Overview The International Trade Administration (ITA), the U.S. International Trade Commission (USITC), and the Office of the United States Trade Representative (USTR) are funded through the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations. This report provides an overview of these agencies' programs and a comparison of the FY2020 CJS proposals with the previous year's enacted legislation. For FY2019, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided a total of $647.0 million in funding for the three CJS trade-related agencies. The FY2019 act provided $484.0 million in direct appropriations for ITA, $95.0 million for USITC, and a total of $68.0 million for USTR. The FY2019 appropriations for the three CJS trade-related agencies was a 0.2% decrease (-$1.3 million) from FY2018 appropriations ($648.3 million). For FY2020, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), provided $678.7 million for the three trade-related agencies, which was $31.7 million (4.9%) more than the FY2019 amount, and $58.5 million (9.4%) more than the Administration's request. See the Appendix for enacted budget authority for the trade-related agencies for FY2009-FY2020. In the FY2020 budget cycle, the House and Senate each passed different versions of their CJS proposals under the same bill number, H.R. 3055 . In this report, the House and Senate versions of H.R. 3055 refer to the CJS provisions passed on June 25, 2019 (House) and October 31, 2019 (Senate). The CJS provisions were later struck from H.R. 3055 , and a continuing resolution was inserted in their place. The CJS provisions were then inserted into a new measure, H.R. 1158 , which passed both chambers and was signed into law as the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ). FY2020 Appropriations The President submitted his FY2020 budget request to Congress on March 11, 2019. The agencies released their congressional budget justification documents in the weeks afterward. In the President's FY2020 budget, the Administration requested a total of $620.2 million for the three CJS trade-related agencies. This request was $26.8 million less (-4.1%) than the FY2019 enacted level. The House Committee on Appropriations reported its FY2020 CJS appropriations proposal, H.R. 3055 , in early June 2019 and passed the measure on June 25, 2019 by a 227-194 vote. The House-passed bill included a total of $694.0 million for the three CJS trade-related agencies. This proposal was $47.0 million more (7.3%) than the FY2019 enacted funding, and $73.8 million more (11.9%) than the Administration's request. The House-passed bill included $521.0 million for ITA, $101.0 million for USITC, and a total of $72.0 million for USTR. The Senate Committee on Appropriations reported its CJS bill, S. 2584 , on September 26, 2019. In late October, the Senate took up the House-adopted proposal, H.R. 3055 , and passed it with amendments by a vote of 84-9. The Senate-passed version of H.R. 3055 included a total ofÂ $678.7 million for the three CJS trade-related agencies, which was $31.7 million more (4.9%) than the FY2019-enacted amount and $58.5 million more (9.4%) than the Administration's request. The Senate-passed version included $510.3 million for ITA, $99.4 million for USITC, and a total of $69.0 million for USTR. The Senate's proposed funding levels were enacted in the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ). The President signed the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), on December 20, 2019, approving FY2020 annual appropriations for the three CJS trade agencies. The act provided $678.7 million for these agencies, which was $31.7 million more (4.9%) than the FY2019 amount, and $58.5 million more (9.4%) than the Administration's request. (For a full summary, see Table 1 ) International Trade Administration (ITA)10 The International Trade Administration is a bureau within the Department of Commerce. ITA's mission is to improve U.S. prosperity by strengthening the competitiveness of U.S. industry, promoting trade and investment, and ensuring compliance with trade laws and agreements. ITA provides export promotion services; works to enforce and ensure compliance with trade laws and agreements; administers trade remedies such as antidumping and countervailing duties; and provides analytical support for ongoing trade negotiations. ITA went through a major organizational change in October 2013 in which it consolidated four organizational units into three more functionally aligned units: (1) Global Markets, (2) Enforcement and Compliance, and (3) Industry and Analysis. ITA also has a fourth organizational unit, the Executive and Administrative Directorate, which is responsible for providing policy leadership, information technology support, and administration services for all of ITA. ( Table 2 outlines ITA FY2020 budget proposals by unit, and Table A-1 shows budget amounts for ITA by unit between FY2009 and FY2019.) For FY2020, the Administration requested $460.1 million for ITA in direct appropriations, with an additional $11.0 million to be collected in user fees, for a total of $471.1 million in authorized spending. With respect to direct appropriations, this request was $23.9 million less (-4.9%) than the FY2019 enacted funding level. The House-passed H.R. 3055 included $521.0 million in direct appropriations for ITA, with an additional $11.0 million to be collected from user fees, for a total of $532.0 million in authorized spending. With respect to direct appropriations, this proposal was $37.0 million more (7.6%) than the FY2019 enacted funding level and $60.9 million more (13.2%) than the Administration's request. The Senate-passed version proposed $510.3 million in direct appropriations for ITA with an additional $11.0 million to be collected from user fees, for a total of $521.3 in authorized spending. With respect to direct appropriations, this proposal was $26.3 million more (5.4%) than the FY2019 funding, and $50.2 million more (10.9%) than the Administration's request. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), adopted the Senate-proposed funding level of $510.3 for ITA's top-level funding ( Table 1 ). Global Markets Unit ITA's Global Markets (GM) unit is a combination of the United States and Foreign Commercial Service (US&FCS) program that provides export promotion services to U.S. businesses and the SelectUSA program that works to attract foreign investment into the United States. Through US&FCS, GM aims to promote U.S. exports by helping U.S. exporters research foreign markets and identify opportunities abroad. GM's country and regional expertsâin domestic and overseas officesâadvise U.S. companies on market access, local standards, and regulations. The unit also helps to make connections through business-to-business trade shows, fairs, and missions. GM is designed to advance U.S. commercial interests by engaging with foreign governments and U.S. businesses, identifying and resolving market barriers, and leading efforts that advocate for U.S. firms with foreign governments. Through its SelectUSA program, the GM unit promotes the United States as a destination for foreign investment. (For more on SelectUSA, see section " SelectUSA Program " below.) For FY2020, the Administration proposed reducing funding for the Global Markets unit. The Administration requested $278.0 million for Global Markets, an amount $42.0 million less (-13.1%) than the FY2019-enacted amount ( Table 2 ). The Administration proposed rescaling the Global Markets unit by "reducing personnel worldwide and closing overseas and domestic officesâ¦ ITA estimated the need to close 32 offices overseas, 18 offices domestically, and reduce personnel [by 114 positions]" in an effort "to reduce fixed operational expenses. " In the reports accompanying the committee-reported bills, the House and Senate Committees did not adopt the Administration's proposed cuts to Global Markets, and instead recommended boosting funding for the Global Markets unit. For FY2020, the House Appropriations Committee recommended $338.6 million for Global Markets, an amount $18.6 million more (5.8%) than the FY2019 enacted funding level and $60.7 million more (21.8%) than the Administration's request. The Senate Committee on Appropriations recommended $335.3 for Global Markets, which was $15.3 million more (4.8%) than the FY2019 enacted amount, and $57.3 million more (20.6%) than the Administration's request. The report to accompany the Senate committee-reported CJS appropriations bill included language directing ITA to spend "no less than $130 million on employee compensation [for Global Markets];" and noted that, "at this funding level, the Committee will not approve any request to close foreign or domestic offices." As outlined in the explanatory statement accompanying the act, the Consolidated Appropriations Act, 2020, provided "no less than $333,000,000 for Global Markets." Enforcement and Compliance The mission of ITA's Enforcement and Compliance unit is to enforce U.S. trade laws and ensure compliance with negotiated international trade agreements. The Enforcement and Compliance unit is responsible for enforcing U.S. antidumping and countervailing duty (AD/CVD) laws; overseeing a variety of programs and policies regarding the enforcement and administration of U.S. trade remedy laws; assisting U.S. industry and businesses with unfair trade matters; and administering the Foreign Trade Zone program and other U.S. import programs. For FY2020, the Administration proposed $93.8 million for Enforcement and Compliance. This request was $5.3 million more (6.0%) than the FY2019 budget authority ( Table 2 ). According to ITA's congressional budget submission, some of the Administration's objectives for the proposed increase for Enforcement and Compliance were: to address increasing caseloads of AD/CVD investigations; to provide technical assistance on Section 232 exclusion requests; and to establish a dedicated team to investigate allegations of circumvention and duty evasion by foreign exporters and their U.S. importers. For FY2020, the House-passed version of H.R. 3055 included $94.8 million for Enforcement and Compliance, which was $6.3 million more (7.2%) than the FY2019 budget authority, and $1.0 million more (1.1%) than the Administration's request ( Table 2 ). In the Senate, language in the report accompanying the Senate committee-reported bill recommended "$1,000,000 above the fiscal year 2019 enacted level [$88.5 million] for the Office of Enforcement and Compliance to establish a dedicated anti-circumvention and duty evasion enforcement unit." The explanatory statement accompanying the Consolidated Appropriations Act, 2020, did not provide specific funding levels. The statement outlined that: The agreement does not assume House levels for Industry and Analysis, Enforcement and Compliance, and Executive Direction and Administration. However, ITA is directed to take steps to fill important vacancies across the agency in support of trade promotion, facilitation, and enforcement, as well as additional staff to support the Committee on Foreign Investment in the United States and the new Anti-Circumvention and Evasion Unit. Industry and Analysis ITA's Industry and Analysis unit brings together ITA's industry, trade, and economic experts to advance the competitiveness of U.S. industries through the development and execution of international trade and investment policies, export promotion strategies, and investment promotion. It develops economic and international policy analysis to improve market access for U.S. businesses, and designs and implements trade and investment promotion programs. The unit serves as the primary liaison between U.S. industries and the federal government on trade and investment promotion. It administers programs that support small and medium-sized enterprises, such as the Market Development Cooperator Program. For FY2020, the Administration proposed increasing funding for the Industry and Analysis unit. The Administration requested $62.6 million for Industry and Analysis. This request was $10.0 million