COVID-19: Significant Improvements Are Needed for Overseeing Relief Funds and Leading Responses to Public Health Emergencies (January 2022)

Summary

This report to congressional committees, dated January 2022, is GAO’s ninth report on its ongoing monitoring and oversight related to the COVID-19 pandemic. As of November 30, 2021, the federal government had expended $3.5 trillion, 77 percent of the total COVID-19 relief funds provided by six relief laws. GAO makes five new recommendations in the areas of emergency rental assistance, nutrition assistance, and tax relief for businesses. It also designates the Department of Health and Human Services’ leadership of public health emergencies as high risk. On emergency rental assistance, GAO says the Department of the Treasury had disbursed nearly $38 billion of the $46.55 billion it was appropriated as of November 30, 2021.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Issuer: Government Accountability Office
Document type: Report
Date: 2021-12-21

Cite this document

“COVID-19: Significant Improvements Are Needed for Overseeing Relief Funds and Leading Responses to Public Health Emergencies (January 2022).” Government Accountability Office, dated 2021-12-21. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-12-21-gao-22-105291-covid-19-significant-improvements-are-needed-for-overseeing-relie/, SHA-256 bf5c37d7cd99e9e1206ee5a0a40ca6826a8627307c63a35147b11d2f0dc24fac.

Full text

United States Government Accountability Oﬃce

Report to Congressional Committees

January 2022

COVID-19
Signiﬁcant Improvements Are
Needed for Overseeing Relief
Funds and Leading Responses to
Public Health Emergencies

GAO-22-105291 www.gao.gov
January 2022

COVID-19
Significant Improvements Are Needed for Overseeing
Relief Funds and Leading Responses to Public Health
Highlights of GAO-22-105291, a report to
Emergencies
congressional committees

Why GAO Did This Study What GAO Found
At the beginning of January 2022, the New U.S. COVID-19 cases and virus variants continue to challenge the nation.
U.S. had about 56 million reported New daily reported cases increased sharply from December 21, 2021 to January
cases of COVID-19 and over 830,000 3, 2022 due primarily to the emergence of the Omicron variant. Cases during this
reported deaths, according to CDC. time generally exceeded 380,000, surpassing the daily case rate reported during
The country also experiences lingering the emergence of the Delta variant in summer 2021, according to Centers for
economic repercussions related to the Disease Control and Prevention (CDC) data. Hospitalizations of individuals with
pandemic, including rising inflation and confirmed COVID-19 also increased almost twofold at the end of 2021—from an
ongoing supply chain disruptions. average of 50,000 daily in late November 2021 to 93,000 daily.
Six relief laws, including the CARES
According to CDC data, as of January 3, 2022, about 62 percent of the total U.S.
Act, have been enacted to address the
population had been fully vaccinated. In late 2021, FDA expanded COVID-19
public health and economic threats
posed by COVID-19. As of November
vaccine eligibility in multiple ways, including authorizing vaccines for children 5
30, 2021 (the most recent date for through 11 years old, and authorizing booster shots for vaccinated individuals 12
which data were available), the federal years and older. In addition, the federal government and private businesses
government had obligated a total of $4 began requiring COVID-19 vaccination for certain employees.
trillion and expended $3.5 trillion, 88
and 77 percent, respectively, of the Reported COVID-19 Vaccinations by Age Group in U.S., as of Jan. 3, 2022
total COVID-19 relief funds provided by
these six laws. Percentage of
Percentage of fully vaccinated population
population
The CARES Act includes a provision Fully vaccinated Booster dose
for GAO to report on its ongoing 5 years of age and
66.1 Not applicable
monitoring and oversight efforts related older
to the COVID-19 pandemic. This 12 years of age and
71.2 Not available
report, GAO’s ninth, examines the older
18 years of age and
federal government’s continued efforts 72.9 37.2
older
to respond to, and recover from, the 65 years of age and
COVID-19 pandemic. 87.7 58.8
older
Total 62.1 34.3
GAO reviewed federal data and
documents. GAO also interviewed Source: Centers for Disease Control and Prevention (CDC). | GAO-22-105291

federal and state officials and other Note: CDC counts individuals as being fully vaccinated if they received two doses on different days of
the two-dose vaccines or received one dose of the single-dose vaccine.
stakeholders.
GAO’s COVID-19 reports have provided analyses of broad federal efforts to
respond to the pandemic and support U.S. businesses and residents, resulting in
What GAO Recommends 246 total recommendations for improving federal operations. Agencies have fully
or partially addressed 38 percent as of December 31, 2021, fully addressing 16
GAO is making five new
percent (40 recommendations) and partially addressing another 22 percent (54
recommendations for agencies that are
recommendations). Fully addressing GAO’s recommendations will enhance the
detailed in this Highlights and in the
report. quality and accountability of federal COVID-19 pandemic response and recovery
efforts. GAO also raised four matters for congressional consideration, three of
which remain open.
In this report, GAO makes five new recommendations in the areas of emergency
rental assistance, nutrition assistance, and tax relief for businesses. GAO is also
designating the Department of Health and Human Services’ (HHS) leadership
and coordination of a range of public health emergencies as high risk. This
View GAO-22-105291. For more designation is in keeping with long-standing efforts to identify federal programs
information, contact Jessica Farb, (202) needing transformation, and to help ensure sustained executive branch and
512-7114 or farbj@gao.gov.
congressional attention so the nation is prepared for future emergencies.
United States Government Accountability Office
Highlights of GAO-22-105291(Continued)

Emergency Rental Assistance
As of November 30, 2021, the Department of the Treasury had disbursed nearly $38 billion of the $46.55 billion it was
appropriated for Emergency Rental Assistance (ERA) programs. These programs provide funds to grantees to administer
programs to assist eligible renter households that are unable to pay rent, utilities, or other expenses due, directly or
indirectly, to the COVID-19 pandemic. Treasury disburses ERA funds to grantees, such as states, local governments, and
tribal governments, which make payments to landlords, households, and others eligible to receive the funds.

Treasury has not yet designed processes to identify and recover overpayments made by grantees, such as post-payment
reviews or recovery audits. Such reviews could verify the eligibility for and accuracy of ERA payments. Without a process
for conducting effective post-payment reviews or recovery audits for the ERA programs, Treasury’s ability to consistently
identify and recover overpayments made by grantees may be delayed or impossible.
The Single Audit Act establishes requirements for audits of states, local governments, and other nonfederal entities that
receive funding from federal awards (e.g., grants) when their expenditures meet a certain dollar threshold. The Office of
Management and Budget (OMB) is responsible for developing government-wide guidance for performing audits to comply
with the act. OMB guidance includes issuing an annual Compliance Supplement—a tool to help auditors identify
compliance requirements that could have a direct and material effect on major programs. Auditors who conduct single
audits follow guidance in the Compliance Supplement and agency guidance specific to their programs.
In its 2021 Compliance Supplement, OMB listed the ERA programs as “higher risk” programs, but did not include
guidance for auditing grantee compliance with ERA. Without this guidance, auditors might not consistently and effectively
identify deficiencies in grantees’ compliance with the requirements of the programs, limiting Treasury’s ability to identify
and mitigate risks, including risks to payment integrity.
GAO recommends that Treasury design and implement processes, such as post-payment reviews or recovery
audits, to help ensure timely identification and recovery of overpayments made by grantees to households,
landlords, or utility providers in the ERA programs. Treasury agreed with this recommendation and stated that it is
working to establish post-payment reviews and recovery audit activities.
GAO also recommends that OMB, in consultation with Treasury, issue guidance now or in the near future on the
ERA programs in OMB’s Compliance Supplement for single audits to help ensure that auditors consistently and
timely identify deficiencies in grantees’ compliance with the programs’ requirements. OMB neither agreed nor
disagreed with this recommendation.
Nutrition Assistance
The Food and Nutrition Service (FNS), within the Department of Agriculture, administers multiple federal nutrition
assistance programs, including the Pandemic Electronic Benefits Transfer (Pandemic EBT) program—which provides
food assistance for children attending schools closed due to COVID-19—and the Supplemental Nutrition Assistance
Program, among others.
Highlights of GAO-22-105291(Continued)

COVID-19 Funding and Expenditures for Selected Federal Nutrition Assistance Programs as of Nov. 30, 2021
Total COVID-19 COVID-19 expenditures
Program Description
funding ($) as of Nov. 30, 2021 ($)
Provides low-income individuals and households with benefits to 16.8 billion 15.6 billion
SNAP purchase allowed food items and achieve a more nutritious diet. Indefinite
15.0 billion
appropriation
Provides households with children who would have received free
Pandemic EBT or reduced-price school meals if not for school closures due to Indefinite
42.4 billion
COVID-19, as well as eligible children in childcare, with benefits appropriation
to purchase food.
Provides eligible low-income women, infants, and children up to
WIC age 5 who are at nutrition risk with nutritious foods to supplement 1.4 billion 710.5 million
diets, information on healthy eating, and referrals to health care.
Provides low-income individuals with groceries through food
TEFAP 1.25 billion 1.1 billion
banks.
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-22-105291
Note: Amounts shown reflect amounts appropriated specifically for COVID-19 response and relief and do not include annual appropriations. SNAP
received both specific amounts of funding, as well as an indefinite appropriation—an appropriation that, at the time of enactment, is for an unspecified
amount—for certain purposes, including a SNAP benefit increase of 15 percent through September 2021.
FNS does not have a comprehensive strategy for how its nutrition assistance programs should respond during
emergencies. As part of this, FNS’s pandemic plans are outdated, and FNS efforts to identify and incorporate lessons
learned from COVID-19 into its nutrition programs are incomplete. Developing a strategy for how its programs should
respond to emergencies would benefit FNS’s response to both the current pandemic and future emergencies. Such a
strategy could help FNS ensure that individuals and households maintain food security in times of heightened need and
that FNS does not miss opportunities to coordinate with vendors across the country.
FNS has also not provided sufficient assistance to state and local agencies to facilitate their efforts to obtain reliable and
comprehensive eligibility data for the Pandemic EBT program. According to FNS officials, state agencies reported various
challenges collecting such data, including relying on manual tracking of thousands of participants. Reliable and
comprehensive data can help state Supplemental Nutrition Assistance Program agencies ensure they have issued
Pandemic EBT benefits to all eligible students in the correct benefit amounts.
GAO recommends that the Department of Agriculture ensure that FNS (1) develops a comprehensive strategy for
the agency’s nutrition assistance programs to respond to emergencies that includes lessons learned during the
COVID-19 pandemic and a mechanism to periodically review and update the strategy and (2) shares timely
information with states and other stakeholders during development of the strategy to help inform their ongoing
response to COVID-19.
GAO also recommends that the Department of Agriculture ensure that FNS further assists state and local
agencies in their efforts to obtain reliable and comprehensive eligibility data for the Pandemic EBT program in
order to determine eligibility and benefits amounts accurately. The Department of Agriculture agreed with both
recommendations.
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 by reducing certain tax obligations, which, in some cases, led to cash refunds.
These tax measures included expanded carrybacks for net operating losses—that is, when a taxpayer’s allowable
deductions exceed the gross income for a tax year—and the acceleration of alternative minimum tax (AMT) credit refunds.
According to officials from the Internal Revenue Service (IRS), the CARES Act changes contributed to the agency
receiving 276 percent more filings for carryback refunds—which include applications for tentative refunds for net operating
loss carrybacks and AMT credit refunds—in fiscal year 2021 than in fiscal year 2020.
IRS has been unable to process this backlog consistent with its statutory time frames for processing applications for
tentative refunds, which businesses submit through IRS Forms 1045 and 1139. The Internal Revenue Code and the
CARES Act generally require IRS to issue certain refunds within a 90-day period. IRS data show that the agency started
to miss the 90-day statutory requirement for applications in September 2020 and missed it throughout 2021. As of
November 2021, the average time for IRS to process all carryback refunds was 165 days (see figure).
Highlights of GAO-22-105291(Continued)

Average Monthly Processing Times for Carryback Applications and Claims Filed with the Internal Revenue Service
(IRS), Apr. 2020–Nov. 2021

Note: These data include all carryback cases, including those filed as “claims” on other IRS forms and those filed as “applications” on Forms 1045 and
1139. Forms 1045 are represented in the individual line and Forms 1139 are represented in the business line. Forms 1139 may also contain refund
claims for the alternative minimum tax refund. IRS officials said the reported times do not include the additional time—up to 2 weeks—it may take for IRS
to finalize production and distribute the refund to the taxpayer. The figure does not represent all of the work that IRS did throughout the year, but focuses
on actions specific to the processing times for carryback cases. The Consolidated Appropriations Act, 2021 and American Rescue Plan Act of 2021 were
also enacted in December 2020 and March 2021 respectively, and contained provisions that also required IRS action.

While IRS took some remedial actions, it did not have effective preventative control activities or mitigation plans in place
to detect or address growing processing times for tentative refunds submitted on IRS Forms 1139 and 1045, such as an
average processing time threshold to trigger activities to avoid missing refund deadlines. As such, IRS did not take actions
to reduce the carryback backlog until April 2021—7 months after the agency began missing its statutory requirement.
Until effective preventative control activities and mitigation plans are put in place, IRS remains at risk of continuing to
exceed its 90-day statutory requirement to issue tentative refunds for net operating loss carrybacks and AMT credit
refunds. Failure to meet processing deadlines not only causes some taxpayers to face delays in receiving their refunds,
but also increases the cost to the federal government in terms of interest paid on such refunds. According to IRS data for
fiscal year 2021, these interest payments amounted to approximately $61 million on all carrybacks, of which applications
for tentative refund made up roughly 80 percent of all carryback interest payments for the fiscal year.
GAO recommends that IRS establish mitigation plans—including indicators, such as a threshold to initiate
mitigation activities—to timely address future challenges to processing times for applications for tentative
refunds on Forms 1045 and 1139 within the 90-day statutory requirement. IRS neither agreed nor disagreed with this
recommendation, but said that it will take the recommendation into consideration as it continues to make improvements to
taxpayer services.
HHS COVID-19 Funding
HHS received approximately $484 billion in COVID-19 relief appropriations from the six COVID-19 relief laws. These relief
funds may be used for a range of purposes, such as assistance to health care or child care providers; testing, therapeutic,
or vaccine-related activities; or procurement of critical supplies. Of the $484 billion appropriated, HHS reported that it had
obligated about $387 billion and expended about $226 billion—about 80 percent and 47 percent, respectively, as of
November 30, 2021.
GAO previously recommended that HHS provide projected time frames for its spending of the remainder of its COVID-19
relief funds in the spend plans HHS submits to Congress. HHS partially agreed with the recommendation, but stated that
the department would not be able to provide specific time frames for all relief funds as it needed to remain flexible in
responding to incoming requests. Providing projected time frames would not affect HHS’s ability to be flexible in its spend
plans, as these plans are not binding to the agency and can be revised. GAO will continue to examine HHS’s oversight of
COVID-19 relief funds.
Highlights of GAO-22-105291(Continued)

High-Risk Designation: HHS’s Leadership and Coordination of Public Health Emergencies
For more than a decade, GAO has reported on HHS’s execution of its lead role in preparing for, and responding to, a
range of public health emergencies and has found persistent deficiencies in its ability to perform this role. These
deficiencies have hindered the nation’s response to the current COVID-19 pandemic and a variety of past threats,
including other infectious diseases—such as the H1N1 influenza pandemic, Zika, and Ebola—and extreme weather
events, such as hurricanes.
As devastating as the COVID-19 pandemic has been, more frequent extreme weather events, new viruses, and bad
actors who threaten to cause intentional harm loom, making the deficiencies GAO has identified particularly concerning.
Not being sufficiently prepared for a range of public health emergencies can also negatively affect the time and resources
needed to achieve full recovery.
While HHS has taken some actions to address the 115 recommendations GAO has made related to its leadership and
coordination of public health emergencies since fiscal year 2007, 72 remain open. For example, HHS has not addressed
our September 2020 recommendation to work with the Federal Emergency Management Agency to develop plans to
mitigate supply chain shortages for the remainder of the pandemic, thus contributing to the shortage of such supplies as
of January 2022. Also, while HHS began to procure additional tests in the latter part of 2021 and into 2022, and the White
House recently appointed a new testing coordinator, HHS had not issued a comprehensive and publicly available testing
strategy, which we recommend it do in January 2021. Such a strategy is needed to ensure more timely proactive action in
the future and the efficient use of billions of dollars in unobligated funds.
GAO’s prior work has identified persistent deficiencies in HHS’s preparedness and response efforts in several areas,
including (1) establishing clear roles and responsibilities for the wide range of key federal, state, local, tribal, territorial, and
nongovernmental partners; (2) collecting and analyzing complete and consistent data to inform decision-making—
including any necessary midcourse changes—as well as future preparedness; (3) providing clear and consistent
communication to key partners and the public; (4) establishing transparency and accountability to help ensure program
integrity and build public trust; and (5) understanding key partners’ capabilities and limitations.
GAO is adding this area to the high-risk list to help ensure the executive branch and Congress pay sustained
attention in order to make additional progress in implementing GAO’s open recommendations and strengthen
HHS’s leadership and coordination role for future public health emergencies.
Contents

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

Introduction................................................................................................................................. 2

Background.................................................................................................................................... 7
Public Health and Economic Eﬀects of the COVID-19 Pandemic............................................................ 7
Federal COVID-19 Funding and Spending........................................................................................ 16

Executive Summary................................................................................................................... 24
Overview..................................................................................................................................... 24
Emergency Rental Assistance......................................................................................................... 24
Nutrition Assistance..................................................................................................................... 26
Tax Relief for Businesses............................................................................................................... 27
HHS COVID-19 Funding................................................................................................................. 28
Designation of New High-Risk Area: HHS’s Leadership and Coordination of Public Health Emergencies..... 29

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

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

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

Appendixes and Enclosures..................................................................................................... 35
Appendix I: Enclosures.................................................................................................................. 35
Economic Indicators..................................................................................................................... 35
HHS COVID-19 Funding................................................................................................................. 42
Enhanced Medicaid Funding.......................................................................................................... 51
Nutrition Assistance..................................................................................................................... 63
Unemployment Insurance Programs............................................................................................... 76
Emergency Rental Assistance......................................................................................................... 91
Student Loan Repayment.............................................................................................................. 98
Economic Injury Disaster Loan Program........................................................................................ 107
Tax Relief for Businesses............................................................................................................. 116
Paycheck Protection Program...................................................................................................... 125
State Small Business Credit Initiative............................................................................................ 136
Federal Oﬃce Space................................................................................................................... 143
Coronavirus State and Local Fiscal Recovery Funds......................................................................... 148
Federal Contracts and Agreements for COVID-19............................................................................ 163
International Trade..................................................................................................................... 174
Federal Fraud-Related Cases........................................................................................................ 180
Appendix II: New High-Risk Designation: HHS and Public Health Emergencies..................................... 189

Page i GAO-22-105291
Appendix III: Highlights Pages from Recently Issued GAO COVID-19 Products..................................... 202
Aviation Industry Recovery.......................................................................................................... 202
Federal Workplace Reentry.......................................................................................................... 204
Hiring Authorities....................................................................................................................... 205
Emergency Relief to Tribes.......................................................................................................... 206
State Department Repatriation Eﬀort........................................................................................... 207
Vaccine Distribution and Communication...................................................................................... 208
Election Assistance Commission Grants........................................................................................ 209
Vaccine Development................................................................................................................. 210
Defense Production Act Loans..................................................................................................... 212
VA Supply Chain........................................................................................................................ 213
Behavioral Health and COVID-19.................................................................................................. 214
Services for Older Adults............................................................................................................ 215
Improving USAspending.gov........................................................................................................ 216
Defense Production Act Authorities.............................................................................................. 217
Housing Finance Vulnerabilities.................................................................................................... 218
HHS-DOD COVID-19 Countermeasures Acceleration Group.............................................................. 220
International Humanitarian Assistance.......................................................................................... 221
Appendix IV: List of Ongoing GAO Work Related to COVID-19 as of December 28, 2021........................ 222
Appendix V: Comments from the Internal Revenue Service.............................................................. 224
Appendix VI: Comments from the Department of the Treasury......................................................... 226

Contacts..................................................................................................................................... 227

Tables
Reported COVID-19 Vaccinations by Age Group in U.S., as of Jan. 3, 2022.............................................H1
COVID-19 Funding and Expenditures for Selected Federal Nutrition Assistance Programs as of Nov. 30,
2021............................................................................................................................................H3
Table 1: Reported COVID-19 Vaccinations by Age Group in the U.S., as of Jan. 3, 2022............................ 12
Table 2: COVID-19 Relief Funding and Spending as of Nov. 30, 2021.................................................... 19
Table 3: COVID-19 Relief Funding for Federal Programs and Funds Receiving $10 Billion or More in Aid for
States, the District of Columbia, Localities, U.S. Territories, and Tribes, as of Nov. 30, 2021...................... 21
HHS-Reported COVID-19 Relief Appropriations, Obligations, and Expenditures, by Relief Law, as of Nov. 30,
2021........................................................................................................................................... 44
HHS-Reported Allocations, Obligations, and Expenditures of COVID-19 Relief Funding, by Agency or Key
Fund, as of Nov. 30, 2021............................................................................................................. 45
HHS-Reported Allocations, Obligations, and Expenditures by Selected COVID-19 Response Activity, as of Nov.
30, 2021..................................................................................................................................... 47
Prior GAO Recommendation Related to Department of Health and Human Services (HHS) COVID-19
Funding...................................................................................................................................... 50
Overview of Selected Changes to the Federal Medical Assistance Percentage (FMAP) during the COVID-19
Public Health Emergency (PHE), as of Oct. 2021............................................................................... 53

Page ii GAO-22-105291
Examples of Selected States’ Proposed Home and Community-Based Services (HCBS) Activities, July
2021........................................................................................................................................... 59
Prior GAO Matter for Congressional Consideration Related to Medicaid Funding................................... 62
COVID-19 Funding and Expenditures for Selected Federal Nutrition Assistance Programs as of Nov.
2021........................................................................................................................................... 65
Prior GAO Recommendation Related to COVID-19 Nutrition Assistance............................................... 75
Prior GAO Recommendations Related to Unemployment Insurance (UI) Programs................................ 88
Summary of Funding for Emergency Rental Assistance (ERA) Appropriated, Disbursed, and Spent as of
November 30, 2021 (dollars in billions)........................................................................................... 93
Prior GAO Recommendations Related to the Economic Injury Disaster Loan Program.......................... 114
Prior GAO Recommendations Related to Tax Relief for Business....................................................... 124
Prior GAO Recommendations Related to the Paycheck Protection Program........................................ 134
Number of States Receiving One or More 30-Day Extensions from Treasury for Distributing Coronavirus
State and Local Fiscal Recovery Funds Payments to Non-Entitlement Units of Local Government, as of Jan. 3,
2022......................................................................................................................................... 154
Prior GAO Recommendations Related to Single Audits and Coronavirus State and Local Fiscal Recovery
Funds (CSLFRF).......................................................................................................................... 161
Prior GAO Recommendations Related to Federal Contracts and Agreements for COVID-19................... 171

Figures
Average Monthly Processing Times for Carryback Applications and Claims Filed with the Internal Revenue
Service (IRS), Apr. 2020–Nov. 2021..................................................................................................H4
Figure 1: Report Enclosures by Topic Area......................................................................................... 5
Figure 2: Status of Prior GAO Recommendations from COVID-19-Related Work, by Federal Department or
Agency, as of Dec. 31, 2021............................................................................................................. 6
Figure 3: 7-Day Averages of Reported COVID-19 Cases in the U.S., Mar. 1, 2020–Jan. 3, 2022..................... 8
Figure 4: Reported Daily Hospitalizations and 7-Day Averages of Patients with Conﬁrmed COVID-19 in the
U.S., Aug. 1, 2020–Jan. 6, 2022......................................................................................................... 9
Figure 5: Percent of People Fully Vaccinated by Jurisdiction, as Reported to the CDC, as of Jan. 3, 2022...... 14
Figure 6: Employment-to-Population Ratio, January 2019–December 2021........................................... 16
Figure 7: Percentage of COVID-19 Relief Funding Obligated and Expended, July 31, 2020–Nov. 30, 2021..... 18
Indicators for Areas of the Economy Supported by the Federal COVID-19 Pandemic Response, Sept.–Dec.
2021, Cumulative Changes since Feb. 2020..................................................................................... 36
Employment-to-Population Ratio, Jan. 2019–Dec. 2021...................................................................... 37
Indicators of Inﬂation, Feb.–Nov. 2021, and Average Inﬂation Rates, 2000–2019.................................... 39
Percentage Change in Inﬂation Indicators from the Previous Month, Jan. 2019-Nov. 2021....................... 40
HHS-Reported COVID-19 Relief Appropriations, Obligations, and Expenditures from COVID-19 Relief Laws, as
of Nov. 30, 2021.......................................................................................................................... 43
Timeline of COVID-19 PHE, 6.2 Percentage Point FMAP Increase, and Medicaid Enrollment
Requirements.............................................................................................................................. 56
Selected States’ Estimates of Additional Federal Funding Attributable to Increased HCBS Federal Medicaid
Assistance Percentage, July 2021.................................................................................................... 58

Page iii GAO-22-105291
Weekly Continued Claims Submitted Nationwide for Regular UI, PEUC, and Extended Beneﬁts, Mar. 1, 2020–
Dec.18, 2021............................................................................................................................... 79
Timeliness of First Payments of Regular Unemployment Insurance (UI) Beneﬁts, Jan. 2020–Nov. 2021....... 81
Number and Type of Borrowers Aﬀected by the Expiration of COVID-19 Emergency Relief for Federal Student
Loans, as of November 2021......................................................................................................... 99
Average Monthly Processing Times for Taxpayer Carryback Applications and Claims Filed with the Internal
Revenue Service (IRS), Apr. 2020–Nov. 2021................................................................................... 119
Status of SBA Loan Forgiveness Determinations on Paycheck Protection Program Loans, as of Sept. 30,
2021......................................................................................................................................... 130
Number of Paycheck Protection Program Loan Forgiveness Decisions Submitted by Lenders to SBA, Aug.
2020–Sept. 2021........................................................................................................................ 131
State Small Business Credit Initiative Funding Allocations, 2010 and 2021.......................................... 137
State Small Business Credit Initiative 2021 Preliminary Allocations to States and Territories.................. 139
Number of Leases in the Federal Leasing Inventory, July 2011–July 2021............................................ 144
Examples of General Services Administration’s (GSA) Return to Workplace Planning Services for Federal
Agencies................................................................................................................................... 146
Coronavirus State and Local Fiscal Recovery Funds Allocations and Treasury Distributions as of Nov. 30,
2021, by Recipient Type.............................................................................................................. 149
Treasury’s Reporting Requirements for the Coronavirus State and Local Fiscal Recovery Funds, by Recipient
Type, as of Nov. 15, 2021............................................................................................................ 152
Percentage of States’ Planned Uses of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) by
Spending Category, Based on States’ Recovery Plan Performance Reports that Were Publicly Available as of
Dec. 3, 2021.............................................................................................................................. 157
Contract Obligations in Response to COVID-19 by Federal Agency, as of Dec. 15, 2021......................... 165
Government-wide COVID-19-Related Contract Obligations and Conﬁrmed COVID-19 Cases by Month, Feb.
2020–Dec. 15, 2021.................................................................................................................... 166
Contract Obligation Amounts for Top Five Goods and Services Procured in Response to COVID-19 by month,
Feb. 2020–Dec. 15, 2021............................................................................................................. 167
Monthly Trends in U.S. Import Charges Relative to Value Imported from Jan. 2018–Aug. 2021............... 175
Monthly U.S. Imports of COVID-19-Related Products, by Product Type, Jan. 2019–Aug. 2021.................. 176
Value of U.S. Exports of Vaccines for Human Use, Overall and to EU Member Countries and the United
Kingdom, January 2019 through August 2021................................................................................ 178
Number of Individuals or Entities That Have Pleaded Guilty to Federal Fraud-Related Charges by COVID-19
Relief Program, as of Oct. 31, 2021.............................................................................................. 182
Number of Individuals Who Have Pleaded Guilty to Federal Fraud-Related Charges and Have Been
Sentenced, as of Oct. 31, 2021.................................................................................................... 183
Number of Individuals or Entities That Have Pleaded Guilty to, Faced Federal Charges for, or Were Convicted
for Consumer Fraud, as of Oct. 31, 2021....................................................................................... 186

Page iv GAO-22-105291
Abbreviations

AMT alternative minimum tax
ARPA American Rescue Plan Act of 2021
CDC Centers for Disease Control and Prevention
COVID-19 Coronavirus Disease 2019
EBT Electronic Benefits Transfer
ERA Emergency Rental Assistance
FDA Food and Drug Administration
FNS Food and Nutrition Service
HHS Department of Health and Human Services
IRS Internal Revenue Service
OMB Office of Management and Budget

GAO’s Mission

The Government Accountability Oﬃce, the audit, evaluation, and investigative arm of Congress, exists
to support Congress in meeting its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people. GAO examines the use of public
funds; evaluates federal programs and policies; and provides analyses, recommendations, and other
assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment
to good government is reﬂected in its core values of accountability, integrity, and reliability.

This is a work of the U.S. government and is not subject to copyright protection in the United States. The
published product may be reproduced and distributed in its entirety without further permission from
GAO. However, because this work may contain copyrighted images or other material, permission from
the copyright holder may be necessary if you wish to reproduce this material separately.

Page v GAO-22-105291
Recommendations for Executive Action
Recommendations for Executive Action

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

• The Secretary of the Treasury should design and implement processes, such as post-
payment reviews or recovery audits, to help ensure timely identiﬁcation and recovery
of overpayments made by grantees to households, landlords, or utility providers in the
Emergency Rental Assistance programs. See the Emergency Rental Assistance enclosure.
(Recommendation 1)
• The Director of the Oﬃce of Management and Budget, in consultation with the Secretary
of the Treasury, should issue guidance now or in the near future on the Emergency Rental
Assistance programs in the Oﬃce of Management and Budget’s Compliance Supplement
for single audits to help ensure that auditors consistently and timely identify deﬁciencies
in grantees’ compliance with the programs’ requirements. See the Emergency Rental
Assistance enclosure. (Recommendation 2)
• The Secretary of Agriculture should ensure that the Administrator of the Food and
Nutrition Service (1) develops a comprehensive strategy for the agency’s nutrition
assistance programs to respond to emergencies that includes lessons learned during the
COVID-19 pandemic and a mechanism to periodically review and update the strategy,
and (2) shares timely information with states and other stakeholders during development
of the strategy to help inform their ongoing response to COVID-19. See the Nutrition
Assistance enclosure. (Recommendation 3)
• The Secretary of Agriculture should ensure that the Administrator of the Food and
Nutrition Service further assists state and local agencies in their eﬀorts to obtain reliable
and comprehensive eligibility data for the Pandemic Electronic Beneﬁts Transfer program
in order to determine eligibility and beneﬁts amounts accurately. See the Nutrition
Assistance enclosure. (Recommendation 4)
• The Commissioner of Internal Revenue should establish mitigation plans—including
indicators, such as a threshold to initiate mitigation activities—to timely address any
future challenges to processing applications for tentative refund on Forms 1045 and 1139
within the 90-day statutory requirement. See the Tax Relief for Businesses enclosure.
(Recommendation 5)

Page 1 GAO-22-105291
Introduction
January 27, 2022

Congressional Committees

A sharp increase in the number of new Coronavirus Disease 2019 (COVID-19) cases continues to
challenge the nation’s ongoing response and recovery eﬀorts. Between December 21, 2021, and
January 3, 2022, new reported U.S. COVID-19 cases generally exceeded 380,000 per day, according
to the Centers for Disease Control and Prevention (CDC)—nearly four times the average number
of cases in late November 2021. Hospitalizations of patients with conﬁrmed COVID-19 have also
increased. U.S. hospitals reported an average of more than 93,000 new patients admitted daily
for the 7-day period from December 28, 2021, to January 3, 2022, an increase from the average of
nearly 50,000 individuals admitted daily during a 7-day period in late November 2021, according to
data from the Department of Health and Human Services (HHS).1

As of January 3, 2022, more than 56 million cases of COVID-19 have been reported in the U.S. since
COVID-19 was ﬁrst identiﬁed in January 2020. According to CDC estimates as of January 1, 2022,
the virus’s Omicron variant was the dominant strain circulating in the U.S.2 As of the week ending
January 1, 2022, over 830,000 deaths attributed to COVID-19 have been reported in the U.S.

Much of the nation’s recent response eﬀorts have focused on mitigating COVID-19’s health
risks by making COVID-19 vaccines more widely available to the U.S. population, and expanding
access to testing. The federal government has expanded vaccination eligibility by authorizing
vaccines for children aged 5 and up. In addition, the CDC recently authorized COVID-19 booster
shots for individuals aged 12 and up. As of January 3, 2022, about 62 percent of the total U.S.
population—over 206 million individuals—had been fully vaccinated.3 In addition, nearly seven
million children aged 5 to 11 have received at least one COVID-19 vaccine dose since October 29,
2021, when the Food and Drug Administration (FDA) authorized the Pﬁzer vaccine for this age
group.4

1HHS, “COVID-19 Reported Patient Impact and Hospital Capacity by State Timeseries,” accessed January 6, 2022, https://
healthdata.gov/Hospital/COVID-19-Reported-Patient-Impact-and-Hospital-Capa/g62h-syeh.
2According to CDC, viruses, such as COVID-19, constantly change through mutation, and new variants are expected to
occur. Sometimes, new variants emerge and disappear, while at other times, new variants persist. First identiﬁed in
the U.S. on December 1, 2021, the Omicron variant has superseded the Delta variant to become the dominant strain
circulating in the U.S. Both the Omicron and Delta variants spread faster than previous variants. As of December 20,
2021, CDC reported that more research is needed to determine if Omicron causes more severe illness or death than
infections caused by other variants and how well available vaccines and medications work against it.
3As of January 8, 2022, CDC counts individuals as being fully vaccinated if they received two doses on diﬀerent days
(regardless of time interval) of the two-dose vaccines or received one dose of a single-dose vaccine. See CDC, “COVID
Data Tracker: COVID-19 Vaccinations in the United States,” accessed January 10, 2022, https://covid.cdc.gov/covid-data-
tracker/#vaccinations_vacc-total-admin-rate-total.
4CDC recommended use of the Pﬁzer COVID-19 vaccine for children aged 5 to 11 on November 2, 2021. We calculated
the population aged 5 to 11 who received at least one COVID-19 vaccine dose by subtracting the population aged 5 and
over from the population aged 12 and over who received at least one dose. These data do not include numbers from
Idaho for vaccine recipients under age 18. Please see https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-total-
admin-rate-total, accessed January 10, 2022, for additional technical notes.

Page 2 GAO-22-105291
The pandemic has also had far reaching eﬀects on the U.S. economy. The U.S. has continued to
experience lower levels of employment relative to the prepandemic period and, more recently,
rising U.S. consumer prices and widespread supply chain disruptions in multiple sectors.5 These
disruptions, which have occurred amid growing demand, have resulted in ﬂuctuating shortages
for some critical products, such as computer chips—which are key inputs into many consumer
goods—and ongoing shortages of medical supplies, including testing material and personal
protective equipment for the COVID-19 response.6

In response to supply chain disruptions, in June 2021, the White House issued a report that
intends to provide a framework for closing supply chain vulnerabilities.7 In addition, in September
2021, HHS—with the input of federal partners—released its National Strategy for a Resilient
Public Health Supply Chain, as called for in Executive Order 14001.8 This strategy makes
recommendations to support designing, building, and sustaining a resilient public health supply
chain, including investing in domestic manufacturing of personal protective equipment and other
medical supplies, building a more capable and robust Strategic National Stockpile, and maintaining
end-to-end public health supply chain visibility.9

Since March 2020, Congress has provided about $4.6 trillion through the CARES Act and other
laws that were enacted to fund federal eﬀorts to help the nation respond to and recover from
the COVID-19 pandemic (COVID-19 relief laws).10 Ongoing implementation of the provisions in

5According to the Department of Labor’s consumer price index, which measures the prices of consumer goods and
services, prices increased 6.8 percent between November 2020 and November 2021, with larger increases recorded in
the prices for certain items, such as energy commodities and services as well as used vehicles.
6The White House noted in an October 13, 2021, press brieﬁng that the COVID-19 pandemic contributed to key
transportation and logistics disruptions domestically and abroad, such as congestion at ports, further disrupting supply
chains.
7The White House, Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based
Growth (Washington, D.C.: June 2021). This report speciﬁcally examined the supply chains of four critical products:
semiconductor manufacturing and advanced packaging, large capacity batteries, critical minerals and materials, and
pharmaceuticals and active pharmaceutical ingredients.
8Department of Health and Human Services, National Strategy for a Resilient Public Health Supply Chain (Washington,
D.C.: July 2021). This strategy aims to build a more resilient supply chain that would support the U.S.’s preparedness and
response for future pandemics and biological threats. We plan to report on the strategy and its implementation in a
future CARES Act report. A Sustainable Public Health Supply Chain, Exec. Order No. 14001, § 4, 86 Fed. Reg. 7,219, 7,220-21
(Jan. 26, 2021).
9The Strategic National Stockpile contains a multibillion dollar inventory of medical countermeasures—drugs, vaccines,
and other medical supplies and materials—to respond to a broad range of public health emergencies.
10For the purposes of our review, we consider COVID-19 relief laws to include the six laws providing comprehensive
relief across federal agencies and programs. These six laws are 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 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. In
our October 2021 report, we reported that, as of August 31, 2021, $4.8 trillion in COVID-19 relief funds were provided by
the six relief laws based on appropriation warrant information provided by Treasury. The total amount we are reporting
as of November 30, 2021 decreased from the amount we reported as of August 31, 2021 mostly due to the return of
unused indeﬁnite appropriations to the Treasury at the end of ﬁscal year 2021 by the Internal Revenue Service and the
Department of Labor. To account for this and other actions aﬀecting funding amounts for each activity, we used total
budgetary resources reported to Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial Balance System

Page 3 GAO-22-105291
the COVID-19 relief laws, as well as the size and scope of these eﬀorts—from distributing funding
to implementing new programs—continue to demand strong accountability and oversight.
Furthermore, the government must remain vigilant and agile to address additional potential
challenges while it continues to respond to the evolving COVID-19 pandemic. For example, the
current annual ﬂu season could place further burdens on the already overtaxed health care,
medical supply, and emergency management sectors.11

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.12 This comprehensive
report is our ninth recurring oversight report in response to this provision.13

This report includes 16 enclosures addressing a range of federal programs and activities across
the government concerning public health and the economy (see appendix I). In these enclosures
we are making ﬁve new recommendations to federal agencies in the areas of emergency rental
assistance payments, nutrition assistance programs, and tax relief for businesses. Figure 1 lists
these enclosures by topic area and highlights those with new recommendations. In addition,
in this report, we are adding HHS’s leadership and coordination of a range of public health
emergencies to GAO’s High-Risk List (see appendix II).

for this report. Total budgetary resources, as opposed to the previously reported appropriation warrant information
provided by Treasury, reﬂect appropriations, as well as transfers, adjustments, recoveries, rescissions, and returns of
unused indeﬁnite appropriations at the end of ﬁscal year 2021.
11According to CDC’s January 1, 2022, weekly inﬂuenza surveillance report, although the ﬂu season is just beginning,
data—including indicators that track hospitalizations—reﬂect increasing ﬂu activity in the United States. In addition,
these early data show lower ﬂu vaccine uptake compared with last season. For additional information from CDC’s weekly
inﬂuenza surveillance report, see https://www.cdc.gov/ﬂu/weekly/index.htm.
12Pub. L. No. 116-136, § 19010, 134 Stat. at 579–81.
13Our recurring oversight reports are GAO, COVID-19: Additional Actions Needed to Improve Accountability and Program
Eﬀectiveness of Federal Response, GAO-22-105051 (Washington, D.C.: Oct. 27, 2021); COVID-19: Continued Attention Needed
to Enhance Federal Preparedness, Response, Service Delivery, and Program Integrity, GAO-21-551 (Washington, D.C.: July 19,
2021); 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 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-22-105291
Figure 1: Report Enclosures by Topic Area

In addition to the eight previously issued recurring oversight reports, as of January 13, 2022, we
have issued 130 targeted COVID-19-related reports, testimonies, and science and technology
spotlights in areas such as behavioral health, veterans nursing homes, federal debt management,
and vaccine development and distribution. We also have reviews ongoing in other areas. See
appendix III for highlights pages from our recently issued work on COVID-19 and appendix IV for a
list of our ongoing work related to COVID-19.

Across our body of COVID-19-related reports, we have made 246 recommendations to federal
agencies and have raised four matters for congressional consideration to improve the federal
government’s response eﬀorts. As of December 31, 2021, agencies had fully or partially addressed
94 of our COVID-19-related recommendations (38 percent); of these, agencies had fully addressed
40 and partially addressed 54 of these recommendations.14 For example, in response to one
of our recommendations, in December 2021 FDA issued draft guidance for industry and FDA
staﬀ to plan for the transition of medical device emergency use authorizations issued during the
COVID-19 pandemic. The guidance outlines both a timeline for advance notice of termination
of emergency use authorization declarations and recommendations for manufacturers to
prepare marketing submissions for clearance or approval of devices when they wish to continue
distributing devices previously allowed under emergency use authorizations. FDA is seeking
comment from stakeholders on the draft guidance through March 23, 2022.15

See ﬁgure 2 for an overview of the status of our COVID-19-related recommendations by
department. For a complete list of our COVID-related products, see https://www.gao.gov/
coronavirus.

14We consider a recommendation to be addressed when the target agency has completed the implementation of
the recommendation. We consider a recommendation to be partially addressed when the agency is in the process of
developing an action, has started but not yet completed or has partially implemented an action, or has taken steps
toward implementation.
15In March 2021, we recommended that, as FDA developed a transition plan for devices with emergency use
authorizations, the agency specify a reasonable timeline and process for transitioning authorized devices to clearance,
approval, or appropriate disposition that takes into account input from stakeholders. FDA’s actions fulﬁll the intent of
our recommendation.

Page 5 GAO-22-105291
Figure 2: Status of Prior GAO Recommendations from COVID-19-Related Work, by Federal Department or Agency,
as of Dec. 31, 2021

Note: For this ﬁgure, recommendations made to the Internal Revenue Service are counted toward the total of
recommendations made to the Department of the Treasury.

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
and obtaining information from federal and state oﬃcials and related stakeholders, such as
servicers of federal student loans and organizations that have implemented nutrition assistance
programs during the pandemic. We also examined federal laws, agency documents, and guidance,
among other information. In each enclosure, we include a summary of the methodology speciﬁc
to the work conducted.

We conducted this performance audit from June 2021 to January 2022 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.

Page 6 GAO-22-105291
Background

Public Health and Economic Eects of the COVID-19
Pandemic
The COVID-19 pandemic continues to have devastating eﬀects on public health and lingering
eﬀects on the economy. As of January 3, 2022, the U.S. had more than 56 million reported cases
of COVID-19, according to CDC.16 CDC and HHS data show that, at the end of December 2021
and into January 2022, the number of new reported COVID-19 cases and hospitalizations for
conﬁrmed COVID-19 were increasing. As of the week ending January 1, 2022, the U.S. had more
than 830,000 reported deaths attributed to COVID-19.17 The country also continues to experience
lingering economic eﬀects. While the labor market has shown signs of improvement in recent
months, the employment-to-population ratio—which measures the share of the population
employed—indicates that labor market conditions remain worse than in the prepandemic period,
likely partially inﬂuenced by health concerns or family demands, among other factors.

The number of new reported daily COVID-19 cases in the U.S. began increasing at the end of
November 2021, when the Delta variant of the virus was the dominant strain, following a decrease
in the number of daily cases from a September 2021 peak. Between December 21, 2021 and
January 3, 2022, new reported COVID-19 cases averaged about 380,000 per day—nearly double
the average during the same period in 2020-2021.18 See ﬁgure 3 for 7-day U.S. case averages since
March 2020. Between December 18 and December 31, 2021, reported new COVID-19 cases per
day, on average, for 52 jurisdictions, increased in 49 jurisdictions, held steady in 2 jurisdictions,
and decreased in 1 jurisdiction.19 The rise in cases in December 2021 coincides with the Omicron
variant becoming the dominant strain, according to CDC estimates.

16Data 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 jurisdictions. 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 US reported to
CDC, by State/Territory,” accessed January 10, 2022, https://covid.cdc.gov/covid-data-tracker/#trends_dailycases.
17CDC’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. Data are
provisional and subject to updates. In more recent weeks, the data are more likely to be 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 January 10, 2022, https://
www.cdc.gov/nchs/nvss/vsrr/covid19/index.htm.
18CDC COVID-19 case counts are subject to change based on any delays or updates in reported data from states and
territories. We compared the relative diﬀerence between the average of new cases per day between December 21, 2020,
and January 3, 2021, and the average of new cases per day between December 21, 2021, and January 3, 2022.
19The 52 states and jurisdictions include all 50 states; Washington, D.C.; and New York, N.Y. COVID-19 case counts for
New York, N.Y., are reported separately from the state of New York. 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 between
December 18 and December 31, 2021. CDC, “United States COVID-19 Cases and Deaths by State Over Time,” accessed
on January 10, 2022, https://data.cdc.gov/Case-Surveillance/United-States-COVID-19-Cases-and-Deaths-by-State-o/9mfq-
cb36. These COVID-19 case counts may change as new or updated data are reported by states.

Page 7 GAO-22-105291
Figure 3: 7-Day Averages of Reported COVID-19 Cases in the U.S., Mar. 1, 2020–Jan. 3, 2022

Note: COVID-19 cases reported from states and territories 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 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 January 10, 2022, https://
covid.cdc.gov/covid-data-tracker/#trends_dailycases

HHS data show that, at the end of December 2021 and into January 2022, COVID-19
hospitalizations were again increasing, after decreases in September and October 2021 (see ﬁgure
4).20 During this same period, a record proportion of emergency department visits were related to
COVID-19—nearly 12 percent of patient visits had an accompanying COVID-19 diagnosis, according
to CDC data.21 This increase in hospitalizations and emergency department utilization has strained
health care systems, requiring multiple state governments to declare states of emergency.22

20HHS, “COVID-19 Reported Patient Impact and Hospital Capacity by State Timeseries,” accessed January 6, 2022, https://
healthdata.gov/Hospital/COVID-19-Reported-Patient-Impact-and-Hospital-Capa/g62h-syeh.
21CDC, “Percentage of Emergency Department visits with Diagnosed COVID-19 in United States, All Ages,” accessed
January 10, 2022, https://covid.cdc.gov/covid-data-tracker/#ed-visits. Data are from the National Syndromic Surveillance
Program (NSSP). For insights into COVID-19 trends, CDC monitors a subset of emergency department in 50 states to
identify visits that have a COVID-19 diagnosis associated with them.
22For example, in response to the rapid increases in hospitalizations due to COVID-19, on January 4, 2022, the Governor
of Maryland declared a 30-day state of emergency to take actions to help health care providers in the state manage the
surge in cases and hospitalizations by expanding the potential health care workforce, allowing new hospital-adjacent
facilities to act as alternate sites of care, and mobilizing National Guard troops to help with testing and other pandemic
response actions.

Page 8 GAO-22-105291
Figure 4: Reported Daily Hospitalizations and 7-Day Averages of Patients with Conﬁrmed COVID-19 in the U.S.,
Aug. 1, 2020–Jan. 6, 2022

Note: We included only hospitalizations with conﬁrmed COVID-19 cases (rather than conﬁrmed and suspected COVID-19) to
be consistent with CDC’s COVID data tracker page on hospitalizations. August 2020 was the ﬁrst full month following HHS’s
transition to its current hospital data collection process. We calculated the 7-day average as the average number of the adult
and pediatric hospitalizations on a given date and each of the six previous days. See HHS, “COVID-19 Reported Patient Impact
and Hospital Capacity by State Timeseries,” accessed January 6, 2022, https://healthdata.gov/Hospital/COVID-19-Reported-
Patient-Impact-and-Hospital-Capa/g62h-syeh.

According to provisional data from CDC’s National Center for Health Statistics, the number of
deaths in the U.S. has been higher during the pandemic than the expected number of deaths
based on previous years’ data. From early February 2020 through December 18, 2021, it was
estimated that at least 748,000 more deaths occurred from COVID-19 and other causes than
would normally be expected.23

As case numbers and hospitalizations have risen again, the federal government has put more
resources into increasing the availability of COVID-19 tests. Since our last comprehensive report
issued in October 2021, HHS, in partnership with the Department of Defense, has invested
more than half a billion dollars from the American Rescue Plan Act of 2021 (ARPA) to boost
manufacturing of key products needed to increase the domestic COVID-19 testing supply and
make tests more widely available. These investments include the National Institutes of Health’s
investment of $70 million to help bring more high-quality, at-home tests onto the U.S. market,
in coordination with FDA.24 In October 2021, the White House announced a plan to purchase $1

23This number represents the number of deaths from all causes reported in the U.S. in a given week from February
2020 through December 18, 2021, that exceeded the upper-bound threshold of expected deaths calculated by CDC’s
National Center for Health Statistics on the basis of variation in mortality in prior years. Since our October report, the
National Center for Health Statistics has updated the methodology used to estimate the number of excess deaths,
using 6 years instead of 4 years of prior data on which to base these estimates. As in prior reports, GAO continues to
report excess deaths based on the more conservative upper bound estimate of expected deaths. For further details of
CDC’s methodology, see CDC, National Center for Health Statistics, “Excess Deaths Associated with COVID-19,” accessed
January 10, 2022, https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm.
24On December 29, 2021, FDA authorized the 13th over-the-counter COVID-19 test.

Page 9 GAO-22-105291
billion worth of rapid, at-home COVID-19 tests to address ongoing shortages and accelerate test
production by the end of 2021. In December 2021 and January 2022, the White House announced
plans to purchase and distribute 1 billion at-home, rapid tests for free to Americans as part of
a larger eﬀort to respond to the Omicron variant, with initial delivery starting in January 2022.25
Increasing testing is a positive step, though, as we have previously reported, improved test result
reporting is needed, especially for rapid tests, for eﬀective surveillance.26

We previously reported on the inadequacy of federal eﬀorts to ensure suﬃcient testing supplies
and sound testing strategies dating back to September 2020, when we identiﬁed challenges with
testing supply availability and recommended that HHS develop plans outlining speciﬁc actions the
federal government could take to help mitigate remaining shortages of testing and other medical
supplies for the remainder of the pandemic. In January 2021, we also recommended that HHS
develop and make publicly available a comprehensive national COVID-19 testing strategy. HHS
disagreed with the ﬁrst recommendation, noting the work that had been done to manage the
medical supply chain and increase supply availability. We maintain that taking the recommended
actions could, among other things, help entities better plan for ongoing and future supply needs.
Although HHS agreed with the second recommendation, it expressed concern about the potential
burden of developing an eﬃcient testing strategy. In May 2021, HHS told us that such a document
was forthcoming and would speak to both the country’s short-term COVID-19 needs and the
long-term needs associated with the country’s broader biopreparedness. However, to date,
HHS has not provided this document. We maintain that developing an eﬀective national testing
strategy—and making it publicly available—remains warranted, especially given that, of the
$58 billion HHS reported that it allocated for testing-related activities—such as procuring and
distributing testing supplies, expanding community-based testing programs, and providing testing
in high-risk and underserved populations—HHS had only spent about $16 billion, as of November
30, 2021 (the most recent date for which data was available), and $23 billion remains unobligated.

In addition to increasing testing to provide valuable information for individual and government
decision-making, providing the public with safe and eﬀective vaccines to protect people from
becoming critically ill with COVID-19 is crucial to mitigating the public health and economic impacts
of the virus and ending the pandemic. As of January 3, 2022, over 511 million doses of COVID-19
vaccine had been administered in the U.S., according to CDC.

As of January 7, 2022, three COVID-19 vaccines—manufactured by Pﬁzer, Janssen, and
Moderna—were available in the U.S. The Pﬁzer vaccine is licensed by FDA for individuals aged
16 and older and is also available for individuals aged 5 through 15 years under an emergency
use authorization.27 The Janssen and Moderna vaccines are authorized for individuals aged 18

25In addition to plans to increase access to free testing, the White House also outlined its plans to support vaccinations
and increase hospital capacity, such as by sending military medical professionals to hospitals throughout the U.S.
26In our October 2021 recurring report, we reported that if rapid antigen testing continues to expand, especially with the
increasing availability of over-the-counter tests, the ongoing limited reporting of antigen test results could reduce the
ability of public health oﬃcials to more comprehensively monitor and eﬀectively respond to the COVID-19 pandemic.
These issues highlight the importance of HHS and CDC eﬀorts aimed at improving reporting and surveillance.
27Pﬁzer’s two-dose COVID-19 vaccine was ﬁrst authorized for emergency use for individuals aged 16 and older on
December 11, 2020. FDA has amended the emergency use authorization multiple times, including to authorize use for
individuals aged 12 through 15 on May 10, 2021, and to authorize a lower dose for individuals aged 5 through 11 on
October 29, 2021. Pﬁzer’s COVID-19 vaccine was developed in collaboration with BioNTech.

Page 10 GAO-22-105291
and older.28 FDA has also authorized booster doses for all three available COVID-19 vaccines.
Speciﬁcally, as of January 3, 2022, FDA had authorized a booster dose of the Pﬁzer vaccine
for individuals aged 12 and older and booster doses of the Janssen and Moderna vaccines
for individuals aged 18 and older.29 See table 1 for U.S. COVID-19 vaccinations by age group.
Additionally, FDA authorized two new COVID-19 antiviral drugs in December 2021.30

28Moderna’s two-dose COVID-19 vaccine was authorized for emergency use on December 18, 2020, and Janssen’s one-
dose COVID-19 vaccine was authorized on February 27, 2021. Both vaccines were authorized for individuals aged 18 and
older. Janssen Pharmaceutical Companies are a part of Johnson & Johnson.
29As of January 7, 2022, the Pﬁzer and Moderna booster doses were authorized to be administered at least 5 months
after completion of the two-dose primary regimen, and the Janssen booster dose was authorized to be administered at
least 2 months after administration of the one-dose regimen. FDA also authorized a “mix and match” booster approach
for eligible individuals following completion of primary vaccination with a diﬀerent available COVID-19 vaccine. For
additional information on vaccine distribution, see GAO, COVID-19: HHS Agencies’ Planned Reviews of Vaccine Distribution
and Communication Eﬀorts Should Include Stakeholder Perspectives, GAO-22-104457 (Washington, D.C.: Nov. 4, 2021).
30On December 22 and 23, 2021, FDA authorized two antiviral drugs for use in individuals aged 18 and older that meet
certain health criteria: molnupiravir, developed by Merck and Ridgeback Biotherapeutics, and Paxlovid, developed by
Pﬁzer, which can reduce the risk of hospitalization and death in high-risk adults with COVID-19.

Page 11 GAO-22-105291
Table 1: Reported COVID-19 Vaccinations by Age Group in the U.S., as of Jan. 3, 2022
Percentage of fully vaccinated
Percentage of population population

a b
Fully vaccinated Booster dose

5 years of age and older 66.1 Not applicable

12 years of age and older 71.2 Not available
c

18 years of age and older 72.9 37.2

65 years of age and older 87.7 58.8

Total 62.1 34.3
c

Source: Centers for Disease Control and Prevention (CDC). | GAO-22-105291

Note: See CDC, “COVID Data Tracker: COVID-19 Vaccinations in the United States,” accessed January 10, 2022, https://
covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-total-admin-rate-total.
a
As of January 8, 2022, CDC counts individuals as being fully vaccinated if they received two doses on diﬀerent days (regardless
of time interval) of the two-dose vaccines or received one dose of the single-dose vaccine. FDA authorized Pﬁzer’s two-dose
COVID-19 vaccine for emergency use for individuals aged 16 and older on December 11, 2020. FDA amended the emergency
use authorization to authorize use for individuals aged 12 to 15 on May 10, 2021, and to authorize a lower dose for individuals
aged 5 to 11 on October 29, 2021.
b
The count of people who received a booster dose includes anyone who is fully vaccinated and has received a third dose of the
two-dose COVID-19 vaccine or a second dose of the one-dose vaccine since August 13, 2021.
c
On December 9, 2021 and January 3, 2022, FDA amended the Pﬁzer emergency use authorization to allow booster doses for
individuals 16 and 17 years of age, and for individuals aged 12 to 15, respectively. CDC recommended Pﬁzer booster doses for
those aged 12 to 15 on January 5, 2022; data on the percentage of the population under 18 years of age who received a booster
dose is therefore not available as this population was not eligible as of January 3, 2022.

The federal government has also issued requirements for vaccinating certain populations
against COVID-19. For example, on September 9, 2021, the White House issued executive orders
requiring COVID-19 vaccination for all federal government executive branch employees and
federal contractors.31 On November 5, 2021, the Department of Labor’s Occupational Safety and
Health Administration published an emergency temporary standard that requires employers with
100 or more employees to develop, implement, and enforce a mandatory COVID-19 vaccination
policy, with an exception for employers that instead create a system requiring covered employees
who are not fully vaccinated to provide proof of regular testing for COVID-19 and, in certain

31Requiring Coronavirus Disease 2019 Vaccination for Federal Employees, Exec. Order No. 14043, 86 Fed. Reg. 50,989
(Sept. 14, 2021). Federal guidance implementing the order required federal executive branch employees to be fully
vaccinated against COVID-19 by November 22, 2021, with some exceptions. The executive order applicable to federal
contractors calls for covered contracts to include a clause that requires compliance with all guidance for contractor or
subcontractor workplace locations published by the Safer Federal Workforce Task Force for which the Director of the
Oﬃce of Management and Budget has determined that adherence “will promote economy and eﬃciency in Federal
contracting.” Ensuring Adequate COVID Safety Protocols for Federal Contractors, Exec. Order No. 14,042, 86 Fed. Reg.
50,985 (Sept. 14, 2021). A federal district court issued a nationwide injunction to prohibit enforcement of “the vaccine
mandate for federal contractors and subcontractors in all covered contracts.” Georgia v. Biden, No. 1:21-cv-163, 2021 WL
5779939, at *12 (S.D. Ga. Dec. 7, 2021).

Page 12 GAO-22-105291
circumstances, wear a face covering.32 Since the emergency temporary standard was issued, it has
faced a number of legal challenges, including, most recently, a stay issued by the U.S. Supreme
Court.33 State and local governments and individual businesses have independently implemented
employee vaccine requirements. For example, certain school districts and airlines have required
employee vaccination against COVID-19 as a condition of continued employment.

