The recording and broadcast radio industries touch the lives of most Americans through the development and distribution of music. Congress is considering legislation, the proposed Performance Rights Act (H.R. 848), that would expand copyright protection for the public performance of sound recordings. The proposed act would require AM/FM radio stations that broadcast music to pay a royalty, and this royalty would be distributed to the copyright holder, performers, and musicians. This report addresses (1) the benefits received by the recording and broadcast radio industries from their current relationship, (2) the possible effects of the proposed act on the broadcast radio industry, and (3) the possible effects of the proposed act on the recording industry. To address these objectives, GAO analyzed data on music sales, broadcast radio airplay, and broadcast radio stations' revenues; calculated potential royalty payments; and interviewed stakeholders from both industries as well as experts and government officials. The Federal Communications Commission (FCC) and the U.S. Copyright Office of the Library of Congress reviewed a draft of this report. FCC noted that it has an interest in legislation that might have an adverse impact on radio stations. The Copyright Office addressed certain methodological approaches and findings in our draft report. Broadcast radio benefits from the use of sound recordings to generate advertising revenue and the recording industry may benefit from radio airplay that can promote sales. Radio stations use sound recordings to attract listeners and generate revenue from advertisers. GAO found that, on average, radio stations with a music format generate $225,000 more in annual revenues than nonmusic stations, such as talk or sports stations. Stations serving large populations receive more revenue from music content compared to stations serving a small population. Most industry stakeholders believe that radio airplay promotes sales for the recording industry, and past and current business practices support this conclusion. However, GAO found the relationship between airplay and music sales to be unclear. The presence of other promotional outlets, such as the Internet and special events, and growth of music piracy create a more nuanced environment wherein the relationship between airplay and music sales is less clear than in the past. The proposed act would result in additional costs for the broadcast radio industry. Under the proposed act, the royalty paid by a radio station would vary according to the station's gross annual revenues and status as commercial or noncommercial. Because the royalty paid by some radio stations would be negotiated or determined subsequent to passage of the proposed act, the total cost to the broadcast radio industry, including the costs to minority and female radio station owners, cannot be determined at this time. If broadcast radio stations with revenues of $1.25 million or more pay a royalty based on a percentage of station revenues, every 1 percentage point would cost the broadcast radio industry $101 million per year. For example, a 2.35 percent rate paid by these stations would entail total annual costs to the radio industry of over $258 million. GAO also estimated that with a 2.35 percent rate, the 25 percent of stations with revenues of $1.25 million or more would pay over 90 percent of the total royalties. According to broadcast industry stakeholders, these costs could lead some stations to reduce staff, switch to a nonmusic format, or discontinue operations. The proposed act would result in additional revenue for recording industry stakeholders. Several factors would influence the revenues a stakeholder receives, including the total royalty payments, the stakeholder's role (copyright holder, performer, or musician), and the amount of airplay the stakeholder's music receives. Since the total royalty payments cannot be determined at this time, the additional revenue for recording industry stakeholders is also unknown. However, assuming a 2.35 percent royalty rate, GAO estimated that 56 percent of performers would receive $100 or less per year, and fewer than 6 percent of performers would receive $10,000 or more per year in royalties from airplay in the top 10 markets; music radio stations in these markets generate about 21 percent of industry revenues. Some experts and the Copyright Office believe that the additional revenue would promote investment in music and greater employment, although this opinion is not universally held.

