U.S. Department of Commerce 

Office of Inspector General 

Semiannual Report to Congress
 

March 2013 
 

 

OffICE Of 

InspECtOr GEnErAl 

Inspector General 

Deputy 

Inspector General Office of 

Administration 

Office of Audit 

and Evaluation 

Office of 

Investigations 

Office of Counsel 

Oversight Areas 

Office of the Secretary 

Bureau of Economic Analysis 

Bureau of Industry and Security 

Economic Development Administration 

Economics and Statistics Administration 

International Trade Administration 

Minority Business Development Agency 

National Institute of Standards and Technology 

National Oceanic and Atmospheric Administration 

National Technical Information Service 

National Telecommunications and 

Information Administration 

U.S. Census Bureau 

U.S. Patent and Trademark Office 

OIG Main number 

Inspector General. . . . . . . . . . . . . . . . . . . . . . . . . . . 202.482.4661 

OIG Hotline 

Telephone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202.482.2495 

or 800.424.5197 

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or 800.854.8407 

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comments to oigweb@oig.doc.gov. 
U.S. Department of Commerce 

Office of Inspector General 

Semiannual Report to Congress
 

March 2013 
d Office of Inspector General | Semiannual Report to Congress | March 2013

 

 

 

 

 

 

tAblE Of 


COntEnts
 

01 FROM ThE INSPECTOR GENERAl 

02 TOP MANAGEMENT ChAllENGES FACING ThE DEPARTMENT 

08 OVERSIGhT AREAS 

08 DEpArtMEnt-WIDE MAnAGEMEnt 

16 ECOnOMIC DEvElOpMEnt ADMInIstrAtIOn 

18 ECOnOMICs AnD stAtIstICs ADMInIstrAtIOn 

20 IntErnAtIOnAl trADE ADMInIstrAtIOn 

22 MInOrIty busInEss DEvElOpMEnt AGEnCy 

24 nAtIOnAl InstItutE Of stAnDArDs AnD tECHnOlOGy 

26 nAtIOnAl OCEAnIC AnD AtMOspHErIC ADMInIstrAtIOn 

30 nAtIOnAl tElECOMMunICAtIOns AnD InfOrMAtIOn ADMInIstrAtIOn 

34 unItED stAtEs pAtEnt AnD trADEMArk OffICE 

36 AMErICAn rECOvEry AnD rEInvEstMEnt ACt 

NATIONAl TElECOMMUNICATIONS AND INFORMATION ADMINISTRATION 

40 WORk IN PROGRESS 

44 STATISTICAl DATA 

50 REPORTING REqUIREMENTS 

52 ACRONyMS AND ABBREVIATIONS 
 

1 

frOM tHE 

InspECtOr GEnErAl 

I am pleased to present the Department of Commerce Office of Inspector General’s 

Semiannual Report to Congress for the 6 months ending March 31, 2013. 

This report summarizes work we initiated and completed during this semiannual 

period on a number of critical departmental activities. Over the past 6 months, our 

office issued 18 audit, evaluation, and inspection reports addressing programs 

overseen by the Economics and Statistics Administration, International Trade 

Administration, National Oceanic and Atmospheric Administration, National 

Telecommunications and Information Administration, U.S. Patent and Trademark 

Office, and the Department itself. 

In November 2012, we issued our annual report, identifying the top management 

challenges facing the Department in fiscal year 2013, a summary of which appears on 

page 2. We will work closely with the Department and Congress in the months ahead 

to meet these and other challenges facing Commerce as it fulfills its complex mission. 

We thank senior officials throughout the Department and members of Congress 

and their staffs for their support of our work and for their receptiveness to our 

recommendations to improve Commerce programs and operations. 

We would also like to convey our appreciation of Deputy Secretary Rebecca Blank’s 

outstanding service to the Department and her support of our office over the past 4 

years. We wish her well in her new role as chancellor of the University of Wisconsin 

at Madison. 

TODD J. ZINSER
 
2 Office of Inspector General | Semiannual Report to Congress | March 2013

tOp MAnAGEMEnt 

CHAllEnGEs fACInG 

tHE DEpArtMEnt 

The Reports Consolidation Act of 2000 requires inspectors general to identify 

the top management challenges facing their departments. In November 2012, 

the Department of Commerce OIG identified five challenges that require 

significant departmental attention in Fy 2013 and beyond. 

1. stIMulAtE ECOnOMIC GrOWtH In kEy InDustrIEs, InCrEAsE ExpOrts, 

AnD EnHAnCE stEWArDsHIp Of MArInE fIsHErIEs 

The Department is at the center of the federal government’s efforts to stimulate economic and 

job growth in key industries and promote exports, while regulating exports and maintaining the 

delicate balance between promoting and regulating the commercial use of marine fisheries. These 

efforts require the Department to work effectively with interagency partners and the private sector 

as well as to marshal and integrate Commerce resources. 

stimulate Economic Growth in Manufacturing, Intellectual property, and Wireless 

Industries. The Department led several initiatives to help stimulate manufacturing, which plays 

an important role in creating high-paying jobs. These include a Repatriation Task Force led by the 

Secretary’s office to help bring manufacturing jobs back to America and initiatives led by NIST to 

stimulate manufacturing technologies. Success in these efforts requires integrating Commerce 

resources, collaborating with interagency partners, and securing congressional support. Also, 

timely decisions on patent applications are key to fostering innovation and protecting inventors’ 

intellectual property rights, critical to the U.S. economy. 

While USPTO successfully reduced the patent applications backlog from more than 700,000 to 

around 600,000 by the end of Fy 2012, it has a long way to go to achieve its goal of reducing 

the backlog to a 10-month inventory (approximately 350,000). Also, implementing the leahySmith America Invents Act on patent reform requires significant management planning, oversight, 

and outreach. Finally, radio frequency spectrum provides an array of wireless communication 

services critical to the U.S. economy. While recent technology advances make the shared (more 

efficient) use of spectrum feasible, it requires a strong partnership between NTIA and the Federal 

Communications Commission and commercial providers to overcome challenges such as bidding 

incentives, revenue generation, and rights of use. 

promote and regulate Exports. To promote the President’s National Export Initiative, ITA 

shifted resources to support higher priority markets and has proposed a reorganization to enhance 

foreign market access and U.S. competitiveness. The Department must continue to strategically 

reorganize its personnel and resources while providing seamless assistance to the public and 

enhance collaboration and information sharing with partner agencies. The Department is also 

responsible for maintaining strong trade enforcement and export control programs. For example, 

BIS administers and enforces dual-use export controls. In April 2010, the Administration proposed 

the Export Control Reform initiative to streamline the country’s export control system. BIS has 

worked with its interagency partners to review the munitions and dual-use lists to assess whether 

changes to controls on certain products are warranted. Commerce must ensure its continued 
 

Top Management Challenges Facing the Department 3 

support of these important enforcement and control initiatives through leveraging existing 

federal resources. 

protect and promote Marine fisheries. For several years, we have reported on NOAA’s 

challenge of balancing two competing interests: promoting commercial and recreational fishing as 

vital elements of our national economy and preserving populations of fish and other marine life. In 

recent years, members of the fishing industry and elected officials from the New England region 

have repeatedly questioned certain fishery regulations and whether NOAA has abandoned its 

core mission of developing the commercial fishing industry and increasing industry participation. 

In its rulemaking, the Department and NOAA will continue to balance the competing interests of 

promoting fishing and preserving populations of fish and other marine life. 

2. InCrEAsE OvErsIGHt Of rEsOurCEs EntrustED by tHE publIC AnD 

InvEst fOr lOnG-tErM bEnEfIts 

As the Department prepares for this extended period of tighter budgets and decreased 

spending, it is more important than ever to understand the risks associated with making tradeoffs in allocating resources between the implementation of programs and the oversight of these 

programs. 

Increase Internal Controls and Oversight of Departmental Operations under a 

Constrained budget. Since Fy 1999, the Department has received unqualified audit opinions 

on its financial statements. While this is a testimony of the health of departmental financial 

reporting systems, it is not an adequate benchmark for internal controls and management 

oversight of day-to-day operations. Recent concerns over conference spending, unauthorized 

reprogramming of funds, and ethical violations committed by Commerce fund recipients have 

highlighted the importance of strong internal controls and the continued need for effective 

management oversight. 

Invest for Efficiencies and long-term benefits. Smart investment for long-term benefits, 

when combined with responsible spending, is key to success in today’s constrained budget 

environment. The Department has endorsed several efforts to modernize its mission-support 

functions, which require senior management attention. The planned replacement of all legacy 

financial systems between Fys 2014 and 2018 is critical to the Department’s future and Census’s 

2020 decennial readiness. With the diverse cultures in the Department, synchronizing bureau 

financial operations to limit the amount of software customization in replacement systems will 

require strong departmental governance. In addition, the Department needs to work with the 

U.S. General Services Administration and Congress to secure funding for continued safety 

improvement in the herbert C. hoover headquarters building. 

Implement bold Design Changes to Contain 2020 Decennial Costs While Maintaining 

Enumeration Quality. The Census Bureau has vowed to contain the costs of the 2020 

decennial to an amount close to final costs of the 2010 census. To achieve cost savings, 

the bureau is exploring new and innovative design alternatives but has already encountered 

challenges, such as cancellation of lessons-learned studies due to funding constraints, uncertainty 

surrounding the American Community Survey, and difficulties in accessing administrative records 

maintained by other government entities—critical to cost containment. In addition, the leadership 

void at the director’s position raises serious concerns. Because the bureau operates on long 

planning cycles for the decennial census, it is difficult to maintain leadership with a consistent 

vision throughout the cycles—and much easier to fall back on old ways and institutional habits. 
4 Office of Inspector General | Semiannual Report to Congress | March 2013

3. strEnGtHEn sECurIty AnD InvEstMEnts In InfOrMAtIOn tECHnOlOGy 

In Fy 2012, the Department planned to invest $2.4 billion in IT. This is about 25 percent of its 

annual budget and one of the highest percentages devoted to IT among all civilian agencies. 

While the Department’s Chief Information Officer (CIO) has taken steps to strengthen IT 

governance, we continue to find significant security vulnerabilities in bureau systems, which could 

lead, and already have led, to service disruptions and loss of sensitive information. 

Continue Improving Commerce’s It security posture by Addressing persistent security 

Weaknesses. Over the years, we have repeatedly identified significant flaws in basic security 

measures protecting IT systems and information. We have continually called for greater attention 

and stronger commitment from the Department’s senior management to basic security practices. 

In response to our recommendations, the Department has updated its IT security policy for 

vulnerability scanning, secure configurations, and management of plans of action and milestones. 

however, the Department needs to better enforce these polices to prevent recurrence of security 

weaknesses. 

Develop resilient Incident response and recovery Capabilities with Increased 

Monitoring of Internet traffic. Several bureaus in Commerce headquarters rely on the 

Department’s Computer Incident Response Team (DOC CIRT) to provide forensic analysis 

when a cyber incident occurs. however, while investigating a malware infection concerning 

EDA during Fy 2012, DOC CIRT faced technical challenges and had to depend on several 

internal and external groups for assistance. The Department needs to strengthen its incident 

response capabilities to deal with ever-increasing cyber events. Also, implementing the Office 

of Management and Budget’s Trusted Internet Connection (TIC) initiative is critical to monitoring 

cyber threats from the Internet. While all bureaus have acquired or planned to acquire TIC service 

by 2014, the Census Bureau has no definite timeline. The Department needs to assign a high 

priority to help Census resolve its concern that the TIC inspection process may violate Title 13 of 

the U.S. Code, which guarantees the confidentiality of census information. 

Manage Commerce’s It portfolio with Enhanced Governance structure. In June 2012, 

the Acting Secretary issued the “Department IT Portfolio Management Strategy,” which expanded 

the oversight role of the Department’s CIO. This new strategy is an important step, but it is 

too early to judge its effectiveness for two reasons. First, historically, bureaus have functioned 

independently on IT matters with little departmental direction. Second, the new strategy focuses 

on increasing the Department CIO’s influence on IT shared commodity services, which account 

for only about 25 percent of the Department’s total IT investments. Senior management should 

consider further enhancing the IT governance structure to help ensure the Department’s success 

with major IT investments. 

strengthen Oversight of It Investments. The Department’s CIO has taken steps to improve 

the IT investment review process. however, three of six troubled IT investments have remained at 

high risk for more than 12 months, and about 25 percent of Commerce’s major IT investments are 

30 percent or more behind schedule. The CIO and Chief Financial Officer need to ensure that 

program management is more aggressively addressing investments with a history of high risk. 

4. IMplEMEnt frAMEWOrk fOr ACQuIsItIOn prOjECt MAnAGEMEnt AnD 

IMprOvE COntrACts OvErsIGHt 

In Fy 2011, the Department obligated approximately $2.4 billion on contracts for goods and 

services. While it has made some progress in enhancing acquisition management, such as 

reorganizing the Office of Acquisition Management, our audits continue to find weaknesses in how 

the Department plans, administers, and oversees its contracts and acquisition programs. 
 

Top Management Challenges Facing the Department 5 

Implement the planned framework for Acquisition project Management. Because of the 

challenges the Department encountered in earlier acquisitions, in June 2010, the former secretary 

mandated a study be conducted on ways to improve the acquisition process. The resulting study 

identified several problems with the system, including requirements, cost analysis, and oversight 

of major projects. To address these concerns, the Office of Acquisition Management developed 

an Acquisition Project Management Framework/Guidebook. The new framework, if implemented 

consistently, should increase the transparency of bureau acquisition programs and help mitigate 

risks of cost overruns, schedule delays, and performance shortfalls. The Department needs to 

ensure that the departmental policy requiring the use of the uniform acquisition framework is 

issued and followed by all bureaus. 

