IG’s
 

Semiannual
 

Report
 

to Congress
 

March 2009 

Overcome the Setbacks Experienced in Reengineering Decennial Processes, and 


Conduct a Successful 2010 Census . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Effectively Manage the Development and Acquisition of NOAA’s
 

Ensure NTIA Effectively Carries Out Its Responsibilities Under the
 

Better Position the Department to Address Information Security Risks . . . . . . . . . . . . . . . . . . . . . . 

Two Environmental Satellites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Establish a Safety Culture at NIST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Digital Television Transition and Public Safety Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Other Issues Requiring Significant Management Attention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

OIG Recovery Act Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Work in Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Agency Overviews 

Bureau of Industry and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Economic Development Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Economics and Statistics Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

National Oceanic and Atmospheric Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

National Institute of Standards and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

National Telecommunications and Information Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

United States Patent and Trademark Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Department-Wide Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Office of Inspector General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Office of Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Other OIG Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Tables and Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

We are pleased to present the Department of 

Commerce Office of Inspector General’s Semiannual 

Report to Congress for the 6 months ending 

March 31, 2009. 

This report summarizes the work we have completed 

and initiated during this semiannual period on a 

number of critical departmental activities. Among 

other things, we identified the top management challenges facing the Department for the incoming 

Administration, issued a report with recommendations for modifying the contract type and fee structure of the Field Data Collection Automation 

(FDCA) contract, which aided Census in the renegotiation of this critical decennial contract, and reported on the fraud, waste, and abuse program for the 

digital-to-analog converter box coupon program. In 

addition, our investigative activities this reporting 

period resulted in two convictions and more than 

$75 million in fines, restitutions, and recoveries. 

Also during this semiannual period, the American 

Recovery and Reinvestment Act of 2009 became law. 

The Act provides nearly $8 billion for stimulus 

projects for the Department, including $4.7 billion 

for the Broadband Technology Opportunities 

Program. This presents the Department, and our 

office, with new responsibilities and challenges to 

spend funds provided under the Act in a transparent 

and accountable manner, while also meeting 

purposes of the Act. 

We had the opportunity in March to testify be

Congress on what we consider the major areas of 

facing the Department in spending stimulus fu

effectively. These areas will be the basis for 

majority of our Recovery Act work in the upcom

reporting period. We are taking steps to pro

recommendations to the Department and its bur

upfront in order to help prevent problems. We 

established an OIG Recovery Act Task Force to 

the oversight efforts required under the Act and 

work closely with key decision-makers. 

We look forward to working with the Departm

and the Congress to address these many challen

We thank the Secretary, senior officials through

the Department, and members of Congress 

their staffs, for their support of our work du

this reporting period and for their respons

ness to our recommendations for improv

Commerce operations. 

1 

FOR THE DEPARTMENT
 

I

n November 

These are list

challenges wit

also discussed belo

2008, we issued a report emphasizing the key challenges facing the new Administrat

ed in detail below. Since that time the Department has been confronted with 

h the passage of the American Recovery and Reinvestment Act. These new challenges 

w. 

The Reports Consolidation Act of 2000 requires 

inspectors general to identify the top management 

challenges facing their departments. For FY 2009 

Commerce OIG has identified five top challenges that 

require immediate and significant action from the 

Department, and four longer term issues that require 

sustained attention. These challenges provide the focus 

for much of our work, as we assess the Department’s 

progress in meeting them. 

TOP 5 MANAGEMENT CHALLENGES 

1. Overcome the Setbacks Experienced in 

Reengineering the Decennial Processes, and 

Conduct a Successful 2010 Census. 

2. Better Position the Department to Address 

Information Security Risks. 

3. Effectively Manage the Development and 

Acquisition of NOAA’s Two Environmental 

Satellites. 

4. Establish a Safety Culture at NIST. 

5. Ensure that NTIA Effectively Carries Out 

Its Responsibilities Under the Digital 

Television Transition and Public Safety Act. 

Challenge 1 

Overcome the Setbacks Experienced in 

Reengineering Decennial Processes, and 

Conduct a Successful 2010 Census 

The Census Bureau’s ability to carry out a succes

2010 population count continues to be one of 

most critical challenges facing the Department: 

first major operation of the 2010 census—add

canvassing—is already under way and deadlines 

several others are approaching. The time los

revamping operations to accommodate 

Department’s late decision to scale back use 

handheld computers has left Census little or 

window for testing a number of its replacem

processes, procedures, and strategies be

conducting live operations. At this point in the 

cycle, the new Secretary will have little opportu

to impact the 2010 decennial. The new Secre

does have the opportunity to impact planning for 

2020 census. We believe that applying the les

learned from the 2010 decennial to the planning 

reengineering of the 2020 decennial should be a h

priority and begin as soon as possible. 

The 2010 census was to be the first high-tech co

in the nation’s history, with employees u

3 
Source: Photograph by the U.S. Census Bureau, Public Information Office (PIO) 

During non-response follow-up, enumerators will obtain 

questionnaire answers directly from respondents. 

During this semiannual period we issued three 

reports on high-risk 2010 plans and operations. To 

aid the bureau’s contract restructuring and 

negotiation of the FDCA contract, we audited 

procedural aspects of the 2008 address canvas

dress rehearsal and found, among other things, 

address canvassing cannot be relied on to imp

address information for certain types of housing u

and communities, such as apartments and tr

parks. (See page 26.) The second review focused 

information technology aspects of the te

operation and the status of the Census’s efforts to 

out a network of local offices to support 

operation. We found delays in defining requirem

and completing software development and test

local office deployment, and establishment 

technical help desk support, all of which h

increased operational risk. (See page 29.) 

We are currently assessing various aspects of the 

address canvassing operation, including the Cen

efforts to mitigate problems we identified du

testing. We are also looking at other key initiat

such as the partnership program designed to incr

participation among minority communities 

hard-to-reach populations. We plan to issue a se

of expedited reports to advise Census of our find

in an effort to inform decision making and allow 

prompt adjustments to improve the operati

outcome, and by extension, the accuracy of the 2

count. 

The infusion of $1 billion in stimulus funding g

the Census Bureau additional resources for enhan

program management, partnership and outre

efforts to minority communities and hard-to-re

populations. Effective use of this funding adds 

challenges to Census’s execution of the 2010 co

We have added these activities to our list of sh

term oversight. 

4 
problem, the Department has reported information 

security as a material weakness every year since 

FY 2001. 

The reason for the material weakness is ineffective 

certification and accreditation (C&A): the Federal 

Information Security Management Act (FISMA) and 

OMB policy require agencies to certify that their 

systems and data are protected with adequate, 

functioning security controls before authorizing 

(accrediting) a system to operate. But year after year 

our FISMA reviews have found ineffective C&A 

processes that do not adequately identify and assess 

needed controls and ultimately fail to assure that 

systems and data are protected. 

Securing systems from cyber threats is clearly the 

most difficult piece of the challenge because these 

threats represent a moving target: they increase in 

number and sophistication almost daily. And as 

agencies incorporate wireless and other technologies 

to support their operations and workplace 

flexibilities, they invite new risks that must be 

anticipated and mitigated. 

To be effective in this environment, the Department’s 

IT security program must be proactive and flexible, 

staffed by IT security professionals who have the 

appropriate skills, experience, and clearances to 

implement required security controls, assess their 

effectiveness, and anticipate and respond to emerging 

threats. Key to the Department’s success in 

establishing such a program are the following: 

● Improved IT security staffing. Our assessments 

over the years have found that IT security 

staff lacks adequate understanding of 

Commerce IT security policy, NIST stan

this calendar year under a jointly develo

plan that incorporates realistic milesto

and measurable steps for building consis

and repeatable C&A practices. Our FIS

reviews have increased their emphasis on 

Department’s efforts to conduct continu

monitoring—a crucial strategy for elimi

ing the material weakness, by which agen

regularly assess and adjust their security c

trols to maintain or improve protec

measures. The limited number of review

which we have completed fieldwork 

far—while not sufficient to draw final c

clusions—have found improved C

processes. 

● Cyber Security Assessment and Managem

(CSAM) tool. As part of the effort to b

repeatable processes, Commerce’s C

Information Officer (CIO) initiated a p

project to facilitate Department-w

implementation of CSAM—a softw

application developed by the Departmen

Justice that allows users to take a 360-de

approach to C&A. They can input sys

information as they begin the C&A pro

and, among other things, generate 

implement a security plan that comp

with FISMA requirements, analyze secu

requirements, and track resolution 

vulnerabilities and the results of secu

control monitoring. 

The six bureaus participating in the pilot are u

CSAM to certify and accredit one of their operati

systems with the goal of identifying challenges to 

requirements for integrating the tool with cur

C&A processes. The project is scheduled 

5 
of potential threats, isolated certain critical networks 

and enhanced their security measures, and is creating 

a specialized stand-alone network for processing 

extremely sensitive information. 

Challenge 3 

Effectively Manage the Development 

and Acquisition of NOAA’s Two 

Environmental Satellites 

NOAA is modernizing its environmental monitoring 

capabilities, spending billions of dollars on two 

satellite systems that provide critical data: the 

National Polar-orbiting Operational Environmental 

Satellite System (NPOESS) and Geostationary 

Operational Environmental Satellite-R Series 

(GOES-R). 

Space acquisitions like NPOESS and GOES-R are 

highly technical and complex and have a history of 

cost overruns, schedule delays, and performance 

shortfalls. The costs and schedules of both of these 

systems have significantly increased since the projects 

commenced. They therefore require careful oversight 

to minimize any further disruption and to prevent 

any gaps in satellite coverage—a situation that could 

have serious consequences for the safety and security 

of the nation. 

More Setbacks for NPOESS. The NPOESS project is 

intended to provide continuo

i

tor

us weather and environmental data for longer 

term weather forecastng and climate moniing through the coming 

revised to $14 billion. The updated estimate refle

additional costs for the development of VIIRS as 

as revised operations and support costs. Subseque

NOAA announced in March it would delay the 

launch by another year—to 2014—because 

continuing problems with VIIRS. It also slipped 

NPOESS Preparatory Project (NPP)2 launch 

from 2010 to 2011. 

Preliminary analysis by a team of independ

satellite experts indicates among other things that 

NPOESS program as currently defined has a 

probability of success, that the current estimat

$14 billion should be increased, and that the deci

making by the triagency committee of senior NO

NASA, and the Department of Defense offi

continues to be ineffective. Although cur

satellites are expected to operate until 2014, a lau

failure or delays beyond 2014 could result in gap

the availability of long-term environmental data. 

Under the American Recovery and Reinvestment 

of 2009, $74 million will be used for developm

activities to mitigate NPOESS cost and schedule 

and for instruments that will monitor fac

affecting climate change. 

GOES-R Acquisitions are Underway. The $7.7 bil

GOESun

q

res

i

w

w

e

R system will offer 

nterrupted flow of h

uality data for short-ra

eather forecasting 

arning, and clim

arch through 2028. 

1 The cost of the NPOESS program is shared equally by N

and the Department of Defense. 

2 NPP was planned as a risk reduction effort to test NPOESS 

instruments in flight. NASA is the lead on this effort. 

6 
2009. NASA awarded the spacecraft contract in 

December 2008, but the award was protested to 

GAO and NASA issued a stop work order shortly 

thereafter. Since then, NASA re-evaluated the 

proposals and re-awarded the contract in May. 

Reining in additional costs and delays in both 

programs requires very specific action and vigilant 

oversight. For NPOESS, the three agencies 

developing the system—NOAA, NASA, and the 

Department of Defense—must (1) control and 

resolve the continuing problems with VIIRS, 

(2) identify the best approach to minimize a potential 

gap in data continuity, and (3) improve triagency 

decision making. Because NPOESS is the only source 

of critical weather and environmental data, it is 

especially important that VIIRS problems be resolved 

and congressional confidence in and support of the 

program be maintained. 

For GOES-R, (1) the Department needs to follow 

best practices in overseeing the acquisition while 

awaiting development of formal Commerce oversight 

policies and procedures to guide such projects, and 

(2) the Department and NOAA need to work with 

Congress to update the baseline life-cycle cost 

estimate used in its annual reporting on the 

satellite system. 