As an important part of the economic stimulus efforts, Congress enacted the First- Time Homebuyer Credit (FTHBC) to assist the struggling real estate market and encourage taxpayers to purchase their first homes. Congress enacted different versions of the FTHBC--as part of the Housing and Economic Recovery Act of 2008 (Housing Act); the American Recovery and Reinvestment Act of 2009 (Recovery Act); and the Worker, Homeownership, and Business Assistance Act of 2009 (Assistance Act). The dollar amounts that can be claimed and rules associated with the credit, including potential repayment, vary depending on the version. Joint Committee on Taxation estimates suggest that the three FTHBC provisions combined may result in total revenue losses to the federal government of about $22 billion through 2019. In response to the request for updated information on the use of the FTHBC, our objectives were to identify (1) the number of FTHBC claims and dollar amounts claimed for each credit version by state and (2) state rankings, using selected statistics, such as the total dollar amount of FTHBC claimed in each state. Through July 3, 2010, IRS reported the following: (1) About 1 million claimants claimed $7.3 billion in interest-free loans through the Housing Act provision. These claimants will begin repaying their loan beginning next tax filing season, which starts in January 2011. (2) About 2.3 million claimants claimed a total of $16.2 billion using both the Recovery Act and Assistance Act provisions. Of these claimants: (1) About 1.7 million claimed about $12.1 billion using the Recovery Act provision This represents half of all claims, making it the most frequently used version of the FTHBC. (2) Nearly 600,000 claimed about $4.1 billion using the Assistance Act provision. Of these, close to 400,000 claimed about $2.9 billion using the first-time homebuyer option and nearly 200,000 claimed $1.2 billion using the long-time homeowner option. These numbers in particular are likely to increase because IRS is still processing FTHBC returns and this version can be claimed on tax returns filed during the 2011 filing season. State rankings vary depending on the statistic used for analysis and may change as IRS continues to process FTHBC returns. The three statistics we selected--total dollar amount claimed, dollar amount claimed per resident, and average dollar amount claimed per FTHBC claim--illustrate how the results can vary.10 Thus, as the following examples illustrate, care should be taken to select measures appropriate for a particular purpose. (1) California, the most populous state in the country, ranked 1st with the most FTHBC dollars claimed under the Housing Act provision, as well as under the combined provisions of the Recovery and Assistance Acts. However, California ranked 32nd and 29th in the amount of FTHBC claimed per resident under the Housing Act provision and under the combined provisions of the Recovery and Assistance Acts, respectively. (2) Nevada ranked 1st in the amount of FTHBC claimed per resident under the Housing Act provision, as well as under the combined provisions of the Recovery and Assistance Acts. However, Nevada ranked 26th and 24th in the amount of FTHBC dollars claimed under the Housing Act provision and under the combined provisions of the Recovery and Assistance Acts, respectively. (3) Utah ranked 1st in the average dollar amount of FTHBC claimed per claim under the Housing Act provision, as well as under the combined provisions of the Recovery and Assistance Acts. However, Utah ranked 29th and 30th in the amount of FTHBC dollars claimed under the Housing Act provision and under the combined provisions of the Recovery and Assistance Acts, respectively. We are not making any recommendations, as, at our request, IRS took action during our review to segregate data by credit version which should provide more accurate information as a basis for more effective enforcement. Having FTHBC data in this format is critical for effective enforcement, since claimants are subject to different rules and requirements depending on the version of the credit.

The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides $70.3 billion for three education programs--the State Fiscal Stabilization Fund (SFSF), Title I of the Elementary and Secondary Education Act (Title I), and Individuals with Disabilities Education Act (IDEA). The Act requires recipients to be accountable for how these funds are being used and what is being achieved. To help attain the level of transparency needed for accountability, recipients are to report quarterly on their award activities and expected outcomes. This information is available to the public on Recovery.gov, the government's official Recovery Act Web site. This report covers three Education programs funded by the Recovery Act. It (1) describes what the Office of Management and Budget (OMB) and the Department of Education (Education) did to facilitate implementation of requirements for recipients to describe the use of funds and (2) assesses the extent to which award descriptions are transparent It also describes reported fund uses for a sample of subrecipients. GAO reviewed requirements for reporting in the Act as well as guidance provided by OMB and Education. GAO assessed the transparency of descriptions for the three education programs on Recovery.gov. Both OMB and Education provided guidance to recipients on how to meet the Recovery Act requirement that they report quarterly on the amount and use of the funds they have received. OMB's guidance was generic for all agencies and instructed recipients to report narrative information that captures the overall purpose of the award, describes projects or activities, and states the expected results. Education's guidance was supplemental and program specific to its formula grants that pass through states as the prime recipient to subrecipients, which are local educational agencies (LEA) and institutions of higher education. However, the Recovery Act reporting system does not provide specific narrative fields for collecting information on how each subrecipient is using the funds. Instead, the states are tasked with reporting on fund use throughout the state, and the reporting system limits the amount of narrative information states may enter. For states with many subrecipients, including detailed information on how each subrecipient is using the funds would be extremely challenging, if not impossible. To ease the reporting burden for prime recipients, Education's guidance