more (19.1%) than the FY2019 budget authority ( Table 2 ). According to ITA's budget justification, some of the Administration's objectives for the proposed increase were: to meet the expected increase in cases related to foreign investment in the United States and to implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA); to develop staff with economic modeling skills and sectoral expertise; to manage the trade processes related to the tariffs imposed under certain U.S. trade law (Sections 301, 201, 232 ); and to provide analysis relevant to ongoing and future trade negotiations and the resolutions of trade barriers. For FY2020, the House-passed bill included $62.6 million for Industry and Analysis, which was $10.0 million (19.1%) more than the FY2019 budget authority and equal to the Administration's request ( Table 2 ). In the Senate, a specific funding level was not provided for Industry and Analysis. Language in the report accompanying the Senate committee-reported CJS bill did recommend "provid[ing] the requested program changes for Industry and Analysis to implement â¦ [FIRRMA] ( P.L. 116-115 â232) and for increased analytical capabilities." The explanatory statement accompanying the Consolidated Appropriations Act, 2020, did not provide specific funding levels. The statement outlined that: The agreement does not assume House levels for Industry and Analysis, Enforcement and Compliance, and Executive Direction and Administration. However, ITA is directed to take steps to fill important vacancies across the agency in support of trade promotion, facilitation, and enforcement, as well as additional staff to support the Committee on Foreign Investment in the United States and the new Anti-Circumvention and Evasion Unit. U.S. International Trade Commission (USITC or the Commission) USITC is an independent, quasi-judicial agency responsible for conducting trade-related investigations and providing independent technical advice on U.S. international trade policy to Congress, the President, and USTR. The Commission (1) investigates and determines whether imports injure a domestic industry or violate U.S. intellectual property rights; (2) provides independent tariff, trade, and competitiveness-related analysis to the President, Congress, and USTR; and (3) maintains the U.S. tariff schedule. USITC also serves as a federal resource for trade data and other trade policy information. It makes most of its information and analyses available to the public to promote understanding of competitiveness, international trade issues, and the role that international trade plays in the U.S. economy. USITC's annual budget request to Congress is subject to two types of submission: (1) the President's budget request for the Commission, included in the President's annual budget; and (2) the Commission's independent budget request. USITC has the authority to submit its budget directly to Congress without revision by the President, pursuant to Section 175 of the Trade Act of 1974. The President's FY2020 budget requested $91.1 million in funding for USITC. This request was $3.9 million less (-4.1%) than FY2019-enacted appropriation ( Table 1 ). While the President requested a decrease in funding for USITC, the Commission's independent budget submission requested $101.0 million, which was $6.0 million more (6.3%) than FY2019 funding and $9.9 million more (10.9%) than the President's budget request. The House-passed H.R. 3055 included $101.0 million for USITC. This represented $6.0 million more (6.3%) than FY2019 funding and $9.9 million more (10.9%) than the President's budget request. The Senate-passed version of H.R. 3055 included $99.4 million for USITC. This proposal was $4.4 million more (4.6%) than the FY2019 funding, and $8.3 million more (9.1%) than the President's budget request. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) enacted the Senate's funding level of $99.4 million for USITC ( Table 1 ). Office of the U.S. Trade Representative (USTR) USTR has primary responsibility for developing and coordinating U.S. international trade and direct investment policies, as the head of the interagency trade policy coordinating process. Located in the Executive Office of the President, USTR is the President's principal advisor on trade policy and the President's chief negotiator for international trade agreements, including commodity and direct investment negotiations. USTR negotiates directly with foreign governments to create trade agreements and resolve disputes, and participates in global trade policy organizations such as the World Trade Organization. It also meets with business groups, policymakers, and public interest groups on trade policy issues. In addition to direct appropriations for USTR, supplementary funding for the agency is available through the congressionally established Trade Enforcement Trust Fund. For more detail on the trust fund, see section " Trade Enforcement Trust Fund (TETF) " below. For FY2020, the Administration requested a total of $69.0 million for USTR, including $59.0 million for salaries and expenses and $10.0 million to be derived from the TETF for certain trade enforcement activities ( Table 3 ). This request was $1.0 million more (1.5%) than the FY2019 enacted funding level. The House-passed version of H.R. 3055 recommended a total of $72.0 total for USTR, including $57.0 million for salaries and $15.0 million to be derived from the TETF for certain trade enforcement activities ( Table 3 ). The House proposal for USTR was $4.0 million more (5.9%) than the FY2019 enacted funding and $3.0 million more (4.3%) than the request. The Senate-passed version recommended a total of $69.0 million for USTR, including $54.0 million for salaries and expenses and $15.0 million to be derived from the TETF. The proposed amount was $1.0 million more (1.5%) than the FY2019 funding amount. While the Senate-passed total funding amount for USTR was equal to the Administration's request, it included a different distribution of funds between USTR's salaries and expenses account and funds to be derived from the TETF (see Table 3 ). The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) enacted the Senate's funding levels of $69.0 million for USTR, including $54.0 million for salaries and expenses and $15.0 million to be derived from the TETF ( Table 3 ). Selected Trade-Related Programs and Activities Over the past decade, Congress has provided funding for specific trade-related programs or activities within broader agency budgets. The following programs are highlighted in this report, due to ongoing congressional interest: (1) ITA's China trade enforcement and compliance activities; (2) ITA's investment promotion activities in its SelectUSA Program; (3) the Survey of International Air Travelers (SIAT) within ITA; and (4) the Trade Enforcement Trust Fund, which funds certain activities of USTR. China Trade Enforcement and Compliance Activities, ITA Since 2004, Congress has dedicated some of ITA's funding to AD/CVD enforcement and compliance activities with respect to China and other nonmarket economies. ITA's Office of China Compliance was established by the Consolidated Appropriations Act of 2004 ( P.L. 108-199 ). Its primary role has been to enforce U.S. AD/CVD laws and to develop and implement other policies and programs aimed at countering unfair foreign trade practices in China. ITA's China Countervailing Duty Group was established by the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) to accommodate the workload that resulted from the application of countervailing duty law to imports from nonmarket economy countries. The Office of China Compliance is within the Enforcement and Compliance unit at ITA. ITA's FY2020 budget justification did not provide a breakdown of funding for its China AD/CVD activities. In agreement with both the House and Senate-passed proposals, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) provided $16.4 million for China antidumping and countervailing duty enforcement and compliance activities in FY2020, an amount equal to the FY2019-enacted funding. SelectUSA Program, ITA SelectUSA was established by executive order in 2011 as a Commerce Department program to (1) promote the United States as an investment market and (2) address investor climate concerns that could impede investment in the United States. SelectUSA coordinates investment-related resources across more than 20 federal agencies; serves as an information resource for international investors; and advocates for U.S. cities, states, and regions as investment destinations. SelectUSA currently is part of ITA's Global Markets unit. ITA's FY2020 budget justification did not provide a breakdown for requested funding for SelectUSA. The House-passed H.R. 3055 also did not include a breakdown for specific funding for SelectUSA, within ITA's Global Markets unit. The Senate-passed H.R. 3055 included up to $10.0 million for SelectUSA for FY2020. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) adopted the Senate funding level. Survey of International Air Travelers (SIAT), ITA ITA's Survey of International Air Travelers (SIAT) gathers statistics about air passenger travelers in the United States. Federal agencies use these statistics for a variety of purposes, such as to estimate the contribution of international travel to the economy, develop public policy on the travel industry, and forecast staffing needs at consulates and ports of entry. SIAT is within the Industry and Analysis unit at ITA. The Administration proposed an increase of $3.0 million to support SIAT in FY2020, within the Industry and Analysis' funding. The House and Senate both recommended $3.0 million to support SIAT in FY2020, within the ITA budget. The Consolidated Appropriations Act, 2020, did not provide a specific funding amount for SIAT. Trade Enforcement Trust Fund (TETF), USTR In order to provide additional funding for USTR's trade enforcement activities, Congress established the Trade Enforcement Trust Fund (TETF) in 2016. In Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015 ( P.L. 114-125 ), Congress set up the trust fund and outlined authorized uses of the funds. According to Section 611(d), USTR can use funds from the TETF to (1) monitor and enforce trade agreements and World Trade Organization (WTO) commitments; (2) support trade capacity-building assistance to help partner countries meet their free-trade agreement obligations and commitments; and (3) investigate petitions concerning unfair trade practices under Section 301 of the Trade Act of 1974. USTR can also transfer funds to select federal agencies for trade enforcement activities authorized in Section 611(d) of the Trade Facilitation and Trade Enforcement Act of 2015. For FY2020, the Administration requested $10.0 million to be derived from the TETF. This request was $5.0 million less than the FY2019-enacted amount. (See Table 3 ). Both the House- and Senate-passed versions of H.R. 3055 included $15.0 million to be derived from the TETF, for trade enforcement activities authorized by the Trade Facilitation and Trade Enforcement Act of 2015. The recommendations were equal to the FY2019 enacted funding level, and were $5.0 million more than the Administration's request. (See Table 3 .) The House and Senate Appropriation committees also directed USTR to provide more detailed reporting on how funds from the Trust Fund are used. The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) provided $15.0 million to be derived from the TETF, for trade enforcement activities authorized by the Trade Facilitation and Trade Enforcement Act of 2015. The funding level was equal to the FY2019 enacted funding level, and was $5.0 million more than the Administration's request. Appendix. Budget Authority Tables