Challenge 4 

Establish a Safety Culture at NIST 

A June 2008 plutonium spill at the National Institute 

of Standards and Technology’s Boulder, Colorado, 

laboratory raised serious concerns about NIST’s 

ability to perform state-of-the-art research with 

radioactive and other dangerous materials while 

py p

Department of Energy, and NIST’s Ioni

Radiation Safety Committee. NIST also arranged 

an independent consultant to analyze the root c

of the plutonium spill. All of the experts share

common finding—a commitment to safety 

NIST Boulder is seriously lacking. (These reports 

available at http://www.nist.gov/public_affa

releases/boulder-incident.html) 

One area related to safety is facility maintena

Two studies conducted by NIST identified a bac

of more than $500 million in facility maintena

and repair requirements. A 2004 study fo

$458 million in deficiencies at NIST’s Gaithersb

campus and a 2008 study identified $48 millio

deficiencies at Boulder. Many of the items re

directly to safety. 

NIST noted that it should be investing at l

$50 million to $70 million annually to bring 

facilities to a “fair” condition and stay ahead 

further deterioration. It will have nearly double 

amount to spend on the backlog in FY 2009: 

agency reported its FY 2009 appropriation inclu

$68.3 million to address the backlog at Boulder 

Gaithersburg, to which it added ano

$11.9 million ($3.7 million for Boulder, $8.2 mil

for Gaithersburg). The Recovery Act alloc

$39 million for addressing the backlog in FY 20

for a total of $119.2 million. Additionally, 

Recovery Act allocated $26.5 million specifically 

safety improvements at Boulder and Gaithersbur

While these funding commitments will be helpfu

improving the safety and physical condition 

NIST’s facilities, it is clear from the circumsta

surrounding the plutonium incident and subsequ

revelations that, at a minimum, NIST must m

7 
dedicated to the backlog and safety issues. Following 

the plutonium spill, NIST established the position of 

special assistant to the director for environment, 

safety, and health. It also is developing a system for 

compiling all findings and recommendations related 

to NIST safety—those from the many experts who 

reviewed the spill as well as those from other reports 

issued over the years—and for tracking related 

implementation activities. Separately, we are assessing 

the status of NIST’s efforts to implement safetyrelated recommendations. 

Challenge 5 

Ensure NTIA Effectively Carries Out Its 

Responsibilities Under the Digital 

Television Transition and Public Safety Act 

The Digital Television Transition and Public Safety 

Act of 2005 assigned the National Telecommunications and Information Administration responsibility 

for implementing a $2.5 billion initiative for the conversion to digital television and improvements to 

public safety communications. The act authorizes 

NTIA to use $1.5 billion to support the nation’s 

switch to all-digital broadcasting by offering coupons 

toward the purchase price of converter boxes that will 

enable analog television sets to receive digital 

broadcasts. 

A primary purpose of the switch is to free up radio 

frequencies for advanced wireless emergency 

communications at state and local levels. NTIA will 

use approximately $1 billion to fund grants for public 

safety interoperable communications (PSIC) projects 

in all 50 states, the District of Columbia, and the 

U.S. territories—a total of 56 entities. 

y 

to all-digital broadcasting from February 17 

June 12, 2009. The delay responded to concerns 

certain hard-to-reach populations—such as r

residents and the elderly—were not yet digital re

Though NTIA had made substantial prog

preparing television viewers for the switch 

dispensing converter box coupons, the age

reported it had a waiting list of over 4.3 mil

coupon requests as of February 25, 2009, bec

Commerce had reached the $1.34 billion fund

limit for the coupons. As a result, NTIA could s

out new coupons only as unredeemed ones reac

their 90-day expiration date. 

The DTV Delay Act extended the deadline 

coupon requests to July 31, 2009, and author

NTIA to issue replacement coupons to consum

who had allowed their original coupons to exp

The Recovery Act provided $650 million 

additional coupons and related activities such 

education and outreach to vulnerable populations

of March 24, the waiting list had been cleared, 

NTIA was filling coupon requests as they came. 

Maintaining strict accountability for the prog

requires careful oversight and strong internal con

to, among other things, guard against waste, fr

and abuse among retailers, and to adapt to evolv

program requirements. We have been caref

monitoring NTIA’s program administration. 

audit of the agency’s oversight, completed during 

semiannual period, found that NTIA has m

significant progress in implementing an initiativ

deter waste, fraud, and abuse, but needed to re

the plan detailing its waste, fraud, and ab

activities. NTIA took numerous corrective action

address our findings and recommendations be

8 
NTIA to continue to work with stakeholders 

representing at-risk groups, and the FCC, which 

has primary responsibility for consumer education 

and outreach, to ensure a smooth transition to 

digital television. 

PSIC Grantees May Not Be Able to Finish Projects 

Within the Mandated Time Frame. The PSIC 

program is a one-time grant opportunity to target 

specific funds and resources toward improving the 

interoperability of local and state voice and data 

communications. But grantees are moving slowly, 

and whether they can complete their projects by the 

statutory deadline of September 30, 2010, is 

questionable. 

As of March 2009, grantees had spent less than 

9 percent of the available $1 billion, which leaves 

them only 18 months to complete their projects or 

lose funding. In March 2009 we contacted 

21 grantees, including 18 of the 20 receiving the 

largest grants. Only two stated they planned to 

acquire most of their interoperable communications 

equipment within the first half of 2009. Ten told us 

they will start acquiring equipment in late FY 2009 

and 2 at the beginning of FY 2010. Seven of the 

21 grantees contacted were concerned that they may 

Source: OIG, December 

Police car outfitted with a communication system from a 

PSIC grant. 

NTIA should expeditiously identify grantees who 

at high risk of not meeting the statutory deadline 

completing their projects, give them the techn

assistance they need to accelerate the proc

carefully monitor their progress, and keep Cong

informed of the PSIC program’s status tow

achieving its objectives. If any entities seem 

unlikely to meet the deadline, NTIA should w

with Congress to obtain the authority to extend 

deadlines for these entities. 

9 
REQUIRING SIGNIFICANT
 

MANAGEMENT ATTENTION
 

Weaknesses in the Department’s Acquisition 

Oversight and Acquisition Workforce 

Acquisition and contract management has been a 

consistent watch list item for inspectors general, as 

related government spending has ballooned in recent 

years without a commensurate growth in the 

acquisition workforce or the higher-level skills 

needed to properly oversee complex procurements. 

Cost overruns, fraud, and a lack of oversight and 

accountability are common findings in IG audits and 

GAO reviews government-wide. 

Our top management challenges report described an 

acquisition infrastructure at Commerce that does not 

have coherent policies to guide systems acquisition or 

effective oversight mechanisms. Hiring and retaining 

a skilled acquisition workforce has been difficult at 

the Department, as it has been for all federal agencies. 

The Department has a limited number of contracting 

specialists to meet its multibillion-dollar workload. It 

has no reliable count of its program and project 

managers or contracting officer representatives— 

critical positions in the contracting oversight chain. 

The billions of new dollars available to Commerce for 

acquisitions grants, and contracts under the Recovery 

Act, coupled with the act’s call for accelerated 

spending and “fixed price” contracts when practicable, 

will undoubtedly further tax an already overwhelmed 

acquisition workforce and exacerbate acquisition 

management weaknesses. Our procurement audits 

have found repeated instances in which the 

Department’s lack of skilled contracting and pro

management professionals has resulted in inadeq

contract management, and significant cost 

schedule overruns and performance shortfalls. 

Our recent audit of the Census Bureau’s Field D

Collection Automation contract (see page XX) fo

that poorly defined requirements were a signifi

contributor to the problems encountered 

developing the handheld computers for automa

key operations and the resulting $3 billion increas

estimated costs for conducting the 2010 census. T

audit and an audit of a satellite acquisition at NO

found that contractors were receiving high award 

for projects that were experiencing ser

performance shortfalls and large cost overruns. 

The Department has taken several steps to add

some of its contract and procurement weaknesse

is working to complete revisions to its major syst

acquisition procedures. It has improved 

certification program for contracting off

representatives, in response to our recommendat

And it has taken additional steps intended 

support sound management of Recovery Act fu

for example, it combined the Commerce IT Rev

Board and the Acquisition Review Board int

single Investment Review Board, which 

scheduled reviews for programs that will rec

Recovery Act funding. 

Also notable are several actions by the Departm

Office of Acquisition Management: it recently iss

10 
addressed immediately to oversee Recovery Act 

spending effectively. In the short term, the 

Department reports that it plans to take advantage of 

all hiring flexibilities made available by the Office of 

Personnel Management and use contractors to 

augment its acquisition staff for both Recovery Act 

and normal acquisition spending. 

Apart from these plans, the Department needs a 

comprehensive human capital strategy that addresses 

both its immediate and long-term hiring needs. That 

strategy must, among other things, (1) explicitly 

define the requisite acquisition skills and 

competencies, (2) tap into government-wide 

recruiting initiatives, and (3) offer professional 

development and other incentives to attract and keep 

qualified candidates. 

Special Acquisition Challenges Face 

NOAA and NIST 

A significant portion of Recovery Act funding going 

to NOAA and NIST will be used for construction 

projects to build science facilities. Monitoring 

construction projects poses special challenges: these 

initiatives are often at risk for anticompetitive 

practices, and substandard workmanship, defective 

materials, nonperformance, and corruption. Our 

audits and investigations of public works projects, for 

example, have identified significant instances of 

nonperformance and misuse of federal funds. 

These are just some of the potential problems NOAA 

and NIST grants and procurement specialists must 

be attuned to. Negotiating fair terms for construction 

projects and managing the work requires a distinctly 

different skill set from that needed to oversee research 

projects—the ability to evaluate architectural and 

The efficiency with which the U.S. Patent 

Trademark Office processes patent applications h

direct bearing on how well it achieves its missio

promoting U.S. competitiveness. Meeting 

demand for new patents in a timely manner has b

a long-standing challenge for USPTO. Increase

both the volume and complexity of pa

applications have lengthened application proces

times and backlogs dramatically. In 2004, USP

had a patent backlog of nearly a half-mil

applications and processing times of 27 months

2007, processing times averaged nearly 32 mon

with wait times for communications-related pat

as long as 43 months. 

As of September 30, 2008, USPTO reporte

backlog of 750,596 applications and estimated 

the backlog will exceed 860,000 by September 20

USPTO’s current estimates put that backlog 

740,000 applications by the end of FY 2009, wh

is a decrease of 10,000 applications over end of 

2008 numbers. The USPTO needs to fur

decrease the backlog by continuing to implem

measures discussed in its 2007-2012 strategic p

that have a significant impact on reducing 

backlog, such as shortening application review tim

improving examiner error rates, and continuing 

initiatives to improve the hiring, training, 

retaining skilled examiners. In addition, the USP

will persist in pursuing and implementing, w

possible, other measures such as international w

sharing and cooperative efforts to aid in decrea

the backlog and enhancing examiner efficiencies. 

USPTO’s unique financing structure also pres

challenges. There is a complex relationship betw

the number of patent applications filed, the siz

the application backlog, the number of pat

11 
roughly $100 million below what it had projected. 

The current model for financing USPTO’s critical 

mission warrants attention to ensure that it will 

continue to provide sufficient funding to process all 

backlogged applications as well as any newly filed 

applications. 

NOAA’s Ability to Conserve the Nation’s 

Fragile Oceans and Living Marine 

Resources While Ensuring a Vital 

U.S. Commercial Fishing Industry 

According to NOAA, 3.5 million square miles of our 

coastal and deep ocean waters and the Great Lakes 

support over 28 million jobs—one of every six—in 

the United States, and the value of the U.S. ocean 

economy tops $115 billion. But these economic 

benefits come at great cost as the health of our ocean 

and coastal ecosystems continues to decline in the 

face of increasing coastal development, pollution, 

overfishing, climate change, and the destructive 

impact of invasive species. 