provided recipients with suggested standard language for use in important narrative fields. GAO determined that 9 percent of the descriptions fully met our transparency criteria; that is, they had sufficiently clear and complete information on the award's purpose, scope and nature of activities, location, cost, outcomes, and status of work. Most descriptions did not include sufficient information on local fund use. Specifically, while 13 percent had most but not all information, the remaining 78 percent contained much less information and only partially met attributes for transparency. We did not find any descriptions that did not include at least some of the information needed to inform the public. Descriptions limited to Education's standard language were less transparent than those with specific information on the programs and activities subrecipients conducted in the state. For example, officials from seven Texas LEAs told us they used ESEA Title I Recovery Act funds for technology purchases for at-risk students, although the information in Texas' project description uses only the standard language. Guidance on reporting requirements for Recovery Act grants that pass through a prime recipient to a subrecipient should balance the need for transparency with the reporting burden and these system limitations. While most states cannot provide information on how each subrecipient is using its funds, providing more information than Education's standard language, such as an overview analysis of how localities are spending the funds, could help the public gain a better understanding of how the funds are being used. GAO recommends that the Secretary of Education, in consultation with OMB, remove the suggested language for the project description field from its guidance and instruct states to include information, to the extent possible, on how the funds are being used and potential project outcomes or results.

The United States depends on avast network of pipelines to transport energy. GAO was asked to review the Transportation Security Administration's (TSA) efforts to help ensure pipeline security. This report addresses the extent to which TSA's Pipeline Security Division (PSD) has (1) assessed risk and prioritized efforts to help strengthen pipeline security, (2) implemented agency guidance and requirements of the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Commission Act) regarding pipeline security, and (3) measured its performance in strengthening pipeline security. GAO reviewed PSD's risk assessment process and performance measures and observed 14 PSD reviews and inspections scheduled during the period of GAO's review. Although these observations are not generalizable, they provided GAO an understanding of how PSD conducts reviews and inspections. PSD identified the 100 most critical pipeline systems and developed a pipeline risk assessment model based on threat, vulnerability, and consequence, but could improve the model's consequence component and better prioritize its efforts. The consequence component takes into account the economic impact of a possible pipeline attack, but not other possible impacts such as public health and safety, as called for in the Department of Homeland Security's (DHS) risk management guidance. PSD plans to improve its model by adding more vulnerability and consequence data, but has no time frames for doing so. Establishing a plan with time frames, as called for by standard management practices, could help PSD enhance the data in, and use of, its risk assessment model. Also, PSD procedures call for scheduling Corporate Security Reviews (CSR)--assessments of pipeline operators' security planning--based primarilyon a pipeline system's risk, but GAO's analysis of CSR data suggests a system's risk was not the primary consideration. Documenting a methodology for scheduling CSRs that includes how to balance risk with other factors could help PSD ensure it prioritizes its oversight of systems at the highest risk. PSD has taken actions to implement agency guidance that outlines voluntary actions for pipeline operators and 9/11 Commission Act requirements for pipeline security, but lacks a system for following up on its security recommendations to pipeline operators. PSD established CSR and Critical Facility Inspection (CFI) Programs in 2003 and 2008, respectively, and has completed CSRs of the 100 most at-risk systems, started conducting second CSRs, and completed 224 of 373 one-time CFIs. Both programs result in recommendations, but PSD does not generally send CSR recommendations to operators in writing or follow up to ensure that CSR and CFI recommendations were implemented. Standard project management practices call for plans that define approaches and start dates and Standards for Internal Control in the Federal Government calls for monitoring to ensure review findings are resolved. Developing a plan for how and when PSD will begin transmitting CSR recommendations to operators, and following up on CSR and CFI recommendations could better inform PSD of the state of pipeline security and whether operators have addressed vulnerabilities. PSD has taken steps to gauge its progress in strengthening pipeline security, but its ability to measure improvements is limited. In its pipeline security strategy, PSD does not include performance measures or link them to objectives, which GAO previously identified as desirable in security strategies. In addition, PSD developed performance measures, including one outcome measure to gauge its efforts to help operators reduce vulnerabilities identified in CSRs. However, the outcome measure does not link to all three of PSD's objectives and provides limited information on improvements in areas such as physical security. According to DHS risk management guidance, outcome measures should link to objectives. Including measures linked to objectives in its strategy and developing more outcome measures directly linked to all of its objectives could help PSD improve accountability and assess improvements. GAO recommends that TSA, among other things, establish time frames for improving risk model data, document its method for scheduling reviews, develop a plan for transmitting recommendations to operators, follow up on its recommendations, include performance measures linked to objectives in its pipeline strategy, and develop more outcome measures. DHS concurred with the recommendations and discussed planned actions, but not all will fully address the recommendations, as discussed in the report.

