged that
the decision to assign manufacturing responsibility to a laboratory that had not implemented
quality manufacturing regulatory requirements contributed to the incident.107

103The CDC laboratory that developed the test was the Respiratory Viruses Branch laboratory from within CDC’s
Division of Viral Diseases, part of the CDC National Center for Immunization and Respiratory Diseases.
104CDC’s International Reagent Resource shipped test kits to 93 qualiﬁed laboratories including to all 50 state
public health laboratories and several DOD laboratories between February 6 and February 10, 2020. Each test kit
could test approximately 700 to 800 specimens.
105See 21 C.F.R. pt. 820 (2020) (generally referred to as current good manufacturing practice regulations).
According to CDC, these regulatory requirements govern the methods, facilities and controls used for the design,
manufacture, packaging, labeling, storage, installation, and servicing of all ﬁnished in vitro diagnostic devices
intended for human use. FDA waived the current good manufacturing practice requirements, including the quality
system requirements, under the EUA for the test.
106See CLIA of 1988, Pub. L. No. 100-578, 102 Stat. 2903 (codiﬁed as amended at 42 U.S.C. § 263a); 42 C.F.R. pt.
493 (2020) (laboratory requirements). Under CLIA, clinical laboratories that perform tests on human specimens to
diagnose, prevent, or treat disease must meet certain requirements. The Centers for Medicare & Medicaid Services
(CMS) has issued regulations to implement CLIA and is responsible for overseeing and certifying compliance with
these regulations.
107In addition, according to CDC, the laboratory used an electronic information system that was incompatible with
another integral CDC component, which led to a loss of document control that resulted in conﬂicting versions of
laboratory documents and procedures in use at the same time.

Page 71 GAO-21-551
Centers for Disease Control and Prevention’s (CDC) investigation of the problems with its ﬁrst
COVID-19 test kits
After learning of the problems with its test kits from public health laboratories, CDC investigated the
technical reasons for the failure, speciﬁcally within the sets of primers and probes—short fragments of
genetic code—that could not be validated. CDC determined that the false results from the N1 primer-probe
set likely had been caused by contamination during the development process. Problems with the N3 set
were likely caused by a design ﬂaw that led to the primers and probes attaching to each other during the
reaction—known as a primer-dimer—and not as the result of contamination.
Source: GAO interviews with CDC oﬃcials. | GAO-21-551

2. Lack of clearly deﬁned approval criteria. CDC oﬃcials told us the agency proceeded with
distributing the test kits on February 6, 2020, even though the laboratory knew of its ﬂaws,
because the laboratory had not deﬁned a pass/fail threshold for quality control checks of the
test’s components and because there was no independent quality unit in place to oversee the
laboratory’s manufacturing process.

3. Poor communication of test performance problems within CDC. CDC oﬃcials told us no one with
knowledge of the test’s failure rate communicated the information beyond the laboratory
when problems were initially discovered and that CDC’s response leadership was not aware
of the failure rate until after CDC began receiving notices from the state public health
laboratories that they had been unable to use the test.
In 2016, we reported problems within CDC related to the ﬂow of critical information to
leadership about inspections of high containment laboratories that work with hazardous
biological agents. Our recommendation that the Secretary of Health and Human Services
should develop policies for reporting laboratory incidents to senior department oﬃcials or
direct the Director of CDC to incorporate these requirements into their policies has not been
implemented as of June 25, 2021.108
Upon learning of the problems with the test from the public health laboratories, CDC ﬁrst
attempted to re-manufacture test kits using all three primer-probe sets. However, CDC later
determined that the third set—N3—was not necessary and that removing it did not aﬀect the
test’s overall performance. Thus, the new test kits CDC began distributing to public health
laboratories on February 28, 2020, contained only two primer-probe sets.109
According to CDC, the test’s design had originally included the N3 set because it was “more
broadly reactive and would identify a wider family of coronaviruses, including SARS-CoV and
bat-carried strains not known to have infected humans. The inclusion of a broadly reactive
primer-probe set was meant to ensure that the test would be partially reactive if sequence
variants arose.” During an interview with the Council on Foreign Relations, the Director of
CDC at that time, said that CDC added the third set to the test because the agency was being
“overly cautious.”

Other CDC actions contributed to slower testing in the early stages of the pandemic. Beyond
the failure of the initial version of CDC’s COVID-19 test, three other areas contributed to testing

108In October 2020 CDC established a policy that, among other things, established reporting requirements for
laboratory safety events in CDC high containment laboratories and associated areas.
109Two days prior, on February 26, 2020, CDC received enforcement discretion from FDA that allowed the CDC test
to be used without the N3 primer-probe set.

Page 72 GAO-21-551
limitations and challenges: CDC’s early testing guidelines, communication with laboratories, and
selection of a testing platform.

CDC’s early testing guidelines. COVID-19 testing in the early stages of the pandemic was not
widespread, in part, because of CDC’s narrow criteria for who should be tested at that time.
Speciﬁcally, testing was limited in January 2020 to symptomatic individuals who had recently
traveled from Wuhan City, China, or had been in close contact with individuals suspected or
conﬁrmed to have COVID-19. By late February, CDC expanded its COVID-19 testing guidelines to
include symptomatic individuals who had traveled through multiple international areas and those
with severe respiratory illness, regardless of their travel history.110 According to CDC, these criteria
were based on the best available information about the virus at that time and what was known
about Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS).
CDC oﬃcials told us it would not have been appropriate to implement wide-scale testing at that
point in the response. CDC’s criteria were generally consistent with the WHO’s criteria in place at
that time.

CDC’s communication of test results to public health laboratories. According to the Association
of Public Health Laboratories (APHL), which represents state and local-level public health
laboratories, communication of test results from CDC back to public health laboratories in the
period when they were unable to perform their own tests was ineﬃcient and slow.111 APHL and
CDC attributed the slowness to the CDC laboratory’s lack of a laboratory information management
system that could communicate test results back to the public health laboratories electronically
and its reliance instead on telephone calls for positive results and emails for negative results.

Further, APHL oﬃcials told us that it often took days to receive negative test results from CDC and
that it was diﬃcult for laboratories to process the negative results received by email because these
laboratories needed to match specimen numbers to separate patient identiﬁcation numbers—a
labor-intensive process for laboratory staﬀ.

CDC’s selection of a testing platform. According to APHL, CDC’s ﬁrst COVID-19 test kit required the
laboratories to use an automated extraction platform that only 12 public health laboratories
had in place at the time. CDC oﬃcials told us they were unaware of how many public health
laboratories had the selected platform in place in early February 2020.

The only alternative to the automated platform CDC had intended for use with its test was manual
extraction of viral material, a more time-consuming method for laboratory staﬀ to employ.
APHL oﬃcials said they believe CDC’s choice of platform indicated that agency oﬃcials did not
appreciate the need to move quickly to scale up testing at that time.

Oﬃcials from APHL told us they worked with the CDC Foundation to purchase the new platform
for use by 12 public health laboratories, and on March 15, 2020, the EUA for the CDC test kit was

110CDC’s criteria on February 28, 2020, also noted that local health departments, in consultation with clinicians, should
determine whether a patient should be investigated or tested for COVID-19.
111Additionally, CDC required public health laboratories to send their positive test results to CDC for conﬁrmatory
testing until the middle of March, 2020.

Page 73 GAO-21-551
reissued to allow laboratories to use other types of testing platforms.112 However, according to
APHL, had the test worked as intended from the start, CDC’s selection of a platform most public
health laboratories did not have would have slowed the testing response because many public
health laboratories would have initially been limited in how many specimens they could have
processed per day.

CDC has begun taking steps to remediate the problems associated with the development of
its ﬁrst COVID-19 test and communication of test results. CDC has identiﬁed and has begun to
make improvements to its process for developing diagnostic tests.

To prevent the future distribution of a ﬂawed test, CDC will require all tests it develops to have clearly
deﬁned approval criteria and management review. According to information posted on CDC’s
website in June 2021 and agency oﬃcials, a new process, including speciﬁc release criteria and
multiple levels of management review and sign-oﬀ has been developed.113 The review process was
implemented for the deployment of CDC’s latest COVID-19 test in July 2020, the Inﬂuenza SARS-
CoV-2 Multiplex Assay, which was designed to test for inﬂuenza and COVID-19 simultaneously.

In addition, CDC’s website stated that the agency had begun developing an internal test
review board.114 According to CDC, once developed, the test review board will require all test
development and validation data to be reviewed by CDC subject matter experts from infectious
disease programs outside of the program developing the test to ensure an objective review and
will require multiple levels of management sign-oﬀ.115 If implemented eﬀectively, a review board
such as this should help prevent the recurrence of a test being distributed without management
having reviewed key information about the test, as occurred with CDC’s ﬁrst COVID-19 test.

To help ensure CDC laboratories meet high-quality standards, CDC has indicated that it will require
laboratories to obtain appropriate accreditation. According to CDC, the agency began eﬀorts in
2020 to require that CDC laboratories become accredited to an appropriate technical standard
that assures compliance with regulatory requirements by October 1, 2024.116 According to CDC
oﬃcials, this would ensure that its laboratories maintain compliance with applicable regulatory
requirements to the extent practicable and that quality practices, integrity and excellence in

112According to the foundation’s website, the CDC Foundation is an independent nonproﬁt that was created by
Congress to mobilize philanthropic and private-sector resources to support the CDC’s critical health protection work.
113Centers for Disease Control and Prevention, “Laboratory Quality Improvement Activities,” accessed June 17, 2021,
https://www.cdc.gov/labs/quality-activities.html.
114CDC told us it has created a working group to develop a charter and process for this new Test Review Board. CDC
expects to complete the Board’s charter by October 2021 and to begin a phased implementation of the Board by early
2022.
115CDC oﬃcials told us that the Test Review Board will be composed of CDC staﬀ with expertise in statistics, assay
development, and assay manufacturing. According to CDC, to ensure independence and safeguard against potential
conﬂicts of interest, the Board’s charter will include a review process that includes input from all board members and
a process to recuse members with conﬂicts of interest from the discussion and voting process. All board members will
adhere to CDC ethics requirements and all potential conﬂicts of interest will be documented within the meeting minutes.
116CDC oﬃcials told us the agency has initiated the Laboratory Excellence and Accreditation Project, which includes
implementation of a quality management system across all of CDC’s laboratories. The goal is for all laboratory programs
to achieve accreditation by October 1, 2024.

Page 74 GAO-21-551
science are not compromised.117 CDC is directing funding from the Paycheck Protection Program
and Health Care Enhancement Act to support the investments necessary to bring laboratories into
compliance with applicable quality system regulations and accreditations.118

To improve communication of test results with public health laboratories, CDC plans to upgrade and
modernize CDC laboratories’ information management infrastructure. According to CDC oﬃcials,
CDC plans to spend a combined total of $1.1 billion appropriated through the CARES Act, the
American Rescue Plan Act of 2012, and its annual appropriations to support the agency’s data
modernization eﬀorts. According to CDC’s road map for these eﬀorts, the agency intends to create
interoperable laboratory information systems that will enhance data sharing between federal,
state and local governments and the private health care system, and CDC has begun eﬀorts
towards this goal. For example, CDC oﬃcials told us the agency performed a gap analysis in ﬁscal
year 2021 to identify laboratories’ current and future uses for an information management system
and challenges that may hinder adoption of this system. APHL oﬃcials told us they believe this
new information technology infrastructure will help prevent the ineﬃcient communication of test
results from CDC to public health laboratories described above from happening again.

To ensure CDC does not release tests that are incompatible with laboratories’ testing platforms and
capabilities, CDC developed a new process that includes an assessment of the platforms available at the
laboratories that will use each test. CDC oﬃcials told us they employed an improved process for the
development of CDC’s Inﬂuenza SARS-CoV-2 Multiplex test that included reaching out to public
health laboratories to identify the platforms currently in place at those laboratories. APHL oﬃcials
told us they currently collect this information and provide it to CDC. According to the June 2021
information on CDC’s website, CDC will require that all tests the agency designs for use by public
health laboratories are compatible with platforms commonly used by these laboratories.119

The COVID-19 pandemic demonstrated potential opportunities for CDC to improve its
testing capacity for future public health emergencies. Reducing the spread of infectious
diseases may require enhanced collaboration with laboratories across the nation and the rapid
deployment of large quantities of test kits. CDC could take additional steps to improve its testing
response in future public health emergencies.

Enhancing public-private partnerships for laboratory testing. CDC oﬃcials told us that responding to
COVID-19 required additional laboratory testing surge capacity. Prior to COVID-19, CDC recognized
that the need for diagnostic testing can exceed the capacity of the public health laboratory
infrastructure, and that private laboratories can serve to supplement national testing capabilities
during an emergency. CDC collaborated with public health and private partners beginning in 2018
to identify potential opportunities to enhance surge capacity for laboratory testing; however, CDC
had not taken concrete steps to enable its partners to provide surge capacity by the time of the
initial stages of the COVID-19 response. To date, CDC has not yet developed a plan for enhancing

117According to CDC, accreditation is used to verify that laboratories have an appropriate quality management system
and can properly develop, deploy, and perform certain test methods that are suitable for their intended purpose,
according to their scopes of accreditation.
118According to CDC oﬃcials, the agency allocated more than $82 million for these eﬀorts.
119Centers for Disease Control and Prevention, “Laboratory Quality Improvement Activities,” accessed June 17, 2021,
https://www.cdc.gov/labs/quality-activities.html.

Page 75 GAO-21-551
laboratory surge testing capacity that identiﬁes objectives and outlines agency and stakeholder
roles and responsibilities for achieving these objectives within deﬁned time frames.

Following the Zika outbreak in 2016, CDC initiated three key actions to explore ways to enhance
laboratory testing capacity during an emergency response by coordinating with public health and
private sector laboratories.

1. CDC entered into a memorandum of understanding (MOU) with CDC, APHL, the American Clinical
Laboratory Association (ACLA)—an association of private clinical laboratories, and the Council of
State and Territorial Epidemiologists (CSTE), signed in April 2018. 120 CDC established the MOU,
in part, in response to our May 2017 report on the 2016 Zika outbreak, which found issues in
the transparency of CDC’s processes for the provision of its tests to manufacturers during an
emergency.121

The stated goal of the MOU was to build a collaborative structure to address testing surge capacity
needs during an emergency. However, oﬃcials from two of CDC’s three MOU partners told us that
while the agreement improved communication ahead of and during the COVID-19 pandemic, it did
not have a material eﬀect on how the nation’s testing response unfolded at the beginning of the
pandemic. For example, oﬃcials from MOU partners commented that:

• The MOU represents the “vision” of how enhanced coordination might work. However,
oﬃcials added that CDC has not used the MOU to change any processes during the COVID-19
emergency response.

• The MOU is a good ﬁrst step, but CDC needs to broaden it to include more organizations.
Oﬃcials added that CDC’s vision for the role of private laboratories remained unclear to them.

According to CDC oﬃcials, the MOU was a low-level agreement with no agency resources provided
for its implementation.

Additionally, FDA oﬃcials told us FDA is interested in joining CDC’s MOU to enhance
communication and coordination related to test development with laboratories. CDC oﬃcials told
us that adding agencies such as FDA to the MOU would allow for a more thorough and consistent
response from the Department of Health and Human Services (HHS). They added that, given
FDA’s role in facilitating surge test capacity, both agencies share responsibility in stakeholder
engagement and planning for enhanced laboratory testing capacity.

2. CDC held a tabletop training exercise with stakeholders in May 2019 to assess laboratory
preparedness during an emergency response that used a scenario where a highly infectious

120Memorandum of Understanding between American Clinical Laboratory Association, Association of Public Health
Laboratories, Council of State and Territorial Epidemiologists and Centers for Disease Control and Prevention/Center for
Surveillance, Epidemiology and Laboratory Services/Division of Laboratory Services. April 30, 2018.
121Our May 2017 report on the 2016 Zika outbreak recommended that CDC establish a transparent process to provide
CDC diagnostic tests, upon request, to manufacturers in the ﬁnal stages of diagnostic test authorization. See “Related
GAO Products” in this enclosure.

Page 76 GAO-21-551
disease emerged that spread both before and after patients began showing symptoms. This
exercise included representatives from ACLA, APHL, and CSTE, as well as other agencies in HHS.

During this exercise, participants identiﬁed a number of areas for further development, including
ensuring early and accurate communication with partners, integrating data more eﬀectively,
coordinating the distribution of emergency diagnostic tests and test materials, and building public-
private partnerships to support surge-testing capacity during an emergency response.

CDC oﬃcials told us that the tabletop exercise helped to open lines of communication with
stakeholders that were vital in responding to COVID-19. For example, following this exercise, CDC
began hosting quarterly conference calls with commercial laboratories to discuss challenges
with electronic reporting and other private sector response-related needs. CDC held two of these
calls before the COVID-19 emergency began. CDC added that it is currently hosting calls with
laboratories on a monthly basis and will return to a quarterly schedule when the emergency
response has ended.

3. CDC began a survey of 1,000 private sector and academic laboratories in January 2021 to identify
laboratory testing surge capacity. Oﬃcials told us that this survey was originally intended to identify
clinical laboratories that would be able to perform CDC-developed tests during an emergency
response. They added that based on the large laboratory testing surge capacity needed during
the COVID-19 pandemic, CDC has also begun using the survey to identify laboratories with
the capability to independently develop diagnostic tests for use during future public health
emergencies. CDC oﬃcials said they would use the results of this survey to expand partnerships
and improve coordination with laboratories that can participate in future response eﬀorts.

The Department of Homeland Security’s Homeland Security Exercise and Evaluation Program
outlines principles for preparedness exercise programs, as well as a common approach to
program management, design and development, conduct, evaluation, and improvement
planning.122 According to this program, agencies should use improvement planning to turn areas
for improvement identiﬁed during an exercise into concrete, measurable corrective actions that
strengthen capabilities.

Additionally, the National Biodefense Strategy, which explains how the U.S. government will manage
its activities when responding to biological threats, states that agencies should develop plans that
implement or support surge capabilities across response sectors in coordination with relevant
entities, including private sector partners.123 The strategy states that, among other things, these
plans should include:

• implementing enhanced surveillance and public health measures for disease control; and

• clinical, environmental, food testing, and forensic surge laboratory operations.

122Department of Homeland Security, Homeland Security Exercise and Evaluation Program (Washington, D.C.: January
2020).
123Executive Oﬃce of the President, National Biodefense Strategy (Washington, D.C.: September 18, 2018).

Page 77 GAO-21-551
Furthermore, in our prior work, we identiﬁed key elements of sound planning that can help
agencies achieve their goals. Sound plans include elements such as what the plan is trying to
achieve and how it will achieve these results, as well as priorities, milestones, and monitoring to
assess progress toward achieving goals.

COVID-19 demonstrated that the risk posed by an emerging infectious disease could exceed
the testing capacity of CDC and public health laboratories. Until CDC works with appropriate
stakeholders—including public health and private laboratories—to develop a plan to enhance
laboratory surge testing capacity that includes timelines, deﬁnes agency and stakeholder roles and
responsibilities to meet objectives, and closes gaps identiﬁed in preparedness exercises, CDC and
its partners will not be best positioned to fully support diagnostic testing needs during a future
infectious disease outbreak.

Improving test kit manufacturing capacity. Enhancing its test kit manufacturing capacity is another
way CDC could improve its ability to respond to a future infectious disease outbreak. CDC oﬃcials
told us they manufactured the ﬁrst batch of test kits that CDC sent to public health laboratories
entirely in-house to allow the agency to make changes to the test during the design and validation
process and to ensure that public health laboratories received test kits as quickly as possible.
However, CDC oﬃcials told us they recognized early in the COVID-19 response that the need
for tests exceeded the agency’s manufacturing capacity, and that it needed to engage private
manufacturers to increase testing capacity.

According to CDC, the agency awarded a contract in 2018 to support the production and
distribution of test kits for a number of pathogens, including, among others, inﬂuenza, meningitis,
and a 2012 strain of coronavirus. However, this contract did not support the manufacturing of a
test kit for COVID-19. Instead, CDC oﬃcials told us the agency procured services to supplement
its internal test kit manufacturing process using purchase orders, which were issued by January
30, 2020. CDC also reported awarding contracts to two companies on February 20, 2020, for the
manufacturing of its test kits. CDC and a contractor jointly manufactured the second batch of
corrected test kits that CDC sent to public health laboratories beginning on February 28, 2020.124
However, CDC did not have manufacturing contracts in place prior to the pandemic that could
have supported the COVID-19 testing response.

We have previously reported that contracting during an emergency can pose a unique set of
challenges, as oﬃcials face a signiﬁcant amount of pressure to provide life-sustaining goods and
services as quickly as possible. We have also previously reported that instead of initiating contracts
during an emergency response, some agencies establish contracts and agreements in advance
of an emergency or disaster to support their needs for certain goods and services, which could
include manufacturing.

124According to CDC, the agency manufactured all of the chemical components for the second batch, with the
manufacturer performing the vialing and labeling. Both contractors were involved in manufacturing the majority of the
kits that were distributed to the public health laboratories from that point forward.

Page 78 GAO-21-551
Establishing contracts prior to an emergency, also called advance contracting, is a tool that can
be leveraged to help federal agencies rapidly and cost-eﬀectively mobilize resources.125 Further,
according to the Federal Emergency Management Administration (FEMA), establishing contracts in
advance of an emergency ﬁlls a critical gap in the emergency acquisition process and ensures that
the agency can provide rapid support during an emergency response.126 For example, contracts
can be structured to include emergency response delivery time frames that require vendors
to provide certain goods and services within a speciﬁc period of time to meet urgent needs.
Additionally, the Oﬃce of Management and Budget encourages federal agencies to seek out pre-
positioned contractors—which agencies may obtain through advance contracting—to facilitate a
timely emergency response.127

CDC oﬃcials said they recognized that establishing contracts in advance could add some
value during an emergency response but that they had not evaluated the potential beneﬁts of
establishing contracts in advance or considered how CDC could establish such contracts in the
future. Speciﬁcally, they noted that having contracts in place before the COVID-19 pandemic could
potentially have allowed the agency to distribute the second batch of test kits to public health
laboratories one or two days sooner.

While we recognize the challenges of planning for unknown events, we maintain it is critical to
think through these issues before, rather than during, the public health emergency to maximize
eﬃciencies and potentially save lives. Further, distributing test kits more quickly, even by only one
day, could be valuable because each day is critical for understanding the spread of a novel virus in
the early weeks of a pandemic.

Having contracts with outside test kit manufacturers prior to a public health emergency is one tool
that could help supplement the supply produced by CDC and aid in the rapid manufacturing and
deployment of test kits during a future public health emergency. By assessing the types of goods
and services that could be leveraged by advance contracting to support the manufacturing and
deployment of diagnostic test kits in public health emergencies, CDC will be prepared to award
advance contracts in areas it deems beneﬁcial and be better positioned to respond to future
public health emergencies, including those caused by novel pathogens.

125For purposes of this report, we refer to advance contracting as an agency’s use of contracts or contracting methods
that may oﬀer agencies advance planning, pre-negotiated line items, and special terms and conditions that permit rapid
response, such as Federal Supply Schedule contracts, blanket purchase agreements, and indeﬁnite delivery contracts.
See e.g., FAR 18.105.
126Department of Homeland Security, Federal Emergency Management Agency, Advance Contracting of Goods and
Services Report to Congress (December 2007). Under the Federal Acquisition Regulation (FAR), agencies are generally
required to use full and open competition when soliciting oﬀers and awarding contracts. During an emergency,
contracting oﬃcers may use the unusual and compelling urgency exception to full and open competition to support
noncompetitive contract awards. See e.g., FAR 6.302-2 and FAR 18.104.
127Oﬃce of Management and Budget, Oﬃce of Federal Procurement Policy, Emergency Acquisitions Guide (Washington,
D.C.: January 14, 2011).

Page 79 GAO-21-551
Methodology
To conduct this work, we reviewed relevant CDC documents, such as the agency’s internal report
summarizing the results of its investigation into the unanticipated failure of its COVID-19 test
and its MOU with laboratory stakeholders.128 We also reviewed transcripts of media brieﬁngs
by CDC oﬃcials, academic publications, and World Health Organization documents describing
international COVID-19 testing eﬀorts.

In addition, we interviewed CDC and FDA oﬃcials. We also interviewed representatives from
associations representing organizations and professionals involved in COVID-19 testing, including
the American Clinical Laboratory Association, the Association of Public Health Laboratories, the
Council of State and Territorial Epidemiologists, and the Infectious Diseases Society of America.
We compared CDC’s eﬀorts to Department of Homeland Security leading practices for exercise
planning and improvement planning, the National Biodefense Strategy, Oﬃce of Management and
Budget and FEMA leading practices for emergency preparedness, and key elements of sound
planning from our prior work.

Agency Comments
We provided a draft of this enclosure to HHS for review and comment. Responses from the
department, including from CDC and FDA, are reprinted in Appendix VI. CDC and FDA also
provided technical comments, which we incorporated as appropriate.

In response to our ﬁrst recommendation, CDC concurred and noted FDA’s shared role in
improving the nation’s laboratory surge testing capacity. We agree and added language to more
explicitly state FDA’s role in increasing access to testing by authorizing tests for use during a public
health emergency and noted our ongoing work examining FDA’s regulation of COVID-19 tests.

In response to our second recommendation, CDC concurred and stated that CDC will investigate
the possibility of setting up a contract mechanism that would allow for rapid capacity to work
with commercial manufacturers, or in the event CDC is unable to set up a contract, CDC will draft
contract language that can be used as needed for future public health emergencies.

GAO’s Ongoing Work
Our work on COVID-19 testing is ongoing. We are currently examining how FDA regulates
COVID-19 tests. We are also planning to examine issues related to the deployment of testing at the
beginning of the pandemic, including work to identify lessons learned from COVID-19 testing that
can improve the nation’s ability to mount a robust diagnostic testing response in the future.

128Centers for Disease Control and Prevention, Oﬃce of Laboratory Science and Safety, Root Cause Analysis:
Unanticipated Failure of the ‘CDC 2019-Novel Coronavirus (2019 nCov) Real-Time RT-PCR Diagnostic Panel’ (Atlanta, Ga.: March
24, 2020, updated Oct. 5, 2020)

Page 80 GAO-21-551
GAO’s Prior Recommendations
The table below presents our recommendations on testing from prior bimonthly and quarterly
CARES Act reports.

Page 81 GAO-21-551
Prior GAO Recommendations Related to COVID-19 Testing
Recommendation Status

The Secretary of Health and Human Services should ensure Open. The Department of Health and Human Services
that the Director of the Centers for Disease Control and agreed with our recommendation and has begun
Prevention clearly discloses the scientiﬁc rationale for any to implement it. For example, on February 16, 2021,
change to testing guidelines at the time the change is made the Centers for Disease Control and Prevention
(November report). (CDC) issued Interim Guidance on Testing Healthcare
Personnel that stated asymptomatic health care
personnel who have recovered from COVID-19 may not
need to undergo repeat testing or quarantine in the
case of another exposure within 3 months of their initial
diagnosis. To support this guidance, CDC's website
provided links to studies that explained the scientiﬁc
rationale. Additionally, CDC told us that it continues
to consult with scientiﬁc stakeholders when issuing or
updating guidance documents, and outlined a series
of steps the agency plans to take to strengthen its
testing guidance. However, as of May 2021, CDC had
not fully completed the recommendation. For example,
clear linkage to a scientiﬁc rationale for recent changes
related to testing after exposure for fully-vaccinated
individuals appeared to be missing. We will continue to
monitor the implementation of this recommendation to
ensure that these eﬀorts continue.

The Secretary of Health and Human Services should Open. The Department of Health and Human Services
develop and make publicly available a comprehensive (HHS) partially agreed with our recommendation.
national COVID-19 testing strategy that incorporates all In January 2021, HHS agreed that the department
six characteristics of an eﬀective national strategy. Such a should take steps to more directly incorporate some
strategy could build upon existing strategy documents that of the elements of an eﬀective national strategy, but
the Department of Health and Human Services has produced expressed concern that producing such a strategy
for the public and Congress to allow for a more coordinated at this time could be overly burdensome on the
pandemic testing approach (January report). federal, state, and local entities that are responding
to the pandemic, and that a plan would be outdated
by the time it was ﬁnalized or potentially rendered
obsolete by the rate of technological advancement.
In May 2021, HHS told us that the White House and
Department of Health and Human Services plan to
execute a National Testing Strategy that will act upon
the Administration’s testing goals. According to HHS,
a ﬁnalized document is forthcoming that includes
speciﬁc actions as well as timelines to achieve these
goals. The National Testing Strategy will speak to the
country’s short-term COVID-19 needs as well as the
long-term needs associated with the country’s broader
bio-preparedness. We will continue to monitor the
implementation of this recommendation.

Source: GAO. I GAO-21-551

Related GAO Products
Foreign Assistance: State Department Should Better Assess Results of Eﬀorts to Improve Financial and
Some Program Data. GAO-21-373. Washington, D.C.: May 10, 2021.

Page 82 GAO-21-551
2017 Disaster Contracting: Action Needed to Better Ensure More Eﬀective Use and Management of
Advance Contracts. GAO-19-93. Washington, D.C.: December 6, 2018.

Emerging Infectious Diseases: Actions Needed to Address the Challenges of Responding to Zika Virus
Disease Outbreaks. GAO-17-445. Washington, D.C.: May 23, 2017.

High-Containment Laboratories: Comprehensive and Up-to-Date Policies and Stronger Oversight
Mechanisms Needed to Improve Safety. GAO-16-305. Washington, D.C.: March 21, 2016.

Disaster Response: Criteria for Developing and Validating Eﬀective Response Plans. GAO-10-969T.
Washington, D.C.: September 22, 2010.

Contact information: Mary Denigan-Macauley, 202-512-7114, DeniganMacauleyM@gao.gov

Page 83 GAO-21-551
HHS COVID-19 Funding
As of May 31, 2021, the Department of Health and Human Services had been appropriated
approximately $484 billion in COVID-19 relief funds in six relief laws. The department uses spend
plans to communicate information to Congress about its COVID-19 relief funds; however, we
found that the most recent spend plans generally lack information on projected time frames for
obligating the remaining COVID-19 relief funds.

Entity involved: Department of Health and Human Services

Recommendation for Executive Action:
To communicate information about and facilitate oversight of the agency’s use of COVID-19 relief
funds, the Secretary of Health and Human Services should provide projected time frames for the
planned spending of COVID-19 relief funds in the Department of Health and Human Services’
spend plans submitted to Congress.

HHS partially concurred with the recommendation and stated that the department would
aim to incorporate some time frames on planned spending where that information may be
available such as time frames for select grants to states. However, HHS oﬃcials stated that the
department would not be able to provide speciﬁc time frames for all relief funds since the evolving
environment requires the department to remain ﬂexible in responding to incoming requests for
response activities.

Background
To assist the response to the COVID-19 pandemic, the Department of Health and Human
Services (HHS) received approximately $484 billion in COVID-19 relief appropriations from six
COVID-19 relief laws. Many HHS COVID-19 relief funds are available for a multiyear period or
are available until expended. Of the $484 billion, approximately $160 billion (about 33 percent)
was appropriated in the sixth COVID-19 relief law, the American Rescue Plan Act of 2021 (ARPA),
enacted on March 11, 2021.

Overview of Key Issues
As of May 31, 2021, the department reported that about $253 billion of the $324 billion
appropriated in the ﬁrst ﬁve COVID-19 relief laws enacted as of December 27, 2020 had been
obligated (about 78 percent) and about $168 billion had been expended (about 52 percent). Of the
$160 billion in appropriations from the sixth law enacted on March 11, 2021, about $75 billion had
been obligated (47 percent) and about $3 billion had been expended (about 2 percent). In total,
approximately $156 billion remained unobligated from all six laws. (See ﬁgure.)

Page 84 GAO-21-551
HHS’s Reported COVID-19 Relief Appropriations, Obligations, and Expenditures from COVID-19 Relief Laws, as of
May 31, 2021

a
These amounts reﬂect appropriations provided in Divisions M and N of the Consolidated Appropriations Act, 2021 that are
speciﬁcally designated for COVID-19 relief.

The table below shows HHS appropriations, obligations, and expenditures by COVID-19 relief
law that HHS reported as of May 31, 2021. Three quarters of HHS’s appropriations from the ﬁrst
ﬁve relief laws have been obligated, and more than half have been expended. HHS also received
signiﬁcant additional appropriations in ARPA, about half of which had not been obligated as of
May 31, 2021.

Page 85 GAO-21-551
Department of Health and Human Services Reported COVID-19 Relief Appropriations, Obligations, and
Expenditures, by Relief Law, as of May 31, 2021
Obligations Expenditures
Date of Appropriations ($ millions, (% ($ millions, (%
Legislation enactment ($ millions) obligated)) expended))

Coronavirus Preparedness and Response March 6, 2020 6,497 5,381 (83) 3,202 (49)
Supplemental Appropriations Act, 2020
(Pub. L. No. 116-123)

Families First Coronavirus Response Act March 18, 2020 1,314 1,288 (98) 1,253 (95)
(Pub. L. No. 116-127)

Coronavirus Aid, Relief, and Economic Security March 27, 2020 142,833 135,532 (95) 112,760 (79)
Act.
(Pub. L. No. 116-136)

Paycheck Protection Program and Health Care April 24, 2020 100,000 56,729 (57) 46,951 (47)
Enhancement Act
(Pub. L. No. 116-139)

Consolidated Appropriations Act, 2021 December 27, 73,175 54,140 (74) 3,764 (5)
(Pub. L. No. 116-260)
a 2020

American Rescue Plan Act of 2021 March 11, 2021 160,494 75,225 (47) 2,642 (2)
(Pub. L. No. 117-2)

Total 484,313 328,294 (68) 170,573 (35)

Source: Department of Health and Human Services (HHS) data. | GAO-21-551

Note: The Department of Health and Human Services (HHS) reported that, of its total appropriations for COVID-19 relief, the
agency transferred $289 million to the Department of Homeland Security, and $300 million are not available until HHS has
taken certain actions.
a
This amount reﬂects appropriations provided in Divisions M and N of the Consolidated Appropriations Act, 2021 that are
speciﬁcally designated for COVID-19 relief. An additional $638 million in COVID-19 relief funds were appropriated under
Division H to the Administration for Children and Families, an agency within HHS, to prevent, prepare for, and respond to the
coronavirus, for necessary expenses for grants to carry out a low-income household drinking water and wastewater emergency
assistance program. However, these funds were not included in the HHS-reported data on HHS COVID-19 relief appropriations,
obligations, and expenditures, as HHS noted that the funds were not considered COVID-19 relief funding for USAspending.gov
reporting purposes.

Appropriations for HHS agencies or key funds. The table below provides COVID-19 relief
appropriations to HHS under the six relief laws and the obligations and expenditures of these
appropriations by HHS agency or fund as of May 31, 2021. The sixth COVID-19 relief law, ARPA, was
enacted on March 11, 2021, and as of May 31, 2021, HHS had obligated $75 billion (47 percent),
and expended $3 billion (two percent) of the appropriations provided under this law.

Page 86 GAO-21-551
Department of Health and Human Services Reported COVID-19 Relief Appropriations, Obligations, and
Expenditures, by Agency or Key Fund, as of May 31, 2021
Appropriations Obligations Expenditures
Agency or key fund ($ millions) ($ millions) ($ millions)

Administration for Children and Families 63,344.0 61,886.3 5,605.3

Administration for Community Living 3,200.0 2,904.7 912.5

Agency for Toxic Substances and Disease Registry 12.5 12.4 7.3

Centers for Disease Control and Prevention (CDC) 26,770.0 12,803.8 2,580.7

a
Centers for Medicare & Medicaid Services 935.0 124.9 47.4

Enhanced Use of Defense Production Act 10,000.0 0.0 0.0

Food and Drug Administration (FDA) 696.0 64.2 27.6

Health Resources and Services Administration (HRSA) 10,750.0 7,523.3 1,241.3

Indian Health Service (IHS) 7,190.0 3,158.5 3,025.6

National Institutes of Health (NIH) 3,031.4 1,144.7 463.2

Oﬃce of Inspector General (OIG) 5.0 0.0 0.0

b
Public Health and Social Services Emergency Fund (PHSSEF) 350,144.5 232,162.6 156,506.3

c
Oﬃce of the Assistant Secretary for Health 9,532.0 6,913.6 3,373.1

c
Oﬃce of the Assistant Secretary for Preparedness and Response 20,497.5 11,776.2 7,595.9

c
Biomedical Advanced Research and Development Authority 38,107.3 28,073.3 8,035.4

c, d
Provider Relief Fund 178,000.0 134,314.1 127,232.2

c
CDC 1,000.0 419.2 204.3

c
FDA 22.0 1.9 1.9

c
HRSA 979.8 971.1 793.5

c
IHS 1,640.0 1,005.9 507.6

c
NIH 1,806.0 1,031.8 501.1

c
OIG 12.0 3.6 3.1

c
Other PHSSEF 98,547.9 47,651.9 8,258.2

Page 87 GAO-21-551
Appropriations Obligations Expenditures
Agency or key fund ($ millions) ($ millions) ($ millions)

Substance Abuse and Mental Health Services Administration 8,235.0 6,508.4 156.2

Grand Total 484,313.4 328,293.8 170,573.4

Source: Department of Health and Human Services (HHS) data. | GAO-21-551

Note: HHS reported that of the total COVID-19 relief appropriations the agency transferred $289 million to the Department of
Homeland Security, and that $300 million in appropriations are not available until HHS takes certain actions. HHS’s reported
appropriations speciﬁcally designated for COVID-19 relief in the Consolidated Appropriations Act, 2021 (Pub. L. No. 116-260)
reﬂect only appropriations provided under Divisions M and N. Of the $324 billion appropriated in the ﬁve relief laws enacted as
of December 27, 2020, about $253 billion (about 78 percent) had been obligated and about $168 billion (about 52 percent) had
been expended, as of May 31, 2021.
a
These amounts do not reﬂect Medicaid and Medicare expenditures that resulted from statutory changes to these programs
under the COVID-19 relief laws.
b
PHSSEF is an account through which funding is provided to certain HHS oﬃces, such as the Oﬃce of the Assistant Secretary for
Preparedness and Response. Amounts have been appropriated to this fund for the COVID-19 response to support certain HHS
agencies and response activities. For example, NIH received about $1.8 billion in transfers from the PHSSEF, and this amount is
not included in the approximately $3 billion appropriated directly to NIH.
c
The italicized amounts are subtotals of the PHSSEF and are already reﬂected in the total $350,144.5 million listed for the
PHSSEF. Italicized amounts listed under the PHSSEF appropriations column are HHS allocations based on appropriations made
in the COVID-19 relief laws and approved allotment decisions made by HHS in coordination with the Oﬃce of Management and
Budget. Some amounts were appropriated to the PHSSEF for transfer to speciﬁed HHS agencies.
d
The Provider Relief Fund reimburses eligible health care providers for health care-related expenses or lost revenues that are
attributable to COVID-19. Provider Relief Fund expenditures also may be referred to as disbursements.

Allocations for selected COVID-19 response activities. HHS oﬃcials noted that allocations
for COVID-19 response activities are determined by appropriations made by Congress in
combination with approved spend plan decisions.129 Some funding—such as funding for testing
or vaccine-related activities—could apply to multiple response activity categories, making an exact
accounting of the obligations and expenditures in certain areas diﬃcult. For example, certain
funds included in the response activity category for support to states, localities, territories, and
tribal organizations were designated for testing or vaccine distribution.

As of May 31, 2021, the Provider Relief Fund (PRF), which reimburses eligible health care providers
for health care-related expenses or lost revenues attributable to COVID-19, had the largest
allocation—comprising about 37 percent ($178 billion) of HHS allocations from the six COVID-19
relief laws. Other activities with high allocations included testing-related activities; the Child Care
and Development Block Grant; vaccine-related activities; and support to state, local, territorial, and
tribal organizations for preparedness, which together comprised an additional 40 percent ($194.0
billion) of HHS allocations.

The following table provides HHS’s reported allocations, obligations, and expenditures by selected
COVID-19 response activity. The sixth COVID-19 relief law, ARPA, was enacted on March 11, 2021,
and as of May 31, 2021, HHS had obligated $75 billion (47 percent), and expended $3 billion (two
percent) of the appropriations provided under this law.

129HHS oﬃcials reported that they made spend plan decisions in coordination with the Oﬃce of Management and
Budget.

Page 88 GAO-21-551
Department of Health and Human Services (HHS) Reported Allocations, Obligations, and Expenditures by
Selected COVID-19 Response Activity, as of May 31, 2021
COVID-19 response Allocations Obligations Expenditures
activity Description ($ millions) ($ millions) ($ millions)

Provider Relief Fund Includes reimbursements to eligible health care 178,000.0 134,314.1 127,232.2
providers for health care-related expenses or
lost revenues that are attributable to COVID-19.

Testing Includes procurement and distribution of 61,416.3 21,180.4 5,117.3
testing supplies, community-based testing
programs, testing in high-risk and underserved
populations and Indian Health Services’
programs, implementing a national strategy,
Centers for Disease Control and Prevention
(CDC) testing-related activities such as technical
assistance, and other activities.

Child Care and Includes assistance to child care providers to 52,465.0 52,087.8 4,043.1
Development Block Grant help maintain or resume operations in the case
of decreased enrollment or closures related to
COVID-19.

Vaccines Includes Biomedical Advanced Research and 40,221.5 25,063.6 6,387.7
Development Authority (BARDA) funding
for vaccine development and procurement;
National Institutes for Health (NIH) research
activities; and CDC vaccine distribution,
administration, and technical assistance related
activities.

Support to state, Includes funding for states and other 40,061.5 38,701.3 6,570.4
local, territorial, and governments to support testing, contact
tribal organizations’ tracing, and surveillance; vaccines distribution;
preparedness and other activities.

Strategic National Includes acquiring, storing, and maintaining 13,919.9 10,236.7 6,318.9
Stockpile
a ventilators, testing supplies, and personal
protective equipment (PPE) and increasing
manufacturing capacity for certain PPE.

Drugs and therapeutics Includes BARDA funding for development and 11,379.4 6,874.7 2,049.5
procurement of therapeutics and NIH research
activities.

Health centers Includes support for COVID-19-related 9,620.0 8,178.1 1,825.4
activities, such as testing, at health centers,
which provide health care services to
individuals regardless of their ability to pay.

Rural Provider Payments Includes assistance for rural providers and 8,500.0 0.0 0.0
suppliers that will be administered using the
same mechanism as the Provider Relief Fund,
according to HHS oﬃcials.

Page 89 GAO-21-551
COVID-19 response Allocations Obligations Expenditures
activity Description ($ millions) ($ millions) ($ millions)

Mental health and Includes substance abuse prevention and 8,315.0 6,508.4 156.2
substance use–related treatment, community-based mental health
services services, and other activities.

Diagnostics research and Includes BARDA diagnostic development 3,321.6 1,761.6 715.1
development programs and NIH projects, such as the Rapid
Acceleration of Diagnostics Initiative.

Head Start Includes grants to local programs for high- 2,000.0 1,325.0 460.5
quality learning experiences and to respond to
other immediate and ongoing consequences of
COVID-19.

Testing for uninsured
b Includes reimbursements to eligible providers 2,000.0 1,980.9 1,973.0
for COVID-19 testing for individuals who are
uninsured.

Global disease detection Includes support to governments and other 1,747.1 432.2 133.5
and emergency response organizations to rapidly diagnose cases and to
ensure readiness to implement vaccines and
therapeutics.

Telehealth Includes eﬀorts to support safety-net health 307.5 136.5 102.8
care providers transitioning to telehealth,
telehealth access—especially for vulnerable
maternal and child health populations—and a
telehealth website.

Other response activities Includes additional activities such as 51,038.6 19,512.5 7,487.8
activities conducted by the Administration for
Community Living, certain CDC-wide activities
and program support, and activities conducted
by the Food and Drug Administration.

Total 484,313.4 328,293.8 170,573.4

Source: Department of Health and Human Services (HHS) data, written HHS responses, and GAO analysis of HHS spend plans. | GAO-21-551

Note: The selected response activities represent examples of certain targeted activities that fall within particular HHS agencies,
such as funding for health centers or Head Start, as well as broader categories of response activities that may span HHS
agencies, such as testing-, vaccine-, and therapeutics-related response activities. HHS reported allocations, 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. However,
HHS also noted that testing-related funding awarded to states or localities that was appropriated under the American Rescue
Plan Act of 2021 (ARPA) was included in the “testing” category. HHS oﬃcials explained that the activity names align with how
funds were appropriated under diﬀerent COVID-19 relief laws. According to HHS oﬃcials, the allocations reported for the key
activities above are based on amounts appropriated for these activities in the COVID-19 relief laws, and on approved spend
plan decisions made by HHS in coordination with the Oﬃce of Management and Budget. According to HHS, as of June 4, 2021,
the agency used about $1.7 billion in appropriations provided under ARPA, including $1.2 billion appropriated for COVID-19
testing, contact tracing, and mitigation activities, for the Administration for Children and Families’ Unaccompanied Children
Program, citing the Secretary’s authorities under the Public Health Service Act and the Consolidated Appropriations Act, 2021.
See Pub. L. No. 116-260, div. H, tit. II, § 204, 134 Stat. 1182, 1589 (2020); 42 U.S.C. 238j(a).With respect to the Consolidated
Appropriations Act, 2021, the amounts reﬂect appropriations speciﬁcally designated for COVID-19 in Divisions M and N of the
act.

Page 90 GAO-21-551
a
According to HHS, the agency transferred $850 million from the Public Health and Social Services Emergency Fund, Strategic
National Stockpile, to the Unaccompanied Children Program within the Administration for Children and Families, citing
authority provided in the Consolidated Appropriations Act, 2021. See Pub. L. No. 116-260, div. M, tit. III, § 304, 134 Stat. at 1923
(2020).
b
According to HHS oﬃcials, HHS has allocated an additional $4.8 billion to the testing for the uninsured program from section
2401 of ARPA, which HHS included in the “testing” response activity category.

The percentage of obligations and expenditures varied across selected COVID-19 response
activities for a variety of reasons including the nature of the activities, their planned uses, and the
timing of the funds provided through the six COVID-19 relief laws.

• Nature of funded activities. The nature of some funded activities—such as ﬁnancial assistance
grants or awards to state, local, and other jurisdictions—means that the full amount of
the grant or award may be obligated at the time of the grant or award, but expended
incrementally over time based on the budget period for the activities. For example, support to
state, local, territorial, and tribal organizations’ preparedness includes assistance to states and
other jurisdictions for testing, contact tracing, laboratory capacity, and vaccine distribution.
Centers for Disease Control and Prevention (CDC) oﬃcials told us that some expenditures for
these awards, such as those for personnel costs, will take place over the time period for which
the award is made, some of which are more than 2 years.

• Planned use of funds. National Institutes of Health (NIH) oﬃcials reported that certain research
programs are planned in phases so that additional funds will be obligated after grantees
meet certain requirements or integrate new advancements. In addition, oﬃcials from the
Biomedical Advanced Research and Development Authority told us that funds obligated
for vaccine manufacturing and procurement are expended as vaccine doses are shipped to
administration or distribution sites. Oﬃcials from the Oﬃce of the Assistant Secretary for
Preparedness and Response said funds obligated for replenishing the Strategic National
Stockpile (SNS) are not expended until products are manufactured and delivered into the SNS.

• Timing of COVID-relief appropriations: About 34 percent (approximately $21 billion) of funds
in the testing category had been obligated as of May 31, 2021. However, a majority of these
funds—approximately $49 billion—were allocated from appropriations in the sixth COVID-19
relief law, which was enacted on March 11, 2021. According to HHS data, about 45 percent of
allocations in this category from the ﬁrst ﬁve COVID-19 relief laws had been obligated as of
February 28, 2021. With respect to expenditures, 19 percent (approximately $1.8 billion) of
allocations for health centers had been expended as of May 31, 2021, mostly due to the nearly
four-fold increase in funding for this activity that was appropriated in the sixth COVID-19 relief
law.

Spend plans. To communicate information about COVID-19 relief funds from the ﬁrst ﬁve
COVID-19 relief laws, HHS uses spend plans, which the laws required be developed, updated,
and provided to Congress every 60 days.130 According to HHS oﬃcials, the department is also

130The ﬁrst ﬁve COVID-19 relief laws require HHS to provide a detailed spend plan of anticipated uses of funds to the
House and Senate Committees on Appropriations and that these plans be updated and submitted to the Committees
every 60 days until September 30, 2024, with the exception of the second law, the Families First Coronavirus Response

Page 91 GAO-21-551
preparing a spend plan for ARPA, which was enacted in March 2021. However, we found that the
most current spend plans generally do not include time frames for obligating the remaining relief
funds, which is useful information for oversight and for informing future funding decisions by
Congress.131

Guidance from the Oﬃce of Management and Budget (OMB) encouraged federal agencies,
including HHS, to act quickly to disburse relief funds and noted the importance of spending
transparency and regular reporting to help safeguard taxpayer dollars.132 In April 2020, OMB
issued guidance to agencies noting that “time is of the essence, and the Administration is
committed to the rapid delivery of relief funds and response activities” and that “agencies should
rapidly issue awards and fund programs to meet crucial needs.” Further, OMB noted that agencies
must report information on awards to provide the public with information in a clear, accurate, and
timely manner.

In its eﬀort to respond quickly to the pandemic and rapidly issue awards and fund programs
consistent with OMB guidance, HHS funded some activities to support relief eﬀorts shortly after
funds were appropriated; for example, the Health Resources and Services Administration (HRSA)
stated that its goal for the PRF was to distribute funds as quickly as possible. HRSA oﬃcials told us
the ﬁrst $30 billion was disbursed to providers by mid-April 2020—about a month after enactment
of the ﬁrst appropriation for provider relief. However, the timing for use of the remaining funds
is unknown and highlights the importance of information to help ensure accountability for these
funds. According to federal internal control standards, management should communicate quality
information to external and internal stakeholders so that they can help the agency achieve its
objectives and address related risks. In particular, quality information helps support Congress in
making future funding decisions.

As of May 31, 2021, about $156 billion of $484 billion (about 32 percent) of COVID-19 relief funds
appropriated to HHS were available to be obligated—this amount includes the funds appropriated
in ARPA. By not communicating its plans about when it expects to obligate these remaining
funds, HHS is missing an opportunity to provide information for oversight and to guide future
congressional funding decisions.133 The ﬁgure below shows obligated and unobligated HHS
COVID-19 relief funds as of May 31, 2021.

Act, which requires that the plans be updated and submitted until all funds are expended or expire. HHS oﬃcials told us
that they submit the spend plans to the Oﬃce of Management and Budget (OMB) for review. In contrast, spend plans
are not required by ARPA, although HHS oﬃcials told us in April 2021 that they are developing a spend plan for ARPA
COVID-19 relief funds.
131As of May 2021, we had received and reviewed a total of 15 spend plans—the original spend plans and subsequent
updates—provided by HHS. The spend plans include some limited references to time frames for a small portion of
funds; for example, one spend plan notes that an NIH project for additional laboratory space will take 2 years for
construction plus 5 to 6 months for move-in time. In April 2021, agency oﬃcials told us that HHS is working on a
consolidated plan that captures the ﬁrst ﬁve relief laws and a separate spend plan for ARPA. The consolidated spend
plan was under internal review at HHS, and the ARPA spend plan was still being ﬁnalized as of April 2021.
132See OMB M-20-21: COVID Reporting Implementation Guidance for Supplemental Funding Provided in Response to the
Coronavirus Disease 2019 (COVID-19), Apr.10, 2020.
133HHS oﬃcials told us that they develop and submit apportionment requests to OMB for the COVID-19 relief funds.
These requests may include information on timing of obligations that vary by individual agency, and OMB apportions the
funds to HHS either by time period (for example, by quarter) or by purpose, as deﬁned by OMB Circular A-11.

Page 92 GAO-21-551
Department of Health and Human Services (HHS) Obligated and Unobligated COVID-19 Relief Funds, as of May
31, 2021

We found that large amounts of funds for certain activities remained unobligated, and it is not
clear when these funds will be obligated or expended. For example:

• As of May 31, 2021, about 25 percent of PRF appropriations remained unobligated ($43.7
billion of $178 billion), and HRSA has not provided time frames for obligating this balance. Of
the unobligated funds, according to HHS’s October 2020 spend plan, HRSA reserved a portion
of the provider relief funds to respond to needs not identiﬁed in the spend plan, and in May
2021 HHS oﬃcials told us that the reserved funds were approximately $24 billion. HHS has
not speciﬁed time frames for obligating these reserved funds or for the other $29.1 billion in
unobligated provider relief funds. In addition, ARPA appropriated an additional $8.5 billion for
rural providers, and as of May 31, 2021, all these funds remained unobligated.134

• As of May 31, 2021, about 66 percent ($40.2 billion of $61.4 billion) of funds that HHS reported
to us for testing activities remained unobligated—most of those allocated funds ($49 billion)
were appropriated on March 11, 2021 when ARPA was enacted.135 We found that the most

134According to HHS, the $8.5 billion for rural providers was appropriated separately from funds for the PRF but will
be administered using the same mechanism as the provider relief funds.
135The funds HHS reported to us for testing includes various activities (e.g., procurement and distribution of
testing supplies, community-based testing programs, testing in high-risk and underserved populations and Indian
Health Services’ Programs, implementing a national strategy, and CDC testing-related activities such as technical

Page 93 GAO-21-551
current spend plans for the ﬁrst ﬁve relief laws do not specify time frames for obligating these
funds, and in April 2021 HHS oﬃcials told us that they were developing a spend plan for ARPA
COVID-19 relief funds, but the plan was not yet completed.136

• In other cases where funds remained unobligated, agency oﬃcials—NIH and CDC—did not
provide time frames, but said that unobligated relief funds would be spent according to their
spend plans and consistent with legislative requirements. HHS oﬃcials told us that the spend
plans submitted to Congress contain information about future planned activities, however,
oﬃcials said that they do not provide information on time frames for obligating relief funds.

Spend plans with information on projected timeframes for obligating the remaining relief funds
would give Congress information useful to facilitate oversight of these resources to help ensure
that relief funds are spent in an expedient and timely manner, as well as help inform future
funding decisions.

Methodology
We requested, and HHS provided, data on appropriations, allocations, obligations, and
expenditures of COVID-19 relief funds by HHS agency and by selected response activity, as of
May 31, 2021. We also reviewed appropriation warrant information provided by the Department
of the Treasury as of May 31, 2021. To assess the reliability of the data reported by HHS, we
reviewed HHS documentation; Treasury appropriation warrant information; and information
from the federal spending database, www.usaspending.gov; as well as HHS’s spending database,
taggs.hhs.gov. We determined that the HHS reported data were suﬃciently reliable for the
purposes of our reporting objective.137 We also reviewed the six COVID-19 relief laws to assist the
response to COVID-19.

We requested, obtained, and analyzed HHS and agency information, including agency spend plans,
and related documentation, to determine HHS and agency plans and information including time
frames for spending COVID-19 relief funds on response activities.

assistance, and other activities), although this category does not include all funds for testing, such as funds to
state and local governments to support testing activities. About 97 percent ($38.7 billion of $40.1 billion) of funds
reported for support for state, local, territorial, tribes and tribal organizations’ preparedness was obligated as of
May 31, 2021.
136HHS’s COVID-19 Strategic Testing Plan, dated November 20, 2020, describes planned uses for $25 billion for
testing, research and development, and response, but it does not include time frames for these activities.
137We searched HHS’s Tracking Accountability in Government Grants System website and www.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
06/02/2021, and https://www.usaspending.gov, accessed 06/02/2021. We did not independently validate the data
provided by HHS.

Page 94 GAO-21-551
Agency Comments
We provided HHS and OMB with a draft of this enclosure. HHS partially concurred with the
recommendation and stated that the department would aim to incorporate some time frames
on planned spending where such information may be available, such as time frames for select
grants to states. However, HHS oﬃcials stated that they would not be able to provide speciﬁc
time frames for all relief funds since the evolving environment requires the department to remain
ﬂexible in responding to incoming requests for response activities. For example, HHS cited ﬁeld
management activities that can change quickly depending on the incoming response requests.

We agree that estimating projected time frames can be challenging and subject to changes.
However, providing projected time frames would not impinge on the Department’s ability to be
ﬂexible as these spend plans are required to be updated every 60 days. Oﬀering projected time
frames to spending would give Congress useful information to help ensure relief funds are spent
in an expedient and timely manner, as well as help inform future funding decisions. HHS also
provided technical comments on this enclosure, which we incorporated as appropriate. OMB did
not provide any comments on this enclosure.

GAO’s Ongoing Work
As HHS works to distribute funds for COVID-19 relief activities and to eligible providers, it will
continue to be important that HHS oﬃcials ensure funds are appropriately distributed and used.
We plan to conduct additional work examining HHS’s COVID-19 relief funds.

Related GAO Product
Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.:
September 2014)

Contact information: Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov

Page 95 GAO-21-551
Domestic Medical Supply Manufacturing
The U.S. faces challenges to building a sustainable domestic manufacturing base for personal
protective equipment, including high relative labor costs and limited access to raw materials that
make staying competitive with foreign manufacturers diﬃcult. There are a number of factors
for the federal government to consider as it moves forward with eﬀorts to build a sustainable
manufacturing base, including the broader goal of supply chain resilience, which may call for
targeted reliance on foreign manufacturers.

Entities involved: The Department of Defense, the Department of Health and Human Services,
and the Federal Emergency Management Agency

Background
Personal protective equipment (PPE)—safety products designed to help prevent the spread
of infectious disease—has been critical to the COVID-19 response. Prior to the pandemic, the
U.S. generally depended on foreign suppliers for certain types of PPE, such as nitrile gloves and
surgical gowns. U.S. dependence on foreign PPE manufacturers has increased over the past
several decades in part because foreign manufacturers can produce their products at a lower
cost.138 Federal agencies have identiﬁed this dependence as a national security issue.

The COVID-19 pandemic triggered a signiﬁcant increase in worldwide demand for PPE and
disrupted global supply chains, which limited availability of critical equipment for U.S. health care
providers. Actions taken by some governments to halt or restrict exports of PPE further aﬀected
the availability of medical supplies in the U.S., including N95 respirators, surgical masks, surgical
and isolation gowns, and nitrile and other gloves for use in health care settings.139 Just-in-time
supply chain strategies, in which manufacturers and distributors produce and maintain just
enough product to meet immediate fulﬁllment demands, also exacerbated PPE shortages.

Use of the Defense Production Act (DPA) and other actions to address PPE supply chain
shortages. Title III of the DPA authorizes the President to provide certain ﬁnancial incentives to
address industrial base capabilities essential for national defense, including maintaining, restoring,
and expanding domestic manufacturing, when certain conditions are met.140 The Department
of Defense (DOD) reported awarding contracts and agreements valued at $574.1 million to
expand domestic production of PPE during the COVID-19 pandemic, through May 2021.141 These
investments helped manufacturers produce an additional 58 million N95 respirators and 125,000
gowns per month and are expected to result in an additional 38 million nitrile gloves and 44
million surgical masks per month by the fall of 2021.

138PPE is typically considered to be a low-margin commodity—that is, the selling price is not much higher than the cost
to produce. Low-margin commodities like PPE are not highly unique or highly specialized products, making the industry
for them more competitive.
139Gloves used in health care settings include latex, vinyl, nitrile, and other rubber synthetic gloves. For the purposes
of this information, we are focusing primarily on nitrile gloves. According to the U.S. International Trade Commission
(USITC), nitrile gloves are the most common of the four types used in health care settings because of their price,
durability, and hypoallergenic properties.
140Pub. L. No. 81-774 (1950), codiﬁed at 50 U.S.C. §§ 4501 et seq., as amended.
141As previously reported, these contracts and agreements were awarded through DPA and other actions.

Page 96 GAO-21-551
However, as shown in the ﬁgure below, the U.S. remains highly dependent on foreign
manufacturers for certain types of PPE such as nitrile gloves and gowns.

Estimated Domestic Production Capacity and Domestic Demand for Select Personal Protective Equipment Types,
March 2020 through May 2021

Overview of Key Issues
Federal planning for medical supply domestic industrial base sustainment is in its initial
stages. Oﬃcials from the Department of Health and Human Services’ (HHS) Oﬃce of the Assistant
Secretary for Preparedness and Response (ASPR), the Department of Homeland Security’s
Federal Emergency Management Agency (FEMA), and DOD acknowledged that federal actions are
needed to build a sustainable domestic PPE industrial base to respond to future public health
emergencies, as well as to enhance the resilience of medical product supply chains more broadly.

Executive Order 14001 called for a national pandemic supply chain resilience strategy, which is due
mid-July 2021.142 ASPR oﬃcials told us that the strategy is under development, and they expect
to issue it on time. Oﬃcials noted that the strategy will include a high-level discussion of the
program and policies that may be needed for industrial base sustainment, as well as challenges
the government faces. Once the strategy is released, ASPR and its federal partners will develop
an implementation plan that includes more speciﬁc actions and timelines, as well as roles and
responsibilities, according to oﬃcials, who did not provide a time frame for development or
release of this implementation plan.

The American Rescue Plan Act of 2021 appropriated $10 billion to support the use of the DPA
for medical supplies, which agency oﬃcials anticipate will result in additional industrial base
expansion projects.143 According to oﬃcials, ASPR and the Supply Chain Advisory Group developed
and submitted a spend plan for this funding to the White House in April 2021, which is pending

142A Sustainable Public Health Supply Chain, Exec. Order No. 14001, § 4, 86 Fed. Reg. 7,219, 7220-21 (Jan. 21, 2021). The
Executive Order directed DOD, HHS, and the Department of Homeland Security, among others, to develop a pandemic
supply chain resilience strategy. This strategy, due July 20, 2021, is to include an approach to design, build, and sustain
a long-term capability in the U.S. to manufacture medical supplies, including PPE, for future pandemics and biological
threats.
143Pub. L. No. 117-2, tit. III, § 3101, 135 Stat. 4, 53-54.

Page 97 GAO-21-551
approval.144 This draft spend plan identiﬁed $5 billion in medical supply projects for ﬁscal year
2021, including approximately $2.4 billion for PPE investments, according to an oﬃcial. ASPR has
not yet identiﬁed plans for the remaining $5 billion.

Challenges to sustainable domestic PPE manufacturing. The U.S. faces challenges to building
a sustainable, competitive domestic PPE manufacturing base primarily due to labor costs and
limited access to raw materials.