Charged with maintaining and improving the 

viability of marine and coastal ecosystems while 

supporting global marine commerce and 

transportation, NOAA manages a significant portion 

of the federal government’s investment in living 

marine resources. It faces difficult challenges in 

promoting the health of these resources while 

ensuring they sustain the vital economic benefits we 

derive from them. The difficulty is perhaps most 

apparent in NOAA’s management of commercial 

fisheries, and its enforcement of numerous related 

statutes and regulations. 

strives to balance diverse societal objectiv

Implementation will need to be incremental an

collaborative. NOAA recognizes that transitio

to and implementation of an ecosystem approa

to management needs to be incremental an

collaborative. 

http://ecosystems.noaa.gov 

During this semiannual period, we responded 

congressional request to investigate a series of is

regarding the quality of the science used to determ

catch limits for New England commercial fishe

and related allegations from the fishing industry 

non-NOAA scientists (see page 31)—a situation 

epitomizes the difficult balance NOAA m

maintain in fulfilling its mission. Overall we fo

NOAA met the “best available science” requirem

of the Magnuson-Stevens Fishery Conservation 

Management Act in setting catch limits to pro

and rebuild compromised species. But the histor

contention between the groundfish industry 

NOAA in the Northeast Region, coupled w

NOAA’s ineffective communications and lim

progress in improving transparency, among o

things, set the stage for challenging the limits 

assailing NOAA’s objectivity in setting them. 

Open communications and transparency are essen

to a productive NOAA-industry partnership 

succeeds in balancing commercial interests w

conservation goals. But also critical are ecosys

approaches to fisheries management, as these sup

more comprehensive assessments of species 

better inform resulting regulations. NOAA is slo

making the transition to ecosystem management, 

its efforts in this regard must be monitored. NOA

ecosystem-based management approaches sho

12 
lead to a fishery’s collapse. The Magnuson-Stevens 

Reauthorization Act gave NOAA new authorities to 

combat IUU fishing. It is important to monitor 

NOAA’s use of these authorities in protecting U.S. 

and global fisheries. 

Finally, approximately $210 of the $860 million 

NOAA received in stimulus funding is expressly 

dedicated to restoring marine and coastal habitats, 

addressing backlogs in hydrographic surveys 

(measuring the depth and bottom configuration of 

water bodies), and issuing biological consultations 

required by the Endangered Species Act. For 

example, NOAA plans to invest up to $167 million 

to support restoration projects addressing coral reef 

conservation, the restoration of fish habitats, the 

recovery of endangered species such as salmon and 

sea turtles, and the improvement of coastal resiliency 

in response to sea level rise and natural hazards. Our 

office plans to monitor how effectively NOAA spends 

these funds and implements these programs. 

BIS’ Setbacks in Modernizing Its 

Obsolete Information Technology 

Infrastructure to Strengthen the Dual-Use 

Export Control System 

In January 2007, GAO added the Bureau of Industry 

and Security’s dual-use export control system to its 

government-wide high-risk list. One of the key 

challenges facing BIS in ensuring that the dual-use 

export control system is properly equipped to 

advance U.S. national security, foreign policy, and 

economic interests is the replacement of its obsolete 

3 The exclusive economic zone (EEZ) is the 200 nautical miles 

extending from a nation’s shores. Nations control the undersea 

resources, primarily fishing and seabed mining, in their EEZ. 

The current projected completion date for 

ECASS modernization is FY 2014. Based on 

interviews, the total funding requirements 

ECASS modernization are not clearly establis

BIS must provide a comprehensive plan for wh

required to modernize ECASS, including how m

it will cost and how it will avoid the management 

technical problems experienced in 

modernization attempts. 

Enhancing the performance of ECASS and ensu

continued operation of an effective licen

information system are far too important to postp

any longer. BIS must demonstrate that it ha

modernization strategy and plan in place 

convincingly make the case for increased funding

develop a plan to implement its ECA

modernization effort with existing resources 

reallocate existing funding). 

13 
On February 17, 2009, the President signed the 

American Recovery and Reinvestment Act of 2009 

into law. The Recovery Act requires an 

unprecedented amount of transparency and 

accountability and sets out specific responsibilities for 

the OIG to provide oversight of the Department’s 

activities under the Act and its spending of funds 

appropriated by the Act. The Department of 

Commerce—five bureaus, plus the Office of 

Inspector General—received $7.946 billion in the 

Recovery Act, as follows: 

● 	 Economic Development Administration: 

$150 million for economic development 

assistance programs. 

● 	 Bureau of the Census: $1 billion for 

periodic censuses and programs. 

● 	 National Telecommunications and Information Administration: $4.7 billion for the 

Broadband Technology Opportunities 

Program and $650 million for the Digitalto-Analog Converter Box Program. 

● 	 National Institute of Standards and 

Technology: $220 million for scientific and 

technical research and services”, $360 million for construction of research facilities, 

$20 million to be transferred from the 

Department of Health and Human Services 

for continued work on advancing health care 

information enterprise integration, and 

$10 million to be transferred from the 

Department of Energy to implement section 

1305 of Public Law 110–140, the Energy 

Independence and Security Act of 2007. 

● National Oceanic and Atmospheric Adm

stration: $230 million for operati

research, and facilities and $600 million 

procurement, acquisition, and construct

● Office of Inspector General: $6 million 

general oversight of funds provided 

Commerce bureaus under the Act 

$10 million to be transferred from N

for audit and oversight of funds prov

for the Broadband Technology Oppo

nities Program. 

The OIG is in the process of developing a risk-b

oversight plan. In the meantime, we have pu

place an interim plan to guide our work. Under 

plan, we 

● Established a Recovery Act Task Force 

identified specific oversight priorities inc

ing fraud prevention, grants; procureme

science and research; broadband; digital 

conversion and Census. 

● Are participating on the Departme

Recovery Act Steering Committee and w

ing groups as advisory members to pro

technical assistance and advice on risk ass

ment, operational procedures, and inte

controls. 

● Developed and are delivering fraud aware

briefings for Departmental procurem

grants and program officials and proc

ment and grant recipients. The brief

focus on risk management for Comme

specific programs and emphasize whi

blower protection and reporting to OIG

14 
15 
16 

and hard-to-reach populations. 

NTIA $4,700,000,000 Broadband Technology Opportunities Program (BTOP), to be available until 

September 30, 2010. For competitive grants to accelerate broadband deployment in 

unserved and underserved areas and to strategic institutions that are likely to create jobs 

provide significant public benefits. 

Up to $350,000,000 To establish the State Broadband Data and Development Grant program, as authorized 

Public Law 110-385 and for the development and maintenance of a national broadban

inventory map as authorized by division B of this Act. 

Not less than 

$200,000,000 For competitive grants for expanding public computer center capacity. 

Not less than 

$250,000,000 For competitive grants for innovative programs to encourage sustainable broadband adoptio

OIG $10,000,000 To be transferred to the Department of Commerce Inspector General for audits and 

oversight of funds provided under this heading. 

NTIA $650,000,000 For additional implementation and administration of the digital-to-analog converter box 

coupon program, including additional coupons to meet new projected demands and 

consumer support, outreach and administration. 

$90,000,000 Of the amounts provided, up to $90,000,000 may be use for education, and outreach to 

vulnerable populations including one-on-one assistance for converter box installation. 

NIST 

Scientific and $220,000,000 For research, competitive grants, additional research fellowships and advanced 

Technical research and measurement equipment and supplies. 

Research 

and Services 

$20,000,000 Provided by transfer from the Health Information Technology (HIT) initiative within this Ac

For HIT activities, NIST is directed to create and test standards related to health security and 

interoperability in conjunction with partners at the Department of Health and Human Servic

$10,000,000 Provided to implement section 1305 of Public Law 110–140 Energy Independence and 

Security Act of 2007. SEC. 1305. SMART GRID INTEROPERABILITY FRAMEWOR

The Director of the National Institute of Standards and Technology shall have primary 

responsibility to coordinate the development of a framework that includes protocols and 

model standards for information management to achieve interoperability of smart grid 

devices and systems. 

Construction of $360,000,000 To address NIST's backlog of maintenance and renovation and for construction of new 

Research Facilities facilities and laboratories. 

$180,000,000 Of the amounts provided, $180,000,000 shall be for the competitive construction grant 

program for research science buildings, including fiscal year 2008 and 2009 competition

NOAA 

Operations, $230,000,000 To address a backlog of research, restoration, navigation, conservation and management activiti

Research, and 

Facilities 

Procurement, $600,000,000 For construction and repair of NOAA facilities, ships and equipment, to improve weath

Acquisition and forecasting and to support satellite development. 

Construction 

$170,000,000 Of the amounts provided, $170,000,000 shall address critical gaps in climate modeling 

and establish climate data records for continuing research into the cause, effects and way

to mitigate climate change. 

OIG $6,000,000 To remain available until September 30, 2013. 
that were initiated or underway during the 

reporting period: 

BIS 

IT Infrastructure System 

Determine whether continuous monitoring of 

information security controls is (1) keeping the 

authorizing official sufficiently informed about the 

operational status and effectiveness of security 

controls; and (2) resulting in prompt mitigation of 

any identified security control deficiencies. Also 

assess whether BIS has resolved deficiencies we 

identified in our FY 2006 Federal Information 

Security Management Act evaluation. 

Export Control Cyber-Infrastructure 

System 

Determine whether (1) the C&A process produced 

sufficient information about remaining system 

vulnerabilities to enable the authorizing official to 

make credible risk-based accreditation decisions, 

(2) continuous monitoring is keeping the authorizing 

official sufficiently informed about the operational 

status and effectiveness of security controls and 

(3) implemented controls adequately protect the 

system and its information. 

Census 

2010 Decennial Census Communications 

Campaign 

Evaluate the development and delivery of 

promotional materials produced to determine 

whether the materials met contract requirements for 

target audiences. Also, review contract requireme

plans, deliverables, timelines, and funding, 

follow up with separate audits of any prob

areas identified. 

Decennial Response Integration System 

(DRIS) 

Assess DRIS contract requirements, deliverab

funding, and timelines, as well as review award 

paid to the contractor, the $170 million cont

modification executed in August 2007, and any o

contract changes made to accommodate the Cens

decision to conduct paper non-response follow

Also analyze the findings of unsupported 

discrepant proposed costs reported by the Def

Contract Audit Agency in 2005. 

Decision Documents and Expenditures 

for the 2010 Decennial Census 

Identify the decision documentation and o

information used to support allocations and spend

for the 2010 census and determine whether 

are consistent with planned activities 

budget requests. 

Field Data Collection Automation Syst

Determine whether (1) the C&A process produ

sufficient information about remaining sys

vulnerabilities to enable the authorizing officia

make credible risk-based accreditation decisi

(2) continuous monitoring is keeping the authori

official sufficiently informed about the operati

status and effectiveness of security controls 

(3) the C&A process produced sufficient informa

about remaining system vulnerabilities to enable 

17 
uug y

vulnerabilities to enable the authorizing official to 

make credible risk-based accreditation decisions, 

(2) continuous monitoring is keeping the authorizing 

official sufficiently informed about the operational 

status and effectiveness of security controls and 

(3) implemented controls adequately protect the 

system and its information. 

Policies and Procedures for Handling 

Radioactive Materials 

Evaluate NIST’s training, safety, and response 

policies and procedures relative to radioactive 

materials as well as controls over its inventory of and 

access to these materials. Also assess whether the 

agency’s management structure facilitates incident 

preparedness and response, and the extent to which 

security and emergency protocols protect the health 

and safety of NIST employees at research labs and the 

surrounding communities. 

NOAA 

Finger Lakes Production International, 

Inc. for Radio Scripts on Ocean Matters 

Evaluate a 2002 contract and financial assistance 

awards made in 2003, 2005, and 2006 in relation to 

a claim by Finger Lakes that NOAA owed the firm 

$526,000. 

Pacific States Marine Fisheries 

Commission 

Comprehensive audit of two NOAA cooperative 

agreements and three contract task orders awarded to 

the Commission, which also includes audit of seven 

qug d dpyg p

cations with PSIC grant funds and whether their 

of these funds is meeting all federal requirements

USPTO 

Enterprise Unix Services System and 

Reed Technology and Information 

Service Patent Data Capture System 

Determine whether (1) the C&A process produ

sufficient information about remaining sys

vulnerabilities to enable the authorizing officia

make credible risk-based accreditation decisi

(2) continuous monitoring is keeping the authori

official sufficiently informed about the operati

status and effectiveness of security controls 

(3) the C&A process produced sufficient informa

about remaining system vulnerabilities to enable 

authorizing official to make a credible, risk-b

accreditation decision. 

Quality Assurance Process 

Determine (1) the effectiveness of USPTO’s pa

quality assurance process in ensuring that establis

standard of patent examination quality are met, 

(2) whether the process complies with applic

Department, bureau and federal laws, regulati

policies, procedures, and guidelines. 

