January 2001 Major Managem

Challenges and 

Program Risks

Department of Comme

GAO-01-243

Page 1 GAO-01-243 Comm

Letter 

Overview 

Major 

Performance 

and 

Accountability 

Challenges

Related GAO 

Products

Performance 

and 

Accountability 

Series
Page 2 GAO-01-243 Commer
of th

Page 3 GAO-01-243 Comm

United States General Accounting Office

Washington, D.C. 20548

January 2001

The President of the Senate

The Speaker of the House of Representati

This report addresses the major performa

accountability challenges facing the Depa

Commerce as it seeks to promote job crea

improve living standards for all American

economic growth, technological competit

sustainable development. It includes a sum

actions that Commerce has taken and tha

way to address these challenges. It also ou

actions that GAO believes are needed. Th

should help the new Congress and admini

out their responsibilities and improve gov

the benefit of the American people.

This report is part of a special series, first 

January 1999, entitled the Performance an

Accountability Series: Major Management 

and Program Risks. In that series, GAO ad

Congress that it planned to reassess the m

and criteria used to determine which fede

government operations and functions sho

highlighted and which should be designat

risk.” GAO completed the assessment, con

comments provided on a publicly availabl

draft, and published its guidance docume

Determining Performance and Accountab

Challenges and High Risks (GAO-01-159SP

November 2000.

This 2001 Performance and Accountabilit

contains separate reports on 21 agencies—

each cabinet department, most major inde

agencies, and the U.S. Postal Service. The 
Page 4 GAO-01-243 Commer

includes a governmentwide perspective on p

and management challenges across the fede

government. As a companion volume to this 

is issuing an update on those government op

and programs that its work identified as “hig

because of either their greater vulnerabilitie

fraud, abuse, and mismanagement or major c

associated with their economy, efficiency, or 

effectiveness.

David M. Walker

Comptroller General 

of the United States
Page 5 GAO-01-243 Comm
Page 6 GAO-01-243 Comm

The Department of Commerce’s activities 

Americans’ lives every day by, among othe

providing weather forecasts and warnings

patents and trademarks, creating jobs and 

distressed communities, reconciling expo

with national security concerns, supportin

from U.S. businesses to international mar

conducting the decennial census. Althoug

Department’s typical budget outlays of ab

annually are relatively small compared to 

many other major departments, its wide-r

programs have far-reaching national impli

Commerce is facing a number of perform

accountability challenges that affect its ab

its mission.

• Increase the access of U. S. businesses to

international markets

• Ensure that the United States is secure from 

proliferation of dual-use commodities and

chemical weapons

• Ensure that weather forecasts and severe w

warnings are accurate and timely

• Improve the economy in distressed areas

• Address other challenges to building a high

performing organization
Page 7 GAO-01-243 Comm

Businesses’ Access to 

International Markets

International trade has become increasing

to the U.S. economy. Since the early 1980s

States has entered into over 400 trade-rela

agreements. While these agreements were 

increase the access of U.S. companies to f

markets, businesses’ efforts to identify po

markets may be hampered by problems re

identifying and monitoring trade agreeme

Specifically, in late 1999, we reported that 

Commerce and other key trade agencies w

provide a definite count of trade agreeme

Consequently, we recommended that the 

Commerce establish clear criteria for the 

agreements to be included in the archive a

the archive is intended to contain all trade 

More recently, we reported that the ability 

and two other trade agencies to monitor a

trade agreements was limited because the 

lacked sufficient numbers of experienced 

right expertise;1

 did not always get needed 

other types of support from other agencie

sometimes had difficulty obtaining balanc

comprehensive input from the private sec

recommended that the Secretary of Comm

with other relevant agencies to develop a 

how our federal government will manage 

trade agreement monitoring and enforcem

Commerce has partially implemented our 

recommendations. However, until these p

fully resolved, U.S. businesses may not be 

full advantage of the benefits secured by t

agreements in accessing foreign markets 

increasing U.S. exports. While Commerce’

1

Commerce’s human capital problems can be seen a

pattern of human capital shortcomings that have ero

capabilities across the federal government. See our 

An Update (GAO-01-263, Jan. 2001) for a descussion 

as a newly designated governmentwide high-risk are
Page 8 GAO-01-243 Commer

Trade Administration (ITA) reported some su

assisting U.S. businesses in gaining access to 

international markets, it also noted that it fa

difficulties in portraying its progress in this e

part, to the reluctance of businesses to share 

information on their exports and unanticipat

in the economies of developing countries.

Control of Exports of 

Dual-Use 

Commodities and 

Chemical Weapons

At the same time that it encourages trade, Co

through its Bureau of Export Administration 

helps administer the nation’s export control 

processing license applications for exported 

may pose a national security risk or foreign p

concern, such as chemical, biological, nuclea

missile technology items. In Commerce’s ann

performance plans, BXA has set performanc

related to (1) restructuring export controls f

century by, among other things, streamlining 

application process and (2) maintaining a fu

law enforcement program to protect U.S. na

security and public safety, uphold U.S. foreig

and ensure the nonproliferation of dual-use 

commodities and chemical weapons.2

 BXA re

it met or exceeded various performance mea

as deterring high-risk transactions. However

unclear how some of the measures would co

restructuring the export control system, and 

terms used in measuring the goal had not ye

defined. In addition, among the performance 

met were average processing time for licens

applications in relation to BXA’s export cont

goal and the number of investigations compl

BXA’s law enforcement goal. Consequently, it 

how much overall progress BXA has made in 

goals.

