U.S. Department of Commerce 

Office of Inspector General 

Semiannual Report to Congress
 

September 2013 
Office Of 

inspectOr General 

Deputy 

inspector General 

inspector General Office of counsel 

Office of 

administration 

Office of audit 

and evaluation 

Office of 

investigations 

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 

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

or 800.424.5197 

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U.S. Department of Commerce 

Office of Inspector General 

Semiannual Report to Congress
 

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

table Of 


cOntents
 

01 FROM ThE INSPECTOR GENERAl 

02 TOP MANAGEMENT ChAllENGES FACING ThE DEPARTMENT 

06 OVERSIGhT AREAS 

06 DepartMent-WiDe ManaGeMent 

16 ecOnOMic DevelOpMent aDMinistratiOn 

20 ecOnOMics anD statistics aDMinistratiOn 

22 internatiOnal traDe aDMinistratiOn 

24 natiOnal Oceanic anD atMOspHeric aDMinistratiOn 

28 natiOnal telecOMMunicatiOns anD infOrMatiOn aDMinistratiOn 

30 uniteD states patent anD traDeMark Office 

34 aMerican recOvery anD reinvestMent act 

38 WORk IN PROGRESS 

42 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 September 30, 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 11 audits, inspections, and responses to Congressional requests 

addressing programs overseen by the Economic Development Administration, 

National Oceanic and Atmospheric Administration, U.S. Patent and Trademark Office, 

and the Department itself. 

A summary of our proposed top management challenges facing the Department in 

fiscal year 2014 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. 

Pursuant to the Whistleblower Protection Enhancement Act of 2012, OIG designated 

a whistleblower protection ombudsman to educate Department employees about 

prohibitions on retaliation for protected disclosures, as well as the rights and 

remedies against retaliation for those who have made or are contemplating making a 

protected disclosure. Training will be officially rolled out during the next semiannual 

period and detailed in the March 2014 Semiannual Report to Congress. 

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 also welcome 

Secretary Penny Pritzker to the Department and look forward to forging a close 

association with her. 

TODD J. ZINSER
 
2 Office of Inspector General | Semiannual Report to Congress | September 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 June 2013, OIG 

issued to the Department and its agencies a memorandum that previewed 

what OIG would discuss in further detail in the upcoming fiscal year (Fy) 

2014 Top Management Challenges Facing the Department of Commerce. 

We identified five major challenges that represent cross-cutting issues with a 

focus on the President’s most important goals and longstanding Departmental 

management concerns. Our report will be issued in November 2013. 

1. strenGtHen cOMMerce infrastructure tO suppOrt tHe natiOn’s 

ecOnOMic GrOWtH 

As reflected in the President’s Fy 2014 proposed budget, the Department is a key player in the 

federal government’s efforts to stimulate economic growth and job creation. Several bureaus, 

which hold pivotal roles in providing the infrastructure for economic growth, face a variety of 

challenges. We have identified two key areas for management attention: 

• promoting U.S. exports while protecting national security interests 

• enhancing economic growth through intellectual property and wireless initiatives 

2. strenGtHen OversiGHt Of nOaa prOGraMs tO MitiGate pOtential 

satellite cOveraGe Gaps, aDDress cOntrOl Weaknesses in 

accOuntinG fOr satellites, anD enHance fisHeries ManaGeMent 

NOAA plays a critical role in protecting life and property, as well as supporting national economic 

vitality. To achieve these missions, NOAA must overcome the challenges associated with the 

acquisition, accounting, and operation of weather satellites and has to balance the competing 

interests concerning marine fisheries. We have identified three key areas for management attention: 

• enhancing weather satellite development and mitigating potential coverage gaps 

• addressing material weakness over satellite accounting 

• enhancing fisheries management 

3. cOntinue enHancinG cybersecurity anD ManaGeMent Of infOrMatiOn 

tecHnOlOGy investMents 

Pervasive and sustained cyber attacks against the United States could have a devastating effect 

on federal and nonfederal systems, disrupt the operations of governments and businesses, and 

impact the lives of the American people. The President’s Fy 2014 budget requires that agencies 
 

Top Management Challenges Facing the Department 3 

eliminate duplicative or low-value IT investments while expanding efforts to counter current and 

evolving cyber threats. Accordingly, we identify five areas for management attention: 

•	 establishing a robust capability to respond to cyber incidents 

•	 continuing sustainable implementation of enterprise cybersecurity initiatives 

•	 preserving the Chief Information Officer’s oversight responsibility of satellite-related 

IT investments 

•	 continuing vigilant oversight of IT investments 

•	 maintaining momentum in consolidating commodity IT1 to cut costs 

4. eXercise strOnG prOJect ManaGeMent cOntrOls Over 2020 census 

planninG tO cOntain cOsts 

The decennial census is a highly visible, decade-long program that requires extensive planning 

and testing. The Census Bureau has promised bold design changes for the 2020 Census, 

seeking to reduce per household costs (on an inflation-adjusted basis) to an amount lower than 

the 2010 Census. To reach this goal, the Bureau must complete research and testing early 

enough in the decade to plan and build the necessary infrastructure for the projected workload 

and workforce. The Bureau will be making key 2020 Census design decisions during Fys 

2015–16 that drive the program’s methodology, quality, and cost. As a result of our 2010 Census 

oversight, we noted challenges the Census Bureau faces to innovate its 2020 Census design. 

The Bureau has partially addressed some of our recommendations; however, more work remains. 

We have identified two key areas for management attention: 

•	 ensuring timely design decision making 

•	 focusing on human capital management, timely research, and testing implementation 

5. cOntinue tO fOster a culture Of ManaGeMent accOuntability tO 

ensure respOnsible spenDinG 

As the government experiences an extended period of tightened budgets, it is imperative to foster 

a culture of management accountability. OIG operates a complaint hotline for information about 

alleged wrongdoing, misconduct, or mismanagement. OIG’s determination to audit, investigate, or 

provide the complaint information to Departmental or bureau management for appropriate action 

helps to instill a culture of ethical conduct and ensure that spending is appropriate, complies 

with laws and regulations, and promotes investments with long-term benefits. In response to 

complaints about mismanagement of appropriated funds within NOAA’s National Weather 

Service (NWS) in 2010 and 2011, the Department conducted an internal inquiry that highlighted 

mismanagement of budgetary resources throughout NWS. While the Department and NOAA have 

taken steps to address the findings identified in the internal inquiry, additional work is needed. In 

addition, the lack of centralized financial reporting capability impedes the Department’s ability to 

oversee and manage Department-wide financial activities. While the Department has developed 

plans to replace legacy systems, significant financial reporting challenges remain. Our audits 

also indicate that reducing the use of high-risk contracts remains a challenge for the Department. 

Other priorities include stricter oversight of the Department’s annual acquisition of approximately 

$2.4 billion in goods and services. Finally, an additional challenge is to strengthening bureaus’ 

1 According to OMB, commodity IT includes “IT infrastructure (data centers, networks, desktop computers and mobile devices); 

enterprise IT systems (e-mail, collaboration tools, identity and access management, security, and web infrastructure); and business 

systems (finance, human resources, and other administrative functions).” See Office of Management and Budget, August 8, 2011. 

Chief Information Officer Authorities, Memorandum M-11-29. Washington, DC: OMB, 2. 
4 Office of Inspector General | Semiannual Report to Congress | September 2013

oversight of Departmental programs that award grants or cooperative agreements due to the 

potential for misuse of federal funds by award recipients. We have identified five key areas for 

management attention: 

• responding to concerns of mismanagement and ethical violations 

• implementing stricter controls over funds 

• modernizing the enterprise financial management system to strengthen financial oversight 

• strengthening controls over high-risk contract actions and developing the acquisition workforce 

• addressing grant management issues 

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 7 

cOMpleteD WOrks (by OversiGHt area) 

During this reporting period, OIG completed 11 audits, inspections, and responses to 

Congressional requests, and testified before Congress once. 