Higher U.S. labor costs result in higher product costs. Domestically produced PPE typically costs
more, in part as a result of higher U.S. labor costs, making it less competitive on the global market,
according to the U.S. International Trade Commission (USITC) and many of the stakeholders we
interviewed.145

Certain PPE types, such as gowns and nitrile gloves, may be particularly challenging to
manufacture in the United States because of the amount of labor required to produce them and
the cost of labor. For example, according to USITC, surgical gowns, which may require workers
to piece gowns together, cost $17 to $20 each for U.S.-made gowns, as compared to $4 to $7
per gown for those made in China.146 The costs of U.S.-made nitrile gloves may also be higher
because of the labor required to manufacture this type of PPE. According to USITC, each glove
production line requires 30-40 workers on average, including workers who remove each glove
manually from hand-shaped molds. Production also requires chemists, machinists, and quality
assurance personnel.

Limited access to raw materials makes scaling production challenging and costly. Each type of PPE
requires raw materials that may be diﬃcult to obtain domestically. For example, nitrile rubber,
a raw material used to make nitrile gloves, comes predominantly from Malaysia, and domestic
production is limited.147 A representative of one U.S. nitrile glove manufacturer that gets its nitrile
rubber from overseas suppliers said the cost of imported nitrile rubber accounts for more than 50
percent of the production costs of the gloves. In addition, this manufacturer cited lengthy delivery
delays of nitrile rubber from suppliers in Malaysia as signiﬁcantly aﬀecting the ability of the federal
government to expand domestic manufacturing of gloves in response to ongoing shortages during
the pandemic.

In addition, increased domestic manufacturing of PPE may aﬀect access to raw materials also
used to manufacture nonmedical products and could result in shortages of raw materials used
for both, further increasing product costs. For example, some of the nonwoven fabrics needed to
make N95 respirators, masks, and gowns are also used to make diapers and sanitizing wipes and

144The federal interagency Supply Chain Advisory Group, established in March 2020 as the Supply Chain Task Force, was
tasked with maximizing the nationwide availability of supplies needed for the COVID-19 response.
145U.S. International Trade Commission, COVID-19 Related Goods: The U.S. Industry, Market, Trade, and Supply Challenges
(Dec. 2020) (prepared at the request of the U.S. House Committee on Ways and Means and the Senate Committee on
ﬁnance).
146For surgical and isolation gowns, workers are needed to cut gown pieces and sew them together; stitch or weld
around seams; and apply any elastic, ties, or other fastening devices.
147According to USITC, there are two nitrile rubber manufacturing facilities in the U.S., one owned by a Japanese
company and the other owned by a U.S. company.

Page 98 GAO-21-551
in other industries such as automotive and construction.148 Signiﬁcant increases in the demand
for N95 respirators and masks at the beginning of COVID-19 also contributed to short supply of
these nonwoven fabrics, which contributed to the increased cost of N95 respirators.

Many stakeholders we interviewed, including manufacturers, distributors, and trade associations
representing end users, cited additional challenges to building a sustainable domestic PPE
manufacturing base. See the below ﬁgure for the challenges cited by these stakeholders, as well as
USITC, for the four types of PPE included in our review.

148These nonwoven fabrics are produced in several countries, including the United States.

Page 99 GAO-21-551
Summary of Information from the U.S. International Trade Commission (USITC) and Other Stakeholders on Key
Challenges Aﬀecting Domestic Production for Certain Types of Personal Protective Equipment (PPE)

Note: Stakeholders included a nongeneralizable sample of 29 industry stakeholders, including PPE manufacturers; distributors
and trade associations representing other purchasers, such as state governments, hospitals, and group purchasing
organizations; and researchers.

Stakeholders noted the need for federal actions to help increase long-term demand for
domestically made PPE. Without a clear signal of long-term demand for PPE to help ensure a
return on investment, some manufacturers—including both those with existing federal domestic
industrial base expansion contracts and those who pivoted to making PPE during COVID-19—told
us that they were unsure if they would continue to produce PPE after the pandemic because
future business longevity seemed too uncertain.

Page 100 GAO-21-551
Stakeholders and federal oﬃcials provided their perspectives on actions that could help increase
federal and nonfederal demand and sustain a long-term domestic base. The options presented
below are being explored by ASPR, according to oﬃcials, as well as research institutes, such as the
National Academies for Science, Education, and Medicine and others. Some of these actions would
require regulatory action or legislation. We present the range of stakeholder perspectives on all
options, even those that may be deemed less feasible or useful by some, as they may be helpful to
HHS and its federal partners in their continued long-term planning.

Federal funding for capital investments and long-term purchases. Funding for capital investments,
such as through manufacturing expansion projects like those executed during the pandemic,
could help domestic manufacturers achieve economies of scale and be more price competitive,
according to some stakeholders we spoke with including manufacturers, distributors, and trade
associations. Such investments would allow manufacturers to purchase equipment to expand
production capacity or automate manufacturing processes to reduce manual labor costs.149

Similarly, long-term federal funding, which could be used for contracts that commit the federal
government to purchasing speciﬁed volumes of PPE over a number of years, would help create a
sustainable base of demand that could justify manufacturers’ capital investments in machinery,
technology, and other expansion or facility needs, according to many manufacturers we spoke
with, as well as some distributors and trade associations.150 Without federal purchasing contracts,
some manufacturers who received federal contracts or agreements for PPE expansion for the
COVID-19 response expressed concern about having idle manufacturing capacity after the
pandemic subsides.

Transparent stockpile planning to include domestically manufactured PPE. Some stakeholders,
including manufacturers, distributors, trade associations, and researchers, commented that
having a clear and transparent understanding of future federal plans for stockpiling would help
signal longer-term demand for PPE and help manufacturers with business planning.151 We have
reported on federal actions related to the Strategic National Stockpile during COVID-19 on a
regular basis, beginning in June 2020.152 (See the Strategic National Stockpile enclosure in this
report for more information.)

149Tax credits could also help manufacturers oﬀset costs of new equipment or investments in automation technology,
according to some manufacturers, distributors, and trade associations. However, other stakeholders noted that such tax
credits would provide only nominal cost oﬀsets. Tax credits for qualiﬁed research expenses are already available. See 26
U.S.C. § 41.
150Contracts to manufacture PPE domestically should be at least 3 years, according to most of the stakeholders that
provided suggestions on contract length. Some stakeholders suggested contract lengths as long as 8 to 10 years for
both business and resource planning purposes. Preferences for contract lengths also vary based on the type of PPE, as
diﬀerent PPE types require diﬀerent levels of capital and labor investments.
151Two stakeholders also discussed a variety of potential stockpiling strategies, including stockpiling raw materials and
using vendor-managed inventory in lieu of federal warehousing. Vendor-managed inventory, which HHS already uses
to some extent for the federal stockpile, allows the government to acquire medical supplies, including PPE, only when
needed and helps to ensure adequate rotation of stock to avoid costs associated with replacing expired products. While
stakeholders primarily discussed stockpiling at the federal level, a few stakeholders from trade associations representing
state and local oﬃcials suggested building demand through state, or even private, stockpiles.
152The Strategic National Stockpile is the federal repository of pharmaceuticals, and medical supplies and devices to be
deployed to support responses to public health emergencies.

Page 101 GAO-21-551
Expanded legal requirements to prioritize federal purchasing of domestically manufactured PPE.
Manufacturers, distributors, and trade associations we spoke with had mixed opinions on the
eﬀect of expanding federal purchasing requirements for domestically produced goods.

Speciﬁcally, one manufacturer suggested that the Berry Amendment, which governs DOD clothing
purchases and, according to textile manufacturing stakeholders, is a signiﬁcant driver of their
domestic textile and apparel businesses, could be expanded to include a broader range of
PPE.153 Similarly, one distributor suggested that the amendment could be extended to agencies
beyond DOD. However, some other stakeholders noted that even with such expansions, the Berry
Amendment may not be feasible for certain PPE types, such as gloves, if raw materials for those
products cannot be sourced domestically.

One manufacturer and one trade association representing manufacturers stated that expanding
federal purchasing requirements under the Berry Amendment would be unlikely to provide
signiﬁcant or primary support to sustain a domestic manufacturing base because of the small
federal share of the domestic medical supply market. One manufacturer and one company that
manufactures and distributes PPE noted similar limitations to expanding purchasing requirements
under the Buy American Act, which requires federal procurement of domestic products, subject to
certain exceptions and waivers.154

Use of Medicare to incentivize nonfederal purchasing of domestically manufactured PPE. Some
stakeholders, including manufacturers and distributors, also discussed restructuring Medicare in
several ways to incentivize health care providers to purchase domestic PPE and help increase the
demand signal for such PPE. These suggestions included:

1. restructuring Medicare conditions of participation to require commitments to domestic
medical supply purchasing in order to participate in the program,

2. restructuring Medicare reimbursement policies to reimburse providers at higher rates for
using domestically made PPE, and

3. requiring hospitals to incorporate plans for purchasing domestically made PPE into their
hospital supply inventories.

153The Berry Amendment speciﬁcally pertains to DOD, generally requiring it to purchase certain products such as
clothing and textiles from domestic sources, including components or materials of those products. See 10 U.S.C. §
2533a.
154Under the Buy American Act, an end product may be considered domestically made even if it contains foreign
components. In addition, the Buy American Act permits federal agencies to procure foreign products under certain
exceptions, such as cases in which domestic products are not reasonably available in suﬃcient quantities of a
satisfactory quality. In January 2021, President Biden signed an executive order, Ensuring the Future Is Made in All of
America by All of America’s Workers, which directed the Oﬃce of Management and Budget and the General Services
Administration to make available on a public website information on proposed waivers of Made in America laws
including the Buy American Act and whether those waivers have been granted. Exec. Order No. 14005, 86 Fed. Reg. §
6, 7,475, 7,476-7 (Jan. 28, 2021). According to oﬃcials from the Oﬃce of Management and Budget, this information will
help ensure that federal agencies are making all reasonable eﬀorts to source domestically made products. In addition,
these oﬃcials noted that they hope that this information will encourage additional domestic manufacturers to submit
oﬀers in response to solicitations for federal contracts.

Page 102 GAO-21-551
Oﬃcials from the Centers for Medicare & Medicaid Services told us that restructuring Medicare
as suggested would be challenging for several reasons. According to oﬃcials, the agency lacks
the statutory authority to implement such purchasing requirements. Further, oﬃcials stated that
reimbursement for PPE is bundled into overall service charges.

Oﬃcials and other stakeholders, including some manufacturers, distributors, and a trade
association representing end users, noted that it would be more feasible to incentivize domestic
purchasing by requiring a certain percentage of providers’ PPE to be purchased from domestic
manufacturers, or to provide a bonus payment for such purchases on a regular basis. However,
they noted that it may be diﬃcult for hospitals and other health care providers, as well as
their suppliers, to identify which brands of PPE may be U.S.-made. Oﬃcials also agreed with
a distributor who told us that any such requirements for purchasing generally higher-priced,
domestically made PPE would place a bigger ﬁnancial burden on smaller providers.

Tax credits for domestic purchases. Some PPE distributors and a manufacturer suggested that tax
credits for purchases of domestically produced PPE could help generate demand, but opinions on
the utility of such tax credits were mixed. Some stakeholders cited aforementioned diﬃculties in
identifying which PPE products are U.S.-made, which could make such credits hard to obtain. In
addition, some distributors noted that tax incentives would not incentivize nonproﬁt hospitals to
purchase domestically manufactured PPE.

Domestic manufacturing is one part of broader supply chain considerations. Building
a sustainable domestic PPE manufacturing base is just one part of broader supply chain
considerations, according to stakeholders and federal oﬃcials we interviewed. Some
manufacturers, one distributor, and several trade associations representing manufacturers and
end users said that sustaining long-term demand for domestically produced PPE will require a
signiﬁcant shift in the way that U.S. manufacturers and purchasers, including the health care
sector, conceive of eﬀective models of just-in-time inventory and other cost control mechanisms.
Other stakeholders, including two trade associations, a manufacturer, and a research group noted
that investing in or sustaining domestic manufacturing will not necessarily ensure that domestic
PPE supply chains alone are suﬃcient to respond to future public health emergencies.

Stakeholders and federal oﬃcials identiﬁed several areas for consideration as the federal
government moves towards creating a more resilient supply chain for PPE to eﬀectively respond to
future public health emergencies.

Supply chain redundancies. Some stakeholders, including trade associations, an advocacy group,
and a manufacturer, noted that it will be important to build redundancies into the domestic
PPE supply chain, such as having multiple manufacturers of one kind of PPE and multiple
manufacturing facilities located in geographically diverse U.S. locations. Several of these
stakeholders cited the disruptions to medical supply production caused by the 2017 hurricanes
in Puerto Rico and the 2021 winter storms in Texas as examples of the importance of redundant
and resilient domestic supply chains that would help the U.S. to respond to future public health
emergencies.155

155Hurricane Maria caused damage to Puerto Rico’s electrical grid, which led to shortages of critical medical supplies
from pharmaceutical plants and medical device manufacturing facilities located there during that year’s ﬂu season,

Page 103 GAO-21-551
Targeted reliance on foreign manufacturers. Some stakeholders, including a manufacturer and
two manufacturing trade associations, two distributors, and a research group, as well as federal
oﬃcials, noted that targeted reliance on, and engagement with, a variety of foreign manufacturers
will remain appropriate given existing trade agreements, the U.S.’s participation in complex global
supply chains, and challenges in accessing certain raw materials.

Supply chain visibility and mapping. Many stakeholders representing manufacturers, distributors,
trade associations, and research groups we spoke with stated that developing a complete picture
of the end-to-end supply chain for each type of PPE could help the federal government identify
vulnerabilities and risks, determine strategies or actions to mitigate them, and plan for and
respond to future disruptions. Supply chain mapping—documenting companies, suppliers, and
individuals across the PPE supply chain to create a global map of the supply network—could help
the federal government have a more complete picture to respond to disruptions and emergencies,
according to stakeholders. However, two stakeholders, including a supply chain research group,
acknowledged that such mapping would be complex and laborious.

Industry outreach and engagement. Many stakeholders representing manufacturers and distributors
and trade associations representing purchasers and end users noted that meaningful federal
engagement with industry will enhance domestic manufacturing and supply chain resilience.
In addition, such engagement could help ensure these perspectives are considered in national
strategies to support and sustain the domestic PPE industry. According to some of these
stakeholders, such engagement with the private sector could help:

• ramp up private investment in domestic PPE manufacturing;

• connect manufacturers with purchasers;

• aid in the collection of data needed for supply chain mapping; and

• help the federal government understand the unique challenges of new and small PPE
manufacturers, as well as those of veteran and minority-owned businesses, including
challenges related to navigating the federal medical device approval or federal contracting
processes.

In January 2021, we reported that HHS had not developed a process for engaging with key
nonfederal stakeholders and the Congress for development of a supply chain strategy for
pandemic preparedness, including the role of the Strategic National Stockpile. We recommended
that HHS do so, and the department generally agreed with our recommendation. However, as of
May 2021, ASPR had not proactively engaged any private or public partners in strategic discussions
to implement this recommendation, although oﬃcials told us that such discussions are important
and they are considering how to better engage their public and private partners.

as well as delays in transportation and other eﬀects. The Texas winter storms signiﬁcantly aﬀected the plastics and
petrochemicals manufacturers located in the state, which resulted in ongoing shortages of medical supplies made from
these items. Medical supplies in shortage during these events included those needed for the COVID-19 response, such
as face shields and sharps containers used to dispose of needles like the kind used to administer the COVID-19 vaccine.

Page 104 GAO-21-551
We continue to underscore that engaging with key nonfederal stakeholders—in meaningful,
proactive ways to obtain their business and industry expertise—as well as engaging with Congress,
is critical for developing strategies to build a sustainable domestic medical supply manufacturing
base. Such engagement includes for the development of the pandemic supply chain resilience
strategy required by Executive Order 14001 and future stockpiling plans.

Methodology
To conduct our work, we reviewed federal strategies and reports, including ASPR’s 2020 draft
strategy for modernizing the Strategic National Stockpile and USITC’s December 2020 report on
the U.S. market for COVID-related goods.156 We reviewed written information submitted by PPE
industry stakeholders to USITC and the Department of Commerce in the fall of 2020 and early
2021.157

We also selected a judgmental sample of industry stakeholders from USITC and Department of
Commerce submissions, as well as other sources, to interview for their perspectives on challenges
to building a sustainable domestic manufacturing base for PPE and federal eﬀorts that could help
support and sustain such a base. Selected stakeholders included PPE manufacturers; distributors
and trade associations that represent other purchasers and end users, such as state governments,
hospitals, and group purchasing organizations; and researchers and policy advocates.158

We interviewed 29 industry stakeholders, including manufacturers that produce textiles for or
ﬁnished products of each type of PPE (N95 respirators, surgical and procedural masks, reusable
and disposable surgical and isolation gowns, and nitrile gloves); distributors; trade associations
representing manufacturers, distributors, and other purchasers and end users including state
and local government oﬃcials; researchers; and standards setting organizations. Our ﬁndings
from interviews with these stakeholders are not generalizable to the entire PPE industry from
manufacturers to end users.

156See Department of Health and Human Services (HHS), SNS 2.0 Strategy – Modernize the SNS (draft). According to HHS
oﬃcials, ASPR ﬁnalized the strategy in January 2021 under the prior administration but has not released it publicly. For
more information on the SNS strategy, see our January 2021 CARES Act report. USITC, COVID-19 Related Goods: The U.S.
Industry, Market, Trade, and Supply Challenges.
157This information was submitted in response to Executive Order 13944, which directed the Department of Commerce
to report on the status of the public health industrial base and provide recommendations for initiatives to strengthen
it. Combating Public Health Emergencies and Strengthening National Security by Ensuring Essential Medicines, Medical
Countermeasures, and Critical Inputs Are Made in the United States, Exec. Order No. 13944 § 6(b), 85 Fed. Reg. 49,929,
49,933 (Aug. 6, 2020). As part of this work, the department solicited comments from the public. 85 Fed. Reg. 77,428 (Dec.
2, 2020). This report was directed to be completed by February 2021. As of May 2021, the department did not have an
anticipated time frame for issuing its report.
158We selected stakeholders from the following sources: (1) USITC and the Department of Commerce public written
submissions, (2) manufacturers that received DPA Title III or other actions for PPE expansion, (3) related GAO work
on medical device authorizations in emergency periods, (4) PPE distributors that share data with the federal Supply
Chain Advisory Group, and (5) other relevant stakeholders suggested by selected interviewees. In some instances,
we interviewed trade associations representing manufacturers, distributors, and other purchasers of PPE, in lieu of
interviewing individual stakeholders.

Page 105 GAO-21-551
We obtained information on federal domestic PPE industrial base planning eﬀorts, including
eﬀorts to address current supply and demand needs from the Supply Chain Advisory Group and
relevant federal agencies. We also interviewed oﬃcials from ASPR, the Centers for Medicare &
Medicaid Services, DOD, FEMA, and USITC about their perspectives on challenges and potential
actions, the feasibility of implementing such actions, and any longer-term sustainment planning
the relevant agencies have conducted.

Agency Comments
We provided a draft of this enclosure to the Department of Homeland Security, DOD, HHS, Oﬃce
of Management and Budget, and USITC. We incorporated technical comments from DOD, HHS,
and USITC as appropriate. The Department of Homeland Security and Oﬃce of Management and
Budget did not submit comments.

GAO’s Ongoing Work
We plan to continue to monitor federal funding and actions for domestic medical supply industrial
base expansion and sustainment. This work will include evaluating the pandemic supply chain
resilience strategy and related implementation plans when they become available and continuing
to assess federal eﬀorts to engage key nonfederal stakeholders and Congress to identify ways to
overcome many of the challenges we identiﬁed in this enclosure.

GAO’s Prior Recommendations
See table below for our past related recommendations on domestic supply manufacturing from
prior bimonthly CARES Act reports.

Page 106 GAO-21-551
Prior GAO Recommendations Related to Domestic Medical Supply Manufacturing during COVID-19
Recommendation Status

The Secretary of Health and Human Services in coordination Open. HHS disagreed with our recommendation,
with the Administrator of the Federal Emergency Management noting, among other things, the work that the
Agency—who head agencies leading the COVID-19 response department had done to manage the medical
through the Uniﬁed Coordination Group—should immediately supply chain and increase supply availability. In
document roles and responsibilities for supply chain management May 2021, the Oﬃce of the Assistant Secretary for
functions transitioning to the Department of Health and Human Preparedness and Response (ASPR) noted that
Services (HHS), including continued support from other federal since March 2020, supply chain responsibility,
partners, to ensure suﬃcient resources exist to sustain and coordination, and execution have been incorporated
make the necessary progress in stabilizing the supply chain, and and integrated into ASPR. However, ASPR has
address emergent supply issues for the duration of the COVID-19 not provided us with documentation of roles and
pandemic (September 2020). responsibilities for these functions. See appendix IV
for more information.

The Secretary of Health and Human Services in coordination Open. HHS disagreed with our recommendation,
with the Administrator of the Federal Emergency Management noting, among other things, the work that the
Agency—who head agencies leading the COVID-19 response department had done to manage the medical
through the Uniﬁed Coordination Group—should further develop supply chain and increase supply availability.
and communicate to stakeholders plans outlining speciﬁc actions However, HHS has begun to take steps that help
the federal government will take to help mitigate remaining address this recommendation. For example, in
medical supply gaps necessary to respond to the remainder of the May 2021, HHS provided several examples of
pandemic, including through the use of Defense Production Act ASPR’s eﬀorts to restock the Strategic National
authorities. (September 2020 report). Stockpile and mitigate potential supply shortages.
In addition, ASPR cited its ongoing work to develop
the pandemic resilience supply chain strategy called
for under Executive Order 14001 and its integration
in the interagency supply chain working group run
by the White House, both of which are good steps
toward developing plans to mitigate supply gaps.
See appendix IV for more information.

The Secretary of Health and Human Services—who heads one Open. Both HHS and the Department of Homeland
of the agencies leading the COVID-19 response through the Security (DHS) disagreed with our recommendation,
Uniﬁed Coordination Group—consistent with their roles and noting, among other things, the work that the
responsibilities, should work with relevant federal, state, territorial, departments had done to manage the medical
and tribal stakeholders to devise interim solutions, such as supply chain and increase supply availability, such
systems and guidance and dissemination of best practices, to help as restocking the Strategic National Stockpile (as
states enhance their ability to track the status of supply requests noted above). In March 2021, DHS reported that
and plan for supply needs for the remainder of the COVID-19 the medical supply situation has improved in both
pandemic response (September 2020 report). the commercial market and at the state level. The
agency stated that most states have 30 to 60 days of
The Administrator of the Federal Emergency Management personal protective equipment to account for spikes
Agency—who heads one of the agencies leading the COVID-19 in demand or localized critical shortages.
response through the Uniﬁed Coordination Group—consistent Although both HHS and DHS have reported
with their roles and responsibilities, should work with relevant separate actions taken as part of supply
federal, state, territorial, and tribal stakeholders to devise interim management eﬀorts within their separate purviews,
solutions, such as systems and guidance and dissemination of best neither has articulated how they have worked
practices, to help states enhance their ability to track the status of with each other and other relevant federal, state,
supply requests and plan for supply needs for the remainder of territorial, and tribal stakeholders to devise interim
the COVID-19 pandemic response (September 2020 report). solutions to help states better track, manage, and
plan for supply needs for the remainder of the
COVID-19 pandemic. See appendix IV for more
information.

Page 107 GAO-21-551
Recommendation Status

The Assistant Secretary for Preparedness and Response should Open. HHS generally agreed with our
establish a process for regularly engaging with Congress and recommendation, while noting that the term
nonfederal stakeholders, including state, local, tribal, and "engage" is vague and unclear, and that they
territorial governments and private industry, as the Department regularly engage with Congress and nonfederal
of Health and Human Services reﬁnes and implements a supply stakeholders. HHS added that improving the
chain strategy for pandemic preparedness, to include the role of pandemic response capabilities of state, local, tribal,
the Strategic National Stockpile (January 2021 report). and territorial governments is a priority. However,
as of May 2021, HHS has not taken steps to engage
with these stakeholders. See appendix IV for more
information.

Source: GAO. | GAO-21-551

Related GAO Product
Defense Production Act: Opportunities Exist to Increase Transparency and Identify Future Actions to
Mitigate Supply Chain Issues. GAO-21-108. Washington, D.C.: November 19, 2020.

Contact information: Mary Denigan-Macauley, 202-512-7114, DeniganMacauleyM@gao.gov; and
William Russell, 202-512-4841, RussellW@gao.gov

Page 108 GAO-21-551
DOD Vaccination Eorts for Civilians and Servicemembers
The Department of Defense has provided active-duty servicemembers and National Guard
personnel to support the federal government’s COVID-19 response and vaccination eﬀorts and
simultaneously vaccinated military servicemembers (active and reserve), dependents, retirees, and
civilian and contractor personnel.

Entities involved: Department of Defense, including the Defense Health Agency; the Department
of Health and Human Services; and the Federal Emergency Management Agency, within the
Department of Homeland Security

Background
The Department of Defense’s (DOD) primary mission is to defend the nation, but the department
has also played a prominent role in supporting civil authorities. In that role, DOD has responded
rapidly when called on during disasters and during declared natural or manmade emergencies.
DOD, which has provided such support through its Defense Support of Civil Authorities mission,
is authorized to provide this support when requested by another federal agency, with approval
from the Secretary of Defense, or when directed by the President.159 DOD provides support to
civil authorities through military forces (Active-Duty, Reserve, National Guard); DOD civilian and
contract personnel; and DOD component assets. To manage both its support for the federal
government’s and its own internal COVID-19 response, the department established the DOD
COVID-19 Task Force on February 28, 2020.

DOD’s Defense Health Agency (DHA) manages and oversees DOD’s immunization programs,
leading eﬀorts to distribute COVID-19 vaccines to eligible DOD personnel.160 In March 2021, we
reported that in mid-December 2020, DHA had begun a phased approach for vaccinating eligible
personnel. Using that approach, DOD prioritized vaccination of individuals providing direct medical
care, personnel maintaining essential national security and installation functions, deploying forces,
and beneﬁciaries at highest risk for developing severe illness from COVID-19.

Overview of Key Issues
DOD has supported mass vaccination sites and other COVID-19-related civilian missions.

DOD personnel support over time. More than a year after the President declared COVID-19
a national emergency, DOD has consistently provided personnel to assist in the whole-of-
government response. The ﬁgure below shows the number of DOD active-duty servicemembers

159Requesting agencies may include the Federal Emergency Management Agency (FEMA) within the Department of
Homeland Security, the Department of Health and Human Services, and the U.S. Department of Agriculture.
160In December 2020, the Food and Drug Administration (FDA) authorized the emergency use of the two-dose Pﬁzer-
BioNTech and Moderna COVID-19 vaccines. On May 10, 2021, the FDA further expanded the emergency use of the
two-dose Pﬁzer-BioNTech COVID-19 vaccines to include adolescents aged 12 to 15 years. In February 2021, the FDA
authorized the emergency use of the one-dose Janssen (Johnson & Johnson) COVID-19 vaccine. From April 13 to 23,
2021, the FDA and Centers for Disease Control and Prevention (CDC) recommended a pause in administering the
Johnson & Johnson vaccine due to reports of blood clots. However, after conducting a safety review, the FDA and CDC
determined that it was safe to resume using the Johnson & Johnson vaccine.

Page 109 GAO-21-551
and National Guard personnel supporting the response eﬀorts from March 2020 through May
2021.

DOD Personnel Supporting the Federal Government’s COVID-19 Response, Mar. 2020–May 2021

Note: The totals shown are as of the end of each month. The totals refer to active-duty servicemembers—which includes
reservists—and National Guard personnel providing support for the federal government’s COVID-19 response at mass
vaccination sites and for other COVID-19-related missions. The total number of active-duty servicemembers who provided
support in March 2020 is too small to be depicted.

Support at mass vaccination sites. In February 2021, DOD oﬃcials stated that the Federal Emergency
Management Agency (FEMA) had requested the department to provide personnel to staﬀ mass
vaccination sites (i.e., federally supported community vaccination centers).161 In response,
active-duty servicemembers, including medical personnel, from the four military services
began supporting community vaccination center operations in mid-February 2021.162 These
servicemembers have assisted with various activities such as registering and screening patients,
distributing supplies, and administering COVID-19 vaccines.

From February 14, 2021, through June 22, 2021, more than 5,100 DOD active-duty servicemembers
provided vaccine-related support, including administering more than 5 million vaccine doses
at centers in 25 states and three territories. During this time, DOD provided active-duty
servicemembers to support community vaccination centers on the basis of FEMA’s staﬃng

161FEMA classiﬁes community vaccination centers by type (i.e., Types 1 through 5) on the basis of facility throughput
over a 12-hour period. A Type 1 center can administer about 6,000 doses per day; a Type 2 center, about 3,000 doses
per day; a Type 3 center, about 1,000 doses per day; and Types 4 and 5 centers, about 250 doses per day. See Federal
Emergency Management Agency, Community Vaccination Centers Playbook (Apr. 23, 2021).
162DOD has assigned the servicemembers on the basis of each center’s size and vaccine administration capacity––for
example, 222 service members for the larger centers that each administer about 6,000 doses daily.

Page 110 GAO-21-551
needs at these centers. The ﬁgure below shows information about active-duty servicemembers’
aggregate COVID-19 vaccine support, including administering more than 5 million doses at
federally supported community vaccination centers.

Locations Where Active-Duty Servicemembers Provided COVID-19 Vaccine Support at Federally Supported
Community Vaccination Centers, Feb. 14, 2021–June 22, 2021

Notes: The shaded states and territories represent the locations where DOD provided active-duty servicemember personnel.
From February 14 to June 22, 2021, DOD provided servicemembers on the basis of community vaccination centers’ needs.

National Guard personnel have also been supporting eﬀorts to help vaccinate the civilian
population in 47 states and three territories. Approximately 14,000 National Guard personnel
have assisted with vaccine activities, including distributing vaccines, planning and coordinating at
vaccination centers, providing transportation support, and administering the vaccine across static
and mobile vaccination sites. As of June 11, 2021, National Guard personnel had administered
about 12 million vaccine doses.

Support for other COVID-19-related missions. At the request of FEMA and the Department of Health
and Human Services, DOD provided support for other COVID-19-related missions. From the
pandemic’s initial emergency declaration in March 2020 until April 1, 2021, DOD provided more
than 4,500 active-duty servicemembers, such as critical care nurses, to support civilian health care
providers. These active-duty servicemembers supported 71 hospitals across 51 cities in 14 states
and in the Navajo Nation.

Additionally, National Guard personnel continue to broadly support the COVID-19 pandemic
response throughout the states and territories. As of June 15, 2021, approximately 28,000 National
Guard personnel were providing support in all 50 states, three territories, and the District of
Columbia. They continued carrying out a range of broad missions, such as:

• testing and screening for COVID-19 cases;

• cleaning sites and equipment;

Page 111 GAO-21-551
• distributing personal protective equipment;

• storing and distributing supplies and equipment in warehouses;

• collecting COVID-19 specimens;

• supporting hospitals, long-term care facilities, food banks, and call centers;

• recording data on, and performing contact tracing and mapping of, infected individuals; and

• training civilian medical and other personnel.

As of June 9, 2021, DOD had at least partially vaccinated about 53 percent of its 2.1 million
military servicemembers and was encouraging vaccinations through outreach and
education.

DOD’s progress in vaccinating military servicemembers and others. As of June 9, 2021, DOD had
at least partially vaccinated about 53 percent—1,124,624 servicemembers, including about 39
percent or 825,954 fully vaccinated servicemembers—of its 2.1 million active-duty, reserve, and
National Guard servicemembers.163 When considering only active-duty servicemembers, DOD had
fully vaccinated about 51 percent (686,915 servicemembers). DOD’s goal was to fully vaccinate 60
percent of its active-duty servicemembers and provide at least one vaccine dose to approximately
70 percent by July 4, 2021.

Additionally, DOD was oﬀering a COVID-19 vaccine to a larger population of 6.7 million individuals,
which includes military servicemembers (active-duty, reserve, and National Guard) and their
dependents; other uniformed personnel (members of the Coast Guard, U.S. Public Health Service,
and National Oceanic and Atmospheric Administration); other beneﬁciaries (e.g., retired military
servicemembers and their dependents); civilian employees; and selected contractor personnel. 164
DOD or a non-DOD vaccine provider had at least partially vaccinated about 45 percent (3,035,474
individuals) of this population as of June 9, 2021. However, the number of vaccinated individuals
in this larger population may be higher, because, according to DHA oﬃcials, DOD has limited
awareness of vaccinations administered to its target vaccine-eligible population at non-DOD sites,
such as local retail pharmacies or through local public health vaccination sites.

DOD is tracking data on those who received the COVID-19 vaccine. The DHA Director monitors
daily the department’s implementation of its vaccine plan, including vaccine administration,
broken out by dose (initial and second) and category of eligibility (e.g., service component,

163Partially vaccinated servicemembers received at least one dose of a COVID-19 vaccine. Fully vaccinated
servicemembers received both doses of a two-dose COVID-19 vaccine series or one dose of the one-dose COVID-19
vaccine.
164According to DHA oﬃcials, the target vaccine-eligible population of 6.7 million is the number of individuals whom
DHA assessed as eligible to receive a COVID-19 vaccine through DOD and who live within 40 miles of a DOD vaccination
site.

Page 112 GAO-21-551
contractors, civilian employees, and other beneﬁciaries).165 The ﬁgure below shows COVID-19
vaccination rates for military servicemembers and others as of June 9, 2021.

COVID-19 Vaccinations in the Department of Defense (DOD), as of June 9, 2021

Notes: Percentages shown may not sum to 100 because of rounding. The 6.7 million eligible individuals targeted are those DHA
assessed as eligible to receive a COVID-19 vaccine through DOD and who live within 40 miles of a DOD vaccination site. The
target population includes eligible military servicemembers (those on active duty and members of the reserve component,
including the National Guard), other uniformed personnel (those members of the Coast Guard, U.S. Public Health Service, and
National Oceanic and Atmospheric Administration), military servicemembers who have retired and their dependent family
members, dependent family members of active-duty servicemembers and of certain reserve component members, civilians,
and contractors. This data shown refer to individuals vaccinated at DOD and non-DOD vaccination sites. DOD has vaccinated a
majority of the individuals.

The percentage of fully vaccinated individuals aged 18 years and older in the U.S. population as
of June 10, 2021, was larger than the percentage of fully vaccinated DOD military servicemembers
as of June 9, 2021 (about 53 percent and 39 percent, respectively). However, when comparing
the percentages of fully vaccinated individuals in the U.S. population and only the fully
vaccinated active-duty servicemembers, the rates were more similar (53 percent and 51
percent, respectively).166 Multiple reasons may account for the vaccination rate diﬀerences. For
example, because military servicemembers tend to be younger and healthier, the majority of
servicemembers did not become eligible for vaccination until April 19, 2021.

DOD oﬃcials use the term “vaccine acceptance” to categorize the proportion of individuals who
have received a vaccine; however, the remainder of those eligible for the vaccine may not have
declined it, as the department does not track or report on the percentage of individuals who
declined the COVID-19 vaccine. According to DHA oﬃcials, the department does not currently have
a reliable method to track and report vaccine declinations or hesitancy. Oﬃcials stated that this
is due in part to the fact that DOD’s target population is encouraged but not required to receive a
COVID-19 vaccine.167 Individuals who show up for an appointment at a DOD vaccination site and
decide not to receive the vaccine after reviewing educational material are asked to record their
decision on DHA Form 207–COVID-19 Vaccine Screening and Immunization Document. However,
DHA oﬃcials noted that this information does not reﬂect an accurate picture of declinations,

165Military servicemembers who elect to receive a COVID-19 vaccine through non-DOD sites are to provide proof of
vaccination for documentation in their immunization records.
166Centers for Disease Control and Prevention, “COVID Data Tracker,” accessed June 11, 2021, https://covid.cdc.gov/
covid-data-tracker/#vaccinations. The Centers for Disease Control and Prevention data includes the population
vaccinated at or eligible to be vaccinated by DOD.
167Federal law states that a vaccine released under an emergency use authorization cannot be made mandatory. 21
U.S.C. § 360bbb-3(e)(1)(A)(ii)(III).

Page 113 GAO-21-551
because submitting the form is voluntary and the form reﬂects the individual’s decision at single
point in time—that is, the individual may choose to receive the vaccine at a later date.

Outreach initiatives and education. To continue encouraging all of its eligible population to be
voluntarily vaccinated, DOD is conducting various eﬀorts designed to communicate the safety and
eﬃcacy of the authorized vaccines. Speciﬁcally, DOD’s outreach eﬀorts include:

• senior DOD leaders’ sharing their own vaccine experiences through social media and video
recordings,

• press events,

• town halls,

• internal news articles on TRICARE.mil and Health.mil webpages,168

• direct email marketing,

• scheduling vaccination events for entire military units (e.g., a Navy ship’s crew) and making
medical personal available during those events to answer questions or address concerns
about the vaccines,

• radio and television stories on military broadcast services, and

• a "Get the Vax" social media campaign (see ﬁgure).

168TRICARE is DOD’s regionally structured program that provides purchased health care to beneﬁciaries through
networks of civilian providers.

Page 114 GAO-21-551
Example of Department of Defense Social Media Graphic

On May 20, 2021, the Deputy Secretary of Defense and Vice Chairman of the Joint Chiefs of Staﬀ
published a memo reaﬃrming support for multiple initiatives to increase vaccination acceptance
among all military servicemembers.169 Further, the memo highlighted multiple techniques that
military commanders and leaders at all levels can use to encourage and promote vaccinations. 170
Example of such techniques include:

• incorporating vaccination opportunities into training events,

• providing educational opportunities with medical professionals,

• using routine personnel management tools such as time oﬀ for post-vaccination recovery, and

169Deputy Secretary of Defense Memorandum, Methods to Enable and Encourage Vaccination Against Coronavirus
Disease 2019 (May 20, 2021).
170On May 24, 2021, the Navy updated its COVID-19 Standardized Operational Guidance. For fully vaccinated individuals,
the updated guidance relaxes predeployment restrictions of movement, health protection measures when naval ships
are underway, and port visits.

Page 115 GAO-21-551
• engaging with military servicemembers one-on-one to acknowledge concerns and answer
questions.

Methodology
To conduct this work, we reviewed DOD guidance and documentation that DOD’s COVID-19 Task
Force and DHA provided. The documentation included the most recent DOD COVID-19-related
data available, which the task force and DHA maintained and reported to senior DOD leaders.
We also interviewed DOD oﬃcials knowledgeable about the department’s COVID-19 response to
corroborate our understanding of the data and DOD’s personnel support and vaccination eﬀorts.
Although we did not independently verify the accuracy of the data, we assessed their reliability
by checking for obvious errors or outliers; discussing the ongoing levels of DOD personnel
support and vaccination eﬀorts with agency oﬃcials; and reviewing relevant documentation,
including publicly available DOD media reports and statements. We determined that the data were
suﬃciently reliable for the purpose of characterizing DOD’s support to civil authorities and its
progress in vaccinating the department’s target population.

Agency Comments
We provided a draft of this enclosure to DOD and the Oﬃce of Management and Budget
for review and comment. DOD provided technical comments on this enclosure, which we
incorporated as appropriate. The Oﬃce of Management and Budget did not provide comments on
this enclosure.

GAO’s Ongoing Work
We plan to continue monitoring DOD’s support of the federal government’s COVID-19 response
and progress in vaccinating the department’s eligible military servicemembers, dependents,
retirees, and civilian and contractor personnel.

Related GAO Products
COVID-19: DOD Has Focused on Strategy and Oversight to Protect Military Servicemember Health.
GAO-21-321. Washington, D.C.: June 3, 2021

Depot Maintenance: DOD Should Improve Pandemic Plans and Publish Working Capital Fund Policy.
GAO-21-103. Washington, D.C.: Apr. 06, 2021

Contact information: Diana Maurer, (202) 512-9627, maurerd@gao.gov, and Brenda S. Farrell,
(202) 512-3604, farrellb@gao.gov

Page 116 GAO-21-551
Strategic National Stockpile Payment Integrity
The Department of Health and Human Services’ Oﬃce of the Assistant Secretary for Preparedness
and Response procured and shipped critical Strategic National Stockpile supplies directly from
vendors to state, local, territorial, and tribal governments and designated project areas during
the COVID-19 pandemic. However, it did not have documented policies and procedures, including
related control and monitoring activities, to address the payment integrity risks within the direct
shipment procurement process.

Entities involved: The Oﬃce of the Assistant Secretary for Preparedness and Response within the
Department of Health and Human Services.

Recommendation for Executive Action
To strengthen the current procedures, the Assistant Secretary for Preparedness and Response
should update policies and procedures, including related control and monitoring activities, for the
Strategic National Stockpile to document the direct shipment procurement process and address
payment integrity risks. Although the Department of Health and Human Services did not agree
with us regarding the need to address payment integrity risks, it stated that it will update its
policies and procedures, including related control and monitoring activities to document the direct
shipment procurement process.

Background
Payment integrity is the process of ensuring that a payment is proper, including the legality,
propriety, validity, and accuracy of all payments. For procurements, one of the key steps in this
process is for agencies to conﬁrm that the goods and services have been received and conform
to the requirements of the purchase order. In short, it is the primary means to ensure that the
government gets what it pays for. Without this control, the government faces risks including
paying for:

• goods and services not received;

• goods received in the wrong quantity;

• goods that are damaged; and

• goods that do not meet quality or other speciﬁcations.

According to the President’s budget proposal for ﬁscal year 2021, the Strategic National Stockpile
(SNS) is the largest federally owned repository of pharmaceuticals, critical medical supplies,
federal medical stations, and medical equipment available for rapid delivery. It is overseen
by the Department of Health and Human Services’ (HHS) Oﬃce of the Assistant Secretary for
Preparedness and Response (ASPR).

Through its standard procurement process, ASPR procures supplies to maintain SNS inventory in
preparation for bioterrorist attacks and other public health emergencies. The SNS can be used as

Page 117 GAO-21-551
a short-term stopgap buﬀer when the supply of materials may not be immediately available in
aﬀected areas during a public health emergency.

Because the nationwide need for critical supplies to respond to COVID-19 quickly exceeded the
quantity of supplies contained in the SNS, in addition to its standard procurement process, ASPR
used two additional procurement processes:

1. ASPR used a procurement process involving direct shipment from vendors. According to ASPR
oﬃcials, the oﬃce initially established this direct shipment procurement process in response
to the 2016 Zika virus outbreak in Puerto Rico. Under this direct shipment process, supplies
purchased by ASPR were not used to replenish the SNS, but rather were primarily distributed
from vendors directly to state, local, territorial, and tribal governments and designated project
areas.

2. Beginning in April 2020, ASPR worked with interagency partners, such as the Federal
Emergency Management Agency and the Department of Defense, through interagency
agreements to increase the availability of supplies to respond to COVID-19. Under these
reimbursable agreements, contracting staﬀ at interagency partners procured and distributed
vital supplies on ASPR’s behalf.

As of May 31, 2021, HHS reported it obligated about $10.2 billion of the $13.9 billion it planned
to use for the SNS. The table below summarizes the amount of ASPR’s SNS obligations from
appropriations provided by the six COVID-19 relief laws by procurement process from March 16,
2020 through May 31, 2021.

Page 118 GAO-21-551
Department of Health and Human Services’ Strategic National Stockpile Obligations from Appropriations
Provided by the Six COVID-19 Relief Laws as of May 31, 2021
Obligations
Procurement process ($ millions) Percent of obligations

Direct shipment 600 6

Interagency agreement 4,700 46

Standard 4,900 48

Total
a 10,200 100

Source: GAO summary of Health and Human Services obligations data. | GAO-21-551

a
Numbers may not total due to rounding.

Overview of Key Issues
SNS direct shipment procurement process was not documented in policies and procedures.
ASPR did not have documented policies and procedures, including related control and monitoring
activities, to address payment integrity risks for its direct shipment procurement process.
Guidance from the Oﬃce of Management and Budget (OMB) states that agency management
is responsible for managing payment integrity risks to reduce improper payments and protect
taxpayer funds.171 Accordingly, agencies are to develop control activities to help management
achieve payment integrity objectives by establishing policies and procedures related to transaction
authorization and approvals of program activities and implementing transaction reviews where
detailed criteria are evaluated before funds are expended.

Additionally, federal internal control standards state that management should design control
activities to achieve objectives and respond to risks and implement control activities through
policies. Accordingly, as part of this internal control principle, agency management is to clearly
document internal control, all transactions, and other signiﬁcant events in a manner that allows
the documentation to be readily available for examination. In addition, if there is a signiﬁcant
process change, management is to review the new process in a timely manner after the change to
determine that the control activities are designed and implemented appropriately. Management
should also establish and operate monitoring activities to monitor the internal control system and
evaluate the results.

According to ASPR oﬃcials, the oﬃce used its direct shipment procurement process to expedite
delivery and eﬀectively manage costs during the pandemic. Although ASPR oﬃcials verbally
explained this procurement process, the oﬃce did not have the process and related control

171Oﬃce of Management and Budget, Appendix C to OMB Circular A-123, Requirements for Payment Integrity Improvement,
OMB Memorandum M-18-20 (Washington, D.C.: June 26, 2018). In March 2021, OMB issued a revised version of OMB
Circular A-123, Appendix C, eﬀective starting in ﬁscal year 2021. Oﬃce of Management and Budget, Appendix C to OMB
Circular A-123, Requirements for Payment Integrity Improvement, OMB Memorandum M-21-19 (Washington, D.C.: March 5,
2021).

Page 119 GAO-21-551
and monitoring activities documented in its policies and procedures, in accordance with federal
internal control standards.

ASPR oﬃcials stated that under the direct shipment procurement process, the oﬃce tracks the
transportation and delivery of supplies shipped directly from vendors to recipients by requesting
that vendors provide ASPR shipment tracking documentation as part of their contracted
deliverables. Further, the delivery conﬁrmation will come from an email or phone call from the
recipient or a delivery conﬁrmation from the carrier, such as a tracking report from the carrier’s
website. ASPR provided examples of email communication with recipients and vendors to conﬁrm
delivery of supplies prior to authorizing payment. However, without properly documented
procedures for this process, ASPR lacks assurance that this communication would take place
consistently.

Although ASPR oﬃcials stated that the oﬃce’s procedures for invoice receiving apply to all SNS
invoices, including those for direct shipment procurements, the policies and procedures did not
include speciﬁc steps to address payment integrity risks for its direct shipment procurement
process, such as to:

1. conﬁrm vendors provide such shipment tracking documentation, or

2. verify intended recipients actually received the correct undamaged supplies prior to issuing
payment.

Without a properly documented process, we could not determine if the control and monitoring
activities were properly designed to provide reasonable assurance that SNS payments are properly
authorized and made to eligible vendors at appropriate amounts.

Until ASPR updates its policies and procedures, including related control and monitoring activities,
to document its direct shipment procurement process, there is an increased risk that taxpayer
funds will not be appropriately protected. For example, without written policies and procedures
documenting how ASPR tracks the direct shipment and receipt of supplies prior to issuing
payments, there is an increased risk that ASPR may make improper payments to vendors for
incorrect supplies or quantities, or supplies the intended recipients did not receive.

In addition, without adequate documentation, it is diﬃcult for management to assess the
adequacy of controls over the direct shipment procurement process and ASPR lacks assurance
that its staﬀ fully understand the process and properly and consistently perform their duties.

Certain interagency transactions lacked suﬃcient documentation. In November 2020,
HHS’s independent ﬁnancial statement auditor reported a deﬁciency, in part due to insuﬃcient
documentation to substantiate what was purchased and when it was received for certain SNS
COVID-19-related transactions with interagency partners.172 The auditor stated that HHS is

172Department of Health and Human Services, Oﬃce of Financial Reporting and Policy, Agency Financial Report Fiscal Year
2020, (Washington, D.C.: Nov. 13, 2020), 75-84. A deﬁciency in internal controls exists when the design or operation of
a control does not allow management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely basis. In addition to the interagency deﬁciency, the auditor

Page 120 GAO-21-551
currently reviewing its processes to identify lessons learned so that new processes are developed
to address potential future crisis situations similar to the current pandemic.

According to ASPR oﬃcials, the oﬃce concurred with the interagency ﬁnding and is continuing
to work with its interagency partners on accountability and documentation for COVID-19 relief
funds expended through interagency agreements.173 Further, according to oﬃcials, starting in
March 2021, ASPR began meeting weekly with the HHS Corrective Action Planning team to discuss
remediation strategies and develop Corrective Action Plans for the auditor’s SNS ﬁndings.

SNS designed control activities for its standard procurement process. For supplies purchased
through its standard procurement process during the COVID-19 response, ASPR used its existing
SNS policies and procedures for purchasing, receiving, distributing, and payment processing
activities. ASPR’s policies and procedures for this standard SNS procurement process were
designed consistent with federal internal control standards for the key eligibility, processing, and
existence control activities we reviewed.

Methodology
We interviewed oﬃcials from ASPR, HHS’s Program Support Center, and the HHS Oﬃce of
Inspector General and reviewed policies and procedures related to the SNS payment process. We
also considered HHS’s ﬁscal year 2020 agency ﬁnancial report and the accompanying independent
auditor’s reports.

Based on HHS provided documentation, we assessed the design of HHS’s policies and procedures
related to the SNS payment process against relevant statutory requirements, OMB guidance,
and federal internal control standards to determine the extent to which HHS’s key control and
monitoring activities are properly designed to achieve the SNS program’s payment integrity
objectives and respond to such risks. For any key control and monitoring activities that were not
properly designed and documented, we inquired with HHS oﬃcials to determine the reasons.

Agency Comments
We provided HHS with a draft of this enclosure. HHS provided written comments, reproduced in
Appendix VI and technical comments on this enclosure, which we incorporated as appropriate.

also identiﬁed internal control deﬁciencies, in part due to weaknesses in the timely posting of SNS receiving and
issuance activities, and discrepancies between warehouse counts and SNS’s inventory management system. ASPR did
not concur with these ﬁndings. The auditor did not report any ﬁndings speciﬁc to the direct shipment procurement
process or the standard procurement process.
173The Intragovernmental Payment and Collection (IPAC) system is the primary method used by most federal entities
to electronically bill or pay for services and supplies within the U.S. government. IPAC is used to communicate between
the Treasury and the trading partner entities that the online billing or payment for services and supplies has occurred.
While IPAC provides an automated, standardized system for interagency transfers, it does not set documentation
requirements for agencies to substantiate purchases, such as receiving reports.

Page 121 GAO-21-551
ASPR did not concur with our recommendation. ASPR stated that it did not ﬁnd that we found or
provided evidence to support the statement that there were payment integrity risks for the direct
shipment process and noted that ASPR has a three-way matching procedure that is followed for
all invoices. However, ASPR acknowledged that it will update its policies and procedures, including
related control and monitoring activities, and work to speciﬁcally document the direct shipment
procurement process.

Although ASPR oﬃcials stated that the oﬃce’s procedures for invoice receiving apply to all SNS
invoices, the policies and procedures did not include speciﬁc steps to address payment integrity
risks for its direct shipment procurement process, such as procedures to (1) conﬁrm vendors
provide shipment tracking documentation, or (2) verify intended recipients actually received the
correct undamaged supplies prior to issuing payment. Therefore, we continue to believe the
recommendation is needed.

GAO’s Ongoing Work
We will monitor the status of our payment integrity recommendation for the Department of
Health and Human Services and continue our oversight of government-wide payment integrity
eﬀorts.

Related GAO Product
Standards for Internal Control in the Federal Government. GAO-14-704G. Washington, D.C.:
September 10, 2014.

Contact information: Beryl Davis, (202) 512-2623, DavisBH@gao.gov

Page 122 GAO-21-551
Strategic National Stockpile
In the years prior to the COVID-19 pandemic, the Oﬃce of the Assistant Secretary for
Preparedness and Response began restructuring an interagency body that recommends
procurement of vaccines, supplies, and other materials for the Strategic National Stockpile to
respond to public health threats. Such restructuring has led to concerns about the eﬀectiveness of
interagency collaboration, transparency, and a lapse in statutorily required reviews used to inform
the contents of the stockpile.

Entities involved: Department of Agriculture; Department of Defense; Department of Health and
Human Services, including the Oﬃce of the Assistant Secretary for Preparedness and Response,
the Centers for Disease Control and Prevention, the Food and Drug Administration, and the
National Institutes of Health; Department of Homeland Security; Department of Veterans Aﬀairs;
and the Oﬃce of the Director of National Intelligence.

Recommendations for Executive Action
To improve the nation’s preparedness for a wide range of threats, including pandemics, the
Assistant Secretary for Preparedness and Response should develop and document plans for
restructuring the Public Health Emergency Medical Countermeasures Enterprise. These plans
should describe how the Assistant Secretary will ensure a transparent and deliberative process
that engages interagency partners in the full range of responsibilities for the Public Health
Emergency Medical Countermeasures Enterprise outlined in the Pandemic and All-Hazards
Preparedness and Advancing Innovation Act of 2019, including those related to the Strategic
National Stockpile annual threat-based reviews. These plans should also incorporate GAO’s
leading practices to foster more eﬀective collaboration, while ensuring that sensitive information
is appropriately protected.

To improve organizational accountability, the Assistant Secretary for Preparedness and Response
should implement records management practices that include developing, maintaining,
and securing documentation related to Public Health Emergency Medical Countermeasures
Enterprise activities and deliberations, including those related to the Strategic National Stockpile.
Documentation should include information such as the factors considered, the rationale
for the action or decision, and the ﬁnal outcomes of the Public Health Emergency Medical
Countermeasures Enterprise processes.

The Department of Health and Human Services concurred with the recommendations, noting
that its Oﬃce of the Assistant Secretary for Preparedness and Response is initiating a review of
the Public Health Emergency Medical Countermeasures Enterprise, which will be conducted by
the National Academies of Sciences, Engineering, and Medicine. According to the Department
of Health and Human Services, the review will examine multiple aspects of the Public Health
Emergency Medical Countermeasures Enterprise processes, including interagency coordination,
policies and practices, and transparency, with a ﬁnal report expected in fall 2021.

Page 123 GAO-21-551
Background
The COVID-19 pandemic has highlighted the importance of a readily available cache of medical
products and supplies to treat patients and protect ﬁrst responders during public health
emergencies. The Strategic National Stockpile (SNS) contains a multibillion dollar inventory of
medical countermeasures—drugs, vaccines, supplies, and other materials—to respond to a broad
range of public health emergencies resulting from exposure to chemical, biological, radiological,
and nuclear agents, as well as emerging infectious diseases, including pandemic inﬂuenza.174

Overseen by the Oﬃce of the Assistant Secretary for Preparedness and Response (ASPR) within
the Department of Health and Human Services (HHS), the SNS mission has expanded since
its inception in 1999 in response to statutory changes and a growing variety of threats.175
During public health emergencies like COVID-19, the contents of the stockpile may be deployed
to state and local entities when their supplies are depleted or when the necessary medical
countermeasures are not commercially available, such as the antitoxin used to treat botulism.

The inventory of the SNS is informed by an interagency group of experts called the Public Health
Emergency Medical Countermeasures Enterprise (PHEMCE), which is led by ASPR and comprised
of multiple HHS and other federal agencies such as the Departments of Defense and Homeland
Security, hereafter referred to as PHEMCE interagency partners. HHS established the PHEMCE
in 2006 to advance national preparedness for natural, accidental, and intentional threats by
coordinating medical countermeasure eﬀorts within HHS and in cooperation with other federal
agencies. Speciﬁcally, the key functions of the PHEMCE are to advise the Secretary of Health and
Human Services in:

• deﬁning and prioritizing requirements for medical countermeasures in public health
emergencies;

• integrating and coordinating research, product development, and procurement activities; and

• setting deployment and use strategies for medical countermeasures held in the SNS.

For example, in 2016, the PHEMCE recommended stockpiling goals for certain personal protective
equipment, such as N95 respirators, which were in high demand during the COVID-19 pandemic.

The PHEMCE was later codiﬁed in law through the Pandemic and All-Hazards Preparedness and
Advancing Innovation Act of 2019.176 The act speciﬁed that the PHEMCE is to use a process to
make recommendations to the Secretary of Health and Human Services regarding research,
procurement, and stockpiling of medical countermeasures and assist the Secretary in developing

174Medical countermeasures refers to drugs, biologics, and devices that can be used to diagnose, treat, prevent, or
mitigate harm.
175See 42 U.S.C. § 247d-6b. The Secretary of Health and Human Services transferred responsibility for the SNS from the
Centers for Disease Control and Prevention to ASPR in 2018.
176Pub. L No. 116-22, § 402(a), 133 Stat. 905, 942-43 (codiﬁed at 42 U.S.C. § 300hh-10a).

Page 124 GAO-21-551
strategies for logistics, deployment, distribution, dispensing, and use of countermeasures that
may be applicable to the SNS, among other things.

The PHEMCE manages the SNS annual review, a year-long, multistep process that starts with
an examination of the inventory. Based on PHEMCE deliberations of the gaps in the stockpile
and threat priorities, this process results in recommendations for SNS medical countermeasure
procurements. Required to be completed since 2006 and to be submitted to Congress since 2013,
these reviews inform medical countermeasure procurements for the SNS inventory 3 years in the
future.177 For example, the 2016 SNS Annual Review examined the SNS’s inventory in 2016, was
ﬁnalized in 2017, and made recommendations for the procurement of medical countermeasures
for ﬁscal year 2019.

These recommendations are prioritized based on a number of factors, such as how critical the
medical countermeasures are to response and life-saving eﬀorts and how usable they are by
clinicians or laypersons. They are informed by the anticipated budget of the SNS, and we have
reported there have been tensions between the limitations of the budget and procurements in
response to identiﬁed threats, according to ASPR oﬃcials.

As part of our CARES Act reports, we have discussed how the COVID-19 pandemic has highlighted
challenges related to SNS funding prior to the pandemic, raising concerns about the SNS’s ability
to respond to a wide range of threats in the future. For example, we reported in January and
March 2021 that SNS funding has not kept pace with the increasing number of threats for which
the SNS may be needed. We also noted that funding requests have not always fully reﬂected SNS
funding needs due to competing priorities and tradeoﬀs involved in aligning SNS budgetary needs
with broader HHS needs and the President’s budget priorities, according to ASPR oﬃcials.

We also reported in June 2020 that HHS previously 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.178 Additionally, we reported in March 2021 that HHS did not replenish personal
protective equipment to previous levels following the H1N1 inﬂuenza pandemic of 2009 prior to
COVID-19 because of a lack of funding.

As of May 31, 2021, six relief laws had been enacted to assist the COVID-19 response.179 These
laws appropriated funding for HHS activities, and, in some cases, speciﬁcally authorized their use

177Pandemic and All-Hazards Preparedness Act, Pub. L. No. 109-417, § 102(c)(2), 120 Stat. 2831, 2834 (2006) and
Pandemic and All-Hazards Preparedness Reauthorization Act of 2013, Pub. L. No. 113-5, § 403, 127 Stat. 161, 196. The
Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 established several new requirements
for SNS annual reviews, referred to in the act as “annual threat-based reviews.” For example, the act speciﬁed that
annual threat-based reviews must provide information regarding quantities of medical countermeasures procured
for the SNS, the threat such procurement is intended to address, and planning considerations for appropriate
manufacturing capacity, among other information. Pub. L. No. 116-22, § 403(a)(3), 133 Stat. at 944-45 (codiﬁed at 42
U.S.C. § 247d-6b(a)(2)).
178Department of Health and Human Services, Public Health Emergency Medical Countermeasures Enterprise Multiyear
Budget: Fiscal Years 2018-2022 (December 2019).
179As of May 31, 2021, the six relief laws enacted to assist the response to COVID-19 were the American Rescue Plan Act
of 2021, Pub. L. No. 117-2, 135 Stat. 4; Consolidated Appropriations Act, 2021, Pub. L. No. 116-620, 134 Stat. 1182 (2020);
Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020); CARES Act,

Page 125 GAO-21-551
for the SNS. 180 As of May 31, 2021, HHS reported it obligated about $10.2 billion of the $13.9
billion it planned to use for the SNS to purchase personal protective equipment and ventilators for
immediate use as well as to replenish SNS inventory, among other purposes, and had expended
about $6.3 billion.

Overview of Key Issues
ASPR signiﬁcantly changed PHEMCE operations after 2017. According to oﬃcials from ASPR
and three of six PHEMCE partners, ASPR made changes to the PHEMCE in response to concerns
raised by the Assistant Secretary, some of which PHEMCE partners shared, including that the
PHEMCE’s decision-making process was too slow.181 According to the former Assistant Secretary
who initiated the PHEMCE changes, while the body was successful in advancing the development
of medical countermeasures and a model for interagency coordination and collaboration, its
consensus-driven process aﬀected the urgency with which medical countermeasures were
developed and, thus, the nation’s preparedness in addressing threats. ASPR oﬃcials responsible
for the administration of the PHEMCE also noted that some changes made to the PHEMCE were
designed to more closely align with the Assistant Secretary’s priorities, as each new Assistant
Secretary comes to the position with speciﬁc expertise and ideas for how preparedness should be
addressed.

The ﬁgure below illustrates the PHEMCE operations immediately prior to and after December
2017, including changes that occurred after December 2017, which narrowed the scope of
issues on which the PHEMCE primarily focused its deliberations, and shifted the structure of
the deliberation process about medical countermeasures from a bottom-up to a top-down
approach.182

Pub. L. No. 116-136, 134 Stat. 281 (2020); Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178
(2020); and the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123,
134 Stat. 146.
180According to HHS, as of April 2, 2021, the agency transferred $850 million from the Public Health and Social Services
Emergency Fund, Strategic National Stockpile, to the Unaccompanied Children Program within the Administration for
Children and Families, under authority in the Consolidated Appropriations Act, 2021. See Pub. L. No. 116-260, div. M, tit.
III, § 304, 134 Stat. at 1923.
181While we either interviewed or received written responses from seven PHEMCE partners, one partner was unable
to provide relevant information due to staﬀ turnover. Therefore, we only included responses from the remaining six
PHEMCE partners.
182For the purpose of this report, historical references to PHEMCE operations refer to the structure that existed in 2017;
the number and type of work groups could change over time, according to PHEMCE documentation.

Page 126 GAO-21-551
Public Health Emergency Medical Countermeasures Enterprise (PHEMCE) Organization

Note: In addition to the Integrated Program Teams, the PHEMCE also established working groups for speciﬁc purposes. For
example, the PHEMCE established the Emerging Infectious Disease Working Group in April 2014 to evaluate the public health
risks posed by emerging infectious diseases, excluding inﬂuenza. This group was sunset in 2016 after it completed its assigned
task of developing a framework for prioritizing emerging disease threats, according to an ASPR oﬃcial.
a
The Oﬃce of the Director of National Intelligence did not previously participate in the PHEMCE, but was identiﬁed as a
PHEMCE partner in the Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019.
b
Ten Integrated Program Teams were identiﬁed in the July 2015 PHEMCE Integrated Program Team charter; however, the
PHEMCE was authorized to establish or disband Integrated Program Teams as needed.
c
ASPR oﬃcials told us the PHEMCE discussed other topics as needed. For example, a Botulinum Portfolio Assessment Team was
in place for a limited period of time, according to a PHEMCE member who participated on that team.