The Navy's Littoral Combat Ship (LCS) is envisioned as a reconfigurable vessel able to meet three missions: surface warfare, mine countermeasures, and anti-submarine warfare. It consists of the ship (seaframe) and the mission package it carries and deploys. The Navy plans to invest over $25 billion through fiscal year 2035 to acquire LCS. However, recurring cost growth and schedule delays have jeopardized the Navy's ability to deliver promised LCS capabilities. Based on a congressional request, GAO (1) identified technical, design, and construction challenges to completing the first four ships within current cost and schedule estimates, (2) assessed the Navy's progress developing and fielding mission packages, and (3) evaluated the quality of recent Navy cost analyses for seaframes and their effect on program progress. GAO's findings are based on an analysis of government and contractor-generated documents, and discussions with defense officials and key contractors. This product is a public version of a For Official Use Only report, GAO-10-1006SU, also issued in August 2010. The Navy faces technical, design, and construction challenges to completing the first four seaframes within current cost and schedule estimates. The Navy and its shipbuilders have learned lessons from construction of the first two seaframes that have positioned them to more effectively construct future vessels. However, technical issues with the first two seaframes have yet to be fully resolved. Addressing these technical issues has required the Navy to implement design changes at the same time LCS 3 and LCS 4 are being built. Incorporating changes during this phase will likely require additional labor hours beyond current forecasts. Together, these challenges may hinder the ability of shipbuilders to apply lessons learned to follow-on ships and could undermine anticipated benefits from recent capital investments in the LCS shipyards. Challenges developing mission packages have delayed the timely fielding of promised capabilities, limiting the ships' utility to the fleet during initial deployments. Until these challenges are resolved, it will be difficult for the Navy to align seaframe purchases with mission package procurements and execute planned tests. Key mine countermeasures and surface warfare systems encountered problems in operational and other testing that delayed their fielding. For example, four of six Non-Line-of-Sight Launch System missiles did not hit their intended targets in recent testing, and the Department of Defense has since canceled the program. Further, Navy analysis of anti-submarine warfare systems has shown the planned systems do not contribute significantly to the anti-submarine warfare mission. These combined challenges have led to procurement delays for all three mission packages. Mission package delays have also disrupted program test schedules--a situation exacerbated by early deployments of initial ships--limiting their availability for operational testing. In addition, these delays could disrupt program plans for simultaneously acquiring seaframes and mission packages. Until mission packages are proven, the Navy risks investing in a fleet of ships that does not deliver promised capability. The Navy entered contract negotiations in 2009 for fiscal year 2010 funded seaframes with an incomplete understanding of LCS program costs. These contract negotiations proved unsuccessful, prompting the Navy to revise its acquisition strategy for the program. The contractors' proposals for construction of the next three ships exceeded the approximate $1.4 billion in funds the Navy had allocated in its fiscal year 2010 budget. In response, the Navy revised its strategy to construct one seaframe design instead of two for fiscal year 2010 ships and beyond in an effort to improve affordability. Navy cost analyses completed prior to the failed negotiations in 2009 lack several characteristics essential to a high-quality cost estimate. These characteristics include the completion of sensitivity and uncertainty analyses and an independent review of the cost estimate. The Navy plans to complete a more comprehensive cost estimate before award of additional ship contracts in 2010. GAO recommends the Secretary of Defense take actions to ensure more realistic cost estimates, timely incorporation of design changes, and coordination of seaframe and mission package acquisition. The Department of Defense concurred with each of these recommendations.