Overview The Republic of Kosovo declared independence from Serbia in 2008, nearly a decade after the end of a brief but lethal conflict between Serbian forces and a Kosovo Albanian insurgency led by the Kosovo Liberation Army (KLA). Since 2008, Kosovo has been recognized by more than 100 countries. The United States and most European Union (EU) member states recognize Kosovo. Serbia, Russia, China, and various other countries (including some EU member states) do not. The United States has strongly supported Kosovo's state-building and development efforts, as well as its ongoing dialogue with Serbia to normalize their relations. Kosovo regards the United States as a security guarantor and key ally. Congress has maintained interest in Kosovo for many decadesâfrom concerns over Serbia's treatment of ethnic Albanians in the former Yugoslavia to the armed conflict in Kosovo in 1998-1999 after the Yugoslav federation disintegrated. Many Members were active in debates over the U.S.- and NATO-led military intervention in the conflict. After Serbian forces withdrew in 1999, many Members backed Kosovo's independence. Today, many in Congress continue to support Kosovo through country- or region-specific hearings, congressional visits, and foreign assistance funding levels averaging around $50 million per year since 2015. Looking ahead, Members may consider how the United States can support the Kosovo-Serbia dialogue, Kosovo's Euro-Atlantic ambitions, transitional justice processes, the ongoing political crisis arising from the March 2020 government collapse, and regional security. Domestic Issues Current key issues in Kosovo's domestic situation include the March 2020 collapse of the government; responding to the Coronavirus Disease 2019 (COVID-19) pandemic; managing relations with the country's ethnic Serb minority, particularly in northern Kosovo; and economic growth. Politics Kosovo is a parliamentary republic with a prime minister, who serves as head of government, and an indirectly elected president, who serves as head of state and has largely ceremonial powers. The unicameral National Assembly has 120 seats, of which 20 are reserved for ethnic minorities. Albin Kurti currently serves as acting Prime Minister. In 2016, the National Assembly elected Hashim ThaÃ§i to a five-year term as president. ThaÃ§i previously served as prime minister and has long been a major political figure in the country. Kosovo's domestic politics have been volatile for much of the past year, marked by government turnover, escalating tension between the president and prime minister, and divisions over various issuesâincluding a stalled dialogue to normalize relations with Serbia. More recently, the country entered a period of uncertainty when the Kurti government lost a vote of confidence on March 25, 2020, less than two months after it had formed (see textbox below, "March 2020 Government Collapse and Aftermath"). Many had viewed that government as a potentially pivotal shift in power from long-ruling parties to the opposition. The government breakdown coincided with the COVID-19 pandemic, and some have expressed concern that the ensuing political crisis could impede the public health response. Outgoing governing partners VetÃ«vendosje and the Democratic League of Kosovo (LDK) were the top-performing parties in early parliamentary elections in October 2019 (see Table 1 ). Their victory was considered to reflect deep voter dissatisfaction with corruption and economic conditions, as well as a desire to hold accountable the small number of parties that have largely rotated in government over the past several decades. Prior to 2020, the Democratic Party of Kosovo (PDK), led by ThaÃ§i until 2016, had participated in all governments since independence. The PDK and several other former ruling parties grew out of factions of the KLA resistance and, along with several other parties, sometimes are referred to as the war wing . Critics charge that these parties became entrenched in state institutions. By contrast, neither VetÃ«vendosje nor its leader, Albin Kurti, had been in national government prior to 2020. The party grew out of a 2000s-era protest movement that channeled popular frustration with government corruption. VetÃ«vendosje also railed against aspects of post-1999 administration of Kosovo, accusing international missions of failing to establish the rule of law despite their vast powers. The party has steadily built support across election cycles. In the past, VetÃ«vendosje was criticized for using obstructionist tactics (including releasing tear gas in parliament) and for seeking to subvert several agreements with Serbia and Montenegro that were seen as important to regional reconciliation. Kurti maintains that the party will govern responsibly and prioritize socioeconomic reforms and the rule of law. VetÃ«vendosje at times has floated the idea of eventual unification with Kosovo's neighbor and close ally, Albania; however, unification does not appear likely to become a serious proposal under current conditions, not least of all due to U.S. and EU objections. Analysts generally have been positive in their assessments of Kosovo's democratic development since 2008, particularly its active civil society, pluralistic media sector, and track record of competitive elections. At the same time, U.S. and EU officials, as well as watchdog groups such as the U.S.-based nongovernmental organization Freedom House, have urged Kosovo to more rigorously enforce anti-corruption rules and uphold judicial independence. Many regard corruption and weak rule of law to be serious problems. The so-called Pronto Affair, one of several scandals to emerge in recent years, raised allegations of nepotism on the part of the then-governing PDK. In 2018, 11 PDK officials, including a minister and a lawmaker, were indicted for allegedly offering public jobs to party backers. According to the U.S.-based nongovernmental organization Freedom House, the Pronto case showed "a systemic abuse of power and informal control over state structures." In April 2020, 19 individuals (thought to include former ministers) were indicted for abuse of position relating to the 2013 privatization of four hydropower plants and a distribution network. Kosovo Serbs and Northern Kosovo About 100,000 to 120,000 Serbs live in Kosovo, primarily in semi-isolated rural communities. Kosovo Serbs are accorded various forms of representation and partial autonomy under the 2008 constitution and related legislation. This framework is partly the result of U.S. and other external pressure on Kosovo's leaders to incorporate power-sharing measures to bolster minority rights and protection. These provisions established a municipal level of governance with specific areas of responsibility (most Serbs live in municipalities where they form a majority). Power-sharing arrangements require Serb representation in parliament, the executive, and other institutions. Majority consent from minority members of parliament is mandatory on some votes, and Serbian has official language status. Nevertheless, some question the actual effectiveness of these measures in integrating Serbs. More than half of Kosovo Serbs live in minority-majority municipalities in central and southeastern Kosovo. These municipalities do not border Serbia and are largely integrated into Kosovo institutions, although wartime legacies of distrust and fear persist. By contrast, the situation in northern Kosovo is one of the most enduring challenges in Kosovo's state building since independence (see also "Relations with Serbia," below). About 40% of the Serb population lives in four Serb-majority municipalities north of the Ibar River that are adjacent to Serbia (see map in Figure 1 ). Pristina has been unable to exert full authority in northern Kosovo, whereas Serbia has retained strong influence (albeit not full authority) in the region despite the withdrawal of its forces in 1999. Kosovo Serbs turned to Serbian-supported parallel structures for security, health care, education, and other services. Due to its grey-zone status, northern Kosovo is considered a regional hub for smuggling and other illicit activities. Serbian List ( Srpska Lista ), the party that has dominated recent elections in northern Kosovo, is considered to be close to the Serbian government. There have been reports of harassment and intimidation against opposition Serb politicians in the north, most recently in the October 2019 elections. The 2018 murder of opposition Serb politician Oliver IvanoviÄ raised questions about the power structures and vested interests that prevail in northern Kosovo. Economy The 1998-1999 war with Serbia caused extensive damage to Kosovo's infrastructure and economy. Two decades later, economic recovery continues. Employment is an acute policy challenge; Kosovo's average 40% labor force participation rate is the lowest in the Western Balkans. The unemployment rate stood at about 26% in 2019, with disproportionately higher levels among working-age females and youth. The economy and perceived limits to upward socioeconomic mobility contribute to high rates of emigration. Kosovo's gross domestic product (GDP) grew by 3.8% in 2018 and 4.2% in 2019. The International Monetary Fund (IMF) estimates that Kosovo's economy could contract by 5% in 2020 due to the COVID-19 pandemic. Foreign direct investment (FDI) in Kosovo in 2018 was â¬214 million (about $232 million), the lowest in the Western Balkans. By contrast, remittances received from citizens abroad (primarily in European countries) amounted to â¬801 million (about $868.6 million) in 2018, equivalent to 12% of GDP. Kosovo's key trade partners are the EU and neighboring countries in the Western Balkans. Kosovo has largely liberalized trade with both blocs through its Stabilization and Association Agreement with the EU (a cooperation framework that includes steps to liberalize trade) and as a signatory to the Central European Free Trade Agreement (CEFTA) alongside other non-EU Balkan countries. Kosovo's 2019 exports totaled about â¬382 million ($414 million), of which the largest shares went to CEFTA countries and the EU. India, Switzerland, and Turkey were other significant export markets. Kosovo's top exports are metals; mineral products; plastics and rubber; and prepared foods, beverages, and tobacco. In lobbying for greater FDI, Kosovo officials tout the country's young workforce, natural resources, low corporate tax rate, use of the euro, and preferential access to the EU market. However, various impediments to investment remain, including corruption, weak rule of law, uncertainties over Kosovo's dispute with Serbia, and energy supply disruptions. Relations with Serbia23 Kosovo declared independence from Serbia in 2008 with U.S. support. Serbia does not recognize Kosovo and relies on Russia in particular for diplomatic support. Many believe that the lack of normalized relations between Kosovo and Serbia impedes both countries' prosperity and progress toward EU membership and imperils Western Balkan stability. War and Independence After centuries of Ottoman rule, Kosovo became part of Serbia in the early 20 th century. After World War II, Kosovo eventually had the status of a province of Serbia, one of six republics of Yugoslavia. Some Serbian perspectives view Kosovo's incorporation as the rightful return of territory that was the center of a medieval Serbian kingdom and is prominent in national identity narratives. Kosovo Albanian perspectives, by contrast, largely view Kosovo's incorporation into Serbia as an annexation that resulted in the marginalization of the Albanian-majority population. During the 1980s, Kosovo Albanians grew increasingly mobilized and sought separation from Serbia. In 1989, Serbiaâthen led by autocrat Slobodan MiloÅ¡eviÄ, who leveraged Serbian nationalism to consolidate powerâimposed direct rule in Kosovo. Throughout the 1990s, amid Yugoslavia's violent breakup and MiloÅ¡eviÄ's continued grip on power in Serbia, human rights groups condemned Serbian repression of Albanians in Kosovo, including suppression of the Albanian language and culture, mass arrests, and purges of Albanians from the public sector and education institutions. In the late 1990s, the Albanian-led Kosovo Liberation Army (KLA) launched an insurgency against Serbian rule in Kosovo. Serbia responded with increasingly heavy force in 1998 and 1999 (see "Transitional