Figure 2: Department of Commerce Fiscal Year 1994
Authorized FTE Levels by Major Compone

Because of the wide diversity of its functions, Commerce historically has not been managed on the basis of a unifying mission and shared goals. In recent years, the desire to create cohesion among its rather independent and autonomous components has driven Commerce to take the first steps to establish a departmentwide strategic management and planning effort. As part of that effort, in March 1995 Commerce issued a strategic statement that articulated a departmentwide mission and established five departmentwide strategic themes. According to the strategic statement, Commerce's mission is "to ensure and enhance economic opportunity for all Americans by working in partnership with businesses, communities, and workers." Commerce's strategic themes include (1) export growth, (2) civilian technology, (3) sustainable development by working to integrate environmental stewardship with economic growth, (4) economic development by working to ensure communities have the infrastructure they need to develop, and (5) economic information and analysis.

If Commerce is to develop a departmentwide strategic plan, it will need to undertake the difficult next steps of developing specific outcome-oriented goals, objectives, and performance measures that are directly linked to its themes. This will be particularly challenging because Commerce does not have exclusive federal responsibility for any of its strategic themes. In fact, other federal agencies play substantial roles in the areas covered by the strategic themes. For example, NIST's proposed fiscal year 1996 funding for grants and cooperative research with industry is about 10 percent of the Federal Government's total funding for such matters, and State governments traditionally have had a leadership role in working with industry to foster technological development. Similarly, NOAA shares responsibility for species protection with the Department of the Interior. Because Commerce shares responsibility with others for making progress on its strategic themes, isolating Commerce's contribution to a particular outcome can be very difficult

In addition to historically having its strategic management efforts based in its components, Commerce also has decentralized key administrative functions. Major Commerce components-NOAA, the Economics and Statistics Administration, NIST, the International Trade Administration, and the Patent and Trademark Officehave been granted the authority and responsibility by Commerce for meeting most of their own administrative needs. According to Commerce officials, these components are large enough that it is more efficient to have them be responsible for their own support services rather than rely on Commerce headquarters. Thus, Commerce headquarters provides some services but primarily sets policy and provides overall direction and oversight. The major components generally are responsible for their own financial management, personnel, budget, and procurement services. In some cases, the major components receive some administrative services from headquarters, which they pay for through a working capital fund. The major components also have congressional and public affairs offices separate from those in Commerce headquarters. In addition, NOAA, the National Telecommunications and Information Administration, the Economic Development Administration, and the Patent and Trademark Office, have their own offices of general counsel to handle the bulk of their legal matters, although these offices work closely with the Commerce general counsel.

In addition, the NOAA Administrative Support Centers provide support services to Commerce components in the field and to other federal agencies on a reimbursable basis. According to senior Commerce officials, Commerce's decentralized approach to providing administrative services is the result of its response to the significant budget reductions that it incurred in the early 1980s. According to these Commerce officials, other federal agencies that did not undergo the earlier downsizing are now facing the same need to make sizable cost-saving improvements in administrative service delivery that Commerce confronted in the early 1980s.

KEY ISSUES NEEDING ATTENTION INDEPENDENT OF ORGANIZATIONAL QUESTIONS As I noted at the outset of my statement, our work has shown that one of the key principles of reorganization is that once an appropriate organizational arrangement is decided upon, continued attention is needed to ensure that programs are properly and effectively implemented and that agencies have the people, information, and technology needed to meet their missions. In that regard, our congressionally requested work at Commerce in recent years has identified a number of key programmatic and management issues that will require continued attention regardless of decisions Congress makes about the organization of Commerce and its components. These key issues include the need for well planned census reform, strengthened financial management, and modernized National Weather Service information systems.

Census Reform

Over many years, we and others have urged that the methods. for taking the decennial census need to be fundamentally rethought to reduce costs and protect the accuracy of the nation's primary data-gathering effort.5 The increased use of sampling and other statistical techniques, a simplified census questionnaire, and streamlined field procedures are among the major changes that we have long urged the Census Bureau to consider and evaluate. On the basis of our work, the congressional fiscal year 1996 budget resolution assumes that almost $1 billion can be saved on the cost of the 2000 Decennial Census if basic changes in census design are made. However, we are very concerned that the possibility for thoughtful and well planned census reform will be lost if Congress and departmental top management-wherever the Census Bureau is placed do not work aggressively to ensure that needed changes are made in time for the 2000 Census.

Financial Management

We have found that like all too many other federal agencies, Commerce cannot provide complete, reliable, and useful financial information to assist federal decisionmakers in making sound decisions.6 The financial management systems at Commerce are incompatible, fragmented, labor-intensive, inadequately controlled, and costly to maintain. Commerce has limited ability to effectively assess program and administrative operations. This problem has resulted in the Office of Management and Budget placing Commerce's financial management on the governmentwide list of high-risk areas.