Department-wide 

Department-wide Oversight of Grants 

Identify relevant oversight activities currently in p

at the Department's grants management offices 

to determine (1) whether those activities 

18 
gg 

Department and operating units are using to 

strengthen their workforce and identify best practices 

gg gg

spend funds appropriated under the Recovery Ac

19 

’

he Bureau of In

nations system f

functions include

applications; conducting

conducting industry outr

primary operating units: 

Export Administration im

INDUSTRY AND SECURITY
 

T dustry and Security is primarily responsible for administering and enforcing 

or controlling exports of sensitive dual-use goods and technologies. BIS’ m

 formulating and implementing export control policy; processing export lic

 various policy, technical, and economic analyses; promulgating regulati

each; and enforcing the Export Administration Act and regulations. BIS has 

plements U.S. export control and nonproliferation laws and policies through ex

licensing, commodity classifications, and advisory opinions; technical, economic, foreign availability, 

policy analyses; promulgation of regulations; and industry outreach. It also conducts various defense indu

activities and enforces industry compliance with arms control treaties. 

Export Enforcement participates in reviews of export license applications and conducts criminal 

administrative investigations relating to the export control portions of the Export Administration Act 

regulations. It also administers and enforces the antiboycott provisions of the act and regulations. 

implementation and compliance. The subcomm

Issues Related to the Bureau 

and committee posed a series of questions relate

of Industry and Security’s BIS’ use of funds designated for international tr

Budget and Responsibilities implementation and compliance, the curtailment 

Chemical Weapons Convention attaché posted 

for International Treaty The Hague, and BIS management’s decision 

Implementation and Compliance discontinue spending on a project to compile 

U.S. Additional Protocol (AP) declaration using 

(IPE-19463) electronic system. 

We reported to the subcommittee and comm

Government Management, the Federal Workforce, 

The Senate Subcommittee on Oversight of 

that conference report language accompanying 

and the District of Columbia, Committee on FY 2006 appropriations bill stated that the fund

Homeland Security and Governmental Affairs, and previously spent on international tr

the Senate Committee on Foreign Relations asked implementation and compliance activities could 

the Office of Inspector General to investigate the be spent on “national security related program

Bureau of Industry and Security’s budget Based on this language, BIS started funding o

management practices related to international treaty programs with the funding previously dedic

21 
22 
ADMINISTRATION
 

The Eco

Develo

private 

mission under t

nomic Development Administration was established by the Public Works and Econo

pment Act (PWEDA) of 1965 to generate new jobs, help retain existing jobs, and stimu

investment in economically distressed regions of the United States. EDA continues to fulfill 

he authority of PWEDA, as amended by the Economic Development Reauthorization Ac

2004. Based on local and regional comprehensive economic development strategies, EDA works in partner

with state and local governments, regional economic development districts, public and private nonp

organizations, and Indian tribes to help distressed communities address problems associated with long-t

economic deterioration and sudden and severe economic dislocations, including recovery from the econo

impact of natural disasters, the closure of military installations and other federal facilities, changes in t

patterns, and the depletion of natural resources. EDA provides eligible recipients with technical assistanc

well as grants for public works, planning, training and research, and economic adjustment assistance. 

San Bernardino International funds, monitors and closes out projects, and ens

recipients comply with federal law and regulati

Airport Authority and the Inland The conversion project is complex; the work is b

Valley Development Agency accomplished through multiple contracts, consul

agreements, and procurements requiring excel

(STL-18837) organization, communications, and coordination

In 1994, the Economic Development Administration 

began a long-term collaboration with the Department 

of Defense Office of Economic Adjustment to 

redevelop Norton Air Force Base in San Bernardino, 

California, into a civilian airport and 

industrial/commercial complex. Before closing in 

March 1994, the 2,221-acre base had maintained and 

repaired aircraft and supported C-141 airlift operations. 

Under a memorandum of understanding with 

Defense, EDA is administering a series of nine 

economic adjustment assistance awards with a total 

estimated cost of over $45 million. Defense provides 

the funding. EDA makes grant awards, disburses 

Source: OIG, October 

Hangar 763 at the former Norton Air Force Base 

23 
allowable, and allocable to the award, and whether 

grantees had complied with award terms and 

conditions and were achieving project objectives. 

In all four cases, we found the grantees had made 

acceptable progress toward achieving project goals 

and objectives. We did, however, question $637,082 

in claimed costs for failure to adhere to a variety of 

uniform administrative requirements and federal cost 

principles applicable to the awards. For example, 

grantees did not maintain adequate or complete 

documentation for a number of critical procurements 

and lacked a system capable of tracking such 

We recommended that EDA disallow the questio

costs, recover the federal share of $573,375, 

ensure grantees make the necessary improvement

program administration and financial managem

systems to fully comply with federal requireme

EDA disallowed the costs as recommended and 

grantee paid off the debt in full. EDA also susta

audit recommendations requiring the grantees 

institute construction management controls, pol

and procedures and to comply with unif

administrative requirements pertaining to finan

management, procurement, records retent

program income and property management. 

24 
’

’

ADMINISTRATION
 

The Econo

and prod

economist

the formulation of

mics and Statistics Administration analyzes economic activity, formulates policy opti

uces a major share of U.S. government economic and demographic statistics. The c

 monitors and analyzes economic developments and directs studies that have a bearing 

 economic policy. ESA has two principal agencies: 

U.S. Census Bureau is the country s preeminent statistical collection and dissemination agency. It publish

wide variety of statistical data about the nations people and economy, conducting approximately 200 an

surveys, in addition to the decennial census of the U.S. population and the quinquennial census of indust

Bureau of Economic Analysis prepares, develops, and interprets the national income and product acco

(summarized by the gross domestic product), as well as aggregate measures of international, regional, and s

economic activity. 

Census 2010: Challenges to 

Conducting a Successful Address 

Canvassing Operation Are 

Highlighted in Field Testing and 

Progress Under Realigned 

FDCA Contract 

Address canvassing—the first major operation of the 

2010 census—involves sending thousands of 

temporary staff (known as “canvassers” or “listers”) 

equipped with handheld computers to collect 

addresses and geographic information to update the 

Census’s master address file (MAF) and digital maps. 

The bureau describes “an accurate, comprehensive, 

and timely [address] list” as “one of the best 

predictors of a successful census.” The live address 

canvassing operation, scheduled for March-July 

2009, is the Census’s last opportunity to significa

improve the MAF. 

In reviews completed during this semiannual pe

we found that persistent problems with the hand

computers and related systems, the resulting nee

modify the Field Data Collection Automa

contract, and the compressed schedule 

operational testing combined to slow Cen

progress toward fine-tuning and finalizing cer

aspects of the address canvassing operation before 

live operation began this past spring. The finding

our individual reviews are summarized below. 

25 
time conditions. The test of address canvassing was 

conducted from May through June 2007 in San 

Joaquin County, California, and a nine-county area 

surrounding Fayetteville, North Carolina. We 

reviewed dress rehearsal activity for the North 

Carolina site, and the impact of that activity on the 

quality of the master address file. 

The MAF is intended to be a current, comprehensive 

list of every address in the nation representing a living 

quarter—whether occupied or vacant—compiled 

from, among other things, Census’s 2000 address list, 

U.S. Postal Service data, and local government 

address information provided primarily through an 

operation known as LUCA—Local Update of Census 

Addresses. 

The Census’s mechanism for collecting and 

tabulating decennial census data is to link (geocode) 

MAF addresses to the Census’s digital map known as 

TIGER (Topologically Integrated Geographic 

Encoding and Referencing). Only geocoded 

addresses are included in the address canvassing 

operation, and only geocoded addresses receive 

census questionnaires. 

We had evaluated activities to update the MAF and 

related maps during the 2006 census test and 

identified missing, duplicate, and erroneous addresses 

in the list—problems that would hinder Census’s 

ability to get a complete and accurate count during 

an actual census. Our review of the 2008 dress 

rehearsal for a sample of assignment areas before and 

after address canvassing found that many of the issues 

we noted in 2006 remain. 

g

nonresponse follow-up enumerators only con

households that received but did not retur

questionnaire. Therefore, residents at addresses 

remain ungeocoded after address canvassing 

unlikely to be counted. 

In addition, several hundred addresses in our sam

were duplicates except for the ZIP code. Up-to-

addresses were added by a LUCA operation but 

updates were not recognized as the same housing 

in the MAF because the ZIP codes were differ

Therefore, the LUCA addresses did not override 

outdated entries. 

Address Canvassing Remains an Unreliable Appro

for Improving the MAF. As in our earlier reviews

found that address canvassing cannot be counted 

to reliably record the information needed to geoc

ungeocoded addresses, identify and add mis

units, or eliminate certain address errors. 

operation is especially challenged when dealing w

(1) nontraditional mailing addresses—for exam

multiunit residences whose individual househ

addresses do not conform to the typical st

number and name format; (2) “hidden” dwelli

such as sheds and makeshift garage apartments; 

(3) trailer parks that display both lot num

corresponding to a unit’s physical space within 

park and unit numbers that are part of the mai

address. Examples of missed or misidenti

residences we noted include the following: 

1. 	 A 352-unit apartment complex in our sam

was in the MAF but not geocoded 

therefore was not on an address canvas

list. The lister missed several addresses w

adding the complex. The missing addre

remained ungeocoded and will not recei

26 
units, allowing them to geocode, but not for 

others. Subsequent changes to canvassing 

procedures and the handheld software will 

prevent listers from making this correction, 

which means that entire complexes such as 

this one may not receive mailed 

questionnaires. 

3. 	 Almost 600 “hidden” units in our sample 

were identified by listers but not added to 

the MAF because listers did not sufficiently 

differentiate the hidden dwelling from the 

primary residence. 

4. Numerous trailer park residences were 

listed twice in the dress rehearsal lists—once 

by street address and once by lot number. 

During dress rehearsal, canvassers often 

eliminated the correct street listing and kept 

the erroneous lot number listing. 

Finally, we identified problems with Census’s revised 

quality control procedures. 

● We found instances in which quality control 

staff reinstated addresses that had been 

correctly deleted by the canvasser and otherwise incorrectly added addresses to 

canvassers’ lists. 

● We noted that the 2010 procedure of having 

the same individual do both the quality control check of canvassed assignment areas and 

the recanvassing of areas that fail the check 

may compromise the results by prompting 

quality control staff to shortcut the recanvassing process—a situation we observed in 

the field. 

the MAF, and linking them to correspond

location addresses; 

3.	 enhancing instructions and training 

listing nontraditional mailing addresses; 

4.	 closely monitoring quality control p

fail rates nationwide for indications 

improper recanvassing practices. 

To eliminate the recurring problems our work 

identified and improve the MAF for 2020, we fur

recommend that Census regularly update the 

throughout the decade in lieu of canvassing the en

nation only once, in proximity to Census Day. 

Revised Field Data Collection 

Automation Contract 

Incorporated OIG 

Recommendations, But Concern

Remain Over Fee Awarded 

During Negotiations 

(CAR-18702) 

The mounting problems with the Census Bure

original Field Data Collection Automation (FD

contract prompted the decision in April 2008 

modify the contract and reduce Harris Corporat

role in providing 2010 decennial systems 

services. The renegotiations allowed Census to re

the contract type and fee structure and modify th

as appropriate. 

27 
risk deliverables and standard IT products and 

services. Complete requirements for both types of 

deliverables were unknown at the time of contract 

award in 2006 and their costs were therefore difficult 

to predict. Under the Federal Acquisition Regulation, 

a cost plus award fee contract is appropriate when 

high-risk deliverables are involved because they 

represent new, untested concepts for which the 

government should bear the greater risk. 

Source: Census Bureau, FDCA Contract Award Determination Plan 

Award Fee Determination Process 

pfp

($3.2 million) and 91 percent ($11 mill

of available fees for the first two performa

periods, respectively, despite serious 

formance problems noted by Census’s t

nical reviewers. Harris received no aw

fee for the third period. And the fee de

mination process lacked key feature

such as qualitative measures and mid-p

assessments—for ensuring awards w

appropriate. 

● The award fee structure did not effectively p

mote excellent performance. Lacking def

performance criteria, the fee structure c

tained no quantitative goals for dicta

potential fee amounts as an incentive 

achievement. Contract provisions fur

allowed unearned award fees to be ro

over to subsequent periods, giving Harris 

opportunity to earn any withheld amo

and minimizing the motivational im

that a fee reduction is intended to have. 