2

Dual-use commodities are those with both commercial 

applications.
Page 9 GAO-01-243 Comm

In 1975, the President established the Com

Foreign Investment in the United States to 

foreign investment by reviewing reports o

acquisitions of U.S. companies that may a

security. In June 2000, we reported that C

other agencies did not always inform the 

known foreign acquisitions with national 

implications. Consequently, the unreporte

may not be reviewed from all appropriate 

For example, an acquisition may be review

perspective of protecting classified mater

from the perspective of other concerns su

technology transfers, weapon technology 

or foreign sources of supply. To improve t

Committee’s process for identifying foreig

with potential national security implicatio

recommended that the Secretary of Comm

others, establish procedures requiring age

submit all known foreign acquisitions of c

potential national security implications to 

Committee. Commerce agrees with and p

steps to implement our recommendation.

Accurate and Timely 

Weather Forecasts 

and Warnings

Almost two decades ago, Commerce’s Nat

Service (NWS) decided to improve its wea

and forecasts through a nationwide mode

program. NWS recognized that improved 

forecasts were essential to enhancing pub

our nation’s economic productivity. Howe

modernization effort, originally expected 

completed in 1994, experienced difficultie

schedule delays, cost overruns, and techn

on key systems. Accordingly, in February 

and January 1999, we identified NWS’ mo

effort as a high-risk initiative because of s

such as the agency’s lack of an overall sys

architecture to guide the modernization an

developing the Advanced Weather Interac

Processing System (AWIPS)—the centerp
Page 10 GAO-01-243 Commer

modernization. Over the years, we have mad

recommendations to address the modernizat

difficulties, and NWS has acted to implemen

example, in response to our recommendatio

established an overall systems architecture, 

the availability of its Next Generation Weath

(NEXRAD), and enhanced its AWIPS softwar

development processes. Due to NWS’ progre

addressing key concerns, and in deploying a

AWIPS, we no longer consider NWS’ modern

effort to be a high-risk initiative; however, w

continue to monitor NWS’ plans to deploy 

enhancements to AWIPS in 2001 and 2002.

Through its modernization, NWS has achieve

improvements in the accuracy and timelines

weather warnings. For example, the agency 

that in fiscal year 1999, the lead times for tor

increased by 20 percent over the lead times i

NWS also noted improvements in the accura

flood warnings in specific areas of the count

Nevertheless, NWS met only two of seven ta

fiscal year 1999 under its performance goal o

short-term warning and forecast services. Fo

NWS met its target of increasing the lead-tim

accuracy of tornado warnings, but did not me

for improving the lead-time and accuracy of 

thunderstorm warnings. Commerce noted th

enhancements to NWS’ systems—and specif

AWIPS—would enhance its forecasting capab

result, the full effect of the modernization on 

of improved forecasts and warnings may not 

determined for several more years.

The Economy in 

Distressed 

Communities

The Economic Development Administration 

within Commerce has both an agency-level a

governmentwide responsibility for improvin

economy in distressed areas. Specifically, ED

grants to economically distressed communit
Page 11 GAO-01-243 Comm

generate and retain jobs and to stimulate 

commercial growth in rural and urban are

experience high unemployment, low inco

economic distress. In addition, through le

accompanying reports, the Congress has u

aggressively pursue efforts to increase the 

the federal response to distressed commu

working with other agencies. In terms of i

programs, EDA has made some progress i

two fiscal year 1999 performance goals re

improving the economy in distressed area

jobs and private enterprise in economical

communities and building local capacity t

sustain economic growth. For example, E

its targets for state and local dollars comm

funded projects that are intended to creat

the percentage of EDA grants awarded to 

distressed areas. However, as we reported 

1999, measuring job creation that results f

development programs is problematic. On 

scale, while EDA has taken steps to coord

with that of other agencies, an important 

be for EDA to collaborate with other agen

develop common or complementary goals 

their performance in addressing crosscutt

Additional 

Challenges 

Finally, Commerce needs to manage impr

three other areas in order to build a high-p

organization. 

• In the financial management area, Com

made substantial progress in recent ye

continues to face challenges in both it

statement reporting and financial man

systems. Although Commerce received 

unqualified opinion on all of its financ

for fiscal year 1999, Commerce’s Chief 

Officer has agreed that a diligent effor

continue to receive unqualified audit o
Page 12 GAO-01-243 Commer

future Commerce financial statements. C

officials strengthened Commerce’s intern

structure; however, one of the remaining 

weaknesses is the lack of a single, integra

financial system. As stated in Commerce’

1999 accountability report, many of its fin

systems are seriously outdated and fragm

unable to provide timely, complete, and r

financial information; inadequately contr

costly and difficult to maintain. Conseque

systems do not comply with federal laws 

regulations. In order to comply with appl

and safeguard its assets against waste, lo

unauthorized use, or misappropriation, C

must continue to emphasize financial ma

improvements and correct its material we

and reportable conditions. Commerce rep

has made progress in addressing this mat

weakness and will continue its efforts to 

this area. 