Since the recent recession, policymakers have emphasized the role exports can play in strengthening the U.S. economy and in creating higher paying jobs. In March 2010 the President signed an Executive Order creating the National Export Initiative (NEI), with a goal of doubling U.S. exports in 5 years. However, since 2004 the workforce of the U.S. and Foreign Commercial Service (CS) has shrunk, calling into question the ability of this key agency to increase its activities to assist U.S. businesses with their exports. In response to a conference committee mandate, GAO reviewed (1) how well CS managed its resources from 2004 to 2009, and (2) the completeness of CS's workforce plans and the quality of its fiscal year 2011 budget request. GAO analyzed data from the Departments of Agriculture, Commerce, and State; reviewed agency documents; and interviewed agency officials. CS had management control weaknesses over its resources from 2004 to 2009. During this period, CS's budgets remained essentially flat as per capita personnel costs and administrative costs increased. However, CS leadership did not recognize the long-term implications of these changes because it lacked key financial and workforce information and risk analysis necessary for good management control. CS continued to pay fees associated with positions it maintained in U.S. embassies that were vacant but not officially eliminated. As CS's financial constraints grew, officials delayed their impact by using a variety of financial management practices. For example, the International Trade Administration (ITA), CS's parent agency, attributed some of CS's centralized costs to other units. However, as the availability of offsetting funds declined and costs continued growing, CS leadership failed to recognize the risks from these changes in accordance with good management controls, and reached a "crisis" situation in 2009. Officials froze hiring, travel, training, and supplies, compromising CS's ability to conduct its core business. CS's workforce declined by about 14 percent from its peak level in 2004 through attrition--affecting the mix and distribution of personnel. CS intends to rebuild its workforce but lacks key planning elements for doing so, and its budget request has weaknesses that could affect its ability to meet its goals. CS will have a central role in implementing the NEI. The President's 2011 budget requested $321 million for CS, $63 million more than its 2010 appropriation. The budget would fund a major staff increase. CS is allocating $5.2 million of its 2010 appropriation to begin recruiting new staff. However, as new executive-level leadership was arriving, GAO found that CS lacked key planning elements, including a clear sense of strategic direction and an analysis to determine its workforce needs. Also, it had not updated its workforce plans to address staffing gaps since fiscal year 2007. Adding more staff could be delayed because CS's human resources office is itself understaffed and because CS requires up to 2 years to hire and train new Foreign Service Officers. GAO also found that the 2011 budget request, though sound in many respects, has weaknesses; it lacks some documentation, and it lacks risk analysis and contingency plans for highly variable program costs, which could lead to cost overruns. GAO recommends to the Secretary of Commerce that CS (1) strengthen management controls, (2) improve workforce planning, and (3) improve cost estimating related to CS's budget estimate. Commerce agreed with our findings and recommendations.

In 2009, the Department of Veterans Affairs (VA) spent nearly $4 billion on prescriptions for veterans. In general, VA provides drugs on its national formulary. However, all VA medical centers must have a nonformulary drug request process that is overseen by their regional Veterans Integrated Service Network (VISN). This report responds to a House Committee on Appropriations report directing GAO to review VA's formulary process and to an additional congressional request. Specifically, GAO reviewed (1) the process VA uses to review drugs for its national formulary, (2) the approaches VISNs and medical centers take to implementing the nonformulary drug request process, (3) the extent to which VA ensures the timely adjudication of nonformulary drug requests, and (4) the mechanisms VA has in place to obtain beneficiary input on the national formulary and make the drug review process transparent. GAO reviewed VA policy guidance and VA's pharmacy-related information technology (IT) initiatives, analyzed 2008 and 2009 drug review data and 2009 nonformulary drug request data, and interviewed VA officials from the national level, each VISN, and a judgmental sample of four medical centers. VA uses a standardized process to review drugs for its national formulary that is coordinated at the national level by its Pharmacy Benefits Management Services (PBM). The Chief Consultant from VA's PBM told us that most drug reviews are initiated in response to FDA's approval of drugs for use on the market. To begin the process of deciding whether to include a drug on the national formulary, PBM develops evidence-based drug monographs that include information on safety, efficacy, and cost. PBM seeks comments on these monographs from VISN and medical center staff and, when appropriate, subject-matter experts. Once a monograph is complete, PBM sends it to its Medical Advisory Panel and the VISN Pharmacist Executive Committee, which review the monograph and vote on whether to add the drug to the national formulary. According to information provided by PBM, reviews for a majority of the drugs VA