Although the percentage of the population vaccinated against COVID-19 has steadily increased,
COVID-19 vaccination rates across the U.S. have varied. See ﬁgure 5 for the percentage of the
population that is fully vaccinated by jurisdiction, according to CDC data.

32COVID-19 Vaccination and Testing; Emergency Temporary Standard, 86 Fed. Reg. 61,402 (Nov. 5, 2021). The Secretary
of Labor shall issue an “emergency temporary standard” without going through the normal rulemaking process if the
Secretary determines that “employees are exposed to grave danger from exposure to substances or agents determined
to be toxic or physically harmful or from new hazards,” and that such a standard “is necessary to protect employees
from such danger.” 29 U.S.C. § 655(c)(1).
33On January 13, 2022, agreeing that challenges to the emergency temporary standard were likely to prevail, the U.S.
Supreme Court stayed the emergency temporary standard until ﬁnal disposition is reached on the petitions for review of
th
the emergency temporary standard that were consolidated in the 6 Circuit Court of Appeals. Nat'l Fed'n of Indep. Bus. v.
Dep't of Lab., Occupational Safety & Health Admin., No. 21A244, 2022 WL 120952, at *1, *5 (U.S. Jan. 13, 2022).

Page 13 GAO-22-105291
Figure 5: Percent of People Fully Vaccinated by Jurisdiction, as Reported to the CDC, as of Jan. 3, 2022

Note: Data are for the number of fully vaccinated residents of a jurisdiction as a percent of the total population of the
jurisdiction. CDC determines the number of people who are fully vaccinated based on vaccine dose information (e.g., dose
number, dose manufacturer) that state, territorial, tribal, and local public health agencies and federal entities report to CDC.
People are “fully vaccinated” if they received two doses on diﬀerent days (regardless of time interval) of the two-dose vaccine
or received one dose of a single-dose vaccine, according to CDC as of January 8, 2022. When the vaccine manufacturer is not
reported, the recipient is considered fully vaccinated with two doses. See CDC, “COVID Data Tracker: COVID-19 Vaccinations in
the United States,” accessed January 10, 2022, https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-people-fully-percent-
total.

HHS is the federal agency responsible for leading and coordinating all matters related to
federal preparedness for, and response to, medical and public health emergencies. HHS and its
component agencies, such as CDC, have coordinated with federal, state, local, tribal, and territorial
governments, as well as public and private partners, to deliver services to the American people to

Page 14 GAO-22-105291
aid in response and recovery. These COVID-19-related services include developing diagnostic tests;
collecting and reporting of testing and other COVID-19 indicator data; developing, manufacturing,
and distributing vaccines and therapeutics to prevent and treat COVID-19; and overseeing the
deployment of the Strategic National Stockpile, among others.

However, HHS’s overall response to the COVID-19 pandemic has underscored longstanding
concerns we have raised about its ability to execute its role leading federal public health and
medical preparedness for, and response to, a range of public health emergencies, including
extreme weather events, infectious disease outbreaks, pandemics, and intentional acts.34
Throughout the COVID-19 pandemic, the Federal Emergency Management Agency—within the
Department of Homeland Security—has provided signiﬁcant support to HHS, including addressing
medical supply shortages and assisting in vaccine distribution eﬀorts.35

In addition to its devastating eﬀects on public health, the pandemic presents lingering economic
challenges. For example, indicators of inﬂation have generally increased in recent months,
suggesting that inﬂation could be somewhat higher, and for somewhat longer, than previously
expected. However, certain areas of the economy saw some improvement in recent months
based on data available in January 2022. For example, the labor market has shown signs of
improvement in recent months. Weekly initial claims for regular unemployment insurance beneﬁts
were generally similar to prepandemic levels in November and December 2021. Moreover, in
December 2021 the employment-to-population ratio, which measures the share of the population
employed, was 59.5 percent—an increase from the previous month. However, this ratio was 1.7
percentage points lower than in the prepandemic period, indicating that labor market conditions
remain worse than in the prepandemic period (see ﬁg. 6).36 See the Economic Indicators enclosure
in appendix I for more information.

34In March 2021, we identiﬁed HHS’s leadership and coordination of public health emergencies as an emerging issue
meriting close attention. High-Risk Series: Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas,
GAO-21-119SP (Washington, D.C.: Mar. 2, 2021).
35While HHS is the lead agency for the public health and medical response, the Federal Emergency Management Agency
leads the overall federal response during emergencies and disasters. The Federal Emergency Management Agency
began assisting with vaccine distribution eﬀorts in February 2021, in line with the White House’s COVID-19 response
strategy.
36The 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 misclassiﬁcation errors with respect to consistently
identifying workers as employed and absent from work or unemployed on temporary layoﬀ.

Page 15 GAO-22-105291
Figure 6: Employment-to-Population Ratio, January 2019–December 2021

Although the eﬀects on labor have been present since the start of the pandemic, the U.S. has
faced more recent challenges to the economy, such as disruptions in global supply chains as
demand for goods has increased rapidly during the economic recovery, which has contributed
to higher inﬂation. The extent to which higher inﬂation will persist for a longer period of time will
depend on many factors, which remain uncertain, such as how quickly capacity increases help
alleviate global supply chain issues or whether changes in the severity of the pandemic inﬂuence
consumer demand across the economy.

The federal government’s response to these evolving economic challenges continue. In addition to
the supply chain plans released by the White House and HHS, the administration announced on
October 13, 2021, that business, port, and union leaders committed to moving towards 24 hours
a day, 7 days a week operations at the California Ports of Los Angeles and Long Beach—the points
of entry for 40 percent of containers with goods coming into the U.S.—to help reduce existing
bottlenecks.37 More recently, the Infrastructure Investment and Jobs Act—enacted November
2021—includes funding to improve infrastructure at coastal ports, inland ports and waterways,
and land ports of entry.38

Federal COVID-19 Funding and Spending
As of November 30, 2021, about $4.6 trillion in relief funds had been provided to fund response
and recovery eﬀorts for—as well as to mitigate the public health, economic, and homeland

37The Port of Long Beach expanded operations in mid-September 2021. Containers at these ports contain such
consumer goods as toys, appliances, bicycles, and furniture. Biden Administration Eﬀorts to Address Bottlenecks at Ports
of Los Angeles and Long Beach, Moving Goods from Ship to Shelf, Fact Sheet (Oct. 13, 2021), https://www.whitehouse.gov/
brieﬁng-room/statements-releases/2021/10/13/fact-sheet-biden-administration-eﬀorts-to-address-bottlenecks-at-ports-
of-los-angeles-and-long-beach-moving-goods-from-ship-to-shelf/.
38Pub. L. No. 117-58, 135 Stat. 429 (2021).

Page 16 GAO-22-105291
security eﬀects of—the COVID-19 pandemic from the six COVID-19 relief laws.39 As of November
30, 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 $4.0 trillion and expended
$3.5 trillion of those funds, as reported by federal agencies to the Department of the Treasury’s
Governmentwide Treasury Account Symbol Adjusted Trial Balance System.40 Obligations and
expenditures relative to the amounts provided through COVID-19 relief laws have varied over
time, as new relief laws have provided additional relief funds and as the federal government has
obligated and expended those funds (see ﬁg. 7).

39In our October 2021 report, we reported that, as of August 31, 2021, $4.8 trillion in COVID-19 relief funds were
provided by the six relief laws based on appropriation warrant information provided by Treasury. The total amount we
are reporting as of November 30, 2021 decreased from the amount we reported as of August 31, 2021 mostly due to
the return of unused indeﬁnite appropriations to the Treasury at the end of ﬁscal year 2021 by the Internal Revenue
Service and the Department of Labor. To account for this and other actions aﬀecting funding amounts for each activity,
we used total budgetary resources reported to Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial
Balance System for this report. Total budgetary resources, as opposed to the previously reported appropriation warrant
information provided by Treasury, reﬂect appropriations, as well as transfers, adjustments, recoveries, rescissions, and
returns of unused indeﬁnite appropriations at the end of ﬁscal year 2021.
40An 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 another party that are 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 funding provided by the COVID-19 relief laws. Federal agencies use the Governmentwide Treasury Account Symbol
Adjusted Trial Balance System to report proprietary ﬁnancial reporting and budgetary execution information to Treasury.

Page 17 GAO-22-105291
Figure 7: Percentage of COVID-19 Relief Funding Obligated and Expended, July 31, 2020–Nov. 30, 2021

Notes: Funding and spending amounts shown are based on trial balance information reported to the Department of the
Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial Balance System. The percentages shown represent the
portions of funds available as of each date shown that had been obligated and expended. Data as of October 31, 2021 was
not available because agencies are not required to report October trial balance information. Funding has generally increased
over time and could increase in the future for programs with indeﬁnite appropriations (i.e., appropriations that, at the time of
enactment, are for an unspeciﬁed amount). In our prior reports, we reported appropriations based on appropriation warrant
information provided by Treasury. The total amount we are reporting as of November 30, 2021 decreased from the amount we
reported as of August 31, 2021 mostly due to the return of unused indeﬁnite appropriations to the Treasury at the end of ﬁscal
year 2021 by the Internal Revenue Service and the Department of Labor. To account for this and other actions aﬀecting funding
amounts for each activity, we used total budgetary resources reported to Treasury’s Governmentwide Treasury Account Symbol
Adjusted Trial Balance System for this report. Total budgetary resources, as opposed to the previously reported appropriation
warrant information provided by Treasury, reﬂect appropriations, as well as transfers, adjustments, recoveries, rescissions, and
returns of unused indeﬁnite appropriations at the end of ﬁscal year 2021.
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 another party that are 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
funding provided by the COVID-19 relief laws. Under Oﬃce of Management and Budget guidance, federal agencies were not
directed to report COVID-19 related obligations and expenditures until July 2020.

The nine major spending areas shown in table 2 represent $3.7 trillion, or 82 percent, of the total
amounts provided. For these nine spending areas, agencies reported obligations totaling $3.4
trillion and expenditures totaling $3.1 trillion as of November 30, 2021. Table 2 provides additional
details on budgetary resources, obligations, and expenditures of government-wide COVID-19 relief
funds, including the nine major spending areas as of November 30, 2021.

Page 18 GAO-22-105291
Table 2: COVID-19 Relief Funding and Spending as of Nov. 30, 2021
Total budgetary
resources Total obligations Total expenditures
Major spending area ($ in billions) ($ in billions) ($ in billions)

Economic Impact Payments 871.5 848.5 848.5
(Department of the Treasury)

Business Loan Programs 838.0 828.3 827.6
a
(Small Business Administration)

Unemployment Insurance 724.1 677.0 670.9
(Department of Labor)

Coronavirus State and Local Fiscal Recovery 350.0 245.2 245.2
Funds
(Department of the Treasury)

Public Health and Social Services Emergency 345.7 273.0 194.5
Fund
(Department of Health and Human Services)

Education Stabilization Fund 278.1 272.4 73.4
(Department of Education)

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

Disaster Relief Fund 97.0 72.1 19.8
b
(Department of Homeland Security)

Supplemental Nutrition Assistance Programs 91.8 75.8 74.4
(Department of Agriculture)

Other areas
c 825.5 584.5 437.3

Total
d 4,571.7 4,026.8 3,541.5

Source: GAO analysis of data from the Department of the Treasury and applicable agencies. | GAO-22-105291

Note: Total budgetary resources, obligations, and expenditure data shown for the major spending areas are based on
data reported by applicable agencies to Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial Balance
System. Each spending area may include multiple programs. Total budgetary resources reﬂect the amount of funding made
available for the COVID-19 response 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 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. In our October 2021 report, we reported that, as
of August 31, 2021, $4.8 trillion in COVID-19 relief funds were provided by the six relief laws based on appropriation warrant
information provided by Treasury. The total amount we are reporting as of November 30, 2021 decreased from the amount we
reported as of August 31, 2021 mostly due to the return of unused indeﬁnite appropriations to the Treasury at the end of ﬁscal
year 2021 by the Internal Revenue Service and the Department of Labor. To account for this and other actions aﬀecting funding
amounts for each activity, we used total budgetary resources reported to Treasury’s Governmentwide Treasury Account Symbol
Adjusted Trial Balance System for this report. Total budgetary resources, as opposed to the previously reported appropriation
warrant information provided by Treasury, reﬂect appropriations, as well as transfers, adjustments, recoveries, rescissions, and
returns of unused indeﬁnite appropriations at the end of ﬁscal year 2021.

Page 19 GAO-22-105291
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 another party that are 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.
a
The Small Business Administration’s Business Loan Program account includes activity for the Paycheck Protection Program
loan guarantees and certain other loan subsidies. These expenditures relate mostly to the loan subsidy costs (i.e., the loan’s
estimated long-term costs to the U.S. government).
b
Funding provided to the Disaster Relief Fund is generally not speciﬁc to individual disasters. Therefore, Treasury’s
methodology for determining COVID-19-related obligations and expenditures does not capture obligations and expenditures
for the COVID-19 response based on funding other than what was provided in the COVID-19 relief laws. Further, Treasury’s
methodology includes all obligations and expenditures based on funding in the COVID-19 relief laws, including those for other
disasters. In its Disaster Relief Fund Monthly Report dated December 7, 2021, the Department of Homeland Security reported
COVID-19-related obligations totaling $84.0 billion and expenditures totaling $65.9 billion as of November 30, 2021.
c
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. This increased
spending is not accounted for in the funding provided by the COVID-19 relief laws and therefore not included in this table.
d
Because of rounding, amounts shown in columns may not sum to the totals.

The COVID-19 relief laws provided more than $1 trillion to federal agencies to provide assistance
related to the COVID-19 pandemic to states, the District of Columbia, localities, U.S. territories, and
tribes through existing and newly created programs and funds.41 Table 3 lists programs and funds
that each received $10 billion or more—exclusively or primarily for states, the District of Columbia,
localities, U.S. territories, and tribes—in at least one of the six laws. It also provides obligations and
expenditures for these programs and funds as of November 30, 2021.

41This total is based on (1) an analysis of the appropriated amounts in ARPA, 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, the District of Columbia., localities, U.S. territories, and
tribes; and (2) the Congressional Budget Oﬃce’s estimated outlays for Medicaid resulting from authorized increases in
payments to states and U.S. territories under those laws.

Page 20 GAO-22-105291
Table 3: COVID-19 Relief Funding for Federal Programs and Funds Receiving $10 Billion or More in Aid for States,
the District of Columbia, Localities, U.S. Territories, and Tribes, as of Nov. 30, 2021
Appropriations Obligations Expenditures
Program fund/description ($ in billions) ($ in billions) ($ in billions)

Coronavirus State and Local Fiscal Recovery 350 245.2 245.2
Funds
Administered by the Department of the 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 190.3 186 26
Relief Fund
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 150 150 149.9
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
a
34
b
22
b
Administered by the Federal Emergency
Management Agency, this fund provides federal
disaster recovery assistance for state, local, tribal,
and territorial governments when a major disaster
occurs.

Medicaid 76.9
c
60.4
d
60.4
d
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 40 27.3
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.

Page 21 GAO-22-105291
Appropriations Obligations Expenditures
Program fund/description ($ in billions) ($ in billions) ($ in billions)

Child Care and Development Fund 52.5 52.4 10.3
Administered by the Department of Health and
Human Services (HHS), this program provides
funds to states, D.C., territories, and tribes to
subsidize the cost of child care for low-income
families. COVID-19 relief funds have supported
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
e
pandemic.

Emergency Rental Assistance 46.6 37.7 37.7
f
Administered by Treasury, these programs provide
grants to states, D.C., U.S. territories, localities, and
tribes to provide assistance to eligible households
for rent and utility payments.

Public Health and Social Services Emergency 33.4 32.8 9.3
Fund 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 17.3
h
9
h
Administered by the Federal Aviation
Administration, these grants provide funds for
eligible airports to prevent, prepare for, and
g
respond to the eﬀects of the COVID-19 pandemic.

Highway infrastructure programs 10 4.5
h
2.1
h
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 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
i
pandemic.

State Small Business Credit Initiative 10 0 0

Page 22 GAO-22-105291
Appropriations Obligations Expenditures
Program fund/description ($ in billions) ($ in billions) ($ in billions)
Administered by Treasury, this program provides
funds to states, D.C., U.S. territories, tribal
governments, and eligible localities to fund small
j
business credit support and investment programs.

Source: GAO analysis of federal laws, data from the Congressional Budget Oﬃce, and obligations and expenditures data from the Department of the Treasury and applicable
agencies. I GAO-22-105291

Notes: The COVID-19 relief laws providing the appropriations 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, Pub. L. No. 116-123, 134
Stat. 146, did not provide any speciﬁed amounts for these programs or funds for states, D.C., localities, territories, or tribes. 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.
We did not independently verify obligations and expenditures amounts.
a
Funding provided to the Disaster Relief Fund is generally not speciﬁc to individual disasters and may be used for various
disaster assistance programs, including the Public Assistance program, which provides assistance to state, local, territorial, and
tribal governments.
b
The obligations and expenditures listed in the table are for the Public Assistance program for the COVID-19 response.
c
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
funding 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 the COVID-19
pandemic.
d
Medicaid obligations and expenditures are as of September 30, 2021. COVID-19 related obligation and expenditure amounts
for Medicaid only reﬂect provisions in the Families First Coronavirus Response Act. Obligation and expenditure amounts for
COVID-19 related Medicaid provisions in ARPA are not currently available from the Centers for Medicare & Medicaid Services.
e
The Child Care and Development Fund is made up of two funding streams: mandatory and matching funding authorized
under section 418 of the Social Security Act, and discretionary funding authorized under the Child Care and Development Block
Grant Act of 1990, as amended. See 42 U.S.C. §§ 618 and 9858m.
f
Expenditures represent funding disbursed to grantees by Treasury for distribution to renters, landlords, and utility providers,
as well as associated administrative costs and certain housing stability services.
g
Funds are available to eligible sponsors of airports. Nearly all of these airports are under city, state, county, or public-authority
ownership.
h
Obligations and expenditures for these funds are as of November 29, 2021.
i
Treasury issued implementing guidance in September 2021 that provides that the application deadline for requesting
allocations of the Coronavirus Capital Projects Fund from Treasury was (1) December 27, 2021, for states, D.C., and U.S.
territories; and is (2) June 1, 2022, for tribal governments.
j
States, D.C., territories, and tribal governments were required to initiate applications for the State Small Business Credit
Initiative program with Treasury by December 11, 2021. Eligible jurisdictions must submit completed applications by February
11, 2022.

Page 23 GAO-22-105291
Executive Summary

Overview
As we enter a new year, the COVID-19 pandemic continues to challenge the federal government’s
ability to respond to and recover from the ongoing public health and economic problems facing
the nation. This report provides key updates on the federal government’s pandemic response. We
are making ﬁve new recommendations aimed at improving the integrity and eﬀectiveness of the
federal response. In addition, in this report, we are designating HHS’s leadership and coordination
of a range of public health emergencies as high risk, in order for it to receive sustained attention
from the executive branch and Congress.42

In our prior CARES Act reports and other targeted COVID-19-related reports, we have made a total
of 246 recommendations to federal agencies, which have addressed or partially addressed 94
(38 percent).43 As of December 31, 2021, agencies had addressed 40 of these recommendations,
resulting in wide-ranging improvements such as the collection of data to assess the long-term
outcomes of persons with COVID-19, by race and ethnicity, and improved communication with
taxpayers. Agencies have also partially addressed an additional 54 recommendations. Fully
addressing our previous recommendations as well as the new recommendations we are making
in this report will enhance the quality, value, and accountability of the federal government’s
investments in the response to and recovery from the COVID-19 pandemic.

Emergency Rental Assistance
Treasury was appropriated a total of $46.55 billion for Emergency Rental Assistance (ERA)
programs to provide assistance, through grants to speciﬁed grantees, to eligible renter households
that are unable to pay rent, utilities, or other expenses due, directly or indirectly, to the COVID-19
pandemic.44 As of November 30, 2021, Treasury had disbursed $37.68 billion of these ERA funds
to grantees, such as states, local governments, and tribal governments, who had expended about
$17 billion in payments to landlords, renter households, and utility providers, including related
administrative costs.45

42Since the early 1990s, our high-risk program has focused attention on government operations with greater
vulnerabilities to fraud, waste, abuse, and mismanagement, or that are in need of transformation to address economy,
eﬃciency, or eﬀectiveness challenges. Every 2 years, we report on our High-Risk List. We issued our most recent high-
risk report in March 2021, in which we listed HHS’s leadership and coordination of public health emergencies as an
emerging issue but did not designate it as a high-risk area at that time because we had ongoing work that had not yet
been completed.
43This number includes recommendations from our June 2020, September 2020, November 2020, January 2021, March
2021, July 2021, and October 2021 CARES Act reports as well as other targeted COVID-19-related reports in areas
such as Department of State’s repatriation of U.S. citizens during the pandemic and federal vaccine distribution and
communication eﬀorts. For a complete list of our COVID-related products, see https://www.gao.gov/coronavirus.
44These appropriations to Treasury consisted of about $25 billion in December 2020, provided under the Consolidated
Appropriations Act, 2021, and about $21.55 billion in additional funding in March 2021, provided under ARPA. Under the
ﬁrst appropriation, the other housing-related expenses, as deﬁned by the Secretary of the Treasury, must have been
incurred due, directly or indirectly, to the COVID-19 pandemic.
45The additional ERA funding from ARPA did not include additional funds for Indian tribes or the Department of
Hawaiian Home Lands. Treasury guidance provides that grantees, in disbursing assistance, may make payments directly

Page 24 GAO-22-105291
Treasury has not yet designed processes to identify and recover ERA overpayments made by
grantees, such as post-payment reviews or recovery audits. According to oﬃcials, the department
is designing processes to gather data about recipients and overcome challenges in data access
and data gathering and plans to implement a recovery audit process. However, Treasury has
not yet designed a post-payment review process to validate ERA eligibility claims and payments
made by grantees. Post-payment reviews can verify, for example, that households were eligible to
receive ERA funds and that grantees made ERA payments in the correct amount. In addition, under
the Payment Integrity Information Act of 2019, programs and activities that expend $1 million
or more in a ﬁscal year are required to perform recovery audits—control processes designed
to identify and recapture overpayments—if conducting such audits is cost-eﬀective. Without a
process for conducting eﬀective post-payment reviews or recovery audits for the ERA programs,
Treasury’s ability to consistently identify and recover overpayments made by grantees—including
those resulting from potential fraud—may be delayed or impossible.

We are recommending that the Secretary of the Treasury design and implement processes, such
as post-payment reviews or recovery audits, to help ensure timely identiﬁcation and recovery
of overpayments made by grantees to households, landlords, or utility providers in the ERA
programs. Treasury agreed with this recommendation and stated that it is working to establish
post-payment reviews and recovery audit activities, among other actions.

In addition, the Single Audit Act establishes requirements for audits of states, local governments,
and other non-federal entities that receive funding from federal awards (e.g., grants) when their
expenditure of such assistance meets a certain dollar threshold.46 Single audits help federal
agencies such as Treasury identify deﬁciencies in grantees’ compliance with applicable provisions
of laws, regulations, contracts, or grant agreements and in grantees’ ﬁnancial management and
internal controls. Correcting such deﬁciencies can help ensure the appropriate use of federal
funds and reduce the likelihood of federal improper payments.

The Oﬃce of Management and Budget (OMB) develops government-wide guidance on performing
audits to comply with the act. OMB’s guidance includes issuing an annual Compliance Supplement
that identiﬁes the compliance requirements that could have a direct and material eﬀect on
major programs. Auditors who conduct single audits follow guidance in the annual Compliance
Supplement and agency guidance speciﬁc to their programs. In its 2021 Compliance Supplement,
OMB listed the ERA programs as “higher risk” programs; therefore, auditors are likely to consider
them major programs that must be audited as part of the single audit process. However, the
2021 Compliance Supplement did not include guidance for auditing grantee compliance with
ERA. Without this guidance, auditors may not consistently and eﬀectively identify deﬁciencies in
grantees’ compliance with the requirements of the ERA programs, limiting Treasury’s ability to
identify and mitigate risks, including risks to payment integrity.

to utility providers. Grantees are required to make reasonable eﬀorts to obtain the cooperation of landlords and utility
providers to accept certain ERA payments before they can be made directly to renter households. For other ERA funds,
grantees can make payments directly to renter households.
46The 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. Non-federal entities (states, the District of Columbia, U.S. territories, Indian tribes, local governments,
or nonproﬁt organizations) that expend $750,000 or more in federal awards in their ﬁscal year are required to undergo
a single audit, which is an audit of an entity’s ﬁnancial statements and federal awards (or a program-speciﬁc audit, in
limited circumstances), for the ﬁscal year. 31 U.S.C. § 7502; 2 C.F.R. § 200.501.

Page 25 GAO-22-105291
We are recommending that the Director of OMB, in consultation with the Secretary of the
Treasury, issue guidance now or in the near future on the ERA programs in OMB’s Compliance
Supplement for single audits to help ensure that auditors consistently and timely identify
deﬁciencies in grantees’ compliance with programs’ requirements. OMB neither agreed nor
disagreed with this recommendation.

See the Emergency Rental Assistance enclosure in appendix I for more information.

Nutrition Assistance
The Food and Nutrition Service (FNS), within the Department of Agriculture, administers nutrition
assistance programs, which help individuals and households maintain food security in times
of heightened need. FNS does not have a comprehensive strategy for how its programs should
respond to emergencies, which would be beneﬁcial to its response to the current pandemic and
for future emergencies. As part of this, FNS’s pandemic plans are outdated, and its eﬀorts to
identify and incorporate lessons learned from the COVID-19 pandemic into its nutrition assistance
programs are incomplete. Developing a comprehensive response strategy could better position
FNS to help individuals and households maintain food security both in the current pandemic and
during future emergencies, as well as help ensure FNS does not miss opportunities to coordinate
with vendors across the country.

Further, FNS has not provided suﬃcient assistance to state and local agencies to ensure they
collect reliable and comprehensive eligibility data for the Pandemic Electronic Beneﬁts Transfer
(Pandemic EBT) program, which provides beneﬁts for purchasing food to households with children
who would have received free or reduced-price school meals—if not for COVID-19-related school
closures—as well as children in childcare. State agencies reported various challenges to obtaining
these data, according to FNS oﬃcials. For example, our review found that state educational
agencies’ capabilities in compiling students’ eligibility data for the Pandemic EBT plans varied, with
some states relying on antiquated systems requiring manual tracking of thousands of participating
students. Reliable and comprehensive data can help state Supplemental Nutrition Assistance
Program agencies ensure they have issued Pandemic EBT beneﬁts to all eligible students in the
correct beneﬁt amounts.

We are recommending that the Secretary of Agriculture ensure that the Administrator of FNS
(1) develops a comprehensive strategy for the agency’s nutrition assistance programs to respond
to emergencies that includes lessons learned during the COVID-19 pandemic and a mechanism
to periodically review and update the strategy, and (2) shares timely information with states and
other stakeholders during development of the strategy to help inform their ongoing response to
COVID-19.

We are also recommending that the Secretary of Agriculture ensure that the Administrator of
FNS further assists state and local agencies in their eﬀorts to obtain reliable and comprehensive
eligibility data for the Pandemic EBT program in order to determine eligibility and beneﬁts
amounts accurately.

The Department of Agriculture agreed with both recommendations.

Page 26 GAO-22-105291
See the Nutrition Assistance 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 by reducing certain tax obligations,
which, in some cases, led to cash refunds.47 These tax measures included expanded net operating
loss carrybacks and the acceleration of alternative minimum tax (AMT) credit refunds.48 According
to oﬃcials from the Internal Revenue Service (IRS), the CARES Act changes contributed to the
agency receiving 276 percent more ﬁlings for carryback refunds—which include applications for
tentative refunds for net operating loss carrybacks and AMT credit refunds—in ﬁscal year 2021
than in ﬁscal year 2020.

IRS has been unable to process this backlog consistent with its statutory time frames for
processing applications for tentative refunds, which businesses submit through IRS Forms 1045
and 1139. The Internal Revenue Code and the CARES Act generally require IRS to issue certain
refunds within a 90-day period.49 IRS data show that the agency started to miss the 90-day
statutory requirement for refund applications in September 2020 and missed it throughout 2021.
As of November 2021, the average time for IRS to process all carryback refunds was 165 days.

While IRS took some remedial actions, it did not have eﬀective preventative control activities or
mitigation plans in place to detect or address growing processing times for tentative refunds
submitted on IRS Forms 1139 and 1045, such as an average processing time threshold to trigger
activities to avoid missing refund deadlines. As such, IRS did not take actions to reduce the
carryback backlog until April 2021—7 months after the agency began missing its statutory
requirement.

Large-scale staﬃng changes resulting from pandemic-related IRS facility shutdowns prevented
the timely processing of paper returns, including those used to ﬁle for tentative refunds. Oﬃcials
emphasized that the agency had to deal with many competing priorities as it worked through the
backlog, such as managing the 2021 tax ﬁling season and adapting to new legislation.

47Pub. L. No. 116-136, §§ 2301–2307, 134 Stat. at 347–359 (2020). The other COVID-19 relief laws include
theConsolidated Appropriations Act, 2021, and ARPA. Pub. L. No. 116-260, 134 Stat. 1182 (2020); Pub. L. No. 117-2, 135
Stat. 4 (2021).
48A net operating loss occurs when a taxpayer's allowable deductions exceed its gross income for a tax year. The CARES
Act generally requires, unless waived, carrybacks for 5 years for net operating losses 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 net operating losses to earlier tax years tends to
increase the relative value of the carryback amounts. In general, the 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.
49IRS is generally required 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. 26 U.S.C. § 6411(b), (d)(2); Pub. L. No. 116-136, § 2305(d)(1), 134 Stat. at 357.

Page 27 GAO-22-105291
Until eﬀective preventative control activities and mitigation plans are put in place, IRS remains at
risk of continuing to exceed its 90-day statutory requirement to issue refunds for net operating
loss carrybacks and AMT credit refunds. Failure to meets its processing deadline not only causes
some taxpayers to face delays in receiving their refunds, but also increases the cost to the federal
government in terms of interest paid on such refunds. According to IRS data for ﬁscal year 2021,
these interest payments amounted to approximately $61 million on all carrybacks, of which
applications for tentative refund made up roughly 80 percent of all carryback payments with
interest for the ﬁscal year.50

We are recommending that the Commissioner of Internal Revenue establish mitigation
plans—including indicators, such as a threshold to initiate mitigation activities—to timely
address any future challenges to processing applications for tentative refunds on Forms 1045
and 1139 within the 90-day statutory requirement. IRS neither agreed nor disagreed with our
recommendation, but said that it will take the recommendation into consideration as it continues
to make improvements to taxpayer services.

See the Tax Relief for Businesses enclosure in appendix I for more information.

HHS COVID-19 Funding
HHS received approximately $484 billion in COVID-19 relief appropriations from the six COVID-19
relief laws enacted as of November 30, 2021. These relief funds may be used for a range of
purposes, such as assistance to health care or child care providers, testing, therapeutic or vaccine-
related activities, or procurement of critical supplies. Of the $484 billion appropriated, HHS
reported that it had obligated about $387 billion and expended about $226 billion—about 80
percent and 47 percent, respectively.

We previously recommended that HHS provide projected time frames for its spending of the
remainder of its COVID-19 relief funds in the spend plans HHS submits to Congress. HHS partially
agreed with the recommendation, but stated that the department would not be able to provide
speciﬁc time frames for all relief funds as it needed to remain ﬂexible in responding to incoming
requests. Providing projected time frames would not aﬀect HHS’s ability to be ﬂexible in its spend
plans, as these plans are not binding to the agency and can be revised. As of December 2021,
HHS has not taken steps to implement this recommendation. We will continue to examine HHS’s
oversight of COVID-19 relief funds.

See the HHS COVID-19 Funding enclosure in appendix I for more information.

5026 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 processable date, date the application
is received by the IRS, or date the application is received by the IRS in processable form. IRS considers applications
unprocessable for a number of reasons, including an incorrect taxpayer name or missing documentation.

Page 28 GAO-22-105291
Designation of New High-Risk Area: HHS’s Leadership and
Coordination of Public Health Emergencies
For more than a decade, we have reported on HHS’s execution of its lead role in preparing for, and
responding to, a range of public health emergencies and have found persistent deﬁciencies in its
ability to perform this role. These deﬁciencies have hindered the nation’s response to the current
COVID-19 pandemic and a variety of past threats, including other infectious diseases—such as the
H1N1 inﬂuenza pandemic, Zika, and Ebola—and extreme weather events, such as hurricanes.

In this report, we are adding HHS’s leadership and coordination of a range of public health
emergencies to our High-Risk List to help ensure sustained executive branch and Congressional
attention so that our nation is adequately prepared for future threats.51 Threats from extreme
weather are predicted to increase, according to the U.S. Global Change Research Program. In
2020 alone, HHS responded to wildﬁres, hurricanes, and an earthquake, while also in the throes
of the response to the COVID-19 pandemic, which itself has resulted in catastrophic loss of life
and substantial damage to the national economy. As devastating as the COVID-19 pandemic has
been, more frequent extreme weather events, new viruses, and bad actors who threaten to cause
intentional harm loom, making the deﬁciencies we have identiﬁed particularly concerning. Not
being suﬃciently prepared for a public health emergency can also negatively aﬀect the time and
resources needed to achieve full recovery.

This new high-risk designation is based on our ﬁndings from a body of related work—including
115 recommendations issued since ﬁscal year 2007, when the Oﬃce of the Assistant Secretary
for Preparedness and Response was created within HHS, and includes recommendations
made in our recurring CARES Act reports and standalone COVID-19 reports.52 The Oﬃce of
the Assistant Secretary for Preparedness and Response serves as the principal advisor to the
Secretary of Health and Human Services on all matters related to federal public health and
medical preparedness and response to a range of public health emergencies.

While HHS has taken some actions to address the 115 recommendations we have made in this
area, 72 remain open. Throughout our work over the years, we have identiﬁed broad principles of
an eﬀective national response. Based on these principles, we have found persistent deﬁciencies in
HHS’s preparedness and response eﬀorts in these areas:

1. establishing clear roles and responsibilities for the wide range of key federal, state, local, tribal,
territorial, and nongovernmental partners;

51We designate federal programs and operations as “high risk” due to their vulnerabilities to fraud, waste, abuse,
and mismanagement, or because they need transformation. We consider qualitative factors, such as whether the
risk involves public health or safety. For information on how we determine which federal government programs and
functions should be designated high risk, see GAO, Determining Performance and Accountability Challenges and High Risks,
GAO-01-159SP (Washington, D.C.: November 2000). For more information on programs and operations on our High-Risk
List, see https://www.gao.gov/high-risk-list.
52Of the 115 recommendations we have made to HHS since ﬁscal year 2007, 58 recommendations were made in our
recurring CARES and standalone COVID-19 reports, and the remaining 57 were made in reports that were issued either
prior to the pandemic or did not focus on the pandemic response.

Page 29 GAO-22-105291
2. collecting and analyzing complete and consistent data to inform decision-making—including
any midcourse changes necessary—as well as future preparedness;

3. providing clear and consistent communication to key partners and the public;

4. establishing transparency and accountability to help ensure program integrity and build public
trust; and

5. understanding key partners’ capabilities and limitations.

See Appendix II for more on this new high-risk designation.

Page 30 GAO-22-105291
Conclusions

The federal government’s eﬀorts to respond to and recover from the COVID-19 pandemic
continue. The ongoing cycle of decreases and increases in the number of cases as a result of new
variants and lingering economic eﬀects illustrate the challenges to the nation’s response and
recovery eﬀorts and the work that remains. We are pleased that agencies have addressed 40 and
partially addressed 54 of our 246 recommendations as of December 31, 2021. Fully addressing
our recommendations, including the new recommendations we are making in this report, can
help improve the federal response and recovery eﬀorts. Central to the federal government’s
response is HHS’s leadership and coordination of a range of public health emergencies, which we
are designating as high risk in this report, so that it receives sustained attention from the executive
branch and Congress.

Page 31 GAO-22-105291
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 Orice Williams Brown, Chief Operating
Oﬃcer, at (202) 512-5600; Jessica Farb, Managing Director, Health Care, at (202) 512-7114 or
farbj@gao.gov; or A. Nicole Clowers, Managing Director, Congressional Relations, at (202) 512-4400
or clowersa@gao.gov. Contact points for our Oﬃces of Public Aﬀairs may be found on the last
page of this report.

Gene L. Dodaro
Comptroller General of the United States

Page 32 GAO-22-105291
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
Chair
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives

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

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

Page 33 GAO-22-105291
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
Chairman
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives

Page 34 GAO-22-105291
Appendixes and Enclosures
Appendix I: Enclosures

Economic Indicators
Based on data available in the beginning of January 2022, the national economy has continued to
recover from the COVID-19 pandemic, while areas of the economy we are monitoring saw mixed
performance in recent months. Indicators of inﬂation have generally increased in recent months,
suggesting that inﬂation could be somewhat higher, and for somewhat longer, than previously
expected. Indicators for labor markets, household ﬁnances, and small business credit conditions
generally improved from September through December 2021, while indicator of state and local
government employment weakened (see table).53

53In previous work, we identiﬁed a number of economic indicators to facilitate ongoing and consistent monitoring of
areas of the economy supported by the federal pandemic response, including labor markets, household ﬁnances, and
small business credit and ﬁnancial conditions. 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-22-105291
Indicators for Areas of the Economy Supported by the Federal COVID-19 Pandemic Response, Sept.–Dec. 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
State and local government and leisure and hospitality employment data from November and December 2021 are preliminary.
c
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.
d
Seriously delinquent loans are 3 months or more past due or in foreclosure, based on mortgages insured by the Federal
Housing Administration (FHA). Decrease in serious delinquency rates on FHA loans may indicate improvement in the ﬁnances of
the minority and low- to moderate-income households that disproportionately take out mortgages insured by FHA.
e
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.

Gross domestic product (GDP) grew at a 2.3 percent annual rate in the third quarter of 2021,
slowing from its second quarter growth rate of 6.7 percent. Housing investment, consumer
spending on automobiles, and federal government spending, among other components of GDP,
were notably lower in the third quarter.

Slower growth to some extent reﬂects the waning ﬁscal eﬀects of the federal pandemic response,
which the Congressional Budget Oﬃce projected would contribute to higher GDP growth in 2020

Page 36 GAO-22-105291
and 2021.54 Some subsequent research found that certain federal pandemic response programs
supported, for example, consumer spending and corporate credit markets, and thereby likely
contributed to economic growth.55 Federal eﬀorts to facilitate vaccinations also likely contributed
to faster economic growth in the ﬁrst half of 2021. The strength of the economic recovery will
continue to depend on the success of public health measures against the COVID-19 pandemic.

Key trends in economic indicators. Based on monthly and weekly data from the Department
of Labor, the labor market showed improvement in October, November, and December 2021
but generally remained worse relative to the prepandemic period. Weekly initial unemployment
insurance declined and were similar to prepandemic levels in November and December 2021 (see
the Unemployment Insurance Programs enclosure in app. I). The employment-to-population ratio
in December 2021 was 59.5 percent, which was 0.2 percentage points higher than the previous
month but 1.7 percentage points lower than the prepandemic period (see ﬁgure).

Employment-to-Population Ratio, Jan. 2019–Dec. 2021

Changes in employment across sectors continue to reﬂect the diﬀerential impact of the pandemic
on various sectors of the economy. For example, the leisure and hospitality sector experienced job
growth in October, November, and December 2021, but employment in the leisure and hospitality
sector was still 7.2 percent lower than it was in February 2020. State and local government
employment declined for the fourth consecutive month in December 2021, and employment in
these sectors remained 4.7 percent lower than in the prepandemic period.

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 from March

54See The Eﬀects of Pandemic-Related Legislation on Output, Congressional Budget Oﬃce, September 2020 and An Update
to the Budget and Economic Outlook: 2021 to 2031, Congressional Budget Oﬃce, July 2021.
55See Cox et al., “Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and
Saving Data,” Brookings Papers on Economic Activity, Summer 2020 and Gilchrist et al, “The Fed Takes on Corporate Credit
Risk: An Analysis of the Eﬃcacy of the SMCCF,” National Bureau of Economic Research Working Paper No. 27809, September
2020.

Page 37 GAO-22-105291
through November 2021, to 7.3 percent of loans, but still remained much higher than rates prior
to the pandemic. FHA loans disproportionately serve minority and low- to moderate-income
borrowers, and therefore falling delinquencies may indicate some improvement in the ﬁnances of
those households in recent months, including fewer borrowers relying on mortgage forbearance
provisions of the CARES Act.56

Key trends in inﬂation. Indicators of inﬂation have generally increased in recent months,
suggesting that inﬂation could be somewhat higher, and for somewhat longer, than previously
expected.57 Some level of inﬂation on average can help promote stable economic conditions,
but persistently high levels of inﬂation can cause ﬁnancial challenges that are experienced more
acutely by low-income households.

If demand grows considerably faster than supply for an extended period of time, for example,
then consumer price inﬂation could meaningfully increase. The extent to which higher inﬂation
will persist for a longer period of time will depend on many factors which remain uncertain, for
example, how quickly capacity increases help alleviate global supply chain issues or whether
changes in the severity of the pandemic inﬂuence consumer demand across the economy. The
Federal Reserve System’s Federal Open Market Committee (FOMC) aims for inﬂation of 2 percent
on average over time and aims to achieve rates of inﬂation that are above 2 percent for some time
after periods in which inﬂation is persistently below 2 percent.58

In previous work, we identiﬁed a number of indicators of inﬂation to facilitate ongoing and
consistent monitoring of the inﬂation experience of consumers to help assess the extent to which
higher inﬂation may be transitory or persistent, including indicators of current consumer price
inﬂation, as well as expectations of future inﬂation.59 Based on data available in December 2021
covering price trends from February through November 2021, inﬂation has generally increased
over the past several months (see table).

56In ﬁscal year 2021, 32.8 percent of all FHA purchase and reﬁnance borrowers were minorities, 52.6 percent of
FHA forward mortgage borrowers were of low-to-moderate income, and 84.6 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 2021. The 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 allowed mortgage servicers to initiate new forbearance through
September 30, 2021, and it allowed borrowers who requested an initial forbearance on or before June 30, 2020, to
request up to 6 months of forbearance extensions. Moreover, on July 23, 2021, FHA introduced additional COVID-19
recovery options to help borrowers transitioning out of forbearance to permanent sustainable payments. For example,
FHA will require mortgage servicers to oﬀer a no-cost option to eligible homeowners and enhance servicers’ ability
to provide all eligible borrowers that cannot resume their monthly mortgage with a 25 percent monthly principal and
interest reduction.
57Inﬂation is the increase in the price of goods and services over time, and is typically measured as the percentage
change in those prices over a set period, often 1 year. For example, an inﬂation rate of 2 percent would mean that the
prices of goods and services, on average, increased 2 percent over the last year.
58See the FOMC’s 2020 Statement on Longer-Run Goals and Monetary Policy Strategy.
59Higher levels of inﬂation over short periods—described as transitory—are not unusual and are less cause for concern.
The prices of goods and services regularly shift in response to economic changes, and any impact on household ﬁnances
is more limited because prices increase more rapidly for only a short period of time. In contrast, high levels of inﬂation
that persist for long periods are more cause for concern, and can reduce the pace of economic growth.

Page 38 GAO-22-105291
Indicators of Inﬂation, Feb.–Nov. 2021, and Average Inﬂation Rates, 2000–2019

Note: Underlined, red text indicates a higher rate of inﬂation than the previous month while black text indicates a lower rate
of inﬂation than the previous month but with prices still rising overall. Deﬂation, or falling prices, would be indicated with a
negative sign.
a
PCE is based on the PCE price index, which reﬂects changes in the prices of goods and services purchased by or on behalf of
consumers in the U.S. The Federal Open Market Committee states its longer-run inﬂation goal in terms of PCE inﬂation and
typically aims for inﬂation of 2 percent on average over time, including by aiming to achieve inﬂation rates above 2 percent for
some time after periods in which inﬂation is persistently below 2 percent.
b
CPI is based on data from the Consumer Price Index for all urban consumers (CPI-U), in which year-over-year change is
computed from the not-seasonally-adjusted series, and the month-over-month change is computed from the seasonally
adjusted series.
c
Median CPI is based on the 1-month inﬂation rate of the component whose expenditure weight is in the 50th percentile of
price changes. By omitting outliers (small and large price changes) and focusing on the interior of the distribution of price
changes, the median CPI may provide a better signal of the underlying inﬂation trend than the all-items CPI.
d
The 16 percent trimmed-mean CPI is based on a weighted average of 1-month inﬂation rates of components whose
expenditure weights fall below the 92nd percentile and above the 8th percentile of price changes. By omitting outliers (small
and large price changes) and focusing on the interior of the distribution of price changes, the 16 percent trimmed-mean CPI
may provide a better signal of the underlying inﬂation trend than the all-items CPI.
e
The 10-year expected inﬂation rate comes from a model that decomposes the TIPS to nominal Treasury spread into three
components: inﬂation expectations, the inﬂation risk premium, and a third component that may capture the TIPS liquidity
premium or other factors that inﬂuence the relative demand for TIPS. See S. D'Amico, D. H. Kim, and M. Wei, "Tips from TIPS:

Page 39 GAO-22-105291
The Informational Content of Treasury Inﬂation-Protected Security Prices," Journal of Financial and Quantitative Analysis, vol. 53,
no. 1 (2018): pp. 395–436.
f
Professional forecast of inﬂation is an average forecast of expected CPI inﬂation in 2022–2023 (annualized) from forecasts
collected by Bloomberg. Absent data for January 2021, we have used black text for February 2021 data based on the data for
10-year expected CPI inﬂation from TIPS.

Inﬂation remains higher than averages in recent decades, but indicators of more recent price
pressures (measured relative to the previous month) decreased in November 2021 after several
months of increases (see ﬁgure). The median and trimmed mean CPI measures, as well as
professional forecasts and investor expectations of future inﬂation, are generally below the
broader inﬂation measures, but the recent increase in these measures suggests that prices are
rising across more goods and services in the economy and that inﬂation could remain elevated
for a longer period of time. As we note above, the FOMC aims to achieve rates of inﬂation that
are above 2 percent for some time after periods in which inﬂation has been persistently below 2
percent, as it was leading up to and during the early months of the pandemic.

Percentage Change in Inﬂation Indicators from the Previous Month, Jan. 2019-Nov. 2021

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 a number of
sources. Speciﬁcally, we used 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 December 2021 and January 2022, depending on availability.

To identify indicators for monitoring inﬂation, we reviewed data from federal statistical agencies,
academic and other research literature, information from the Federal Reserve, the Federal Open

Page 40 GAO-22-105291
Market Committee, written responses to our questions provided by the Bureau of Labor Statistics
and the Federal Reserve, data available on the Bloomberg Terminal, and input from internal GAO
experts.

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 (1) how the areas of the economy supported by the federal pandemic response were
performing and (2) trends in the inﬂation experience of consumers.

Agency Comments
We provided the Department of Labor, the Department of the Treasury, the Federal Reserve, and
the Oﬃce of Management and Budget (OMB) with a draft of this enclosure. The Departments of
Labor and Treasury provided technical comments, which we incorporated as appropriate. The
Federal Reserve 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: Michael Hoﬀman, (202) 512-6445, hoﬀmanme@gao.gov

Page 41 GAO-22-105291
HHS COVID-19 Funding
The Department of Health and Human Services was appropriated approximately $484 billion
in COVID-19 relief funds. The department reported that it had obligated about $387 billion and
expended about $226 billion of this amount—about 80 percent and 47 percent, respectively—as of
November 30, 2021.

Entity involved: The Department of Health and Human Services

Background
The Department of Health and Human Services (HHS) received approximately $484 billion in
COVID-19 relief appropriations from six COVID-19 relief laws enacted as of November 30, 2021.
HHS COVID-19 relief funds may be used for a range of purposes, such as assistance to health care
or child care providers, testing, therapeutic, or vaccine-related activities, or procurement of critical
supplies. Many HHS COVID-19 relief funds are available for a multiyear period or are available until
expended.

Overview of Key Issues
As of November 30, 2021, HHS reported that it had obligated about $387 billion (80 percent) and
expended about $226 billion (47 percent) of the approximately $484 billion in COVID-19 relief
funds appropriated (see ﬁgure below).

Page 42 GAO-22-105291
HHS-Reported COVID-19 Relief Appropriations, Obligations, and Expenditures from COVID-19 Relief Laws, as of
Nov. 30, 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 Nov. 30, 2021.

Page 43 GAO-22-105291
HHS-Reported COVID-19 Relief Appropriations, Obligations, and Expenditures, by Relief Law, as of Nov. 30, 2021
Appropriations Obligations Expenditures
Date of ($ in millions) ($ in millions ($ in millions
Legislation enactment (% obligated)) (% expended))

Coronavirus Preparedness March 6, 2020 6,497 5,820 (90) 3,983 (61)
and Response Supplemental
Appropriations Act, 2020
(Pub. L. No. 116-123)

Families First Coronavirus Response March 18, 2020 1,314 1,308 (100)
c 1,265 (96)
Act
(Pub. L. No. 116-127)

CARES Act March 27, 2020 142,833 138,017 (97) 122,592 (86)
a
(Pub. L. No. 116-136)

Paycheck Protection Program and April 24, 2020 100,000 70,847 (71) 54,607 (55)
Health Care Enhancement Act
(Pub. L. No. 116-139)

Consolidated Appropriations Act, December 27, 73,175 63,107 (86) 17,925 (24)
2021 2020
b
(Pub. L. No. 116-260)

American Rescue Plan Act of 2021 March 11, 2021 160,494 108,398 (68) 26,003 (16)
(Pub. L. No. 117-2)

Total 484,313 387,497 (80) 226,374 (47)

Source: Department of Health and Human Services (HHS) data. | GAO-22-105291

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 that is not included in the reported obligations or
expenditures, and that $300 million in appropriations are not available until HHS has taken certain actions.
a
HHS reported that it transferred $289 million from CARES Act appropriations to the Department of Homeland Security; this
amount is not included in HHS’s reported obligations or expenditures.
b
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. 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.
c
The percent obligated was 99.6 percent, which we show as 100 percent due to rounding.

The table below shows allocations, obligations, and expenditures of COVID-19 relief appropriations
made to HHS under the six relief laws by HHS agency or key fund as of Nov. 30, 2021.

Page 44 GAO-22-105291
HHS-Reported Allocations, Obligations, and Expenditures of COVID-19 Relief Funding, by Agency or Key Fund, as
of Nov. 30, 2021
Allocations Obligations Expenditures
Agency or key fund ($ millions) ($ millions) ($ millions)

Administration for Children and Families 65,257.5 65,072.8 14,930.2

Administration for Community Living 3,200.0 2,994.8 1,109.8

Agency for Toxic Substances and Disease Registry 12.5 12.5 10.4

Centers for Disease Control and Prevention 27,225.9 19,357.2 5,499.9

Centers for Medicare & Medicaid Services
a 935.0 180.6 90.2

Enhanced Use of Defense Production Act 10,000.0 881.7 54.1

Food and Drug Administration 718.0 256.3 79.8

Health Resources and Services Administration 11,729.8 10,408.7 3,422.3

Indian Health Service 7,980.0 5,199.4 4,777.9

National Institutes of Health 3,001.3 2,560.2 1,443.4

Oﬃce of Inspector General 17.0 5.2 4.6

Public Health and Social Services Emergency Fund (PHSSEF)
b 346,001.4 272,957.5 194,470.8

Oﬃce of the Assistant Secretary for Health
c 5,269.9 5,017.7 4,201.8

Oﬃce of the Assistant Secretary for Preparedness and Response
c 23,443.0 18,026.9 11,866.1

Biomedical Advanced Research and Development Authority
c 43,509.5 40,455.7 17,135.3

Provider Relief Fund
c, d 178,000.0 144,546.1 135,570.2

Other PHSSEF
c 95,779.0 64,911.1 25,697.4

Substance Abuse and Mental Health Services Administration 8,235.0 7,609.7 480.1

Grand Total 484,313.4 387,496.6 226,373.5

Source: Department of Health and Human Services (HHS) data. | GAO-22-105291

Note: For the purpose of this table, the term allocation includes both direct appropriations and transfers between HHS
agencies. For example, according to HHS, the agency transferred $1,063.5 million to the Administration for Children and
Families’ Unaccompanied Children Program from National Institutes of Health appropriations provided in the Consolidated
Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182, 1913 (2020), citing the Secretary’s authorities under that act.
HHS reported that of its total appropriation for COVID-19 relief, the agency transferred $289 million to the Department of
Homeland Security that is not included in the reported obligations or expenditures, and that $300 million in appropriations are
not available until HHS takes certain actions. 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 45 GAO-22-105291
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. Amounts appropriated to the PHSSEF and transferred to agencies within HHS listed in the
table are included in the allocation amounts for the speciﬁed receiving agencies. For example, the National Institutes of Health
(NIH) received transfers from the PHSSEF and this amount is included in the NIH allocation rather than in the PHSSEF total.
c
The italicized amounts are subtotals of the PHSSEF and are already reﬂected in amounts listed for the PHSSEF.
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.

HHS reported allocations, obligations, and expenditures of appropriations from the six COVID-19
relief laws for a variety of COVID-19 response activity categories (see table). When response
activities had spending related to multiple categories, they were only assigned to one. For
example, certain funds for testing and vaccine distribution were included in the response activity
category for support to states, localities, territories, and tribal organizations rather than in the
testing or vaccine activity categories.

HHS oﬃcials noted that allocations for COVID-19 response activities are determined by
appropriations made by Congress in combination with approved spend plan decisions. The timing
of obligations and expenditures of allocations for response activities can vary due to a variety of
factors, including the timing of the appropriations and the planned uses of funds. For example,
some research programs are planned in phases, which aﬀects the timing of the release of the
funds.

Page 46 GAO-22-105291
HHS-Reported Allocations, Obligations, and Expenditures by Selected COVID-19 Response Activity, as of Nov. 30,
2021
COVID-19
response Allocations Obligations Expenditures
activity Description ($ in millions) ($ in millions) ($ in millions)

Provider Relief Includes reimbursements to eligible health care 178,000.0 144,546.1 135,570.2
Fund providers for health care-related expenses or lost
revenues that are attributable to COVID-19.

Testing Includes procurement and distribution of testing 58,326.2 34,912.2 15,502.0
supplies, community-based testing programs,
testing in high-risk and underserved populations
and in Indian Health Services’ programs, screening
in schools, Centers for Disease Control and
Prevention (CDC) testing-related activities such as
technical assistance, and other activities.

Child Care and Includes funding for states and other governments 52,450.0 52,432.9 10,302.6
Development for child care subsidies for eligible families and
Fund
a quality improvement activities, sub-grants to child
care providers to stabilize the child care market,
and payments for child care assistance.

Vaccines Includes Biomedical Advanced Research and 40,681.7 34,954.7 13,395.4
Development Authority (BARDA) funding for
vaccine development and procurement; National
Institutes of Health (NIH) research activities; and
CDC vaccine distribution, administration, and
technical assistance related activities.

Support to state, Includes funding for states and other governments 40,116.6 39,541.3 11,841.9
local, territorial, to support testing, contact tracing, and
and tribal surveillance; vaccine distribution; and other
organizations’ activities.
preparedness

Drugs and Includes BARDA funding for development and 17,092.8 13,918.8 5,076.8
therapeutics procurement of therapeutics and NIH research
activities.

Strategic Includes funds for acquiring, storing, and 13,919.9 10,583.9 7,845.2
National maintaining ventilators, testing supplies, and
Stockpile personal protective equipment (PPE) and
increasing manufacturing capacity for certain PPE.

Health centers Includes support for COVID-19-related 9,620.0 9,487.9 3,118.5
activities—such as testing—at health centers,
which provide health care services to individuals
regardless of their ability to pay.

Rural provider Includes assistance for rural providers and 8,500.0 6,627.5 6,627.5
payments suppliers, administered using the same
mechanism as the Provider Relief Fund.

Page 47 GAO-22-105291
COVID-19
response Allocations Obligations Expenditures
activity Description ($ in millions) ($ in millions) ($ in millions)

Mental health Includes substance abuse prevention and 8,315.0 7,624.7 480.3
and substance treatment, community-based mental health
use–related services, and other activities.
services

Diagnostics Includes BARDA diagnostic development programs 2,333.0 1,930.2 1,115.6
research and and NIH projects, such as the Rapid Acceleration of
development Diagnostics Initiative.

Head Start Includes grants to local programs for high- 2,000.0 1,999.1 734.3
quality learning experiences and to respond to
other immediate and ongoing consequences of
COVID-19.

Testing for Includes reimbursements to eligible providers 2,000.0 1,998.4 1,973.4
uninsured
b for COVID-19 testing for individuals who are
uninsured.

Global disease Includes support to governments and other 1,550.0 707.4 264.3
detection and organizations to rapidly diagnose cases and to
emergency ensure readiness to implement vaccines and
response therapeutics.

Telehealth Includes eﬀorts to support safety-net health care 284.2 175.0 145.5
providers transitioning to telehealth, telehealth
access—especially for vulnerable maternal
and child health populations—and a telehealth
website.

Other response Includes additional activities such as activities 49,124.0 26,056.5 12,380.0
activities
c conducted by the Administration for Community
Living, certain CDC-wide activities and program
support, and activities conducted by the Food and
Drug Administration.

Total 484,313.4 387,496.6 226,373.5

Source: Department of Health and Human Services (HHS) data, written HHS responses, and GAO analysis of HHS spend plans. | GAO-22-105291

Notes: 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, HHS transfers of funds, and approved spend plan decisions made by HHS in coordination
with the Oﬃce of Management and Budget. According to HHS, 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,

Page 48 GAO-22-105291
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. HHS reported that, of its total appropriation for COVID-19
relief, the agency transferred $289 million to the Department of Homeland Security that is not included in the reported
obligations or expenditures.
a
The Child Care and Development Fund is made up of two funding streams: mandatory and matching funding authorized
under section 418 of the Social Security Act, and discretionary funding authorized under the Child Care and Development Block
Grant Act of 1990, as amended. See 42 U.S.C. §§ 618 and 9858m.
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.
c
According to HHS oﬃcials, the agency transferred $1,063.5 million from NIH appropriations for research and clinical trials
related to long-term studies of COVID-19 and $850 million from the Public Health and Social Services Emergency Fund, Strategic
National Stockpile, to the Administration for Children and Families’ Unaccompanied Children Program citing authority provided
in section 304 of the Consolidated Appropriations Act, 2021 for both transfers. See Pub. L. No. 116-260, div. M, tit. III, § 304, 134
Stat. at 1913, 1916, 1923 (2020).