8

2

1 1

Department­widea NOAA EDA USPTO

a Department-wide completed works include 1 testimony. 

internal cOntrOls fOr cOMMerce purcHase carD transactiOns neeD 

tO be strenGtHeneD (OiG-13-025-a) 

In September 2011, we began an audit on transactions initiated during fiscal year (Fy) 2011 

to determine whether the Department had adequate transaction-level internal controls over the 

use of purchase cards. During this time period, Department staff used 4,515 purchase cards for 

265,423 transactions, spending $118,628,549. 

We selected approximately 850 transactions for testing through a stratified random sample, 

ensuring that transactions from all bureaus were included and that results could be projected to 

the entire Department. We also projected bureau-specific results for the Census Bureau, NOAA, 

and NIST, because those bureaus represented the highest volume users of purchase cards. 

Our audit found that transaction documentation was incomplete, procedural issues existed, 

transactions were improper or questionable, and cardholders and approving officials did not 

obtain annual refresher training. 

We recommended that the Department’s Chief Financial Officer and Assistant Secretary for 

Administration 

•	 direct cardholders to document purchase requests and approvals, budget approvals, and bona 

fide government needs for purchase card transactions; 

•	 strengthen the monthly purchase card reconciliation process; 

•	 ensure that purchases are equitably distributed among qualified vendors and that agencies 

determine the most efficient and effective method of obtaining services (e.g., insourcing versus 

outsourcing, purchase cards versus other procurement tools); 
8 Office of Inspector General | Semiannual Report to Congress | September 2013

•	 develop policies and procedures to ensure that purchase card files are retained when 

cardholders or approving officials end employment with the Department or otherwise 

discontinue their functions as cardholders or approving officials; 

•	 improve training—as well as tracking and monitoring—for cardholders and approving officials 

on regulations over the use of purchase cards; 

•	 ensure that the Department’s Electronic Transmission of Personally Identifiable Information 

policy is consistent with the Commerce Acquisition Manual (CAM); and 

•	 ensure that the CAM’s record retention requirements expressly state the National Archives and 

Records Administration requirements. 

Obligations 

An obligation is the amount of an order placed, contract 

awarded, or service purchased during an accounting 

period, which requires future payment. 

An unliquidated obligation is an amount of money that 

has been designated for a specific purpose but has not 

been disbursed. 

Obligations must be liquidated within certain time 

limits. If unobligated funds are not used for their original 

purpose within these time frames, the agency is required 

to release the funds for other allowable purposes or, 

depending on restrictions placed by Congress, return the 

money to the U.S. Treasury. 

MOnitOrinG Of ObliGatiOn balances neeDs 

strenGtHeninG (OiG-13-026-a) 

As of December 31, 2011, the Department’s unliquidated 

obligations exceeded $9.9 billion. Of this amount, $147 million 

in obligations were recorded in fiscal year 2006 or earlier. This is 

particularly important because susceptibility for misuse increases 

as the obligation ages. 

We reviewed the Department’s unliquidated obligation balances 

as of December 31, 2011, to assess whether the Department 

and bureaus have adequate controls over the management and 

closeout of unliquidated obligations. We examined a sample of 

obligations with balances as of December 31, 2011, and identified 

49 obligation balances, totaling $18.4 million, that could have 

been deobligated. NOAA and NTIA incurred 70 percent of the 

Department’s unliquidated obligations. More than 60 percent of the 

unliquidated obligations were for grant funding. 

Specifically, we found that original obligation balances could not 

be verified; accounting records did not accurately reflect Department obligations; bureaus did not 

know the status of obligation balances; obligation balances as of December 31, 2011, could not 

be verified; and bureaus improperly liquidated contract obligations. 

Our findings included monetary benefits to the Department—in the form of estimated obligations 

that needed to have been deobligated by December 31, 2011—in the amount of $159 million. 

We recommended that the Office of the Secretary 

•	 develop a Department-wide initiative related to the timely liquidation, deobligation, and closure 

of unneeded open obligations; 

•	 enhance policies and procedures to include specific, comprehensive guidance for the 

consistent monitoring and deobligation of unliquidated obligation balances, as well as ongoing 

Departmental oversight; 

•	 develop guidance and training on the quarterly verification of open obligations; 

•	 investigate each specific instance noted in the report where contract obligations may have 

been liquidated against an incorrect fiscal year funding source or charged to the wrong 

account; and 

•	 provide training on the proper methodology for funding invoices of multiple-year contracts. 
Department-Wide Management 9 

letter tO representative issa reGarDinG Open anD uniMpleMenteD 

recOMMenDatiOns (OiG-13-028-i) 

In response to a Congressional request, the Inspector General provided information about 

the status of OIG’s open and unimplemented recommendations. (Open recommendations are 

unresolved; unimplemented recommendations have approved action plans, but the bureaus have 

not yet completed their implementation of the recommendations.) 

Of the 746 recommendations contained in OIG performance audit, evaluation, and inspection 

reports issued January 1, 2007–June 21, 2013, 20 recommendations were still open and 

163 were still unimplemented at the time of this letter to Representative Issa. (Not included 

are classified or sensitive nonpublic recommendations, recommendations in financial statement 

audits, or those addressed to specific nonfederal entities in connection with audits of financial 

assistance awards.) The cumulative estimated cost savings associated with these open and 

unimplemented OIG recommendations is $385.3 million. OIG’s top open and unimplemented 

recommendations concern Departmental contracts, Departmental IT security, and NOAA 

environmental satellite programs. 

status Of DepartMental actiOns tO cOrrect natiOnal WeatHer service 

MisManaGeMent Of funDs (OiG-13-029-i) 

In June 2012, the U.S. Senate Appropriations Subcommittee for 

Commerce, Justice, Science, and Related Agencies asked OIG 

to review materials and findings from the Department’s May 2012 

Internal Inquiry into Alleged Mismanagement of Funds Within the 

National Weather Service report. We reviewed the actions taken 

by the Department and NOAA to address identified weaknesses 

to determine the adequacy of such actions in addressing issues 

arising from NWS’s Fy 2012 reprogramming requests. Our review 

compared actions against what was directed in the separate 

May 2012 decision memorandums from then-Deputy Secretary 

Rebecca Blank and then-Under Secretary of Commerce for 

Oceans and Atmosphere Jane lubchenco. 

Our review found that the Department and NOAA have taken 

steps to address the findings identified in the Department’s internal 

inquiry, some of which were still ongoing as of our March 2013 

end of fieldwork. Since May 2012, the Department and NOAA 

completed 15 out of 20 of their planned action items. We noted 

that the Department and NOAA need to take additional steps to 

ensure that budget formulation processes at line offices and the 

bureau are transparent and accountable, provide training to certain 

NOAA officials, and review NOAA’s financial management team. 

We recommended that the Department’s Chief Financial Officer 

Mismanagement of National Weather 

Service (NWS) Funds 

In 2010 and 2011, the Department and OIG received 

a series of complaints about mismanagement of funds 

within NWS. In May 2012, the Department issued 

a report that found—in addition to the unauthorized 

reprogramming of NWS funds in Fys 2010 and 2011— 

significant management, leadership, budget, and financial 

control problems at NWS that resulted in Antideficiency 

Act violations. 

later that month, then-Deputy Secretary Rebecca Blank 

and then-Under Secretary of Commerce for Oceans 

and Atmosphere Jane lubchenco issued separate 

decision memoranda, which required specific actions for 

correcting the conditions leading to the report’s findings. 