• With respect to the 2000 Census, Commer

of the Census generally completed its pea

collection activities consistent with its op

plans, and remaining activities appear to b

As a result, we no longer consider the 200

be a high-risk program. We had designate

census a high-risk area as early as 1997 d

formidable challenges that included build

complete and accurate master address fil

motivating the public to participate in the 

returning their census questionnaires, me

staffing goals in a tight labor market, and 

timely and accurate data from nonrespon

Fortunately, the Bureau’s actual peak dat

activities proceeded on or ahead of sched

generally were performed as planned. Pa

noteworthy was an initial mail response r

percent, which was four percentage poin

than the Bureau had anticipated, and mat

response rate to the 1990 Census. Noneth
Page 13 GAO-01-243 Comm

surmounting the various challenges to 

census that the Bureau faced in 2000 c

considerable cost. Moreover, the singl

important determinate of a successful 

completeness and accuracy of the cen

in particular, the size and nature of the 

will not be known until the Bureau com

various accuracy and coverage assessm

Consequently, as the Bureau looks tow

census, continued societal and demogr

such as more complex living arrangem

large non-English-speaking population

national headcount in 2010 at least as 

it was in 2000. As a result, it will be im

Commerce to ensure that the Bureau c

evaluations of key census operations a

explores innovative options for a cost-

census in 2010.

• The National Oceanic and Atmospheri

Administration (NOAA) within Comme

operates a fleet of ships that supports i

fisheries research, oceanographic rese

hydrographic charting and mapping. H

ships can be costly and inefficient to o

maintain, and they may lack state-of-th

technology. For more than a decade, c

committees, public and private sector 

groups, the National Performance Rev

Commerce Office of Inspector Genera

urged NOAA to aggressively pursue co

alternatives to its in-house fleet of ship

to NOAA, it has taken steps to improve 

efficiency of its fleet such as removing 

from service, bringing new and conver

into service, and negotiating contracts 

to meet some of its needs. However, co

oversight of NOAA’s plans to replace o

ships will be needed to ensure that NO

the most cost-effective alternatives for 

marine data.
Page 14 GAO-01-243 Comm

y g

As stated in its fiscal year 2001 annual perf

the Department of Commerce’s basic miss

promote job creation and improve living s

all Americans through economic growth, 

competitiveness, and sustainable develop

Commerce employs about 40,000 people i

offices in the U.S. and overseas; however, 

relatively small annual budget, with typica

about $5 billion annually. Commerce is co

nine agencies, whose programs and activi

• supporting export policies that affect m

domestic jobs and monitoring hundred

international trade agreements; 

• helping stop the proliferation of weapo

destruction and providing technical as

Russia and newly emerging countries 

export controls;

• forecasting and warning the public abo

weather, such as hurricanes, tornadoe

• providing assistance to distressed com

• advancing the establishment and expa

minority-owned businesses;

• supporting the domestic and internatio

management of living marine resource

overseeing 2,000,000 square miles of o

marine species;

• fostering telecommunications policies 

economic and technical advancement;

• protecting patents, trademarks, and in

property rights; and

• conducting the decennial census, dem

economic censuses, and over 200 annu

Commerce shares responsibilities for thes

with a number of other federal departmen

agencies, and has a lead role in one area—

economic development in distressed area

increased focus on results and accountab

accompanying the Government Performa
Page 15 GAO-01-243 Comm

Results Act, Commerce has come to symb

dispersed responsibility for federal progra

On the basis of our work and reports from 

Office of Inspector General, we have iden

performance and accountability challenge

Department. These challenges include (1) 

access of U. S. businesses to internationa

(2) ensuring that the United States is secu

proliferation of dual-use commodities and 

weapons, (3) ensuring that weather foreca

weather warnings are accurate and timely

(4) improving the economy in distressed a

a high-performing organization, Commerc

continue to successfully produce financia

reports, as well as implement a departmen

financial management system; complete t

Census and develop innovative options fo

cost-effective census in 2010; and better m

research fleet.
Page 16 GAO-01-243 Commer

Increasing the 

Access of 

Businesses to 

International 

Markets 

International trade has become increasingly 

to the U.S. economy. As shown in figure 1, U

have increased about 70 percent since 1990, 

$700 billion a year. In recent decades, the Un

has led the world in the effort to create a sys

trade under accepted rules, in which the red

trade barriers, such as tariffs and import quo

help provide greater market access for U.S. g

services. The United States has entered into 

trade-related agreements since the early 1980

the far-reaching 1994 World Trade Organizati

agreements, which cover about $1.4 trillion i

U.S. trade with 135 countries.1

 Most of these 

were negotiated by the Office of the U.S. Tra

Representative, which is statutorily responsi

developing and coordinating U.S. internation

policy. However, other federal agencies, incl

Department of Commerce, negotiated some 

agreements. Although these agreements wer

to increase U.S. companies’ access to foreign 

businesses’ efforts to identify potential mark

hampered by problems related to identifying 

monitoring the trade agreements.

1

Trade agreements are negotiated understandings betw

more countries that generally address the terms of trad

universal definition of a trade agreement, because agree

take many forms and serve different purposes.
Page 17 GAO-01-243 Comm

Figure 1: United States Export Growth, 1970-98 

Source: GAO calculations based on International F

(Washington, D.C.: International Monetary Fund, Ja

Specifically, to fully use the benefits of tra

liberalization, both private businesses and 

need quick and easy access to the terms a

of the numerous trade agreements to whi

States is a party. However, in December 1

reported that the number of those trade ag

uncertain. Officials at key trade agencies, 

Commerce Department, were unable to p

definite count of trade agreements that we

force. Although Commerce maintains the 

government archive of trade agreements t

designed to include all agreements, we fo

archive was incomplete and was missing 

of the trade agreements that we identified

Consequently, we recommended that the 

0

100

200

300

400

500

600

700

800

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

19881989

1990

1991

1992

19931994

19

Dollars in billions

Exports

Years
Page 18 GAO-01-243 Commer

Commerce establish clear criteria for the typ

agreements to be included in the archive and 

the archive is intended to contain all trade ag

Commerce has since taken actions to clarify 

for including trade agreements in its archive

Commerce decided that its database would n

some agreements, such as those involving ag

Therefore, U.S. businesses may still have dif

taking full advantage of the benefits that trad

agreements provide in accessing foreign mar

because they may not be aware of all of the a

and the terms of those agreements.