Justice," below). Following a NATO air campaign against Serbian targets in early 1999, Serbia agreed to end hostilities and withdraw its forces from Kosovo. U.N. Security Council (UNSC) Resolution 1244 authorized the U.N. Interim Administration Mission (UNMIK) to provide transitional civil administration and the NATO-led KFOR mission to provide security (both missions still operate on a smaller scale). MiloÅ¡eviÄ lost power in 2000 amid mass protests in Serbia. Kosovo's decision to declare independence in 2008 followed protracted and ultimately unsuccessful efforts on the part of the international community to broker a settlement with Serbia. Serbia challenged Kosovo's actions before the International Court of Justice (ICJ); however, the ICJ's 2010 advisory opinion found that Kosovo had not contravened international law. European Union-Facilitated Dialogue Following the ICJ ruling, the EU and the United States urged Kosovo and Serbia to participate in a dialogue aimed at eventual normalization of relations, but with an initial focus on technical measures to facilitate the movement of goods and people and otherwise improve the quality of life. In 2012, the talks advanced to a political level, bringing together leaders from the two countries for EU-brokered meetings. Leaders in both countries are constrained by public opinion and a political climate that tends to make major concessions costly. Kosovo and Serbia's goal to join the EU helps incentivize their participation in the dialogue; the EU maintains that neither country can join the union until they normalize relations. Kosovo's participation in the dialogue also is motivated by its desire to clear a path to U.N. membership and, eventually, NATO membership (Serbian approval is seen as a key step to unlocking Kosovo's U.N. membership). To date, the dialogue has produced 33 agreements, mostly of a technical nature. In 2013, Serbia and Kosovo reached the Brussels Agreement, which set out principles to normalize relations, including measures to dismantle Serbian-backed parallel structures in northern Kosovo and create an Association of Serb Municipalities (ASM) linking Kosovo's 10 Serb-majority municipalities. Implementation of the dialogue's agreements has progressed in some areas, such as Kosovo Serb electoral participation and the integration of law enforcement and the judiciary in the north into statewide institutions. It has lagged in other areas, such as in the energy sector and in the ASM. Although the dialogue format does not predetermine a specific outcome, the EU has urged a "comprehensive, legally binding" agreement between the parties. Two particularly thorny issues in any such agreement are the scope of Serbian recognition of Kosovo and the situation in northern Kosovo. It remains undetermined whether Serbia would fully recognize Kosovo or accept Kosovo's institutions and U.N. membership without formal recognition. It is also uncertain how northern Kosovo would be addressed in any final settlement. Prior to 2018 (see below), U.S. and EU officials rejected local (primarily Serbian) leaders' occasional hints at partition as a potential solution. The United States and the EU feared that transferring territory or changing borders along ethnic lines could set a dangerous precedent and destabilize the region. Alternatively, some consider the integration of the north into statewide institutions through autonomy measures, such as the ASM, to be a potential compromise that could preserve Kosovo's territorial integrity while offering concessions to Kosovo Serbs. However, the ASM has faced resistance from some in Kosovo due to concerns that it could undermine state integrity if it is endowed with significant executive functions and formalized links to Serbia. Since late 2015, there has been little progress in reaching new agreements or implementing existing ones. Further, a shift in focus absorbed some of the dialogue's energies: in 2018, President ThaÃ§i and Serbian President Aleksandar VuÄiÄ raised the prospect of redrawing borders as an approach to normalizing relations (sometimes described as a land swap , a partition, or a border adjustment ). Analysts believe such a measure could entail transferring Serb-majority municipalities in northern Kosovo to Serbia, possibly in exchange for Albanian-majority areas of Serbia's PreÅ¡evo Valley. To the surprise of some, Trump Administration officials broke with long-standing U.S. and EU opposition to redrawing borders/partition by signaling willingness to consider such a proposal if Kosovo and Serbia were to reach a mutually satisfactory agreement. However, some European allies, particularly Germany, remain opposed to any such proposal. Acting Prime Minister Kurti and much of Kosovo's political class and population also oppose ceding territory. The dialogue has been suspended since late 2018, when Kosovo imposed tariffs on Serbian goods in retaliation for Serbia's campaign to block Kosovo's Interpol membership bid and its efforts to lobby countries to "de-recognize" Kosovo. Serbian leaders say they will not return to negotiations until the tariffs are lifted. U.S. and European officials repeatedly called upon the two parties to return to talks. In March 2020, Prime Minister Kurti announced the repeal of tariffs on raw material imports from Serbia. The following month, amid continued U.S. pressure, he announced the decision to conditionally repeal tariffs against Serbian goods and replace them with gradual reciprocity measures to match existing Serbian measures impacting the movement of goods and people. EU officials welcomed the tariff removal; however, U.S. officials expressed dissatisfaction with the reciprocity measures. Kosovo's parties and leaders have become increasingly divided over several aspects of the dialogue, particularly the terms of lifting tariffs against Serbia. Furthermore, acting Prime Minister Kurti has challenged President ThaÃ§i's leadership of Kosovo's participation in the dialogue, arguing that the authority of the government (rather than the head of state) to lead efforts was confirmed in a prior Constitutional Court ruling. Separately, some observers caution that growing uncertainty over the Western Balkan countries' EU membership prospects could alter the incentive structure weaving together the dialogue and the accession process. Recently, the United States has played a more direct role in Kosovo-Serbia negotiations (see "U.S.-Kosovo Relations"). Transitional Justice Transitional justice relating to the 1998-1999 war is a sensitive, emotionally charged issue in Kosovo and Serbia and a source of friction in efforts to normalize relations. Serbian police, soldiers, and paramilitary forces were accused of systematic, intentional human rights violations during the conflict. About 13,000 people were killed, and nearly half of the population was forcibly driven out of Kosovo. An estimated 20,000 people were victims of conflict-related sexual violence. The vast majority of all victims were ethnic Albanians. On a smaller scale, some KLA fightersâparticularly at the local levelâcarried out retributive acts of violence against Serb civilians, other minority civilians, and Albanian civilians whom they viewed as collaborators. Before closing in 2017, the International Criminal Tribunal for the former Yugoslavia tried several high-profile cases relating to the Kosovo conflict, including those of deposed Serbian leader MiloÅ¡eviÄ, who died before his trial finished, and former Kosovo Prime Minister Haradinaj, who was twice acquitted of charges relating to his role as a KLA commander. Domestic courts in Kosovo and Serbia now handle most war crimes cases. Weak law enforcement and judicial cooperation between Kosovo and Serbia is an impediment in the many cases in which evidence, witnesses, victims, and alleged perpetrators are no longer in Kosovo. Critics assert that low political will in Serbia in particular hampers transitional justice. Officials from successive post-MiloÅ¡eviÄ Serbian governments have been criticized for downplaying or failing to acknowledge Serbia's role in the wars in Bosnia, Croatia, and Kosovo in the 1990s and for fostering a climate that is hostile to transitional justice and societal reconciliation with the past. Transitional justice processes concerning the KLA are controversial in Kosovo. Under U.S. and EU pressure, in 2015 the National Assembly adopted a constitutional amendment and legislation to create the Kosovo Specialist Chambers and Specialist Prosecutor's Office. These institutions are part of Kosovo's judicial system but are primarily staffed by international jurists and located in The Hague, Netherlands, to allay concerns over witness intimidation and political pressure. They are to investigate the findings of a 2011 Council of Europe report concerning allegations of war crimes committed by some KLA units. The Specialist Chambers is controversial in Kosovo, because it is to try only alleged KLA crimes. In 2017, lawmakers from the then-governing coalition moved to abrogate the Specialist Chambers but backed down after the United States and allies warned that doing so would have "severe negative consequences." More than 120 former KLA fighters are reported to have received summons for questioning during 2019, and analysts believe some Kosovo politicians could face indictment. Relations with the EU and NATO The EU and NATO have played key roles in Kosovo; these institutional relationships continue to evolve alongside Kosovo's state-building processes. European Union The EU has played a large role in Kosovo's postwar development. A European Union Rule of Law Mission (EULEX) was launched in 2008, assuming some tasks that UNMIK had carried out since 1999. The mission's scope has decreased over time as domestic institutions assume more responsibilities; today, EULEX's primary role is to monitor and advise on rule-of-law issues, with some executive functions. EULEX's current mandate runs through June 2020. Additionally, the EU provided over â¬1.48 billion (about $1.6 billion) in assistance from 2007 to 2020, as well as emergency support to address the COVID-19 pandemic (see "Coronavirus Disease 2019 (COVID-19) Response"). Kosovo is a potential candidate for EU membership and signed a Stabilization and Association agreement with the EU in 2014. The next steps in Kosovo's EU membership bid are obtaining candidate status and launching accession negotiations, which would commence the lengthy process of harmonizing domestic legislation with that of the EU. Kosovo's EU membership bid is complicated by the fact that five EU member states do not recognize it. Kosovo's more immediate goal in its relationship with the EU is to obtain for its citizens visa-free entry into the EU's Schengen area of free movement, which allows individuals to travel without passport checks between most European countries. Kosovo is the only Western Balkan country that does not have this status, despite EU officials' assessment that it fulfilled key requirements in 2018. Some observers contend that the EU's continued denial of visa liberalization to Kosovo has undercut the bloc's credibility and influence in the country. NATO The NATO-led Kosovo Force (KFOR) was launched in 1999 with 50,000 troops as a peace-support operation with a mandate under UNSC Resolution 1244. KFOR's current role is to maintain safety and security, support free movement of citizens, and facilitate Kosovo's Euro-Atlantic integration. As the security situation in Kosovo improved, NATO defense ministers in 2009 resolved to shift KFOR's posture toward a deterrent presence. Some of KFOR's functions have been transferred to the Kosovo Police. The United States remains the largest contributor to KFOR, providing about 660 of the 3,500 troops deployed as of November 2019. Any changes to the size of the mission would require approval from the North Atlantic Council and be "dictated by continued positive conditions on the ground." Many analysts assert that KFOR continues to play an important role in regional security. KFOR has played a key role in developing the lightly armed Kosovo Security Force (KSF) and bringing it to full operational capacity. KSF's current role is largely nonmilitary in nature and is focused instead on emergency response. A recurring issue is how KSF may transform into a regular army. In December 2018, Kosovo lawmakers amended existing legislation to gradually transform KSF, drawing sharp objections from Kosovo Serb leaders and Serbia. NATO Secretary-General Jens Stoltenberg called the measure "ill timed" given heightened tensions with Serbia, cautioned that the decision could jeopardize cooperation with NATO, and expressed concern that the decisionmaking process had not been inclusive. The United States, however, expressed support for the Kosovo government's decision and urged officials to ensure that the transformation is gradual and inclusive of all communities. U.S.