considered for addition to the national formulary in 2008 and 2009 were completed within a year of FDA approval, but there were a number of factors, such as safety concerns, that caused some to take longer. VISNs and medical centers vary in how they implement the nonformulary drug request process, including how they adjudicate nonformulary drug requests, collect and report required data to VA's PBM, and address appeals of denied requests. GAO found that IT enhancements could help facilitate more consistent implementation of the process. Although VA is working on replacing its pharmacy IT system, officials could not tell GAO whether components that would support the nonformulary drug request process will be implemented. VA requires that nonformulary drug requests be adjudicated within 96 hours, but it is unable to determine the total number of adjudications that exceed this standard due to limitations in the way data are collected, reported, and analyzed. While the total number of nonformulary drug request adjudications that exceed 96 hours is unknown, GAO found that data reported to VA's PBM on quarterly average adjudication times for medical centers are sufficient to demonstrate that not all requests are adjudicated within this time frame. Additionally, PBM does not have the framework in place to ensure that appeals of denied nonformulary drug requests are resolved in a timely fashion. VA obtains input from beneficiaries on the national formulary mainly through Veterans Service Organization meetings and complaints, though some VISNs have taken additional steps to seek this input. Officials from VA's PBM told GAO that they make the drug review process transparent to veterans through national formulary information available on PBM's Web site, and some VISN and medical center officials described undertaking other activities to educate beneficiaries. At the national level, VA officials are considering options for increasing beneficiary input on the national formulary and improving the transparency of the drug review process, and most VISN and medical center officials told us there could be benefit to doing so. GAO recommends that VA establish additional mechanisms to ensure nonformulary drug requests are adjudicated in a timely fashion. VA concurred with this recommendation.

Residents of the Gulf Coast continue to struggle to recover almost 5 years after Hurricanes Katrina and Rita devastated the area in August and September of 2005. In many cases the federal government coordinates with, and provides support to, nonprofit organizations in order to deliver recovery assistance to impacted residents. A better understanding of how the federal government works with nonprofit organizations to provide such assistance may be helpful for recovery efforts on the Gulf Coast as well as for communities affected by major disasters in the future. GAO was asked to describe (1) how the federal government has worked with nonprofit organizations to facilitate Gulf Coast recovery following the 2005 hurricanes and (2) steps the federal government has taken to address challenges to strengthen relationships with nonprofits in the future. Toward this end, GAO reviewed the applicable disaster recovery literature and relevant supporting documents. GAO also interviewed officials from federal, state, and local governments as well as a wide range of nonprofit officials involved in Gulf Coast recovery. The federal government used a variety of direct and indirect funding programs to support the delivery of human recovery services by nonprofit organizations following Hurricanes Katrina and Rita in areas such as housing, long-term case management, and health care. These programs included well-established grants such as the Department of Health and Human Services' (HHS) Temporary Assistance for Needy Families and its Social Services Block Grant, as well as the Department of Housing and Urban Development's (HUD) Community Development Block Grant. Programs established in the wake of the 2005 hurricanes also provided funding to nonprofits offering recovery services. These included HHS's Primary Care Access and Stabilization Grant and HUD's Disaster Housing Assistance Program. The federal government also supported nonprofit organizations through coordination and capacity building. For example, the Federal Emergency Management Agency (FEMA) used Voluntary Agency Liaisons (VAL) to help establish and maintain working relationships between nonprofits and FEMA as well as other federal, state, and local agencies. The Office of the Federal Coordinator for Gulf Coast Rebuilding in the Department of Homeland Security provided a variety of assistance to nonprofits including problem identification, information sharing, and networking. Other federal agencies also worked to bolster the capacity of nonprofits by providing temporary staff, training, and technical assistance to nonprofit organizations. The federal government is taking steps to address several challenges and strengthen its relationship with nonprofit organizations providing recovery assistance. For example, nonprofit officials GAO spoke with cited challenges with the federal disaster grant process including what they viewed to be complicated record keeping and documentation procedures as well as other requirements to obtain aid. A report issued earlier this year by the President's Advisory Council for Faith-Based and Neighborhood Partnerships recognized the need to ease the administrative burden on nonprofits and contains specific recommendations for action. In an effort to make it easier for nonprofits with limited financial resources to obtain the services of