United States General Accounting Office

GAO Testimony

Before the Committee on Commerce, Science, and

Transportation

United States Senate

For Release on Delivery

Expected at

9:30 a.m. EDT

Wednesday

May 14, 1997

FEDERAL MANAGEMENT

Addressing Management

Problems at the

Department of Commerce

Statement of L. Nye Stevens, Director

Federal Management and Workforce Issues

General Government Division

GAO/T-GGD/AIMD-97-115

Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

Mr. Chairman and Members of the Committee:

We are pleased to be here today to discuss major challenges facing the

Department of Commerce in managing its diverse set of missions, and how

legislative reforms enacted in recent years can be used to address these

challenges.

Major Management

Challenges Confront

the Department of

Commerce

The missions and functions of Commerce are among the most diverse of

the cabinet departments in the federal government. Formed as a

department in 1913, the Department of Commerce initially had nine major

components that ranged from the Steamboat Inspections Service and the

Bureau of Lighthouses to the Bureau of the Census and the Bureau of

Foreign and Domestic Commerce. Of the nine original components, three

remain in Commerce—the Coast and Geodetic Survey, which is now part

of the National Oceanic and Atmospheric Administration (NOAA); the

Bureau of Standards, which is now the National Institute of Standards and

Technology (NIST); and the Bureau of the Census.

To this day, Commerce remains essentially a holding company for many

disparate programs. Its 14 major components cover a wide range of

responsibilities that include natural resources and the environment,

advancement of commerce, regional development, scientific research, and

statistical information collection. In previous testimony before the Senate

Governmental Affairs Committee on June 7, 1995, we identified several

other departments and agencies that share these same responsibilities.1

For example, Commerce shares its responsibilities for

• natural resources and the environment with the Departments of

Agriculture, Defense, the Interior, State, and Transportation; the

Environmental Protection Agency, and other independent agencies;

• community and regional development with the Departments of

Agriculture, Housing and Urban Development, and the Interior; the Small

Business Administration; and the Federal Emergency Management

Agency;

• collection of statistical information with 9 other “principal” statistical

agencies and 60 more agencies that spend at least $500,000 on statistical

activities.

1

See Government Restructuring: Identifying Potential Duplication in Federal Missions and Approaches

(GAO/T-AIMD-95-161, June 7, 1995)

Page 1 GAO/T-GGD/AIMD-97-115
Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

Because of the diversity of its functions, Commerce historically has not

been managed on the basis of a unifying mission and shared goals.

Strategic management of the department has been based in its bureaus. Its

key administrative functions are decentralized.

We recently worked with the Commerce Office of the Inspector General

(IG) to provide the committee with a joint analysis of the major

management problems facing the department. The IG took the lead in

identifying specific program areas most in need of reform to improve

efficiency and effectiveness, while we took the lead in describing steps

taken to implement the Government Performance and Results Act and the

Chief Financial Officers (CFO) Act, and to adjust the Department’s

information systems to the year 2000.

As an example of one such management problem, Congress, the Office of

Management and Budget (OMB), GAO, the IG, and others have repeatedly

urged NOAA to explore alternatives to an agency-designed,-owned,

and-operated fleet for acquiring marine data. In a 1996 program evaluation

report of NOAA’s 1995 fleet operations and modernization plan, the IG

recommended that NOAA terminate its fleet modernization plan efforts;

cease investing in its ships; begin immediately to decommission, sell, or

transfer them; and contract for the required ship services from the private

sector, academia, and other government ship operators who can provide

more cost-effective and modern platforms. Yet NOAA continues to plan

investments of millions of dollars in its aging in-house fleet, rather than

using those funds for more cost-effective alternatives.

