Context: As we have previously reported, 911 services have evolved from basic 911—which provided Americans with a universally recognized emergency number—to Enhanced 911 which also routes calls to the appropriate call center and provides information about the caller’s location and a call back number. NG911 represents the next evolution in 911 services by using IP-based technology to deliver and process 911 traffic. Under NG911, call centers will continue to receive voice calls and location information, but will also be able to accommodate emergency communications from the range of technologies in use today. In addition, NG911 systems provide call centers with enhanced capabilities to route and transfer calls and data, which could improve call centers’ abilities to handle overflow calls and increase information sharing with first responders. Generally speaking, 911 communications begin when a caller dials 911 using a landline, wireless, or Voice over Internet Protocol (VoIP) system. Once a 911 caller places an emergency call, a communications provider receives and routes the call to the appropriate call center, along with the caller’s phone number and location (i.e., street address for a landline caller, approximate geographic location for a wireless caller, and the subscriber’s address for VoIP). Calls and data may be routed to 911 call centers using legacy methods (i.e., routing calls across traditional telephone networks) or NG911 methods (i.e., routing calls and other data through IP-networks). Once the call reaches a call center, trained call takers and dispatchers determine the nature of the emergency and dispatch first responders, typically using a variety of equipment and systems, including call handling systems, mapping programs, and computer aided dispatch. Figure 1 illustrates the 911 communications and dispatch process. As illustrated in figure 1, NG911 systems use IP-networks capable of carrying voice plus large amounts of data. These emergency-services networks are typically deployed at the state or regional level with multiple call centers connecting to the network. However, the existence of an IP- network alone does not constitute an NG911 system. As defined by standards developed by the emergency communications community, an NG911 system should have the capability to, among other things: provide a secure environment for emergency communications; acquire and integrate additional data for routing and answering calls; process all types of emergency calls, including multimedia messages; transfer calls with added data to other call centers or first responders. While NG911 systems must possess certain capabilities, it is important to note that states and localities may make decisions about which capabilities they intend to use to best meet their needs. In addition, states and localities have the authority to make decisions about what NG911 equipment, systems, and vendors to use; thus, the configurations of these systems vary. According to a panel of experts convened by the National 911 Program, the transition to NG911 may require a variety of technical and operational changes to current 911 systems and processes. For example, technical changes can include upgrades to networks or installing new hardware or software in 911 call centers. Operational changes can include the need for additional training or the development of new policies and procedures (e.g., new procedures for processing or storing multimedia). These technical and operational changes may also have effects on 911 funding and state and local governance structures, which we will discuss in more detail later in this report. According to an FCC advisory body that examined NG911 systems architecture in 2016, while NG911 systems are implemented in a variety of ways at the state or local level, NG911 implementation can occur gradually and in phases. According to this model, NG911 implementation occurs on a continuum that begins with legacy 911 systems and ends with a fully deployed NG911 national end-state where all individual 911 call centers nationwide would be connected. The NG911 implementation model identifies activities that take place as part of the NG911 transition, many of which occur concurrently, such as: planning (e.g., conducting feasibility studies, preparing databases, establishing governance models); acquiring, testing, and implementing NG911 system elements (e.g., establishing an emergency-services IP-network, location-based call routing, processing multimedia); connecting call centers within a jurisdiction (i.e., jurisdictional end- state in which all call centers are fully NG911 operational, supported by agreements, policies, and procedures); and connecting NG911 systems nationwide (i.e., national end-state in which all call centers in the nation are fully NG911 operational, supported by agreements, policies, and procedures). In addition, because 911 services provide an essential function, the implementation of NG911 generally involves using both the legacy system and the NG911 system simultaneously for a period of time, according to the FCC advisory body, to ensure 911 services are not disrupted as new system elements are tested and implemented. Deploying and operating 911 is the responsibility of 911 authorities at the state and local level. As we have previously reported, all 50 states and the District of Columbia collect—or have authorized local entities to collect—funding for 911 from telephone service subscribers, and methods within each state for collecting funds vary. FCC, as required by statute, reports to Congress annually on the states’ collection and distribution of 911 fees and charges. There are approximately 6,000 call centers nationwide that process 911 calls, often at the county or city level, and these centers can vary greatly in size and technical sophistication. The state and local governance structures that oversee 911 operations also vary by location. For example, we previously reported that some states collect fees or charges for 911 and administer a statewide 911 program. Other states authorize local entities to collect fees or charges for 911 and administer 911 programs at the local level. Still other states use a combination of these approaches. According to a panel of experts convened by the National 911 Program, historically, 911 authority has been coordinated and maintained locally with no requirement to coordinate with other jurisdictions. However, the transition to NG911 enables connection of 911 systems. Thus, as previously mentioned, the NG911 transition may require technological and operational changes, as well as changes to 911 policies and governance responsibilities for states and localities. While deploying and operating 911 is the responsibility of entities at the state and local level, federal agencies—including NHTSA, NTIA, FCC, and DHS—have responsibilities to support state and local implementation, including through facilitating coordination of activities among 911 stakeholders and administering federal grants, for example: NHTSA houses the National 911 Program as part of its Office of Emergency Medical Services (Office of EMS) to provide national leadership and coordination for the NG911 transition throughout the United States, as previously mentioned. According to NHTSA, the fiscal year 2017 budget for the National 911 Program was $2.74 million. Among other activities, which we will discuss later in this report, the National 911 Program surveys states on progress implementing NG911 and reports this survey data annually. FCC issues orders and regulations for 911 service providers on topics relevant to NG911, such as 911 reliability, location accuracy, and text- to-911. FCC also sponsors advisory bodies comprised of government and industry experts that study relevant topics and provide recommendations related to NG911, such as the Task Force on Optimal Public Safety Answering Point Architecture and the Communications, Security, Reliability, and Interoperability Council. While there are no federally mandated time frames for implementing NG911, the Next Generation 911 Advancement Act of 2012 requires specific actions of some federal agencies as outlined in table 1, below. In addition, according to the National 911 Program, as states and localities continue to implement NG911, and begin to explore interconnection with other states’ 911 systems, federal agencies may need to take steps to help ensure state NG911 networks are interoperable and connected. We will discuss actions taken by federal agencies to assist states and localities to implement NG911 later in this report. According to NHTSA’s most recent national survey, state and local progress implementing NG911 varies, and about half of all states reported being in some phase of transition to NG911 in 2015. While a few states are well into statewide implementation, NHTSA officials told us that no state had completely implemented all NG911 functions. Additionally, as of the fall of 2017, none of the selected states we spoke with were processing multimedia—such as images or audio/video recordings—through their 911 systems due to concerns related to privacy, liability, and the ability to store and manage these types of data, among other things. The national survey data, based on responses from 45 states, measured the extent to which NG911 planning and acquisition of NG911 equipment and services were occurring, and the extent to which basic NG911 functions were operational at the state and local levels in 2015. Planning: This measure includes state and local NG911 plans for governance, funding, system components, and operations. In this context, system components refer to an emergency services IP-based network, NG911 