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 Nov.
30, 2021. We also reviewed appropriation warrant information provided by the Department of the
Treasury as of Nov. 30, 2021. To assess the reliability of the data reported by HHS, we reviewed
HHS documentation; Department of the Treasury appropriation warrant information; and other
available information on HHS’s use of COVID-19 relief funds. We did not independently validate
the data provided by HHS. We determined that the HHS-reported data were suﬃciently reliable for
the purposes of our reporting objective. We also reviewed the six COVID-19 relief laws to assist the
response to COVID-19.

Agency Comments
We provided HHS and the Oﬃce of Management and Budget with a draft of this enclosure. Neither
agency provided comments on this enclosure.

GAO’s Ongoing Work
We will continue to examine HHS’s use of COVID-19 relief appropriations contained in COVID-19
relief laws and HHS’s oversight of these funds.

GAO’s Prior Recommendation
The table below presents our recommendation related to HHS COVID-19 funding from a prior
quarterly CARES Act report.

Page 49 GAO-22-105291
Prior GAO Recommendation Related to Department of Health and Human Services (HHS) COVID-19 Funding
Recommendation Status

To communicate information about and facilitate oversight of the Open—not addressed. HHS partially concurred
agency’s use of COVID-19 relief funds, the Secretary of Health and with the recommendation and as of December,
Human Services should provide projected time frames for the 2021, stated that the department would aim to
planned spending of COVID-19 relief funds in the Department of incorporate some time frames on planned spending
Health and Human Services’ spend plans submitted to Congress. where that information may be available such as
(July 2021 report). time frames for select grants to states. However,
HHS 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. Providing
projected time frames would not aﬀect HHS’s ability
to be ﬂexible in its spend plans, as spend plans are
not binding to the agency and can be revised.

Source: GAO. I GAO-22-105291

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

Page 50 GAO-22-105291
Enhanced Medicaid Funding
Selected states said that temporary increases in federal funds have helped support their
Medicaid program operations during the COVID-19 public health emergency; however, (1) the
6.2 percentage point temporary funding increase will end while states work to resume normal
enrollment operations, and (2) potential challenges exist for obtaining additional funds for home
and community-based services.

Entities involved: Centers for Medicare & Medicaid Services, within the Department of Health and
Human Services

Background
Medicaid is the nation’s largest source of funding for health care services for low-income and
medically needy individuals, covering an estimated 77 million people at an estimated cost of
$673 billion in total federal and state spending in ﬁscal year 2020.60 Medicaid oﬀers a wide range
of beneﬁts, including coverage for inpatient and outpatient hospital care, physician services,
and laboratory testing. Medicaid also oﬀers coverage for home and community-based services
(HCBS), which provide individuals who are aged or have disabilities with various services, including
assistance with daily activities, so that they may live in their homes and communities.

States administer their Medicaid programs within broad federal guidelines and according to state
plans approved by the Centers for Medicare & Medicaid Services (CMS), the agency within the
Department of Health and Human Services (HHS) that oversees Medicaid at the federal level.61
Among other responsibilities, states must determine eligibility and enroll beneﬁciaries, verify
eligibility periodically, and promptly terminate coverage for individuals who are no longer eligible.

The federal government matches states’ spending for Medicaid services according to a statutory
formula known as the Federal Medical Assistance Percentage (FMAP). Each state has an FMAP that
is calculated based on its per capita income relative to national per capita income. 62 In ﬁscal year
2021, states’ regular FMAPs ranged from 50 percent in 13 states to about 78 percent in Mississippi.

In response to previous economic downturns, legislation was enacted to provide states with an
increased FMAP to provide ﬁscal relief and to maintain states’ Medicaid programs.63 Most recently,

60Department of Health and Human Services, Centers for Medicare & Medicaid Services, 2018 Actuarial Report on the
Financial Outlook on Medicaid (Baltimore, Md.).
61For the purposes of this enclosure, the term “state” refers to the 50 states, the District of Columbia, and the U.S.
territories, unless otherwise noted.
62For the District of Columbia and U.S. territories, the FMAP is set by statute regardless of their per capita incomes.
Additionally, federal law speciﬁes a maximum amount, or allotment for federal contributions to Medicaid spending
in U.S. territories, in contrast to the states and the District of Columbia, for which federal Medicaid spending is open-
ended.There are exceptions to the regular FMAP for certain populations and services. For example, states receive a 90
percent FMAP for services provided to the newly eligible adult population, and for family planning services and supplies.
Additionally, in general, the federal government matches states’ spending on Medicaid administrative costs at a 50
percent FMAP.
63For example, the American Recovery and Reinvestment Act of 2009 was enacted in response to the 2007 national
recession and included a provision that increased eligible states’ FMAP for nine quarters, which was later extended for

Page 51 GAO-22-105291
the Families First Coronavirus Response Act (FFCRA) and the American Rescue Plan Act of 2021
(ARPA) provided states with temporary increases to their FMAP rates in response to the COVID-19
public health emergency (PHE), as shown in the table below.64

two additional quarters, but at a lower level. American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, div. B,
tit. V, § 5001, 123 Stat. 115, 496 (as amended by Pub. L. No. 111-226, tit. II, subtit. A, § 201, 124 Stat. 2389, 2393 (2010)).
64See Families First Coronavirus Response Act, Pub. L. No. 116-127, div. F, §§ 6004(a)(3), 6008, 134 Stat. 178, 205, 208
(2020); American Rescue Plan Act of 2021, Pub. L. No. 117-2, tit. IX, subtit. J, §§ 9811, 9817, 135 Stat 4, 208, 216.

Page 52 GAO-22-105291
Overview of Selected Changes to the Federal Medical Assistance Percentage (FMAP) during the COVID-19 Public
Health Emergency (PHE), as of Oct. 2021
6.2 percentage 100% FMAP for 10 percentage point 100% FMAP for
point FMAP optional COVID-19 FMAP increase for home COVID-19 vaccine
increase
b
group
c and community-based administration
d
services (HCBS)

Authorizing FFCRA § 6008 FFCRA § 6004(a)(3) ARPA § 9817 ARPA § 9811(b)
a
legislation ARPA § 9811(a)

Eﬀective dates January 1, 2020, March 18, 2020, April 1, 2021 through April 1, 2021, through
through the end of through the last day March 31, 2022 the end of the quarter
the quarter in which of the PHE that begins one year
the PHE ends after the PHE ends

Number of All 15 states, 3 territories All states and D.C. All
e
participating states

CBO estimated $50 billion $2 billion $12.7 billion $1.1 billion
f
spending

Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS) and Congressional Budget Oﬃce (CBO) documentation. | GAO-22-105291

a
See Families First Coronavirus Response Act, Pub. L. No. 116-127, div. F, §§ 6004(a)(3), 6008, 134 Stat. 178, 205, 208 (2020)
(“FFCRA”); American Rescue Plan Act of 2021, Pub. L. No. 117-2, tit. IX, subtit. J, §§ 9811, 9817, 135 Stat 4, 208, 216 (“ARPA”).
b
In general, a state may not receive this FMAP increase if it 1) restricts eligibility standards, methodologies, or procedures, 2)
increases premiums, 3) fails to provide continuous enrollment through the last day of the month in which the PHE ends, or 4)
imposes cost sharing for certain COVID-19-related services.
c
This column refers to the optional COVID-19 group for otherwise uninsured individuals described at section 1902(a)(10)(A)
(ii)(XXIII) of the Social Security Act. Coverage for this group is generally limited to COVID-19 vaccines, vaccine administration,
testing, and treatment, as well as treatment of any condition that may seriously complicate the treatment of an individual with
COVID-19, if otherwise covered by the state. See 42 U.S.C. § 1396a(a)(10)(XVIII) (in the matter following subsection (G)).
d
No state receiving the HCBS FMAP increase may receive a total FMAP greater than 95 percent for HCBS expenditures. In
order to receive the FMAP increase for eligible HCBS expenditures, states must meet certain programmatic requirements,
including submitting a spending plan to the Centers for Medicare & Medicaid Services (CMS) and obtaining CMS approval. As of
December 15, 2021, CMS oﬃcials said they had given conditional approval to nine states, meaning the state is fully approved to
claim the HCBS FMAP increase conditional upon its continued compliance with program requirements, and partial approval to
42 states, meaning the state is approved to claim the HCBS FMAP increase but CMS requested additional information about one
or more of the states’ planned activities. No territories had submitted a spending plan as of that date.
e
Unless otherwise noted, the term “state” refers to the 50 states, the District of Columbia, and the ﬁve U.S. territories that have
Medicaid programs.
f
The CBO estimate does not account for additional Medicaid costs associated with evaluation and treatment of COVID-19, nor
any increased Medicaid enrollment resulting from the economic disruption brought about by COVID-19. Thus, CBO notes that
actual federal spending on Medicaid is likely to be greater.

Of the four COVID-19 related FMAP changes noted above, the Congressional Budget Oﬃce (CBO)
projected that the 6.2 percentage point FMAP increase and the 10 percentage point FMAP increase
for HCBS expenditures are expected to account for the majority of expenditures—over 95 percent.
Both of these FMAP increases had qualifying requirements, as noted below.

• The 6.2 percentage point FMAP increase. In general, this increase applies to allowable
Medicaid expenditures for which a state receives its standard FMAP rate and that are made

Page 53 GAO-22-105291
from January 1, 2020, through the end of the quarter in which the PHE ends. All states qualify
for the increased FMAP provided they meet certain conditions, such as maintaining Medicaid
enrollment for beneﬁciaries through the end of the month in which the PHE ends.65

• The 10 percentage point FMAP increase for HCBS expenditures. This increase applies to
certain expenditures for HCBS provided from April 1, 2021 to March 31, 2022.66 To qualify
for the increase, states must (1) use federal funds attributable to the increased FMAP to
supplement, not supplant, existing state HCBS spending and (2) invest state funds equivalent
to the amount of federal funding they receive from the increase into activities that will
“enhance, expand, or strengthen” their HCBS programs. Each state was to submit an HCBS
spending plan to CMS that estimated its expected amount of additional federal funding from
the FMAP increase and described its planned activities in order to qualify.67

Overview of Key Issues
The 6.2 percentage point FMAP increase. As of September 30, 2021, federal expenditures
attributed to the FFCRA 6.2 percentage point FMAP increase totaled approximately $60 billion.68
For eight selected states in which we interviewed state Medicaid oﬃcials, this FMAP increase
resulted in additional federal funds of approximately $8.5 billion, ranging from $208 million in New
Hampshire to $2.3 billion in Ohio.69

Medicaid oﬃcials in all eight selected states said that the 6.2 percentage point FMAP increase was
critical in enabling them to maintain program operations while they faced increased enrollment
and decreased revenue. For example, New Hampshire oﬃcials noted their Medicaid enrollment

65States must maintain enrollment for all beneﬁciaries enrolled as of or after March 18, 2020, except for any
beneﬁciary who requests to terminate their eligibility or no longer resides in that state. In general, states must also
maintain Medicaid eligibility standards that are no more restrictive than what was in place as of January 1, 2020; not
charge premiums that exceed those that were in place as of January 1, 2020; cover COVID-19 testing, services, and
treatments without cost sharing; and ensure local governments are not required to contribute a larger percentage
of the state’s share than what was in place on March 11, 2020. FFCRA, § 6008(b), 134 Stat. at 208; 42 C.F.R. § 433.400
(2020).
66American Rescue Plan Act of 2021, Pub. L. No. 117-2, § 9817, 135 Stat 4, 216.
67See Centers for Medicare & Medicaid Services, State Medicaid Director Letter #21-003, Implementation of American
Rescue Plan Act of 2021 Section 9817: Additional Support for Medicaid Home and Community-Based Services during
the COVID-19 Emergency (Baltimore, Md.: May 13, 2021.) All states and the District of Columbia submitted such a
plan by July 2021. As of December 15, 2021, CMS oﬃcials said they had given conditional approval to nine states,
meaning the state is fully approved to claim the HCBS FMAP increase conditional upon its continued compliance
with program requirements, and partial approval to 42 states, meaning the state is approved to claim the HCBS
FMAP increase but CMS requested additional information about one or more of the states’ planned activities. No
territories had submitted a spending plan as of that date.
68The most recent available information is for the quarter which ended September 30, 2021. States generally report
their expenditures to CMS within 30 days of the end of each quarter, but may adjust their past reporting for up to 2
years after a quarter ends. Virginia had not reported COVID-19 expenditures for the fourth quarter of ﬁscal year 2021 as
of November 30, 2021.
69We interviewed Medicaid oﬃcials from Georgia, Iowa, Louisiana, New Hampshire, New Jersey, New Mexico, Ohio, and
Washington.

Page 54 GAO-22-105291
increased 25 percent during COVID-19, and they said they would have faced serious ﬁnancial
challenges without the FMAP increase. Additionally,

• oﬃcials from four selected states said the funding helped them respond to COVID-19, for
example, by expanding telehealth and making supplemental payments to retain providers.

• oﬃcials from six selected states said the increased FMAP provided general economic relief to
their states in light of revenue declines and budget uncertainty, with oﬃcials from three states
noting it freed up state funds to address other needs.

With respect to implementing the 6.2 percentage point FMAP increase, oﬃcials from seven
selected states characterized their eﬀorts as easy or straightforward, citing reasons such as the
increase did not have to be applied to speciﬁc services and could be reported using existing
processes.

Since the beginning of the PHE, Medicaid enrollment has increased 18.5 percent (11.9 million
individuals) nationally, and CMS oﬃcials said states have postponed coverage terminations, as
FFCRA requires states to maintain enrollment for nearly all Medicaid beneﬁciaries through the end
of the month in which the PHE ends to receive the increased FMAP.70 CMS is providing states up to
12 months after the PHE ends to complete any pending eligibility reviews and to reassess eligibility
for beneﬁciaries who were determined ineligible during the PHE but who retained coverage due
to FFCRA requirements.71 FFCRA established that the increased FMAP will end on the last day of
the quarter in which the PHE ends. Thus, the FMAP increase will end well before state oﬃcials said
they can work through their backlog of eligibility reviews, as shown in the ﬁgure below.

70CMS, May 2021 Medicaid and CHIP Enrollment Trends Snapshot. These data represent Medicaid enrollment from
February 2020 to May 2021.In order to receive the 6.2 percentage point FMAP increase, states must meet certain
requirements, including maintaining enrollment of all beneﬁciaries who were enrolled as of or after March 18, 2020,
except for any beneﬁciary who requests to terminate their eligibility or no longer resides in that state. See FFCRA, §
6008(b), 134 Stat. at 208; 42 C.F.R. § 433.400 (2020).
71See Centers for Medicare & Medicaid Services, State Health Oﬃcial Letter #21-002. Updated Guidance Related to Planning
for the Resumption of Normal State Medicaid, Children’s Health Insurance Program (CHIP), and Basic Health Program (BHP)
Operations Upon Conclusion of the COVID-19 Public Health Emergency (Baltimore, Md.: Aug. 13, 2021.)

Page 55 GAO-22-105291
Timeline of COVID-19 PHE, 6.2 Percentage Point FMAP Increase, and Medicaid Enrollment Requirements

a
The end date of the PHE is unknown.
b
The FMAP is the rate at which the federal government matches state spending for Medicaid services. Depending on the exact
date on which the PHE ends, the FMAP increase could be discontinued the same date as the PHE (if the PHE ends on last day of
the quarter), approximately 90 days later (if the PHE ends on ﬁrst day of a quarter), or in between.
c
To receive the 6.2 percentage point FMAP increase provided under section 6008 of the Families First Coronavirus Response Act,
states must meet certain requirements, such as maintaining enrollment for all Medicaid beneﬁciaries that were enrolled as of
or after March 18, 2020, through the month in which the PHE ends, except for any beneﬁciary who requests to terminate their
eligibility or no longer resides in the state. See Pub. L. No. 116-127, div. F, § 6008, 134 Stat. 178, 208 (2020). CMS is providing
states up to 12 additional months to review eligibility and terminate coverage, as appropriate.

State oﬃcials we spoke with raised two primary concerns about the ultimate discontinuation of
the FMAP increase:

Uncertainty surrounding end date of PHE. HHS has said it will notify states 60 days before the PHE
ends, but oﬃcials from ﬁve selected states said the uncertainty surrounding when the PHE will
end complicates their planning and budget eﬀorts.72 Oﬃcials from three selected states also said
it will be helpful to receive as much advance notice of the oﬃcial end date as possible.

Eligibility determination backlog. Oﬃcials from seven selected states were concerned about
completing eligibility reviews after the PHE ends and the costs associated with maintaining
eligibility for an increased number of Medicaid beneﬁciaries while they do so. Oﬃcials from six
states said that a phase out of the FMAP increase would help them with the transition; oﬃcials
in three of these states estimated it would take 6 to 12 months to return to normal enrollment
levels.73 For example,

• New Hampshire oﬃcials estimated it will cost the state $3.8 million per 10,000 enrollees each
month as they work to remove coverage for those who are no longer eligible.

72On January 14, 2022, the Secretary of HHS renewed the PHE through April 16, 2022.
73CMS oﬃcials said the agency does not have authority to extend the FMAP increase because the increase and its
termination are speciﬁed in statute. The House of Representatives recently passed legislation proposing to phase out
FFCRA’s FMAP increase and amend the requirement that states maintain Medicaid enrollment for most beneﬁciaries
through the end of the PHE. See H.R. 5376, 117th Cong. § 30741 (2021) (as passed by House, Nov. 19, 2021).

Page 56 GAO-22-105291
• New Jersey oﬃcials said that a phase out of the increased FMAP would help the state
normalize operations as it returns to pre-PHE enrollment levels, because enrollment will not
drop immediately when the PHE ends.

Because the FMAP increase will end before states complete their work on the backlog of eligibility
reviews and terminations, there will be increased ﬁnancial pressure to expedite reviews, which
could exacerbate known weaknesses in states’ eligibility processes. CMS identiﬁed eligibility-
related errors as a driving factor of the growing improper payment rate in Medicaid, a rate that
exceeded 21 percent in 2021.74 In addition, in January 2020, we reported that state and federal
audits across 21 states identiﬁed weaknesses in states’ Medicaid eligibility determinations,
including that states did not complete redeterminations (10 states) or terminate coverage for
ineligible individuals (nine states) in a timely manner. These challenges underscore the importance
of CMS and states continuing to work together to ensure that eligibility reviews are conducted
accurately and timely and in a manner that ensures program integrity.75

The 10 percentage point FMAP Increase for HCBS. Actual expenditure data related to the
increased FMAP for HCBS were not available at the time we conducted our work.76 However,
based on our review of selected states’ respective HCBS spending plans, their estimates of related
federal funding ranged from $44 million in New Hampshire to $586 million in Georgia, as shown in
the ﬁgure below.

74Improper payments are those that did not meet statutory, regulatory, or administrative requirements. CMS computes
an annual rolling average of improper payment rates across all states based on a 3-year rotation cycle of 17 states each
year. We designated Medicaid a high risk program in 2003, due in part to its susceptibility to improper payments. GAO’s
High-Risk Series identiﬁes government operations with vulnerabilities to fraud, waste, abuse, and mismanagement, or in
need of transformation to address economy, eﬃciency, or eﬀectiveness challenges.
75In November 2021, CMS released policy and operational strategies states can adopt to support their eﬀorts to resume
normal eligibility and enrollment operations.
76States began reporting expenditure data for ARPA in October 2021; thus, complete data were not available at the time
of our analysis.

Page 57 GAO-22-105291
Selected States’ Estimates of Additional Federal Funding Attributable to Increased HCBS Federal Medicaid
Assistance Percentage, July 2021

Note: Selected states submitted plans to the Centers for Medicare & Medicaid Services (CMS) estimating the amount of
additional federal funding they expect to receive for HCBS and describing how the state will reinvest funding into proposed
HCBS activities. State estimates are subject to CMS approval and actual expenditures.

Oﬃcials from all selected states acknowledged that HCBS are an important area for targeted
funding, with oﬃcials from ﬁve states noting HCBS beneﬁciaries and providers were particularly
aﬀected by COVID-19. Most selected states’ HCBS spending plans proposed workforce activities,
such as payment increases or training for speciﬁed providers, and options to improve access to
services, such as telehealth, as shown in the table below. Less commonly, states proposed other
activities, such as IT infrastructure updates and expanding the number of beneﬁciaries eligible for
HCBS.

Page 58 GAO-22-105291
Examples of Selected States’ Proposed Home and Community-Based Services (HCBS) Activities, July 2021
Number of
a b
Proposed activity selected states Examples of proposed activities

Payments to 7 New Mexico to provide temporary economic recovery payments to HCBS
providers providers.
New Jersey to increase payment rates for personal care assistants.
New Hampshire to enhance payments to HCBS providers to support
retention and recruitment.

Education and 7 Iowa to provide crisis response training for providers that serve people with
training for providers disabilities.
New Mexico to provide trainers and training resources for families providing
In-Home Living Supports.
Louisiana to provide training for community practitioners to support
persons with intellectual and developmental disabilities.

Improving access to 7 Georgia to incorporate telehealth into HCBS.
HCBS New Hampshire to deliver certain health care services in homeless shelters.
Washington to purchase technology and equipment for providers and
beneﬁciaries to deliver services remotely.

Pilot new services or 6 Iowa to expand the number of providers that deliver services for children
programs with complex behavioral needs.
New Hampshire to allow home modiﬁcations to allow for the elderly to
receive care in their home.
Washington to implement homeless outreach provider teams that specialize
in mental health and substance use disorder.

Source: GAO analysis of State Medicaid agency documentation. | GAO-22-105291

a
Selected states submitted plans to the Centers for Medicare & Medicaid Services (CMS) estimating the amount of additional
federal funding they expect to receive for HCBS and describing how the state will reinvest state funds equivalent to the amount
of federal funds attributable to the increased FMAP into proposed HCBS activities. Proposed activities are subject to CMS
approval, which was in process for all eight selected states as of October 21, 2021. As of this date, CMS had given partial
approval to the plans submitted by six selected states, but had requested additional information on one or more of their
proposed activities. For the other two selected states, CMS was awaiting on additional information from the states to complete
its initial review. On October 21, 2021, CMS launched a webpage on Medicaid.gov that includes all states’ HCBS spending plans
and a summary of related activities.
b
We did not include Ohio in the count of states because the state did not indicate speciﬁc proposed activities in its HCBS
spending plan submitted to CMS in July 2021.

Selected states have faced challenges implementing HCBS activities and receiving increased
federal funds. ARPA established the HCBS FMAP increase to begin 3 weeks after its enactment, and
CMS oﬃcials said the abbreviated timeline created challenges for CMS to develop related guidance
and system changes. Oﬃcials from six selected states noted that CMS guidance issued to date has
generally been helpful, but seven selected states highlighted ongoing challenges related to their
eﬀorts to take advantage of these funds and the need for additional guidance or clariﬁcation on
eligible services and expenditure reporting. For example,

Page 59 GAO-22-105291
• Washington oﬃcials said they needed additional clariﬁcation from CMS on what types of
behavioral health services are considered eligible HCBS activities.

• Oﬃcials from three selected states also expressed uncertainty about how to apply the FMAP
increase to managed care payments, which CMS had not issued guidance on as of November
9, 2021.77

In addition, at the time of our interviews, all eight selected states were still waiting for CMS’s
conditional approval of their HCBS spending plans. As of October 21, 2021, CMS had given partial
approval to the plans submitted by six selected states but had requested additional information
on one or more of their proposed activities before granting conditional approval. For the other
two selected states, CMS was awaiting additional information from the states to complete its initial
review. Given that states can receive an additional 10 percentage point match if, among other
things, they reinvest state funds equivalent to the amount of federal funds attributable to the
increased FMAP on eligible HCBS while the FMAP increase is still in eﬀect, there is an incentive
for states to implement their proposed activities quickly to maximize the federal match.78 Four
selected states expressed concerns that the delay in CMS’s approval of their plans would aﬀect
their implementation of proposed activities and their ability to receive the maximum amount
of funding available. For example, oﬃcials from New Mexico estimated they would receive
approximately $100 million less from the FMAP increase if they adjusted their timeline and
reinvested most of their state spending in ﬁscal years 2023 and 2024 instead of ﬁscal year 2022, as
was included in the state’s original plan.

In addition to implementation concerns, oﬃcials from ﬁve of our selected states also raised
concerns about the sustainability of HCBS enhancements they implement once the FMAP increase
is no longer available.79 For example:

• New Mexico oﬃcials were concerned about increasing the number of individuals receiving
HCBS, knowing that the state would be responsible for funding the increased costs associated
with their coverage after the increase in funding ends.

• Likewise, Iowa oﬃcials said their plan focused on infrastructure proposals that would support
HCBS but require minimal state funding over time, while Ohio oﬃcials reported collaborating
with their state legislature to develop proposed activities that would later be authorized.

77Under managed care, states contract with managed care plans to provide a speciﬁc set of covered services in
return for a ﬁxed periodic payment per beneﬁciary. According to CMS guidance, states should report the portion of
their managed care payment that is attributable to HCBS to receive the increased FMAP on that portion.
78States have until March 31, 2024, to reinvest the additional funding into HCBS but can only receive the additional
match once, on approved expenditures made by March 31, 2022. See Centers for Medicare & Medicaid Services, State
Medicaid Director Letter #21-003. Implementation of American Rescue Plan Act of 2021 Section 9817: Additional Support for
Medicaid Home and Community-Based Services during the COVID-19 Emergency (Baltimore, MD.: May 13, 2021)
79The House of Representatives recently passed legislation that would provide a permanent 6 percentage point
FMAP increase for a state that implements an HCBS improvement program and a 6 quarter increase to the FMAP of
2 percentage points if a state adopts an HCBS model that promotes self-direction of care and meets certain other
requirements. It would also provide an 80 percent FMAP for administrative costs associated with improving HCBS. See
H.R. 5376, 117th Cong. § 30712 (2021) (as passed by House, Nov. 19, 2021).

Page 60 GAO-22-105291
Methodology
To conduct this work, we reviewed federal laws, prior GAO reports, and CBO estimated
expenditures for the FMAP increases included in FFCRA and ARPA. We also reviewed related
CMS guidance, including guidance regarding states’ eligibility for these funds and reporting of
related expenditures, and interviewed CMS oﬃcials about steps they have taken to oversee states’
eﬀorts to obtain the various FMAP increases. We also interviewed Medicaid oﬃcials from eight
states on their experiences implementing the diﬀerent FMAP increases and reviewed their HCBS
spending plans.80 These states were selected based on variation in their location, program size,
and approved Medicaid ﬂexibilities. Information from these states is not generalizable across
all states. We also reviewed CMS data on COVID-19-related Medicaid expenditures, which we
determined are suﬃciently reliable for the purpose of this enclosure.

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

GAO’s Ongoing Work
We have ongoing work related to Medicaid and COVID-19, such as telehealth use during COVID-19,
and will continue to review Medicaid program integrity.

GAO’s Prior Recommendations
The table below presents our past matter for consideration by Congress on Medicaid funding from
the June 2020 CARES Act report:

80The eight states in which we interviewed state Medicaid oﬃcials are Georgia, Iowa, Louisiana, New Hampshire, New
Jersey, New Mexico, Ohio, and Washington.

Page 61 GAO-22-105291
Prior GAO Matter for Congressional Consideration Related to Medicaid Funding
Matter Status

To help ensure that federal funding is targeted and timely, Open—Our past work has found that during economic
we urge Congress to use GAO's Federal Medical Assistance downturns-when Medicaid enrollment can increase and
Percentage formula for any future changes to the Federal state economies weaken-the formula, which is based on
Medical Assistance Percentage during the current or any each state's per capita income, does not reﬂect current
future economic downturn. (June 2020) state economic conditions. No congressional action has
been taken as of December 2021.

Source: GAO. | GAO-22-105291

Related GAO Product
Medicaid Eligibility: Accuracy of Determinations and Eﬀorts to Recoup Federal Funds Due to Errors.
GAO-20-157. Washington, D.C.: January 13, 2020.

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

Page 62 GAO-22-105291
Nutrition Assistance
The Food and Nutrition Service should develop a comprehensive strategy for its nutrition
assistance programs during national emergencies and further assist states in their eﬀorts to
obtain eligibility data for the Pandemic Electronic Beneﬁts Transfer program.

Entities involved: Food and Nutrition Service, within the Department of Agriculture

Recommendation for Executive Action
The Secretary of Agriculture should ensure that the Administrator of the Food and Nutrition
Service (1) develops a comprehensive strategy for the agency’s nutrition assistance programs
to respond to emergencies that includes lessons learned during the COVID-19 pandemic and a
mechanism to periodically review and update the strategy, and (2) shares timely information with
states and other stakeholders during development of the strategy to help inform their ongoing
response to COVID-19.

The Secretary of Agriculture should ensure that the Administrator of the Food and Nutrition
Service further assists state and local agencies in their eﬀorts to obtain reliable and
comprehensive eligibility data for the Pandemic Electronic Beneﬁts Transfer program in order to
determine eligibility and beneﬁts amounts accurately.

The Department of Agriculture agreed with both recommendations.

Background
About 41.5 million individuals participated in the Supplemental Nutrition Assistance Program
(SNAP) per month on average in ﬁscal year 2021, making it the largest federal nutrition assistance
program. SNAP beneﬁts totaled $107.9 billion that year, a new historic high for the program.81 The
Food and Nutrition Service (FNS), within the Department of Agriculture (USDA), administers SNAP
and other programs, including the Pandemic Electronic Beneﬁts Transfer program (Pandemic
EBT); the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); and the
Emergency Food Assistance Program (TEFAP).

Legislative and executive actions have resulted in increased funding for FNS’s nutrition assistance
programs and provided ﬂexibilities in how states administer some programs during the COVID-19
pandemic (see table for COVID-19 funding and expenditures for selected programs). For example,
in March 2020, the Families First Coronavirus Response Act (FFCRA) authorized the issuance
of SNAP emergency allotments—additional beneﬁts on top of regular SNAP beneﬁts—during
the national COVID-19 public health emergency.82 FFCRA also allowed FNS to adjust federal

81In nominal terms, SNAP beneﬁts previously peaked at $76.1 billion in ﬁscal year 2013. FNS released data on
participation and expenditures for ﬁscal year 2021 in December 2021. The data are preliminary and subject to signiﬁcant
revision, as states ﬁnalize their data submissions to FNS.
82Pub. L. No. 116-127, § 2302(a), 134 Stat. 178, 188 (2020). As of November 2021, 42 states continued to issue
emergency allotments, according to FNS oﬃcials. Provisions in the Consolidated Appropriations Act, 2021 and the
American Rescue Plan Act of 2021 (ARPA) led to an additional 15 percent increase in SNAP beneﬁts from January through

Page 63 GAO-22-105291
requirements for SNAP related to issuing beneﬁts, reviewing applications, and reporting data. FNS
approved 34 states’ requests to continue to take advantage of at least one adjustment, such as
waiving certain interview requirements, through December 2021.

September 2021. Pub. L. No. 117-2, § 1101(a), 134 Stat. 4, 15; Pub. L. No. 116-260, div. N, tit. VII, § 702(a), 134 Stat. 1182,
2092. In August 2021, FNS released its reevaluation of the Thrifty Food Plan—the basis for determining SNAP beneﬁt
amounts—which was required by the Agriculture Improvement Act of 2018. See Pub. L. No. 115-334, § 4002, 132 Stat.
4490, 4624. Eﬀective October 1, 2021, FNS’s reevaluation led to about a 21 percent increase in SNAP beneﬁts for a family
of four. Thus, the beneﬁt increase resulting from FNS’s reevaluation of the Thrifty Food Plan, generally, more than oﬀset
the expiration of the 15 percent increase in SNAP beneﬁts on September 30, 2021.

Page 64 GAO-22-105291
COVID-19 Funding and Expenditures for Selected Federal Nutrition Assistance Programs as of Nov. 2021
Total COVID-19 funding COVID-19 expenditures
a
Program Description ($) as of Nov. 30 2021 ($)
SNAP Provides low-income individuals and households 16.8 billion
b 15.6 billion
with beneﬁts to purchase allowed food items and
Indeﬁnite appropriation
c 15.0 billion
achieve a more nutritious diet.
Pandemic EBT Provides households with children who would Indeﬁnite appropriation
d 42.4 billion
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, and 1.4 billion 710.5 million
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 groceries 1.25 billion 1.1 billion
through food banks.
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-22-105291

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. For example, the Nutrition Assistance
Program (not shown in the table above) provides block grants to Puerto Rico, American Samoa, and the Commonwealth of the
Northern Mariana Islands to provide food assistance to low-income households and has expended $1.3 billion in COVID-19
funding through November 2021.
a
Amounts shown from the Consolidated Appropriations Act, 2021 reﬂect amounts appropriated in Division N, pertaining to
COVID-19 response and relief.
b
The $16.8 billion shown reﬂects total funding for SNAP provisions in COVID-19 relief laws that included a speciﬁc amount of
funding. It does not include SNAP provisions from COVID-19 relief laws that included an indeﬁnite appropriation. It also does
not include SNAP emergency allotments, which are included in the regular annual SNAP appropriation, according to FNS.
c
The Consolidated Appropriations Act, 2021 provided an indeﬁnite appropriation for certain provisions, including a SNAP
beneﬁt increase of 15 percent through June 2021. The American Rescue Plan Act of 2021 extended the increase through
September 2021.
d
The Families First Coronavirus Response Act provided an indeﬁnite appropriation for Pandemic EBT.

Overview of Key Issues
FNS lacks a comprehensive strategy for its nutrition assistance programs to respond to
emergencies. As we have previously reported, FNS’s diﬀerent nutrition assistance programs have
varying eligibility requirements. In addition, programs vary in their capability to provide
immediate aid in emergencies compared to their potential contributions to long-term recovery
eﬀorts. However, FNS does not have a documented strategy for how its diﬀerent programs
should respond to emergencies.
Several factors highlight the need for FNS to develop a comprehensive strategy for its response to
the current pandemic and to future emergencies to help individuals and households maintain
food security in times of heightened need. These factors include FNS’s (1) outdated pandemic
plans; (2) new statutory authority to adjust program operations during the COVID-19 pandemic;(3)
missed opportunities to coordinate with vendors across states; and (4) incomplete efforts to identify and
incorporate lessons learned from the COVID-19 pandemic.

Page 65 GAO-22-105291
Outdated pandemic plans. At the onset of the COVID-19 pandemic, FNS had pandemic plans in
place for several of its nutrition assistance programs, but the plans were outdated and did not
always provide actionable guidance for FNS and state agencies.

FNS oﬃcials told us that the agency developed pandemic planning guidelines for SNAP in 2009
in response to the H1N1 inﬂuenza pandemic, but that it had not updated them until March 2020.
When the COVID-19 pandemic emerged, the agency determined that some strategies included
in the 2009 plan were not feasible. For example, oﬃcials said the 2009 plan directed states to
operate Disaster SNAP in the event of a pandemic, but several factors impeded FNS’s ability to
use this program in response to the COVID-19 pandemic. For instance, FNS oﬃcials said that
during the COVID-19 pandemic, the Federal Emergency Management Agency did not issue any
declarations for individual assistance under the Robert T. Staﬀord Disaster Relief and Emergency
Assistance Act—a prerequisite for operating Disaster SNAP. FNS oﬃcials also said that Disaster
SNAP is a short-term recovery program that typically issues only one month of beneﬁts and that,
during this pandemic, it would be more beneﬁcial for eligible households to apply for SNAP—as
opposed to Disaster SNAP—since they could receive multiple months of beneﬁts.

FNS oﬃcials also conﬁrmed that the agency developed pandemic planning guidelines for WIC
and TEFAP in 2007 and 2009 respectively, and has not updated them. However, oﬃcials noted
that the agency provided additional communications on WIC and TEFAP implementation to states
and other stakeholders during the COVID-19 pandemic through its website, question and answer
documents, and other technical assistance.

New statutory authority to adjust program operations. Provisions of COVID-19 relief laws provided
FNS and states with new authority to adjust their administration of nutrition assistance during
the pandemic. For example, throughout the COVID-19 pandemic, states were able to request
from FNS various adjustments to federal requirements for SNAP and WIC, such as waiving certain
requirements for in-person services.

COVID-19 relief laws did not provide additional authority for FNS or states to adjust TEFAP
operations, which, according to oﬃcials from the American Commodity Distribution Association
and Feeding America, caused challenges for some states. For example, states must monitor some
TEFAP activities on site, such as food storage procedures in warehouses, according to FNS oﬃcials.
State oﬃcials had to determine how to conduct on-site monitoring safely during the pandemic,
including instances when there had been recent cases of COVID-19 among warehouse staﬀ.
American Commodity Distribution Association oﬃcials said FNS had communicated that guidance
on this issue was forthcoming for several months in 2020, but ultimately FNS did not publish the
guidance.

Given the lessons learned, FNS has the opportunity to examine how it was able to operate its
programs in light of the statutory authority it received to adjust some program operations during
the COVID-19 pandemic, including how such authority may have aﬀected FNS’s and states’
emergency responses. By doing so, FNS could be positioned to request certain authority to help
the agency respond eﬃciently to a future emergency.

Missed opportunities to coordinate with vendors across states. State agencies have relied on contracts
with vendors to implement several aspects of the COVID-19 response for their nutrition assistance

Page 66 GAO-22-105291
programs, according to oﬃcials from the American Public Human Services Association and Code
for America. For example, all states needed to develop a process to implement the new Pandemic
EBT program. FNS did not have a national contract with vendors that would have potentially
allowed FNS to coordinate with states and vendors to procure goods or services that could apply
across states, such as purchasing card stock for EBT cards that all states would need.

FNS oﬃcials acknowledged that, on occasion, states expressed concerns that competing with
each other for limited resources required them to modify their timelines for SNAP and Pandemic
EBT. This meant it took those states longer to implement the programs. However, FNS oﬃcials
said that sharing resources or costs across states was not practical during COVID-19 because the
agency had never done so in the past and speed was essential in FNS’s response to the pandemic.
Oﬃcials also said that sharing resources or costs across states would have been logistically
diﬃcult and would have created challenges based on reporting and other requirements that
could have further delayed implementation of nutrition assistance programs during COVID-19.
Oﬃcials noted that FNS facilitated a decision between states and their EBT vendors about how
they would add Pandemic EBT beneﬁts to accounts as an example of how FNS’s national-level
eﬀorts attempted to create eﬃciencies for states and vendors implementing the program.

Incomplete eﬀorts to identify lessons learned. FNS has identiﬁed and incorporated some lessons
learned from earlier in the pandemic to adjust its current approach to responding to COVID-19,
but has not yet done so extensively. For example, in November 2020, we reported that FNS initially
required states to request extensions of certain SNAP adjustments each month, rather than
oﬀering them for multiple months—a process that created considerable uncertainty for states.
In April 2021, FNS issued guidance on how states could request adjustments for multiple months
through December 2021, or the month after the national COVID-19 public health emergency ends,
whichever comes ﬁrst. A SNAP oﬃcial in one state noted that the multi-month approvals were
a welcome change to FNS’s process and helped them operate SNAP eﬀectively as the pandemic
continued.

Similarly, we previously reported that the timing of FNS’s decisions about WIC waivers caused
uncertainty among states, such as when local WIC oﬃces would need to return to in-person
services. In September 2020, FNS extended certain WIC waivers until 30 days after the COVID-19
public health emergency ends, which provided states greater clarity on waivers available for WIC.
In September 2021, FNS further extended the expiration of certain WIC waivers until 90 days after
the end of the public health emergency. FNS oﬃcials said the agency has also begun studying the
use and eﬀect of WIC waivers granted during the pandemic and plans to issue a report as early as
2022.

FNS oﬃcials described other key lessons learned from the COVID-19 pandemic that apply to its
nutrition programs:

•
They said communication was essential and that, in the early months of the pandemic, the
time it took USDA to ﬁnalize and communicate policies presented major challenges to those
on the frontlines.

•

Page 67 GAO-22-105291
They also acknowledged that emergencies tend to exacerbate existing inequalities and made
the response more diﬃcult. They said that the pandemic disproportionately aﬀected food
insecurity for people of non-White races and ethnicities—disparities that are linked to long-
standing, structural issues that they said FNS must be deliberate about addressing in the
pandemic recovery and future reforms.

Though FNS has identiﬁed and incorporated some lessons learned from earlier in the pandemic to
improve operations, the agency has not taken steps to do so comprehensively. Speciﬁcally:

• Pandemic EBT: Oﬃcials from all ﬁve states we interviewed said FNS had not yet solicited
feedback on Pandemic EBT lessons learned. FNS oﬃcials conﬁrmed that the agency had
not conducted formal data collection on lessons learned for the program, though oﬃcials
noted they have collected some information on lessons learned through listening sessions,
conference calls with regional groups of states, and working with states to develop their
Pandemic EBT plans.

• SNAP: Oﬃcials in four states said FNS had not yet solicited feedback on SNAP lessons learned,
though FNS oﬃcials told us they have collected some anecdotal information from states on
lessons learned and expect to learn more when states submit reports to FNS on the SNAP
adjustments they used during the pandemic.

• TEFAP: Feeding America and the American Commodity Distribution Association oﬃcials said
they were not aware of FNS eﬀorts to identify lessons learned for TEFAP during the pandemic,
and FNS oﬃcials conﬁrmed that the agency did not institute a formal process to gather
information from TEFAP stakeholders.

Oﬃcials from the American Public Human Services Association also indicated that they were not
aware of FNS eﬀorts to engage stakeholders on lessons learned and said that FNS could be more
proactive and strategic in this regard.83

According to FNS oﬃcials, the agency has not comprehensively identiﬁed lessons learned for
its nutrition assistance programs because the COVID-19 pandemic is ongoing. Oﬃcials said the
agency would likely conduct this eﬀort after the COVID-19 pandemic has ended. However, as
described above, in some instances FNS has been able to use lessons learned during COVID-19
to improve operations in real time. While the COVID-19 pandemic is ongoing, FNS has the
opportunity to analyze how its programs have responded to the pandemic thus far and then take
action to better support states in operating these programs and assist individuals and households
in need of nutrition assistance.

USDA has strategic goals to ensure it delivers its programs eﬃciently and eﬀectively and to provide
all Americans access to a safe, nutritious, and secure food supply.84 In addition, the Department

83In October 2021, we recommended that USDA document its plan to analyze lessons learned during the pandemic for
its child nutrition programs, such as the National School Lunch Program and the Summer Food Service Program. USDA
generally agreed with this recommendation.
84Department of Agriculture, USDA Strategic Plan: FY 2018-2022 (Washington, D.C.: May 2018).

Page 68 GAO-22-105291
of Homeland Security’s National Response Framework—a guide to how the nation responds to all
types of disasters and emergencies—speciﬁes that evaluation and continual process improvement
are cornerstones of eﬀective preparedness.85

With a comprehensive strategy for administering its nutrition assistance programs during crises,
FNS would be better prepared to leverage the strengths of its programs and respond eﬃciently
during future emergencies. A national strategy that includes lessons learned from the COVID-19
pandemic and a process to ensure FNS periodically reviews and updates the strategy could help
FNS provide a quick and coordinated response to the ongoing pandemic and future emergencies.
Implementing such a strategy could mitigate food insecurity and help ensure consistent access
to safe and nutritious food for all Americans, including those disproportionately aﬀected by the
COVID-19 pandemic.

FNS has not provided suﬃcient assistance to state and local agencies to ensure they
collect reliable and comprehensive eligibility data for Pandemic EBT. State SNAP agencies
have encountered challenges obtaining reliable and comprehensive information regarding
students’ eligibility to receive Pandemic EBT, according to FNS oﬃcials, but FNS has not provided
suﬃcient assistance to help states overcome these challenges. Currently, state SNAP agencies
issue Pandemic EBT beneﬁts based on information obtained from states’ educational agencies
on students’ eligibility to receive free or reduced-price meals through the National School Lunch
Program (NSLP) and on school operating status.86 Because state SNAP agencies are responsible
for issuing beneﬁts to eligible students, the SNAP agencies have collaborated with educational
agencies to obtain data regarding Pandemic EBT eligibility. However, selected state SNAP agency
oﬃcials have reported challenges to obtaining data through this process.87 Speciﬁcally:

• Challenges to data timeliness. SNAP oﬃcials we interviewed in selected states said that
obtaining data from their state’s educational agency was a challenge that impeded their
eﬀorts to issue Pandemic EBT in a timely manner. For example, oﬃcials in one state said
that, at the onset of the pandemic, a state law prohibited data sharing between the state
educational agency and the state SNAP agency. FNS oﬃcials said challenges collecting
eligibility data have led to delays in states issuing Pandemic EBT beneﬁts to students—an
issue that has led to students receiving Pandemic EBT beneﬁts several months after they
missed the school meals that those beneﬁts were intended to replace. Code for America
oﬃcials, who provided Pandemic EBT technical assistance to several states, said that delays in
beneﬁt issuance or challenges with incomplete data may disproportionately aﬀect the most
vulnerable, highest need families.

85Department of Homeland Security, National Response Framework, Fourth Edition (Washington, D.C.: Oct. 2019) and Third
Edition (Washington, D.C.: June 2016).
86States, school districts, and schools identify children who are eligible to receive free or reduced-price meals through
the NSLP, and determine Pandemic EBT beneﬁt levels based on the number of days that eligible students did not receive
meals at school due to the COVID-19 public health emergency. State SNAP agencies identify SNAP-enrolled children who
are eligible for Pandemic EBT’s childcare beneﬁt.
87For additional information on challenges states experienced implementing Pandemic EBT, see Urban Institute and
American Public Human Services Association, Documenting Pandemic EBT for the 2020-21 School Year: State Perspectives on
Implementation Challenges and Lessons for the Future (Washington, D.C.: Oct. 2021).

Page 69 GAO-22-105291
• Challenges to data reliability. FNS oﬃcials said state SNAP agencies encountered challenges
to obtaining reliable and comprehensive NSLP eligibility data and school operating status
information from state educational agencies. Prior to the pandemic, state educational
agencies did not track whether students were learning in-person, remotely, or via a hybrid
model. State SNAP agencies needed this information to determine students’ eligibility and
beneﬁt amounts for Pandemic EBT accurately.88

Our review of 50 state Pandemic EBT plans found that state educational agencies’ capabilities in
compiling students’ NSLP data and school operating status varied by schools, districts, and states.
For example, a few states had existing systems—or created systems during the pandemic—that
could centralize data on students’ NSLP participation and school operating status, whereas
other states had antiquated systems that required manually tracking thousands of participating
students. In one instance, a state SNAP oﬃcial told us they contacted every school in their state
directly to obtain individual spreadsheets of students eligible for Pandemic EBT. Code for America
noted that issues with accuracy and reliability are pervasive in education data sets. Reliable
and comprehensive NSLP data and school operating status information from state educational
agencies can help state SNAP agencies conﬁrm that (1) they have issued Pandemic EBT beneﬁts to
all eligible students, and (2) students received the correct amount of beneﬁts.

Given these challenges, state SNAP oﬃcials we interviewed said they needed more assistance
from FNS to help them obtain the data they need to accurately determine Pandemic EBT eligibility
from state educational agencies. FNS oﬃcials said they posted approved Pandemic EBT plans
online so states could see how other states were addressing data collection challenges. They also
said FNS regional oﬃce staﬀ convened states to share ideas. FNS oﬃcials acknowledged that
states faced constraints identifying students who were eligible for Pandemic EBT, but said federal
NSLP data cannot be used to determine Pandemic EBT eligibility because the data do not include
student identiﬁers. FNS oﬃcials also said that FNS could do little to ensure states had correct data
on Pandemic EBT-eligible students because ensuring the reliability of NSLP eligibility and school
operating status data is a state and local responsibility.

FNS oﬃcials further noted that ﬂexibilities allowing states to provide free school meals to all
students for school years 2020-21 and 2021-22 may hinder states’ and school districts’ eﬀorts to
collect comprehensive data on NSLP eligibility. The oﬃcials said that parents or guardians may
not realize that some students who do not receive SNAP but would otherwise meet Pandemic
EBT eligibility requirements may not receive beneﬁts if those students are not registered for NSLP.
FNS allows school districts to use the most recent lists of children eligible for free or reduced-price
school meals to determine Pandemic EBT eligibility. FNS guidance emphasizes that school districts
must provide an opportunity for new students and those who have become newly income-eligible
for free or reduced-price school meals to establish their eligibility. However, given that students
can still receive free meals without submitting new applications, parents of many students eligible
for Pandemic EBT may not have been actively encouraged to provide the information needed to
access beneﬁts.

88FNS oﬃcials noted that these data challenges are somewhat mitigated during the summer, when state agencies
do not need to track school operating status.

Page 70 GAO-22-105291
As mentioned before, USDA has strategic goals to ensure it delivers its programs eﬃciently and
eﬀectively and to provide all Americans access to a safe, nutritious, and secure food supply.
Furthermore, Standards for Internal Control in the Federal Government state that management
should use quality information to achieve its objectives. According to these standards, quality
information is appropriate, accurate, current, complete, and provided on a timely basis. While
state educational agencies directly manage Pandemic EBT eligibility data, FNS should take steps
to improve the reliability of the data to ensure program integrity and meet programmatic goals.
For example, FNS could provide additional guidance or templates to state and local educational
agencies to help them collect the speciﬁc data needed for Pandemic EBT.

By providing further assistance to states and local agencies to collect reliable and comprehensive
data, FNS has the potential to improve students’ and their families’ access to Pandemic EBT as well
as ensure program integrity through accurately determining eligibility and beneﬁt amounts. For
example, FNS may be able to alleviate signiﬁcant delays in issuing Pandemic EBT beneﬁts moving
forward to help ensure the program is operating eﬃciently and eﬀectively and that participants
receive beneﬁts in a timely manner. Also, FNS can have assurance that states have identiﬁed all
eligible students for Pandemic EBT and that only eligible students are receiving beneﬁts.

FNS has determined that Pandemic EBT is at high-risk for improper payments and is taking
measures to mitigate risks. In summer 2021, FNS assessed Pandemic EBT for susceptibility to
signiﬁcant improper payments. Similar to what we reported in July 2021, FNS found that some
factors indicated the potential for susceptibility to signiﬁcant improper payments, including that
eligibility decisions and payments are made by state or local government agencies, a risk factor
noted in the Payment Integrity Information Act of 2019. According to FNS oﬃcials, provisions
of FFCRA encouraged states to use the best feasible data to issue Pandemic EBT beneﬁts in a
timely manner, and FFCRA does not demand or expect precision in identifying eligible children or
calculating beneﬁt amounts.

FNS’s Oﬃce of the Chief Financial Oﬃcer has reviewed FNS’s improper payment risk assessment
for Pandemic EBT and found the program to be at high-risk for improper payments. This
designation triggered several improper payment reporting deliverables that will be due
throughout ﬁscal year 2022, according to FNS. Additionally, FNS oﬃcials said an FNS workgroup
has developed a protocol to provide oversight of state agencies for Pandemic EBT. The workgroup
reviewed six states using the protocol in August and September 2021, and will use that
information for an internal report on common strengths and weaknesses across the states. FNS
oﬃcials said the report will also inform any additional mitigation and corrective action necessary
for Pandemic EBT. FNS oﬃcials noted that the protocol may beneﬁt the agency’s administration of
other emergency programs or a future permanent program modeled on Pandemic EBT.

FNS continues to modernize WIC to help promote access to beneﬁts. FNS oﬃcials provided
updates on several ongoing WIC eﬀorts during the pandemic.

WIC Task Force. The Task Force submitted a report to USDA on September 30, 2021, that
recommended (1) use of online ordering and purchasing that follows commercial models and best
practices, and (2) proposed regulatory changes that will enhance innovation and reduce barriers

Page 71 GAO-22-105291
to online shopping.89 USDA subsequently submitted a report to Congress that included a plan to
carry out the recommendations received and an assessment of whether legislative changes are
necessary to address such recommendations.90 National WIC Association oﬃcials said WIC has
consistently trailed behind SNAP in oﬀering online purchasing because the statute and regulations
governing WIC generally prohibit states from allowing transactions without the physical presence
of a client and cashier.91

WIC beneﬁt increase. USDA increased the cash-value voucher for fruits and vegetables in ﬁscal
year 2021, with a cost of $114.7 million.92 This increased beneﬁt expired on September 30,
2021; however, the Extending Government Funding and Delivering Emergency Assistance Act
temporarily increased the WIC cash-value voucher again.93 National WIC Association oﬃcials said
that maintaining this increased beneﬁt is important because it has helped keep participants on
WIC, and that consuming more fruits and vegetables is likely to provide health beneﬁts.

WIC program modernization. FNS conducted more than 30 listening sessions with program
stakeholders, such as state and local agencies and WIC recipients, and FNS shared an investment
framework with state agencies to guide the use of $390 million in American Rescue Plan Act of
2021 (ARPA) funds.94

Return to in-person WIC operations. As of December 2021, 88 of the 89 WIC state agencies were still
using the physical presence waiver, which allows agencies to deliver WIC services remotely, though
some states were oﬀering both in-person and remote appointments.95 According to FNS oﬃcials,
challenges state agencies face in reopening in-person services include participants’ concern
about coming into WIC clinics, especially with children who are too young to be vaccinated against
COVID-19, as well as clinic staﬀ’s hesitancy to return to an oﬃce to provide services.

89In response to a Consolidated Appropriations Act, 2021 requirement, FNS established a WIC Task Force in March
2021 to study how to streamline and promote convenient, safe, and equitable access to WIC beneﬁts. For the report,
see USDA Task Force on Supplemental Foods Delivery, Task Force on Supplemental Foods Delivery in the WIC Program:
Recommendations Report, (Washington, D.C.: Sept. 2021).
90The Consolidated Appropriations Act, 2021 required (1) the WIC Task Force to submit a report to USDA on the study
results and related recommendations by September 30, 2021, and (2) USDA to submit a report to Congress within 45
days of receiving the Task Force report.
91In addition to convening the WIC Task Force, 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. In
December 2021, the center issued subgrants to states and was in the process of developing guidance and best practices
for WIC online ordering.
92ARPA 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. Pub. 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.
93The Extending Government Funding and Delivering Emergency Assistance Act increased the WIC cash-value voucher
for fruits and vegetable to an amount recommended by the National Academies of Science, Engineering and Medicine
and adjusted for inﬂation. Pub. L. No. 117-43, § 118, 135 Stat. 344, 348 (2021). According to USDA oﬃcials, for the ﬁrst
quarter of ﬁscal year 2022, the value was $24 for children, $43 for pregnant and postpartum women, and $47 for fully
and partially breastfeeding women.
94ARPA provided $390 million to USDA to remain available through ﬁscal year 2024, for WIC outreach, innovation, and
program modernization eﬀorts, including oﬀering waivers and ﬂexibilities to states, to increase participation and beneﬁt
redemption. Pub. L. No. 117-2, § 1106, 135 Stat. 4, 17.
95WIC state agencies include 50 states, the District of Columbia, ﬁve territories, and 33 Indian Tribal Organizations.

Page 72 GAO-22-105291
FNS continues to face challenges operating TEFAP, but added a fresh produce option and
funds to increase access. FNS oﬃcials provided updates on several ongoing TEFAP eﬀorts during
the pandemic.

Canceled TEFAP orders. Canceled TEFAP orders due to pandemic-induced supply chain issues
continue to be a challenge for FNS and states. FNS data for ﬁscal year 2021 show that 22 percent
of TEFAP orders were canceled—totaling about 13,000 truckloads with a value of nearly $540
million.96

TEFAP fresh produce initiative. Forty-four state agencies ordered about 1.7 million TEFAP mixed
fresh produce boxes for delivery to states and food banks from June to December 2021, with
an estimated total value of $13 million. FNS expects to continue oﬀering these boxes into ﬁscal
year 2022. Feeding America and the American Commodity Distribution Association support
FNS continuing the fresh produce initiative. Food banks prefer purchasing fresh produce in bulk
because bulk purchases result in cost savings, streamlined distribution, eﬃcient storage, and
greater acceptance of produce from participating families.

Additional funds to support emergency feeding programs. As a result of ARPA, in June 2021, FNS
announced its plan to provide $1 billion to support and expand the emergency food network,
including $500 million for TEFAP food, $100 million for infrastructure needs, and $400 million
for cooperative agreements for state agencies to support local and regional procurement.97 FNS
oﬃcials said these funds will support local organizations and rural, remote, and underserved
communities. According to Feeding America and American Commodity Distribution Association
oﬃcials, TEFAP is a critical part of how food banks provide emergency food assistance, and is
particularly important in rural communities, where families may have limited access to resources,
especially during the pandemic.

Methodology
We reviewed FNS data on program participation through September 2021 that were released in
December 2021 and FNS data on expenditures as of November 30, 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.

We interviewed FNS oﬃcials, as well as SNAP oﬃcials in ﬁve states—California, Illinois,
Louisiana, Montana, and Virginia—selected for a variety of factors, including states’ overall SNAP
participation rates, requests for certain SNAP adjustments during the pandemic, and geographic
diversity. In these interviews, we discussed experiences administering nutrition assistance
programs during the pandemic and FNS’s guidance and assistance to states. We also interviewed

96As we reported previously, canceled TEFAP orders result from a variety of supply chain issues reported by vendors that
aﬀect product availability, including shortages of raw materials and transportation challenges.
97In August 2021, USDA oﬀered states up to $100 million of the $500 million in food funds to support state
administrative expenses; the remaining funds were used to purchase additional food for TEFAP through the end of ﬁscal
year 2021. USDA is currently approving implementation plans and proposal documents to allocate the $100 million in
infrastructure funds and $400 million for cooperative agreements.

Page 73 GAO-22-105291
oﬃcials from the American Commodity Distribution Association, the American Public Human
Services Association, Code for America, Feeding America, and the National WIC Association. These
organizations represent state and local stakeholders who have implemented nutrition assistance
programs during the pandemic. Finally, we reviewed relevant federal laws, FNS guidance, and
relevant documents.