● Census missed opportunities to control costs 

manage risk. The FDCA Acquisition P

identified several elements that would 

fixed price, such as mobile compu

devices and office furniture. The bureau 

mately awarded the contract for full c

reimbursement but did not document w

We briefed Census on our audit findings in Au

2008. We made recommendations for improving 

FDCA contract by, among other things, establish

measurable criteria for assessing performance 

determining fees; modifying the fee structure 

promote excellent performance and limit the prac

28 
modification was signed. Although the fixed fee is less 

than the 13 percent maximum allowed under the 

original award fee plan, 9.5 percent is a highly 

questionable amount to guarantee to a contractor the 

bureau felt was performing poorly. 

Delays in Address Canvassing 

Software Development and 

Testing, Help Desk Planning, and 

Field Office Deployment Have 

Increased Operational Risk 

(OIG-19171) 

The renegotiated FDCA contract significantly 

reduced Harris Corporation’s responsibilities and 

requirements for the 2010 census. Among the 

contract changes, the bureau required far fewer 

handheld computers—the result of the decision to 

abandon their use for nonresponse follow-up. Census 

also took back responsibility for several major tasks 

that had been assigned to Harris, such as collecting 

data for large blocks (those containing 1,000 or more 

addresses) and providing help desk support. 

Under the Census’s revised decennial schedule, 

Harris was to deliver improved handheld computers 

to early local census offices by February 3, 2009, so 

that listers could begin training for the April 6 start 

of address canvassing. 

We assessed the Census’s progress in developing and 

implementing planned activities for the address 

canvassing operation and identified a number of 

concerns: 

Source: Photograph by the U.S. Census Bureau, Public Information Office 

The mounting problems with the FDCA contract prompted the 

decision to abandon use of the handhelds during nonresponse 

follow-up while keeping them for address canvassing--the first 

major operation of the 2010 census. 

● Potential for unexpected handheld probl

Census missed scheduled dates for tes

handheld components and the integr

system, and was left with only 8 days 

field testing the entire system prior to 

live canvassing operation. This short 

period increases the risk that unexpe

problems may surface during address 

vassing, possibly affecting the productivit

listers and the accuracy of the resu

In addition: 

■ Census eliminated some hyd

graphic information from map 

so that each region’s maps could 

on a single digital card in 

handhelds. But the move le

listers with fewer reference poin

guide them through assignm

areas, which might make canvas

more difficult. 

■ Census chose the Autom

Listing Mapping Instrum

(ALMI) to list large blocks, bec

these have been a problem for 

29 
approach based on field test results operational offices had the space 

to ensure the information collected resources to handle the added work. 

is accurate and reliable. 

We made no recommendations in this report bec

● Short time frame for establishing help 

desk services. The Census’s decision in 

of the little time Census had to complete its add

canvassing preparations. But we continued 

July 2008 to manage help desk support monitor how it (1) finalized its approach to l

beginning in January 2009 left little time to block canvassing, (2) developed and condu

plan for and establish these services by the training for help desk staff, and (3) deployed l

start of address canvassing. Given the limit- census offices while preparing to implement 

ed handheld testing and the uncertainty of contingency plans as necessary. 

their performance, solid help desk services 

must be in place to field potentially high call 

volumes and ensure a successful operation. 

30 
’

ATMOSPHERIC ADMINISTRATION

The Nati

the prot

and ma

onal Oceanic and Atmospheric Administration studies climate and global change; ens

ection of coastal oceans and the management of marine resources; provides weather servi

nages worldwide environmental data. NOAA does this through the following organization

National Weather Service reports the weather of the United States and provides weather forecasts and warn

to the general public. 

National Ocean Service provides products, services, and information that promote safe navigation, supp

coastal communities, sustain marine ecosystems, and mitigate coastal hazards. 

National Marine Fisheries Service conducts a program of management, research, and services related to 

protection and rational use of living marine resources. 

National Environmental Satellite, Data, and Information Service observes the environment by operating a natio

satellite system. 

Office of Oceanic and Atmospheric Research conducts research related to the oceans and Great Lakes, the lo

and upper atmosphere, space environment, and the Earth. 

Office of Program Planning and Integration develops and coordinates NOAAs strategic plan, supp

organization-wide planning activities, guides managers and employees on program and performa

management, and integrates policy analyses with decision-making. 

Review of the Quality of Science 

Used by the National Marine 

Fisheries Service’s Northeast 

Fisheries Science Center 

During this semiannual period, we investigated a 

series of issues regarding the work and scientific 

methods of the NOAA’s National Marine Fisheries 

Service’s (NMFS’) Northeast Fisheries Science 

Center at the request of Senators Snowe, Collins, 

Kennedy, and Kerry. Specifically, we investigated 

nine allegations concerning either the quality of the 

31 

science used to determine catch limits for N

England commercial fisheries or related issues ra

by the fishing industry and non-NOAA scient

These allegations were centered on the two fishe

that generated the most concerns—north

groundfish (specifically, Atlantic cod, hadd

pollock, and yellowtail flounder) and Atlantic 

scallops. We also reviewed NMFS’ implementa

of National Standard 2 of the Magnuson-Stev

Fishery Conservation and Management 

National Standard 2 requires that conservation 

management measures in fishery management p

be based on the best scientific information availa

Finally, we addressed concerns that NMFS 
NOAA in the northeast, where industry views 

NOAA as biased towards conservation goals. The 

challenges inherent to balancing a sustainable fishery 

with industry’s interests, coupled with ineffective 

efforts to rebuild stocks, have contributed to this 

unproductive relationship. In our view, the lack of 

trust and confidence in NOAA by the groundfish 

industry manifests itself as doubt in the science. Of 

the nine allegations we examined, we concluded that 

six are the result of ineffective communications and 

ongoing tension between the groundfish industry 

and NOAA. Without an improved relationship, we 

believe the science will continue to be questioned. To 

address this concern, we made several 

recommendations to NOAA to improve its 

relationship with the groundfish industry. 

Additionally, we found that NOAA’s poor handling 

of a 2008 FOIA request also contributed to its 

reputation in the Northeast Region as an agency that 

is unconcerned with transparency. In reviewing the 

FOIA request, we found that the FOIA process was 

loosely managed, with both internal NOAA and 

statutory deadlines not being met. We recommended 

that NMFS examine why deadlines were not met for 

this particular FOIA request, and take steps to ensure 

that it meets statutory FOIA requirements and 

NOAA’s internal guidelines for future FOIA requests 

by holding responsible staff accountable for 

process deadlines. 

Finally, several issues arose during the course of our 

review that reinforced the need for NOAA to more 

aggressively pursue ecosystem approaches to fisheries 

Source: Environmental Assessment Regulatory Impact Review, Initial Regu

Flexibility Analysis for Northeast Multispecies Fishery Managemen

National Marine Fisheries Service, Gloucester, Massachusetts, January 16, 

Northeast U.S. Shelf Ecosystem 

interaction affects growth and mortality. Finally, 

top tier is an ecosystem assessment that wo

include single and multispecies effects as wel

environmental factors—the physical, chemical 

biological processes in a marine ecosystem, and 

interrelationships with human activity. We fo

that NOAA scientists have been and are curre

working within the first tier of single st

assessments, but are working toward multispecies 

ecosystem approaches. We recommended 

NOAA more aggressively pursue ecosys

approaches to fisheries management, which 

require additional data, new models, and analysis

32 
of a research report on climate change and hurricane 

intensity. At about the same time, NOAA and NASA 

scientists were complaining that their climate studies 

were being suppressed. A September 2006 letter from 

14 senators to the Commerce and NASA inspectors 

general expressed concerns about possible 

suppression, and asked specifically whether 

Commerce had blocked release of a hurricane/global 

warming report. In response, we assessed Commerce 

policies regarding public release of research data and 

the events surrounding the purported report. 

Our review documented the following chain of 

events: in November 2005, NOAA published an 

article in its online NOAA Magazine contending that 

its research indicated natural cycles in tropical climate 

were the cause of increased Atlantic hurricane activity 

since 1995, not the greenhouse effect of global 

warming. The statement drew criticism from some 

NOAA scientists, who believed it failed to reflect the 

full spectrum of the agency’s research on hurricanes 

and global warming. In response, NOAA decided in 

January 2006 to prepare a fact sheet that would 

present a balanced view of the agency’s 

hurricane/climate change research. The fact sheet was 

approved in May 2006, but was not released until the 

following September. 

We determined the document was not a report 

containing new research but the fact sheet approved 

in May 2006. The fact sheet did not contain new 

science but was an overview of various scientific 

opinions within NOAA. We attributed the delay in 

publishing the document to three principal factors: 

1. 	Changes in senior-level personnel at 

NOAA overseeing the fact sheet’s 

development and distribution, which 

We also found that at the time NOAA had prep

the fact sheet and initiated the approval proces

was operating under Commerce and NO

communications policies that were out of d

confusing, and burdensome, and contai

conflicting guidance. These policy deficien

resulted in delays in disseminating press releases 

scientific research. 

The Department updated its communications po

in May 2007. NOAA issued a formal policy 

preparing fact sheets that is consistent with 

Department’s new policy. Both give specific guida

for sharing findings from fundamental resea

However, at the time of our review, NOAA had 

incorporated the fact sheet policy into the agen

directives system or publicized it agencywide. 

We recommended that 

● procedures developed for preparing 

sheets be incorporated into NOAA’s di

tives system and posted to the NOAA 

site, and 

● state of the science fact sheets requi

Department approval be routed through 

Office of the Secretary Executive Secreta

33 

STANDARDS AND TECHNOLOGY

The Nati

competi

econom

Innovation Pro

onal Institute of Standards and Technology promotes U.S. innovation and indus

tiveness by advancing measurement science, standards, and technology in ways that enha

ic security and improve quality of life. NIST manages four programs: the Technol

gram, the Manufacturing Extension Partnership program, the Baldrige National Qua

Program, and NIST Research Laboratories. 

Hollings Manufacturing 

Extension Partnership (MEP) 

Program: Audits Question 

$20 Million in Costs Claimed 

by Three MEPs 

Congress established the MEP program in 1988 to 

offer technical and business management assistance 

to manufacturers, with the goal of improving 

their profitability, productivity, and global 

competitiveness. The program, operated by NIST, 

provides partial federal funding to nonprofit 

organizations to operate MEP centers that offer an 

array of services to business and industry clients. The 

funding is made available through “cooperative 

agreements” that require nonfederal matching funds 

from state or regional partners to support center 

operations. Today there is at least one center in every 

state and a total of 59 MEP centers located across 

the country. 

During this semiannual period, we audited the 

operations of three MEP centers, located in South 

Carolina, Florida, and Massachusetts, to determine 

whether their claimed costs were allowable under the 

terms of their MEP agreements and whether they 

complied with all other MEP operating guideli

award terms, and conditions. We also exam

(1) the costs submitted by certain entities 

received cooperative agreement fund

(“subrecipients”) from the MEP centers to pro

services to clients, and (2) in the case of Flor

third-party in-kind contributions. 

South Carolina MEP Award No

70NANB5H1187 (ATL-18567) 

The South Carolina Manufacturing Exten

Partnership (SCMEP) received a NIST coopera

agreement in 2005 that, as amended, fun

operations of its MEP center for 2 years (July 20

June 2007). Total estimated costs of the project w

$13.6 million. The federal share was capped 

$4.5 million. 

The Partnership claimed costs totaling $11.4 mil

for the period July 2005 through March 2007, 

received federal reimbursements of $3.8 million. 

audit found that the recipient could not prop

support approximately $3.4 million in costs claim

35 
 

 

In addition, the subrecipients’ MEP agreements did 

not contain the required budget information, and 

none had written procedures in place to determine 

whether amounts reported to SCMEP were allowable 

under federal cost principles. 

Finally, two of three subrecipients that qualified for 

single audits4 did not separately identify the NIST 

MEP program. Therefore these grants were not 

subjected to the proper audit techniques required 

under the Single Audit Act. 

We recommended that NIST take the following 

actions: 

1.	 Disallow $3,409,409 in questioned costs 

and recover excess federal funds of 

$1,136,736. 

2.	 Require the recipient to ensure its 

subrecipients have appropriate budgets and 

written policies and procedures that meet 

financial system requirements prior to 

granting any future subawards. The written 

procedures should direct subrecipients to 

comply with the Single Audit Act. 