software, system and information security, and databases, among other things, according to NHTSA’s survey. In total, 25 of 45 states reported having a state or at least one local NG911 plan in place; conversely, 18 states reported having no NG911 plan in place at either the state or local level—which may indicate they are in the early stages of planning for the NG911 transition or have not yet begun the transition to NG911. Acquisition: These measures identify states or local entities that have defined their NG911 needs and awarded contracts, and then installed and tested acquired NG911 components and services. Twenty-four states reported awarding at least one contract at the state or local level for NG911 components and services. Twenty-three states reported having installed and tested NG911 components and services at either the state or local level. NG911 services: This is a measure of 911 authorities that have some basic, functioning NG911 infrastructure in place. In total, 21 states reported having some level of basic NG911 services in place at the state or local level. Of these 21 states, 10 reported that all 911 authorities within the state were using NG911 technology to process emergency calls. Another 7 of these states reported that 25 percent or less of their state’s 911 authorities were using NG911 technology to process emergency calls. Federal officials, industry stakeholders, and state and local 911 officials we interviewed from nine states identified a number of challenges to implementing NG911, including challenges related to funding, evolving technology and operations, and governance. Funding: State and local officials in four of nine selected states identified insufficient funding as one of the challenges they face in implementing NG911. Additionally, FCC, NHTSA, and industry reports noted that state and local financing strategies are generally insufficient to fully implement NG911. Specifically, these reports note that the need to provide new capital for NG911 implementation while simultaneously funding legacy operational costs during the transition can strain state and local funding. Limited funding: Officials in three states told us that their current funding may not be able to support the upfront costs of infrastructure and equipment acquisitions associated with the transition to NG911. Further, officials said they will need to simultaneously fund both the new NG911 and legacy 911 systems currently in operation until the NG911 systems are fully operational. To address these challenges, a Minnesota official told us about how the state leveraged economies of scale to reduce overall costs through cost sharing between multiple call centers and of call centers consolidating operations from 114 to 104 call centers. Additionally, a Virginia official told us that to cover the upfront costs of transitioning to NG911, the state plans to borrow from the state treasury and then repay the treasury with future-year fee collections. Fee diversion: Diversion of fees intended for 911 costs to non-911 activities may affect a state’s or locality’s ability to cover NG911 transition costs and necessitate identifying alternative funding sources. The FCC’s 2016 annual report on 911 fees indicates that for calendar year 2015, all but two of the states that responded to FCC’s 911 fee survey affirmed that their state or jurisdiction collects fees from phone users to support or implement 911 services. State and local authorities also determine how these 911 fees can be used. FCC’s report also indicated that eight states and Puerto Rico reported diverting a total of more than $220 million (or approximately 8.4 percent) of 911 fees collected to non-911 purposes. Some of these diverted funds were directed to other public safety programs, and others were diverted to either non-public safety or unspecified purposes. According to one state official, had it not been for 911 fees being diverted to non-911 purposes, funding would have been sufficient to cover the NG911 transition without having to go to the state legislature for additional funding. However, officials in the other eight selected states told us that either fee diversion was not an issue in their state or that the diversion of funds had not affected their state’s ability to implement NG911. Evolving technology and operations: Officials in eight states told us that the retirement of legacy infrastructure and the transition to IP-based systems introduces new technical and operational challenges for call centers and states, as well as for equipment and service providers. Interoperability: Officials in three selected states mentioned that connecting to neighboring networks—whether within or between states—could pose challenges. For example, officials mentioned that states and localities may have obtained different equipment, software applications, or service providers – all of which can make interconnections difficult. Officials in Maine and New Hampshire told us that differences in service providers can also be a challenge to seamlessly connecting to neighboring systems. In an instance where two states (Minnesota and North Dakota) have worked to connect their 911 systems, both states used the same service provider, which officials said allowed for fewer barriers to connection. Cyber risks: Officials in three states told us that the transition from a traditional system that only transmits voice traffic to an IP-based system that transmits voice and data traffic has significantly increased the risk of a cyber-attack. This can be a challenge because managing cyber risks is a new and evolving role for state and local 911 authorities. Approaching the transition to NG911 without managing these risks could result in disrupted or disabled call center operations and ultimately a delayed response to an emergency situation. Multimedia: Officials in three states mentioned potential implementation challenges related to accepting and processing multimedia such as audio recordings, images, and videos. More specifically, one official said they did not have procedures to manage or store these multimedia files once received. In addition, another official raised privacy and liability concerns. Call routing: One of the core services of an NG911 system is the ability to have calls routed to the appropriate call center based on a wireless caller’s physical location, instead of the location of the cellular tower that receives and transmits the call. An FCC-sponsored working group reported that there are several options for achieving this and each option has unique positive and negative aspects. One challenge officials in two states noted was that rather than a single, nationwide approach to routing these calls, state and local 911 authorities would need to work individually with the wireless carriers to determine how to best implement location-based call routing. Governance: FCC has noted that transitioning to NG911 will likely result in new roles and levels of coordination between state 911 authorities, local 911 authorities, 911 call centers, and 911 service providers. Further, relationships among authorities at the state and local level may change as states work to interconnect NG911 systems. State and local officials noted that these types of governance challenges can apply in a variety of situations, including within or between states. Evolving roles: As previously mentioned, 911 governance structures vary among states. These varying governance structures may pose different challenges. For example, some states have a centralized structure in which a single government agency is responsible for statewide 911 system’s administration and policy. Officials in two states told us that although they faced challenges transitioning to NG911, their states’ centralized 911 structure eased the transition in their states because there was uniformity in policy and technology, among other things, coming from a single statewide authority. In other states, 911 systems are primarily a local responsibility and organized with decentralized authorities and resources. In these instances, there may be specific challenges related to transitioning to an interconnected NG911 system. Such challenges may include the need for increased levels of coordination among numerous jurisdictions with potentially disparate organizational structures, levels of funding, and priorities. An official also noted that there are governance challenges related to connecting states and evolving relationships between 911 authorities and service providers. Informing decision makers: One of the challenges identified by officials in two states is differing levels of experience and understanding by state and local officials as to what NG911 priorities should be for timely implementation. To help with this understanding, the federal government is making efforts to educate state and local authorities on how to facilitate policymaker understanding as well as provide regular updates to stakeholders on recent NG911 developments. We discuss some of these efforts later in this report. While state and local entities have the primary responsibility for implementing NG911 technology and services, federal agencies are taking actions to assist state and local 911 entities to address NG911 implementation challenges. Actions taken include developing resources, offering technical assistance, and convening stakeholders. More specifically, we identified selected activities that were taken by NHTSA, NTIA, FCC, and DHS that address some of the funding, technology, and governance challenges raised by state and local 911 stakeholders, for example: Cost study: NHTSA’s National 911 Program and NTIA, in consultation with FCC and DHS, plan to issue a study