Agency Comments
We provided a draft of this enclosure to USDA and the Oﬃce of Management and Budget
(OMB) for review and comment. USDA agreed with both recommendations. With regard to
the ﬁrst recommendation, USDA emphasized that the department must balance developing a
comprehensive strategy with the resources needed for responding to the ongoing COVID-19
pandemic. USDA noted that it would analyze lessons learned during the pandemic based on input
from states and other stakeholders to implement short-term solutions, which will inform the
department’s development of a long-term, comprehensive strategy. With regard to the second
recommendation, USDA noted that it would focus its eﬀorts on facilitating the transfer of eligibility
data for child nutrition programs across state and local agencies to support the administration
of future emergency programs and USDA’s permanent nutrition assistance programs. The
department noted that it would work to develop tools or processes that states may adopt at their
option, given USDA’s limited authority to impose data management solutions on state and local
agencies.

USDA also provided technical comments, which we incorporated as appropriate. OMB did not
provide comments.

GAO’s Ongoing Work
We will continue to monitor program integrity in FNS’s nutrition assistance programs, as well as
the agency’s eﬀorts to develop a comprehensive strategy for its nutrition assistance programs to
respond to emergencies and the agency’s work to ensure states have suﬃcient, reliable data to
implement Pandemic EBT accurately and equitably.

GAO’s Prior Recommendations
The table below presents our recommendation on nutrition assistance from a prior bimonthly
CARES Act report.

Page 74 GAO-22-105291
Prior GAO Recommendation Related to COVID-19 Nutrition Assistance
Recommendation Status

The Secretary of Agriculture should ensure that the Administrator Closed—addressed. FNS generally agreed with
of the Food and Nutrition Service (FNS) (1) provides suﬃcient this recommendation and took action to address
context to help stakeholders and the public understand and it. In March 2021, FNS reconﬁgured its data system
interpret data on federal nutrition assistance programs during so that manual processing would no longer be
the pandemic and (2) discloses potential sources of error that necessary. By doing so, FNS has removed potential
may aﬀect data quality during the pandemic, such as manual sources of error that aﬀected data quality earlier
processing. For example, the agency could publish key information in the COVID-19 pandemic. The agency also added
from its internal communications plan that it developed for the several table notes to data it released in April 2021
January 2021 data release and include additional table notes in to help provide stakeholders and the public with
subsequent data releases to help explain these issues. (March suﬃcient context to understand and interpret key
2021 report) data.

Source: GAO. I GAO-22-105291

Related GAO Products
National Preparedness: Additional Actions Needed to Address Gaps in the Nation’s Emergency
Management Capabilities. GAO-20-297. Washington, D.C., May 4, 2020.

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

Contact information: Kathryn A. Larin, (202) 512-7215, larink@gao.gov

Page 75 GAO-22-105291
Unemployment Insurance Programs
Weekly claims for CARES Act unemployment insurance beneﬁts declined considerably after those
programs expired in September 2021, and regular unemployment insurance claims were generally
similar to prepandemic levels in November and December. States continued to address challenges
resulting from historic numbers of claims during the COVID-19 pandemic—such as delayed beneﬁt
payments and increased amounts of overpayments—that have future implications.

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. The Department
of Labor (DOL) oversees states’ compliance with federal requirements, such as by ensuring that
states pay beneﬁts when they are due. Regular UI beneﬁts, which have been provided by state
UI programs since before the CARES Act was enacted, are funded primarily through state taxes
levied on employers.98 These beneﬁts are intended to replace a portion of a claimant’s previous
employment earnings, according to DOL.

The CARES Act created three federally funded temporary UI programs that expanded beneﬁt
eligibility and enhanced beneﬁts during the COVID-19 pandemic. These programs, which were
amended by the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021,
expired in September 2021. About half of the states, however, ended their participation in at least
one of these programs in June or July, according to DOL. These temporary UI programs were:

1. Pandemic Unemployment Assistance (PUA), which authorized UI beneﬁts for individuals not
otherwise eligible for UI beneﬁts, such as self-employed and certain gig economy workers,
who were unable to work as a result of speciﬁed COVID-19-related reasons.99

2. Federal Pandemic Unemployment Compensation (FPUC), which generally authorized an
additional weekly beneﬁt for individuals who were eligible for weekly beneﬁts under the
regular UI or CARES Act UI programs.100

3. Pandemic Emergency Unemployment Compensation (PEUC), which generally authorized
additional weeks of UI beneﬁts for those who had exhausted their regular UI beneﬁts.101

In addition, the Consolidated Appropriations Act, 2021 created the Mixed Earner Unemployment
Compensation (MEUC) program, which was extended by the American Rescue Plan Act of 2021

98To 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.
99Pub. L. No. 116-136, § 2102, 134 Stat. 281, 313 (2020), as amended.
100Pub. L. No. 116-136, § 2104, 134 Stat. at 318, as amended.
101Pub. L. No. 116-136, § 2107, 134 Stat. at 323, as amended.

Page 76 GAO-22-105291
and expired in September 2021.102 According to DOL, the MEUC program was intended to cover
regular UI claimants whose beneﬁts did not account for signiﬁcant self-employment income and
who thus may have received a lower regular UI beneﬁt than they would have received had they
been eligible for PUA.103

DOL required states to process and pay PUA, FPUC, PEUC, and MEUC beneﬁts to eligible claimants
for all weeks of unemployment before the programs ended due to early termination or expiration.
In August 2021, the Secretary of the Treasury and the Secretary of Labor issued a joint letter to
Congress aﬃrming that states and territories also had the option to use Coronavirus State and
Local Fiscal Recovery Funds from the American Rescue Plan Act of 2021 to provide additional
weeks of income support to workers whose beneﬁts had expired in September 2021 and to
workers who were not covered by the regular UI program. However, DOL oﬃcials told us they
were not aware of any states or territories that had used this funding for these purposes as of
November 2021. Oﬃcials said one explanation may be that some states had already committed
these funds for other purposes. They noted that states do not report to DOL on how they use
these funds, because the funds are administered by the Department of the Treasury.

During the pandemic, regular UI claimants who exhausted their regular UI and PEUC beneﬁts
in certain states also had access to the Extended Beneﬁts program. The program, which existed
before 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.104

Because of high numbers of UI claims during the pandemic, some states have held substantial
federal loans to pay UI beneﬁts.105 As of December 31, 2021, nine states and one territory held
federal loans totaling about $39.9 billion, which is two states less and approximately $5.4 billion
less than we reported in October 2021.106 Following guidance from Treasury, some states used

102The MEUC program, which was voluntary for states, authorized 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. Pub. 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.
103According to DOL, 51 states and territories elected to participate in the MEUC program, with Idaho and South Dakota
opting not to participate, but 23 states terminated their participation in June or July 2021. The remaining 28 states and
territories continued participating in the MEUC program until it expired in September 2021, including Maryland, which
intended to terminate participation but did not because of litigation at the state level, according to DOL. As of November
2021, not all participating states and territories had begun paying MEUC beneﬁts, according to DOL.
104After the PEUC program ended, Extended Beneﬁts were available to claimants who exhausted their regular UI
beneﬁts in certain states.DOL reported that as of January 9, 2022, the Extended Beneﬁts program was activated in two
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.
105While the CARES Act UI programs were federally funded, regular UI is funded primarily 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.
106Under federal law, the accrual of interest was suspended through early September 2021. As we previously reported,
the number of states holding federal loans to pay UI beneﬁts, and the total amount of these loans, decreased slightly in
late summer 2021. According to DOL oﬃcials, this decrease likely occurred because some states repaid these loans in
full before they began accruing interest, and others repaid part of their loan balances to reduce the amount that would
be subject to ongoing interest.

Page 77 GAO-22-105291
Coronavirus Relief Fund payments to reduce or prevent federal loan balances.107 In addition,
states may use Coronavirus State and Local Fiscal Recovery Funds from the American Rescue Plan
Act of 2021 to restore their UI trust funds or to repay federal loan balances.108 As of November
2021, interim reports for some states indicated that they planned to contribute some of these
funds to their UI trust funds.109

Overview of Key Issues
Claims for CARES Act UI beneﬁts declined considerably after those programs expired, and
claims for regular UI beneﬁts were generally similar to prepandemic levels in November
and December 2021. After the CARES Act UI programs expired in early September 2021, initial
PUA claims fell nationwide from 102,521 in late August to 17,267 in late September, and continued
PUA and PEUC claims fell from about 9.3 million to 989,538 during that time, according to DOL.110

Initial claims for regular UI beneﬁts in November and December 2021 were generally similar to
prepandemic levels. During that time, the number of regular UI initial claims submitted each week
ranged from about 8 percent higher to about 17 percent lower than the number submitted during
the corresponding weeks in 2019. For example, during the week ending on December 18, 2021,
DOL reported that 255,021 initial claims for regular UI beneﬁts were submitted nationwide, which
was about 11 percent lower than the number submitted during the corresponding week in 2019.

According to DOL oﬃcials, the number of continued claims may be a better measure of continuing
demand for beneﬁts than the number of initial claims. Continued claims for regular UI beneﬁts
were similar to prepandemic levels from mid-November through mid-December 2021. During that
time, the number of regular UI continued claims ranged from about 12 percent higher to about 8
percent lower than the number submitted during the corresponding weeks in 2019. For example,
during the week ending on December 18, 2021, DOL reported that about 1.6 million continued

107The 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 because of the COVID-19 pandemic. Pub.
L. No. 116-136, § 5001, 134 Stat. 281, 501-504. In its guidance on the Coronavirus Relief Fund, 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. 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.
108Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786, 26,822 (May 17, 2021). Funds may be used to
restore a state’s unemployment trust fund to its balance on January 27, 2020, or to pay back advances received for the
payment of beneﬁts between January 27, 2020, and May 17, 2021. 31 C.F.R. § 35.6(b)(5).
109Interim reports were not publicly available for all states.
110Claims counts are for the weeks ending on August 28, 2021, and September 25, 2021, and are not seasonally
adjusted. An initial claim is the ﬁrst claim ﬁled by an individual to determine eligibility for UI beneﬁts after separating
from an employer. According to DOL, after ﬁling an initial claim to establish eligibility for UI beneﬁts, individuals then
generally ﬁle a continued claim on a weekly basis to claim beneﬁts for the preceding week of unemployment. States
continued to receive some PUA and PEUC claims after the programs expired. For 30 days after the PUA program ended,
DOL required states to continue accepting new PUA applications for weeks of unemployment before the program
ended. States were also required to accept new PEUC and MEUC applications for weeks of unemployment before those
programs ended, if state law allowed claims to be backdated.

Page 78 GAO-22-105291
claims for regular UI beneﬁts were submitted nationwide, which was about 8 percent lower than
the number submitted during the corresponding week in 2019.111

During the pandemic, the number of regular UI continued claims submitted each week declined
overall after the peak in late April and early May 2020 through December 2021 (see ﬁgure).
Although some of the decline in regular UI claims was due to claimants’ ﬁnding employment, the
decline was also likely due to other factors, such as claimants’ exhausting regular UI beneﬁts and
beginning to claim PEUC—prior to the program’s expiration in September 2021—or other beneﬁts.

Weekly Continued Claims Submitted Nationwide for Regular UI, PEUC, and Extended Beneﬁts, Mar. 1, 2020–
Dec.18, 2021

Note: After exhausting regular UI beneﬁts—generally available for up to 26 weeks in most states, according to the Department
of Labor (DOL)—eligible individuals were generally able to apply for (1) PEUC; then (2) the Extended Beneﬁts program, if
activated in a state; and then (3) Pandemic Unemployment Assistance (PUA) beneﬁts, in certain circumstances. PEUC and
PUA expired on September 6, 2021. The weekly counts of continued claims shown are not seasonally adjusted. Counts are
from DOL data that include any adjustments submitted by states as of January 6, 2022. All 53 states and territories reported
regular UI claims in each week shown. The number of states and territories reporting PEUC claims varied by week; for example,
fewer than half of the states and territories reported data before mid-May 2020 and at least 50 states and territories reported
data each week from mid-July 2020 through mid-June 2021, when certain states began terminating their PEUC programs. The

111During the week ending on December 18, 2021, states also reported that 87,850 continued claims were submitted
in other programs, including those for Extended Beneﬁts, federal employees and former service members, state
additional beneﬁt programs, and Short-Time Compensation or work-sharing. In addition, states reported continued
claims submitted that week for the PUA and PEUC programs, which had expired on September 6, 2021. According to
DOL, these continued claims were for weeks of unemployment before the programs expired.

Page 79 GAO-22-105291
number of states reporting Extended Beneﬁts claims each week varied, partly on the basis of 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.

As we have previously reported, because of backlogs in processing historic numbers of claims in
many states, among other data issues, the number of continued claims did not approximate the
number of individuals claiming beneﬁts during the pandemic. For example, backlogs in claims
processing led to individuals submitting claims for multiple weeks of beneﬁts in a single reporting
period, which states 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 throughout the pandemic cannot be drawn from data on continued claims.

In fall 2021, the timeliness of regular UI ﬁrst payments remained lower than earlier in
the year, and some claimants still face substantial delays in receiving beneﬁts. As we
have previously reported, the percentage of regular UI ﬁrst payments made within 3 weeks has
ﬂuctuated during the pandemic.112 First-payment timeliness nationwide improved from fall
2020 through January 2021, after a substantial decline in timeliness early in the pandemic due
to the historically high numbers of claims and the resulting processing backlog. Subsequently,
regular UI ﬁrst-payment timeliness nationwide ﬂuctuated from February through April 2021, then
generally declined through October 2021, and then increased in November 2021.113 First-payment
timeliness was about 16 percentage points lower in November than in January 2021 (see ﬁgure).

112DOL 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 uses 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 that states had reported to DOL as of January 3, 2022.
At that point, all 53 states and territories had reported data for November 2021 and prior months.
113The extension of the CARES Act UI programs at the end of 2020, according to DOL oﬃcials, may have aﬀected
payment timeliness because states had to reassign staﬀ and focus resources on implementing new program
requirements. According to oﬃcials, states also cited the need for additional time to process backlogs of claims
requiring adjudication and appeals, decreased numbers of staﬀ, and an increase in adjudication issues following the
implementation of enhanced fraud prevention eﬀorts.

Page 80 GAO-22-105291
Timeliness of First Payments of Regular Unemployment Insurance (UI) Beneﬁts, Jan. 2020–Nov. 2021

Note: We analyzed UI ﬁrst-payment timeliness data that states had reported to the Department of Labor (DOL) as of January
3, 2022. At that point, all 53 states and territories had reported data for November 2021 and prior months. 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 regular UI claims within 14 or 21 days to
reach an acceptable level of performance.

In some states, many regular UI claimants continue to face delays before receiving their ﬁrst
payments. For example, in 15 states, at least half of regular UI claimants who received their ﬁrst
beneﬁts in November 2021 had been waiting longer than 3 weeks. In addition, nationwide, about
23 percent of regular UI claimants who received their ﬁrst beneﬁts in November 2021 had been
waiting longer than 10 weeks. By comparison, of the regular UI claimants nationwide who received
their ﬁrst beneﬁts in March 2020, less than 3 percent had been waiting longer than 3 weeks and
less than 1 percent had been waiting longer than 10 weeks.

In November 2021, DOL oﬃcials said that the decrease in ﬁrst-payment timeliness in August
2021 was likely caused by the same reasons as earlier declines in timeliness that we previously
reported. Speciﬁcally, DOL oﬃcials previously said that when they asked oﬃcials in some states
about the reasons for the decrease in timeliness in May and June 2021, they cited the additional
time and eﬀort needed to process backlogs of claims requiring adjudication and appeals,
decreased numbers of staﬀ, and enhanced fraud prevention eﬀorts that have resulted in more
adjudication issues for states to resolve.

States have continued to identify overpayments in the regular UI and CARES Act UI
programs, and 36 states have reported data to DOL on recovered PUA overpayments.
DOL reported that as of January 3, 2022, states and territories had identiﬁed approximately

Page 81 GAO-22-105291
$27.1 billion in overpayments made in UI programs during the ﬁrst 6 quarters of the pandemic
combined (April 2020 through September 2021).114 These reported overpayments are not
necessarily a result of fraud, though some may be.115 This $27.1 billion in reported overpayments
includes

• $10.4 billion in PUA overpayments,116

• $8.5 billion in FPUC overpayments,117

• $6.9 billion in regular UI and Extended Beneﬁts overpayments, and

• $1.3 billion in PEUC overpayments.118

States and territories reported recovering about $0.5 billion in the PEUC and FPUC programs
combined from April 2020 through September 2021 (i.e., during the 6 quarters those programs
existed).119 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 recovered
PUA overpayments. As of January 3, 2022, 36 states had reported some data on recovered PUA
overpayments, reporting a combined total of about $1.3 billion recovered from April 2020 through
September 2021.120

114While states do not report the actual amount of underpayments to DOL, they estimate underpayments based on
representative samples of paid and denied regular UI claims and report these estimates to DOL. In calendar year 2020,
states estimated about $696 million in regular UI underpayments, although this estimate does not include the second
quarter (April 1, 2020, through June 30, 2020). According to DOL oﬃcials, DOL provided operational ﬂexibilities to states
in response to the pandemic by temporarily suspending this sampling process during the second quarter of 2020 to
allow states to implement the CARES Act UI programs.
115While some overpayments may be caused by unintentional error, fraud involves obtaining something of value
through willful misrepresentation. Whether an act is fraudulent is determined through the judicial or other adjudicative
systems. According to DOL, in the case of these payments made by states, whether an act is fraudulent is deﬁned by
states and must be determined through the appropriate adjudication process.
116States and territories report PUA overpayments data to DOL on a monthly basis, and the total amount shown
includes overpayments related to identity theft. We accessed the PUA overpayments data on January 3, 2022;
these data are subject to change as more states report data and as 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 September 2021. As of January 3, 2022, 40 states and
territories had reported approximately $1.8 billion of additional PUA overpayments. The number of states and
territories that have reported PUA overpayments data varies by month; for example, 45 reported overpayment
amounts in August 2021, and 44 reported overpayment amounts in September 2021.
117FPUC beneﬁts were paid in addition to other UI beneﬁts. About 92 percent of reported FPUC overpayment
amounts were paid on regular UI or PUA claims.
118States and territories report regular UI, Extended Beneﬁts, PEUC, and FPUC overpayments data to DOL
on a quarterly basis. We accessed the data on January 3, 2022. 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.
119We accessed the recovered overpayments data on January 3, 2022; these data are subject to change as more states
and territories report data and as states and territories revise previously reported data.
120As of January 3, 2022, 33 states and territories had reported approximately $32 million of additional PUA
overpayments recovered. As of January 3, 2022, states and territories had also reported recovering about $1.9 billion
in the regular UI and Extended Beneﬁts programs during the ﬁrst 6 quarters of the pandemic combined (April 2020

Page 82 GAO-22-105291
When overpayments are not due to fraud, states and territories may waive and not recover them
in certain circumstances.121 States and territories reported waiving about $0.2 billion of regular
UI, Extended Beneﬁts, PEUC, and FPUC overpayments during the ﬁrst 6 quarters of the pandemic
combined (April 2020 through September 2021).122 In response to a recommendation in our
March 2021 report, DOL updated state reporting requirements for the PUA program in September
2021 to include the collection of data on waived PUA overpayments.123 As of January 3, 2022, 21
states had reported some data on waived PUA overpayments, reporting a combined total of about
$103.6 million waived from April 2020 through September 2021.124

Because of the limited number of states and territories that had reported data on recovered and
waived PUA overpayments to DOL as of January 3, 2022, our related recommendations remain
open. Sustained reporting by more 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.

States and territories also report the amounts of overpayments that are due to fraud—a subset
of the total overpayment amounts.125 During the ﬁrst 6 quarters of the pandemic combined
(April 2020 through September 2021), states and territories reported that about $2.3 billion in
overpayments they had identiﬁed resulted from fraud across the UI programs, including about $1
billion from PUA, $791 million from FPUC, $426 million from the regular UI and Extended Beneﬁts
programs, and $63 million from PEUC.126 However, according to DOL, states do not report such
overpayments until investigations are complete and fraud has been conﬁrmed, which may take a
long time. As a result of these ongoing investigations, increasing amounts of overpayments due to
fraud could be reported in the coming months.

through September 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.
121According to DOL, states generally may waive a nonfraud overpayment, in accordance with state law and an
established waiver policy, 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;
however, 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. 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.
122We accessed the waived overpayments data on January 3, 2022; these data are subject to change as more states and
territories report data and as states and territories revise previously reported data.
123Department of Labor, Pandemic Unemployment Assistance (PUA) Program: Updated Operating Instructions and
Reporting Changes, UIPL 16-20, Change 6 (Washington, D.C.: Sept. 3, 2021).
124As of January 3, 2022, 19 states and territories had reported approximately $71 million of additional PUA
overpayments waived.
125According to DOL guidance, an overpayment is established when a formal notice of determination has been issued.
Whether an act is fraudulent is determined through the judicial or other adjudicative systems. According to DOL,
because states may use diﬀerent deﬁnitions for categorizing an overpayment as fraudulent, an overpayment that is
classiﬁed as fraudulent in one state might not be classiﬁed as fraudulent in another state.
126We accessed the fraud overpayments data on January 3, 2022; these data are subject to change as more states and
territories report data and as states and territories revise previously reported data.

Page 83 GAO-22-105291
In addition to reporting overpayments, states conduct independent assessments of representative
samples of paid and denied claims of permanent UI programs to determine the accuracy of
UI beneﬁt payments and estimate the amount and rate of improper payments.127 According
to OMB’s paymentacccuracy.gov, DOL reported an estimated improper payment amount of
$78.1 billion with an estimated improper payment rate of about 19 percent for ﬁscal year 2021.
According to DOL oﬃcials, the estimated improper payment amount includes the regular UI,
Extended Beneﬁts, PEUC, and FPUC programs.

According to DOL oﬃcials, because PUA has unique and distinct eligibility requirements, applying
the improper payment methodology for the regular UI program would not be appropriate.
Oﬃcials said they are exploring methods to estimate improper payments for PUA that will not be
overly burdensome for states. DOL oﬃcials stated that they are required to submit the improper
payment estimation methodology to OMB by June 2022, and they plan to include the estimates in
DOL’s ﬁscal year 2022 agency ﬁnancial report.128

We have previously reported that the identiﬁcation of improper payments could suggest that a
program is vulnerable to fraud; however, it is important to note that fraud is a speciﬁc type of
improper payment and that improper payment estimates are not intended to measure fraud in a
particular program.

DOL continues to address potential fraud in the UI programs and is also taking steps to
address equitable access to UI beneﬁts and timely payment of those beneﬁts. In fall 2021,
DOL continued implementing its plan for using $2 billion in funding provided by the American
Rescue Plan Act of 2021 to combat potential UI fraud, promote equitable access to UI beneﬁts, and
ensure timely payment of those beneﬁts. As we reported in October 2021, DOL’s plan includes: 1)
sending experts directly to states to help them address challenges related to fraud, beneﬁt access,
and beneﬁt timeliness, 2) providing states with grants to combat potential fraud and address
equity, 3) supporting states in modernizing their IT systems, and 4) awarding purchase agreements
to vendors that can assist states in preventing identity fraud.129 In fall 2021, agency oﬃcials said
that DOL had taken the following actions in these areas:

• Deployed expert teams to six states, and began deploying expert teams to six others. According to
DOL oﬃcials, as of the end of October 2021, teams of experts in fraud, timeliness, technology,
and equity had ﬁnished gathering information from the ﬁrst six states that volunteered to
participate—Colorado, Kansas, Nevada, Virginia, Washington, and Wisconsin—and were
working with DOL and the states to ﬁnalize recommendations. Oﬃcials said that expert

127An improper payment is deﬁned as any payment that should not have been made or that was made in an incorrect
amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally
applicable requirements. 31 U.S.C. § 3351(4). For the purpose of producing an improper payment estimate, when the
executive agency cannot determine, due to lacking or insuﬃcient documentation, whether a payment is proper or not,
the payment shall be treated as an improper payment. 31 U.S.C. § 3352(c)(2).
128According to OMB guidance, OMB does not formally approve improper payment estimation methodologies
submitted by agencies prior to implementation. See 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).
129See Department of Labor, “Fact Sheet: Unemployment Insurance Modernization: American Rescue Plan Act Funding
for Timely, Accurate and Equitable Payment in Unemployment Compensation Programs,” Aug. 11, 2021, https://
oui.doleta.gov/unemploy/pdf/FactSheet_UImodernization.pdf.

Page 84 GAO-22-105291
teams had also held initial meetings with four of six additional states that had volunteered to
participate: Alabama, Connecticut, Iowa, Kentucky, Nebraska, and Pennsylvania. As this work
continues, oﬃcials said they plan to use the expert teams’ ﬁndings to identify best practices
and solutions for common challenges, and make them available as a resource for all states.
In November 2021, DOL announced the availability of up to $200 million in grant funding to
support states in improving UI systems and processes by implementing the expert teams’
recommendations following a consultative assessment.130

• Awarded grants to states to strengthen their eﬀorts to address potential fraud and recover
overpayments, and solicited grant applications from states to address equity issues. As we
previously reported, DOL announced grant opportunities for states to address potential
fraud and recover overpayments in their UI programs.131 According to DOL oﬃcials, DOL
awarded a total of about $94 million in these grants in 2021, including grants to 55 states,
territories, and the District of Columbia for PUA and to 50 states, territories, and the District of
Columbia for PEUC.132 In addition, DOL announced that it had awarded a total of nearly $134
million to 50 states, territories, and the District of Columbia to combat potential fraud in all UI
programs. DOL also solicited grant applications from states to address equity issues, such as
by improving access to the regular UI program for individuals with disabilities or individuals
who have limited or no internet access, and eliminating administrative barriers to beneﬁt
applications.133 States seeking these grants were required to identify the equity gaps they
planned to address and the metrics they planned to use to measure improvement in equitable
access. In October 2021, DOL oﬃcials said they planned to review states’ applications to
ensure that states planned to use these funds for allowable purposes and had identiﬁed
suﬃcient metrics before they awarded these grants.

• Began developing modular technology solutions and a UI customer service blueprint. In November
2021, DOL oﬃcials said they had begun working with OMB’s U.S. Digital Service to develop
modular technology solutions that can be integrated with state IT systems. Oﬃcials said they
planned to begin pilot testing the ﬁrst module, which is focused on the claimant experience,
with states in February or March of 2022. In December 2021, DOL announced that Arkansas

130See Department of Labor, Grant Opportunity to Support States Following a Consultative Assessment for Fraud
Detection and Prevention, Promoting Equitable Access, and Ensuring the Timely Payment of Beneﬁts, including Backlog
Reduction, for all Unemployment Compensation (UC) Programs, UIPL 2-22 (Washington, D.C.: Nov. 2, 2021).
131For more information about these fraud-related grants, see Department of Labor, Additional Funding to
Assist with Strengthening Fraud Detection and Prevention Eﬀorts and the Recovery of Overpayments in the Pandemic
Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) Programs, as well
as Guidance on Processes for Combatting Identity Fraud, UIPL 28-20, Change 2 (Washington, D.C.: Aug. 11, 2021).
Also see Department of Labor, Grant Opportunity to Support States with Fraud Detection and Prevention, Including
Identity Veriﬁcation and Overpayment Recovery Activities, in All Unemployment Compensation (UC) Programs, UIPL 22-21
(Washington, D.C.: Aug. 11, 2021).
132These PUA grants were available to 6 territories that administered the PUA program under the CARES Act but do
not administer regular UI programs: Guam, American Samoa, the Commonwealth of the Northern Mariana Islands,
the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau.
133For more information about these equity grants, including other allowable uses of these funds, see Department
of Labor, Grant Opportunity for Promoting Equitable Access to Unemployment Compensation (UC) Programs, UIPL 23-21
(Washington, D.C.: Aug. 17, 2021). State grant applications were due on December 31, 2021.

Page 85 GAO-22-105291
and New Jersey would be the ﬁrst two states to participate in the pilot project.134 Oﬃcials
noted that they are also working with the U.S. Digital Service to develop a blueprint for the UI
customer experience.

• Addressed identity-related fraud by issuing instructions to states on accessing identity veriﬁcation
and fraud protection services and working with the Social Security Administration to establish
a secure incarceration data exchange. As we previously reported, DOL oﬃcials told us that
they had awarded purchase agreements to three vendors that states can use to combat
identity-related fraud. In September 2021, DOL issued instructions to states on how to use
DOL’s blanket purchase agreements to order the identity veriﬁcation and fraud protection
services provided by these vendors.135 As a separate action, DOL oﬃcials said they signed a
Memorandum of Understanding with the Social Security Administration in October 2021 to
establish a secure incarceration data exchange that will allow states to cross-match UI claims
data with incarceration records when determining the eligibility of UI claimants. That month,
DOL announced the establishment and availability of this secure incarceration data exchange,
and provided guidance for states on how to access it.136

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 January 6, 2022. We reviewed relevant federal
laws and DOL guidance. We interviewed DOL oﬃcials about program data and agency actions, and
we also interviewed DOL Oﬃce of Inspector General oﬃcials. In addition, we reviewed data ﬁle
documentation and written responses from DOL oﬃcials. Further, 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. We examined the data for outliers, missing values, and
errors. We determined that the DOL data we used were suﬃciently reliable for the purposes of
this report.

Agency Comments
We provided DOL and OMB with a draft of this enclosure. DOL provided technical comments on
this enclosure, which we incorporated as appropriate. OMB did not provide any comments.

134See Department of Labor, Announcing Grant Awards Made to States Selected to Participate in the Unemployment
Insurance (UI) Information Technology (IT) Modernization Project - Claimant Experience Pilot, TEN No. 16-21 (Washington,
D.C.: Dec. 2, 2021).
135See Department of Labor, Accessing Unemployment Insurance (UI) Identity Veriﬁcation and Fraud Protection (Identity
Prooﬁng) Services using the U.S. Department of Labor’s (Department) Blanket Purchase Agreements (BPA), TEN 6-21
(Washington, D.C.: Sept. 15, 2021).
136For more information about this data exchange, see Department of Labor, Announcing the Availability of an
Incarceration Data Exchange and Instructions to Access the Data Exchange between the Unemployment Insurance (UI)
Interstate Connection Network (ICON) and the Social Security Administration (SSA) Prisoner Update Processing System
(PUPS), UIPL 01-22 (Washington, D.C.: Oct. 29, 2021).

Page 86 GAO-22-105291
GAO’s Ongoing Work
In our ongoing work, we continue to examine a variety of UI issues, including:

• the implementation and administration of the 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;

• selected claimants’ experiences during the pandemic, including their experiences with
accessing the CARES Act UI programs;

• selected states’ data on PUA beneﬁt receipt, by race and ethnicity;

• programmatic risks and challenges for the regular UI program as well as options for program
transformation; and

• UI IT systems modernization.

GAO’s Prior Recommendations
The table below presents our recommendations on UI programs from prior CARES Act reports.

Page 87 GAO-22-105291
Prior GAO Recommendations Related to Unemployment Insurance (UI) Programs
Recommendation Status

The Secretary of Labor should designate a dedicated entity Open–not addressed. The Department of
and document its responsibilities for managing the process Labor (DOL) neither agreed nor disagreed with
of assessing fraud risks to the unemployment insurance our recommendation. In December 2021, DOL
program, consistent with leading practices as provided in our reiterated that its Chief Financial Oﬃcer and the
Fraud Risk Framework. This entity should have, among other Employment and Training Administration’s Assistant
things, clearly deﬁned and documented responsibilities and Secretary are responsible for risk management in
authority for managing fraud risk assessments and for facilitating the UI program. We maintain that, consistent with
communication among stakeholders regarding fraud-related our Fraud Risk Framework, it is important for DOL
issues (October 2021 report). to clearly document this designation and these
oﬃcials’ antifraud responsibilities.

The Secretary of Labor should identify inherent fraud risks facing Open–not addressed. DOL neither agreed nor
the unemployment insurance program (October 2021 report). disagreed with our recommendation. In December
2021, DOL reiterated that its current process allows
it to identify, evaluate, and manage risks. However,
DOL also said it will incorporate the recommended
practices and approaches from the Fraud Risk
Framework in its risk assessment activities moving
forward. We will continue to monitor DOL’s fraud
risk assessment activities.

The Secretary of Labor should assess the likelihood and impact of Open–not addressed. DOL neither agreed nor
inherent fraud risks facing the unemployment insurance program disagreed with our recommendation. In December
(October 2021 report). 2021, DOL reiterated that its current process allows
it to identify, evaluate, and manage risks. However,
DOL also said it will incorporate the recommended
practices and approaches from the Fraud Risk
Framework in its risk assessment activities moving
forward. We will continue to monitor DOL’s fraud
risk assessment activities.

The Secretary of Labor should determine fraud risk tolerance for Open–not addressed. DOL neither agreed nor
the unemployment insurance program (October 2021 report). disagreed with our recommendation. In December
2021, DOL reiterated that its current process allows
it to identify, evaluate, and manage risks. However,
DOL also said it will incorporate the recommended
practices and approaches from the Fraud Risk
Framework in its risk assessment activities moving
forward. We will continue to monitor DOL’s fraud
risk assessment activities.

The Secretary of Labor should examine the suitability of existing Open–not addressed. DOL neither agreed nor
fraud controls in the unemployment insurance program and disagreed with our recommendation. In December
prioritize residual fraud risks (October 2021 report). 2021, DOL reiterated that its current process allows
it to identify, evaluate, and manage risks. However,
DOL also said it will incorporate the recommended
practices and approaches from the Fraud Risk
Framework in its risk assessment activities moving
forward. We will continue to monitor DOL’s fraud
risk assessment activities.

The Secretary of Labor should document the fraud risk proﬁle for Open–not addressed. DOL neither agreed nor
the unemployment insurance program (October 2021 report). disagreed with our recommendation. In December

Page 88 GAO-22-105291
Recommendation Status
2021, DOL reiterated that its current process allows
it to identify, evaluate, and manage risks. However,
DOL also said it will incorporate the recommended
practices and approaches from the Fraud Risk
Framework in its risk assessment activities moving
forward. We will continue to monitor DOL’s fraud
risk assessment activities.

The Secretary of Labor should ensure the Oﬃce of Unemployment Open—partially addressed. DOL agreed with our
Insurance collects data from states on the amount of recommendation and on September 3, 2021, issued
overpayments waived in the Pandemic Unemployment Assistance PUA program guidance and updated instructions
(PUA) program, similar to the regular UI program (March 2021 for states to report PUA overpayments waived. As
report). of January 3, 2022, 21 states had reported some
data on PUA overpayments waived. We will continue
to monitor state reporting of PUA overpayments
waived.

The Secretary of Labor should ensure the Oﬃce of Unemployment Open—partially addressed. DOL agreed with our
Insurance collects data from states on the amount of recommendation and on January 8, 2021, issued
overpayments recovered in the PUA program, similar to the PUA program guidance and updated instructions for
regular UI program (January 2021 report). states to report PUA overpayments recovered. As
of January 3, 2022, 36 states had begun reporting
some data on the amount of PUA overpayments
recovered. Sustained reporting by more 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 Unemployment Open—partially addressed. DOL partially agreed
Insurance pursues options to report the actual number of distinct with our recommendation. Speciﬁcally, DOL
individuals claiming beneﬁts, such as by collecting these already agreed to pursue options to report the actual
available data from states, starting from January 2020 onward number of distinct individuals claiming UI beneﬁts.
(November 2020 report). However, DOL did not agree with the recommended
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.
In November 2021, DOL oﬃcials said their work
on the new state report that would capture data
related to distinct individuals claiming regular UI
beneﬁts had not yet been completed, due to other
competing priorities. In January 2022, oﬃcials said
they plan to have the new data collection ready for
submission for public notice and comment early in
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.

Page 89 GAO-22-105291
Recommendation Status

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 received 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
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 use of regular and expanded UI
beneﬁt programs.

The Secretary of Labor should ensure the Oﬃce of Unemployment Closed—addressed. DOL’s weekly news release
Insurance revises its weekly news releases to clarify that in the of December 10, 2020, clariﬁed that the numbers
current unemployment environment, the numbers it reports for reported for weeks of UI beneﬁts claimed do not
weeks of unemployment claimed do not accurately estimate the represent the number of unique individuals claiming
number of unique individuals claiming beneﬁts (November 2020 beneﬁts.
report).

The Secretary of Labor should, in consultation with the Small Closed—addressed. DOL issued guidance on
Business Administration (SBA) and the Department of the August 12, 2020, clarifying that individuals working
Treasury, immediately provide information to state unemployment full time and being paid through PPP are not eligible
agencies that speciﬁcally addresses SBA's Paycheck Protection for UI. The guidance also clariﬁed that individuals
Program (PPP) loans, and the risk of improper payments working part time and being paid through PPP
associated with these loans (June 2020 report). would 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. Finally, the guidance noted that an individual
receiving full compensation would be ineligible for
UI.

Source: GAO. I GAO-22-105291

Related GAO Products
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) 512-4769, costat@gao.gov and Seto J. Bagdoyan,
(202) 512-6722, bagdoyans@gao.gov

Page 90 GAO-22-105291
Emergency Rental Assistance
The Department of the Treasury has not yet designed processes, such as post-payment reviews
or recovery audits, for identifying and recovering overpayments made by grantees to households,
landlords, or utility providers to help reasonably assure payment integrity for the Emergency
Rental Assistance programs, and the Oﬃce of Management and Budget has not yet issued
guidance on the programs in the Compliance Supplement for single audits.

Entities involved: Department of the Treasury and Oﬃce of Management and Budget

Recommendations for Executive Action
The Secretary of the Treasury should design and implement processes, such as post-payment
reviews or recovery audits, to help ensure timely identiﬁcation and recovery of overpayments
made by grantees to households, landlords, or utility providers in the Emergency Rental Assistance
programs. Treasury agreed with this recommendation.

The Director of the Oﬃce of Management and Budget, in consultation with the Secretary of the
Treasury, should issue guidance now or in the near future on the Emergency Rental Assistance
programs in the Oﬃce of Management and Budget’s Compliance Supplement for single audits to
help ensure that auditors consistently and timely identify deﬁciencies in grantees’ compliance with
the programs’ requirements. The Oﬃce of Management and Budget neither agreed nor disagreed
with this recommendation.

Background
In response to concerns about the economic eﬀects of the COVID-19 pandemic on renters and
their landlords, the Department of the Treasury was appropriated a total of $46.55 billion for two
Emergency Rental Assistance (ERA) programs—referred to by Treasury as ERA1 and ERA2—which
Treasury disburses through grants to speciﬁed grantees to make payments as appropriate to
landlords, utility providers, and eligible renter households. Speciﬁcally, in December 2020, the
Consolidated Appropriations Act, 2021 appropriated about $25 billion for Treasury to make
payments to states (including the District of Columbia), local governments with more than 200,000
residents, U.S. territories, Indian tribes or their tribally designated housing entities, as applicable,
and the Department of Hawaiian Home Lands. The act, as amended, provides for the funds in
ERA1 to remain available to grantees until September 30, 2022.137 In March 2021, the American
Rescue Plan Act of 2021 appropriated about $21.55 billion in additional funding for Treasury to
disburse through ERA2 to grantees, to remain available until September 30, 2025.138

137Pub. L. No. 116-260, div. N, tit. V, § 501, 134 Stat. 1182, 2069-2079 (2020) (codiﬁed at 15 U.S.C. § 9058a), as amended
by Pub. L. No. 117-2, tit. III, § 3201(h), 135 Stat. 4, 58. The American Rescue Plan Act of 2021 extended the period of
availability from December 30, 2021, to September 30, 2022. The Consolidated Appropriations Act, 2021 reserved $15
million of the ERA1 appropriation for administrative expenses of the Secretary of the Treasury. 15 U.S.C. § 9058a(a)(2)(C),
(h).
138Pub. L. No. 117-2, tit. III, § 3201(a)(1), (f)-(g), 135 Stat. 4, 58, (codiﬁed at 15 U.S.C. §§ 9058c(a)(1), (f)-(g)). The statute
directs ERA2 allocations to similar grantees as ERA1, except that ERA2 does not include allocations for Indian tribes or
the Department of Hawaiian Home Lands.

Page 91 GAO-22-105291
ERA provides funds to grantees to administer programs to assist eligible renter households that
are unable to pay rent, utilities, or other expenses due, directly or indirectly, to the COVID-19
pandemic.139 The table below summarizes the amount of Treasury’s ERA appropriations,
disbursals, and spending as of November 30, 2021.

139See Consolidated Appropriations Act, 2021, § 501(c)(2)(A) (codiﬁed at 15 U.S.C. § 9058a(c)(2)(A)); American Rescue Plan
Act of 2021, §3201(d)(1)(A)(i) (codiﬁed at 15 U.S.C. § 9058c(d)(1)(A)(i)). For ERA1, the other expenses related to housing, as
deﬁned by the Secretary of the Treasury, must have been incurred due, directly or indirectly, to the COVID-19 pandemic.
According to Treasury guidance, other expenses related to housing include relocation expenses (including prospective
relocation expenses), such as rental security deposits, and rental fees, which may include application or screening fees. It
can also include reasonable accrued late fees (if not included in rental or utility arrears), and Internet service provided to
the rental unit.

Page 92 GAO-22-105291
Summary of Funding for Emergency Rental Assistance (ERA) Appropriated, Disbursed, and Spent as of November
30, 2021 (dollars in billions)
Amount
appropriated to Amount disbursed Amount spent
Law Treasury to grantees by grantees

Consolidated Appropriations Act, 2021 (ERA1) $25.00 $24.99 $14.58

American Rescue Plan Act of 2021 (ERA2) $21.55 $12.69 $2.81

Total $46.55 $37.68 $17.39

Source: GAO analysis of the Consolidated Appropriations Act, 2021; the American Rescue Plan Act of 2021; and Department of the Treasury (Treasury) data. | GAO-22-105291

Note: The amounts disbursed are through November 30, 2021. For ERA1, the funding remains available until September 30,
2022, and the amount spent includes expenditures for ﬁnancial assistance to households through November 30, 2021, as
well as payments for administrative costs, housing stability services, Indian tribes or their tribally designated housing entities,
and the Department of Hawaiian Home Lands through September 30, 2021. For ERA2, the funding remains available until
September 30, 2025, and the amount spent includes total expenditures through November 30, 2021. As required by law,
Treasury has made available 40 percent of the ERA2 allocations to grantees and is disbursing additional ERA2 funds to grantees
that have both substantially expended their ERA1 allocation and obligated at least 75 percent of their initial ERA2 allocation.

Treasury awards ERA funds to states, local governments, and U.S. territories based primarily on
their population, as required by law.140 Landlords, renter households, and utility providers can
then apply to grantees for ﬁnancial assistance.141 In general, eligible households must (1) have
qualiﬁed for unemployment insurance beneﬁts or experienced a ﬁnancial hardship due to the
COVID-19 pandemic, (2) demonstrate a risk of housing instability or homelessness, and (3) meet
certain household income requirements.

Payment integrity is the process of ensuring that a payment is proper, including the legality,
propriety, validity, and accuracy of payments. Payment integrity controls are designed to help
the government manage risks, including the risk that grantees (1) make payments to ineligible
recipients, (2) make payments in incorrect amounts, and (3) make payments as a result of potential
fraud.

Preventive control activities generally oﬀer the most cost-eﬃcient use of resources to help ensure
payment integrity, since they enable managers to avoid a costly and ineﬃcient “pay-and-chase”
post-payment process.142 However, on occasion, factors beyond the direct control of agencies,
such as the emergency nature of the ERA programs and the challenges that it created for Treasury
and grantees, may limit the extent to which certain control activities are appropriate and feasible
for a program. As we reported in October 2021, some grantees have experienced overwhelming
demand for ERA1 funds and lacked suﬃcient staﬀ capacity to address all applications in a timely

140Consolidated Appropriations Act, 2021, § 501(b)(1) (codiﬁed at 15 U.S.C. § 9058a(b)(1)); American Rescue Plan Act of
2021, §3201(b) (codiﬁed at 15 U.S.C. § 9058c(b)).
141Treasury guidance provides that grantees, in disbursing assistance, may make payments directly to utility providers.
Grantees are required to make reasonable eﬀorts to obtain the cooperation of landlords and utility providers to accept
ERA1 payments before they can be made directly to renter households. For ERA2 funds, grantees can make payments
directly to renter households.
142“Pay-and-chase” refers to the practice of detecting overpayments and attempting to recover funds after payments
have been made.

Page 93 GAO-22-105291
manner. Challenges for grantees also include developing new policies and procedures, hiring
additional staﬀ, and developing electronic application and data collection systems. When agencies
do not establish strong preventive controls, especially in eligibility-based programs such as ERA,
strong post-payment controls can help ensure timely identiﬁcation and recovery of overpayments.

The Single Audit Act establishes requirements for audits of states, local governments, and other
non-federal entities that receive funding from federal ﬁnancial assistance programs (e.g., grants).
Single audits help federal agencies identify deﬁciencies in the grantee’s compliance with applicable
provisions of laws, regulations, contracts, or grant agreements and in the grantee’s ﬁnancial
management and internal controls.

Overview of Key Issues
Identiﬁcation and recovery of overpayments. Treasury has not yet designed processes to
identify and recover overpayments made by grantees, such as post-payment reviews or recovery
audits, to help ensure payment integrity for the ERA programs. A post-payment review occurs
after a payment has been made and is designed to determine whether the payment was correct
or whether there was an over or underpayment. According to guidance from the Oﬃce of
Management and Budget (OMB), a recovery audit is a control process designed to identify and
recapture overpayments, and, as such, is a management function and responsibility.

According to Treasury oﬃcials, the department is designing processes to gather data about
recipients and overcome challenges in data access and data gathering. However, Treasury has
not yet designed a post-payment review process to validate ERA eligibility claims and payments
made by grantees. Additionally, according to oﬃcials, Treasury plans to implement a recovery
audit process; however, the department has not yet established such a recovery audit process to
help ensure timely identiﬁcation and recovery of overpayments made by grantees to households,
landlords, or utility providers in the ERA programs. Also, Treasury oﬃcials indicated that these
payments may be tested as part of future single audits.

Under the Payment Integrity Information Act of 2019 (PIIA), programs and activities that expend $1
million or more in a ﬁscal year are required to perform recovery audits, if conducting such audits
is cost-eﬀective. OMB guidance states that when determining the cost-eﬀectiveness of a recovery
audit, an agency should assess the likelihood that the expected recoveries will be greater than the
costs incurred to identify and recover the overpayments. The agency should consider whether its
existing business practices for recovery activities provide an eﬃcient and eﬀective means for the
identiﬁcation of overpayments.143 Common activities used to identify overpayments outside of
recovery audits include statistical sampling, agency post-payment reviews, and the agency audit
resolution and follow-up process.

According to Treasury oﬃcials, they have not yet conducted a cost-beneﬁt analysis to determine
the cost-eﬀectiveness of payment recovery audits but plan to do so as part of the agency’s PIIA
compliance activities for ﬁscal year 2022.

143Oﬃce 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 94 GAO-22-105291
In addition, Treasury oﬃcials noted that the Consolidated Appropriations Act, 2021 requires
Treasury’s Oﬃce of Inspector General (OIG) to carry out recoupment activities, among other
oversight responsibilities.144 Treasury oﬃcials explained that they have ongoing meetings with
the OIG to determine how they plan to coordinate payment recovery activities and establish
communication mechanisms, but have yet to ﬁnalize a process. While Treasury’s OIG is required
to conduct oversight and recoupment activities, per OMB guidance, Treasury has responsibility
for conducting recovery audits that are determined to be cost-eﬀective to identify and recover
overpayments, including ineligible payments.

Federal internal control standards state that management should design control activities to
achieve objectives and respond to risks and implement control activities through policies. Without
a process for conducting eﬀective post-payment reviews or recovery audits for ERA, such as
reviews to verify eligibility of households and accuracy of payments to households, landlords,
and utility providers, Treasury’s ability to consistently identify and recover overpayments made
by grantees—including those resulting from potential fraud—will be limited. As a result, the
opportunities to identify and recover any overpayments may be delayed or impossible.

Single audit guidance. The Single Audit Act establishes requirements for states, local
governments, and other non-federal entities that receive federal awards (e.g., grants) to undergo
single audits (or, in limited circumstances, program-speciﬁc audits) of those awards annually
(unless a speciﬁc exception applies) when their expenditures meet a certain dollar threshold.145
These audits help identify deﬁciencies in the grantee’s compliance with applicable provisions of
laws, regulations, contracts, or grant agreements and in the grantee’s ﬁnancial management and
internal controls. Correcting such deﬁciencies can help ensure the appropriate use of federal
funds and reduce the likelihood of federal improper payments.

The Single Audit Act directs OMB to develop government-wide guidance on performing audits
to comply with the act. As part of this role, each year OMB, after consultation with federal
agencies, issues a Compliance Supplement—a tool designed to help consolidate applicable
legal requirements for numerous programs into one central place. The Compliance Supplement
identiﬁes the compliance requirements that could have a direct and material eﬀect on major
programs. Auditors who conduct single audits must determine whether the grantee has complied
with laws, regulations, and the provisions of contracts or grant agreements that may have a direct
or material eﬀect on each of its major programs. Federal agencies are responsible for ensuring
that program objectives, procedures, and compliance requirements that are subject to the audit
are submitted to OMB for inclusion in the Compliance Supplement.

144Both the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021 include provisions
addressing the Treasury OIG’s oversight of ERA1 and ERA 2, respectively. However, these provisions diﬀer in that the
Consolidated Appropriations Act, 2021 includes speciﬁc direction for OIG monitoring, oversight, and recoupment related
to ERA1, while the American Rescue Plan Act of 2021 requires Treasury to reserve funds for the OIG’s ERA2 oversight
without further direction. Treasury oﬃcials indicated that they functionally manage ERA1 and ERA2 together. Therefore,
Treasury oﬃcials are planning to consult with the OIG about performing the oversight and recoupment functions for
ERA2 as well.
145The 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. Non-federal entities (states, the District of Columbia, U.S. territories, Indian tribes, local governments,
or nonproﬁt organizations) that expend $750,000 or more in federal awards in their ﬁscal year are required to undergo
a single audit, which is an audit of an entity’s ﬁnancial statements and federal awards (or a program-speciﬁc audit, in
limited circumstances), for the ﬁscal year. 31 U.S.C. § 7502; 2 C.F.R. § 200.501.

Page 95 GAO-22-105291
In its 2021 Compliance Supplement, OMB listed the ERA programs as “higher risk” programs;
therefore, auditors are likely to consider them major programs that must be audited as part of
the single audit process. However, the 2021 Compliance Supplement, issued in August 2021, did
not include guidance for auditing grantee compliance with ERA. Treasury oﬃcials stated that
they could not meet OMB’s deadline because they are still determining Treasury’s policies with
regard to how ERA will be reviewed and what requirements to include in a future Compliance
Supplement. Treasury oﬃcials also said that they plan to have guidance for ERA included in a
forthcoming addendum to the 2021 Compliance Supplement or the 2022 Compliance Supplement
but did not provide any speciﬁc timeframes.146

According to Treasury oﬃcials, for ﬁscal year 2021 single audits, auditors can also use the
supplement’s general compliance guidance applicable to all federal programs not included in
the supplement.147 However, auditors who conduct single audits generally follow guidance in
the Compliance Supplement and agency guidance speciﬁc to their programs. Auditors utilize the
Compliance Supplement to help understand a federal program’s objectives, procedures, and
compliance requirements. Without program-speciﬁc guidance, auditors would need to research
many statutes and regulations for each program to determine which compliance requirements to
test.

Federal internal control standards state that management should use quality information and
externally communicate the necessary quality information to achieve the entity’s objectives.
These standards emphasize the need for providing timely information, which would include such
information as guidance to auditors that conduct single audits, so it can be used for eﬀective
monitoring. The Compliance Supplement identiﬁes important compliance requirements that the
federal government expects to be considered as part of a single audit. Without this guidance,
auditors might not consistently and eﬀectively identify deﬁciencies in grantees’ compliance with
the requirements of ERA, limiting Treasury’s ability to identify and mitigate risks, including risks to
payment integrity.

Methodology
We interviewed oﬃcials from Treasury and reviewed policies and procedures related to payment
integrity risks in the ERA programs. Based on Treasury-provided documentation, we assessed
the design of Treasury’s policies and procedures against relevant statutory requirements, OMB
guidance, and federal internal control standards. For any key control activities that were not
properly designed and documented, we inquired with Treasury oﬃcials to determine the reasons.

146At the time of publication of the 2021 Compliance Supplement, several federal agencies were working to stand
up and develop program sections for new COVID-19 programs, as well as revise existing program sections to address
implications from the American Rescue Plan Act of 2021. Therefore, OMB will be posting addendums to the 2021
Compliance Supplement to include audit guidance for such programs.
147OMB’s guidance implementing the Single Audit Act states that for those federal programs not included in the
Compliance Supplement, the auditor must follow the Supplement’s guidance for auditing programs not included in
the Supplement. See 2 C.F.R. § 200.514(d)(3). For the 2021 Compliance Supplement, Part 7 provides guidance both
in identifying the compliance requirements and designing tests of compliance for programs such as ERA that are not
included in the Supplement.

Page 96 GAO-22-105291
For our review, we focused on Treasury’s eﬀorts related to payment integrity risks. We did not
evaluate Treasury OIG’s oversight and recoupment activities for ERA.

Agency Comments
We provided Treasury and OMB with a draft of this enclosure. Treasury provided written
comments, which are reproduced in appendix VI, and technical comments, which we incorporated
as appropriate. OMB did not provide comments.

Treasury agreed with our recommendation, and stated that it is working to establish post-payment
reviews and recovery audit activities within the schedule prescribed in Treasury’s Implementation
Guide for OMB Circular A-123 Appendix C: Requirements for Payment Integrity. Treasury also
stated that it will be approving and initiating an ERA desk review plan that uses risk-based analytics
to identify the highest-risk ERA recipients. Treasury stated that it is also actively working with OMB
to publish guidance on the programs in the Compliance Supplement in early 2022.

GAO’s Ongoing Work
We will monitor the status of our payment integrity recommendations for Treasury and OMB and
continue our oversight of government-wide payment integrity eﬀorts and OMB’s guidance for
single audits.

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

A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP. Washington, D.C.: July 28,
2015.

COVID-19 Housing Protections: Moratoriums Have Helped Limit Evictions, but Further Outreach Is
Needed. GAO-21-370. Washington, D.C.: March 15, 2021.

Additional Actions Needed to Improve Accountability and Program Eﬀectiveness of Federal Response.
GAO-22-105051. Washington, D.C.: October 27, 2021.

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

Daniel Garcia-Diaz, (202) 512-4529, GarciaDiazD@gao.gov

Page 97 GAO-22-105291
Student Loan Repayment
The Department of Education has begun implementing plans to address anticipated challenges
with helping borrowers resume student loan repayment in May 2022.

Entities involved: Department of Education, including the Oﬃce of Federal Student Aid

Background
Federal student loans are an important resource to help individuals access higher education. As
of November 2021, 45.8 million borrowers had a combined $1.61 trillion in outstanding federal
student loan debt, according to data from the Department of Education. The majority of these
loans are part of the William D. Ford Federal Direct Loan program and are owned by Education.148
Loan servicers under contract with Education are responsible for maintaining federal student loan
records, communicating with borrowers about the status of their loans, and processing payments.

Several types of relief were provided through the CARES Act and actions taken by Education for
all borrowers with student loans owned by Education. This relief included, among other things,
suspending (1) all payments due, (2) interest accrual, and (3) involuntary collections for loans
in default.149 Private student loans and commercially-owned or school-owned federal loans
were not eligible for the suspensions. Education implemented these suspensions retroactively
to March 13, 2020, the date COVID-19 was declared a national emergency. On August 6, 2021,
Education announced these suspensions would expire on January 31, 2022, and planned to
resume repayment in February 2022. Then on December 22, 2021, Education announced that the
period of relief would be extended and these suspensions would now expire on May 1, 2022.150
According to Education, the extension will allow the administration to assess the impacts of the
Omicron variant of the virus on student borrowers and provide additional time for borrowers
to plan for the resumption of payments and reduce the risk of delinquency and defaults after
payments resume.

Beginning May 2, 2022, Education and seven of its loan servicers will resume collection of
payments, interest accrual, and involuntary collection of defaulted loans for 42.3 million borrowers
with federal student loans. About 26.6 million of these borrowers will transition to repayment and

148Some older federal student loans made under the Federal Family Education Loan and Federal Perkins Loan programs
may not be owned by Education.
149On March 27, 2020, the CARES Act was enacted, which suspended payments due, interest accrual, and involuntary
collections for Direct Loans and Federal Family Education Loans held by Education. See Pub. L. No. 116-136, § 3513(a),
(b), (e), 134 Stat. 281, 404-05 (2020). Involuntary collections may include wage garnishments and oﬀsets of tax refunds
or federal beneﬁt payments. In addition, Education has taken several actions, including some prior to the enactment of
the CARES Act, to provide similar relief to borrowers, including those with other federal loans held by Education, such as
Perkins loans. The CARES Act required Education to grant relief to borrowers through September 30, 2020. The period
of relief has been extended by Education ﬁve times, with the most recent announcement extending relief through May
1, 2022. In this enclosure, we do not diﬀerentiate between actions Education took independently of the CARES Act and
actions Education took under the CARES Act. We refer to all such relief as COVID-19 emergency relief for federal student
loans.
150Most of the audit work for this enclosure was completed before the extension to May 1, 2022, was announced on
December 22, 2021. The Education documents we reviewed reﬂected Education’s plan to resume repayment in February
2022. We did not assess how Education’s plans have changed since the most recent extension was announced.

Page 98 GAO-22-105291
be required to make monthly payments once the relief ends, according to data as of November
2021 (see ﬁgure below).151 In addition to those borrowers in repayment, another 7.2 million
borrowers have loans that are in default and 9 million borrowers have loans that do not yet
require monthly payments (because the borrower is enrolled in school or in a grace period).152

Number and Type of Borrowers Aﬀected by the Expiration of COVID-19 Emergency Relief for Federal Student
Loans, as of November 2021

Note: When calculating the number of borrowers in each of the three categories, some borrowers may be double-counted if
they have multiple loans in diﬀerent payment statuses (e.g., one loan in repayment and one loan in default). This, along with
rounding, explains why the sum of the borrowers in the three categories does not exactly equal the total number of borrowers
covered by COVID-19 emergency relief for federal student loans.

Education has a four-part plan for helping borrowers adjust to the end of COVID-19 emergency
relief for federal student loans that focuses on communicating with borrowers, reducing
delinquency, meeting customer service expectations, and monitoring and oversight.