-Kosovo Relations The United States enjoys broad popularity in Kosovo due to its support during the MiloÅ¡eviÄ era, its leadership of NATO's 1999 intervention in the Kosovo war, its backing of Kosovo's independence in 2008, and its subsequent diplomatic support. The United States supports Kosovo's Euro-Atlantic ambitions. Kosovo regards the United States as a security guarantor and critical ally, and many believe the United States retains influence in domestic policymaking and politics. The Trump Administration has signaled growing interest in securing a deal to resolve the Kosovo-Serbia dispute and stepping up U.S. engagement in the Western Balkans more broadly. U.S. officials assert that the full normalization of Kosovo-Serbia relations is a "strategic priority." In August 2019, U.S. Secretary of State Michael Pompeo appointed Deputy Assistant Secretary of State Matthew Palmer as his Special Representative for the Western Balkans. Shortly thereafter, President Donald Trump appointed U.S. Ambassador to Germany (now also Acting Director of National Intelligence) Richard Grenell as Special Presidential Envoy for Serbia and Kosovo Peace Negotiations. Many officials in Kosovo and Serbia have welcomed the prospect of a greater U.S. role in efforts to normalize relations. In January 2020, U.S. officials announced two new Kosovo-Serbia agreements on transportation links, pursuant to a strategy that focuses on economic growth and job creation as foundations for the normalization process. In March 2020, the White House hosted informal talks between President ThaÃ§i and President VuÄiÄ. U.S. efforts currently center on bringing the two parties back to negotiations. As mentioned, U.S. officials criticized the reciprocity principles that acting Prime Minister Kurti announced in April 2020 alongside the conditional lifting of tariffs. The direct U.S. role in brokering the recent transportation agreements and greater U.S. involvement in efforts to normalize Kosovo-Serbia relations is largely a departure from the approach taken under previous Administrations, which strongly supported EU-led efforts to normalize relations but did not play a formal, direct role. News of the January 2020 U.S.-brokered agreements reportedly came as a surprise to some European officials, who in turn have underscored the EU's long-standing role in the normalization process and appointed an EU special representative for the dialogue. Some analysts, while welcoming greater U.S. involvement, assert that the United States is more effective in engaging the Western Balkans when its actions and positions are aligned with those of its European allies; they contend that recent gaps between the United States and allies such as Germany on the Kosovo-Serbia dialogue, as well as on the March 2020 no-confidence session, have undercut overall engagement efforts. Some observers and several Members of Congress have expressed concern over recent U.S. policies toward Kosovo's government, such as pausing implementation of a $49 million Millennium Challenge Corporation (MCC) Threshold Program and delaying the development of its proposed Compact Program, until Kosovo rescinds the tariffs. Some Kosovo officials expressed dismay over what they describe as U.S. pressure on Kosovo to lift tariffs against Serbia without equivalent pressure on Serbia to cease its campaign to undercut Kosovo's international legitimacy. On April 13, 2020, the Chairman of the House Committee on Foreign Affairs and the Ranking Member of the Senate Committee on Foreign Relations released a joint letter to Secretary Pompeo that welcomed greater U.S. diplomatic engagement in efforts to normalize relations between Kosovo and Serbia but expressed concern over what they described as "heavy-handed" treatment of the weeks-old Kurti government. They urged greater cooperation with the EU and restarting implementation of Kosovo's MCC Threshold Program. Separately, acting Prime Minister Kurti alleged that U.S. officials had aided efforts to unseat his government in the March 2020 no-confidence session in hopes that a more pliable government in Pristina would quickly reach a deal with Serbia. U.S. officials have underscored that the United States is "committed to working with any government formed through the constitutional process" and rejected speculation that the United States was brokering a "secret plan for land swaps." Foreign Aid The United States is a significant source of foreign assistance to Kosovo (see Figure 2 ). U.S. assistance aims to support the implementation of agreements from the Kosovo-Serbia dialogue and to improve transparent and responsive governance, among other goals. Additional assistance is provided through a $49 million Millennium Challenge Corporation (MCC) Threshold Program that launched in 2017, with focus on governance and energy efficiency and reliability. Threshold programs are intended to help countries become eligible to participate in a larger Compact Program; in December 2018 and again in December 2019, the MCC board determined that Kosovo was eligible to participate in a compact. As discussed above, MCC assistance is currently on hold. Cooperation on Transnational Threats and Security Issues The United States and Kosovo cooperate to combat transnational threats and bolster security. Like elsewhere in the Western Balkans, Kosovo is a transit country and in some cases a source country for trafficking in humans, contraband smuggling (including illicit drugs), and other criminal activities. Observers consider Kosovo to have a relatively strong legal framework to counter trafficking, smuggling, and other transborder crimes. At the same time, the United States and the EU have urged officials in Kosovo to better implement the country's domestic laws by more strenuously investigating, prosecuting, and convicting traffickers, as well as by improving victim support. Combatting terrorism and violent extremism is a core area of U.S.-Kosovo security cooperation. Kosovo is a secular state with a moderate Islamic tradition, but an estimated 400 Kosovo citizens traveled to Syria and Iraq in the 2010s to support the Islamic State amid the terrorist group's growing recruitment efforts. As this policy challenge emerged, the United States assisted Kosovo with tightening its legal framework to combat recruitment, foreign fighter travel, and terrorism financing, as well as strengthening its countering violent extremism strategy. The United States provides support to Kosovo law enforcement and judicial institutions to combat terrorism and extremism. The State Department's Antiterrorism Assistance program, for example, has provided training or capacity-building support for the Kosovo Police's Counterterrorism Directorate and for the Border Police. Kosovo and the United States agreed to an extradition treaty in March 2016. In April 2019, the United States provided diplomatic and logistical support for the repatriation of about 110 Kosovo citizens from Syriaâprimarily women and childrenâwho had supported the Islamic State or were born to parents who had. Some repatriated persons were indicted on terrorism-related charges. Kosovo has a sister-state relationship with Iowa that grew out of a 2011 State Partnership Program (SPP) between the Iowa National Guard and the Kosovo Security Force. That relationship has been hailed as a "textbook example" of the scope and aims of the SPP. Congressional Engagement Congressional interest in Kosovo predates Yugoslavia's disintegration. Through resolutions, hearings, and congressional delegations, many Members of Congress highlighted the status of ethnic Albanian minorities in Yugoslavia, engaged in heated debates over intervention during the Clinton Administration, urged the George W. Bush Administration to back Kosovo's independence, and supported continued financial assistance. Congressional interest and support continues. In the 116 th Congress, several hearings have addressed Kosovo in part or in whole, including an April 2019 House Foreign Affairs Committee hearing on Kosovo's wartime victims and recent hearings on Western Balkan issues held by the Senate Armed Services Committee and the Senate Foreign Relations Committee's Subcommittee on Europe and Regional Security Cooperation. Given Kosovo's geography, history, and current challenges, the country also factors into wider U.S. foreign policy issues in which Congress remains engaged. Such issues include transitional justice, corruption and the rule of law, combatting human trafficking and organized crime, U.S. foreign assistance, security in Europe, and EU and NATO enlargement.


Background Contract Types Described by the Federal Acquisition Regulation The government can choose from a wide selection of contract types to acquire the variety and volume of supplies and services agencies require to meet their needs. Contract types vary according to the degree and timing of the responsibility assumed by the contractor for the costs of performance, and the amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals. The primary contract types described by the Federal Acquisition Regulation (FAR) fall into two broad categories—cost-type and fixed- price-type—and table 1 summarizes key features of each. As illustrated in figure 1, within these categories the specific contract types range from cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed, to firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss). In between are the various incentive contracts, under which the contractor’s responsibility for the performance costs and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance. For contracts with incentive fees or profits, the amount of fee or profit payable is related to the contractor’s performance, and generally involves an objective evaluation by the government of the contractor’s performance toward cost, schedule, or technical goals. Award fees, on the other hand, typically emphasize multiple aspects of contractor performance that are more subjectively assessed, such as the contractor’s responsiveness, technical ingenuity, or cost management. Furthermore, the basic types of contracts may be used in combination, with both fixed-price-type and cost-type contract line item numbers, unless otherwise prohibited. For example, a firm-fixed-price contract may have a cost-type line item for travel. The FAR states that selecting the contract type is generally a matter for negotiation and requires the exercise of sound judgment by the contracting officer. Negotiating the contract type and negotiating prices are closely related and should be considered together. The objective is for the government to negotiate a contract type and price (or estimated cost and fee) that will result in reasonable contractor risk and provide the contractor with the greatest incentive for efficient and economical performance. As also noted in the FAR, the government usually assumes greater risk in its contracts for more complex requirements, particularly those unique to the government. This is especially true for complex research and development contracts, where performance uncertainties or the likelihood of changes make it difficult to estimate performance costs in advance. Cost-type contracts are suitable for instances when uncertainties about contract performance do