of the range of costs for 911 call centers and service providers to implement NG911 systems. According to NHTSA officials, the cost study will present a nationwide view, rather than a state-by-state view, on the progress of NG911 implementation and its associated costs. Grant program: NHTSA and NTIA are preparing to jointly administer a $115 million grant program to improve 911 services, including the adoption and operation of NG911 services. In September 2017, NHTSA and NTIA issued a notice of proposed rulemaking outlining implementing regulations for the grant program. NHTSA and NTIA expect to award the grants in 2018. Technology standards: The National 911 Program issued an annual guide in 2017 that stressed the importance of using open technology standards for NG911 services. The guide provides a list of standards that have been recently updated and an analysis that identifies whether existing standards fully address NG911 processes and protocols. Cybersecurity guides: DHS issued a guide in 2016 that identified cybersecurity risks for NG911 and risk mitigation strategies. According to DHS officials, the National 911 Program provided input on this guide. In addition, an advisory body tasked by FCC to examine 911 call-centers’ architecture issued a report in 2016 that provided a cybersecurity self-assessment tool for call centers and guidance on cybersecurity strategies. Governance plans: To address challenges related to the evolving roles for state and local 911 authorities, the National 911 Program issued a guide in 2016 that provided practices for states to consider when interconnecting NG911 networks, and DHS issued a guide in 2015 for emergency communications officials for establishing, assessing, and updating their governance structures. In addition, an FCC advisory body issued a report in 2016 that identified NG911 governance approaches, issues, and recommendations for states, localities, and call centers to consider when planning for the deployment of NG911. In addition to federal agency efforts to assist the state and local 911 community, the National 911 Program is in the early stages of establishing an interagency initiative to create a National NG911 Roadmap. As part of this initiative, the National 911 Program plans to convene the 911 stakeholder community to identify tasks that need to be completed at the national level by the federal government and other public and private-sector organizations to support the creation of a national, interconnected NG911 system. Additional details regarding this planned activity are described in further detail later in this report. For additional information on federal actions to address state and local NG911 challenges, see appendix II. As the lead entity for coordinating federal NG911 activities, the National 911 Program has taken a variety of actions to assist the state and local 911 community, in collaboration with other federal agencies. However, the program lacks goals and performance measures to assess whether these activities are achieving desired results. National 911 Program officials stated that they initiate program activities based on feedback received from the 911 community. In addition, officials said the program’s activities fall within the tasks established in the Next Generation 911 Advancement Act of 2012. However, the National 911 Program does not have a means to assess its progress toward meeting its responsibilities established in the 2012 Act. National 911 Program officials said the Office of EMS—the office within NHTSA in which the program is housed—has a strategic plan, but it is outdated and does not contain specific goals or performance measures related to 911 or NG911 implementation. Officials said the Office of EMS has held preliminary discussions to begin updating its strategic plan by January 2019 and plans to include goals and performance measures related to 911 and NG911 services. Office of EMS officials told us the Office of EMS strategic plan will be jointly developed with the National 911 Program. However the Office of EMS had not yet developed a draft strategic plan during the time of our review. Federal internal control standards call for management to clearly define objectives in order to achieve desired results. According to these standards, an entity determines its mission, establishes specific measurable objectives, and formulates plans to achieve its objectives. These standards state that management sets objectives in order to meet the entity’s mission, strategic plan, and goals and requirements of applicable laws and regulations. In addition, our work on leading practices for managing for results indicated that an agency’s strategic goals should also explain what results are expected from the agency and when to expect those results. Further, these goals form a basis for an entity to identify strategies to fulfill its mission and improve its operations to support the achievement of that mission. As the lead entity for coordinating federal NG911 efforts, the National 911 Program faces a complex and challenging task of assisting the 911 community while the nation’s 911 systems undergo a major transformation. However, without specific goals and related performance measures, the National 911 Program is unable to assess how well its activities are achieving results in relation to its responsibilities identified in the 2012 Act. As the National 911 Program and the Office of EMS consider creating a strategic plan, ensuring that the plan includes specific goals and related measures for the National 911 Program would help officials better understand whether the program’s activities are effectively assisting states and localities in transitioning to a fully integrated national NG911 system, and help identify any programmatic changes that might be needed. As previously mentioned, the National 911 Program is in the early stages of establishing an interagency initiative to create a National NG911 Roadmap. This initiative will convene the 911 stakeholder community to identify national-level tasks that need to be completed by federal agencies and other organizations to realize a national, interconnected NG911 system. According to the National 911 Program, a list of the national-level tasks needed to advance NG911 implementation nationwide has not been created to date. In addition, state officials we spoke with said there are certain issues related to interoperability and cybersecurity that federal agencies need to address before states can connect their respective state NG911 systems. To address these issues, NHTSA’s National 911 Program issued a request for proposal (RFP) in August 2017 for managing the roadmap development process and awarded a contract in September 2017. While the National 911 Program is taking steps to develop a National NG911 Roadmap, the program does not have a plan to identify: (1) roles or responsibilities for federal entities to carry out national-level tasks or (2) how the program plans to achieve the roadmap’s objectives. NHTSA’s NG911 roadmap RFP specifies that by identifying a list of national-level tasks that are developed and adopted by the 911 stakeholder community, the roadmap could serve as a blueprint to carry out these tasks and thereby ensure the interoperability of the nation’s NG911 system. However, the National 911 Program does not have plans for the entities participating in the development of the roadmap to be assigned roles and responsibilities for executing the roadmap’s national- level tasks. National 911 Program officials told us the National 911 Program does not plan to assign roles and responsibilities because NHTSA does not have the authority to require or assign tasks for other entities. Additionally, program officials view the simultaneous identification of tasks and assignments of responsibility for those tasks as a risk to facilitating a candid and productive discussion with entities participating in the roadmap initiative. However, officials stated it may be appropriate for agencies participating in the roadmap initiative to perform specific tasks after the roadmap is finalized. We have previously examined interagency collaborative mechanisms and identified certain key issues for federal agencies to consider when using these mechanisms to achieve results. Our prior work has found that following leading collaboration practices, such as clarifying roles and responsibilities of agencies engaged in collaboration, can enhance and sustain collaboration among agencies and provide an understanding of who will do what in support of meeting the aims of the collaborative group. As stated above, the RFP specifies that a roadmap developed by and adopted by 911 stakeholders could serve as a blueprint to carry out the roadmap’s tasks. Securing the commitment of agencies to assigned roles could help organize the collaborative group’s joint and individual efforts and thereby better facilitate decision making. As we have previously found, a lack of clarity on the roles and responsibilities of agencies participating in an interagency effort—such as the execution of the roadmap’s tasks—may limit agencies’ abilities to effectively achieve shared objectives. Given the complexity of the task and the number of agencies that could be involved, following selected leading collaboration practices for the roadmap initiative—particularly with regard to collaborating with roadmap stakeholders to clarify their roles and responsibilities (whether during the creation of the task list or afterwards)—could reduce barriers to agencies effectively working together to achieve the national-level tasks. While clarifying the roles and responsibilities of roadmap stakeholders for the execution of the roadmap’s