INTERNATIONAL TRADE 

ADMINISTRATION 

U.S. Export Assistance 

Centers Could Improve 

Their Delivery of Client 

Services and Cost 

Recovery Efforts 

FINAL REPORT NO. OIG-13-010-I 

NOVEMBER 30, 2012 

U.S. Department of Commerce 

Office of Inspector General 

Office of Audit and Evaluation 

FOR PUBLIC RELEASE 
UNITED STATES DEPARTMENT OF COMMERCE 

Office of Inspector General 

Washington, D.C. 20230 

November 30, 20 12 

MEMORANDUM FOR: Ambassador Charles A. Ford 


Acting Assistant Secretary for Trade Promotion and 


Director General of the U.S. & Foreign Commercial Service 


Antwaun Griffin 

Deputy Assistant Secretary for Domestic Operations 

U.S. & Foreign Commercial Service 

FROM: 

Assistant 

Ron Prevost 

Inspector 

~~ General for Economic and 


Statistical Program Assessment 


SUBJECT: U.S. Export Assistance Centers Could Improve Their Delivery 

ofClient Services and Cost Recovery Efforts 

Final Report No. OIG-13-0 I 0-1 

Attached is the final report on our evaluation of the U.S. & Foreign Commercial Service 

(US&FCS) Export Assistance Centers (USEACs). This evaluation, part of the OIG's fiscal year 

20 12 audit plan, sought to (I) evaluate whether CS's allocation of domestic resources meets its 

mission and goals, (2) assess CS's level of cost recovery, and (3) determine the extent to which 

the level of coordination between USEACs and its federal and nonfederal partners is sufficient 

to meet Administration priorities with respect to the National Export Initiative (NEI). 

In the area of resource allocation, we found administrative tasks limit trade specialists' 

performance of export promotion duties; USEACs with location and performance issues 

consume CS's limited resources; and some USEAC initiated services warranting a response 

from overseas posts go unfulfilled. With respect to cost recovery, CS's fee schedule is 

outdated, inaccurate, and does not include all recoverable costs; in addition, certain internal 

controls are deficient. Finally, in the area of coordination: trade specialists reported that CS 

actions to implement the NEI have had a limited effect on collaboration, guidance and training 

to enhance collaboration is inadequate, and collaboration between USEACs and their partners 

is hampered by restrictions on sharing client information. 

W here appropriate, we have modified this final report based on your response to our draft 

report and subsequent conversations. The formal International Trade Administration (ITA) 

response is included as appendix F. (We summarized your response, reflecting subsequent 

conversations with your staff, and OIG comments, starting on page 19.) The final report will be 

posted on the OIG's website pursuant to section 8L of the Inspector General Act of 1978, as 

amended. 
In accordance with Departmental Administrative Order 213-2, please submit to us within 60 

calendar days of the date of this memorandum an action plan that responds to the 

recommendations in this report including an estimate of cost savings resulting from your 

proposed approach to decrease trade specialist administrative burdens. We thank CS personnel 

for the assistance and courtesies extended to my staff during the review. If you have any further 

questions or comments about the report, please contact Carol Rice, Division Director, at 

(202) 482-6020, or Eleazar Velazquez, Program Manager, at (202) 482-0744. 

Attachment 

cc: 	 Francisco Sanchez, Under Secretary of Commerce for International Trade 

Daniel O'Brien, Acting National Director, US&FCS 

Pat Kirwan, Director, Trade Promotion Coordinating Committee, US&FCS 

Debra Delay, Director, Strategic Analysis and Policy, US&FCS 

Justin Guz, Audit Liaison, ITA 

Chris Christov, Audit Liaison, US&FCS 
 

 

 

Report In Brief 

 NOVEMBER 30, 2012 

Background 

The United States & Foreign Commercial Service (the Commercial 

Service, or CS) within the Department’s International Trade Administration (ITA) helps (a) promote 

the export of goods and services 

by small- and medium-sized U.S. 

companies and (b) enhance U.S. 

government collaboration and coordination on federal export promotion efforts. 

The CS Office of Domestic Operations employs around 350 staff, 

most of whom are trade specialists. 

This domestic unit operates 107 

field offices, known as U.S. Export 

Assistance Centers (USEACs) 

located across 8 networks 

nationwide. 

USEACs enter into contracts, referred to as participation agreements (PAs), with companies and 

work closely with overseas CS staff 

to deliver services. Overseas CS 

staff set up interviews with foreign 

buyers, compile financial reports on 

foreign companies, and screen foreign business contacts for U.S. companies. A CS service that results in 

an actual export by a U.S. company 

is recorded as an “export success,” 

which is the organization’s primary 

performance measure. 

Why We Did This Review 

CS is a key player in the National 

Export Initiative (NEI), the Administration’s plan to double U.S. exports by the end of 2014 over 2009 

levels. The NEI calls on more than a 

dozen federal agencies and offices 

to help U.S. companies increase 

their exports and create jobs. This 

initiative was announced by the 

President during the 2010 State of 

the Union address and promulgated 

by executive order. 