AmeriCorps workers, the Corporation for National and Community Service waived the usual matching requirements in the wake of the 2005 hurricanes. In addition, FEMA is taking steps to address challenges regarding the training of its VAL staff. Following an earlier GAO recommendation that VALs could benefit from additional training regarding federal recovery resources, FEMA issued a VAL handbook and is developing several VAL training courses that it expects to implement by the end of 2010. Finally, although there has been a lack of specific guidance regarding the role of nonprofits in disaster recovery, the federal government has taken steps to address this gap. FEMA and HUD have led a multi-agency effort that resulted in the development of a draft National Disaster Recovery Framework. Among other things, this framework contains specific information about the roles and responsibilities of nonprofits in disaster recovery. GAO is not making new recommendations in this report but discusses the implementation status of a relevant prior recommendation.

The development of oil and natural gas resources on federal lands contributes to domestic energy production but also results in concerns over potential impacts on those lands. Numerous public protests about oil and gas lease sales have been filed with the Bureau of Land Management (BLM), which manages these federal resources. GAO was asked to examine (1) the extent to which BLM maintains and makes publicly available information related to protests, (2) the extent to which parcels were protested and the nature of protests, and (3) the effects of protests on BLM's lease sale decisions and on oil and gas development activities. To address these questions, GAO examined laws, regulations, and guidance; BLM's agencywide lease record-keeping system; lease sale records for the 53 lease sales held in the four BLM state offices of Colorado, New Mexico, Utah, and Wyoming during fiscal years 2007-2009; and protest data from a random sample of 12 of the 53 lease sales. GAO also interviewed BLM officials and industry and protester groups. While BLM has taken steps to collect agency-wide protest data, the data it maintains and makes publicly available are limited. Although in 2007 BLM required its staff to begin using a module, added to its lease record-keeping system, to capture information related to lease sale protests, GAO found that the information BLM collected was incomplete and inconsistent across the four reviewed BLM state offices and, thus, of limited utility. Moreover, in the absence of a written BLM policy on protest-related information the agency is to make publicly available during the leasing process, each state office developed its own practices, resulting in state-by-state variation in what protest-related information was made available. As a result, protester groups expressed frustration with both the extent and timing of protest-related information provided by BLM. In May 2010, the Secretary of the Interior announced several agency-wide leasing reforms that are to take place at BLM. Some of these reforms may address concerns raised by protester groups, by providing earlier opportunities for public input in the lease sale process, thereby potentially giving stakeholders more time to assess parcels and decide whether to file a protest. A diverse group of entities protested the majority of parcels BLM identified in its lease sale notices during fiscal years 2007 through 2009 in the four states, for a variety of reasons. GAO found that 74 percent of parcels whose leases were sold competitively during this period by BLM state offices in Colorado, New Mexico, Utah, and Wyoming were protested. In examining a random sample of lease sales, GAO found that protests came from various entities, including nongovernmental organizations representing environmental and hunting interests, state and local governments, businesses, and private individuals. Their reasons for protesting ranged from concerns over wildlife habitat to air or water quality to loss of recreational or agricultural land uses. The extent to which protests influenced BLM's leasing decisions could not be measured because BLM's information does not include the role protests played in its decisions to withdraw parcels from lease sale. Regardless, BLM officials stated that the protest process can serve as a check on agency decisions to offer parcels for lease. In reviewing BLM's lease sale data in the four selected states during fiscal years 2007 through 2009, GAO found that 91 percent of the time, BLM was unable to issue leases on protested parcels within the 60-day window specified in the Mineral Leasing Act. Industry groups expressed concern that these delays increased the cost and risk associated with leasing federal lands. GAO found that, despite industry concerns, protest activity and delayed leasing have not significantly affected bid prices for leases; if protests or subsequent delays added significantly to industry cost or risk, it would be expected that the value of, and therefore bids for, protested parcels would be reduced. In addition, because federal lands account for a small fraction of the total onshore and offshore nationwide oil and gas output, the effects of protests to BLM leasing decisions on U.S. oil and gas production are likely to be relatively modest. GAO recommends that BLM (1) revisit the way it tracks protest information and in so doing ensure that complete and consistent information is collected and made publicly available and (2) improve the transparency of leasing decisions and the timeliness of lease issuance. Interior concurred with GAO's recommendations.