The top leadership at Commerce has forthrightly acknowledged the serious problems with its financial management systems and related internal controls. Commerce now has leaders in key financial management positions at the department level who have demonstrated a commitment to the Chief Financial Officers (CFO) Act, and efforts are under way to correct Commerce's long-standing financial management problems. However, although Commerce has placed qualified CFOs at 3 of its 13 major components, 2 of its largest components-NOAA and NIST do not have CFOs in place to manage financial operations and guide improvement efforts. Thus, continuing attention will be needed to ensure that strong financial management exists over Commerce's present functions even if they are relocated. National Weather Service Information Systems

NOAA's National Weather Service modernization program is one of the larger systems modernization programs of the Federal Government. Our work has shown that it was being designed and developed without adequate attention as to how the systems were to work together and that development and performance problems remain with individual systems.7 The modernization includes four major systems that are intended to provide more reliable detection and prediction of severe weather and flooding, permit more cost-effective operations, and achieve higher productivity. Collectively, these four component systems and several smaller systems acquisitions are expected to be fully integrated so as to form a single weather forecasting and warning system. The total cost of the modernization is estimated to be over $4.5 billion.

In March 1994, we recommended that the National Weather Service develop a guiding systems blueprint, or systems architecture, to ensure that the component systems for the modernization proceed according to a common set of rules and standards. We have cautioned the Weather Service that to do otherwise invites system inefficiencies, incompatibilities, and more difficult and costly maintenance. The Weather Service agreed to develop a modernization architecture, but it estimated that this will take over 3 years to complete. Thus, while the modernization program can boast of some successes, the lack of a systems architecture compounded by

5 See, for example, Decennial Census: 1995 Test Presents Opportunities to Evaluate New Census-Taking Methods (GAO/T-GGD-94-136, Sept. 27, 1994) and Decennial Census: 1990 Results Show Need for Fundamental Reform (GAO/GGD-92-94, June 9, 1992). 6 See, for example, Financial Management: Status of the CFO Act Implementation at the Department of Commerce (GAO/T-AIMD-94-150, June 28, 1994).

7Weather Forecasting: Racer Availability Requirement Not Being Met GAO/AIMD-95–132, May 31, 1995; Weather Forecasting: Unmet Needs and Unknown Costs Warrant Reassessment GAO/AIMD-95-81, Apr. 21, 1995); Weather Service Modernization: Despite Progress, Significant Problems and Risks Remain (GAO/T-AIMD-95-87, Feb. 21, 1995); Weather Forecasting: Improvements Needed in Laboratory Software Development Processes GAO/AIMD-95-24, Dec. 14, 1994); Weather Forecasting: Systems Architecture Needed for National Weather Service Modernization (GAO/AIMD-94-28, Mar. 11, 1994); Weather Forecasting: Important Issues on Automated Weather Processing System Need Resolution (GAO/IMTEC-93-12BR, Jan. 6, 1993). 8 GAO/T-AIMD-95-87, February 21, 1995.

known system problems and development risks means that modernization is far from over and that the challenges remaining are formidable.

As I noted, these issues require continuing attention no matter what organizational arrangement is used for Commerce's functions. However, a clear focus on goals and outcomes may identify opportunities to rationalize the Federal Government's organizational structure. Our work also has identified cases of apparent duplication of functions across agencies often differentiated by constituency rather than basic activity. As I noted earlier, at a broad functional level, other agencies share responsibility with Commerce for its five strategic themes. Some of the functions performed by NIST and NOAA suggest possible lines for further inquiry to determine whether and if so, to what extent, duplication of effort exists in the activities that these and other federal organizations perform. The efforts of NIST and NOAA also underscore the need for an integrated approach to reorganization that focuses on clearly identified goals-one that is sensitive to how changes in one organization can affect the abilities of other organizations to meet their missions.

THE NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY

NIST was originally established in 1901 as the National Bureau of Standards to perform the research and development (R&D) needed to develop uniform standards and physical measurements. NIST's mission and responsibilities were expanded in 1988 with the establishment of (1) the Advanced Technology Program (ATP), which makes cost-shared awards to industry to develop high-risk technologies and (2) the Manufacturing Extension Partnership (MEP), which provides seed money for the creation of extension centers that provide technical assistance to small manufacturers. Today, NIST's primary mission is to promote economic growth by working with industry to develop and apply technology, measurements, and standards.

Of NIST's $632 million in fiscal year 1994 obligations, about 60 percent was from appropriated funds. Other federal agencies and the sale of calibration services and standard reference materials primarily provided the remaining 40 percent. While most of NIST's spending supported its R&D program in fiscal year 1994, ATP and MEP, which are growing, will account for most of NIST's obligations this fiscal year. ATP

Initially funded in 1990, ATP is a competitive cost-sharing program designed to help U.S. businesses pursue high-risk technologies with significant commercial or economic potential. ATP funding increased substantially from $68 million in fiscal year 1993 to $431 million in fiscal year 1995. Our May 1995 report examined NIST's efforts to evaluate ATP.9 We concluded that it was too early to determine ATP's long-term economic impact. However, our analysis indicated that short-term results that NIST had identified in a January 1 994 report were overstated or lacked adequate support. In addition, NIST's proposed use of technical milestones and the number of collaborations and strategic alliances to evaluate ATP may create false expectations of its economic success.