Our review sought to (1) evaluate 

whether CS’s allocation of domestic 

resources meets its mission and 

goals, (2) assess CS’s level of cost 

recovery, and (3) determine the 

extent to which the level of coordination between USEACs and their 

federal and nonfederal partners is 

sufficient to meet Administration 

priorities with respect to the NEI. 

INTERNATIONAL TRADE ADMINISTRATION 

U.S. Export Assistance Centers Could Improve Their 

Delivery of Client Services and Cost Recovery Efforts 

OIG-13-010-I 

WHAT WE FOUND 

CS’ Allocation of Resources Is Not Optimal. A significant amount of specialists’ time is spent 

performing administrative tasks that prevent them from performing more substantive clientrelated services. Also, USEACs with location and performance issues consume CS’s limited 

resources. Finally, approximately 20 percent of USEAC-initiated services go unfulfilled because 

overseas posts are unable to perform them. 

CS’ Cost Recovery Model and Certain Internal Financial Controls Have Weaknesses. CS’s current model 

for recovering costs through fees for its client services is based on outdated information, cannot 

accurately track the time required to perform services, and does not account for all costs 

associated with providing those services. We also found deficient internal controls related to the 

handling of check payments for client services and the reconciliation of CS’s accounts with the 

Department’s. 

Survey Respondents Reported That CS Actions to Implement NEI Reportedly Have Had a Limited Effect 

on USEAC Collaboration with Partners and Guidance to Enhance Collaboration Is Inadequate. According 

to trade specialists, the NEI has not significantly affected the outcomes of USEAC collaboration 

with partners. Further, trade specialists surveyed reported insufficient guidance on related 

initiatives and lack of participation in relevant training . Finally, collaboration between USEACs and 

their partners is hampered by restrictions on sharing client information. 

WHAT WE RECOMMEND 

We recommend the Acting Assistant Secretary for Export Promotion and Director General 

of the U.S. & Foreign Commercial Service: 

1. Develop strategies for minimizing the administrative duties of trade specialists. 

2. Upgrade or replace the current Client Tracking System. 

3. Determine why some USEACs are underperforming and take corrective action. 

4.	 Track overseas posts that are unable to deliver adequate services and use the tracking tool to 

provide estimated service delivery times to clients based on post performance and service type. 

5. Standardize the review process for the fee schedule to ensure biennial updates. 

6. Ensure that surveys used to determine user fees are methodologically sound and sample 

participation agreements for client services to validate the survey results. 

7. Analyze and document the methodology for estimating overhead costs and include appropriate 

costs in the fee schedule to approximate full-cost recovery. 

8.	 Develop (a) formal policies prohibiting trade specialists from handling checks and (b) appropriate 

internal controls for check payments, consistent with those in place for credit card payments. 

9. Create official policies for account reconciliation, providing second-party review of 

reconciliation activities and guidance for corrective action. 

10. Determine why guidance on collaboration is not effectively communicated to trade specialists 

in the field and take corrective action. 

11. Develop guidance on how to incorporate GAO practices for enhancing collaboration to 

structure partnerships to add value in achieving the USEACs’ mission. 

12.Develop and provide training to USEAC and partner staff on collaboration strategies and 

techniques. 

13. Request expanded Trade Promotion Coordinating Committee Trade Officer Training 

with a web-based alternative available to all domestic trade specialists. 

14.Explore the possibility of requiring CS clients to waive confidentiality, in whole or in part, 

as a condition for receiving services. 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Contents 

Introduction ....................................................................................................................................................... 1
 

Findings and Recommendations .................................................................................................................... 4
 

I. Commercial Service’s Allocation of Resources Is Not Optimal ..................................................4
 

A. Administrative tasks limit trade specialists’ performance of export promotion duties......4
 

B. USEACs with location and performance issues consume CS’s limited resources ...............6
 

C. Some USEAC-initiated services that warrant a response go unfulfilled after referral to 

overseas offices.................................................................................................................................... 7
 

II. Commercial Service’s Cost Recovery Model and Certain Internal Financial Controls 

Have Weaknesses .................................................................................................................................. 8
 

A. CS’s fee schedule is outdated, inaccurate, and does not include all recoverable costs ......9
 

B. Certain internal controls for processing and reconciling client transactions 

are deficient ....................................................................................................................................... 11
 

III. Survey Respondents Reported That CS Actions to Implement the National Export 

Initiative Have Had a Limited Effect on USEAC Collaboration with Partners and 

Guidance to Enhance Collaboration is Inadequate ...................................................................... 14
 

A. Trade specialists report the National Export Initiative has had a limited effect on 

collaboration ..................................................................................................................................... 14
 

B. Trade specialist guidance and training on enhancing collaboration is inadequate ............. 16
 

C. Collaboration between USEACs and their partners is hampered by restrictions on 

sharing client information ............................................................................................................... 17
 

Summary of Agency Response and OIG Comments............................................................................. 19
 