tasks is an important collaborative step, the National 911 Program has additional responsibilities as the lead entity for the initiative. However, National 911 Program officials are unable to clearly articulate how the program will proceed following the completion of the roadmap. National 911 Program officials said without knowing the contents of the roadmap, it would be premature to specify how the roadmap’s national-level tasks would be completed. Officials stated that once the roadmap is completed, possible next steps may include identification of timelines, deadlines, and a mechanism for tracking progress, among other things, but officials stated that these steps are not required in the roadmap RFP. As stated above, federal internal control standards call for management to clearly define objectives in specific terms. According to these standards, management defines what is to be achieved, who is to achieve it, how it will be achieved, and the time frames for achievement. Without a clear plan for how the National 911 Program would take next steps to support the implementation of the roadmap’s objectives and tasks, the National 911 Program may not be prepared to take effective action once the roadmap is completed. We have previously found that having an implementation plan can assist agencies to better focus and prioritize goals and objectives, and align planned activities. Once the roadmap is completed, developing an implementation plan that details what is to be achieved and how it will be accomplished will place the National 911 Program in a better position moving forward to support the completion of the national-level tasks. The current 911 system is undergoing a historic transition. With no federal requirement that states transition to NG911 services, federal leadership is critical to addressing interoperability challenges and promoting the goal of an interconnected national system. As the lead federal entity for fostering coordination and collaboration among federal, state, and local 911 authorities, the National 911 Program plays a critical role in coordinating NG911 implementation efforts to improve the nation’s 911 services. However, this program—in collaboration with other federal agencies— faces a complex and challenging task to help move approximately 6,000 independent 911 call centers toward an interconnected national NG911 system. In addition, given that the NG911 transition is still in its early stages and is an ongoing effort, it is difficult to assess the effectiveness of various federal actions to assist states and localities in the transition. In light of these challenges, without specific goals and related measures to assess effectiveness, the National 911 Program may be hindered in determining whether it is making progress towards its stated mission. Through the roadmap initiative, the National 911 Program has taken important first steps in identifying the need for actions at the national level, in order to fully realize the desired end-state of a national, interconnected NG911 system. However, while identifying needed next steps is essential, equally important to the collaborative effort’s success is (1) defining and agreeing on the roles and responsibilities of the entities best suited to undertake these actions, and (2) developing plans for how the National 911 Program will support implementation to achieve the roadmap’s objectives. If taken, these actions could help further NG911 implementation nationwide and help the National 911 Program and federal agencies in assisting states and localities to improve these lifesaving services. We are making the following three recommendations to the Administrator of NHTSA regarding the National 911 Program: develop specific program goals and performance measures related to NG911 implementation. (Recommendation 1) in collaboration with the appropriate federal agencies, determine roles and responsibilities of federal agencies participating in the National NG911 Roadmap initiative in order to carry out the national-level tasks over which each agency has jurisdiction. (Recommendation 2) develop an implementation plan to support the completion of the National NG911 Roadmap’s national-level tasks. (Recommendation 3) We provided a draft of this report to the Departments of Transportation, Commerce, and Homeland Security and FCC for their review and comment. In its comments, reproduced in appendix III, the Department of Transportation agreed with the recommendations. The Departments of Transportation and Homeland Security also provided technical comments, which we incorporated as appropriate. The Department of Commerce and FCC had no comments. As agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of the Department of Transportation, the Secretary of the Department of Commerce, the Secretary of the Department of Homeland Security, the Managing Director of the FCC, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Staff who made key contributions to this report are listed in appendix IV. Our objectives were to examine (1) progress states and localities are making to implement Next Generation 911 (NG911) and the challenges they have faced and (2) how federal agencies have addressed state and local implementation challenges and planned next steps. To describe state and local progress in implementing NG911 and background information on fee collection and costs, we analyzed select survey data elements from the 2016 National 911 Progress Report and the Eighth Annual Report to Congress on State Collection and Distribution of 911 and Enhanced 911 Fees and Charges, maintained by the National Highway Traffic Safety Administration (NHTSA) and the Federal Communications Commission (FCC) respectively. More specifically, we analyzed the most recent state-provided data (from calendar year 2015) related to the planning and implementation of NG911 at the state and local levels, as well as NG911 cost and 911-related revenue data. We assessed the reliability of these data by reviewing relevant documents and discussing data elements with staff responsible for collecting and analyzing the data. We also conducted our own testing to check the consistency of the data. We found the data from both sources to be sufficiently reliable for our purposes to describe states’ progress in implementing NG911 and provide background on 911 fee collection and costs. While these data provide the best nationwide picture of NG911 implementation and fee collection, and are reliable for our purposes, there are some limitations on how the data can be used. Since we did not validate the state-reported responses, our findings based on these data are limited to what states reported. Additionally, regarding the 2016 National 911 Progress Report data, there are limitations to (1) making comparisons between states because states have different approaches to implementing NG911 and (2) ascertaining year-over-year progress because reporting is voluntary and states’ response rates can vary year to year. To describe implementation challenges that states and local authorities may be encountering, we selected a non-generalizable sample of 10 states as case studies, based upon a variety of factors, including reported progress in implementing NG911, statewide planning and coordination, reported number of annual 911 calls, whether states diverted 911 fees to other uses, and variation in geographic location. We selected these states, in part, based on their responses to the two aforementioned surveys. Based on the aforementioned criteria, we selected the following states to include as case studies: California, Maine, Maryland, Minnesota, Nevada, New Hampshire, North Dakota, South Dakota, Vermont, and Virginia. We reviewed documents and interviewed state officials from all of these states except Nevada about NG911 implementation progress, challenges, federal actions, and any additional assistance needed. We contacted 911 officials in Nevada but did not receive responses. We also interviewed local officials in four of the selected states. While not generalizable to all states, the information obtained from our case studies provides examples of broader issues faced by states and localities in managing the NG911 transition. To determine how federal agencies have addressed state and local implementation challenges and planned next steps, we reviewed relevant statutes, regulations, and documentation of federal agency actions and plans, and our prior reports. We also interviewed officials from federal agencies, including NHTSA, the National Telecommunications and Information Administration (NTIA), FCC, and the U.S. Department of Homeland Security (DHS), about federal actions taken and plans for next steps. To understand planning activities undertaken by NHTSA’s National 911 Program, and its planned project to develop a National NG911 Roadmap, we reviewed the National 911 Program’s internal planning documents, the program’s request for proposal to develop a national roadmap, the program’s written responses to our questions, and interviewed National 911 Program officials. In addition, we interviewed officials from national associations representing emergency-response- technology companies, wireless and wireline phone carriers, emergency- communications entities, and groups representing deaf and hard-of- hearing consumers to gain their perspectives on federal actions taken and next steps. We assessed the National 911 Program’s strategic- planning activities against leading practices for performance management found in our prior work on strategic planning and goal setting and federal internal control standards. We assessed the National 911 Program’s planned activities for the national roadmap project against