Oversee High-risk Contracts. In Fy 2011, the Department reported progress in reducing 

dollar amounts of high-risk contract awards. Nonetheless, overseeing existing high-risk contracts 

remains a challenge to management. We continue to find weaknesses in the use of cost-plusaward-fee and cost-plus-award-term contracts. For example, in May 2012, we reported that 

NOAA consistently gave contractors high ratings and substantial award fees and contract 

extensions, despite the lack of adequate support for their actual performance. Based on our audit, 

we found that more than $40 million was paid in award fees or approved for contract extensions 

without proper justification. Effective implementation of NOAA measures will be critical to ensuring 

it does not pay improper award fees and extend contract terms. 

Maintain an Acquisition Workforce that Holds bureau Officials Accountable. 

Commerce acquisition workforce’s capability to oversee and manage contracts faces major 

challenges due to high turnover and employee retirement, coupled with a significantly reduced 

budget, gaps in key competency areas, and expanded workload. Also, our investigations have 

continuously identified the need for more vigilant oversight and stronger process controls to 

detect and prevent procurement fraud, waste, and abuse. The Department needs to continue 

its recruitment efforts at the acquisition entry levels and focus on staff retention to maintain 

corporate knowledge. 

Implement an Effective suspension and Debarment program. Since finalizing its first 

suspension or debarment action in over 15 years, in April 2011, the Department has made 

progress toward establishing an efficient and durable suspension and debarment program. 

however, certain issues present ongoing challenges. Specifically, while the Office of the 

Suspending and Debarring Official has begun drafting policy documents to institutionalize 

processes regarding the referral, review, and issuance of suspension and debarment matters, the 

adoption process needs to be finalized. Also, there is room for improvement regarding the prompt 

review of referral, and the program lacks a clear delineation of roles and responsibilities. 

5. rEDuCE rIsks Of COst OvErruns, sCHEDulE DElAys, AnD COvErAGE 

GAps fOr nOAA’s sAtEllItE prOGrAMs 

Managing risks in the acquisition and development of the next generation of environmental 

satellites is a continuing challenge for the Department. The satellites will provide data and imagery 

for weather forecasting and the study of climate change. Operating environmental satellites and 

weather forecasting are primary mission-essential functions of the Department, yet because of 

cost overruns, schedule delays, and the aging of NOAA’s current constellation of satellites, NOAA 

is confronting coverage gaps for these critical assets. 

Communicate with stakeholders to Define joint polar satellite system (jpss) 

Capabilities, schedule, and Cost baselines. In our September 2011 audit report, we 

recommended that NOAA develop a mechanism to provide executive and legislative decision 

makers with complete, objective, and understandable information that illustrates the consequences 

of limiting satellite observational capabilities. This was driven, in part, from congressional concerns 
6 Office of Inspector General | Semiannual Report to Congress | March 2013

regarding NOAA’s limited communication of plans for its satellite programs. During Fy 2012, 

NOAA has made progress in prioritizing and finalizing high-level JPSS requirements to support its 

commitment to capping the life-cycle costs at $12.9 billion. Nonetheless, fitting requirements into 

a previously authorized budget increases project risks. NOAA needs to revisit the cost estimates 

after finalizing lower-level JPSS requirements, acquisition strategies, and system design— 

particularly for the ground system and “free-flyer” satellites—and work with the Department and 

Congress in adjusting its budget estimates. 

Ensure Adequate leadership and Governance structure over jpss Development. More 

progress in JPSS development may have been possible if not for delays in defining the program’s 

governance structure and staffing key positions. NOAA and NASA did not agree to a management 

control plan for JPSS until February 2012, nearly 2 years after the program was started. Also, only 

two of the top five management positions overseeing JPSS development were permanently filled 

since program inception. qualified officials, who can make timely decisions and take management 

action, are essential for the success of JPSS development. NOAA needs to fill open positions 

overseeing JPSS development and govern the program according to the management plan 

accepted by NASA. 

Develop a plan to support nOAA Weather forecasting Capabilities During Coverage 

Gaps. We project a 10–16-month gap between Suomi National Polar-orbiting Partnership’s 

(Suomi NPP’s) end of design life and when JPSS-1 data become available. NOAA’s mediumrange weather forecasting (3–7 days) could be significantly degraded during the time that JPSS 

data are unavailable. In our September 2011 report, we recommended that NOAA take actions to 

minimize the degradation of weather and climate forecasting during coverage gaps. NOAA agreed 

but did not fully develop a strategy and mitigation plan. NOAA needs to develop a timetable to 

having a mitigation plan in place before Suomi NPP’s end of design life: November 2016. 

reduce program risks Associated with GOEs-r Development. There is less than a 50 

percent chance the Geostationary Operational Environmental Satellite-R Series (GOES-R) 

will be launched on schedule, based on the program’s own models used to assess GOES-R 

development. NOAA must implement solid program management and system engineering 

principles to control costs, keep schedules on track, and maintain required technical performance. 

The program’s standing review board has also warned that should the program’s request in the 

President’s Fy 2013 budget submission not be realized, a launch delay is nearly certain. NOAA 

needs to adequately communicate to decision makers its justification for the significant funding 

increase for Fy 2013. 
7 
8 Office of Inspector General | Semiannual Report to Congress | March 2013

DEpArtMEnt-WIDE MAnAGEMEnt 

The u.s. Department of Commerce works to help American 

companies become more innovative and successful at home and more 

competitive abroad. It creates the conditions for economic growth and 

opportunity by promoting innovation, entrepreneurship, competitiveness, 

and stewardship. 

The Department accomplishes its mission by providing national and 

local weather services; developing key economic and demographic data 

(including the decennial census); advancing technological and scientific 

innovation; protecting and restoring environmental resources; promoting 

international trade; and supporting local, regional, and national economic 

development. These activities affect U.S. business and industry daily and 

play a critical role in the nation’s economic well-being. 
 

 

Department-Wide Management 9 

COMplEtED WOrks (by OvErsIGHt ArEA) 

During this reporting period, OIG completed 18 audits, evaluations, and inspections, as well as 

3 congressional testimonies. 

11

3 3

1 1 1 1

Department­wide a USPTO Recovery Actb ESAc ITA NOAA NTIA

a Department-wide completed works include 2 testimonies.
 

b Recovery Act-related completed works concern NTIA, including 1 testimony.
 

c ESA completed work concerns the Census Bureau.
 

QuArtErly COnfErEnCE rEpOrtInG prOCEssEs nEED IMprOvEMEnt 

(OIG-13-001-I) 

In Fy 2012, the Department received an appropriations provision in the Consolidated and Further 

Continuing Appropriations Act, 2012 (P.l. 112-55) requiring it to submit to OIG quarterly reports 

on the costs and contracting procedures related to Fy 2012 departmental conferences for which 

the government’s costs exceeded $20,000. In the Department’s first conference spending report 

to OIG, five bureaus—Census Bureau, ITA, NOAA, NTIA, and USPTO—reported 24 conferences, 

totaling over $1.7 million, in the first quarter of Fy 2012. 

In March 2012, the Department submitted its first quarter conference report to OIG, along 

with a summary of its report validation process and an explanation of ongoing improvements to 

conference reporting guidance. In April, we initiated an evaluation of the conference reporting 

process; our objective was to determine whether the Department had established controls and 

provided guidance to bureaus for reporting quarterly conference data. We limited the scope of 

our evaluation to processes for reporting the Department’s conference data for the first quarter 

Fy 2012–October 1, 2011, through December 31, 2011. 

Our review found that, for this first conference report, the Department established initial 

operational processes and reporting guidance. however, these processes were still in 

development and needed to become clearly established before the information in its periodic 

reports is fully reliable. We noted the following: 

•	 The bureaus over- and underreported costs by $37,000 and $70,000, respectively, and 

reported $280,000 in unsupported costs. 
10 Office of Inspector General | Semiannual Report to Congress | March 2013

•	 The Department accepted bureaus’ conference spending data with only a limited validation 

of the reported data and planning procedures, which resulted in incorrect reporting for select 

conferences. 

We made a number of policy, process, training, and testing recommendations to the Department’s 

director of the Office of Administrative Services to ensure the reliability of conference data in 

future submissions. 

fy 2012 fEDErAl InfOrMAtIOn sECurIty MAnAGEMEnt ACt (fIsMA) AnnuAl 

rEpOrt (OIG-13-008-M) 

To meet OIG obligations under FISMA, we reviewed the Department’s IT security policies and 

procedures. We also assessed the effectiveness of the information security programs of four 

bureaus—EDA, ITA, NTIA, and USPTO—by evaluating key security measures in place to protect 

mission-critical information that is processed, stored, or transmitted on 17 information systems. 

While the Department had taken steps to improve its IT security posture, we found significant 

security weaknesses in basic security practices. Specifically, our Fy 2012 FISMA audit work 

identified weaknesses in security categorization, patch management, secure configuration 

settings, vulnerability scanning, tracking and remediation of security weaknesses, and incident 

response capabilities. 

fy 2012 COMplIAnCE WItH IMprOpEr pAyMEnt 

rEQuIrEMEnts (OIG-13-020-I) 

We initiated this engagement to review the Department’s 

compliance with the Improper Payments Information Act of 2002 

(IPIA)—as required by the Office of Management and Budget’s 

(OMB’s) government-wide implementation guidance, Circular 

A-123, Management’s Responsibility for Internal Controls, 

Appendix C, “Requirements for Effective Measurement and 

Remediation of Improper Payments.” Specifically, we (1) assessed 

whether the Department complied with all reporting requirements 

and (2) evaluated the accuracy and completeness of its reporting 

as well as its performance in reducing and recapturing improper 

payments. 

To comply with IPIA and OMB Circular A-123, Appendix C, 

the Department implemented procedures in Fy 2012 to detect 

and prevent improper payments—conducting program risk 

assessments, reviewing a sample of Fy 2012 disbursements, 

performing payment recapture audits, and conducting routine 

monitoring procedures. These assessments revealed no programs 

or activities susceptible to significant risk of improper payments. 

In addition, the Department’s review did not identify any significant 

improper payments among its approximately $14.8 billion in outlays. The Department’s routine 

monitoring efforts in Fy 2012 identified almost $1.2 million in improper payments, of which 

more than $1 million was confirmed by the Department as recaptured. The Department also 

implemented corrective actions to address some of the issues identified in our March 2012 report 

on improper payment practices and reporting. A summary of the Department’s relevant Fy 2012 

practices and results appears in the U.S. Department of Commerce Fy 2012 Performance and 

Accountability Report (PAR). 

Federal Information Security 

Management Act of 2002 

(Title III, P.l. 107-347) 

The Federal Information Security Management Act of 

2002 requires agencies to secure systems through 

the use of cost-effective management, operational, 

and technical controls. The goal is to provide adequate 

security commensurate with the risk and extent of 

harm resulting from the loss, misuse, or unauthorized 

access to—or modification of—information collected or 

maintained by, or on behalf of, an agency. 

In addition, FISMA requires inspectors general to 

evaluate agencies’ information security programs and 

practices by assessing a representative subset of 

agency systems. The results are reported to the Office of 

Management and Budget, the Department of homeland 

Security, and Congress annually. 
Department-Wide Management 11 

While the Department met the applicable compliance requirements 

for Fy 2012, we determined that the Department could further 

improve its improper payment implementation strategy related to 

payments made without sufficient documentation. An OIG audit 

found that the Department paid more than $300,000 in award 

fees without proper justification for one contract. This amount was 

considered an unsupported cost. Any such payment made without 

sufficient documentation to determine propriety represents an 

improper payment. however, this amount was not included in the 

Department’s Fy 2012 improper payment reporting in the PAR. 

We recommended that the Department identify items that lack 

sufficient documentation from OIG audits and reviews of its 

programs and activities and report the unsupported costs related 

to those items as improper payments in its annual PAR. 

Improper Payments Elimination and

Recovery Act of 2010 (IPERA) 

(P.l. 111-204) 

IPERA amended the Improper Payments Information Act 

of 2002 (P.l. 107-300), by expanding on the previous 

requirements for identifying, estimating, and reporting

on programs and activities that were vulnerable to

significant improper payments and broadening recovery 

requirements for overpayments. (Improper payments

are those made by the federal government in the wrong

amount, to the wrong entity, or for the wrong reason.) 

lEttEr tO rEprEsEntAtIvEs IssA AnD CuMMInGs rEGArDInG tHE OIG WOrk 

plAn AnD unIMplEMEntED rECOMMEnDAtIOns (OIG-13-025-M) 

In response to a congressional request, the Inspector General provided information about OIG’s 

work plan and highest-priority unimplemented recommendations to the Department or its bureaus. 

In his reply, he noted that OIG’s annual risk-based work plan includes legislatively mandated work, 

such as reviews of IT security and annual financial statement audits, as well as other priorities 

discussed in the annual Top Management Challenges report. OIG’s plan contains the flexibility to 

perform critical unplanned additional work that is either required by new legislation or requested 

directly by Congress. 

OIG’s most important unimplemented short-term recommendations concern the following 

program areas: NOAA deficiencies in budgetary controls and accounting procedures, NOAA 

environmental satellite programs, NOAA acquisitions, and NTIA’s and ITA’s IT security. The most 

important unimplemented long-term recommendations concern NOAA deficiencies in budgetary 

controls, USPTO IT automation, and the Census Bureau’s 2020 decennial census. The issues, 

recommendations, and implementation status were summarized in more detail in two enclosures. 