In March 2000, we reported that the ability of 

and two other trade agencies to monitor and 

trade agreements is limited. We attributed th

to the agencies’ lack of sufficient numbers o

experienced staff with the right expertise; no

getting the needed analytical or other types o

from other agencies; and difficulty obtaining 

comprehensive input from the private sector

addition, we found that Commerce and the t

agencies—the Department of Agriculture an

of the U.S. Trade Representative—had not d

strategy for how the U.S. government would 

growing trade monitoring and enforcement w

Specifically, they have not identified the full 

this workload, the number and types of reso

needed to perform it, the availability of these 

and the roles of individual agencies. As a res

government is not realizing the full benefits 

agreements to increase U.S. market access a

thereby increase U.S. exports. We recommen

the Secretary of Commerce work with other 

agencies to develop a strategy for how our fe

government will manage its growing trade ag

monitoring and enforcement workload. Whil

strategy has not yet been developed, Comme

conjunction with the Office of the U.S. Trade 
Page 19 GAO-01-243 Comm

Representative, has begun to address our 

recommendation.

According to the measures used by ITA, it 

some success in assisting U.S. businesses 

to international markets. For instance, ITA 

it exceeded its target for the number of fir

new to the export market in fiscal year 19

ITA noted that it faced several difficulties 

its progress in attaining greater U.S. busin

international markets. For instance, ITA n

to proprietary concerns, businesses often 

reluctant to share information on their ex

addition, ITA’s programs are subject to un

changes to the economies of developing c

was also sometimes difficult to gauge ITA

because ITA’s measures have not always b

linked to its goals. For example, under its 

goal of enforcing U.S. trade agreements, I

value of market openings as a measure of 

Trade agreements are intended to guarant

opportunity for U.S. firms to engage in fre

trade but do not necessarily lead to expor

firms. 

Key Contact Susan Westin, Managing Director 

International Affairs and Trade

(202) 512-4128 

westins@gao.gov
Page 20 GAO-01-243 Commer

Ensuring That the 

United States Is 

Secure From the 

Proliferation of 

Dual-Use 

Commodities and 

Chemical Weapons

The Commerce Department, through BXA, is 

agencies that administer the nation’s export 

system.2

 Under U.S. law, the President has th

to control and require licenses for exporting 

may pose a national security risk or foreign p

concern. The risk level can vary depending o

being exported and the country of destinatio

therefore, exports of some items involve less 

other items and exports to some countries in

risk than to other countries. In addition, Com

other agencies are involved in notifying the C

on Foreign Investment in the United States ab

foreign acquisitions of U. S. companies, nam

with national security implications.3

In Commerce’s annual performance plans, B

performance goals related to (1) restructurin

controls for the 21st century and (2) maintai

effective law enforcement program to protec

national security and public safety, uphold U

policy, and ensure the nonproliferation of du

commodities and chemical weapons. Howev

clear how much progress BXA has made in m

these performance goals, in part, because th

terminology used in stating the goals is not c

defined or understood. For example, the goa

“restructure export controls for the 21st cen

not articulate what BXA is attempting to ach

through restructuring. In addition, BXA’s per

2

The State Department licenses munitions items throug

Defense Trade Controls.

3

In May 1975, the President established the Committee 

Investment in the United States to monitor foreign inve

companies that could have national security implication

reporting of a foreign acquisition calls for the company 

detailed information to the Committee concerning its o

background, assets, and products, including their relati

national security. 
Page 21 GAO-01-243 Comm

measures related to this goal tend to refle

and outputs and do not show a clear link 

would contribute to a restructuring of the 

system; e.g., a change in the number of tra

deterred could occur simply as a result of 

the number of licensing decisions. Althou

information might indicate improvements 

implementation of export controls, it wou

changes to the structure of the export con

discussing these issues, BXA officials told 

did not have comprehensive or specific gu

developing performance goals and measu

Similarly, it is difficult to determine wheth

measures indicate progress toward achiev

related to maintaining a fully effective law 

program because BXA has not defined the 

effective law enforcement program.” Thus

sense as to how many outreach visits, inv

completed, etc., would equal a “fully effec

In addition, although the performance rep

according to Commerce’s scoring method

substantially met, met, or exceeded all of 

BXA’s data showed that it actually met or 

target for five out of nine measures. Targe

not met included the average processing t

licensing applications in relation to its exp

system goal and the number of investigati

under BXA’s law enforcement goal. Althou

explained why those targets classified as 

met” fell short of fully meeting the intend

performance, it did not discuss how it pla

address its unmet targets in the future.

In June 2000, we reported that Commerce 

agencies did not always inform the Comm

foreign acquisitions of U. S. companies w

security implications. Consequently, the u

acquisitions may be reviewed from only on

for example, from the viewpoint of protec
Page 22 GAO-01-243 Commer

classified material, while other important na

security concerns, such as technology transfe

technology proliferation, or foreign sources 

may not be considered. To improve the Com

process for identifying foreign acquisitions w

potential national security implications, we 

recommended that the Secretary of Commer

others, establish procedures requiring agency 

submit all known foreign acquisitions of com

potential national security implications to th

Committee. Commerce agrees with and plan

steps to implement our recommendation.