federal internal control standards and selected key practices to enhance interagency collaboration identified in our prior work. We conducted our work from January 2017 to January 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Description of challenge State and local funding may not be sufficient to support costs associated with transitioning to NG911 equipment and infrastructure. Transitioning from legacy infrastructure to Internet Protocol-based systems presents technical and operational challenges such as interoperability and cybersecurity risks. Federal actions Grant resources: The National Highway Traffic Safety Administration’s (NHTSA) National 911 Program issued on its website a list clarifying which of the fiscal year 2016 emergency-communications grants may be used for NG911 services. Program officials said they developed this list in collaboration with the Department of Homeland Security (DHS). Cost study: NHTSA’s National 911 Program and the National Telecommunications and Information Administration (NTIA), in consultation with the Federal Communications Commission (FCC) and DHS, plan to issue a study of the range of costs for 911 call centers and service providers to implement NG911 systems and on the nationwide progress of implementing NG911 services. Grant program: NHTSA and NTIA are preparing to jointly administer a $115 million grant program to improve 911 services, including the adoption and operation of NG911 services. NHTSA and NTIA expect to award the grants in 2018. Funding mechanisms: An advisory body tasked by FCC issued a report in 2016 that identified common costs and funding mechanisms for 911 officials to consider. The report also introduced a 911 funding sustainment model designed for use by 911 officials to calculate their financial needs to support a transition to NG911 implementation. Guides on technology standards and procurement practices: In 2017, NHTSA’s National 911 Program issued an annual guide on emergency- communications technology standards that stressed the importance of using open technology standards for NG911 services. The National 911 Program issued another guide in 2016 that provides information on procuring goods and services related to NG911 such as practices for call centers to consider when developing their request for proposals and contracts. Examining emerging technology issues: In 2017, FCC tasked a public- private advisory council to recommend how FCC can promote the NG911 transition, enhance the reliability of NG911, and mitigate the threat of 911 outages. Prior to that tasking, the FCC advisory council issued a report in 2016 that explored location-based routing issues and discussed transition considerations from legacy 911 to NG911. NG911 cybersecurity guide and technical assistance: DHS, with input from NHTSA’s National 911 Program according to DHS officials, issued a guide in 2016 that identifies cybersecurity risks for NG911 and risk mitigation strategies. In addition, DHS provides NG911 technical assistance for states seeking assistance with strategic planning and technology integration. In a separate effort, an advisory body tasked by FCC to examine 911 call center architecture issued a report in 2016 that provides a cybersecurity self- assessment tool for call centers and guidance on cybersecurity strategies. Description of challenge States may face a range of challenges related to evolving roles for state and local 911 authorities that could hinder NG911 implementation. Federal actions Guides on state and legislative planning: NHTSA’s National 911 Program issued guides on state 911 planning and legislative issues to consider for NG911 and awarded a contract in September 2017 to update those guides. In 2016, the National 911 Program issued a guidebased on the experiences of Iowa, Minnesota, North Dakota, and South Dakota that identifies practices to consider for states interconnecting NG911 networks across state lines. Exploring NG911 governance implementation issues: In 2016, an advisory body tasked by FCC issued a report that identifies NG911 governance approaches, issues, and recommendations for states, localities, and call centers to consider when planning for the deployment of NG911. In 2013, FCC also issued a report that details recommendations to Congress for transitioning from legacy 911 to NG911 networks. Guide on emergency communications governance structures: In 2015, DHS and the National Council of Statewide Interoperability Coordinators issued a guide that provides characteristics of effective governance approaches and best practices for officials to establish, assess, and update their governance structures. In addition to the contact named above, Andrew Huddleston (Assistant Director), Jean Cook (Analyst in Charge), Camilo Flores, Steven Rabinowitz, Malika Rice, Kelly L. Rubin, Michael Sweet, Hai Tran, Marika Van Laan, and Michelle Weathers made key contributions to this report.

Answer: Each year, millions of Americans call 911 for help during emergencies. However, the nation's legacy 911 system relies on aging infrastructure that is not designed to accommodate modern communications technologies. As a result, states and localities are upgrading to NG911, which offers improved capabilities, such as the ability to process images, audio files, and video. While deploying NG911 is the responsibility of state and local entities, federal agencies also support implementation, led by NHTSA's National 911 Program, which facilitates collaboration among federal, state, and local 911 stakeholders. GAO was asked to review NG911 implementation nationwide. This report examines: (1) state and local progress and challenges in implementing NG911 and (2) federal actions to address challenges and planned next steps. GAO reviewed relevant statutes, regulations, and federal agency reports and plans. GAO also analyzed NHTSA's survey data on state 911 implementation for calendar year 2015, the most recent year for which data were available, and interviewed federal officials, state and local officials from nine states (selected to represent different regions and various phases of NG911 implementation), and officials from industry and advocacy groups. The National Highway Traffic Safety Administration's (NHTSA) National 911 Program's most recent national survey on Next Generation 911 (NG911) implementation indicated that about half of states were in some phase of transition to NG911 in 2015, but that state and local progress varied. Specifically, 10 states reported that all 911 authorities in their state processed calls using NG911 systems; however, 18 states reported having no state or local NG911 transition plans in place—which may indicate these states were in the early phases of planning for the transition to NG911 or had not yet begun. GAO spoke with state and local 911 officials in 9 states, which were in various phases of implementing NG911, and found that none of the 9 selected states were accepting images, audio files, or video. State and local 911 officials identified a number of challenges to implementing NG911. Such challenges are related to funding, evolving technology and operations, and governance. For example, officials in 3 states said that the current funding they collect from telephone service subscribers may not be sufficient to support NG911's transition costs while simultaneously funding the operation of existing 911 systems. Federal agencies—including NHTSA, the National Telecommunications and Information Administration, the Federal Communications Commission, and the U.S. Department of Homeland Security—have responsibilities to support NG911 implementation, such as through coordinating activities and administering grants, and are taking actions to assist state and local entities in addressing challenges to NG911's implementation. Such actions include developing resources, offering technical assistance, and convening stakeholders to explore emerging NG911 issues. For example, as the lead entity for coordinating federal NG911 efforts, NHTSA's National 911 Program is developing resources on NG911 topics, such as federal funding and governance structures. While the National 911 Program is taking steps to facilitate the state and local transition to NG911, the program lacks specific performance goals and measures to assess its progress. Without such goals and measures, it is not clear to what extent the program is effectively achieving its mission. In 2018, the National 911 Program plans to establish an interagency initiative tasked with creating a National NG911 Roadmap. This roadmap is intended to identify next steps for the federal government in supporting the creation of a national, interconnected NG911 system. While the National 911 Program is taking steps to develop a list of national-level tasks as part of its roadmap initiative, the program does not have a plan to identify: (1) roles or responsibilities for federal entities to carry out these tasks or (2) how the program plans to achieve the roadmap's objectives. Collaborating with the appropriate federal agencies to determine federal roles and responsibilities to carry out the roadmap's national-level tasks could reduce barriers to agencies effectively working together to achieve those tasks. Furthermore, developing an implementation plan that details how the roadmap's tasks will be achieved would place the National 911 Program in a better position to effectively lead interagency efforts to implement NG911 nationwide. GAO recommends that NHTSA's National 911 Program develop performance goals and measures and, for the National NG911 Roadmap, determine agencies' roles and responsibilities and develop an implementation plan. NHTSA agreed with GAO's recommendations.