Scope of PHEMCE deliberations. After 2017, ASPR narrowed the scope of work performed by the
PHEMCE in terms of the range of issues for which it provided recommendations, according to
oﬃcials from ASPR and three of six PHEMCE partners. Historically, the PHEMCE provided input

Page 127 GAO-21-551
on a comprehensive range of issues related to medical countermeasures, which ASPR oﬃcials
currently responsible for the administration of the PHEMCE referred to as an end-to-end approach
to planning. For example, the PHEMCE provided input on deployment strategies and clinical
guidance for the use of medical countermeasures in the SNS for public health emergencies,
according to oﬃcials from two of six PHEMCE partners.

However, after 2017, ASPR began narrowing the PHEMCE’s scope to focus its eﬀorts on
medical countermeasure development and procurement, according to ASPR oﬃcials. ASPR and
Department of Defense (DOD) oﬃcials told us that through these PHEMCE changes, the oﬃce
sought to better align medical countermeasure development and procurements between HHS
and DOD—the primary purchasers of medical countermeasures—including coordinating diﬀerent
priorities for vaccine development. As part of this change, the former Assistant Secretary made
DOD a co-chair, along with ASPR, on the Enterprise Governance Board, the most senior leadership
level of the PHEMCE structure.

According to the former Assistant Secretary, in future iterations of the PHEMCE restructure, ASPR
planned to broaden the PHEMCE’s scope to also focus on issues such as the deployment and
utilization of medical countermeasures. In particular, it planned to incorporate the insight of public
health organizations that represent states, local governments, tribes, and territories, such as the
National Association of County and City Health Oﬃcials.

ASPR also aimed to limit access to national-security-sensitive or proprietary information, as part
of its scope changes, according to ASPR’s 2020-2023 Strategic Plan and the former Assistant
Secretary. According to the former Assistant Secretary, a critical PHEMCE vulnerability that needed
to be addressed was the security of PHEMCE proceedings. Prior to 2018, PHEMCE proceedings
were conducted in unclassiﬁed and unsecured settings which, according to the former Assistant
Secretary, could have enabled hostile foreign entities or other individuals to access sensitive or
propriety information related to both medical countermeasure vulnerabilities and development
innovations.183 According to oﬃcials from ASPR and two of six PHEMCE partners, discussions
after 2017 primarily occurred among PHEMCE partners that had appropriate security clearances
to enable access to real-time information from the intelligence community. A former senior
ASPR oﬃcial told us that this signiﬁcantly limited subject matter experts’ ability to participate in
discussions. However, according to the former Assistant Secretary, the views of subject matter
experts could be communicated through their respective agency representatives who participated
in discussions at senior leadership levels of the PHEMCE.

Structure and activities of the PHEMCE. After 2017, PHEMCE deliberations shifted from a bottom-
up to a top-down approach. Prior to the reorganization eﬀorts, the PHEMCE process consisted of
10 groups of subject matter experts (known as Integrated Program Teams, as illustrated above),
which focused on a speciﬁc threat area and its associated medical countermeasures.184 Among
other responsibilities, these teams developed recommendations on the type and number of
medical countermeasures HHS should buy for the SNS. These recommendations subsequently

183ASPR oﬃcials noted that while the majority of PHEMCE meetings prior to 2018 were unclassiﬁed, classiﬁed meetings
were held at various levels of the PHEMCE when needed.
184Ten Integrated Program Teams were identiﬁed in the July 2015 PHEMCE Integrated Program Team charter; however,
the PHEMCE was authorized to establish or disband Integrated Program Teams as needed.

Page 128 GAO-21-551
underwent further examination by increasingly senior PHEMCE leadership levels, which, according
to oﬃcials from ASPR and a PHEMCE partner, took a signiﬁcant amount of time.

To make the process more eﬃcient and ensure medical countermeasure development focused
on national security vulnerabilities, the former Assistant Secretary shifted the PHEMCE decision-
making structure so that leadership at the highest level, speciﬁcally the Assistant Secretary,
identiﬁed areas of concern related to threats or medical countermeasures and assigned them to
subject matter experts for analysis and assessment, according to ASPR oﬃcials and the former
Assistant Secretary.

Further, as illustrated in the previous ﬁgure, ASPR reduced the number of standing subject
matter expert groups that convened to deliberate on speciﬁc threats and added others that met
for a limited period of time. According to ASPR documentation, ASPR established two Portfolio
Assessment teams in 2019 to focus on anthrax and smallpox, which have been identiﬁed by
the PHEMCE as high-priority threats, among other things. The PHEMCE multiyear budget for
ﬁscal years 2018-2022 projected that these threats would account for more than 50 percent of
the SNS budget for this period and noted that estimated spending for anthrax and smallpox
would increase by 15 and 47 percent, respectively. Senior ASPR oﬃcials told us that the PHEMCE
also established Portfolio Assessment Teams for other threats, but ASPR did not provide us
documentation of the goals of these other teams or evidence that they met regularly.

Additionally, activities and deliberations among the various PHEMCE levels became less frequent
and regular after 2017, according to ASPR oﬃcials and all PHEMCE partners. The precise
number of meetings that occurred at diﬀerent levels is unclear; ASPR was unable to provide us
documentation of these meetings. According to ASPR oﬃcials, some of the change in PHEMCE
activity between 2017 and 2020 was due to uncertainty about which ASPR division was responsible
for the administration of the PHEMCE, the lack of a PHEMCE governance structure, and the
COVID-19 pandemic.185 Consistent with leading collaboration practices we have identiﬁed, deﬁning
and sustaining leadership is beneﬁcial for collaborative eﬀorts; and as such, leadership transitions
and inconsistency can weaken the eﬀectiveness of any interagency collaborative eﬀort.

PHEMCE partners’ concerns about changes. Three of six PHEMCE partners had concerns about
changes to the body, including a reduced ability to provide input and reduced transparency of
the process. All PHEMCE partners acknowledged that while the previous PHEMCE processes
contributed to its ineﬃciency, these processes were eﬀective in ensuring appropriate input and
thorough deliberation on a broad range of medical countermeasure issues that aﬀect all PHEMCE
partners. For example, oﬃcials from one PHEMCE partner said that under the previous PHEMCE
structure, concerns about the purpose and scientiﬁc rationale for a plan to purchase a product
for the SNS inventory would have been vetted with all PHEMCE partners prior to its acquisition.
In addition, two of six PHEMCE partners also told us the PHEMCE restructure resulted in a lack
of clarity on how ASPR makes decisions about the medical countermeasure enterprise and the
rationale behind decisions made, including for the SNS inventory.

185ASPR oﬃcials told us the oﬃce delayed its PHEMCE reorganizational plans while waiting for the enactment of the
Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019, which contained requirements related
to the PHEMCE. However, they said the oﬃce ultimately began implementing its plans when the legislation was not
enacted in the anticipated timeframe. According to ASPR oﬃcials, the oﬃce expected the legislation to be enacted in
June 2018 but it was not enacted until June 2019.

Page 129 GAO-21-551
According to the former Assistant Secretary, under the new structure, input of PHEMCE partners
was appropriately considered. However, he noted that his responsibility was to make the best use
of ASPR resources to advance the nation’s preparedness against threats, not to ensure consensus
was reached. ASPR was unable to provide us with documentation to understand the extent
PHEMCE partners were involved in deliberations.

Further, oﬃcials from two of six PHEMCE partners credited the prior process with enhancing
preparedness and producing sound, scientiﬁcally based decisions, including recommendations on
the SNS inventory. One PHEMCE partner also noted the importance of maintaining connectivity
among interagency partners, which existed under the former PHEMCE operational structure.
Consistent with leading collaboration practices we have identiﬁed, positive working relationships
between participants from diﬀerent organizations build trust and foster communication which
facilitates collaboration that is vital in responding to an emergency.

In a hearing before the Senate Committee on Homeland Security and Governmental Aﬀairs on
April 14, 2021, the Assistant Secretary for Preparedness and Response from 2009-2017 noted
the PHEMCE coordination process led to the development of over 50 medical countermeasures
against recognized public health threats. However, she identiﬁed the degradation of the PHEMCE
process as one of several actions that led to the nation being less ready for the COVID-19
pandemic than we otherwise might have been. In contrast, the former Assistant Secretary
said that the revised top-down PHEMCE process was applied successfully during the COVID-19
response for Operation Warp Speed, which focused on portfolios of vaccines, diagnostic tests, and
treatments, and were co-led by DOD and HHS.

ASPR did not conduct statutorily required annual reviews of the SNS for 3 years. ASPR did
not conduct statutorily required SNS annual reviews for 2017, 2018, and 2019, while the PHEMCE
was undergoing operational changes, according to ASPR oﬃcials. As noted earlier, the annual
reviews examine inventory relative to threat priorities and inform procurements 3 years in the
future. Therefore, the ﬁrst ﬁscal year aﬀected by the lack of an annual review was 2020.

According to ASPR oﬃcials, in the summer of 2020, they made some Congressional staﬀ aware
that these annual reviews had not been completed due to the transfer of the SNS from the
Centers for Disease Control and Prevention (CDC) to ASPR and the PHEMCE reorganization, among
other things. The former Assistant Secretary told us in July 2021 that he recognized the importance
of conducting the annual reviews and was not aware that they had not been completed.

In the absence of the annual reviews that would have informed procurements for ﬁscal years
2020 and 2021, ASPR oﬃcials told us that they procured medical countermeasures based on
PHEMCE recommendations from SNS annual reviews conducted prior to the PHEMCE restructure
and real-time direction from the Assistant Secretary. ASPR plans to use a similar approach for
ﬁscal year 2022. ASPR oﬃcials noted that, for many years, much of the annual appropriations for
the SNS had been used to replenish medical countermeasures, including anthrax therapeutics
and smallpox vaccines, which have always been high priority investments, adding that the SNS’s
budget does not enable it to purchase all medical countermeasures identiﬁed as priorities in
the SNS annual reviews. As a result, there are still many medical countermeasures left over from
previous prioritization lists to procure.

Page 130 GAO-21-551
Previous SNS annual reviews have identiﬁed similar challenges of competing priorities
and tradeoﬀs due to budget limitations. The 2015 SNS Annual Review proposed reducing
procurements of both anthrax vaccine and antibiotics to meet budget constraints. Additionally,
the 2016 SNS Annual Review reported that the SNS inventory was below the stockpiling goals for
several types of medical countermeasures, according to the PHEMCE multiyear budget for ﬁscal
years 2018 to 2022.

ASPR oﬃcials stated that the 2020 SNS Annual Threat-Based Review is currently being ﬁnalized
and will inform SNS procurement priorities for ﬁscal year 2023.186 This review was required to be
submitted to congressional committees by March 15, 2021, but had not been submitted as of June
21, 2021; ASPR oﬃcials told us they communicated this delay to Congress. ASPR oﬃcials noted
that in comparison with prior SNS annual reviews, the 2020 review was not developed through
deliberative discussions of the PHEMCE and will be fairly limited due to the ongoing COVID-19
response; ASPR oﬃcials told us they plan to conduct more robust annual threat-based reviews in
the future.

New PHEMCE reorganization eﬀorts underway. ASPR is in the process of re-assessing and re-
establishing new organizational processes for the PHEMCE, but has not yet ﬁnalized planning
documents, including an organizational charter and implementation plan, to guide those eﬀorts.

Although ASPR developed some materials outlining the structure it began implementing in 2019,
a revised PHEMCE charter was never ﬁnalized, according to oﬃcials from ASPR and a PHEMCE
partner, and therefore, never shared with PHEMCE partners. ASPR oﬃcials acknowledged that the
changes made to the PHEMCE in the 2018 to 2020 period did not fully achieve the desired aims
and created other challenges. As a result, oﬃcials said they have paused PHEMCE operations while
they assess how best to move forward.

ASPR oﬃcials told us they are currently developing the PHEMCE charter and policies that will
describe how the PHEMCE will operate going forward, which they hoped to ﬁnalize in May 2021.
However, as of June 21, 2021, the charter had not been ﬁnalized. Additionally, in April 2021, ASPR
oﬃcials reported that they had engaged with PHEMCE partners to gather feedback and contracted
with the National Academies of Sciences, Engineering, and Medicine to develop recommendations
on how to improve PHEMCE operations but their review had not yet begun.

According to ASPR’s 2021-2022 PHEMCE Strategy and ASPR oﬃcials, the PHEMCE will return
to having a broader scope of work, such as helping HHS to develop strategies for the logistics,
deployment, distribution, dispensing, and use of medical countermeasures in the SNS.187
The COVID-19 pandemic illustrated that medical countermeasure planning needs to be
comprehensive, according to one ASPR oﬃcial who noted that discussions among PHEMCE

186The Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 refers to the SNS annual reviews
as “annual threat-based reviews.” Ongoing work will assess the 2020 SNS Annual Threat-Based Review, once complete,
against statutory requirements as outlined in the act.
187In January 2021, ASPR ﬁnalized the 2021-2022 PHEMCE Strategy. The strategy outlines strategic goals to update
and strengthen the medical countermeasure enterprise and enhance preparedness. According to the strategy, an
associated implementation plan will be created at a later date. The Assistant Secretary is required to develop and submit
to appropriate congressional committees a PHEMCE Strategy and Implementation Plan every two years. See 42 U.S.C. §
300hh-10(d).

Page 131 GAO-21-551
partner oﬃcials are underway to determine the best way to evaluate threats and develop
strategies to ensure that medical countermeasures to counter those threats are available.

However, responding to the daunting and speciﬁc challenges of the COVID-19 response, as
well as changes within ASPR (speciﬁcally the shifting of the division responsible for PHEMCE
administration as recently as July 2020), have contributed to delays in re-establishing the PHEMCE,
according to ASPR oﬃcials.

Developing and documenting plans for restructuring the PHEMCE would help ASPR to meet the
requirements outlined in the Pandemic and All-Hazards Preparedness and Advancing Innovation
Act of 2019. Such plans would help ASPR to ensure that it develops a transparent and deliberative
process that also balances the need to protect sensitive, including proprietary information. The act
stipulates that the functions of the PHEMCE shall involve several activities, including the following:

• Making recommendations to the Secretary of Health and Human Services regarding research,
development, procurement, stockpiling, deployment, distribution, and use of medical
countermeasures;

• Identifying national health security needs, including gaps in public health preparedness and
response related to medical countermeasures; and

• Assisting the Secretary of Health and Human Services in developing strategies related to
logistics, deployment, distribution, dispensing, and use of medical countermeasures that may
be applicable to SNS activities.188

The act also stipulates that the annual threat-based review should be conducted in consultation
with the PHEMCE.189

In addition, developing and documenting plans that incorporate GAO’s leading collaboration
practices would help ASPR ensure that its current plans for restructuring of the PHEMCE results
in an eﬀective interagency collaboration over the long term. Among our leading practices for
collaboration ASPR should consider addressing the following in its plans:

• identifying a leadership model and detailing how it will be sustained over time,

• clearly identifying roles and responsibilities of interagency partners and steps for decision
making,

• developing ways to update or monitor collaborative agreements, and

• establishing ways to operate across participating agencies’ boundaries to build positive
relationships and bridge organizational cultures.

188See 42 U.S.C. § 300hh-10a(c).
189See 42 U.S.C. § 247d-6b(a)(2).

Page 132 GAO-21-551
Until ASPR develops and documents plans for restructuring the PHEMCE that addresses a number
of issues, ASPR risks being unable to fulﬁll its responsibilities in advancing national preparedness
for a wide range of threats, including a pandemic. These include having a transparent and
deliberative process that engages interagency partners in the full range of PHEMCE responsibilities
outlined in the Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019,
including those related to the SNS annual threat-based reviews, and incorporates leading practices
to foster more eﬀective collaboration. These plans should also reﬂect the need to conduct
deliberations securely, so as not to risk harming our nation’s homeland security. The completion
of the PHEMCE reorganization aided through the development of these plans is crucial to ensuring
that the most eﬃcacious medical countermeasures—informed by the PHEMCE partners’ broad
range of scientiﬁc, regulatory, and logistical expertise—are available for rapid deployment and
eﬀective administration and utilization during the next public health emergency.

ASPR lacks documentation of PHEMCE activities and deliberations. ASPR was unable to
provide us with documentation of PHEMCE activities and deliberations after 2017, which raises
concerns about the oﬃce’s records management practices. For example, the oﬃce was unable to
provide the following items:

• Documentation related to PHEMCE decisions or recommendations during the 2018 to 2020
period, which could have provided information on the factors that interagency partners
considered when making decisions about the medical countermeasures enterprise, including
the SNS.

• Documentation that would support ASPR oﬃcials’ accounts of the rationale for the changes
to the PHEMCE—information that was shared with PHEMCE interagency partners in 2019,
according to three of six PHEMCE partner oﬃcials we interviewed.

• PHEMCE meeting agendas and minutes for 2018 to 2020 to know, for example, who was
involved.

For these reasons, we do not know whether PHEMCE partners were aware of the lapse in SNS
annual reviews, which historically were managed by the PHEMCE, or if PHEMCE partners discussed
the implications of this lapse for the SNS inventory. We also do not know if senior ASPR leadership
provided any explicit guidance regarding the approach that should be used to determine medical
countermeasure acquisition priorities for the SNS in the absence of SNS annual reviews. ASPR
oﬃcials told us that several staﬀ transitions during this time period made it challenging for them
to locate documentation related to PHEMCE activities and deliberations, and acknowledged the
need to improve records management going forward.

Not maintaining such documentation is inconsistent with HHS’s policy for records management,
which implements the Federal Records Act of 1950 and other laws and regulations.190 The policy
requires HHS components to:

190The Federal Records Act of 1950 requires federal agencies to make and preserve records with adequate and proper
documentation of the organization, functions, policies, decisions, procedures, and essential transactions of the agency.
Pub. L. No. 81-754, 64 Stat. 578 (codiﬁed, as amended, at 44 U.S.C. § 3101 et seq.).

Page 133 GAO-21-551
• establish and maintain a records management program that includes managerial activities
related to the creation, maintenance and use, and disposition of records, carried out in such
a way as to achieve adequate and proper documentation of federal transactions and eﬀective
and economical management of agency operations;

• implement a records maintenance program so that complete records are ﬁled or otherwise
identiﬁed and preserved and can easily be found when needed; and

• ensure that departing employees’ federal records have been turned over to the appropriate
successor or oﬃcial to permit continued preservation of departmental federal records.191

Until ASPR implements records management practices that include developing, maintaining,
and securing documentation related to PHEMCE activities and deliberations, including those
related to the SNS, Congress and key stakeholders do not have assurance that steps taken are
advancing national preparedness for natural, accidental, and intentional threats. Practices should
ensure information such as the factors considered, the rationale for the action or decision, and
the ﬁnal outcomes of PHEMCE processes are properly documented. Creation and management of
PHEMCE records facilitates transparency and accountability as it provides stakeholders, including
interagency partners impacted by decisions and oversight bodies that assess them, with access
to information regarding how and why decisions were made. Maintaining these records can also
reduce the risks of losing organizational knowledge due to staﬃng volatility.

Methodology
To conduct this work, we reviewed PHEMCE documentation that described the PHEMCE prior to
the restructuring, including charters, a past and current PHEMCE Strategy and Implementation
Plan, and information publicly available on the PHEMCE internet site, among other things. We
interviewed or obtained written responses from:

• current and former ASPR oﬃcials that participated in the governance of the PHEMCE and that
had responsibility for the administration of the PHEMCE prior to and after December 2017,
including the former Assistant Secretary.

• seven PHEMCE interagency partners: CDC, Department of Agriculture (USDA), Department
of Defense (DOD), Department of Homeland Security (DHS), Department of Veterans Aﬀairs
(VA), Food and Drug Administration, and National Institutes of Health, in April and May 2021.
One of the seven interagency partners was unable to provide relevant information due to
staﬀ turnover. Therefore, we only included responses from the remaining six partners in our
ﬁndings.

• oﬃcials within the Division of the Strategic National Stockpile responsible for developing
the SNS budget and spend plans for the SNS and ASPR oﬃcials that liaised between the

191See Department of Health and Human Services, HHS Policy for Records Management, HHS-OCIO-PIM-2020-06-004,
May 2020.

Page 134 GAO-21-551
PHEMCE and the Division of the Strategic National Stockpile, including the Acting Director of
the Division of the Strategic National Stockpile.

Lastly, we assessed ASPR’s actions related to the PHEMCE restructure against our leading
practices for eﬀective collaboration and relevant requirements in the Pandemic and All-Hazards
Preparedness and Advancing Innovation Act of 2019, and the Department of Health and Human
Services Policy for Records Management, which implements the Federal Records Act of 1950 and
other laws and regulations.

Agency Comments
We provided HHS, DOD, DHS, the Oﬃce of Management and Budget (OMB), USDA, and VA with a
draft of this enclosure. HHS provided comments, which are reproduced in Appendix VI .

In its comments, HHS stated that it concurred with our recommendations and that it is initiating a
review of the PHEMCE by the National Academies of Sciences, Engineering, and Medicine to look at
a number of issues including interagency coordination, appropriate policies and practices, scope,
transparency and ethical conduct. HHS also noted that several meetings will be held to allow for
stakeholder input and that the review will culminate in a report, which HHS anticipates receiving in
fall 2021.

HHS also provided technical comments, which we incorporated as appropriate. DHS, DOD, OMB,
USDA, and VA did not provide comments on this enclosure.

GAO’s Ongoing Work
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.192 This work
includes examining the contents and management of the SNS to include a review of procurements
of medical countermeasures over time, the decisions behind these procurements, and how
they help address emergency health security needs. We will also continue to monitor eﬀorts to
modernize and restructure the SNS.

GAO’s Prior Recommendation
The table below presents our recommendation on the Strategic National Stockpile from a prior
bimonthly CARES Act report.

192Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019, Pub. L. No. 116-22, § 403(a)(5), 133
Stat. at 946-47; CARES Act, Pub. L. No. 116-136, § 19010, 134 Stat. at 579-81.

Page 135 GAO-21-551
Prior GAO Recommendation Related to the Strategic National Stockpile
Recommendation Status

To improve the nation’s response to and preparedness for Open. HHS generally agreed with our
pandemics, the Assistant Secretary for Preparedness and recommendation, while noting that the term
Response should establish a process for regularly engaging with “engage” is vague and unclear, and that they
Congress and nonfederal stakeholders—including state, local, regularly engage with Congress and nonfederal
tribal, and territorial governments and private industry—as the stakeholders. HHS added that improving the
Department of Health and Human Services (HHS) reﬁnes and pandemic response capabilities of state, local, tribal,
implements a supply chain strategy for pandemic preparedness, and territorial governments is a priority.
to include the role of the Strategic National Stockpile (January 2021
report).

Source GAO I GAO-21-551

Related GAO Product:
Managing for Results: Key Considerations for Implementing Interagency Collaborative Mechanisms,
GAO-12-1022 (Washington D.C.: September 27, 2012).

Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov

Page 136 GAO-21-551
Federal Contracts and Agreements for COVID-19
As of May 31, 2021, federal agencies reported obligating tens of billions of dollars in support
of COVID-19 response eﬀorts through contracts and other transaction agreements, with the
predominant types of goods and services procured changing from medical equipment and
supplies to drugs and treatments over the course of the pandemic.

Entities involved: U.S. Department of Agriculture; Department of Defense; Department of Health
and Human Services; and Department of Homeland Security, among others

Background
Federal agencies have used a variety of contracting mechanisms to provide vital goods and
services in support of federal, state, and local COVID-19 response eﬀorts.193 For example, federal
agencies have reported billions of dollars in obligations on contracts subject to the Federal
Acquisition Regulation—which provides uniform policies and procedures for acquisitions by all
executive agencies.194 Our prior work on disaster contracting has found that contracts play a
key role in federal emergency response eﬀorts, and that contracting during an emergency can
present a unique set of challenges as oﬃcials can face signiﬁcant pressure to provide critical goods
and services as expeditiously and eﬃciently as possible. The January 2021 National Strategy for
the COVID-19 Response and Pandemic Preparedness emphasizes the important role contracts will
continue to play during the response. The strategy states that the federal government will fully
leverage contract authorities to strengthen the vaccine supply chain; staﬀ vaccination sites; and ﬁll
supply shortages for personal protective equipment, drugs, and therapeutics.

In addition, federal agencies like the Department of Defense (DOD) and Department of Health
and Human Services (HHS) have relied on the use of other transaction agreements—which are
not subject to the Federal Acquisition Regulation—for activities such as vaccine development
and manufacturing in response to COVID-19.195 Our prior work has noted that the ﬂexibility to
tailor other transaction agreements can help agencies attract companies that do not typically do
business with the government. However, their use also carries a risk of reduced accountability
and transparency. The CARES Act relaxed certain limitations on the use of other transaction
agreements in response to COVID-19 for HHS and DOD, such as congressional reporting
requirements and requirements for who can approve certain transactions.196

193The CARES Act includes a provision for GAO to provide a comprehensive audit and review of federal contracting
pursuant to the authorities provided in the Act. In addition to speciﬁc contracting reviews, we have reported on federal
contracting in response to the pandemic as part of regularly issued government-wide reports on the federal response to
COVID-19.
194For the purposes of this report, “contract obligations” refers to obligations on procurement contracts that are subject
to the Federal Acquisition Regulation and does not include, for example, grants, cooperative agreements, loans, other
transactions for research, real property leases, or requisitions from federal stock.
195Other transaction authorities allow certain agencies to enter into agreements “other than” standard government
contracts or other traditional mechanisms. Agreements under these authorities are generally not subject to federal
laws and regulations applicable to federal contracts or ﬁnancial assistance, allowing agencies to customize their other
transaction agreements to help meet project requirements and mission needs.
196Pub. L. No. 116-136, §§ 3301, 13006, 134 Stat. 281, 383, 522 (2020).

Page 137 GAO-21-551
As federal contracting activity continues to play a critical role in response to the pandemic,
it is important to ensure that contract actions made in response to COVID-19 are accurately
reported and visible to congressional decision makers, entities with oversight responsibilities,
and taxpayers. National Interest Action (NIA) codes were established in 2005 following Hurricane
Katrina to enable the consistent tracking of emergency or contingency-related contracting
actions in the Federal Procurement Data System-Next Generation (FPDS-NG). The COVID-19
NIA code—used to track contract actions and associated obligations in response to COVID-19
in FPDS-NG—was originally established on March 13, 2020, and set to expire on July 1, 2020.
The Department of Homeland Security (DHS) and DOD subsequently extended the code three
times—ﬁrst to September 30, 2020, then to March 31, 2021, and more recently to September 30,
2021.197

Overview of Key Issues
Agencies obligated $61.4 billion on federal contracts, with DOD and HHS accounting for
most obligations. In response to the COVID-19 pandemic, contract obligations totaled about
$61.4 billion as of May 31, 2021. At the beginning of the response, HHS accounted for the most
federal contract obligations. However, as the response has progressed, DOD’s contract obligations
surpassed HHS’s, in part due to DOD’s support of interagency acquisition needs, which has
included awarding contracts on behalf of HHS for vaccine and therapeutic production and medical
supplies.

As of May 31, 2021, DOD accounted for about 40 percent and HHS for about 29 percent of the
total obligations made by federal agencies. U.S. Department of Agriculture (USDA) obligations,
almost all of which were in support of the Farmers to Families Food Box Program, accounted for
$6.1 billion, or 10 percent of total obligations made in response to COVID-19 (see ﬁgure).198

197Based on the memorandum of agreement guiding the management of the NIA code, DHS and DOD are responsible
for making determinations about whether to establish or close a code, based on a variety of considerations. The General
Services Administration (GSA)—the agency that operates and maintains FPDS-NG—is responsible for adding or updating
the NIA code in the system based on DHS’s and DOD’s decisions. The extensions of the code are consistent with our
prior recommendations to DHS, DOD, and GSA related to the importance of ensuring federal agencies, the public, and
Congress have visibility into contract actions and associated obligations related to emergency response eﬀorts.
198In May 2020, USDA implemented the Farmers to Families Food Box Program to assist commodity suppliers impacted
by the pandemic and to provide food assistance to the public. To accomplish these goals, USDA contracted with
hundreds of distributors to purchase billions of dollars in fresh fruits, vegetables, dairy, and meat products, and package
these products into family-sized food boxes for delivery to food banks, community and faith-based organizations, and
other non-proﬁt entities across the country.

Page 138 GAO-21-551
Contract Obligations in Response to COVID-19 by Federal Agency, as of May 31, 2021

In our March 2021 report, we reported that government-wide contract obligations related to
COVID-19 totaled $55.5 billion through February 28, 2021; by May 31, 2021, those obligations had
increased by about $5.9 billion—to $61.4 billion. HHS accounted for about $1.9 billion, or about
33 percent of the increase in total contract obligations since February 28, 2021. See ﬁgure for
government-wide obligations and conﬁrmed COVID-19 cases by month.

Page 139 GAO-21-551
Government-wide COVID-19-Related Contract Obligations and Conﬁrmed COVID-19 Cases by Month, February
2020–May 2021

Types of goods and services purchased and extent of competition changed over the course
of the pandemic. As the response to the pandemic has progressed, the types of goods and
services purchased have shifted from being primarily medical equipment and supplies—such
as ventilators and personal protective equipment—to drugs and treatments—such as COVID-19
vaccines and therapeutics.

• As we reported in March 2021, drugs and treatments surpassed medical equipment and
supplies as the largest area of government-wide obligations, accounting for 23 percent of total
obligations. These obligations more than tripled from $3 billion as of November 2020, prior
to the Food and Drug Administration’s emergency use authorizations for the Pﬁzer, Moderna,
and Janssen vaccines, to about $14.3 billion as of May 31, 2021.199 However, these contract
obligations hit their peak and have declined by about $333 million since late February.

• Medical equipment and supplies—including ventilators and personal protective
equipment—increased by about $439.6 million since February 28, 2021, and accounted for
about $9.4 billion, or 15 percent of government-wide contract obligations.

• Obligations for fruits and vegetables—made primarily in support of the USDA’s Farmers to
Families Food Box Program—increased by an additional $732.5 million, to $4.6 billion.

199Emergency use authorizations allow for the temporary use of unapproved medical products. Janssen
Pharmaceutical Companies are a part of Johnson & Johnson.

Page 140 GAO-21-551
See ﬁgure for obligation amounts for the most-procured goods and services over time.

Contract Obligation Amounts for Top Five Goods and Services Procured in Response to COVID-19 by month, Feb.
2020–May 2021

Note: In addition to what is reﬂected in the ﬁgure, agencies canceled, or deobligated, $176.5 million and $335.1 million for
drugs and treatments in July 2020 and April 2021, respectively.

As of May 31, 2021, COVID-19-related contracts for goods continued to be competed less
frequently than contracts for services. About 69 percent of the obligations for goods were on
contracts that were not awarded competitively, compared with about 41 percent of the obligations
for services. For example, about $13.8 billion, or 97 percent, of the $14.3 billion in obligations
for drugs and treatments and about $8 billion, or 85 percent, of the $9.4 billion in obligations for
medical and surgical equipment were on contracts awarded noncompetitively.

The proportion of COVID-19 related contracts identiﬁed as having been awarded noncompetitively
decreased slightly from about 60 percent of government-wide contract obligations as of February
28, 2021, to about 58 percent as of May 31, 2021—about $35.7 billion.200 Throughout the course of
the pandemic, the percentage of obligations on contracts identiﬁed as awarded noncompetitively
has ﬂuctuated from a low of 25 percent of obligations in February 2020 to a high of 88 percent
of obligations in December 2020. The higher rate of obligations on noncompetitively awarded
contracts was driven in part by large noncompetitive awards for vaccine production.

200Our methodology for identifying noncompetitive contracts is explained in detail at the end of this enclosure.

Page 141 GAO-21-551
Agencies must provide for full and open competition when awarding contracts, unless one of
several limited exceptions applies, such as when there is an unusual and compelling urgency for a
needed supply or service. Agencies cited an urgent need for awarding contracts noncompetitively
for about 79 percent, or about $28.3 billion, of the contract obligations associated with
noncompetitive awards.201 However, our prior work has noted that promoting competition—even
in a limited form—increases the likelihood of acquiring quality goods and services at a lower price
in urgent situations.

Federal agencies have obligated about $5 billion on undeﬁnitized contracts. Undeﬁnitized
contracts are one technique that agencies have reported using to respond to COVID-19.
Undeﬁnitized contracts can enable the government to quickly fulﬁll requirements that are urgent
or need to be met quickly by allowing contractors to begin work before reaching a ﬁnal agreement
with the government on all contract terms and conditions.202 As of May 31, 2021, undeﬁnitized
contract obligations for COVID-19 totaled about $5 billion, and accounted for about 8 percent
of government-wide contract obligations on contracts awarded in response to COVID-19. DOD
reported the highest amount of undeﬁnitized contract obligations, identifying about $4.1 billion,
or about 17 percent of its COVID-19-related contract obligations as being undeﬁnitized for goods
and services such as N95 respirator production and constructing alternate care facilities to treat
COVID-19 patients. Our prior work has shown that, while undeﬁnitized contract actions can allow
the government to fulﬁll requirements that are urgent or need to be met quickly, these types
of contracts can pose risks to the government. For example, contractors may lack incentives to
control costs before all contract terms and conditions are deﬁned.

Federal agencies have obligated at least $12.5 billion through other transaction
agreements. Three federal agencies—DOD, HHS, and DHS—have continued to report using
other transaction agreements in response to COVID-19. From February 28, 2021, through May 31,
2021, obligations associated with other transaction agreements reported by DOD, HHS, and DHS
increased from about $12.2 billion to $12.5 billion. Of the $12.5 billion, DOD reported obligating
about $10.8 billion through other transaction agreements, including at least $8.5 billion on eﬀorts
to manufacture large-scale vaccines and therapeutics in response to COVID-19 through a DOD and
HHS partnership formerly known as Operation Warp Speed.

Our analysis of FPDS-NG data and agreement documents found that HHS continues to misreport
at least four other transaction agreements with about $1.6 billion in obligations as procurement
contracts. These other transaction agreements supported the COVID-19 vaccine manufacturing
eﬀorts and other medical countermeasures, which can include therapeutic treatments and testing
capabilities. In our January 2021 report, we recommended that HHS should accurately report data

201For the purposes of this report, obligations on contracts identiﬁed as using the unusual and compelling urgency
exception include those associated with contracts subject to Federal Acquisition Regulation 6.302-2, as well as orders
under multiple award contracts, which are subject to separate requirements under Federal Acquisition Regulation
subpart 16.5. Speciﬁcally, under Federal Acquisition Regulation 16.505(b)(2), orders on multiple award contracts
require contracting oﬃcers to give every awardee a fair opportunity to be considered for a delivery order or task order
exceeding $3,500, with exceptions, including if the agency need for the supplies or services is so urgent that providing
a fair opportunity would result in unacceptable delays. When using the unusual and compelling urgency exception to
full and open competition, agencies still must request oﬀers from as many potential sources as is practicable under the
circumstances.
202Undeﬁnitized contracts include letter contracts, as well as other undeﬁnitized actions.

Page 142 GAO-21-551
in the federal procurement database system and provide information that would allow the public
to distinguish between spending on other transaction agreements and procurement contracts.
HHS concurred with our recommendation and is exploring ways to address it.

Methodology
To identify agencies’ federal contract and other transaction agreement obligations and
competition rate on contracts in response to COVID-19, we reviewed data reported in FPDS-
NG through May 31, 2021.203 We primarily identiﬁed contract obligations related to COVID-19
using the NIA code. We supplemented the use of the NIA code by searching for “COVID-19” and
“coronavirus” in the contract description ﬁeld to identify a limited number of additional contract
obligations.204 For contract actions over $1 million, we removed obligations that were identiﬁed in
the contract description as not related to COVID-19.

We assessed the reliability of federal procurement data by reviewing existing information
about FPDS-NG and the data it collects—speciﬁcally, the data dictionary and data validation
rules—and by performing electronic testing. For the four other transaction agreements that HHS
misreported as contracts, we removed the $1.6 billion associated obligations from our reported
contract obligations and reported them instead as other transaction agreement obligations.
We determined that the data were suﬃciently reliable for the purposes of describing agencies’
reported contract obligations in response to COVID-19.

Agency Comments
We provided HHS, DOD, DHS, USDA, and the Oﬃce of Management and Budget with a draft
of this enclosure. HHS, DHS, USDA, and the Oﬃce of Management and Budget did not provide
comments. DOD provided technical comments, which we incorporated as appropriate.

203FPDS-NG data from SAM.gov accessed through May 31, 2021. For purposes of this report, “competition rate” is
the percentage of total obligations associated with contracts awarded competitively. We calculated competition rates
as the percentages of obligations on competitive contracts and orders over all obligations on contracts and orders.
Competitive contracts included contracts and orders coded in the FPDS-NG as “full and open competition,” “full and
open after exclusion of sources,” and “competed under simpliﬁed acquisition procedures” as well as orders coded as
“subject to fair opportunity,” “fair opportunity given,” and “competitive set aside.” Noncompetitive contracts included
contracts and orders coded in the FPDS-NG as “not competed,” “not available for competition,” and “not competed under
simpliﬁed acquisition procedures,” as well as orders coded as an exception to “subject to fair opportunity,” including
“urgency,” “only one source,” “minimum guarantee,” “follow-on action following competitive initial action,” “other
statutory authority,” and “sole source.” Even for contracts identiﬁed as noncompetitive, agencies may have solicited
more than one source.
204In November 2019 we identiﬁed some inconsistencies in the information agencies report in the contract description
ﬁeld in the FPDS-NG. Data on DOD contract obligations based on information in the description ﬁeld were available only
through March 1, 2021, due to diﬀerences in the time frames for which DOD data are made publicly available.

Page 143 GAO-21-551
GAO’s Ongoing Work
We have work underway related to the federal government’s use of contracts to respond to
COVID-19, including assessing contracts awarded by selected agencies in response to COVID-19
and agencies’ eﬀorts to review prospective contractors in advance of awarding a contract.

GAO’s Prior Recommendations
The table below presents our recommendations on federal contracts and agreements for
COVID-19 from prior bimonthly and quarterly CARES Act reports.

Page 144 GAO-21-551
Prior GAO Recommendations Related to Federal Contracts and Agreements for COVID-19
Recommendation Status

The Secretary of Agriculture should direct the Administrator of Closed-Implemented. The U.S. Department of
the Agricultural Marketing Service to issue guidance—such as an Agriculture (USDA) neither agreed nor disagreed
acquisition alert or a reminder to contracting oﬃcials—on the use with our recommendation. In February 2021,
of the COVID-19 National Interest Action code for the Farmers following our identiﬁcation of contract data
to Families Food Box Program or successor food distribution reporting challenges using the COVID-19 National
program to ensure it accurately captures COVID-19-related Interest Action code for the Farmers to Families
contract obligations in support of the program (March 2021 Food Box Program, Agricultural Marketing Service
report). oﬃcials said they conducted training with staﬀ
to review National Interest Action code data
entry protocols. At that time, a senior Agricultural
Marketing Service oﬃcial also sent an email
reminder to procurement division personnel
about OMB’s guidance on the use of the COVID-19
National Interest Action code. Following this training
and email, oﬃcials took action to retroactively
report contract actions for the program with
the National Interest Action code. In May 2021,
the Agricultural Marketing Service updated its
instructions for entering contract actions into the
Federal Procurement Data System-Next Generation
to include a reminder to utilize the proper National
Interest Action code, if applicable.

The Secretary of Agriculture should direct the Administrator Open. USDA neither agreed nor disagreed with
of the Agricultural Marketing Service to assess the contracting our recommendation, and as of May 2021 had not
personnel needed to fully execute the award and administration fully assessed the contracting personnel needed
of existing contracts in support of the Farmers to Families Food to execute and administer contracts in support
Box Program or successor future food distribution program, and of the Farmers to Families Food Box Program or
take the necessary steps to ensure it has adequate contracting successor food distribution program. According to
staﬀ in place to award and administer any future contracts for the Agricultural Marketing Service oﬃcials, they have
program (March 2021 report). discontinued the program, and are using other
methods of hunger relief, so do not anticipate
needing additional permanent staﬀ. Agricultural
Marketing Service oﬃcials are planning to use
an existing contract vehicle to obtain additional
staﬀ support for contract documentation needs
for the awards that have been made under the
Farmers to Families Food Box Program and other
food purchasing eﬀorts. However, as of May 2021
Agricultural Marketing Service oﬃcials had not
yet determined the staﬃng support levels to be
obtained under the contract vehicle.

The Assistant Secretary for Preparedness and Response (ASPR), in Open. ASPR agreed with our recommendation, and
coordination with the appropriate oﬃces within the Department of as of April 2021, ASPR oﬃcials stated that they have
Health and Human Services (HHS), should accurately report data in discussed within ASPR the need to consistently
the federal procurement database system and provide information identify other transaction agreements in the
that would allow the public to distinguish between spending on Federal Procurement Data System-Next Generation
other transaction agreements and procurement contracts (January (FPDS-NG) and explored how their contract writing
2021 report). system may interface with the FPDS-NG other
transaction agreement module in the future.
ASPR oﬃcials added that in the meantime, they
have identiﬁed other transaction agreements in

Page 145 GAO-21-551
Recommendation Status
the procurement module by manually adding
designators such as “other transaction agreement”
into the description of requirement data ﬁeld. We
will continue to monitor ASPR’s eﬀorts to implement
our recommendation.

The Secretary of Homeland Security, in coordination with the Closed-Implemented. The Department of
Secretary of Defense, should (1) revise the criteria in the 2019 Homeland Security (DHS) did not agree with
National Interest Action (NIA) code memorandum of agreement to our recommendation. However, in March 2021,
clearly identify steps they will take to obtain input from key federal DHS, in coordination with the Department of
agencies prior to extending or closing a National Interest Action Defense (DOD), issued a revised memorandum
code, (2) establish timelines for evaluating the need to extend of agreement. The revised agreement establishes
a National Interest Action code, and (3) deﬁne what constitutes a process and timelines for communicating and
a consistent decrease in contract actions and routine contract evaluating NIA code extensions by requiring the
activity to ensure the criteria for extending or closing the National General Services Administration to notify other
Interest Action code reﬂect government-wide needs for tracking federal agencies no less than seven days before
contract actions in longer term emergencies, such as a pandemic a NIA code is set to expire so that agencies can
(September 2020 report). request an extension as needed. The revised
agreement also more clearly deﬁnes what
constitutes a consistent decrease in contract actions
to ensure criteria for extending or closing a NIA
code is consistently applied.

The Secretary of Defense, in coordination with the Secretary Closed-Implemented. DOD did not agree with
of Homeland Security, should (1) revise the criteria in the 2019 our recommendation. However, in March 2021
National Interest Action code memorandum of agreement to DOD, in coordination with DHS, issued a revised
clearly identify steps they will take to obtain input from key federal memorandum of agreement. The revised
agencies prior to extending or closing a National Interest Action agreement establishes a process and timelines for
code, (2) establish timelines for evaluating the need to extend communicating and evaluating NIA code extensions
a National Interest Action code, and (3) deﬁne what constitutes by requiring the General Services Administration
a consistent decrease in contract actions and routine contract to notify other federal agencies no less than seven
activity to ensure the criteria for extending or closing the National days before a NIA code is set to expire so that
Interest Action code reﬂect government-wide needs for tracking agencies can request an extension as needed. The
contract actions in longer term emergencies, such as a pandemic revised agreement also more clearly deﬁnes what
(September 2020 report). constitutes a consistent decrease in contract actions
to ensure criteria for extending or closing a NIA
code is consistently applied.

Source: GAO. I GAO-21-551.

Related GAO Products
COVID-19 Contracting: Observations on Federal Contracting in Response to the Pandemic. GAO-20-632.
Washington, D.C.: July 29, 2020.

Defense Acquisitions: DOD’s Use of Other Transactions for Prototype Projects Has Increased. GAO-20-84.
Washington, D.C.: November 22, 2019.

DATA Act: Quality of Data Submissions Has Improved but Further Action Is Needed to Disclose Known
Data Limitations. GAO-20-75. Washington, D.C.: November 8, 2019.

Page 146 GAO-21-551
Disaster Contracting: FEMA Continues to Face Challenges with Its Use of Contracts to Support Response
and Recovery. GAO-19-518T. Washington, D.C.: May 9, 2019.

2017 Disaster Contracting: Actions Needed to Improve the Use of Post-Disaster Contracts to Support
Response and Recovery. GAO-19-281. Washington, D.C.: April 24, 2019.

2017 Disaster Contracting: Action Needed to Better Ensure More Eﬀective Use and Management of
Advance Contracts. GAO-19-93. Washington, D.C.: December 6, 2018.

Federal Contracting: Noncompetitive Contracts Based on Urgency Need Additional Oversight.
GAO-14-304. Washington, D.C.: March 26, 2014.

Department of Homeland Security: Further Action Needed to Improve Management of Special
Acquisition Authority. GAO-12-557. Washington, D.C.: May 8, 2012.

Defense Contracting: DOD Has Enhanced Insight into Undeﬁnitized Contract Action Use, but
Management at Local Commands Needs Improvement. GAO-10-299. Washington, D.C.: January 28,
2010.

Department of Homeland Security: Improvements Could Further Enhance Ability to Acquire Innovative
Technologies Using Other Transaction Authority. GAO-08-1088. Washington, D.C.: September 23,
2008.

Contact information: Marie A. Mak, (202) 512-4841, makm@gao.gov

Page 147 GAO-21-551
Unemployment Insurance Programs
The number of claims for unemployment insurance beneﬁts generally declined during spring
2021, though they remained at a high level into June 2021 as compared to pre-pandemic levels.
We continue to focus on the implications of the high number of claims, including timeliness of
beneﬁts and program integrity concerns.

Entity involved: Department of Labor

Background
The unemployment insurance (UI) system is a federal-state partnership that provides temporary
ﬁnancial assistance to eligible workers who become unemployed through no fault of their
own. States design and administer their own UI programs within federal parameters, and the
Department of Labor (DOL) oversees states’ compliance with federal requirements, such as by
ensuring states pay beneﬁts when they are due. Regular UI beneﬁts—those provided under the
state UI programs in place before the CARES Act was enacted—are funded primarily through
state taxes levied on employers and are intended to typically be lower than a claimant’s previous
employment earnings, according to DOL.205

Three federally funded temporary UI programs that expanded beneﬁt eligibility and enhanced
beneﬁts were created by the CARES Act and amended by the Consolidated Appropriations Act,
2021 and the American Rescue Plan Act of 2021.206

1. Pandemic Unemployment Assistance (PUA), generally available through September 6, 2021,
generally authorizes up to 79 weeks of UI beneﬁts for individuals not otherwise eligible for UI
beneﬁts, such as self-employed and certain gig economy workers, who are unable to work as a
result of speciﬁed COVID-19 reasons.207

205To be eligible for regular UI beneﬁts, applicants generally must be able and available to work and actively seeking
work. 42 U.S.C. § 503(a)(12). Administration of the regular UI program is ﬁnanced by a federal tax on employers,
according to DOL.
206The CARES Act also addressed other aspects of the UI system, such as authorizing certain ﬂexibilities for states to
hire additional staﬀ and to participate in Short-Time Compensation programs. In addition to the CARES Act, the Families
First Coronavirus Response Act provided up to $1 billion in emergency grant funding to states in ﬁscal year 2020 for UI
administrative purposes. In addition, on August 8, 2020, the President signed a memorandum directing the Department
of Homeland Security’s Federal Emergency Management Agency (FEMA) to provide up to $44 billion in lost wages
assistance. Pursuant to the presidential memorandum, upon receiving a FEMA grant, states and territories could provide
eligible claimants $300 or $400 per week—which included a $300 federal contribution—in addition to their UI beneﬁts.
The White House, Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related
to Coronavirus Disease 2019 (Aug. 8, 2020). FEMA approved 54 states and territories to provide lost wages assistance to
eligible claimants for at most 6 weeks of unemployment experienced from the week ending August 1, 2020, through the
week ending September 5, 2020.
207Pub. L. No. 117-2, § 9011(a), (b), 135 Stat. 4, 118; Pub. L. No. 116-260, div. N, tit. II, § 201(a), (b), 134 Stat. 1182,
1950-1951 (2020); Pub. L. No. 116-136, § 2102, 134 Stat. 281, 313 (2020). The Consolidated Appropriations Act,
2021 increased the authorized maximum number of weeks of PUA beneﬁts from 39 to 50 and generally extended
the expiration of the program from December 31, 2020, to March 14, 2021. The American Rescue Plan Act of 2021
further increased the maximum number of weeks of PUA beneﬁts to 79 and generally extended the expiration of
the program to September 6, 2021. The CARES Act also provided funding for up to an additional 7 weeks of PUA
beneﬁts in certain states with high rates of unemployment. Department of Labor, CARES Act of 2020 – Pandemic

Page 148 GAO-21-551
2. Federal Pandemic Unemployment Compensation (FPUC) generally authorized an additional
$600 weekly beneﬁt through July 2020 for individuals eligible for weekly beneﬁts under the
regular UI and CARES Act UI programs. FPUC also generally authorizes an additional $300
beneﬁt for weeks beginning after December 26, 2020, and ending on or before September 6,
2021, for these individuals.208

3. Pandemic Emergency Unemployment Compensation (PEUC), generally available through
September 6, 2021, generally authorizes an additional 53 weeks of UI beneﬁts for those who
exhaust their regular UI beneﬁts.209

The Consolidated Appropriations Act, 2021 created, and the American Rescue Plan Act of 2021
extended, the Mixed Earner Unemployment Compensation (MEUC) program, which authorizes
an additional $100 weekly beneﬁt for certain UI claimants who received at least $5,000 of self-
employment income in the most recent tax year prior to their application for UI beneﬁts.210 The
$100 weekly beneﬁt is in addition to other UI beneﬁts received by claimants; however, individuals
receiving PUA beneﬁts may not receive MEUC payments. According to DOL, the MEUC program,
which is voluntary for states, is intended to cover regular UI claimants whose beneﬁts do not
account for signiﬁcant self-employment income and who thus may receive a lower regular UI
beneﬁt than the beneﬁt they would have received had they been eligible for PUA.211 As of June 8,
2021, 51 of 53 states and territories had elected to participate in the MEUC program, though just
23 had begun paying MEUC beneﬁts, according to DOL.212

Unemployment Assistance (PUA) Program Operating, Financial and Reporting Instructions, Unemployment Insurance
Program Letter (UIPL) 16-20 (Washington, D.C.: Apr. 5, 2020).
208Pub. L. No. 117-2, § 9013, 135 Stat. 4, 119; Pub. L. No. 116-260, div. N, tit. II, § 203, 134 Stat. 1182, 1953; Pub.
L. No. 116-136, § 2104, 134 Stat. at 318. The Consolidated Appropriations Act, 2021 authorized the $300 beneﬁt
initially through March 14, 2021, and the American Rescue Plan Act of 2021 extended that beneﬁt through
September 6, 2021.
209Pub. L. No. 117-2, § 9016(a), (b), 135 Stat. 4, 119-120; Pub. L. No. 116-260, div. N, tit. II, § 206(a), (b), 134 Stat.
1182, 1954; Pub. L. No. 116-136, § 2107, 134 Stat. at 323. The Consolidated Appropriations Act, 2021 increased
the maximum amount of PEUC beneﬁts from 13 to 24 times the individual’s average weekly beneﬁt amount and
generally extended the expiration of the PEUC program from December 31, 2020, to March 14, 2021. The American
Rescue Plan Act of 2021 further increased the maximum amount to 53 times the individual’s average weekly beneﬁt
amount and generally extended the expiration of the program to September 6, 2021. Consistent with the CARES
Act and program extension in the Consolidated Appropriations Act, 2021, the increased maximum amount of
PEUC beneﬁts translates to 53 weeks of beneﬁts for individuals who are totally unemployed. However, individuals
may receive more weeks of beneﬁts if they are receiving a reduced weekly beneﬁt amount for weeks of partial
unemployment. See Department of Labor, Continued Assistance for Unemployed Workers Act of 2020—Pandemic
Emergency Unemployment Compensation (PEUC) Program: Extension, Transition Rule, Increase in Total Beneﬁts, and
Coordination Rules, UIPL 17-20, Change 2 (Washington, D.C.: Dec. 31, 2020).
210Pub. L. No. 117-2, § 9013(a), 135 Stat. 4, 119; Pub. L. No. 116-260, div. N, tit. II, § 261(a)(1), 134 Stat. 1182, 1961. The
American Rescue Plan Act of 2021 generally extended MEUC through September 6, 2021.
211Department of Labor, Continued Assistance for Unemployed Workers (Continued Assistance) Act of 2020 – Federal
Pandemic Unemployment Compensation (FPUC) Program Reauthorization and Modiﬁcation and Mixed Earners Unemployment
Compensation (MEUC) Program Operating, Reporting, and Financial Instructions, UIPL 15-20, Change 3 (Washington, D.C.:
Jan. 5, 2021).
212As of June 8, 2021, Idaho and South Dakota had opted not to participate in the MEUC program, according to DOL.

Page 149 GAO-21-551
As of June 8, 2021, 25 states had announced their intention to terminate participation in at
least one of the pandemic UI programs before their September 2021 expiration dates.213
For example, according to DOL, 21 states submitted notice to DOL that they intended to end
participation in the FPUC, PEUC, and PUA programs and 3 states submitted notice that they
intended to end participation in the FPUC program.214 In addition, 1 state publicly announced its
intention to end participation in the FPUC program, but as of June 8 had not submitted notice
to DOL.215 States’ planned program termination dates range from mid-June through mid-July.
In public announcements, states generally cited labor shortages among the reasons for their
intended withdrawals from the programs. After the ﬁrst states’ announcements, the Secretaries
of Commerce and Treasury stated that, nationwide, data do not support the argument that
unemployment beneﬁts are keeping people from returning to work. They identiﬁed caregiving
responsibilities and health concerns as key factors in people’s decisions. The Secretary of
Commerce also noted that governors had to respond to their regional labor markets, which vary.

In addition to extending and expanding beneﬁts, the Consolidated Appropriations Act, 2021
added new program integrity requirements for the CARES Act UI programs. For example, the act
generally requires PUA claimants to provide documentation substantiating their prior employment
or self-employment and to recertify with their state each week that they continue to meet the
eligibility requirement of not being able to work as a result of COVID-19.216 In addition, states are
required to have procedures for identity veriﬁcation or validation and for timely payment of PUA
beneﬁts, to the extent reasonable and practicable.217 The American Rescue Plan Act of 2021 also
appropriated $2 billion for DOL to detect and prevent fraud, promote equitable access, and ensure
the timely payment of UI beneﬁts.218

During the pandemic, regular UI claimants in certain states have also had access to the Extended
Beneﬁts program. The program, which existed prior to the pandemic and provides up to an
additional 13 or 20 weeks of beneﬁts, is activated in states during periods of high unemployment,
according to DOL.219 If unemployment is not high enough to activate the Extended Beneﬁts

213States participate in these UI programs under agreements with the Secretary of Labor. According to DOL, states
are permitted to terminate participation in the FPUC, MEUC, PEUC, and PUA programs before their expiration, upon
providing 30 days’ notice to DOL.
214The 21 states that submitted notice of their intent to withdraw from FPUC, PEUC, and PUA are Alabama, Arkansas,
Georgia, Idaho, Indiana, Iowa, Maryland, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota,
Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming. The 3 states that
submitted notice of their intent to withdraw from FPUC are Alaska, Florida, and Ohio. In addition, according to DOL, 22
of these 24 states submitted notice of their intent to withdraw from the MEUC program, and the other two states (Idaho
and South Dakota) had not been participating in the MEUC program.
215Arizona’s governor announced the state’s intention to withdraw from the FPUC program by early July, but according
to DOL, the state had not submitted notice as of June 8, 2021.
216Pub. L. No. 116-260, div. N, tit. II, §§ 241(a), 263(a), 134 Stat. 1182, 1959-1960, 1963.
217Pub. L. No. 116-260, div. N, tit. II, § 242(a), 134 Stat. 1182, 1960.
218Pub. L. No. 117-2, § 9032, 135 Stat. 4, 121.
219DOL reported that as of June 20, 2021, the Extended Beneﬁts program was activated in 11 states and territories
because of high levels of unemployment. The Extended Beneﬁts program was activated in all states except South Dakota
at some point during the pandemic, according to DOL.

Page 150 GAO-21-551
program in a state, or if regular UI claimants exhaust their PEUC and Extended Beneﬁts, they may
be eligible for PUA beneﬁts—provided they also meet PUA eligibility requirements.220

Overview of Key Issues
Although weekly numbers of initial and continued claims for UI beneﬁts have declined,
their levels suggest that more individuals are still losing jobs on a weekly basis than is
typical and that many others are experiencing long-term unemployment. DOL reported
that 393,078 initial claims for regular UI beneﬁts and 104,682 initial claims for PUA beneﬁts were
submitted nationwide during the week ending June 19, 2021.221 Weekly initial claims numbers are
near their lowest point since the surge at the beginning of the pandemic. However, they remain
at a level that indicates that more Americans are still experiencing job losses than was typical in
the year before the pandemic. For example, the 393,078 regular UI initial claims submitted during
the week ending June 19, 2021, is about 74 percent higher than the number submitted during the
corresponding week in 2019.

220If approved for PUA beneﬁts, the number of weeks of regular UI and Extended Beneﬁts a claimant has already
received is subtracted from the duration of PUA beneﬁts. Department of Labor, CARES Act of 2020 – Summary of Key
Unemployment Insurance (UI) Provisions and Guidance Regarding Temporary Emergency State Staﬃng Flexibility, UIPL 14-20
(Washington, D.C.: Apr. 2, 2020).
221An initial claim is the ﬁrst claim ﬁled by an individual to determine eligibility for UI beneﬁts after separating from
an employer. Initial claims counts presented are not seasonally adjusted, and counts for the week ending June 19,
2021, reﬂect advance initial claims, which are preliminary and subject to revision. In some cases, advance initial claims
represent estimates submitted by states that are later revised.

Page 151 GAO-21-551
Weekly Initial Claims Submitted Nationwide for Regular Unemployment Insurance (UI) and Pandemic
Unemployment Assistance (PUA) Beneﬁts, Mar. 1, 2020–June 19, 2021

Notes: The weekly counts of initial claims shown are not seasonally adjusted. Counts for weeks through June 5, 2021, are from
Department of Labor (DOL) data ﬁles that include any adjustments submitted by states as of June 24, 2021. Counts for the
weeks ending June 12 and 19, 2021, are from DOL’s weekly report released on June 24, 2021. Counts for the week ending June
19, 2021, reﬂect advance initial claims, which are preliminary and subject to revision. The number of states and territories
reporting PUA claims is out of a potential total of 53. All 53 states and territories reported regular UI claims in each week shown.

The number of initial claims is not intended to measure how many claimants were determined
eligible to receive beneﬁts or how many of those who ﬁled for beneﬁts earlier in the pandemic are
still unemployed. DOL oﬃcials have stated that continued claims (i.e., weeks of unemployment
claimed by individuals during a reporting period) may be a better barometer than initial claims for
measuring continuing demand for beneﬁts. For example, states reported that about 14.8 million
continued claims were submitted in all programs during the week ending June 5, 2021, including:

• about 3.3 million in the regular UI program,

• about 6.0 million in the PUA program,222

• about 5.3 million in the PEUC program,223

222Of the 53 states and territories, two did not report PUA continued claims data for the week ending June 5, 2021.
223Of the 53 states and territories, two did not report PEUC continued claims data for the week ending June 5, 2021.

Page 152 GAO-21-551
• about 0.2 million in the Extended Beneﬁts program,224 and

• about 0.1 million in other programs.225

The number of regular UI continued claims submitted each week has declined overall since the
peak in late April and early May 2020 (see ﬁgure). Some of this decline is due to claimants’ ﬁnding
employment, though some of the decline is also likely due to other factors, such as claimants’
exhausting regular UI beneﬁts and beginning to claim PEUC or other beneﬁts.226 For example,
the persistently high numbers of PEUC continued claims since fall 2020 suggest that many
individuals may be experiencing long-term unemployment and have likely exhausted their regular
UI beneﬁts.227

Notably, the combined total of continued claims submitted for regular UI, PEUC, and Extended
Beneﬁts remained at a relatively consistent level from the beginning of October 2020 through
the beginning of March 2021 (see ﬁgure). Since then, the combined total of continued claims
submitted in these three programs has generally declined, though the number remains high.

224According to DOL, during the week ending June 5, 2021, the Extended Beneﬁts program was available in 12
states; however, the total number of continued claims for Extended Beneﬁts was reported by 46 states and
territories because some of these claims may have been submitted for previous weeks of unemployment.
225Other programs include those for federal employees and newly discharged veterans, state additional beneﬁt
programs, and Short-Time Compensation or worksharing.
226After exhausting regular UI beneﬁts—generally available for up to 26 weeks in most states, according to
DOL—eligible individuals are generally able to apply for (1) PEUC; then (2) the Extended Beneﬁts program, if activated in
a state; and ﬁnally, in certain circumstances, (3) PUA beneﬁts.
227In its Employment Situation news releases, the Bureau of Labor Statistics deﬁnes the long-term unemployed
population as those who are jobless for 27 weeks or more.

Page 153 GAO-21-551
Weekly Continued Claims Submitted Nationwide for Regular Unemployment Insurance, Pandemic Emergency
Unemployment Compensation, and Extended Beneﬁts, Mar. 1, 2020–June 5, 2021

Notes: The weekly counts of continued claims shown in the ﬁgure are not seasonally adjusted. Counts for weeks through May
29, 2021, are from Department of Labor (DOL) data that include any adjustments submitted by states as of June 24, 2021. The
count for the week ending June 5, 2021, is from DOL’s weekly report released on June 24, 2021. The number of states and
territories reporting PEUC claims is out of a potential total of 53. All 53 states and territories reported regular UI claims in each
week shown. The number of states reporting Extended Beneﬁts claims each week varies, in part based on the number of states
with the program activated each week. The Extended Beneﬁts program, which existed before the pandemic, is activated in
states during periods of high unemployment, according to DOL.

The persistently high number of claims across all programs suggests continued high demand
for beneﬁts. However, as we have previously reported, the number of continued claims has
not approximated the number of individuals claiming beneﬁts during the pandemic because
of backlogs in processing historic numbers of claims in many states and other data issues. For
example, backlogs in claims processing led to individuals claiming multiple weeks of beneﬁts
in single reporting periods and thus being counted as multiple claims for that reporting period,
particularly in the PUA program. As a result, reliable conclusions about trends in the number of
individuals claiming beneﬁts cannot be drawn from data on continued claims.