Another example is the decennial census. With the year 2000 fast

approaching, the Census Bureau’s ability to complete an accurate

decennial census on time and at a reasonable cost is in question. Major

design plans remain incomplete, and the Bureau’s increased dependence

on technology, automated systems, and statistical methods creates a more

interdependent environment requiring a new level of rigor and planning

not readily apparent at the Bureau. The Commerce Department has failed

to convince Congress that it can equitably and efficiently manage a census

design that is in part dependent on statistical sampling. As a result of these

problems, this year we added the census to GAO’s governmentwide list of

high-risk programs where it joined the National Weather Service’s

modernization, which has been on the list since 1995.

Page 2 GAO/T-GGD/AIMD-97-115
Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

The Results Act

Requires a

Fundamental Change

in Federal

Management

In the past few years Congress has taken steps to fundamentally change

the way federal agencies go about carrying out their missions. A key step

taken by Congress was the passage of the Government Performance and

Results Act in 1993. The Act, which is also referred to as “GPRA” or the

“Results Act,” is the centerpiece of a statutory framework requiring

agencies to clarify their missions, set strategic goals, and measure

performance toward those goals with reliable, auditable information that

Congress can use to hold them accountable for results, rather than merely

activities or processes. This framework also includes the CFO Act and

important information technology reform legislation, including the

Paperwork Reduction Act of 1995 and the Clinger-Cohen Act. The CFO Act,

as amended by the Government Management Reform Act (GMRA), spelled

out an ambitious and long overdue agenda to address the lack of timely,

reliable, useful, and consistent financial information in the federal

government. The information technology reform legislation is directed at

more effective management and use of information technology to better

support agencies’ missions and improve program performance.

In crafting the Results Act, Congress recognized that congressional and

executive branch decisionmaking had been severely handicapped by the

absence in many agencies of the basic underpinnings of well managed

organizations. The Results Act is intended to address basic management

problems and deficiencies that have been typical throughout the federal

government, and notably characteristic of the Department of Commerce.

For example:

• Because they have accumulated diverse responsibilities in a piecemeal

fashion over many years, some agencies, including Commerce, have

operated with unclear missions, which hampers their effectiveness. The

Results Act requires agencies to define their missions and strategic goals,

and to do so in consultation with Congress.

• Many agencies lack coherent strategies for achieving their missions and

goals. In a time of budget constraints, the Results Act is intended to force

agencies to rethink how they manage their programs, and compare

alternative strategies for achieving their goals most efficiently and

effectively. In some program areas, responsibilities are fragmented among

several agencies, which wastes scarce funds, confuses and frustrates

customers, and limits the overall effectiveness of federal efforts to solve

national problems. Effective implementation of the Results Act will require

agencies to address the fragmentation of program areas, and to coordinate

their strategic planning efforts with other agencies. Overlap of missions

and functions is a critical problem for the Department of Commerce in

Page 3 GAO/T-GGD/AIMD-97-115
Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

that it shares responsibility for major budget functions with 14 other

departments and agencies.

• Many agencies lack adequate information on program results and costs.

Agencies often measure performance based on their activities or the

resources they expend, rather than on the results of their programs. Thus,

agencies do not know, and cannot inform Congress, how well their

programs are actually achieving their purpose. The Results Act requires

agencies to develop results-oriented performance measures and to report

regularly to Congress on whether results-oriented goals have been met.

The Results Act aims to provide systematic information on the

performance of government programs and to directly link such

information with the annual budget process. Thus, the other two elements

of the statutory framework—the CFO and Clinger-Cohen Acts—are critical

to its success. Without accurate and reliable financial information

undergirding budgetary estimates decisionmakers will lack a clear

understanding of long-term unfunded commitments as well as of the full

costs of current government programs. Without information technology to

better support agencies’ missions and processes, agencies will not be able

to effectively control costs and provide better services. Commerce, for

example, is plagued with poor financial and information systems.