not allow accurate enough cost estimates to use a fixed-price-type contract—in other words, when programs choose to accept more risk. The level of risk drives the contract type chosen, with the contract then reflecting the risk of the work. DOD programs may use different contract types across the life of the MDAP. For example, DOD guidance notes that the preferred contract type for development efforts is cost-type, and requires particular consideration of fixed-price-incentive contracts for acquisitions moving from development to production. Consistent with the FAR, DOD guidance also notes that firm-fixed-price production contracts may be in the government’s best interest once costs have become stable. DOD and Congress have encouraged use of fixed-price-type contracts where appropriate. For example, DOD’s Better Buying Power initiative, which started in 2010, called for increased use of fixed-price-incentive contracts for programs transitioning from development to production. In addition, the National Defense Authorization Act (NDAA) for Fiscal Year 2017 required DOD to establish a preference for fixed-price-type contracts in the determination of contract type and specified approval requirements for use of cost-type contracts above certain dollar thresholds. Congress has also limited DOD’s ability to use cost-type contracts to acquire production units absent congressional notification. Our prior work contains many recommendations related to incentive-type contracts. For example, in March 2017 we recommended that the Navy remind contracting officials to follow guidance on documenting the rationale for using fixed-price-incentive contracts, and in April 2017, the Navy issued a memorandum addressing this issue. In July 2017 we recommended that DOD collect and analyze data to determine the extent to which incentive contracts achieved desired outcomes. While DOD agreed with the recommendation and developed a template for the military departments to use to collect relevant information, it is still gathering updates from the military departments about the status of this effort. Contracting for Major Defense Acquisition Programs DOD acquires MDAPs through the Defense Acquisition System, which implements an adaptive acquisition framework that allows DOD officials to develop acquisition strategies and employ acquisition processes that match the characteristics of the capability being acquired. The pathway for acquiring major capabilities generally includes four phases, three of which we focus on in this report: (1) technology maturation and risk reduction; (2) engineering and manufacturing development; and (3) production and deployment. Programs typically complete a series of milestone reviews and other key decision points that authorize entry into a new acquisition phase, as illustrated in figure 2. These milestones also typically mark critical contract award decisions. For example, the Milestone B decision commits the resources, including authorizing award of the program’s development contract, needed to conduct development leading to production. Milestone C represents the decision to move forward with initial production, including award of the initial production contract. A number of officials and agencies are involved in DOD’s choice and monitoring of MDAP contracts. Milestone decision authority: The designated individual with overall responsibility for the program who, at the time of key milestone reviews, approves the acquisition strategy with specified contract types. In approving the acquisition strategy, this individual must ensure that the strategy considers how to manage risk and how the contract type selected relates to the level of program risk in each acquisition phase. This individual is to use the acquisition strategy to assess the viability of the proposed approach, ensuring that it clearly explains how it is to be implemented with available resources, and is tailored to address program requirements and constraints. Milestone decision authority for most MDAPs now resides with the military departments following a reform enacted in the NDAA for Fiscal Year 2016. Prior to this reform going into effect, a position within the Office of the Secretary of Defense typically served as the milestone decision authority for MDAPs until they entered the production and deployment phase. Following a reorganization of the Office of the Secretary of Defense enacted in the NDAA for Fiscal Year 2017, the USD(A&S) now serves as milestone decision authority for a small number of MDAPs, such as the F-35 program. For other MDAPs, the following officials serve as milestone decision authority within the military departments: the Assistant Secretary of the Air Force (Acquisition, Technology, and Logistics); the Assistant Secretary of the Army (Acquisition, Logistics, and Technology); and the Assistant Secretary of the Navy (Research, Development, and Acquisition). Program manager: The designated individual with responsibility for and authority to accomplish program objectives for development, production, and sustainment to meet user operational needs. The program manager plans acquisition programs, prepares programs for key decisions, and executes approved acquisition and product support strategies. Contracting officer: The individual with the authority to enter into, administer, or terminate contracts and make related determinations and findings. Contracting officers are responsible for ensuring performance of all necessary actions for effective contracting, ensuring compliance with the terms of the contract, and safeguarding the interests of the United States in its contractual relationships. In order to perform these responsibilities, contracting officers are allowed wide latitude to exercise business judgement. Defense Contract Management Agency (DCMA): The entity that provides contract administration services for most DOD buying activities. Its contract management offices work with defense contractors to help ensure they deliver goods and services that meet performance requirements on time and at projected cost. Supervisor of Shipbuilding, Conversion and Repair (SUPSHIP): The entity that is the Navy’s on-site technical, contractual, and business authority for the construction of Navy ships. SUPSHIPs are co-located with the nation’s major shipbuilders and oversee the construction of every Navy ship, from patrol craft to the Navy’s most complex surface combatants and nuclear submarines and aircraft carriers. In addition to serving as milestone decision authority for certain MDAPs, USD(A&S) is responsible for improving outcomes by gathering and distributing best practices and lessons learned across the military departments. One such mechanism related to contract type choice, established in 2008, was mandatory preaward peer review—conducted by DPC, an office within USD(A&S)—for solicitations and contracts valued at over $1 billion and noncompetitive procurements over $500 million. For these competitive procurements, DPC conducted phased peer reviews prior to three events—issuance of the solicitation, issuance of the request for final proposal revisions, and contract award. The peer review teams—composed of senior DOD contracting leaders and officials from other military departments, and whenever possible comprising the same personnel across the three phases—discussed contract type and structure, and reviewed key program documentation such as acquisition strategies. Upon completion of a review, the team provided its findings and recommendations to the contracting officer, among other officials. However, in August 2019, DPC announced that it would no longer conduct peer reviews for most competitive procurements above $1 billion. Further details of this change are discussed later in this report. While the individual military departments have distinct requirements for the weapon systems they acquire, they also on occasion procure similar types of platforms, and use the same relatively small pool of contractors. For example, the Air Force and Navy both purchase fighter aircraft, and all three military departments buy missile systems. In 2019, we analyzed the 183 major development and procurement contract awards for MDAPs reported by DOD at that time, and found that almost half went to five corporations and entities connected with them, constituting 72 percent of the dollars associated with those contracts. Small Proportion of Obligations for Major DOD Acquisitions Since 2011 Was on Cost-Type Contracts and Level Varied across Military Departments From fiscal year 2011 through fiscal year 2019, a small proportion—an average of less than one-fifth—of obligations for programs in DOD’s portfolio of MDAPs was on cost-type contracts, although this proportion varied across the military departments. The remainder were on fixed- price-type contracts, split between firm-fixed-price and fixed-price- incentive, as illustrated in figure 3. Figure 4 illustrates the proportion of obligations by contract type for each of the military departments across the 9-year period. The Air Force made the most use of cost-type contracts, at an average of around one-quarter of obligations. While the Army made the least use of cost-type contracts, it made the most use of firm-fixed-price contracts. The Navy made the most use of fixed-price-incentive contracts. We have previously reported that the Navy has generally used cost-type contracts for lead ships and fixed-price-incentive contracts for follow-on ships. Choice of Cost-Type Contracts Informed by Program Risk and Subject to Additional Risk-Based Monitoring We found that the choice of cost-type contracts for MDAPs by contracting officers is based on assessments of program risk and uncertainty, underpinned by a number of statutory, regulatory, and policy provisions. Risk assessment also drives the application of additional reporting and surveillance requirements—designed to help the program office monitor cost and schedule performance—once DOD has awarded a cost-type contract for an MDAP. Choice of Cost-Type Contracts Is Based on Consideration of Program Risk and Uncertainty A range of statutory, regulatory, and policy provisions emphasize the importance of considering program risk and uncertainty when planning acquisitions and determining contract types for MDAPs. These provisions guide the decisions of contracting officers when choosing contract type and establish documentation requirements such as acquisition strategies. Table 2 describes key provisions related to program risk and uncertainty. Contracting and program officials, among others, collaborate and determine the appropriate contract type based on assessments of risk, considering factors such as availability of historical contract information, use of new technologies, cost stability, and the level of definition of requirements, such as software. In arriving at these determinations, officials we met with noted the importance of contracting officers having experience using a range of contract types. The seven MDAP cost-type contracts included in our review had documented rationales for their choice that all indicated areas of risk and uncertainty, addressing provisions noted in table 2. For example, four were development contracts, and FAR Part 35 states that the use of cost- type contracts for research and development is usually appropriate given the absence of precise specifications and difficulties in accurately estimating costs. The other three cost-type contract rationales noted that, consistent with the FAR, uncertainties in contract performance did not allow for costs to be estimated with sufficient accuracy to use a fixed- price-type contract. Table 3 summarizes these rationales. Additional Risk-Based Reporting Requirements for Cost-Type Contracts Designed to Help Programs Monitor Cost and Schedule Performance Contract types that shift more risk onto the government—including cost- type contracts—and exceed certain dollar thresholds have additional contractual reporting requirements. These requirements are designed to help the program office to monitor cost and schedule performance. In