Context: The Commercial Space Launch Act Amendments of 1988 established the foundation for the current U.S. policy to potentially provide federal payment for a portion of claims by third parties for injury, damage, or loss that results from a commercial launch or reentry accident. A stated goal of the act was to provide a competitive environment for the U.S. commercial space launch industry. The act also provided for, among other things, government protection against some losses—referred to as indemnification—while still minimizing the cost to taxpayers. All FAA- licensed commercial launches and reentries by U.S. companies, whether unmanned or manned and from the United States or overseas, are covered by federal indemnification for third-party damages that result from the launch or reentry. According to agency officials, in 2016 FAA issued five active licenses, which had an average third-party MPL of about $51 million and ranged from $10 million to $99 million. The amount of insurance coverage that FAA requires launch companies to purchase—the MPL value—is intended to reflect the greatest dollar amount of loss to third parties and the federal government for bodily injury and property damage that can be reasonably expected to result from a launch or reentry accident. FAA calculates separate MPL values for potential damages to third parties and the federal government. For each launch license that it issues, FAA determines MPL values for third parties with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 10 million chance of occurring. For damages to the federal government, FAA determines MPL values with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 100,000 chance of occurring. According to FAA, the agency defines these probability thresholds to estimate the federal government’s exposure to losses above the MPL. Agency officials said that the current probability thresholds are set such that losses are very unlikely to exceed launch companies’ private insurance and become potential costs for the government under CSLCA. FAA’s process for determining the MPL value for a launch or reentry license generally includes three elements: 1. Number of casualties. Estimating the number of third-party casualties involves adding the number of direct and secondary casualties that could result from a launch accident. Direct casualty estimates include serious injuries and deaths. Secondary casualties include those resulting from fires and collapsing buildings. 2. Cost of casualties. FAA uses $3 million as an estimate of the average loss per casualty, which is multiplied by the number of estimated casualties. 3. Property damage. FAA applies a predetermined factor—which it recently changed from 50 percent to 25 percent—to the estimated cost of casualties to derive estimated losses from property damage. The total MPL is equal to the estimated cost of casualties plus property damage. FAA has revised two components of its MPL methodology since our 2012 report. For example, in April 2016, the agency adopted a new method for estimating the number of casualties, known as the risk profile method. This method uses different tools to simulate a range of possible scenarios to create a distribution of potential casualty numbers and the simulated probability of different levels of casualty numbers. The risk profile method replaced FAA’s “overlay method,” which was a method it had used since the early 1990s which the agency said did not work well for launches of small launch vehicles in remote areas, or for reentries. In addition, FAA reduced the factor it uses to estimate losses due to property damage, based on tests of a new process for estimating such losses that showed the previous factor was too high. We have previously reviewed FAA’s MPL methodology in 2012 and 2017. In 2012 we examined the U.S. government’s indemnification policy, the federal government’s potential costs for indemnification, and the effects of ending indemnification on the competitiveness of U.S. launch companies, among other aspects of FAA’s MPL methodology. In 2017 we examined the extent to which FAA had revised its MPL methodology since our 2012 report to address previously cited weaknesses and the potential effect of any changes to that methodology on financial liabilities for the federal government. The findings and recommendations of those reports, including any unaddressed weaknesses, are discussed later in this report. CSLCA required FAA to evaluate its MPL methodology incorporating three requirements, but the agency’s report did not fully address these requirements. First, the act required FAA to ensure a balance of risk between launch companies and the federal government. However, agency officials told us that they did not re-evaluate the probability thresholds—which are used to divide the risk of loss between launch companies and the federal government—as part of evaluating its MPL methodology when implementing the risk profile method due to resource constraints. Second, the act required FAA to consider the cost impact of implementing an updated MPL methodology, but the agency did not evaluate the impact of implementing its revised methodology on the direct costs to launch companies (insurance premiums) and to the federal government (indemnification liability). Third, the act required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL, but they did not consult such parties in response to the act. Without fully addressing CSLCA’s mandated requirements, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary. In its report, FAA states that implementing an updated MPL methodology in April 2016—the risk profile method—helps ensure that the federal government is not exposed to greater liability costs than intended and that launch companies are not required to purchase more insurance coverage than necessary, as required under CSLCA. Further, agency officials told us that their updated methodology is technically more valid and improves their ability to avoid overestimating MPL values (which can cause launch companies to purchase more insurance coverage than necessary) or significantly underestimating MPL values (which can expose the federal government to greater costs than intended). While an improved model may provide a more realistic calculation of the MPL, by changing the resulting estimates it can also change the balance between the federal government’s exposure to liability costs and the amount of insurance launch companies are required to purchase. For example, if the more realistic results produced by the revised methodology increased the MPL estimates, this would increase insurance costs for the launch companies and reduce the federal government’s exposure, thereby shifting the balance of costs between the two and suggesting a reevaluation of the thresholds. In addition, FAA officials told us that they had not reevaluated the probability thresholds upon implementing the revised MPL methodology, although defining these thresholds is their primary mechanism for adjusting the balance of risk between launch companies and the federal government. Agency officials acknowledged that an examination of the thresholds’ continued appropriateness would be warranted in the future. However, they told us that changing the probability thresholds would require significant effort because it would require them to change federal regulations and that resources are currently allocated to other rulemaking priorities. Nevertheless, without evaluating the appropriateness of the probability threshold as part of the mandated evaluation of the MPL methodology, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary. CSLCA also required FAA to consider the cost impact on both the commercial space launch industry and the federal government of implementing an updated MPL methodology. In its report to Congress, the agency discussed indirect costs to launch applicants and the federal government. For example, FAA discussed indirect data burden costs on launch company applicants and FAA analysts associated with the agency’s risk profile method implementation. The report states that the risk profile method requires more data from a launch applicant than the previous method, but that the added burden is minimal because the information is similar to the type of information required by FAA for a risk analysis. Agency officials also said that the risk profile method requires more of an FAA analyst’s time than the overlay method, but that the added burden is minimal because the work done by FAA on risk analysis provides much of the foundation for an MPL analysis. However, FAA’s report did not include an evaluation of the direct costs to launch companies and the federal government of implementing an updated MPL methodology. The report identifies the direct cost to the launch industry as insurance premiums, and the direct cost to the federal government include potential indemnification payments. Agency officials also told us that the agency does not track commercial space launch insurance costs, and that they do not have meaningful insights on insurance premiums paid by commercial launch companies. FAA officials told us that they only have a general notion of insurance premiums because the industry is reluctant to share such information. FAA officials also told us that, outside of the work done for the report, they have not evaluated the economic implications for launch companies of implementing an updated MPL methodology. Without evaluating direct costs to both the launch companies and the federal government, FAA will be limited in its ability to consider the impact of the cost to both the industry and the federal government of implementing an updated methodology. Although CSLCA required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL methodology for the mandated report, it obtained limited input. For example, FAA officials told us that they obtained input from their Commercial Space Transportation Advisory Committee (COMSTAC) in April 2016 about what to include in their