4	 The Single Audit Act requires nonfederal entities that expend 

federal awards from more than one agency totaling $500,000 or 

more in a year to undergo a “single” audit, conducted by an 

independent auditor. 

The MEP claimed costs totaling $19.1 million 

the period July 2005 through March 2007, 

received federal reimbursements of $5 million. 

questioned $12.6 million of the claimed costs. 

bulk of this amount—$11.4 million—were c

submitted by eight subrecipients who did 

document that the expenditures were dire

incurred as part of their MEP-funded work. 

We questioned an additional $742,782 for, am

other things, unsubstantiated consultant f

duplicative services, unallowable lobbying activi

unreasonable travel expenses, and unreasonable 

and supply costs, as well as $386,133 in indirect c

related to these expenditures. 

We also questioned $99,738 in improperly va

and inadequately documented donated services 

personnel time. The bulk of this amoun

$85,738—represented expenses incurred by 

third-party contributors for their own day-to

business operations rather than for services dire

supporting the MEP. 

Finally, we found that the financial status reports 

MEP filed during the period of our audit w

erroneous: the MEP reported having excess prog

income, which was not the case, and incorre

characterized these funds as “unrestricted net ass

meaning they could be used without fed

restrictions or oversight. 

We recommended that NIST take the follow

actions: 

● Disallow $12,623,477 in questioned co

● Recover $2,868,393 of excess federal fu

36 
 

 

 

cooperative agreement in September 2005 to 

continue operating an MEP center it had established 

in 1998. The September 2005 award, as amended, 

provided funding for 1 year (July 2005-June 2006). 

Total estimated costs of the project were $7.1 million. 

The federal share was capped at $2.4 million 

(33 percent) of allowable costs. 

The Partnership claimed costs totaling $9.4 million 

for the period July 2005 through June 2006, and 

received federal reimbursements of $2.4 million. 

We questioned $5.1 million of its claimed costs, 

as follows: 

● $4,167,430 claimed by two subrecipients 

who could not document that their costs 

were incurred as part of their MEP-funded 

work. 

● $908,823 for contract services that did not 

accomplish NIST cooperative agreement 

objectives. 

● $10,745 in consultant fees and associated 

costs for services provided prior to the 

award’s start date. 

In addition, we found that the MEP’s reported 

earned program income for the year ended June 30, 

2006, exceeded its nonfederal matching share expenditures by $1.1 million. But the MEP did not seek 

required NIST approval to apply the additional 

income to nonfederal expenditures incurred in subsequent award periods. It should therefore have used 

this amount to reduce the federal share of its expenditures, in accordance with cooperative agreement 

terms and conditions and federal regulations. 

ADVANCED TECHNOLOGY 

PROGRAM 

The ReJen Company NIST 

Cooperative Agreement No. 

70NANB4H3011 (CAR-18706) 

In April 2004, a Nevada company and a Califo

firm received a $1.5 million Advanced Techno

Program (ATP) cooperative agreement to develo

prototype diesel engine built on thermal techno

that promised huge gains in fuel efficiency along w

significant reductions in emissions. The project

amended, operated for 3 years (2004-2007) 

capped federal contributions at $600,000 (3

percent). The recipients were responsible for 

remaining costs, the bulk of which came f

Caterpillar, Inc., the primary investor in the vent

The Nevada company served as administrator for 

cooperative agreement. The California firm prov

the materials, subcontractors, and a test site. 

In 2006, we conducted interim audits of c

claimed by both firms during the first 20 month

the project and questioned considerable amounts 

September 2006 Semiannual Report to Congress, p

41). Interim audits are required for non-fed

entities expending more than $500,000 in fed

awards in a fiscal year under OMB Circ

No. A-133. 

During this semiannual period, we conducted a f

audit, in which we assessed whether costs claim

during the balance of the project period (Janu

2006 through April 2007) were reasona

37 
38 
TELECOMMUNICATIONS AND
 

INFORMATION ADMINISTRATION

The Natio

principal

policy is

national inform

nal Telecommunications and Information Administration serves as the executive bran

 advisor to the President on domestic and international telecommunications and informa

sues. NTIA manages the federal use of the electromagnetic spectrum; provides grants 

ation and public broadcasting infrastructure projects; and performs telecommunicat

research and engineering. It works to enhance citizens’ access to cable television, phone, and o

telecommunications services; and educates state and local governments and other entities on ways to 

information technology and telecommunications more effectively. 

NTIA Should Further Improve 

Digital-to-Analog Converter Box 

Coupon Program Internal 

Controls to Prevent Waste, Fraud, 

and Abuse (CAR-19004) 

NTIA’s management of the $1.5 billion converter 

box coupon program has been an important watch 

item for OIG because maintaining strict 

accountability for funds in a program of this type and 

size can be difficult. We have been closely monitoring 

the program, and during this semiannual period we 

assessed the adequacy of NTIA’s controls to prevent 

waste, fraud, and abuse and the effectiveness of its 

oversight of the IBM contract for retailer coupon 

redemption. 

Our review found that NTIA is providing effective 

oversight but needed to further improve its internal 

controls to prevent waste, fraud, and abuse. 

Specifically, the agency needed to take steps to rec

more timely and informative data on contra

procedures, revise its own audit plan, and cle

document the results of its oversight. 

Contractor Reports Lacked The 

Most Useful Data 

Reports of contractor activities have not alw

provided sufficient useful information. For exam

May 2008 reports contained voluminous data ta

but little analysis and limited information on 

actions to be taken as a result of audit tests. On

IBM’s subcontractors showed us tests and analys

had performed outside of IBM’s plan, which 

believed would provide valuable information 

NTIA. We noted that June, July, and August rep

from IBM provided more meaningful data, suc

retailer surveillance logs that more clearly identi

the status of potential program violation reviews 

the results of onsite visits to certified retailers. 

39 
 

strengthen its controls to prevent waste, fraud, and 

abuse. After we discussed this concern with agency 

officials, IBM improved the timeliness of subsequent 

reporting: it submitted the August 2008 audit test 

results on September 17 and the September 2008 

audit results on October 17. 

NTIA’s Waste, Fraud, and Abuse 

Plan Needed Revision 

We also found that NTIA’s own plan for reducing 

and preventing waste, fraud, and abuse needed 

improvement. The following were among the 

weaknesses we identified: 

● The plan did not include a complete listing 

of the bureau’s activities, did not define the 

project management office’s role in decertifying retailers who violate program rules, and 

did not designate specific staff members 

responsible for activities. It also did not identify how often activities are performed or the 

resources necessary to complete them. As a 

result, it was difficult to track NTIA’s 

progress against the plan. 

We showed NTIA a spreadsheet tool we had 

developed for our own analysis that 

identified each activity; owner or contact 

person who performed the work; 

date/frequency of the review; test conducted; 

audit process or audit steps taken; 

contractor efforts. Although N

made some site visits earlier in 

program, staff had not made spe

visits focusing on waste, fraud, 

abuse. Such visits are impor

because they allow real-t

observation of internal cont

at work. 

■ The plan calls for regular f

back from NTIA on IBM’s a

plans and reports. We found o

one set of formal comments 

IBM’s reports, dated June 24, 20

NTIA subsequently informed u

has begun holding regular meet

with IBM and its subcontractor

the waste, fraud, and abuse prev

tion program and commenting 

IBM’s monthly reports. 

We recommended that NTIA revise its TV Conve

Box Coupon Program: Program Management Of

Waste, Fraud, and Abuse Plan, to include a comp

list of its activities and the individuals responsible 

accomplishing them. The revised plan sho

stipulate the frequency for performing proced

and the resources needed. In addition, NTIA sho

track its efforts against the plan and take pro

action to address any shortfalls in resources avail

for supporting its efforts to prevent program w

fraud, and abuse. 

40 
Commission Act of 2007 requires the Commerce 

Office of Inspector General to annually assess NTIA’s 

management of the Public Safety Interoperable 

Communications Grant program—a $1 billion onetime, formula-based matching grant program to 

enable public safety agencies to establish 

interoperable emergency communications systems. 

PSIC was authorized by the Digital Television 

Transition and Public Safety (DTV) Act of 2005. 

NTIA was charged under this act with implementing 

the program, in consultation with the Department of 

Homeland Security (DHS) and set a deadline of 

September 30, 2010, for grant funds to be expended. 

The Call Home Act of 2006 directed NTIA to award 

grants by September 30, 2007. 

We completed our first annual review during this 

reporting period, in fulfillment of the Implementing 

Recommendations Act requirement. For the year 

ended September 30, 2008, we assessed whether 

NTIA efficiently managed and met statutory 

requirements for the following grant administration 

activities: formula allocations, grant awards, 

statewide communications interoperability plans, 

and grantees’ applications and investment 

justifications. 

Overall, we found that NTIA’s management of the 

PSIC program has complied with the statutory 

requirements of the DTV and Call Home acts. 

However, we identified an issue regarding the 

program’s effectiveness that we believe warrants 

immediate attention: most grantees have made little 

progress in actually implementing their projects, and 

may not be able to meet the September 30, 2010, 

statutory deadline for completing them. 

OIG, December 

Radios purchased under a PSIC grant. 

Unique Award Process Shortened 

Time for Implementing Projects 

To meet the September 30, 2007, deadline 

awarding grants, NTIA made awards before gran

had submitted their required interoperability p

and spending justifications. This process diff

from many other Commerce grants programs, wh

award grants competitively based on the merit o

applicant’s proposal. As a result, many P

recipients spent the first year of the grant pe

developing required plans and justifications, 

awaiting approvals and subsequent release of fu

They therefore did not have the full 3-year aw

period for acquiring and deploying interoper

communications equipment. 

As of February 28, 2009—17 months into 

36-month grant period—less than 7 per

($66.3 million) of the PSIC grant funds had b

drawn down. We surveyed grantees in the fal

2008 regarding the status of their projects. Only 

the 22 grantees responding stated that it planne

acquire most of its interoperable communicat

equipment within the next 6 months. Eight ot

stated they are in the early stages of planning t

acquisitions. The remaining 13 stated they will b

acquiring equipment in FY 2009 or early FY 201

Given all that must follow the purchase 

equipment—installation, operational testing, 

41 
 

 

● promptly identify those grantees at high risk 

of not meeting the statutory deadline for 

completing their projects, provide the technical assistance they need to accelerate the 

process, and carefully monitor their progress; 

and 

● keep Congress informed of the PSIC program’s status, and if necessary, work with 

Congress to allow NTIA to extend the deadline for grantees to expend grant proceeds. 

NTIA Should Apply Lessons 

Learned from PSIC Program to 

Ensure Sound Management and 

Timely Execution of $4.7 Billion 

Broadband Technology 

Opportunities Program 

(ARR-19583) 

The American Recovery and Reinvestment Act of 

2009 authorized NTIA to implement the Broadband 

Technology Opportunities Program (BTOP)—a 

$4.7 billion one-time competitive matching grants 

program to expand broadband services to unserved 

and underserved areas, improve broadband access for 

public safety agencies, stimulate the economy, and 

create jobs. 

NTIA will implement the program alongside the 

Department of Agriculture’s Rural Utilities Service— 

which received $2.5 billion for broadband loans, loan 

guarantees, and grants under the Recovery Act—and 

NTIA is taking on this program midway through 

administration of the Public Safety Interoper

Communications program, which, like BT

requires a 20 percent nonfederal match. It also h

September 30, 2010, expiration date for fed

funding, but in this case, the deadline applie

availability of grantee funds (See page 41 for 

PSIC report summary). 

Our audit work on PSIC to date prov

important lessons learned for the NTIA broadb

opportunities program to ensure BTOP funds 

used effectively and grants meet prog

objectives. As NTIA prepares to implement 

broadband program, it should consider 

following three lessons learned from 

administration of PSIC. 

Lesson 1: Seek to Extend Funding 

for the Program Office Beyond 

FY 2010 to Ensure Proper Oversig

The September 30, 2010, funding time constr

could impact the quality and success of BT

projects and effective use of funds, though differe

from PSIC: the Recovery Act stipulates that any g

money not awarded by this deadline will be retur

and does not authorize funding for managing 

program beyond September 30, 2010. While the

no indication at this time that grant awards canno

made by the deadline, the loss of Recovery 

funding for the BTOP program office could m

that grant projects still under way at September 

2010, will no longer be actively managed, monito

and closed out. To address this, NTIA could se

revision to the broadband program requirements 

extends the operational time frame for the prog

42 
Peer Reviews before Making 

Grant Awards 

PSIC’s enabling legislation required that grant awards 

be made by September 30, 2007—before grantees 

had submitted their spending plans and project 

proposals. Funds were not disbursed until the plans 

and proposals were rigorously reviewed and 

approved. This “after award” approach ultimately 

delayed the release of funding—and project 

initiation—by 6 to 12 months. 