order to receive a cost-type or incentive contract valued at $20 million or more, a contractor must have an earned value management (EVM) system that complies with certain guidelines. These systems integrate the scope of work with cost, schedule, and performance elements to support project planning. They also provide program offices with monthly contract performance reports that include cost and schedule status and risks. Our prior work contains recommendations related to DOD’s use of EVM. For example, in 2009 we recommended that DOD modify policies governing EVM to ensure they addressed a number of weaknesses we had identified. In response, DOD developed and incorporated into its program management curricula a new EVM training course. Among the duties of two specialized government contract administration agencies—DCMA and SUPSHIP—are the review and approval of contractor EVM systems, and ongoing surveillance of data generated by the systems. The regular reports provided to program offices by these agencies include EVM data and analysis and highlight areas of concern and contract performance risk. In addition to use of EVM data, contracting officials from the seven cost- type MDAP contracts included in our review noted the importance of regular interactions between DOD—whether the program office, DCMA, or SUPSHIP—and the contractor in order to proactively identify drivers of cost or schedule overruns. These interactions can range from day-to-day tracking to comprehensive quarterly reviews. Several officials also noted the importance of having DCMA and SUPSHIP representatives on-site at contractor facilities, overseeing the contract and communicating with the contractor. Program Outcomes Vary Regardless of Contract Type but Correspond to the Use of Knowledge to Reduce Risk Our analysis of program cost and schedule outcomes for 21 MDAPs did not find a clear relationship between these outcomes and the contract type used. DOD’s current portfolio of MDAPs contains a total of 85 programs. The 21 MDAPs in our review are the non-shipbuilding subset of the 85 that, as of January 2019, had completed system development, held a critical design review, and started production. Thus, these 21 programs are sufficiently far along the acquisition process that we can analyze their cost and schedule outcomes. We found that they demonstrated a range of cost and schedule performance, regardless of contract type chosen. Table 4 notes the contract types used for these MDAPs as well as unit cost and schedule change between each program’s first full estimate and our most recent in-depth assessment of the program as of May 2019. As reflected in the table, all but four of the MDAPs used some mix of cost-type and fixed-price-type contracts. Performance varied widely for programs using cost-type contracts at some stage, with unit cost change varying from 44 percent reduction to 183 percent growth, and schedule change varying from zero to 146 percent growth. In addition, while two of the three programs that used only fixed-price-type contracts had unit cost reductions, they also experienced schedule growth of over 40 percent. Programs generally made greater use of cost-type contracts than fixed-price-type contracts during development, and greater use of fixed-price-type contracts during procurement, as knowledge built over time. While we did not find a clear relationship between contract type and cost and schedule performance, we have found a relationship between improved outcomes and implementation of certain knowledge-based acquisition practices on these 21 programs. These are practices identified in our body of prior work that ensure a high level of knowledge is achieved at key junctures in development. We apply these practices as criteria in weapon system reviews, including our annual assessment of weapon systems. As shown in table 5 and based on analysis of the 21 programs, in general MDAPs that implemented certain knowledge practices—thus reducing risk—before the start of system development and critical design review had better unit cost and schedule outcomes than those that did not. The first such practice—completing preliminary design review before system development start—means that a program has held a review that assesses the maturity of the preliminary design, supported by the results of activities including prototyping and critical technology demonstrations. The second practice—release of at least 90 percent of drawings by critical design review—refers to the design drawings released or deemed releasable to manufacturing by that point. Our prior work has shown that establishing a sound business case is essential to achieving better program outcomes. A solid, executable business case provides credible evidence that the warfighter’s needs are valid and can best be met with the chosen concept. The business case should also demonstrate that the chosen concept can be developed and produced within existing resources such as technologies, design knowledge, funding, and time. At the heart of a business case is a knowledge-based approach, in which knowledge supplants risk over time. Establishing a business case calls for a realistic assessment of risks and costs; doing otherwise undermines the intent of the business case and invites failure. Over the years, we have identified a number of factors that undermine business cases and drive cost and schedule overruns, several of which are illustrated in figure 5. Undesirable outcomes such as cost and schedule growth reflect decisions made to move forward with programs before the knowledge needed to reduce risk and make those decisions is sufficient. For example, we have previously found that the majority of cost growth occurs after production start, which may be a sign that programs are entering production without attaining key knowledge about technology maturity, design stability, and production readiness in preceding phases of development. The primary consequences of risk are often more time and money, and these consequences flow through the acquisition phases, with unplanned overlap—known as concurrency—in development, testing, and production. Our annual assessment of weapon systems has identified numerous examples of programs proceeding without sufficient knowledge to reduce risk, and their subsequent cost and schedule growth. These examples have included the following from among the 21 MDAPs reviewed in this report: The F-35 program started development without a match between resources and requirements and without a stable design. Critical technologies were immature, development and production occurred concurrently, and critical deficiencies were still not resolved well into production. As of May 2019, the program had experienced unit cost growth of 75 percent and schedule growth of 35 percent since its first full estimate in October 2001. The MQ-4C program did not achieve technology maturity or design stability prior to development start and critical design review, respectively, and developmental challenges delayed production start. As of May 2019, the program had experienced unit cost growth of 10 percent and schedule growth of 70 percent since its first full estimate in February 2009. The CH-53K program failed to demonstrate technology and design maturity at appropriate points earlier in system development. As of May 2019, the program had experienced unit cost growth of 21 percent and schedule growth of 60 percent since its first full estimate in December 2005. A year after the production decision for the Ground/Air Task Oriented Radar program, the Marine Corps revised the program’s reliability requirements in response to an expert panel finding that the existing requirements did not reflect operational needs, contributing to delayed full-rate production. As of May 2019, the program had experienced unit cost growth of 168 percent and schedule growth of 146 percent since its first full estimate in August 2005. We have identified and recommended solutions to these issues, including that MDAPs establish firm and feasible requirements, mature technologies, incremental acquisition approaches, and realistic cost estimates. While DOD has agreed with most of our recommendations in these areas, it has not always implemented them. As we noted in our most recent High Risk List report, as of November 2018, 88 recommendations related to DOD weapon systems acquisition remained open. Furthermore, while we had previously reported better cost performance on newer programs initiated after implementation of major acquisition reforms in 2010, more recently we found cost growth on those programs. We attributed the deteriorating performance of newer programs to the inconsistent implementation of knowledge-based acquisition practices, as the negative effects of entering development with insufficient knowledge cascade throughout the acquisition cycle. Peer Review Change in 2019 Reduced a Means for Sharing Information about Contract Choice across DOD In August 2019, DPC announced that it would no longer conduct mandatory peer reviews for competitive procurements above $1 billion, except for the small number of MDAPs for which USD(A&S) remains milestone decision authority, and other programs of special interest to USD(A&S). As part of the same announcement, DPC stated that it planned to continue to perform peer reviews for noncompetitive procurements of $500 million or more. DPC officials expect that the procurements no longer covered by DPC’s peer review will instead be covered by the military departments’ own review processes, which already address competitive procurements up to $1 billion. While these review processes exist within the military departments, there is not an active mechanism for sharing across the departments any best practices and lessons learned—including about contract choice—found in the course of the reviews. DPC does not currently have plans to address the reduced potential for information sharing resulting from this change. Figure 6 depicts key developments related to the DPC peer reviews since their establishment in 2008, including the last update to an online compendium—a tool designed to share best practices, lessons learned, and recommendations from peer reviews across DOD—in 2013. According to DPC officials, updates to the compendium stopped as personnel became more familiar with the peer review process. They also noted that the change to peer reviews in 2019 resulted from resource constraints and staff reductions associated with recent acquisition reforms. The officials expect this change to reduce the number of DPC peer reviews by half to approximately 50 per year, consisting primarily of the reviews for noncompetitive procurements of $500 million or more. The peer review process was established with the following objectives: 1. to ensure that contracting officers across DOD consistently and appropriately implement policies and regulations; 2. to continue to improve the quality of contracting processes across 3. to facilitate cross-sharing of best practices and lessons learned across DOD. In support of this third objective, procedures for conducting peer reviews stated that the predecessor office to DPC would look for common trends and issues to be shared with the broader DOD contracting community, and maintain information about best practices and lessons learned on its website. This public website currently houses the online compendium, although, as noted above, the last update was in 2013. Contracting officials we met with noted the value of being able to learn from the experiences of officials in other military departments through peer reviews. For example, contracting officials on an Air Force program that had a peer review involving Navy officials stated that lessons shared by those officials reduced the time it took to subsequently execute a contract. Officials from across the military departments cited benefits that resulted from these opportunities to learn from the real-world experience of peers across DOD, including the ability to share contracting information and expertise, review cost-sharing arrangements, and