report to Congress, but did not consult with the commercial space sector and insurance providers to evaluate their MPL methodology in response to CSLCA. FAA officials also said that, to respond to CSLCA’s consultation requirement, they did not think they needed to repeat the consultations they took in 2013. In January 2013, the agency solicited input from COMSTAC’s Business/Legal Working Group about how to best conduct a review of FAA’s methodology for calculating MPL, in response to our July 2012 report. FAA also briefed the Business/Legal Working Group in May 2013 to solicit input on MPL methodologies, including the risk profile method. In the January 2013 meeting, a COMSTAC member suggested several contractors for a study by outside experts of the complete MPL methodology, and FAA subsequently hired one of these contractors to develop the risk profile method that it implemented in April 2016. However, the agency did not solicit input from COMSTAC about its risk profile methodology prior to its April 2016 implementation or following CSLCA’s November 2015 mandated evaluation. As a result, FAA lacks input on the effect of its revised MPL methodology on launch companies and the federal government, making it difficult to evaluate the balance of risk between the two. Our 2012 report identified concerns with all three components of FAA’s MPL methodology: estimating the number of casualties, estimating the cost of casualties, and deriving estimated property damage costs from estimated casualty costs. In that report we recommended that the agency reassess its methodology, including the reasonableness of several key elements. As noted in our 2017 report, FAA has since made improvements to its methodology. However, it still has not yet updated the cost of a casualty. In addition, in our 2017 report we also noted that there are instances where deriving estimated property damage from estimated casualty costs is inappropriate. As of November 2017, FAA does not have guidance to identify such instances or to guide decisions on which tools to use in developing the MPL estimate. FAA has taken steps designed to improve two of three elements of its MPL methodology, including revising its methodology for estimating the number of potential casualties for a given launch and changing the factor it uses to derive estimated property damage from estimated casualties. However, the agency has not updated the third element, the amount it uses for the cost of an individual casualty, leaving a previously identified weakness unaddressed. Our 2012 report raised concerns with each of the three components of FAA’s MPL calculation methodology. First, we found that FAA’s method for estimating the number of casualties involved use of a single loss scenario instead of applying the insurance industry’s standard practice of catastrophe modeling, and that the agency’s method might significantly understate the number of potential casualties. Catastrophe modeling, unlike the single-loss approach, generally estimates losses by using various tools to simulate tens of thousands of scenarios to create a distribution of potential losses and the simulated probability of different levels of loss. Second, we reported that FAA had been using an outdated and likely understated figure of $3 million to estimate the cost of a single casualty—including injury or death—which Office of Commercial Space Transportation officials said has not been updated since they began using it in 1988. Third, we reported that the agency’s approach of estimating potential property damage by adding a flat 50 percent to the estimated casualty damage could lead to estimates that were too high in some cases. Given these weaknesses, we recommended that FAA reassess its MPL methodology, including assessing the reasonableness of the cost-of- casualty amount and other assumptions used. Because the agency took actions to assess its MPL methodology, we closed the recommendation as implemented. In March 2017 we reported that FAA had taken steps to address weaknesses in two of these three areas. Specifically, we reported that FAA’s adoption of the risk profile method in April 2016 had improved its estimates of the number of potential casualties associated with a particular license launch. In addition, we reported that the agency had revised the factor it uses to estimate losses from property damage in the MPL calculation from 50 percent to 25 percent. This change has resulted in property damage estimates that FAA officials believe are still conservative but more realistic than previous estimates. However, in our March 2017 report we also determined that FAA had not yet addressed weaknesses in the cost-of-casualty amount we had previously identified; despite the conclusion by a contractor it had hired to study the cost-of-casualty that it was too low. Agency officials told us that they had not addressed this weakness because of other priorities. Given the significance of the cost-of-casualty amount to the MPL calculations, we recommended that FAA prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount, including setting time frames for action, and update the amount based on current information. In October 2017, FAA officials told us that they had not yet updated the cost-of-casualty because they have continued to prioritize completing other work with their limited resources, such as reviewing launch applications and fulfilling other safety responsibilities. As a result, our recommendation remains open. FAA officials told us that they have identified potential steps to update the cost-of-casualty amount, including seeking public input on whether and how to revise the amount, but that they do not expect to make a decision on whether to make any changes to the cost-of-casualty amount until June 30, 2018, at the earliest. FAA officials told us that in order to prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount they will need to consult with both the commercial space and insurance industries about the necessity and implications of any potential increase in the cost-of-casualty amount. Agency officials said that they plan to do such consultations through COMSTAC. However, because COMSTAC was just reestablished in June 2017 after not having been active since November 2016 and new members had not been approved as of October 2017, the anticipated decision date of June 2018 could be further delayed. As we reported in March 2017, an understated cost-of-casualty amount can lead to an inaccurate loss calculation, which in turn understates the amount of insurance a launch company must obtain. This could increase the potential exposure to the federal government, as the insurance amount would be less than the potential losses associated with the launch activity and the property would be inadequately protected. Because of this potential exposure, we maintain that addressing this weakness is a priority. As noted above, in our 2012 report we raised concerns about the first element of FAA’s MPL methodology, which is estimating the number of potential casualties. FAA officials said that they have implemented two tools for estimating the number of potential casualties, and that each tool requires a different level of resources and is more appropriate for different launch scenarios. The Range Risk Analysis Tool creates physics-based simulations of possible accidents using launch vehicle data, such as launch trajectory and types of failures, and assigns each simulated accident a probability of occurrence based on the failure rates of the different elements of the launch vehicle. According to agency officials, the Range Risk Analysis Tool is a comprehensive, high-fidelity tool and is the most appropriate tool for coastal launch sites, which are often located in heavily populated areas, and is labor intensive. The Risk Estimator Sub- orbital and Orbital Launch Vehicle and Entry tool, which in contrast to the Range Risk Analysis Tool, is a medium-fidelity tool that can be used for low-risk launches, such as launch sites located in very sparsely populated areas and reentry operations that do not need the use of a high-fidelity tool. According to FAA, this tool significantly reduces the time required to estimate the risk from launch and reentry vehicle operations. In our 2017 report, we also reiterated that there are cases where the third element of FAA’s methodology, deriving estimated property damage from estimated casualties, could lead to misleading MPL calculations. Specifically, in March 2017 we reported that estimating losses from property damage as a percentage of losses from casualties could lead to overestimates. For example, FAA’s contractor found that, if a launch accident affected a residential area, the agency’s practice of estimating property damage based on casualties would likely overstate property damages because residential structures have relatively low values compared to losses from casualties. We also reported in March 2017 that in some accidents the number of casualties may be low but property losses could still be very large, in which case FAA’s estimating property losses based on casualties would likely understate potential property damage. For example, a launch vehicle could strike an unoccupied structure that is very expensive, such as a neighboring launch complex. Agency officials said that while deriving property losses from casualty losses is a simpler method that may be an effective use of limited FAA resources, it could be inappropriate in scenarios where the number of casualties might be low but property losses could still be very large. In October 2017, agency officials said that FAA had not developed guidance for determining, for a given launch license, which of the available tools would be most appropriate to estimate the number of potential casualties, and whether it would be more appropriate to estimate property losses separately rather than derive them from estimated casualties. While FAA officials said they believe their current decision process is adequate and that