A third enclosure described ways in which the Department and bureau management solicit OIG 

input on how to improve efficiency and reduce waste. For the Recovery Act, the Department and 

bureau management reached out to OIG for assistance in several ways, including involvement 

in NTIA’s oversight of the Broadband Technology Opportunities Program through workshops, 

training sessions, assistance in drafting program-specific audit guides, and site visits. Bureau 

and departmental management requested audit data and analysis as well as assistance in 

resolving operational issues. In addition, the Inspector General attends select departmental 

meetings to keep posted on bureau events. OIG is also working with the Department to identify 

additional departmental and bureau oversight meetings at which OIG could participate in an 

advisory capacity. 

fy 2012 COnsOlIDAtED fInAnCIAl stAtEMEnt AuDIts (OIG-13-006-A, 

OIG-13-007-A, OIG-13-009-A) 

Independent auditor kPMG llP found that the Department’s consolidated financial statements 

were fairly presented in all material respects and in conformity with U.S. generally accepted 

accounting principles. It found no instances in which the Department’s financial management 

systems did not substantially comply with the requirements of the Federal Financial Management 

Improvement Act of 1996. 
12 Office of Inspector General | Semiannual Report to Congress | March 2013

 

kPMG found one material weakness in internal control over financial reporting related to NOAA’s 

financial management oversight of budgetary controls and accounting for general property 

and satellites. The budgetary control issues related to moving expenses between accounts to 

prevent exceeding budget authority, and using appropriations for program activities that may 

not meet the intended purpose. The property issues, including satellites, related to proper and 

timely accounting for acquisitions, transfers, construction work-in-process, asset retirements, 

and impairment assessments. As a result of these matters, NOAA needs to make significant 

improvements in its financial management oversight of its budget execution processes, as well as 

the effective accounting for its property, including satellites. (A material weakness is a deficiency, 

or a combination of deficiencies, in internal control such that there is a reasonable possibility that 

a material misstatement of the entity’s financial statements will not be prevented, or detected and 

corrected on a timely basis.) 

In addition, kPMG noted one significant deficiency related to controls over general information 

technology (which was not considered to be a material weakness). kPMG identified new 

deficiencies in Fy 2012 relating to control weaknesses in IT security, access, and configuration 

management that require management’s attention. Despite the positive efforts made by the 

Department, the Department needs to make continued improvements in its IT controls to fully 

ensure that financial data processed on the Department’s systems has integrity, is securely 

maintained, and is available only to authorized users. (A significant deficiency in internal control 

exists when the design or operation of a control does not allow management or employees—in 

the normal course of performing their assigned functions—to prevent or detect and correct 

misstatements on a timely basis and merits attention by those charged with governance.) 

kPMG also noted a reportable noncompliance with the Antideficiency Act. During Fy 2012, the 

Department determined that the National Weather Service, a component of NOAA, circumvented 

budgetary controls by moving expenses between accounts to prevent exceeding budget authority. 

kPMG also audited the Department’s special-purpose financial statements and determined 

its compliance with financial reporting requirements in the Treasury Financial Manual. These 

statements are used to assist in preparing the Financial Report of the U.S. Government. In its 

unqualified opinion on these statements, kPMG reported no material weaknesses in internal 

control and no instances of noncompliance. 

nOnfEDErAl AuDIt rEsults fOr tHE 6-MOntH pErIOD EnDInG 

DECEMbEr 31, 2012 (OIG-13-015-M) 

Nonfederal entities (states, local governments, tribes, colleges and universities, and nonprofit 

organizations) that expend $500,000 or more in a year of federal awards are required by the 

Single Audit Act of 1984, and Amendments of 1996, to have an annual audit of their federal 

awards. During the 6-month period ending December 31, 2012, OIG reviewed 115 reports by 

recipients of grants from EDA, MBDA, NIST, NOAA, and NTIA. The audits identified approximately 

$2,355,151 in questioned costs. Our report contained an analysis of findings identified in 

single audit reports, noted trends in the types of findings reported, and summarized findings by 

departmental program. 

Commercial organizations that receive federal funds from the Department are subject to award 

requirements as stipulated in the award document. If an award does not have specific audit 

guidelines incorporated into the award, OIG auditors follow the requirements for a programspecific audit as described in OMB Circular A-133, Audits of States, Local Governments, and 

Non-Profit Organizations, section 235. During the reporting period, OIG analyzed 27 audits 

submitted for awards to commercial and other organizations for NIST’s Advanced Technology 

Program (ATP) and NIST’s Technology Innovation Program (TIP). The audits identified 

approximately $1,655,673 in questioned costs for these program-specific audits. 
 

Department-Wide Management 13 

AuDIts Of COMMErCE funD rECIpIEnts by InDEpEnDEnt AuDItOrs 

(rEvIEWED by OIG DurInG tHE 6 MOntHs EnDInG MArCH 31, 2013) 

In addition to undergoing OIG-performed audits, certain recipients of Department of Commerce 

financial assistance or cost-reimbursable contracts are periodically examined by state and local 

government auditors and by independent public accountants. OMB Circular A-133 sets forth 

audit requirements for most of these audits. For-profit organizations are audited in accordance 

with Government Auditing Standards. For-profit organizations include those that receive TIP 

funds and funds from NIST’s Measurement and Engineering Research and Standards program. 

In addition, organizations that received ATP funds are audited in accordance with NIST ProgramSpecific Audit Guidelines for Advanced Technology Program Cooperative Agreements. 

We examined 144 audit reports during this semiannual period to determine whether they 

contained audit findings related to departmental programs. For 89 of these reports, the 

Department acts as an oversight agency and monitors the audited entity’s compliance with OMB 

Circular A-133, Government Auditing Standards, or program-specific reporting requirements. 

The other 55 reports cover entities for which other federal agencies have oversight responsibility. 

We identified 14 reports with material findings related to the Department. 

report Category OMb A-133 Audits program-specific total 

Audits 

Pending Review (October 1, 2012) 23 2 25 

Received 118 20 138 

Examined 125 19 144 

Pending Review (March 31, 2013) 16 3 19 

The following table shows a breakdown by bureau of approximately $538 million in Department 

funds audited through the A-133 or program-specific guidelines. 

Agency funds 

Economic Development Administration 76,744,846 

Minority Business Development Agency 0 

National Institute of Standards and Technologya 45,320,189 

National Oceanic and Atmospheric Administration 15,513,242 

National Telecommunications and Information Administration 142,605,296 

Multi-bureau 257,712,441 

total 537,896,014 

a Includes $41,137,120 in program-specific audits; A-133 audits account for the remaining amount of $4,183,069. 

The audits identified a total of $2,773,970 in the federal share of questioned costs, $145,356 

in federal unsupported costs and $2,450,174 in funds to be put to better use. In most reports, 

the subject programs were not considered major programs; thus, the audits involved limited 

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

The 14 reports with departmental findings are listed in table 7-a on page 52. 
14 Office of Inspector General | Semiannual Report to Congress | March 2013

COnGrEssIOnAl tEstIMOny (OIG-13-018-t) 

On February 28, 2013, the Deputy Inspector General testified before the house Science, Space, 

and Technology’s Subcommittee on Oversight about the top management challenges facing the 

Department in Fy 2013. (These are summarized on pages 2–6 of this report.) Before discussing 

the individual challenges, he noted that the Department plays a pivotal role in implementing the 

President’s initiatives for economic recovery and job creation and, like other federal agencies, 

faced significant financial uncertainties in the upcoming year. 

COnGrEssIOnAl tEstIMOny (OIG-13-019-t) 

On March 5, 2013, the Inspector General testified before the house Appropriations Committee’s 

Subcommittee on Commerce, Justice, Science, and Related Agencies about the Department’s 

Fy 2013 top management challenges. he focused on specific aspects of four of the five 

challenges. NOAA satellite-related challenges, he said, include reducing the risk of cost overruns, 

schedule delays, and coverage gaps. For the 2020 Census, the bureau needs to implement 

design changes to contain life-cycle costs while maintaining enumeration quality. The U.S. Patent 

and Trademark Office must reduce the patent backlog, improve processing times, and effectively 

implement patent reform. The fourth area—departmental operational controls and oversight— 

requires strengthened operational controls and oversight under constrained budgets. 

bODy ArMOr MAnufACturEr sEttlEs In DEfECtIvE MErCHAnDIsE CAsE 

In October 2012, First Choice Armor & Equipment (First Choice); Edward Dovner; karen 

herman; Exotic Cars, llC; Excel Aviation, llC; and MRSA Jets, llC (collectively, “the Dovner 

Corporations”) agreed to settle a civil false claims case for $250,000 as the result of an 

investigation into the manufacture and sale of bulletproof vests containing Zylon. This settlement 

is part of a larger investigation of the body armor industry’s use of Zylon ballistic material in body 

armor, as we previously reported in prior Semiannual Reports. The companies manufactured 

and sold Zylon bulletproof vests despite possessing information showing that the Zylon materials 

degraded quickly over time and were not suitable for ballistic use. The First Choice vests were 

purchased by the federal government and by various state, local, and tribal law enforcement 

agencies that were partially reimbursed by the United States under the U.S. Department of 

Justice’s (DOJ’s) Bulletproof Vest Partnership Grant Program. This settlement was the result of 

a joint investigation involving DOJ and investigative units from our office and eight other federal 

departments and agencies. 

fOrMEr DEpArtMEnt EMplOyEE rEMOvED fOllOWInG DIsClOsurE Of 

pErsOnAlly IDEntIfIAblE InfOrMAtIOn AnD prOvIDInG fAlsE InfOrMAtIOn 

In December 2012, a Department employee resigned from federal service after our investigation 

determined she had committed several improprieties in the course of performing her official job 

duties, as well as in her role as a supervisor. We found that the former employee provided false 

information to the Department’s Computer Incident Response Team (DOC-CIRT) when she 

asserted she had encrypted the social security numbers of over 30,000 Department employees 

within files she e-mailed. Our investigation, performed jointly with CIRT, found the e-mailed files 

clearly exposed the employees’ social security numbers. In the course of our investigation, we 

also determined the former employee had inappropriately approved a $1,000 cash award to a 

subordinate for performance in order to offset the subordinate’s loss of salary resulting from a 

change in the subordinate’s tax withholdings. Further, we found the former employee had not 

followed Department policy when she approved over $100,000 in student loan repayments for 

three employees. 
Department-Wide Management 15 

nInE ADDItIOnAl MultIMIllIOn DOllAr GuIlty plEAs In prICE-fIxInG CAsE 

In November 2012, 10 Japanese shipping companies pled guilty for their roles in a conspiracy 

to fix certain fees in the provision of freight forwarding services for air cargo shipments from 

Japan to the United States between September 2002 and November 2007. In the September 

2010 Semiannual Report, we reported on guilty pleas by six companies for their violations of 

the Sherman Antitrust Act by conspiring to create and fix fees related to export surcharges, 

currency adjustments, and peak season surcharges. As a result of this multiyear investigation, 

16 companies have either pled guilty or agreed to plead guilty and have agreed to pay criminal 

fines totaling more than $120 million. The investigation was conducted in conjunction with 

DOJ’s Antitrust Division–National Criminal Enforcement Section, and the Federal Bureau of 

Investigation’s Washington Field Office. 
16 Office of Inspector General | Semiannual Report to Congress | March 2013

ECOnOMIC DEvElOpMEnt 

ADMInIstrAtIOn

The u.s. Economic Development Administration’s mission is to 

lead the federal economic development agenda by promoting innovation 

and competitiveness, preparing American regions for growth and 

success in the worldwide economy. Its investment policy is designed 

to establish a foundation for sustainable job growth and the building 

of durable regional economies throughout the United States. This 

foundation builds on two key economic drivers: innovation and regional 

collaboration.
Economic Development Administration 17 

EDA InstItutEs nEW sAfEGuArDs tO ADDrEss GrAnt 

MAnAGEMEnt COnCErns 

Our office initiated a joint investigation with the Federal Bureau of Investigation (FBI) into the 

potential forgery of grant documents on an EDA grant. We confirmed multiple instances of 

evident forgery and fraud related to grant beneficiary assurances on two occasions, although 

there was insufficient evidence to prove who actually forged the documents. We found EDA 

lacked a clear policy across its regional offices on the amount of pre-award due diligence that 

must be conducted on grant applicants and beneficiaries. We also identified concerns with the 

enforcement of regulations limiting the extent to which grantees may use private consultants 

to prepare their grant applications. In January 2013, EDA responded to our findings by (1) 

withholding final payment to the grantee, pending administrative action with respect to the 

grantee’s employees who had not properly vetted the beneficiary assurances, and (2) restating 

existing EDA policies regarding the required due diligence for review and approval of applications 

and related documentation, as well as recordkeeping and internal controls. 

EDA rEvIsEs pOlICy tO EnsurE bEttEr MOnItOrInG Of 

HIGH-rIsk GrAntEEs 

In June 2010, our office opened an investigation regarding misuse of EDA grant funds by an EDA 

grantee in Arizona and determined the grantee had used EDA grant funds to pay an employee 

who worked on non-EDA projects, resulting in an improper payment of $17,337.83 in federal 

funds to the grantee. Subsequently, EDA designated the grantee as high-risk and instituted policy 

changes to ensure proper training and compliance for both the grantee and the regional office in 

charge of oversight of the grantee. This case originated from a hotline complaint. 
18 Office of Inspector General | Semiannual Report to Congress | March 2013

ECOnOMICs AnD stAtIstICs 

ADMInIstrAtIOn 

The Economics and statistics Administration analyzes economic 

activity, formulates policy options, and produces a major share of the 

U.S. government’s economic and demographic statistics. ESA has one 

constituent operating unit and two primary operating units. 