Key Contacts Susan Westin, Managing Director 

International Affairs and Trade

(202) 512-4128 

westins@gao.gov

Katherine V. Schinasi, Director

Acquisition and Sourcing Management

(202) 512-4841

schinasik@gao.gov

Ensuring That 

Weather Forecasts 

and Severe Weather 

Warnings Are 

Accurate and 

Timely

In the 1980s, NWS decided to leverage the po

information technology to achieve more unif

weather services across the nation, improve 

provide more reliable detection and predictio

weather and flooding, permit more cost-effe

operations through staff and office reduction

achieve higher productivity. At that time, NW

nationwide modernization program to upgra

observing systems (such as satellites and rad

design and develop advanced computer wor

for forecasters, and to reorganize its field off

structure. 
Page 23 GAO-01-243 Comm

In February 1995 and 1997 and January 19

identified NWS’ modernization as a high-r

because of several issues, including NWS’ 

systems architecture to guide the modern

and problems in developing AWIPS. Over 

made a series of recommendations intend

NWS’ problems. For example, in March 19

recommended NWS develop an overall sy

architecture to be used as a guide in deve

and future subsystems; in May 1995, we re

that the agency correct shortfalls in its rad

performance; and in 1996, we recommend

improve its processes for testing AWIPS s

obtain an independent AWIPS cost estima

did not have reliable project cost informa

NWS has acted to implement our recomm

agency issued an initial systems architect

its radar availability, strengthened its soft

development and testing processes, and c

independent cost estimate of AWIPS. NW

overcame major obstacles in developing A

system is now operating in field offices ac

country. However, it is operating with less 

functionality that AWIPS was planned to p

example, it does not provide weather fore

range of interactive forecast preparation t

such as allowing forecasters to enter hum

observations of the weather into radar-ba

tools. To allow more efficient and improv

NWS plans to deploy radar and infrastruc

enhancements to AWIPS in three phased r

beginning in 2001 and 2002. Because of NW

establishing an initial systems architectur

deploying and using AWIPS, we no longer 

modernization effort to be a high-risk initi

However, we will continue to monitor NW

develop and deploy AWIPS enhancements
Page 24 GAO-01-243 Commer

NWS’ modernization has resulted in improve

the accuracy and the timeliness of some wea

warnings. For example, in October 1998, we 

that the accuracy and timeliness of flash floo

improved in Ventura and Los Angeles counti

California after the Next Generation Weathe

program was commissioned in 1996. Further

Commerce noted in its performance report f

year 1999 that the lead time for tornadoes in

20 percent over the lead times for 1997. Neve

NWS met only two of seven targets for fiscal 

under its performance goal of advancing sho

warning and forecast services. For example, 

its target of increasing the lead-time and acc

tornado warnings, but did not meet its target 

improving the lead-time and accuracy of sev

thunderstorm warnings. Similarly, NWS did n

target for increasing the accuracy of heavy s

forecasts. Commerce noted that planned enh

to NWS’ systems—and specifically AWIPS—

enhance its forecasting capabilities. As a res

effect of the modernization on NWS’ goal of 

forecasts and warnings may not be determin

several more years.

Key Contact Joel C. Willemssen, Managing Director 

Information Technology

(202) 512-6408 

willemssenj@gao.gov

Improving the 

Economy in 

Distressed Areas 

EDA has both an agency-level and a governm

responsibility for improving the economy in 

areas. Specifically, EDA was created to gene

help retain existing jobs, and stimulate indus

commercial growth in rural and urban areas 

nation experiencing high unemployment, low 

severe economic distress. EDA provides gra

economically distressed communities for sp
Page 25 GAO-01-243 Comm

projects. In addition, through legislation a

accompanying reports, the Congress has u

aggressively pursue efforts to increase the 

the federal response to distressed commu

working with other agencies. 