Overview of Key Issues
Outreach to borrowers. Education oﬃcials said that the department has been communicating
regularly with borrowers since loan repayment was suspended in March 2020, but they expect
it will still be a challenge to motivate borrowers to resume repaying their loans after over two
years of payment inactivity. In addition, after months of informing borrowers that payments
would resume in February 2022, Education’s outreach eﬀorts must now shift towards preparing
borrowers for the new May 2, 2022, start date after the most recent extension of loan relief.

Education created a communication plan to prepare borrowers for the transition back to loan
repayment, which includes multiple campaign phases with key outreach messages to borrowers

151Some borrowers opted to make payments on their student loans during the payment suspension. Education
estimates that approximately 8.4 million borrowers made at least one payment during April 2020–September 2021.
Borrowers who made payments during this time are included in the 26.6 million borrowers whose loans are entering
repayment in May 2022.
152Some borrowers may be double-counted if they have multiple loans in diﬀerent payment statuses (e.g., one loan in
repayment and one loan in default).

Page 99 GAO-22-105291
that increase in urgency over time.153 For example, in early communication starting in August
2021, Education provided information to borrowers about when payments would resume and
about repayment resources, such as Income-Driven Repayment plans and loan consolidation.154
Once payments resume, Education plans to encourage borrowers to repay their loans and validate
that all borrowers have made an initial payment or have been contacted by a servicer. In the
months following the resumption of payments, Education plans to continue to provide borrowers
with information that will keep them on track with their payments.

Education oﬃcials also provided loan servicers with guidance that outlines Education’s borrower
outreach plans so the servicers can coordinate their outreach with the department’s planned
messages. In addition, Education oﬃcials said they reviewed sample communications from
four servicers who chose to conduct additional borrower outreach beyond Education’s planned
communications. Education oﬃcials said they provided these servicers with feedback and
suggested changes to ensure the messages were accurate and aligned with current policy.

According to Education oﬃcials, the department will communicate directly with all borrowers
about resuming repayment. This is a change from previous years, when Education primarily relied
on its loan servicers to contact borrowers. Education is planning to communicate with borrowers
every month and through a variety of outreach methods.

Emails. Education selected email as its primary communication method with borrowers.155
Education’s communication plan involves emailing borrowers once a month with a key message
that will change based on the current phase. For example, in September 2021, Education sent
borrowers an email announcing the February 2022 date for resuming repayment (subsequently
extended to May) and reminding borrowers to update their contact information with their
servicers. As the date to resume repayment approaches, the email content will include warnings
of interest rates being reinstated and potential consequences for missing payments. Each monthly
email will also include standard information like the date for resuming repayment and a checklist
of borrower actions to take, such as considering enrollment in an Income-Driven Repayment plan
or setting up auto-debit payments.

Education will also require loan servicers to develop messages that meet Education’s
requirements for its outreach timeframes and content, and will periodically provide servicers with
speciﬁc content to use in their emails. For example, as the end of the payment suspension nears,

153The CARES Act required Education, beginning on August 1, 2020, to carry out a program to provide not less than six
notices by postal mail, telephone, or electronic communication to borrowers indicating 1) when the borrower’s normal
payment obligations will resume; and 2) that the borrower has the option to enroll in an Income-Driven Repayment plan,
including a brief description of such options. Pub. L. No. 116-136, § 3513(g)(2), 134 Stat. at 405.
154Prior to the extension of payment relief announced in December 2021, Education’s earlier outreach eﬀorts had
been informing borrowers that payments would resume in February 2022. Income-Driven Repayment plans base
monthly payments on a borrower’s income and family size. Loan consolidation allows borrowers to combine multiple
federal education loans into one Direct Consolidation Loan, resulting in one single monthly payment instead of multiple
payments. Loan consolidation can also give borrowers access to additional loan repayment plans and forgiveness
programs.
155Education’s communication plan acknowledged that borrower communication preferences vary by age group, but
there was a consensus of email as the preferred method based on customer interviews and usability studies.

Page 100 GAO-22-105291
Education will require servicers to develop and send a payment reminder to all borrowers with a
bill due.

From August through November 2021, Education emailed 125.6 million monthly messages to
approximately 34.9 million borrowers. Education oﬃcials reported that as of December 2021 they
had valid email addresses for 87 percent of all borrowers covered by COVID-19 emergency relief
for federal student loans. Education oﬃcials said they have other processes in place to help reach
borrowers they are unable to contact via email—including directing loan servicers to contact these
borrowers via postal mail—and providing key information through other online channels.

Website. Education updated StudentAid.gov to improve usability and reﬂect key messages for
borrowers on resuming repayment. For example, Education posted messages on its website
that link to resources such as a loan simulator that can help borrowers calculate payments
under various Income-Driven Repayment plan options. Education also updated its Coronavirus
Frequently Asked Questions on StudentAid.gov with information on how borrowers can determine
their interest rate after the zero percent interest rate ends, and provided options for how
borrowers can lower their monthly student loan payment if it will be too high when repayment
resumes. Education reported that from March 2020 to March 2021 there were more than 10
million visits to the Coronavirus Frequently Asked Questions on StudentAid.gov.

In addition, Education oﬃcials reported that they have seen an increase in traﬃc to
StudentAid.gov since August 2021 when they began communications about resuming repayment,
with the website receiving 14 million visits during the last week of October 2021 alone. In addition,
Education plans to use its website to provide partners, such as schools and student advisors,
with information and communication resources to help borrowers with resuming repayment.
For example, in October 2021 Education updated its ﬁnancial aid toolkit for partners with sample
email content, sample social media posts, video content, and guidance on how to help prepare
borrowers for resuming repayment, among other things. Education is planning to update the
toolkit with resources that will reﬂect the new May 2022 repayment start date.

Other outreach channels. Education is conducting additional borrower outreach through channels
such as social media, search engine marketing, text messages, and alerts from its myStudentAid
mobile phone application.156 For example, Education sent 2.4 million text messages in October
2021. According to Education’s communication plan, the use of social media and search engine
marketing began in August 2021. Education oﬃcials said that all communications link back to
StudentAid.gov as the main source of information for resuming repayment.

Targeted outreach to certain borrowers. Education is providing targeted communications
and assistance for speciﬁc groups of borrowers, including borrowers 1) at increased risk of
delinquency, 2) in default on their loans, and 3) automatically paying their student loan bills prior
to the payment freeze.

Borrowers at increased risk of delinquency. Education determined that some borrowers will require
additional engagement before and after payments resume to reduce their risk of becoming

156See https://studentaid.gov/mystudentaid-mobile-app for more information about Education’s mobile phone
application for federal student loan borrowers.

Page 101 GAO-22-105291
delinquent. These borrowers include those who did not complete their program of study,
borrowers that were delinquent before the payment suspension, and borrowers who entered
repayment within the past three years.157 Education oﬃcials noted that borrowers who recently
entered repayment are not traditionally considered a high risk for delinquency; however, these
borrowers may need extra support to develop healthy repayment behaviors and ﬁnd a repayment
plan that ﬁts their needs because they have not been required to make payments for the majority
of their time in repayment status.

Education has required loan servicers to conduct phone outreach campaigns to these at-risk
borrowers to inform them of their payment due date and the various programs and ﬂexibilities
available to help them resume repayment. About 50 percent of all federal student loan borrowers
were identiﬁed as at-risk for this purpose, according to data we obtained from loan servicers
in October 2021. In addition, Education has been sending monthly emails directly to at-risk
borrowers beginning in September 2021. Once repayment resumes, Education plans to also
send daily emails to at-risk borrowers, including those who have missed payments. These emails
will include information on the risk of delinquency and available options for borrowers who are
struggling to make payments.

Borrowers in default. Education determined that borrowers who have defaulted on their loans
require additional communication and assistance. According to Education, many of these
borrowers did not respond to early outreach attempts regarding the payment suspension. In
addition, the contractor managing borrowers’ defaulted loans initially did not have valid email
addresses for about half of the borrowers in default. Education recently began providing the
contractor with additional email addresses drawn from various data sources; however, email
addresses are still missing for about 25 percent of defaulted borrowers. Education is planning to
reach these borrowers by using other outreach channels to share messages about rehabilitation
options.158 For example, Education is planning to post social media content with options for
defaulted loan rehabilitation, resources borrowers should be aware of, and consequences of not
taking action to enroll in a rehabilitation plan.

Borrowers with auto-debit. Education required loan servicers to contact 5.1 million borrowers
who were making loan payments via auto-debit prior to the payment suspension because these
borrowers will have to conﬁrm that they want to continue automatically paying their student
loans when repayment resumes.159 Education oﬃcials said borrowers’ circumstances may have
changed since the repayment freeze began. Therefore, Education chose to require borrowers who

157Education instructed loan servicers to identify borrowers as at-risk who, as of the end of the payment suspension: 1)
had not graduated and entered repayment in the last 60 months; 2) entered repayment for the ﬁrst time within the last
36 months; 3) exited hardship, unemployment, or natural disaster deferment or forbearance—a temporary suspension
of monthly loan payments—in the last 48 months; or 4) were ever 90 days delinquent or more in the year prior to the
payment suspension.
158Defaulted borrowers who enter into a loan rehabilitation agreement can restore their eligibility for federal student
aid and remove the record of default from their credit history after making nine on-time monthly payments within 10
months. The borrower’s credit history will still show late payments that were reported before the loan went into default.
159Borrowers with auto-debit have payments automatically deducted from their bank accounts. Loan servicers are not
required to reconﬁrm the auto-debit enrollment for the 571,000 borrowers who signed up for auto-debit after March
13, 2020, or the 280,000 borrowers who have been continuing to make payments via auto-debit during the payment
suspension, as of October 2021. These borrowers will not need to take any action to remain in auto-debit status.

Page 102 GAO-22-105291
want to resume auto-debit after the payment suspension to opt back in to automatically making
payments, to ensure that borrowers are aware that a withdrawal will be occurring so they can
budget accordingly. Education oﬃcials said that restarting auto-debits without a conﬁrmation from
borrowers could result in unnecessary harm, such as borrowers not having enough money in their
account and being subject to bank overdraft fees. Borrowers who do not opt in to resuming auto-
debit will have to manually submit each loan payment.160 Borrowers were allowed to make their
selection by clicking on a link in emails from their loan servicer without logging into their account
and through other means, such as over the phone or by logging into their account online.

Borrowers enrolled in auto-debit are traditionally the least risky customers, according to one loan
servicer. If borrowers do not proactively reconﬁrm their enrollment in auto-debit it will result in
higher rates of delinquency, according to another loan servicer. These borrowers are not used
to manually submitting loan payments and may not realize they have been removed from auto-
debit. The loan servicer outreach is intended to ensure that borrowers who want to continue
making automatic payments will have the ability to do so, according to Education documentation.
As of December 2021, 3.3 million of the 5.1 million borrowers who were previously making loan
payments via auto-debit had reinstated their automatic payments.161

Flexibilities for borrowers once repayment resumes. As borrowers face student loan bills for
the ﬁrst time in over two years, getting borrowers to resume payments and avoid delinquency
or default will be a signiﬁcant challenge, according to Education oﬃcials. Education has planned
to ease this transition by temporarily not reporting missed payments to credit rating agencies. In
addition, Education is providing borrowers with additional ﬂexibilities during the early stages of
resuming repayment.

Simplifying Income-Driven Repayment. The 8.7 million borrowers with loans in an Income-Driven
Repayment plan will not be required to recertify their current income and family size for six
months after repayment resumes, although borrowers can voluntarily recertify at any time.162
Borrowers who apply for a new Income-Driven Repayment plan or those already in a plan who
volunteer to provide this information can self-certify their current income amount and family size
over the phone or through other means oﬀered by their loan servicer instead of submitting an
application and documentation of their income, which is typically required.163 Education oﬃcials
said that these documentation requirements are a common friction point that can keep some
borrowers from enrolling in Income-Driven Repayment plans. Oﬃcials said temporarily removing
these requirements will make signing-up for Income-Driven Repayment plans easier. As of

160The borrower will need to re-sign up for auto-debit if they choose to participate at a later time.
161Of the remaining borrowers who previously had auto-debit accounts prior to the payment freeze, 106,000 have
elected to opt out of auto-debit going forward and 1.7 million had not responded as of December 2021. Generally,
borrowers have until 15 days before their ﬁrst bill is due to opt back into automatic payment status, according to
Education oﬃcials.
162If a borrower’s income has decreased or their family size has changed, recertifying their Income-Driven Repayment
plan with this information may result in a lower monthly payment.
163During the payment suspension, borrowers in an Income-Driven Repayment plan did not have to recertify their
income annually.

Page 103 GAO-22-105291
December 2021, 160,000 borrowers had self-certiﬁed to either start or continue their enrollment
in an Income-Driven Repayment plan.164

Expanding customer service. Education will require loan servicers to add evening and weekend call
center hours to increase the availability of customer service representatives who can respond to
borrower questions about resuming repayment. Education plans to validate whether call centers
meet their performance standards, and will monitor call center communication metrics like call
volumes, wait times, and abandon rates. Education also plans to conduct oversight of servicers
with call center secret shoppers.

Servicers leaving federal student loan portfolio. Additional communication and assistance
is needed for some borrowers as a result of changes in loan servicers. Three loan servicers—
Navient, Granite State Management and Resources, and FedLoan Servicing—announced in 2021
that they plan to end student loan servicing activities by the end of 2022.165 As of December
2021, approximately 12.2 million borrowers held student loans with these three servicers. This
includes all loans certiﬁed for Public Service Loan Forgiveness and all borrowers with Teacher
Education Assistance for College and Higher Education loans and grants that are currently
serviced by FedLoan Servicing. Education plans to transfer borrowers’ loan accounts held by these
servicers to other federal student loan servicers. Education oﬃcials said that these transfers will
be challenging because some borrowers will have to adjust to new servicers at the same time they
will be adjusting to resuming loan repayment.

Education plans to send targeted outreach to borrowers aﬀected by the servicer transfers.
Education oﬃcials said that for each servicer transfer they will communicate via email with
borrowers both before and after the transfer occurs, letting them know which servicer they are
transferring to and immediate steps to take before and after the transfer, such as updating their
contact information and setting up their online accounts with their new servicer.

Education completed the transfer of all student loan accounts from Granite State Management
and Resources in November 2021 and from Navient in December 2021. As of January 2022,
Education had transferred 37 percent of student loan accounts from FedLoan Servicing, and
expected to complete all transfers by the summer of 2022.166

Loan servicer capacity to help borrowers resume repayment. Adequate loan servicer
staﬃng and training are important aspects of meeting the increased demands related to helping

164Education oﬃcials noted that while borrowers do have the option to self-certify their income, many borrowers
applying for Income-Driven Repayment plans through Education’s website choose to validate their income with IRS data.
For example, in early December 2021 the majority of borrowers who applied for an Income-Driven Repayment plan
online used the IRS income veriﬁcation process.
165Navient transferred its federal student loan servicing contract to another loan servicer, Maximus, in October 2021.
Maximus’s Aidvantage servicing unit will administer student loans owned by the federal government. While all student
accounts for Granite State Management and Resources have been transferred, the servicer will answer calls from
borrowers until January 28, 2022. Pennsylvania Higher Education Assistance Agency’s FedLoan Servicing unit administers
student loans owned by the federal government, and plans to end its servicing activities by December 2022.
166As of January 12, 2022, approximately 3.2 million of the approximately 8.5 million FedLoan Servicing borrowers had
been transferred. Education anticipates that at least 1.8 million more borrowers will be transferred through March/April
2022.

Page 104 GAO-22-105291
borrowers resume repayment. For example, loan servicers need to ensure they have trained staﬀ
available to accommodate extended call center hours and to prepare for higher call volumes
as borrowers seek information about their loans and apply for diﬀerent repayment plans in
preparation for resuming payments.

In October 2021, all seven of the loan servicers told us that they expected higher than normal call
volumes.167 Two loan servicers also said they anticipated that borrowers will require longer and
more frequent phone calls as they get used to repaying their loans and seek to determine how
changes to their ﬁnancial and family circumstances since the payment freeze may impact their
loan payments.

All seven servicers reported that they needed to increase hiring to prepare for and administer
borrower loan repayment. All seven servicers reported in October 2021 that they have already
increased hiring to prepare for resuming repayment, but indicated that they still needed to
hire over 4,500 employees to meet their hiring targets. Two of the seven servicers said that the
substantial increase in new hires may contribute to negative customer service experiences, as
these staﬀ may not have the experience to answer all the unique questions that may arise from
resumption of payments.

These new hires will have to obtain federal clearance and complete training, a process that can
collectively take up to eight weeks, according to one servicer.168 Despite these challenges, all seven
servicers reported that they will have adequate time to hire and train the staﬀ needed before
the payment suspension ends. Education oﬃcials said they do not have any immediate concerns
about their loan servicers’ current capacity or their ability to hire staﬀ, and that they are closely
monitoring servicer hiring, workload estimates, and performance.

Methodology
To conduct this work we reviewed data reported by Education, relevant federal laws, agency plans,
and guidance. We also interviewed Education oﬃcials and sent questions to seven student loan
servicers about their preparations for resuming borrower loan repayment.169 We assessed the
reliability of Education’s reported data by reviewing documents and responses from oﬃcials. We
found the data suﬃciently reliable for our purposes.

167In contrast, loan servicers reported that call volume generally decreased during the payment suspension. We did
not include responses from an eighth servicer—Granite State Management and Resources—in this report because
their servicing contract ends in March 2022, meaning they will not be assisting borrowers once payments resume
in May 2022. Although FedLoan Servicing and Navient are also ending their servicing contracts with Education, we
included responses from both because their staﬀ will still be servicing student loans in some capacity after repayment
resumes. Education does not plan to complete the transfer of borrowers from FedLoan Servicing until the summer of
2022, and Education conﬁrmed that Navient transitioned about 800 of its staﬀ to Maximus’s Aidvantage servicing unit
in December 2021. We obtained responses from all servicers in October 2021, before Education announced that the
payment suspension will be extended from January 31, 2022, to May 1, 2022.
168Federal clearances generally take about two weeks to process, according to Education oﬃcials.
169We also sent questions to an eighth servicer, Granite State Management and Resources. They did not provide
responses to the majority of our questions as their servicing contract ends in March 2022, meaning they will not be
assisting borrowers once payments resume in May 2022.

Page 105 GAO-22-105291
Agency Comments
We provided a draft of this enclosure to Education and the Oﬃce of Management and Budget
for review and comment. Education provided technical comments, which we incorporated as
appropriate. The Oﬃce of Management and Budget did not provide comments on this enclosure.

GAO’s Ongoing Work
We will continue to examine Education’s oversight of the student loan program and servicers.

Contact information: Melissa Emrey-Arras, (617) 788-0534, emreyarrasm@gao.gov

Page 106 GAO-22-105291
Economic Injury Disaster Loan Program
The Small Business Administration has taken steps to improve its implementation of the Economic
Injury Disaster Loan program—including moving the operation of COVID-19 loans and advances
to the Oﬃce of Capital Access, implementing program changes, communicating key information,
and increasing its application processing capacity— but needs to continue to work to improve its
controls over the program.

Entities involved: Small Business Administration

Background
Since March 2020, the Small Business Administration (SBA) has provided millions of dollars in
loans and grants (called advances) through the Economic Injury Disaster Loan (EIDL) program to
assist small businesses and nonproﬁts experiencing economic injury caused by COVID-19.170 In
the Paycheck Protection Program and Health Care Enhancement (PPPHCE) Act, enacted on April
24, 2020, Congress appropriated $50 billion in loan credit subsidies for SBA to cover the cost of
making EIDL loans.171 Additionally, in the CARES Act and the PPPHCE Act, Congress appropriated
$20 billion for EIDL advances, a new component of the program that provided direct payments of
up to $10,000 to qualifying small businesses that did not have to be repaid.172 On July 11, 2020,
SBA announced that it had fully allocated the $20 billion in funding for EIDL advances.

On December 27, 2020, under the Consolidated Appropriations Act, 2021, Congress appropriated
an additional $20 billion for targeted EIDL advances to eligible entities with 300 or fewer
employees that are located in low-income communities and experienced an economic loss of
greater than 30 percent.173 Qualifying entities may receive up to $10,000 in targeted advances.174
Advances do not have to be repaid.

On March 11, 2021, under the American Rescue Plan Act of 2021, Congress appropriated
additional funding for entities that qualiﬁed for targeted EIDL advances under the Consolidated
Appropriations Act, 2021. Congress appropriated an additional $10 billion for eligible entities
that have not received the full amount of $10,000 in targeted EIDL advances. Congress also
appropriated $5 billion to provide an additional $5,000 for eligible entities in low-income
communities that suﬀered an economic loss greater than 50 percent and employed not more than

170All references to the EIDL program in this report refer to the program administered in response to the COVID-19
pandemic.
171EIDL loans are limited by statute to a maximum of $2 million. However, SBA set lower maximum amounts for periods
in 2020 and 2021. From March 16, 2020 through May 3, 2020, SBA limited the maximum loan amount to $500,000,
even if the calculated economic injury exceeded that amount. From May 4, 2020, through April 5, 2021, SBA limited the
maximum loan amount to $150,000. Beginning on April 6, 2021, SBA increased the loan limit back to $500,000.
172When implementing the advances under the CARES Act, SBA provided advances in the amount of $1,000 per
employee up to a maximum of $10,000.
173The Consolidated Appropriations Act, 2021, deﬁnes economic loss as the amount by which the gross receipts of
the covered entity declined during an 8-week period between March 2, 2020, and December 31, 2021, relative to a
comparable 8-week period immediately preceding March 2, 2020, or during 2019 or for seasonal businesses, as the SBA
deﬁned as appropriate.
174These eligible entities qualify for the full amount of $10,000 in targeted advances—regardless of their number of
employees—minus the amount they received under the CARES Act advances, which SBA based on employee numbers.

Page 107 GAO-22-105291
10 employees. The $5,000 is available in addition to advances obtained under the CARES Act or
targeted advances under the Consolidated Appropriations Act, 2021. The act also appropriated
$70 million for EIDL loans and additional funding for SBA administrative expenses for several
programs, including the targeted advance programs and the EIDL loan program. The Infrastructure
Investment and Jobs Act, signed into law on November 15, 2021, rescinded $13.5 billion of the
COVID EIDL loan appropriations and approximately $17.6 billion from the targeted EIDL advance
appropriations.

Overview of Key Issues
Transition of COVID-19 EIDL loans and advances to the Oﬃce of Capital Access facilitated
program improvements. In July 2021, SBA moved the operation of EIDL program responsibilities
related to COVID-19 from the Oﬃce of Disaster Assistance to the Oﬃce of Capital Access. SBA
oﬃcials explained that SBA made this transition to allow the Oﬃce of Disaster Assistance to focus
on natural disaster response—in particular the upcoming hurricane season—and to implement
additional risk management approaches for the EIDL program that SBA had used for the Paycheck
Protection Program and the Restaurant Revitalization Fund program.175 The oﬃcials emphasized
that collaboration continues between the two oﬃces. For example, while the Oﬃce of Capital
Access is now responsible for overseeing the program, the Oﬃce of Disaster Assistance staﬀ
dedicated to COVID-19 EIDL processing remain the same.

Following the transition, SBA oﬃcials told us that the agency had made changes intended to
improve the processing of COVID-19 EIDL loans and advances. For example, they noted the
inclusion of steps to better identify potential fraud, such as making the login process more secure.
In March 2021, we found that the EIDL program was susceptible to fraudulent payment risks. We
recommended that SBA conduct and document a fraud risk assessment for the program. SBA
stated in October 2021 that it was ﬁnalizing a fraud risk assessment and that its Compliance,
Oversight, and Reporting Team was reviewing the results of the assessment. These represent
positive steps toward implementing the recommendation.

Some improvements made to communication with applicants. To improve the borrower
experience, SBA oﬃcials told us that they allowed ﬁeld oﬃce staﬀ to view the status of an
application and provide the status to applicants. In addition, SBA oﬃcials noted that they revised
the template used for letters sent to applicants not approved for EIDL loans to provide additional
information to applicants on how they can request that their application be reconsidered.

We reported in July 2021 that while SBA had moved quickly under challenging circumstances to
provide EIDL funding to applicants, beneﬁting many small businesses, SBA did not communicate
key information (such as processing times and loan limits) and loan status to potential and actual
applicants in an eﬀective, consistent, or timely manner. Consequently, we recommended that
SBA develop a comprehensive strategy for communicating with potential and actual program
applicants in the event of a disaster. While SBA has not as of December 2021 completed this

175In March 2021, the American Rescue Plan Act of 2021 established the Restaurant Revitalization Fund and
appropriated $28.6 billion for SBA to provide support to eligible entities that suﬀered revenue losses related to the
pandemic. SBA provides grants of up to $10 million per entity.

Page 108 GAO-22-105291
strategy, the changes represent positive steps to help improve the communication of key
information with program applicants. In December 2021, SBA stated that the agency was
evaluating plans for a major change to its disaster loan processing platform that must be resolved
before further action could be taken on this recommendation.

Changes to better support small businesses. In September 2021, SBA announced that it had
implemented the following changes to the COVID EIDL program:

• increased the amount of funding that can be borrowed from $500,000 to $2 million;

• created a 1-month exclusivity window for businesses requesting loans of $500,000 or less;

• authorized funds to be used to prepay commercial debt and make payments on federal
business debt;

• deferred repayments for 2 years after loan origination date;

• created additional ways to meet program size standards for businesses in industries uniquely
aﬀected by COVID-19;

• established more simpliﬁed requirements for aﬃliated businesses to model those of the
Restaurant Revitalization Fund; and

• added a $10 million limit on maximum aggregate loans to a single corporate group.

These changes aﬀected some eligibility requirements and overall processing time frames.
For example, SBA requires that loans over $500,000 be secured with real estate owned by the
business; consequently, these larger loans require additional underwriting.176 SBA oﬃcials
estimated that these loans take approximately 3 additional weeks to close, but described this
time frame as similar to loans of a similar size made through the 7(a) Loan Program, SBA’s largest
lending program, or through traditional lending.

As another example of SBA’s improved communication eﬀorts, SBA issued a press release in
September 2021 and updated its frequently asked questions document, which is available on its
website, to communicate the programmatic changes discussed above to potential applicants.

Increased application processing capacity. Beginning in September 2021, SBA reported a
number of improvements in loan processing. For example, SBA stated that the EIDL program
had increased application processing capacity from an average of 2,000 to more than 37,000
applications per day. SBA attributed the increased productivity primarily to its recent ability
to obtain tax transcripts directly from, and streamlining the data transmittal process with, the

176No personal real estate is required as collateral.

Page 109 GAO-22-105291
Internal Revenue Service, which has helped SBA to validate information on borrowers’ applications
more eﬃciently.177 SBA also temporarily increased staﬀ to eliminate the application backlog.

The oﬃcials said that the number of new applications is increasing, but signiﬁcantly less than
applications for loan increases. The oﬃcials stated that the overall trend in requests for targeted
advances and supplemental targeted advances has remained ﬂat. They noted that implementing
the legislative criteria for qualifying for targeted and supplemental targeted advances has created
unanticipated challenges for borrowers. Speciﬁcally, they said that demonstrating the requisite
revenue decline required a lot of eﬀort for borrowers. They also noted that while some potential
borrowers could demonstrate that they needed ﬁnancial assistance, they were not located in
designated low-income communities that would make them eligible for such assistance.

As of December 15, 2021, SBA had approved more than 3.8 million COVID-19 EIDL loans totaling
about $312.4 billion, and funded 532,124 targeted advances totaling about $4.6 billion and
429,554 supplemental targeted advances totaling about $2.1 billion.

Inability to support EIDL accounting and related controls. In November 2021, SBA’s
independent auditor issued a disclaimer of opinion on SBA’s ﬁscal year 2021 consolidated ﬁnancial
statements, meaning the auditor was unable to express an opinion due to insuﬃcient evidence.
This was SBA’s second consecutive disclaimer on its ﬁnancial statements. As the basis for the
disclaimer, the auditor reported that SBA was unable to provide adequate evidence to support
a signiﬁcant number of transactions and account balances due to inadequate processes and
controls related to its implementation of its programs authorized under the CARES Act and related
legislation, including EIDL and the Paycheck Protection Program.178 For more information on
the auditor’s ﬁndings related to the Paycheck Protection Program, see the Paycheck Protection
Program enclosure in appendix I.

177The CARES Act restricted SBA from obtaining federal tax transcripts—typically a component of SBA’s review of a
disaster loan application—as part of the EIDL application process. The Consolidated Appropriations Act, 2021 removed
this restriction.
178The auditor also reported that it identiﬁed a material weakness in internal control related to SBA’s Shuttered Venues
Operators Grant program and Restaurant Revitalization Fund program. Speciﬁcally, the auditor stated that SBA did not
adequately design and implement monitoring controls over program awards to ensure accurate ﬁnancial reporting
as of the ﬁscal year-end, and to ensure that funds were used in accordance with related legislation. For example, SBA
disbursed numerous awards to restaurants that had a Paycheck Protection Program loan guarantee with an alert or ﬂag
prior to approval of the award. SBA oﬃcials told us in December 2021 that SBA plans to provide details to the auditor
that it believes will remedy the ﬁnding for the Restaurant Revitalization Fund. They also noted that since the completion
of the audit SBA had implemented a process to monitor the use of recipients’ funds. We will continue to monitor SBA’s
eﬀorts to address the deﬁciencies identiﬁed in its ﬁnancial statement audit. The Consolidated Appropriations Act, 2021,
enacted in December 2020, authorized and appropriated $15 billion to SBA for the shuttered venues program to assist
businesses in the performing arts and entertainment industries experiencing economic hardship due to the COVID-19
pandemic. Pub. L, No. 116-260, div. N, tit. III, §§ 323(d)(1)(H), 324, 134 Stat. 1182, 2021, 2022-32 (2020). The American
Rescue Plan Act of 2021, enacted in March 2021, appropriated an additional $1.25 billion for shuttered venues and
modiﬁed certain eligibility requirements. Pub. L. No. 117-2, tit. V, § 5005, 135 Stat. 4, 91-92 (2021). The American Rescue
Plan Act of 2021 also established the restaurant revitalization program and appropriated $28.6 billion to SBA for eligible
entities that suﬀered revenue losses related to the COVID-19 pandemic. Pub. L. No. 117-2, tit. V, § 5003, 135 Stat. 4, 85-90
(2021).

Page 110 GAO-22-105291
The auditor also identiﬁed several material weaknesses in internal controls related to EIDL.179
Speciﬁcally, the auditor reported weaknesses concerning (1) controls over EIDL loans and
advances; (2) subsidy reestimates, including the EIDL subsidy reestimate; and (3) SBA’s evaluation
of service organizations (contractors), including those relevant to EIDL.180 In addition, the
auditor identiﬁed a material weakness in SBA’s entity-level controls, citing challenges due to the
implementation of new and expanded programs, including EIDL.

In its discussion of the material weakness related to controls over EIDL loans and advances,
the auditor stated that SBA did not adequately design and implement controls to ensure that
approved loans and advances were provided to eligible borrowers and accurately reported. The
auditor noted instances where more than one loan or advance was approved and disbursed to
the same recipient, as well as instances where, according to law enforcement agencies, loans and
advances were awarded to recipients with fraudulent tax identiﬁcation numbers. The auditor
reported that as of September 30, 2021, SBA had ﬂagged over 500,000 approved and disbursed
EIDL loans and advances (with an approximate total value of over $30 billion) in its loan repository
system as issued to potentially ineligible borrowers.

For the material weakness related to subsidy reestimates, the auditor stated that SBA did not
adequately design and implement controls to ensure the assumptions used in the subsidy
reestimate for EIDL loans appropriately reﬂect risks in the portfolio. SBA is in the process of
reviewing the EIDL portfolio to address eligibility concerns related to disbursed loans. The
auditor reported that because this review was not completed at the time of the year-end subsidy
reestimate, SBA did not have a reasonable basis to determine whether the assumptions it applied
to loans in the EIDL portfolio were appropriate. In addition, the auditor reported that SBA did
not design and implement suﬃcient review controls over the development and application of
the assumptions it used in the subsidy reestimate for the EIDL portfolio, and therefore, SBA was
unable to suﬃciently support the appropriateness of the assumptions it applied to the subsidy
reestimate.

For the material weakness related to service organizations, the auditor reported that SBA did not
obtain reasonable assurance of the operating eﬀectiveness of internal controls within service
organizations’ control environments, including a service organization relevant to the processing
of EIDL transactions. Additionally, SBA did not provide evidence of adequate monitoring activities
performed over the relevant control environments at service organizations, such as obtaining
and reviewing attestation reports on the design, implementation, and operating eﬀectiveness of
controls.

179A material weakness is a deﬁciency, or combination of deﬁciencies, in internal control over ﬁnancial reporting,
such that there is a reasonable possibility that a material misstatement of the entity’s ﬁnancial statements will not
be prevented, or detected and corrected, on a timely basis. A deﬁciency in internal control 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.
180The Federal Credit Reform Act of 1990 (FCRA) requires that agencies have budget authority to cover a program’s
subsidy cost to the government in advance—before new loan guarantee commitments are made. The data used for
budgetary subsidy cost estimates are generally updated—or reestimated—annually after the end of the ﬁscal year
to reﬂect actual loan performance and to incorporate any changes in assumptions about future loan performance.
Reestimates that increase subsidy costs are referred to as upward reestimates (an agency would need additional funds),
while reestimates that decrease subsidy costs are referred to as downward reestimates (an agency would return funds
to the Department of the Treasury).

Page 111 GAO-22-105291
In total, the auditor made nine recommendations to SBA to address the issues related to EIDL
in the three areas of material weaknesses described above. Among other things, the auditor
recommended that SBA

• develop and execute a review plan for the EIDL loans and advances portfolios and determine
which transactions were made to ineligible recipients;

• implement controls to prevent or detect loans and advances that are not in conformance with
related legislation and program eligibility terms;

• design and implement controls to continue accumulating relevant, complete, and accurate
data on which to base the subsidy reestimate model for the EIDL portfolio; and

• enhance its review and evaluation of service organization controls.

SBA’s auditor also reported a material weakness in SBA’s entity-level controls, citing challenges
due to the implementation of new and expanded programs. Related to EIDL, the auditor
stated SBA lacked a clear organizational structure that designated responsibilities for
management and oversight of EIDL, including timely development of corrective actions to
remediate recommendations related to review of the EIDL portfolio. The auditor issued ﬁve
recommendations to improve entity-level controls, including recommending, among other things,
that SBA document its internal control system and processes related to the implementation of
new or expanded programs from new legislation; develop and implement monitoring controls to
ensure implementation of an eﬀective internal control environment; and develop and implement
a suﬃcient plan to test and monitor the design, implementation, and operating eﬀectiveness of
key controls that aﬀect ﬁnancial reporting and compliance with relevant laws and regulations.

The auditor noted that the deﬁciencies were primarily caused by SBA prioritizing the
implementation of CARES Act provisions and related legislation as quickly and eﬃciently as
possible over implementing internal control processes. In addition, the auditor cited the inherent
challenges of implementing new and expanded programs without historical precedence.

SBA disagreed with the severity of the weaknesses related to controls over EIDL loans and
advances, subsidy reestimates, and entity-level controls. SBA partially agreed with the material
weakness related to service organization oversight. While SBA did not agree or disagree with
the auditor’s recommendations, in commenting on the auditor’s report, SBA stated that it is
continuing its eﬀorts to address material weaknesses, strengthen processes, develop fraud risk
assessments, and support requirements for the auditability of its ﬁnancial statements.

We support the recommendations the auditor provided to address control weaknesses related to
EIDL, and we encourage SBA to continue to work to improve its controls over the program, as well
as to improve its documentation to support future ﬁnancial statement audits.

Page 112 GAO-22-105291
Methodology
To conduct this work, we reviewed SBA documentation of policy and programmatic changes
the agency has made to the EIDL program since July 2021. We also analyzed SBA’s data on
the processing of loans, targeted advances, and supplemental targeted advances through
October 2021 and interviewed SBA oﬃcials. We monitored SBA’s ﬁscal year 2021 ﬁnancial
statement audit and reviewed its ﬁscal year 2021 agency ﬁnancial report and the accompanying
independent auditor’s report. We assessed the reliability of SBA data by interviewing SBA oﬃcials.
We determined that the data were suﬃciently reliable for reporting the status of EIDL COVID-19
loans and targeted advances.

Agency Comments
We provided SBA and the Oﬃce of Management and Budget (OMB) with a draft of this enclosure.
SBA provided technical comments, which we incorporated as appropriate. OMB did not provide
comments on this enclosure.

GAO’s Ongoing Work
Our work on the EIDL program is ongoing. We continue to examine SBA’s processing of EIDL
COVID-19 loans and advances and the fraud risks in the program. We will also continue to monitor
SBA’s progress toward developing and implementing corrective actions to address the material
weaknesses identiﬁed in December 2020 and November 2021 by its independent ﬁnancial
statement auditor.

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

Page 113 GAO-22-105291
Prior GAO Recommendations Related to the Economic Injury Disaster Loan Program
Recommendation Status

The Administrator of the Small Business Administration (SBA) Open—partially addressed. SBA agreed with the
should conduct and document a fraud risk assessment for the recommendation, stating that it would work to
Economic Injury Disaster Loan (EIDL) program. (March 2021 report) ensure that a fraud risk assessment for the EIDL
program is completed. In December 2021, SBA
provided a fraud risk assessment that had been
prepared by its contractor. Based on our initial
review of the assessment, it adhered to many fraud
risk management leading practices, but for example,
SBA did not determine its fraud risk tolerance. We
intend to follow up with SBA to discuss the fraud
risk assessment and agency actions in response to
the assessment.

The Administrator of SBA should develop a strategy that outlines Open—partially addressed. SBA agreed with
speciﬁc actions to address assessed fraud risks in the EIDL the recommendation, stating that it would work
program on a continuous basis. (March 2021 report) to ensure that fraud risks are monitored on a
continuous basis. In December 2021, SBA provided
a fraud risk assessment, which would inform an
antifraud strategy. We intend to follow up with
SBA to discuss agency actions in response to the
fraud risk assessment and plans for developing an
antifraud strategy.

The Administrator of SBA should implement a comprehensive Open—partially addressed. SBA agreed with the
oversight plan to identify and respond to risks in the EIDL program recommendation, stating that it will implement
to help ensure program integrity, achieve program eﬀectiveness, a comprehensive oversight plan. In December
and address potential fraud. (March 2021 report) 2021, SBA provided a fraud risk assessment, which
would inform the oversight plan. We will continue
to monitor the agency's actions to address this
recommendation.

The Administrator of SBA should develop and implement portfolio- Open—partially addressed. At the time of our
level data analytics across EIDL program loans and advances made report, SBA neither agreed nor disagreed with this
in response to COVID-19 as a means to detect potentially ineligible recommendation. In December 2021, SBA stated
and fraudulent applications. (January 2021 report) that the agency had implemented fraud indicators
for EIDL application data. SBA also stated that the
agency shared these indicators with the Pandemic
Response Accountability Committee for review.
Further, SBA stated that the agency would provide
additional details to GAO in 2022. We will continue
to monitor the agency's actions to address this
recommendation.

Source: GAO. I GAO-22-105291

Related GAO Products
Economic Injury Disaster Loan Program: Additional Actions Needed to Improve Communication with
Applicants and Address Fraud Risks. GAO-21-589. Washington, D.C.: July 30, 2021.

Page 114 GAO-22-105291
Contact information: William B. Shear, (202) 512-8678, shearw@gao.gov

Page 115 GAO-22-105291
Tax Relief for Businesses
Internal Revenue Service’s controls were not suﬃcient to timely address challenges to meeting the
90-day statutory requirements for issuing tentative net operating loss and alternative minimum
tax refund claims. This contributed to the delay of the issuance of tentative refunds to some
taxpayers beyond the 90-day requirement, and cost the government around $61 million in interest
from all carrybacks in ﬁscal year 2021.

Entities involved: Internal Revenue Service, within the Department of the Treasury

Recommendation for Executive Action
The Commissioner of Internal Revenue should establish mitigation plans—including indicators,
such as a threshold to initiate mitigation activities—to timely address any future challenges to
processing applications for tentative refund on Forms 1045 and 1139 within the 90-day statutory
requirement.

The Internal Revenue Service neither agreed nor disagreed with our recommendation, but
stated that it will take the recommendation into careful consideration as it continues to make
improvements to ensure that it can serve the future needs of the nation’s taxpayers.

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—by
reducing certain tax obligations.181 In some cases, those measures led to cash refunds. 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).182 The Joint
Committee on Taxation estimates the following tax provisions will result in about $26 billion in
foregone revenue for the federal government in ﬁscal years 2020 through 2030.183

Net Operating Loss (NOL) carrybacks. An NOL is a loss which may result from a trade or
business loss or a casualty or theft loss, and may occur when a taxpayer's allowable deductions
exceed its gross income for a tax year, essentially resulting in negative income. During an NOL
year, a taxpayer generally does not owe any income taxes and may be able to use the NOL to

181Pub. 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). The measures can also help other types of entities, such as estates and
trusts.
182Pub. L. No. 115-97, 131 Stat. 2054 (2017).
183This is lower than our July 2021 CARES Act report estimate because it only includes the estimate for Net Operating
Loss and Alternative Minimum Tax.

Page 116 GAO-22-105291
oﬀset income in other tax years, via a carryback or carryforward.184 The CARES Act generally
requires, unless waived by the taxpayer, 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.185 Tax
years prior to 2018 generally had a higher tax rate, so the ability of businesses to carryback 2018,
2019, and 2020 NOLs to earlier tax years with a higher tax rate tends to increase the relative value
of the carryback amounts.

In general, for NOLs arising in tax years beginning after 2017, TCJA limited the deduction of NOL
carrybacks and carryforwards to 80 percent of taxable income.186 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 2021.187

For corporations (other than S corporations), refunds resulting from NOL carrybacks are typically
claimed on either Form 1120-X, Amended U.S. Corporation Income Tax Return; or Form 1139,
Corporation Application for Tentative Refund. For individuals, estates, and trusts, refunds resulting
from NOL carrybacks are typically claimed on Form 1045, Application for Tentative Refund.188 This
enclosure focuses on the Applications for Tentative Refunds on Forms 1139 and 1045. From April
17 to December 31, 2020, IRS implemented temporary procedures to allow taxpayers to submit
via fax Forms 1139 and 1045 for a quick tentative refund during the period that IRS closed its
processing centers and was unable to process mail due to COVID-19.189 After December 31, 2020,
all Forms 1045 and 1139 must be ﬁled on paper.

Acceleration of Alternative Minimum Tax (AMT) credit refunds. 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. TCJA repealed the corporate AMT, but
most corporations could claim their remaining unused minimum tax credits as a refundable credit

18426 U.S.C. § 172(a), (b)(2). TCJA generally repealed NOL carrybacks and required NOLs to be carried forward
indeﬁnitely. Pub. L. No. 115-97, § 13302(b), 131 Stat. at 2122. The amount allowed as an NOL and the amount allowed
as a net operating loss deduction in another year may be subject to certain modiﬁcations. 26 U.S.C. § 172(d). 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.
185Pub. L. No. 116-136, § 2303, 134 Stat. at 352–356. Taxpayers who have amounts included in their income because of
the one-time repatriation tax established in the TCJA (referred to as the “section 965 tax” or “transition tax”), can elect to
exclude those inclusion years from the carryback period to produce an NOL refund in other years. 26 U.S.C. § 965.
186Pub. L. No. 115-97, § 13302(a)(1), 131 Stat. at 2121. Speciﬁcally, for NOLs arising in tax years beginning after 2017, the
TCJA’s 80-percent limitation limited the deduction of NOL carrybacks and carryforwards to an amount equal to the lesser
of (1) the aggregate of the NOL carryforwards and carrybacks to that taxable year, or (2) 80 percent of taxable income of
the taxpayer computed without regard to any NOL deduction.
187Pub. L. No. 116-136, § 2303(a)(1), 134 Stat. at 353.
188An S corporation is a corporation meeting certain requirements that elects to be taxed under subchapter S of the
Internal Revenue Code. Corporations, other than S corporations, ﬁle Form 1139, Corporation Application for Tentative
Refund. Individuals, including sole proprietors, 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. IRS uses
“claim” to refer to the carrybacks ﬁled on amended returns, according to agency oﬃcials.
189 See: IRS, Temporary procedures to fax certain Forms 1139 and 1045 due to COVID-19, accessed November 16, 2021,
https://www.irs.gov/newsroom/temporary-procedures-to-fax-certain-forms-1139-and-1045-due-to-covid-19. The IRS has
marked this webpage as “historical content,” providing that the webpage “is an archival or historical document and may
not reﬂect current law, policies or procedures.”

Page 117 GAO-22-105291
for tax years 2018 through 2021.190 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.191

Overview of Key Issues
IRS processing times well exceed its 90-day statutory time limit. The CARES Act amended
tax provisions aﬀecting NOL and corporate AMT, which could 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.192 This requirement includes applications for tentative refund
on Forms 1139 and 1045 ﬁled via fax before December 31, 2020 and via paper since that date.

According to IRS data, the agency’s average monthly processing time has been consistently longer
than the statutory 90-days to process applications for tentative refund on Forms 1139 and 1045
since September 2020 and January 2021 for corporate and individual ﬁlings, respectively (see
ﬁgure).193 As we reported in July 2021, before late 2020, IRS had not taken longer than 90 days to
process these refunds in the 3 prior years of data we analyzed for that report. Our review of IRS
data for this report shows that as of November 2021, average monthly processing times peaked in
March and June 2021 for corporate and individual ﬁlings, respectively, and have decreased since
then, but remain well above 90-days. Since the CARES Act allows corporations to use Form 1139
to claim AMT credit refunds, these refunds are also represented in the carryback processing data,
which includes applications for tentative refund on Forms 1139 and 1045.

190Pub. L. No. 115-97, § 12001(a), 131 Stat. at 2092.
191Pub. 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.
Alternatively, a taxpayer may elect to claim the entire excess credit as a refundable credit in its ﬁrst tax year beginning
in 2018. If a corporation elects to claim all of the excess credit as a refundable credit in 2018, the corporation may use
Form 1139 to claim a refund for this refundable credit. If a corporation does not ﬁle Form 1139 to make this election,
it may ﬁle a Form 1120-X to make the election and claim a refund for this refundable credit. See: IRS, Questions and
Answers about NOL Carrybacks of C Corporations to Taxable Years in which the Alternative Minimum Tax Applies, Question
5, accessed December 18, 2021, https://www.irs.gov/newsroom/questions-and-answers-about-nol-carrybacks-of-c-
corporations-to-taxable-years-in-which-the-alternative-minimum-tax-applies.
19226 U.S.C. § 6411(b), (d)(2); Pub. L. No. 116-136, § 2305(d)(1), 134 Stat. at 357.
193Individuals that ﬁle applications for tentative refund include sole proprietors.

Page 118 GAO-22-105291
Average Monthly Processing Times for Taxpayer Carryback Applications and Claims Filed with the Internal
Revenue Service (IRS), Apr. 2020–Nov. 2021

Note: These data include all carryback cases, including those ﬁled as “claims” on Forms 1120-X and 1040-X and those ﬁled as
“applications” on Forms 1045 and 1139. Forms 1045 are represented in the individual line and Forms 1139 are represented in
the business line. Forms 1139 may also contain refund claims for the alternative minimum tax (AMT) refund. IRS oﬃcials said
the reported times do not include the additional time—up to 2 weeks—it may take for IRS to ﬁnalize production and distribute
the refund to the taxpayer. The ﬁgure does not represent all of the work that IRS did throughout the year, but focuses on
actions speciﬁc to the processing times for carryback cases. The Consolidated Appropriations Act, 2021 and American Rescue
Plan Act of 2021 were also enacted in December 2020 and March 2021 respectively, and contained provisions that also required
IRS action.

As of November 2021, the average time to process all carryback refunds for individual ﬁlers in
2021 was 165 days and 166 days for corporate ﬁlers. IRS oﬃcials said these numbers do not
include unprocessable applications or the additional time—up to 2 weeks—for IRS to ﬁnalize
production and distribute the refund to the taxpayer.194 This means that taxpayers are not
receiving their NOL and AMT credit refunds in a timely manner, and are subsequently owed
interest after 45 days.195 According to IRS data, IRS has paid around $61 million in interest on all
carrybacks, including applications for tentative refund, for ﬁscal year 2021.196 According to IRS
data, applications for tentative refund made up roughly 80 percent of all carryback payments with
interest for the ﬁscal year.

194IRS considers applications unprocessable for a number of reasons, including an incorrect taxpayer name or missing
documentation. According to IRS oﬃcials, if an Application for Tentative Refund is deemed unprocessable, IRS does not
start counting the 90-day timeline until the application is considered complete.
19526 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 (without regard to any extension), delinquent loss year return received date (used when the loss year
return is ﬁled after its due date, without regard to any extension), loss year return processable date, date the application
is received by the IRS, or date the application is received by the IRS in processable form.
196This number includes the total interest for all carrybacks, including applications and claims via both applications
for tentative refund and amended returns. This enclosure focuses on “applications” ﬁled via applications for tentative
refund. The 2021 ﬁscal year ended on September 30, 2021.

Page 119 GAO-22-105291
IRS facility closures and associated staﬃng challenges contributed to processing backlogs.
COVID-19 caused IRS facilities to shut down, and the subsequent large-scale staﬃng changes
prevented the timely processing of paper returns, including paper ﬁled Forms 1045 and 1139.197
IRS processing centers re-opened in June 2020, and IRS oﬃcials said they have been processing
mail in the order of receipt while operating at partial capacity to accommodate social distancing.
More information about IRS’s backlog is included in our March and July 2021 CARES Act reports.

The COVID-19 facility closures and staﬃng changes created a large ﬁling backlog, which the IRS
was still working through for much of 2021. At 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. IRS reported that as of May 28, 2021, it had entered all 2020 individual returns
into its processing systems. As of November 19, 2021, IRS reported that it still had roughly 460
business ﬁlings from 2020 that had not been entered into its processing systems.198 Oﬃcials
emphasized that the agency had to deal with many competing priorities as it worked through the
backlog, such as managing the 2021 tax ﬁling season and adapting to new legislation.199

While IRS had some controls in place to help manage applications for tentative refunds, the
controls did not trigger suﬃcient responsive or preventative action in ﬁscal year 2021. IRS
oﬃcials said the agency had standard processes and procedures in place to address changes in
its inventory of taxpayer ﬁlings and to monitor processing times for carryback cases.200 However,
these processes and procedures did not result in immediate action when processing times for
corporate ﬁlings approached and then surpassed the statutory 90-day limit in late 2020.

• Weekly reports. IRS headquarters staﬀ produce weekly carryback reports that they share
with IRS processing sites to alert them of older cases and to help ensure that processing
timeframes are met, particularly for higher dollar value cases. 201 They also generate reports
that track the weekly processing times for applications for tentative refund. In late 2020
through early 2021, neither of these eﬀorts resulted in immediate action to reduce the overall
processing times for these applications, but rather focused on speciﬁc aged cases that IRS
prioritized based on refund amount.

• Inventory projections. IRS’s Accounts Management team also develops ﬁscal year inventory
projections for both the corporate and individual ﬁler programs, which include but are not
limited to Forms 1139 and 1045 ﬁlings. According to IRS oﬃcials, the projections are typically
completed by the beginning of the ﬁscal year and are updated as needed to identify changes

197Oﬃcials explained that the staﬃng changes required IRS to provide its Accounts Management employees with the
equipment needed to work from home, which limited the available staﬀ to complete work and added to the processing
backlog.
198This includes all of IRS’s Business Master File pipeline, and not just carryback cases. This is down from roughly 4,500
business ﬁlings that they reported unprocessed in October 2021. We are reviewing challenges of the ﬁling season as part
of our annual review of the tax ﬁling season and expect to issue a report in 2022.
199New legislation includes the CARES Act, the Consolidated Appropriations Act, 2021, and the American Rescue Plan Act
of 2021. Pub. L. No. 116-136,134 Stat. 281, (2020); Pub. L. No. 116-260, 134 Stat. 1182 (2020); Pub. L. No. 117-2, 135 Stat.
4 (2021).
200We use the word inventory to refer to the number of taxpayer ﬁlings that the IRS has in house.
201 IRS creates weekly reports with the 15 oldest carryback cases and the 15 oldest that have not shown any activity
in the last 30 days. A case stays on these reports until it is closed.

Page 120 GAO-22-105291
in the receipt patterns to help ensure adequate staﬃng. According to IRS oﬃcials, if data
in their projections show a speciﬁc program is not on track to meet the program target, a
more comprehensive look at staﬃng, inventory levels, and any known changes to receipts or
eﬃciency is completed.
For ﬁscal year 2021, this process was not able to eﬀectively predict the inﬂux of tentative
carryback applications from the 2020 tax year because the projections, according to IRS
oﬃcials, are largely based on historical data on ﬁling volumes. Speciﬁcally, according to IRS
oﬃcials, those projections did not take into account the CARES Act changes that aﬀected
the number of ﬁlers submitting refund claims at the end of the year. Oﬃcials explained that
projections for ﬁscal year 2021 were updated twice, with one of those updates occurring
in April 2021 when large receipt patterns were identiﬁed. However, by ﬁscal year end, IRS
had received 276 percent more carryback ﬁlings in ﬁscal year 2021 than in ﬁscal year 2020,
according to IRS oﬃcials.

Since IRS’s policies and procedures did not focus on mitigating overall processing times,
particularly when the agency was at risk of not meeting its statutory requirement, IRS did not
take action to reduce the carryback backlog until April 2021. At that time, IRS had already been
missing its statutory 90-day requirement for approximately 7 months. According to IRS oﬃcials,
in response to the April 2021 inventory projections update, IRS began training additional staﬀ the
following month to address the backlog. From June through September 2021, IRS oﬃcials said that
the agency continued to train additional staﬀ to work on the carryback inventory to help further
reduce the backlog and processing times, as shown in the ﬁgure above. Therefore, training of staﬀ
was completed a year after IRS was consistently missing the deadline for corporate ﬁlings. As of
October 2021, there had been an overall decrease in processing times since IRS began training
new staﬀ to work these cases, but numbers increased again in November 2021.

While IRS took some remedial actions, it did not have eﬀective preventative control activities or
mitigation plans in place to detect or address growing processing times for Forms 1139 and 1045.
Standards for Internal Control in the Federal Government highlight the design of control activities
to achieve an agency’s objectives and respond to risks. Control activities can be preventative,
meaning they are designed to prevent an entity from failing to achieve an objective or address a
risk, in this case, the 90-day statutory requirement to issue refunds.

IRS initiated action after observing the volume of applications it had received, and not when
its average processing time consistently surpassed the statutory requirement. A common
control activity identiﬁed in the Standards for Internal Control is the establishment and review
of performance measures and indicators by assessing data so that appropriate actions can be
taken. We recognize that 2020 and 2021 were unprecedented times, but developing a threshold
at which planned preventative mitigation activities would start could help IRS better manage
unexpected backlogs and reduce the volume of refunds issued after the 90-day deadline in the
future. For example, actions could include an analysis of average processing times with a speciﬁed
number of days at which preventative actions would occur. These improved controls could help
IRS better adapt to circumstances in the future that could create a risk of not meeting its statutory
requirement.

Page 121 GAO-22-105291
IRS is pursuing other eﬀorts that may result in improvements for the carryback process.
In addition to increased staﬀ to process these refund claims, IRS is taking steps to address
objectives and activities outlined in an April 2021 Lean Six Sigma Organization (LSSO) opportunity
assessment and the National Taxpayer Advocate Service’s (TAS) 2022 Objectives Report to Congress,
according to IRS oﬃcials.202 LSSO reviewed the carryback program for improvement opportunities
and eﬃciency gains, with the COVID-19 backlog in mind.203 IRS said it is working on responding to
the recommended opportunities in the report. While this eﬀort presents opportunities to improve
processes, it did not focus on monitoring and indicators to help the agency meet its statutory
requirement.

In its June 2021 report, TAS stated that due to the CARES Act, it anticipates many taxpayers will
ﬁle applications for refunds for the 2020 taxable year and that it will work with IRS to identify
delays and propose further recommendations to improve the timely payment of tentative
refunds. If implemented by IRS, some of the activities that TAS proposed could be integrated
into control activities to mitigate the risk of IRS failing to meet the 90-day statutory requirement
in the future.204 For example, TAS suggested that IRS open a dedicated fax line to expedite the
processing of paper forms, which could include the tentative carryback applications. They also
suggested that IRS assign a speciﬁc employee unit dedicated to processing Forms 1139 and 1045.
Such activities could be components of a mitigation plan that is triggered when processing times
cross a certain threshold.

Methodology
To conduct this work, we reviewed IRS data as of November 27, 2021, federal laws, and agency
guidance; and interviewed IRS oﬃcials. To analyze IRS data, we reviewed processing times for
carryback cases from ﬁscal years 2019 through 2021 and calculated the average days it took to
process these forms per month. We determined that the data were suﬃciently reliable for our
purposes.

202National Taxpayer Advocate, Objectives Report to Congress, Fiscal Year 2022, https://www.taxpayeradvocate.irs.gov/
reports/2022-objectives-report-to-congress/full-report/ (Washington, D.C.: June 2021. The Treasury Inspector General for
Tax Administration also issued a report in June 2021 that identiﬁed IRS internal control issues within the process to verify
tentative carryback refund eligibility. This report did not directly address processing issues because at the time of the
review, IRS was processing carryback applications within the 90-day statutory requirement.
203IRS has an internal Lean Six Sigma Organization whose mission is to support the IRS Wage and Investment Division's
strategy of improving service to the taxpayer by leading accelerated process improvement initiatives utilizing the Lean
Six Sigma Methodology. LSSO employs experienced process improvement individuals who are speciﬁcally trained and
certiﬁed in the Lean Six Sigma Methodology. To accomplish the mission, the LSSO methodology focuses on eliminating
waste and non-value-added activities and improving process eﬀectiveness and eﬃciency by reducing variation and
increasing quality. LSSO is guided by a structured problem-solving approach called Deﬁne-Measure-Analyze-Improve-
Control.
204 The National Taxpayer Advocate Service 2022 Objectives Report to Congress proposed four activities for improving
the timeliness of tentative refunds during national emergencies: (1) Work with the IRS to identify issues causing delays,
expedite relief to taxpayers, propose recommendations, and collaborate on improved timely payments. (2) Advocate
for a dedicated fax line or other means of delivery to expedite the processing of paper forms. (3) Recommend the
IRS assign a speciﬁc employee unit dedicated to processing Forms 1139 and 1045. (4) Work with the IRS to develop
a communication strategy to ensure the IRS is transparent and keeps taxpayers informed about the status of their
application for refund and the anticipated delays. IRS oﬃcials said any decisions they make will be based on subsequent
reviews along with any ﬁnal TAS recommendations.