Office of the Chief Economist—Provides the Department with 

expertise on key economic forces affecting the U.S. economy, 

delivering timely, relevant, and credible economic analysis and advice to 

government leaders and the public. 

Census Bureau—Publishes a wide variety of statistical data about the 

nation’s people and economy, conducting approximately 200 annual 

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

the quinquennial census of industry. 

Bureau of Economic Analysis—Prepares, develops, and interprets 

national income and product accounts (summarized by the gross 

domestic product), as well as aggregate measures of international, 

regional, and state economic activity. 
Economics and Statistics Administration 19 

lEttEr tO sEnAtOr COburn rEGArDInG IMprOvInG tHE 2020 CEnsus 

tHrOuGH ADMInIstrAtIvE rECOrDs AnD GEOspAtIAl InfOrMAtIOn 

(OIG-13-002-M) 

In October 2012, the Inspector General responded to a request from Senator Coburn made 

during a July 2012 hearing about 2020 Census planning before the U.S. Senate Committee on 

homeland Security and Governmental Affairs, Subcommittee on Federal Financial Management, 

Government Information, Federal Services, and International Security. Senator Coburn asked 

OIG to answer (1) what Congress can do to help the Census Bureau make greater use of 

administrative records, and (2) how Congress can ease the Census Bureau’s restrictions on 

sharing address information with state and local governments. 

The Inspector General’s response outlined that data collected by federal agencies for program 

purposes (typically referred to as administrative records) contain personally identifiable information 

that, when combined with other records, can produce statistical information such as demographic, 

labor force, and socioeconomic indicators. Administrative records have the potential to decrease 

data collection costs, reduce respondent burden, and produce additional data that are not 

collected by questionnaires. however, accumulating person-level information from multiple 

sources must be balanced against privacy and confidentiality concerns. Consequently, OIG 

suggests that Congress consider (1) playing a role in compelling other federal agencies to provide 

their data to the Census Bureau and (2) easing the Bureau’s restrictions on sharing address 

information with state and local governments. 
20 Office of Inspector General | Semiannual Report to Congress | March 2013

IntErnAtIOnAl trADE 

ADMInIstrAtIOn 

The International trade Administration strengthens the 

competitiveness of U.S. industry, promotes trade and investment, and 

ensures fair trade through the rigorous enforcement of our trade laws 

and agreements. ITA works to improve the global business environment 

and helps U.S. organizations compete at home and abroad. ITA is 

organized into four distinct but complementary business units. 

U.S. and Foreign Commercial Service—Promotes U.S. exports, 

particularly by small- and medium-size enterprises, and provides 

commercial diplomacy support for U.S. business interests around 

the world. 

Manufacturing and Services—Strengthens U.S. competitiveness 

abroad by helping shape industry-specific trade promotion policy. 

Market Access and Compliance—Assists U.S. companies 

and helps create trade opportunities through the removal of market 

access barriers. 

Import Administration—Enforces U.S. trade laws and agreements 

to prevent unfairly traded imports and to safeguard the competitive 

strength of U.S. businesses. 
21

International Trade Administration

Commercial service usEAC networks

Source: U.S. Commercial Service

U.S. Export Assistance Centers

The Office of Domestic Operations of the United States 

& Foreign Commercial Service (CS) employs around 350 

staff, most of whom are trade specialists. This domestic 

unit operates 107 field offices, known as U.S. Export 

Assistance Centers (USEACs) located across eight 

networks nationwide.

Domestic trade specialists at USEACs provide export 

counseling to small- and medium-size businesses, 

helping them identify foreign markets and facilitate the 

sale of their products. They work closely with overseas 

CS staff to set up interviews with foreign buyers, 

compile financial reports on foreign companies, and 

screen foreign business contacts for U.S. companies. 

The vast majority of services that USEACs deliver are 

free of charge.

A CS service that results in an actual export sale or the 

appointment of a foreign agent/distributor is recorded 

as an export success, which is among the organization’s 

primary performance measures.
22 Office of Inspector General | Semiannual Report to Congress | March 2013

MInOrIty busInEss 

DEvElOpMEnt AGEnCy 

The Minority business Development Agency was created to help 

minority owned and operated businesses achieve effective and equal 

participation in the American free enterprise system and overcome the 

social and economic disadvantages that have limited their participation 

in the past. MBDA provides management and technical assistance to 

minority firms upon request, primarily through a network of business 

development centers. It also promotes and coordinates the efforts of 

other federal agencies in assisting or providing market opportunities for 

minority businesses. 
 

Minority Business Development Agency 23 

MbDA InstItutEs pOlICy CHAnGEs In rEspOnsE tO rEvIEW Of rEGIOnAl 

lOCAl trAvEl prACtICEs 

In response to a congressional request, our office reviewed travel reimbursement documents and 

policies for MBDA’s Chicago regional office and identified several internal control weaknesses in 

its processing of travel reimbursements. Our investigation found that between October 1, 2008, 

and May 25, 2011, eight employees of MBDA’s Chicago office, including the regional director, 

received reimbursements totaling approximately $25,700 for travel expenditures. These were 

claimed in a total of 551 vouchers, which appear to encompass both local cab fares (e.g., in 

or around Chicago) and cab fares while on agency-approved travel outside the local area. We 

identified internal control issues related to how travel vouchers are reviewed and approved and 

made several recommendations to MBDA. In response to our findings, MBDA revised its Financial 

Management Guide and now requires supervisory approval of travel vouchers for all MBDA staff, 

as well as receipts for all travel expenses. 
24 Office of Inspector General | Semiannual Report to Congress | March 2013

nAtIOnAl InstItutE Of stAnDArDs 

AnD tECHnOlOGy 

The national Institute of standards and technology promotes 

U.S. innovation and industrial competitiveness by advancing 

measurement science, standards, and technology in ways that enhance 

economic security and improve our quality of life. NIST carries out its 

mission via three cooperative programs. 

NIST Laboratories—Conduct research that advances the nation’s 

technology infrastructure and is needed by U.S. industry to continually 

improve products and services. 

Hollings Manufacturing Extension Partnership—Works with 

small- and mid-sized U.S. manufacturers through a nationwide network 

of 350 field offices to help them create and retain jobs, expand into new 

markets and new products, increase profits, and save time and money. 

Baldrige Performance Excellence Program—Promotes 

performance excellence among U.S. manufacturers, service companies, 

educational institutions, health care providers, and nonprofit 

organizations through outreach programs and the annual Malcolm 

Baldrige National quality Award. 
 

National Institute of Standards and Technology 25 

fOrMEr nIst EMplOyEE OrDErED tO rEpAy fEDErAl GOvErnMEnt 

In March 2013, based on the results of OIG’s investigation, NIST sent a collection letter to a 

former employee ordering repayment of $10,221.97 for expenses she improperly charged to her 

government purchase card. The employee had previously resigned from federal service and signed 

a resolution agreement stating she would be liable for any debt established during her federal 

employment. 

nIst EMplOyEE rEsIGns AftEr COMMIttInG EtHICAl vIOlAtIOns 

During this semiannual reporting period, an official at NIST’s Gaithersburg campus resigned 

from service after our investigation determined he had engaged in multiple ethics violations and 

had maintained improper content on his government e-mail account, including racially offensive 

material and pornographic content. Our office initiated the investigation following concerns of 

a large copper theft ring originating at NIST and found internal control deficiencies regarding 

the procurement, inventory, use, and recycling of materials from NIST’s Facilities Management 

Division, creating opportunity for widespread copper theft, which may have involved the official. 

In the course of our investigation, we learned of several improprieties on the part of the official and 

identified several violations of the Standards of Ethical Conduct for Employees of the Executive 

Branch, leading to the supervisor’s resignation. This case originated from a hotline complaint. 
26 Office of Inspector General | Semiannual Report to Congress | March 2013

nAtIOnAl OCEAnIC AnD 

AtMOspHErIC ADMInIstrAtIOn 

The National Oceanic and Atmospheric Administration mission is to 

understand and predict changes in Earth’s environment, as well as conserve 

and manage coastal and marine resources to meet our nation’s economic, 

social, and environmental needs. NOAA does this through six line offices. 

National Environmental Satellite, Data, and Information Service— 

Observes the environment by operating a national satellite system. 

National Marine Fisheries Service—Conducts a program of 

management, research, and services related to the protection and rational use 

of living marine resources. 

National Ocean Service—Provides products, services, and information 

to promote safe navigation, support coastal communities, sustain marine 

ecosystems, and mitigate coastal hazards. 

National Weather Service—Reports the weather of the United States and 

provides weather forecasts and warnings to the general public. 

Office of Oceanic and Atmospheric Research—Conducts research 

related to the oceans and Great lakes, the lower and upper atmosphere, 

space environment, and the earth. 

Office of Program Planning and Integration—Develops and 

coordinates NOAA’s strategic plan, supports organization-wide planning 

activities, guides managers and employees on program and performance 

management, and integrates policy analysis with decision making. 
National Oceanic and Atmospheric Administration 27 

nOAA nEEDs tO COntInuE strEAMlInInG tHE rulEMAkInG prOCEss AnD 

IMprOvE trAnspArEnCy AnD COnsIstEnCy In fIsHErIEs MAnAGEMEnt 

(OIG-13-011-I) 

In August 2011, Congressmen Barney Frank and John F. Tierney 

asked OIG to review controls and processes used by NOAA’s 

Fishery Management Councils (FMCs) to develop rules for 

the commercial fishing industry—known as fishery rulemaking. 

The request was prompted by concerns that NOAA’s National 

Marine Fisheries Service (NMFS) had abandoned its core 

missions of “development of the commercial fishing industry” and 

“increasing industry participation.” We are conducting this review 

of rulemaking in several phases and plan to generate additional 

reports. In this first phase, we evaluated the role of NOAA and the 

FMCs in the fishery rulemaking process and the transparency of 

the rulemaking process prescribed under the Magnuson-Stevens 

Fishery Conservation and Management Act. Subsequent products 

will look further into NOAA and the FMCs and the rules they 

develop. 

We found the following: 

•	 FMC voting members’ financial disclosures do little to increase 

transparency and lack effective review. 

•	 NMFS has not fully implemented regulatory streamlining 

remedies. 

•	 Maintenance of rules packages and administrative records 

needs to be consistent. 

We recommended that the Assistant Administrator for 

NOAA Fisheries 

•	 strengthen policy guidance on financial disclosure by FMC 

voting members, with emphasis on how NOAA intends 

to handle specific consequences for conflicts or potential 

conflicts it identifies; 

•	 strengthen processes for formal reviews of financial interest 

disclosures, considering the time period that the disclosure 

covers, how financial interest amounts relate to voting 

restrictions, and when affiliations with outside organizations 

should be reported; 

•	 strengthen criteria for identifying conflicts of interest and 

processes to follow up on any conflicts that are identified; 

•	 finalize draft Operational Guidelines and provide them to 

NMFS regional offices; 

•	 finalize regional operating agreements between NMFS 

regional offices and FMCs; and 

•	 develop uniform procedures for the collection, management, 

and maintenance of documents supporting decisions and 

administrative records associated with fishery regulations. 

Magnuson-Stevens Fishery 


Conservation and Management Act
 

The legislation that directs how NOAA manages the 

nation’s fisheries and the principal law that governs the 

fishery rulemaking process is the Magnuson-Stevens 

Fishery Conservation and Management Act (MSA). 

A primary goal of the MSA is to end and prevent 

overfishing through the use of annual catch limits and 

accountability measures. 

Eight regional Fishery Management Councils, established 

by the MSA, work with NOAA and the public to prepare 

and maintain fishery management plans for fisheries 

under their authority. Fishery management plans are 

intended to preserve and repair fisheries while minimizing 

adverse effects on dependent communities through 

a formal process that incorporates scientific data, the 

knowledge of council members and advisory bodies, and 

public input. 

fishery Management rulemaking 

Magnuson-Stevens Act 

Reauthorized in 2006 

Fishery Management Councils 

With input from stakeholders 

propose fishery management 

alternatives 

Fishery Management Plans 

Required by the MSA to manage 

stocks of fish off the U.S. coast 

Fishery Management Actions 

Implemented by NMFS 

Source: OIG 
28 Office of Inspector General | Semiannual Report to Congress | March 2013

 

lEttEr tO rEprEsEntAtIvE jOnEs rE: nAtIOnAl MArInE fIsHErIEs sErvICE’s 

rEspOnsE tO tHE 2006 DIsCOvEry Of A nOrtH AtlAntIC rIGHt WHAlE 

CAlf CArCAss 

In response to a congressional request, OIG examined issues related to NMFS’ response to the 

January 2006 discovery of a dead North Atlantic right whale calf off the coast of Jacksonville, 

Florida. The North Atlantic right whale is designated as an endangered species under the 

Endangered Species Act (ESA) and listed as depleted under the Marine Mammal Protection 

Act (MMPA). historically, right whale populations were depleted by commercial whaling; more 

recently, however, vessel collisions and entanglement in fishing gear have contributed to their lack 

of recovery. 

As part of our inquiry, we reviewed the temporary, emergency, and final rules that NMFS enacted 

under the MMPA and the ESA. These rules severely restricted the activities of fishermen using 

small mesh gill nets to target whiting in the Southeastern U.S. critical habitat for northern right 

whales during annual restricted periods associated with the right whale calving season. We also 

reviewed the March 2006 necropsy (autopsy) report and scientific journal articles on large whale 

(including right whale) entanglements, and interviewed representatives of the whiting component 

of the Southeast Atlantic gillnet fishery, the necropsy team lead, and various NMFS officials. Our 

efforts alerted us to several matters that we felt warranted further action. 