In terms of its own programs, EDA has m

progress in meeting the two fiscal year 19

performance goals related to improving th

distressed areas—creating jobs and privat

economically distressed communities and 

capacity to achieve and sustain economic 

example, EDA reported that it exceeded i

state and local dollars committed to EDA

projects that are intended to create jobs. T

of EDA grants awarded to economically di

also exceeded its target. Progress toward 

and business success through the other si

could not be determined. As we reported 

measuring the creation of new jobs result

economic development programs is diffic

complex. EDA did not report results for th

because, among other reasons, they focus

or long-term objectives for which EDA sta

provide results in future performance rep

addition, EDA has not yet included goals t

complementary with or shared by the oth

working to improve distressed areas. 
Page 26 GAO-01-243 Commer

The Economic Development Administration 

Appalachian Regional Development Reform 

(P.L. 105-393) requires that other federal age

cooperate with Commerce in its efforts to as

distressed communities. Furthermore, the 

accompanying Senate report states that EDA 

aggressively pursue efforts to increase the ef

the federal response to distressed communit

working with other agencies. As we reported 

September 2000, at least nine agencies other 

Department of Commerce provide funds for 

development activities. These include the de

of Agriculture, Housing and Urban Developm

Defense, Health and Human Services, Interio

Transportation, as well as the Environmenta

Agency, the Small Business Administration, a

Appalachian Regional Commission. These ag

along with EDA, operate over 70 programs th

used to support economic development by fu

activities that include constructing roads, str

and sewer systems, nonresidential buildings

industrial parks. EDA has taken steps to coo

work with that of other agencies. In particul

Commerce’s fiscal year 2001 performance pla

other agencies—both inside and outside of C

that share crosscutting issues with EDA. How

important next step will be for EDA to collab

other agencies to develop common or compl

goals for improving their performance in add

crosscutting issues.4

Key Contact Thomas J. McCool, Managing Director 

Financial Markets and Community Investme

4

In 1999 and 2000, the Office of Management and Budge

included the development of common goals as guidance 

agencies in OMB Circular No. A-11, Preparing and Subm

Estimates, which is used to prepare performance plans

things.
Page 27 GAO-01-243 Comm

(202) 512-8678 

mccoolt@gao.gov 

Addressing Other 

Challenges to 

Building a HighPerforming 

Organization

Commerce also needs to address other ch

order to build a high-performing organiza

include (1) continuing to successfully pro

statement reports and implement a depar

financial management system, (2) ensurin

Bureau of the Census completes its evalu

2000 Census as planned and uses the resu

innovative options for taking a more cost-

census in 2010, and (3) better managing N

research fleet and associated personnel.

In the financial management area, Comme

substantial progress in recent years, but c

face challenges in both its financial statem

and financial management systems. Speci

Commerce’s Inspector General issued a d

opinion on Commerce’s financial stateme

management’s inability to support certain 

balances and deficiencies noted in Comm

controls.5

 In addition, the auditors identif

reportable conditions that represented sig

deficiencies in the design or operation of 

control structure, of which 37 were consid

material internal control weaknesses. In c

Commerce received an unqualified opinio

financial statements for fiscal year 1999. I

Commerce officials strengthened Comme

control structure so that the number of re

conditions identified dropped to 12, of wh

material weaknesses. In order to comply w

5

Of the 15 financial statements submitted that year, 

unqualified opinions, 3 received qualified opinions o

their financial statements, 4 received disclaimers of 

financial statements, and 1 was not audited.
Page 28 GAO-01-243 Commer

laws and safeguard its assets against waste, 

unauthorized use, or misappropriation, Com

continue to emphasize financial managemen

improvements and correct the remaining ma

weaknesses and reportable conditions. Com

Chief Financial Officer has agreed that a dilig

needed to continue to receive unqualified au

on future Commerce financial statements. 

In the financial systems area, Commerce’s la

single, integrated financial system continues 

reported by its auditors as a material weakne

as stated in Commerce’s fiscal year 1999 acc

report, many of its financial systems are seri

outdated and fragmented. In addition, these 

unable to provide timely, complete, and reliab

information; inadequately controlled; and co

difficult to maintain. Consequently, the syste

comply with federal laws and regulations. Co

reports that it has made progress in addressi

material weakness and will continue its effo

improve in this area. Specifically, Commerce 

continue its phased implementation of the C

Administrative Management System, which i

complete by 2004. Also, Commerce is develo

corporate database that it says will integrate 

data from each of its reporting units and will 

preparing consolidated statements and repo

With respect to the 2000 Census, the Bureau 

Census generally completed its peak data co

activities consistent with its operational plan

remaining activities appear to be on-track. A

we no longer consider the operation of the 2

to be high risk.

Beginning in February 1997, when we first d

the census a high-risk area, we noted that fo

challenges surrounded critical census-taking 
Page 29 GAO-01-243 Comm

Key among these challenges were buildin

and accurate master address file, motivat

to participate in the census by returning t

questionnaires, meeting field staffing goal

labor market, and collecting timely and ac

from nonrespondents. Moreover, in antici

comparatively low public participation in t

Bureau planned on using statistical sampl

estimation procedures that the Bureau be

be more accurate and cost-effective than 

nonresponding household. However, Con

legal and methodological concerns, did no

the Bureau’s planned use of sampling, wh

questions about the Bureau’s readiness fo

“traditional,” nonsampling census. 

As we have noted in several reports and te

Bureau has taken a number of steps aimed 

the challenges it faced. For example, in 19

redesigned its existing procedures for bui

master address file. Under the new approa

Bureau employees went door-to-door veri

majority of housing unit addresses across 

To increase public participation in the cen

Bureau streamlined census questionnaire

implemented an aggressive outreach and 

campaign, hiring a private sector advertis

promote the census nationally, and partne

religious, community, and other local orga

market the census on a grassroots basis. M

January 1999, the U.S. Supreme Court rule

statistical sampling could not be used to d

population count that would be used to ap

House of Representatives, thus, eliminatin

uncertainties about which census design t

to use. 

The Bureau’s peak data collection activiti

on or ahead of schedule, and generally we

as planned. Particularly noteworthy was a
Page 30 GAO-01-243 Commer

response rate of 65 percent, which was four 

points higher than the Bureau had anticipate

matched the response rate to the 1990 Censu

have often noted, although the response rate 

guarantee a successful census, it reduced th

scheduling pressures in nonresponse follow-

subsequent census operations while enhanci

quality. Indeed, this lower than anticipated n

follow-up workload, combined with the Bure

met its national staffing goals, helped the Bu

generally complete nonresponse follow-up in 

half weeks, several days ahead of schedule. 

Nonetheless, surmounting the various challe

successful census that the Bureau faced in 2

considerable cost. As we noted in our Decem

report, the Bureau estimated that the 2000 C

cost at least $6.8 billion, an increase of 113 p

real terms over the $3.2 billion cost of the 199

1999 dollars. Moreover, the single most impo

determinate of a successful census—the com

and accuracy of the census count, and in par

size and nature of the undercount—will not 

until later in the census cycle when the Bure

completes various accuracy and coverage as

Past experience suggests that increased inve

the census does not necessarily generate mo

results. Indeed, the 1990 Census was, at that 

most expensive in the nation’s history, but le

of Americans—particularly members of mino

and renters—uncounted.

