Analysis of US Federal Spending Using SAS. Data Decoders

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Helena Brooks
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2 Table of Contents 1. Introduction: Data: Problem: Data cleaning/validation: Analysis: Contracts How are small disadvantaged businesses performing in Simplified Acquisition Procedures (SAP) contracts? Proximity to Pentagon Self-Certified & SBA-Certified Vs. Women Owned Business Medicaid Program Democratic States vs Republican States Student Loan Distribution Can we go beyond Cohort Default Rates? Conclusion Appendix Visualizations References

3 1. Introduction: US federal budget is the world s biggest budget program, the money is channelled by the Fed in terms of grants, contracts, loans and other financial assistance. Fed has spent $3.8 Trillion dollars for the FY SAS was used to analyse the budgetary spending contained in the consortium datasets with the goal to address some of the well-known programs such as student loan, healthcare spending and so on in our project. Student loans, which stands at $1.2 trillion dollars today and is mounting rapidly, is one of the biggest challenges that the young American are facing now. Healthcare programs in the US, specifically the fed supported healthcare program, has been the subject of debate for a long time now. The minority and women owned small businesses are adding jobs and contributing to the recovering American economy, how are they being supported by the Fed? 2. Data: The data given were reported by federal agencies channelling funds through contracts, grants, loans and other financial assistance. This was provided by SAS in the HDFS environment. We accessed data using SAS Studio utilizing SAS s ability to interact with Hadoop file system. In addition to this to support our analysis we used U.S congress data for each state. [1] 3. Problem: The problems that have been addressed in this project are: How were the disadvantaged businesses supported by the Fed when allotting the contracts in FY 2015? How are Republicans and Democratic states performing in the Medicaid expansion programs? What are the patterns in student loans? 4. Data cleaning/validation: Initial explorative analysis of the data provided by SAS showed that the data in hand was for FY till the month of September. Out of 6 datasets provided by SAS under USA spending category we chose Loans, Grants and Contracts for the purpose of this analysis. In the grants dataset, variables linked to details of the agencies, geographic location of these agencies and aggregate of grant amount were corrected before analysis.[2] 2

4 External data was brought in to support the loans and grants dataset, and the data with individual school s three year cohort default rates published by Education Department was used along with the loans dataset. 5. Analysis: 5.1 Contracts Federal agencies have given out $173.2 Billion dollars in contracts last financial year 2015 till the month of August, of this about 62% of contracts were for Department Of Defence amounting $96 Billion dollars (Appendix 1). All the companies that had contracts worth more than $1 Billion were manufacturing companies mostly aircraft manufacturers. Lockheed Martin Corporation with $12.7 Billion dollars (refer the appendix for the top 10 vendors Appendix 1Appendix 2) is the most successful bidder, of this contracts 80% ($10.6 Billion US dollars) for Lockheed Martin Corporation has been given out in NOT COMPETED category. The frontrunner in the Full Open Competition category is healthcare giant McKesson Corporation with contracts worth $3.2 Billion dollars operating from San Francisco, California (Appendix 5 Appendix 6) 5.2 How are small disadvantaged businesses performing in Simplified Acquisition Procedures (SAP) contracts? One of the primary benefits of SAP contracts is to promote small business (FAR (b)(1);19.202), which falls under the categories a) Small Disadvantaged Business b) Women Owned Small Business c) HUB zone small business d) Service-Disabled Veteran-Owned small business e) Veteran-Owned small business. A total unique vendors fall under this category and these disadvantaged businesses have successfully bid for contracts worth $20 Billion dollars in total. In this $20 Billion dollars only 10.5% ($2.1 Billion dollars) are from SAP contracts with $1.5 Billion from contracts competed under SAP and $572 Million dollars from contracts not competed under SAP (Appendix 7 Appendix 8 Appendix 9). These disadvantaged businesses have in fact successfully bid 75% ($15.5 Billion dollars) of all their contracts in the Full Open Competition category. 5.3 Proximity to Pentagon Vendor location is likely playing an important role in getting the contracts. The vendors located in the state of Virginia alone have successfully bid 15% ($26.5 Billion dollars) and vendors in states Maryland, Connecticut and Massachusetts together are having another 15% ($26.6 Billion dollars) of all the contracts. This is then followed by more populous states like California and Texas, the vendors located in each of these states are having contracts worth 13% ($22.9 Billion dollars) and 9% ($16.9 Billion dollars) respectively (Appendix 10). 3