For the broadband program, NTIA needs to establish 

a similarly rigorous review process to ensure that 

proposals target areas of greatest need. And it needs 

to ensure that proposals are evaluated in a timely 

manner and in advance of grant award. 

Recovery Act provides that adequate resources m

be devoted to ensuring that applicable NEPA rev

are completed expeditiously. A March 11, 20

memorandum from the Office of Management 

Budget articulated procedures for executive agen

to report their progress to the Council 

Environmental Quality beginning as soon 

possible, but no later than April 7, 2009, with we

updates through April 28, 2009. The OMB m

alerts agencies to ensure they address complia

issues as quickly as possible for any projects 

activities for which necessary environmental activ

and permits have not been completed. NTIA m

ensure an environmental assessment for broadb

projects is completed expeditiously so as not 

hinder grantees from completing their proj

within mandated time frames. 

43 

’

TRADEMARK OFFICE
 

The Unit

Patents 

invest i

otherwise go 

ed States Patent and Trademark Office administers the nations patent and trademark l

are granted and trademarks registered under a system intended to provide incentives to inv

n research, commercialize new technology, and draw attention to inventions that wo

unnoticed. USPTO also collects, assembles, publishes, and disseminates technolog

information disclosed in patents. 

FY 2008 Financial Statements 

Audit (FSD-19049-1 and 2) 

Independent auditor KPMG rendered a clean 

opinion on USPTO’s FY 2008 financial statements, 

finding that the statements were fairly presented, in 

all material respects and in conformity with U.S. 

generally accepted accounting principles. The audit 

found no instances in which the agency’s financial 

management systems did not substantially comply 

with the requirements of the Federal Finan

Management Improvement Act of 1996. Howe

the audit identified two significant deficiencies. O

was related to USPTO’s lack of segregation of du

-KPMG noted that responsibilities in the rece

accounting and customer deposit accounts area w

not segregated between individuals in order 

maintain an effective control environment. 

second deficiency was in access controls for the 

systems and supporting infrastructure involved 

processing and maintaining key financial data. 

45 

’

MANAGEMENT
 

The Un

opport

Depart

ited States Department of Commerce creates the conditions for economic growth 

unity by promoting innovation, entrepreneurship, competitiveness, and stewardship. 

ment has three stated strategic goals: 

Goal 1: Provide the information and tools to maximize U.S. competitiveness. 


Goal 2: Foster science and technological leadership by protecting intellectual property, enhan

technical standards, and advancing measurement science. 


Goal 3: Observe, protect, and manage the Earths resources to promote environmental stewardshi

The Department has also established a Management Integration Goal that is equally important to all bure

Achieve organizational and management excellence. 

Department of Commerce 

FY 2008 Consolidated Financial 

Statements Audit 

(FSD-19048-9-0002) 

Independent auditor KPMG rendered an unqualified 

opinion on the Department’s FY 2008 consolidated 

statements, and found its financial management 

systems in full compliance with the Federal Financial 

Management and Improvement Act of 1996. 

However, the audit found two significant deficiencies. 

The first was the result of continuing weaknesses in 

all six IT control areas outlined in GAO’s Federal 

Information System Controls Audit Manual 

(FISCAM): entity-wide security, security access 

controls, application software development and 

change control, system software, segregation of 

duties, and service continuity. FISCAM weaknesses 

have been reported at the Department since 1998, 

though Commerce has made some progress 

addressing them. 

The second deficiency relates to NOAA’s accoun

for personal property. KPMG noted weaknesse

NOAA methods of conducting its fiscal year 2

annual personal property physical invent

recording capital assets and completed pers

property construction projects, and review

personal property data in the Sunflower system. 

Nonfederal Audit Activities 

In addition to undergoing OIG-performed au

certain recipients of Commerce financial assista

are periodically examined by state and l

government auditors and by independent pu

accountants. OMB Circular A-133, Audits of St

Local Governments, and Non-Profit Organizations, 

forth the audit requirements for most of these au

47 
Nonfederal Audit Activities 

Report Category 

Pending (October 1, 2008 ) 

Received 

OMB A-133 Audits 

42 

57 

ATP Program- Specifics Audits 

18 

44 

Tot

6

10

Examined 63 41 10

Pending (March 31, 2009) 36 21 5

The following table shows a breakdown by bureau of approximately $199 million in Commerce funds audi

Bureau Funds

Census 111,527

EDA 44,264,265

NIST* 45,043,457

NOAA 63,834,508

NTIA 569,695

PTO 2,464,042

Unknown 1,061,180

Multi-Agency 41,621,574

Total $198,970,248

* Includes $45,043,457 in ATP program-specific audits. 

We identified a total of $1,348,912 in federal questioned costs and $659,567 in funds to be put to better 

In most reports the subject programs were not considered major programs; thus the audits involved lim

transaction and compliance testing against laws, regulations, and grant terms and conditions. The 10 rep

with Commerce findings are listed in Appendix B-1. (Regional Offices of Audits) 

48 
The mis

detect

U.S. 

investigations, 

Department. 

sion of the Office of Inspector General is to promote economy, efficiency, and effectiveness 

 and prevent waste, fraud, abuse, and mismanagement in the programs and operations of 

Department of Commerce. Through its audits, inspections, performance evaluations, 

OIG proposes innovative ideas and constructive solutions that lead to positive changes for 

By providing timely, useful, and reliable information and advice to departmental officials, 

administration, and Congress, OIG’s work helps improve Commerce management and operations as well a

delivery of services to the public. 

INVESTIGATIONS 

Convictions, Restitution and Jail 

Terms Continue to Mount in 

Telemarketing Fraud Case 

Judicial actions continue to flow from our joint, 

international investigation, previously reported in 

multiple Semiannual Reports, of a major international 

telemarketing fraud scheme perpetrated by callers 

falsely identifying themselves as employees of the 

Department of Commerce and other federal 

agencies. Callers told victims they had won huge 

sweepstakes prizes in a national lottery sanctioned by 

the U. S. government. The victims were instructed to 

use commercial wire transfer services to send 

payments of $1,500 to $4,500 to Costa Rica, 

purportedly for insurance and customs fees that were 

required to retrieve their winnings. Many of those 

defrauded made multiple transfers to the 

telemarketers, resulting in more than $30 million in 

identified losses to U. S. residents. 

This reporting period, 11 defendants were sentenced 

to prison terms ranging from 3 to 15 years, along 

with restitution orders exceeding $70 million. In the 

case thus far, 26 defendants have been remanded to 

federal prison as a result of their involvement in 

scheme, and over $200 million in fines 

restitution have been ordered. Also during 

reporting period, one additional defendant 

guilty and was convicted on conspiracy, wire fr

and other charges relating to the scheme. He is 

34th participant in the scheme to be convi

during the course of this investigation. O

additional defendant was also indicted in M

2009 on charges relating to this case. (Atlanta F

Office) 

Commerce Employee Entered into 

Pretrial Diversion Program for 

Metrochek Fraud, Removed From 

Federal Service 

As reported in our September 2008 Semiann

Report, page 43, an Office of the Secretary emplo

was arrested on charges of first degree theft by O

special agents and the Washington, DC Metropol

Police. The employee had fraudulently obtained 

given away $1,950 in transit subsidy benefits that 

had received while also maintaining an assig

parking permit at the Commerce headquar

building. In October 2008, the employee plea

guilty, agreed to a deferred prosecution, and 

49 
 

for Money Laundering 

In our March 2008 Semiannual Report, page 26, we 

noted that assistance was provided to Immigration 

and Customs Enforcement (ICE) with the 

investigation of a Census Bureau contractor, resulting 

in his conviction in the US District Court for the 

District of Columbia on one count of conspiracy to 

launder monetary instruments. On February 13, 

2009, the defendant was sentenced to 9 years 

incarceration and ordered to serve 2 years supervised 

probation upon his release. Debarment proceedings 

are pending against the individual and his affiliated 

CPA firm to prevent them from obtaining future 

government contracts. (Washington Field Office) 

NIST Grant Recipient Sentenced for 

Grant Fraud; Civil Suit Filed 

In our September 2008 Semiannual Report, page 41, 

we reported that a jury found a research scientist 

guilty of intentionally misusing approximately 

$500,000 in NIST Advanced Technology Program 

(ATP) grant funds to pay for numerous personal 

expenses including rent, home renovations, cleaning 

services for his condominium and miscellaneous 

household items. This was the first conviction at trial 

achieved by the DOC OIG in a fraud case involving 

the ATP. The grantee had received a $2 million grant 

for research into computerized medical imaging. A 

criminal investigation was launched, based on 

questioned costs first identified by the OIG Office of 

Audits, which continued to provide active assistance 

throughout the case. 

On October 20, 2008, the former grantee was 

sentenced to 15 months imprisonment and 3 years 

probation for violating 18 USC § 666, which covers 

scientist’s role in applying for and receiving a g

for the purpose of defrauding the United St

government. On December 3, 2008, the defend

was served a civil summons in this new proceed

(Atlanta Field Office) 

Former NIST Employee Sentenced 

in Steel Theft Scheme 

In our September 2008 Semiannual Report, page 

we reported that a former NIST employee had 

guilty to charges of theft of government prop

related to his conversion of large quantitie

industrial steel samples while in charge of the N

program dedicated to testing its strength 

structural integrity. On December 12, 2008, 

individual was sentenced to five years of proba

and ordered to pay a $25,000 criminal fine

addition, the court concurrently imposed a

forfeiture, pursuant to the plea agreement 

sentencing statement. This asset forfeiture inclu

the steel and computers that were seized during 

execution of the search warrant at the defenda

residence in March 2006. The value of the forfe

assets is over $900,000. A motion to finalize 

forfeiture is expected to be filed with the Cour

April 2009, after a public notice has run and 

claims are filed for the forfeited property, and 

result in the completion of the forfeiture and 

recovery of the assets. (Denver Field Office) 

NOAA Grantee Sentenced for 

Misusing Funds 

In our September 2008 Semiannual Report, page 

we reported a guilty plea by a NOAA grantee 

charges of violating 18 USC § 666, prohibiting t

50 
years’ supervised release. The defendant was also 

ordered to pay restitution for the full amount of 

$60,000.00 and pay a special assessment of $100.00. 

(Atlanta Field Office) 

NOAA Employee Fired for Misuse 

of Purchase Card 

A NOAA Corps shipboard employee misused his 

government purchase credit card for personal 

purchases. On November 11, 2008, a search warrant 

was served at a motorcycle specialty shop in 

Birmingham, Alabama. The employee’s personal 

racing motorcycle was seized and found to contain 

$18,174 in aftermarket parts, paid for using the 

government purchase card. On January 27, 2009, 

the employee was removed for misuse of the purchase 

card. A criminal theft prosecution is pending with 

the United States Attorney’s Office, Northern 

District of Alabama. (Atlanta Field Office) 

Other OIG Activities 

The Inspector General Testifies on 

American Recovery and 

Reinvestment Act Oversight 

On March 19, 2009, the Inspector General testified 

before the House Subcommittee on Investigations 

and Oversight regarding OIG’s oversight of the 

science programs and initiatives at the Department of 

Commerce that will be funded through the American 

Recovery and Reinvestment Act. 

The Inspector General discussed the risks the 

Department faces in spending its stimulus funds, 

1.	 Spending these funds expeditiously, w

little time to staff up and gear operation

accommodate the additional activities, 

nificantly increases the risks for fraud 

waste in stimulus-funded initiatives as 

as in the Department’s traditionally fun

operations. 

2. 	The executive branch, including 

Department of Commerce, is still in tra

tion. This puts at risk the leadership vi

and decision-making important in execu

a cohesive Recovery Act plan. 

3.	 The act’s emphasis on grant and cont

spending puts additional pressure on alre

overburdened management and adminis

tive operations. 

4.	 Construction grants and contracts—wh

NOAA and NIST are expressly require

fund —are inherently risky and difficul

manage effectively. 