The Results Act as a

Tool for Addressing

Commerce’s

Management

Problems

In anticipation of the Results Act’s requirement that it submit a strategic

plan to Congress no later than September 30, 1997, Commerce, like all

other departments, has been working to define its mission and has drafted

a strategic plan. Its third draft is dated April 1997 and is being circulated to

certain committees as it does the consultations required by the act. The

draft plan articulates Commerce’s mission: “To promote job creation,

economic growth, sustainable development, and improved living standards

for all Americans, by working in partnership with business, universities,

communities, and workers” through three strategic themes (or goals):

(1) build for the future and promote U.S. competitiveness in the global

marketplace, by strengthening and safeguarding the nation’s economic

infrastructure; (2) keep America competitive with cutting-edge science

and technology and an unrivaled information base; and (3) provide

effective management and stewardship of our nation’s resources and

assets to ensure sustainable economic opportunities.

Commerce faces a challenge in defining its mission and outcomes to be

achieved in that it does not have exclusive federal responsibility for any of

its strategic themes. A focus on results as envisioned by the Results Act,

implies that federal programs contributing to the same or similar results

Page 4 GAO/T-GGD/AIMD-97-115
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Federal Management: Addressing

Management Problems at the Department of

Commerce

will be closely coordinated to ensure that goals are consistent and

program efforts are mutually reinforcing. However, our work in many

important program areas has suggested that the executive branch and

Congress have not fully coordinated related programs, and that overlap

and fragmentation are widespread. The Commerce draft plan, though it

devotes most of its attention to defining the contributions of each of its

bureaus to the three strategic themes, has little to say about the

relationships of Commerce’s programs to those of other agencies.

Because Commerce shares responsibility with other agencies for making

progress on its strategic themes, it must recognize that its efforts are but

one factor among many that may influence whether, and the degree to

which, these program efforts collectively achieve intended results.

Isolating the federal contribution to the achievement of an intended result

has been exceedingly difficult. Economic development programs are a

case in point. According to the Catalogue of Federal Domestic Assistance

there are 342 federal assistance programs related to economic

development. In a 1996 review of economic development programs, we

reported2

 that one study of the effectiveness of the Economic

Development Administration’s (EDA) economic development program

found that income in the counties that received EDA funding grew

significantly faster than income in the counties that received no aid.

However, when EDA’s programs and factors unrelated to EDA were

considered simultaneously, the study found that EDA’s program had a very

small effect on income growth rates during the period that the aid was

received and had no significant effect in the years after the aid ceased. The

study found that only a small part of the difference in the growth rates

between the two groups of counties could be attributed to EDA’s programs.

Another focus of the Results Act is to encourage agencies to rethink their

current strategies for achieving their goals. The process has already shown

positive results. One case study highlighted in our Executive Guide 3

 is the

Coast Guard’s Office of Marine Safety, Security and Environmental

Protection, which is under this Committee’s jurisdiction. The agency’s

mission is to protect the public, the environment, and U.S. economic

interests through the prevention and mitigation of marine incidents.

Traditionally, the Coast Guard based its marine safety efforts on

inspections and certifications of vessels. It measured its performance by

2

Economic Development: Limited Information Exists on the Impact of Assistance Provided by Three

Agencies (GAO/RCED-96-103, April 3, 1996)

3

Executive Guide: Effectively Implementing the Government Performance and Results Act

(GAO/GGD-96-118, June 1996)

Page 5 GAO/T-GGD/AIMD-97-115
Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

counting outputs, such as the number of inspections and changes in

inspection results. But the data on marine casualties indicated that

accidents were often caused not by deficiencies in the vessels or other

factors, but by human error. For example, towing industry data for 1982

through 1991 showed that 18 percent of reported casualties were caused

by equipment or material failures, 20 percent by environmental and other

factors, and 62 percent by human factors.

Putting this information to use, the Coast Guard changed the focus of its

marine safety program from outputs to outcomes in its first business plan,

dated January 1994. The Coast Guard shifted its resources and realigned

its processes away from inspections and toward joint efforts with the

industry to build the knowledge and skills of entry-level crew members

through training. The joint effort resulted in a significant reduction in the

reported towing industry fatality rate: from 91 per 100,000 industry

employees in 1990 to 27 per 100,000 in 1995.