5 This holds true even for the disadvantaged businesses, where in the vendors in the states of Virginia and Maryland have successfully bid for contracts worth $5.1 Billion dollars and $2.5 Billion dollars respectively. In contrast California and Texas vendors have only contracts worth $1.2 Billion and $1.1 Billion dollars respectively (Appendix 11). 5.4 Self-Certified & SBA-Certified Vs. Women Owned Business Post October 3, 2008 any business can self-represent their status as Small Disadvantaged Business, if they meet the eligibility and there is no need for certification by Small Business Administration (SBA). The SBA still certifies the businesses falling under the category Women-owned Small Business, Self- Disabled Veteran-Owned Small Business and HUB Zone Program. The self-certified disadvantaged business and SBA-certified disadvantaged business together are valued at $13.8 Billion dollars of contracts. The Women-owned Small Business, Self-Disabled Veteran-Owned Small Business and HUB Zone Program together are valued at $6.9 Billion dollars of contracts, of this $6.7 Billion dollars is women-owned small business alone. This means that women-owned business has contracts worth 33.33% of disadvantaged businesses. Sierra Nevada Corporation a women-owned business with contracts worth $ million dollars is the most successful bidder. 5.5 Medicaid Program Federal government spent $3.8 trillion dollars in FY 2015 out of which 27% was spent in Health sector. Out of $ 610 Billion dollars federal funding through grants, more than 50% of the amount is used for the medical assistance program known as Medicaid. Medicaid is the largest health insurance program in United States covering nearly 71 million people, including low income individuals, people with disabilities and children. For FY 16 medicaid program is expected to have an outlays of $351 Billion dollars. Outlays for Medicaid rose by $49 Billion. Figure 1 Federal Funds through grants for FY 15 This project discusses how federal funding for medicaid spending is allocated for different states, trends in the number of people enrolling under medicaid program, the impact of recent provisions of Affordable Care Act (ACA) such as Medicaid Enrollment Expansion, political influence in getting states to accept Medicaid Expansion. Figure 1 indicates that about $325 Billion dollars of grants were sanctioned by federal government through Centres for Medicare & Medicaid Services agency under medical assistance program in FY 15. That constitutes 52% of total funding through federal grants. 4

Figure 3 represents medicaid spending through Federal grants spent in different states during FY 2015. It varies because of different state policies.

6 Figure 3 represents medicaid spending through Federal grants spent in different states during FY It varies because of different state policies. Democratic states Calfornia, New Mexico and Oregon received 33% of total federal funding, amounting to $110 Billion because these states accepted medicaid expansion program. Figure 2 Enrolment rates and Medicaid spending for expansion & non-expansion states USA in FY 15 is varying among expansion and non-expansion states Democratic States vs Republican States Figure 3 Medicaid Expansion Program (States which accepted Medicaid expansion indicated as Y) Medicaid expansion includes adults younger than 65 years with annual income of 138% poverty line or less, while previously it was 45% or less. Enrollment varies by state because of factors like poverty rates, federal minimums etc, as this is a state administered program. But overall enrollment has been on the rise especially because of the ACA coverage expansions. In FY 2015 medicaid enrollment increased by an average of 13.8%, we can see how the enrollment As of Oct million nonelderly people lack health coverage. Of them more than 25% (8 million) are eligible either through Medicaid Adult/CHIP. In states which accepted medicaid expansion, nearly 38% of uninsured people are eligible for insurance under medicaid whereas only 13% are eligible for insurance in those states which rejected medicaid expansion. This percentage is particularly higher in Republican states which recently accepted medicaid expansion program. But comparitively a greater number of adults in non-expansion states can receive market place tax credits(27% vs 17%). More than 25% of uninsured people are in the states of Texas, Florida and Georgia which rejected medicaid expansion and whose current legislature FY 15 is Republican. Infact only 12 out of 31 5

7 Republican states accepted medicaid expansion, whereas all Democratic states are implementing Obama Care. This probabily is one of the reasons for lower percentage of people being covered under medicaid especially in the central and south east regions. (Appendix 12). 5.6 Student Loan Distribution The mounting student debts is one of the biggest financial problem the younger American generation are facing, which amounts to 1.3 trillion USD that is 85% of all the loans (Appendix 13). Surprisingly the student loans are not uniformly distributed among the states (Appendix 14). We expect the states like California and Texas will have the major chunk of these loans taking their population into account, but Arizona with a population of only 6.7 million accounts for 18% followed by Minnesota with a population of 5.4 million accounting for 12% of all student loans. The more interesting fact here is that a single county Maricopa (Appendix 15) in the state of Arizona accounts for 14% of all the federal student loans granted amounting to $195.8 Billion dollars. The average employment and household income of this county is well below the national average. One of the exciting thing about this county is it has been a Republican stronghold for long time, including the Republican presidential nominee 2008 John McCain belonging to this state. The two schools Grand Canyon University and University of Phoenix from this county account to $165 Billion dollars of student loans (Appendix 16). 5.7 Can we go beyond Cohort Default Rates? The student loan forgiveness is one of the biggest fed wastages, when checked for the most number of transactions (Appendix 17), we can find for-profit organizations like Corinthian Colleges, Heald Colleges LLC and Argosy Education Group which have charges of fraud against them have the most frequency. The current system of using only the Cohort Default Rate by the Fed to grant student loans is not sufficient to avoid such wastages. We need to check for more similar trends among the universities that default to avoid such frauds and wastages. 6.0 Conclusion 1. Doing business with Uncle Sam is not easy unless you are a defense equipment manufacturer, but definitely as an business closer to white house and pentagon helps even in the shrinking world. 2. The small disadvantaged business is performing better in the full and open competition contracts than SAP based contracts, so it is safe to say that they are on par in terms of competiveness with other similar business that has no disadvantage. Figure 4 Contracts across the US states 6