We found a January 2006 letter in which the humane Society of the United States (hSUS) urged 

NMFS to close gillnet fisheries in the Southeast U.S. Restricted Area immediately, indicating that 

hSUS had been made privy to the preliminary necropsy results. While we did not find that NMFS 

officials communicated with hSUS concerning the necropsy findings, the necropsy team lead 

said it was possible that he conveyed this information to hSUS and that he was unaware of any 

confidentiality provision restricting him from doing so. Accordingly, we recommended that NMFS 

establish protocols to safeguard the integrity of such information in the future so as to ensure full 

compliance with NOAA’s Information quality Guidelines and the Federal Information quality Act. 

We examined information related to NMFS’ and the Department’s Office of General Counsel’s 

(OGC’s) respective processing of a January 2007 Freedom of Information Act (FOIA) request 

and subsequent March 2008 appeal submitted by representatives of the whiting component of 

the Southeast Atlantic gillnet fishery. We found that NMFS failed to meet FOIA’s 20-business day 

response period by 6 weeks, while OGC responded to the associated appeal 23 months late. As 

such, we recommended that both offices streamline and coordinate their FOIA processes so that 

they are better able to meet these statutory guidelines. 

We also found that after the FOIA requesters asked for a fee waiver, NMFS changed their 

classification from “other” to “commercial,” raising concerns that NMFS sought to penalize the 

requesters for seeking the waiver. While we did not find evidence to suggest that this action was 

improper or that it adversely impacted the requesters in this case, we recommended that NMFS 

ensure that it properly categorizes FOIA requesters in accordance with FOIA at the outset when it 

determines that FOIA fees will be charged to avoid the appearance of impropriety. 

Finally, we found that OGC could not determine in the course of the appeal process whether 

NMFS wrongly withheld records from the FOIA requesters, because OGC could not ascertain 

from the records it was provided how NMFS applied particular FOIA exemptions to withhold 

entire records. While neither FOIA nor the Department’s FOIA regulations require that this 

information be provided to OGC, an OGC attorney said that not doing so is a problem because 

it slows down the appeal process. The chief of OGC’s General law Division reported that OGC 

attorneys are working with NOAA’s FOIA coordinator and various NMFS personnel to improve this 

and other shortcomings that OGC has observed in NMFS’ processing of FOIA requests. 
National Oceanic and Atmospheric Administration 29 

tWO fOrMEr ExECutIvE DIrECtOrs Of AlAskA EskIMO WHAlInG 

COMMIssIOn sEntEnCED fOr frAuD 

In November and December 2012, two former executive directors for the Alaska Eskimo Whaling 

Commission (AEWC) were sentenced to 41 months, and 6 months in prison, respectively, for 

their roles in defrauding AEWC. They were also ordered to pay restitution in the amounts of 

$383,193.90 and $100, 339. AEWC had received grant funds from NOAA for implementing 

a whaling weapon improvement plan, undertaking a census of whale species, and paying for 

employees and commissioners to attend International Whaling Commission and AEWC meetings. 

Previously, in the September 2012 Semiannual Report, we reported on the guilty pleas entered 

by the two former AEWC executive directors for counts of fraud and money laundering. Our joint 

investigation with the FBI and the Internal Revenue Service disclosed that in 2007 and 2008 the 

former executive directors misapplied over $600,000. 

nOAA EMplOyEE rEprIMAnDED fOr IMprOpEr usE Of GOvErnMEnt 

OWnED vEHIClEs 

In February 2013, NOAA issued a letter of Caution to a NOAA law enforcement officer for 

repeated improper incidental use of a government vehicle for personal errands both on his way to 

and from work over the course of a number of years. As a response to our investigation, NOAA 

instituted new policies and procedures with respect to use of government vehicles, including a 

prohibition on home-to-work vehicles. 

sCIEntIst fOrMErly On AssIGnMEnt tO nOAA sEntEnCED fOr ClEAn WAtEr 

ACt vIOlAtIOn 

In March 2013, an engineer formerly assigned to NOAA’s National Environmental Satellite, Data, 

and Information Service was sentenced to 2 years’ probation after pleading guilty to discharging 

fill material into the Chesapeake Bay without a permit, in violation of the Clean Water Act. 

Further, the engineer was ordered to remove, at his own expense, all fill material discharged 

into the Chesapeake Bay. Our office provided the forensic analysis support for the case, jointly 

investigated by the Environmental Protection Agency–Criminal Investigative Division and the U.S. 

Fish and Wildlife Service, Office of law Enforcement. The investigation determined the engineer 

had discharged fill material from his home into the Chesapeake Bay, scraping away significant soil 

on the cliff face and interfering with the critical habitat of the Puritan Tiger Beetle, an endangered 

species as identified by the Endangered Species Act. 

nOAA EMplOyEE rEtIrEs fOllOWInG fInDInGs Of MIsMAnAGEMEnt 

During this semiannual reporting period, a NOAA employee retired from federal service after our 

investigation found the employee had engaged in poor contract management and failed to effect 

strong internal controls for procurements. In particular, we found the employee had engaged 

in questionable noncompetitive contracting practices, unauthorized procurement actions, and 

potential organizational conflicts of interest. Further, in the course of our investigation, we found 

the employee demonstrated an evident lack of candor regarding his knowledge and involvement in 

these activities. 
30 Office of Inspector General | Semiannual Report to Congress | March 2013

nAtIOnAl tElECOMMunICAtIOns 

AnD InfOrMAtIOn ADMInIstrAtIOn 

The national telecommunications and Information 

Administration serves as the executive branch’s principal adviser 

to the President on domestic and international telecommunications 

and information policy issues. NTIA manages the federal use 

of the electromagnetic spectrum, provides grants for national 

information and public broadcasting infrastructure projects, and 

performs telecommunications research and engineering. It works to 

enhance citizens’ access to cable television, telephone, and other 

telecommunications services and educates state and local governments 

and other entities on ways to use information technology and 

telecommunications more effectively. 
National Telecommunications and Information Administration 31 

fOurtH AnnuAl AssEssMEnt Of tHE psIC GrAnt prOGrAM (OIG-13-016-A) 

Our assessment found that, overall, NTIA is providing effective oversight of PSIC grants. however, 

we identified instances where additional communication from NTIA to recipients could have 

clarified the unique requirements of this grant program, resulting in greater recipient compliance. 

In addition, although NTIA faced many significant challenges in administering this grant 

program, a higher level of monitoring by NTIA could have prevented many instances of recipient 

noncompliance that we found. In particular, the number of late report submissions and necessary 

approvals and authorizations could have been reduced with improved continuous trend analysis 

monitoring. 

We identified two common areas of concern: (1) unallowable costs and (2) internal control 

weaknesses in the areas of noncompliance with reporting requirements, compliance with grant 

requirements, subrecipient monitoring, and cost-match monitoring. 

We made the following recommendations to the Assistant Secretary for Communications and 

Information: 

1.	 Pursue the recovery of questioned unallowable costs for each grant recipient and determine 

the most appropriate process to recover questioned costs in the future. 

2.	 Require recipients to submit all necessary reports in conformance with grant terms and 

conditions. 

3.	 Institute a routine follow-up process with recipients, to ensure that grant requirements are 

understood and met. 

4.	 Strengthen existing requirements for grant recipients to perform subrecipient monitoring. 

5.	 Calculate the impact of the unrealized cost match on the PSIC program and alert those 

recipients who have not met this match of their responsibilities under their grants. 

6.	 Document the follow-up conducted with PSIC grant recipients on recommendations included 

in appendices to this report. 

We included recommendations addressing internal control weaknesses, as well as other state 

recommendations, in the report’s appendices. 

Public Safety Interoperable Communications Program 

The Public Safety Interoperable Communications (PSIC) program is a nearly $1 billion formula-based matching grant program. 


PSIC enables public safety agencies to establish interoperable emergency communication systems using reallocated radio spectrum. 


NTIA, in consultation with the Department of homeland Security, executes PSIC. NTIA awarded PSIC grants to all 50 states, 


5 territories, and the District of Columbia in amounts ranging from $692,000 to $94 million.
 

The Implementing Recommendations of the 9/11 Commission Act of 2007 (P.l. 110-53) requires OIG to annually assess NTIA’s 

management of PSIC and to transmit findings to the house Committee on Energy and Commerce and the Senate Committee on 

Commerce, Science, and Transportation. Also, Congress specified that 25 financial audits be conducted on the PSIC program. 

We previously reported the results of 9 PSIC financial audits. The Fourth Annual Assessment of the PSIC Grant Program consolidates 

the results of the remaining 16 financial audits. 
32 Office of Inspector General | Semiannual Report to Congress | March 2013

EnGInEErInG COnsultAnt On ntIA GrAnt plEADs GuIlty tO fElOny tHEft 

Of GrAnt funDs 

In November 2012, an engineering consultant on an NTIA grant pled guilty to one felony count 

of violating 18 U.S.C. § 641, Theft of Public Money, and agreed to repay the U.S. Treasury 

$190,396 in restitution. The engineering consultant, scheduled for sentencing in April 2013, faces 

a fine of up to $250,000, a maximum of 10 years in prison, or both, as well as up to 3 years of 

supervised release. Our office opened this case based on information referred by NTIA regarding 

suspicious activity observed on a 2009 Public Telecommunications Facilities Program grant for 

the construction and operation of a radio station on a Navajo reservation in the Shiprock, New 

Mexico, area. Our investigation determined the engineering consultant had misappropriated grant 

funds for personal use. Specifically, he named himself as the authorized person for the drawdown 

of grant funds and wired nearly all of the $322,364 grant award to his personal bank account. he 

subsequently used the grant funds for personal purposes such as dining, foreign and domestic 

travel, retail goods, and the purchase of a car. OIG traced the stolen grant funds and seized 

$131,964, which was returned to the U.S. Treasury. 
33 
34 Office of Inspector General | Semiannual Report to Congress | March 2013

unItED stAtEs pAtEnt 

AnD trADEMArk OffICE 

The united states patent and trademark Office administers the 

nation’s patent and trademark laws. Patents are granted and trademarks 

registered under a system intended to provide incentives to invent, 

invest in research, and commercialize new technology. USPTO also 

collects, assembles, publishes, and disseminates technological 

information disclosed in patents. 
United States Patent and Trademark Office 35 

usptO DEplOyED WIrElEss CApAbIlIty WItH MInIMAl COnsIDErAtIOn fOr It 

sECurIty (OIG-13-014-A) 

We evaluated the Public and Enterprise Wireless local Area Network (PEWlAN) as part of our 

Fy 2012 Federal Information Security Management Act of 2002 (FISMA) audit. Our objective was 

to assess the effectiveness of USPTO’s IT security program by determining whether key security 

measures adequately protect its systems and its information. To 

do so, we assessed security measures USPTO employed during 

development of its PEWlAN system. PEWlAN 

The PEWlAN system provides wireless access 

on USPTO’s Alexandria, Virginia, campus. 

Through PEWlAN, USPTO employees and 

contractors access internal USPTO systems 

and information, which can include financial 

and patent application data. 

 

 

that USPTO placed PEWlAN into operation—despite serious 

security weaknesses and significant vulnerabilities—and had not 

implemented the required security controls and conducted proper 

control assessment as defined by FISMA. Thus, USPTO put its critical operational systems at risk. 

We made the following recommendations to the Under Secretary of Commerce for Intellectual 

Property and Director of the U.S. Patent and Trademark Office: 

When we began our audit in June 2012, USPTO insisted that 

PEWlAN was under development and was not operational, 

requesting that we wait until 2013 to review the system. however, 

we independently verified that USPTO had inappropriately 

connected PEWlAN to its operational environment (e.g., 

production systems and critical information). We also determined 

1.	 Ensure that system owners register all systems under development in Cyber Security 

Assessment and Management during the initiation phase of the system development life 

cycle (SDlC). 

2.	 Ensure that USPTO rigorously applies its SDlC process and the risk management framework 

to all IT system development projects. This should include ensuring that required system 

security documents are appropriately developed and updated and that security controls 

required to protect a system are implemented and assessed. 

3.	 Ensure that system owners, information system security officers, technical leads, project 

managers, and program managers attend the SDlC role-based training course regularly. 

4.	 Ensure that the Cybersecurity Division representatives have a role in deciding whether IT 

system development projects should transition to a subsequent phase in the SDlC, based 

on their assessment of the effectiveness of incorporating security into the process. 

fy 2012 fInAnCIAl stAtEMEnt AuDIt (OIG-13-004-A, OIG-13-005-A) 

Independent auditor kPMG llP found that USPTO’s Fy 2012 financial statements were fairly 

presented in all material respects and in conformity with U.S. generally accepted accounting 

principles. During the audit, kPMG also assessed the IT controls supporting financial management 

systems. kPMG found one significant deficiency related to controls over general information 

technology; this deficiency was not considered a material weakness. (A significant deficiency in 

internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and 

correct misstatements on a timely basis, and merits attention by those charged with governance.) 

USPTO needs to continue improving its IT general control environment to ensure that financial 

data processed on USPTO’s systems are complete, reliable, and have integrity. kPMG found no 

instances of reportable noncompliance with applicable laws, regulations, and contracts. 
36 Office of Inspector General | Semiannual Report to Congress | March 2013

AMErICAn rECOvEry 

AnD rEInvEstMEnt ACt 

The Recovery Act—signed into law by President Barack Obama on 

February 17, 2009—had three immediate goals: (1) create new jobs 

and save existing ones, (2) spur economic activity and invest in longterm growth, and (3) foster unprecedented levels of transparency and 

accountability. 