The Results Act’s processes should, in time, stimulate Commerce and its

stakeholders to ask similar basic questions about its own programs. For

example, how cost-effective is NOAA’s $23 million fishing vessel buyout

program compared with other programs by EDA, Labor, and Agriculture

that are aimed more broadly at meeting the needs of the Northeast fishing

community? If one-third of maritime accidents could be avoided by the use

of electronic charts, what is the appropriate priority for efforts to promote

their use as opposed to building double hulled vessels to better withstand

grounding and collision? NIST’s Advanced Technology Program (ATP)

provides cost-shared awards to industry to develop high-risk technologies

with significant commercial or economic potential: is it more or less

cost-effective than the 11 other major federal initiatives that support

industrial research and development in such areas as energy,

semiconductors, rail and automobile transportation, a national

information infrastructure, or small business innovation?

Reliable Information

Is Essential

Good financial, management, and program information are key to the

successful implementation of the Results Act. Without it, accountability

for performance toward results-oriented goals cannot be assured. The

Commerce Department must contend with three significant

obstacles—antiquated financial management information systems, weak

performance measures, and the conversion of its information systems to

meet year 2000 requirements.

Page 6 GAO/T-GGD/AIMD-97-115
Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

Commerce currently uses eight separate different primary financial

systems. Commerce officials have acknowledged that their financial

systems are in disrepair, and the systems have been identified as high risk.

As a result, the Department’s auditors were unable to render an opinion on

the most recent financial statements because of material deficiencies in

accounting policies, practices, internal controls, data, and automated

systems. A major step the department is taking to address these problems

is the development of the Commerce Administrative Management System

(CAMS). CAMS, which is undergoing limited pilot testing, will eventually

replace and or integrate existing financial and administrative management

systems in the department. However, CAMS has experienced

implementation delays.

This past year the Department’s financial statements for fiscal year 1996

were subjected to audit. The resulting audit report noted several

weaknesses in performance measures. For example, many measures were

not directly relevant to the activities of bureaus and did not consistently

provide a clear picture of the outcomes of activities. Often they did not

include benchmarks to allow the reader to compare statistics and evaluate

the results achieved by the bureaus. An example of the performance

measurement problems that the department is confronting as it

implements the Results Act is measuring the outcomes from the ATP in

NIST. In reviewing NIST’s evaluation of ATP in 1995, we reported that

short-term results were overstated or lacked adequate support. In

addition, NIST’s proposed use of technical milestones, and the number of

collaborations and strategic alliances, to evaluate ATP ran the risk of

creating false expectations of its economic success.4

The Year 2000 Problem Three of Commerce’s units—Census, NOAA, and the Patent and Trademark

Office—rely heavily on large computer systems to carry out their missions.

Consequently, they face a major departmentwide challenge in converting

information systems for the year 2000. Delays in CAMS implementation

could also result in significant year 2000 problems for Commerce. The root

of the year 2000 problem is in the way dates are recorded and computed.

To conserve on electronic data storage, systems have typically used two

digits to represent the year, such as “97” for year 1997. With this two-digit

format, however, the year 2000 is indistinguishable from 1900, 2001 from

1901 and so on. As a result, system or application programs that use dates

4

Performance Measurement: Efforts to Evaluate the Advanced Technology Program,

(GAO/RCED-95-68, May 15, 1995).

Page 7 GAO/T-GGD/AIMD-97-115
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Federal Management: Addressing

Management Problems at the Department of

Commerce

to do calculations, comparisons, or sorting may generate incorrect results

when working with years after 1999.

The year 2000 program is probably the largest and most complex system

conversion that the department and its components have ever undertaken.