In November 2020, we recommended that DOL address this issue by (1) revising its weekly
news releases to clarify that the numbers it reports for weeks of unemployment claimed do not
accurately estimate the number of unique individuals claiming beneﬁts and (2) pursuing options to
report the actual number of distinct individuals claiming beneﬁts from January 2020 onward.

Page 154 GAO-21-551
DOL fully agreed with our ﬁrst recommendation and, starting with the December 10, 2020, weekly
UI news release, clariﬁed that the numbers it reports for weeks of unemployment claimed do not
represent the number of unique individuals claiming beneﬁts. We consider this recommendation
closed.

DOL partially agreed with our second recommendation, taking issue with implementing a
retroactive change in state reporting. In a letter dated March 30, 2021, DOL stated that it had
begun developing a new state report that would capture data related to distinct individuals
claiming regular UI beneﬁts; DOL estimated that this data collection might begin in early 2022.
DOL also reiterated its concerns about the feasibility of states’ reporting this information
retroactively, including for the pandemic UI programs, without detracting from their primary
obligation for timely and accurate claims processing.

We maintain that these data are vital to understanding the size of the population supported by
the UI system during the pandemic. Even if the information is unavailable for some time, reporting
the number of distinct individuals who claimed beneﬁts for calendar year 2020 and later years will
help DOL and policymakers identify lessons learned about the administration and utilization of
regular and expanded UI beneﬁt programs during the pandemic. We encourage DOL to pursue
options to report this information in the most feasible and least burdensome way and at a time
when providing this information retroactively will not detract from states’ primary obligation for
timely and accurate claims processing.

Although timeliness of regular UI ﬁrst payments improved nationally from fall 2020 through
early 2021, timeliness has varied since then, including by state, and some claimants still
face substantial delays in receiving beneﬁts. The timeliness of ﬁrst payments of regular UI
beneﬁts declined substantially early in the pandemic, as states faced extensive claims-processing
backlogs resulting from historically high numbers of claims.228 When we last reported in March
2021, we observed that, nationwide, ﬁrst payment timeliness had improved from fall 2020 through
January 2021. Since then, regular UI ﬁrst payment timeliness, nationwide, declined in February
2021, improved again in March and April, and then declined again in May (see ﬁgure).229 In some
states, many regular UI claimants continue to face delays before receiving their ﬁrst payments.
For example, in six states, at least half of regular UI claimants who received their ﬁrst beneﬁts in
May 2021 had been waiting longer than 3 weeks. In addition, nationwide, about 10.3 percent of
regular UI claimants who received their ﬁrst beneﬁts in May 2021 had been waiting longer than 10

228DOL monitors timeliness of beneﬁt payments in the regular UI program. One of DOL’s core performance measures
is the percentage of all regular UI ﬁrst payments made within either 14 or 21 days of the ﬁrst week of beneﬁts for
which claimants are eligible; DOL considers 87 percent to be an acceptable level of performance. DOL uses 14 days
as the timeliness goal for states with a waiting week requirement and 21 days for states without a waiting week
requirement. According to DOL, some states require individuals who are otherwise eligible for beneﬁts to serve a
waiting period—generally 1 week—before receiving beneﬁts. In its guidance released at the start of the pandemic, DOL
recommended that states consider temporarily waiving their waiting week requirements. Thus, we focus on payments
made within 21 days. We analyzed ﬁrst payment timeliness data states had reported to DOL as of June 21, 2021. At that
point, of the 53 states and territories, 46 had reported data for May 2021, 51 had reported data for April 2021, 52 had
reported data for January through March 2021, and all 53 had reported data for all months in 2020.
229As we previously reported, the extension of the CARES Act UI programs at the end of 2020 could, according to DOL
oﬃcials, aﬀect payment timeliness if states had to reassign staﬀ or focus resources on implementing new program
requirements. We will continue to monitor regular UI ﬁrst payment timeliness, including asking DOL about the May 2021
decline in ﬁrst payment timeliness.

Page 155 GAO-21-551
weeks. By comparison, of the regular UI claimants who received their ﬁrst beneﬁts in March 2020,
nationwide, less than 3 percent had been waiting longer than 3 weeks and less than 1 percent
longer than 10 weeks.

Timeliness of First Payments of Regular Unemployment Insurance (UI) Beneﬁts, Jan. 2020–May 2021

Notes: We analyzed ﬁrst payment timeliness data that states had reported to the Department of Labor (DOL) as of June 21,
2021. At that point, of the 53 states and territories, 46 had reported data for May 2021, 51 had reported data for April 2021,
52 had reported data for January through March 2021, and all 53 had reported data for all months in 2020. One of DOL’s core
performance measures is the percentage of all regular UI ﬁrst payments made within either 14 or 21 days of the ﬁrst week of
beneﬁts for which claimants are eligible, depending on whether the state requires that individuals who are otherwise eligible
for beneﬁts serve a waiting period—generally 1 week—before receiving beneﬁts. We focus on payments made within 21 days
because in guidance released at the start of the pandemic, DOL recommended that states consider temporarily waiving their
waiting week requirements. According to DOL, states must pay at least 87 percent of claims within 14 or 21 days to reach an
acceptable level of performance.

As we have previously reported, although DOL has not tracked the timeliness of payments in
the temporary PUA program, DOL oﬃcials told us that states have struggled with making PUA
payments in a timely manner. For example, they said regional oﬃcials had observed a number of
implementation challenges at the state level that likely contributed to claims processing backlogs
and payment delays. In addition, in early 2021, DOL oﬃcials said they expected PUA program
changes enacted in the Consolidated Appropriations Act, 2021 to slow the payment of PUA
beneﬁts as states implemented the new program integrity provisions.

More than half of the 47 states and territories submitting data reported average PUA
beneﬁts paid in April 2021 that were close to the minimum amount. Speciﬁcally, as of June
21, 2021, 31 states and territories reported average weekly PUA beneﬁts paid in April 2021 that
were up to 25 percent above the state’s minimum PUA beneﬁt amount; 13 of these states and

Page 156 GAO-21-551
territories reported average beneﬁts that were up to 10 percent above the minimum.230 This
suggests that many individuals in these states and territories were receiving the minimum PUA
beneﬁt in April 2021—because the average was close to the minimum. As we have previously
reported, DOL oﬃcials told us that to facilitate implementation of the PUA program, most states
decided to initially pay PUA claimants the minimum allowable beneﬁt and then recalculate
beneﬁts at a later point based on claimants’ documentation of their prior earnings.231 DOL oﬃcials
said that through the regional oﬃces’ monitoring eﬀorts, DOL has found that some states have
faced challenges and expressed confusion related to recalculating PUA beneﬁt amounts and that
DOL has required some states to implement corrective actions.

Persistently high numbers of UI claims during the pandemic have led some states to take
out substantial federal loans to pay UI beneﬁts.232 As of June 18, 2021, 19 states and territories
held federal loans totaling about $53.5 billion—approximately $1.4 billion more than we reported
in March 2021. This total loan balance is also greater than the approximately $40.2 billion held by
30 states and territories at the end of 2010, after the 2007-2009 recession and early recovery.233

As we reported in March 2021, some states have used their Coronavirus Relief Fund payments,
under guidance from the Department of the Treasury, to pay for UI beneﬁts to reduce or prevent
loan balances and avoid possible future increases in employer tax rates.234 Generally, if a state

230We calculated PUA average beneﬁt amounts by dividing the state-reported monthly amounts for total compensation
paid by total weeks compensated, which we compared with each state’s PUA minimum weekly beneﬁt amount set
in UIPL 3-20. Beneﬁt amounts are based on data reported by states as of June 21, 2021. At that point, 47 states and
territories had reported these PUA data for April 2021 and just 18 had reported for May 2021. Thus, we analyzed PUA
beneﬁt payment data for April 2021. The following six states and territories did not report PUA data on weeks or amount
compensated for April 2021: Alabama, Florida, Illinois, Oklahoma, Puerto Rico, and Vermont. According to DOL, states
must use the amounts set in UIPL 3-20 as the minimum weekly beneﬁt amount for all PUA claims. Department of
Labor, Minimum Disaster Unemployment Assistance (DUA) Weekly Beneﬁt Amount: January 1 – March 31, 2020, UIPL 3-20
(Washington, D.C.: Dec. 12, 2019).
231According to DOL oﬃcials, states have previously used this approach to pay beneﬁts more expediently under the
Disaster Unemployment Assistance (DUA) program. Under the CARES Act, the regulations for DUA generally apply to
PUA. Pub. L. No. 116-136, § 2102(h), 134 Stat. 281, 317. DOL guidance notes that when individuals submit suﬃcient
documentation of wages, states must immediately recalculate their weekly beneﬁts and pay the full PUA beneﬁt
amount with the greatest promptness that is administratively feasible. Department of Labor, Coronavirus Aid, Relief,
and Economic Security (CARES) Act of 2020 – Pandemic Unemployment Assistance (PUA) Program Operating, Financial, and
Reporting Instructions, UIPL 16-20 (Washington, D.C.: Apr. 5, 2020). According to DOL, guidance also permits states to
initially rely on claimant self-attestations to calculate PUA beneﬁt amounts. Department of Labor, Coronavirus Aid, Relief,
and Economic Security (CARES) Act of 2020 – Pandemic Unemployment Assistance (PUA) Program Reporting Instructions and
Questions and Answers, UIPL 16-20, Change 1 (Washington, D.C.: Apr. 27, 2020); and Coronavirus Aid, Relief, and Economic
Security (CARES) Act of 2020 – Pandemic Unemployment Assistance (PUA) Additional Questions and Answers, UIPL 16-20,
Change 2 (Washington, D.C.: Jul. 21, 2020).
232While the CARES Act UI programs are federally funded, regular UI is primarily funded through state and federal
taxes on employers. When a state exhausts the funds available for regular UI beneﬁts, it may borrow from the federal
government. According to DOL data, even before the pandemic, many states were not collecting enough UI tax revenue
to satisfy the solvency standard speciﬁed in DOL regulations providing for interest-free loans to states. See 20 C.F.R. §
606.32 (2019).
233According to the National Bureau of Economic Research, the 2007-2009 recession began in December 2007 and
ended in June 2009. The total loan balance held by states at the end of 2010 represented the highest year-end balance
from the 2007-2009 recession until 2020. Total loan balances ﬂuctuate throughout any given year.
234The CARES Act established the $150 billion Coronavirus Relief Fund to provide payments to state, local, territorial,
and tribal governments to cover the costs of necessary expenditures incurred due to the COVID-19 pandemic. Pub.

Page 157 GAO-21-551
holds a federal loan balance to pay UI beneﬁts for 2 or more years, the rate of the federal tax
on employers that is used to fund the UI program will increase.235 States may continue to use
these Coronavirus Relief Fund payments for expenses through the end of 2021.236 In addition,
the American Rescue Plan Act of 2021 provided funds to states, local governments, territories,
and tribal governments. States and territories may use these funds, under an interim ﬁnal rule
from the Department of the Treasury, to restore their UI trust funds or to pay back federal loan
balances.237

DOL and other federal and state agencies continue to take actions to address potential
fraud in the UI programs.238 As we have previously reported, DOL made two allotments of $100
million available to states, in September 2020 and January 2021, respectively, to address potential
fraud and identity theft in the PUA and PEUC programs. According to DOL, states have reported
using the funds from the September allotment to, among other things, hire additional staﬀ to
investigate suspicious claims, connect with the National Association of State Workforce Agencies’
(NASWA) Integrity Data Hub to utilize an identity veriﬁcation service, and implement integrity tools
and software to conduct further identity protections and fraud screening.239

The American Rescue Plan Act of 2021, enacted March 11, 2021, subsequently provided DOL with
$2 billion to detect and prevent fraud, promote equitable access, and ensure the timely payment
of UI beneﬁts. As of May 20, 2021, DOL oﬃcials said that DOL was working to develop detailed
plans for this $2 billion in coordination with the Oﬃce of Management and Budget, and noted that
developing spending plans across 53 states and territories involves complex considerations.

L. No. 116-136, § 5001, 134 Stat. 281, 501-504. In its guidance on the Coronavirus Relief Fund, the Department of the
Treasury reported that states may use this funding to make payments to their state UI trust funds to prevent expenses
related to the COVID-19 public health emergency from causing these UI trust funds to become insolvent. On January
15, 2021, the Department of the Treasury republished in a ﬁnal form the guidance it had previously made available
on its website regarding the Coronavirus Relief Fund. Prior to publication in the Federal Register, the last version of its
guidance and frequently asked questions documents were dated September 2, 2020, and October 19, 2020, respectively.
86 Fed. Reg. 4,182 (Jan. 15, 2021).
235The regular UI program is primarily funded through state and federal taxes on employers. Under the Federal
Unemployment Tax Act (FUTA), employers are generally required to pay a federal unemployment tax at a rate of 6.0
percent on the ﬁrst $7,000 of wages paid to an employee each year, which funds administrative costs associated with
the regular UI program and the federal share of beneﬁts paid under the Extended Beneﬁts program, among other
things. FUTA provides a credit of up to 5.4 percent against federal tax liability to employers who pay state taxes timely
under an approved state UI program. If a state has outstanding loan balances on January 1 for two consecutive years
and does not repay the full amount of its loans by November 10 of the second year, the FUTA credit rate for employers
in that state will be reduced. Thus, the federal taxes paid by employers will increase, all else being equal.
236The Department of the Treasury reported that as of December 31, 2020, it had obligated all of the $150 billion from
the Coronavirus Relief Fund to state, local, territorial, and tribal governments. The Consolidated Appropriations Act, 2021
extended the period for states and other entities to use these funds through December 31, 2021. Pub. L. No. 116-260,
div. N, tit. X, § 1001, 134 Stat. 1182, 2145.
237Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786, 26,822 (May 17, 2021).
238Fraud involves obtaining something of value through willful misrepresentation. Whether an act is in fact fraud is a
determination to be made through the judicial or other adjudicative systems.
239DOL is monitoring states’ use of funds and progress in carrying out these eﬀorts through quarterly reports from
states. The ﬁrst round of quarterly reports submitted by states covered the use of the funds made available in
September 2020.

Page 158 GAO-21-551
In addition to providing funding, DOL continues to assist states with their fraud prevention and
detection eﬀorts. For example, on April 13, 2021, DOL issued guidance highlighting the importance
of states’ identity veriﬁcation eﬀorts to stop potentially fraudulent UI claims.240 The guidance
outlines procedures that states must take when processing claims and determining UI eligibility in
cases where an individual’s identity is in question. DOL oﬃcials also said that DOL is exploring new
datasets that states could use to detect potential UI fraud.

In addition, according to DOL oﬃcials, DOL has ongoing eﬀorts to connect state workforce
agencies with banking institutions and law enforcement to recover potentially fraudulently
obtained funds that banks have intercepted. On May 4, 2021, DOL issued guidance encouraging
states to work with ﬁnancial institutions to detect suspicious activity, ensure that accounts are not
unduly suspended, and recover overpayments.241 This guidance also establishes instructions for
banks and ﬁnancial institutions on how to return recovered overpayments, such as in instances
when the recovered funds span multiple states.

In March 2021, DOL also launched a website to help the public better understand UI identity
theft.242 The website provides resources for those who may have been victims of identity theft,
including a list of contact information for each state and territory to report UI identity theft.

DOL’s Oﬃce of Inspector General (OIG), the Department of Justice (DOJ), and the U.S. Secret
Service also continue to investigate potential UI fraud and examine program integrity issues. As of
June 10, 2021, DOL’s OIG had opened more than 17,000 complaints and investigations involving
UI fraud since the pandemic began, according to the agency’s website. According to DOL’s OIG,
its eﬀorts have directly resulted in the identiﬁcation and recovery of more than $160 million in
UI fraud. In addition, DOL’s OIG reported that it is currently working on a range of audit work
related to UI, covering topics such as DOL’s and states’ eﬀorts to prevent and detect overpayments
and states’ capabilities to process UI claims accurately and in a timely manner with outdated
information technology systems.

In late May 2021, DOL’s OIG issued a report that found that DOL and states struggled to
implement the three CARES Act UI programs (FPUC, PEUC, and PUA) and, among other things,
that DOL’s guidance and oversight did not ensure states performed required and recommended
improper payment detection and recovery activities.243 For example, DOL’s OIG found that from
March 27, 2020, to July 31, 2020, 20 states did not perform all required cross-matches, which could
have prevented improper payments, including fraud.

240Department of Labor, Identity Veriﬁcation for Unemployment Insurance (UI) Claims, UIPL 16-21 (Washington, D.C.: Apr.
13, 2021).
241Department of Labor, Beneﬁts Held by Banks and Financial Institutions as a Result of Suspicious and/or Potentially
Fraudulent Activity and the Proportional Distribution Methodology Required to Recovering/Returning Federally Funded
Unemployment Compensation (UC) Program Funds, UIPL 19-21 (Washington, D.C.: May 4, 2021).
242Department of Labor, “Report Unemployment Identity Theft,” accessed June 23, 2021, https://www.dol.gov/agencies/
eta/UIIDtheft.
243Department of Labor Oﬃce of Inspector General, COVID-19: States Struggled to Implement CARES Act Unemployment
Insurance Programs, Report Number 19-21-004-03-315 (Washington, D.C.: May 28, 2021).

Page 159 GAO-21-551
According to DOJ, from March 2020 through April 2021, DOJ ﬁled federal charges against 207
individuals for defrauding the UI programs, 41 of whom have pleaded guilty.244 See the enclosure
on Federal Fraud-Related Cases in appendix I for more information about DOJ charges.

As we previously reported, the U.S. Secret Service also conducts UI fraud investigations in
coordination with various federal, state, and local partners. According to a May 2021 press release,
over the last year the Secret Service has initiated more than 690 UI fraud investigations and
investigative inquiries and seized more than $640 million in fraudulently obtained funds.245

Several state auditors have also issued reports on UI program integrity issues. According to
the California State Auditor, California’s Employment Development Department did not take
substantive action to bolster its UI fraud detection eﬀorts until months into the pandemic, which
resulted in payments of about $10.4 billion that the department has since determined may be
potentially fraudulent because it cannot verify claimants’ identities. Also, the Kansas Legislative
Division of Post Audit found that the Kansas Department of Labor’s fraud detection process was
not designed to detect large-scale fraud. According to this audit, in December 2020, the Kansas
Department of Labor reported that it had partnered with a private company to enhance its fraud
detection capabilities.

States have continued to identify overpayments in the regular UI and CARES Act
UI programs, and some states have begun reporting data to DOL on recovered PUA
overpayments. Overpayments are not necessarily a result of fraud, though some may be. As we
reported in January 2021, DOL data show that the dollar amount of state-reported overpayments
in the regular UI program increased substantially during the pandemic, coinciding with historically
high numbers of UI claims. States have also reported large amounts of overpayments in the CARES
Act UI programs.

As of June 21, 2021, DOL reported that states and territories had identiﬁed approximately $12.9
billion in overpayments made in UI programs during the ﬁrst four quarters of the pandemic
combined (April 2020 through March 2021), including:

• $4.3 billion in regular UI and Extended Beneﬁts overpayments,246

244Federal charges refer to criminal complaints and indictments. A charge is merely an allegation, and all defendants are
presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
245These investigations fall within the Secret Service’s jurisdiction to investigate cyber-enabled ﬁnancial crimes,
according to the agency.
246States and territories report regular UI, Extended Beneﬁts, PEUC, and FPUC overpayments data to DOL
on a quarterly basis. We accessed the data on June 21, 2021. At that point, not all states and territories had
reported overpayment amounts for all programs in all quarters. States and territories may revise the amount of
overpayments they have identiﬁed for 3 years after the reporting quarter, according to DOL. For this report, we
excluded overpayments related to emergency unemployment compensation programs prior to the pandemic.
Thus, the totals we calculate diﬀer slightly from those available on DOL’s UI overpayment recovery website,
which, according to DOL oﬃcials, include non-pandemic emergency programs, such as those enacted during the
2007-2009 recession.

Page 160 GAO-21-551
• $4.6 billion in PUA overpayments,247

• $0.2 billion in PEUC overpayments, and

• $3.8 billion in FPUC overpayments.248

These amounts are likely to increase as states shift their focus from program implementation and
clearing claims processing backlogs to identifying overpayments, according to DOL oﬃcials.

States and territories also report the amounts of fraud overpayments—a subset of the total
overpayment amounts.249 During the ﬁrst four quarters of the pandemic combined (April 2020
through March 2021), states and territories reported about $1.3 billion in overpayments identiﬁed
as fraud across the UI programs.250 However, according to DOL, states do not report these
overpayments until investigations are complete and fraud has been established, which may take
a long time. As a result, it is likely that states and territories have not yet reported substantial
amounts of fraud overpayments, which could contribute to increasing amounts reported in
the coming months. For example, 7 of the 45 states and territories that have reported PUA
overpayments have reported no data on fraud overpayments.

States and territories may waive and not recover overpayments in certain circumstances.251 States
and territories reported waiving about $0.1 billion of regular UI, Extended Beneﬁts, PEUC, and

247States and territories report PUA overpayments data to DOL on a monthly basis, and the total amount shown
includes overpayments related to identity theft. This is the ﬁrst time we have reported total amounts that include
data on identity theft overpayments, which DOL began collecting from states and territories in early 2021. We
accessed the PUA overpayments data on June 21, 2021; these data are subject to change as more states report
data and states revise previously reported data. For consistency with the regular UI overpayment data, which
states and territories report on a quarterly basis, the PUA overpayment amount shown is for April 2020 through
March 2021. As of June 21, 2021, 40 states and territories had reported an additional approximately $556 million of
PUA overpayments identiﬁed in April and May 2021. The number of states and territories that have reported PUA
overpayments data varies by month; for example, 17 reported overpayment amounts in April 2020 and 40 reported
overpayment amounts in March 2021.
248FPUC beneﬁts are paid in addition to other UI beneﬁts. About 93 percent of FPUC overpayment amounts were
paid on regular UI or PUA claims.
249In its data documentation, DOL deﬁnes fraud in this context as “an overpayment for which material facts to
the determination or payment of a claim are found to be knowingly misrepresented or concealed (i.e., willful
misrepresentation) by the claimant in order to obtain beneﬁts to which the individual is not legally entitled.” A nonfraud
overpayment is not due to willful misrepresentation and may include overpayments resulting from state agency errors
or claimant errors, among other circumstances.
250We accessed the fraud overpayments data on June 21, 2021; these data are subject to change as more states and
territories report data and states and territories revise previously reported data. Of the $1.3 billion in overpayments
identiﬁed as fraud, states and territories reported about $208 million from regular UI and Extended Beneﬁts programs,
$512 million from PUA, $537 million from FPUC, and $14 million from PEUC.
251According to DOL, states generally may waive a nonfraud overpayment, in accordance with state law, if the
overpayment was not the fault of the claimant and if requiring repayment would be against equity and good conscience
or would otherwise defeat the purpose of the UI law. States were authorized to waive PUA overpayments under the
Consolidated Appropriations Act, 2021. According to this act, if an individual receives PUA beneﬁts they were not entitled
to, the state must generally require such individuals to repay the amount, but the state can waive that requirement if the
individual was without fault and repayment would be contrary to equity and good conscience. Pub. L. No. 116-260, div.

Page 161 GAO-21-551
FPUC overpayments during the ﬁrst four quarters of the pandemic combined (April 2020 through
March 2021).252 In response to a recommendation in our March 2021 report, DOL stated that
it was preparing to update its state reporting requirements for the PUA program to include the
collection of data on PUA overpayments waived. On June 17, 2021, DOL oﬃcials stated that the
agency expected to release guidance by mid-July 2021.

States and territories report the amount of overpayments they have recovered in the period the
recovery occurs. For example, states and territories have reported recovering about $0.3 billion
in the PEUC and FPUC programs combined from April 2020 through March 2021 (i.e., during the
ﬁrst 4 quarters those programs existed).253 In response to a recommendation in our January
2021 report, DOL updated its state reporting requirements for the PUA program to include the
collection of data on PUA overpayments recovered. As of June 21, 2021, 27 states had reported
some data on PUA overpayments recovered, reporting a combined total of about $0.2 billion
recovered.254

Because of the limited number of states and territories reporting data to DOL as of June 21, 2021,
our recommendations related to reporting PUA overpayments waived and recovered remain
open. Sustained reporting by most states is needed to help inform DOL, policymakers, and the
public about the amount of PUA overpayments that states have waived and recovered and about
the amount that remains outstanding.

In addition to reporting actual overpayments established, states also conduct independent
investigations of samples of regular UI claims to estimate accuracy rates for paid and denied
claims. However, estimates of improper payments from this process are not yet available for the
pandemic period.255 We reported in November 2020 that DOL had not included the CARES Act
UI programs in its improper payment estimation methods and that it planned to conduct a risk
assessment after the ﬁrst year of each program’s operations. On April 8, 2021, oﬃcials told us
that DOL would be conducting this risk assessment during the second quarter of 2021. Oﬃcials
also said that DOL had formed a working group to develop new sampling and investigative
methodologies for the PUA program and that DOL planned to extrapolate regular UI data to the
FPUC and PEUC programs.

N, tit. II, § 201(d), 134 Stat. 1182, 1952. According to DOL, states are able to retroactively waive PUA overpayments from
the beginning of the program onward.
252We accessed the waived overpayments data on June 21, 2021; these data are subject to change as more states and
territories report data and states and territories revise previously reported data.
253We accessed the recovered overpayments data on June 21, 2021; these data are subject to change as more states
and territories report data and states and territories revise previously reported data.
254As of June 21, 2021, states and territories had also reported recovering about $1.3 billion in the regular UI and
Extended Beneﬁts programs during the ﬁrst four quarters of the pandemic combined (April 2020 through March 2021).
However, the amounts recovered for any quarter may be from overpayments established in many previous periods.
Thus, the total amount does not measure the extent to which overpayments made during the pandemic have been
recovered.
255The performance year for reporting is generally a 12-month period from July through June. For example, improper
payment estimates for 2020 would generally cover the period July 1, 2019, through June 30, 2020. However, the sampling
and investigation program was suspended for the quarter April 1, 2020, through June 30, 2020, due to operational
ﬂexibilities provided to states in response to the pandemic, according to DOL.

Page 162 GAO-21-551
Methodology
To conduct this work, we analyzed regularly reported DOL data for calendar years 2019, 2020,
and 2021, having obtained the most recent data on June 24, 2021. We reviewed relevant federal
laws, DOL guidance, and DOL OIG reports, and we interviewed DOL oﬃcials about program data
and agency actions. We also reviewed data ﬁle documentation and written responses from DOL
oﬃcials. In addition, we interviewed DOL oﬃcials about the UI database, PUA claims data ﬁles,
and data on outstanding federal loans to pay UI beneﬁts, speciﬁcally related to state-reported
data on claims counts, overpayments, payment timeliness, and loan balance amounts by state. We
examined the data for outliers, missing values, and errors. We determined the DOL data we used
were suﬃciently reliable for the purposes of this report.

Agency Comments
We provided DOL and the Oﬃce of Management and Budget (OMB) with a draft of this enclosure.
DOL provided technical comments on this enclosure, which we incorporated as appropriate. OMB
did not have any comments on this enclosure.

GAO’s Ongoing Work
We continue to examine the implementation and administration of CARES Act UI programs
and the implications of high claims volumes during the pandemic on the timeliness of beneﬁt
payments and on overall program integrity. We plan to conduct additional work to examine
selected claimants’ experiences during the pandemic and with accessing CARES Act UI programs.
We are also continuing to analyze selected states’ data on PUA beneﬁt receipt by race and
ethnicity as part of our ongoing work on the PUA program.

GAO’s Prior Recommendations
The table below presents our recommendations on UI programs from prior bimonthly CARES Act
reports.

Page 163 GAO-21-551
Prior GAO Recommendations Related to Unemployment Insurance (UI) Programs
Recommendation Status

The Secretary of Labor should ensure the Oﬃce of Open. The Department of Labor (DOL) agreed with
Unemployment Insurance collects data from states on our recommendation and noted that it intended
the amount of overpayments waived in the Pandemic to issue PUA program guidance that would include
Unemployment Assistance (PUA) program, similar to the regular revised reporting requirements and instructions
UI program (March 2021 report). for states to provide information on the amount of
PUA overpayments waived. On June 17, 2021, DOL
oﬃcials stated that the agency expected to publish
guidance by mid-July 2021. As of June 21, 2021, this
recommendation remained open, as this guidance had
not yet been issued and no states had begun reporting
this data. We will continue to monitor state reporting
of PUA overpayments waived.

The Secretary of Labor should ensure the Oﬃce of Open. DOL agreed with our recommendation and
Unemployment Insurance collects data from states on the on January 8, 2021, issued PUA program guidance
amount of overpayments recovered in the PUA program, similar and updated instructions for states to report PUA
to the regular UI program (January 2021 report). overpayments recovered. As of June 21, 2021, this
recommendation remained open, as just 27 states
had begun reporting some data on the amount of
PUA overpayments recovered. Sustained reporting
by most states is needed to help inform DOL,
policymakers, and the public about the amount of PUA
overpayments states have recovered. We will continue
to monitor state reporting of PUA overpayment
recovery data.

The Secretary of Labor should ensure the Oﬃce of Open. DOL partially agreed with our recommendation.
Unemployment Insurance pursues options to report the actual Speciﬁcally, DOL agreed to pursue options to report
number of distinct individuals claiming beneﬁts, such as by the actual number of distinct individuals claiming
collecting these already available data from states, starting from UI beneﬁts. However, DOL did not agree with the
January 2020 onward (November 2020 report). retroactive eﬀective date of the reporting. In a letter
dated March 30, 2021, DOL stated that it had begun
developing a new state report that would capture
data related to distinct individuals claiming regular
UI beneﬁts; DOL estimated that this data collection
might begin in early 2022. DOL also reiterated its
concerns about the feasibility of states reporting this
information retroactively, including for the pandemic
UI programs, without detracting from their primary
obligation for timely and accurate claims processing.
As of June 21, 2021, this recommendation remained
open. We maintain that DOL should pursue options
to report the actual number of distinct individuals
claiming UI beneﬁts, retroactive to January 2020.
Even if the information is unavailable for some time,
these data are vital to understanding how many
individuals are receiving UI beneﬁts as well as the
size of the population supported by the UI system
during the pandemic. Given the substantial investment
in UI programs during the pandemic, an accurate
accounting of the size of the population supported
by this funding may be critical to understanding the
eﬃciency and eﬀectiveness of the nation’s response

Page 164 GAO-21-551
Recommendation Status
to unemployment during the pandemic. An accurate
accounting may also be critical to helping DOL and
policy makers identify lessons learned about the
administration and utilization of regular and expanded
UI beneﬁt programs.
We encourage DOL to pursue options to report the
actual number of individuals claiming beneﬁts in the
most feasible and least burdensome way and at a time
when providing this information retroactively will not
detract from states’ primary obligation for timely and
accurate claims processing. Collecting data from states
is one way to address the recommendation, but DOL
could develop other ways of gathering and reporting
this information.

The Secretary of Labor should ensure the Oﬃce of Closed. DOL’s weekly news release of December 10,
Unemployment Insurance revises its weekly news releases to 2020, clariﬁed that the numbers reported for weeks
clarify that in the current unemployment environment, the of UI beneﬁts claimed do not represent the number of
numbers it reports for weeks of unemployment claimed do not unique individuals claiming beneﬁts.
accurately estimate the number of unique individuals claiming
beneﬁts (November 2020 report).

The Secretary of Labor should, in consultation with the Closed. DOL neither agreed nor disagreed with our
Small Business Administration (SBA) and the Department recommendation. Following our recommendation,
of the Treasury, immediately provide information to state DOL issued guidance on August 12, 2020, that clariﬁed
unemployment agencies that speciﬁcally addresses SBA's that individuals working full-time and being paid
Paycheck Protection Program (PPP) loans, and the risk of through PPP are not eligible for UI, and that individuals
improper payments associated with these loans (June 2020 working part-time and being paid through PPP would
report). be subject to certain state policies, including state
policies on partial unemployment, to determine
their eligibility for UI beneﬁts. Further, the guidance
clariﬁed that individuals being paid through PPP but
not performing any services would similarly be subject
to certain provisions of state law, and noted that
an individual receiving full compensation would be
ineligible for UI.

Source: GAO. I GAO-21-551

Related GAO Product
Management Report: Preliminary Information on Potential Racial and Ethnic Disparities in the Receipt
of Unemployment Insurance Beneﬁts during the COVID-19 Pandemic. GAO-21-599R. Washington, D.C.:
June 17, 2021.

Contact information: Thomas M. Costa, (202) 512-7215, costat@gao.gov

Page 165 GAO-21-551
Economic Impact Payments
The Department of the Treasury and the Internal Revenue Service quickly issued the third round
of direct payments to most eligible individuals, and have taken steps to begin issuing advance
payments of the Child Tax Credit starting in July 2021, but are still not using some available data to
improve outreach eﬀorts.

Entities involved: Internal Revenue Service and Bureau of the Fiscal Service, within the
Department of the Treasury

Recommendation for Executive Action
The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, should
release interim ﬁndings on the eﬀectiveness of the notices it sent in September 2020 to nonﬁlers
who are potentially eligible for economic impact payments; incorporate that analysis into Internal
Revenue Service outreach eﬀorts as appropriate; and then, if necessary, release an update based
on new analysis after the 2021 ﬁling season.

Treasury neither agreed nor disagreed with this recommendation and stated that it shares the
underlying goal of reaching as many nonﬁlers as possible to encourage them to claim economic
impact payments online. However, Treasury does not plan to release any interim ﬁndings until it
completes its analysis.

Background
The American Rescue Plan Act of 2021 (ARPA) authorized the Internal Revenue Service (IRS) and
the Department of the Treasury (Treasury) to issue direct payments, known as economic impact
payments (EIP), to eligible individuals to help address ﬁnancial stress due to the pandemic.256
Starting on March 17, 2021, Treasury and IRS quickly issued a third round of direct payments (EIP
3) to most eligible individuals.257 As of May 28, 2021, IRS reported that it had disbursed over 168.2
million payments totaling over $394.3 billion (see ﬁgure). From March 2021 through May 2021, the
Bureau of the Fiscal Service disbursed the third round of payments in the form of direct deposits,
paper checks, and debit cards.

256On March 10, 2021, Congress passed the American Rescue Plan Act of 2021, which the President signed on March 11,
2021. The statute authorized a third round of direct payments to individuals to help address ﬁnancial stress due to the
pandemic. Pub. L. No. 117-2, § 9601, 135 Stat. 4, 138–144.
257The CARES Act (in March 2020) and the Consolidated Appropriations Act, 2021 (in December 2020) authorized
Treasury and IRS to issue EIP 1 and EIP 2 as direct payments to help individuals address ﬁnancial stress due to the
pandemic. Pub. L. No. 116-136, § 2201, 134 Stat. 281, 335–340 (2020); Pub. L. No. 116-260, § 272, 134 Stat. 1182,
1965–1976 (2020).

Page 166 GAO-21-551
Total Number and Amount of Economic Impact Payments (EIP) Disbursed, Rounds 1, 2, and 3, as of May 28, 2021

Eligible individuals who did not receive EIP 1 or EIP 2—or their maximum amount of the credit for
which they were eligible—can claim a recovery rebate credit (RRC) on their tax year 2020 income
tax return equal to the amount of the credit for which they are eligible, as reduced by their EIP 1
and EIP 2 amounts. According to IRS data, as of May 26, 2021, 21 million returns, nearly 21 percent
of the total number of ﬁled returns, included a claim for the RRC. Of these returns, almost 2.4
million (11 percent) only claimed an RRC; 97 percent of these returns belonged to someone with
an adjusted gross income of $15,000 or less. These individuals likely would not have ﬁled a tax
return other than to claim an RRC because their income is below the minimum ﬁling threshold
or all their income is derived from federal beneﬁts. This very low-income population is one of the
groups IRS has been trying to reach through their communications eﬀorts.

ARPA also directed IRS to make supplemental payments to individuals who received an EIP 3 prior
to the processing of their 2020 tax return, but who are eligible for an additional payment based on
their recently processed 2020 tax returns. For example, in situations where individuals’ adjusted
gross income was lower or if they claimed more qualifying dependents on their 2020 tax return
than their 2019 tax return, they may be eligible for an additional supplemental payment. As of
June 3, 2021, IRS had issued over 8.1 million supplemental payments totaling over $16 billion.

ARPA also made several temporary changes that expand the eligibility of the child tax credit (CTC)
to more families and increase the amount. The law makes the following changes:

• increases the maximum age of a qualifying child dependent from 16 to 17 years old,

• eliminates the earned income requirement, and

• increases the maximum amount of the CTC from $2,000 to $3,600 per qualifying child for a
young child (0 to 5 years old) and $3,000 per child for an older child (6 to 17 years old).

Page 167 GAO-21-551
As part of implementing ARPA, beginning in July 2021, IRS and Treasury are responsible for issuing
half of the expected 2021 CTC in periodic advance payments.258 Eligible individuals can claim the
remaining amount of the total 2021 credit for which they are eligible when ﬁling their 2021 income
tax return in 2022. The amount of the CTC payments advanced in 2021 is estimated based on
the taxpayer’s 2020 income tax data or, if unavailable, the taxpayer’s 2019 income tax data and
may be adjusted based on any other information provided by the taxpayer during 2021. IRS is
developing an online portal for qualiﬁed individuals to update personal information or opt out of
the advance payments.

In May 2021, IRS released guidance that provides instructions for individuals who are not
otherwise required to ﬁle tax returns to receive the advance CTC payments and the third-round
EIPs, and also allowed those individuals to claim the 2020 RRC.259 The guidance outlines two
procedures for individuals to follow: The ﬁrst procedure permits individuals to ﬁle simpliﬁed
returns, while the second procedure enables these individuals to ﬁle complete returns
electronically even if they have zero adjusted gross income.

Overview of Key Issues
IRS’s EIP communication and outreach eﬀorts. To publicize information about how to ﬁle a tax
return with IRS to receive an EIP, IRS continued to partner with other organizations that work with
communities that may not traditionally interact with IRS, such as lower-income families, senior
citizens, veterans, tribal communities, and families with mixed immigration status.260 However,
according to oﬃcials from IRS partner organizations with whom we spoke, it continues to be a
challenge to ensure that eligible nonﬁlers, particularly among hard-to-reach groups, such as those
experiencing homelessness, receive their payments.

IRS partners reported particular diﬃculties with reaching underserved communities with limited
internet access. Partners said an IRS phone hotline or television and radio advertisements
sponsored by IRS could be helpful outreach sources. Most partners we interviewed that have an
ongoing relationship with a local IRS oﬃce that understands the unique circumstances of the local
community—compared with partners that do not traditionally interact with IRS—said they had
received IRS materials, that IRS had tailored those materials to meet their constituents’ needs, and
that IRS was responsive to their questions and follow-up requests.

258Pub. L. No. 117-2, § 9611(b)(1), 135 Stat. at 145–148, codiﬁed at 26 U.S.C. § 7527A. U.S. territory residents are also
eligible for the expanded child tax credit. Eligible residents of Puerto Rico will receive the newly expanded child tax
credit directly from IRS when they ﬁle a 2021 tax return and will not be eligible for advance payments of the credit. The
Commonwealth of the Northern Mariana Islands, Guam, and the U.S. Virgin Islands governments are responsible for
administering the advance child tax credit payments to their residents and will determine whether or not to disburse
advance payments. According to Treasury oﬃcials, American Samoa has opted to administer the child tax credit
payments for its residents.
259See Revenue Procedure 2021-24.
260IRS partners with nationwide and local organizations by providing outreach material, training, and tax preparation
products for taxpayer assistance and education. IRS partner organizations are meant to serve low-to-moderate income
populations, older Americans, students, military service members, people with disabilities, and other populations. IRS
refers to these organizations as outreach partners.

Page 168 GAO-21-551
Partners also told us their outreach eﬀorts to nonﬁlers could be more eﬀective if they had current
data that help identify speciﬁc communities of nonﬁlers who may need assistance. Following our
November 2020 recommendation, in January 2021, Treasury began analyzing nearly 9 million
notices it sent to nonﬁlers who may be eligible for EIP 1 payments. However, Treasury does not
plan to complete this analysis until fall 2021, more than 6 months after the ﬁrst EIP 3 payments
were issued. This timing will limit the usefulness of the analysis for informing EIP 3 outreach
eﬀorts. According to Treasury oﬃcials, they are incorporating information from the 2021 ﬁling
season into their analysis. The ﬁling season ended May 17, but there is a 5-month extension to ﬁle
amended returns, which means complete data would likely not be available until October.

Federal standards for internal control state that management should obtain relevant data from
reliable sources in a timely manner based on the identiﬁed information requirements. Moreover,
Treasury issued a fact sheet in January 2021 outlining eﬀorts Treasury planned to take to help
households who had not yet been able to access payments.261 One action Treasury identiﬁed
was to analyze and better understand underserved populations to enhance outreach eﬀorts. We
acknowledge that having data from the entirety of the ﬁling season will allow for a more robust
analysis, which Treasury and IRS could use to inform their outreach eﬀorts for the expanded
child tax credit. However, by waiting to complete the analysis, Treasury and IRS are missing an
opportunity to identify communities that may have higher numbers of nonﬁlers, and use that
information to inform their outreach eﬀorts and distribute payments to qualiﬁed individuals in a
more timely manner.

Similar to the previous acts authorizing EIP 1 and 2, ARPA requires Treasury and IRS to carry out
a robust and comprehensive outreach program to ensure that all individuals eligible for recovery
payments are informed of their eligibility and are provided assistance in applying for these
payments.262 IRS oﬃcials said they do not have a new plan to implement this outreach program;
rather, they are incorporating the legislative requirements into their current communication
strategy. For example, IRS is developing a database to collect feedback from its stakeholders and
outreach partners to help update and assess its communication strategy on a quarterly basis.

In our September 2020 report, we recommended that IRS update estimates of eligible recipients
who have not received a payment and share that and other relevant information with outreach
partners. Fully implementing these recommendations, along with our November 2020
recommendation to analyze notices sent to potentially eligible individuals, would provide Treasury
and IRS more information on the nonﬁler population and also potentially provide insights into
the eﬀectiveness of targeted outreach eﬀorts to reach these populations. Treasury oﬃcials said
they continue to work on implementing these recommendations but recent changes, such as the
extension of the 2020 ﬁling season, have further delayed their eﬀorts.

Payments to federal beneﬁt recipients and incarcerated individuals. Treasury and IRS were
able to quickly disburse the majority of EIP 3 payments to most eligible individuals within 3

261Department of the Treasury, FACT SHEET: Treasury to Work to Ensure Families Get Access to Economic Impact Payments,
accessed May 18, 2021, https://home.treasury.gov/news/featured-stories/fact-sheet-treasury-to-work-to-ensure-families-
get-access-to-economic-impact-payments.
262Pub. L. No. 116-136, § 2201(e), 135 Stat. at 339; Pub. L. No. 116-260, § 272(e), 135 Stat. at 1975; Pub. L. No. 117-2, §
9601(a), 135 Stat. at 142.

Page 169 GAO-21-551
weeks of the enactment of ARPA. Payments to federal beneﬁt recipients were the last signiﬁcant
batch of payments to be disbursed 3 weeks after the passage of ARPA. These payments arrived
later because IRS and the Social Security Administration (SSA) had to work together to put a
reimbursable Memorandum of Agreement (agreement) in place to provide funding to SSA to
complete non-mission work by providing IRS with up-to-date data on Social Security beneﬁciaries.
SSA oﬃcials said they did not receive direct funding to cover any costs associated with preparing
the data for IRS. SSA signed the agreement with IRS on March 16, 2021, after starting discussions
with IRS in January. According to SSA oﬃcials, the agreement could not be signed until ARPA was
signed into law on March 11, 2021. The agreement covered SSA’s administrative costs associated
with providing SSA beneﬁt recipient data to IRS and conducting a marketing and communication
campaign to inform individuals about EIPs. SSA then provided its data to IRS on March 25, 2021.

The fourth batch of payments was issued to recipients of SSA and Railroad Retirement Board
beneﬁts. The ﬁfth batch of payments was issued to recipients of Department of Veteran Aﬀairs
beneﬁts. According to IRS oﬃcials, all three agencies needed to submit updated payments ﬁles to
IRS, but only SSA had the additional step of a new reimbursable agreement to cover the expenses
incurred. SSA does not have the authority to use its funding outside of its mission. SSA oﬃcials
said that IRS requested information about certain federal beneﬁt recipients in place of using
existing tax information within IRS, which required a diﬀerent ﬁle format and transmission process
from EIP 1.263 According to IRS oﬃcials, IRS changed the way in which it requested data from the
agencies so that it could process their data more quickly.

IRS continues to experience challenges in delivering timely payments to incarcerated individuals.
According to the attorneys who represented incarcerated individuals in a class action suit
against Treasury regarding their eligibility for the payments, there have been several EIP-related
challenges that have created confusion among this population. According to IRS data, Treasury
and IRS disbursed just over 1.4 million EIP 1 payments to incarcerated individuals in 2020. IRS data
also show that nearly 300,000 incarcerated individuals ﬁled tax returns after the deadline for IRS
to issue an EIP 1 or EIP 2. Of those individuals, over 70,000 were able to claim an RRC on their 2020
tax return. IRS oﬃcials said the remaining 229,000 returns that it reviewed and processed did not
claim the RRC or were not eligible for it.

Incarcerated individuals who ﬁled paper returns or who ﬁled after December 31, 2020, may be
caught in an IRS backlog of unprocessed returns. IRS is experiencing delays in processing certain
returns received in 2021—including millions of returns claiming the RRC—resulting in extended
time frames for some taxpayers. For more information about how these errors related to the RRC
are aﬀecting the ﬁling season, see the 2021 Filing Season enclosure in appendix I.

Finally, payments to incarcerated individuals are at a higher risk of garnishment. Only statutory
authorization for EIP 2 provided protection against garnishment; the statutory authorization for
EIP 1 and 3 did not.264 Federal and state prisons also have diﬀerent rules regarding how and what

263For EIP 2, IRS did not request SSA assistance to identify and pay federal beneﬁt recipients and instead used existing
tax information and information SSA provided to IRS for EIP 1.
264Pub. L. No. 116-260, § 272(d)(2), 134 at 1972. While the statutory authorization for each round of EIPs prohibits
Treasury from oﬀsetting EIPs, tax refunds, including refunds based on the RRC, may be subject to oﬀset if the taxpayer
has debts owed to government agencies. See, Pub. L. No. 116-136, § 2201(d), 134 Stat. at 338–339; Pub. L. No. 116-260, §
272(d)(1), 134 at 1972; Pub. L. No. 117-2, § 9601(c)(2), 135 Stat. at 143.

Page 170 GAO-21-551
portion of payments to incarcerated individuals can be garnished when otherwise permitted
by law. According to Treasury and IRS, they have no jurisdiction over the payments once they
disburse them, and there is no centralized data on how widespread garnishment is. The Consumer
Financial Protection Bureau found fewer than 10 incidents in one state where it investigated
garnishments of incarcerated individuals’ payments, upon which the state subsequently returned
the EIPs to the recipients. Federal Deposit Insurance Corporation oﬃcials said their agency has not
received reports that incarcerated individuals’ EIPs were garnished.

Payments in the U.S. territories. Residents of the ﬁve U.S. territories are eligible for EIPs
from the territory tax authorities if they meet the income thresholds and other eligibility
requirements.265 IRS disbursed three rounds of economic impact funds to the U.S. territory tax
administrators totaling $9.7 billion.

Territory residents generally received payments later than mainland residents because territory
oﬃcials were required to submit payment plans to Treasury for review and approval before
receiving funds for each round of payments. The plans specify how the territory tax administrators
plan to disburse payments to territory residents. According to IRS oﬃcials, improved coordination
between Treasury and the territory tax administrators helped expedite the process in subsequent
rounds. IRS oﬃcials said that once Treasury approved a territory plan, IRS transferred the funds
within 24–48 hours.

According to IRS data, over 116,000 duplicate payments—instances where both IRS and the
territory tax administrators made the same payment—were issued during the ﬁrst round of EIP.
IRS oﬃcials said that as of March 18, 2021, IRS recovered $4.5 million from payments it had issued
to 3,632 individuals. IRS does not have data on how much each of the territories has recovered. To
the extent provided in the territory plans, each territory tax administrator is responsible for using
available methods for recovering duplicate payments and returning the funds to Treasury. IRS is
assessing its capability to collect any duplicate payments the territories are unable to recover.

Expired EIP payments. As of May 31, 2021, 583,000 EIP 1 checks, totaling around $822 million,
were set to expire if not cashed, representing slightly less than 1 percent of the total number of
payments disbursed.266 The majority of uncashed EIP 1 check payments will expire by July 2021 if
they are not cashed. In addition, over 153,000 EIP 1 debit cards remained unactivated as of May
31, 2021. Bureau of the Fiscal Service oﬃcials said they did not send notices to remind individuals
to cash checks but are considering using social media to remind individuals to activate debit
cards. Additionally, around 817,000 EIP 2 checks and over 486,000 EIP 2 debit cards had not been
cashed or activated, totaling over $1 billion. Bureau of the Fiscal Service oﬃcials said EIP 2 check
payments will start expiring in spring 2022.

IRS preparation for advance child tax credit payments. IRS oﬃcials are taking steps to begin
issuing advance payments of the CTC starting in July 2021. According to Treasury and IRS, roughly
39 million households—covering 88 percent of children in the U.S.—are slated to automatically

265The ﬁve permanently inhabited U.S. territories are the Commonwealth of Puerto Rico, the U.S. Virgin Islands,
American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands.
266EIP check payments expire after 14 months after issuance, and debit cards expire after 36 months.

Page 171 GAO-21-551
begin receiving monthly payments on July 15, 2021. Treasury and IRS also announced that CTC
payments will be made on the 15th of each month, unless the 15th falls on a weekend or holiday.

IRS oﬃcials are oﬀering three online tools to help individuals with the CTC payments: a Non-ﬁler
Sign-Up Tool, a portal (CTC UP) that individuals can use to opt out of the advance payments and
update personal information, and an eligibility calculator. On June 14, 2021, IRS opened the Non-
ﬁler Sign Up Tool to allow individuals who do not normally ﬁle a tax return the opportunity to
ﬁle a simpliﬁed return. This simpliﬁed return will allow individuals the opportunity to receive the
advance CTC payments and the EIP 3 and to claim the 2020 RRC. IRS oﬃcials said the online tool
would be similar to the tool established for the ﬁrst round of EIPs. The new Sign-Up Tool is not
available in a mobile friendly version in that it doesn’t scale to ﬁt a phone or tablet screen. Two IRS
outreach partners had previously said that the ﬁrst EIP nonﬁlers tool could be diﬃcult to access
and navigate, particularly on a mobile device, which may be the only device readily available to
some individuals.

The CTC Up portal became available on June 21, 2021. Initially, individuals will use the portal to
check if they are eligible to receive advance payments and opt out of receiving them. IRS estimates
that between 15 and 16 million individuals will opt-out of the advance payments. IRS is planning
updates to the portal throughout 2021 to increase its functionality. For example, IRS oﬃcials said
that starting on June 30, 2021, individuals will be able to update their bank account information. In
September 2021, individuals will also be able to update their personal information such as marital
status, income, and number of children. Lastly, in November 2021, IRS anticipates launching a
Spanish version of the CTC portal, and prior to the start of the 2022 Filing Season, IRS will provide
a summary of the advanced payments received to help taxpayers complete their 2021 tax returns.

To raise awareness about CTC advance payments, oﬃcials said IRS plans to leverage the outreach
channels it established with federal agencies for EIP and work with childcare facilities, educational
organizations, and stakeholders who assist individuals experiencing homelessness. On June 14,
2021, IRS published frequently asked questions on the CTC on its website (https://www.irs.gov/
credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-frequently-asked-
questions). IRS also sent two notices to alert potentially eligible taxpayers of the advance CTC
payments, provide estimated amounts of monthly advance CTC payments, and explain the opt-out
option.

The White House declared June 21, 2021 as Child Tax Credit Awareness Day to ensure parents
know about the expansion of the CTC and how it will beneﬁt their families. As part of Child Tax
Credit Awareness Day, the administration encouraged elected oﬃcials, organizations that assist
children, and faith-based organizations, to help low-income families use the Non-Filer Sign Up
Tool. In addition, Treasury publicly released zip code level data showing the number of children
who may be eligible to be claimed for the CTC, but who had not been claimed on a recent tax
return. This information could potentially help IRS and its outreach partners tailor outreach eﬀorts
for the EIP and CTC to speciﬁc communities. IRS also plans to hold in person events in a dozen
cities to help eligible families prepare and ﬁle tax returns in June and July, 2021.267

267These cities are Atlanta, New York, Detroit, Houston, Las Vegas, Los Angeles, Miami, Milwaukee, Philadelphia,
Phoenix, St. Louis, and Washington D.C.

Page 172 GAO-21-551
IRS oﬃcials said they are facing multiple challenges as they prepare to issue advance payments,
such as the short amount of time between the enactment of ARPA in March and the July start of
payments. Staﬃng is another challenge. The IRS team responsible for the online portal is also
responsible for EIP 3, the 2021 ﬁling season, and preparing for the 2022 ﬁling season.

IRS oﬃcials said they are also concerned about how to provide suﬃcient customer support to
individuals given the current demands at IRS taxpayer assistance centers and the high number of
telephone calls to customer support. IRS reported it intends to set up a dedicated phone line for
CTC assistance (1-800-908-4184) and to redirect at least 1,800 customer service representatives
and at least 220 bilingual representatives—to provide telephone assistance. As of June 2021, IRS
is anticipating 12 million phone calls and expects to be able to answer 17 percent of those calls.
IRS oﬃcials said that individuals who cannot access the portal can receive assistance at taxpayer
assistance centers, however, IRS identiﬁed providing suﬃcient customer service as a risk.

IRS oﬃcials said they hope a new authentication process, Secure Access Digital Identity (SADI),
will help alleviate some of the pressure on customer support. While IRS has been developing
SADI using a third-party service since 2019, the CTC Up portal is the ﬁrst IRS system that will
authenticate users’ identity using SADI. IRS oﬃcials estimate that 70 to 80 percent of online users
will be able to successfully complete authentication using SADI. IRS oﬃcials anticipate that the
more people who can successfully authenticate their identity and access the portal will result in
fewer people calling the support line for assistance.

In its comments, reproduced in appendix VIII, IRS deferred to Treasury on the recommendation.

Methodology
To review how Treasury and IRS administered EIP 3 payments, we examined Treasury and IRS data
as of May 31, 2021, federal laws, and agency guidance. We reviewed the data and interviewed
Treasury and IRS oﬃcials to determine the data were suﬃciently reliable to describe the number
and amount of payments disbursed.

We interviewed oﬃcials from Treasury and IRS about the administration of EIP 3. We also
interviewed oﬃcials from the Social Security Administration, Consumer Financial Protection
Bureau, and Federal Deposit Insurance Corporation to understand their roles in relation to
Treasury and IRS’s administration of the EIP and to understand any support they are providing in
preparation for advance payments of the CTC. We interviewed tax administrators from American
Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto
Rico, and the U.S. Virgin Islands to understand how they administered EIP 1, 2, and 3.

We asked representatives from 21 selected IRS outreach partners to provide us with their
perspectives on IRS’s outreach coordination with their organizations. We selected 11 partners for
their national outreach to underserved populations such as low-income families, veterans, and
seniors; we also selected 10 partners for their local outreach to communities in ZIP codes with
high numbers of potential nonﬁlers (based on IRS data). This sample is not representative, but the
interviews provided us with illustrative examples of how organizations worked with IRS to reach

Page 173 GAO-21-551
traditionally underserved communities and what aspects of the IRS communications plan worked
well, and they also highlighted potential areas for improvement.

Agency Comments
We provided a draft of this enclosure to Treasury, IRS, the Oﬃce of Management and Budget,
Social Security Administration, Consumer Financial Protection Bureau, and Federal Deposit
Insurance Corporation. Treasury and IRS provided comments, which are summarized below.
Treasury also provided technical comments, which we incorporated as appropriate. The Oﬃce of
Management and Budget, Social Security Administration, Consumer Financial Protection Bureau,
and Federal Deposit Insurance Corporation did not provide comments on this enclosure.

In its comments, reproduced in appendix XI, Treasury neither agreed nor disagreed with our
recommendation, and stated that it shares the underlying goal of reaching as many nonﬁlers as
possible to encourage them to claim EIPs online. However, Treasury also stated that it is unable
to release interim ﬁndings and analysis at this time. According to Treasury, the analysis is not yet
complete. Moreover, Treasury stated that disclosing partial analysis could limit the extent of its
ability to publicize the currently outstanding data (as part of a future, complete data set) because
of prohibitions on disclosure of taxpayer data under section 6103 of the Internal Revenue Code.

As stated in the report, we acknowledge that having data from the entirety of the ﬁling season
will allow for a more robust analysis. However, by waiting to complete the analysis, Treasury
and IRS are missing an opportunity to identify communities that may have higher numbers of
nonﬁlers, and use that information to inform their outreach eﬀorts during the extended 2021
ﬁling season. This type of information could support Treasury and IRS’s ongoing eﬀort to reach
eligible families to get them to register for the advance CTC payment before the nonﬁlers tool
closes in October 2021. IRS’s outreach partners told us their outreach eﬀorts to nonﬁlers could
be more eﬀective if they had current data that help identify speciﬁc communities of nonﬁlers who
may need assistance. Treasury and IRS could also ensure any partial data releases are structured
to not disclose taxpayer data. IRS has existing guidance for preparing statistical tabulations and
does not allow releasing data tabulations with fewer than 10 or 20 observations, depending on
the circumstances, so that the data cannot be associated with or otherwise identify a particular
taxpayer.268

GAO’s Ongoing Work
We will continue to monitor IRS and Treasury's eﬀorts to analyze data that could potentially
improve communication and outreach to nonﬁlers. We will also continue to monitor IRS and
Treasury’s progress to ensure eligible individuals receive their third EIP, and their eﬀorts to issue
the advance payments of the CTC.

268IRS, Tax Information Security Guidelines For Federal, State and Local Agencies, Publication 1075 (Washington, D.C.:
September 2016).

Page 174 GAO-21-551
GAO’s Prior Recommendations
The table below presents our recommendations on economic impact payments from prior
bimonthly CARES Act reports.

Page 175 GAO-21-551
GAO’s Prior Recommendations Related to Economic Impact Payments
Recommendation Status

The Commissioner of Internal Revenue should periodically Open. IRS disagreed with the recommendation.
review control activities for issuing direct payments to However, IRS acknowledged that it established
individuals to determine that the activities are designed and additional procedures and reviews upon discovering
implemented appropriately as the Internal Revenue Service that it had sent millions of payments to the wrong
(IRS) disburses a third round of economic impact payments account. IRS also stated that it plans to assess the
(EIP) and prepares for advance payments on the child tax eﬀectiveness of these new controls during the next
credit. These control activities should include appropriate round of EIPs and will adjust them as warranted.
testing procedures, quality assurance reviews, and processes
that ensure payments distributed by tax partners reach the
intended recipients (March 2021 report).

The Secretary of the Treasury, in coordination with the Open. The Department of the Treasury (Treasury)
Commissioner of Internal Revenue, should begin tracking and IRS agreed with this recommendation. According
and publicly reporting the number of individuals who were to Treasury oﬃcials, Treasury began analyzing data
mailed an EIP notiﬁcation letter and subsequently ﬁled for and in January 2021 on those individuals who received a
received an EIP, and use that information to inform ongoing notice and subsequently ﬁled for and received a ﬁrst-
outreach and communications eﬀorts (November 2020 report). round EIP (EIP 1). However, Treasury does not plan
to complete this analysis until fall 2021, more than 6
months after the ﬁrst payments of the third round of
direct payments (EIP 3) were issued, limiting how any
ﬁndings could inform EIP 3 outreach eﬀorts. According
to Treasury oﬃcials, they are incorporating information
from the 2021 ﬁling season into their analysis. The ﬁling
season ended May 17, but there is a 5-month extension
to ﬁle amended returns.

The Secretary of the Treasury, in coordination with the Open. Treasury and IRS neither agreed nor disagreed
Commissioner of Internal Revenue, should make estimates with our recommendation, but did take some actions
of eligible recipients who have yet to ﬁle for an EIP, and other that are consistent with our recommendation. For
relevant information, available to outreach partners to raise example, in September 2020, the agencies used
awareness about how and when to ﬁle for EIPs (September tax return information to identify nearly 9 million
2020 report). individuals who had not received an EIP 1 and then
notiﬁed these individuals that they may be eligible for
a payment. The letters also provided instructions on
how to request a payment. In addition, IRS publicly
released detailed ZIP code data from the notices to help
community outreach partners with their own outreach
eﬀorts.

The Secretary of the Treasury, in coordination with the Open. Treasury and IRS neither agreed nor disagreed
Commissioner of Internal Revenue, should update and reﬁne with our recommendation, but did take some actions
the estimate of eligible recipients who have yet to ﬁle for that are consistent with our recommendation. For
an EIP to help target outreach and communications eﬀorts example, in January 2021, Treasury revised its estimate
(September 2020 report). of eligible recipients who have yet to ﬁle for an EIP 1 to
8 million. According to Treasury oﬃcials, this estimate
is based on the 9 million notices IRS sent in September
2020. Treasury oﬃcials stated that it is likely that some
of the 9 million recipients have since claimed the EIP,
but Treasury did not provide data supporting this claim.

The Commissioner of Internal Revenue should consider cost- Closed. Treasury and IRS took steps to implement our
eﬀective options for notifying ineligible recipients on how to recommendation, such as providing instructions on the
return payments (June 2020 report). IRS website requesting that individuals voluntarily mail

Page 176 GAO-21-551
Recommendation Status
the appropriate EIP amount sent to the decedent back
to IRS, for both electronic and paper check payments.
Treasury has also held and canceled payments made to
decedents, along with those that have been returned.
As of April 30, 2021, around 57 percent (just over $704
million) of the $1.2 billion in EIP 1 sent to deceased
individuals had been recovered.
As of March 2021, Treasury and IRS had not taken any
further action to recoup payments made to decedents
that had not been returned. IRS oﬃcials determined
that further actions, such as initiating erroneous refund
cases against the estates of the decedents to which
payments were made and not returned, could be
burdensome to taxpayers, the federal court system,
and IRS. As such, IRS oﬃcials concluded that doing so is
not prudent at this time.

Source: GAO. | GAO-21-551

Related GAO Product
Standards for Internal Control in the Federal Government. GAO-14-704G. Washington, D.C.:
September 10, 2014.