Five Department of Commerce bureaus—the Census Bureau, EDA, 

NIST, NOAA, and NTIA—and OIG received $7.9 billion under the Act, 

with $1.2 billion ultimately rescinded or transferred to other agencies. 

As of March 31, 2013, the Department had obligated almost all of the 

approximately $6.7 billion remaining and disbursed approximately $5.4 

billion. (The disbursal amount includes funding for the now-completed 

NTIA Digital Television Converter Box Coupon Program.) 
American Recovery and Reinvestment Act 37 

OIG rECOvEry ACt OvErsIGHt, fEbruAry 2009–MArCH 2013 

Funded by $16 million for proactive oversight of the Department’s Recovery Act programs and 

activities, OIG has been evaluating whether agencies are using Recovery Act funds efficiently and 

effectively and following up on complaints, including whistleblower reprisal allegations. 

key Activities Cumulative results 

Published audit and evaluation reports 22 

Other work products (correspondence to Congress and the Recovery 

Accountability and Transparency Board) 7 

Audits/evaluations in progress 2 

OIG recommendations for action, correction, or improvement 88 

Recommendations implemented to take corrective action by making 

improvements, reducing risk, or preventing waste 58 

Investigations completed 24 

Investigations in progress 5 

Whistleblower reprisal allegations received 12 

Whistleblower reprisal allegations accepted 6 

Debarments and corporate compliance agreements implemented 0 

Proactive training and outreach sessions held 129 

Individuals trained 6,624 

hours of training provided 8,259 

COMMErCE burEAus’ rECOvEry ACt OblIGAtIOns AnD DIsbursEMEnts 

As Of MArCH 31, 2013 

$4,129 

$360 

$249 $250 $230 

$145 

$996 

$2,931 

$320 

$231 $218 $220 

$138 

$995 

71% 

89% 

93% 

87% 

95% 

95% 

100% 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

$0 

$500 

$1,000 

$1,500 

$2,000 

$2,500 

$3,000 

$3,500 

$4,000 

$4,500 

Percent Disbursed 

Dollars (in Millions) 

Total Obligations 

Total Disbursements 

% Disbursed 

NTIA NIST NIST NOAA NOAA EDA Census 

Construction Research Procurement, Operations, 

and Services Acquisition, and Research, and 

Construction  Facilities 
38 Office of Inspector General | Semiannual Report to Congress | March 2013

prOpEr ClAssIfICAtIOn AnD strEnGtHEnED MOnItOrInG Of subrECIpIEnts 

ArE nEEDED fOr tHE brOADbAnD tECHnOlOGy OppOrtunItIEs prOGrAM 

(OIG-13-013-A) 

At the conclusion of the Broadband Technology Opportunities Program (BTOP) award process 

on September 30, 2010, NTIA had awarded 233 grants. Over time, this number has decreased 

slightly to 225 due to grant cancellations, modifications, and terminations. As of January 26, 

2012, when OIG initiated this audit, the FederalReporting.gov 

data extract reported 217 BTOP awards with payments and 

disbursements greater than $100,000. Recipients responsible for

approximately $3.8 billion in BTOP awards reported subrecipient 

awards of $850 million and vendor payments of $602 million.

The Recovery Act and Broadband 

The Recovery Act gave $4.7 billion to NTIA to establish 

BTOP, a competitive grant program intended to provide 

funds for deploying broadband infrastructure in the 

United States in order to enhance broadband capacity at 

public computing centers, improve access to broadband 

services for public safety agencies, promote sustainable 

broadband adoption projects, and develop an interactive 

map showing broadband capabilities and availability. 

Since enactment of the law, OIG has provided oversight 

of NTIA’s administration of this program. The Recovery 

Act requires BTOP grantees to provide at least a 20 

percent nonfederal matching share. 

For this audit, we reviewed 56 of these awards, totaling $1.9 

billion. We divided the recipients into subgroups based on whether 

they made payments and disbursements to subrecipients, vendors,

or both. Effective monitoring of subrecipients is necessary to 

ensure that project costs are allowable, allocable, and reasonable

and that program goals are achieved. Recipients, rather than NTIA, 

are directly responsible for the oversight of subrecipients. NTIA, in 

turn, is responsible for ensuring that recipients effectively oversee

their projects. This includes ensuring that the recipient adequately 

selects subrecipients and has controls in place to effectively and

efficiently monitor the projects.

While NTIA and the recipients of BTOP awards have taken steps 

to oversee subrecipients, additional operating procedures should 

be implemented. We reviewed 56 awards to determine whether entities had been classified 

properly as vendors or subrecipients and performed testing on 26 awards to assess the 

effectiveness of subrecipient monitoring. Specifically, our audit found the following: 

•	 Two of the 56 awards reviewed (4 percent) have a vendor that may not be properly classified. 

•	 Eleven of 26 awards reviewed (42 percent) may not be completed on time. 

•	 Subrecipient monitoring plans are not in place for 3 of 26 awards reviewed (12 percent). 

•	 Seven of 26 subrecipient agreements reviewed (27 percent) do not contain all required 

provisions. 

•	 For 15 of 56 awards reviewed (27 percent), recipients are not reporting required information to 

FederalReporting.gov. 

lEttEr tO rEprEsEntAtIvEs WAlDEn AnD sHIMkus rE: rEvIEW Of ntIA’s 

btOp GrAnt AWArD tO tHE ExECutIvE OffICE Of stAtE Of WEst vIrGInIA 

(OIG-13-012-I) 

In January 2013, the Inspector General responded to a request from the chairmen of house 

Energy and Commerce Subcommittees on Communication and Technology and on Environment 

and the Economy to review a $126 million BTOP grant awarded by NTIA in 2010 to the Executive 

Office of the State of West Virginia (EOWV). The grant was for the creation of a fiber and radio 

broadband network to serve community anchor institutions formerly not connected and improve 

existing bandwidth to these public facilities, as well as emergency responder networks. Members 

of the Subcommittee on Communications and Technology raised concerns about the BTOP grant 

awarded to EOWV at a May 2012 hearing on broadband grants and loans and requested that 

OIG conduct additional analysis. 
American Recovery and Reinvestment Act 39 

OIG found that EOWV could have better managed its execution of its $126.3 million BTOP 

grant. Specifically, EOWV did not demonstrate the most efficient use of BTOP funds to purchase 

routers, nor did it effectively manage and track router inventory. It also did not execute agreements 

for the receipt of federal property. however, OIG did not find any material misrepresentations in 

EOWV’s submitted application. OIG also found that, prior to issuance of the award, NTIA followed 

its defined process to evaluate the application submitted by EOWV, a process that both OIG and 

GAO found to be reasonable in separate reports. 

COnGrEssIOnAl tEstIMOny (OIG-13-017-t) 

On February 27, 2013, the Principal Assistant Inspector General for Audit and Evaluation testified 

about OIG’s continued oversight of BTOP, as well as the challenges that NTIA faces in its 

oversight of BTOP projects as they are completed and the grant awards closed out. 

The Principal Assistant IG described OIG’s oversight efforts, 

which have (1) assessed the establishment, implementation, and 

program operations of BTOP and (2) reviewed specific issues 

with some individual awards. At the time of her testimony, OIG’s 

work included 10 published products and 44 recommendations 

developed to improve the administration of BTOP and monitoring 

of approximately $4 billion in grant awards. She added that OIG 

has also provided training to NTIA and grant recipients on the 

need for compliance with award terms; conducted nonfederal 

audit reviews of single and program-specific audit reports; and 

established procedures to closely monitor, follow up on, and 

analyze trends for hotline complaints. 

“For the Department to ensure effective 

implementation of BTOP, especially in 

light of fulfilling OMB and legislative 

requirements, OIG and NTIA will 

need Congress to continue your 

oversight efforts.” 

Principal Assistant IG testimony before a 

house Energy and Commerce Subcommittee, 

February 27, 2013 

 

The Principal Assistant IG concluded by addressing five 

challenges facing NTIA: 

•	 Some BTOP projects are at risk of not being completed by September 30, 2013. 

•	 Additional monitoring of equipment may be needed. 

•	 Findings from OIG and nonfederal audits require close attention. 

•	 NTIA needs to address challenges associated with the First Responder Network Authority 

(FirstNet) program and BTOP public safety projects that were affected by its establishment. 

•	 Effective oversight remains essential as awards are closed out. 
40 Office of Inspector General | Semiannual Report to Congress | March 2013

WOrk In 

prOGrEss 

WOrk In prOGrEss (by OvErsIGHt ArEA) 

During this reporting period, 19 OIG audit and evaluation projects were initiated or underway. 

7 

5 

2 2 

1 1 1 

Department­wide NOAA USPTO Recovery Act a EDA ESAb NIST 

a Both Recovery Act-related works in progress concern NTIA. 

b The ESA work in progress concerns the Census Bureau. 

DEpArtMEnt-WIDE 

Department’s Management of Classification policies and procedures 

Assess whether applicable classification policies, procedures, rules, and regulations have been 

adopted, followed, and effectively administered. Identify policies, procedures, rules, regulations, 

and management practices that may be contributing to persistent misclassification of material. 

Department’s Incident Detection and response Capabilities 

Determine whether key security measures are in place to adequately monitor networks, detect 

malicious activities, and handle cyber incidents. 

purchase Card Controls 

Determine whether the Department has adequate transaction-level internal controls over purchase 

card transactions by reviewing a sample from all bureaus during Fy 2011, when the Department 

had more than 4,500 purchase cards and processed approximately $118.6 million in purchase 

card transactions. 

time-and-Materials and labor-Hours (t&M/lH) Contracts 

Assess whether the Department properly awards and administers these contracts (for Fy 2011, 

the Department awarded 2,893 high-risk T&M/lh contract actions for $586 million). 
Work in Progress 41 

unliquidated Obligations 

Evaluate controls over the management and closeout of unused or unneeded (unliquidated) 

obligations. 

letter to Congressional bicameral task force on Climate Change 

Respond to a congressional request to review the Department’s policies, environmental program, 

and activities to carry out requirements that federal agencies address climate change. Assess the 

Department’s authority to reduce emissions of heat-trapping pollution and make the nation more 

resilient to the effects of climate change, as well as the most effective additional steps that could 

be taken to reduce emissions and strengthen resiliency. 

fy 2013 Audit of the Department’s financial statements 

Determine whether the financial statements are presented fairly, in all material respects, in 

accordance with generally accepted accounting principles (the audit will also consider the 

Department’s internal controls over financial reporting and test compliance with certain provisions 

of laws, regulations, and contracts that could have a direct and material effect on the financial 

statements). 

ECOnOMIC DEvElOpMEnt ADMInIstrAtIOn 

Audit of EDA’s It security program 

Assess, as part of our Fy 2012 Federal Information Security Management Act of 2002 audit, the 

effectiveness of EDA’s IT security program, determine the significant factors that contributed to 

the cyber compromise of EDA’s information systems, and evaluate activities either completed or 

planned to reconstitute its information systems to support critical operational requirements. 

ECOnOMICs AnD stAtIstICs ADMInIstrAtIOn 

Census 2020 redesign 

Review the status of the Bureau’s Census 2020 redesign. Determine whether Census Bureau 

governance and internal controls are adequate; assess implementation of each research project, 

including time frames for completion and deliverables; and assess the Bureau’s approach to 

evaluating each project, including whether accurate and reliable data will be available. 

nAtIOnAl InstItutE Of stAnDArDs AnD tECHnOlOGy 

review of fys 2011 and 2012 Manufacturing Extension partnership (MEp) 

Conference spending 

Review federal spending at MEP conferences in Fys 2011 and 2012, including the May 2012 

conference, to determine the legitimacy and reasonableness of related charges. 

nAtIOnAl OCEAnIC AnD AtMOspHErIC ADMInIstrAtIOn 

results of Commerce OIG’s Online survey of fishery Management Council (fMC) 

Members and staff 

In response to a request from Congressmen Barney Frank and John F. Tierney, review fisheries 

management at NOAA and eight regional FMCs regarding interactions with NOAA’s National 

Marine Fisheries Service; regulatory requirements; interactions with the fishing industry and 

nongovernment organizations; FMC operations and training; and rules of conduct, conflict of 

interest, and ethics. 
42 Office of Inspector General | Semiannual Report to Congress | March 2013

review of nOAA’s Catch share program 

In response to Congressmen Frank and Tierney, review fisheries management at NOAA and eight 

regional FMCs regarding NOAA’s catch share programs (i.e., allocation of the total allowable 

fishery catch or a specific fishing area to individuals, cooperatives, communities, or other entities) 

to determine the adequacy of related NOAA controls and processes. 

Actions taken to Correct Deficiencies leading to budget reprogramming requests 

In response to a June 2012 request from the U.S. Senate to review materials and findings from a 

May 2012 internal inquiry report prepared by the Department, determine the adequacy of actions 

taken by NOAA in addressing issues arising from Fy 2012 reprogramming requests. 

joint polar satellite system (jpss) Implementation risks 

Review the adequacy of JPSS development activities, including the flight, ground, and “free-flyer” 

projects, as the program completes system definition and transitions to implementation per NOAA 

and NASA standards. Monitor NOAA’s overall progress in establishing the program’s capabilities 

(requirements), schedule, and cost baselines by the end of summer 2013 and its efforts in 

mitigating the projected data gap between Suomi National Polar-orbiting Partnership satellite’s 

end-of-design life and the planned operational availability of the first JPSS satellite (JPSS-1). 