As shown in appendix I, ATP is just one of several federal initiatives that support industrial R&D through grants or cooperative R&D agreements. The administration's fiscal year 1996 budget has proposed $4.8 billion for these initiatives, including $491 million for ATP. Some of these initiatives, including ATP, require participants to provide a substantial portion of a project's costs, and many R&D projects involve consortia of companies within an industry. For example, the Advanced Research Projects Agency (ARPA), within the Department of Defense, has supported SEMATECH-a consortium of 11 major semiconductor manufacturers-by providing up to about 50 percent of the funds for its R&D activities. SEMATECH'S R&D program was designed to regain U.S. leadership in semiconductor manufacturing by developing advanced semiconductor equipment and reducing costs through improved manufacturing efficiency and product quality.

MEP

Since 1988, NIST and ARPA's Technology Reinvestment Project have helped create 42 MEP centers to improve the competitiveness of U.S. manufacturing by advancing the level of manufacturing technology used by small- and medium-sized U.S.-based firms. The administration's fiscal year 1996 budget proposal of $147 million would transfer funding for ARPA's centers to NIST and increase the total number of centers to 90.

9 Performance Measurement: Efforts to Evaluate the Advanced Technology Program (GAO/ RCED-95-68, May 15, 1995).

The Omnibus Trade and Competitiveness Act of 1988 authorized NIST to award funding for up to 6 years to U.S.-based nonprofit organizations for establishing and operating Manufacturing Technology Centers, the predecessors of MEPs. While NIST could provide up to 50 percent of an MEP center's capital and annual operating and maintenance costs during the center's first 3 years, the center's operator was expected to contribute increasing percentages of the costs in the last 3 years. NIST's declining levels of funding were intended to ensure that the centers would no longer need NIST financial support by the seventh year. NIST found, however, that revenues generated by the centers would not be sufficient to cover the costs of providing services to small manufacturers. In response, Congress, in Commerce's fiscal year 1995 appropriation allowed NIST to provide up to one-third of a center's total annual costs for additional periods that were not to exceed 3 years to any center. 10 This provision changed the character of the MEP program from offering timelimited incentives to states to provide technology assistance to creating a possible longer term federal role in providing such assistance.

THE NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

NOAA is the largest component of the Department of Commerce, with fiscal year 1994 budget obligations of about $2.3 billion, or about 44 percent of Commerce's $5.3 billion in obligations. NOAA was created by President Nixon in 1970 on the basis of the recommendation of the Stratton Commission on Marine Science, Engineering, and Resources. NOAA was the organizational recognition that the oceans and the atmosphere are interacting parts of the total environmental system. It pulled together scientific, technological, and administrative resources from various agencies across the Federal Government in the belief that a unified approach to the oceans and the atmosphere was needed to better understand and respond to the total environment and its modification. According to NOAA, its mission is to conserve and manage wisely the nation's coastal and marine resources and to describe and predict changes in the earth's environment to ensure sustainable economic development opportunities. Key programmatic elements of NOAA include the National Weather Service, the National Environmental Satellite and Data Information Service (NESDIS), the National Marine Fisheries Service (NMFS), the Office of Oceanic and Atmospheric Research, the National Ocean Service, and Program Support. As we reported in May 1995, essentially all of NOAA's programs and activities are classified within the federal budget function of natural resources and environment and, specifically, the subfunction of other natural resources. 11 Federal agencies other than NOAA, whose budgets are similarly classified, include the U.S. Geological Survey, the Bureau of Mines, and a small portion of the Bureau of Reclamation-all in the Department of the Interior. Many of NOAA's activities involve scientific research and the assessment and application of research results. Some of NOAA's key activities include the collection and assessment of scientific data on the condition of the oceans and marine species and the climate and weather patterns. Another significant NOAA activity is the management and protection of marine species and their habitats.

Our examination of marine species research and management activities and ocean research activities within NOAA showed that such activities are supported by a number of NOAA's organizational components. According to NOAA officials, research and management of NOAA's marine species efforts supports two of NOAA's strategic goals-building sustainable fisheries and recovering protected species. In its fiscal year 1996 budget request, funding for these goals would amount to about $404 million and about 2,500 FTE positions. The funds and staff primarily would go to NMFS and, to a lesser extent, the Office of Oceanic and Atmospheric Research, Program Support, and NESDIS. In addition, NOAA activities that support its goal of sustaining healthy coastal ecosystems also contribute to the management of marine species and represent about $206 million and 1,020 FTE positions in the budget request.

The budget request for ocean research activities, according to NOAA officials, totals about $201 million, and these activities would be supported by about 640 FTE positions. However, these figures include an atmospheric research component. NOAA officials told us that because of the physical relationship between the ocean and atmosphere, it is not realistic to separate the atmospheric and oceanic components of this research.

Our limited review to identify other federal agencies with activities similar to those of NOAA in these areas showed that the Department of the Interior's U.S.

10 P.L. 103-317.

11 GAO/AIMD-95-116FS, May 10, 1995.