Page 122 GAO-22-105291
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 V. IRS and Treasury provided
technical comments, which we incorporated as appropriate. The Oﬃce of Management and
Budget did not provide any comments on this enclosure.

In its comments, IRS neither agreed nor disagreed with our recommendation to establish
mitigation plans—including indicators, such as a threshold to initiate mitigation activities—to
timely address any future challenges to processing applications for tentative refund on Forms
1045 and 1139 within the 90-day statutory requirement. IRS stated that prior to COVID-19, it met
the 90-day timeframe for the majority of carryback cases. IRS also said that it would not have
been adequately resourced to prevent the overage even with an indicator due to impacts from the
pandemic, the high volume of cases, and limited staﬃng. However, IRS stated that it will take the
recommendation into careful consideration as it continues to make improvements to ensure the
IRS can serve the needs of the nation’s taxpayers well into the future. We continue to believe that
taking the recommended action would improve IRS’s ability to meet their statutory requirement
and enhance accountability in the federal government’s response to, and recovery from, the
COVID-19 pandemic.

GAO’s Ongoing Work
As IRS works to reduce processing times, it will continue to be important that IRS design control
activities to mitigate processing backlogs like this in the future. We will continue to monitor IRS
eﬀorts.

GAO’s Prior Recommendations
The table below presents our recommendations on tax relief for businesses from prior bimonthly
and quarterly CARES Act reports.

Page 123 GAO-22-105291
Prior GAO Recommendations Related to Tax Relief for Business
Recommendation Status

The Commissioner of Internal Revenue should update the Closed—addressed. On November 10, 2021,
Form 1040-X instructions to include information on the IRS posted an update of the Form 1040-X
electronic ﬁling capability for tax year 2019 (November 2020 instructions on its website. This revision contains
report) the reminder that taxpayers can ﬁle Form 1040-
X electronically with tax ﬁling software to amend
2019 or later Forms 1040 or 1040-SR. As a result,
taxpayers are more likely to be aware of the
electronic ﬁling capability, which enables them
to ﬁle their amended returns eﬀectively and
helps reduce government administrative costs
associated with paper submissions.

The Commissioner of Internal Revenue should clearly Closed—addressed. IRS neither agreed
communicate on the Internal Revenue Service’s website that nor disagreed with our recommendation. In
there are delays beyond the statutory 90-day timeline in September 2021, IRS updated its website to
processing net operating loss and alternative minimum tax address our recommendation. Speciﬁcally, the
tentative refunds. (July 2021 report) update states, “due to the lingering eﬀects of
COVID-19, we continue to experience inventory
backlogs and processing times longer than the
normal 90-day statutory period.” This will provide
taxpayers with more accurate information and
expectations for receiving a refund and helps
IRS meet its obligation to provide taxpayers
with clear explanations of the laws and IRS
procedures, as stated in the IRS Taxpayer Bill of
Rights.

Source: GAO. I GAO-22-105291

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.

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 124 GAO-22-105291
Paycheck Protection Program
In November 2021, the Small Business Administration’s independent auditor issued a disclaimer
of opinion on the agency’s 2021 consolidated ﬁnancial statements, in part because of weaknesses
in the Paycheck Protection Program, including its controls over the ongoing loan forgiveness
process.

Entities involved: Small Business Administration, Department of the Treasury

Background
Since March 2020, Congress has provided commitment authority of about $814 billion for the
Paycheck Protection Program (PPP) under the Small Business Administration’s (SBA) largest
guaranteed loan program, its 7(a) small business lending program.205 PPP loans, made by lenders
but guaranteed 100 percent by SBA, are low interest (1 percent) and fully forgivable if certain
conditions are met.206

Lenders made about 11.5 million PPP loans, totaling about $792 billion.207 Of those, lenders
made about 5.1 million loans (totaling about $521 billion) during Round 1 (April through August
2020). SBA relaunched the program (Round 2) on January 11, 2021, following enactment of the
Consolidated Appropriations Act, 2021, which authorized additional PPP loans and made changes
to the program. Among other things, the act expanded the categories of forgivable nonpayroll
costs and allowed PPP borrowers to receive a second PPP loan (second draw loans) of up to $2
million, provided that they meet certain criteria.208 In Round 2, lenders made about 6.3 million
loans totaling about $271 billion. As of November 30, 2021, SBA had obligated about $815.2 billion
across the two rounds of PPP, including lender fees, and expended about $815.1 billion, according
to SBA.

205See Pub. L. No. 116-136, § 1102(b), 134 Stat. 281, 293-294 (2020); Pub. L. No. 116-139, § 101(a), 134 Stat. 620, 620
(2020); Pub. L No. 116-260, div. N, tit. III, §323(a) 134 Stat. 1182, 2018-19 (2020); Pub. L. No. 117-2, § 5001(d) 135 Stat. 4,
85 (2021). The program also paid fees to lenders for their participation in the program.
206As originally implemented by SBA, at least 75 percent of the loan forgiveness amount must have been for payroll
costs. In addition, the CARES Act required loans to be used within an 8-week period in order for the loans to be fully
forgiven. However, the Paycheck Protection Program Flexibility Act of 2020 modiﬁed this to at least 60 percent and
allowed borrowers to pay or incur those expenses over a 24-week period. Pub. L. No. 116-142, § 3, 134 Stat. 641, 641-42
(2020). Under the Paycheck Protection Program Flexibility Act of 2020, the loan forgiveness covered period for PPP loans
was to end the earlier of 24 weeks after origination or December 31, 2020. The Consolidated Appropriations Act, 2021
further modiﬁed the covered period for forgiveness to allow the borrower to choose a covered period ending on any
date between 8 and 24 weeks after origination. Pub. L. No. 116-260, div. N, tit. III, § 306, 134 Stat. 1182, 1997 (2020).
207New applications were accepted through May 31, 2021, and SBA had until June 30, 2021, to process submitted
applications.
208The Consolidated Appropriations Act, 2021 expanded the categories of forgivable nonpayroll costs to include
certain operations, property damage, supplier, and worker protection expenditures. PPP borrowers were eligible to
receive a second PPP loan of up to $2 million provided that they met certain criteria, such as having not more than 300
employees, having used the full amount of their initial PPP loan, and having experienced revenue reductions of at least
25 percent in a quarter of 2020 when compared to the same quarter in 2019. Pub. L No. 116-260, div. N, tit. III, § 311, 134
Stat. 1182, 2001-2007 (2020); see also 86 Fed. Reg. 3712 (Jan. 14, 2021).

Page 125 GAO-22-105291
SBA implemented the program rapidly, and millions of small businesses have beneﬁted from
PPP.209 However, the speed with which SBA implemented the program left it with limited
safeguards to identify and respond to program risks, including susceptibility to improper
payments and fraud. Consequently, we have made eight recommendations since June 2020
to help ensure program integrity, achieve program eﬀectiveness, and address potential fraud.
As discussed in the table below, SBA has partially addressed the four recommendations from
our prior bimonthly and quarterly CARES Act reports. In addition, as noted below, SBA has fully
addressed one of the four recommendations from our July 2021 PPP report and shared its plans to
address the other three.

Overview of Key Issues
Inability to support PPP accounting and related controls. In November 2021, SBA’s
independent auditor issued a disclaimer of opinion on SBA’s ﬁscal year 2021 consolidated ﬁnancial
statements, meaning the auditor was unable to express an opinion due to insuﬃcient evidence.
This was SBA’s second consecutive disclaimer on its ﬁnancial statements. As the basis for the
disclaimer, the auditor reported that SBA was unable to provide adequate evidence to support
a signiﬁcant number of transactions and account balances due to inadequate processes and
controls related to its implementation of its programs authorized under the CARES Act and related
legislation, including PPP and the Economic Injury Disaster Loan program.210

The auditor identiﬁed several material weaknesses in internal control related to PPP.211
Speciﬁcally, the auditor reported weaknesses concerning (1) SBA’s controls over PPP loan
guarantee approval, reporting, review, and forgiveness; (2) subsidy reestimates, including the PPP

209SBA worked with the Department of the Treasury (Treasury) to implement PPP.
210For more information on the auditor’s ﬁndings related to the Economic Injury Disaster Loan program, see the
enclosure on the Economic Injury Disaster Loan Program in app. I. The auditor also reported that it identiﬁed a material
weakness in internal control related to SBA’s Shuttered Venues Operators Grant program and Restaurant Revitalization
Fund program. Speciﬁcally, the auditor stated that SBA did not adequately design and implement monitoring controls
over program awards to ensure accurate ﬁnancial reporting as of the ﬁscal year-end, and to ensure that funds were
used in accordance with the CARES Act and related legislation. For example, SBA disbursed numerous awards to
restaurants that had a PPP loan guarantee with an alert or ﬂag prior to approval of the award. SBA oﬃcials told us
in December 2021 that SBA plans to provide details to the auditor that it believes will remedy the ﬁnding for the
Restaurant Revitalization Fund. They also noted that since the completion of the audit SBA had implemented a process
to monitor the use of recipients’ funds. We will continue to monitor SBA’s eﬀorts to address the deﬁciencies identiﬁed
in its ﬁnancial statement audit. The Consolidated Appropriations Act, 2021, enacted in December 2020, authorized
and appropriated $15 billion to SBA for the shuttered venues program to assist businesses in the performing arts and
entertainment industries experiencing economic hardship due to the COVID-19 pandemic. Pub. L, No. 116-260, div. N,
tit. III, §§ 323(d)(1)(H), 324, 134 Stat. 1182, 2021, 2022-32 (2020). The American Rescue Plan Act of 2021, enacted in March
2021, appropriated an additional $1.25 billion for shuttered venues and modiﬁed certain eligibility requirements. Pub. L.
No. 117-2, tit. V, § 5005, 135 Stat. 4, 91-92 (2021). The American Rescue Plan Act of 2021 also established the restaurant
revitalization program and appropriated $28.6 billion for eligible entities that suﬀered revenue losses related to the
COVID-19 pandemic. Pub. L. No. 117-2, tit. V, § 5003, 135 Stat. 4, 85-90 (2021).
211A material weakness is a deﬁciency, or combination of deﬁciencies, in internal control over ﬁnancial reporting,
such that there is a reasonable possibility that a material misstatement of the entity’s ﬁnancial statements will not
be prevented, or detected and corrected, on a timely basis. A deﬁciency in internal control 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.

Page 126 GAO-22-105291
subsidy reestimate; and (3) SBA’s evaluation of service organizations (contractors), including those
relevant to PPP.212 In addition, the auditor identiﬁed a material weakness in SBA’s entity-level
controls, citing challenges due to the implementation of new and expanded programs, including
PPP.

In its discussion of the material weakness related to controls over PPP loan guarantee approval,
reporting, review, and forgiveness, the auditor noted that SBA did not adequately design and
implement controls to ensure PPP loan guarantees approved in ﬁscal year 2021 were in existence,
accurate, and in conformance with the CARES Act and related legislation. The auditor also
stated that SBA lacked adequate controls to review the status of PPP loan guarantees where
lender loan status reports had not been submitted, had been submitted incorrectly, or were
not processed, hindering SBA’s ability to determine that the status of PPP loan guarantees was
complete and accurate. In addition, the auditor noted that SBA lacked controls to ensure the PPP
loan guarantees approved in ﬁscal year 2020 were completely and accurately reviewed to address
eligibility ﬂags and determine eligibility for forgiveness. Finally, the auditor stated that SBA did not
adequately design and implement controls to ensure that forgiveness payments were accurate
and proper in accordance with the CARES Act and related legislation.

The auditor’s report included several examples to highlight the control deﬁciencies contributing to
the material weakness described above, such as the following:

• The auditor could not verify existence and accuracy for 32 of 383 sampled items from the PPP
loan guarantees approved in ﬁscal year 2021 because lenders did not respond to conﬁrmation
requests.

• As of September 30, 2021, SBA had ﬂagged over 27,000 approved PPP loan guarantees (with
an approximate value of $488 million) in its loan repository system as potentially not in
conformance with the CARES Act and related legislation.

• As of September 30, 2021, SBA had reported approximately $2 billion of PPP loans that were
approved but not disbursed due to unsubmitted or unprocessed loan status reports from
lenders.

• An analysis of the results of the PPP loan review process and forgiveness payments showed
$49 billion was paid to lenders for forgiveness of PPP loans that were still being reviewed by
SBA to address alerts and ﬂags indicative of eligibility concerns.

For the material weakness related to subsidy reestimates, the auditor stated that SBA did not
adequately design and implement controls over the review of the data inputs used in the PPP
subsidy reestimate. Speciﬁcally, SBA did not consider and document the eﬀects of errors from

212The Federal Credit Reform Act of 1990 (FCRA) requires that agencies have budget authority to cover a program’s
subsidy cost to the government in advance—before new loan guarantee commitments are made. The data used for
budgetary subsidy cost estimates are generally updated—or reestimated—annually after the end of the ﬁscal year
to reﬂect actual loan performance and to incorporate any changes in assumptions about future loan performance.
Reestimates that increase subsidy costs are referred to as upward reestimates (an agency would need additional funds),
while reestimates that decrease subsidy costs are referred to as downward reestimates (an agency would return funds
to the Department of the Treasury).

Page 127 GAO-22-105291
lender reporting on the reestimate. As a result, SBA did not have suﬃcient controls to ensure that
the unpaid principal balance of loan guarantees that is the basis for the reestimate was complete
and accurate. SBA also lacked controls to ensure completeness and accuracy of data sourced from
the loan review process and forgiveness transactions that underlie key assumptions in the PPP
reestimate calculation.

For the material weakness related to service organizations, the auditor reported that SBA did not
obtain reasonable assurance of the operating eﬀectiveness of internal controls within service
organizations’ control environments. These service organizations included ﬁnancial service
providers involved in the PPP loan approval and forgiveness processes. Additionally, SBA did
not provide evidence of adequate monitoring activities performed over the relevant control
environments at service organizations, such as obtaining and reviewing attestation reports on the
design, implementation, and operating eﬀectiveness of controls at the service organizations.

In total, the auditor made 14 recommendations to SBA to address the issues related to PPP
in the three areas of material weakness described above. Among other things, the auditor
recommended that SBA

• perform a thorough review of PPP loan guarantees approved in ﬁscal year 2021;

• develop and enforce a policy and controls that require the adequate training and monitoring
of lenders to execute their responsibilities in the PPP loan servicing process;

• develop and enforce a policy and controls to monitor the results of its contractor’s loan review
processes;

• design adequate controls and processes to ensure forgiveness payments are not processed
for loan guarantees that have not been suﬃciently reviewed;

• design and implement controls to continue accumulating relevant, complete, and accurate
data on which to base the subsidy reestimate models for the PPP portfolio; and

• assess the risk posed by service organizations’ control environments, and obtain suﬃcient
assurance of the operating eﬀectiveness of relevant and signiﬁcant service organization
controls.

SBA’s auditor also reported a material weakness in SBA’s entity-level controls, citing challenges
due to the implementation of new and expanded programs. Related to PPP, the auditor stated
that the PPP loan guarantee review and forgiveness review processes were not designed to
ensure the reviews performed were to a suﬃcient level of precision to ensure the related balances
were free of material misstatement. In addition, the auditor stated that SBA did not develop and
implement an adequate monitoring plan for lenders participating in PPP. The auditor issued ﬁve
recommendations to improve entity-level controls, including recommending, among other things,
that SBA:

• document its internal control system and processes related to the implementation of new or
expanded programs from new legislation;

Page 128 GAO-22-105291
• develop and implement monitoring controls to ensure implementation of an eﬀective internal
control environment; and

• develop and implement a suﬃcient plan to test and monitor the design, implementation, and
operating eﬀectiveness of key, relevant controls that aﬀect ﬁnancial reporting and compliance
with relevant laws and regulations.

SBA disagreed with the severity of the weaknesses related to PPP loan guarantees, subsidy
reestimates, and entity-level controls. SBA partially agreed with the material weakness related
to service organization oversight. While SBA did not agree or disagree with the auditor’s
recommendations, in commenting on the auditor’s report, SBA stated that it is continuing its
eﬀorts to address material weaknesses, strengthen processes, develop fraud risk assessments,
and support requirements for the auditability of its ﬁnancial statements.

We support the recommendations the auditor provided to address control weaknesses related to
PPP, and we encourage SBA to continue to work to improve its controls over the program, as well
as to improve its documentation to support future ﬁnancial statement audits.

Status of SBA’s loan forgiveness determinations. Based on our analysis of loan-level SBA
data as of September 30, 2021, of the approximately 11.5 million PPP loans, SBA had received
forgiveness decisions from lenders for about 7.4 million loans (64 percent).213 SBA had made
forgiveness determinations on 7.3 million of these loans, resulting in about 97 percent (7.1 million
loans totaling more than $548 billion) receiving full forgiveness, about 141,000 loans receiving
partial forgiveness, and 177 loans not receiving any forgiveness (see ﬁgure). About 115,000 loans
were still being reviewed by SBA and had not received a forgiveness determination.214

213Under SBA rules and guidance, the borrower submits the forgiveness application to the lender. The lender then has
60 days from receipt of the application to review and submit its forgiveness decision (approved in full, approved in part,
or denied) to SBA. SBA reviews the lender decision, makes a ﬁnal forgiveness determination, and remits the appropriate
forgiveness amount to the lender. In general, SBA must remit the forgiveness amount to the lender within 90 days of
that amount being determined. SBA and Treasury oﬃcials told us they interpreted the CARES Act requirement to remit
funds within 90 days to be subject to SBA’s review of loans. Of the approximately 8.6 million loan forgiveness decisions
submitted to SBA by lenders as of November 14, 2021, 4,782,390 were for loans made in 2020 and 3,855,083 were for
loans made in 2021.
214According to SBA oﬃcials, lenders have recommended that about 7,500 of the approximately 115,000 loans still
under SBA review not receive any forgiveness.

Page 129 GAO-22-105291
Status of SBA Loan Forgiveness Determinations on Paycheck Protection Program Loans, as of Sept. 30, 2021

Note: Percentages do not add to 100 because of rounding.

The rate at which lenders are submitting loan forgiveness decisions to SBA has generally increased
each month since August 2020 (see ﬁgure).215 Whereas SBA received fewer than 100,000 loan
forgiveness decisions in August and September 2020, SBA received more than 1 million each
month in August and September 2021.

215According to Treasury oﬃcials, there could be a variety of reasons for this increase. For example, the oﬃcials noted
that the covered period was extended to a maximum of 24 weeks, and borrowers can apply for forgiveness after
they have used all the proceeds for which they are seeking forgiveness. See 86 Fed. Reg. 8283 at 8288 (Feb. 5, 2021).
Consequently, it would have been reasonable for Round 1 borrowers to wait for the full 24 weeks to elapse before
applying for forgiveness. The oﬃcials also suggested that another potential reason could be that the Consolidated
Appropriations Act, 2021 was passed around the time when many Round 1 borrowers would have been preparing
to apply for forgiveness, and resources at lenders were likely diverted to implementing Round 2. As a result, lender
processing of forgiveness applications likely picked back up after Round 2 closed in May 2021.

Page 130 GAO-22-105291
Number of Paycheck Protection Program Loan Forgiveness Decisions Submitted by Lenders to SBA, Aug. 2020–
Sept. 2021

Status of loan reviews. As we previously reported, an SBA contractor conducted an initial
automated review of all Round 1 loans to identify anomalies or attributes that may indicate
noncompliance with eligibility requirements, fraud, or abuse.216 Loans with any identiﬁed issues
were subject to manual review by contractor and SBA staﬀ. Any issue identiﬁed would need to
be resolved before borrowers could receive a second draw PPP loan or have their loan forgiven.
According to SBA oﬃcials, contractor staﬀ had completed about 78,000 manual reviews and
referred about 8,900 loans to SBA for further review, as of November 15, 2021.217

Of the approximately 7.3 million loans for which SBA had made a forgiveness determination as
of September 30, 2021, about 98,000 loans (totaling around $37.5 billion) required further review
by SBA based on contractor concerns or perceived risk. The reviewed loans fell into one of three
loan amount categories: (1) loans of less than $150,000 (65,600), (2) loans between $150,000 and
$2,000,000 (15,239), and (3) loans of more than $2 million and loans with ﬂags that required an
escalated review (17,387).

SBA progress in addressing previous recommendations. Of the four recommendations we
made in July 2021 to improve its loan review and forgiveness processes, SBA has fully addressed
one. Speciﬁcally, we previously found that as of early July 2021, SBA had not yet ﬁnalized a process
for PPP lenders to claim the loan guarantee if a borrower ceases operations or defaults on a
loan. We therefore recommended that SBA establish time frames for ﬁnalizing and issuing a PPP-
speciﬁc loan guarantee purchase process, including allowing lenders to claim the SBA guarantee
when they have evidence the business ceased operations or declared bankruptcy.

216For a discussion of potential fraud in PPP, see the enclosure on Federal Fraud-Related Cases in app. I.
217The contractor referred an additional approximately 3,300 loans to SBA automatically and without manual review
based on agreed parameters.

Page 131 GAO-22-105291
On July 15, 2021, SBA issued a procedural notice on lenders’ servicing responsibilities for PPP loans
and SBA’s guarantee purchase process. According to the notice, SBA will honor its guarantee and
purchase 100 percent of the outstanding balance of the loan in applicable circumstances provided
that the lender has complied with all the PPP requirements, including the lender’s underwriting
requirements and the document collection and retention requirements. The process outlined
in the procedural notice would also apply to requests for guarantee purchase and charge-oﬀ
for loans to businesses that have permanently closed and do not plan to submit a forgiveness
application or have ﬁled for Chapter 7 bankruptcy protection, among other circumstances. Based
on these actions, we determined that SBA has addressed our recommendation.

SBA has taken some steps or plans to take steps to address our three other July 2021
recommendations.

• In our July 2021 report, we found that SBA had not documented policies and procedures
for some elevated reviews conducted when SBA determines that the borrower is ineligible
for a PPP loan or for the loan amount or loan forgiveness amount claimed by the borrower.
Consequently, we recommended that SBA establish time frames for ﬁnalizing and issuing
these procedures. SBA agreed with the recommendation, and the agency issued a Federal
Register notice on November 16, 2021, that delegated certain authorities related to SBA's
review of PPP loans and ﬁnal SBA loan review decisions to two entities within SBA—a Higher
Authority Review Team and the Oﬃce of Capital Access Committee.218 We are reviewing the
notice to determine whether it fully addresses our recommendation.

• We also found in July 2021 that although SBA developed tools such as a web portal and
lender hotline, its system for responding to lender inquiries was ad hoc. Some lenders, lender
associations, and state banking associations also noted that SBA was not responsive to
lender inquiries, including on loan reviews and the status of loan forgiveness determinations.
Consequently, we recommended that SBA develop and implement a process to help ensure
it responds in a timely manner to PPP lender inquiries on loan reviews. SBA agreed with
the recommendation, and SBA oﬃcials told us in October 2021 that they had taken steps to
improve communication with lenders, such as having a customer service team handle all the
lender inquiries from the lender platform and communicate to lenders reasons for delays
or issues with loan reviews. In late December 2021, SBA provided us with documentation on
procedures its customer service staﬀ are to follow. We are reviewing the documentation to
determine whether it fully addresses our recommendation.

• Lastly, we found in July 2021 that SBA had not yet implemented the CARES Act requirement
that SBA purchase loans prior to loan forgiveness upon submission of reports by lenders
concerning the amount expected to be forgiven. Consequently, we recommended that
SBA implement this statutory provision or report to Congress why it has not complied,
including seeking statutory ﬂexibilities or exceptions that the agency believes appropriate. In
response, SBA stated that it would notify Congress of its request to seek statutory ﬂexibility
on this matter or would request that Congress repeal the advance purchase requirement. In

21886 Fed. Reg. 63437 (Nov. 16, 2021).

Page 132 GAO-22-105291
December 2021, SBA oﬃcials said they planned to send a letter to Congress in the second
quarter of ﬁscal year 2022.

Methodology
To conduct this work, we analyzed SBA loan-level forgiveness data as of September 30, 2021,
reviewed data on PPP obligations and expenditures, and interviewed SBA oﬃcials. We reviewed
SBA’s ﬁscal year 2021 agency ﬁnancial report and the accompanying independent auditor’s report.
We assessed the reliability of the SBA data by reviewing documentation and interviewing SBA
oﬃcials. We determined that the data were suﬃciently reliable for reporting the status of loan
forgiveness determinations and PPP expenditures.

Agency Comments
We provided SBA, Treasury, and the Oﬃce of Management and Budget (OMB) with a draft of this
enclosure. SBA and Treasury provided technical comments, which we incorporated as appropriate.
OMB did not provide comments on this enclosure.

GAO’s Ongoing Work
Our work on PPP is ongoing. We continue to examine SBA’s loan review and forgiveness processes
and the fraud risks in the program. We also continue to monitor SBA’s progress toward developing
and implementing corrective actions to address the material weaknesses identiﬁed in December
2020 and November 2021 by its independent ﬁnancial statement auditor.

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

Page 133 GAO-22-105291
Prior GAO Recommendations Related to the Paycheck Protection Program
Recommendation Status

The Administrator of the Small Business Administration (SBA) Open—partially addressed. SBA agreed with the
should conduct and document a fraud risk assessment for the recommendation. In December 2021, SBA provided
Paycheck Protection Program (PPP). (March 2021 report) a fraud risk assessment that had been prepared
by its contractor. Based on our initial review of the
assessment, it adhered to many but not all fraud
risk management leading practices. For example,
SBA did not determine its fraud risk tolerance as
called for by leading practices. We intend to follow
up with SBA to discuss the fraud risk assessment
and agency actions in response to the fraud risk
assessment.

The Administrator of SBA should develop a strategy that outlines Open—partially addressed. SBA agreed with
speciﬁc actions to monitor and manage fraud risks in the Paycheck the recommendation, stating that it would work
Protection Program on a continuous basis. (March 2021 report) to ensure that fraud risks are monitored on a
continuous basis. In December 2021, SBA provided
a fraud risk assessment, which would inform an
antifraud strategy. We intend to follow up with
SBA to discuss agency actions in response to the
fraud risk assessment and plans for developing an
antifraud strategy.

The Administrator of SBA should expeditiously estimate improper Open—partially addressed. SBA neither agreed
payments and report estimates and error rates for PPP due to nor disagreed with our recommendation at the time
concerns about the possibility that improper payments, including of our report. In response to our recommendation,
those resulting from fraudulent activity, could be widespread. SBA stated that it was planning to conduct improper
(November 2020 report) payment testing for PPP and that it takes improper
payments seriously. SBA oﬃcials stated that SBA
had submitted a sampling plan to the Oﬃce of
Management and Budget in February 2021. In July
2021, they said that SBA would use this sampling
plan to estimate both improper payments and error
rates for PPP in the fourth quarter of ﬁscal year
2021. They noted in August 2021 that SBA would
oﬃcially report the improper payment rate in its
Fiscal Year 2022 Agency Financial Report, not in the
same report for ﬁscal year 2021, because of timing.

The Administrator of SBA should develop and implement plans to Open—partially addressed. At the time of our
identify and respond to risks in PPP to ensure program integrity, report, SBA neither agreed nor disagreed with our
achieve program eﬀectiveness, and address potential fraud, recommendation. As we reported in September
including in loans of $2 million or less. (June 2020 report) 2020, SBA had said that it planned to review all PPP
loans of $2 million or more and further stated that
it may review any PPP loan it deems appropriate,
including loans of less than $2 million. In late
December 2020, SBA provided a Loan Review Plan
outlining steps it planned to take to review PPP
loans. The document describes three steps in
the process: automated screenings of all loans,
manual reviews of selected loans, and quality
control reviews to ensure the quality, completeness,
and consistency of the review process. In July
2021, SBA oﬃcials told us that the agency had

Page 134 GAO-22-105291
Recommendation Status
begun updating its review plan to incorporate
programmatic changes, including its oversight of
loans of $2 million or more. As of December 2021,
SBA was still ﬁnalizing the updated plan.

Source: GAO. I GAO-22-105291

Related GAO Product
Paycheck Protection Program: SBA Added Program Safeguards, but Additional Actions Are Needed.
GAO-21-577. Washington, D.C.: July 29, 2021.

Contact information: William B. Shear, (202) 512-8678, shearw@gao.gov

Page 135 GAO-22-105291
State Small Business Credit Initiative
Treasury is in the process of implementing the reauthorized State Small Business Credit Initiative
to help support small business ﬁnancing programs and expects to begin disbursing funds to
states, territories, and tribal governments in the ﬁrst quarter of 2022.

Entities involved: Oﬃce of Recovery Programs and Oﬃce of Domestic Finance, within the
Department of the Treasury

Background
Under the State Small Business Credit Initiative (SSBCI), reauthorized in March 2021 by the
American Rescue Plan Act of 2021 (ARPA), $10 billion was appropriated for small business capital
access programs and other credit support programs of state, territory, District of Columbia, and
tribal governments.219 ARPA requires Treasury to complete all disbursements and remaining
obligations before September 30, 2030. Any amount that remains unexpended by Treasury on that
date is to be rescinded and deposited into Treasury’s general fund.

Congress ﬁrst authorized SSBCI in the Small Business Jobs Act of 2010, appropriating $1.5 billion in
funding following the 2007-2009 ﬁnancial crisis. This original SSBCI program ended in September
2017. As with the original program, the current program may fund (1) capital access programs
that provide insurance for business loans (in the form of loan loss reserve funds) for participating
ﬁnancial institutions;220 and (2) other credit support programs that include collateral support, loan
participation, loan guarantee, venture capital, and other similar programs.221 Through diﬀerent
mechanisms, each program type shares a portion of the risk of loan repayment or equity ﬁnancing
with lenders, thereby facilitating transactions that might not otherwise have occurred.

The current program also retains the original formula for allocating a portion of the funds ($6
billion) to states (and municipalities, if their states do not submit a complete application to
Treasury), territories, and the District of Columbia; disbursement structure (three installments
over the life of the program); and the requirement for participants to use at least 80 percent of
the previous disbursement before receiving the next installment. In addition, each participating
jurisdiction (state, territory, District of Columbia, tribal government, or any participating
municipality) is required to demonstrate a “reasonable expectation” that its other credit support
programs, taken together, would generate an amount of small business lending and investment at
least 10 times its SSBCI funding (a 10:1 leverage ratio).

In contrast to the original program, the current program received a much larger appropriation
and includes an allocation for tribal governments and additional funding for very small businesses
and business enterprises owned and controlled by socially and economically disadvantaged

219 For purposes of the SSBCI program, tribal government is deﬁned as the recognized governing body of any Indian or
Alaska Native tribe, band, nation, pueblo, village, community, component band, or component reservation, individually
identiﬁed (including parenthetically) in the list published most recently as of March 11, 2021 pursuant to 25 U.S.C. §
5131. 12 U.S.C. § 5701(19).
220 Eligible businesses may have no more than 500 employees.
221 Other credit support programs are required to target an average borrower or investee size of 500 employees or
fewer and are not permitted to extend credit support to borrowers that have more than 750 employees.

Page 136 GAO-22-105291
individuals (see ﬁgure).222 It also includes technical assistance funds that can be used to provide
legal, accounting, and ﬁnancial advisory services to support very small businesses and businesses
owned by socially and economically disadvantaged individuals that apply to participate in an SSBCI
program or another government small business program.

State Small Business Credit Initiative Funding Allocations, 2010 and 2021

Note: Only municipalities located in states that do not submit complete applications are eligible to receive funding. In addition
to the allocations of $6.0 billion for states, territories, the District of Columbia, and any participating municipalities, and $0.5
billion for tribal governments, these jurisdictions may receive portions of the funding for very small businesses, technical
assistance, and businesses owned and controlled by socially and economically disadvantaged individuals.

Overview of Key Issues
Preliminary funding allocations and program time frames. In November 2021, Treasury
updated the preliminary allocation amounts it had previously published for states, territories,
and the District of Columbia (see map).223 The updated preliminary amounts include the main
allocation and allocations for very small businesses, businesses owned and controlled by socially
and economically disadvantaged individuals, and jurisdictions that demonstrate “robust support”
for such businesses. Treasury also published the aggregate preliminary allocation to all tribal
governments and communicated individual amounts to each tribal government directly.

222 Very small businesses are deﬁned as businesses with fewer than 10 employees and may include independent
contractors and sole proprietors. 12 U.S.C. § 5702(f)(2). Business enterprises owned and controlled by socially and
economically disadvantaged individuals are deﬁned as businesses that, if privately or publically owned, are at least
51 percent owned by one or more socially and economically disadvantaged individuals or in the case of a mutual
institution, a majority of the Board of Directors, account holders, and the community which the institution services is
predominately comprised of socially and economically disadvantaged individuals. 12 U.S.C § 5701(15).
223 Treasury published initial preliminary allocation amounts, including main allocations and allocations for very small
businesses, for states, territories, and the District of Columbia in April 2021 and communicated preliminary allocation
amounts to tribal governments in June 2021. In November 2021, Treasury published updated preliminary allocation
amounts and communicated individual amounts to tribal governments.

Page 137 GAO-22-105291
For states and territories, preliminary main allocations and allocations for very small businesses
were based on each state’s or territory’s decline in employment from 2019 through 2020 as a
proportion of national employment decline.224 Preliminary allocations related to businesses
owned and controlled by socially and economically disadvantaged individuals were based on the
percentage of each jurisdiction’s total population residing in Community Development Financial
Institution Investment Areas.225 All preliminary allocations for tribal governments were based on
the total number of enrolled tribal members for each tribe using available enrollment data.226

Total potential funding amounts varied among states and territories. California received the
highest allocation (approximately $1.2 billion), followed by New York (approximately $502 million)
and Florida (approximately $488 million). The Northern Mariana Islands and American Samoa
received the lowest allocations (approximately $57 million each). Tribal governments in aggregate
received a total of approximately $709 million. Treasury oﬃcials told us they have not published
data on individual tribal government preliminary allocations because of concerns from tribal
governments about disclosing sensitive tribal data on which the allocations are partially based.

224 Each state, territory, and the District of Columbia was guaranteed a minimum allocation amount.
225 Community Development Financial Institution Investment Areas, as deﬁned in 12 C.F.R. § 1805.201(b)(3)(ii), are
generally low-income, high-poverty areas that receive neither suﬃcient access to capital nor support for the needs of
small businesses.
226 The preliminary minimum allocation amount for each tribal government was $432,000, according to Treasury’s
methodology for allocating funds to tribal governments.

Page 138 GAO-22-105291
State Small Business Credit Initiative 2021 Preliminary Allocations to States and Territories

According to Treasury oﬃcials, all states and territories and 395 tribal governments submitted a
notice of intent to apply for the program.227 States, territories, and the District of Columbia must
have initiated their SSBCI applications for capital access and other credit support programs by the
statutory deadline of December 11, 2021, and fully complete their applications by February 11,
2022. The deadline for tribal governments to initiate and submit their complete SSBCI applications
for this funding was extended to May 11, 2022. Oﬃcials said applications will be accepted and
reviewed by Treasury on a rolling basis. As of November 1, 2021, Treasury oﬃcials told us they
anticipate the ﬁrst round of completed application reviews and disbursements will likely occur
during the ﬁrst quarter of 2022. Applications for technical assistance funding are due by March 31,
2022 for states, territories, and the District of Columbia, and July 11, 2022 for tribal governments.

Staﬃng of program oﬃce continues. Treasury has determined preliminary staﬃng needs
for the SSBCI program oﬃce (part of Treasury’s Oﬃce of Recovery Programs) and has been

227 According to Treasury oﬃcials, Treasury identiﬁed 582 tribal governments—574 federally recognized tribes and 8
component bands of those tribes that had submitted tribal enrollment data to the Bureau of Indian Aﬀairs—as eligible
to apply to the program. Multiple tribal governments may apply jointly to the SSBCI program.

Page 139 GAO-22-105291
hiring staﬀ. According to Treasury oﬃcials, as of October 20, 2021, 11 positions were staﬀed,
out of 23 total authorized positions in the program oﬃce. Treasury oﬃcials said the oﬃce will
include (1) a compliance group that trains participating jurisdictions on compliance rules and
answers their questions about eligible transactions; (2) an outreach group that assists jurisdictions
with applications and other Treasury processes and facilitates knowledge sharing through
white papers, webinars, and subject matter experts; (3) a policy group that releases guidance
and frequently asked questions (FAQs) and responds to new policy issues; and (4) a technical
assistance group that will assist states through contractors. The structure of the compliance,
outreach, and policy groups will be similar to the original program. While some staﬀ will be
assigned to a speciﬁc group, program analysts will work across the four groups.

Original program guidance was updated to reﬂect some of the new components. Treasury
released updated guidance for the current SSBCI program on November 10, 2021. The guidance
covers (1) requirements for borrowers, lenders, and investors participating in capital access and
other credit support programs, (2) the funding methodology and requirements for using the
additional funds to assist very small businesses and businesses owned and controlled by socially
and economically disadvantaged individuals, and (3) eligibility and reporting requirements for
jurisdictions applying to the program. Treasury published application instructions and launched
an online application portal on November 22, 2021. Treasury plans to announce the availability of
technical assistance funding and issue separate guidelines for this component of the program in
early 2022, according to oﬃcials.

Treasury has conducted initial outreach to eligible jurisdictions. According to oﬃcials, prior
to releasing the November 2021 guidance, Treasury had held over 50 listening sessions with state
and territory oﬃcials and other organizations, and approximately 15 webinars and seven regional
leadership meetings to provide support to tribal governments, which did not participate in the
original program. Treasury oﬃcials said that outreach to eligible jurisdictions occurred through
the December 11 initial application deadline, with daily oﬃce hour sessions supplemented by
webinars. Oﬃcials said Treasury plans to host webinars on program design and separate oﬃce
hours for eligible jurisdictions on an ongoing basis, and provide direct assistance related to the
speciﬁc types of programs applicants propose implementing.

Lessons learned from the original SSBCI program may inform implementation of the
current program. Our reviews of the original SSBCI program from 2011 through 2014, as well as
audits by Treasury’s Oﬃce of Inspector General, included recommendations to improve Treasury’s
implementation. For example, we made three recommendations related to measuring program
performance that Treasury implemented, including a recommendation that Treasury establish
targets for selected performance measures such as the amount of SSBCI funds used over time.
In addition, a 2016 program evaluation commissioned by Treasury identiﬁed lessons learned and
eﬀective practices from Treasury’s experience with the original program.

Treasury oﬃcials provided examples on how Treasury plans to apply lessons learned to the
current program. For example, Treasury oﬃcials noted that in developing updated guidance, they
were aware of the need to provide appropriate ﬂexibility to participants so that they can adapt
programs to their jurisdiction’s needs and adjust their programs over time. In addition, Treasury
oﬃcials recognized the importance of information sharing across participants and said they plan
to facilitate ongoing discussions among participants so they can learn about implementing speciﬁc

Page 140 GAO-22-105291
programs from their counterparts. Treasury oﬃcials also said they identiﬁed the top 11 risks states
faced during the original program and best practices for managing those risks, which are publicly
available on Treasury’s website.

Increased size and new program features present potential challenges. As Treasury
operationalizes a larger and more complex SSBCI program, potential challenges for Treasury and
program participants include:

• Meeting the overall program leverage ratio. ARPA increased total funding for states and
territories by over $5 billion, creating a larger pool of money for lending and investing. Many
states were unable to meet the 10:1 leverage ratio requirement for the original program,
and state oﬃcials expressed some concerns about meeting the same leverage ratio for the
current program. For example, one state oﬃcial said meeting the leverage ratio requirement
will be a challenge given the amount of money the state will receive for the current program.
Representatives from a ﬁnancial organization we interviewed noted that participants have a
better understanding of opportunities to leverage funds and which types of programs result in
higher leverage ratios for the current program.

• Managing allocations related to very small businesses and businesses owned and controlled by
socially and economically disadvantaged individuals. ARPA included $1.5 billion to be expended
for businesses owned and controlled by socially and economically disadvantaged individuals
(as well as $1 billion to be provided to jurisdictions that demonstrate robust support for
these businesses), and $500 million to be expended for very small businesses. State oﬃcials
we interviewed said assisting these businesses can be diﬃcult. For example, oﬃcials from
one state said it may be diﬃcult to incentivize banks to take on the level of risk necessary to
serve these businesses and that they plan to address this by working closely with community
development ﬁnancial institutions.

• Managing funds for tribal governments. ARPA included a $500 million set-aside for tribal
governments, who as ﬁrst-time participants will likely require additional guidance and
technical assistance from Treasury, according to representatives from a ﬁnancial organization
that helped states set up their programs during the original SSBCI round. Tribal governments
may also receive additional SSBCI funding from the allocations related to very small
businesses and businesses owned and controlled by socially and economically disadvantaged
individuals. We reported in October 2021 that Treasury faced various challenges that slowed
distribution of funds from the Coronavirus Relief Fund to tribes.

• Managing technical assistance funds. ARPA included a $500 million set-aside for technical
assistance to very small businesses and businesses owned by socially and economically
disadvantaged individuals. Treasury may provide these funds to participating jurisdictions,
transfer them to the Minority Business Development Agency, or use them to directly contract
with technical assistance providers. State oﬃcials we interviewed said the technical assistance
component would be an important component of the current program and receiving
additional guidance from Treasury in this area will help them plan how to use the SSBCI funds.
One oﬃcial noted that allowing participating jurisdictions to administer these funds may
improve access for underserved businesses. As previously noted, Treasury oﬃcials plan to
release guidance for this component in early 2022.

Page 141 GAO-22-105291
Methodology
To conduct this work, we reviewed relevant federal laws, agency guidance, notices, and
reports, and interviewed Treasury oﬃcials. We also interviewed oﬃcials from three states that
implemented the 2010 program, and representatives from four organizations familiar with the
program. We also analyzed data from Treasury on preliminary funding allocations for states and
territories. We obtained information from Treasury on how they determined and veriﬁed these
allocations, and determined the data were suﬃciently reliable for the purposes of our reporting
objective.

Agency Comments
We provided the Department of the Treasury and the Oﬃce of Management and Budget with
a draft of this enclosure. Treasury provided technical comments, which we incorporated as
appropriate. The Oﬃce of Management and Budget did not provide comments on this enclosure.

GAO’s Ongoing Work
We will continue to monitor Treasury’s eﬀorts to make the 2021 SSBCI program operational. We
plan to review how states, territories, and tribal governments plan to use SSBCI funds to support
small businesses. We also plan to examine Treasury’s eﬀorts to ensure compliance with program
requirements, manage program risk, and monitor and assess the eﬀectiveness of the program.

Related GAO Products
COVID-19: Lessons Learned from Interior and Treasury’s Administration of CARES Act Funds Could
Improve Federal Emergency Relief to Tribes. GAO-22-104349. Washington, D.C.: October 29, 2021.

Small Business Credit Programs: Treasury Continues to Enhance Performance Measurement and
Evaluation but Could Better Communicate and Update Results. GAO-15-105. Washington, D.C.:
December 11, 2014.

State Small Business Credit Initiative: Opportunities Exist to Enhance Performance Measurement and
Evaluation. GAO-14-97. Washington, D.C.: December 18, 2013.

Small Business Lending: Opportunities Exist to Improve Performance Reporting of Treasury’s Programs.
GAO-13-76. Washington, D.C.: December 5, 2012.

State Small Business Credit Initiative: Opportunities Exist to Improve Program Oversight. GAO-12-173.
Washington, D.C.: December 7, 2011.

Contact Information: Michael Clements, (202) 512-8678, clementsm@gao.gov

Page 142 GAO-22-105291
Federal Oce Space
Bottom line statement: Most agencies we surveyed expect to reduce oﬃce space leases or
square footage in the next 3 to 5 years, in part due to the pandemic. Some told us they anticipate
making potentially costly oﬃce design changes to meet hybrid workforce needs and evolving
federal requirements.

Entities involved: The 24 agencies that fall under the Chief Financial Oﬃcers Act of 1990, as
amended.228 These agencies collectively occupied approximately 98 percent of all federal oﬃce
space in ﬁscal year 2020, according to General Services Administration data.

Background
The COVID-19 pandemic, which resulted in nearly 60 percent of the federal workforce teleworking,
has raised questions about the oﬃce space needs of the federal government and ways agencies
will plan for federal workspace in the future.229 Furthermore, it is not clear whether previous
workspace standards and designs, such as for building ventilation, occupancy rates, and open
oﬃce conﬁgurations, are appropriate in light of COVID-19.

Federal properties include thousands of leased and owned oﬃce buildings that cost billions of
dollars annually to rent, operate, and maintain, one reason that managing federal real property
has been on GAO’s High-Risk List since 2003. The General Services Administration (GSA) provides
real property guidance to federal agencies, including the 24 Chief Financial Oﬃcers (CFO) Act
agencies, and assists them in acquiring and leasing properties, including ensuring properties meet
federal safety protocols such as those related to ventilation.

Overview of Key Issues
Recent and future decreases in leased oﬃce space. In response to a GAO survey of all CFO Act
agencies, several agencies reported terminating leases or allowing leases to expire in response to
the pandemic and pandemic-related policies allowing more telework. Five of the 24 agencies we
surveyed reported terminating leases due to the pandemic and two reported extending current
leases to avoid pandemic-related challenges associated with moving oﬃces to a new location. For
example:

• The Department of Veterans Aﬀairs reduced its leased oﬃce space by approximately 237,000
square feet across 18 leases nationwide—through lease terminations and allowing leases to
expire—because of teleworking personnel.

228These agencies include the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human
Services, Homeland Security, Housing and Urban Development, Interior, Justice, Labor, State, Transportation, the
Treasury, and Veterans Aﬀairs; National Aeronautics and Space Administration; Environmental Protection Agency;
U.S. Agency for International Development; General Services Administration; National Science Foundation; Nuclear
Regulatory Commission; Oﬃce of Personnel Management; Small Business Administration; and Social Security
Administration.
229Oﬃce of Personnel Management, Federal Employee Viewpoint Survey 2020: Governmentwide Management Report
(Washington, D.C.: 2020).

Page 143 GAO-22-105291
• The Environmental Protection Agency delayed its oﬃce relocation to a federal building in
Washington, D.C. due to the challenges of moving almost 1,000 employees and equipment
while the federal government was operating under a maximum telework status. As a result,
the agency had to extend its lease in Arlington, Virginia (326,057 square feet) until March 2022
at an annual cost of approximately $14 million.

Prior to the pandemic, the federal government’s leased and owned real property assets were
already decreasing, in part in response to executive branch policies aimed at reducing the federal
footprint—for example, Freeze the Footprint (2012) and Reduce the Footprint (2015).230 However,
since the pandemic began in March 2020, federal agencies have reduced leasing at a higher rate
(see ﬁgure below).

Number of Leases in the Federal Leasing Inventory, July 2011–July 2021

a
In 2012, the Oﬃce of Management and Budget (OMB) directed the 24 Chief Financial Oﬃcers (CFO) Act agencies to “freeze”
their footprint and maintain their civilian real estate inventory at or below their then-current levels.
b
In 2015, OMB issued its Reduce the Footprint policy requiring the CFO Act agencies to set annual targets for reducing their
portfolio of domestic oﬃce and warehouse space.

While there are likely several reasons other than the pandemic for the recent and substantial
reduction in leases, according to agencies this downward trend is likely to continue. Most agencies
we surveyed told us they plan to reduce the number of leases or reduce square footage in
their real estate portfolio starting in the next 3 to 5 years, in part because of the pandemic. For
example:

230According to GSA oﬃcials, the Lease Cost Avoidance program, which aggregates cost savings from several eﬀorts,
including the Freeze the Footprint and Reduce the Footprint initiatives, has achieved $4.5 billion in cost avoidance
from ﬁscal year 2018 through ﬁscal year 2021. However, in prior GAO work issued in March 2020, we raised concerns
regarding the reliability of the information used to calculate these cost savings.

Page 144 GAO-22-105291
• Department of Education oﬃcials said they are canceling plans for several new leases because
of the pandemic and will reduce square footage between 27 and 50 percent for future leases.

• Department of Defense oﬃcials reported plans to reduce their reliance on leased workspace
because, in some oﬃces, almost 90 percent of personnel were able to telework.

Additionally, in the next 5 years more than half of federal leases will expire, giving agencies the
opportunity to signiﬁcantly change their leased portfolio.

Needed oﬃce design changes and related costs. Multiple agencies reported that they expect
potentially costly oﬃce design changes will be needed for post-pandemic workforce reentry.
Speciﬁcally, agencies expect a need to transform traditional oﬃces to hybrid oﬃces, which allow
regular and occasional in-oﬃce work, and for additional technology investments to enable agency
personnel to perform their jobs at home. Several agencies reported that one-time costs to make
design changes may oﬀset some savings from reducing the federal footprint.

Additionally, the majority of agencies told us they expect increased costs from construction, driven
by increased building supply costs and labor shortages. For example, Department of Defense
oﬃcials said that data collected from June 2020 to June 2021 show costs for non-residential
construction materials rose 26 percent.

Guidance and assistance for agencies on workforce reentry and space planning. Some
guidance has been provided to federal agencies regarding workforce reentry issues, including
telework and remote work, and updated or additional guidance may be issued.

• On June 10, 2021, the Oﬃce of Personnel Management (OPM), GSA, and the Oﬃce of
Management and Budget (OMB) jointly issued a memorandum providing guidance to agencies
for reentry and post-reentry work environment and personnel policies. This memorandum
included high-level guidance to agencies on telework, remote work, hours of work, labor
relations, and performance management.

• On July 23, 2021, OPM issued further guidance for agencies on workforce reentry issues. It
covered many topics addressed in the previous guidance but also included information on pay
administration, evacuation pay, labor, and employee relations.

• On November 12, 2021, OPM released additional guidance which provides resources and
information to help agencies conceptualize the continued evolution of telework, including a
new section providing agencies with policy guidance on remote work.

GSA oﬃcials said they will consider future guidance updates on space conﬁguration and
ventilation. Oﬃcials from other federal agencies told us they thought that OMB may provide
additional guidance involving space reduction goals in the future. However, OMB oﬃcials we
interviewed said it was too early to tell whether they would publish new guidance.

GSA oﬃcials said the agency has shifted preexisting eﬀorts to assist agencies in the real property
planning process to respond more directly to the pandemic, and has added additional services

Page 145 GAO-22-105291
(see ﬁgure below). For example, GSA’s eﬀorts to assist agencies in planning workspace now and
after the pandemic include facility capacity analysis and occupancy planning.

Examples of General Services Administration’s (GSA) Return to Workplace Planning Services for Federal Agencies

Methodology
We sent a survey to all 24 CFO Act agencies and received a 100 percent response rate. The survey
asked speciﬁcally about the eﬀects of COVID-19 on current changes to and future plans for oﬃce
space leases, owned buildings, and new construction projects. We also reviewed relevant OPM,
OMB, and GSA guidance; interviewed oﬃcials from federal agencies; and analyzed GSA leasing
inventory data from July 2011 to July 2021. We interviewed cognizant agency oﬃcials about the
data and reviewed the data for omissions and completeness and concluded the data was reliable
for our purposes.

Agency Comments
We provided a draft of this enclosure to the 24 CFO Act agencies and to the Oﬃce of Management
and Budget. GSA provided technical comments, which we incorporated as appropriate.

GAO’s Ongoing Work
The COVID-19 pandemic continues to have eﬀects on federal oﬃce space needs and
requirements. We have ongoing work related to the oﬃce space of the 24 CFO Act agencies and
expect to issue a report in the summer of 2022. GAO is also currently conducting work to examine
telework use at the 24 CFO Act agencies during the COVID-19 pandemic.

Page 146 GAO-22-105291
Related GAO Products
Federal Leasing: Quality Information and Metrics Would Allow GSA to Better Assess the Value of Its
Broker Program. GAO-20-361. Washington, D.C.: March 31, 2020.

Contact information: Jill Naamane, Acting Director, (202) 512-2834, naamanej@gao.gov

Page 147 GAO-22-105291
Coronavirus State and Local Fiscal Recovery Funds
States continue to distribute Coronavirus State and Local Fiscal Recovery Funds awards to smaller
local governments, and the Department of the Treasury has extended deadlines for meeting
reporting requirements for all recipients.

Entities involved: Department of the Treasury

Background
The Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), established under the American
Rescue Plan Act of 2021 (ARPA) and administered by the Department of the Treasury, allocated
$350 billion to the states, the District of Columbia, local governments, tribal governments, and U.S.
territories to help cover a broad range of costs stemming from the ﬁscal eﬀects of the COVID-19
pandemic.231 Local governments consist of metropolitan cities, counties, and smaller local
governments (typically serving populations of less than 50,000) referred to as non-entitlement
units of local government (NEU).232

Treasury had distributed more than $245 billion in CSLFRF allocations to recipients as of
November 30, 2021, according to Treasury data. The ﬁgure below shows the amounts of funding
the CSLFRF allocates to various recipient types as well as the amount of funding Treasury
distributed to each recipient type as of November 30, 2021.

CSLFRF recipients have until December 31, 2024, to incur obligations with their CSLFRF awards
and, according to Treasury, until December 31, 2026, to liquidate those obligations, in accordance
with allowable uses established in ARPA.

231Pub. L. No. 117-2, tit. IX, subtit. M, § 9901, 135 Stat. 4, 223 (2021) (codiﬁed at 42 U.S.C. §§ 802-803) (ARPA). Sections
602 and 603 of the Social Security Act as added by section 9901 of ARPA appropriated $350 billion in total funding for
two funds—the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund. For purposes
of this report, we discuss these two funds as one—the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). 42
U.S.C. §§ 802-803. For purposes of the CSLFRF, ARPA establishes that the District of Columbia is considered to be a state.
42 U.S.C. §§ 802(g)(5), 803(g)(9).
23242 U.S.C. §§ 803(g), 5302(a).

Page 148 GAO-22-105291
Coronavirus State and Local Fiscal Recovery Funds Allocations and Treasury Distributions as of Nov. 30, 2021, by
Recipient Type

a
Non-entitlement units of local government (NEU), are local governments typically serving populations of less than 50,000. 42
U.S.C. §§ 803(g)(5), 5302(a)(5). NEUs include cities, villages, towns, townships, or other types of local governments.
b
A metropolitan city is deﬁned as the central city within a metropolitan area (i.e., a standard metropolitan statistical area as
established by the Oﬃce of Management and Budget) or any other city within a metropolitan area that has a population of
50,000 or more. 42 U.S.C. §§ 803(g)(4), 5302(a)(3)-(4).
c
ARPA provides that to receive their Coronavirus State and Local Fiscal Recovery Funds award, states, the District of Columbia,
and U.S. territories must ﬁrst provide Treasury with a signed certiﬁcation stating that they require their award to carry out
allowable activities and will comply with relevant requirements when they use their award. According to Treasury, states that
have experienced a net increase of more than 2 percentage points in their unemployment rate from February 2020 to the
date of the latest available data will receive their full award in a single payment; other states will receive award funds in two
equal tranches, with the second tranche provided within 12 months after certiﬁcation. Governments of U.S. territories will
receive an award in a single payment. Treasury is required to distribute awards to metropolitan cities, states (for distribution to
NEUs), and counties in two equal tranches, providing the ﬁrst payment within 60 days after ARPA’s enactment, or May 10, 2021,
to the extent practicable, and providing the second payment no earlier than 12 months after the ﬁrst. After receiving award
funds for distribution to NEUs, states have 30 days to make those distributions, unless Treasury grants an extension. According
to Treasury, tribal governments will receive their award funds in two distributions: the ﬁrst distribution in May 2021 and the
second distribution, based on employment data, in June 2021.

Under ARPA, eligible state, territorial, metropolitan city, county, and tribal governments receive
funding directly from Treasury. According to Treasury, over 20,000 NEUs are receiving CSLFRF
awards through their state governments.233 Speciﬁcally, Treasury will make payments to states for

23342 U.S.C. § 803(b)(2). Territories also allocate and distribute payments to NEUs. For purposes of payments to NEUs,
ARPA deﬁnes “states” to include territories (i.e., Commonwealth of Puerto Rico, the United States Virgin Islands, the
Commonwealth of the Northern Mariana Islands, and American Samoa). 42 U.S.C. § 803(g)(9). However, for purposes of
this report we excluded territories from our analysis.

Page 149 GAO-22-105291
distribution to NEUs in two tranches (approximately 12 months apart), and states are required to
allocate and distribute the payments to each NEU within their state.234

Treasury has issued guidance that includes steps states should follow for allocating and
distributing funds to NEUs.235 Among other things, these steps include identifying eligible NEUs,
calculating initial allocation amounts, and establishing a process for NEUs to submit requests
for their award.236 Consistent with ARPA, states must also ensure an NEU’s total CSLFRF award
(i.e., the sum of both tranches) does not exceed 75 percent of the NEU’s most recent budget.237
According to Treasury guidance, states have some discretion in calculating the initial allocation
of funds. For example, the guidance explains that states may divide any overlapping population
between NEUs in a number of ways for the purpose of allocating funds.238
As CSLFRF recipients, NEUs may be subject to single audits, as required by the Single Audit Act. The
act establishes requirements for nonfederal entities that receive federal awards to undergo single
audits (or, in limited circumstances, program-speciﬁc audits) of those awards annually (unless
a speciﬁc exception applies) when they spend at least $750,000 in federal awards in their ﬁscal
year.239

On May 10, 2021, Treasury released an interim ﬁnal rule for implementing the CSLFRF that
identiﬁed reporting requirements for all recipients.240

234Treasury considers state governments that request their own allocations also to have requested allocations for
NEUs within their states. Treasury will make payments to states from the Coronavirus Local Fiscal Recovery Fund for
distribution to NEUs in two tranches, with the second tranche payment to be made no earlier than 12 months after the
date on which the ﬁrst tranche payment is paid to the state.
235Department of the Treasury. Coronavirus Local Fiscal Recovery Fund: Guidance on Distribution of Funds to Non-
entitlement Units of Local Government, accessed Oct. 25, 2021. https://home.treasury.gov/system/ﬁles/136/
NEU_Guidance.pdf.
236ARPA requires states to allocate and distribute to NEUs an amount that is the same proportion to the amount of
payment as the population in the NEU as a share of the total population of all NEUs in the state. 42 U.S.C. § 803(b)(2)(C).
237Section 603(b)(2)(C)(iii), as added by section 9901 of ARPA (codiﬁed at 42 U.S.C. § 803(b)(2)(C)(iii)), provides that each
NEU’s total allocation and distribution (i.e., the total of distributions under both the ﬁrst and second tranche) is capped
at 75 percent of its most recent budget, in eﬀect as of January 27, 2020. The supplemental information accompanying
Treasury’s interim ﬁnal rule that implements CSLFRF deﬁned a NEU’s most recent budget for purposes of the cap to
mean the NEU’s most recent annual total operating budget, including its general fund and other funds, as of January 27,
2020. Coronavirus State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786, 26,814 (May 17, 2021). Treasury’s ﬁnal rule
speciﬁes that the NEU’s total annual budget includes both operating and capital expenditure budgets. See Department
of the Treasury, Coronavirus State and Local Fiscal Recovery Funds, Final Rule (Jan. 6, 2022), https://home.treasury.gov/
system/ﬁles/136/SLFRF-Final-Rule.pdf. While the ﬁnal rule does not go into eﬀect until April 1, 2022, recipients may take
actions consistent with the ﬁnal rule prior to the eﬀective date. See, Treasury’s Statement Regarding Compliance with the
Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule.
238In some states, the boundaries of some NEUs overlap with or encompass other NEUs within the state, typically
resulting in overlapping populations between the larger “parent” NEU and the subsidiary NEU (e.g., a township that
encompasses a city).
239The Single Audit Act is codiﬁed, as amended, at 31 U.S.C. §§ 7501-06, and implementing Oﬃce of Management and
Budget (OMB) guidance is reprinted in 2 C.F.R. part 200. The single audit that the statute generally requires covers both
the entity’s ﬁnancial statements and its federal awards for the ﬁscal year. The nonfederal entities covered by the act are
states, the District of Columbia, U.S. territories, Indian tribes, local governments, and nonproﬁt organizations. 31 U.S.C. §
7502; 2 C.F.R. § 200.501.
240Subsequently, on May 17, 2021, Treasury published the interim ﬁnal rule in the Federal Register. See Coronavirus
State and Local Fiscal Recovery Funds, 86 Fed. Reg. 26,786. Treasury provided initial guidance on reporting requirements

Page 150 GAO-22-105291
• All recipients—except NEUs—were required to submit an interim report that provided an initial
overview of the status and use of their funding.