It requires first-class program management, as well as the disciplined and

coordinated application of scarce resources to a departmentwide systems

conversion that must be completed by a fixed date. We have concerns

about Commerce’s efforts. While Commerce has completed awareness

training and issued a policy directive, it has not documented a high-level

year 2000 strategy. Management of the program is a collateral duty for its

leadership, and the staff assigned to the year 2000 program are not full

time, and while Commerce has established an overall schedule for the

completion of the remaining assessment, renovation, and implementation

phases, it has not defined year 2000 compliance or developed a year 2000

program plan. Further, although Commerce has an inventory of its major

systems, the inventory assigns equal priority to all of Commerce’s systems.

Thus, the inventory may not be useful for establishing system conversion

priorities. Moreover, the inventory does not identify internal or external

interfaces, or show which systems are to be renovated, replaced, or

eliminated.

Strong Congressional

Oversight Will Be

Necessary to Keep the

Focus on Improving

Management

Our assessment of Results Act implementation efforts across the

government to date has shown that to effectively implement the act,

agencies face a number of policy challenges that will not be quickly

resolved. For example, the federal approach to addressing national needs

often has been to give several agencies important responsibilities in a

given program area. This is the case, as we noted, with natural resource,

economic development, and statistical programs for which Commerce is

one of several agencies having responsibility.

Forging the political consensus needed to create and sustain federal

programs often results in those programs having competing and/or broadly

stated goals. Thus, coordinating cross-cutting program efforts and

reaching a reasonable degree of consensus on agencies’ strategic goals

likely will force agencies and Congress to directly confront significant

political and policy hurdles that will not be easily resolved. Nevertheless,

the Results Act implementation can help to inform policy decisions by

providing information on the relative effectiveness and costs of different

programs, thus allowing comparisons among differing approaches in

cross-cutting program areas.

Page 8 GAO/T-GGD/AIMD-97-115
Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

Consistent congressional interest at authorization, appropriation, budget,

and oversight hearings on the status of an agency’s Results Act efforts,

performance measures, and use of performance information to make

decisions, will send an unmistakable message to agencies that Congress

expects the Results Act to be thoroughly implemented. The first step is the

consultation with congressional committees on agencies’ strategic plans

that the Results Act requires—a step that needs to be taken soon since the

plans are to be formally transmitted to Congress by September 30 of this

year. Another step that committees can take toward sharpening agencies’

focus on results would be to hold comprehensive oversight hearings, using

a wide range of program and financial information. Agencies’ program

performance information in the form of accountability reports that will be

generated under the Results Act, and the audited financial statements that

are being developed to comply with the GMRA can serve as the basis for

these hearings. The accountability reports are intended to show the degree

to which an agency met its goals, at what cost, and whether the agency

was well managed. Congress must have a central role in defining the

content and format of these reports to ensure that the reports eventually

provide Congress with a comprehensive “report card” on the degree to

which agencies are making wise and effective uses of tax dollars. Such

reports should provide a full picture of an agency’s performance and

resource usage to accomplish its mission—thus giving Congress an

excellent tool for oversight.

In the case of Commerce, a special obstacle is created by the dispersion of

responsibility among 18 different congressional committees that have

either authorizing, appropriating, or budgeting jurisdiction over the

Department and its wide array of programs and services. This presents a

challenge for the department as well as Congress in gaining coherent

agreement on virtually all aspects of performance and results—from the

content of the strategic plan, to the selection of performance goals and

appropriate results-oriented measures, to the review of the department’s

subsequent annual reports on the extent to which goals were met. The

House has responded to this challenge, which affects most agencies

(though few to Commerce’s extent) by forming cross-cutting teams of staff

members from different committees to help ensure that strategic plans

meet the requirements of the Results Act and thereby provide a solid

foundation on which to assess the effectiveness of each department or

agency. The teams’ initial focus is on coordination of the consultation

process on draft strategic plans. At the request of several House chairmen,

we have just developed a guide to the consultation process that lists a

series of key questions that the teams may find useful in evaluating the

Page 9 GAO/T-GGD/AIMD-97-115
Statement 

Federal Management: Addressing

Management Problems at the Department of

Commerce

plans and discussing them with the agencies.5 We are also assisting most

of these teams in their work by bringing to bear the results of our work in

a systematic fashion on important issues identified by the teams.