Audit of nOAA’s It security program 

Assess, as part of our Fy 2013 FISMA audit, the effectiveness of NOAA’s information security 

program by determining whether key security measures adequately protect NOAA’s systems. 

unItED stAtEs pAtEnt AnD trADEMArk OffICE 

leahy-smith America Invents Act (AIA) Implementation and lessons learned 

Evaluate the effectiveness of USPTO’s efforts to train employees and provide the IT infrastructure 

to implement provisions of the AIA. Review whether and to what extent USPTO is collecting 

the necessary information to provide Congress with an assessment of AIA implementation 

due by September 2015. Review whether and how USPTO will incorporate lessons learned 

while implementing initial AIA provisions. Review the extent to which USPTO is carrying out the 

expansion of satellite offices in a cost-effective manner and in accordance with relevant regulations. 

fy 2013 financial statement Audit 

Determine whether the financial statements are presented fairly, in all material respects, in 

accordance with generally accepted accounting principles (the audit will also consider the bureau’s 

internal controls over financial reporting and test compliance with certain provisions of laws, 

regulations, and contracts that could have a direct and material effect on the financial statements). 

AMErICAn rECOvEry AnD rEInvEstMEnt ACt 

broadband technology Opportunities program (btOp) Equipment review 

Determine whether NTIA has the personnel and processes in place to monitor BTOP grantees’ 

equipment acquisitions; assess whether grantees have appropriately acquired, tested, and 

implemented the most effective equipment; and evaluate whether grantees are on track to 

complete BTOP projects on schedule and achieve project goals. 

btOp Award Closeout Audit 

Determine whether the NTIA has established adequate policies and procedures to effectively 

close out the approximately 230 BTOP awards (valued at approximately $3.8 billion) and assess if 

closeout procedures are being followed as the awards are completed and closed. 
Work in Progress 43
44 Office of Inspector General | Semiannual Report to Congress | March 2013

stAtIstICAl DAtA 

The Inspector General Act Amendments of 1988 require us to present the statistical data 

contained in Tables 1–8. 

tAblEs	 page 

1. Office of Investigations Statistical highlights for This Period 	 44
 

2. Audit Resolution and Follow-up 	 45
 

3. Audit and Evaluation Statistical highlights for This Period 	 46
 

4. Audits with questioned Costs 	 47
 

5. Audits with Recommendations That Funds Be Put to Better Use 	 48
 

6. Report Types for This Period 	 48
 

6-a. Performance Audits 49
 

6-b. Financial Statement Audits 49
 

6-c. Evaluations and Inspections 50
 

7. Single Audit and Program-Specific Audits 	 51
 

7-a. Processed Reports with Material Audit Findings 52
 

8. Audits Unresolved for More Than 6 Months 	 53
 

tAblE 1. OffICE Of InvEstIGAtIOns stAtIstICAl HIGHlIGHts fOr tHIs pErIOD 

Investigative activities cover investigations opened and closed by OIG; arrests by OIG 

agents; indictments and other criminal charges filed against individuals or entities as a result of 

OIG investigations; convictions secured at trial or by guilty plea as a result of OIG investigations; 

and fines, restitution, and all other forms of financial recoveries achieved by OIG as a result of 

investigative action. 

Allegations processed presents the number of complaints from employees, stakeholders, and 

the general public that were handled by our Complaint Intake Unit. Of these, some resulted in 

the opening of investigations; others were referred to bureaus for internal administrative followup. Others were unrelated to departmental activities or did not provide sufficient information for 

any investigative follow-up and so were not accepted for investigation or referral. Fines and other 

financial recoveries refer only to agreements that a judge accepted. 
Statistical Data 45 

Investigative Activities 

Investigations opened 37 

Investigations closed 28 

Arrests 0 

Indictments/Informations 1 

Convictions 9 

Fines and other financial recoveries $41,244,893.90a 

Allegations processed 

hotline complaints 628 

Total complaints, all sources 628 

Referrals to bureaus or non-Commerce agencies 279 

Referrals with response required 74 

Responses received 63 

From referrals made this reporting period 12 

From referrals made prior 51 

Referrals closed 57 

Referrals with no response required 205 

Evaluated but not accepted for investigation or referral 312 

a A portion of this total is derived from our participation in federal multiagency investigations. It does not 

reflect actual monetary recoveries for the Department. 

tAblE 2. AuDIt rEsOlutIOn AnD fOllOW-up 

The Inspector General Act Amendments of 1988 require us to present in this report audits 

issued before the beginning of the reporting period (October 1, 2012) for which no management 

decision had been made by the end of the period (March 31, 2013). Seven audit reports remain 

unresolved for this reporting period (see page 53). 

Audit resolution is the process by which the Department of Commerce reaches an effective 

management decision in response to audit reports. Management decision refers to 

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

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

Department Administrative Order 213-5, Audit Resolution and Follow-up, provides procedures 

for management to request a modification to an approved audit action plan or for a financial 

assistance recipient to appeal an audit resolution determination. The following table summarizes 

modification and appeal activity during the reporting period. 

report Category Modifications Appeals 

Actions pending (October 1, 2012) 0 2 

Submissions 0 4 

Decisions 0 4 

Actions pending (March 31, 2013) 0 2 
46 Office of Inspector General | Semiannual Report to Congress | March 2013

 

 

 

tAblE 3. AuDIt AnD EvAluAtIOn stAtIstICAl HIGHlIGHts fOr tHIs pErIOD 

Audits comply with standards established by the Comptroller General of the United States for 

audits of federal establishments, organizations, programs, activities, and functions. 

Inspections include evaluations, inquiries, and similar types of reviews that do not constitute an 

audit or a criminal investigation. 

questioned costsa $ 3,246,924 

Value of audit recommendations that funds be put to better useb 3,978,174 

Value of audit recommendations agreed to by managementc 116,038,608 

These amounts include costs questioned by state and local government auditors or independent 

public accountants. 

a Questioned cost: This is a cost questioned by OIG because of (1) an alleged violation of 

a provision of a law, regulation, contract, grant, cooperative agreement, or other agreement or 

document governing the expenditure of funds; (2) a finding that, at the time of the audit, such cost 

is not supported by adequate documentation; or (3) a finding that an expenditure of funds for the 

intended purpose is unnecessary or unreasonable. 

b value of audit recommendations that funds be put to better use: This results from 

an OIG recommendation that funds could be used more efficiently if Department management 

took action to implement and complete the recommendation. Such actions may include (1) 

reductions in outlays; (2) deobligation of funds from programs or operations; (3) withdrawal of 

interest subsidy costs on loans or loan guarantees, insurance, or bonds; (4) costs not incurred by 

implementing recommended improvements related to the Department, a contractor, or a grantee; 

(5) avoidance of unnecessary expenditures identified in preaward reviews of contracts or grant 

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

c value of audit recommendations agreed to by management: This is the sum of (1) 

disallowed costs and (2) funds put to better use that are agreed to by management during 

resolution. Disallowed costs are the amount of costs that were questioned by the auditors or the 

agency action official and subsequently determined—during audit resolution or negotiations by a 

contracting officer—not to be charged to the government. 
Statistical Data 47 

tAblE 4. AuDIts WItH QuEstIOnED COsts 

See table 3 for a definition of “questioned cost.” An unsupported cost is a cost that is not 

supported by adequate documentation at the time of the audit. questioned costs include 

unsupported costs. 

report Category number Questioned unsupported 

Costs Costs 

A.	 Reports for which no management decision 

had been made by the beginning of the 20 $64,230,176 $ 48,774,644 

reporting perioda 

B. 	 Reports issued during the reporting period 15 3,246,924 427,993 

Total reports (A+B) requiring a management 

decision during the periodb 35 67,477,100 49,202,637 

C. 	 Reports for which a management decision 

was made during the reporting periodc 17 50,753,607 48,246,902 

i. Value of disallowed costs	 50,261,979 47,985,602 

ii. Value of costs not disallowed	 500,708 261,300 

D. 	 Reports for which no management decision 

had been made by the end of the 

reporting period 18 16,723,493 955,735 

a The beginning balance of table 4 (category A) is $3.9 million greater than the ending balance of table 4 (category D) in 

the September 2012 Semiannual Report because $3.9 million in questioned costs from More Action Needed to Improve 

Controls in Asset Forfeiture Fund (OIG-12-019-I) was erroneously omitted from the September 2012 report. 

b Two audit reports included in this table are also included among reports with recommendations that funds be put to better 

use (see table 5). however, the dollar amounts do not overlap. 

c 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 

original recommendations. 
48 Office of Inspector General | Semiannual Report to Congress | March 2013

report Category 	 number value 

A. 	 Reports for which no management decision had been made by 

the beginning of the reporting period a 

B. 	 Reports issued during the reporting period 

Total reports (A+B) requiring a management decision during the period b 

C. 	 Reports for which a management decision was made 

during the reporting period c 

i. Value of recommendations agreed to by management 	

ii. Value of recommendations not agreed to by management 	

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

the end of the reporting period 

2 

2 

4 

4 

0 

$61,798,455 

3,978,174 

65,776,629 

65,776,629 

65,776,629 

0 

0 

a The beginning balance of table 5 (category A) is $871,000 greater than the ending balance of table 5 (category D) in 

the September 2012 Semiannual Report because $871,000 in funds be put to better use from More Action Needed to 

Improve Controls in Asset Forfeiture Fund (OIG-12-019-I) was erroneously omitted from the September 2012 report. 

b Two audit reports included in this table are also included among reports with questioned costs (see table 4). however, the 

dollar amounts do not overlap. 

c 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 

original recommendations. 

tAblE 5. AuDIts WItH rECOMMEnDAtIOns tHAt funDs bE put tO bEttEr usE 

See table 3 for a definition of “recommendation that funds be put to better use.” 

tAblE 6. rEpOrt typEs fOr tHIs pErIOD 

performance audits are engagements that provide assurance or conclusions based on an 

evaluation of sufficient, appropriate evidence against stated criteria, such as specific requirements, 

measures, or defined business practices. Performance audits provide objective analysis so that 

management, and those charged with governance and oversight can use the information to 

improve program performance and operations, reduce costs, facilitate decision making by parties 

with responsibility to oversee or initiate corrective action, and contribute to public accountability. 

financial statement audits provide reasonable assurance through an opinion (or disclaimer 

of an opinion) about whether an entity’s financial statements are presented fairly in all material 

respects in conformity with generally accepted accounting principles, or with a comprehensive 

basis of accounting other than these principles. 

Evaluations and inspections include evaluations, inquiries, and similar types of reviews that 

do not constitute an audit or a criminal investigation. An inspection is defined as a process that 

evaluates, reviews, studies, or analyzes the programs and activities of a department or agency to 

provide information to managers for decision making; make recommendations for improvements to 

programs, policies, or procedures; and identify where administrative action may be necessary. 

type number of reports table number 

Performance audits 3 Table 6-a 

Financial statement audits 5 Table 6-b 

Evaluations and inspections 10 Table 6-c 

total 18 
 

 

 

 

 

 

 

 

Statistical Data 49 

tAblE 6-A. pErfOrMAnCE AuDIts 

report title report 

number 

Date 

Issued 

funds to be 

put to 

better use 

Amount 

Questioned 

Amount 

unsupported 

national telecommunications and Information Administration 

Proper Classification and Strengthened 

Monitoring of Subrecipients Are 

Needed for the Broadband Technology 

Opportunities Program (BTOP) 

OIG-13-013-A 01.31.2013 0 0 0 

Fourth Annual Assessment of the 

Public Safety Interoperable 

Communications Grant Program 

OIG-13-016-A 02.22.2013 0 190,317 0 

u.s. patent and trademark Office 

USPTO Deployed Wireless Capability 

with Minimal Consideration for 

IT Security 

OIG-13-014-A 02.01.2013 0 0 0 

tAblE 6-b. fInAnCIAl stAtEMEnt AuDIts 

report title report 

number 

Date 

Issued 

funds to be 

put to 

better use 

Amount 

Questioned 

Amount 

unsupported 

Office of the secretary 

Fy 2012 Consolidated 

Financial Statements 

OIG-13-006-A 11.15.2012 0 0 0 

Fy 2012 Financial Statements Audit: 

Assessment of Information Technology 

Controls Supporting Financial 

Management Systems 

OIG-13-007-A 11.15.2012 0 0 0 

Fy 2012 Special Purpose 

Financial Statements 

OIG-13-009-A 11.15.2012 0 0 0 

u.s. patent and trademark Office 

Fy 2012 Financial Statements OIG-13-004-A 11.15.2012 0 0 0 

Fy 2012 Financial Statements Audit: 

Assessment of Information Technology 

Controls Supporting Financial 

Management Systems 

OIG-13-005-A 11.15.2012 0 0 0 
50 Office of Inspector General | Semiannual Report to Congress | March 2013

report title report 

number 

Date 

Issued 

funds to be 

put to 

better use 

Amount 

Questioned 

Amount 

unsupported 

Economics and statistics Administration 

letter to Senator Coburn OIG-13-002-M 

re: Improving the 2020 

Census Through Administrative 

Records and Geospatial 

Information 

10.25.2012 0 0 0 

International trade Administration 

U.S. Export Assistance Centers 

Could Improve Their Delivery 

of Client Services and 

Cost Recovery Efforts 

OIG-13-010-I 11.30.2012 1,528,000 0 0 

national Oceanic and Atmospheric Administration 

NOAA Needs to Continue OIG-13-011-I 

Streamlining the Rulemaking 

Process and Improve Transparency 

and Consistency in 

Fisheries Management 

01.16.2013 0 0 0 

Office of the secretary 

quarterly Conference Reporting 

Processes Need Improvement 

OIG-13-001-I 10.17.2012 0 282,637 282,637 

Top Management Challenges 

Facing the Department 

of Commerce 

OIG-13-003-I 11.09.2012 0 0 0 

Fy 2012 Assessment of 

key System Security Measures 

letter to Representatives 

Issa and Cummings 

re: the OIG Work Plan 

and Unimplemented 

Recommendations 

OIG-13-008-M 

OIG-13-025-M 

11.15.2012 

12.28.2012 

0 

0 

0 

0 

0 

0 

Nonfederal Audit 

Results for the 6-Month 

Period Ending 

December 31, 2012 

OIG-13-015-M 2.11.2013 0 0 0 

Fy 2012 Compliance 

with Improper Payment 

Requirements 

OIG-13-020-I 03.15.2013 0 0 0 

national telecommunications and Information Administration 

Response to Chairmen OIG-13-012-I 1.23.2013 

Walden and Shimkus 

re: BTOP grant to the 

Executive Office of the 

State of West Virginia 

0 0 0 

tAblE 6-C. EvAluAtIOns AnD InspECtIOns 
 

Statistical Data 51 

tAblE 7. sInGlE AuDIt AnD prOGrAM-spECIfIC AuDIts 

OIG reviewed and accepted 144 audit reports prepared by independent public accountants 

and local, state, and other federal auditors. The reports processed with questioned costs, 

recommendations that funds be put to better use, and/or nonfinancial recommendations are listed 

in table 7-a. 