As the Bureau looks toward the next census

societal and demographic changes such as m

complex living arrangements and a large non

speaking population, will make the national 

in 2010 at least as challenging as it was in 20

result, it will be important for the Departmen

Commerce to ensure that the Bureau comple

evaluations of key census operations as plan
Page 31 GAO-01-243 Comm

a timely manner, explores innovative opti

help better ensure a cost-effective census 

Through NOAA, Commerce owns and ope

ships that supports its programs in fisheri

oceanographic research, and hydrographi

mapping. However, these ships can be cos

inefficient to operate and maintain, and th

state-of-the-art technology. For more than 

congressional committees, public and priv

advisory groups, the National Performanc

Commerce Office of Inspector General, an

urged NOAA to aggressively pursue cost-e

alternatives to its in-house fleet of ships. O

timeframe, NOAA developed several fleet 

and modernization plans that required inv

hundreds of millions of dollars to upgrade 

these ships, each of which was criticized b

Commerce Office of Inspector General fo

alternative approaches strongly enough. M

recently—as part of our performance and 

series of reports issued in 1999—we ident

NOAA fleet as one of the major performan

management issues confronting the Depa

Commerce. According to NOAA, it has tak

improve the cost efficiency of its fleet suc

some ships from service, bringing new an

Navy ships into service, and negotiating c

outside NOAA to meet some of its needs. 

NOAA continues to rely heavily on its in-h

still plans to replace or upgrade some of t

Consequently, continued oversight of NOA

replace or upgrade ships will be needed to 

NOAA is pursuing the most cost-effective 

for acquiring marine data.

Key Contacts Jeffrey C. Steinhoff, Managing Director

Financial Management and Assurance
Page 32 GAO-01-243 Commer

(202) 512-2600

steinhoffj@gao.gov 

J. Christopher Mihm, Director

Strategic Issues

(202) 512-6806

mihmj@gao.gov

Thomas J. McCool, Managing Director 

Financial Markets and Community Investme

(202) 512-8678 

mccoolt@gao.gov
Page 33 GAO-01-243 Comm

Increasing the 

Access of 

Businesses to 

International 

Markets 

Export Promotion: Federal Agencies’ Acti

Resources in Fiscal Year 1999 (GAO/NSIA

Apr. 10, 2000). 

International Trade: Strategy Needed to B

and Enforce Trade Agreements (GAO/NSI

Mar. 14, 2000). 

International Trade: Improvements Neede

Archive Trade Agreements (GAO/NSIAD-0

1999).

Export Promotion: U.S. Export Assistance 

to Improve Services (GAO/NSIAD-99-180, 

Ensuring That the 

United States Is 

Secure From 

Proliferation of 

Dual-Use 

Commodities and 

Chemical Weapons

Arms Control: Experience of U.S. Industry 

Chemical Weapons Convention Inspection

(GAO/T-NSIAD-00-249, Sept. 13, 2000). 

Defense Trade: Identifying Foreign Acquis

Affecting National Security Can Be Impro

(GAO/NSIAD-00-144, June 29, 2000). 

Export Controls: Challenges and Changes 

on Computer Exports (GAO/T-NSIAD-00-1

2000). 

Export Controls: National Security Risks 

to Controls on Computer Systems 

(GAO/T-NSIAD-00-139, Mar. 23, 2000). 

Export Controls: National Security Risks 

to Controls on Computers (GAO/T-NSIAD

Feb. 28, 2000). 
Page 34 GAO-01-243 Commer

Export Controls: Implementation of the 1998 

Mandate for High Performance Computers 

(GAO/T-NSIAD-00-53, Oct. 28, 1999). 

Export Controls: 1998 Legislative Mandate fo

Performance Computers (GAO/NSIAD-99-20

1999). 

Ensuring That 

Weather Forecasts 

and Severe Weather 

Warnings Are 

Accurate and 

Timely

National Oceanic and Atmospheric Administ

National Weather Service Modernization and 

Satellite Program (GAO/T-AIMD-00-86, Mar. 

Department of Commerce: National Weather 

Modernization and NOAA Fleet Issues 

(GAO/T-AIMD/GGD-99-97, Feb. 24, 1999).

High-Risk Series: An Update (GAO/HR-99-1, 

National Weather Service: Sulphur Mountain 

Performance (GAO/AIMD-99-7, Oct. 16, 1998

National Weather Service: Budget Events an

Continuing Risks of Systems Modernization 

(GAO/T-AIMD-98-97, Mar. 4, 1998).

Weather Service Modernization: Risks Rema

Systems Potential Will Not Be Achieved 

(GAO/T-AIMD-97-85, Apr. 24, 1997).

Weather Satellites: Planning for the Geostati

Satellite Program Needs More Attention 

(GAO/AIMD-97-37, Mar. 13, 1997).

High-Risk Series: Information Management a

Technology (GAO/HR-97-9, Feb. 1997).
Page 35 GAO-01-243 Comm

Weather Forecasting: Recommendations t

New Weather Processing System Develop

(GAO/AIMD-96-74, May 13, 1996).

Weather Forecasting: Radar Availability R

Not Being Met (GAO/AIMD-95-132, May 3

High-Risk Series: An Overview (GAO/HR-

Feb. 1995).

