GAO Identifies Federal Response Challenges to the Pandemic

Key Takeaways:

• In response to a CARES Act mandate, the GAO issued a report detailing federal response efforts and lessons learned to the COVID-19 pandemic.
• Among the challenges identified by the GAO in the federal response is the lack of transparency, consistency, preparedness and detail among agencies in several COVID-19 relief programs.
• The GAO provides recommendations to Congress and federal agencies to establish clear goals and defined processes to improve response and recovery efforts to the ongoing pandemic.

The onset of the COVID-19 global pandemic in the U.S. has prompted large, swift actions by the federal government in response to the virus. Several pieces of legislation, packed with trillions of dollars, have passed to provide economic and individual relief to the pandemic. As such, the Coronavirus Aid, Relief, and Economic Security (CARES) Act calls on the GAO to monitor and report on federal efforts related to COVID-19.

The U.S. watchdog agency released its first report in response to the directive, providing a comprehensive description of key federal actions taken in the pandemic as well as lessons learned.  

COVID-19 relief laws provided an estimated $2.6T to fund response and recovery efforts. The GAO report examines several federal programs comprised of $2.2T of this total, including:

• The Paycheck Protection Program (PPP)
• Economic Stabilization and Assistance to Distressed Sectors
• Unemployment Insurance
• Internal Revenue Service (IRS) Economic Impact Payouts
• Public Health and Social Services Emergency Fund
• Coronavirus Relief Fund

In reviewing the above programs, the GAO identified several key challenges in various areas of federal response to COVID-19:

The Department of Health and Human Services (HHS) experienced several issues with its initial COVID-19 public health response. Specifically, data sets out of the Centers for Disease Control and Prevention (CDC) providing key statistics on the effects and spread of the virus were incomplete and inconsistent. CDC lacked initial interoperability with state and local systems. Moreover, states and localities measured the effects of the virus differently, producing unreliable data.

Lack of intergovernmental coordination, efficiency and program integrity hindered quick delivery of services to the American people. In particular, the Treasury department and the Internal Revenue Service (IRS) face increasing risk in making improper payments to ineligible individuals and to fraud. In fact, the Treasury Inspector General for Tax Administration found almost 1.1M payments totaling $1.4B had gone to the deceased, as of April 30.

In terms of unemployment insurance and nutrition assistance programs, several outdated state systems prevented efficient processing of large volumes of claims. Furthermore, the GAO found a lack of experience among staff to process the claims. Both findings also increase the risk of improper payments.

The GAO also found that unintentional overlaps likely occurred with unemployment and PPP benefits due to lack of coordination with state unemployment agencies on the risk of improper payments related to these specific loans.

Quick turnaround in making loans led to gaps in thorough and timely information to recipients. Upon issuance of PPP loans, the Small Business Administration (SBA) presented itself unprepared in standardizing guidance for unprecedented economic relief. As a result, SBA issued 18 interim final rules and 17 updates to its frequently asked questions, as of June 15.

GAO Recommendations

Based on these findings, GAO pointed out lessons learned in the federal response to the COVID-19 pandemic. In general, the GAO advises agencies provide clear and consistent communication, strengthen mechanisms to drive reliable data for critical decision-making, and establish transparency and accountability processes in funding disbursements.

The GAO provides three specific action steps each for Congress and executive agencies to take in fulfilling a majority of its recommendations:

• Actions for Congressional Oversight:
  • Aviation Preparedness. Transportation lacks a national aviation-preparedness plan for communicable disease outbreaks; GAO recommends Congress require the department to produce a plan.
  • Full Access to Death Data. Treasury (specifically the Bureau of Fiscal Service) does not have full access to the Social Security Administration’s set of death records. GAO recommends Congress give Treasury that access authority.
  • Fiscal Assistance through Medicaid. The Federal Medical Assistance Percentage (FMAP) formula, which matches federal spending with state in Medicaid Services, is not sufficient during economic crises. GAO recommends Congress use a formula to provide targeted assistance during economic downturns.
• Actions for Executive Agencies:
  • Improper Unemployment Payments. The GAO recommends that Labor, in coordination with the Small Business Administration and Treasury, provide guidance to state unemployment agencies on the risk of improper payments related to unemployment and PPP loans.
  • Ineligible Payment Return Notification. The IRS has yet to provide notification to ineligible recipients on how to return payments. GAO recommends IRS consider cost-effective options for notification.
  • Risks in the PPP. GAO recommends the SBA develop and implement plans to identify and respond to PPP risks to achieve program effectiveness and minimize potential fraud in all loans.

The recent report by the GAO on federal COVID-19 response is the first in a series of bimonthly reports slated for release between June 2020 and March 2021, as mandated by the CARES Act. The agency also plans to release additional reports focusing on specific topics related to the ongoing national pandemic.