Contact information: James R. McTigue Jr., (202) 512-6808, mctiguej@gao.gov

Page 177 GAO-21-551
2021 Tax Filing Season
The Internal Revenue Service needs to clearly communicate the nature and extent of 2021 tax
refund delays to clarify expectations for taxpayers.

Entity involved: Internal Revenue Service, within the Department of the Treasury

Recommendation for Executive Action
The Commissioner of Internal Revenue should direct the appropriate oﬃcials to update relevant
pages of irs.gov and, if feasible, add alerts to the Internal Revenue Service’s toll-free telephone
lines to more clearly and prominently explain the nature and extent of individual refund delays
occurring for returns taxpayers ﬁled in 2021. The Internal Revenue Service neither agreed nor
disagreed with this recommendation.

Background
The Internal Revenue Service’s (IRS) annual tax ﬁling activities include processing over 150 million
individual and business tax returns electronically or on paper, issuing hundreds of billions of
dollars in refunds, and providing customer service to tens of millions of taxpayers on return
processing issues, such as suspected identity theft and math errors. During the 2021 ﬁling season,
IRS was also responsible for issuing a third round of economic impact payments to millions of
taxpayers totaling over $388 billion as of May 12, 2021; updating its systems and procedures
to incorporate tax law provisions enacted in early 2021; and processing millions of tax returns
remaining from the 2020 ﬁling season.269

According to IRS oﬃcials, these additional responsibilities, coupled with reduced staﬃng due
to ongoing COVID-19 pandemic conditions and an increase in manual work, have impacted
IRS’s ability to assist taxpayers and process returns during the 2021 ﬁling season. As a result,
taxpayers are experiencing unusually long delays in receiving refunds and diﬃculty reaching IRS
for assistance.

Overview of Key Issues
Returns processing and refund delays. IRS is experiencing delays in processing certain returns
received in 2021, resulting in extended time frames for some taxpayers. Speciﬁcally, as of the
end of the 2021 ﬁling season in mid-May, IRS had about 25.5 million unprocessed individual
and business returns, including about 1.2 million returns from its 2020 backlog, and 13.7 million
returns IRS suspended due to errors.270 IRS staﬀ must manually review these returns with errors.

269As of early June 2021, IRS had largely addressed its 2020 processing backlog—all individual returns had been entered
into its processing system and fewer than 1 million business returns remained to be entered. For more information on
economic impact payments, see the enclosure on Economic Impact Payments.
270Due to the COVID-19 pandemic, the federal government extended this year's federal individual income tax ﬁling
deadline from April 15, 2021, to May 17, 2021. Unprocessed returns include those ﬁled on paper or electronically that
IRS received but had not fully processed. IRS may suspend a return due to errors such as a miscalculated tax credit

Page 178 GAO-21-551
IRS typically has unprocessed returns in its inventory at the end of the ﬁling season, but not to
this extent. For example, at the end of the 2019 ﬁling season, IRS had 8.3 million unprocessed
individual and business returns, including 2.7 million returns suspended for errors.271

IRS oﬃcials stated that many of the returns are being held due to potential errors in the
information taxpayers provided for both the Recovery Rebate Credit, which individuals can claim
on their tax year 2020 income tax return if they were eligible for but did not receive their ﬁrst or
second 2020 economic impact payment or did not receive the full amount, and the temporary
changes to the Earned Income Tax Credit, which allows taxpayers to use prior year income from
2019 to increase their beneﬁts under this credit. For example, if a taxpayer entered a diﬀerent
amount for the Recovery Rebate Credit than IRS has in its records (such as if the taxpayer had
a child since the previous ﬁling season), the return would be suspended for manual review
to resolve the discrepancy. IRS reported that it is taking longer than usual to manually review
some of these returns, but it has not provided speciﬁc time frames. Further, as discussed below,
information on the reasons for delayed returns and refunds is not easy for taxpayers to ﬁnd.

As of May 14, 2021, IRS’s website stated that more than nine out of 10 refunds are issued in less
than 21 days. This information provides taxpayers with a general sense of when they will likely
receive their refund and at what point they should call IRS for more information. In interviews with
representatives of the tax industry, such as software providers and tax preparer organizations,
representatives noted that taxpayers were frustrated when they had not received their refunds
within IRS’s posted time frames and that they could not get any explanation from IRS’s website,
including the Where’s My Refund application, or when calling IRS’s toll-free telephone line.

Taxpayer service limitations. With signiﬁcantly more returns being held for manual review than
in prior years, more taxpayers are trying to get information on the status of their returns and
refunds. However, taxpayers have had a diﬃcult time getting a status update on their refund from
IRS, either via phone or online:

Phone services. Speciﬁcally, during our review between January 1 and May 1, 2021, IRS’s level of
telephone service—the percentage of taxpayers seeking and reaching live assistance—was 14.3
percent, compared to an average of about 78 percent level of service for the end of ﬁling seasons
2017 through 2019. IRS’s call volume and demand for live assistors has been unprecedented this
year: IRS data show that between January 1 and May 1, 2021, it received about 65.6 million calls
from taxpayers, compared to about 15.6 million calls during the same period in 2019.

In addition, IRS’s automated message on its toll-free telephone line for individual taxpayers has
not been updated to explain refund delays or to include any other alerts associated with the 2021
ﬁling season. The message as of May 14, 2021, informs taxpayers about refund interest payments
they may have received in August 2020. In early May 2021, IRS oﬃcials stated that once the ﬁling
season starts, it is diﬃcult for IRS to make changes to its telephone system’s automated messages

or incorrect Social Security number. The 13.7 million returns suspended due to errors may be from the 2021, 2020,
or an earlier ﬁling season because, according to oﬃcials, IRS cannot diﬀerentiate these returns in its systems. The
unprocessed returns total does not include those suspended for suspected refund fraud, such as identity theft, or
amended returns.
271We compare 2021 performance to 2019 because IRS was not impacted by closures during the 2019 ﬁling season due
to the COVID-19 pandemic. The 2019 data are based on IRS’s April 17, 2020, Miscellaneous Monitoring Report.

Page 179 GAO-21-551
due to scheduled blackout periods and other potential risks to the telephone infrastructure.
However, these oﬃcials stated that they had no plans to update the recorded messages when the
blackout period ends in late May 2021.

Online services. IRS’s website does not contain all of the relevant information regarding 2021 return
processing delays and delays in issuing taxpayers’ refunds. Rather, IRS’s webpages devoted to
information on refunds state that IRS continues to process and issue refunds and that most of
these are issued in 21 days or less.

Further, the information IRS has posted online is not easy for taxpayers to ﬁnd. While IRS added
information on its “IRS Operations and Services” web page about the status of its operations,
including a partial explanation for why some refunds have been delayed this ﬁling season, this
information is diﬃcult to ﬁnd because it requires navigating through several pages from the
irs.gov home page and is located on a page with information on COVID-19-related tax relief
and mission-critical functions. Other web pages that taxpayers might easily access, such as
the “Refunds” page or related “Frequently Asked Questions” page, do not include complete
information about delays in 2021 returns processing.

After we explained these concerns to IRS oﬃcials in early May 2021, IRS updated its “Refunds”
and “Frequently Asked Questions” pages to include some information on delays. However, the
information IRS posted was inconsistent. For example, one page stated that IRS was experiencing
delays in opening mail, and the other page indicated that IRS was current on opening mail. In
addition, IRS updated its refund-related pages to include an alert linking to the “IRS Operations
and Services” page, which contains status updates on return and refund processing (see ﬁgure).
However, this alert does not clearly state that a taxpayer will learn about potential refund delays
by clicking the link to the “IRS Operations and Services” page.

Page 180 GAO-21-551
Internal Revenue Service (IRS) Web Page for Taxpayers on Refund Expectations

Note: We captured this screenshot from https://www.irs.gov/refunds/what-to-expect-for-refunds-this-year on May 6, 2021.

When we asked IRS about the limited information online about current refund delays, oﬃcials said
that they did have some information online and they were not sure what additional information
would be helpful. We provided some examples, such as updating speciﬁc web pages related
to refund information and frequently asked questions. Oﬃcials indicated they would consider
making changes, but as of May 20, 2021, had not yet done so.

Federal internal control standards state that management should externally communicate
necessary quality information to achieve the entity’s objectives. Government entities should report
this information to government leaders and regulators, as well as the general public. Without
clear, timely information on reasons why some refunds are being delayed during the 2021 ﬁling
season, taxpayers lack information on when they should expect to receive their refunds. This may
lead taxpayers to continue to call IRS with limited success, due to IRS’s limited ability to answer
a high number of incoming calls or lack of information on returns being held for errors. Further,
taxpayers that count on their refunds to cover certain expenses do not have essential information
to make alternative plans. Providing updated and timely information on irs.gov may help reduce
the volume of calls to IRS from taxpayers and help reset taxpayers’ expectations.

Methodology
To conduct this work, we reviewed 2021 ﬁling season return processing and customer service
performance data, reviewed federal laws and agency communications, and interviewed IRS

Page 181 GAO-21-551
oﬃcials. To assess the reliability of these data, we interviewed IRS oﬃcials and assessed the data
for any limitations. Due to disruptions during the 2020 ﬁling season aﬀecting performance, we
compared the most recent data available from the 2021 ﬁling season to 2019 ﬁling season data
from the same period to determine the extent to which the 2021 ﬁling season diﬀers from a
typical year. We determined the data were suﬃciently reliable for the purposes of our reporting
objective.

Agency Comments
We provided a draft of this enclosure to the Department of the Treasury, IRS, and the Oﬃce of
Management and Budget. The Department of the Treasury and the Oﬃce of Management and
Budget had no comments on this enclosure. IRS’s comments are reproduced in appendix VIII and
summarized below. IRS also provided technical comments, which we incorporated as appropriate.

In its comments, IRS neither agreed nor disagreed with our recommendation. IRS stated that it will
review its messaging on the general state of returns processing and provide clarity as needed. IRS
also noted that its “Where’s My Refund” tool provides taxpayers with the most current information
on the status of their return and refund. After IRS provided its comments in mid-June 2021, we
found that IRS had updated irs.gov to provide clearer information about refund delays. We also
found that IRS had removed outdated messaging from its automated toll-free telephone line
for taxpayers. We will follow up with IRS on other planned updates to its website and taxpayer
telephone line. Based on this information, we will determine if the agency’s actions are suﬃcient
to fully address our recommendation.

GAO’s Ongoing Work
We have ongoing work to evaluate IRS’s 2021 ﬁling season performance, including the ongoing
impact of COVID-19.

Related GAO Product
Standards for Internal Control in the Federal Government. GAO-14-704G. Washington, D.C.:
September 10, 2014.

Contact information: Jessica Lucas-Judy, (202) 512-6806, lucasjudyj@gao.gov

Page 182 GAO-21-551
Nutrition Assistance
Expenditures for key federal nutrition assistance programs remain at record levels because of
increased need and the federal response to the pandemic, as the Department of Agriculture works
to ensure program integrity.

Entities involved: Food and Nutrition Service, within the Department of Agriculture

Background
Demand and expenditures for key federal nutrition assistance programs have remained high
throughout the COVID-19 pandemic. According to the Food and Nutrition Service’s (FNS) most
recent data, 42 million individuals participated in the Supplemental Nutrition Assistance Program
(SNAP), the largest federal nutrition assistance program, in March 2021. SNAP beneﬁts in that
month totaled $9 billion, about 70 percent more than the amount of beneﬁts issued in March
2020.272 SNAP participation also grew during this period, but to a lesser extent.273 FNS oﬃcials
said the agency anticipates it will expend all of the approximately $101.8 billion appropriated for
SNAP beneﬁts for ﬁscal year 2021, which would exceed the previous historic high for the program
by more than $25 billion.274

FNS, within the Department of Agriculture (USDA), administers SNAP and other federal nutrition
assistance programs, including the new Pandemic Electronic Beneﬁts Transfer program (Pandemic
EBT); the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); the
Emergency Food Assistance Program (TEFAP); and the Nutrition Assistance Program for the
Commonwealth of Puerto Rico, American Samoa, and the Commonwealth of the Northern
Mariana Islands. Eligibility criteria vary across FNS’s nutrition assistance programs, and individuals
and households may receive assistance from multiple programs.

Throughout the COVID-19 pandemic, legislative and executive actions have resulted in increased
funding and expenditures for FNS’s nutrition assistance programs. In March 2021, the American
Rescue Plan Act of 2021 (ARPA) extended a temporary 15 percent increase in beneﬁts for all
SNAP participants through September 2021.275 In April 2021, FNS announced that it would begin
providing additional SNAP beneﬁts through emergency allotments to households that were
already receiving the maximum, or almost the maximum, SNAP beneﬁt for their household
size.276 FNS estimated that this adjustment to eligibility for SNAP emergency allotments would

272FNS released these preliminary data in June 2021, noting that the data are subject to signiﬁcant revision.
273SNAP participation increased by 14 percent between March 2020 and March 2021. SNAP beneﬁts levels grew more
than participation during the pandemic, in part because of legislation that temporarily increased the value of SNAP
beneﬁts for all participants.
274In nominal terms, SNAP expenditures previously peaked in ﬁscal year 2013, when beneﬁts totaled $76.1 billion,
according to FNS data.
275Pub. L. No. 117-2, § 1101(a), 134 Stat. 4, 15.
276The Families First Coronavirus Response Act (FFCRA) authorized the issuance of SNAP emergency
allotments—additional beneﬁts on top of regular SNAP beneﬁts—during the COVID-19 public health emergency. Pub.
L. No. 116-127, § 2302(a), 134 Stat. 178, 188. FNS initially interpreted this provision as providing authority to issue SNAP
emergency allotments to increase households’ total monthly beneﬁt to the maximum allowable for their households’
size. In June 2020, we reported that FNS had denied several states’ requests to provide SNAP emergency allotments to

Page 183 GAO-21-551
result in approximately 25 million SNAP participants receiving additional beneﬁts and would
cost approximately $1 billion per month. FNS’s other nutrition assistance programs have also
collectively received and expended billions of dollars in COVID-19 funding. The table below shows
total COVID-19 funding and expenditures as of May 2021 for SNAP as well as a selection of other
programs.

households already receiving the maximum beneﬁt. In November 2020, we reported that there was ongoing litigation
challenging FNS’s interpretation, and in March 2021, we reported that USDA was reviewing its authority to permit
states to issue SNAP emergency allotments to households already receiving the maximum beneﬁt. FNS’s April 2021
announcement explained that the agency had changed its interpretation of FFCRA and would begin providing additional
beneﬁts to households that had been receiving less than $95 per month in SNAP emergency allotments, including
households that had not received any SNAP emergency allotment before April 2021 because they were already receiving
the maximum beneﬁt.

Page 184 GAO-21-551
COVID-19 Funding and Expenditures for Selected Federal Nutrition Assistance Programs as of May 31, 2021
Total COVID-19 funding COVID-19 expenditures
a
Program Description ($) as of May 31, 2021 ($)

SNAP Provides low-income individuals and 16.8 billion
b 15.5 billion
households with beneﬁts to purchase
c 5.7 billion
allowed food items and achieve a move Indeﬁnite appropriation
nutritious diet.

Pandemic EBT Provides households with children who Indeﬁnite appropriation
d
13.3 billion
e
would have received free or reduced-price
school meals if not for school closures due
to COVID-19, as well as eligible children in
childcare, with beneﬁts to purchase food.

WIC Provides eligible low-income women, infants, 1.4 billion 475.8 million
and children up to age 5 who are at nutrition
risk with nutritious foods to supplement
diets, information on healthy eating, and
referrals to health care.

TEFAP Provides low-income individuals with 1.25 billion 705.7 million
groceries through food banks.

Nutrition Assistance Provides block grants to Puerto Rico, 1.9 billion 676.8 million
Program American Samoa, and the Commonwealth
of the Northern Mariana Islands to provide
food assistance to low-income households in
these territories.

Legend: Pandemic EBT = Pandemic Electronic Beneﬁts Transfer; SNAP = Supplemental Nutrition Assistance Program; TEFAP = the
Emergency Food Assistance Program; WIC = Special Supplemental Nutrition Program for Women, Infants, and Children.
Source: GAO analysis of relevant provisions of the Families First Coronavirus Response Act; the CARES Act; the Consolidated Appropriations Act, 2021; and the American Rescue Plan
Act of 2021 as well as information from the Food and Nutrition Service (FNS), within the Department of Agriculture. | GAO-21-551

Note: This table provides information about selected programs and is not intended to provide comprehensive information
about all federal nutrition assistance funding provided during the COVID-19 pandemic.
a
Amounts shown from the Consolidated Appropriations Act, 2021 reﬂect amounts appropriated in Division N, pertaining to
COVID-19 response and relief.
b
In some cases, COVID-19 relief laws provided speciﬁc amounts of funding to carry out certain SNAP provisions, and in other
cases such laws provided an indeﬁnite appropriation for certain SNAP provisions. The $16.8 billion shown reﬂects total
COVID-19 funding for SNAP provisions that included a speciﬁc amount in COVID-19 relief laws.
c
The Consolidated Appropriations Act, 2021 provided an indeﬁnite appropriation for certain COVID-19 relief provisions,
including a provision that temporarily increased SNAP beneﬁts by 15 percent through June 2021. The American Rescue Plan Act
of 2021 extended this increase in SNAP beneﬁts through September 2021.
d
The Families First Coronavirus Response Act provided an indeﬁnite appropriation for Pandemic EBT.
e
The $13.3 billion shown reﬂects Pandemic EBT expenditures through March 2021, the most recent data available as of June
2021. FNS oﬃcials noted that there is a lag in reporting Pandemic EBT expenditures because FNS must manually input state-
reported Pandemic EBT data into its accounting system.

Page 185 GAO-21-551
Our prior work has highlighted concerns with SNAP improper payments.277 For example, in April
2020, we recommended that FNS develop and implement a process, documented in policies and
procedures, to analyze the root causes of state SNAP estimated improper payments to identify
potential similarities among states and develop and implement agency-level corrective actions,
if appropriate, to help address them. FNS generally agreed with the recommendation and, in
June 2021, oﬃcials said the agency had ﬁnalized a standard operating procedure to assist FNS
in working with states to develop and implement corrective action plans for SNAP improper
payments, among other things. We plan to review the standard operating procedure and monitor
FNS’s implementation of it. According to the most recent FNS estimate available, the SNAP
estimated improper payment rate was 7.36 percent in ﬁscal year 2019, totaling approximately $4
billion in estimated improper payments that year.

Overview of Key Issues
FNS will assess the susceptibility of Pandemic EBT to signiﬁcant improper payments. FNS
oﬃcials said the agency plans to assess Pandemic EBT’s susceptibility to signiﬁcant improper
payments in summer 2021.278 Pandemic EBT is a new program, authorized in March 2020, to
provide beneﬁts to households with children who would have received free or reduced-price
school meals if not for school closures due to COVID-19.279 As of March 2021, Pandemic EBT had
expenditures of $13.3 billion. This amount will likely increase signiﬁcantly during the remainder
of ﬁscal year 2021. For example, FNS estimates that issuing Pandemic EBT beneﬁts in summer
2021 will cost approximately $13 billion. FNS oﬃcials previously told us they had not assessed
Pandemic EBT for susceptibility to signiﬁcant improper payments, because it is a temporary
program and states have considerable discretion to determine eligibility. However, in April 2021,
FNS determined that the agency would perform an improper-payment risk assessment for
Pandemic EBT and expects to complete the assessment in summer 2021.

The Payment Integrity Information Act of 2019 (PIIA) directs the head of each executive agency
to consider risk factors (examples of which are listed in the law) that are likely to contribute to

277An improper payment is statutorily 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. An improper payment includes any payment to an ineligible recipient, any payment
for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for
such payments where authorized by law), and any payment that does not account for credit for applicable discounts.
31 U.S.C. § 3351(4). Further, when an executive agency’s review is unable to discern, because of lacking or insuﬃcient
documentation, whether a payment was proper, the agency must treat the payment as improper in conducting risk
assessments and producing an improper payment estimate. 31 U.S.C. §§ 3352(a)(3), (c)(2).
278Signiﬁcant improper payments mean that, in a ﬁscal year, the sum of a program’s or activity’s improper payments
and payments whose propriety the agency cannot discern due to lacking or insuﬃcient documentation may have
exceeded (1) $10,000,000 of all reported program activity payments made during a given ﬁscal year and 1.5 percent of
program outlays, or (2) $100,000,000. 31 U.S.C. § 3352(a)(3)(A).
279Pub. L. No. 116-127, § 1101, 134 Stat. 178, 179-180. FFCRA originally set Pandemic EBT to expire at the end of ﬁscal
year 2020, but the Continuing Appropriations Act, 2021 and Other Extensions Act extended the program through ﬁscal
year 2021 and also expanded it to include younger children aﬀected by day care closures. Pub. L. No. 116-159, § 4601,
134 Stat. 709, 744-745. ARPA amended the duration of the program to continue through the COVID-19 public health
emergency, including summer 2021. Pub. L. No. 117-2, § 1108, 135 Stat. 4, 18-19. As such, the Pandemic EBT beneﬁts
period stretches more than 12 months, across two ﬁscal years thus far.

Page 186 GAO-21-551
susceptibility to signiﬁcant improper payments.280 See the table for examples of such risk factors
that may apply to Pandemic EBT.

280Pub. L. No. 116-117, § 2, 134 Stat. 113, 114-115 (2020), codiﬁed at 31 U.S.C. § 3352(a)(3)(B). In November 2020, we
suggested that, in future legislation appropriating COVID-19 relief funds, Congress consider designating all executive
agency programs and activities making more than $100 million in payments from said funds as “susceptible to
signiﬁcant improper payments.”

Page 187 GAO-21-551
Examples of Risk Factors Listed in the Payment Integrity Information Act of 2019 (PIIA) Compared with
Characteristics of the Pandemic Electronic Beneﬁts Transfer Program (Pandemic EBT)
PIIA risk factors for improper payments Characteristics of Pandemic EBT

The program or activity is new to the executive agency. The program started in March 2020.

The volume of payments made through the program The program had expenditures of $13.3 billion as of March
or activity. 2021.

Payments or payment eligibility decisions are made
outside the executive agency, such as by a state or State agencies make payment eligibility decisions.
local government.

Several changes have been made to the program since March
There have been recent major changes in program 2020, including expansion to certain children younger than 6
funding, authorities, practices, or procedures. years and children who are in child care as well as extension
through ﬁscal year 2021.

The program has similarities to other programs or Program beneﬁts are often loaded onto Supplemental Nutrition
activities that have reported improper payment Assistance Program (SNAP) electronic beneﬁts transfer cards for
estimates or been deemed susceptible to signiﬁcant households also receiving SNAP. The reported SNAP improper
improper payments. payment rate in ﬁscal year 2019 was 7.36 percent.

Source: GAO analysis of relevant federal law and information from the Food and Nutrition Service, within the Department of Agriculture. | GAO-21-551

Additionally, the Oﬃce of Management and Budget (OMB) issues guidance for federal agencies
regarding improper payments.281 OMB guidance provides that newly established programs should
complete an improper payment risk assessment after the ﬁrst 12 months of the program, a
time span that the Pandemic EBT program has exceeded. Also, in general, we and many federal
Inspectors General have identiﬁed reducing and preventing improper payments as a signiﬁcant
challenge under the COVID-19 relief laws, citing the large amount of money at issue and the need
to distribute funds rapidly under emergency conditions.282

States have experienced challenges in implementing Pandemic EBT, some of which may indicate
the program’s potential susceptibility to signiﬁcant improper payments. To implement Pandemic
EBT, state SNAP oﬃcials we interviewed said they needed to work with other state agencies,
such as educational agencies, to identify eligible participants. Some state SNAP oﬃcials we
interviewed identiﬁed multiple challenges experienced in securing data to identify and verify
eligible participants. For example, oﬃcials in one state said state privacy laws impeded data
sharing. Oﬃcials in another state said the data systems at the SNAP agency and the educational
agency were incompatible, making data matching for payment integrity diﬃcult. In that state, the
SNAP agency tried to match its data to the list of eligible students from the educational agency’s
data to verify addresses and identify any duplication of participants. However, state oﬃcials noted

281Oﬃce of Management and Budget, Appendix C to OMB Circular A-123, Requirements for Payment Integrity Improvement,
OMB Memorandum M-21-19 (Washington, D.C.: Mar. 5, 2021).
282See, for example, Council of the Inspectors General on Integrity and Eﬃciency, Pandemic Response Accountability
Committee, Top Challenges Facing Federal Agencies: COVID-19 Emergency Relief and Response Eﬀorts (Washington, D.C.: June
2020).

Page 188 GAO-21-551
that diﬀerences between the state SNAP agency’s and the state educational agency’s data systems
made this process challenging.

In one instance, a state SNAP oﬃcial we interviewed noted that the agency had identiﬁed some
ineligible individuals who had received Pandemic EBT beneﬁts and that the state was unsure
what recourse it could take, given the lack of FNS guidance or regulations on the issue. The oﬃcial
said colleagues in other states had identiﬁed similar concerns. Oﬃcials from the American Public
Human Services Association similarly told us that state oﬃcials have expressed concern about
ineligible individuals’ receiving Pandemic EBT and have also expressed confusion about the
steps they should take if they identiﬁed ineligible recipients. Unlike for SNAP, FNS has not issued
regulations on methods for recovering Pandemic EBT overpayments or states’ ability to disqualify
a recipient from Pandemic EBT as a penalty.283 Instead, for school year 2020–21, FNS’s Pandemic
EBT state plan template required states to outline a process to recover or adjust beneﬁts to correct
payment accuracy errors.284

FNS’s forthcoming assessment of Pandemic EBT’s susceptibility to signiﬁcant improper payments
may inform agency eﬀorts to ensure payment integrity and may guide the agency’s eﬀorts to oﬀer
states technical assistance, mitigation strategies, or corrective actions.

FNS cannot calculate SNAP payment error rates for ﬁscal years 2020 and 2021 but has
continued other work to ensure program integrity.

Payment error rate. The payment error rate is integral to SNAP program integrity.285 In addition
to being the basis for establishing the rate of improper payments for SNAP, the error rate is an
important factor in FNS oversight of state SNAP agencies. The payment error rate determines
state liability for errors that exceed the national target and informs the development of corrective
actions to mitigate or reduce payment errors.

In February 2021, FNS announced that it cannot calculate SNAP national and state payment error
rates for ﬁscal years 2020 and 2021.286 FNS explained that it must develop SNAP payment error
rates on the basis of a legislatively mandated Quality Control (QC) review process.287 However,

283In November 2020, FNS promulgated a Final Rule to help protect Pandemic EBT from retailer traﬃcking. 85 Fed. Reg.
70,043 (Nov. 4, 2020). Retailer traﬃcking refers to the practice by which retailers exchange beneﬁts for cash instead of
food, often taking a fraudulent proﬁt.
284Most states issued Pandemic EBT beneﬁts without receiving an application, thereby automatically providing beneﬁts
based on the information they received from other state agencies or collected for other purposes, such as determining
SNAP eligibility. Some recipients who automatically received Pandemic EBT beneﬁts may not wish to use them, and
states may need to develop a process to recover those beneﬁts.
285The error rate measures a state’s ability to determine SNAP eligibility and issue beneﬁts in the correct amount.
286In 2014, USDA also identiﬁed concerns with the quality of the data used to calculate the SNAP error rate. USDA
suspended SNAP error rate reporting for ﬁscal years 2015 and 2016 to complete a thorough review of quality control
systems in all 50 states, the District of Columbia, the U.S. Virgin Islands, and Guam. Through that review, USDA found
data integrity issues that required corrective action in 42 states.
287FNS uses a two-tier SNAP QC review process. In the ﬁrst tier, state SNAP agencies randomly select a sample of
participating households to conﬁrm eligibility and their receipt of the correct amount of beneﬁts. In the second tier,
federal SNAP reviewers select a subsample of each state’s reviews to verify the accuracy of the state’s ﬁndings. States
must correct errors, and any overpayment of beneﬁts must be paid back to the state. In the case of underpayments,

Page 189 GAO-21-551
COVID-19 relief laws and FNS gave states the ﬂexibility to suspend SNAP QC reviews from March
2020 through June 2021 in response to the pandemic.288 According to FNS oﬃcials, all states opted
to suspend QC reviews. As a result, FNS determined that it lacked the data necessary to determine
error rates. USDA’s Oﬃce of General Counsel agreed with FNS’s determination that it could not
calculate SNAP payment error rates for ﬁscal years 2020 and 2021. FNS oﬃcials said they also
notiﬁed OMB of their inability to calculate the SNAP payment error rate.

FNS oﬃcials said the agency considered its options for analyzing the SNAP QC data that states
submitted in ﬁscal year 2020 before the pandemic (i.e., from October 2019 through February
2020), but several factors limited the usefulness of these data for publication. For example, FNS
oﬃcials said that because the available ﬁscal year 2020 SNAP QC data do not cover any months
during the pandemic, FNS and states could not use those data to understand the pandemic’s
eﬀect on the SNAP error rate. Oﬃcials also explained that calculating a partial-year error rate
with incomplete data could expose FNS to the risk of lawsuits from states because states with
a high SNAP error rate are subject to sanctions. Last, FNS oﬃcials said that using fewer than 12
months of SNAP QC data could result in estimates of the SNAP payment error rate that would be
too imprecise to be instructive for FNS and the states.

Oversight of state agencies. Though FNS has determined that it cannot calculate SNAP payment
error rates, oﬃcials said other SNAP program integrity eﬀorts have continued during the
pandemic. Oﬃcials said they are currently developing guidance to assist states to resume SNAP
QC reviews in July 2021. Several FNS regional oﬃcials we interviewed also said that, though all
states had opted to suspend SNAP QC reviews, most states continued to perform QC reviews on
their own, in some cases using smaller sample sizes as a part of their program integrity eﬀorts.
Oﬃcials from one regional oﬃce said that all states in their region continued to provide QC data to
the regional oﬃce so that regional oﬃcials could review their cases and provide feedback.

Most state SNAP oﬃcials we spoke with said they received regular technical assistance regarding
payment accuracy from their FNS regional oﬃces during the pandemic. FNS held payment
accuracy training for all SNAP QC oﬃces at both the national and regional levels, and FNS regional
oﬃcials said they were continuing to provide technical assistance on payment accuracy to states
both periodically, through conference calls, and on demand. To ensure compliance with program
requirements, regional oﬃcials also performed scheduled Management Evaluations of states
during the pandemic.289

states provide the additional beneﬁts to participants. Federal staﬀ analyze the data from the QC reviews and establish
state-level error rates and the national error rate.
288Speciﬁcally, at the beginning of the pandemic, FNS issued a blanket waiver that allowed states to temporarily waive
SNAP QC reviews for March, April, and May 2020. In October 2020, the Continuing Appropriations Act, 2021 and Other
Extensions Act allowed states to suspend SNAP QC reviews from June 2020 through September 2021. Pub. L. No.
116-159, § 4603(a)(2), 134 Stat. 709, 746. In December 2020, the Consolidated Appropriations Act, 2021 revised the
suspension period to end on June 30, 2021. Pub. L. No. 116-260, div. N, tit. VII, § 702(g), 134 Stat. 1182, 2094.
289Management Evaluations are annual reviews to ensure compliance with program requirements. Each year, FNS
selects topics for review. FNS regional oﬃces conduct a federal Management Evaluation, while states perform the state
evaluation. As part of the Management Evaluation, the regional oﬃce selects at least one state in each region for a
QC Integrity Review, which evaluates state-level QC processes to ensure state-reported errors are accurate and free
from any bias. State agencies receive a QC Integrity Review once every 5 years and more frequently if necessary. States
perform a QC Integrity Review of their processes annually.

Page 190 GAO-21-551
Finally, FNS oﬃcials told us that the lack of a payment error rate will not impede their work with
states currently under sanction for having high SNAP error rates in prior years. Oﬃcials further
explained that FNS will continue monitoring corrective action plans, including reviewing and
updating them.

Demographic information. In addition to calculating the error rate, FNS uses data derived from
the SNAP QC reviews to produce the annual report Characteristics of Supplemental Nutrition
Assistance Program Households for a given ﬁscal year. The report describes the demographics of
SNAP households and participants nationwide and provides an overview of SNAP beneﬁt levels
during that ﬁscal year. FNS oﬃcials said they are assessing the reliability of the available data
to determine whether they will be able to produce the report given the SNAP QC suspension
during the pandemic. They acknowledged that FNS, policymakers, and other stakeholders use
information from this report for many purposes. As long as the agency determines the data
are suﬃciently reliable, FNS intends to issue Characteristics of Supplemental Nutrition Assistance
Program Households for ﬁscal year 2020. The agency will follow a similar process to assess the
ﬁscal year 2021 data after the ﬁscal year ends, according to oﬃcials.

Workforce capacity challenges aﬀected states’ implementation of SNAP throughout the
COVID-19 pandemic. The COVID-19 pandemic has strained the capacity of most states’ SNAP
agency staﬀ and slowed SNAP operations, according to oﬃcials we interviewed from each of FNS’s
seven regional oﬃces and from ﬁve selected state SNAP agencies. Overall, state and regional
oﬃcials highlighted the following factors that aﬀected the capacity of state SNAP agencies to
administer the program during the pandemic:

• Higher volume of applications. Many states received and processed substantially higher
numbers of SNAP applications, especially at the outset of the pandemic. For example, oﬃcials
we interviewed in one state said they received double the typical number of applications per
week during the early months of the pandemic.

• Sudden shift to remote work. Local SNAP oﬃces were unprepared for teleworking and did
not have the technology (e.g., laptops) to deliver SNAP services remotely. It was diﬃcult for
them to adjust workﬂow processes typically performed in person.

• Shortages of personnel. In some states, COVID-19 caused personnel shortages as staﬀ
adjusted work schedules to quarantine and care for children.

• Simultaneous operation of other programs. Some states redirected SNAP staﬀ and
resources toward planning and implementing Pandemic EBT. In a few states, the pandemic
coincided with natural disasters such as hurricanes, causing these states to redirect SNAP staﬀ
toward Disaster SNAP operations.290

States relied on several strategies to mitigate the challenges of decreased workforce capacity
during the pandemic. As we have previously reported, adjustments to SNAP operations allowed

290Disaster SNAP is a separate program from SNAP. FNS oﬃcials said that, traditionally, state SNAP agencies
conduct Disaster SNAP via an entirely in person application and interview process. Since the onset of the pandemic,
states have used fully virtual or hybrid models to ensure social distancing, according to oﬃcials.

Page 191 GAO-21-551
by COVID-19 relief laws have helped states streamline program operations and increased their
ability to process the large inﬂux of SNAP applications eﬃciently.291 For example, oﬃcials from
six FNS regional oﬃces said states in their regions beneﬁted immensely from adjustments
related to certiﬁcation processes (e.g., to determine participants’ eligibility and beneﬁt levels for
SNAP). Some states also pursued innovative technological solutions—such as equipping SNAP
websites with chatbots to assist applicants or mass-texting participants and eligible populations
about programmatic changes—that increased staﬀ capacity to work on other pressing issues.292
In addition, FNS oﬃcials said that states would spend ﬁscal year 2021 administrative funds
authorized for Pandemic EBT in ways that will reduce SNAP staﬀ’s Pandemic EBT workload. FNS
oﬃcials anticipate common types of administrative spending will include contracting with call
centers to provide customer support and translating program information into multiple languages.

FNS plans to modernize WIC to help promote access to WIC beneﬁts. We have previously
reported that FNS is taking steps to provide WIC participants options to purchase food online,
similar to SNAP participants. FNS has several ongoing eﬀorts in this area.

WIC Task Force. In response to a Consolidated Appropriations Act, 2021 requirement, FNS
established a WIC Task Force in March 2021 to study how to streamline and promote convenience,
safety, and equitable access to WIC beneﬁts, including online and phone ordering, curbside
pickup, and home delivery. According to FNS oﬃcials, although setting up the task force in a short
period of time was a challenge, recruiting members who represent various interests (as required
by the act) to serve on the task force was not diﬃcult.293 The task force held a kickoﬀ meeting
on March 24, 2021, and is now meeting regularly to complete its study and provide results and
recommendations to USDA by September 30, 2021.

Grants to states. In fall 2020, FNS awarded a $2.5 million, 3-year competitive grant to the Gretchen
Swanson Center for Nutrition to develop and test a safe and secure model for online ordering in
WIC. According to FNS oﬃcials, the center plans to begin soliciting grant proposals from states in
summer 2021. FNS oﬃcials said they are working closely with the center and are on track to award
subgrants to states by fall 2021. In addition, FNS oﬃcials told us the center worked with experts to
develop a document that includes policy, technical, and programmatic information to guide state
agencies and other stakeholders as they adopt and implement WIC online ordering.

291FFCRA authorized FNS to make certain adjustments to federal requirements for SNAP related to issuing beneﬁts,
reviewing applications, and reporting data during the pandemic. Pub. L. No. 116-127, § 2302(a)(2), 134 Stat. 178, 188. The
Continuing Appropriations Act, 2021 and Other Extensions Act, among other things, granted states broader authority
to adjust some SNAP operations without prior FNS approval. Pub. L. No. 116-159, § 4603(a)(1)(A), 134 Stat. 709, 746. In
April 2021, FNS issued guidance on how states could continue to request approval for adjustments authorized by FFCRA
through December 2021, or through the month following the month in which the COVID-19 public health emergency
ends, whichever comes ﬁrst. FNS oﬃcials said the agency would consider further extensions, depending upon the
degree to which the COVID-19 pandemic is under control by the end of 2021. For more information on the successes
and challenges states experienced implementing SNAP adjustments during the pandemic, see Johns Hopkins Institute
for Health and Social Policy and the American Public Human Services Association, SNAP Waivers and Adaptations During
the COVID-19 Pandemic: A Survey of State Agency Perspectives in 2020 (Baltimore, MD: June 2021).
292Chatbots are software applications that use artiﬁcial intelligence to mimic conversations and provide support that a
human customer service agent might otherwise provide.
293WIC Task Force members include representatives of manufacturers, retailers, state and local agencies, WIC
participants, and other stakeholder organizations.

Page 192 GAO-21-551
WIC beneﬁt increase and outreach. ARPA provided $490 million to USDA to oﬀer a temporary
increase of up to $35 per month to the WIC cash-value voucher for fruits and vegetables during
the pandemic.294 On March 24, 2021, FNS sent a memo to state WIC agencies to implement
this provision, allowing states to provide this increase for up to 4 consecutive months through
September 30, 2021. As of June 11, 2021, FNS oﬃcials said all states had opted to provide this
increase.

In addition, ARPA provided $390 million to USDA for ﬁscal year 2021 for WIC outreach, innovation,
and program modernization eﬀorts, including waivers and ﬂexibilities, to increase participation
and beneﬁt redemption.295 (This funding is available through ﬁscal year 2024.) FNS oﬃcials
acknowledged that WIC is underused and said that the agency is giving high priority to conducting
outreach to attract eligible people to the program, especially those in underserved populations.296
Further, FNS oﬃcials told us that the agency’s other priorities are to simplify the WIC enrollment
process and to support WIC through modernization and technology. They said FNS is currently
developing strategic goals for the agency’s eﬀorts to increase access to, and use of, WIC beneﬁts
and is also developing plans to engage with stakeholders, such as state and local agencies, on this
eﬀort.

FNS plans to oﬀer new food options to help address the continuing challenge of canceled
TEFAP orders during the pandemic. FNS plans to oﬀer new food products and ways to buy food
as states continue to face challenges with canceled TEFAP orders. We previously reported that
TEFAP orders FNS canceled during the pandemic led to shortages of certain products, such as
canned meats, soups, and vegetables, in food banks nationwide at a time of increased demand
and made it diﬃcult for states to spend TEFAP funds provided through COVID-19 relief laws. We
reported that FNS canceled orders for several reasons, including a lack of vendor bids on the
orders, unavailability of food due to supply chain issues, and increased costs for transportation
and raw materials.

In April 2021, FNS oﬃcials told us that these factors continued to contribute to cancelations of
TEFAP orders but that there were fewer canceled orders than in the past. According to FNS data
from March 2020 to March 2021, the magnitude of canceled TEFAP orders in terms of both the
estimated value of the food and total number of truckloads was highest in October 2020, at 33
percent, and decreased by March 2021 to 18 percent. Oﬃcials from the American Commodity
Distribution Association and Feeding America agreed that canceled TEFAP orders continued to be
a challenge and that the causes remained the same.

To address these challenges, according to FNS oﬃcials, the agency is working to add new food
products and prepackaged, fresh produce to TEFAP to help ensure states can spend COVID-19
funds before they expire on September 30, 2021. On April 9, 2021, USDA announced that it would

294Pub. L. No. 117-2, § 1105(e), 135 Stat. 4, 17. The WIC cash-value voucher allows participants to purchase fruits and
vegetables at grocery stores and farmers’ markets.
295Pub. L. No. 117-2, § 1106, 135 Stat. 4, 17. The provision is applicable to WIC and the WIC Farmers’ Market Nutrition
Program. The waiver authority provided under the act does not apply to the content of the WIC food packages or to
certain regulatory nondiscrimination requirements.
296According to a December 2019 FNS report, about 51 percent of eligible individuals participated in WIC in an average
month in 2017.

Page 193 GAO-21-551
add prepackaged produce boxes as an option for TEFAP through the rest of ﬁscal year 2021, as
it ends a similar program that provided boxes of food to food banks and other providers.297 FNS
oﬃcials told us that, although they believe states and food banks will appreciate the fresh-produce
option, the agency is testing this approach to assess demand for prepackaged produce boxes and
whether to continue oﬀering them.

Oﬃcials from Feeding America said they appreciated how intentional USDA has been in gathering
insight from Feeding America’s food bank network regarding adding new food products to
TEFAP, including type, size, and method of packaging. Oﬃcials from the American Commodity
Distribution Association said the box of mixed produce does not replace canceled shelf-stable
items, as fresh produce must be distributed within 30 days of receipt and is extremely diﬃcult to
move. Further, according to Feeding America oﬃcials, although COVID-19 relief funds for TEFAP
will help to some extent, they are expecting a 30 to 40 percent drop in USDA foods in Feeding
America’s food bank network during 2021, given that a USDA trade mitigation program has
ended.298

Methodology
To conduct our work, we reviewed FNS data on program participation through March 2021 that
were released in June 2021 and FNS data on expenditures as of May 31, 2021—the most recent
data available at the time of our analysis. We determined these data were suﬃciently reliable for
our purposes by reviewing program documentation, discussing the data with knowledgeable FNS
oﬃcials, and conducting manual testing for outliers or other errors.

In addition, we interviewed oﬃcials from FNS’s National Oﬃce and all seven FNS regional oﬃces.
We also interviewed SNAP oﬃcials in ﬁve states—California, Illinois, Louisiana, Montana, and
Virginia—selected on the basis of a variety of factors, including states’ overall SNAP participation
rates, requests for certain SNAP adjustments during the pandemic, methods of issuing Pandemic
EBT beneﬁts for school year 2019–20, and geographic diversity. In interviews with FNS and state
oﬃcials, we discussed their experiences in administering SNAP and Pandemic EBT during the
pandemic, FNS’s guidance and assistance to states, and program integrity issues. Further, we
reviewed relevant federal laws, FNS guidance, and relevant documents. Finally, we interviewed,
or otherwise solicited input from, representatives of the American Commodity Distribution
Association, the American Public Human Services Association, Feeding America, and the National
WIC Association.

297According to the notice, the boxes will include an assortment of fruits and vegetables that meet speciﬁc requirements
for weight, variety, and shelf life. USDA ended the Farmers to Families Food Box Program on May 31, 2021, and plans to
apply lessons learned from this program to inform other activities, such as the TEFAP fresh-produce initiative, according
to USDA oﬃcials.
298According to USDA, most of the food purchased through USDA trade mitigation programs is provided to states for
distribution to the network of food banks and food pantries that participate in TEFAP. In ﬁscal years 2019 and 2020,
USDA provided more than $2.2 billion in food through its trade mitigation eﬀorts. The Farmers to Families Food Box
Program, which ended on May 31, 2021, is separate from USDA trade mitigation programs.

Page 194 GAO-21-551
Agency Comments
We provided a draft of this enclosure to FNS and OMB for review and comment. FNS provided
technical comments, which we incorporated as appropriate. OMB did not provide comments.

GAO’s Ongoing Work
Our work on FNS’s response to COVID-19 through its nutrition assistance programs is ongoing.
We will continue to examine FNS’s use of COVID-19 relief funds, its eﬀorts to ensure program
integrity, and its eﬀorts to help vulnerable populations access the programs. In addition, we will
continue monitoring FNS’s actions to ensure stakeholders and the public have suﬃcient context
to understand and interpret data on federal nutrition assistance programs during the pandemic.
Moreover, we will continue monitoring FNS’s actions to ensure stakeholders and the public are
aware of potential sources of error in its data on participation and expenditures for some of its
nutrition assistance programs during the pandemic.

GAO’s Prior Recommendations
The table below presents our recommendation from a prior bimonthly CARES Act report.

Page 195 GAO-21-551
Prior GAO Recommendation Related to COVID-19 Nutrition Assistance
Recommendation Status

The Secretary of Agriculture should ensure that the Administrator Open. As of June 2021, the Food and Nutrition
of the Food and Nutrition Service (1) provides suﬃcient context to Service (FNS) had taken steps toward implementing
help stakeholders and the public understand and interpret data this recommendation. For example, the agency
on federal nutrition assistance programs during the pandemic and added several table notes to data it released in April
(2) discloses potential sources of error that may aﬀect data quality 2021 to help provide stakeholders and the public
during the pandemic, such as manual processing. For example, with suﬃcient context to understand and interpret
the agency could publish key information from its internal key data. FNS oﬃcials said the agency is currently
communications plan that it developed for the January 2021 data discussing next steps for disclosing potential
release and include additional table notes in subsequent data sources of error, such as manual processing of
releases to help explain these issues (March 2021 report). participation and expenditures data for some
programs.

Source GAO. I GAO-21-551

Related GAO Product
Payment Integrity: Selected Agencies Should Improve Eﬀorts to Evaluate Eﬀectiveness of Corrective
Actions to Reduce Improper Payments. GAO-20-336. Washington, D.C.: April 1, 2020.

Contact information: Kathryn A. Larin, (202) 512-7215, larink@gao.gov

Page 196 GAO-21-551
Child Nutrition
The Food and Nutrition Service has taken multiple steps to increase children’s access to meals
during the COVID-19 pandemic; however, federal child nutrition programs continue to serve fewer
meals than before the pandemic, and schools face ongoing challenges in increasing meal service
in the 2021–22 school year.

Entity involved: Food and Nutrition Service, within the U.S. Department of Agriculture

Background
Federal child nutrition programs administered by the U.S. Department of Agriculture’s (USDA)
Food and Nutrition Service (FNS) help improve children’s nutrition and combat child hunger by
providing cash reimbursements for meals and snacks for eligible children in schools or at other
locations when schools are closed. The largest programs, the National School Lunch Program
(NSLP) and School Breakfast Program (SBP), subsidize meals for nearly 30 million children in
approximately 95,000 elementary and secondary schools nationwide in a typical year.299 NSLP
and SBP typically serve children at school during the school year. In addition, the Summer Food
Service Program (SFSP) and Seamless Summer Option (SSO) typically provide meals for school-
age children during the summer months. Finally, the Child and Adult Care Food Program (CACFP)
provides meals to younger children enrolled for care at participating childcare centers and day
care homes, and to school-age children participating in CACFP At-risk Afterschool programs.300 In
general, FNS provides the largest subsidies for free- or reduced-price meals and snacks served to
children from low-income households.

According to the Census Household Pulse Survey, from April 2020 through February 2021, the
percentage of U.S. households with children reporting that they often or sometimes did not have
enough to eat in the last 7 days ﬂuctuated from roughly 12 to 15 percent.301 As we reported
in September 2020 and March 2021, FNS granted various nationwide waivers in response to
pandemic-related school closures that began in spring 2020, to facilitate meal provision while

299Congressional Research Service, School Meals and Other Child Nutrition Programs: Background and Funding, R46234
(Washington, D.C.: April 1, 2021).
300This review covers meals served under the childcare centers portion of the Child and Adult Care Food Program,
which also serves meals to eligible adults enrolled for care at adult day care centers. The Special Supplemental Nutrition
Program for Women, Infants, and Children (WIC) program is not included in this review. The Seamless Summer Option is
a program that allows school districts to operate a modiﬁed version of the National School Lunch Program and School
Breakfast Program in the summer or during unanticipated school closures. The program is reimbursed at the same rate
as the National School Lunch Program. In contrast, the Summer Food Service Program has a higher reimbursement rate.
301To account for the sample representation and design used in the Household Pulse Survey (HPS), we conducted
this analysis using the household weight present in the HPS data These estimates have a margin of error of plus or
minus 1.3 percentage points or less at the 95 percent conﬁdence level. The HPS, an experimental data product, is
an interagency federal statistical rapid-response survey to measure household experiences during the COVID-19
pandemic. The survey is conducted by the Census Bureau in partnership with seven other agencies from the Federal
Statistical System. Response rates have ranged from 1.3 to 10.3 percent. In March 2021, Census published the results
of a nonresponse bias analysis that identiﬁed evidence of response patterns that could result in biased estimates. The
Census Bureau adjusted sampling weights, which can help, but may not completely, mitigate nonresponse bias. See
Sandra Peterson, Norilsa Toribio, James Farber, and David Hornick, Nonresponse Bias Report for the 2020 Household Pulse
Survey, version 1.0 (U.S. Census Bureau, Mar. 24, 2021), accessed April 23, 2021, https://www2.census.gov/programs-
surveys/demo/technical-documentation/hhp/2020_HPS_NR_Bias_Report-ﬁnal.pdf.

Page 197 GAO-21-551
limiting potential COVID-19 exposure. For example, these waivers allow meals to be served in
noncongregate settings, enable parent and guardian meal pickup, and provide ﬂexibility in foods
served and meal times.302

In addition to granting the various waiver ﬂexibilities, in spring 2020 FNS began allowing schools
and other meal providers to operate under summer meal programs—SFSP and SSO—which are
generally more ﬂexible than NSLP. FNS also waived the requirement that summer meal sites
providing free meals to all children must be located in areas where at least half of the children are
from low-income households. This waiver expanded the population of children eligible for free
meals, which eased the administrative burden of tracking and collecting payment for school meals
while maintaining social distancing guidelines.

Various COVID-19 relief laws have provided funding or authority to USDA to support child nutrition
programs during the pandemic. For example:

• The CARES Act provided $8.8 billion in supplemental funds.303 As of May 31, 2021, FNS had
disbursed nearly all of this funding to states and other meal providers, using the majority
of the funds, $8.615 billion, to reimburse providers for the cost of meals served during the
pandemic. FNS used the remainder of the funds, $185 million, to operate Emergency Meals-
to-You, a new partnership that delivered meals to address pandemic-related nutrition needs
among children from low-income households in rural areas throughout spring and summer
2020.304

• The Families First Coronavirus Response Act granted FNS authority to issue nationwide
waivers in certain programs for speciﬁc purposes.305 The Continuing Appropriations Act, 2021
and Other Extensions Act, enacted in October 2020, extended this authority and provided an
indeﬁnite appropriation to cover the costs incurred as a result of the waiver extensions.306 As
of May 31, 2021, FNS had not obligated any of this funding for child nutrition programs.

• The Consolidated Appropriations Act, 2021, enacted in December 2020, provided additional
funding to support CACFP childcare providers and school nutrition programs by replacing

302Typically, meals served through federal child nutrition programs must be served in a congregate setting and must be
consumed on site. The noncongregate waiver removes these requirements.
303Pub. L. No. 116-136, div. B, tit. I, 134 Stat. 281, 507 (2020).
304Emergency Meals-to-You was a public–private partnership between USDA, the Baylor University Collaborative on
Hunger and Poverty, McLane Global, and PepsiCo. It began as a summer pilot project in 2019 but was expanded in
response to the COVID-19 pandemic.
305Pub. L. No. 116-127, § 2202(a), 134 Stat. 178, 185 (2020). This act further authorized a new program, Pandemic
Electronic Beneﬁts Transfer (Pandemic EBT), which provides beneﬁts for food purchase to households with children
who would have received free or reduced-price school meals if not for school closures due to COVID-19. The
program also provides these beneﬁts to households with eligible children in childcare. On April 26, 2021, USDA
announced that it would oﬀer Pandemic EBT beneﬁts to all low-income children of all ages during the summer of
2021. For more information on the Pandemic EBT program, see the Nutrition Assistance enclosure in appendix I of
this report.
306Pub. L. No. 116-159, § 4602(a), (d), 134 Stat. 709, 745.

Page 198 GAO-21-551
some of the decline in reimbursement funding in spring 2020.307 As of May 31, 2021, FNS had
not obligated any of this funding for child nutrition programs.

Overview of Key Issues
School districts and other providers served one-third fewer meals in March through
November of school year 2020–21 than in the previous year, but changes varied by season.
Although waiver ﬂexibilities were in place to facilitate meal provision, according to the most recent
available data from FNS, 32 percent—over 2 billion—fewer meals were served under NSLP, SBP,
SFSP, and CACFP from March through November 2020 than during the same months in 2019 (see
ﬁgure). In total, from March through November 2020, meals served under SFSP accounted for
40 percent of all meals served under the four child nutrition programs, compared with 2 percent
during the same period in 2019. From March through November 2020, the number of meals
served under NSLP, SBP, and CACFP dropped by a combined 58 percent. As we reported in March,
school district nutrition oﬃcials we interviewed attributed this drop in meals served to several
factors, including school closures. The ﬂexibilities allowing operators to use SFSP—which has a
higher reimbursement rate and provides free meals—contributed to an increase in meals served
under SFSP during the pandemic; however, the increase in meals served under SFSP did not
make up for the decreases in the other programs. Although children may be accessing nutrition
assistance through food banks, pantries, and other programs, such as the Pandemic EBT program,
the extent to which these programs may be ﬁlling the gap is not known.

307Pub. L. No. 116-260, div. N, tit. VII, § 722, 134 Stat. 1182, 2097. This law provided an indeﬁnite appropriation of
funds, based on a formula that generally takes into account the diﬀerence between reimbursements paid from
March through June 2019 and those paid from March through June 2020.

Page 199 GAO-21-551
Total Meals Served by Key Federal Child Nutrition Programs, Mar.–Nov. 2019 and Mar.–Nov. 2020

Notes: Totals shown for CACFP include child meals only. Totals shown for SBP and NSLP include meals served through the
Seamless Summer Option, a program that allows school districts operating SBP and NSLP to continue using the same meal
service rules and claiming procedures as in the regular school year throughout the summer and during unanticipated school
closures. According to Food and Nutrition Service, the number of meals reported for any given month is subject to marginal
revisions over time for a variety of reasons, including late claims and changes that come as a result of routine monitoring
activity.

Although FNS data indicate the number of meals served under each child nutrition program,
the expanded eligibility provided by the waivers may make it diﬃcult to determine whether
children of certain ages accessed meals through these programs. Speciﬁcally, waivers allowed
more operators to oﬀer summer meal programs, which can serve all children younger than 18

Page 200 GAO-21-551
years rather than only school-age children.308 As a result, young children who would have typically
received meals from day care centers operating CACFP may have accessed meals through summer
meal programs during pandemic-related day care closures.309 At the same time, hunger advocacy
oﬃcials we interviewed in one state suggested that families whose children were not yet school
age may have been unaware of and therefore not accessing these meals, particularly if they did
not have school-age siblings.

Diﬀerences in the numbers of total meals served through NSLP, SBP, SFSP, and CACFP in school
year 2020–21 and in the prior year varied by season. During spring 2020 (March through May) and
fall 2020 (September through November), school district nutrition programs and other providers
served 42 and 33 percent fewer meals, respectively, than during the same months in 2019. In
contrast, meal providers served roughly the same number of meals in the summer 2020 (June
through August) as in summer 2019, although the number of meals served in June and July was
slightly higher in 2020 than in 2019.

Oﬃcials from half of the district nutrition programs and most of the hunger advocacy groups we
interviewed told us the ﬂexibilities provided by FNS waivers reduced typical barriers to summer
meals and presented an opportunity to expand summer food service.310 This may explain why, in
spite of the pandemic, the number of meals served was roughly the same in summer 2020 as in
summer 2019. An oﬃcial from one hunger advocacy group attributed an increase in meals served
in July 2020 speciﬁcally to the waiver ﬂexibilities allowing meals to be served in noncongregate
settings (i.e., “grab-and-go”). In addition, nutrition program oﬃcials from two of the districts told
us that schools and other providers in their areas provided more meals during summer 2020
than in prior summers. Oﬃcials from two of the hunger advocacy groups agreed, reporting that
waiver ﬂexibilities facilitated summer meal service. FNS oﬃcials said that after operating summer
meal programs during the pandemic, some districts and providers may be more likely to continue
to serve meals in future summers. Such an increase in summer meal providers could improve
children’s access to summer meals after the pandemic.

FNS leveraged an existing pilot program to distribute meals to high-need children, but
participation was regionally concentrated. FNS utilized other programs to serve meals to
children whose schools were closed during the pandemic, including Pandemic EBT and Emergency
Meals-to-You, which both served high-need children and reduced barriers to accessing food.311
FNS established the Emergency Meals-to-You program by repurposing an existing summer pilot
project (Summer Meals-to-You) to provide boxes of shelf-stable food via mail to children in rural,
high-poverty areas in spring and summer 2020.312 Through its cooperative agreement with FNS,

308According to FNS oﬃcials, FNS does not collect data on program participant age, and changing the type of data
collected would require costly and diﬃcult system changes.
309According to the National CACFP Sponsors Association, many childcare centers and day care homes have closed
permanently because of ﬁnancial challenges.
310In a May 2018 report, we identiﬁed challenges aﬀecting summer meal programs, including administrative burdens
and lack of community awareness.
311 For more information on the Pandemic EBT program, see the Nutrition Assistance enclosure in appendix I of this
report.
312In 2019, FNS partnered with Baylor University’s Collaborative on Hunger and Poverty and private partners to create
the Summer Meals-to-You pilot project, which provided breakfasts, lunches, and snacks to students in selected school

Page 201 GAO-21-551
the Baylor Collaborative on Hunger and Poverty operated Emergency Meals-to-You from April
through August 2020 and provided approximately 39 million meals to more than 270,000 children
in 345 school districts nationwide, according to FNS data.313

Access to meals during school closures in rural areas has been a persistent area of concern. For
example, in May 2018, we reported challenges with summer meal–site operations that might
contribute to underserving of rural communities, including Indian reservations. Oﬃcials from
hunger advocacy groups whom we interviewed for our current report stated that during the
pandemic, rural communities experienced limited access to federal child nutrition programs
because of challenges such as lack of transportation. The Emergency Meals-to-You program
addressed some of these challenges by shipping boxes of shelf-stable meals directly to eligible
children in participating school districts, including several districts serving American Indian
and Alaska Native children. According to our analysis, schools funded by the Bureau of Indian
Education (BIE), within the Department of the Interior, made up 6 percent of districts participating
in Emergency Meals-to-You.314

Although the program was available nationwide, almost 90 percent of meals served under
Emergency Meals-to-You went to children in the South, and approximately 50 percent were served
to children in Louisiana and Texas. Oﬃcials from FNS and the Baylor Collaborative on Hunger
and Poverty attributed this trend to high rates of rural child poverty in the South and noted that
southern state agencies actively encouraged districts to apply for Emergency Meals-to-You.315
Oﬃcials from three of the six school district nutrition programs we interviewed in non-Southern
states said they were not aware of Emergency Meals-to-You or of their district’s eligibility to
participate while the program was ongoing.

Oﬃcials from one FNS regional oﬃce told us that state nutrition oﬃces’ level of involvement was
an important predictor of districts’ participation in the program. One state nutrition program
oﬃcial suggested states may not have understood that they played a critical role in notifying
districts about the program. According to oﬃcials from the Baylor Collaborative on Hunger
and Poverty, some states were less proactive than others because their resources were already
strained during the pandemic.

districts during the summer months when schools were closed. Districts were eligible to participate in Emergency
Meals-to-You if (1) their schools served rural areas, (2) 50 percent or more of their schools’ students qualiﬁed for free
or reduced-price lunch, (3) their schools were closed for at least 4 weeks during the pandemic, and (4) their schools
participated in the NSLP. During the spring and summer of 2020, the Emergency Meals-to-You program mailed boxes of
10 breakfasts and 10 lunches to eligible students in participating school districts.
313This count of school districts participating in the Emergency Meals-to-You Program does not include four private and
public schools that participated in the program separately from a school district. However, the count includes schools
directly funded by the Bureau of Indian Education (BIE)—known as BIE schools—each of which is considered its own
local educational agency (often referred to as a school district) in the U.S. Department of Education’s Common Core of
Data (CCD). These data do not include meals served under the Summer Meals-to-You Program.
314This analysis is based on CCD data for school year 2019–20 for BIE schools, which represent less than 1 percent
of U.S. school districts. According to the CCD, there were 174 BIE schools in school year 2019–20. Oﬃcials from the
Baylor Collaborative on Hunger and Poverty reported that in addition to serving BIE schools, the Emergency Meals-to-
You program served many other schools located on or near reservations that serve American Indian and Alaska Native
families.
315According to oﬃcials from FNS and the Baylor Collaborative on Hunger and Poverty, there was already awareness of
the program in Texas because the state was part of the initial Summer Meals-to-You pilot program.

Page 202 GAO-21-551
As school year 2021–22 begins, school learning models and other factors may aﬀect school
district nutrition programs’ eﬀorts to return meal service to prepandemic levels.

School learning models. The various learning models—remote, in-person, and hybrid—that schools
nationwide adopted during school year 2020–21 may continue in some schools in 2021–22,
presenting challenges for school nutrition programs.316 In its April 2021 handbook on safe
reopening of schools, the U.S. Department of Education stated that school leaders should design a
variety of meal distribution schedules and feeding models, such as in-person and grab-and-go, to
ensure equity among recipients.317

Nearly all of the district nutrition and hunger advocacy oﬃcials we interviewed described
challenges that aﬀected meal service under a hybrid model. For example, one district nutrition
oﬃcial reported that the district could use vans to deliver food when learning was fully remote in
spring 2020 but had to stop food delivery when the school changed to hybrid learning, because
the vans were needed for more traditional uses. In another district, a nutrition oﬃcial said that
variability in school learning models and student attendance made it diﬃcult to plan meal service
and estimate the number of students needing in-person versus grab-and-go meals. In addition,
the oﬃcial reported that the hybrid model required additional resources for serving meals in
person while also packing and distributing boxes of meals for remote learners.