These decision memoranda required Departmental 

actions on 20 distinct activities, including audits, 

organizational reporting adjustments, and changes to 

budget formulation and execution processes. 

take appropriate action to 

•	 issue an informational notice alerting Departmental staff to the OIG online hotline complaint 

process; 

•	 ensure, for future inquiries, that Departmental offices are aware of the requirement to obtain 

and keep documentation supporting data requests and conclusions reached; 

•	 provide a training module for NOAA managers and employees on reporting complaints of 

fraud, waste, abuse, and mismanagement at NOAA; 
10 Office of Inspector General | Semiannual Report to Congress | September 2013

•	 evaluate the impact of Departmental senior executive training on the overall proficiency related 

to managing human, financial, and informational resources; and 

•	 document an analysis of NOAA’s financial management leadership that addresses improper 

past practices and how the current leadership team can provide effective financial 

management direction. 

results of investigation—nWs reprogramming of funds 

Subsequent to the issuance of the Department’s May 2012 inquiry report, OIG also received 

a hotline complaint alleging that unauthorized reprogramming at NWS had continued despite 

ongoing administrative inquiries and alleged knowledge of unauthorized reprogramming by 

NOAA leadership. Based on this complaint—and the Department’s and NOAA’s May 2012 

report covering only Fys 2010 and 2011—we conducted an investigation focusing on whether 

senior leadership within NOAA, including NWS, had knowledge of unauthorized reprogramming, 

and whether unauthorized reprogramming occurred beyond the period covered by the joint 

Department–NOAA inquiry. We interviewed 20 NOAA officials, including the former NOAA 

Chief Financial Officer and current Chief of Resources and Operations Management. The former 

Assistant Administrator for NWS had retired and declined to be interviewed. 

Our investigation did not find evidence that NOAA senior leadership had specific knowledge that 

unauthorized reprogramming activities were occurring within NWS at the time these activities 

occurred. however, both this investigation and the May 2012 Department–NOAA report 

preceding it identified a series of events and circumstances that should have alerted senior NWS 

and NOAA officials at the time these activities were occurring. Testimonial evidence reflects that 

the then-NWS Assistant Administrator, the NWS Deputy Assistant Administrator, and the thenNOAA Chief Financial Officer were made aware of funding concerns, specifically involving the 

Advanced Weather Interactive Processing System (AWIPS) program (activities later found to 

constitute unauthorized reprogramming). These programs were, over several years, consistently 

behind schedule and faced with budget issues well known in NWS and NOAA, but senior 

leaders failed to take appropriate action. We concluded that senior leaders’ failure to address 

concerns repeatedly voiced to them by subordinate program managers allowed unauthorized 

reprogramming activities to occur at NWS over multiple fiscal years. Our report of investigation 

was referred to NOAA on September 30, 2013, for appropriate action. 

classifieD infOrMatiOn pOlicies anD practices 

at tHe DepartMent Of cOMMerce neeD 

iMprOveMent (OiG-13-031-a) 

The Reducing Over-Classification Act of 2010 (Public law 

111-258) mandates that the inspector general of each department 

or agency with an officer or employee authorized to make original

classification decisions conduct two evaluations to promote the

accurate classification of information. The first evaluation must be 

completed by September 30, 2013; a second, to be completed by

September 30, 2016, must review progress made after the first.

Our audit found that the Department has generally adopted

policies, procedures, rules, and regulations prescribed by order

13526. however, we identified areas where the Department could 

improve certain classification policies, procedures, rules, and 

regulations:

Executive Order 13526: 

Classified National Security Information 

Executive Order 13526 prescribes a uniform system 

effective June 27, 2010, for classifying, safeguarding, 

and declassifying national security information. In addition 

to controlling the amount and duration of classification 

and sharing classified information more freely, order 

13526 outlines mandatory training requirements for 

those with classification authority. 

The Department of Commerce is responsible for 

both implementing national policies and establishing 

Departmental policies to ensure that such information is 

adequately safeguarded when necessary and appropriately 

shared whenever possible. Its Office of Security is 

responsible for overseeing all security management. 
Department-Wide Management 11 

•	 The Department must ensure its policies and practices are consistent with federal 

requirements. Some documents are not being received and reviewed timely for declassification 

or destruction, and some derivative classification documents contained marking deficiencies. 

•	 Oversight and internal control processes need improvement. Data reported in the Security 

Manager database were inaccurate, and poor inventory practices contributed to inaccurate 

information. 

We recommended that the Director, Office of Security 

•	 ensure that the document custodian take action to finalize the disposition of the three 

documents identified with expired declassification dates; 

•	 require container custodians to be responsible for the classified documents in the container(s) 

they control; 

•	 amend the Security Manual to align with the language in Executive Order 13526 regarding 

markings on derivatively classified documents, as well as update biennial training on 

classification markings for derivatively generated documents; 

•	 improve the process for entering accurate data into Security Manager and develop guidance 

addressing the processes to be followed for annual classified information inventory reviews; 

and 

•	 incorporate any relevant changes made as a result of recommendations in this report as part of 

the Office of Security’s annual reviews of the Department’s classified information. 

letter tO tHe HOuse cOMMittee On science, space, anD tecHnOlOGy 

reGarDinG tHe DepartMent’s use Of persOnal anD/Or alias e-Mail 

accOunts tO cOnDuct Official GOvernMent business 

In May 2012, the Inspector General responded to Representative lamar Smith and house 

Committee on Science, Space, and Technology members with the results of OIG’s inquiry into 

the Department’s use of personal and/or alias e-mail accounts to conduct official government 

business. (For the purposes of this inquiry, personal e-mail account was defined as an account 

established with a commercial internet service provider such as yahoo!, Gmail, or hotmail. 

Unofficial alias e-mail account was defined as a Departmental email account where the name 

or position of the account holder is not readily apparent. Official alias account was defined as a 

Department-established e-mail account with a clearly identifiable account holder or purpose, such 

as one using an individual account holder’s title or a group account holder’s function.) 

With a focus on the Office of the Secretary, NOAA, and NIST, OIG’s inquiry examined various 

policies and procedures and included interviews with senior leadership within the Department, the 

Department’s Chief Information Officer (CIO), and other relevant CIO staff from the Department, 

NIST, and NOAA. 

OIG’s examination could not determine the extent to which personal e-mail accounts were used 

by Commerce employees to conduct official business because the Department does not have the 

technology, policies, or procedures in place to provide this information. however, OIG found the 

following: 

•	 Current Departmental policy and procedures regarding the use of personal or alias e-mail 

accounts for official business are only found in a “Remote Access Policy” and, therefore, not 

interpreted as a blanket policy. 
12 Office of Inspector General | Semiannual Report to Congress | September 2013

•	 There is a lack of consistent, adequate training regarding the use of personal or alias e-mail 

accounts for official business. 

•	 There is no record of adverse personnel action resulting from the use of personal or unofficial 

alias e-mail accounts for official business. 

•	 Senior Departmental officials have neither encouraged the use of personal or unofficial alias 

email for official business nor used personal or unofficial alias e-mail for official business, 

except for incidental instances. 

To ensure proper records management of all e-mails containing official business, and to facilitate 

transparency and oversight, OIG recommended that the Department’s CIO, in coordination with 

the CIOs of each bureau 

•	 finalize the pending policy revision to ensure the Department has a clear, comprehensive policy 

prohibiting the use of personal e-mail for conducting official business; and 

•	 clearly communicate Commerce policies regarding the use of personal e-mails to all 

Commerce employees (e.g., through initial and annual refresher IT training presentations). 

cOnGressiOnal testiMOny (OiG-13-023-t) 

On April 11, 2013, the Inspector General testified before the Senate Appropriations’ 

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

$11.7 billion Fy 2014 budget request. 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, faces significant challenges in the upcoming year. After summarizing the 

management and performance challenges facing the Department, he focused on challenges 

specifically related to NOAA satellites, 2020 Census, U.S. Patent and Trademark Office, and 

Departmental operational controls and oversight. 

auDits Of cOMMerce funD recipients by nOnfeDeral 

inDepenDent auDitOrs (revieWeD by OiG DurinG tHe 6 MOntHs 

enDinG septeMber 30, 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 establishes 

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

Government Auditing Standards (GAS) include those that receive NIST awards from both the 

Technology Innovation Program (TIP) and the Measurement and Engineering Research and 

Standards (MERS) program. Some for-profit organizations are audited in accordance with other 

specific audit guides. These include Advanced Technology Program awards that are audited in 

accordance with the NIST Program-Specific Audit Guidelines for Advanced Technology Program 

Cooperative Agreements, as well as BTOP awards that are audited in accordance with the NTIA 

Program-Specific Audit Guidelines for the Broadband Technology Opportunities Program. 

We examined 105 audit reports during this semiannual period to determine whether they 

contained audit findings related to departmental programs. For 52 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 53 reports cover entities for which other federal agencies have oversight responsibility. We 

identified 15 reports with material findings related to the Department. 
 