5.	 Specific requirements related to compet

contracts, such as maximizing the use 

fixed-price contracts, and the Act’s 

American requirements, will require e

vigilance. 

6.	 The act’s strict oversight requirements 

reporting deadlines will require a gre

level of centralized management of 

bureaus than the Department has histor

ly exercised. 

Of these six areas, the Inspector General focused 

testimony on the Department’s weakness in gr

and acquisition management and, NOAA 

51 
52 
5. Audits with Recommendations that Funds be Put to Better Use 55 

APPENDIXES 

A. Report Types this Period 

A.1. Performance Audits 

55 

56 

A.2. Financial Assistance Audits 56 

A-3. Financial Statements Audits 57 

A-4. Inspections and System Evaluations 

B. Processed Audit Reports 

B.1. Process Reports with Audit Findings 

57 

58 

59 

Table 1. Investigative Statistical Highlights for this Period
 

Criminal Investigative Activities 

Arrests 0 

Indictments and informations 1 

Convictions 2

Personnel Actions 3 

Fines, restitutions, judgments, and other civil and administrative recoveries $75,967,583 

Sentencing 95.6 years

Allegations Processed 

Accepted for investigation 27 

Referred to operating units 28 

Evaluated but not accepted for investigation or referral 62 

Total 117 

Audit Resolution and Follow-Up 

The Inspector General Act Amendments of 1988 

require us to present in this report those audits issued 

before the beginning of the reporting period 

(October 1, 2008) for which no management 

decision had been made by the end of the period 

(March 31, 2009). Six audit reports remain 

unresolved for this reporting period (see page 62). 

53 

Department Administrative Order 213-5, A

Resolution and Follow-up, provides procedures 

management to request a modification to an appro

audit action plan or for a financial assistance recip

to appeal an audit resolution determination. 

following table summarizes modification and ap

activity during the reporting period. 
Table 3. Audit and Inspection Statistical Highlights for this Period
 

Questioned Costs $8,961,5441 

Value of audit recommendations that funds be put to better use 1,753,062 

Value of audit recommendations agreed to by management 1,495,300 

1 This number includes costs questioned by state and local government auditors or independent public accountants. 

Table 4. Audits with Questioned Costs 

Questioned Unsupport

Report Category Number Costs Costs 

A. Reports for which no management decision had been 

made by the beginning of the reporting period 15 $23,027,932 $4,023,93

B. 

Tot

ma

C. 

Reports issued during the reporting period 

al reports (A+B) requiring a management decision was 

de during the reporting period1 

Reports for which a management decision was made 

during the reporting period 

i. Value of disallowed costs 

ii. Value of costs not disallowed 

10 

25 

11 

8,961,544 

31,989,476 

4,373,450 

978,388 

3,395,062 

1,953,57

5,977,51

501,59

501,55

D. 

1 Three a

Howev

Reports for which no management decision had been 

made by the end of the reporting period. 

udit reports included in this table are also included among reports with recom

er, the dollar amounts do not overlap. 

14 

mendations that 

27,616,026 

funds be put to bette

5,475,95

r use (see Table 

54 
pg p

,

i. Value of recommendations agreed to by management 516,91

ii. Value of recommendations not agreed to by management 212,52

D. Reports for which no management decision had been made by the end 

of the reporting period. 2 1,180,78

1 Three audit reports included in this table are also included among reports with questioned costs (see Table 3). However, the dollar amoun

not overlap (see Table 4). 

2 In Category C, lines i and ii do not always equal the total line in C because resolution may result in values greater than the ori

recommendations. 

Definitions of Terms Used in the Tables 

Questioned cost: a cost questioned by OIG because of (1) an alleged violation of a provision of a law, regulation, cont

grant, cooperative agreement, or other agreement or document governing the expenditure of funds; (2) a finding tha

the time of the audit, such cost is not supported by adequate documentation; or (3) a finding that an expenditure of fu

for the intended purpose is unnecessary or unreasonable. 

Unsupported cost: a cost that, at the time of the audit, is not supported by adequate documentation. Questioned 

include unsupported costs. 

Recommendation that funds be put to better use: an OIG recommendation that funds could be used more efficie

if Commerce management took action to implement and complete the recommendation, including (1) reduction

outlays; (2) deobligation of funds from programs or operations; (3) withdrawal of interest subsidy costs on loans or 

guarantees, insurance, or bonds; (4) costs not incurred by implementing recommended improvements relate

Commerce, a contractor, or a grantee; (5) avoidance of unnecessary expenditures identified in preaward review

contracts or grant agreements; or (6) any other savings specifically identified. 

Management decision: management’s evaluation of the findings and recommendations included in the audit report 

the issuance of a final decision by management concerning its response. 

Appendix A. Report Types this Period 


Type Number of Reports Appendix Number 

Performance audits 3 A-1 

Financial assistance audits 5 A-2 

Financial statement audits 5 A-3 

Inspection and system evaluations 

Total 

5 

18

A-4 

55 
National Telecommunications and Information Administration 

NTIA Should Further Improve 

Digital-to-Analog Converter Box Coupon 

Program Internal Controls to Prevent 

Waste, Fraud and Abuse CAR-19004-9-0001 11/25/08 — 

Public Safety Interoperable 

Communications Grant Program: 

Grantees Appear Unlikely to Finish 

Projects Within Short Funding Time Frame DEN-19003-9-0001 03/31/09 — 

Appendix A-2. Financial Assistance Audits
 

Date Funds to be Put Amount Amoun

Report Title Report Number Issued for Better Use Questioned Unsuppor

Economic Development Administration 

San Bernardino 

International Airport 

Authority and/or 

Inland Valley 

Development 

Agency, CA STL-18837-9-0001 10/17/08 0 $573,375 $461,886 

National Institute of Standards and Technology 

South Carolina 

Manufacturing 

Extension Partnership ATL-18567-9-0001 03/06/09 0 1,136,356 868,564 

The ReJen Company 

Joint Venture, NV CAR-18706-9-0001 03/11/09 0 0 0 

Florida Manufacturing 

Extension Partnership ATL-18568-9-0001 03/31/09 0 4,207,405 157,818 

Massachusetts 

Manufacturing 

Extension Partnership DEN-18135-9-0001 03/31/09 $1,093,495 1,695,496 0 

56 
Bureau of Industry and Security 

Issues Related to the Bureau of Industry and 

Security’s Budget and Responsibilities for 

International Treaty Implementation and 

Compliance IPE-19463 10/07/08 —

Census Bureau 

Census 2010: Dress Rehearsal of Address 

Canvassing Revealed Persistent Deficiencies in 

Approach to Updating Master Address File OSE-18599 10/17/08 — 

Census 2010: Delays in Address Canvassing 

Software Development and Testing, Help Desk 

Planning, and Field Office Deployment Have 

Increased Operational Risk OIG-19171 2/12/09 — 

National Oceanic and Atmospheric Administration 

NMFS Northeast Fishery 

Management Decisions IPE-19476 2/26/09 — 

National Telecommunications and Information Administration 

NTIA Should Apply Lessons Learned from 

Public Safety Interoperable Communications 

Program to Ensure Sound Management and 

Timely Execution of $4.7B Broadband 

Technology Opportunities Program ARR-19583 3/31/09 — 

U.S. Patent and Trademark Office 

Assessment of Information Technology Controls 

Supporting Financial Management Systems FSD-19049-9-0001 11/12/08 

FY 2008 Financial Statements FSD-19049-9-0002 11/10/08 

Appendix A-4. Inspection and System Evaluations
 

Funds to Be P

Report Title Report Number Date Issued to Better Us

57 
p

National Institute of Standards and Technology* 41 

National Oceanic and Atmospheric Administration 15 

National Telecommunication Information Administration 2 

PTO 3 

Multi-Agency 7 

No DOC 3 

Unknown 1 

Total 104 

*Includes 41 ATP program-specific audits. 

58 
Los Angeles 

County Fair 

Association ATL-09999-9-3073 03/04/09 0 0 0 

National Institute of Standards and Technology 

Thomson, 

Inc., NJ ATL-09999-9-2836 11/19/08 0 75,666 0 

National Oceanic and Atmospheric Administration 

Michigan 

Department of 

Environmental 

Quality ATL-09999-9-3293 12/15/08 0 118,757 3,509 

State of 

Mississippi 

Institutions of 

Higher Learning ATL-09999-9-3226 12/31/08 0 0 0 

Howard 

University, DC ATL-09999-9-3220 01/09/09 0 461,797 461,797 

American 

Rivers, DC ATL-09999-9-3149 03/04/09 0 627,600 0 

Western Research 

Alliance 

Foundation, SD ATL-09999-9-3410 03/25/09 0 36,250 0 

National Telecommunications and Information Administration 

Kanza Society, 

Inc., KS ATL-09999-9-3201 01/07/09 87,287 0 0 

U.S. Patent and Trademark Office 

International 

Intellectual 

Property 

Institute, DC ATL-09999-9-3418 03/17/09 0 28,842 0 

59 
aocabe udecotact tes ad codtos ad 

federal regulations. We found that the firm had 

failed to comply with numerous contract and federal 

requirements, and questioned more than 

$8.5 million in direct labor and reimbursable costs. 

Computer & High Tech Management, Inc. We 

reported in our September 2005 Semiannual Report 

(page 14) the results of audits of 2 of the 21 task 

orders for another firm providing IT services to 

Census. We sought to determine whether the firm 

NOAA 

Alaska Eskimo Whaling Commission: A si

audit review of this NOAA grant questioned c

totaling $66,353 in expenditures that were 

adequately documented. This audit rem

unresolved because we requested that NO

postpone its submission of an audit resolu

proposal. (ATL-09999-8-3238). 

60 
5(a)(3) Prior Significant Recommendations Unimplemented 61 

5(a)4 Matters Referred to Prosecutive Authorities 53 

5(a)(5) and 6(b)(2) Information or Assistance Refused 61 

5(a)(6) Listing of Audit Reports 56-

5(a)(7) Summary of Significant Reports 21-

5(a)(8) Audit Reports—Questioned Costs 54 

5(a)(9) Audit Reports—Funds to Be Put to Better Use 55 

5(a)(10) Prior Audit Reports Unresolved 62 

5(a)(11) Significant Revised Management Decisions 62 

5(a)(12) Significant Management Decisions with which OIG Disagreed 62 

Section 4(a)(2): Review of 

Legislation and Regulations 

This section requires the inspector general of each 

agency to review existing and proposed legislation 

and regulations relating to that agency’s programs 

and operations. Based on this review, the inspector 

general is required to make recommendations in the 

semiannual report concerning the impact of such 

legislation or regulations on the economy and 

efficiency of the management of programs and 

operations administered or financed by the agency or 

on the prevention and detection of fraud and abuse 

in those programs and operations. Comments 

concerning legislative and regulatory initiatives 

affecting Commerce programs are discussed, as 

appropriate, in relevant sections of the report. 

Section 5(a)(3): Prior Significant 

Recommendations Unimplemented 

This section requires identification of each significant 

recommendation described in previous semiannual 

reports for which corrective action has not b

completed. Section 5(b) requires that the Secre

transmit to Congress statistical tables showing 

number and value of audit reports for which no f

action has been taken, plus an explanation of 

reasons why recommended action has not occur

except when the management decision was m

within the preceding year. 

To include a list of all significant unimplemen

recommendations in this report would 

duplicative. Information on the status of any a

recommendations can be obtained through O

Office of Audit and Evaluation. 

Sections 5(a)(5) and 6(b)(2): Informati

or Assistance Refused 

These sections require a summary of each repor

the Secretary when access, information, or assista

has been unreasonably refused or not provided. T

were no instances during this semiannual period 

no reports to the Secretary. 

61 
and five Census reports more than 6 months old. 

Section 5(a)(11): Significant 

Revised Management Decisions 

This section requires an explanation of the reasons 

for any significant revision to a management decision 

made during the reporting period. Department 

Administrative Order 213-5, Audit Resolution and 

Follow-up, provides procedures for revising a 

management decision. For performance audits, OIG 

must be consulted and must approve in advance any 

Management Decisions with Whi

OIG Disagreed 

This section requires information concerning 

significant management decision with which 

inspector general disagrees. Departm

Administrative Order 213-5 provides procedures 

elevating unresolved audit recommendations 

higher levels of Department and OIG managem

including their consideration by an Audit Resolu

Council. During this period no audit issues w

referred to the council. 

62