• All recipients, including NEUs, are required to submit project and expenditure reports on a
quarterly or annual basis—depending on the type of recipient—that provide information on
their use of the funding and projects undertaken with the funding, among other things.

• States, U.S. territories, and metropolitan cities and counties with a population that exceeds
250,000 residents are also required to submit to Treasury annually, and post on their public
websites, a recovery plan performance report (recovery plan). These recovery plans are
to discuss planned uses of spending and include, among other things, descriptions of the
projects funded.

Treasury released subsequent guidance that provides additional detail and clariﬁcation on the
compliance and reporting responsibilities for each recipient type, including reporting deadlines
as shown in the ﬁgure below.241 Recipients must submit all required CSLFRF reports through
Treasury’s online reporting portal.

for all recipients in the supplemental information section of the interim ﬁnal rule. The text of the rule in the interim ﬁnal
rule did not contain speciﬁc reporting requirements, but rather established recipients’ obligation to provide regular
detailed reporting and other information as Treasury requires. This general provision was retained in the ﬁnal rule which
Treasury released on January 6, 2022. See Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds,
Final Rule (Jan. 6, 2022), https://home.treasury.gov/system/ﬁles/136/SLFRF-Final-Rule.pdf.
241Department of the Treasury. Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, ver. 2.1
(Nov. 15, 2021), accessed Dec. 2, 2021, https://home.treasury.gov/system/ﬁles/136/SLFRF-Compliance-and-Reporting-
Guidance.pdf.

Page 151 GAO-22-105291
Treasury’s Reporting Requirements for the Coronavirus State and Local Fiscal Recovery Funds, by Recipient
Type, as of Nov. 15, 2021

Overview of Key Issues
States’ progress in distributing CSLFRF payments to NEUs. Under ARPA, states have 30 days
to distribute funds to NEUs, once they receive the payments from Treasury.242 We asked Treasury
oﬃcials about data they could provide us on the amount of funds states distributed to NEUs for
the ﬁrst tranche of payment of award funds. Treasury oﬃcials told us that states had submitted
data on distributions to NEUs, as well as NEUs’ contact information (e.g., personal contact and
other related information), but that Treasury had concerns with the quality and completeness of
the data and was not prepared to share the data at the time of our review.243

Treasury oﬃcials told us that they are in the process of working to ensure the completeness and
quality of the data, which includes, among other things, working with states to address missing
data and ensuring that the allocation amounts to NEUs met the allowable statutory limits under
ARPA. The oﬃcials also said they plan to engage directly with NEUs to create accounts in Treasury’s

242Pub. L. No. 117-2, § 9901, 135 Stat. at 229 (codiﬁed at 42 U.S.C. § 803(b)(2)(C)).
243The other related identifying information includes Data Universal Numbering System (DUNS) numbers, which are
unique nine-digit identiﬁers used to identify an organization. By April 2022, the federal government will transition from
the DUNS number to the new Unique Entity ID (SAM) assigned by SAM.gov. Treasury requires all CSLFRF recipients to
have an active SAM registration.

Page 152 GAO-22-105291
online portal, which recipients use to submit required reports.244 We will continue to follow up
with Treasury on its eﬀorts to address these data concerns.

ARPA also allows states to request from Treasury one or more extensions of up to 30 days,
with the initial extension granted if states encounter an “excessive administrative burden” that
aﬀects their ability to distribute all CSLFRF payments to their NEUs.245 According to Treasury data,
as of January 3, 2022, most states had received multiple 30-day extensions from Treasury for
distributing CSLFRF payments to NEUs within their state, as shown in the table below.

244In December 2021, Treasury released a user guide for NEUs to conﬁrm their accounts in Treasury’s online reporting
portal and upload required documents, among other things. Department of the Treasury. NEU and Non-UGLGs
Agreements and Supporting Documents User Guide: State and Local Fiscal Recovery Funds, ver. 1 (Dec. 14, 2021), accessed
Dec. 14, 2021. https://home.treasury.gov/system/ﬁles/136/SLFRF_Recipient-Reporting-User-Guide-NEU_Non-UGLG.pdf.
245An authorized state oﬃcer must certify that CSLFRF distributions to NEUs would constitute an “excessive
administrative burden” for the state with respect to one or more of those distributions. After the initial extension, any
additional extensions may only be granted by Treasury if (1) the state provides a written plan specifying when it expects
to make such distribution and the actions the state has taken and will take in order to make all such distributions before
the end of the distribution period (as extended), and (2) Treasury determines such plan is reasonably designed to
distribute all such funds to NEUs by the end of the extended period. 42 U.S.C. § 803(b)(2)(C)(ii).

Page 153 GAO-22-105291
Number of States Receiving One or More 30-Day Extensions from Treasury for Distributing Coronavirus State
and Local Fiscal Recovery Funds Payments to Non-Entitlement Units of Local Government, as of Jan. 3, 2022
Second Fourth Seventh
First 30-day 30-day Third 30-day 30-day Fifth 30-day Sixth 30-day 30-day
extension extension extension extension extension extension extension

States 44 35 25 21 12 10 4
(50)
Source: Department of the Treasury. I GAO-22-105291

According to Treasury oﬃcials, some states faced challenges that aﬀected their ability to distribute
all CSLFRF payments to NEUs. Treasury oﬃcials said some states have thousands of NEUs and
need more time to manage eﬀorts such as reaching out to NEUs and processing NEU requests for
funds. For example, they said some states requested an extension so they could have additional
time to establish a process for distributing CSLFRF payments. These oﬃcials also told us that some
states had diﬃculty contacting NEUs—particularly smaller NEUs—that have limited administrative
capacity, such as a lack of full-time staﬀ and limited broadband access and oﬃce hours.

Representatives from some state and local government associations described similar challenges.
For example, some states encountered diﬃculties communicating with NEUs that did not have
staﬀ readily available to respond to state inquiries, while other states were not able to identify an
appropriate NEU contact.

In addition, representatives from one association told us that obtaining the necessary
documentation to verify NEUs’ budgets can be challenging for states, particularly because some
NEUs do not have a documented budget. For example, an association representative told us that
one NEU had provided the state its written budget on a napkin. According to Treasury guidance,
states may rely on an NEU’s budget total, rather than actual budget documents, to ensure an
NEU’s total CSLFRF award does not exceed 75 percent of its annual budget.246 However, NEUs
must provide actual budget documents that validate their budget total when they submit their ﬁrst
project and expenditure report to Treasury due on April 30, 2022.

Status of NEU single audits. Representatives from both the audit community and state and local
government associations told us that NEUs may face challenges in conducting the single audits
required by the Single Audit Act, given that thousands of NEUs may be subject to single audits
for the ﬁrst time. The act requires auditors to conduct single audits in accordance with generally
accepted government auditing standards (GAGAS).247 The representatives expressed concern
that there may not be enough qualiﬁed state auditors available with the expertise to address the
increased COVID-19 workload and the number of entities that may be subject to a single audit.

246Department of the Treasury. Frequently Asked Questions on Distribution of Funds to Non-entitlement Units of Local
Government, (June 30, 2021), accessed Nov. 2, 2021, https://home.treasury.gov/system/ﬁles/136/NEU-FAQs.pdf.
24731 U.S.C. § 7502(c). GAGAS provides standards and guidance for auditors and audit organizations, outlining the
requirements for audit reports, professional qualiﬁcations for auditors, and audit organization quality control. Auditors
of federal, state, and local government programs use these standards to perform their audits and produce their reports.

Page 154 GAO-22-105291
For example, representatives from one association said they estimate that CSLFRF spending may
trigger up to 10,000 new single audits.248

Representatives also expressed concern that resources to perform these audits might be
stretched beyond auditors’ capacity, especially auditors with GAGAS certiﬁcation. One association’s
representatives told us that state auditors are using resources to conduct audits of CSLFRF funding
at the state level, limiting the staﬀ they can devote to local government audits. Speciﬁcally, they
said that while state auditors usually conduct audits for local governments, many have been
constrained due to an increase in demand and insuﬃcient staﬃng.249 As a result, local accounting
ﬁrms may be called on to conduct many single audits.

In addition, association representatives said that the cost of performing single audits may
be a challenge for some jurisdictions. For example, representatives from one state and local
government association said that some smaller NEUs have to consider the cost of the single
audit when determining whether to accept a CSLFRF award and that some have declined their
award as a result.250 Representatives at another association said that state auditors often get a
set appropriation from the state legislature each ﬁscal year, making it diﬃcult to obtain additional
funding to conduct audits that occur after the state appropriations were originally enacted.

Treasury oﬃcials said they are aware of the concerns raised by the associations as well as others
in the audit community, including the American Institute of Certiﬁed Public Accountants. They
told us that they worked with the Oﬃce of Management and Budget (OMB) on the Compliance
Supplement for single audits to clarify the CSLFRF requirements for auditors.251 We will continue
to monitor Treasury’s progress along with our prior July 2021 recommendation that OMB, in
consultation with Treasury, issue timely and suﬃcient single audit guidance for auditing recipients’
uses of CSLFRF payments.

States’ planned uses of funds. As discussed above, Treasury required state recipients to submit
their recovery plans by August 31, 2021, or 60 days after receiving their CSLFRF award. These plans
were to describe planned (i.e., intended and actual) uses of spending that cover the date of the
award through July 31, 2021. We analyzed 47 state recovery plans that were publicly available
as of December 3, 2021.252 Ten of these recovery plans did not include speciﬁed dollar amounts

248Because NEUs qualify as nonfederal entities under the Single Audit Act, any NEU that meets the $750,000
expenditure threshold in a given ﬁscal year will need to comply with the act. 31 U.S.C. §§ 7501, 7502.
249As a nonfederal entity subject to the Single Audit Act, each NEU meeting the act’s expenditure threshold in a given
ﬁscal year is responsible for obtaining an independent auditor to conduct its single audit. 31 U.S.C. § 7502; 2 C.F.R. §
200.501.
250Pursuant to OMB guidance implementing the Single Audit Act, certain single audit costs may be charged to the
recipient’s federal award. 2 C.F.R. § 200.425.
251OMB’s Compliance Supplement provides guidance for performing single audits, including information about
programs’ objectives, procedures, and compliance requirements. Each year, OMB works with agencies to compile this
information and issues the information in the supplement. In December 2021, OMB published single audit guidance for
the CSLFRF in an addendum to the 2021 Compliance Supplement.
252Our review of 47 state recovery plans included the recovery plan for the District of Columbia, which is considered
a state under ARPA. 42 U.S.C. § 802(g)(5). The recovery plans we analyzed described the states’ planned uses of funds,
which includes intended and actual uses, at the time the reports were ﬁled. Our analysis is based only on those states
with recovery plans available as of December 3, 2021 and on information that was presented in the state’s recovery plan

Page 155 GAO-22-105291
related to their planned uses of funds. The remaining 37 plans speciﬁed dollar amounts for their
planned uses of funds that totaled $80.8 billion across seven spending categories as deﬁned by
Treasury:253

1. Public Health. Recipients may address the eﬀects of the COVID-19 public health emergency.
Examples include funds for COVID-19 testing and vaccination eﬀorts, procuring personal
protective equipment, and providing mental health services.

2. Negative Economic Impacts. Recipients may address the negative economic impacts that the
COVID-19 pandemic had on individuals, households, and businesses, among other groups.
Examples include funds for food programs, job training assistance, and aid to tourism, travel,
and hospitality industries.

3. Services to Disproportionately Impacted Communities. Recipients may provide services to
communities disproportionately impacted by the COVID-19 pandemic. Examples include funds
for education assistance to high-poverty school districts, aﬀordable housing, and services for
unhoused persons.

4. Premium Pay. Recipients may use funds to provide premium pay to eligible public and private
sector workers performing essential work during the COVID–19 pandemic.

5. Infrastructure. Recipients may use funds for necessary investments in water, sewer, and
broadband infrastructure. Examples include funds for wastewater treatment services,
managing and treating stormwater, and providing broadband to unserved or underserved
users.

6. Revenue Replacement. Recipients may use funds for the provision of government services to the
extent of the reduction in revenue experienced due to the COVID–19 pandemic.

7. Administrative and Other. Recipients may use funds to cover the administrative expenses of
managing their CSLFRF award. Examples include costs of consultants to ensure compliance
with program requirements and costs of facilities or administrative functions (e.g., a director’s
oﬃce).254

Across the 37 state recovery plans that speciﬁed dollar amounts for planned uses of CSLFRF
award funds, revenue replacement represented the largest share (about 33 percent of planned

report. A number of states’ plans noted that the information contained in their plans is subject to further deliberation
and development. We did not assess whether the planned uses were in accordance with statute or Treasury guidance on
permissible uses of these funds. In addition, our review did not include U.S. territories’ and local governments’ recovery
plans or their planned uses of funds.
253According to Treasury guidance, each of these seven spending categories is comprised of one or more sub-categories
that recipients use to group their speciﬁc projects. See Department of the Treasury, Recovery Plan Template, accessed
Nov. 30, 2021. https://home.treasury.gov/system/ﬁles/136/SLFRF-Recovery-Plan-Performance-Report-Template.docx.
We excluded from our analysis of recovery plans any dollar amounts that were not identiﬁed within one of the seven
spending categories.
254Recipients may also report on distributions to NEUs and other units of government. We excluded distributions
to NEUs from our analysis because they are distributions of payments from the Coronavirus Local Fiscal Recovery
Fund. As previously mentioned, Treasury is in the process of validating state provided data on distributions to NEUs.

Page 156 GAO-22-105291
speciﬁed dollar amounts), as shown in the ﬁgure below. Twenty of these 37 states reported plans
to use at least some of their award funds for revenue replacement. For example, Washington state
reported plans to use $600 million to replace lost transportation revenue and fund transportation
operating expenses due to decreases in travel-related revenue during the pandemic. Pennsylvania
planned to use $4.6 billion to replace lost revenue in a number of areas related to the state’s
government operations, including higher education, housing ﬁnance programs, and emergency
medical services.

Percentage of States’ Planned Uses of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) by Spending
Category, Based on States’ Recovery Plan Performance Reports that Were Publicly Available as of Dec. 3, 2021

Note: Our analysis is based on 47 states’ recovery plan performance reports (recovery plan), including the District of Columbia,
that were publicly available as of December 3, 2021. Based on our analysis, 37 states’ recovery plans speciﬁed dollar amounts
for planned uses of CSLFRF award funds in at least one of the seven spending categories deﬁned by the Department of the
Treasury. Our analysis does not include U.S. territories’, metropolitan cities’, and counties’ recovery plans or their planned uses
of CSLFRF award funds.

Addressing the negative economic impacts of COVID-19 represented the second largest share
(about 28 percent) of speciﬁed dollars for states’ planned uses of CSLFRF award funds. Twenty-
nine states reported plans to spend some of their CSLFRF award funds in this spending category.
Some states reported planned uses for contributing to unemployment insurance trust funds. For
example, Arizona provided nearly $759 million to replenish its unemployment insurance trust fund
to pre-pandemic levels. Other states reported planned uses of CSLFRF award funds in support
of their tourism industries. For example, Alaska reported that it planned to spend $90 million to
help more than 2,000 businesses remain viable during the 2022 tourism season, due to economic
losses the state experienced in 2020 and 2021.

For the 10 state recovery plans that did not specify a dollar amount for their planned use of funds,
some included general descriptions of planned uses in one or more spending categories. For
example, Arkansas reported plans to use some funds to increase staﬃng in the state’s health
care systems and cover expenses related to skilled nursing facilities. Other states reported that

Page 157 GAO-22-105291
they had not made decisions as of July 31, 2021, and were in the process of determining how to
spend their award at the time the reports were due. For example, Missouri reported that it was
evaluating potential uses for its CSLFRF award and that most funds would be appropriated when
the state legislature reconvenes in 2022.

CSLFRF reporting requirement extensions. Treasury extended the deadlines to all CSLFRF
recipients for submitting the ﬁrst project and expenditure reports. While prior Treasury guidance
speciﬁed that such reports were originally due on October 31, 2021, states, territories, certain
metropolitan cities and counties, and tribal governments receiving more than $30 million must
now meet a January 31, 2022 deadline, with reports covering the period between March 3,
2021, and December 31, 2021.255 For NEUs, other metropolitan cities and counties, and tribal
governments receiving less than $30 million, the ﬁrst reports are now due on April 30, 2022, and
will cover the period between March 3, 2021 and March 31, 2022.256

Treasury oﬃcials told us that the deadline extensions were due, in part, to technological issues
with the online reporting portal. For example, they said recipients attempting to submit their
interim reports (due August 31, 2021) were not able to upload large amounts of data for certain
required information due to an issue with the portal’s bulk upload feature. Oﬃcials told us that,
in these cases, Treasury provided recipients with emergency technical assistance or uploaded the
data on the recipients' behalf. In addition, Treasury oﬃcials told us that the extended timeframes
would allow them to improve the portal’s capabilities, including the bulk data upload feature, and
to make reporting more user-friendly.

In addition, Treasury oﬃcials said that reporting deadlines were extended due to challenges some
recipients faced using ID.me—a commercial identity veriﬁcation service—to access Treasury’s
portal. Speciﬁcally, they said some recipients—particularly those from smaller jurisdictions—were
not familiar with ID.me and faced challenges uploading the required evidence to verify their
identity, such as copies of government identiﬁcation or physical address listings. However, in
December 2021, Treasury implemented Login.gov—which does not require the same level of
personal identiﬁcation and veriﬁcation as ID.me—as an alternative way for recipients to access the
portal.257

255The metropolitan cities and counties required to submit the ﬁrst quarterly project and expenditure reports by
January 31, 2022 are (1) metropolitan cities and counties with populations that exceed 250,000 residents and (2)
metropolitan cities and counties with populations below 250,000 residents that are allocated more than $10 million in
CSLFRF funding. Department of the Treasury. Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds,
ver. 2.1 (Nov. 15, 2021), accessed Dec. 2, 2021, https://home.treasury.gov/system/ﬁles/136/SLFRF-Compliance-and-
Reporting-Guidance.pdf.
256The metropolitan cities and counties required to submit the ﬁrst annual project and expenditure reports by April 30,
2022 are metropolitan cities and counties with populations below 250,000 residents that are allocated less than $10
million in CSLFRF funding.
257In an October 2021 report, we described various challenges taxpayers faced using ID.me to access the Internal
Revenue Service’s Child Tax Credit Update Portal. This online portal allows qualiﬁed individuals to check their eligibility
for the advance payments, opt out of receiving the payments, update their bank account information, and change
their mailing address. We also reported that applicants to the Coronavirus Economic Relief for Transportation Services
(CERTS) Program faced challenges using ID.me, which Treasury required applicants to use to verify their identity before
they could complete a CERTS Program application.

Page 158 GAO-22-105291
Association representatives told us that recipients are unclear about what information to include
in the project and expenditure reports because Treasury had not released a user guide for these
reports. In early January 2022, Treasury released a user guide that contained detailed instructions
to help recipients navigate the portal and adhere to reporting requirements.258 Treasury oﬃcials
also told us they were testing the portal's functionality for the project and expenditure reports,
based on feedback from selected CSLFRF recipients, and planned to make improvements to the
portal before the ﬁrst reports are due in January 2022.

Representatives from state and local government associations told us that some recipients also
face challenges in meeting CSLFRF reporting requirements due to limited broadband access and
outdated technology. Treasury oﬃcials told us that they are aware that some smaller NEUs and
rural communities, among other recipients, have limited technological capacity, which could aﬀect
their ability to meet reporting requirements. Oﬃcials added that, for those recipients with limited
technological capacity, the extended reporting timeframes will provide them with additional
time to obtain technical assistance from Treasury. Treasury oﬃcials also told us that Treasury is
planning to engage directly with NEUs and other recipients with limited technological capacity to
help them comply with reporting requirements.

Methodology
We reviewed federal laws and Treasury guidance and documentation regarding the CSLFRF,
interviewed Treasury oﬃcials, and collected Treasury’s written responses to questions that we
posed. To gather perspectives about CSLFRF recipients’ experiences with reporting and auditing
requirements, we interviewed representatives from 11 organizations that collectively represent
state and local governments and the audit community: the American Institute of Certiﬁed Public
Accountants; the Council of State Governments; the Government Finance Oﬃcers Association;
the International City/County Management Association; the National Association of Counties; the
National Association of State Auditors, Comptrollers and Treasurers; the National Association
of State Budget Oﬃcers (NASBO); the National Conference of State Legislatures; the National
Governors Association; the National League of Cities; and the United States Conference of Mayors.
We also analyzed 47 states’ recovery plan performance reports that were publicly available based
on our search of state government websites, and that were collectively available on the NASBO
and the Pandemic Response Accountability Committee websites as of December 3, 2021. We
determined that the state recovery plans, and the data they contained, were reliable for the
purpose of reporting aggregate spending regarding states’ planned uses of funds as of the date of
their reports.

258Department of the Treasury, Project and Expenditure Report User Guide: State and Local Fiscal Recovery Funds, ver. 1
(Jan. 7, 2022), accessed Jan. 7, 2022, https://home.treasury.gov/system/ﬁles/136/Project-and-Expenditure-Report-User-
Guide.pdf.

Page 159 GAO-22-105291
Agency Comments
We provided Treasury and OMB with a draft of this enclosure. Treasury provided technical
comments, which we incorporated as appropriate. OMB did not provide comments on this
enclosure.

GAO’s Ongoing Work
Our work on the CSLFRF is ongoing. We will continue to review how CSLFRF recipients use their
awards, address challenges they face in managing the funds, and evaluate outcomes of their
funded projects. We will continue to monitor OMB’s and Treasury’s eﬀorts to provide CSLFRF
guidance, monitor funds, and ensure adequate audit coverage. We will also continue to follow up
on open recommendations.

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

Page 160 GAO-22-105291
Prior GAO Recommendations Related to Single Audits and Coronavirus State and Local Fiscal Recovery Funds
(CSLFRF)
Recommendation Status

The Secretary of the Treasury should design and document Open—partially addressed. Treasury agreed with
timely and suﬃcient policies and procedures for monitoring the recommendation. In December 2021, Treasury
recipients of Coronavirus State and Local Fiscal Recovery Funds to oﬃcials stated the agency expects to have drafts of
provide assurance that recipients are managing their allocations internal control policies and procedures for CSLFRF
in compliance with laws, regulations, agency guidance, and award ﬁnalized in the coming weeks. We will continue to
terms and conditions, including ensuring that expenditures are monitor the actions Treasury takes in response to
made for allowable purposes. (October 2021 report) our recommendation.

The Director of the Oﬃce of Management and Budget (OMB), in Open—partially addressed. OMB neither agreed
consultation with the Secretary of the Treasury, should issue timely nor disagreed with our recommendation. In
and suﬃcient single audit guidance for auditing recipients' uses December 2021, OMB issued single audit guidance
of payments from the Coronavirus State and Local Fiscal Recovery for the Coronavirus State and Local Fiscal Recovery
Funds. (July 2021 report) Funds in Addendum 1 of the 2021 Compliance
Supplement. We will review Addendum 1 and obtain
feedback from members of the audit community
(e.g., agency Oﬃces of Inspector General; National
Association of State Auditors, Comptrollers, and
Treasurers; and American Institute of Certiﬁed
Public Accountants) to determine if the guidance is
suﬃcient.

The Director of the Oﬃce of Management and Budget (OMB) Open—partially addressed. OMB neither agreed
should work in consultation with federal agencies and the audit nor disagreed with our recommendation. In
community (e.g., agency Oﬃces of Inspector General; National response to this report, OMB stated that it is
Association of State Auditors, Comptrollers, and Treasurers; actively working, to the extent practicable, to
and American Institute of Certiﬁed Public Accountants), to the update processes to better ensure that the single
extent practicable, to incorporate appropriate measures in OMB’s audit guidance is issued in a timely manner and
process for preparing single audit guidance, including the annual is responsive to users' input and needs. OMB
Single Audit Compliance Supplement, to better ensure that such also stated that it continues to work with federal
guidance is issued in a timely manner and is responsive to users’ agencies and the audit communities to develop and
input and needs. (March 2021 report) publish audit guidance for major programs in the
Compliance Supplement.
As we previously reported, auditors who conduct
single audits for entities with June 30 year-ends
have expressed a need to obtain the Compliance
Supplement by no later than April of each year in
order to eﬀectively plan their audits and conduct
interim testing. The 2021 Compliance Supplement
was not issued until August 2021 and lacked
guidance for several American Rescue Plan Act of
2021 (ARPA) programs.
In December 2021, OMB issued single audit
guidance for two ARPA programs in Addendum 1
of the 2021 Compliance Supplement and stated
that Addendum 2 is projected for publication in
early 2022. OMB also issued a Controller Alert
in December 2021, which included a timeline
for preparing the 2022 Compliance Supplement
(in collaboration with federal agencies and the
audit community) and such timeline estimated
publication by April 30, 2022. We continue to meet
periodically with OMB and the audit community

Page 161 GAO-22-105291
Recommendation Status
to discuss the audit community’s concerns and
the additional single audit guidance needed. We
will continue to monitor the actions OMB takes in
response to our recommendation.

Source: GAO. I GAO-22-105291

Related GAO Products
Government Auditing Standards: 2018 Revision Technical Update April 2021 (Supersedes GAO-18-568G).
GAO-21-368G. Washington, D.C.: April 14, 2021.

Contact Information: Jeﬀ Arkin, (202) 512-6806, arkinj@gao.gov, and Beryl Davis, (202) 512-2623,
davisbh@gao.gov

Page 162 GAO-22-105291
Federal Contracts and Agreements for COVID-19
As of December 15, 2021, federal agencies continued to obligate billions of dollars monthly in
support of COVID-19 response eﬀorts through contracts and other transaction agreements, with
drugs and treatments continuing to be the predominant type of good and service procured.

Entities involved: Department of Defense and Department of Health and Human Services,
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.259 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.260 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-19.261 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 requirements on the use of other transaction
agreements in response to COVID-19 for HHS and DOD—for example, related to congressional
reporting and who can approve certain transactions.262

259The 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.
260For 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.
261Other 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.
262Pub. L. No. 116-136, §§ 3301, 13006, 134 Stat. 281, 383, 522 (2020).

Page 163 GAO-22-105291
As federal contracting activity through contracts and agreements continues to play a critical role
in response to the pandemic, it is important to ensure that these contracts and agreements 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 (FPDS).263 The
COVID-19 NIA code was established on March 13, 2020, to track contract actions and associated
obligations in response to the pandemic in FPDS. The Department of Homeland Security (DHS)
and DOD have subsequently extended the code four times—generally in 6-month increments, and
most recently until March 30, 2022.264

Overview of Key Issues
Agencies obligated more than $100 billion on federal contracts, with DOD and HHS
accounting for over three-quarters of obligations as of December 15, 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 exceeded HHS’s. The increase in DOD’s
contract obligations is due, in part, 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 December 15, 2021, DOD accounted for about 56 percent and HHS for about 22
percent of the total obligations made by federal agencies in response to the COVID-19 pandemic.
See ﬁgure for obligation amounts by federal agency.

263The memorandum of agreement guiding the use of NIA codes does not address tracking of other transaction
agreements. Our prior work has identiﬁed challenges with how the Departments of Defense, Health and Human
Services, and Homeland Security tracked other transaction agreements in response to COVID-19.
264According to 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—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.

Page 164 GAO-22-105291
Contract Obligations in Response to COVID-19 by Federal Agency, as of Dec. 15, 2021

In our October 2021 report, we reported that government-wide contract obligations related
to COVID-19 totaled $86.9 billion through September 30, 2021; by December 15, 2021, those
obligations had increased by about $14.7 billion—to $101.6 billion. DOD accounted for about
$12.5 billion, or about 85 percent of the increase in total contract obligations since September
30, 2021. Signiﬁcant increases in obligations early in the pandemic were due to large purchases
of medical equipment and supplies—such as ventilators and personal protective equipment.
Large vaccine and therapeutic purchases explain more recent spikes in obligations. For example,
following purchases of about $4 billion in Pﬁzer and Moderna vaccines in December 2020,
multi-billion dollar vaccine purchases by DOD in February, June, and July 2021 contributed to
monthly increases in reported contract obligations. Additionally, multi-billion dollar purchases
of therapeutics from Pﬁzer and Regeneron contributed to monthly increases in September and
November 2021. See ﬁgure for government-wide obligations and conﬁrmed COVID-19 cases by
month.

Page 165 GAO-22-105291
Government-wide COVID-19-Related Contract Obligations and Conﬁrmed COVID-19 Cases by Month, Feb. 2020–
Dec. 15, 2021

Types of goods and services purchased and competition rate 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 primarily medical equipment and supplies—such as
ventilators and personal protective equipment—to drugs and treatments, such as COVID-19
vaccines and therapeutics. Drugs and treatments have become the largest area of government-
wide obligations, accounting for 42 percent of total obligations over the course of the pandemic,
and 63 percent of the total obligations in response to COVID-19 in calendar year 2021. These
obligations increased over tenfold 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 $42.6 billion as of December 15, 2021.265 In calendar year 2021, increases
in obligations for drugs and treatments have included $19 billion in obligations for COVID-19
vaccines to Pﬁzer and Moderna, with the most recent increases in obligations since June 2021 due
to purchases to support booster shots, pediatric vaccinations, international vaccine donations, and
therapeutics to treat COVID-19.

See ﬁgure for obligation amounts for the most-procured goods and services over time.

265Emergency use authorizations allow for the temporary use of unapproved medical products. Janssen Pharmaceutical
Companies are a part of Johnson & Johnson.

Page 166 GAO-22-105291
Contract Obligation Amounts for Top Five Goods and Services Procured in Response to COVID-19 by month, Feb.
2020–Dec. 15, 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. Obligations for fruits and vegetables were made primarily in
support of the U.S. Department of Agriculture’s Farmers to Families Food Box Program.

As of December 15, 2021, COVID-19-related contracts for goods continued to be competed less
frequently than contracts for services. About 64 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 $32 billion, or 75 percent, of the $42.6 billion in obligations for
drugs and treatments and about $8.2 billion, or 81 percent, of the $10.1 billion in obligations for
medical and surgical equipment were on contracts awarded noncompetitively.

Since our October 2021 report, the proportion of COVID-19 related contracts identiﬁed as having
been awarded noncompetitively decreased from about 62 percent as of September 30, 2021 to
57 percent, or $58 billion as of December 15, 2021.266 Throughout the course of the pandemic,
the percentage of obligations on these noncompetitive contracts has ﬂuctuated from a low of 21
percent of obligations in November 2021 to a high of 94 percent of obligations in July 2021. The
higher rate of obligations on noncompetitively awarded contracts in July 2021 was driven in part
by large noncompetitive awards for vaccine production.

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

266Our methodology for identifying noncompetitive contracts is explained in detail at the end of this enclosure.

Page 167 GAO-22-105291
for about 85 percent, or about $49.1 billion, of the contract obligations associated with
noncompetitive awards.267

Federal agencies’ use of undeﬁnitized contracts increased. 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.268 Undeﬁnitized contract obligations for COVID-19 increased from
about $5.5 billion as of September 30, 2021 to $6.2 billion as of December 15, 2021, continuing
to total about 6 percent of government-wide obligations on contracts awarded in response to
COVID-19. A majority of the increase was driven by undeﬁnitized contracts awarded by HHS for the
purposes of increasing community access to COVID-19 testing at pharmacy and retail locations.
DOD continued to report the highest amount of undeﬁnitized contract obligations, identifying
about $4.3 billion, or about 8 percent of its overall COVID-19-related contract obligations, as being
on undeﬁnitized contracts.

Our prior work reviewed DOD’s, HHS’s, and the Department of Homeland Security’s use of
undeﬁnitized contracts in response to COVID-19, including the use of CARES Act ﬂexibilities
for such contracts. We found that the timing of deﬁnitization and amount obligated prior to
deﬁnitization varied across our selected contracts, and that oﬃcials at DOD—which accounted for
the majority of undeﬁnitized contract obligations—cited the ability to quickly award undeﬁnitized
contracts as a major beneﬁt during the pandemic.

Use of other transaction agreements by DOD remained the same. In addition to contract
obligations, DOD, HHS, and DHS have reported using other transaction agreements in response
to COVID-19, with obligations on these agreements remaining at $12.5 billion as of December
15, 2021. In July 2021, we reported almost all of the obligations on other transaction agreements
were for vaccine development and manufacturing; medical research and development, such
as COVID-19 rapid test kits; and applied defense research and development, such as COVID-19
therapeutics.

267For 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.
268Undeﬁnitized contracts include letter contracts, as well as other undeﬁnitized actions. Letter contracts are a
preliminary contract that authorizes the contractor to begin work immediately, and undeﬁnitized contract actions
include any contract action for which the contract terms, speciﬁcations, or price are not agreed upon before
performance has begun under the action. Federal Acquisition Regulation 16.603 and Defense Federal Acquisition
Regulation Supplement 217.74.

Page 168 GAO-22-105291
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
through December 15, 2021.269 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.270 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 and the data it collects—speciﬁcally, the data dictionary and data validation
rules—and by performing electronic testing. For the other transaction agreements that HHS
misreported as contracts, we removed the $1.6 billion in associated obligations from our reported
contract obligations and reported them instead as other transaction agreement obligations. We
supplemented our FPDS analysis with analysis of agency-provided data and interviews with agency
oﬃcials. 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 DOD, HHS, and the Oﬃce of Management and Budget with a draft of this enclosure.
The agencies did not provide comments on this enclosure.

GAO’s Ongoing Work
We have work underway related to DOD’s use of advance and progress payments during the
response to COVID-19.

269FPDS data from SAM.gov accessed through December 15, 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 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 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.
270In November 2019 we identiﬁed some inconsistencies in the information agencies report in the contract description
ﬁeld in the FPDS. Data on DOD contract obligations based on information in the description ﬁeld were available only
through September 15, 2021, due to diﬀerences in the time frames for which DOD data are made publicly available.

Page 169 GAO-22-105291
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 170 GAO-22-105291
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 to include a
reminder to utilize the proper National Interest
Action code, if applicable.

The Secretary of Agriculture should direct the Administrator Open-Partially Addressed. USDA neither agreed
of the Agricultural Marketing Service to assess the contracting nor disagreed with our recommendation, and
personnel needed to fully execute the award and administration as of December 2021 had not fully assessed the
of existing contracts in support of the Farmers to Families Food contracting personnel needed to execute and
Box Program or successor future food distribution program, and administer contracts in support of the Farmers
take the necessary steps to ensure it has adequate contracting to Families Food Box Program or successor food
staﬀ in place to award and administer any future contracts for the distribution program. According to Agricultural
program (March 2021 report). Marketing Service oﬃcials, they have discontinued
the program, and are using other methods of
hunger relief, so they 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. Agricultural Marketing Service oﬃcials
have prepared a statement of work for the
contract support services needed, which includes
information on the number of Farmers to Families
Food Box program contracts needing support
services and other tasks. Agricultural Marketing
Service oﬃcials expect interested vendors to
submit staﬃng plans identifying the number of
staﬀ needed to accomplish the work under the
contract. Agricultural Marketing Service oﬃcials said
they planned to award the contract by the end of
calendar year 2021, but as of December 2021, had
not provided an update on the status of doing so.

Page 171 GAO-22-105291
Recommendation Status

The Assistant Secretary for Preparedness and Response (ASPR), in Open-Partially Addressed. ASPR agreed with
coordination with the appropriate oﬃces within the Department of our recommendation, and as of April 2021, ASPR
Health and Human Services (HHS), should accurately report data in oﬃcials stated that they have discussed within ASPR
the federal procurement database system and provide information the need to consistently identify other transaction
that would allow the public to distinguish between spending on agreements in the Federal Procurement Data
other transaction agreements and procurement contracts (January System (FPDS) and explored how their contract
2021 report). writing system may interface with the FPDS other
transaction agreement module in the future.
In December 2021, ASPR oﬃcials added that
in the meantime, they have issued guidance to
their contracting teams to manually track other
transaction agreements in their contract writing
system. 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
of Homeland Security, should (1) revise the criteria in the 2019 with our recommendation. However, in March
National Interest Action code memorandum of agreement to 2021 DOD, in coordination with DHS, issued a
clearly identify steps they will take to obtain input from key federal revised 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-22-105291

Related GAO Products
COVID-19 Contracting: Actions Needed to Enhance Transparency and Oversight of Selected Awards.
GAO-21-501. Washington, D.C.: July 26, 2021.

Page 172 GAO-22-105291
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.

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.

Department of Homeland Security: Further Action Needed to Improve Management of Special
Acquisition Authority. GAO-12-557. Washington, D.C.: May 8, 2012.

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 173 GAO-22-105291
International Trade
Shipping costs for importing goods into the U.S. have signiﬁcantly increased since the beginning
of the pandemic; U.S. import values of COVID-19-related products, such as face masks, ventilators,
gloves, and hand sanitizer, have continued to ﬂuctuate; and U.S. exports of COVID-19 vaccines
have increased in recent months.

Background
Global trade has rebounded from the initial steep decline at the beginning of the COVID-19
pandemic, but international supply chains continue to experience disruptions. According to
United Nations trade statistics, trade in world merchandise grew by 22 percent from the second
quarter of 2020 through the second quarter of 2021, after declining by 15 percent from the second
quarter of 2019 through the second quarter of 2020. According to the United Nations, imbalances
between global demand and supply of merchandise have created congestion at U.S. and European
ports and a shortage of vessels and equipment needed to export products from China, Malaysia,
India and parts of Europe. According to the same reporting, port congestion and export bans
imposed by other countries have challenged the delivery of life-saving products such as medicine,
water, and hygiene-related products.

The overall U.S. trade deﬁcit of goods and services increased by 75 percent, from $42 billion
in February 2020 to $73 billion in August 2021.271 The U.S. goods trade deﬁcit increased by 40
percent from $64 billion in February 2020, the month before the World Health Organization (WHO)
declared the start of a pandemic, to roughly $89 billion in August 2021. U.S. exports of goods and
services increased by between 4 and 5 percent from February 2020 through August 2021 and U.S.
imports of goods and services increased by 16 percent from February 2020 through August 2021.

Overview of Key Issues
Increasing shipping costs and port congestion. The cost of shipping goods across country
borders has signiﬁcantly increased in 2021 (see ﬁgure). Throughout 2019 and before the pandemic
started in 2020, U.S. importers paid an average of about $283 in import charges, which includes
freight cost, per $10,000 of merchandise imported. After March 2020, the cost relative to dollar
imported has increased. In August 2021, U.S. importers paid close to $400 per $10,000 of
merchandise imported.272 According to an executive brieﬁng by the United States International
Trade Commission (USITC), there are a number of factors that contributed to the increase in
shipping prices, including a shortage of shipping containers in East Asian countries. A shortage of
port workers has created delays in unloading shipping containers, which further contributes to the
shortage of available shipping containers.

271The overall trade deﬁcit is calculated as total imports in goods and services subtracted from exports in goods and
services.
272U.S. Census import data contains information on total monthly import charges paid on all imported shipments.
Census cannot reliably account for shipments valued below $2,000. As such, Census implements statistical
methodologies to account for imported shipments below $2,000 to improve coverage, timeliness and relevance of
the international merchandise trade statistics. Import charges include cost of freight; insurance; and other charges,
excluding duties.

Page 174 GAO-22-105291
The number of shipping containers ﬂowing through the ports of Los Angeles and Long Beach, the
two major U.S. ports on the west coast, has increased to record levels. According to press releases
issued by the port of Los Angeles, the port of Los Angeles saw its busiest September on record
after processing over 900,000 twenty-foot equivalent units (TEU) in September 2021, which was
a 26 percent increase from the previous year.273 According to a press release issued by the port
of Long Beach, the port of Long Beach experienced its second busiest October on record after
processing almost 800,000 TEUs. On October 13, 2021, after a meeting between port leadership
and the President, the U.S. administration announced that the port of Los Angeles agreed to
operate 24/7 in order to clear the backlog of ships waiting to unload their containers in the U.S.
Approximately 40 percent of containerized freight ﬂowing through the United States arrives or
departs the ports of Los Angeles and Long Beach.

Monthly Trends in U.S. Import Charges Relative to Value Imported from Jan. 2018–Aug. 2021

Note: U.S. Census import data contains information on total monthly import charges paid on all imported shipments into the
United States. Census cannot reliabily account for shipments valued below $2,000. As such, Census implements statistical
methodologies to account for imported shipments below $2,000 to improve coverage, timeliness and relevance of the
international merchandise trade statistics. Import charges include cost of freight; insurance; and other charges, excluding
duties. August 2021 was the latest month of trade data available at the time of our analysis.

Fluctuations in U.S. trade of COVID-19-related products. U.S. import values of COVID-19-related
products (e.g., face masks, ventilators, gloves, and hand sanitizer) have continued to ﬂuctuate.
U.S. import values of products in categories related to the COVID-19 response decreased by
14 percent from March through May 2021 before rebounding by 13 percent from May through
August 2021.274 Import values of these products in August 2021 were 34 percent higher than in
February 2020, the last month before the declaration of the COVID-19 pandemic by the World
Health Organization (see ﬁgure).275

273The TEU is a measure of volume in units of 20-foot long shipping containers.
274For the purposes of our analysis, U.S. import values refer to the value of imports for consumption, which is a
measure of the total of merchandise that has physically cleared through customs.
275U.S. Census Bureau trade statistics—a widely used source analyzing U.S. international trade—do not contain precise
data on imports of COVID-19-related products. As a result, we estimated the import value of all product types and

Page 175 GAO-22-105291
Monthly U.S. Imports of COVID-19-Related Products, by Product Type, Jan. 2019–Aug. 2021

Note: U.S. Census Bureau trade statistics—a widely used source analyzing U.S. international trade—do not contain precise
data on imports of COVID-19-related products. As a result, we estimated the import value of all product types and categories
within those types using Harmonized Tariﬀ Schedule of the United States (HTS) statistical reporting numbers and associated
product groupings listed by the U.S. International Trade Commission (USITC). Examples of products included in the “Other”
category of product type include hospital beds and wheelchairs. See U.S. International Trade Commission, COVID-19 Related
Goods: U.S. Imports and Tariﬀs, Investigation No. 332-576, USITC Publication 5073 (Washington, D.C.: June 2020). Revisions to the
HTS on July 1, 2020, January 1, 2021, and July 1, 2021, provided several new HTS-10 statistical reporting numbers for previously
identiﬁed COVID-19-related product categories. We identiﬁed these product categories and included them in our analysis.
Some HTS categories represent more than one product, and some categories contain products that are not directly relevant to
COVID-19 response. Product categories that USITC identiﬁed as COVID-19 related refer only to the subset of goods considered
to be COVID-19 related in each HTS-10 statistical reporting number. Therefore, the values shown may overestimate the imports
of products directly relevant to COVID-19 response. Nevertheless, the values shown are useful indicators for tracking import
trends for such products. For more information about factors inﬂuencing import trends in various types of COVID-19-related
products, see U.S. International Trade Commission, COVID-19 Related Goods: The U.S. Industry, Market, Trade and Supply Chain
Challenges, Investigation No. 332-580 (December 2020). August 2021 was the latest month of trade data available at the time of
our analysis.

A rise in import values of personal protective equipment (PPE) and testing equipment has been
driving the increase in import value of COVID-19-related products. Import values of PPE increased
more than 500 percent from February 2020 through June 2020. Import values of PPE in August
2021 remained nearly 150 percent greater than in February 2020, before the pandemic. Import
values of testing equipment also doubled from February 2020 through August 2021. Meanwhile,
import values of pharmaceutical products; non-PPE-related hospital equipment (e.g., surgical

categories within those types using Harmonized Tariﬀ Schedule of the United States (HTS) statistical reporting numbers
and associated product groupings listed by the U.S. International Trade Commission (USITC) in COVID-19 Related Goods:
U.S. Imports and Tariﬀs, Investigation No. 332-576, USITC Publication 5073 (Washington, D.C.: June 2020). Revisions to
the HTS on July 1, 2020, January 1, 2021, and July 1, 2021, provided several new HTS-10 statistical reporting numbers for
previously identiﬁed COVID-19-related product categories. We identiﬁed these product categories and included them in
our analysis.

Page 176 GAO-22-105291
towels); and other medical products (e.g., hospital beds and wheel chairs) increased by 6 percent,
35 percent, and 17 percent, respectively, from February 2020 through August 2021.

There are many factors that could contribute to ﬂuctuations in import values of COVID-19-related
products. First, changes in import values are related to changes in both the quantity and price of
the imported products. For instance, import values for a speciﬁc product can decrease despite an
increase in the number of units imported if the decrease in price is large enough.276 In addition,
changes in the number of COVID-19 cases may shift the demand for some COVID-19-related
products, such as pharmaceuticals and diagnostic equipment, over time.

According to the United Nations Conference on Trade and Development, more than 80 countries
banned exports of medical and personal protective equipment in the early phases of the
pandemic, and 60 percent of those restrictions remained in place as of June 11, 2021. Overall, the
need for medical supplies in response to the pandemic explains the increase in import values
of these products since early 2020 despite increased constraints on the global supply chain
mentioned above.

Increased U.S. exports of COVID-19 vaccines. The U.S. has increased exports of COVID-19
vaccines in recent months. As of September 2, 2021, the U.S had exported over 130 million doses
to over 90 countries and as of November 7, the U.S. State Department reported over 230 million
vaccines had been delivered to foreign countries. In October 2021, we reported that the U.S.
government had taken several actions to increase the availability of COVID-19 vaccines to other
countries, and, in July 2021, we reported that the U.S. government had taken several steps to
increase domestic production of COVID-19 vaccines. In February 2021, the U.S. announced it
would provide an initial $2 billion to COVID-19 Vaccines Global Access (COVAX) to support access to
COVID-19 vaccines for 92 low- and middle-income countries. 277 The U.S. Agency for International
Development obligated $2 billion for COVAX in March 2021 and an additional $2 billion in July
2021. We also reported that the U.S. government has taken steps through COVAX and other
means to provide COVID-19 vaccines to other countries. In addition, we reported in July that the
administration has taken several actions to increase domestic production of COVID-19 vaccines. In
September 2021, the administration announced plans to expand domestic production of vaccine
inputs by investing an additional $3 billion in the vaccine supply chain.

U.S. exports of vaccines signiﬁcantly increased after the ﬁrst COVID-19 vaccine was approved for
emergency use authorization (EUA). According to U.S. Census Bureau trade statistics, the value of
exports of vaccines for human use, which include COVID-19 vaccines, increased over 16-fold from

276As an example, the number of imported N-95 respirators increased by 15 percent from June 2021 through August
2021 while the unit values of these products declined by 42 percent in the same time period. Overall, U.S. import values
for N-95 respirators fell by 33 percent from June 2021 through August 2021. Unit values equal the total import value of
the product divided by the quantity imported. Trends in this measure serve as a proxy for understanding ﬂuctuations in
import price.
277In April 2020, WHO and seven other global health organizations created the Access to COVID-19 Tools Accelerator
(ACT-Accelerator), an eﬀort to rapidly develop and provide equitable access to vaccines, diagnostics, and therapeutics.
The vaccine-related component of the ACT-Accelerator is known as COVID-19 Vaccines Global Access (COVAX).

Page 177 GAO-22-105291
$91 million in December 2020, when the ﬁrst COVID-19 vaccine was granted EUA, to over $1.4
billion in August 2021 (see ﬁgure).278

The value of U.S. export of vaccines for human use averaged $128 million per month in 2020, but
averaged over $1.2 billion from May 2021 through August 2021 (see ﬁgure). Generally, the majority
of U.S. vaccine exports—by value—prior to December 2020 went to EU member countries and the
United Kingdom (UK), averaging 52 percent in 2020. However, the share of vaccine exports going
to EU member countries and the UK dropped to under 20 percent by August 2021, from roughly
70 percent in January 2021. This suggests that, as of August 2021, more U.S. vaccine exports were
going to other countries outside the EU and the UK.

Value of U.S. Exports of Vaccines for Human Use, Overall and to EU Member Countries and the United Kingdom,
January 2019 through August 2021

Note: Domestic export data for products described in Schedule B code 3002.20.0000 reported in the ﬁgure above contain
exports on all vaccines for human use (See Schedule B code 3002.20.0000—Vaccines for Human Medicine), including
authorized COVID-19 vaccines, to every country. Schedule B product categories are a systematic grouping of commodities
used by the U.S. Census Bureau to track exports of diﬀerent products, which is based on the headings and subheadings in the
International Harmonized System used by WTO members. As of October 2021, Schedule B product categories do not contain
suﬃciently granular information required to identify exports of COVID-19 vaccines speciﬁcally. August 2021 was the latest
month of trade data available at the time of our analysis.

Methodology
To conduct this work, we reviewed the most recent publicly available U.S. trade statistics from the
U.S. Census Bureau as well as U.S. International Trade Commission data on product categories

278The Census uses Schedule B product categories, a systematic grouping of commodities used by the Census Bureau
to track exports of diﬀerent products, which is based the headings and subheadings in the International Harmonized
System used by WTO members. As of October 2021, Schedule B product categories do not contain more granular
information required to identify exports of COVID-19 vaccines speciﬁcally.

Page 178 GAO-22-105291
that contain COVID-19-related products.279 We also analyzed trends in U.S. export data of vaccines
for human use to provide context behind U.S. eﬀorts to supply the COVID-19 vaccine to other
countries. We determined that the trade data were suﬃciently reliable to provide an overview of
U.S. trade of COVID-19-related products and the costs related to importing goods into the U.S.

Agency Comments
We provided a draft of this enclosure to the Oﬃce of Management and Budget, which had no
comments on this enclosure.

GAO’s Ongoing Work
We will continue to monitor U.S. trade of COVID-19-related products and COVID-19 vaccines, as
well as international supply chain issues and Customs and Border Protection’s trade facilitation
during COVID-19.

Related GAO Products
COVID-19: Additional Actions Needed to Improve Accountability and Program Eﬀectiveness of Federal
Response. GAO-22-105051. Washington, D.C.: October 27, 2021.

Contact information: Kimberly Gianopoulos, (202) 512-8612, gianopoulosk@gao.gov

279We compared COVID-19-related HTS-10 statistical reporting numbers before and after July 1, 2020, before and after
January 1, 2021, and before and after July 2021. If no data existed for an HTS-10 statistical reporting number, we checked
USITC guidance to determine whether the original reporting number had been annotated or discontinued. If it had been
annotated or discontinued, we included import values of those codes after July 1, 2020, January 1, 2021 or July 1, 2021
in our analysis. For instance, on July 1, 2020, according to guidance provided by the USITC, the HTS statistical reporting
number 4818.50.0000 split into two new HTS-10 statistical reporting numbers, 4818.50.0080 and 4818.50.0020.
Therefore, we included imports for products contained in 4818.50.0080 and 4818.50.0020 after July 1, 2020, in our
calculations. As such, we may overestimate the value of imports for COVID-19 related products. Nevertheless, the values
shown are useful indicators for tracking import trends for such products. August 2021 was the latest month of trade
data available at the time of our analysis.

Page 179 GAO-22-105291
Federal Fraud-Related Cases
Federal agencies’ enforcement actions on fraud-related charges help protect consumers and
ensure that taxpayer dollars and government services related to COVID-19 serve their intended
purposes.

Entities involved: Government-wide

Background
The public health crisis, economic instability, and increased ﬂow of federal funds associated
with the COVID-19 pandemic present increased pressures and opportunities for fraud.280 By
proactively managing fraud risks, federal oﬃcials can help safeguard taxpayer dollars to ensure
they serve their intended purposes, particularly given that about $4.6 trillion had been provided as
of November 30, 2021, to fund COVID-19 response and recovery eﬀorts.

According to GAO’s A Framework for Managing Fraud Risks in Federal Programs, among other things,
eﬀective managers of fraud risks refer instances of potential fraud to Oﬃces of Inspector General
(OIG) or other appropriate parties, such as law enforcement entities or the Department of Justice
(DOJ), for further investigation.

The extent of fraud associated with the COVID-19 relief funds appropriated to date has not
yet been determined. One of the many challenges is that because of fraud’s deceptive nature,
programs can incur ﬁnancial losses related to fraud that are never identiﬁed, and such losses are
diﬃcult to reliably estimate. However, many individuals have already pleaded guilty to federal
charges of defrauding COVID-19 relief programs—including the Small Business Administration’s
(SBA) Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program,
the Department of Labor’s (DOL) unemployment insurance (UI) programs, and economic impact
payments (EIP) issued by the Department of the Treasury and Internal Revenue Service.281 Also,
two individuals have been convicted at trial of PPP-related fraud, and four individuals have been
convicted at trial of fraud related to both the PPP and EIDL program.282 In addition, numerous
others faced related federal charges as of October 31, 2021.

Further, federal hotlines have received numerous complaints from the public, many of them
alleging potential fraud involving COVID-19 relief funds. For example, from March 2020 through
October 2021, our hotline—known as FraudNet—received over 3,200 complaints related to the

280Fraud and “fraud risk” are distinct concepts. Fraud—obtaining something of value through willful
misrepresentation—is challenging to detect because of its deceptive nature. Fraud risk (which is a function of likelihood
and impact) exists when individuals have an opportunity to engage in fraudulent activity, have an incentive or are under
pressure to commit fraud, or are able to rationalize committing fraud. Fraud risk management is a process for ensuring
program integrity by continuously and strategically mitigating the likelihood and impact of fraud. When fraud risks can
be identiﬁed and mitigated, fraud may be less likely to occur. Although the occurrence of fraud indicates there is a fraud
risk, a fraud risk can exist even if actual fraud has not yet been identiﬁed or occurred.
281In July 2021, we reported that SBA’s initial implementation of PPP contributed to increased risk of improper
payments and extensive fraud. Also in July 2021, we reported on eﬀorts SBA has taken to address risks of fraud in the
EIDL program and provision of funds to ineligible applicants. Further, in our October 2021 quarterly report, we reported
on fraud risks in UI programs and strategies DOL is implementing to address potential fraud in UI programs.
282We consider convictions to be cases where an individual was convicted of a fraud-related charge at trial.

Page 180 GAO-22-105291
CARES Act, about half of which involve SBA’s PPP and EIDL program, DOL’s UI program, and EIPs
(see text box).283

Report Fraud, Waste, and Abuse
GAO’s FraudNet supports accountability across the federal government. Allegations of fraud, waste, or abuse can be
submitted via the FraudNet portal or by calling the hotline at 1-800-424-5454.

Source: GAO. | GAO-22-105291

In addition to fraud against federal programs, scammers are also targeting consumers, which
can result in ﬁnancial losses and undermine health and safety. For example, the Federal Trade
Commission (FTC) is tracking complaints related to COVID-19 fraud against consumers. According
to FTC reporting, the agency had received nearly 280,000 reports about fraud and over 192,000
reports about identity theft as of December 2, 2021.284 Also according to FTC reporting, nearly half
of the reports about fraud indicated a ﬁnancial loss and cost Americans over an estimated $627
million.

In prior quarterly reports, we made recommendations to SBA and DOL to better manage fraud
risks to COVID-19 relief programs, in accordance with the Fraud Risk Framework. For example, in
our March 2021 quarterly report, we recommended, among other things, that SBA conduct and
document fraud risk assessments for the PPP and EIDL programs. In our October 2021 quarterly
report, we made several recommendations to DOL, including to designate a dedicated entity for
managing the process of assessing fraud risks to the UI programs and identify and assess fraud
risks facing the UI programs. We are reviewing agency eﬀorts to address these recommendations.

Overview of Key Issues
Since March 2020, DOJ has publicly announced charges in numerous fraud-related cases involving
COVID-19 relief programs, COVID-19-related consumer fraud schemes, or other types of fraud
related to COVID-19.285 The charges—ﬁled across the U.S. and investigated by a range of law
enforcement agencies—include making false statements and engaging in identity theft, wire and
bank fraud, and money laundering.286 The number of individuals facing fraud-related charges has
continued to grow in the past year and will likely increase, as these cases take time to develop.287

283The remainder of the complaints relate to a variety of other programs and issues, including other federal programs,
such as the Restaurant Revitalization Fund Grant program and Higher Education Emergency Relief fund; COVID-19-
related mortgage fraud; and testing and vaccines. While not all of the complaints received involve allegations of
potential fraud, many of them do.
284According to FTC, the fraud reports reﬂect complaints in the Consumer Sentinel Network that mention COVID,
stimulus, N95, and related terms. The identity theft reports reﬂect complaints that mention COVID, stimulus, or related
terms in the following identity theft subtypes: tax, employment and wage, government beneﬁts, and government
documents.
285A charge is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable
doubt in a court of law.
286The federal government may enforce laws through civil or criminal action. Such action may be resolved through
a trial, a permanent injunction, a civil settlement, or a guilty plea. Since March 2020, DOJ has resolved an EIDL fraud-
related case against one individual and PPP fraud-related cases against eight individuals or entities through civil

Page 181 GAO-22-105291
Fraud against federal programs. From March 2020 through October 2021, 303 individuals
pleaded guilty to federal charges of defrauding COVID-19 relief programs, including SBA’s PPP
and EIDL program and DOL’s UI programs, among others. See the ﬁgure below for the number
of individuals who have pleaded guilty to federal fraud-related charges against COVID-19 relief
programs as of October 31, 2021.