 

 

 

Department-Wide Management 13 

report category OMb a-133 audits program-specific total

 audits 

Pending Review (April 1, 2013) 16 3 19 

Received 117 25 142 

Examined 86 19 105 

Pending Review (March 31, 2013) 47 9 56 

The following table shows a breakdown by bureau of approximately $855 million in Department 

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

agency funds 

Census Bureau 268,986 

Economic Development Administration 19,761,353 

International Trade Administration 85,554 

Minority Business Development Administration 0 

National Institute of Standards and Technologya 11,669,864 

National Oceanic and Atmospheric Administration 4,421,723 

National Telecommunications and Information Administrationb 113,338,682 

Multi-bureau 705,123,540 

total 854,669,702 

a Includes $8,363,222 in program-specific audits; A-133 audits account for the remaining amount of $3,306,642. 

b Includes $35,006,706 in program-specific audits; A-133 audits account for the remaining amount of $78,331,976. 

The audits identified a total of $4,752,629 in the federal share of questioned costs, $3,847,014 

in federal unsupported costs and $3,215,149 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 

15 reports with departmental findings are listed in table 7-a on page 49. 

results Of nOnfeDeral auDits fOr tHe 6-MOntH periOD enDinG June 30, 

2013 (OiG-13-030-M) 

OIG’s report contained an analysis of findings identified in nonfederal audit reports from January 1 

through June 30, 2013, noted trends in the types of findings reported and summarized findings by 

Departmental program. 

final tWO MultiMilliOn DOllar Guilty pleas in price-fiXinG case 

During this semiannual reporting period, two Japanese shipping companies pled guilty and were 

convicted 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 U.S. between September 2002 and November 

2007. The two companies were fined over $15.4 million and $3.5 million, respectively, and each 

was placed on probation for 24 months. During this reporting period we also confirmed another 

shipping company had been ordered to pay restitution in excess of $10.4 million for violations 

in this case. As a result of this multiyear investigation, a total of 16 companies were convicted 
14 Office of Inspector General | Semiannual Report to Congress | September 2013

and paid criminal fines totaling more than $120 million for conspiring to suppress and eliminate 

competition by fixing certain components of freight forwarding service fees (i.e., fuel surcharges 

and security fees) charged to customers for services provided in connection with shipments of air 

cargo to the U.S. The investigation was conducted in conjunction with the Department of Justice’s 

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

Washington Field Office. Additional details have been provided in the past four Semiannual 

Reports to Congress. 

DepartMental eMplOyee DisciplineD fOr tiMe anD attenDance abuse 

In April 2013, the Department deducted over 130 hours of annual, sick, and compensatory 

leave from an employee’s leave balance after our investigation determined the employee failed to 

record it on time sheets over a 7-month period. The leave was valued at over $8,200. Moreover, 

we found the employee’s responses during the interview with us lacked candor and credibility. 

The U.S. Department of Justice declined criminal prosecution in lieu of administrative action. The 

Department corrected the employee’s leave balance and issued the employee a “last chance 

letter” for misconduct. 

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 

MalWare infectiOns On eDa’s systeMs Were OverstateD anD tHe 

DisruptiOn Of it OperatiOns Was unWarranteD (OiG-13-027-a) 

In December 2011, the Department of homeland Security (DhS) notified the Department of 

Commerce that it detected a potential malware infection within the Department’s systems. The 

Department determined the infected components resided within IT systems operating on the 

herbert C. hoover Building (hChB) network and informed EDA and another agency of a potential 

infection in their IT systems. 

In January 2012—believing it had a widespread malware infection—EDA requested that the 

Department isolate its IT systems from the hChB network. This action resulted in the termination 

of EDA’s operational capabilities for enterprise e-mail and website access, as well as regional 

office access to database applications and information residing on servers connected to the 

hChB network. Given the Department’s limited incident response capabilities and the perceived 

extent of the malware infection, the Department and EDA decided to augment the Department’s 

incident response team. Additional incident response support was provided by DhS, the 

Department of Energy, NIST, and the National Security Agency, as well as a cyber security 

contractor. In early February 2012, EDA entered into an agreement with the Census Bureau to 

provide interim e-mail capability, Internet access to EDA staff, and Census Bureau surplus laptops 

for EDA staff. 

In accordance with the Federal Information Security Management Act of 2002 (FISMA), we 

evaluated EDA’s IT security program and the events surrounding the December 2011 cyber 

incident response and recovery efforts. We found that (1) EDA based its critical cyber-incident 

response decisions on inaccurate information, (2) deficiencies in the Department’s incident 

response program impeded EDA’s incident response, and (3) misdirected efforts hindered EDA’s 

IT system recovery. Because of a series of missteps in responding to this incident, a common 

malware infection originally found on two EDA computers was portrayed as a widespread 

cyber attack on its IT infrastructure. This resulted in a prolonged disruption of normal business 

operations and the unnecessary spending of more than $2.7 million for its recovery activities. 

We recommended that EDA’s Deputy Assistant Secretary 

•	 identify EDA’s areas of IT responsibility and ensure the implementation of required security 

measures; 

•	 determine whether EDA can reduce its IT budget and staff expenditures, through the increased 

efficiencies of EDA’s involvement in the Department’s shared services; and 

•	 ensure that EDA does not destroy additional IT inventory that was taken out of service as a 

result of this cyber incident. 

We also recommended that the Department’s Chief Information Officer 

•	 ensure the Department’s Computer Incident Response Team (DOC CIRT) can appropriately 

and effectively respond to future cyber incidents, 

•	 ensure incident response procedures clearly define DOC CIRT as the incident response 

coordinator for the bureaus relying on DOC CIRT’s incident response services, and 

•	 ensure that DOC CIRT management has proper oversight and involvement in cyber incidents 

to ensure that required incident response activities take place. 
18 Office of Inspector General | Semiannual Report to Congress | September 2013

 

bill fOr cOllectiOn issueD tO eDa Grantee fOr cOnflicts Of interest, 

seniOr eDa Official cOunseleD fOr lack Of OversiGHt, anD neW 

prOceDures instituteD fOr Grants ManaGeMent fOr all eDa eMplOyees 

In April 2010, we initiated an investigation into multiple allegations of conflicts of interest by an 

EDA grantee as well as into EDA’s management and oversight of the award. Our investigation 

found that the president of the awardee organization had a personal financial interest in another 

company associated with the grant, in violation of EDA policy. The president received monetary 

benefits despite several EDA employees and officials being aware of the apparent conflict of 

interest. In addition, the grantee spent award funds in a different area of the state than originally 

specified in the grant and provided false statements to EDA about it. As a result, the organization 

improperly received supplemental funding. We also established that the awardee violated several 

stipulations in the Special Award Conditions, which caused EDA to misallocate a considerable 

portion of federal share funds. The U.S. Department of Justice declined criminal prosecution in lieu 

of administrative action. EDA subsequently agreed to make a final determination of the disallowed 

amounts and established a debt of over $485,000 in accordance with 15 C.F.R. Part 19. The 

agency formally counseled a senior EDA official regarding the poor management and inadequate 

oversight of the grant funds. EDA also revised its policy and operations manual to address the 

issues raised by our investigation. 

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 21 

census eMplOyee reMOveD fOr MiscOnDuct 

In August 2010, a state agency notified our office of possible time and attendance (T&A) 

fraud committed by a Census employee who was also employed by the state in question. 