Weather Forecasting: Systems Architectur

National Weather Service Modernization 

(GAO/AIMD-94-28, Mar. 11, 1994).

Improving the 

Economy in 

Distressed Areas 

Economic Development: Multiple Federal 

Fund Similar Economic Development Act

(GAO/RCED/GGD-00-220, Sept. 29, 2000).

Department of Energy Workforce Reducti

Community Assistance Can Be Better Tar

(GAO/RCED-99-135, May 7, 1999). 

Economic Development: Observations Re

Economic Development Administration’s 

Final Report on Its Public Works Program 

(GAO/RCED-99-11R, Mar. 23, 1999).

Addressing Other 

Challenges to 

Building a HighPerforming 

Organization

2000 Census: Headquarters Processing Sy

and Risks (GAO-01-1, Oct. 17, 2000).

Observations on the Department of Comm

Year 1999 Annual Program Performance R

Fiscal Year 2001 Annual Performance Plan 

(GAO/GGD-00-152R, June 30, 2000).

2000 Census: Status of Nonresponse Follo

Operations (GAO/T-GGD/AIMD-00-164, M
Page 36 GAO-01-243 Commer

2000 Census: Contingency Planning Needed 

Risks That Pose a Threat to a Successful Cen

(GAO/GGD-00-6, Dec. 14, 1999).

2000 Census: Analysis of Fiscal Year 2000 Am

Budget Request (GAO/AIMD/GGD-99-291, Se

1999).

NOAA Fleet: Responses to Post-Hearing Que

(GAO/GGD-99-60R, Mar. 22, 1999). 

Managing For Results: An Agenda to Improv

Usefulness of Agencies’ Annual Performance 

(GAO/GGD/AIMD-98-228, Sept. 8, 1998).

Results Act: Observations on the Departmen

Commerce’s Annual Performance Plan for F

1999 (GAO/GGD-98-135R, June 24, 1998).

Managing For Results: Agencies’ Annual Per

Plans Can Help Address Strategic Planning C

(GAO/GGD-98-44, Jan. 30, 1998).

Issues on the National Oceanic and Atmosph

Administration’s Commissioned Corps 

(GAO/GGD-98-35R, Dec. 2, 1997).

National Oceanic and Atmospheric Administ

Issues on the Civilianization of the Commissi

(GAO/T-GGD-98-22, Oct. 29, 1997).

The Results Act: Observations on Commerce

Draft Strategic Plan (GAO/GGD-97-152R, Jul

Federal Management: Addressing Manageme

Problems at the Department of Commerce 

(GAO/T-GGD/AIMD-97-115, May 14, 1997).
Page 37 GAO-01-243 Comm

Federal Personnel: Issues on the Need for 

Commissioned Corps (GAO/GGD-97-10, O

Research Fleet Modernization: NOAA Nee

Alternatives to the Acquisition of New Ves

(GAO/RCED-94-170, Aug. 3, 1994).

Letr
Page 38 GAO-01-243 Comm

Major Management Challenges and Progr

Governmentwide Perspective (GAO-01-24

Major Management Challenges and Progr

Department of Agriculture (GAO-01-242)

Major Management Challenges and Progr

Department of Commerce (GAO-01-243)

Major Management Challenges and Progr

Department of Defense (GAO-01-244)

Major Management Challenges and Progr

Department of Education (GAO-01-245)

Major Management Challenges and Progr

Department of Energy (GAO-01-246)

Major Management Challenges and Progr

Department of Health and Human Service

(GAO-01-247)

Major Management Challenges and Progr

Department of Housing and Urban Develo

(GAO-01-248)

Major Management Challenges and Progr

Department of the Interior (GAO-01-249)

Major Management Challenges and Progr

Department of Justice (GAO-01-250)

Major Management Challenges and Progr

Department of Labor (GAO-01-251)

Major Management Challenges and Progr

Department of State (GAO-01-252)
Page 39 GAO-01-243 Comm

Major Management Challenges and Progr

Department of Transportation (GAO-01-25

Major Management Challenges and Progr

Department of the Treasury (GAO-01-254)

Major Management Challenges and Progr

Department of Veterans Affairs (GAO-01-2

Major Management Challenges and Progr

Agency for International Development (G

Major Management Challenges and Progr

Environmental Protection Agency (GAO-0

Major Management Challenges and Progr

National Aeronautics and Space Administ

(GAO-01-258)

Major Management Challenges and Progr

Nuclear Regulatory Commission (GAO-01

Major Management Challenges and Progr

Small Business Administration (GAO-01-2

Major Management Challenges and Progr

Social Security Administration (GAO-01-2

Major Management Challenges and Progr

U.S. Postal Service (GAO-01-262)

High-Risk Series: An Update (GAO-01-263

(250002) Letr
Ordering 

Information

The first copy of each GAO report is free. Addi

reports are $2 each. A check or money order sh

out to the Superintendent of Documents. VISA 

credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a 

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available r

testimony. To receive facsimile copies of the dai

from the past 30 days, please call (202) 512-60

touchtone phone. A recorded menu will provide 

how to obtain these lists.

Orders by Internet:

For information on how to access GAO reports 

send an e-mail message with “info” in the body 

info@www.gao.gov

or visit GAO’s World Wide Web home page at: 

http://www.gao.gov

To Report Fraud, 

Waste, or Abuse in 

Federal Programs

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraud

• e-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering syst

Official Business

Penalty for Private Use $300

Address Correction Requested