recalibrate contracting decisions. The online compendium is a spreadsheet with a row for each example of feedback, with the program and officials concerned kept anonymous. Columns include the category of feedback (e.g., source selection, terms and conditions), the type of feedback (e.g., recommendation, lesson learned, best practice), and the phase of review (e.g., issuance of the solicitation). Our analysis of the compendium found that it captures practices and recommendations related to contract type, as illustrated by the following examples: Use of incentives: Consider development of cost and performance incentives, rather than use of an award fee. Different contract type: Reconsider plan to award a fixed-price- incentive contract, given historical use of a cost-plus-incentive-fee arrangement under which contractor delivered at or around target cost. Source selection: Throughout solicitation for an award combining firm-fixed-price and cost-type line items, tell offerors what they are expected to provide and how they will be evaluated, and document that evaluation occurred in this exact way. Officials from the military departments confirmed that they are aware that they will now be expected to perform the reviews that DPC previously conducted. They have taken steps to adjust procedures accordingly, including updating their acquisition regulations as necessary. However, DPC does not currently have plans to encourage sharing of findings from military department-level reviews across the departments. For example, there are no plans to solicit updates to the online compendium or a similar centralized resource. USD(A&S) is responsible for improving acquisition results—including cost, schedule, and performance—by gathering and distributing data, best practices, and lessons learned across the military departments. Without a centralized resource for sharing findings, and as most reviews transition to the military departments, it will become more difficult for USD(A&S) to identify contracting trends across DOD and perform this assigned role. An updated compendium or other centralized resource could help contracting officials continue to learn from the experiences of peers across DOD—including when acquiring similar platforms and from similar contractors—by exposing them to good practices for structuring contracts and prompting consideration of alternative contract types. Conclusions With DPC conducting fewer peer reviews and no updates to the compendium since 2013, contracting officials might not have insight into how other programs across DOD structure contracts. As the reviews will now primarily occur within the military departments, these officials could lose exposure to alternative contracting approaches suitable for their programs. A centralized resource such as the compendium takes on a new significance as a means for sharing information between the military departments as they proceed with their own peer reviews. USD(A&S) remains well-positioned to facilitate information exchange and contribute to positive program outcomes by requiring the military departments to share the findings of their peer reviews. Recommendation for Executive Action The Under Secretary of Defense for Acquisition and Sustainment should establish procedures requiring the military departments to collect and share findings from their peer reviews of MDAP contracting approaches— including choice of contract type—such as by updating the existing online compendium of best practices and lessons learned as they complete their reviews. Agency Comments and Our Evaluation We provided a draft of this report to DOD for review and comment. DOD concurred with our recommendation and provided written comments, which are reprinted in appendix II. DOD also provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the Secretary of Defense. In addition, the report is 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) 512-4841 or oakleys@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III. Appendix I: Objectives, Scope, and Methodology This report addresses: (1) the extent to which the Department of Defense (DOD) uses cost-type contracts for major defense acquisition programs (MDAP); (2) how DOD chooses among cost-type and other contract types for MDAPs and monitors their cost and schedule performance; (3) the range of cost and schedule outcomes across MDAPs that used cost-type contracts; and (4) the extent to which DOD shares information about choosing MDAP contract types across the military departments. To assess the extent to which DOD uses cost-type contracts for MDAPs, we analyzed Federal Procurement Data System-Next Generation (FPDS- NG) data regarding obligations by contract type from fiscal year 2011 through fiscal year 2019 on contracts for programs in DOD’s MDAP portfolio awarded from fiscal year 2010 through fiscal year 2018. These data reflect programs that were part of DOD’s MDAP portfolio and contracts that were reported in Selected Acquisition Reports at any point during this period. The basic types of contracts may be used in combination, with both fixed-price-type and cost-type contract line item numbers, unless otherwise prohibited. Per the Defense Federal Acquisition Regulation Supplement (DFARS) Procedures, Guidance, and Information, when entering contract type information info FPDS-NG, the data entrant is to choose the contract type that is applicable to the predominant amount of the contract action, based on the value of the line items; the selected contract type automatically populates any subsequent contract action reports for modifications. We aggregated obligations on orders under indefinite-delivery contracts and basic ordering agreements by contract type for each fiscal year. We used the Defense Acquisition Management Information Retrieval (DAMIR) system to identify those contracts reported in Selected Acquisition Reports for programs in the MDAP portfolio awarded from fiscal year 2010 through fiscal year 2018. Our dataset includes only obligations on MDAP contracts awarded since fiscal year 2010 due to problems identified in a prior GAO report regarding how data on contract types were reported in FPDS-NG for contracts awarded prior to that date. Specifically, prior to fiscal year 2010, data entrants could select the contract types “combination” and “other”, or not enter a contract type at all. The Office of Federal Procurement Policy subsequently removed those contract types as options in FPDS-NG, and made completion of the field mandatory. Contracts retain their original designation in FPDS-NG when modifications to those contracts are subsequently made. Therefore, in order to avoid including contracts coded as “combination” or “other”, we limited our analysis to contracts awarded since fiscal year 2010. We assessed data reliability by comparing the contract types identified in FPDS-NG for each contract with information on contract types contained in DAMIR and in another DOD database—Earned Value Management- Central Repository—and determined the data were sufficiently reliable for the purposes of analyzing the extent of DOD’s use of cost-type contracts for MDAPs. Contractors for programs with earned value management (EVM) reporting requirements submit EVM data to Earned Value Management-Central Repository. EVM reporting is generally required for cost-type or incentive contracts valued at $20 million or more. We included obligations associated with contract types contained in FPDS- NG if they matched contract types contained in either DAMIR or Earned Value Management-Central Repository. When there was no match with either source, we reviewed the narrative discussion of contract types contained in Selected Acquisition Reports in order to determine the most appropriate contract type with which to label those obligations. To assess how DOD chooses among cost-type and other contract types for MDAPs and monitors their cost and schedule performance, we reviewed relevant statutes, regulations, and policies. We analyzed documentation and interviewed officials regarding contract choice and monitoring from the following DOD and military department offices and selected contracting commands: Under Secretary of Defense for Acquisition and Sustainment Acquisition, Analytics and Policy Defense Pricing and Contracting Cost Assessment and Program Evaluation Defense Contract Management Agency Deputy Assistant Secretary of the Air Force for Contracting Deputy Assistant Secretary of the Army for Procurement Deputy Assistant Secretary of the Navy for Procurement Air Force Materiel Command Space and Missile Systems Center Marine Corps Systems Command Naval Air Systems Command Naval Information Warfare Systems Command Naval Sea Systems Command As illustrative examples of contract choice and monitoring under a variety of conditions, including different military departments and appropriation types, we also selected a nongeneralizable sample of seven MDAP contracts. Specifically, we selected for each of the three military departments the most recently awarded cost-type MDAP Research Development, Test, and Evaluation contract and the most recently awarded cost-type MDAP Procurement contract as reported in the December 2017 Selected Acquisition Reports. We also selected the most recently awarded cost-type MDAP contract for the Marine Corps. Table 6 notes the selected MDAPs and contracts, as well as the milestone decision authority responsible for approving the acquisition strategy associated with that contract. We interviewed contracting officials for these programs and reviewed key documentation such as acquisition strategies relating to each one of these contracts. We also reviewed our past work related to contract types used for MDAPs, including DOD’s use of incentive contracts and the Navy’s use of fixed-price-incentive contracts for shipbuilding. To assess the range of cost and schedule outcomes across MDAPs that used cost-type contracts, we identified the contract types as reported in DAMIR or GAO’s April 2018 and May 2019 annual assessments of weapon systems for 21 non-shipbuilding MDAPs that as of January 2019 had completed system development, held a critical design review, and started production. Table 7 notes the 21 MDAPs, as well as the dates of their first full estimate, and their most recent individual assessment by GAO as of May 2019. We compared the contract types reported in DAMIR or GAO’s annual assessments of weapon systems with the percentage unit cost and schedule change between the first full estimate and our most recent in- depth assessment of each program as of May 2019. Since 2018, as part of our annual assessment of weapon systems, we have conducted a statistical analysis evaluating programs’ completion of knowledge-based acquisition practices and corresponding performance outcomes. Our report cites results of this analysis as it pertains to these 21 MDAPs. We reviewed prior GAO work on the drivers of cost and schedule overruns for MDAPs. To assess the extent to which DOD shares information about choosing MDAP contract types across the military departments, we reviewed DOD and military department documentation related to contracting review processes. We compared this information to DOD memorandums establishing practices and policies for sharing of acquisition information across DOD. We also interviewed officials from offices including Defense Pricing and Contracting within the Office of the Under Secretary of Defense for Acquisition and Sustainment, and the cognizant Deputy Assistant Secretaries of the military departments. We conducted this performance audit from February 2019 to May 2020 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. Appendix II: Comments from the Department of Defense Appendix III: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments Shelby S. Oakley, (202) 512-4841 or oakleys@gao.gov In addition to the contact named above, Raj Chitikila (Assistant Director), Robert Bullock, Jenny Chanley, Jasmina Clyburn, Andrea Evans, Lori Fields, Suellen Foth, Kurt Gurka, Stephanie Gustafson, and Grace Haskin made key contributions to this report.