they do not need more formal guidance at this time, they also told us that they were in the process of developing internal guidance on the most appropriate tool to use for future launches. The officials said that they did not have a projected completion date for the guidance, primarily because the agency has other priorities and resource limitations. As noted earlier, these priorities include reviewing commercial space launch license applications and managing program safety. Federal internal control standards state that, as part of an entity’s risk assessment component, management should identify, analyze, and respond to risks to achieving objectives. For example, the standards state that management should design control activities in response to the entity’s objectives and risks to achieve an effective internal control system. Without such guidance, FAA could face challenges in ensuring that it is using the most appropriate method to calculate an MPL for a given launch and is making the most efficient use of its resources. Such guidance could become more important as the number of commercial space launches increases, potentially creating greater demands on its resources. We have previously reported that the commercial space launch industry has experienced significant growth in the number and complexity of launches in the past half-decade. FAA has also reported that its licensed launches have increased 60 percent and industry revenue has increased 471 percent since 2012. FAA’s MPL methodology is critical in balancing the encouragement of the U.S. commercial space industry with the need to manage the federal government’s risk exposure because it determines how much risk each party will bear for third-party damages resulting from potential space launch accidents. However, despite changes to the methodology, the probability threshold that the agency uses to achieve this balance of risk has been the same since the 1990s, and has not been reviewed for appropriateness. In addition, while FAA evaluated the effect of its MPL methodology on the indirect costs of launch companies and the federal government, it did not similarly evaluate direct costs. Further, although FAA has obtained input from some stakeholders on certain aspects of its MPL methodology, it has not consulted with launch providers and insurance companies to evaluate effects on key potential costs to launch companies and the federal government, as required under CSLCA. FAA officials told us that resource issues and pursuing other priorities have prevented them from taking these actions. However, the longstanding nature of these issues, as well as their importance in determining the federal government’s financial exposure, makes their completion a priority. FAA has also begun improving other aspects of its MPL process, but important actions remain incomplete. For example, the cost of a casualty, a key component of the methodology, has not been updated since 1988. While FAA has identified potential steps to update this amount, it has not implemented these steps and our March 2017 recommendation to prioritize the updating of this amount remains open. Further, agency officials said they have begun to develop internal guidance on how to determine which methodological tools should be used for a given launch, but are not sure when this process will be completed. These are important steps to help ensure the validity of the MPL methodology and the results obtained for each launch, which in turn determine the balance between the amount of insurance launch companies are required to purchase and the potential financial exposure for the federal government. We are making the following four recommendations to FAA: The FAA Administrator should fulfill the CSLCA mandate to include ensuring a balance of risk between the federal government and launch companies as part of FAA’s MPL methodology evaluation by reexamining the current probability thresholds. (Recommendation 1) The FAA Administrator should fulfill the CSLCA mandate to analyze the cost impact of implementing its revised MPL methodology by evaluating the impact on the direct costs of launch companies and the federal government. (Recommendation 2) The FAA Administrator should fulfill the CSLCA mandate to evaluate its MPL methodology in consultation with the commercial space sector and insurance providers by consulting with those entities on the cost impact of its revised MPL methodology, including an updated cost-of-casualty amount, on the launch industry and the federal government. (Recommendation 3) The FAA Administrator should establish an estimated completion date for developing and implementing a plan to establish guidance on the most appropriate MPL methodologies and tools to use for each launch. (Recommendation 4) We provided a draft of this report to the Department of Transportation for their review and comment. In its comments, reproduced in appendix I, the Department of Transportation concurred with our recommendations. The Department of Transportation also provided technical comments, which we incorporated as appropriate. We are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions or would like to discuss this work, please contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Individuals making key contributions to this report are listed in appendix II. In addition to the contact named above, Patrick Ward (Assistant Director), Jessica Artis, Isidro Gomez (Analyst in Charge), Courtney La Fountain, Maureen Luna-Long, Jessica Sandler, Jennifer Schwartz, Joseph Silvestri, and Shana Wallace made key contributions to this report.

Answer: The federal government shares liability risks with the commercial space launch industry for accidents that result in damages to third parties or federal property. This arrangement requires space launch companies to have a specific amount of insurance to cover these damages. The government is potentially liable for damages above that amount, up to a cap GAO estimated to be $3.1 billion in 2017, subject to appropriations in advance. CSLCA, enacted in 2015, directed the Department of Transportation, of which FAA is a part, to evaluate its MPL methodology and, if necessary, develop a plan to update that methodology. The act also included a provision requiring GAO to assess FAA's evaluation and any actions needed to update the methodology. This report discusses the extent to which (1) FAA's evaluation report addresses the requirements in CSLCA and (2) FAA has addressed previously identified weaknesses in the MPL methodology. GAO reviewed documents and interviewed FAA on its loss methodology evaluation and actions to address weaknesses. The Federal Aviation Administration's (FAA) report evaluating its maximum probable loss (MPL) methodology did not fully address the evaluation and consultation requirements specified by the U.S. Commercial Space Launch Competitiveness Act (CSLCA). Balance of Risk. CSLCA required FAA to include ensuring that the federal government is not exposed to greater indemnification costs and that launch companies are not required to purchase more insurance coverage than necessary as a result of FAA's MPL methodology. FAA said that it ensured this balance by improving its methodology, but it did not reevaluate its probability thresholds after revising its methodology. These thresholds are used to divide the risk of loss between launch companies and the government. Impact on Costs. The act required FAA to consider the costs to both the industry and the federal government of implementing an updated methodology. FAA's report discussed the impact on indirect costs, such as data collection, but did not discuss direct costs: insurance premiums for launch companies and indemnification liability for the federal government. Consultation. The act also required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL methodology in accordance with the preceding requirements. While the agency consulted with some stakeholders, these consultations were limited in scope. FAA officials said they have not been able to take the actions needed to fully satisfy the mandated elements because of issues such as resource limitations and the lack of available data. However, by not resolving these issues, FAA lacks assurance that launch companies are not purchasing more insurance than needed or that the federal government is not being exposed to greater indemnification costs than expected. FAA has addressed two of three previously identified weaknesses in its MPL methodology but has not yet dealt with the remaining weakness. Specifically, the agency has revised its methodology for estimating the number of potential casualties for a launch and changed the factor it uses to derive estimated property damage from estimated casualties. However, FAA has not updated the amount used for the cost of an individual casualty. GAO recommended in a March 2017 report (GAO-17-366) that FAA update this amount. Not doing so could understate the amount of insurance launch companies are required to purchase, exposing the federal government to excess risk. GAO also determined that while FAA has two tools and methods it can use in making its MPL estimates, it does not have guidance on determining which are most appropriate for a given launch scenario. For example, one tool is more comprehensive but also labor intensive to use, while the other is inappropriate for certain launch scenarios and could result in misleading MPL amounts. Officials said they have begun to create such guidance but do not have an estimated completion date. Without such guidance, FAA cannot ensure that the most appropriate MPL methodology is used for each launch. FAA should fully address mandated requirements in evaluating its MPL—probability thresholds, direct costs, and stakeholder consultations— and establish an estimated completion date for developing guidance on tools and methods to use for specific launch scenarios. The Department of Transportation concurred with the recommendations, and provided technical comments.