A comparison of T&A records determined that the individual had claimed compensation for the 

same time periods from both agencies which, coincidently, were physically located within blocks 

of each other. In September 2010, the individual was terminated by the state agency, in part for 

the individual’s double billing. In February 2012, our office referred this matter to the Census 

Bureau to determine whether this person’s termination from state employment would impact 

the individual’s Census Bureau employment. The Census Bureau terminated the individual in 

September 2013 for falsifying official Census Bureau documents. 

fOrMer census cOntractOr reacHes settleMent in civil false 

claiM actiOn 

In April 2013, a former U.S. Census Bureau contractor organization, along with its parent 

company, agreed to settle a civil false claims action for over $645,000 following an extensive 

investigation into numerous violations of the Federal Acquisition Regulation on several Census 

Bureau contracts. The settlement, negotiated by the U.S. Attorney’s Office for the Eastern District 

of Virginia, was reached following an investigation we initiated in 2005 into seven indefinite 

delivery, indefinite quantity contracts for information technology services. The investigation 

established the contractor had mischarged subcontract labor hours not worked on a task order, 

billed the Census Bureau for project hours not worked on task orders, overbilled prime contractor 

labor hours on four task orders, charged hours worked prior to the start of one task order, billed 

the Census Bureau for direct labor hours for services that were not supported with employee 

timesheets, charged the Census Bureau for a labor category not supported by the timesheets or 

monthly status reports, and did not credit back any overpayments to the government. 
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. 
 

International Trade Administration 23 

tWO ita eMplOyees cOunseleD fOr MiscOnDuct 

In April 2013, following our investigation, two ITA employees were counseled for violating the 

Standards of Ethical Conduct for Employees of the Executive Branch. We found that a senior 

official permitted a subordinate employee to participate on an evaluation committee for a contract 

without the proper written authorization. The subordinate was employed by one of the potential 

contractors during the preceding year, which would have required documented authorization to 

participate in any dealings between the government and the subordinate’s former employer. An 

attorney from the contract law division of the Department’s Office of General Counsel provided a 

presentation on government contracting ethics to staff in that particular office. 
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. 
 

NOAA NMFS 

Other federal agency 

State or local government 

For-profit business 

Nongovernmental (or not-for-profit) organization 

Other 

National Oceanic and Atmospheric Administration 25 

results Of OiG Online survey Of fisHery 

ManaGeMent cOuncil MeMbers anD staff 

(OiG-13-022-i) 

As part of our continuing oversight of fisheries management at 

the National Marine Fisheries Service (NMFS), OIG sent a survey 

to 292 Fishery Management Council members and staff. The 

purpose of the survey was to obtain an FMC perspective on fishery 

regulatory requirements, rulemaking, and improvements in fisheries 

management. Seventy nine percent of survey recipients

 (235 persons) responded. 

We asked FMC members and staff about interactions with NMFS 

and with the fishing industry and nongovernment organizations, 

regulatory requirements, FMC operations and training, and FMC 

compliance with the code of conduct. 

In general, responses to the survey were positive. Most survey 

participants were satisfied with their interactions with NMFS, as 

well as with the fishing industry and nongovernment organizations. 

Suggestions to improve collaboration between NMFS and FMCs 

National Marine Fisheries Service 

(NMFS) and Fishery Management 

Councils (FMCs) 

NMFS is responsible for the management and 

conservation of living marine resources within the 

statutorily prescribed areas in the U.S. Exclusive 

Economic Zone, the area extending from 3 to 200 

nautical miles offshore. 

Eight regional FMCs, established by the MagnusonStevens Fishery Conservation and Management Act, 

partner with NMFS, state agencies, and other federal 

agencies to develop fisheries management strategies 

and rules for the commercial and recreational fishing 

industries. 

mainly involved occurrence and methods of communication, participation from NOAA’s Office of 

the General Counsel, and outreach and transparency to stakeholders. 

survey respondents by employer or section represented 

21%

7%

8%

36%

19%

9%

FMC members and staff also believed that FMCs and NMFS were complying with the MagnusonStevens Fishery Conservation and Management Act and the FMC code of conduct. Nonetheless, 

when asked to select the “top three problems in the fishery management plan development and 

amendment processes,” respondents chose complexity of the process, timeliness, and public 

distrust. 

Finally, less than a third of survey respondents rated FMC training as effective (most selected 

“Neutral” or “Don’t know” for questions regarding training). When asked about successful 

practices at their FMCs, respondents cited public participation, consideration of public input, 

and outreach and public education. 
26 Office of Inspector General | Semiannual Report to Congress | September 2013

A summary of our initial report—NOAA Needs to Continue Streamlining the Rulemaking Process 

and Improve Transparency and Consistency in Fisheries Management (OIG-13-011-I)—appears 

on page 27 of the March 2013 Semiannual Report to Congress. 

cOMpreHensive MitiGatiOn apprOacHes, strOnG systeMs enGineerinG, 

anD cOst cOntrOls are neeDeD tO reDuce risks Of cOveraGe Gaps in 

GeOstatiOnary OperatiOnal envirOnMental satellite-r series 

(OiG-13-024-a) 

The GOES-R program is a mission-critical acquisition and development effort with a life-cycle 

cost of $10.9 billion. The program engages multiple contractors and close management attention 

is required, as it prepares for its integration and test phase. The increasing risk associated with 

meeting key milestones in preparation for the first satellite’s launch readiness date of October 

2015 necessitated our review. Our audit sought to assess (1) the adequacy of contract 

management and administration and (2) the effectiveness of management’s direction, monitoring, 

and collaboration for development of select components of the GOES-R program. 

We found that: 

•	 NOAA needs to develop a comprehensive plan to mitigate the risk of potential launch delays 

and communicate to users and other stakeholders changes that may be necessary to maintain 

the first GOES-R satellite’s launch readiness date. 

•	 Program systems engineering has been strengthened; 

however, early in system development, it contributed to ground 

system schedule compression and increased costs. 

•	 NOAA needs to ensure NASA’s evaluation of contractors’ 

proposals and subsequent plans is effective in assessing 

technical readiness to reduce delays and cost increases. 

•	 NOAA lost the opportunity to negotiate on significant costs for 

ground system contract changes because it did not finalize 

these changes in a timely manner. 

OIG identified over $8.8 million in questioned costs and over 

$105.9 million in funds to be put to better use. 

We recommended that the NOAA Deputy Under Secretary 

for Operations 

•	 develop a comprehensive set of tradeoff approaches 

to mitigate launch delays and communicate approaches to 

stakeholders and users, 

•	 keep stakeholders and users informed of tradeoffs made to 

meet the launch date, and 

NOAA’s National Environmental 

Satellite, Data and Information Service 

(NESDIS) 

One of the primary functions of NESDIS is to acquire and 

manage the nation’s operational environmental satellites. 

One type of satellite NESDIS operates is a geostationary 

operational environ-mental satellite (GOES)—which orbits 

approximately 22,300 miles above Earth, producing images 

every 15 minutes. These satellites provide cloud, land, and 

ocean temperatures; monitor sun activities; and assist with 

search and rescue activities. 

NOAA, in conjunction with the National Aeronautics and 

Space Administration, is developing the next generation 

of GOES satellites known as the GOES-R Series of four 

satellites (GOES-R, -S, -T and -U). The first satellite in the 

series, GOES-R, is scheduled for launch in October 2015. 

•	 direct NESDIS to report periodically on the adequacy of program systems engineering 

integration and NASA systems engineering support. 

We also recommended that the NOAA Assistant Administrator for Satellite and Information 

Services ensure that NASA: 

•	 effectively validate contractors’ proposals and subsequent plans, to verify that technical 
National Oceanic and Atmospheric Administration 27 

designs meet readiness requirements per NASA standards; 

•	 modify contract award-fee structures to reduce award fee percentages and clearly articulate 

how scores should be adjusted based on the magnitude of cost overruns; and 

• adjust future award fees to be more commensurate with contractor performance. 