Agency Audits 

Economic Development Administration 58 

Minority Business Development Agency 0 

National Institute of Standards and Technologya 25 

National Oceanic and Atmospheric Administration 18 

National Telecommunications and Information Administration 14 

Multibureau 26 

No Departmental expenditures 3 

total 144 

a Includes 19 program-specific audits. 
52 Office of Inspector General | Semiannual Report to Congress | March 2013

report title report 

number 

Date 

Issued 

funds to 

be put to 

better use 

Amount 

Questioned 

Amount 

unsupported 

Economic Development Administration 

Borough of Paulsboro ATl-09999-13-4416 

Scioto County ATl-09999-13-4621 

11.30.2012 

12.04.2012 

0 

0 

665,958 

21,557 

Community Investment ATl-09999-13-4649 

Corp. of Decatur Inc. 

1.15.2013 2,450,174 0 0 

Acadiana Regional ATl-09999-13-4729 

Development District 

3.05.2013 0 40,000 0 

kerr Tar Regional ATl-09999-13-4742 

Council of Governments 

3.13.2013 0 103,903 0 

national Institute of standards and technology 

Coherix, Inc. ATl-09999-13-4642 12.21.2012 0 81,539 0 

America Society of ATl-09999-13-4695 

heating, Refrigerating, 

and Air-Conditioning 

Engineers Inc. and 

Affiliates 

01.24.2013 0 66,820 0 

Fluke Electronics ATl-09999-13-4716 02.20.2013 0 15,803 15,803 

Caterpillar Inc. ATl-09999-13-4713 

Product Development 

& Global Technology 

Division 

02.21.2013 0 17,885 0 

Angstron Materials ATl-09999-13-4710 03.29.2013 0 55,130 0 

Angstron Materials ATl-09999-13-4711 03.29.2013 0 32,030 0 

national Oceanic and Atmospheric Administration 

Institute for ATl-09999-13-4679 

Wildlife Studies 

01.15.2013 0 89,274 0 

national telecommunications and Information Administration 

Florida Rural ATl-09999-13-4681 12.19.2012 

Broadband Alliance, llC 

0 1,454,518 0 

North Florida ATl-09999-13-4687 02.12.2013 

Broadband Authority 

0 129,553 129,553 

tAblE 7-A. prOCEssED rEpOrts WItH MAtErIAl AuDIt fInDInGs 
 

 

 

 

 

 

 

 

 

 

 

Statistical Data 53 

tAblE 8. AuDIts unrEsOlvED fOr MOrE tHAn 6 MOntHs 

Census bureau Computer & High tech Management, Inc. 

In our September 2005 Semiannual Report, we reported the results 

of audits of 2 of the 21 task orders for IT services that Computer & 

high Tech Management, Inc., was providing to the Census Bureau. 

We sought to determine whether the firm had complied with contract 

terms and conditions and federal regulations and had billed Census 

for work performed in accordance with specifications of the task 

order. We found that the firm failed to comply with numerous contract 

and federal requirements, which caused us to question more than 

$10.7 million in direct labor and other reimbursable costs. We have 

suspended audit resolution on these two audits pursuant to an 

agreement with Census. 

Economic Development 

Administration 

southeastern Arizona Governments Organization 

A single audit review noted that two reimbursement requests were 

submitted to the Department and contained the same expenditures. 

The result was that the organization received a reimbursement of 

$33,240 in excess of expenditures. EDA is still reviewing the audit 

resolution proposal. 

national Institute of 

standards and technology 

Manufacturing Extension partnership program 

OIG is reviewing NIST’s audit resolution proposal for OIG’s July 2010 

audit report on California Manufacturing Technology Consulting. We 

have reported the findings and questioned costs contained in this 

report as unresolved in previous Semiannual Reports. 

national Institute of 

standards and technology 

Chevron Energy technology Company 

This program-specific audit questioned some direct and indirect 

costs. NIST’s grants office is trying to resolve the audit with 

the recipient. 

national Oceanic and 

Atmospheric Administration 

Alaska Eskimo Whaling Commission 

As reported in our March 2009 Semiannual Report, a single audit 

review of this NOAA grant questioned costs totaling $66,353 in 

expenditures that were not adequately documented. 

national 

telecommunications and 

Information Administration 

virgin Islands public finance Authority 

The audit report noted material findings and noncompliance with five 

different compliance requirements. There were no questioned costs 

associated with the findings. NTIA is reviewing the audit resolution 

proposal. 
54 Office of Inspector General | Semiannual Report to Congress | March 2013

rEpOrtInG 

rEQuIrEMEnts 

The Inspector General Act of 1978, as amended, specifies reporting requirements for semiannual 

reports. The requirements are listed below and indexed to the applicable pages of this report. 

section topic page 

4(a)(2) Review of legislation and Regulations 54 

5(a)(1) Significant Problems, Abuses, and Deficiencies 8–32 

5(a)(2) Significant Recommendations for Corrective Action 8–32 

5(a)(3) Prior Significant Recommendations Unimplemented 54 

5(a)(4) Matters Referred to Prosecutorial Authorities 45 

5(a)(5) and 6(b)(2) Information or Assistance Refused 55 

5(a)(6) listing of Audit Reports 49–50 

5(a)(7) Summary of Significant Reports 8–32 

5(a)(8) Audit Reports—questioned Costs 47 

5(a)(9) Audit Reports—Funds to Be Put to Better Use 48 

5(a)(10) Prior Audit Reports Unresolved 55 

5(a)(11) Significant Revised Management Decisions 55 

5(a)(12) Significant Management Decisions with Which OIG Disagreed 55 

5(a)(13) Results of Peer Review 55 

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 (1) the economy and efficiency of 

the management of programs and operations administered or financed by the agency or (2) 

the prevention and detection of fraud and abuse in those programs and operations. Comments 

concerning legislative and regulatory initiatives affecting departmental 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 been completed. Section 5(b) requires 

that the Secretary transmit to Congress statistical tables showing the number and value of audit 

reports for which no final action has been taken, plus an explanation of why recommended action 

has not occurred, except when the management decision was made within the preceding year. 

however, information on the status of any audit recommendations can be obtained through OIG 

upon request. 
 

Reporting Requirements 55 

sECtIOns 5(A)(5) AnD 6(b)(2): InfOrMAtIOn Or AssIstAnCE rEfusED 

These sections require a summary of each report to the Secretary when access, information, or 

assistance has been unreasonably refused or not provided. 

On November 30, 2012, the NOAA Deputy Secretary for Operations informed the Inspector 

General via e-mail that OIG and GAO staff—both of whom had been routine observers at 

past Program Management Council (PMC) meetings—would no longer be invited to attend 

the monthly PMC meetings, where the National Environmental Satellite, Data and Information 

Service environmental satellite program management offices report progress and issues to 

NOAA executives. Because PMCs are the highest decision-level forum within NOAA for satellite 

programs, attending these meetings has helped OIG gain valuable insight into NOAA leadership’s 

direction and program execution, as well as effectively providing independent assessments 

to Congress and other stakeholders, for ongoing satellite audits and oversight activities. The 

Inspector General reported OIG’s concerns to NOAA and the Deputy Secretary and has 

requested that OIG attendance be reinstated. The matter remains unresolved. 

sECtIOn 5(A)(10): prIOr AuDIt rEpOrts unrEsOlvED 

This section requires (1) a summary of each audit report issued before the beginning of the 

reporting period for which no management decision has been made by the end of the reporting 

period (including the date and title of each such report); (2) an explanation of why a decision has 

not been made; and (3) a statement concerning the desired timetable for delivering a decision on 

each such report. There are two Census Bureau, one EDA, two NIST, one NOAA, and one NTIA 

reports more than 6 months old for which no management decision has been made. 

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 financial assistance 

audits, OIG must concur with any decision that would change the audit resolution proposal in 

response to an appeal by the recipient. There are two appeals pending at the end of this period. 

sECtIOn 5(A)(12): sIGnIfICAnt MAnAGEMEnt DECIsIOns WItH WHICH 

OIG DIsAGrEED 

This section requires information concerning any significant management decision with which 

the inspector general disagrees. Department Administrative Order 213-5 provides procedures 

for elevating unresolved audit recommendations to higher levels of Department and OIG 

management, including their consideration by an audit resolution council. During this period, no 

audit issues were referred. 

sECtIOn 5(A)(13): rEsults Of pEEr rEvIEW 

The most recent peer review of the Office of Audit and Evaluation was conducted in 2012 by the Office 

of Personnel Management (OPM) Office of Inspector General. OPM OIG’s System Review Report of our 

audit operations is available on our website. We received a pass rating, the highest available rating. We 

are implementing all of OPM OIG’s recommendations for process and policy improvements. 

The most recent peer review of the Office of Investigations was conducted in 2011 by OPM’s OIG. 

We received a compliant rating. The final report of this peer review was issued on April 30, 2012. 

In 2012, we conducted our latest peer review, which examined NASA OIG’s audit operations. 

NASA OIG has informed us that it is implementing the recommendation we made in our review. 
56 Office of Inspector General | Semiannual Report to Congress | March 2013

ACs American Community Survey 

AEWC Alaska Eskimo Whaling 

Commission 

AIA America Invents Act 

Atp Advanced Technology Program 

(NIST) 

bEA Bureau of Economic Analysis 

bIs Bureau of Industry and Security 

btOp Broadband Technology 

Opportunities Program 

CIO Chief Information Officer 

CIrt Computer Incident Response 

Team 

Cs Commercial Service (ITA) 

DOj Department of Justice 

EDA Economic Development 

Administration 

EsA Economics and Statistics 

Administration 

EsA Endangered Species Act 

EOWv Executive Office of the State of 

West Virginia 

fAr Federal Acquisition Regulation 

fbI Federal Bureau of Investigation 

firstnet First Responder Network Authority 

fIsMA Federal Information Security 

Management Act of 2002 

fMC Fishery Management Council 

(NOAA) 

fOIA Freedom of Information Act 

fy fiscal year 

GAO Government Accountability Office 

GOEs Geostationary Operational 

Environmental Satellite 

GOEs-r Geostationary Operational 

Environmental Satellite-R Series 

Hsus humane Society of the 

United States 

IpErA Improper Payments Elimination 

and Recovery Act of 2010 

IpIA Improper Payments Information 

Act of 2002 

It information technology 

ItA International Trade Administration 

jpss Joint Polar Satellite System 

MbDA Minority Business Development 

Agency 

MEp Manufacturing Extension 

Partnership (NIST) 

MMpA Marine Mammal Protection Act 

MsA Magnuson-Stevens 

Fishery Conservation and 

Management Act 

nAsA National Aeronautics and Space 

Administration 

nEI National Export Initiative 

nIst National Institute of Standards 

and Technology 

nMfs National Marine Fisheries Service 

nOAA National Oceanic and 

Atmospheric Administration 

ntIA National Telecommunications and 

Information Administration 

OGC Office of General Counsel 

OIG Office of Inspector General 

OMb Office of Management and 

Budget 

OpM Office of Personnel Management 

pAr Performance and Accountability 

Report 

pEWlAn Public and Enterprise Wireless 

local Area Network (USPTO) 

psIC Public Safety Interoperable 

Communications 

sDlC system development life cycle 

suomi npp	 Suomi National Polar-orbiting 

Partnership 

t&M/lH	 Time-and-Materials and 

labor-hour 

tIC	 Trusted Internet Connection 

tIp	 Technology Innovation Program 

(NIST) 

usEAC	 U.S. Export Assistance Center 

(ITA) 

usptO	 U.S. Patent and Trademark Office 

ACrOnyMs AnD AbbrEvIAtIOns
 
U.S. Department of Commerce 

Office of Inspector General 

1401 Constitution Avenue, NW 

Washington, DC 20230 

www.oig.doc.gov 

OUr MISSIOn 

To improve the programs and operations of the 

Department of Commerce through independent 

and objective oversight.