3. Post October 3, 2008 any business can self-represent their status as Small Disadvantaged Business, if they meet the eligibility and there is no need for certification by SBA.

in terms of contract value (Figure 5). Figure 5 Self-Certified Vs. SBA- Certified Businesses 4.

8 3. Post October 3, 2008 any business can self-represent their status as Small Disadvantaged Business, if they meet the eligibility and there is no need for certification by SBA. This has made the process easier for disadvantaged business and this new system is helping them, as both Small Business Administration Certified (SBA) certified business and selfcertified are at par in terms of contract value (Figure 5). Figure 5 Self-Certified Vs. SBA- Certified Businesses 4. The women-owned business is doing well, when compared to the other socially and economically presumed groups (Figure 6). 5. Obama care has been succesful in providing health insurance to a majority of people, yet there are many uninsured people in Republican states that didn t accept medicaid expansion program (20 states). Though Federal government will be funding 97% of total new costs, some states are declining it because of other political factors and are potentially missing out huge funds from federal government (appx. $360b from ). Figure 6 Women-Owned Business Vs. Others 7

9 7.0 Appendix 7.1 Visualizations Appendix 1 Contracts in different Agencies Top Vendors with Contracts Over 1 Billion USD Total Funds Vendor Name 12,770,000, lockheed martin corporation 4,519,800, electric boat corporation 4,439,400, raytheon company 3,294,500, boeing company, the 2,152,900, sikorsky aircraft corporation 1,750,200, united technologies corporation 1,689,900, northrop grumman systems corporation 1,668,200, humana military healthcare services, inc. 1,525,500, bechtel marine propulsion corporation 1,513,800, bell boeing joint project office Appendix 2 Top Vendors with contracts over 1 Billion Dollars 8

10 Appendix 3 Contracts granted for different competition categories Appendix 4 Extent Competed for Contracts by different agencies 9

11 Vendors with Contracts Over 1 Billion USD in Full and Open Competition Vendor name Total Funds mckesson corporation 3,225,500, lockheed martin corporation 2,904,400, bechtel marine propulsion 2,622,000, corporation sandia corp 2,303,500, los alamos national security limited 1,949,000, liability company humana military healthcare 1,668,200, services, inc. consolidated nuclear security llc 1,658,000, lawrence livermore national security 1,342,100, limited liability company ut battelle limited liability company 1,090,600, health net federal services, llc 1,058,400, the boeing company 1,030,500, unitedhealth military & veterans 1,026,200, services, llc Appendix 5 Top Vendors in Full and Open Competition Category with contracts over 1 Billion Dollars Vendors with Contracts Over 1 Billion USD in Not Competed Category Vendor Name Total Funds lockheed martin corporation 10,630,000, electric boat corporation 4,511,100, raytheon company 3,694,200, boeing company, the 2,183,900, sikorsky aircraft corporation 1,938,700, united technologies corporation 1,678,500, bell boeing joint project office 1,518,400, huntington ingalls incorporated 1,030,700, Appendix 6 Top Vendors in Not Competed Category with contracts over 1 Billion Dollars 10

12 Appendix 7 Disadvantaged Business in Extent Competed Appendix 8 SAP contracts Full and Open Competition in disadvantaged business 11

13 Appendix 9 SAP contracts not competed in disadvantaged business Appendix 10 US geographic MAP contracts granted for different states 12

14 Appendix 11 US geographic MAP contracts granted for disadvantaged business across different states Appendix 12 Total number of uninsured people in USA 13

15 Appendix 13 Federal Loans by Sector Appendix 14 Student loan by States 14

16 County Breakdown Appendix 15 County breakdown Maricopa County Recipients Appendix 16 Maricopa County Colleges 15

Appendix 17 Recipients by Number of Transactions 8.0 References http://www2.ed.gov/offices/osfap/defaultmanagement/cdr.html http://obamacarefacts.com/obamacares-medicaid-expansion/ https://www.

17 Appendix 17 Recipients by Number of Transactions 8.0 References

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