We further recommended that the NOAA Deputy Under Secretary for Operations 

•	 direct the development of a policy for managing undefinitized contract actions to definitize 

change orders in the shortest practicable time. 
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 29 

enGineerinG cOnsultant sentenceD fOr felOny tHeft Of ntia 

Grant funDs 

In November 2012, as reported in the March 2013 Semiannual Report to Congress, an 

engineering consultant on an NTIA grant pled guilty to one felony count of violating 

18 U.S.C. § 641, theft of public money. Our office initiated an investigation based on a 

complaint from NTIA regarding suspicious activity observed on a 2009 Public Telecommunications 

Facilities Program (PFTP) grant for the construction and operation of a radio station on a Navajo 

reservation in the Shiprock, New Mexico, area. Our investigation determined that the engineering 

consultant transferred nearly all of the $322,364 grant award to his personal bank account, 

subsequently using much of it for personal purchases of dining, foreign and domestic travel, 

a car, and assorted retail goods. OIG traced the stolen grant funds and seized over $130,000, 

which was returned to the U.S. Treasury. In April 2013, the engineering consultant was sentenced 

to time served and 3 years’ probation. he was also ordered to pay restitution of over $240,000 

and forfeit the 2010 Infiniti G37 sedan he purchased with proceeds of the theft. The individual 

has been suspended from doing business with the government. 
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 31 

usptO successfully iMpleMenteD MOst prOvisiOns Of tHe aMerica 

invents act, but several cHallenGes reMain 

Given the magnitude of changes required by the America Invents Act (AIA), OIG audited USPTO’s 

effectiveness and progress in implementing them by the law’s multiple deadlines. We found that 

USPTO implemented most provisions of the AIA on time but is overdue on several others. 

Specifically, we noticed significant problems with the planning 

and implementation of one IT system—the Patent Review 

Processing System—which was developed to meet AIA mandates 

and had cost overruns and limited functionality. 

In addition, USPTO’s initial plan to assess training provided to 

approximately 8,000 examiners on AIA-mandated changes was 

not sufficient and did not enable structured feedback from the 

examiners. 

Challenges also remain for the satellite office program. To 

increase the agency’s presence beyond USPTO’s Alexandria, 

Virginia, headquarters, the AIA required the agency to establish 

at least three satellite offices by September 16, 2014, subject 

to available resources. The agency opened the first of these 

offices in Detroit in July 2012, but is unlikely to open the 

remaining offices by the September 16, 2014, deadline. USPTO 

is required to report to Congress by September 30, 2014, on 

the effectiveness of these offices, and the delayed openings will 

affect the report. 

Finally, we found that USPTO lacks implementation plans to 

complete the overall AIA implementation report and operate 

two AIA-mandated programs, the Pro Bono and Diversity of 

Applicants programs. 

We recommended that the Under Secretary of Commerce for 

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

•	 strengthen project planning and execution between the Office of the Chief Information Officer 

and the Patent Trial and Appeal Board (PTAB), and with other USPTO units; 

•	 develop a multiyear plan that comprehensively addresses PTAB’s IT requirements to support its 

expanded responsibilities under the AIA; 

•	 ensure the quality of processing first-inventor-to-file (FITF) applications by soliciting feedback 

from examiners after FITF training and after their first reviews of those applications, as well as 

by oversampling recently filed FITF applications; 

•	 update Congress on the agency’s ability to establish satellite offices that meet AIA provisions 

and provide a plan for more satellite offices as resources become available; 

•	 strengthen management of the satellite office program to develop a consistent and coordinated 

approach for establishing and operating satellite offices; and 

•	 prepare a comprehensive plan for issuing the overall AIA implementation report that includes 

milestones for completing the remaining AIA reports and for operational oversight needed to 

carry out the Pro Bono and Diversity of Applicants programs. 

leahy-Smith America Invents Act 

(Public law 112-29) 

The President signed the leahy–Smith America Invents 

Act (AIA) in September 2011. The AIA included 

fundamental revisions to patent laws and USPTO 

practices, such as moving to a first-inventor-to-file 

patent process, authorizing the agency to set and 

retain fees to ensure it has sufficient resources for its 

operations, and establishing satellite offices. 

USPTO has stated these changes would help 

it process applications faster, reduce the patent 

application backlog, increase patent quality through 

expedited patent challenges, and improve examiner 

recruitment and retention.

The new law, containing 37 provisions, mandated 

USPTO to implement 24 rules, 7 reports, and 4 

programs and the Small Business Administration and

the Government Accountability Office to issue one 

report each by September 16, 2015. 
32 Office of Inspector General | Semiannual Report to Congress | September 2013

usptO iMpleMents annual etHics traininG fOr all patent eXaMiners 

fOllOWinG OiG investiGatiOn 

Our investigation found that a patent examiner committed ethics violations when the individual 

purchased stock from a company for which he was simultaneously processing and examining 

patent applications. In addition, we found several internal control weaknesses that could adversely 

affect the integrity of operations at USPTO, including limited ethics training for examiners at 

the levels of GS-12 and below. In this specific case, the patent examiner had not had ethics 

training for 4 years. We also learned that patent examiners below GS-13 are not required to file 

confidential financial disclosure reports, which would have required this particular individual to 

disclose the conflict of interest. Further investigation revealed that USPTO does not require patent 

examiners to self-identify potential conflicts of interest or affirmatively assert their independence 

for applications under their personal review. Based upon these findings, we referred this matter to 

the Commissioner for Patents in May 2013 for review and comment. USPTO agreed to implement 

annual ethics training for patent examiners at all grade levels. Our investigative findings in this 

case have been referred to USPTO. 

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 September 30, 2013, the Department had obligated and disbursed 

almost all of the approximately $5.9 billion remaining. (The disbursal 

amount includes funding for the now-completed NTIA Digital Television 

Converter Box Coupon Program.) 
$4,127 

$360 

$249 $249 $230 

$144 $144 

$996 $996 

$3,382 

$348 

$240 $220 $226 

82% 

97% 97% 

88% 

98% 

100% 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 

American Recovery and Reinvestment Act 35 

OiG recOvery act OversiGHt, february 2009–septeMber 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 78 

Investigations completed 25 

Investigations in progress 4 

Whistleblower reprisal allegations received 13 

Whistleblower reprisal allegations accepted 7 

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 septeMber 30, 2013 
36 Office of Inspector General | Semiannual Report to Congress | September 2013

btOp suspenDs anD reDuces aWarD tO Grantee anD requires tHe 

cOMpany tO reOrGanize 

In June 2012, we initiated an investigation of alleged violations of an Arizona grantee who received 

a $39.3 million BTOP award from NTIA. The alleged scheme involved using grant funds to pay 

for unauthorized and unreasonable expenses unrelated to the purposes of the grant, such as 

chartering a helicopter and private aircraft to fly to destination spots for personal purposes. Our 

investigation included extensive financial analysis, but did not identify any criminal misuse of 

grant funds. however, further investigation identified numerous administrative problems with their 

management, including travel expenses and unreasonable vendor costs and transfers of funds to 

another business. In April 2013, the U.S. Department of Justice declined to take criminal or civil 

action against the grantee. NTIA’s administrative action included suspending the award for nearly a 

year and declaring a portion of the award as unallowable costs under the grant. Additionally, NTIA 

required the grantee to restructure its organization and make significant improvements to its grant 

oversight and internal control policies. 

38 Office of Inspector General | Semiannual Report to Congress | September 2013

WOrk in 

prOGress 

WOrk in prOGress (by OversiGHt area) 

During this reporting period, 21 OIG audit and evaluation projects were initiated or underway. 

6 

4 4 

2 2 2 

1 

Department­wide NOAA USPTO ESAa NIST Recovery Act b BIS 

a Both ESA works in progress concern the Census Bureau. 

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

DepartMent-WiDe 

fy 2014 top Management challenges 

An annual report, required by the Reports Consolidation Act of 2000, highlighting the most 

significant management challenges facing the Department of Commerce. 

Office of secretary Working capital fund 

Evaluate controls over the Department’s Working Capital Fund, including a review of the 

Department’s budget process and financial management of the fund. 

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 control over financial reporting and test compliance with certain provisions 

of applicable laws, regulations, contracts, and grant agreements that could have a direct and 

material effect on the financial statements). 