Enrollment and staﬃng. Almost all of the district nutrition and hunger advocacy oﬃcials also cited
consequences of the pandemic that raised uncertainties for meal service in the coming year.
Some district nutrition oﬃcials said that the changes in student enrollment, in some cases due
to families changing districts or electing homeschooling, would make it diﬃcult to anticipate
the number of meals needed. Most district nutrition and hunger advocacy oﬃcials described
ongoing staﬃng challenges as a result of the pandemic. For example, nutrition oﬃcials in three
districts described concerns about staﬀ retention and shortages. In addition, oﬃcials in two
districts expressed concern that potential furloughs, being considered because of ﬁnancial
constraints, could exacerbate staﬃng shortages and make it diﬃcult to ﬁll these positions when
normal operations resume. In its handbook, the Department of Education noted that schools
that are reopening will need suﬃcient staﬀ to maintain services for in-person, hybrid, and remote
students. According to the National CACFP Sponsors Association, staﬃng may also be a challenge
for childcare centers and day care homes that had to let staﬀ go during the pandemic because of
low enrollment.318

Waivers. Many oﬃcials from district oﬃces and hunger advocacy organizations told us that the
FNS waivers had been critical in enabling operators to serve meals throughout the pandemic and
noted that it would be helpful if the waivers continued through school year 2021–22. In response
to state and district requests for continued ﬂexibilities, on April 20, 2021, FNS announced that it

316For information on school operating status, see U.S. Department of Education, Institute of Education Sciences,
“Monthly Schools Survey Dashboard,” accessed May 6, 2021, https://ies.ed.gov/schoolsurvey/.
317U.S. Department of Education, Oﬃce of Planning, Evaluation and Policy Development, ED COVID-19 Handbook, Volume
2-2021: Roadmap to Reopening Safely and Meeting All Students’ Needs (Washington, D.C.: 2021), accessed April 20, 2021,
https://www2.ed.gov/documents/coronavirus/reopening-2.pdf.
318Factors that may have contributed to staﬀ layoﬀs during the pandemic include limits placed on class size and
enrollment as well as families’ removal of children from childcare.

Page 203 GAO-21-551
would extend through school year 2021–22 several key waivers to aid in social distancing, such as
allowing meals to be served in noncongregate settings, enabling parent and guardian meal pickup,
and providing ﬂexibility in foods served and meal times. In addition, FNS issued a new waiver
allowing schools to operate SSO when school is open during the regular school year.319 FNS also
issued a waiver allowing SSO operators to claim these meals at the higher SFSP reimbursement
rate, with the intent of promoting nutritious meals while managing increases in pandemic-related
costs. FNS oﬃcials noted that they are currently developing guidance related to these new waivers
that will include instructions for submitting claims for reimbursements.

FNS did not extend the waiver allowing schools to operate SFSP when school is open during the
regular school year. However, because they are allowed to operate SSO, schools may continue
to provide free meals to all students in the upcoming school year without the administrative
requirement of tracking and collecting payments from students. According to FNS oﬃcials, FNS
made the decision not to extend the SFSP waivers in part because SFSP has lower nutritional
standards than SSO, which emphasizes, among other things, fruits, vegetables, and whole grains.

Methodology
To conduct our work, we analyzed the most recent data available from FNS on meals served
through four key child nutrition programs—NSLP, SBP, SFSP, and CACFP—and the Emergency
Meals-to-You program. We also used data for school year 2019–20 (the most recent available)
from the Department of Education’s CCD, matching and merging these data with the list of school
districts participating in Emergency Meals-to-You, to identify school district characteristics, such as
BIE status, from the CCD. To assess the reliability of these data, we reviewed existing information
about the data and reporting processes, interviewed agency oﬃcials, and conducted electronic
testing of the data. We determined that these data were suﬃciently reliable for our purposes.

We also reviewed relevant federal laws and agency guidance and documents, and we interviewed
oﬃcials from FNS’s national and regional oﬃces. Additionally, in four states—Georgia, Maine,
Texas, and Washington, which we selected in part on the basis of variation in geographic location
and school operating policies at the time of selection—we interviewed state nutrition directors and
oﬃcials from hunger advocacy organizations as well as district nutrition oﬃcials from three school
districts in each state. Further, we interviewed oﬃcials from the School Nutrition Association and
National CACFP Sponsors Association. The information presented from these interviews is not
intended to be representative but instead to provide examples of meal providers’ experiences
during the COVID-19 pandemic.

Agency Comments
We provided a draft of this enclosure to FNS and the Oﬃce of Management and Budget for review
and comment. They did not provide comments on this enclosure.

319The ﬂexibility to operate the SSO is available to all schools in states that opt to participate under the waiver.

Page 204 GAO-21-551
GAO’s Ongoing Work
We will continue to monitor data on the number of meals served by the child nutrition programs
FNS administers, FNS’s use of COVID-19 relief funds, and its eﬀorts to provide ﬂexibilities to states
and school districts to support child nutrition. We plan to review FNS’s monitoring and oversight of
child nutrition programs in our future work.

Related GAO Product
Summer Meals: Actions Needed to Improve Participation Estimates and Address Program Challenges.
GAO-18-369. Washington, D.C.: May 31, 2018.

Contact Information: Kathryn A. Larin, (202) 512-7215 or larink@gao.gov

Page 205 GAO-21-551
Employer Tax Relief
Employers have claimed about $17.6 billion of employer tax credits, as of May 2021; new
information on the Small Business Administration’s Paycheck Protection Program loan forgiveness
webpage, posted in response to a proposed recommendation, could help eligible borrowers make
decisions to maximize their Employee Retention Credits.

Entities involved: Small Business Administration and Department of the Treasury, including the
Internal Revenue Service

Background
The Families First Coronavirus Response Act (FFCRA) and the CARES Act provide tax credits to
covered employers to mitigate the cost of paid sick and family leave for employees aﬀected by
COVID-19, as well as provide an Employee Retention Credit for all eligible employers, among other
tax relief. The Consolidated Appropriations Act, 2021 (CAA, 2021), enacted in December 2020, and
the American Rescue Plan Act of 2021 (ARPA), enacted in March 2021, amended and extended
some aspects of these credits. The Internal Revenue Service’s (IRS) capacity to implement new
initiatives, such as the relief laws’ tax credits, is an ongoing challenge cited in our 2021 High-Risk
Report.

Tax credits for employers. The Joint Committee on Taxation (JCT) estimates that the COVID-
related tax credit provisions in the four laws will result in about $246 billion in foregone revenue
for the federal government for ﬁscal years 2021-2031.320

The paid leave credits and the Employee Retention Credit are both fully refundable payroll tax
credits, meaning that they are credited ﬁrst against certain payroll taxes (also referred to as
employment taxes), and any excess over those payroll taxes is refunded to the employer. These
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 (or next day deposits, if applicable) by the amount
of their anticipated credit.321 If an anticipated credit amount remains after reducing deposits,
employers may receive an advance payment by ﬁling Form 7200, Advance Payment of Employer
Credits Due to COVID-19.322 Form 7200 must be submitted using electronic fax (e-fax). The tax
credits include the following:

320On March 9, 2021, JCT updated estimates for forgone revenue to reﬂect changes in the American Rescue Plan
Act of 2021. JCT’s original estimate for the CARES Act and FFCRA employer provisions was $172 billion for ﬁscal years
2020-2030.
321Internal Revenue Service, COVID-19-Related Tax Credits: Basic FAQs (March 12, 2021), accessed online on May 11, 2021,
https://www.irs.gov/newsroom/covid-19-related-tax-credits-basic-faqs.
322For 2021, only employers with an average of 500 or fewer full-time employees in 2019 may receive advance
payments of the Employee Retention Credit and the amount of any such advance is limited. Pub. L. No. 116-260, §
207(g), 134 Stat. at 3063–3064.

Page 206 GAO-21-551
• Leave credits.323 Businesses and tax-exempt organizations with fewer than 500 employees
and certain government entities are eligible for refundable tax credits for sick and family
leave.324 The tax credits under the FFCRA, as amended and extended by the CAA, 2021, for
leave taken from April 1, 2020, through March 30, 2021, are equal to qualiﬁed leave wages paid
to employees, plus the employer share of Medicare taxes paid with respect to qualiﬁed wages
and allocable health plan expenses. The tax credits under the ARPA for leave taken from April
1, 2021, through September 30, 2021, are equal to qualiﬁed leave wages paid to employees,
plus the employer share of Medicare tax and the employer share of Social Security tax paid
with respect to the qualiﬁed leave wages, and allocable health plan expenses and certain
collectively bargained contributions as shown below. In the table, we summarize the FFCRA
and ARPA paid sick and family leave tax credits. Certain self-employed persons in similar
circumstances are allowed equivalent credits.

323For additional information on FFCRA paid leave provisions, including the Department of Labor’s enforcement of
these provisions, see the Leave Beneﬁts for Employees enclosure.
324Pub. L. No. 116-127, §§ 7001–7004, 134 Stat. 178, 210–219 (2020); Pub. L. No. 116-136, § 3606, 134 Stat. 281,
411–412 (2020); Pub. L. No. 116-260, § 286, 134 Stat. 1182, 1989 (2020); Pub. L. No. 117-2, § 9641, 135 Stat. 4,
161–172 (2021), codiﬁed at 26 U.S.C. §§ 3131–3133. 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 advances on their credit refunds.

Page 207 GAO-21-551
Comparison of Tax Credits for Paid Leave under the Families First Coronavirus Response Act, as amended and
extended by the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act, 2021
Families First Coronavirus Response
Act American Rescue Plan Act of 2021

Periods of leave for which Apr. 1, 2020–Mar. 31, 2021 Apr. 1, 2021–Sept. 30, 2021
employers may claim credits

Eligible entities Businesses and tax exempt Expanded to include state and local
organizations with fewer than 500 governments, as well as 501(c)(1) tax-exempt
employees and self-employed federal government entities.
individuals.

Employment tax against Employer share of Social Security tax. Changed to employer share of Medicare tax
which the credit may be for periods of leave taken after March 31,
applied 2021.

Qualifying paid leave Sick leave: Includes quarantine or Sick leave: Expanded to include obtaining
deﬁnitions isolation order (or caring for someone a COVID-19 vaccine or illness related to
under these orders), seeking COVID-19 immunization, or waiting for COVID-19 test
diagnosis, and childcare. results.
Family leave: Childcare when school Family leave: Expanded to include all
or other care is unavailable due to qualifying reasons for paid sick leave.
COVID-19.

Qualifying wages for the Sick leave: Wages paid for up to 80 Sick leave: Credit also increased for certain
credits and credit maximums hours for a full-time employee and collectively bargained contributions and
allocable health plan expenses and the employer’s share of Social Security tax
employer share of Medicare taxes. b
imposed on the wages. A new 80-hour period
Credit maximum is dependent on the for paid leave eligible for the credits for leave
a
purpose for taking the sick leave. wages after March 31, 2021.
Family leave: After 10 days of Family leave: Credit also increased for certain
other leave (unpaid, personal, etc.), collectively bargained contributions and
employees receive leave that is at least the employer’s share of Social Security tax
two-thirds of their usual pay (max $200 imposed on the wages. The ﬁrst 10 days of
per day and $10,000 total per employee) leave may qualify as paid family leave wages
and allocable health plan expenses. and the per-employee limit is increased to
$12,000 and resets for periods of leave after
March 31, 2021.

Source: GAO analysis. | GAO-21-551

a
Qualiﬁed sick leave wages cannot exceed $511 per day ($5,110 total) for employees if they are taking leave because of a
government quarantine or isolation order, self-quarantine, or seeking a COVID-19 diagnosis or related to vaccination when
ARPA is in eﬀect. Qualiﬁed sick leave wages cannot exceed $200 per day ($2,000 total) for employees if they are caring for
someone in quarantine or isolation or caring for a child.
b
Certain collectively bargained contributions’ includes deﬁned beneﬁt pension plan contributions which are paid or incurred
by an employer during the calendar quarter on behalf of its employees to a deﬁned beneﬁt plan which meets certain
requirements, are made based on a pension contribution rate, and are required to be made pursuant to the terms of
a collective bargaining agreement. The term also includes contributions which are paid or incurred by an employer on
behalf of its employees with respect to the calendar quarter to a registered apprenticeship program, are made based on
an apprenticeship program contribution rate, and are required to be made pursuant to the terms of a collective bargaining
agreement.

• Employee Retention Credit. Under the CARES Act as amended by the CAA, 2021 and ARPA,
eligible employers of any size—including tax-exempt entities, certain governmental entities,

Page 208 GAO-21-551
and self-employed individuals with employees—can claim the refundable Employee Retention
Credit.325 The credit amount is based on qualiﬁed wages paid to employees, including
certain health care expenses. Qualiﬁed leave wages for which leave credits are allowed are
not included in qualiﬁed wages for which an employer may claim the Employee Retention
Credit.326 The table below describes statutory changes made to the Employee Retention
Credit.

325Some government entities, including tribal governments, tribal entities, state- or locally-run colleges, universities,
and organizations providing medical or hospital care, are also eligible for the Employee Retention Credit. The
Employee Retention Credit created by the CARES Act and amended by CAA, 2021, was not made as an amendment
to the Internal Revenue Code (IRC) and is classiﬁed as a note to section 3111 of the IRC. Pub. L. No. 116-136, § 2301,
134 Stat. at 347–351; Pub. L. No. 116-260, div. EE, § 206, 134 Stat. at 3059–3061.The Employee Retention Credit
created by ARPA was added as section 3134 of the IRC. Pub. L. No. 117-2, § 9651, 135 Stat. at 176–182.
326There are other wages for which an employer may not claim the Employee Retention Credit. For example, the
Employee Retention Credit cannot be claimed for wages for which the Work Opportunity Tax Credit (WOTC) is
claimed in the third and fourth quarters of 2021. In the ﬁrst and second quarters of 2021, the WOTC cannot be
claimed on any wages for which the Employee Retention Credit is claimed.

Page 209 GAO-21-551
Selected Changes to the Employee Retention Credit in the American Rescue Plan Act, 2021 and Previous
Legislation
Changes in the
Consolidated Changes in the American
CARES Act Appropriations Act, 2021 Rescue Plan Act of 2021

Eligibility period for Mar. 13–Dec. 31, 2020 Extended Jan. 1–June 30, Extended through Dec. 31,
qualiﬁed wages paid 2021 2021

Eligible entities Any employer operating a Expanded to include: No change
trade or business or a tax- • public colleges or
exempt organization, except
universities,
governments and their agencies
and instrumentalities • government entities
whose principal purpose
is medical or hospital
care, and

• certain tax-exempt
a
federal entities

Employment tax oﬀset Employer portion of Social No change Changed to employer portion
Security tax of Medicare tax

Eligibility Employers must experience Amended to require that Amended to also allow
requirements either: gross receipts decline to 80 “recovery startup
percent of gross receipts for businesses”, who otherwise
full or partial suspension of
the same quarter in 2019; would not meet eligibility
operations due to governmental
employers may elect to make criteria, to be eligible to claim
orders during any quarter or
the determination using the the creditd
signiﬁcant decline in gross c
previous calendar quarter
receipts, more than 50 percent
for the same calendar quarter in
b
2019

Percent of qualiﬁed 50 percent of qualiﬁed wages Increased maximum to Maximums unchanged.
wages eligible for ($10,000 per employee for the 70 percent ($10,000 per “Severely ﬁnancially
credit
e year), including certain health care calendar quarter per distressed employers” may
expenses employee) for wages paid treat all wages as qualiﬁed
100 or fewer employees, all wages between January 1 and June wages
f
30, 2021
count toward qualiﬁed wages
500 or fewer employees, all No change for small
wages count toward qualiﬁed employer qualiﬁed wages
wages

Credit maximums Maximum credit of $5,000 per Increased the maximum Quarterly maximum
employee in 2020 per employee to $7,000 per unchanged, but extension
employee per quarter in of dates means $28,000
2021 possible per employee in
2021
“Recovery startup
businesses” may receive
up to $50,000 per calendar
quarter

Page 210 GAO-21-551
Changes in the
Consolidated Changes in the American
CARES Act Appropriations Act, 2021 Rescue Plan Act of 2021

Interaction with Generally, an employer receiving PPP borrowers are eligible No change
Paycheck Protection a PPP loan is not eligible for the for the Employee Retention
Program (PPP) employee retention credit (but see Credit retroactive to 2020.
retroactive change for 2020). However, employers cannot
use the same wages for
the credit and to obtain
forgiveness of the PPP loan.

Source: GAO analysis. | GAO-21-551

a
An organization described in section 501(c)(1) of the Internal Revenue Code can claim the credit.
b
Employers are no longer eligible in the ﬁrst quarter after the one in which gross receipts are more than 80 percent of the same
quarter in the previous calendar year.
c
Businesses formed in 2020 may use the same quarter in 2020 to establish eligibility.
d
Employers which began carrying on any trade or business after February 15, 2020, with average annual gross receipts in the
prior three tax years that do not exceed $1 million and that do not experience a full or partial suspension of operations due to a
governmental order or a decline in gross receipts.
e
Small eligible employers may treat wages paid to employees for providing services and wages paid to employees for not
providing services as qualiﬁed wages. Large eligible employers may treat only wages that are paid to employees who are not
providing services as qualiﬁed wages.
f
Severely ﬁnancially distressed employers are those with gross receipts that are less than 10 percent of what they were in the
same calendar quarter in 2019.

• Consolidated Omnibus Budget Reconciliation Act (COBRA) Premium Assistance Credit. Under
federal COBRA requirements and comparable state laws, certain employers must provide
employees who experienced speciﬁc events with the option for continued health insurance
coverage.327 Under ARPA, eligible individuals are provided with a 100 percent premium
subsidy of COBRA coverage for periods of coverage from April 1, 2021, through September
30, 2021.328 Employers generally are required to cover the costs of the individual’s subsidized
COBRA coverage, but can oﬀset costs with a refundable tax credit in certain instances. In other
circumstances, a multiemployer plan, or health insurance issuer should cover the subsidized
cost and will claim the tax credit. In cases not addressed in the prior two sentences the insurer
is eligible for the credit.

Deferred payroll tax payments for employer share of Social Security. 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

327Federal COBRA requirements apply to private sector employers, and state and local government employers that
have 20 or more employees and oﬀer their employees employer-sponsored health insurance coverage, and states
may impose comparable requirements on other entities. Individuals can receive COBRA premium assistance if they
experienced an involuntary termination (except in the case of gross misconduct) or reduction in hours and elect
COBRA coverage.
328Pub. L. No. 117-2, § 9501, 135 Stat at 127–138. Premium assistance will end earlier if an individual becomes
eligible for a diﬀerent group health plan or Medicare, or the end of the maximum continuation period is reached.

Page 211 GAO-21-551
December 31, 2020.329 Self-employed individuals could defer half of their Social Security taxes
imposed on net earnings from self-employment during the same period.330 Deferred deposits and
payments are to be reported on their employment tax returns, typically on Form 941.331

Deferred payroll tax payments for employee share of Social Security. On August 8, 2020,
the President signed a presidential memorandum that, in part, directed the Secretary of the
Treasury to exercise authority under section 7508A of the Internal Revenue Code.332 In response,
IRS issued Notice 2020-65, which allowed for deferral of the withholding, deposit, and payment of
the employee share of certain employment taxes imposed on wages or compensation paid from
September 1, 2020, through December 31, 2020, if an employee’s wages or compensation are
below a certain amount in a pay period.333 The presidential memorandum directed the Secretary
of the Treasury to make this deferral available to an employer for employees whose earnings
during any biweekly pay period generally are less than $4,000 on a pre-tax basis, or the equivalent
amount with respect to other pay cycles. Under the CAA, 2021, and Notice 2021-11, payments may
be collected until December 31, 2021.334 Collection of the deferred tax results in a reduction in
take-home pay as compared to what would have occurred without the deferral.

Overview of Key Issues
Status of tax credit claim processing. IRS continues to process a paper return backlog, which
makes the data on tax credit claims and deferrals incomplete, particularly for small employers
who tend to ﬁle on paper. Additional claims for the Employee Retention Credit, with regard to
2020 qualiﬁed wages, are also being processed as Paycheck Protection Program (PPP) borrowers

329Pub. L. No. 116-136, § 2302, 134 Stat. at 351–352, as amended by the Paycheck Protection Program Flexibility Act,
Pub. L. No. 116-142, § 4, 134 Stat. 641, 643 (2020). 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 Social Security wage base cap on taxable income.
330Self-employed individuals pay the employer and employee tax share, which is 12.4 percent of taxable earnings, up to
the Social Security wage base cap on taxable income.
331Deferred payments for self-employment taxes are reported on Form 1040, Schedule SE and deferred payments for
household employment taxes are reported on Form 1040, Schedule H.
332U.S. Presidential Memorandum, Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19
Disaster (Aug. 8, 2020), accessed online March 15, 2021, https://trumpwhitehouse.archives.gov/presidential-actions/
memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster/. The memorandum also directs the
Secretary to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the
implementation of this memorandum.”
333IRS Notice 2020-65, 2020-38 I.R.B. 567 (Sept. 14, 2020), available online at: https://www.irs.gov/irb/2020-38_IRB
(accessed May 17, 2021). We were asked to issue a legal decision regarding whether Notice 2020-65 is a rule under the
Congressional Review Act. We determined that since IRS submitted Notice 2020-65 to us under the Congressional Review
Act, there is no need for a legal decision from our oﬃce. See GAO, Request for a Congressional Review Act Opinion on IRS
Notice 2020-65, B-332517 (Washington D.C.: September 2020). As noted in our correspondence, on September 4, 2020,
Representative John Larson of Connecticut introduced House Joint Resolution 94 which is a resolution of disapproval of
the Notice. H. R. J. Res. 94, 116th Cong. (2020).
334Pub. L. No. 116-260, div. N, § 274, 134 Stat. at 1978; IRS Notice 2021-11, 2021-6 I.R.B 827 (Feb. 8, 2021). The guidance
directs employers to ratably withhold and pay the deferred taxes, meaning, in general, equally apportioned across the
period.

Page 212 GAO-21-551
who became newly eligible for the Employee Retention Credit ﬁle retroactively.335 Most of these
newly eligible employers use Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim
for Refund, which can be ﬁled only on paper.336 Several payroll and tax professional industry
representatives said refunds from Forms 941-X are delayed. IRS oﬃcials said it is taking longer
to process returns because IRS facilities that process paper employment tax returns continue to
operate at reduced capacity to accommodate social distancing. As of May 2021, IRS oﬃcials said
they are opening mail in normal time frames but are still processing returns received in 2020. IRS
reported about 2.5 million unprocessed Forms 941 as of June 9, 2021.337

IRS also continues to process Forms 7200 for tax credit advance refunds. As of May 13, 2021,
according to IRS oﬃcials, IRS had issued $780.4 million in advance payments.338 As of May 17,
2021, IRS was taking approximately 7 weeks to process the forms, according to IRS oﬃcials. They
said they received a higher volume (compared with November and December 2020) of Forms 7200
from January to March 2021, possibly because of CAA, 2021. Six of 10 payroll and tax professional
representatives we spoke with said the employers for whom they ﬁle employment tax returns
were frustrated with the Form 7200 response, and in some cases were using Form 941 instead
because the Forms 7200 were not resulting in timely payments. Of the approximately $17.6 billion
in claims for the Employee Retention Credit and leave credits claimed, as of May 2021 we found a
little over 1 percent were also ﬁled as advance payments through a Form 7200 ﬁling.339

IRS designated almost 60 percent (39,722 of 67,310 ) of Form 7200 claims it received as of May 17,
2021, as “rejected,” according to IRS oﬃcials. According to IRS oﬃcials, the most common reasons
for rejecting a Form 7200 claim were that the ﬁler provided an unauthorized signature or ﬁled a
Form 7200 after submitting a Form 941 for the quarter or after the due date of the Form 941 for
the quarter. Additional rejections resulted from the newly eligible PPP borrowers who submitted
Forms 7200 in January 2021 claiming the Employee Retention Credit, when they should have used
a Form 941-X instead because those quarters were already closed. IRS said as of May 17, 2021, it
had mailed 26,858 letters to employers whose Form 7200 claims were rejected. IRS also continues
to process Forms 7200 for claims for advanced payments of employer credits for COVID -19.

335The CAA, 2021 amended the CARES Act to allow PPP loan recipients to claim the Employee Retention Credit for
qualiﬁed wages, although qualiﬁed wages for which the credit is claimed cannot be used to support forgiveness of
the PPP loan. This change was retroactive to March 27, 2020, the date of the enactment of the CARES Act. Pub. L. No.
116-260, div. N, § 206(c)(2)(B)(i), 134 Stat. at 3061.
336Certain employers could have also made claims using the “fourth quarter rule” for certain 2020 second and third
quarter credits for which they were previously ineligible. IRS oﬃcials said it is not possible to know the number of these
claims because they cannot be diﬀerentiated from other Employee Retention Credit claims.
337In our March 2021 report on the 2020 ﬁling season, we raised concerns about IRS’s paper backlog and also
recommended that IRS identify barriers taxpayers face to e-ﬁling business-related returns. IRS agreed with the
recommendation and said it will take steps to assess the barriers.
338Some of these advances are also included in the table in the next section because employers are to report on
employment tax returns the advance payments they have received.
339This calculation is based on the amount of advance payments reported by taxpayers on employment tax returns,
which diﬀers from the amount of advance payments IRS has issued. For additional details on the data we analyzed,
see the next section in this enclosure on credit claims. Additionally, IRS oﬃcials said many taxpayers are not reporting
advances received. IRS found that of the $631.8 million in advances paid for tax year 2020, for which a return has been
ﬁled or processed, taxpayers reported $272.9 million in advances. Therefore, the number we report may be lower than
the actual.

Page 213 GAO-21-551
IRS issued a “tax tip” in April 2020 outlining common errors on Form 7200 and another tip in May
2021 outlining additional steps that can help employers ensure their Form 7200 is accurate, which
can prevent processing delays. IRS oﬃcials said they conduct monthly outreach calls with the
payroll industry, and the Form 7200 instructions has additional tips. They said they are considering
additional outreach.

Data on employer use of tax credits and deferrals. Some data on the use of these tax
provisions are available, though data are incomplete due to backlogs and data availability issues
on annual ﬁlings. At the time of our analysis in May 2021, IRS had processed employer tax return
ﬁlings claiming about $7.4 billion in leave credits and about $10.2 billion in Employee Retention
Credits (see table).340 Of the approximately 17 million employment tax return ﬁlings received, less
than 1 percent of employers ﬁled to claim the Employee Retention Credit.341

340The tax credit dollar ﬁgures we are reporting are as reported by taxpayers and are subject to taxpayer reporting
error. These ﬁgures may diﬀer from IRS’s reported ﬁgures because we are reporting what was ﬁled without adjustments.
These ﬁgures represent paper returns as of May 5, 2021 (main Form 941) and May 19, 2021 (Schedule R) and e-ﬁle
returns, as of May 26, 2021 and include quarterly returns from second quarter through fourth quarter 2020. We did not
analyze credits for self-employed individuals, which are reported on their income tax return, and annual employment
tax returns.
341We calculated this using the number of total unique employer ﬁlers (including those listed on Schedule R), and the
total number unique employers claiming the Employee Retention Credit.

Page 214 GAO-21-551
Number and Amount of Leave Credits and Employee Retention Credits Claimed, as of May 2021
Number of Dollars claimed
Provision employers claiming ($ billions)

Leave credits 766,819 7.4

Employee Retention Credit 146,492 10.2

Source: GAO analysis of Internal Revenue Service data. | GAO-21-551

Notes: The tax credit dollar ﬁgures we are reporting are as reported by taxpayers and are subject to taxpayer reporting error.
These ﬁgures may diﬀer from IRS’s reported ﬁgures because we are reporting what was ﬁled without adjustments. The table
includes quarterly returns from second through fourth quarter 2020, including electronically ﬁled (e-ﬁle) returns and about 6.7
million paper ﬁlings. Paper return data are as of May 5, 2021 (main Form 941) and May 19, 2021 (Schedule R), and e-ﬁle data are
as of May 26, 2021. The second quarter 2020 returns include amounts for the Employee Retention Credit from the end of the
ﬁrst quarter because legislation passed too late in the quarter to be reported then. Dollars claimed as credits include amounts
also received as advance payments requested on Form 7200. We did not analyze credits for self-employed individuals, which
are reported on their income tax return, and annual employment tax returns. The Internal Revenue Service also continues to
process a paper return backlog, which makes the data in the table above incomplete, particularly for small employers.

We found a total of 424,354 employers deferred about $112 billion in Social Security taxes for
the employer and employee share together.342 All 10 of the payroll and tax preparer industry
representatives we spoke with said the employer share deferral was the most widely used of
the tax-related COVID-19 relief provisions for employee retention. For example, the deferral
functioned like an interest free loan, according to one tax professional.

Employee Retention Credit and PPP loan forgiveness. Certain employers who applied for
forgiveness of their PPP loans may have included information in the application that subsequently
reduced their eligibility for the Employee Retention Credit. Speciﬁcally, IRS Notice 2021-20,
issued on March 1, 2021, states that employers who include any qualiﬁed wages in the amount
reported to the Small Business Administration (SBA) as payroll costs when applying for PPP loan
forgiveness, unless the loan is not forgiven, are deemed to have elected to not take those qualiﬁed
wages into account for purposes of the credit.343 See example.

Example of Tax Implications from Payroll Cost Allocations for Paycheck Protection Program (PPP) Loan
Forgiveness
An employer received a PPP loan of $200,000. That employer had $200,000 in payroll costs and $70,000 of other PPP-
eligible costs. The $200,000 in payroll costs could also have qualiﬁed for the Employee Retention Credit.
Scenario A: The employer submitted a PPP loan forgiveness application and reported the $200,000 of qualiﬁed wages
as payroll costs, but did not report the other eligible expenses (such as rent or utilities) of $70,000. The employer’s
entire loan was forgiven. However because the full $200,000 of qualiﬁed wages were reported on the forgiveness
application, per IRS Notice 2021-20, no portion of those wages may be treated as qualiﬁed wages for the Employee
Retention Credit. The employer cannot reduce the deemed election by the amount of the other eligible expenses that it
could have reported on its forgiveness application, according to the Notice.

342We could not separate employee and employer share of the deferrals because data from Form 941 that breaks out
the two were not available at the time of our analysis.
343IRS Notice 2021-20, 2021-11 I.R.B. 922 (Mar. 15, 2021), available online at: https://www.irs.gov/pub/irs-irbs/
irb21-11.pdf (accessed May 18, 2021). Eligible employers may elect not to take into account certain qualiﬁed wages for
purposes of the credit. Pub. L. No. 116-260, div. N, § 206(c)(2)(A), 134 Stat. at 3060–3061.

Page 215 GAO-21-551
Scenario B: The employer submitted a PPP loan forgiveness application and reported $70,000 of eligible non-payroll
expenses and $130,000 of payroll costs. The employer’s entire loan was forgiven. The employer may use the remaining
$70,000 in payroll costs not reported on the application as qualiﬁed wages for the Employee Retention Credit.

Source: GAO analysis of Internal Revenue Service guidance. | GAO-21-551

To qualify for full PPP loan forgiveness, borrowers must spend at least 60 percent of proceeds on
wages and beneﬁts (eligible payroll costs). The remainder may be other eligible non-payroll costs,
such as rent and utilities.344 According to our analysis of SBA data, 911,288 of the approximately
2 million PPP borrowers who applied for PPP loan forgiveness by March 1, 2021, reported more
than 60 percent payroll costs on their application for PPP loan forgiveness.345 Therefore, if they
had other potentially eligible expenses that they could have reported, they may have missed
opportunities to maximize the qualiﬁed wages available to claim the Employee Retention Credit.
Borrowers could also make decisions about the covered period for their loan, which may aﬀect
availability of qualiﬁed wages for the Employee Retention Credit. We are continuing to analyze
this situation and any possible options IRS might have for allowing additional credit eligibility,
consistent with the law.

As of May 10, 2021, about 37 percent of the forgiveness applications for PPP loans made in 2020
could still be submitted. SBA accepted new loan applications until May 4, 2021, according to SBA
oﬃcials, and community ﬁnancial institutions could still enter loan guaranty applications into SBA’s
loan portal through May 31, 2021. As of May 2021, neither the loan forgiveness application, its
instructions, nor the loan forgiveness frequently asked questions on SBA’s website mentioned how
borrowers’ allocations of loan proceeds aﬀect the Employee Retention Credit.

In a draft of this report, we recommended to IRS and SBA that the agencies work together to
disseminate information in the SBA loan forgiveness guidance on the tax implications of payroll
cost allocations to the PPP loan forgiveness applicants. In response to our draft recommendations
and prior to ﬁnal issuance of this report, SBA worked with Treasury to develop language for its
PPP loan forgiveness guidance web page noting the potential tax implications of loan forgiveness
applications, and linking to IRS guidance on the Employee Retention Credit. The language was
posted on June 11, 2021. This information could help employers—particularly those who do not
work with tax professionals—make decisions that allow them to maximize the Employee Retention
Credit.

Methodology
To conduct our work, we reviewed federal laws and agency documents; and interviewed oﬃcials
at IRS and SBA, and representatives from two tax and payroll professional organizations. We
selected the organizations because of their members’ prominent role in working with a large
number of employers. We interviewed 10 members selected by these organizations. Because
these members are from a nongeneralizable sample, we cannot make inferences about the

344The ﬁrst round of PPP loan applications closed on August 8, 2020, and the forgiveness applicants prior to March 1,
2021 were from this round.
345 Not all PPP borrowers may have paid qualiﬁed wages or be an eligible employer that would qualify for the Employee
Retention Credit.

Page 216 GAO-21-551
populations of professionals. We also analyzed IRS employment tax data as of May 2021 and SBA
data as of May 17, 2021. We determined that the data were suﬃciently reliable for our purposes
by comparing with other data sources, such as our previous work and other IRS data, and checking
for outliers.

Agency Comments
We provided IRS, Treasury, the Oﬃce of Management and Budget, and SBA with a draft of this
enclosure, which included two recommendations. IRS provided written comments that are
summarized below and reproduced in Appendix VIII: Comments from the Internal Revenue
Service. IRS, Treasury, and SBA provided technical comments, which we incorporated as
appropriate. The Oﬃce of Management and Budget did not have any comments on this enclosure.

IRS disagreed with our recommendation to work with the SBA to disseminate information in
SBA loan forgiveness guidance on the tax implications of payroll cost allocations to PPP loan
forgiveness applicants. However, because SBA worked with Treasury and posted IRS guidance on
its loan forgiveness website, we removed the recommendations and no further action is required.

GAO’s Ongoing Work
We will continue to monitor information on SBA and IRS guidance. We plan to conduct additional
analysis of employment tax returns on the use of these provisions, and on how IRS is adapting to
the administration of the credits.

GAO’s Prior Recommendations
The table below presents our recommendations on employer tax relief from prior bimonthly
CARES Act reports.

Page 217 GAO-21-551
Prior GAO Recommendations Related to Employer Tax Relief
Recommendation Status

The Commissioner of Internal Revenue should leverage Open. IRS agreed with our recommendation. IRS
employee counts from Form 941, Employer’s Quarterly Federal provided an updated compliance plan, as of May 18,
Tax Return, and Form 943, Employer’s Annual Federal Tax Return 2021. The plan states that IRS is considering Forms
for Agricultural Employees, to identify potentially ineligible 941 and 943 line 1 data in conjunction with W-2 (Wage
COVID-19 related sick and family leave credit claims, and and Tax Statement) information as well as other data to
address discrepancies the Internal Revenue Service deems identify potentially ineligible COVID-19 related credit
signiﬁcant. claims, and address discrepancies IRS deems signiﬁcant.
We will continue to monitor IRS’s plans for evidence that
the employee counts will be leveraged.

The Commissioner of Internal Revenue should conduct Closed-implemented. In May 2021, IRS released a “tax
outreach to employment tax return ﬁlers to educate and tip” for employment tax return ﬁlers reminding them
promote accurate reporting of employee counts on Form to ensure that line 1 of their return is accurate, and
941, Employer’s Quarterly Federal Tax Return, and Form 943, referring employers to the form instructions for details.
Employer’s Annual Federal Tax Return for Agricultural Employees. This information could support compliance eﬀorts,
which can result in multiple beneﬁts including—helping
taxpayers understand their responsibilities for tax
compliance, and a decrease in potentially ineligible credit
claims.

Source: GAO analysis. | GAO-21-551

Related GAO Products
High Risk Series: Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas.
GAO-21-119SP. Washington, D.C.: March 2, 2021.

Tax Filing: Actions Needed to Address Processing Delays and Risks to the 2021 Filing Season.
GAO-21-251. Washington, D.C.: March 1, 2021.

Contact information: Jessica Lucas-Judy, (202) 512-6806, lucasjudyj@gao.gov

Page 218 GAO-21-551
Leave Beneﬁts for Employees
The Department of Labor provided information to employers and employees about COVID-19-
related paid leave provisions and has continued to enforce them, but gaps in its outreach and case
management may limit its eﬀorts to identify and resolve potential violations.

Entity involved: Wage and Hour Division, within the Department of Labor

Recommendations for Executive Action
The Administrator of the Department of Labor’s Wage and Hour Division should:

• better monitor data across all statutes that the Wage and Hour Division enforces, to ensure
the division’s case management is consistent with established policies for assigning and
prioritizing cases;

• ensure that the new data system under development includes mechanisms to prevent staﬀ
from assigning and prioritizing cases in a manner inconsistent with established policies;

• expand the Essential Workers, Essential Protections initiative on pandemic-related worker
protections to include information about ﬁling a complaint related to paid leave provided
under the Families First Coronavirus Response Act; and

• engage in a comprehensive and timely eﬀort to consult with employers, workers, and
organizations that represent them, to identify and document lessons learned from the Wage
and Hour Division’s administration and enforcement of COVID-19-related paid leave.

The Department of Labor’s Wage and Hour Division agreed with these recommendations.

Background
The Families First Coronavirus Response Act (FFCRA), as amended by the CARES Act, required
employers covered under FFCRA—in this report, covered employers—to provide emergency paid
sick leave and expanded family and medical leave to eligible employees aﬀected by COVID-19.346
FFCRA was enacted on March 18, 2020, and the Department of Labor (DOL) developed regulations
for the paid leave provisions that went into eﬀect on April 1, 2020, and expired on December
31, 2020.347 Though the requirement for covered employers to provide paid leave has ended,

346Pub. L. No. 116-127, §§ 3101-3106, 5101-5111, 134 Stat. 178, 189-192, 195-201 (2020), as amended by Pub. L. No.
116-136, §§ 3601, 3602, 134 Stat. 281, 410 (2020).The Family and Medical Leave Act of 1993, as amended (FMLA),
generally requires covered employers to provide up to 12 weeks of unpaid leave per year for eligible employees to,
among other things, care for a spouse, child, or parent with a serious health condition or for their own serious health
condition. Employees are generally eligible if they meet certain requirements related to length of employment and size
of employer. Some state laws also provide paid sick or family leave, with eligibility rules varying by state.
347DOL began enforcement actions related to FFCRA paid leave provisions on April 18, 2020, after a limited stay of
enforcement to enable public and private employers who are covered by the act to come into compliance with the new
law. During the limited stay of enforcement, DOL reserved its right to exercise its enforcement authority if the employer

Page 219 GAO-21-551
employees can ﬁle a complaint against their employer up to 2 years after the date of an alleged
violation or up to 3 years after an alleged willful violation. In addition, employers may continue to
provide paid leave voluntarily and, if eligible, can claim paid leave tax credits through September
30, 2021, to oﬀset the cost of employees’ paid leave.348

FFCRA paid leave provisions generally required covered employers to provide eligible employees
(1) up to 80 hours of emergency paid sick leave, subject to daily and aggregate payment caps,
and (2) up to 12 weeks of expanded family and medical leave, including 2 weeks of unpaid
and 10 weeks of paid leave at no less than two-thirds of the eligible employee’s regular rate of
pay, subject to daily and aggregate payment caps.349 Covered employers included most public
employers and private employers with fewer than 500 employees.350 Small businesses—those
with fewer than 50 employees—may have qualiﬁed for an exemption from providing leave to an
employee who needed to care for a child because of closure or unavailability of the child’s school,
place of care, or child care provider if the requested leave would have jeopardized the business’s
viability.351

All employees of a covered employer were eligible to take emergency paid sick leave regardless
of how long they had been employed, and all employees who had been employed by a covered
employer for at least 30 calendar days were eligible to take expanded family and medical leave.
However, employers were not required to apply these leave requirements to employees who were
health care providers or emergency responders.352

The Department of Labor’s (DOL) Wage and Hour Division (WHD) administers and enforces FFCRA
paid leave requirements for most employees. Covered employers generally face liability if they
did not provide or improperly denied emergency paid sick leave or expanded family and medical
leave or if they discharged, disciplined, or discriminated against any employee for taking either
type of leave.353 Employees who believe their covered employer violated FFCRA may call a toll-free
number—1-866-4US-WAGE (1-866-487-9243)—for assistance or to ﬁle a complaint.

violated FFCRA willfully, failed to provide a written commitment to future compliance with FFCRA, or failed to remedy a
violation after notiﬁcation by DOL.
348For more information on paid leave tax credits, see the Employer Tax Relief enclosure in appendix I.
349The emergency paid sick leave could be used for quarantine and other situations related to COVID-19 that caused
employees to be unable to work. Both leave provisions covered care for a child whose school, place of care, or child care
provider was closed or unavailable because of COVID-19.
350FFCRA paid leave provisions did not apply to private sector employers with 500 or more employees.
351See 29 C.F.R. § 826.40(b) (2020).
352DOL revised its deﬁnition of “health care provider” in response to a federal court ruling that DOL’s original deﬁnition
was overly broad. See New York v. U.S. Dep't of Labor, 477 F.Supp. 3d 1 (S.D.N.Y. Aug. 3, 2020). The April 2020 rule
deﬁned “health care provider” to include anyone employed at any doctor’s oﬃce; hospital; health care center; clinic;
postsecondary educational institution oﬀering health care instruction; medical school; local health department
or agency; nursing facility; retirement facility; nursing home; home health care provider; any facility that performs
laboratory or medical testing; pharmacy; or any similar institution, employer, or entity. DOL revised the deﬁnition
in September 2020 to include only employees who either (1) met the deﬁnition of a health care provider under the
FMLA regulations or (2) were employed to provide diagnostic services, preventative services, treatment services, or
other services that were integrated with and necessary to the provision of patient care and that if not provided would
adversely impact patient care.
353Covered employers that failed 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 are subject to

Page 220 GAO-21-551
When an employee ﬁles an FFCRA paid leave complaint, WHD determines whether the complaint
meets its criteria for investigation. If the complaint does not meet the criteria, WHD ﬁles the
complaint with no compliance action. If the complaint meets the criteria for investigation, WHD
registers the complaint as a case, determines the complaint’s priority level, and determines
what type of compliance action to take. WHD generally has three priority levels for cases it
investigates—tier I, tier II, and tier III. Tier I cases have the highest priority and tier III cases have
the lowest priority.354

According to internal WHD guidance, all FFCRA cases are to be assigned a priority level of tier I or
tier II. Tier I cases are those in which the worker alleges violations that present a danger to safety
or health, including both the employees’ safety or health and that of the community at large, or
that allege an imminent or recent termination. For example, such violations include situations
in which an employee was denied leave even though the employee was subject to a COVID-19
isolation order or was experiencing COVID-19 symptoms. All other FFCRA complaints are to be
assigned to tier II. WHD may drop a case after acceptance, even if it meets WHD’s criteria for
investigation. For example, WHD may drop a case if an employer went out of business.355

WHD can initiate one of four types of compliance actions for FFCRA complaints accepted for
investigation—conciliation, oﬃce audit, limited investigation, or full investigation. Conciliations use
the fewest WHD resources, and full investigations use the most resources. The type of compliance
action taken depends on factors such as the number of employees involved, the level of resources
involved, or the level of fact ﬁnding required to investigate the complaint. In addition to initiating
compliance actions in response to complaints, WHD may initiate compliance actions, known as
agency-directed investigations, on its own initiative. According to WHD guidance, agency-directed
investigations are needed for eﬀective enforcement for vulnerable worker populations, including
garment workers, agricultural workers, and workers with disabilities.

Overview of Key Issues
WHD used a variety of mechanisms to increase awareness and understanding of FFCRA paid
leave provisions. WHD oﬃcials said one of the greatest challenges they faced in administering
the paid leave provisions was making employers and employees aware of their responsibilities

penalties described therein, including being liable to the aﬀected employees. See Pub. L. No. 116-127, § 5105(a), 134
Stat. at 197. Covered employers are subject to additional penalties for discharging, disciplining, or discriminating against
any employee for taking emergency paid sick leave. See id. § 5105(b), 134 Stat. at 197. The prohibitions and enforcement
provisions in FMLA apply to leave under the expanded family and medical leave provisions. See 29 U.S.C. §§ 2615 and
2617. Employees may also bring civil action against covered employers that have violated the expanded family and
medical leave provisions. See 29 U.S.C. § 2617(a).
354Tier III is intended for use with cases under other statutes WHD enforces but not for FFCRA cases, according to WHD
guidance.
355WHD oﬃcials said they use their discretion in determining whether to continue an investigation if an employer has
ﬁled for bankruptcy or has gone out of business. In the event of bankruptcy, WHD oﬃcials said the determining factor in
deciding how to proceed is the stage of the investigation when WHD learns of the bankruptcy, as any payment of back
wages must be made in accordance with the bankruptcy code. If the court has yet to discharge debts, an employee may
have an opportunity to ﬁle a claim, according to WHD oﬃcials. If an employer has gone out of business and WHD does
not perform additional investigative work, WHD oﬃcials said they may advise the employee of the employee’s right to
bring a private suit in state or federal court.

Page 221 GAO-21-551
and rights under FFCRA. WHD oﬃcials said their outreach eﬀorts targeted a large cross section
of employers and workers, including those in certain vulnerable worker populations. Speciﬁcally,
WHD reported conducting the following outreach eﬀorts:

Created an FFCRA work group. WHD created an FFCRA work group to oversee FFCRA education and
outreach.356 According to WHD oﬃcials, the group’s primary objective was to provide ﬁeld support
to staﬀ responsible for educating employers and employees aﬀected by the COVID-19 pandemic.
WHD oﬃcials said the work group helped make strategic decisions about outreach.

Conducted outreach eﬀorts. WHD reported that it conducted 3,155 FFCRA outreach events
targeting employers and employees from March 17, 2020, to December 31, 2020, when the paid
leave requirements ended.357 WHD oﬃcials said these events were facilitated predominantly
by Community Outreach and Planning Specialist (CORPS) staﬀ in their district oﬃces.358 The
two most common types of outreach events were compliance consultations (37 percent of
events)—meetings requested by an individual or employer to discuss methods of ensuring
compliance—and meetings with stakeholder groups or organizations (15 percent). These events,
along with webinars and telephone contacts, made up the vast majority of all outreach events (see
table). WHD oﬃcials noted that these outreach events helped WHD target employees who may
have been aﬀected by COVID-19. For example, WHD oﬃcials said that WHD exhibits on FFCRA paid
leave installed at COVID-19 testing sites reached employees who potentially needed paid leave to
quarantine.

356The work group was also responsible for overseeing FFCRA enforcement. According to WHD documents, the work
group includes national and regional representatives with expertise in policy, enforcement, compliance assistance,
communications, data analytics, and training.
357WHD conducted an additional 66 FFCRA outreach events from January 1 to March 31, 2021.
358WHD developed several new ﬁscal year 2020 performance measures to capture its FFCRA enforcement and outreach
eﬀorts. One of these measures is the number of outreach events involving FFCRA. WHD set a goal of 200 events for the
ﬁrst quarter of ﬁscal year 2021 and exceeded its goal with 683 outreach events in that quarter.

Page 222 GAO-21-551
Type and Number of Families First Coronavirus Response Act Outreach Events, Mar. 17, 2020–Dec. 31, 2020
Event type Number of events Percentage of total events

Compliance consultation 1166 37

Stakeholder meeting 482 15

Webinar 412 13

Telephone contact/call 305 10

Presentation/seminar/speech 268 8

Exhibit booth 172 5

Committee/task force meetings 117 4

Other 233 7

Total 3,155 99
a

Source: GAO analysis of Department of Labor data. | GAO-21-551

a
Percentages do not sum to 100 because of rounding.

WHD oﬃcials said that, in general, CORPS staﬀ determined which outreach events to conduct
by targeting speciﬁc employer or employee organizations or by responding to requests for
information. In addition, the oﬃcials said CORPS staﬀ prioritized events expected to reach the
largest number of employers and workers.359 WHD oﬃcials said CORPS staﬀ maintained a list of
associations and organizations representing employers and workers in their districts, including
state and local governments, and regularly sent these groups emails about FFCRA paid leave
guidance and outreach events. WHD oﬃcials also stated that WHD staﬀ at all levels continually
looked for opportunities to collaborate with other federal agencies as well as with state and local
governments to disseminate information on FFCRA paid leave, such as by partnering to provide
joint presentations.

Conducted a national public awareness campaign. WHD’s national public awareness eﬀorts, which
were conducted by a third-party contractor, included disseminating information about FFCRA paid
leave through billboards, radio and television public service announcements, and a digital media
campaign.360 WHD oﬃcials said the national campaign generally targeted a broad audience. The
contractor reported that as a result of this campaign, information about FFCRA paid leave was
displayed more than 300 million times. In addition, WHD oﬃcials said that after hearing about low

359WHD reported that 1,342 of its 3,155 events (43 percent) targeted employee groups and 1,813 events (57 percent)
targeted employer groups.
360The radio and television public service announcements included more than 2,000 airings on national television
networks; more than 24,000 airings on local television stations; and more than 3,000 airings on local radio stations in
addition to a smaller number of airings on satellite radio stations, according to a report provided to DOL by the vendor.
The digital media campaign included banner displays, social media posts, and other digital advertisements.

Page 223 GAO-21-551
use of FFCRA paid leave by agricultural workers, they increased the number of Spanish-language
public service announcements in rural areas to target this population.

Disseminated information through other channels. WHD oﬃcials also shared information with
employers and employees about the paid leave provisions when investigating complaints or
responding to questions and by disseminating information on WHD’s website. WHD provides
compliance assistance, which includes educating employers about their responsibilities under
FFCRA while investigating them for potential violations of the law. WHD’s Operating Plan states
that its education eﬀorts play an important role in promoting compliance, because the vast
majority of employers want to comply with the law but fail because they do not understand their
legal obligations. WHD oﬃcials said employers were often willing to comply once WHD made
them aware of the paid leave requirements. In addition, WHD provides information to employers
and employees who call its toll-free number with questions.361 WHD also created a COVID-19-
related landing page on its website, providing, among other resources, links to its regulations;
documents explaining employee rights, including workplace posters and fact sheets; a frequently
asked questions page; and a tool to help users determine their eligibility for FFCRA paid leave.362

Employers and employees were not always aware of, or did not always understand, the
FFCRA paid leave provisions. Representatives of employer and employee organizations we
interviewed acknowledged that WHD moved quickly to develop regulations, guidance, and other
resources, such as frequently asked questions, fact sheets, posters, and webinars. Several of
these organizations’ representatives said that they found WHD’s resources helpful. However,
representatives of these organizations also described challenges related to the following areas:

Educating employers about FFCRA paid leave. Like WHD oﬃcials, representatives of some employer
organizations said it was challenging to ensure that employers were aware of or understood
the paid leave provisions. While some representatives said employers may have received
information from WHD, a representative of a small business organization with several hundred
thousand members across a wide range of industries said that employers were unlikely to have
learned about the provisions from the agency. In addition, a representative of a large employer
organization representing restaurants across the nation said it seemed the onus was on the
organization to educate employers. Representatives from each of the employer organizations we
interviewed said they disseminated their own guidance on FFCRA paid leave. Moreover, several
representatives noted that employers—particularly small businesses—who did not belong to a
membership organization or did not have dedicated staﬀ who knew about the requirements, such
as human resources personnel, would likely have found it more diﬃcult to learn about the paid
leave requirements.

Educating employees about FFCRA paid leave. Several organizations’ representatives said employees
generally learned about FFCRA paid leave from sources other than DOL, including membership
organizations—such as unions, trade associations, or community organizations—or by word

361WHD established a performance measure in ﬁscal year 2020 to track the percentage of calls to its toll-free number
that were answered live. In the ﬁrst quarter of ﬁscal year 2021, WHD live-answered 63 percent of calls to its toll-free
number, exceeding its target of 55 percent; however, this measure is not speciﬁc to FFCRA and includes all calls received
by the call center.
362WHD reported more than 12 million visits to its FFCRA paid leave website from March 9, 2020, to February 28, 2021.

Page 224 GAO-21-551
of mouth. In addition, some representatives of employee organizations said employers may
not have eﬀectively informed employees about FFCRA paid leave, in some cases because they
may not have wanted to share the information with employees. Moreover, a few organizations’
representatives said they were unaware of public service announcements or other WHD eﬀorts to
reach employees directly.

Several organizations’ representatives said that low-wage workers—such as those in food services,
restaurants, retail, and construction—are generally harder to reach because they may have
less established relationships with their employers or may have limited English proﬁciency,
among other reasons. More speciﬁcally, a representative from an organization representing
farmworkers said many of these workers did not understand DOL’s guidance and announcements
regarding FFCRA paid leave, both because of low levels of education and literacy and because
some farmworkers speak indigenous languages rather than English or Spanish.363

Complexity of guidance. Several representatives of employer organizations said DOL had provided
helpful information and guidance on FFCRA; however, a few of these representatives also said
some of DOL’s guidance, such as fact sheets and frequently asked questions, was too long,
technical, and challenging to understand. Several organizations’ representatives told us they
had created simpliﬁed guidance that they said was easier to understand than DOL’s guidance.
In addition, a few representatives of employer-related organizations said it would be diﬃcult
for a business without legal consultants to follow changes to, and appropriately apply, WHD’s
regulations and guidance.

Applying guidance to real-world scenarios. Some employer organizations’ representatives said
employers had questions about how to apply FFCRA paid leave provisions to speciﬁc scenarios not
covered by DOL’s guidance. Examples of such questions included whether employees qualiﬁed
for FFCRA paid leave when they were required to quarantine because of voluntary out of state
travel or when someone in the employee’s household tested positive for COVID-19 but was
asymptomatic.

Some organizations’ representatives said employers and employees obtained clariﬁcation about
FFCRA paid leave requirements from various sources, such as associations to which they belonged
or legal counsel, as well as from DOL. A few organizations’ representatives also stated that
employers likely used their own judgment to determine what to do in certain situations. As a
result, employers may have implemented the requirements unevenly.

Some representatives of both employer and employee organizations said more opportunities to
interact with DOL would have been helpful—for example, to submit questions to DOL’s frequently
asked questions page or to ask questions during DOL’s webinars. DOL oﬃcials said their webinars
allowed time for questions, but a representative from one employer organization who attended
the webinars expressed concern about the limited amount of time for questions.

Understanding FFCRA exemptions. Several representatives of employer and employee organizations
said employers and employees faced obstacles to understanding the health care worker

363FFCRA required that employers post, and keep posted, a notice of the law’s requirements and information
concerning procedures for ﬁling complaints of violations of the FFCRA. See Pub. L. No. 116-127, § 5103, 134 Stat. at 196;
29 C.F.R. § 826.80(a)(2020).

Page 225 GAO-21-551
exemption. For example, several representatives of employer and employee organizations said
some employers and employees did not understand whether employees such as security guards
or administrative personnel employed in a health care setting were covered by the health care
exemption and were therefore ineligible to take FFCRA paid leave.

Similarly, some organizations’ representatives said some employers and employees did not
understand the small business exemption that applied to businesses with fewer than 50
employees. More speciﬁcally, representatives said some employers may have believed—or
willfully acted as if—all small businesses with fewer than 50 employees were automatically exempt
from providing FFCRA paid leave to any of their workers. In reality, businesses could claim the
exemption only under certain circumstances described in DOL regulations.364 Likewise, a few
organizations’ representatives stated that some employees of small businesses either believed
all small businesses were exempt from providing FFCRA leave or believed their employers would
treat the exemption in this way. Representatives from one employer organization said they did not
actively encourage small businesses to use the exemption, because they were worried employers
would not understand it or know how to document their use of it.

WHD engaged in a complaint-driven enforcement strategy. WHD relied primarily on
employee complaints to identify employers who may have violated requirements to provide
FFCRA paid leave. According to WHD oﬃcials, when WHD enforces other statutes, such as the
Fair Labor Standards Act of 1938 (FLSA), its enforcement is driven in equal parts by complaints
and by agency-directed investigations targeting employers in certain industries or employers
of vulnerable workers. WHD oﬃcials said they initiated a limited number of agency-directed
FFCRA paid leave cases based on third-party referrals from federal or state agencies, newspaper
articles, or other sources. The oﬃcials further said they did not use complaint data or external
data sources to identify industries or employers for agency-directed investigations; instead, given
short time frames, they focused on responding to, and resolving, the large volume of FFCRA paid
leave complaints they received and on conducting outreach to educate employees and generate
complaints.

However, many employees were likely unaware of their right to FFCRA paid leave, according to
representatives of employee organizations. In addition, interviewees said fear of retaliation may
have deterred some low-wage workers, such as those in agriculture or food service, from ﬁling
complaints against their employers, even if the employees knew about the enforcement process.
As a result, some employees, including those in vulnerable worker populations, may not have
received the beneﬁts to which they were entitled.

WHD has concluded more than 80 percent of open FFCRA paid leave cases, primarily
through conciliation. The most recent available data show that as of March 31, 2021, WHD
had received 8,052 FFCRA paid leave complaints, of which 6,821 (85 percent) resulted in a case
that received a compliance action.365 WHD oﬃcials also reported initiating a limited number of

364See 29 C.F.R. § 826.40(b) (2020).
365Data showing how many employees utilized FFCRA paid leave are not available.

Page 226 GAO-21-551
agency-directed actions, for a total of 6,929 cases.366 Of those, 5,500 cases (79 percent) had been
concluded as of March 31, 2021 (see table).

366WHD oﬃcials said the agency initiated 53 agency-directed cases. In addition, they said that, on further investigation,
some cases initially ﬁled under a diﬀerent statute may have been reclassiﬁed as FFCRA cases.

Page 227 GAO-21-551
Number and Percentage of Concluded Families First Coronavirus Response Act Paid Leave Cases, by Compliance
Action, as of Mar. 31, 2021
Compliance action Total number of Number of cases Percentage of
registered cases concluded cases concluded

Conciliation 5,525 4,538 82

Oﬃce audit 1,350 947 70

Limited investigation 28 14 50

Full investigation 26 1 4

Total 6,929 5,500 79

Source: GAO analysis of Department of Labor data. | GAO-21-551

Note: The data shown are the most recently available.

WHD concluded the vast majority of cases through conciliation.367 As we reported in our
November 2020 CARES Act report, WHD oﬃcials said that conciliation is usually the most
appropriate action for FFCRA paid leave complaints because most complaints are straightforward
and involve one or a few employees. WHD oﬃcials further said they have emphasized conciliation
because this type of compliance action provides WHD the best way to quickly resolve an
employee’s complaint, such as by securing back pay or leave for the employee.368

WHD’s data track 11 FFCRA paid leave violations that employers may have committed, on the basis
of requirements laid out in the statute. The complaint data show that the most common employer
violations among concluded cases were (1) failing to provide up to 2 weeks of paid sick leave—that
is, the employer did not pay employees for leave that was granted (50 percent); (2) denying leave
(34 percent); and (3) failing to keep accurate records (16 percent).369

WHD staﬀ did not correctly prioritize some FFCRA cases. Although WHD guidance calls for
FFCRA cases to be assigned to a priority level of tier I or tier II when accepted for investigation,
WHD staﬀ did not always follow this guidance. As a result, some concluded cases that should have

367WHD established a performance measure in ﬁscal year 2020 to track FFCRA enforcement, setting a goal of concluding
70 percent of FFCRA conciliations in 15 days or less. WHD reported that in the ﬁrst quarter of ﬁscal year 2021, it
concluded 81 percent of FFCRA conciliations within 15 days.
368An oﬃcial from DOL’s Oﬃce of Inspector General (OIG) said the OIG is conducting related work on WHD’s
enforcement of FFCRA paid leave, which will focus, in part, on WHD’s use of conciliation. The OIG plans to issue a report
on its work in the coming months.
369WHD’s complaint data show that additional types of FFCRA paid leave violations included failing to display an FFCRA
poster (7 percent); failing to provide an additional 10 weeks of paid leave at two-thirds of the regular rate of pay (7
percent); requiring the employee to use other paid leave before using FFCRA paid leave (7 percent); failing to allow the
employee to substitute paid leave for the ﬁrst 2 weeks of expanded family and medical leave (2 percent); terminating the
employee (1 percent); discriminating against the employee (1 percent); requiring the employee to search for and ﬁnd a
replacement to cover the employee’s hours (less than 1 percent); and failing to maintain the employee’s health beneﬁts
(less than 1 percent). Because an employer may have committed more than one paid leave violation, the sum of the
percentages for all 11 violations exceeds 100.

Page 228 GAO-21-551
been assigned to a priority level were not assigned or were incorrectly assigned to tier III (see
table).

Page 229 GAO-21-551
Number and Percentage of Concluded Families First Coronavirus Response Act Paid Leave Cases, by Priority
Level, as of Mar. 31, 2021
Priority level Number of concluded cases Percentage of concluded cases

Not assigned 977 18

Tier I 1,313 24

Tier II 3,087 56

Tier III 123 2

Total 5500 100

Source: GAO analysis of Department of Labor data. | GAO-21-551

Notes: The data shown are the most recently available. Tier I denotes highest priority, and tier III denotes lowest priority.
According to Department of Labor guidance, all Families First Coronavirus Response Act cases are supposed to be assigned a
priority level of tier I or tier II.

In response to our questions, WHD oﬃcials said the 977 concluded cases not assigned to a
priority level were “registered to self”—meaning they were self-assigned for investigation to
the person who conducted intake. WHD oﬃcials said self-assigned cases are not assigned to
a priority level because they are investigated immediately. According to WHD guidance, only
conciliations—compliance actions that do not involve fact ﬁnding and are used to correct minor
violations aﬀecting only one or a few employees—can be self-assigned, allowing these cases to be
registered and assigned quickly.

According to WHD oﬃcials, of the 977 cases not assigned to a priority level, 933 were concluded
through conciliation. The remaining 44 cases were concluded through oﬃce audits and limited
investigations, which, under WHD guidance, should not have been self-assigned and should have
been assigned to tier I or tier II. In addition, WHD oﬃcials said 123 cases were incorrectly assigned
to tier III. Of those, 96 were concluded through conciliation and did not require assignment to a
priority level, per WHD’s guidance. The remaining 27 were concluded through oﬃce audits and
should have been assigned to a priority level of tier I or tier II, according to the guidance.