In summary, the Results Act, if properly implemented, can be a useful tool

for improving the management of the Department of Commerce. Having

enacted it and other financial and information statutes, Congress has put

into place the right tools for obtaining the kinds of information it needs for

effective oversight. We have no higher priority than helping Congress carry

out this role.

That concludes my prepared statement, Mr. Chairman. I will be pleased to

respond to any questions you or other Members of the Committee may

have.

5

Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate Congressional Review

(GAO/GGD-10.1.16, May 1997)

Page 10 GAO/T-GGD/AIMD-97-115
Page 11 GAO/T-GGD/AIMD-97-115
Related GAO Products

Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate

Congressional Review (GAO/GGD-10.1.16, May 1997 Version 1).

Statistical Agencies: Consolidation and Quality Issues (GAO/T-GGD-97-78,

Apr. 9, 1997).

Weather Satellites: Planning For the Geostationary Operational

Environmental Satellite Program Needs More Attention (GAO/AIMD-97-37,

March 13, 1997).

Managing for Results: Enhancing the Usefulness of GPRA Consultations

Between the Executive Branch and Congress (GAO/T-GGD-97-56, March 10,

1997).

Managing for Results: Using GPRA to Assist Congressional and Executive

Branch Decisionmaking (GAO/T-GGD-97-43, Feb. 12, 1997).

Information Technology Investment: Agencies Can Improve Performance,

Reduce Costs, and Minimize Risks (GAO/AIMD-96-64, Sept. 30, 1996).

Information Management Reform: Effective Implementation Is Essential

for Improving Federal Performance (GAO/T-AIMD-96-132, July 17, 1996).

Managing for Results: Key Steps and Challenges in Implementing GPRA in

Science Agencies (GAO/T-GGD/RCED-96-214, July 10, 1996).

Executive Guide: Effectively Implementing the Government Performance

and Results Act (GAO/GGD-96-118, June 1996).

Managing for Results: Achieving GPRA’s Objectives Requires Strong

Congressional Role (GAO/T-GGD-96-79, Mar. 6, 1996).

Weather Forecasting: NWS Has Not Demonstrated that New Processing

Systems Will Improve Mission Effectiveness (GAO/AIMD-96-29, February 29,

1996).

Measuring Performance: The Advanced Technology Program and Private

Sector Funding (GAO/RCED-96-47, January 11, 1996).

Government Reorganization: Observations on the Department of

Commerce (GAO/T-GGD/RCED/AIMD-95-248, July 25, 1995).

Page 12 GAO/T-GGD/AIMD-97-115
Related GAO Products

Managing for Results: Status of the Government Performance and Results

Act (GAO/T-GGD-95-193, June 27, 1995).

Government Restructuring: Identifying Potential Duplication in Federal

Missions and Approaches (GAO/T-AIMD-95-161, June 7, 1995).

Weather Forecasting: Radar Availability Requirements Not Being Met

(GAO/AIMD-95-132, May 31, 1995).

Performance Measurement: Efforts To Evaluate the Advanced Technology

Program (GAO/RCED-95-68 May 15, 1995).

Government Reorganization: Issues and Principles (GAO/T-GGD/AIMD-95-166,

May 17, 1995).

Research Fleet Modernization: NOAA Needs To Consider Alternatives to the

Acquisition of New Vessels (GAO/RCED 94-170, August 3, 1994).

Executive Guide: Improving Mission Performance Through Strategic

Information Management and Technology (GAO/AIMD-94-115, May 1994).

Weather Forecasting: Systems Architecture Needed For National Weather

Service Modernization (GAO/AIMD-94-28, March 11, 1994).

Decennial Census: 1990 Results Show Need for Fundamental Reform

(GAO/GGD-92-94, June 9, 1992).

(410139) Page 13 GAO/T-GGD/AIMD-97-115
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