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. 
Work in Progress 39 

review of climate change efforts 

Review the Department’s policies, environmental programs, and activities to carry out requirements 

that federal agencies address climate change, including (a) a review of renovation initiatives at the 

Department’s herbert C. hoover Building, to determine whether they meet requirements to reduce 

energy use in federal buildings and (b) an assessment of the Department’s fleet management, to 

determine how it is reducing petroleum use. 

audit of Department’s use of time-and-Materials and labor-Hour contracts 

Evaluate the Department’s awarding and administering of time-and-materials and labor-hour 

contracts, which constitute a high risk to the government, as part of a risk-based oversight 

strategy developed to help the Department address management challenges in its acquisition 

function and to comply with the Office of Management and Budget’s directive that federal 

agencies reduce their use of high-risk contracting authorities. 

bureau Of inDustry anD security 

bis export control reform preparedness 

Audit BIS’ plans to implement changes to its licensing and enforcement operations resulting 

from the Export Control Reform Initiative, including (a) a review of the adequacy of BIS program 

plans and budget requests to address the increased workloads in Fys 2014–2016 and (b) an 

evaluation of existing BIS licensing, outreach, and enforcement activities to identify any areas for 

increased efficiencies. 

ecOnOMics anD statistics aDMinistratiOn 

census 2020 planning 

Evaluate the Census 2020 planning efforts. Assess the implementation status of the research 

and testing and the Geographic Support System initiative projects related to the Census 2020 

design, the Census Bureau’s plans to evaluate each research project, and whether governance 

and internal controls are sufficient to manage the design effort. 

census budget reduction implementation 

Review the Census Bureau’s process for implementing budget reductions to the 2020 Census 

Research Program in Fys 2013 and 2014. 

natiOnal institute Of stanDarDs anD tecHnOlOGy 

audit of nist’s Oversight of contracts 

Determine whether (1) NIST has managed and administered contracts in accordance with 

federal and departmental guidelines, policies, and procedures, and (2) officials with performance 

monitoring responsibilities possess the requisite training, technical expertise, and certification. 

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. 
40 Office of Inspector General | Semiannual Report to Congress | September 2013

 

 

natiOnal Oceanic anD atMOspHeric aDMinistratiOn 

audit of nOaa’s it security program 

Assess, as part of our Fy 2013 Federal Information Security Management Act audit, the 

effectiveness of NOAA’s information security program by determining whether key security 

measures adequately protect NOAA’s systems. 

review of nOaa’s catch share program 

Review fisheries management at NOAA and eight regional fishery management councils 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. 

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 according 

to NOAA and National Aeronautics and Space Administration (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 Geostationary Operational environmental satellite—r series 

(GOes-r) program 

Assess the adequacy of GOES-R development activities in accordance with NOAA and NASA 

standards. Monitor NOAA’s progress in developing and vetting with stakeholders a comprehensive 

set of trade-off approaches to mitigate launch delays and its oversight of GOES-R systems 

engineering. 

uniteD states patent anD traDeMark Office 

fy 2013 audit of usptO financial statements 

Audit USPTO’s Fy 2013 financial statements to determine whether the financial statements are 

presented fairly, in all material respects, and in accordance with generally accepted accounting 

principles. (The audit will also consider USPTO’s internal control over financial reporting and test 

compliance with certain provisions of applicable laws, regulations, and contracts that could have a 

direct and material effect on the financial statements). 

audit of usptO’s use of time-and-Materials and labor-Hour contracts 

Evaluate USPTO’s awarding and administering of time-and-materials and labor-hour contracts, 

which constitute high risk to the government, as part of a risk-based oversight strategy developed 

to help the Department address management challenges in its acquisition function and comply 

with the Office of Management and Budget’s directive that federal agencies reduce their use of 

high-risk contracting authorities. 

audit of usptO it Modernization projects 

Assess the impact of IT contract termination decisions made as a result of the $110 million 

reduction in USPTO’s IT budget, review progress USPTO has made in implementing the 

recommendations from the Fy 2011 Patent End-to-End audit, and assess the project 

management and technical progress USPTO has made in development and implementation of the 

Trademark Next Generation project. 
Work in Progress 41 

audit of usptO’s Delays in processing request for continued examination (rce) 

patent applications 

Evaluate the reason for the increase in the RCE backlog and review USPTO’s efforts to address 

this issue. 

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. 

broadband technology Opportunities program (btOp) closeout audit 

Evaluate the effectiveness of closeout procedures for the NTIA’s BTOP awards as they near 

completion. Assess whether NTIA—along with the grants offices at NIST and NOAA—have 

established adequate policies and procedures for closing out approximately 230 BTOP awards 

(valued at approximately $3.9 billion) and closeout procedures are being followed. 
42 Office of Inspector General | Semiannual Report to Congress | September 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 42 

2. Audit Resolution and Follow-up 43 

3. Audit, Evaluation, and Inspection Statistical highlights for This Period 44 

4. Audits with questioned Costs 45 

5. Audits with Recommendations That Funds Be Put to Better Use 46 

6. Report Types for This Period 46 

6-a. Performance Audits 47 

6-b. Evaluations and Inspections 47 

7. Single Audit and Program-Specific Audits 48 

7-a. Processed Reports with Material Audit Findings 49 

8. Audits Unresolved for More Than 6 Months 49 

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 43 

investigative activities 

Investigations opened 53 

Investigations closed 50 

Arrests 4a 

Indictments/Informations 7b 

Convictions 2 

Fines and other financial recoveries $31,293,342.45c 

allegations processed 

hotline complaints 660 

Total complaints, all sources 660 

Referrals to bureaus or non-Commerce agencies 275 

Referrals with response required 55 

Responses received 94 

From referrals made this reporting period 28 

From referrals made prior 66 

Referrals closed 92 

Referrals with no response required 124 

Evaluated but not accepted for investigation or referral 316 

a Individuals arrested as part of on-going joint investigations with other federal agencies. 

b Four of the seven indictments actually occurred in the previous reporting period, but were not reported in 

the March 2013 Semiannual Report to Congress. We are counting these indictments in the current period’s 

total to accurately reflect our annual investigative statistics. The indictments related to an investigation 

regarding price-fixing and to an internal matter. 

c 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 (April 1, 2013) for which no management decision 

had been made by the end of the period (September 30, 2013). One audit report remains 

unresolved for this reporting period (see page 49). 

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. 
44 Office of Inspector General | Semiannual Report to Congress | September 2013

 

 

report category Modifications appeals 

Actions pending (April 1, 2013) 0 2 

Submissions 0 3 

Decisions 0 2 

Actions pending (September 30, 2013) 0 3 

table 3. auDit, evaluatiOn, anD inspectiOn 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. 

evaluations and inspections include evaluations, inquiries, and similar types of reviews that do 

not constitute an audit or a criminal investigation. 

questioned costsa $13,610,379 

Value of audit recommendations that funds be put to better useb $268,155,937 

Value of audit recommendations agreed to by managementc $279,705,019 

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 45

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 18 $16,723,493 $955,735 

 reporting perioda

B. Reports issued during the reporting period 14 13,610,379 3,847,014

Total reports (A+B) requiring a management 

decision during the periodb 32 30,333,872 4,802,749

C. Reports for which a management decision 

 was made during the reporting periodc 23 26,620,178 1,989,450

 i. Value of disallowed costs 13,235,771 41,810

 ii. Value of costs not disallowed 13,384,407 1,947,640

D. Reports for which no management decision 

 had been made by the end of the 

 reporting period 9 3,713,694 2,813,299

a One audit report included in this table is also included among reports with recommendations that funds be put to better 

use (see table 5). However, the dollar amounts do not overlap.

b 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.
46 Office of Inspector General | Semiannual Report to Congress | September 2013

 

 

 

 

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. 

report category 	 number value 

A. 	 Reports for which no management decision had been made by 

the beginning of the reporting period 0 $0 

B. 	 Reports issued during the reporting period 4 268,155,937 

Total reports (A+B) requiring a management decision during the periodb 4 268,155,937 

C. 	 Reports for which a management decision was made 

during the reporting periodc 3 266,469,248 

i. Value of recommendations agreed to by management 	 266,469,248 

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 1 1,686,689 

a One audit report included in this table is also included among reports with questioned costs (see table 4). however, the 

dollar amounts do not overlap. 

b	 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 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. 