We found that WHD oﬃcials did not monitor data or design its data system to ensure cases were
correctly prioritized. WHD oﬃcials said they monitor data on the time taken to process FFCRA
cases. However, their monitoring did not identify that some oﬃce audits or limited investigations
either were not assigned to a priority level as they should have been—because staﬀ incorrectly
assigned cases to themselves—or were assigned to an incorrect priority level. Standards for
internal control in the federal government state that management should perform ongoing
monitoring of the design and operating eﬀectiveness of the internal control system as part of
the normal course of operations. In addition, WHD did not include controls in its data system to
prevent staﬀ from incorrectly assigning cases to themselves or from assigning a case to an invalid
tier. Standards for internal control in the federal government state that management should
design the entity’s information system and related control activities to achieve objectives and
respond to risks.

Page 230 GAO-21-551
WHD oﬃcials said that all of the cases not assigned to a priority level or incorrectly assigned
were ultimately investigated and concluded and that nearly all were isolated to three oﬃces
in one region. However, the oﬃcials said that as of May 12, 2021, they had not yet determined
whether any ongoing cases had also been assigned incorrectly. In addition, although the number
of aﬀected FFCRA paid leave cases may be relatively small, WHD oﬃcials acknowledged that
there may be cases under other statutes enforced by WHD that have not been assigned to a
priority level because staﬀ incorrectly assigned cases to themselves. In addition, cases under other
statutes enforced by WHD may have been assigned to an incorrect priority level. WHD uses the
same general process for prioritizing cases across all statutes it enforces. WHD had not looked into
this issue further as of May 10, 2021.

By not regularly examining data on the assignment of cases to priority levels or including features
in its data system to prevent errors in case assignment and prioritization, WHD may have failed
to prioritize ongoing cases under FFCRA and under other statutes, and it may continue making
such errors in future cases. Cases that were not assigned to a priority level or were assigned to the
wrong priority level may have not been investigated or concluded as rapidly as other cases that
were properly assigned. To address these concerns, WHD oﬃcials said they planned to remind
staﬀ about WHD’s policies for prioritizing cases and also planned to develop a report to monitor
the assignment of cases to priority levels. In addition, WHD oﬃcials said its new case management
system may include features to prevent future errors.

WHD cannot easily analyze data to show why certain cases are not investigated but
plans to address this as it updates its data system. WHD lacks systematic data that it can
easily aggregate to identify the reasons FFCRA complaints were ﬁled with no compliance action
and the reasons FFCRA cases were dropped.370 In December 2020, we reported the same
concern with respect to FLSA complaint data and recommended that WHD develop a method
for systematically collecting this information to ensure complaints are handled consistently and
resources are allocated appropriately. WHD agreed with our recommendation and said its new
case management system will incorporate the ability to categorize, aggregate, and review data
on the types of cases that are not investigated. WHD oﬃcials said changes to the enforcement
database will apply to future cases ﬁled under all statutes WHD enforces but will not apply
retroactively.

WHD has taken limited steps to continue informing employees about their right to ﬁle
FFCRA paid leave complaints. Although WHD has done some FFCRA outreach since the paid
leave provisions expired, WHD’s new Essential Workers, Essential Protections (EWEP) initiative on
pandemic-related worker protections does not include information on ﬁling a complaint related to
FFCRA paid leave, even though employees can continue to ﬁle complaints for up to 2 years from
the date of an alleged violation or for up to 3 years from the date of an alleged willful violation.

WHD oﬃcials said the EWEP initiative includes presentations to stakeholders—including
employers, employees, and organizations who work with or represent them—to share information
on WHD’s role, speciﬁc worker protections, and general information on how to ﬁle a complaint.
The speciﬁc worker protections included in EWEP are related to FMLA, FLSA, and protections

370WHD ﬁled 14 percent of FFCRA complaints with no compliance action and dropped 16 percent of FFCRA cases that
were accepted for investigation.

Page 231 GAO-21-551
for agricultural workers. WHD oﬃcials said they include information on tax credits available to
employers who continue to voluntarily provide paid leave through September 30, 2021, but do
not include additional information on FFCRA paid leave because the requirements expired in
December. WHD oﬃcials said that as of April 2021, WHD had conducted 64 outreach events and
planned to continue the initiative as long as the pandemic aﬀects industries that employ essential
workers.

According to WHD documents, WHD promotes compliance with the statutes it enforces by
conducting education and outreach to ensure that employers are aware of their responsibilities
and that employees understand and exercise their rights. Standards for internal control in the
federal government state that management should externally communicate the necessary quality
information to achieve the entity’s objectives. By not including information about how to ﬁle a
complaint about FFCRA paid leave in the scope of its EWEP initiative, WHD may be missing an
opportunity to reach employees who did not obtain paid leave to which they were entitled and
who could still ﬁle a complaint and receive beneﬁts.

WHD does not have speciﬁc plans to engage with stakeholders to generate lessons learned
on the administration and enforcement of FFCRA paid leave. WHD oﬃcials said they have
not actively sought information from stakeholders about their experiences with FFCRA paid leave,
though they said some stakeholders have shared this information in the course of WHD’s outreach
under the EWEP initiative. As a result, the information WHD is obtaining about stakeholder
experiences with FFCRA paid leave will not be comprehensive.

We previously reported that organizations that identify and apply lessons learned can ensure
they factor beneﬁcial information into planning for future eﬀorts and limit the recurrence of
challenges that can be anticipated in advance. By not engaging with employers, employees,
and representative organizations speciﬁcally about their experiences with FFCRA paid leave
in a comprehensive and timely manner, WHD may be missing an opportunity to improve its
administration and enforcement—including its education and outreach—for future emergencies
that might require a rapid response.

Methodology
To conduct this work, we reviewed federal laws, regulations, and agency documents; interviewed
WHD oﬃcials; and reviewed WHD data on FFCRA paid leave outreach and enforcement eﬀorts as
of March 31, 2021. On the basis of interviews with WHD oﬃcials, we determined the data were
suﬃciently reliable for the purposes of this report. In addition, we interviewed representatives
of 12 organizations that we characterized as either (1) employer organizations (i.e., membership
organizations for employers and research entities knowledgeable about employer experiences)
or (2) employee organizations (i.e., member organizations for employees, worker advocacy
organizations, and research entities knowledgeable about employee experiences). For these
interviews, we identiﬁed organizations that represented employers and employees in workforce
sectors aﬀected by the COVID-19 pandemic, such as agriculture and health care, or that had
conducted research on FFCRA paid leave.

Page 232 GAO-21-551
We determined that three internal control components identiﬁed in Standards for Internal Control
in the Federal Government were signiﬁcant to this audit: (1) the monitoring component and the
underlying principle that management should perform ongoing monitoring of the design and
operating eﬀectiveness of the internal control system as part of the normal course of operations;
(2) the control activities component and the underlying principle that management should design
activities for the information system; and (3) the information and communication component
and the underlying principle that management should communicate with, and obtain quality
information from, external parties. We also reviewed our prior work on key practices of a lessons
learned process. We assessed WHD’s eﬀorts against these criteria.

Agency Comments
We provided WHD and the Oﬃce of Management and Budget with a draft of this enclosure.
WHD provided written comments, reproduced in appendix IX, and technical comments, which we
incorporated as appropriate. The Oﬃce of Management and Budget did not have comments on
this enclosure.

In its comments, WHD agreed with our recommendations. More speciﬁcally:

• WHD agreed with our recommendation to better monitor data on assigning and prioritizing
cases across all statutes WHD enforces. WHD stated that it is in the process of developing
a report that will identify the priority level for concluded cases and cases currently under
investigation. WHD also plans to include this recommendation in its business requirements for
its new case management system.

• WHD agreed that its new case management system should include mechanisms to prevent
staﬀ from assigning and prioritizing cases in a manner inconsistent with established policies.
WHD stated that it plans to include such mechanisms in its business requirements for the new
case management system.

• WHD agreed that it should expand the EWEP initiative to include information about ﬁling a
complaint related to paid leave provided under FFCRA. WHD stated that it is expanding the
EWEP initiative into a second phase and will incorporate outreach emphasizing how workers
can ﬁle a complaint related to their rights to take FFCRA paid leave in 2020.

• WHD agreed that it should engage in a comprehensive and timely eﬀort to consult with
employers, workers, and organizations that represent them, to identify and document lessons
learned from WHD’s administration and enforcement of COVID-19 related paid leave. WHD
stated that, as part of the second phase of the EWEP initiative, it plans to conduct stakeholder
listening sessions across the country that will include a component on lessons learned from
FFCRA.

GAO’s Ongoing Work
We will continue to monitor WHD’s eﬀorts to implement the recommendations we are making in
this report.

Page 233 GAO-21-551
Related GAO Products
Fair Labor Standards Act: Tracking Additional Complaint Data Could Improve DOL’s Enforcement.
GAO-21-13. Washington, D.C.: December 9, 2020.

Standards for Internal Control in the Federal Government. GAO-14-704G. Washington, D.C.:
September 2014.

Project Management: DOE and NNSA Should Improve Their Lessons-Learned Process for Capital Asset
Projects. GAO-19-25. Washington, D.C.: December 21, 2018.

Contact information: Thomas Costa, (202) 512-7215, costat@gao.gov

Page 234 GAO-21-551
Higher Education Grants
The Department of Education did not eﬀectively design and implement procedures for conducting
quality assurance reviews of award amounts after they were obligated to help timely identify and
correct erroneous obligations, which increased the risk that improper payments could occur.

Entity involved: The Oﬃce of Postsecondary Education, within the Department of Education

Recommendation for Executive Action
The Assistant Secretary for Postsecondary Education should design and implement procedures for
regularly conducting quality assurance reviews of obligated amounts for higher education grants,
including the Higher Education Emergency Relief Fund, to help identify and correct erroneous
obligations in a timely manner.

The Department of Education agreed with this recommendation.

Background
Since March 2020, Congress appropriated approximately $76.2 billion in relief funding for the
Higher Education Emergency Relief Fund (HEERF), which provides grants to institutions of higher
education to prevent, prepare for, and respond to COVID-19.371 In June 2020, we issued the ﬁrst
of a series of reports on key federal eﬀorts to address the pandemic, which described the timeline
of HEERF grants to schools. In April 2021, we issued a report on how schools distributed HEERF
emergency ﬁnancial aid grants to eligible students.

Education’s Oﬃce of Postsecondary Education (OPE) is responsible for administering HEERF. The
CARES Act directed Education to allocate HEERF funding to eligible schools based on a funding
formula.372 In April 2020, Education notiﬁed schools of their individual allocations provided by
the CARES Act to help inform their planning,373 and provided the paperwork required to apply
for HEERF grants, which included Certiﬁcation and Agreement forms that described grantee
responsibilities under the program. That same month, Education also began awarding HEERF
grants to schools. As of May 31, 2021, 14 months following the enactment of the CARES Act, OPE
had obligated $66 billion in HEERF funding provided by the COVID-19 relief laws—33 times the
average of $2 billion in grants OPE normally administers annually.374

To administer HEERF grants, OPE relied primarily on existing staﬃng levels and already established
grant-management policies and procedures. Although OPE had policies and procedures in place,

371The total appropriation comprises $39.6 billion from the American Rescue Plan Act of 2021, Pub. L. No. 117-2, title II,
§ 2003, 135 Stat. 4, $22.7 billion from the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, div. M, title III, §§
311(b)(3), 314, 134 Stat. 1182 (2020), and $13.9 billion from the CARES Act, Pub. L. No. 116-136, div. B, title VIII, §§ 18001,
18004, 134 Stat. 281, 564, 567-568 (2020).
372Education used OPE Identiﬁcation Number as the unique identiﬁer for each school that was allocated funding per
Education’s formula allocation tables for HEERF, published on OPE’s website.
373Education notiﬁed schools of additional allocations provided by the subsequent COVID-19 relief laws at a later date.
374An obligation is a ﬁnancial commitment to pay the grantee based on the terms and conditions for funding.

Page 235 GAO-21-551
Education faced inherent challenges—an unusually large volume of funding, and the urgency to
process and distribute the funding expeditiously due to the health and economic threats posed by
the COVID-19 pandemic—that increase the risk of improper payments.

Overview of Key Issues
Education procedures for approving and processing HEERF grants. Education relied on existing
grant policies and procedures, including those documented in its Guide for Managing Formula Grant
Programs (the Guide), for awarding HEERF grants, and modiﬁed these procedures as necessary
given the emergency nature of the funding. The Guide establishes the structure and oversight
responsibility over grant funding. OPE developed the process for awarding HEERF grants and
provides HEERF-speciﬁc guidance, technical assistance, and other communications to grantees,
such as responses to frequently asked questions, which OPE posts on its website. As part of
administering HEERF, OPE is responsible for designing, implementing, and ensuring the operating
eﬀectiveness of procedures so that the funds awarded to grantees are valid and accurate.

The ﬁgure below depicts Education’s procedures for approving and processing HEERF grants.

Page 236 GAO-21-551
Department of Education (Education) Procedures for Approving and Processing Higher Education Emergency
Relief Fund (HEERF) Grants

OPE procedures state that only qualiﬁed staﬀ have access to approve grant awards and record
obligations in Education’s Grants Management System (G5).375 Per the Guide, these authorized
staﬀ must possess the necessary qualiﬁcations, skills, and knowledge, and meet applicable
training requirements, to obtain a system license for G5 access. OPE procedures call for staﬀ
to verify that the grant applicant adhered to the application requirements and to verify the
accuracy of grant amounts prior to awarding the grants and recording obligations. The Guide
requires OPE staﬀ to verify that the applicant’s authorized representative signs and dates the
applicable Certiﬁcation and Agreement form(s).376 This form is a required component of the

375G5 is one of the main components of Education’s suite of core ﬁnancial applications. It performs pre- and post-award
processing for grants, including grant payment processing.
376Schools may apply for HEERF awards provided by the CARES Act for various purposes or designations (i.e., types of
grants). For awards under the CARES Act, these designations included: Institution of Higher Education (IHE)—Student

Page 237 GAO-21-551
application package for funding and is the grant recipient’s aﬃrmation of the terms, conditions,
and requirements that govern the use of grant award funds.377

The Guide requires that OPE staﬀ review the accuracy of award information on the Grant Award
Notiﬁcations, such as funding period and formula-allocation information, prior to awarding the
grant and recording the obligation.378 The grantee initiates a payment request in G5 to obtain
grant funds. The amount the grantee requests cannot exceed the available funds (i.e., obligated
amount less any payments already provided) under the grantee’s G5 account. In addition, to help
prevent unauthorized access to grant award funds, OPE staﬀ initiate a veriﬁcation through G5
when reviewing grant applications to validate that: (1) the grant recipient is an active registrant in
the System for Award Management and (2) the applicant has an active Data Universal Number
System (DUNS) number.379 If the grantee does not have an active DUNS number, OPE staﬀ
manually restrict the grantee’s access to grant funds within G5 until the grantee successfully
renews its DUNS number.

We tested Education’s procedures for approving and processing HEERF grants through a sample of
obligations and identiﬁed exceptions during our testing, described below.

Education changed its process to no longer require that OPE staﬀ verify authorized
representative signatures on Certiﬁcation and Agreement forms for HEERF. Education’s
procedures in the Guide require OPE staﬀ to verify that the applicant’s authorized representative
signs and dates the required Certiﬁcation and Agreement form. However, we estimate that 17.8
percent (about 848) of all schools that were awarded HEERF grants as part of the CARES Act
have a Certiﬁcation and Agreement form that cannot be conﬁrmed as signed by an authorized
representative from the school.380 OPE staﬀ told us that in order to expedite the processing of
these HEERF grants, Education oﬃcials changed the department’s process to allow staﬀ to award
them regardless of the type of signature on the Certiﬁcation and Agreement form submitted. OPE
oﬃcials told us that applicants submitted HEERF applications, which include the Certiﬁcation and

Aid, IHE—Institutional Aid, Historically Black Colleges and Universities, Tribally Controlled Colleges and Universities,
Minority Serving Institutions, Strengthening Institutions Program, and Fund of the Improvement of Postsecondary
Education. The school must submit a Certiﬁcation and Agreement form speciﬁc to the type of HEERF award for which
they are applying.
377According to Education’s Instructions for Submitting the Recipient’s Funding Certiﬁcation and Agreement and Application
Form, the institution’s authorized representative, which is typically the institution’s president, chancellor, or chief
executive oﬃcer, must sign the form. The signature must be handwritten or an electronic signature and it cannot be a
typed signature or the typed name of the institution.
378When OPE awards a grant, G5 automatically generates a Grant Award Notiﬁcation and emails it to the grantee as a
notice that the grantee has been awarded HEERF funds. Education’s responses to HEERF Frequently Asked Questions
state that schools have one calendar year from the date of award to use the funds.
379The System for Award Management is a web-based, government-wide application that collects, validates, stores,
and disseminates business information about the federal government's trading partners in support of the contract
awards, grants, and electronic payment processes. A DUNS number is a unique nine-character number used to identify
an organization. The federal government uses it to track how it allocates federal money.
380Within our sample of obligations, we could not conﬁrm authorized representative signatures on Certiﬁcation and
Agreement forms for 29 schools (identiﬁed by OPE Identiﬁcation Number) because the signature lines were not legible,
not signed, or contained a typed institution name instead of a person’s name. Based on our statistical projection of
these testing results, with 95 percent conﬁdence interval of 10.9 percent to 26.6 percent, between 519 to 1267 schools
could have this issue.

Page 238 GAO-21-551
Agreement form, through Grants.gov.381 They also stated that schools designate their point of
contact or authorized oﬃcial what their speciﬁc roles are in Grants.gov. As such, they accepted
all forms submitted through Grants.gov as appropriately authorized by the school because OPE
considers applicants registering in Grants.gov as a control measure. In addition, OPE oﬃcials
stated that only school-designated individuals that are also registered in G5 would have access to
obtain grant funds within G5.

The Certiﬁcation and Agreement forms for HEERF funding provided by the CARES Act included only
a signature line and did not require the “authorized representative’s title” or “typed name,” both of
which would help OPE verify that the form was signed by an authorized representative. During the
course of our testing, OPE updated the Certiﬁcation and Agreement forms for additional HEERF
funding provided by the Consolidated Appropriations Act, 2021 and the American Rescue Plan
Act of 2021 to also include a line for the “authorized representative’s title” and “typed name.”
OPE oﬃcials told us that they added the authorized representative name and title lines to clarify
what information they are requesting from the applicant and to verify the identity of the grant
applicant.382

Standards for internal control in the federal government state that management should identify,
analyze, and respond to change. In implementing control activities, management reviews controls
for continued relevance and eﬀectiveness in achieving the entity’s objectives and addressing
related risks. Education changed its process of verifying an applicant’s authorized representative’s
signature given its more immediate objective to process HEERF grants expeditiously. We believe
that this change for HEERF was reasonable because of the existing control in G5 that would
prevent unauthorized access to grant funds and Education’s subsequent action to revise the
Certiﬁcation and Agreement forms for additional HEERF funding.

Education did not eﬀectively design and implement procedures needed to identify
erroneous obligations. We estimate that for 5.5 percent (about 262) of all schools receiving
HEERF grants, Education awarded grants in excess of the amount allocated to the school.383
Within our sample of obligations, we identiﬁed three instances, totaling $20 million overobligated.
Two of these awards were duplicates and the third award was greater than what was allocated
to the school. OPE oﬃcials stated that all these instances were due to human error. They also
stated that during the initial implementation of HEERF, a team within OPE separately checked
all grant awards to mitigate the risk of duplicate obligations and to conﬁrm the accuracy of the
obligation. However, this post-obligation quality assurance review was not part of OPE’s policies
and procedures and, as the number of grants increased, OPE no longer conducted it on a regular
basis. OPE procedures only called for staﬀ approving awards to review the amounts as part of the
award-preparation process (pre-obligation).

381Grants.gov is a centralized system managed by the Department of Health and Human Services and used by federal
agencies to post federal funding opportunities and for grant seekers to ﬁnd and apply for them.
382OPE stated that only new applicants are required to submit the revised forms. Grantees who already received HEERF
funding under the CARES Act are not required to re-submit the forms.
383Based on our statistical projection of the testing results with 95 percent conﬁdence interval of 0.2 percent to 25.8
percent, about 10 to 1229 schools could have this issue.

Page 239 GAO-21-551
OPE oﬃcials stated that due to time constraints and having the same staﬃng level to administer
a signiﬁcantly higher volume of grants, OPE did not regularly perform post-obligation reviews
to identify and correct erroneous obligations, such as additional quality assurance reviews of
HEERF grants. Instead, OPE conducted post-obligation reviews as time permitted and as it deemed
appropriate. OPE oﬃcials told us that in some instances, schools have identiﬁed and self-reported
discrepancies in their awards. OPE then veriﬁed those errors and processed supplemental Grant
Award Notiﬁcations to correct them. Subsequent to our inquiry, we veriﬁed that OPE processed
supplemental Grant Award Notiﬁcations to correct the three errors we identiﬁed in our testing.

Standards for internal control in the federal government require that management design
control activities to achieve objectives and respond to risks. This includes control activities to help
ensure that agencies accurately record transactions. In some instances, OPE relied on schools
that self-reported to identify errors in award amounts. Absent its own review procedures to
identify erroneous obligation amounts such as post-obligation quality assurance reviews, given
the signiﬁcant increase in volume of awards processed, this increased the risk that improper
payments could occur.

Methodology
To conduct this work, we interviewed Education oﬃcials and reviewed Education’s policies and
procedures related to HEERF grant awards (e.g., Education’s Formula Grant Guide, other HEERF-
speciﬁc guidance, and related Frequently Asked Questions). We evaluated Education’s responses,
policies and procedures, and related internal controls, against standards for internal control in the
federal government.

We conducted detailed transaction testing of a generalizable random sample of HEERF obligations
recorded in G5 representing awards to 4,764 schools (identiﬁed by an OPE Identiﬁcation Number)
totaling $13.5 billion from enactment of the CARES Act, March 27, 2020, through September 30,
2020. We selected a stratiﬁed random sample of 178 grant recipients representing 514 grant
awards. The strata were based on percentiles of the distribution of total obligated dollars in the
sampling frame of $13.5 billion, the largest 10 grants by dollar selected with certainty. We used
a conﬁdence level of 95 percent and a tolerable error of $89.9 million. For each award in our
sample, we reviewed underlying grant documentation to determine whether Education approved
and obligated these awards (1) in accordance with established procedures and HEERF-speciﬁc
guidance and (2) for the correct amounts. We determined the data we used were suﬃciently
reliable for the purposes of our reporting objective.

We followed a probability procedure based on random selections; as such, our sample is only
one of a large number of samples that we might have drawn. Since each sample could have
provided diﬀerent estimates, we expressed our conﬁdence in the precision of our particular
sample’s results as a 95 percent conﬁdence interval. While we designed the sample for a 95
percent margin of error for an estimate of total dollars that is within the designed tolerable error
of $89.9 million, the estimate for total dollars in error may not follow the same distribution as
total dollars. Therefore, we reported our results above with larger margins of error as unweighted
actual total dollars in error in the sample, rather than projecting the dollars in error to derive an
estimate of erroneous obligations for the sample population.

Page 240 GAO-21-551
Agency Comments
We provided Education and the Oﬃce of Management and Budget (OMB) with a draft of this
enclosure. Education provided written comments, which are reproduced in appendix V. In its
comments, Education agreed with our recommendation and with the importance of conducting
quality controls throughout the pre- and post-award processing of grant awards to schools.
Education stated that it has already established, and will continue to enhance, procedures for
quality control of grant obligations. This includes staﬃng and training program specialists who
will have responsibility for quality controls for pre- and post-obligation, as well as for monitoring
HEERF grants. Education also stated that it is committed to promptly addressing any error and
making corrections to ensure accuracy of obligations. We will continue to monitor Education’s
eﬀorts to help reduce the risk of improper payments in this area. Education also provided
technical comments, which we incorporated as appropriate. OMB did not provide comments on
this enclosure.

GAO’s Ongoing Work
As the Department of Education works to provide COVID-19 relief funding to institutions of higher
education, it will continue to be important for Education oﬃcials to properly award and disburse
these funds, and that recipients properly use them.

We plan to monitor the status of our recommendation in future reports and continue our
oversight of government-wide payment integrity eﬀorts.

Related GAO Products
COVID-19: Emergency Financial Aid to Students under the CARES Act. GAO-21-312R. Washington, D.C.:
April 20, 2021.

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

Standards for Internal Control in the Federal Government. GAO-14-704G. Washington, D.C.:
September 10, 2014.

Contact information: Beryl Davis, (202) 512-2623, davisbh@gao.gov

Page 241 GAO-21-551
Tax Relief for Businesses
Available data indicate the Internal Revenue Service has disbursed approximately $15.8 billion in
refunds for net operating loss and alternative minimum tax since the enactment of the CARES Act,
but the extent of delays in processing these refunds is not transparent to taxpayers.

Entities involved: Internal Revenue Service, within the Department of the Treasury

Recommendation for Executive Action
The Commissioner of Internal Revenue should clearly communicate on the Internal Revenue
Service’s website that there are delays beyond the statutory 90-day timeline in processing net
operating loss and alternative minimum tax tentative refunds. IRS neither agreed nor disagreed
with this recommendation.

Background
To provide liquidity to businesses during the COVID-19 pandemic, the CARES Act and other
COVID-19 relief laws included tax measures to help businesses—including sole proprietors,
estates, and trusts—by reducing certain tax obligations, which, in some cases, led to cash
refunds.384 The Internal Revenue Service’s (IRS) capacity to implement new initiatives, such as
the many COVID-19 related tax provisions, is an ongoing challenge we cited in our 2021 High Risk
Report.

The CARES Act, the Consolidated Appropriations Act, 2021, and the American Rescue Plan Act of
2021 modiﬁed, among other provisions of the tax law, provisions previously enacted or amended
by Public Law 115-97 commonly known as the Tax Cuts and Jobs Act (TCJA).385 The Joint Committee
on Taxation (JCT) estimates the following tax provisions will result in about $211 billion in foregone
revenue for the federal government in ﬁscal years 2020-2030. 386

Net Operating Loss (NOL) carrybacks. An NOL occurs when a taxpayer's allowable deductions exceed
its gross income for a tax year. During an NOL year, a taxpayer generally does not owe any income
taxes and may be able to use the NOL to oﬀset income in other tax years.387 The CARES Act
requires, unless waived, carrybacks for 5 years for NOLs arising in tax years beginning in 2018,
2019, and 2020, which may provide a cash refund for certain taxpayers.388 Tax years prior to 2018
generally had a higher tax rate, so the ability of businesses to carryback post-2018 NOLs to earlier

384Pub. L. No. 116-136, §§ 2301–2307, 134 Stat. 281, 347–359 (2020). Other COVID-19 relief laws include the
Consolidated Appropriations Act, 2021, and the American Rescue Plan Act of 2021. Pub. L. No. 116-260, 134 Stat. 1182
(2020); Pub. L. No. 117-2, 135 Stat. 4 (2021).
385Pub. L. No. 115-97, 131 Stat. 2054 (2017).
386This is an update from our March 2021 CARES Act report estimate and includes the $31 billion estimate for the
extension of limitation of excess business loss from the American Rescue Plan Act of 2021.
38726 U.S.C. § 172(a). TCJA generally repealed NOL carrybacks and required NOLs to be carried over indeﬁnitely. Pub. L.
No. 115-97, § 13302(b), 131 Stat. at 2122. For ease of reporting, we use the term taxpayer to refer to an entity that may
use the CARES Act tax relief provisions described in this enclosure.
388Pub. L. No. 116-136, § 2303, 134 Stat. at 352–356.

Page 242 GAO-21-551
tax years tends to increase the relative value of the carryback amounts. For NOLs arising in tax
years beginning after 2017, TCJA limited the deduction of NOL carrybacks and carryforwards to 80
percent of taxable income.389 The CARES Act temporarily suspended the 80 percent limitation and
those NOLs can reduce 100 percent of a taxpayer’s taxable income for tax years beginning before
2021.390

NOL carryback refunds are typically claimed on Form 1120-X, an Amended U.S. Corporation Income
Tax Return; paper Form 1139, Corporate Application for Tentative Refund; or paper Form 1045,
Application for Tentative Refund.391 From April to December 31, 2020, IRS implemented temporary
procedures to allow for e-fax of Forms 1139 and 1045 for a quick tentative refund during the
period that IRS campuses were closed and mail was not being processed due to COVID-19.392

Acceleration of Alternative Minimum Tax (AMT) Credit refunds. TCJA repealed the corporate AMT, but
most corporations could claim their remaining unused minimum tax credits as a refundable credit
for tax years 2018 through 2021.393 Under the CARES Act, corporations with AMT credits may claim
a refund for tax years beginning in 2018 and 2019 and may either ﬁle Form 1139 or Form 1120-X
to receive a refund for some or all of these credits.394

Increased limits on business interest. Taxpayers may generally deduct business interest expense in
amounts not to exceed the sum of (1) the taxpayer’s business interest income for the tax year,
(2) 30 percent of their adjusted taxable income for the tax year, and (3) their ﬂoor plan ﬁnancing
interest for the tax year.395 The CARES Act modiﬁed the computation to allow for 50 percent
of adjusted taxable income instead of 30 percent for tax years beginning in 2019 and 2020.396
Taxpayers may still choose to use 30 percent of adjusted taxable income and not 50 percent to
calculate and take their 2019 and 2020 business interest expense deduction, as it may aﬀect other

389Pub. L. No. 115-97, § 13302(a)(1), 131 Stat. at 2121. Speciﬁcally, TCJA’s 80-percent limitation, as amended by section
2303(c) of the CARES Act, limited the deduction of NOL carrybacks and carryforwards (attributable to NOLs generated
after 2017) to an amount equal to the lesser of (1) the aggregate of the post-2017 NOL carryovers and carrybacks to that
taxable year, or (2) 80 percent of taxable income of the taxpayer computed without regard to any NOL deduction for
post-2017 NOLs.
390Pub. L. No. 116-136, § 2303(b)(1), 134 Stat. at 353–354.
391Corporations ﬁle Form 1139, Corporation Application for Tentative Refund. Individuals, estates, and trusts ﬁle Form
1045, Application for Tentative Refund. For ease of reporting, we use the term “application for tentative refund” to refer to
Form 1139 and Form 1045.
392See: IRS, Temporary procedures to fax certain Forms 1139 and 1045 due to COVID-19, accessed February 10, 2021,
https://www.irs.gov/newsroom/temporary-procedures-to-fax-certain-forms-1139-and-1045-due-to-covid-19.
393Pub. L. No. 115-97, § 12001(a), 131 Stat. at 2092. More information on AMT is included in our March 2021 CARES Act
report. In general, AMT was an alternative tax regime, which applied a lower tax rate to a broader tax base by limiting
the use of tax preferences and disallowing credits and deductions.
394Pub. L. No. 116-136, § 2305, 134 Stat. at 357. Under the CARES Act, corporations with AMT credits in excess of the
credit allowed to oﬀset regular tax liability (excess credit) may claim 50 percent of the excess credit as a refundable credit
for the ﬁrst tax year beginning in 2018 and then claim any remaining excess credit as a refundable credit in 2019. For
more information, please see our March 2021 report on the CARES Act.
395Pub. L. No. 116-136, § 2306, 134 Stat. at 358. Pub. L. No. 115-97, § 13301, 131 Stat. at 2117. More information,
including how partnerships are handled, is included in our March 2021 CARES Act report.
396The 50 percent adjusted taxable income limitation did not apply to partnerships for tax years beginning in 2019.

Page 243 GAO-21-551
credits or deductions. Taxpayers may also elect to use 2019 adjusted taxable income in computing
their 2020 business interest expense deduction.

Excess business losses. An excess business loss is the amount by which the total deductions from
all of a noncorporate taxpayer’s trades or businesses exceed the sum of the total gross income
and gains from those trades or businesses, plus $250,000 ($500,000 for a joint return).397 Under
TCJA, for noncorporate taxpayers, any excess business loss generated in tax years 2018 through
2025 is not allowed as a deduction in that year. Such an amount becomes an NOL, which may lead
to NOL deductions in other tax years. The CARES Act temporarily removed this limitation for tax
years 2018-2020.398 Taxpayers that applied the TCJA limits to any excess business loss that arose
during the 2018 or 2019 tax year, or during both tax years, can ﬁle amended returns to claim
refunds. The American Rescue Plan Act of 2021, enacted March 2021, extends the TCJA’s limitation
on excess business losses from 2026 to 2027.399

Overview of Key Issues
Use of excess business loss provision via amended returns. While complete data on the
number of taxpayers taking advantage of the changes to excess business loss tax provisions
will not be available until after tax year 2020 returns are processed, initial data are available on
claims made so far on processed amended returns. As of April 29, 2021, IRS had received 311
amended returns with excess business loss refund claims. The majority of these claims were for
refunds between $100,000 and $999,999. Of the business tax provisions we are monitoring, JCT
had estimated that this would be the provision with the largest revenue eﬀect, at $166 billion.

Update on the status of NOL and AMT credit refunds. Initial data are available on refund
requests and payments of refunds related to NOL carrybacks and AMT credits (see table).400 As of
April 29, 2021, IRS had received a total of 75,848 NOL carryback and AMT credit refund requests
since the start of the CARES Act on March 27, 2020, but we cannot determine if all of these NOL
and AMT credit refund requests were speciﬁc to CARES Act changes. IRS approved roughly $18.6
billion and dispersed roughly $15.8 billion of NOL and AMT refunds as of April 29, 2021.

39726 U.S.C. § 461(I)(3)(A). These values are 2018 amounts and are indexed for inﬂation thereafter. The CARES Act
clariﬁed that NOL deductions (i.e., losses carried from other years) are not included in the calculation of excess business
losses.
398CARES Act, § 2304, 134 Stat. at 356. 26 U.S.C. § 461(I)(3)(A).
399Pub. L. No. 117-2, § 9041, 135 Stat. 4, 122.
400Complete data on the number of taxpayers taking advantage of these tax provisions will not be available until after
tax year 2020 income tax returns are processed, at the earliest, in late in 2021.

Page 244 GAO-21-551
Net Operating Loss Carryback and Alternative Minimum Tax Credit Refund Requests Received as of April 29,
2021
a b
Form Refund requests received Number of taxpayers ﬁling

Applications for tentative refund 51,372 40,622

Amended return 24,476 20,457

Totals 75,848 61,079

Source: GAO analysis of Internal Revenue Service data. | GAO-21-551

Notes: “Refund requests” includes applications for tentative refund on Forms 1045 and 1139 as well as amended returns on
forms 1040-X and 1120-X. Since these provisions were available prior to the CARES Act, we were unable to distinguish CARES-
Act-speciﬁc ﬁlings for paper applications for tentative refunds and amended returns.
a
Applications for tentative refund include forms 1045 and 1139 and amended return data includes Forms 1040-X and 1120-X.
b
A single case may include multiple submissions. Submissions for the same identiﬁcation number, form, and tax period
generally are one case. Submissions for the same number and form, but for diﬀerent tax periods, are separate cases.

The number of refund requests received via applications for tentative refund has increased by
over 10,000 since we last received this data as of December 31, 2020. The general deadlines to ﬁle
an application for tentative refund for tax year 2018 and 2019 were June 30, 2020, and December
31, 2020, respectively. The deadline for tax year 2020 is December 31, 2021. Since IRS closed the
temporary e-fax line for these ﬁlings at the end of calendar year 2020, all applications for tentative
refund must now be sent by mail.

Transparency around timeliness of issuing tentative refunds. As discussed above,
amendments to NOL and AMT tax provisions under the CARES Act can potentially help increase
business liquidity during the COVID-19 pandemic. The Internal Revenue Code and the CARES Act
generally require IRS to issue certain refunds within a period of 90 days from the date on which
a complete application for a tentative carryback adjustment is ﬁled, or from the last day of the
month in which the return is due, whichever is later.401 Form 1139 and 1045 instructions refer to
the statutory time frame and IRS’s temporary procedures to e-fax certain Forms 1139 and 1045
due to COVID-19 state that IRS is mindful of taxpayers’ need to get these refunds.402

After 45 days, the taxpayer is also owed interest.403 According to IRS data, 23,236 approved
refunds included interest payments totaling nearly $280 million from the enactment of the CARES
Act through April 29, 2021. Based on our analysis, nearly 62 percent of approved NOL and AMT
refunds included interest payments.

40126 U.S.C. § 6411(b), (d)(2); Pub. L. No. 116-136, § 2305(d)(1), 134 Stat. at 357.
402According to IRS oﬃcials, if an Application for Tentative Refund is deemed unprocessible, IRS does not start counting
the 90-day timeline until the application is considered complete. Applications are considered unprocessible for a
number of reasons, for example if the name on the form is wrong, or if there is missing supporting documentation,
according to IRS oﬃcials.
40326 U.S.C. § 6611(e), (f). Interest is owed when the refund is not issued within 45 days of the later of the: loss year
return due date, delinquent loss year return received date, loss year return processible date, date the application is
received by the IRS, or date the application is received by the IRS in processible form.

Page 245 GAO-21-551
According to IRS data, IRS is not meeting the statutory 90-day refund requirement and the average
processing time in 2021 was 154 days as of May 1, 2021. Agency records show that IRS has taken
as long as 210 days to process some applications for tentative refunds. IRS oﬃcials said that
number does not include the additional time it takes for IRS to ﬁnalize production and distribution
of the refund to the taxpayer, which can take 2 weeks. This could potentially make the total refund
processing time as long as 224 days. This would be more than 4 months later than the taxpayer
would be expecting, based on the statutory requirement listed on the form instructions and
temporary procedures webpage. An industry group has also said that the process to receive a
refund is taking longer than expected and several tax professionals we spoke with said most of
their clients have waited more than 90 days for their refund.

Based on our analysis of IRS records, the average processing time ﬁrst consistently surpassed
90 days for Form 1045 in October 2020 and in January 2021 for Form 1139. Prior to that, IRS had
been generally meeting the 90-day requirement for the last 3 years.404 IRS oﬃcials said it is taking
longer to process returns because IRS facilities that process paper returns continue to operate at
reduced capacity to accommodate social distancing. This, combined with the December 31 due
date for applications for tentative refund for tax year 2019 and the close of the e-fax line for ﬁling
these forms, could be contributing to the slowdown of issuing these tentative refunds.

Delays in processing refunds may continue until the backlog has reduced further. IRS reported
being caught up on opening mail in December 2020; however, as of May 2021, IRS oﬃcials said
they were still processing returns received in 2020.405 IRS had about 11.7 million unprocessed
returns as of May 11, 2021, and its processing backlog of tentative refund claims was roughly
15,000. We are continuing to review data on tentative refund application backlogs to determine
the cause, what could have been done to mitigate the delays, and any actions IRS could take to
address the issue going forward.

In the meantime, transparent communication on these issues and delays could help the IRS follow
the Taxpayer Bill of Rights and help the taxpayer know when to expect their refund. According
to IRS’s Taxpayer Bill of Rights, taxpayers are entitled to clear explanations of the laws and IRS
procedures. An explanation on IRS’s website that IRS is processing tentative refunds beyond
the expected 90 days due to service disruptions would provide taxpayers with more accurate
information and expectations for receiving a refund.

In discussions with IRS on the refund delays, we indicated that based on our ﬁndings, we are
considering a recommendation regarding communication of the issue to taxpayers. In response,
on May 21, 2021, IRS added an update to irs.gov indicating that due to the lingering eﬀects of
COVID-19, IRS continues to experience inventory backlogs and longer than normal processing
times for Forms 1139 and 1045. The update also states that IRS cannot provide a time frame
for how long taxpayers will wait for a refund. IRS’s communication eﬀort is an improvement.
However, even without an exact time frame, IRS could provide taxpayers a clearer indication of the

404We reviewed IRS data from October 2016 until present, and this is the ﬁrst time that the IRS has consistently taken
over 90 days to process these forms.
405IRS oﬃcials said that all 2020 returns have been “opened” by a machine, but not all have been extracted, which is a
separate step to extract the paper from the envelope.

Page 246 GAO-21-551
magnitude of delays.406 For example, IRS could indicate that processing times may exceed 90 days
given current circumstances.407

NOL and AMT approved refunds by industry sector. Analysis of IRS data from Form 1120-
X and Form 1139 and North American Industry Classiﬁcation System (NAICS) codes showed
that among corporations, the manufacturing; professional, scientiﬁc, and technical services;
and wholesale trade industries have claimed the highest number of NOL and AMT refunds
so far, making up about 37 percent of all approved refunds to corporations (see table).408
However, the “management of companies and enterprises” industry makes up about 48 percent
of all refund dollars approved for corporations, with an average refund size of nearly $6.9
million.409 Companies under this industry classiﬁcation can span or overlap with other industry
classiﬁcations. We will continue to examine refund claim activity across industry types.

406The average processing time from 2017-2019 was between 20 and 50 days, making the statement that IRS is
experiencing longer than normal processing times misleading given the latest average is over 100 days more than what
was considered normal in those years.
407For other ﬁlings, IRS has shared more information on its website on what time frames taxpayers can expect when
ﬁling a form when IRS faces service disruptions, including the size of the current backlog and that it may take longer
than a certain speciﬁed time frame. For example, see IRS: IRS Operations During COVID-19: Mission-critical functions
continue, accessed on June 2, 2021, https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-
functions-continue.
408NAICS is the standard used by federal statistical agencies in classifying business establishments for the purpose of
collecting, analyzing, and publishing statistical data related to the U.S. business economy. On IRS forms such as the Form
1120, taxpayers are instructed to determine from a provided list which business activity the company derives the largest
percentage of its total receipts, to self-report their principal business activity. The list of principal business activity that
the IRS uses is based on the NAICS.
409This industry comprises of (1) establishments primarily engaged in holding the securities of companies or (2)
establishments (except government establishments) that administer, oversee, and manage other establishments of the
company or enterprise. This includes a wide range of companies from banks and holding companies, to airlines and
freight rail companies.

Page 247 GAO-21-551
Approved Corporate Refunds for Net Operating Loss (NOL) and Alternative Minimum Tax (AMT) Credit by
Industry, Mar. 27, 2020–Apr. 29, 2021
Average refund Number of Percentage of Percentage of
size ($ in approved all approved Amount approved total amount
a b
Industry thousands) refunds refunds ($ in thousands) approved

Management of $ 6,872 1,162 5.56% $ 7,985,785 48.24%
Companies and
Enterprises

Mining, Quarrying, and $ 1,099 224 1.07% $ 246,264 1.49%
Oil and Gas Extraction

Manufacturing $ 837 2,769 13.26% $ 2,317,482 14.00%

Information $ 819 489 2.34% $ 400,662 2.42%

Transportation and $ 669 668 3.20% $ 446,641 2.70%
Warehousing

Retail Trade $ 618 1,737 8.32% $ 1,073,968 6.49%

Wholesale Trade $ 558 2,159 10.34% $ 1,204,231 7.27%

Finance and Insurance $ 532 1,474 7.06% $ 784,003 4.74%

Administrative and $ 363 461 2.21% $ 167,502 1.01%
Support and Waste
Management and
Remediation Services

Accommodation and $ 356 375 1.80% $ 133,444 >1%
Food Services

Real Estate and Rental $ 302 1,515 7.25% $ 456,864 2.76%
and Leasing

Arts, Entertainment, $ 300 231 1.11% $ 69,213 >1%
and Recreation

Utilities $ 252 57 >1% $ 14,374 >1%

Professional, Scientiﬁc, $ 210 2,433 11.65% $ 511,531 3.09%
and Technical Services

Health Care and Social $ 208 955 4.57% $ 198,868 1.20%
Assistance

Educational Services $ 187 137 >1% $ 25,574 >1%

Agriculture, Forestry, $ 121 936 4.48% $ 113,216 >1%
Fishing and Hunting
(not covered in
economic census)

Page 248 GAO-21-551
Average refund Number of Percentage of Percentage of
size ($ in approved all approved Amount approved total amount
a b
Industry thousands) refunds refunds ($ in thousands) approved

Construction $ 114 2,055 9.84% $ 234,626 1.42%

Other Services
c $ 65 586 2.81% $ 37,894 >1%

Total N/A 20,423 100% $16,422,144 100%

Source: GAO analysis of Internal Revenue Service data. | GAO-21-551

Notes: This table includes data from Forms 1120-X and Forms 1139 only, which make up 55 percent of the total number of
approved refunds (which is diﬀerent from the table with applications received found earlier in the document). Forms 1045 and
1040-X are ﬁled by sole proprietors, individuals, estates, and trusts that do not always have an associated NAICS code. We were
not able to identify NAICS sectors in IRS data for a small number of Employer Identiﬁcation Numbers, which made up roughly 2
percent of the corporate records. This does not materially aﬀect our results.
a
Industry is classiﬁed by North American Industry Classiﬁcation System (NAICS) codes
b
Companies may receive more than one refund. Average refund size is calculated by dividing the total approved refund dollar
amount by the number of approved refunds per industry.
c
except Public Administration

Insights from public company reporting of provision use. The totality of tax ﬁlings reﬂecting
the use of COVID-19 relief provisions will not be ﬁled and processed for a few months. Therefore,
to obtain additional preliminary insights on the extent corporations are using these provisions,
speciﬁcally NOL, we examined a generalizable sample of 185 public company Securities and
Exchange Commission (SEC) ﬁlings starting with the March 27, 2020, enactment of the CARES Act,
through March 26, 2021.410 Based on our review of annual and quarterly reports for sampled
companies, we estimate that about 15 percent of companies said they have or will use the NOL
CARES Act provision, and about 5 percent of companies mentioned NOL but were unsure of
whether they will use the provision (see table).411

410At this time, we only analyzed the usage of NOL with this methodology, but we will continue to analyze the use of
other provisions in future reports. Public companies are required to ﬁle annual reports on Form 10-K and quarterly
reports on Form 10-Q. The target population of our sample was the largest publicly traded companies with annual or
quarterly reports ﬁled. We identiﬁed 3,328 companies included in the Russel 3000E index that ﬁt within the scope of our
review.
411We selected a generalizable, simple random sample of 185 companies from the 3,328 companies that were
within the scope of our review. We computed sample sizes necessary to obtain a precision of at least plus or minus 7
percentage points, at the 95 percent conﬁdence level, for a proportion estimate.

Page 249 GAO-21-551
Estimated Reported Usage of CARES Act Net Operating Loss Provision Based on a Sample of 185 Public Company
Filings, Mar. 27, 2020–Mar. 26, 2021
Estimated percentage of Estimated percentage of Estimated percentage of
companies that said they companies unsure about companies not using or no
a b c d
did or will use usage or eﬀect eﬀect Unable to determine

15% 5% 61% 19%

Source: GAO analysis of Securities and Exchange Commission (SEC) data. | GAO-21-551

Note: All estimates in this table have a margin of error, at the 95 percent conﬁdence level, of plus or minus 7 percentage
points or fewer. This analysis is not representative of all companies that are eligible for the CARES Act net operating loss (NOL)
provision and represents only publicly traded companies, which may have diﬀerent characteristics than private companies.
We reviewed report excerpts with keywords associated with NOL and “CARES Act” within 20-40 words. However, this does not
automatically mean that the use of the provision was directly related to the CARES Act.
a
Companies that included the speciﬁed provision in their SEC ﬁling and said that they either already used it or planned to.
b
Companies that mention the speciﬁed provision, but are still deciding or unsure if they will ultimately use it or were
ambiguous in their mention of NOL.
c
Companies that mention the speciﬁed provision, but explicitly say they will not use it and companies that did not mention the
provision but had populated text related to some of our keywords.
d
Companies that mention the speciﬁed provision, but that GAO analysts were unable to determine whether or not the
company ultimately utilized CARES NOL or the company did not have any text from their ﬁlings related to our keywords.

Some companies noted that the provision helped their company, for example, receive a refund or
other longer-term tax beneﬁts. Others said that they were still deciding whether to use the NOL
provision, due to potential ownership changes that place limitations on the use of net operating
losses and other tax attributes.

Based on our analysis of the sampled companies, 37 reported that they did or will use NOL or
were unsure if they will use. Of these, we found that businesses in the manufacturing industry
mentioned NOL the most, followed by the ﬁnance and insurance industry and the information
industry.412 See below for the industry breakdown of companies that mention using or were
unsure if they will use NOL.413

412This is consistent with our ﬁndings in the section above, where we found that the manufacturing industry made up
the highest number of approved NOL refunds. The manufacturing sector is comprised of establishments engaged in the
mechanical, physical, or chemical transformation of materials, substances, or components into new products, such as
food and beverage, textiles, apparel manufacturers, among others. Industry type was taken from the Standard Industrial
Classiﬁcation codes that appear in Securities and Exchange Commission ﬁlings, and translated into the North American
Industry Classiﬁcation System and indicate the company’s type of business.
413For the purposes of this table, we included only companies that mentioned they did or will use NOL and companies
that were unsure if they will use NOL. There were 26 companies who said they did or will use NOL, out of our 185
company sample. There were 10 companies that were unsure if they will use NOL, out of our 185 company sample.

Page 250 GAO-21-551
Sampled Public Company Filings Mentioning CARES Act Net Operating Loss by Industry, From Mar. 27, 2020–Mar.
26, 2021
Number of sampled companies that Number of sampled companies
Sector said they did or will use unsure if they will use

Manufacturing 16 6

Finance and insurance 2 1

Information 2 1

Retail trade 1 1

Mining, quarrying, and oil and gas 2 0
extraction

Utilities 1 0

Transportation & warehousing 1 0

Accommodation and food services 1 0

Professional, scientiﬁc, and technical 1 0
services

Educational services 0 1

Total: 27 10

Source: GAO analysis of Securities and Exchange Commission data. | GAO-21-551

Note: Industry type was taken from the Standard Industrial Classiﬁcation codes that appear in Securities and Exchange
Commission ﬁlings, and translated into the North American Industry Classiﬁcation System and indicate the company’s type of
business.

Methodology
We reviewed IRS data as of April 29, 2021, federal laws, and agency guidance; and interviewed IRS
oﬃcials and tax professionals. To analyze IRS data, we extracted the data from IRS databases on
the use of these provisions from March 27, 2020, through April 29, 2021. We also aligned them
with industry codes as reported by taxpayers, using their Employment Identiﬁcation Number to
show which industries took advantage of the tax provisions. Knowledgeable IRS oﬃcials conﬁrmed
the validity of our methodology. We determined that the data were suﬃciently reliable for our
purposes.

We selected a generalizable, random sample of 185 publicly traded companies from the Russell
3000 Index, which represents about 98 percent of U.S. incorporated equity securities and lists
3,328 unique companies with an SEC Central Index Key.414 We computed sample sizes necessary
to obtain a precision of at least plus or minus 7 percentage points, at the 95 percent conﬁdence

414Prior to sample selection, a small number of companies were removed from the population that are not within the
scope of this audit.

Page 251 GAO-21-551
level, for a proportion estimate. We reviewed SEC public company reports ﬁled from March 27,
2020, through March 26, 2021. In our analysis, we reviewed all ﬁled Form 10-Ks and 10-Qs in
that time span and ran computer code with a designated list of key terms, and pulled 20 words
before and 40 words after the term. We then applied decision rules to manually analyze if the
passages indicated whether businesses are using the provisions of the CARES Act. For example,
if the SEC company ﬁling provided a monetary value associated with federal NOL carrybacks or
carryforwards after any CARES Act mention, we classiﬁed the company as using the NOL provision.

As noted above, the sample does not represent all companies that may use the CARES Act NOL
provision and only represents publicly traded companies, which may have diﬀerent characteristics
than private companies.415 Because we followed a probability procedure based on random
selections, our sample is only one of a large number of samples that we might have drawn. Since
each sample could have provided diﬀerent estimates, we express our conﬁdence in the precision
of our particular sample’s results as a 95 percent conﬁdence interval (e.g., the margin of error is
+/- 7 percentage points). This is the interval that would contain the actual population value for 95
percent of the samples we could have drawn. This analysis is similar to the methodology used by
authors of a University of Chicago study published in June 2020.416

Agency Comments
We provided IRS, Treasury, and the Oﬃce of Management and Budget, with a draft of this
enclosure. IRS’s written comments are reproduced in appendix VIII , and IRS and Treasury provided
technical comments, which we incorporated as appropriate. The Oﬃce of Management and
Budget did not have any comments on this enclosure.

IRS neither agreed nor disagreed with our recommendation to clearly communicate on its website
that there are delays beyond the statutory 90-day timeline in processing net operating loss and
alternative minimum tax tentative refunds. However, IRS did say it would review messaging
addressing tentative refund processing times and update it as necessary. We will monitor IRS
actions to address this recommendation.

GAO’s Ongoing Work
We will continue to monitor the use of these COVID-19 related tax provisions and IRS’s eﬀorts to
ensure taxpayer compliance with them.

415About 1 percent of the business/corporate population are public companies. In addition to businesses/corporate
ﬁlers, tax exempt organizations with certain business operations, are eligible for refunds.
416Gallemore, John, Stephan Hollander, and Martin Jacobs, “Who CARES? Evidence on the Corporate Tax Provisions of
the Coronavirus Aid, Relief, and Economic Security Act from SEC Filings,” Becker Friedman Institute, University of Chicago
(June 2020).

Page 252 GAO-21-551
GAO’s Prior Recommendations
The table below presents our recommendation on tax relief for businesses from a prior bimonthly
CARES Act report.

Page 253 GAO-21-551
Prior GAO Recommendations Related to Tax Relief for Businesses
Recommendation Status

The Commissioner of Internal Revenue should update the Form Open. IRS agreed with our recommendation and
1040-X instructions to include information on the electronic ﬁling said that it would start to update the Form 1040-X
capability for tax year 2019 (November 2020 report) instructions to include information on the electronic
ﬁling (e-ﬁle) capability for tax year 2019.
As of early May 2021, IRS still planned to include this
information in the next routine annual update of
the instructions with an October 31, 2021, release,
rather than updating them sooner, out of cycle.
According to IRS, the normal revision process takes
10 months to complete properly, and would be
diﬃcult to complete in a shorter time frame. IRS’s
planned revision will occur after the deadline for
submitting an application for a tentative refund
via the temporary electronic fax procedures, which
for some taxpayers, may require an accompanying
Form 1040-X. This means that taxpayers who ﬁled
their 1040-X before the December 31 deadline with
the temporary procedures did not ﬁnd the e-ﬁle
capability in the form instructions. However, some
taxpayers will use Form 1040-X for other CARES Act
refunds after that deadline, so instructions that are
updated in tax year 2021 will still help ensure these
taxpayers are aware of this option. A timelier update
to the instructions would help taxpayers ﬁling the
1040-X between now and when the annual update
to the instructions occurs in October 2021.
In the meantime, IRS previously posted information
about the e-ﬁle availability on the Form 1040-X
product page at IRS.gov, which is referenced in the
ﬁrst paragraph of the Form 1040-X instructions. IRS
also added a development article dated February
18, 2021, to www.irs.gov/Form1040X to notify
taxpayers that e-ﬁling is available for amending
2019 and 2020 returns that were originally e-ﬁled.
We will continue to monitor any updates to the
instructions.

Source: GAO. I GAO-21-551

Related GAO Product
High Risk Series: Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas.
GAO-21-119SP. Washington, D.C.: March 2, 2021.

Contact information: Jessica Lucas-Judy, (202) 512-6806, lucasjudyj@gao.gov

Page 254 GAO-21-551
Loans for Aviation and Other Eligible Businesses
By approving nearly $22 billion in loans to aviation and other eligible businesses out of the $46
billion in available funds, the Department of the Treasury provided critical assistance to large
passenger air carriers, but smaller businesses did not see the same beneﬁts.

Entity involved: Department of the Treasury

Background
The CARES Act authorized the Department of the Treasury (Treasury) to provide up to $46 billion
in loans and loan guarantees to certain aviation businesses and other businesses deemed critical
to maintaining national security (national security businesses).417 This loan program was intended
to provide liquidity to targeted sectors. Of the 267 applications submitted, Treasury executed 35
loans to businesses in these targeted sectors, totaling about $22 billion, as shown in the table
below.418

417CARES Act, Pub. L. No. 116-136, 134 Stat. 281, 470 (2020). The CARES Act did not provide criteria for which businesses
were “critical to maintaining national security.” Treasury established the following deﬁnition: (1) performing under a “DX”-
priority-rated contract or order under the Defense Priorities and Allocations System regulations (15 C.F.R. pt. 700) or (2)
operating under a valid top secret facility security clearance under the National Industrial Security Program regulations
(32 C.F.R. pt. 2004). Treasury guidance further noted that applicants that did not meet either of these criteria may still be
considered for loans if, based on the recommendation and certiﬁcation by the Secretary of Defense or the Director of
National Intelligence, the applicant’s business is critical to maintaining national security.
418As directed by the CARES Act, Treasury coordinated with the Department of Transportation (DOT) to determine the
eligibility of certain applicants. DOT conﬁrmed that applicants held the appropriate air carrier certiﬁcates and the status
of their operations, and reported this information to Treasury, according to DOT. Treasury also coordinated with the
Department of Defense to determine the eligibility of applicants.

Page 255 GAO-21-551
Loans for the CARES Act Loan Program for Aviation and Other Eligible Businesses
Number of loans Assistance provided
Loan category Number of applications executed ($ millions)

Passenger and cargo air carrier 102 17 21,116

Repair station operator 41 5 19

Ticket agent 50 2 21

National security business 74 11 736

Total 267 35 21,891

Source: GAO analysis of Department of the Treasury data. | GAO-21-551

Note: Section 4003 of the CARES Act authorized maximum assistance available through loans in three categories: passenger air
carrier, repair station operator, and ticket agent ($25 billion); cargo air carrier ($4 billion); and businesses critical to maintaining
national security ($17 billion). CARES Act, Pub. L. No. 116-136, § 4003, 134 Stat. 281, 470 (2020). To match the Department of the
Treasury’s reporting on these loans, and because air carriers that received loans could provide both passenger and cargo air
services, we combined all air carriers into a single category.

The loan agreements executed by Treasury, as amended, ranged in size from nearly $295,000
to $7.5 billion.419 Treasury prioritized applications from the largest passenger air carriers and
executed loan agreements with seven of them totaling about $20.8 billion.

In December 2020, we reported that Treasury’s policies and procedures to evaluate loan
applications were generally consistent with selected standards for internal control, although some
practices, such as the quality of external communication with stakeholders, could be improved.
Given that Treasury’s authority to make new loans ended on December 31, 2020, we did not
make recommendations but identiﬁed lessons learned from this program—highlighted below. In
March 2021, we further reported that loan applicants did not receive loans for reasons such as not
responding to Treasury’s requests for ﬁnancial data, entering bankruptcy, not meeting Treasury’s
credit standards, and—for national security businesses—not meeting Treasury’s criteria for a
business critical to maintaining national security. Given our prior work on the implementation of
the loan program, we focus below on the initial eﬀects of the loan program on applicants. This
enclosure satisﬁes a provision in the CARES Act that directs us to submit annual reports regarding
the loan program.420

419These ﬁgures include amendments to loan commitments made to loan agreements after the initial closings. The
amendments include increases in loan commitments that reallocated unused funds, according to Treasury.
420Speciﬁcally, the CARES Act directs GAO to submit a report to speciﬁed committees on the Section 4003 loan program
within 9 months of the enactment of the Act, and then annually thereafter through the year succeeding the last year
for which the loans, loan guarantees, or other investments made from the loan program are outstanding. Pub. L. No.
116-136, § 4026(f), 134 Stat. at 496. Our report in December 2020 (GAO-21-198) satisﬁed the initial 9 month reporting
requirement and this enclosure satisﬁes our ﬁrst annual reporting requirement as it pertains to the loans to passenger
air carriers (and certain speciﬁed related businesses), cargo air carriers, and businesses critical to maintaining national
security under Sections 4003(b)(1)-(3).

Page 256 GAO-21-551
Overview of Key Issues
Receiving a loan had generally positive eﬀects on employment and operations for the
businesses we interviewed. In comparing 16 loan applicants selected to cover the range of
business types and sizes that applied, those businesses that received a Treasury loan generally
reported positive eﬀects on employment levels and operations, while those that did not receive
loans reported negative eﬀects.421 Of the eight applicants we spoke to that received loans,
several said the loan had a positive eﬀect on their employment levels by allowing them to retain
employees. Most loan recipients told us they used loan proceeds for payroll and other operational
expenses. In contrast, all but one of the eight applicants we spoke to that did not receive loans
attributed reductions in employment levels to the inability to receive a loan. Speciﬁcally, not
receiving the loan funds coupled with reduced revenues meant these applicants had to pause
planned hiring or lay oﬀ employees.

With regard to businesses’ ability to continue operating, those that received loans generally
reported that receiving a loan had a positive eﬀect, and those that did not reported a negative
eﬀect. For loan recipients, ﬁve said the loan positively aﬀected their operations, in part by enabling
them to lease new equipment, keep skilled staﬀ, or take advantage of new contracts. For those
that did not receive the loan, seven said the overall eﬀect on operations was negative. The reason
was, in part, that they were not able to retain staﬀ or hire new staﬀ and therefore were not able to
move forward with planned business activities or not able to take on new contracts.

Treasury oﬃcials noted that to make these loans, the CARES Act directed Treasury to determine
whether various conditions related to loan risk were met, including that employment levels be
maintained and that the loans be prudently incurred and fully secured or made at a rate that
reﬂects the risk of the loan, among other things. As such, oﬃcials told us that some businesses
that were not in a strong ﬁnancial position and had a need for ﬁnancial assistance did not qualify
for a loan.

Loan program provided liquidity—the intended goal—to large passenger air carriers that
applied. As we reported in December 2020, large passenger carriers viewed the loan program
application and review process as responsive and ﬂexible enough to address their ﬁnancial
needs—during a period of unprecedented declines in passenger demand.422 Representatives
from four large passenger air carriers we interviewed—two that received loans and two that
did not—told us the existence of the loan program created liquidity in ﬁnancial markets. The
two large passenger air carriers that received the Treasury loan reported it provided critical
liquidity to maintain operations. Two large passenger air carriers that applied but did not receive

421We selected 16 applicants to interview to ensure variety based on business type (passenger air carrier, cargo air
carrier, ticket agent, repair station operator, and business critical to maintaining national security), loan received/not
received, amount of loan request, and number of employees. The reasons applicants did not receive loans varied;
however, one applicant we interviewed requested that Treasury withdraw its application.
422According to Treasury documents, the top 10 large passenger air carriers were identiﬁed based on global available
seat miles in 2019, which measures how many seats on a plane on a given route are actually available for purchase.
These carriers included Alaska Airlines, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue
Airways, SkyWest Airlines, Spirit Airlines, Southwest Airlines, and United Airlines. In our discussion of large passenger
air carriers, we also include another passenger air carrier that applied to the loan program and has several thousand
employees.