Before approving a new drug, the Food and Drug Administration (FDA)--an agency of the Department of Health and Human Services (HHS)--assesses a drug's effectiveness. To do so, it examines information contained in a new drug application (NDA), including data from clinical trials in humans. Several types of trials may be used to gather this evidence. For example, superiority trials may show that a new drug is more effective than an active control--a drug known to be effective. Non-inferiority trials aim to demonstrate that the difference between the effectiveness of a new drug and an active control is small--small enough to show that the new drug is also effective. Drugs approved on this basis may provide important benefits, such as improved safety. Because non-inferiority trials are difficult to design and interpret, they have received attention within the research community and FDA. FDA has issued guidance on these trials. GAO was asked to examine FDA's use of non-inferiority trial evidence. This report (1) identifies NDAs for new molecular entities--potentially innovative new drugs not FDA-approved in any form--that included evidence from non-inferiority trials, (2) examines the characteristics of these trials, and (3) describes FDA's guidance on these trials. GAO reviewed NDAs submitted to FDA between fiscal year 2002 (the first full year that FDA documentation was available electronically) and fiscal year 2009 (the last full year of submissions), examined FDA's guidance, and interviewed agency officials. Evidence from non-inferiority trials was included in about one-quarter, or 43, of the 175 NDAs for new molecular entities that were submitted to FDA for review from fiscal years 2002 through 2009. Many of these applications were for antimicrobial drugs, such as those treating bacterial, viral, and fungal infections. As of December 31, 2009, FDA approved 18 of the 43 NDAs on the basis of evidence from non-inferiority trials. Of the remaining 25 NDAs, FDA approved 11 based on other evidence, such as proof that the new drug was more effective than a placebo (no treatment), and decided not to approve 14. The non-inferiority trials included in these NDAs varied with respect to their characteristics. FDA generally requires sponsors to provide evidence of a drug's effectiveness as shown in more than one trial. For the 18 NDAs that were approved based on evidence from non-inferiority trials, the number of non-inferiority trials used to provide primary support for approval ranged from one to four, with an average of 2 such trials per NDA. Half of these applications included non-inferiority trials that tested the effectiveness of the new drug against more than one active control. The non-inferiority margins--the maximum clinically acceptable extent to which the new drug can be less effective than the active control and still show evidence of an effect--ranged from 5 to 20 percent among trials that supported approval. Among the other 25, FDA identified nine NDAs that included poorly designed non-inferiority trials which did not provide primary evidence for approval. Some of these problems included an inappropriate selection of an active control and an improper calculation of a non-inferiority margin. FDA notified sponsors of its concerns with the poorly designed trials prior to the sponsors' submissions of all NDAs that included such trials. In March 2010 FDA issued draft guidance which focused solely on the use of non-inferiority trials. This guidance presents detailed and comprehensive recommendations on how non-inferiority trials may be used to provide evidence of a drug's effectiveness. For example, it provides advice on how to select an active control and how to set the non-inferiority margin, as well as how to interpret the trials. This guidance offers broad, generally applicable recommendations to supplement indication-specific guidance documents that FDA had previously issued. These indication-specific guidance documents include FDA's advice on many issues related to the development of drugs for particular indications, some of which are related to the use of non-inferiority trials. GAO's review of FDA's guidance showed that the agency has become more conservative in allowing evidence from non-inferiority trials to demonstrate a drug's effectiveness. First, FDA has limited the indications for which these trials may be used. Second, the agency has also become more rigorous in its review of evidence from non-inferiority trials. We sent a draft of this report to HHS for review. HHS provided us with technical comments, which we incorporated as appropriate.