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 6 Table 6-a 

Evaluations and inspections 4 Table 6-b 

total 10 

0 
 

 

 

 

Statistical Data 47 

table 6-a. perfOrMance auDits 

report title report 

number 

Date 

issued 

funds to be 

put to 

better use 

amount 

questioned 

amount 

unsupported 

economic Development administration 

Malware Infections on EDA’s Systems 

Were Overstated and the Disruption 

of IT Operations Was Unwarranted 

OIG-13-027-A 06.26.2013 0 0 0 

Office of the secretary 

Internal Controls for Purchase Card 

Transactions Need to Be Strengthened 

OIG-13-025-A 05.02.2013 0 0 0 

Monitoring of Obligation Balances 

Needs Strengthening 

OIG-13-026-A 06.18.2013 159,000,000 0 0 

Classified Information Policies and 

Practices at the Department of 

Commerce Need Improvement 

OIG-13-031-A 09.30.2013 0 0 0 

national Oceanic and atmospheric administration 

Audit of Geostationary Operational 

Environmental Satellite-R Series: 

Comprehensive Mitigation Approaches, 

Strong Systems Engineering, and 

Cost Controls Are Needed to Reduce 

Risks of Coverage Gaps 

OIG-13-024-A 04.25.2013 105,940,788 8,857,750 

u.s. patent and trademark Office 

USPTO Successfully Implemented Most 

Provisions of the America Invents Act, 

but Several Challenges Remain 

OIG-13-032-A 09.30.2013 0 0 0 

table 6-b. evaluatiOns anD inspectiOns 

report title report 

number 

Date 

issued 

funds to be 

put to 

better use 

amount 

questioned 

amount 

unsupported 

national Oceanic and atmospheric administration 

Results of Commerce OIG’s 

Survey of Fishery Management 

Council members and Staff 

OIG-13-022-I 04.05.2013 0 0 0 

Office of the secretary 

letter to Representative Issa 

Regarding Information on OIG’s 

Open and Unimplemented 

Recommendations 

OIG-13-028-I 06.28.2013 0 0 0 

Nonfederal Audit Results for the 

6-Month Period Ending 

June 30, 2013 

OIG-13-030-M 09.09.2013 0 0 0 

Status of Departmental Actions 

to Correct National Weather 

Service Mismanagement of Funds 

OIG-13-029-I 09.13.2013 0 0 0 
48 Office of Inspector General | Semiannual Report to Congress | September 2013

table 7. sinGle auDit anD prOGraM-specific auDits 

OIG reviewed and accepted 105 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 

Census 1 

Economic Development Administration 24 

International Trade Administration 1 

National Institute of Standards and Technologya 17 

National Oceanic and Atmospheric Administration 9 

National Telecommunications and Information Administrationb 19 

Multibureau 32 

No Departmental expenditures 2 

total 105 

a Includes 11 program-specific audits. 

b Includes 8 program-specific audits. 
 

 

Statistical Data 49 

table 7-a. prOcesseD repOrts WitH Material auDit finDinGs 

report title report 

number 

Date 

issued 

funds to 

be put to 

better use 

amount 

questioned 

amount 

unsupported 

economic Development administration 

City of Baldwin Park, CA ATl-09999-13-4796 06.27.2013 1,686,689 0 0 

Northeastern Pennsylvania 

Industrial Resource Center Inc. 

ATl-09999-13-4803 07.09.2013 0 260,546 0 

Southwest Arkansas Planning 

and Development District Inc. 

ATl-09999-13-4768 05.21.2013 1,528,460 0 0 

national institute of standards and technology 

Ebert Composites Corporation 

(70NANB10h010) 

ATl-09999-13-4843 08.20.2013 0 6,284 0 

Nanoridge Materials Inc. 

(70NANB7h7043) 

ATl-09999-13-4757 06.28.2013 0 248,340 0 

Nanoridge Materials Inc. 

(70NANB7h7043) 

ATl-09999-13-4812 06.28.2013 0 151,862 0 

Nanoridge Materials Inc. 

(70NANB7h7043) 

ATl-09999-13-4813 06.28.2013 0 164,837 0 

University of Nebraska ATl-09999-13-4853 07.19.2013 0 28,526 0 

national Oceanic and atmospheric administration 

Commonwealth of the 

Northern Mariana Islands 

ATl-09999-13-4838 06.27.2013 0 257,332 246,731 

New Jersey Sea Grant 

Consortium Inc. 

ATl-09999-13-4821 08.02.2013 0 24,385 0 

Republic of the 

Marshall Islands 

ATl-09999-13-4737 04.12.2013 0 50,705 50,705 

State of Maine ATl-09999-13-4780 06.27.2013 0 10,234 0 

national telecommunications and information administration 

The Navajo Nation ATl-09999-13-4805 07.19.2013 0 2,762,594 2,762,594 

State of Oklahoma ATl-09999-13-4794 06.27.2013 0 418,788 418,788 

State of West Virginia ATl-09999-13-4787 06.13.2013 0 368,196 368,196 

table 8. auDits unresOlveD fOr MOre tHan 6 MOntHs 

economic Development acadiana regional Development District 

administration OIG received the Audit Resolution Proposal on May 7, 2013. Since 

then, there have been extensive and ongoing discussions between 

OIG and EDA. 
50 Office of Inspector General | Semiannual Report to Congress | September 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 50 

5(a)(1) Significant Problems, Abuses, and Deficiencies 16-32 

5(a)(2) Significant Recommendations for Corrective Action 16-32 

5(a)(3) Prior Significant Recommendations Unimplemented 50 

5(a)(4) Matters Referred to Prosecutorial Authorities 43 

5(a)(5) and 6(b)(2) Information or Assistance Refused 51 

5(a)(6) listing of Audit Reports 47 

5(a)(7) Summary of Significant Reports 16-32 

5(a)(8) Audit Reports—questioned Costs 45 

5(a)(9) Audit Reports—Funds to Be Put to Better Use 46 

5(a)(10) Prior Audit Reports Unresolved 51 

5(a)(11) Significant Revised Management Decisions 51 

5(a)(12) Significant Management Decisions with Which OIG Disagreed 51 

5(a)(14) Results of Peer Review 51 

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 51 

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. 

In our March 2013 Semiannual Report to Congress, we reported that NOAA’s 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. The Inspector General reported OIG’s concerns to NOAA 

and the Deputy Secretary, and to the Secretary upon her arrival in July, and requested that OIG 

attendance be reinstated. NOAA now allows OIG and GAO representatives to attend the monthly 

PMC meetings. The matter is resolved. 

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 is one EDA report more than 6 months old for which no management 

decision has been made. (See table 8.) 

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 generally 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)(14): 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. 
52 Office of Inspector General | Semiannual Report to Congress | September 2013

acrOnyMs anD abbreviatiOns
 

aia America Invents Act 

atp Advanced Technology Program 

bis Bureau of Industry and Security 

btOp Broadband Technology 

Opportunities Program 

cirt Computer Incident 

Response Team 

caM Commerce Acquisition Manual 

DOc cirt Department of Commerce 

Computer Incident 

Response Team 

eDa Economic Development 

Administration 

esa Economics and Statistics 

Administration 

fisMa Federal Information Security 

Management Act of 2002 

fitf first-inventor-to-file 

fMc Fishery Management Council 

fy fiscal year 

GaO Government Accountability 

Office 

Gas Government Auditing Standards 

GOes Geostationary Operational 

Environmental Satellite 

GOes-r Geostationary Operational 

Environmental Satellite-R Series 

HcHb herbert C. hoover Building 

it information technology 

ita International Trade 

Administration 

Jpss Joint Polar Satellite System 

M&ie meals and incidental expenses 

Mep Manufacturing Extension 

Partnership (NIST) 

Mers Measurement and Engineering 

Research and Standards 

nasa National Aeronautics and 

Space Administration 

nist National Institute of Standards 

and Technology 

nMfs National Marine Fisheries 

Service 

nOaa National Oceanic and 

Atmospheric Administration 

ntia National Telecommunications 

and Information Administration 

nWs National Weather Service 

OiG Office of Inspector General 

OMb Office of Management 

and Budget 

OpM Office of Personnel 

Management 

pftp Public Telecommunications 

Facilities Program 

ptab Patent Trial and Appeal Board 

rce request for continued 

examination 

suomi npp Suomi National 

Polar-orbiting Partnership 

t&a time and attendance 

tip Technology Innovation Program 

usptO U.S. Patent and 

Trademark Office 

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.