Page 257 GAO-21-551
Treasury loans were able to access loans through private ﬁnancial markets. These air carriers’
representatives credited the Treasury loan program with increasing the conﬁdence of lenders in
private ﬁnancial markets to make loans to air carriers.

According to Treasury oﬃcials, the purpose of this loan program was to provide liquidity to the
targeted sectors, and they view the continued operations of major airlines as an indicator of the
program’s success.

Loan program provided fewer beneﬁts to smaller businesses that we interviewed. Of the
16 loan applicants we interviewed, many of the 12 smaller businesses said the program did not
work or did not work as well as it could have.423 For smaller businesses we interviewed across
all application categories (national security and aviation), the application process was long and
expensive. For example, several smaller businesses we spoke to said they needed to hire outside
legal counsel to assist with their applications. While the six smaller businesses that received loans
were positive about the eﬀects on employment and operations, representatives of some of these
same businesses raised concerns that the loan amount was too small and the loan terms were, in
some cases, too restrictive to allow the businesses to adapt to the post-pandemic environment.

For the six smaller businesses that did not receive loans, representatives generally saw no beneﬁts
from applying to the program. Some of these businesses noted they spent signiﬁcant time and
money applying for the Treasury loan, in some cases at the expense of other ﬁnancing options.
Unlike the experience of large passenger air carriers, smaller businesses reported the loan
program did not have a positive eﬀect on their ability to receive alternative private ﬁnancing, with
most noting they were not able to ﬁnd ﬁnancing to take the place of the Treasury loan.

According to Treasury oﬃcials, the concerns highlighted by applicants from smaller businesses
reﬂect the loan program structure and the conditions imposed by statute. For example, they said
that in order for Treasury to ensure that loans were suﬃciently secured or made at a rate that
reﬂected the risk of the loan as required by the CARES Act, Treasury had to undertake extensive
due diligence on each applicant to assess its ﬁnancial position. Treasury oﬃcials said that these
requirements and others were unavoidably complex—a situation typical with such transactions. In
these situations, it is not unusual for applicants to loan programs, such as this one, to hire a lawyer
to assist with the process.

All applicants we spoke to received assistance from other federal programs, including the
Paycheck Protection Program, Economic Injury Disaster Loans, and the Payroll Support Program
(PSP).424 These programs oﬀered ﬁnancial assistance that, for many recipients, does not have to
be repaid. However, for those that did not receive Treasury loans, other federal assistance was not
generally viewed as a replacement for the Treasury loan program.

423Those businesses we refer to as “smaller” employed fewer than 200 people and requested loans between $250,000
and $26.1 million.
424In addition to the Section 4003 loan program, Treasury also administered PSP. The CARES Act directed Treasury to
prioritize PSP, speciﬁcally requiring Treasury to publish streamlined and expedited procedures not later than 5 days
after the date of enactment of the act (in contrast with 10 days after enactment of the act for the 4003 loan program).
Additionally, the CARES Act directed Treasury to make initial payments to air carriers and contractors that submitted
requests for ﬁnancial assistance approved by the Secretary no later than 10 days after enactment of the act, whereas the
4003 loan program did not have such a requirement.

Page 258 GAO-21-551
As Treasury rolls out new emergency ﬁnancial assistance programs, it should continue to
apply lessons learned from the loan program. Treasury continues to implement emergency
ﬁnancial assistance programs, such as the Coronavirus Economic Relief for Transportation Services
(CERTS) and the third extension of PSP (for more information see the Payroll Support Assistance to
Aviation Businesses enclosure in app. I).425 According to Treasury oﬃcials, the agency is applying
the lessons it has learned from administering the loan program and other ﬁnancial assistance
programs to these newer ones. However, our interviews with loan applicants underscore lessons
learned that we reported on in December 2020. Speciﬁcally:

• Clear communication. In December 2020, we reported concerns from industry associations
representing businesses eligible for the loan program about Treasury’s communication with
applicants on the status of their application and program timelines. Some loan program
applicants we spoke with that did not receive loans were critical of Treasury’s ability to
communicate clearly and consistently. Speciﬁcally, most of these applicants told us they
were not satisﬁed with the explanations they received from Treasury regarding the status or
outcome of their application. For example, two applicants said they thought their application
was on track, only to ﬁnd out within days of closing on the loan that Treasury had changed the
loan terms. According to Treasury oﬃcials, loan closing dates for all applicants were scheduled
at the beginning of the application review process, but approval was subject to the results of
this review. In some cases, ﬁnal decisions on an applicant’s creditworthiness were made close
to the previously scheduled closing date.

• Multiple paths within a program to better accommodate businesses of varied types and sizes.
A wide range of businesses—from large passenger air carriers with tens of thousands of
employees to ticket agents, repair station operators, and air carriers with only a handful of
employees—were eligible for and applied to this program. According to several applicants
we interviewed, the cost of applying, in terms of time, dollars, and missed opportunities, was
more onerous for smaller businesses. According to Treasury oﬃcials, for smaller businesses a
loan program with the terms and conditions as required by the CARES Act may have been less
helpful than a program like the Paycheck Protection Program or the Payroll Support Programs,
which provided funds that did not need to be repaid. As we reported in December 2020, it is
diﬃcult to implement a program quickly for a wide range of businesses, so multiple programs
or multiple paths within a program may better accommodate businesses of varied types and
sizes.

• Leveraging resources from other agencies and external parties. According to some applicants
we interviewed and as we previously reported from industry associations, they thought
the program was designed for larger businesses, such as large passenger air carriers. For
example, several applicants described multiple exchanges with Treasury to clarify the types
of collateral available or why certain businesses could not undertake secured loans. Treasury
oﬃcials said that agency staﬀ, as well as the law ﬁrms and ﬁnancial advisors employed by the
agency to help administer this program, had signiﬁcant experience in ﬁnancial transactions.
As we have reported, Treasury could have made greater use of expertise at the Department

425Established by the Consolidated Appropriations Act, 2021, the CERTS program is to provide $2 billion in grants
to eligible transportation service providers aﬀected by the COVID-19 pandemic, including motorcoach, school bus,
passenger vessel, and pilot vessel companies. Grant funds are primarily to be used to cover payroll costs, but may also
be used to cover operating expenses as well. Pub. L. No. 116-260, div. N, tit. IV, 134 Stat. 1182, 2061-68 (2020).

Page 259 GAO-21-551
of Transportation (DOT) and other entities to design the program and help communicate
with eligible businesses, based on the experiences of industry associations we interviewed.
According to Treasury oﬃcials, the agency is leveraging expertise at DOT and from relevant
industry associations as it sets up and rolls out the CERTS program.

Methodology
To conduct this work, we reviewed Treasury reports on the status of loan withdrawals and
repayments as of June 1, 2021, and interviewed Treasury oﬃcials. We also interviewed 16 loan
program applicants, selected based on whether they received a loan or not, the type of business
(passenger air carrier, cargo air carrier, ticket agent, repair station operator, or business critical to
maintaining national security), amount of loan request, and business size (as measured by number
of employees). To enable comparison between those that received and did not receive loans,
we selected eight loan recipients that reﬂected the mix of the factors above and eight applicants
that were similar across those factors but did not receive a loan. In conducting these interviews,
we used two sets of interview questions—one for those that received loans and one for those
that applied but did not receive a loan. The information obtained from our interviews cannot be
generalized to all loan program applicants.

Agency Comments
We provided the Department of Transportation (DOT), Treasury, and the Oﬃce of Management
and Budget (OMB) with a draft of this enclosure. Treasury provided technical comments, which we
incorporated as appropriate. DOT and OMB did not provide comments on the enclosure.

GAO’s Ongoing Work
We continue to review Treasury’s plans to monitor borrowers’ compliance with the terms and
conditions of loan agreements. We are also completing a review on the eﬀect of the pandemic
on the aviation sector and how those businesses have responded. Further, we will continue to
monitor Treasury’s implementation of federal ﬁnancial assistance programs for the transportation
sector authorized by COVID-19 relief laws in December 2020 and March 2021.

Pursuant to Section 4026(f) of the CARES Act, we will provide copies of this enclosure to the
following committees: in the House of Representatives, the Committee on Financial Services,
the Committee on Transportation and Infrastructure, the Committee on Appropriations, and
the Committee on the Budget; and in the Senate, the Committee on Banking, Housing, and
Urban Aﬀairs, the Committee on Commerce, Science, and Transportation, the Committee on
Appropriations, and the Committee on the Budget.

Page 260 GAO-21-551
Related GAO Product
Financial Assistance: Lessons Learned from CARES Act Loan Program for Aviation and Other Eligible
Businesses. GAO-21-198. Washington, D.C.: December 10, 2020.

Contact information: Heather Krause, (202) 512-2834, krauseh@gao.gov

Page 261 GAO-21-551
Federal Reserve Lending Facilities
The last of the Federal Reserve’s lending facilities (both CARES Act and non-CARES Act) is
scheduled to stop purchasing assets or extending credit on July 30, 2021. As of June 30, 2021,
the CARES Act facilities had $30.1 billion in outstanding asset purchases and $36.9 billion in
outstanding loans to the Federal Reserve Banks. The Federal Reserve’s oversight of the facilities is
ongoing and focuses on previously identiﬁed risk areas.

Entities involved: Department of the Treasury, Federal Reserve System

Background
In response to the economic eﬀects of COVID-19, and with the Secretary of the Treasury’s
approval, the Board of Governors of the Federal Reserve System (Federal Reserve) established
nine facilities supported by CARES Act funding.426 These programs were established to provide
liquidity to the ﬁnancial system that supports lending to states, tribes, municipalities, eligible
businesses, and nonproﬁt organizations.427 All nine facilities stopped purchasing assets or
extending credit by January 8, 2021. The Federal Reserve also established four facilities with the
Treasury Secretary’s approval that did not receive CARES Act-appropriated funds.428 These facilities
were designed to provide liquidity to the ﬁnancial sector and businesses. The last of these facilities
is scheduled to stop extending credit by July 30, 2021.

Overview of Key Issues
As of June 30, 2021, the CARES Act facilities had $30.1 billion in outstanding assets and $36.9
billion in outstanding loans to the Federal Reserve Banks managing the facilities. The Paycheck
Protection Program Liquidity Facility was the only non-CARES Act facility that was extended beyond
March 31, 2021, to July 30, 2021. This facility conducted an additional $41.6 billion in transactions
from April through May 2021.

CARES Act facilities. For the facilities that received CARES Act funds, outstanding assets—that is,
assets (for example, corporate and municipal bonds) the facilities purchased and had not disposed
of through sale or other means—peaked between November 2020 and January 2021.429 These
outstanding assets have since slightly declined. In June 2021, the Federal Reserve announced that
it would begin the process of selling the assets in the Secondary Market Corporate Credit Facility.
The Federal Reserve Bank of New York anticipates that it will complete the sale of the facility’s

426The facilities were authorized under Section 13(3) of the Federal Reserve Act, which permits the Federal Reserve to
provide emergency lending, and were approved by the Secretary of the Treasury.
427The CARES Act-supported facilities were the Primary Market Corporate Credit Facility, Secondary Market Corporate
Credit Facility, Municipal Liquidity Facility, Term Asset-Backed Securities Loan Facility, and ﬁve facilities under the Main
Street Lending Program—the Main Street New Loan Facility, Main Street Priority Loan Facility, Main Street Expanded
Loan Facility, Nonproﬁt Organization New Loan Facility, and Nonproﬁt Organization Expanded Loan Facility.
428The facilities not supported with CARES Act funds were the Commercial Paper Funding Facility, Money Market Mutual
Fund Liquidity Facility, Primary Dealer Credit Facility, and the Paycheck Protection Program Liquidity Facility.
429Because all nine CARES Act-supported facilities stopped purchasing assets or extending credit by January 8, 2021, we
report on their outstanding assets in this enclosure rather than on their transaction volumes.

Page 262 GAO-21-551
assets by the end of 2021. See the ﬁgure below for outstanding assets held by the facilities as of
June 2021.

Outstanding Assets of Federal Reserve Lending Facilities Supported by CARES Act Funding, June 2020–June 2021

Note: Beginning on Feb. 24, 2021, the amount of the Main Street Lending Program’s outstanding assets is reported net of an
allowance for loan losses, which is updated quarterly.

The Federal Reserve analyzes all of the CARES Act facilities on a quarterly basis to determine if
it is necessary to set aside an allowance for potential loan losses in accordance with generally
accepted accounting principles. As of March 31, 2021, the most recent ﬁnancial statement
available, only the Main Street Lending Program reﬂected a loan loss allowance, in the amount
of $2.7 billion.430 Of this amount, a speciﬁc allowance of $1.2 billion is for loans for which it has
been determined to be probable that the program will be unable to collect all of the contractual
interest and principal payments as scheduled in the loan agreement. The remaining $1.5 billion is
a general allowance for all other outstanding loans under the program.

As of May 31, 2021, the Main Street facilities had reported about $4 million in actual losses.431
These, and any future losses, are covered by the Department of the Treasury’s (Treasury) CARES
Act funding invested in the Main Street facilities. In its most recent report to Congress in June 2021,
the Federal Reserve said it continued to expect that none of the facilities will result in a loss to the
Federal Reserve.

Non-CARES Act facilities. As of May 31, 2021, the four non-CARES Act facilities combined had
conducted a little more than $377 billion in cumulative transactions—with the Paycheck Protection
Program Liquidity Facility and the Primary Dealer Credit Facility accounting for about $182 billion

430The allowance for loan losses is an estimate of potential losses based upon the Main Street Lending Program’s
holdings as of March 31, 2021, and does not indicate losses experienced by the program.
431According to Federal Reserve oﬃcials, these losses involved fewer than ﬁve loans, and losses are recognized due to
events such as a bankruptcy ﬁling, continued past due payments, or acceleration of a loan by the lender.

Page 263 GAO-21-551
and $132.7 billion, respectively (see ﬁgure below).432 About 60 percent of the transaction volume
for non-CARES Act facilities occurred before May 15, 2020. The Paycheck Protection Program
Liquidity Facility was the only non-CARES Act facility extended beyond March 31, 2021, through July
30, 2021, and it conducted an additional $41.6 billion in transactions in April and May 2021.433

Cumulative Transaction Volume of Federal Reserve Lending Facilities Not Supported by CARES Act Funding, Apr.
2020–May 2021

Note: This ﬁgure illustrates the cumulative transaction volume for non-CARES Act facilities. To the extent that loans have been
repaid, the outstanding balances will be lower.

As of October 14, 2020, the Commercial Paper Funding Facility had fully repaid all loans used to
purchase commercial paper. As of May 9, 2021, the Primary Dealer Credit Facility and the Money
Market Mutual Fund Liquidity Facility had also fully repaid all loans to Federal Reserve Banks. None
of the three facilities resulted in a loss to the Federal Reserve. According to the Federal Reserve’s
quarterly ﬁnancial reports, as of March 31, 2021, the Paycheck Protection Program Liquidity
Facility did not require an allowance for loan losses, and as of May 31, 2021, it had $84.2 billion in
outstanding loans.

Oversight of facilities. The Federal Reserve’s Division of Reserve Bank Operations and Payment
Systems’ general framework for oversight of all of the facilities consists of three phases. In the
initial phase of oversight, the division established oversight approaches and procedures. In
the second phase, the division’s reviews assessed the adequacy of the design of the facilities’
controls and processes in ensuring eﬀective operations. The division completed its second-phase
reviews for all facilities by December 2020, and found the design of controls and processes to be

432Because the non-CARES Act facilities continued conducting transactions in 2021, we report on their transaction
volumes in this enclosure.
433The Federal Reserve established the Paycheck Protection Program Liquidity Facility under its Section 13(3) authority
to encourage lender participation in the Paycheck Protection Program. Although the Paycheck Protection Program was
established through the CARES Act, the Paycheck Protection Program Liquidity Facility did not require support through
CARES Act funds.

Page 264 GAO-21-551
eﬀective. According to Federal Reserve oﬃcials, the division commenced the third and ﬁnal phase
of oversight activities in December 2020, and as of May 2021, the division was still in this phase.
For this ﬁnal phase of review, the division is leveraging ﬁndings from second-phase reviews to
identify risk areas for continued oversight, including collateral and asset management, conﬂicts of
interest, risk management, and internal controls. According to phase three planning documents,
the division will develop and periodically review detailed work plans for each risk area. The division
also plans to complete interim reports summarizing the scope of oversight activities at 6-month
intervals.

Methodology
To conduct this work, we reviewed Federal Reserve documentation on each facility, including term
sheets, reports to Congress, and the most recent Federal Reserve data available on the facilities’
transactions and outstanding loans and assets, as of June 2021. We assessed the reliability of the
transaction data and outstanding asset purchases by reviewing published data on the facilities
and obtaining information from Federal Reserve oﬃcials on the collection, maintenance, and
compilation of the data. We found these data to be reliable for our purposes. We also interviewed
Federal Reserve and Treasury oﬃcials.

Agency Comments
We provided a copy of this enclosure to the Federal Reserve, Treasury, and the Oﬃce of
Management and Budget (OMB) for review. The Federal Reserve provided technical comments,
which we incorporated where appropriate. Treasury and OMB did not provide comments on this
enclosure.

GAO’s Ongoing Work
In our ongoing work on the Federal Reserve facilities, we will continue to monitor outstanding
assets and loans, and the Federal Reserve’s oversight of the facilities. We also plan to analyze the
characteristics of participants of select CARES Act-supported facilities.

In July 2011, we made two recommendations regarding facilities the Federal Reserve established
in response to the 2007–2009 ﬁnancial crisis. Because the Federal Reserve established similar
facilities in response to the COVID-19 pandemic, these recommendations are relevant. The two
recommendations are for the Federal Reserve to (1) strengthen procedures related to high-risk
borrowers and (2) estimate and track losses within and across all facilities. We closed the ﬁrst
recommendation in December 2020 based on the Federal Reserve having established eligibility
requirements and terms that applied to all participants, including high-risk borrowers. We closed
the second recommendation in May 2021 based on the Federal Reserve conducting scenario-
based analyses and documenting a policy for evaluating loan losses, among other things, and
using this information to adjust facilities’ terms and inform other facility-related policy decisions.

Page 265 GAO-21-551
Related GAO Products
Federal Reserve Lending Programs: Use of CARES Act-Supported Programs Has Been Limited and Flow of
Credit Has Generally Improved. GAO-21-180. Washington, D.C.: December 10, 2020.

Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing
Emergency Assistance. GAO-11-696. Washington, D.C.: July 21, 2011.

Contact information: Michael E. Clements, (202) 512-8678, clementsm@gao.gov

Page 266 GAO-21-551
Payroll Support Assistance to Aviation Businesses
The Department of the Treasury continues to provide payroll assistance to the aviation industry
and has developed and implemented a risk-based approach to monitoring and overseeing
recipients’ compliance with the terms of this assistance.

Entities involved: The Department of Transportation and the Department of the Treasury

Background
In September 2020, November 2020, and March 2021, we reported on the initial rollout of the
Payroll Support Program (PSP1), which provided $32 billion that was appropriated by the CARES
Act in March 2020, and the Payroll Support Program Extension (PSP2), which provided $16 billion
that was appropriated by the Consolidated Appropriations Act, 2021 in December 2020.434 In
March 2021, the American Rescue Plan Act of 2021 extended the program again by appropriating
$15 billion to the Department of the Treasury (Treasury) to provide additional ﬁnancial support
to passenger air carriers and contractors that received ﬁnancial assistance under PSP2.435 This
additional support, known as PSP3, must be used exclusively for employee wages, salaries, and
beneﬁts.436 As was the case with PSP1 and PSP2, Treasury requires passenger air carriers that
receive PSP3 payments of more than $100 million and contractors receiving more than $37.5
million to provide warrants or notes as taxpayer protection through Payroll Support Program
agreements.437

PSP3 recipients—passenger air carriers and contractors—must agree to refrain from conducting
involuntary furloughs or terminations and reducing pay rates and beneﬁts until September 30,
2021, or until their funds are exhausted, whichever is later. Other conditions for PSP3 recipients
include requirements related to limits on executive compensation and restrictions on dividends or
other capital distributions on the recipient’s common stock.

Although passenger demand for air travel seems to be rebounding and leisure travel seems to be
leading to an increase in airline bookings, according to industry sources, passenger demand for

434CARES Act, Pub. L. No. 116-136, § 4112, 134 Stat 281, 498 (2020); Pub. L. No. 116-260, div. N, tit. IV, 134 Stat. 1182,
2052-61 (2020).
435Pub. L. No. 117-2, § 7301, 135 Stat. 4, 104-107. Treasury guidance deﬁnes passenger air carriers as those that derived
more than 50 percent of their air transportation revenue from passengers between April 1, 2019, and September 30,
2019. Contractors refer to a person that, under contract with a passenger air carrier conducting operations under 14
C.F.R. pt. 121, performs catering functions or functions on airport property, such as security and airport ticketing, among
other things. Under the American Rescue Plan Act of 2021, $14 billion can be made available to eligible passenger air
carriers, and $1 billion can be made available to eligible contractors.
436Treasury has developed taxpayer protections for certain payments made under PSP1, PSP2, and PSP3. Passenger air
carriers receiving over $100 million of payroll support are required to provide notes equal to 30 percent of the payroll
support provided over $100 million with a 10-year term. Contractors receiving over $37.5 million of payroll support
must provide notes equal to 44 percent of the payroll support provided over $37.5 million with a 10-year term. Warrants
provide Treasury with the right to purchase shares of common stock.
437As of mid-June 2021, 12 passenger air carriers had received PSP2 payments that required notes, and the total
anticipated note principal amount was $3.9 billion. Six contractors received PSP2 payments that required notes, and
the total anticipated note principal amount was $45.3 million. Twelve passenger air carriers received PSP2 payments
that required warrants, and the total anticipated number of warrants was 14.1 million. No contractors received PSP2
payments that required warrants.

Page 267 GAO-21-551
air travel faces a slow, uneven recovery over the next 3 years or more. The pace of the recovery
will depend on many factors, including the COVID-19 vaccination rate globally and the broader
economic recovery.

Overview of Key Issues
Treasury has nearly completed making payments for PSP2. Treasury continues to make
payments under PSP2, and, as of mid-June 2021, had made payments of about $15.6 billion out of
$16 billion available. Treasury has received 520 total applications for PSP2.438 More speciﬁcally:

• Of these 520 applications, 317 applications were from passenger air carriers. The 10 largest
payments for this category averaged about $1.4 billion. The average for the remaining
passenger air carrier payments was about $3.2 million.

• The other 203 applications were from aviation contractors. The 10 largest payments for this
category averaged about $49.6 million. The average for the remaining contractor payments
was about $2.2 million.

Due to the high demand for funds, Treasury prorated the amounts that passenger air carriers
and contractors received through PSP2, as authorized by the statute. These prorated amounts
represent the percentage of the total approved payment amount that a recipient receives.
According to Treasury oﬃcials, the prorated amounts for PSP2 payments are 46.0 percent for
passenger air carriers and 30.4 percent for aviation contractors.

Treasury has begun making PSP3 payments, and only PSP2 recipients are eligible for PSP3
funds, as directed by statute. PSP2 recipients are eligible for payments under PSP3, as long
as they otherwise meet the statutory criteria.439 Treasury released a guidance document on its
website to provide recipients with information about PSP3. Treasury oﬃcials said that, at this time,
they do not plan to release additional guidance or information about PSP3. Rather, Treasury is
communicating directly with PSP2 recipients about PSP3 payments. Treasury sent notiﬁcations
to all approved PSP2 recipients. According to Treasury oﬃcials, these notiﬁcations included PSP3
statutory requirements and required that recipients certify that (1) they provided passenger air
transportation or performed eligible contractor functions as of March 31, 2021, and (2) they had
not involuntarily terminated, furloughed, or reduced pay or beneﬁts between March 31, 2021, and
the date the recipient signs a PSP3 agreement.

438Of the 520 applications Treasury received, 12 have not yet been acted upon. As of mid-May 2021, Treasury oﬃcials
said they did not know when the review of the 12 outstanding PSP2 applications would be complete due to factors
beyond Treasury’s control, such as unresponsive applicants.
439For example, recipients must not have conducted involuntary furloughs or reduced pay rates or beneﬁts between
March 31, 2021, and the date of the PSP3 agreement. As of mid-June 2021, Treasury had made payments of PSP3 funds
to 434 companies—268 passenger air carriers and 166 contractors. The average payment amount for passenger air
carriers was $51.3 million, and the average payment amount for contractors was $5 million. Of these 434 companies, 11
received payments greater than $100 million, and four received payments greater than $1 billion. According to Treasury
oﬃcials, given the authorized amount of funds for PSP3, contractors will receive PSP3 payments equal to their PSP2
payment, and passenger air carriers will receive PSP3 payments equal to 93 percent of their PSP2 payment.

Page 268 GAO-21-551
The terms and conditions of PSP3 are similar to those of PSP2. However, unlike PSP2, PSP3
agreements do not have requirements related to recalling employees who were involuntarily
terminated or furloughed. Treasury oﬃcials said that the PSP3 notiﬁcation process was still
ongoing because Treasury has not completed making payments of PSP2 funds. However, Treasury
oﬃcials said they have not provided PSP3 information to PSP2 applicants who have not yet
received their PSP2 payment, because these PSP2 applicants cannot qualify for PSP3 unless they
receive payroll support under PSP2.

Treasury’s monitoring and oversight of PSP1 funds involve two levels of compliance testing.
Treasury uses its monitoring and oversight approach for PSP1 to ensure that recipients are in
compliance with the PSP1 agreement’s key terms.440 Each quarter, recipients submit information
to Treasury via a web portal, according to Treasury oﬃcials. If a recipient fails to submit a quarterly
report, even after Treasury has followed up with the recipient, Treasury will move directly to
remediation.

All recipients that have submitted a quarterly report undergo Level 1 testing, which is a set of
automated testing rules Treasury has developed. A Level 1 test assesses recipients’ compliance
with terms and agreements such as involuntary terminations and furloughs and restrictions on
executive compensation. Treasury oﬃcials said that, as of May 2021, they were still evaluating
the extent to which cash payments to airline executives payable after PSP requirements expire
are in compliance with PSP agreement terms. Although Treasury relies primarily on the data from
recipients’ quarterly reports for the ﬁrst level of testing, Treasury may also use supplemental
information, such as recall and rehire information that it requests recipients submit via a web
portal.

The Level 2 test is a more detailed review conducted by a Treasury analyst, who can communicate
with the recipient to obtain additional information. According to Treasury documents and oﬃcials,
a recipient will be escalated to a Level 2 test if their Level 1 test contains discrepancies.441 As of
May 2021, recipients that have undergone a Level 2 test have been elevated to that level because
there were discrepancies in their Level 1 test. According to Treasury oﬃcials, most of the issues
that are elevated to Level 2 testing are resolved.

However, if a recipient does not clear Level 2 testing and Treasury determines that a recipient
is not in compliance with the PSP agreement terms, there is a range of penalties. For example,
under the terms and conditions of PSP agreements, Treasury can withhold additional payments
or require repayment of previously disbursed payments. Treasury has levied penalties against
23 recipients out of all the recipients it has tested over three quarters, according to Treasury

440PSP1, PSP2, and PSP3 agreements require that recipients periodically provide Treasury with their ﬁnancial
statements. According to PSP1 and PSP2 guidance, annual ﬁnancial statements must generally be audited by an
independent certiﬁed public accountant. However, if a recipient does not prepare audited ﬁnancial statements
as an ordinary part of its business operations, the recipient can submit certiﬁed unaudited ﬁnancial statements.
Recipients that sign an agreement with Treasury certify that false, ﬁctitious, or fraudulent statements, including
concealing or omitting facts, may result in administrative remedies or civil or criminal penalties. Similarly, for PSP1
compliance reporting, Treasury requires that recipients certify their ongoing compliance with PSP agreement terms, their
maintenance of eﬀective internal controls, and the veracity and accuracy of data submitted to Treasury. Treasury oﬃcials
said that they expect to use the compliance monitoring approach developed for PSP1 for monitoring PSP2 and PSP3.
441There are other reasons that a recipient could be escalated to a Level 2 test, such as a whistleblower report.

Page 269 GAO-21-551
oﬃcials.442 Most instances of noncompliance were due to involuntary terminations or failure
to submit quarterly compliance monitoring reports, according to Treasury oﬃcials. The penalty
amount that a recipient incurs varies based on the infraction. For example, according to Treasury
oﬃcials, if a large number of employees were terminated or if some funds were used improperly,
then Treasury may ask for all PSP funds to be returned, whereas if a recipient terminated one or
two employees, then Treasury would request that the recipient return funds equal to the foregone
compensation of those employees.

Treasury plans to use the same monitoring and oversight approach for PSP2 and PSP3,
with some updates to monitor for speciﬁc requirements. Treasury oﬃcials said that Treasury
will continue to test quarterly reports submitted by recipients through a web portal to monitor
PSP2 and PSP3 recipient compliance with agreement terms. As we reported in March 2021,
PSP2 required that recipients recall employees who were involuntarily terminated or furloughed
between either October 1, 2020, (for recipients that received PSP1 assistance) or March 27, 2020,
(for recipients that did not receive PSP1 assistance) and the date of the PSP2 agreement. Each
PSP2 payment was allocated in two payments, and prior to making the second payment, Treasury
requires recipients to certify that they complied with employee recall-related requirements.
After the certiﬁcation is received and processed, Treasury may make the second PSP2 payment.
However, if a recipient is found to be noncompliant with the recall-related requirements or any
other requirement, the second PSP2 payment will be delayed until the recipient has been cleared
by Treasury. Treasury monitors recipient compliance with these requirements through additional
web portals.443 Treasury also reviews subsequent quarterly reports submitted by the recipient to
ensure that all terms are met. Treasury has said that it can also oﬀset PSP2 payment amounts with
penalties incurred from a PSP1 monitoring violation.

For PSP3 monitoring and oversight, Treasury oﬃcials said that PSP3 recipients will have their
payment delayed if they are found to be noncompliant with PSP2 Payroll Support Program
agreements. Treasury can also oﬀset PSP3 payment amounts with penalties incurred from a PSP1
or PSP2 monitoring violation.

Methodology
To conduct this work, we reviewed the CARES Act, Consolidated Appropriations Act, 2021, and the
American Rescue Plan Act of 2021. We also reviewed agency guidance and documentation, and we
interviewed Treasury oﬃcials to understand Treasury’s approach to implementing and providing
monitoring and oversight of PSP1, PSP2, and PSP3. We also analyzed Treasury data about PSP2
and PSP3 as of June 16, 2021. We reviewed these data for missing information and outliers. We
determined that the data were suﬃciently reliable for the purposes of summarizing the number
and value of PSP2 and PSP3 payments.

442According to Treasury oﬃcials, Treasury tested about 487 recipients in the second quarter of 2020, 603 recipients in
the third quarter of 2020, and 610 recipients in the fourth quarter of 2020.
443According to Treasury oﬃcials, Treasury has made changes to its web portals over time to help ensure that it obtains
the information it needs from recipients for its monitoring and compliance process.

Page 270 GAO-21-551
Agency Comments
We provided the Department of Transportation (DOT), Treasury, and the Oﬃce of Management
and Budget (OMB) with a draft of this enclosure. DOT, Treasury, and OMB did not provide
comments on the enclosure.

GAO’s Ongoing Work
As Treasury moves to complete making payments of PSP2 funds and continues making payments
of PSP3 funds, we will continue to review Treasury’s implementation and oversight of these
programs. We also will continue to monitor Treasury’s implementation of federal ﬁnancial
assistance programs for the transportation sector authorized by COVID-19 relief laws in December
2020 and March 2021.

GAO’s Prior Recommendations
Prior GAO Recommendation Related to Payroll Support Assistance for Aviation Businesses
Recommendation Status

The Secretary of the Treasury should ﬁnish Closed. In April 2021, GAO conﬁrmed that the Department
developing and implement a compliance monitoring of the Treasury (Treasury) had developed, documented, and
plan that identiﬁes and responds to risks in the implemented a risk-based approach to monitor PSP recipients’
Payroll Support Program (PSP) to ensure program compliance with the terms of the assistance. Treasury’s risk-
integrity and address potential fraud, including based approach entails a two level compliance review. In the ﬁrst
the use of funds for purposes other than for the level review, automated testing is conducted on all recipients’
continuation of employee wages, salaries, and quarterly reports using factors/thresholds that can trigger
beneﬁts (November 2020 report). recipients being moved to the next review. In the second level
review, Treasury analysts conduct a more detailed review of
recipients that failed the ﬁrst level review or were selected for
other reasons. Treasury has also developed penalties and a
process for remediating noncompliance with PSP agreement
terms through Payroll Support Program agreements. As of April
2021, Treasury has identiﬁed noncompliance by recipients and
applied penalties, as appropriate.

Source: GAO. | GAO-21-551

Contact information: Heather Krause, (202) 512-2834, krauseh@gao.gov

Page 271 GAO-21-551
FEMA’s Disaster Relief Fund
FEMA’s workforce has been stretched thin as it takes on additional responsibilities to establish
mass vaccination sites and provide funeral assistance to families impacted by the COVID-19
pandemic while preparing for the upcoming hurricane season.

Entities involved: Federal Emergency Management Agency, within the Department of Homeland
Security

Background
Federal Emergency Management Agency’s (FEMA) Disaster Relief Fund—the primary source
of federal disaster assistance for state, local, tribal, and territorial governments—had never
before been used during a nationwide public health emergency on the scale of the COVID-19
pandemic.444 As of May 31, 2021, FEMA had obligated over $75 billion from the Disaster Relief
Fund to respond to COVID-19. The Disaster Relief Fund’s balance was over $48 billion and FEMA
projected that the balance would be approximately $12.3 billion on September 30, 2021.

FEMA’s Disaster Relief Fund Balance by Month, Feb. 2020–May 2021

FEMA has used the Disaster Relief Fund to respond to the COVID-19 pandemic by providing three
primary types of disaster assistance.

444The Disaster Relief Fund receives an annual appropriation and has routinely received supplemental appropriations.
In March 2020, the CARES Act was enacted, appropriating $45 billion for the Disaster Relief Fund. Pub. L. No. 116-136,
div. B, tit. VI, 134 Stat. 281, 543 (2020). The Consolidated Appropriations Act, 2021, appropriated $17 billion to the
Disaster Relief Fund for major disasters and an additional $2 billion to provide assistance for COVID19-related funeral
expenses. Pub. L. No. 116-260, div. F, tit. III, 134 Stat. 1182, 1462 (2020); Pub. L. No. 116-260, div. M, tit. II, 134 Stat. at
1910. In March 2021, the American Rescue Plan Act of 2021 appropriated $50 billion to the Disaster Relief Fund. Pub. L.
No. 117-2, § 4005, 135 Stat. 4, 79.

Page 272 GAO-21-551
1. Individual Assistance program. FEMA’s Individual Assistance program provides assistance
to disaster survivors to cover necessary expenses and serious needs—such as housing
assistance, counseling, or funeral assistance—which cannot be met through insurance or low-
interest loans. For the COVID-19 response, FEMA has provided lost wages assistance, funeral
assistance, and crisis counseling.

2. Public Assistance program. FEMA’s Public Assistance program provides assistance to state, local,
tribal, and territorial governments, and certain types of private nonproﬁt organizations so that
communities can quickly respond to and recover from major disasters or emergencies. For
all 59 major disaster declarations for COVID-19, FEMA has authorized Public Assistance for
emergency protective measures only. This may include eligible medical care, purchase and
distribution of food, non-congregate medical sheltering, operation of Emergency Operations
Centers, and the purchase and distribution of personal protective equipment.445 On February
2, 2021, the President issued a memorandum that directed FEMA to fully reimburse states,
territories, and tribes for all work eligible for emergency protective measures assistance.446

3. Mission assignments. FEMA also issues mission assignments—work orders directing
other federal agencies to provide direct assistance to state, local, tribal, and territorial
governments—to support disaster response and recovery. For the COVID-19 response, for
example, FEMA issued a mission assignment to the Department of Defense to fund National
Guard deployments to support state and territorial response eﬀorts.

In recent years, we reported on long-standing workforce management, capacity, and training
challenges within FEMA. For example, in May 2020, we reported that FEMA had established
mechanisms to qualify and deploy staﬀ to disasters. However, FEMA’s qualiﬁcation and
deployment processes did not provide reliable and complete staﬃng information to ﬁeld
oﬃcials to ensure its workforce was eﬀectively deployed and used during the 2017 and 2018
disaster seasons. Further, FEMA’s disaster workforce experienced challenges with receiving staﬀ
development through the agency’s existing methods to enhance the skills and competencies
needed during disaster deployments—challenges FEMA headquarters oﬃcials acknowledged.

Additionally, in 2018, we reported that FEMA’s available workforce was overwhelmed by the
response needs of four sequential disasters. While FEMA has taken actions to address several
of our workforce management-related recommendations since 2016 that covered topics such
as staﬃng levels and staﬀ development, a number of recommendations remain open. As FEMA
continues to address these existing workforce challenges, it is now faced with responding to other
missions, including the COVID-19 pandemic and unaccompanied minor children arriving at the
Southwest border, which could further stretch its workforce.

445For natural disasters, Public Assistance tends to be used for emergency cleanup and for permanent
reconstruction projects for example, to rebuild damaged public infrastructure.
446White House, Memorandum on Maximizing Assistance from the Federal Emergency Management Agency, February 2,
2021.

Page 273 GAO-21-551
Overview of Key Issues
FEMA’s use of the Disaster Relief Fund to support COVID-19 activities. FEMA currently uses
the Disaster Relief Fund to provide funding for the three types of disaster assistance mentioned
above—(1) Individual Assistance; (2) Public Assistance; and (3) mission assignments––as part of the
agency’s COVID-19 response.447 As of May 31, 2021, FEMA had obligated over $75 billion from the
Disaster Relief Fund to respond to COVID-19. Speciﬁcally:

• Individual Assistance. On August 8, 2020, President Trump issued a presidential memorandum
that directed that up to $44 billion be made available from the Disaster Relief Fund to provide
lost wages assistance to supplement unemployment insurance compensation.448 According
to FEMA oﬃcials, as of April 30, 2021, FEMA had obligated approximately $39 billion for the
Lost Wages Assistance program. Further, in December 2020, the Consolidated Appropriations
Act, 2021, appropriated $2 billion to the Disaster Relief Fund for eligible funeral expenses for
individuals or households with COVID-19-related funeral expenses.449 On April 12, 2021, FEMA
began accepting and processing applications for Funeral Assistance via a dedicated call center
number, as discussed further below.

• Public Assistance. FEMA oﬃcials stated that as of June 4, 2021, FEMA had received 25,168
applications for Public Assistance and awarded $26.9 billion. If all of the remaining
approximately 16,000 applicants submits projects, FEMA anticipates it will receive a minimum
of approximately 32,000 additional public assistance projects for an estimated additional
$27.8 billion as of the end of ﬁscal year 2021. FEMA oﬃcials stated that previous Public
Assistance policy indicated that eligibility was limited to response activities and did not extend
to operational costs at facilities. However, a January 21, 2021, presidential memorandum
expands the deﬁnition of eligible goods and services under FEMA’s Public Assistance program
to include the costs of opening and operating facilities such as schools, domestic violence
shelters, transit systems, and others and may include the funding for the provision of personal
protective equipment and disinfecting services and supplies.450 According to FEMA oﬃcials,

447FEMA continues to play a key role in the ongoing COVID-19 pandemic response eﬀort, including distributing personal
protective equipment, supporting Defense Production Act activities, and providing incident management coordination
and leadership.
448The White House, Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations
Related to Coronavirus Disease 2019 (Aug. 8, 2020). Pursuant to the presidential memorandum, upon receiving a
FEMA grant, states and territories may provide eligible claimants $300 or $400 per week—which includes a $300
federal contribution—in addition to their Unemployment Insurance beneﬁts. The presidential memorandum
directed that the program would end when $44 billion had been obligated; the balance of the Disaster Relief Fund
reached $25 billion; on December 27, 2020; or upon the enactment of legislation providing supplemental federal
unemployment compensation, whichever comes ﬁrst.
449Pub. L. No. 116-260, div. M, tit. II, 134 Stat. at 1910.
450White House, Memorandum to Extend Federal Support to Governors’ Use of the National Guard to Respond to
COVID-19 and to Increase other Federal Assistance Provided to States, January 21, 2021. A subsequent presidential
memorandum, issued on February 2, 2021, required FEMA to provide 100 percent cost share reimbursement
for work eligible under Public Assistance for emergency protective measures from January 20, 2020, through
September 30, 2021, except for the operational expenses made eligible by the January 20, 2021, memorandum,
discussed above, which receive 100 percent cost share reimbursement from January 21, 2021 through September
30, 2021. White House, Memorandum on Maximizing Assistance from the Federal Emergency Management Agency,
February 2, 2021.

Page 274 GAO-21-551
the memorandum will likely have a signiﬁcant impact on their resources and operations.
Speciﬁcally, FEMA oﬃcials stated that the eligibility of reopening and operating expenses for
schools and other facilities is likely to signiﬁcantly increase the number of applicants and cost
of eligible claims under Public Assistance.

• Mission assignments. FEMA has issued mission assignments to multiple federal agencies
including the United States Department of Agriculture, Department of Labor, Environmental
Protection Agency, and Department of Defense, among others, to assist in the COVID-19
response. For example, FEMA issued a mission assignment to the Department of Defense to
fund National Guard deployments to assist in recovery eﬀorts. The presidential memorandum
issued on January 21, 2021, provided that FEMA would fully reimburse expenses for National
Guard activities to respond to COVID-19, which may include vaccination distribution.451
According to FEMA, the estimated cost is over $4.2 billion for National Guard assistance as of
May 31, 2021.

The ﬁgure below shows FEMA’s obligations for COVID-19 by program and activity.

FEMA’s Disaster Relief Fund Obligations and Projections for COVID-19 by Program and Activity through June 2021

Note: This ﬁgure includes Disaster Relief Fund obligations through May 31, 2021, and estimated obligations that FEMA
projected through June 30, 2021.

FEMA’s workforce and hurricane season preparedness. According to an assessment report
issued by FEMA in January 2021, the scale and duration of COVID-19 operations challenged FEMA’s
capabilities. The record-breaking response operations included the activation of the National
Response Coordination Center for over a year (and counting). Simultaneously, it included FEMA
coordinating with the White House Coronavirus Task Force and other federal agencies and

451White House, Memorandum to Extend Federal Support to Governors’ Use of the National Guard to Respond to
COVID-19 and to Increase other Federal Assistance Provided to States, January 21, 2021.

Page 275 GAO-21-551
supporting its state, local, tribal and territorial partners, while preserving its own workforce from
illness. FEMA responded to many disasters in 2020, including a record-breaking hurricane season
in the Atlantic Ocean, and the most active ﬁre year on record for the West Coast, with record-
breaking wildﬁres in California, Colorado, Nevada, New Mexico, Oregon, Utah, and Washington.452
FEMA’s daily operations brieﬁng dated June 14, 2021, shows FEMA’s incident management
workforce consisted of 13,789 employees, of which 6,393 were deployed in response to COVID-19
and other natural disasters.

Meteorologists are predicting an above average Atlantic hurricane season this year.453 With
hurricane season approaching and FEMA supporting numerous eﬀorts outside of its normal core
responsibilities, such as supporting the COVID-19 response and eﬀorts to address the recent
surge in unaccompanied minor children at the Southwest border, we are concerned that FEMA
personnel may not be available to deploy or prepared to manage a catastrophic natural disaster
or concurrent disasters.

We have made a number of recommendations to FEMA regarding workforce challenges. For
example, in May 2020, we recommended that FEMA develop a mechanism to assess how
eﬀectively its disaster workforce was deployed to meet mission needs in the ﬁeld. FEMA oﬃcials
we spoke with on May 7, 2021, stated that they analyzed past data on deployments and disaster
declarations to identify future deployment scenarios and use the results of this analysis to
mitigate any workforce shortfalls. Speciﬁcally, FEMA’s planned actions to mitigate shortfalls
include: (1) replacing reservists and incident management workforce at community vaccination
centers with surge capacity forces and the Peace Corps by early June and (2) hiring 600 temporary
FEMA employees through its local hire program. Although FEMA has taken action to address our
recommendations on staﬃng levels, staﬀ development and other workforce management-related
recommendations since 2016, more than 10 of these recommendations remain open. We will
continue to monitor issues related to FEMA’s workforce management.

FEMA is focusing on hurricane season preparation, using the time to coordinate and exercise
with state, local, tribal, and territorial governments and other federal agencies. According to
FEMA oﬃcials, FEMA is working to scale back and provide breaks to staﬀ and teams who are
continuously deployed, such as the Incident Management Assistance Teams, before the 2021
hurricane season, while minimizing the impact to current operations. Nevertheless, with the high
number of hurricanes predicted, FEMA’s number of deployed staﬀ could be stretched thinner.

Mass vaccination sites. As part of a national eﬀort to speed the pace of COVID-19 vaccination
campaigns and ensure equitable access to vaccinations, FEMA was directed by the President to
establish Pilot Community Vaccination Centers (CVC). CVCs are a partnership among FEMA, the
Centers for Disease Control and Prevention, and other federal agencies, and states, tribal, and
territorial governments. After an initial 8-week operational period, CVC pilot sites are closed or
transitioned to the state entity to fully operate. As of June 1, 2021, FEMA reported that the Pilot

452In addition to supporting the COVID-19 response, FEMA supported California’s largest ﬁre in history and managed
the response to 10 named storms in September 2020 alone. As of February 2021, FEMA had personnel deployed to 173
active disasters and was supporting 956 open disasters.
453Colorado State University Tropical Weather and Climate Research, Seasonal Hurricane Forecasting: Forecast for 2021
Hurricane Activity (April 8, 2021).

Page 276 GAO-21-551
CVCs had given more than 5.5 million doses of vaccines across 39 locations, including sites that
have extended their participation in the pilot program.454

In addition, FEMA is coordinating with other federal agencies to meet state, local, tribal, and
territorial needs to support the distribution of COVID-19 vaccines. Speciﬁcally, FEMA oﬃcials stated
that as of May 31, 2021, it had obligated $4.85 billion to states, tribes, and territories for vaccine
distribution.455 In addition, FEMA is deploying additional personnel to vaccination sites where
they will assist people obtaining the vaccine. According to FEMA oﬃcials, assistance for vaccine
distribution may include but is not limited to:

• leasing facilities or equipment to administer and store the vaccine;

• providing staﬃng and training support;

• providing personal protective equipment and other administrative supplies; and

• using technology to register and track vaccine administration.

FEMA funeral assistance for COVID 19-related deaths. In December 2020, the Consolidated
Appropriations Act, 2021, appropriated $2 billion to the Disaster Relief Fund for eligible funeral
expenses for individuals or households with COVID-19-related funeral expenses.456 FEMA began
accepting applications on April 12, 2021. According to FEMA data, as of June 28, 2021, the call
center had received and is processing 222,862 applications, and as of the same date, FEMA
approved 66,798 applications and awarded approximately $447.8 million.

454The initial pilot period for each location was eight weeks; however, jurisdictions were able to request an extension
of an additional four weeks, during which period of time the site would receive federal staﬃng and support, but not an
additional vaccine allocation.
455FEMA oﬃcials stated that the almost $5 billion had been obligated through the Public Assistance program.
456Pub. L. No. 116-260, div. M, tit. II, 134 Stat. at 1910.

Page 277 GAO-21-551
FEMA’s Funeral Assistance by State and Territory as of June 28, 2021

FEMA’s interim policy on COVID-19 funeral assistance states that it will reimburse up to a
maximum of $9,000 per funeral in eligible funeral expenses incurred after January 20, 2020,
for deaths attributed to the COVID-19 pandemic. The maximum for multiple deaths under the
same applicant per state or territory is $35,500. Reimbursements are given for eligible funeral
expenses including remains transfer, caskets/urns, burial plots/cremation niches, and markers/
headstones.457

457Eligible expenses also include eligible interment expenses that include transportation to identify the deceased for
up to two people, interment, funeral services, oﬃciant of the services, and up to ﬁve death certiﬁcate costs. Costs
associated with obituaries and other printed materials, as well as ﬂowers, are not eligible for reimbursement under
the funeral assistance program. Applicants must be U.S. citizens, noncitizen nationals, or qualiﬁed aliens who paid for

Page 278 GAO-21-551
FEMA does not accept online applications but, according to FEMA oﬃcials, hired a contractor to
establish a dedicated call center number and staﬀ to accept and support processing applications
for COVID-19 related funeral assistance. Currently, the call center is staﬀed by approximately 3,500
operators across the United States. According to FEMA oﬃcials, as of June 30, 2021, the average
time to complete an application was about 21 minutes. After completion of the application with
a call center representative, applicants are provided an application number that can be used
to provide supporting documentation to FEMA online, by fax, or mail. In addition, FEMA sends
applicants a letter requesting additional documents to support their application for COVID-19
funeral assistance. Applicants approved for COVID-19 funeral assistance will receive a check by
mail or direct deposit, depending on the option chosen when applying for assistance. Applicants
who are not approved for COVID-19 funeral assistance are sent a decision letter explaining why
they are not approved, their rights to appeal the decision, and information on how to appeal it.
Applicants have 60 days from the date of the decision letter to appeal FEMA’s decision. Any U.S.
citizen, non-citizen national, or qualiﬁed alien who incurred funeral expenses due to a COVID-19
related death after January 20, 2020, can apply for funeral assistance. FEMA has not established a
deadline to apply at this time.

The scope of FEMA’s funeral assistance program for COVID-19 related deaths is unprecedented.
Prior to COVID-19, FEMA oﬃcials stated that approximately 6,000 cases had been processed for
funeral assistance for other natural disasters over the past decade. According to FEMA oﬃcials,
FEMA has internal controls in place to mitigate fraudulent activity. FEMA oﬃcials described their
internal controls as eﬃcient for preventing and identifying fraud, and to develop them, FEMA
relied on numerous sources and lessons learned from previous disasters. Since FEMA only
recently began making payments, we have not fully assessed the eﬀectiveness of these controls.
However, we will continue to assess the controls FEMA is using to prevent fraud, waste, and abuse
in this program. We will continue to report on this program in the next CARES Act report to be
issued in October 2021.

Methodology
To conduct this work, we reviewed FEMA’s monthly Disaster Relief Fund reports to obtain FEMA’s
obligations data for Individual Assistance, Public Assistance, and mission assignments for March
2020 through May 2021 and projected obligations data through June 2021. We reviewed federal
laws and FEMA policies and guidance on how states, local, tribal, and territorial entities may apply
for and receive assistance to respond to the COVID-19 pandemic. We also reviewed data from
FEMA’s Senior Leadership brieﬁngs, FEMA’s Daily Operations Brieﬁngs, and FEMA’s advisories
on mass vaccination sites, public assistance, FEMA’s workforce, and funeral assistance related
to COVID-19. We presented FEMA’s data on funeral assistance, but did not independently review
it for accuracy. In addition, we reviewed August 8, 2020, and January 21, 2021, and February
2, 2021 presidential memorandums; FEMA’s fact sheets; and FEMA’s initial assessment of its
COVID-19 response report; as well as previous GAO reports on FEMA’s response to the COVID-19
pandemic and other natural disasters. Finally, we interviewed FEMA oﬃcials on their initial eﬀorts
in implementing the funeral assistance program.

funeral expenses that are not covered by other sources, such as burial insurance. The death certiﬁcate must directly or
indirectly attribute the death to COVID-19 and the death must have occurred in the U.S.

Page 279 GAO-21-551
Agency Comments
We provided a draft of this enclosure to the Department of Homeland Security (DHS), FEMA,
and the Oﬃce of Management and Budget (OMB). In its comments, which are reproduced in
appendix VII, DHS outlined various actions it has taken to respond to the COVID 19 pandemic.
Speciﬁcally, DHS noted that FEMA successfully established federal Community Vaccination Centers
to administer vaccines while also accomplishing its commitment to deliver impartial and equitable
programs and services to communities. DHS further stated that FEMA adapted its strategy for
response and recovery by making resources available for states to fund more on-the ground
eﬀorts to promote vaccinations. In addition, FEMA used funds to help individuals with funeral
expenses for deaths that were attributed to COVID-19 and noted that funeral assistance at this
scale is unprecedented. DHS further stated that FEMA implemented this program with numerous
fraud prevention measures to ensure oversight and accountability. DHS also noted steps that
FEMA is taking to prepare for hurricane season, including ensuring that the disaster workforce is
prepared to address this additional workload. DHS also provided technical comments, which we
incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Ongoing Work
We will continue to monitor issues related to FEMA’s Disaster Relief Fund, workforce, and funeral
assistance for COVID-19 related deaths. Speciﬁcally, we will monitor obligations for Individual
Assistance, Public Assistance, and mission assignments, as well as the balance in the fund. In
addition, we will monitor FEMA’s workforce challenges and eﬀorts to execute its funeral assistance
program and the fraud internal controls established for it.

GAO’s Prior Recommendations
The table below presents our recommendation(s) on FEMA’s response to COVID-19 from prior
CARES Act reports.

Page 280 GAO-21-551
Prior GAO Recommendations Related to COVID-19
Recommendation Status

The Federal Emergency Management Agency Administrator Open. DHS concurred with our recommendation. DHS
should adhere to the agency’s protocols listed in the stated that FEMA’s National Tribal Aﬀairs Adviser, based
updated 2019 Tribal Consultation Policy by obtaining tribal in the Oﬃce of External Aﬀairs, will coordinate with other
input via the four phases of the tribal consultation process FEMA oﬃces and directorates, as appropriate, to review
when developing new policies and procedures related to the agency’s adherence to protocols listed in the Tribal
COVID-19 assistance. (March 2021 report). Consultation policy.

The Federal Emergency Management Agency Administrator Open. DHS concurred with our recommendation. DHS
should provide timely and consistent technical assistance stated that FEMA’s Recovery Directorate will publish a
to support tribal governments’ eﬀorts to request and memorandum that will contain direction to FEMA regions
receive Public Assistance as direct recipients, including regarding the assignment of Public Assistance program
providing additional personnel, if necessary, to ensure that delivery managers to promote equitable delivery of Public
tribal nations are able to eﬀectively respond to COVID-19. Assistance to tribal governments. FEMA stated that it plans
(March 2021 report). to send the memorandum to tribal governments in July
2021.

The Administrator of the Federal Emergency Management Open. In September 2020, DHS disagreed with this
Agency—who heads one of the agencies leading the recommendation, noting, among other things, work that
COVID-19 response through the Uniﬁed Coordination FEMA had already done to manage the medical supply
Group—consistent with their roles and responsibilities, chain and increase supply availability. Although DHS
should work with relevant federal, state, territorial, and disagreed with our recommendation, it began taking
tribal stakeholders to devise interim solutions, such some actions in March 2021. As of May 2021, DHS has not
as systems and guidance and dissemination of best demonstrated action to devise interim solutions that would
practices, to help states enhance their ability to track systematically help states, tribes, and territories eﬀectively
the status of supply requests and plan for supply needs track, manage, and plan for supplies to carry out the
for the remainder of the COVID-19 pandemic response. COVID-19 pandemic response in the absence of state-level
(GAO-20-701) end-to-end logistics capabilities that would track critical
supplies required for a response of this scale. We note
that we made this recommendation to both DHS and HHS
with the intent that they would work together under the
Uniﬁed Coordination Group to address challenges reported
by state oﬃcials with both public health and emergency
management responsibilities. Moreover, we recommended
they take actions that were consistent with the roles and
responsibilities that were to be more clearly deﬁned as HHS
took a more central role in leading supply distribution. The
recommendation to deﬁne those roles and responsibilities
remains open. Moreover, although both DHS and HHS have
reported separate actions, taken as part of other eﬀorts
within each separate purview, neither has articulated how
they worked with the other nor how they assessed whether
the actions changed the experiences of state oﬃcials who
reported issues during our prior work. Without systematic
and deliberate action to help states ensure they have the
support they need to track, manage, and plan for supplies,
states, tribes, and territories on the front lines of the
whole-of-nation COVID-19 response may continue to face
challenges that hamper their eﬀectiveness.

Source: GAO. | GAO-21-551

Page 281 GAO-21-551
Related GAO Products
FEMA Disaster Workforce: Actions Needed to Address Deployment and Staﬀ Development Challenges.
GAO-20-360. Washington, D.C.: May 4, 2020.

The Nation's Fiscal Health: Action Is Needed to Address the Federal Government's Fiscal Future.
GAO-20-403SP. Washington, D.C.: March 12, 2020.

Disaster Response: Federal Assistance and Selected States and Territory Eﬀorts to Identify Deaths from
2017. GAO-19-486. Washington, D.C.: September 13, 2019.

Contact information: Chris Currie, (404) 679-1875, curriec@gao.gov

Page 282 GAO-21-551
Airport Grants
The Federal Aviation Administration is administering grants to help the nation’s airports respond
to and recover from the economic eﬀects of the COVID-19 pandemic.

Entity involved: Federal Aviation Administration, within the Department of Transportation

Background
Historic decreases in passenger demand for air travel due to the COVID-19 pandemic signiﬁcantly
aﬀected U.S. airports’ abilities to generate the revenue needed for operating and infrastructure
costs. According to data ﬁled with the Department of Transportation (DOT), U.S. airlines carried
about 47 percent fewer passengers in March 2021 than in March 2019. One airport association
estimates that U.S. airports will face $40 billion in operating losses and additional costs related to
COVID-19 from March 2020 to March 2022. The CARES Act, the Consolidated Appropriations Act,
2021, and the American Rescue Plan Act of 2021 provide a combined total of $20 billion in federal
funding for U.S. airports to respond to the COVID-19 pandemic, although funding allocation and
certain allowable uses diﬀer under each act.

Obligations and expenditures. Of the $20 billion combined total in federal COVID-19 relief
funding provided by the CARES Act, Consolidated Appropriations Act, 2021, and the American
Rescue Plan Act of 2021 for U.S. airports, about $10.6 billion has been obligated and $6.5 billion
expended as of May 14, 2021.

CARES Act. The CARES Act, signed into law on March 27, 2020, provided $10 billion to support U.S.
airports of all sizes to prevent, prepare for, and respond to coronavirus.458 Airport owners—also
known as airport sponsors—may use CARES Act funds for any purpose for which airport revenues
may be lawfully used, including for airport operating expenses and debt service. As of May 14,
2021, the Federal Aviation Administration (FAA) had obligated about $9.5 billion and expended
over $6.5 billion to reimburse airports for eligible costs and to increase the federal share for 2020
Airport Improvement Program (AIP) grants, according to FAA oﬃcials (see table). Speciﬁcally, for
larger airports, FAA has obligated about $6.5 billion, and expended about $5 billion; for smaller
airports, FAA has obligated about $3 billion, and expended $1.5 billion in CARES funding.459 As of
May 14, 2021, FAA had processed CARES Act grant applications for 3,230 U.S. airports.

458Pub. L. No. 116-136, 134 Stat. 281, 596-97. The CARES Act gives the Federal Aviation Administration (FAA) the
authority to retain up to 0.1 percent of the $10 billion (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.
459Consistent with our prior work, we have grouped airports into two broader categories: larger airports, which includes
large and medium hubs, and smaller airports, which includes small hubs, non-hubs (also referred to as “non-hub
primary”), and non-primary commercial service airports as well as reliever airports and general aviation airports.

Page 283 GAO-21-551
FAA Obligations and Expenditures for CARES Act Airport Grants, as of May 14, 2021
Obligations Expenditures
Funding group ($ thousands) ($ thousands)

Increase federal share for 2020 Airport Improvement Program (AIP) $513,706 $276,390
a
grants

Commercial service airports
b $7,134,220 $5,456,731

Primary airports
c $1,628,724 $665,363

General aviation airports
d $100,311 $63,846

Reallocated CARES Act funds
e $151,387 $13,795

Total $9,528,349 $6,476,125

Source: GAO analysis of CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020) and data from the Federal Aviation Administration (FAA). | GAO-21-551

a
The CARES Act directed FAA to allocate funding to these groups through various formulas. Approximately 3,300 airports in
the U.S. are part of the national airport system and are eligible to receive federal AIP grants to fund infrastructure projects.
The CARES Act appropriated at least $500 million to increase the federal share to 100 percent for grants awarded for airport
infrastructure projects under ﬁscal year 2020 and supplemental discretionary grants.
b
Commercial service airports are publicly owned airports with at least 2,500 passenger boardings per year and scheduled air
service.
c
Primary airports are large, medium, and small hub and non-hub airports with more than 10,000 passenger boardings per year.
d
General aviation airports are public-use airports with fewer than 2,500 passenger boardings per year and no scheduled air
service.
e
Under the Consolidated Appropriations Act, 2021, unallocated CARES funds as of December 27, 2020 were to be allocated
under the Consolidated Appropriations Act, 2021 using the primary commercial service and certain cargo airports allocation
formula. According to FAA oﬃcials, FAA calculated that $290,774,557 in CARES Act funds are available for reallocation under the
Consolidated Appropriations Act, 2021.

Consolidated Appropriations Act, 2021. The Consolidated Appropriations Act, 2021, enacted
on December 27, 2020, provided $2 billion in additional federal aid to help eligible airports
and certain tenants to prevent, prepare for, and respond to COVID-19.460 Airports must use
Consolidated Appropriations Act, 2021 grant funding for costs related to operations, personnel,
cleaning, sanitization, janitorial services, combating the spread of pathogens at the airport,
and debt service payments.461 As of May 14, 2021, FAA had obligated about $1 billion and
expended about $53 million to reimburse airports for eligible costs, according to FAA oﬃcials
(see table). For larger airports, FAA has obligated about $606 million, and expended about $35

460Pub. L. No. 116-260, div. M, tit. IV, 134 Stat. 1182, 1939-41 (2020). Division M of the Consolidated Appropriations
Act, 2021 is also referred to as the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA).
The Consolidated Appropriations Act, 2021, made up to $5 million of the $2 billion in funding available for the Small
Community Air Service Development Program.
461The 31 airports that received CARES Act funds in excess of four times their annual operating expenses are excluded
from receiving Consolidated Appropriations Act, 2021 funding. See Pub. L. No. 116-260, 134 Stat. at 1939. Speciﬁc
amounts appropriated by the Consolidated Appropriations Act, 2021 are also available to cover lawful expenses to
support FAA contract tower operations and to provide relief from rent and minimum annual guarantees to on-airport car
rental, on-airport parking, and in-terminal concessions.

Page 284 GAO-21-551
million, while for smaller airports, FAA has obligated about $400 million, and expended $14
million in Consolidated Appropriations Act, 2021 funding. As of May 14, 2021, FAA had processed
Consolidated Appropriations Act, 2021 grant applications for 2,636 U.S. airports.

Page 285 GAO-21-551

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