Number of Individuals or Entities That Have Pleaded Guilty to Federal Fraud-Related Charges by COVID-19 Relief
Program, as of Oct. 31, 2021

Of the 303 individuals who pleaded guilty, 101 had been sentenced as of October 31, 2021. See the
ﬁgure below for additional sentencing details.

settlements. For example, in one case, an individual agreed to pay over $280,000 to settle allegations brought by
a former employee that this individual misappropriated PPP loan proceeds obtained on behalf of this individual’s
company for personal expenses. In addition to the federal government, state governments have brought COVID-19-
related unemployment insurance fraud charges.
287The statute of limitations for mail fraud and wire fraud prosecutions is 5 years (18 U.S.C. § 3282), except for mail
and wire fraud schemes that aﬀect a ﬁnancial institution, in which case the statute is 10 years (18 U.S.C. § 3293). Also,
based on our analysis, these cases can take many years to resolve. For example, the Department of Housing and Urban
Development OIG closed cases in 2017–2020 resulting from Hurricane Sandy in 2012.

Page 182 GAO-22-105291
Number of Individuals Who Have Pleaded Guilty to Federal Fraud-Related Charges and Have Been Sentenced, as
of Oct. 31, 2021

Note: Some of these individuals were sentenced for additional charges not related to COVID-19 relief programs. Also, sentences
can include things in addition to prison time such as restitution or other fees.

For example:

• The ﬁrst person in the country charged with fraudulently seeking SBA loans was sentenced
to 56 months in prison followed by 3 years supervised release in connection with a PPP loan
scheme. This individual and a co-conspirator pleaded guilty to conspiracy to commit bank
fraud after ﬁling four fraudulent PPP loan applications in the names of businesses they falsely
claimed to own. In total, these individuals sought over $500,000. In fact, this individual had no
ownership interest in three of the businesses and the fourth business had no employees and
did not pay any wages.288 See the enclosure on the Paycheck Protection Program in appendix I
for more information on the program.

• In another case, an individual pleaded guilty to wire fraud and aggravated identity theft
associated with a scheme to defraud SBA’s EIDL program. This individual created multiple

288This individual also pleaded guilty to failure to appear in court after removing an electronic monitoring device
while released to home detention and staging suicide.

Page 183 GAO-22-105291
ﬁctitious businesses and submitted three fraudulent EIDL applications for the businesses,
providing false statements on the loan applications using the stolen identiﬁcation of another
person. As a result of these applications, this individual received over $110,000 and spent
the funds on unauthorized personal expenses and to make money transfers to individuals in
another country. As of October 31, 2021, this individual had not yet been sentenced. See the
enclosure on the Economic Injury Disaster Loan Program in appendix I for more information
on the program.

• One individual pleaded guilty to wire fraud, conspiracy to commit wire fraud, and identity theft
associated with a scheme to defraud UI. This individual was hired by the state unemployment
agency shortly after being released from prison following a conviction for aggravated identity
theft. Using this position with the agency, this individual submitted fraudulent UI claims for
personal beneﬁt and for the beneﬁt of a co-conspirator. The co-conspirator—who was also the
individual’s spouse and was incarcerated at the time of the application and therefore ineligible
for UI—also pleaded guilty to wire fraud. As of October 31, 2021, neither individual had yet
been sentenced. For more information on the UI programs, including information on state
and territory reporting of overpayments that are due to fraud and DOL’s eﬀorts to address
potential fraud in the UI programs, see the enclosure on Unemployment Insurance Programs
in appendix I.

• One individual was sentenced to 70 months in prison followed by 5 years supervised release
and ordered to pay over $50,000 in restitution after pleading guilty to bank fraud and
aggravated identity theft in connection with a mail theft and EIP fraud scheme. This individual
admitted, among other things, to stealing mail, including bank statements, credit cards, credit
card statements, W-2 forms, and more than $700,000 in checks, including an EIP check. This
individual used the stolen EIP check to create six counterfeit EIP checks, ranging from $1,200 to
$2,400. Further, this individual admitted to attempting to deposit his own EIP check through an
online banking platform after having already cashed it the prior day.

• As part of another case, one individual pleaded guilty to theft of government money
associated with a scheme to defraud the Coronavirus Food Assistance Program. This individual
submitted an application to the program, falsely claiming that this individual’s livestock
business sustained signiﬁcant losses because of the COVID-19 pandemic, and received
over $70,000 in beneﬁts as a result. As of October 31, 2021, this individual had not yet been
sentenced.

As of October 31, 2021, six individuals had been convicted at trial for COVID-19 relief fraud.289
For example, a federal jury convicted an individual of bank fraud, making false statements to a
federally insured ﬁnancial institution, aggravated identity theft, and making false statements to a
federal agency. This individual submitted fraudulent applications seeking more than $1.5 million
in PPP and EIDL loans for ﬁctitious businesses. Speciﬁcally, this individual used the identities of

289Two of these individuals had been sentenced as of October 31, 2021. One of these individuals was sentenced to 37
months in federal prison and 3 years of supervised release and ordered to pay restitution of over $2 million for PPP-
related fraud. The other individual was sentenced to one year and one day in federal prison and 3 years of supervised
released and ordered to pay restitution of over $10.7 million for PPP- and EIDL-related fraud. As of October 31, 2021,
there had not been any convictions related to UI, EIP, or other federal COVID-19 relief programs.

Page 184 GAO-22-105291
elderly residents of senior living facilities and falsiﬁed oﬃcial documents about these ﬁctitious
business to support the PPP and EIDL applications.

Federal charges were pending against 499 individuals for attempting to defraud COVID-19 relief
programs as of October 31, 2021.290

Consumer fraud. In addition to fraud against federal programs, fraud can result in ﬁnancial
losses to consumers and undermine health and safety. From March 2020 through October 2021,
18 individuals or entities pleaded guilty to federal charges related to consumer fraud and one
individual was convicted of a consumer fraud-related charge.291 For example, one individual
pleaded guilty to wire fraud related to a personal protective equipment (PPE) fraud scheme. For
instance, this individual agreed to provide approximately 1.5 million medical gowns to multiple
individuals, but instead used the funds for personal expenses, including online gaming. As part
of the guilty plea, this individual admitted to defrauding eight individuals of close to $1 million. In
another case, an individual pleaded guilty to importation contrary to law associated with a scheme
to smuggle hydroxychloroquine sulfate into the U.S. to sell in COVID-19 “treatment kits.”292 This
individual sold one of the treatment kits, which the individual claimed would cure COVID-19, to an
undercover agent for $4,000.

There were also federal charges pending against 53 individuals or entities related to consumer
fraud as of October 31, 2021.

As of October 31, 2021, the majority of individuals and entities that had pleaded guilty, faced
federal charges for, or were convicted of COVID-19-related consumer fraud schemes were
allegedly involved in schemes related to prevention or treatment of COVID-19 or PPE sales (see
ﬁgure).

290The majority of these individuals were charged with attempting to defraud SBA’s PPP and EIDL program and DOL’s UI
programs, or fraudulently accessing EIPs. Eight individuals were charged with attempting to defraud only other federal
COVID-19 relief programs, including the Higher Education Emergency Relief Fund and the Provider Relief Fund. Seventy-
eight of the 499 individuals faced charges related to more than one federal COVID-19 relief program. For example, 60
individuals faced federal charges related to both PPP and EIDL, 10 individuals faced federal charges related to both
EIDL and UI, and one individual faced federal charges related to PPP, the Accelerated and Advance Payments Program,
and the Provider Relief Fund as of October 31, 2021. Some of these individuals also faced federal charges related to
consumer fraud or other types of COVID-19-related fraud.
291One of the 18 individuals or entities has also pleaded guilty to federal charges of defrauding a COVID-19 relief
program. Also, 11 of the 18 individuals or entities had been sentenced as of October 31, 2021. Sentences for individuals
ranged from 6 months of probation and almost $5,000 of restitution to more than 5 years in prison followed by 5 years
of supervised release. In addition to these 18 individuals or entities, since March 2020, DOJ resolved a civil complaint of
consumer fraud against one entity through a civil settlement.
292The Food and Drug Administration approved the use of hydroxychloroquine sulfate on an emergency basis
forhospitalized COVID-19 patients in March 2020 and revoked this emergency use authorization in June 2020 after
ﬁnding, based on clinical research data, that hydroxychloroquine sulfate may not be eﬀective in the treatment of
COVID-19 and that the drug’s potential beneﬁts for such use do not outweigh its known and potential risks.

Page 185 GAO-22-105291
Number of Individuals or Entities That Have Pleaded Guilty to, Faced Federal Charges for, or Were Convicted for
Consumer Fraud, as of Oct. 31, 2021

a
The “other” category can include individuals or entities that engaged in deceptive business practices, making COVID-19-related
claims that caused consumers to suﬀer or potentially suﬀer ﬁnancial or other losses unrelated to prevention or treatment,
personal protective equipment, or testing. For example, one individual pleaded guilty and was sentenced to 63 months in
prison for, among other things, creating a website to sell other goods that were sought after during the pandemic and not
delivering those goods.

Other federal cases. The federal government is also pursuing charges including conspiracy, wire
fraud, and theft that are related to COVID-19 but separate from consumer fraud and fraud against
the federal programs discussed earlier. From March 2020 through October 2021, 24 individuals
pleaded guilty to these types of federal charges.293 For example, one individual pleaded guilty
to hoarding and price gouging after purchasing 100,000 KN95 facemasks that he oﬀered for
resale at markups of as high as 500 percent. This individual was sentenced to 3 years of probation
and ordered to pay a $2,500 ﬁne. In another case, two individuals pleaded guilty to conspiracy
to commit health care fraud and were sentenced to 3 years of probation and ordered to pay
restitution of about $14,000. These individuals admitted to approaching residents of senior
complexes to oﬀer “COVID-19 screening tests”—which were actually general respiratory pathogen
screening panels—and submitting inaccurate and medically unnecessary claims to Medicare for
the tests.294

293Twelve individuals had been sentenced as of October 31, 2021. Sentences ranged from 2 years of probation and a
$75,000 ﬁne to almost 4 years in prison, 3 years of supervised release, and an order to pay over $530,000 in restitution
and to forfeit $527,000, among other things, in the case of an individual who also pleaded guilty to an additional fraud
scheme that was not related to COVID-19. In addition to these 12 individuals, since March 2020, DOJ resolved complaints
against three individuals or entities for activities such as hoarding and price gouging through settlements.
294In September 2021, DOJ announced charges against numerous individuals as part of a national health care fraud
enforcement action. The action resulted in charges against ﬁve defendants who allegedly engaged in the misuse of
Provider Relief Fund monies and nine defendants, including these two individuals, who allegedly engaged in various
health care fraud schemes designed to exploit the COVID-19 pandemic, resulting in the submission of over $29 million in
false billings.

Page 186 GAO-22-105291
There were also other federal charges pending against 32 individuals as of October 31, 2021.
For example, one individual was charged with 16 counts of health care fraud and one count of
money laundering associated with a Medicare fraud scheme. This individual allegedly submitted
$100 million in false Medicare claims, at least $42 million of which was billed after the onset of
the COVID-19 public health emergency, including claims for fraudulent respiratory test billings
submitted alongside COVID-19 tests. This individual allegedly spent the funds on luxury cars, real
estate, and jewelry, among other things.

In prior quarterly reports, we have reported that, while the extent of vaccine-related fraud
is unknown, DOJ has publicly announced charges or other actions in consumer fraud cases
involving individuals or entities that claimed to oﬀer vaccines to prevent COVID-19. As COVID-19
vaccines have become increasingly available, and government and private entities have begun
implementing vaccination requirements, other types of fraud involving COVID-19 vaccines have
emerged. For example:

• In one case, an individual pleaded guilty to participating in a felony conspiracy associated with
a vaccine-related Medicaid fraud scheme. Speciﬁcally, this individual illegally vaccinated minors
who were ineligible to receive a COVID-19 vaccine and submitted corresponding claims to
Medicaid.

• In another case, DOJ announced charges against two individuals in two separate cases for
allegedly selling or attempting to sell COVID-19 vaccination record cards via social media. In
one of the cases, the individual is alleged to have stolen authentic COVID-19 vaccination record
cards from a Department of Veterans Aﬀairs hospital, while the second individual is alleged to
have imported fraudulent cards.

Federal agency warnings to help prevent future fraud-related cases. As a result of complaints
from the public alleging potential fraud involving COVID-19 relief funds received through hotlines
and other fraud detection eﬀorts, federal agencies have warned the public about emerging fraud
schemes, which can help prevent future cases of fraud against federal programs and consumers.
For example:

• In October 2021, the FTC warned the public about scams related to the Federal
Communications Commission’s Emergency Broadband Beneﬁt Program—a program designed
to help qualiﬁed households aﬀord internet service during the COVID-19 pandemic by
providing a one-time discount on an internet-connected device and monthly discounts for
internet service. Speciﬁcally, the FTC warned the public about impersonators oﬀering to help
individuals sign up for a “free” device and internet service in exchange for money or personal
information and oﬀered tips to avoid such scams.

• In August 2021, the FTC warned the public about schemes in which identity thieves use text
messages to gather personal information necessary to steal UI beneﬁts or ﬁle fraudulent UI
beneﬁts claims.

• Also in August 2021, the Department of Health and Human Services Oﬃce of Inspector
General alerted the public about COVID-19-related scams in which fraudsters oﬀer

Page 187 GAO-22-105291
unapproved and illegitimate COVID-19 tests, federal grants, and Medicare prescription cards in
exchange for personal information.

• In addition, federal oﬃcials have continued to warn the public against making or buying fake
COVID-19 vaccination cards.

We previously reported on examples of agency warnings to the public about emerging fraud
schemes in our quarterly July and October 2021 reports. In addition, in our October 2021 report,
we reported on other federal eﬀorts to address and prevent future fraud-related cases, such as
taking administrative and other enforcement actions and establishing task forces and working
groups.

Methodology
To conduct this work, we reviewed information from DOJ to identify federal fraud-related charges
related to COVID-19 relief funding as of October 31, 2021. We also analyzed related federal court
documents. In addition, we reviewed FTC reports on complaints related to fraud and identity
theft and press releases from other federal entities, including the FTC, describing COVID-19 fraud-
related eﬀorts.

Agency Comments
We provided a draft of this enclosure to the Oﬃce of Management and Budget, which provided no
comments.

GAO’s Ongoing Work
In our ongoing work, we are reviewing fraud risk management and potential fraud in the PPP, EIDL,
and UI programs, among others.

Related GAO Products
Economic Injury Disaster Loan Program: Additional Actions Needed to Improve Communication with
Applicants and Address Fraud Risks. GAO-21-589. Washington, D.C.: July 30, 2021.

Paycheck Protection Program: SBA Added Program Safeguards, but Additional Actions Are Needed.
GAO-21-577. Washington, D.C.: July 29, 2021.

A Framework for Managing Fraud Risks in Federal Programs. GAO-15-593SP. Washington, D.C.: July 28,
2015.

Contact information: Rebecca Shea, (202) 512-6722, shear@gao.gov

Page 188 GAO-22-105291
Appendix II: New High-Risk Designation: HHS and Public
Health Emergencies
We are adding the Department of Health and Human Services’ (HHS) leadership and coordination
of public health emergencies—including extreme weather events, infectious disease outbreaks,
pandemics, and intentional acts—to GAO’s High-Risk List. The department’s response to the
COVID-19 pandemic has highlighted longstanding concerns we have raised about its ability to
execute its role leading federal public health and medical preparedness for, and response to, such
public health emergencies. We reported in March 2021 that our ongoing and planned work may
lead us to designate HHS’s leadership and coordination of public health emergencies as a high-
risk issue. We are adding this high-risk designation now to help ensure sustained leadership and
attention from the executive branch and Congress so that our nation is adequately prepared for
future emergencies.

Why the Area Is High Risk
For more than a decade, we have reported on HHS’s execution of its lead role in preparing for, and
responding to, public health emergencies and have found persistent deﬁciencies in its ability to
perform this role. These deﬁciencies have hindered the nation’s response to the current COVID-19
pandemic and a variety of past threats, including other infectious diseases—such as the H1N1
inﬂuenza pandemic, Zika, and Ebola—and extreme weather events, such as hurricanes.

If left unaddressed, these deﬁciencies will continue to hamper the nation’s ability to be prepared
for, and eﬀectively respond to, future threats. Threats from extreme weather are predicted to
increase, according to the U.S. Global Change Research Program. In 2020 alone, we saw HHS
responding to wildﬁres, hurricanes, and an earthquake, while also in the throes of the response
to the COVID-19 pandemic, which has resulted in catastrophic loss of life and substantial damage
to the national economy. As devastating as the COVID-19 pandemic has been, more frequent
extreme weather events, new viruses, and bad actors who threaten to cause intentional harm
loom, making the deﬁciencies we have identiﬁed particularly concerning. Not being suﬃciently
prepared for a public health emergency can also negatively aﬀect the time and resources needed
to achieve full recovery.

In our March 2021 High-Risk report, we named HHS’s leadership and coordination of public health
emergencies as an emerging issue requiring close attention. Based on our ﬁndings from a body of
work related to HHS’s preparedness for, and response to, public health emergencies—including 10
new GAO products with recommendations issued since our 2021 High-Risk report—we have now
determined that this issue should be on our High-Risk List.

GAO’s High-Risk Designation
GAO designates programs and operations as ‘high risk’ due to their vulnerabilities to fraud, waste, abuse, and
mismanagement, or because they need transformation. To determine which federal government programs and
functions should be designated high risk, we consider qualitative factors, such as whether the risk
• involves public health or safety, service delivery, national security, national defense, economic growth, or privacy
or citizens’ rights, or

Page 189 GAO-22-105291
• could result in signiﬁcantly impaired service; program failure; injury or loss of life; or signiﬁcantly reduced
economy, eﬃciency, or eﬀectiveness.

We also consider the exposure to loss in monetary or other quantitative terms. Before making a high-risk designation,
we consider corrective measures planned or under way to resolve a material control weakness and the status and
eﬀectiveness of these actions.
Source: GAO. | GAO-22-105291

HHS is responsible for leading and coordinating all matters related to federal public health
and medical preparedness for, and response to, emergencies, whether naturally occurring or
intentional.295 Preparing for and responding to nationally signiﬁcant public health emergencies
requires a whole-of-nation, multidisciplinary approach involving multiple federal agencies and
coordination with nonfederal entities, including state, tribal, and territorial governments, and the
private sector.

Within HHS, a variety of agencies and oﬃces are involved, including the following:

• The Oﬃce of the Assistant Secretary for Preparedness and Response (ASPR) serves as the
principal advisor to the Secretary of Health and Human Services on all matters related to
federal public health and medical preparedness and response to public health emergencies.

• The Centers for Disease Control and Prevention (CDC) supports public health preparedness
eﬀorts to prevent, detect, and respond to new and emerging disease threats. For example,
during infectious disease outbreaks, CDC conducts studies to learn about the link between
infection and health outcomes, monitors and reports cases of infection, and provides guidance
to travelers and health care providers, among other activities. Additionally, CDC typically
develops a diagnostic test for an emerging pathogen when no diagnostic test has been
approved, cleared, or authorized by the Food and Drug Administration (FDA) and no adequate
alternative is available, such as during H1N1 and Zika.

• FDA plays a critical role in protecting the U.S. from biological threats, including intentional acts
and naturally occurring infectious diseases. For example, FDA is responsible for ensuring that
medical countermeasures—including drugs, vaccines, diagnostic tests, and personal protective
equipment—against these threats are safe and eﬀective.296 FDA may also issue emergency
use authorizations to allow the temporary use of unapproved medical products to diagnose,
prevent, or treat disease.297

295While HHS is the lead for the public health and medical response, the Federal Emergency Management Agency,
an agency within the Department of Homeland Security, leads the overall federal response during emergencies and
disasters.
296Medical countermeasures are drugs, biologics, and devices used to diagnose, treat, prevent, or mitigate harm
from any chemical, biological, radiological, or nuclear agent.
297The Secretary of Health and Human Services may declare that circumstances, prescribed by statute, exist
justifying the emergency use of certain medical products. Once such declaration has been made, FDA may
temporarily allow the use of an unapproved product through an emergency use authorization. For FDA to issue
an emergency use authorization, it must be reasonable to believe that the product may be eﬀective and that
the known and potential beneﬁts of the product outweigh the known and potential risks, among other statutory
criteria. See 21 U.S.C. § 360bbb-3.

Page 190 GAO-22-105291
Key GAO Findings

Through our work on public health emergencies from ﬁscal year 2007—when ASPR was created
and designated the principal advisor to the Secretary of Health and Human Services on public
health emergencies—to present day (January 2022), we have made 115 recommendations to HHS
related to its leadership and coordination of public health emergencies. Of these,

• 72 recommendations have not been fully implemented—49 stemming from the COVID-19
pandemic (HHS generally concurred with 62 of these 72 recommendations);

• 10 recommendations—all made prior to the COVID-19 pandemic, in ﬁscal year 2012 or
earlier—have been closed as unimplemented as the department does not plan to address
them, though we believe these recommendations are still relevant;298 and

• 33 recommendations—nine made during, and the rest prior to the COVID-19 pandemic—have
been implemented.

Through our work, we have identiﬁed broad principles of an eﬀective national response and found
persistent deﬁciencies in HHS’s preparedness and response eﬀorts in these areas:

1. establishing clear roles and responsibilities for the wide range of key federal, state, local,
tribal, territorial, and nongovernmental partners;

2. collecting and analyzing complete and consistent data to inform decision-
making—including any midcourse changes necessary—as well as future preparedness;

3. providing clear, consistent communication to key partners and the public;

4. establishing transparency and accountability to help ensure program integrity and build
public trust; and

5. understanding key partners’ capabilities and limitations.

Establishing clear roles and responsibilities within HHS and between it and its key partners.
The unprecedented scale of the COVID-19 pandemic, and the whole-of-nation response required
to address it, highlight the critical importance of clearly deﬁning the roles and responsibilities
for the wide range of federal departments and other key partners involved when preparing for
pandemics and addressing unforeseen emergencies. Our work has found numerous deﬁciencies
in this critical principle for an eﬀective response, and concerns remain, including the following:

298For example, in 2007, we recommended that the Secretary of Health and Human Services work with the
Secretary of Homeland Security to develop and conduct rigorous testing, training, and exercises to ensure that
federal leadership roles are clearly deﬁned and understood and to ensure that leaders are able to eﬀectively
execute their shared responsibilities. We also made a similar recommendation to HHS with regard to involving
state, local, and tribal governments to ensure their leadership roles and responsibilities are clearly deﬁned. These
recommendations were not implemented and HHS acknowledged in ﬁscal year 2012 that while it continued to
exercise its pandemic response capabilities, its exercises would not speciﬁcally address our recommendation to test
leadership roles and responsibilities.

Page 191 GAO-22-105291
Decision-making roles for national biodefense resources. HHS leads the Biodefense Steering
Committee and Coordination Team, which are in charge of facilitating joint decision-making for
the National Biodefense Strategy—the national strategy outlining actions needed to protect the
nation from potentially catastrophic biological threats.299 In February 2020, we reported that there
were no clear, detailed processes, roles, and responsibilities for joint decision-making, and that
agency oﬃcials reported being unsure how decisions related to prioritizing and allocating national
biodefense resources would be made. The lack of clear decision-making roles can especially
impede the ability of agencies to address gaps or leverage resources that span department and
agency boundaries, which is frequently the situation for biodefense, leading us to recommend that
HHS document such roles. As of January 2022, this recommendation has not been fully addressed.

HHS agencies’ roles and responsibilities in repatriating U.S. citizens during the COVID-19 pandemic.
At the beginning of the COVID-19 pandemic, the U.S. returned, or repatriated, about 1,100 U.S.
citizens from abroad and quarantined them domestically to prevent the spread of COVID-19.
In April 2021, we reported that HHS put these repatriates, its own personnel, and nearby
communities at risk due to a lack of clarity as to which HHS agency was in charge, including which
HHS agency was responsible for managing infection prevention. This led to fundamental problems
including a delay in issuing a federal quarantine order, during which time a repatriate tried to
leave the quarantine facility; inconsistent use of personal protective equipment to protect HHS
responders from the virus; and ASPR allowing asymptomatic COVID-19 positive repatriates to
return on ﬂights with citizens who had not tested positive, contradicting CDC guidance. As of
January 2022, HHS has not fully addressed our recommendations to revise or develop new plans
that clarify agency roles and responsibilities during a pandemic, and regularly exercise these plans
with key partners.

HHS’s role in medical countermeasure management. Safe and eﬀective medical
countermeasures—including vaccines, drugs, diagnostics, and related supplies, such as personal
protective equipment—are critical for responding to large-scale public health emergencies as
demonstrated by the COVID-19 pandemic. As of January 2022, shortages of such supplies continue
to plague the nation’s pandemic response. HHS has not addressed our recommendation from
September 2020 that the department work with the Federal Emergency Management Agency to
develop plans outlining speciﬁc actions the federal government will take to help mitigate supply
chain shortages for the remainder of the pandemic.

The pandemic has highlighted gaps in clearly deﬁned roles and responsibilities for management of
these critical supplies, including the following:

• In September 2020, we reported that many responsibilities for medical supply chain
management—the process for obtaining and delivering goods and services—that had been
shared between multiple agencies for the COVID-19 response were transitioning to HHS. We

299The National Biodefense Strategy outlines a national vision for addressing challenges arising from naturally
occurring, deliberate, or accidental biological threats and explains how the federal government can manage its activities
more eﬀectively to assess, prevent, prepare for, respond to, and recover from biological threats like the COVID-19
pandemic. HHS chairs the two coordination bodies responsible for facilitating joint decision-making to implement the
National Biodefense Strategy. The Secretary of Health and Human Services chairs the cabinet-level Biodefense Steering
Committee and a senior HHS oﬃcial chairs the Biodefense Coordination Team, which consists of subject matter experts
from multiple departments and agencies with biodefense responsibilities.

Page 192 GAO-22-105291
recommended that HHS document roles and responsibilities for supply chain management
functions transitioning to HHS, including continued support from other federal partners, to
ensure suﬃcient resources exist to sustain and make the necessary progress in stabilizing
the supply chain. As of January 2022, HHS has not addressed this recommendation, which
we reiterate as important, especially during a time of ongoing shortages of medical supplies,
including testing material and personal protective equipment for the COVID-19 response.

• In January 2021, we reported on challenges facing HHS’s Strategic National Stockpile (SNS),
among them, its appropriate role and responsibilities during future pandemics. We cited
confusion among stakeholders and experts regarding the role of the SNS in the COVID-19
response. The SNS is part of the federal medical infrastructure that can supplement state
and other jurisdictional medical countermeasure needs during public health emergencies.300
However, as of January 2022, HHS has not developed a formal process for engaging with key
stakeholders on a supply strategy for pandemic preparedness. These stakeholders, including
state, local, tribal, and territorial partners and the private sector, have a shared role for
providing supplies during a pandemic.

Cross-department roles in pandemic responses. Clear roles and responsibilities during a pandemic
have been a longstanding concern. For example, in August 2007, we reported that federal
leadership roles and responsibilities, including HHS’s, needed to be rigorously and robustly
tested as they evolve to ensure clarity in how relationships should work during emergencies. We
also reported that because initial actions may help limit the spread of a virus, such as inﬂuenza,
the eﬀective exercise of shared leadership roles and responsibilities could substantially shape
the outcome of a pandemic. The unclear roles and responsibilities observed in aspects of the
COVID-19 response, some described above, have emphasized the importance of this key principle
further.

Collecting and analyzing complete and consistent data to inform decision-making and
future preparedness. Data are critical to inform the response to a public health emergency. For
example, during the COVID-19 pandemic, data have been needed to understand who has been
infected and their location to enable informed decision-making about resource allocation and
steps to limit disease spread. However, the data HHS has relied on during the COVID-19 pandemic
have been, and remain, incomplete and inconsistent, highlighting longstanding concerns we have
had with the data HHS relies on to respond to public health emergencies.

Data on the spread of COVID-19 at the outset of the pandemic. We reported in July 2021 that the
ﬁrst COVID-19 test developed by CDC was faulty, undermining data collection on the spread of
the virus in the U.S. during the early weeks of the pandemic. CDC developed the nation’s ﬁrst
diagnostic test for COVID-19 and distributed it to public health and Department of Defense
(DOD) laboratories between February 6 and 10, 2020; however, the test was faulty and a new test
was not distributed to laboratories until February 28, 2020. Since no other testing options were
available in the U.S. outside of CDC headquarters until February 29, 2020, the failure of CDC’s test

300See 42 U.S.C. § 247d-6b. The SNS contains a multibillion dollar inventory of medical countermeasures 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.

Page 193 GAO-22-105291
limited the nation’s understanding of the spread of the virus, even as other countries were able to
scale up their own testing faster.

Data collection during the COVID-19 response. Throughout the response to the COVID-19 pandemic,
we have reported on numerous ongoing data collection concerns, which have plagued our
nation’s ability to eﬀectively, eﬃciently, and equitably respond, including the following:

• COVID-19 testing, case counts, and hospital capacity data. We reported in January 2021 that
interpreting these data has proven challenging because the data HHS collects are often
incomplete and inconsistent. Test positivity rates may be incomplete and inconsistent due, in
part, to whether and how states report on certain types of COVID-19 tests. Case counts may
be incomplete and inconsistent due, in part, to diﬀerences in how states count cases. Available
hospital capacity may be inconsistent due, in part, to how hospital staﬀ interpret which data
must be reported.

• Race and ethnicity data for COVID-19 cases, hospitalizations, and deaths. We reported in
September 2020 that persistent gaps in these data limited the nation’s ability to eﬀectively
target pandemic response eﬀorts for various racial and ethnic groups that available data
suggest may be disproportionately aﬀected.

• Nursing home data for COVID-19 cases and deaths. We reported in September 2020 that HHS’s
Centers for Medicare & Medicaid Services began requiring nursing homes to report COVID-19
data to CDC starting with information as of May 8, 2020, but made reporting prior to May 8,
2020, optional. By not requiring nursing homes to submit data from the ﬁrst 4 months of 2020,
HHS limited the usefulness of the data in helping to understand the eﬀects of COVID-19 in
nursing homes during the initial stage of the response.

Data on the locations of critical care and dialysis patients evacuated in response to 2017 hurricanes.
We reported in September 2019 that ASPR oﬃcials indicated that poor patient tracking resulted in
HHS personnel having to later search for patients who were evacuated in response to Hurricanes
Irma and Maria in 2017. Further, because case workers are not required to report the ﬁnal status
of evacuated patients to ASPR, the oﬃce was unable to readily determine if approximately one-
fourth of the evacuated patients were appropriately discharged, left against medical advice, or
were otherwise unaccounted for.

Long-standing mandate for an HHS-led nationwide public health situational awareness capability.
We reported in 2010 that, although required by statute, HHS had made little progress on
implementing a nationwide public health situational awareness capability through an
interoperable network of systems to help ensure timely and complete collection of public health
data to aid a response.301 Under the existing process—which HHS has had to rely on during
the COVID-19 pandemic—public health data are collected by thousands of diﬀerent health

301The Pandemic and All-Hazards Preparedness Act required the Secretary of Health and Human Services to establish
a near real-time electronic nationwide public health situational awareness capability through an interoperable network
of systems to enhance early detection of, rapid response to, and management of public health emergencies. Pub. L. No.
109-417, § 202, 120 Stat. 2831, 2845-48 (2006) (codiﬁed, as amended, at 42 U.S.C. § 247d-4(c)).

Page 194 GAO-22-105291
departments and laboratories, as well as multiple federal agencies.302 Technological capabilities
vary widely among these entities, which may use systems and software that are not interoperable
and unable to exchange and share data.

HHS was originally required to establish the nationwide public health situational awareness
network capability by December 2008. The network was to share data and information in near real
time from state, local, tribal, and territorial public health entities to enhance early detection of,
rapid response to, and management of potentially catastrophic infectious disease outbreaks and
other public health emergencies. Subsequent legislation required HHS to establish the network
by March 2015, but we found in September 2017 that HHS had only submitted an incomplete
implementation plan.303 Consequently, public health reporting has continued to rely on disparate
systems that struggle to share information on a nationwide basis, as has been evident during the
COVID-19 pandemic.

Providing clear, consistent communication to key partners and the public. In the midst of a
public health emergency, clear and consistent communication—among all levels of government,
with health care providers, and to the public—is paramount. Our work over the years has found
that HHS has, during critical incidents, provided unclear and inconsistent communications; this
was also an identiﬁed concern in an HHS exercise to test preparedness.

COVID-19 pandemic response. We have reported on communication concerns throughout the
pandemic:

• In April 2021, we reported that some stakeholders said states often did not have information
critical to COVID-19 vaccine distribution at the local level, such as how many doses they would
receive and when. We reemphasized ﬁndings from a prior September 2020 report that a
clearly communicated plan for coordination with key federal and non-federal partners remains
imperative for eﬀective distribution and administration planning, as well as for eﬀective
management of the public’s expectations, including to help ensure public acceptance and
uptake of the vaccine.

• In March 2021, we reported that there was inconsistent communication to health care
providers about the use of certain personal protective equipment, according to association
oﬃcials. Speciﬁcally, there was inconsistent information on the recommended use of
decontamination systems for respirators between FDA and CDC, which led to confusion and
hesitancy among providers about using such devices, according to some associations we
interviewed.

• In January 2021, we reported that HHS had not issued a publicly available and comprehensive
national COVID-19 testing strategy, creating the risk of key partners and the public lacking
crucial information to support an informed and coordinated testing response. An eﬀective

302As of our September 2017 report, these health entities included about 59 state and territorial health departments;
3,000 county, city, and tribal health departments; and 180,000 public and private laboratories, as well as multiple federal
agencies.
303See Pandemic and All-Hazards Preparedness Reauthorization Act of 2013, Pub. L. No. 113-5, § 204(a)(4), 127 Stat. 161,
177 (codiﬁed, as amended, at 42 U.S.C. § 247d-4(c)). We have ongoing work examining HHS’s eﬀorts in establishing this
network.

Page 195 GAO-22-105291
national strategy not only aids coordination, but is also an important tool to help determine
resources required to meet future needs and measure progress on national goals. As of
January 2022, HHS has not made public a comprehensive national strategy on COVID-19
testing.

ASPR Crimson Contagion exercise. In August 2019, ASPR conducted a pandemic planning exercise,
known as Crimson Contagion, in conjunction with multiple federal agencies, states, and
stakeholders.304 ASPR’s after-action report from this exercise found that HHS’s regional staﬀ
lacked clear guidance on the distribution of information to state and local partners, and that
states lacked clarity on which channels they should use to request information from, and report
information to, federal partners throughout the response.305 As we reported in June 2020, HHS
oﬃcials told us they had not been able to address the Crimson Contagion ﬁndings, because they
were busy responding to the COVID-19 pandemic.

Zika surveillance and research. In May 2017, we reported that at the beginning of the outbreak
when relatively little was known about the disease, there were several challenges for Zika virus
disease surveillance and research eﬀorts. This included challenges related to communicating
changes to the national Zika virus case deﬁnition, which is essential to ensure consistent reporting
of cases across entities. For example, oﬃcials from a state that had one of the largest number of
reported cases said they sometimes received inconsistent guidance because entities within CDC
did not talk with each other, and CDC could not come to a quick decision about the Zika virus case
deﬁnition.

H1N1 response. In June 2011, we reported that selected state oﬃcials reported being overwhelmed
from the large volume of, and sometimes inconsistent, information received from HHS and the
Department of Homeland Security during the H1N1 response. We found that the departments did
not eﬀectively coordinate their release of information to state contacts, according to four of the
ﬁve states we interviewed.

Establishing transparency and accountability to help ensure program integrity and build
public trust. When agencies need to quickly disseminate funding and information during public
health emergencies, transparency and accountability are especially critical to help ensure program
integrity and build public trust. However, we have found deﬁciencies in these areas both during
and prior to the COVID-19 pandemic.

Payment integrity risks for directly shipping SNS materials from vendors during the COVID-19 pandemic.
In July 2021, we reported that ASPR did not have documented policies and procedures in place
to ensure accountability of funds the oﬃce provided to vendors of supplies. Speciﬁcally, it could
not ensure that state, local, territorial, and tribal governments actually received the correct and

304Crimson Contagion was a multi-state, whole-of-government exercise on the nation’s ability to respond to a large-
scale outbreak of a novel inﬂuenza virus strain, which quickly spreads via human-to-human transmission around the
world and across the continental U.S. with high rates of morbidity and mortality.
305Agencies use after-action reports to summarize the agency’s performance during an exercise or real-world event,
including strengths and areas for improvement. The after-action report for the Crimson Contagion exercise identiﬁed a
number of areas for improvement related to planning and other response functions, including that the organization of
the federal government response when HHS is the lead federal agency was not suﬃciently outlined in documents.

Page 196 GAO-22-105291
undamaged SNS materials that were to be shipped directly from ASPR’s vendors. Because of a
lack of accountability mechanisms, such as clear policies and procedures, we found that 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.

Transparency of changes to testing guidelines for the COVID-19 pandemic. In November 2020, we
reported that COVID-19 testing guidelines had changed several times over the course of the
pandemic with little scientiﬁc explanation of the rationale behind the changes, thereby confusing
providers and public health stakeholder groups implementing the guidelines, and risking the
erosion of trust in the federal government.

Transparency related to procurement of materials for the SNS prior to the COVID-19 pandemic. In July
2021, we reported concerns related to the transparency of decisions made by the interagency
body that recommends procurement of vaccines, supplies, and other materials for the SNS in the
years prior to the COVID-19 pandemic. Speciﬁcally, some interagency body members reported
that ASPR’s eﬀorts to restructure this body in the years prior to the COVID-19 pandemic led to a
reduced ability to provide input and reduced transparency of the rationale behind decisions made,
including for the SNS inventory. Additionally, the restructuring led to a lapse in statutorily required
annual reviews that provide transparency to Congress about the priorities and procurements
for the SNS.306 Further, ASPR was unable to provide documentation of the interagency body’s
deliberations during the 2018 to 2020 period, leaving it unclear who was involved in the meetings
or what they considered when making decisions.

Transparency and accuracy regarding vaccine availability during H1N1. In June 2011, we reported
that the credibility of all levels of government was diminished when the initial supply of the H1N1
vaccine available during the 2009 H1N1 pandemic did not meet expectations HHS conveyed to
the public. HHS conveyed to state and local jurisdictions, and to the public, that a robust H1N1
vaccine supply, about 120 million to 160 million doses, was expected to be available in October
2009, but ultimately only 23 million doses were available at that time. Consequently, the public
had an unfavorable view of the federal government’s ability to provide the country with the H1N1
vaccine.

Understanding key partners’ capabilities and limitations. We reported in September 2019
that, in general, ASPR’s resource response capacity—personnel and supplies—can support a
response to two simultaneous events that occur in diﬀerent areas in the continental U.S. for
30 days, according to oﬃcials. Beyond that, ASPR relies on other response partners. However,
ASPR does not have a complete understanding of key partners’ capabilities and limitations, which
creates a vulnerability. Furthermore, we have concerns that ASPR lacks the capability to fully
execute its own responsibilities.

Key partners’ capabilities during 2017 hurricane response. In September 2019, we reported that ASPR
did not have a full understanding of the capabilities and limitations of its key federal partners
during the response to Hurricanes Irma and Maria in the U.S. Virgin Islands and Puerto Rico in
2017—including DOD and the Department of Veterans Aﬀairs. This resulted in some deployed

306See 42 U.S.C. § 247d-6b(a)(2).

Page 197 GAO-22-105291
resources not being properly and eﬃciently utilized, according to ASPR documentation and DOD
oﬃcials.

Response capabilities if DOD is unavailable. DOD has been an integral response partner for
HHS, carrying out key medical response activities, such as patient care and evacuation, during
public health emergencies. However, we reported in 2018 and 2019 that ASPR does not have a
contingency plan for a response in which DOD’s assistance is unavailable—for example, if DOD
is deployed to defend the nation from outside threats at the same time its support is needed for
a domestic public health emergency response. DOD’s 2017 hurricane after-action report also
included reliance on DOD as a concern and recommended that HHS establish contracts with
the commercial sector to ensure the federal government has other options available for larger
responses.

Understanding capabilities of nonfederal governments. HHS is responsible for providing assistance
to state, local, territorial, and tribal governments during public health emergencies when needed.
It is important for ASPR to understand these governments’ capabilities and their limitations. In
our May 2018 report we found that routine federal public health funding to these entities had
generally decreased over the years. Such decreases had limited state and local preparedness
capacity, according to CDC oﬃcials—such as being able to maintain preparedness staﬀ—and
increased the importance of supplemental appropriations to respond to infectious disease
threats. In March 2021, we found similar concerns. We reported that while COVID-19 supplemental
funding available for testing was helpful in the near term, most selected jurisdictions were
concerned about the ability to maintain testing capacity and preparedness in the longer term once
supplemental funding was no longer available.

Capacity to execute new and ongoing preparedness and response duties. We have identiﬁed concerns
with ASPR’s capabilities to fully execute its preparedness and response activities, especially as
ASPR’s responsibilities have increased. These additional responsibilities include leading the
Biodefense Coordination Team, which coordinates implementation of the National Biodefense
Strategy; oversight of the SNS, including inventory management and supply distribution; and
leadership in establishing a resilient medical products supply chain for the nation, including
related supply chain data management and tracking, and acquisitions and contracting activities,
all of which have been areas of concern during the COVID-19 pandemic. We have reported on the
following examples as areas of concern:

• Vaccine responsibilities. In January 2022, we reported that federal eﬀorts to accelerate the
development, manufacturing, and distribution of COVID-19 vaccines transitioned to a new
oﬃce within ASPR, when they previously had been led by a partnership between HHS and
DOD—known as the HHS-DOD Countermeasures Acceleration Group (and formerly known
as Operation Warp Speed). We reported that the partnership and HHS had not completed
all tasks necessary to ensure that ASPR could fully assume all of its new responsibilities by
the transition date of January 1, 2022. For example, documentation that we reviewed did not
indicate that HHS had developed and implemented strategies to resolve identiﬁed workforce
gaps—such as communication and logistic expertise—resulting from DOD’s departure.

• Domestic manufacturing of medical products. In December 2021, we reported that HHS
created an oﬃce in September 2020 in response to ASPR’s new responsibility to manage the

Page 198 GAO-22-105291
expansion of domestic manufacturing of critical medical supplies, according to oﬃcials. One
year later as the pandemic continues and ASPR has already assumed new responsibilities,
ASPR has yet to reveal how it will staﬀ this oﬃce.

• Medical supply acquisition. In September 2020, we reported that ASPR was expected to take
over medical supply acquisition responsibilities from DOD, which would require knowledge of
certain legal authorities, according to oﬃcials. However, only three of ASPR’s 20 contracting
oﬃcers had experience using these authorities prior to the COVID-19 pandemic and hiring was
expected to be a challenge, according to ASPR oﬃcials.307

• Emergency responder workforce. In June 2020, we reported that when determining the size
of its emergency responder workforce, ASPR did not consider the number of responders
projected to be needed to respond to multiple or concurrent events, and oﬃcials could not
tell us why their planning did not take such scenarios into account. This lack of planning
was notable given that we had previously reported that during the 2017 hurricane season,
ASPR experienced a shortage of these responders, which contributed to a reliance on DOD to
provide essential public health and medical service functions.

What Remains to Be Done
The Secretary of Health and Human Services has an imperative, complex, and far-reaching role
as the lead for the federal public health and medical response to public health emergencies.
Numerous public health emergencies converging and occurring simultaneously can present
signiﬁcant challenges and tax already strained resources. As devastating as the COVID-19
pandemic and the concurrent ﬁres, hurricanes, and earthquake have been, HHS, its partners, and
Congress must be prepared for more frequent disasters and new viruses, whether naturally or
intentionally introduced.

Sustaining attention on preparing for, and responding to, future public health emergencies will
be challenging as the nation continues to address the COVID-19 pandemic. However, waiting to
address the deﬁciencies we have identiﬁed in HHS’s leadership and coordination of public health
emergencies is not an option as it is not possible to know precisely when the next threat will occur;
only that it will come. Addressing these deﬁciencies will require sustained leadership commitment;
the necessary capacity to prepare, respond, and recover; and the systems to measure, evaluate,
and demonstrate progress. The 72 related GAO recommendations that HHS has yet to implement
are a starting place, including the following:

• Cleary deﬁned roles and responsibilities. HHS should direct the Biodefense Coordination
Team to document agreed upon processes, roles, and responsibilities for making and
enforcing joint decisions across federal agencies and their partners involved in protecting the
nation against catastrophic biological threats.

• Complete and consistent data. HHS should establish the nationwide public health
situational awareness network capability, as required by statute, to help ensure timely and

307HHS signed a memorandum of understanding with DOD in May 2021 to establish a framework whereby the
departments will identify a path to enhance HHS’s own capabilities while incrementally reducing DOD’s support.

Page 199 GAO-22-105291
complete collection of public health data to aid a response, and use an expert committee to
systematically review, and help standardize, the ongoing collection and reporting of public
health data.

• Clear, consistent communication. FDA and CDC should develop a process to ensure
consistent guidance for health care providers on the appropriate use of personal protective
equipment during future public health emergencies.

• Transparency and accountability. ASPR should develop plans to ensure a transparent and
deliberative process for making recommendations on the procurement of vaccines, supplies,
and other materials for the SNS and maintain related documentation, including the rationale
and outcomes for decisions made.

• Understanding key partners’ capabilities and limitations. ASPR should work with key
federal response partners to develop and ﬁnalize memorandums of agreement that include
information on the capabilities and limitations of these agencies to meet public health and
medical services core capabilities during public health emergencies.

In 2021, the administration released high-level plans that help provide HHS and its partners a
road map to be better prepared for the next pandemic or biological threat.308 These plans will
require a whole-of-nation approach to implementation, including from states, territories, tribes,
and localities where public health funding has declined over the years. Health departments at all
levels need to be prepared to help HHS respond to ongoing and future public health emergencies.

Through our ongoing and planned work, we will continue to monitor HHS’s eﬀorts to
address public health emergencies. This includes evaluating HHS’s eﬀorts to implement the
administration’s plans, which will be essential to addressing this High-Risk area overall. We will
evaluate HHS’s eﬀorts against our ﬁve High-Risk criteria: (1) leadership commitment to addressing
our concerns; (2) capacity to resolve the risks; (3) development of a corrective action plan that
deﬁnes the root cause, solutions, and corrective measures needed; (4) monitoring to validate the
eﬀectiveness and sustainability of corrective measures; and (5) demonstrated progress in the
implementation of those measures. By taking actions to enhance its leadership and coordination
of public health emergencies, HHS will be better positioned to help the nation more eﬀectively
prepare for, and respond to, future public health emergencies in a timely and eﬀective manner.

Selected Related GAO Products
COVID-19: HHS and DOD Transitioned Vaccine Responsibilities to HHS, but Need to Address Outstanding
Issues. GAO-22-104453. Washington, D.C.: January 19, 2022.

COVID-19: Agencies Are Taking Steps to Improve Future Use of Defense Production Act Authorities.
GAO-22-105380. Washington, D.C.: December 16, 2021.

308For example, see White House, American Pandemic Preparedness: Transforming Our Capabilities (Washington, D.C.:
Sept. 2, 2021) and National Strategy for the COVID-19 Response and Pandemic Preparedness (Washington, D.C.: Jan. 21,
2021).

Page 200 GAO-22-105291
Biodefense: After-Action Findings and COVID-19 Response Revealed Opportunities to Strengthen
Preparedness. GAO-21-513. Washington, D.C.: August 4, 2021.

COVID-19: HHS Should Clarify Agency Roles for Emergency Return of U.S. Citizens during a Pandemic.
GAO-21-334. Washington, D.C.: April 19, 2021.

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

High-Risk Series: Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas.
GAO-21-119SP. Washington, D.C.: March 2, 2021.

Public Health Preparedness: HHS Should Take Actions to Ensure It Has an Adequate Number of
Eﬀectively Trained Emergency Responders. GAO-20-525. Washington, D.C.: June 18, 2020.

National Biodefense Strategy: Additional Eﬀorts Would Enhance Likelihood of Eﬀective Implementation.
GAO-20-273. Washington, D.C.: February 19, 2020.

Disaster Response: HHS Should Address Deﬁciencies Highlighted by Recent Hurricanes in the U.S. Virgin
Islands and Puerto Rico. GAO-19-592. Washington, D.C.: September 20, 2019.

2017 Hurricanes and Wildﬁres: Initial Observations on the Federal Response and Key Recovery
Challenges. GAO-18-472. Washington, D.C.: September 4, 2018.

Infectious Disease Threats: Funding and Performance of Key Preparedness and Capacity-Building
Programs. GAO-18-362. Washington, D.C.: May 24, 2018.

Public Health Information Technology: HHS Has Made Little Progress toward Implementing Enhanced
Situational Awareness Network Capabilities. GAO-17-377. Washington, D.C.: September 6, 2017.

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.

Inﬂuenza Pandemic: Lessons from the H1N1 Pandemic Should Be Incorporated into Future Planning.
GAO-11-632. Washington, D.C.: June 27, 2011.

Public Health Information Technology: Additional Strategic Planning Needed to Guide HHS’s Eﬀorts to
Establish Electronic Situational Awareness Capabilities. GAO-11-99. Washington, D.C.: December 17,
2010.

Inﬂuenza Pandemic: Further Eﬀorts Are Needed to Ensure Clearer Federal Leadership Roles and an
Eﬀective National Strategy. GAO-07-781. Washington, D.C.: August 14, 2007.

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

Page 201 GAO-22-105291
Appendix III: Highlights Pages from Recently Issued GAO
COVID-19 Products

Aviation Industry Recovery
We issued COVID-19 Pandemic: Observations on the Ongoing Recovery of the Aviation Industry,
GAO-22-104429, on October 21, 2021.

Page 202 GAO-22-105291
Page 203 GAO-22-105291
Federal Workplace Reentry
We issued COVID-19: Federal Agencies’ Initial Reentry and Workplace Safety Planning, GAO-22-104295,
on October 25, 2021.

Page 204 GAO-22-105291
Hiring Authorities
We issued Federal Hiring: OPM Should Collect and Share COVID-19 Lessons Learned to Inform Hiring
during Future Emergencies, GAO-22-104297, on October 25, 2021.

Page 205 GAO-22-105291
Emergency Relief to Tribes
We issued COVID-19: Lessons Learned from Interior and Treasury’s Administration of CARES Act Funds
Could Improve Federal Emergency Relief to Tribes, GAO-22-104349, on October 29, 2021.

Page 206 GAO-22-105291
State Department Repatriation Eort
We issued COVID-19: State Carried Out Historic Repatriation Eﬀort but Should Strengthen Its
Preparedness for Future Crises, GAO-22-104354, on November 2, 2021.

Page 207 GAO-22-105291
Vaccine Distribution and Communication
We issued COVID-19: HHS Agencies’ Planned Reviews of Vaccine Distribution and Communication Eﬀorts
Should Include Stakeholder Perspectives, GAO-22-104457, on November 4, 2021.

Page 208 GAO-22-105291
Election Assistance Commission Grants
We issued Election Assistance Commission: Assessment of Lessons Learned Could Improve Grants
Administration, GAO-22-104313, on November 8, 2021.

Page 209 GAO-22-105291
Vaccine Development
We issued Vaccine Development: Capabilities and Challenges for Addressing Infectious Diseases,
GAO-22-104371, on November 16, 2021.

Page 210 GAO-22-105291
Page 211 GAO-22-105291
Defense Production Act Loans
We issued U.S. International Development Finance Corporation: Actions Needed to Improve
Management of Defense Production Act Loan Program, GAO-22-104511, on November 17, 2021.

Page 212 GAO-22-105291
VA Supply Chain
We issued VA Acquisition Management: Fundamental Challenges Could Hinder Supply Chain
Modernization Eﬀorts If Not Addressed, GAO-22-105483, on November 18, 2021.

Page 213 GAO-22-105291
Behavioral Health and COVID-19
We issued Behavioral Health and COVID-19: Higher-Risk Populations and Related Federal Relief
Funding, GAO-22-104437, on December 10, 2021.

Page 214 GAO-22-105291
Services for Older Adults
We issued COVID-19: Selected States Modiﬁed Meal Provision and Other Older Americans Act Services to
Prioritize Safety, GAO-22-104425, on December 15, 2021.

Page 215 GAO-22-105291
Improving USAspending.gov
We issued Federal Spending Transparency: Opportunities Exist for Treasury to Further Improve
USAspending.gov’s Use and Usefulness, GAO-22-104127, on December 16, 2021.

Page 216 GAO-22-105291
Defense Production Act Authorities
We issued COVID-19: Agencies Are Taking Steps to Improve Future Use of Defense Production Act
Authorities, GAO-22-105380, on December 16, 2021.

Page 217 GAO-22-105291
Housing Finance Vulnerabilities
We issued Housing Finance System: Future Reforms Should Consider Past Plans and Vulnerabilities
Highlighted by Pandemic, GAO-22-104284, on January 13, 2022.

Page 218 GAO-22-105291
Page 219 GAO-22-105291
HHS-DOD COVID-19 Countermeasures Acceleration Group
We issued COVID-19: HHS and DOD Transitioned Vaccine Responsibilities to HHS, but Need to Address
Outstanding Issues, GAO-22-104453, on January 19, 2022.

Page 220 GAO-22-105291
International Humanitarian Assistance
We issued COVID-19: Better USAID Documentation and More-Frequent Reporting Could Enhance
Monitoring of Humanitarian Eﬀorts, GAO-22-104431, on January 26, 2022.

Page 221 GAO-22-105291
Appendix IV: List of Ongoing GAO Work Related to COVID-19
as of December 28, 2021
Agencies' Readiness and Use of Telework for COVID-19 Response

Aviation Contact Tracing

CARES Act Assistance to Farmers

U.S. Customs and Border Protection Trade Facilitation during COVID-19

COVID-19 Diagnostic Testing

COVID-19 Disparities

COVID-19 in Nursing Homes: Data and Challenges

COVID-19 in Nursing Homes: Federal Policies

COVID-19 Meat and Poultry Worker Safety

COVID-19 Unemployment Assistance for Contingent Workers

COVID-19 Vaccine Allocation Methodology

COVID-19: Employer Tax Provisions

COVID-19: State Department Overseas Operations

Department of Defense Advance and Progress Payments during the COVID-19 National Emergency

Election Administration during the COVID-19 Pandemic

Emergency Rental Assistance Program

Financial Regulatory Oversight during COVID-19

Fraud Risks in Small Business Administration (SBA) Pandemic Relief Programs

Health Insurance Loss

Department of Health and Human Services (HHS) High-Risk Research Oversight

HHS Medicare Telehealth Waivers for COVID-19

HHS Public Relations Campaign

HHS's Public Health Situational Awareness Capability

Page 222 GAO-22-105291
Indian Health Service Response to COVID-19

K-12 Disconnected Students during the COVID-19 Pandemic

Medicaid Telehealth during COVID-19

Medical Surge Readiness

Oversight of Emergency Rental Assistance Program

Oversight of Unemployment Insurance during COVID-19

Pandemic Learning Loss

Political Interference at Selected HHS Agencies

Post-COVID-19 Federal Space Planning

Regulatory Flexibilities for COVID-19 Response

SBA Assistance to Venues

SBA Restaurant Revitalization Fund

Scientiﬁc Integrity at Selected HHS Agencies

Social Security Administration Service Delivery during COVID-19

State Small Business Credit Initiative Funds for COVID-19 Response

Strategic National Stockpile Contents and Management Review

Tax Policy Eﬀects on Businesses by Sex, Race, and Ethnicity

Tax Policy Eﬀects on Households by Sex, Race, and Ethnicity

Tribal Epidemiological Data Access

Transportation Security Administration COVID-19-related Directives for Transportation Systems

Unemployment Insurance Risks and Transformation

Page 223 GAO-22-105291
Appendix V: Comments from the Internal Revenue Service

Page 224 GAO-22-105291
Page 225 GAO-22-105291
Appendix VI: Comments from the Department of the Treasury

Page 226 GAO-22-105291
Contacts
Report Director(s)
Jessica Farb
Managing Director, Health Care, (202) 512-7114, farbj@gao.gov

Congressional Relations
A. Nicole Clowers, Managing Director, clowersa@gao.gov, (202) 512-4400

Public Aairs
Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

Strategic Planning and External Liaison
Stephen J. Sanford, Managing Director,spel@gao.gov, (202) 512-4707

Obtaining Copies of GAO Reports and Testimony
The fastest and easiest way to obtain copies of GAO documents at no cost is through our website. Each
weekday afternoon, GAO posts on its website newly released reports, testimony, and correspondence. You
can also subscribe to GAO’s email updates to receive notiﬁcation of newly posted products.

Order by Phone
The price of each GAO publication reﬂects GAO’s cost of production and distribution. Pricing and ordering
information is posted on our website.

To Report Fraud, Waste, and Abuse in Federal Programs
Website: http://www.gao.gov/fraudnet/fraudnet.htm
Automated answering system: (800) 424-5454 or (202) 512-7470

Connect with GAO
Connect with GAO on Facebook, Flickr, LinkedIn, Twitter, and YouTube. Subscribe to our RSS Feeds or E-mail
updates. Listen to our Podcasts. Visit GAO on our website and read the Watchblog.

(105291) Page 227 GAO-22-105291

File and source

File: 22-105291-significant-improvements-overseeing-relief-jan2022.pdf
Size: 12,428,522 bytes
SHA-256: bf5c37d7cd99e9e1206ee5a0a40ca6826a8627307c63a35147b11d2f0dc24fac
Our copy: 22-105291-significant-improvements-overseeing-relief-jan2022.pdf
Original: www.gao.gov