Appendix A: Objectives, Scope, and Methodology ................................................................................ 22
 

Appendix B: Quantitative Methodology ................................................................................................... 24
 

Appendix C: Monetary Benefits ................................................................................................................. 26
 

Appendix D: Survey Methodology............................................................................................................. 27
 

Appendix E: Export Promotion Cabinet Recommendations Related to Collaboration ................ 30
 

Appendix F: Agency Response .................................................................................................................... 33
 

COVER: Detail of fisheries pediment,

U.S. Department of Commerce headquarters,
 

by sculptor James Earle Fraser, 1934
 

FINAL REPORT NO. OIG-13-010-I 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Introduction 

The United States & Foreign Commercial Service (hereafter, referred to as the Commercial 

Service, or CS) is one of four major business units within the Department’s International Trade 

Administration (ITA). Established in 1980 and headed by the Assistant Secretary for Trade 

Promotion and Director General of the U.S. & Foreign Commercial Service, CS helps (a) 

promote the export of goods and services by small- and medium-sized U.S. companies and 

(b) enhance U.S. government collaboration and coordination on federal export promotion 

efforts. CS is divided into two primary units: its Office of International Operations and Office of 

Domestic Operations. 

In FY 2012, CS received $270 million in appropriations, of which more than $9 million is 

derived from CS charging user fees for services it provides to U.S. exporters, to support 1,381 

positions. The Office of International Operations received $175 million that support a total of 

943 commercial officers and locally engaged staff stationed overseas at 117 offices in 73 

countries.1

 The Office of Domestic Operations received $48 million and employed a total of 

354 staff, most of whom are trade specialists (who are the focus of section I of this report’s 

“Findings and Recommendations”).2

 This domestic unit operates 107 field offices, known as U.S. 

Export Assistance Centers (USEACs) located across 8 networks nationwide (see figure 1, next 

page). Each USEAC is headed by a director, and each network is headed by a network director 

who works out of a USEAC office.3

                                                           

1

 State Department staff provides services on behalf of CS at 57 offices referred to as “partner posts” in another 

57 countries. 

2

 The preceding two figures exclude CS headquarters costs and personnel, as well as costs for ITA centralized 

services. 

3

 Network offices are located in Atlanta; Boston; Chicago; Cleveland; Denver; Irvine, California; Philadelphia; and 

San Jose, California. 

FINAL REPORT NO. OIG-13-010-I 1 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Figure 1. Commercial Service USEAC Networks 

Source: U.S. Commercial Service 

In addition to providing general trade information 

and data to the public, trade specialists nationwide 

offer a number of fee-based, standardized services 

to U.S. companies seeking to export their goods 

(see box at right). They also offer fee-based 

customized services such as promoting a U.S. 

company’s exports, performing market research, 

leading foreign trade missions into the United States, 

and sponsoring overseas trade events. USEACs 

enter into contracts, referred to as participation 

agreements (PAs), with companies and work closely 

with overseas CS staff to deliver services. Overseas 

CS staff carries out tasks such as setting up 

interviews with foreign buyers, compiling financial 

reports on foreign companies, and screening foreign 

business contacts for U.S. companies. A CS service 

that results in an actual export by a U.S. company is 

recorded as an “export success,” which is the 

organization’s primary performance measure. 

Standardized CS Services 

Offered to U.S. Exporters 

Gold Key Service—targeted business 

meetings with pre-screened foreign buyers 

International Company Profile—a 

detailed financial report on a foreign 

company 

International Partner Search—a 

prequalified list of international business 

contacts 

Featured U.S. Exporter—overseas 

website promotion of U.S. companies 

targeted to foreign buyers 

Business Service Provider—a directory 

to help U.S. companies identify domestic 

professional service providers to assist them 

with an export transaction 

Source: OIG analysis of CS information 

Specialists also coordinate and collaborate with other federal government agencies, such as the 

Small Business Administration (SBA) and Export–Import Bank, as well as state and local 

partners to assist U.S. companies export—whether as new exporters or exporters wishing to 

FINAL REPORT NO. OIG-13-010-I 2 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

                                                           

National Export Initiative’s 

Eight Priority Areas
 

	 Export by small- and medium-sized 

enterprises
 

	 Federal export assistance 

	 Trade missions 

	 Commercial advocacy 

	 Increase export credit 

	 Macroeconomic rebalancing 

	 Reducing barriers to trade 

	 Export promotion services 

Source: Export Promotion Cabinet, Report to the 

President on the National Export Initiative: The 

Export Promotion Cabinet’s Plan for Doubling U.S. 

Exports in Five Years (September 2010) 

expand their business to new international markets. CS is a key player in the National Export 

Initiative (NEI), the Administration’s plan to strengthen federal export promotion activities to 

double U.S. exports by the end of 2014 over 2009 levels. The NEI calls on more than a dozen 

federal agencies and offices to work together to 

advance eight priorities (see box at left) to help U.S. 

companies increase their exports and create jobs. 

This initiative was announced by the President 

during the 2010 State of the Union address and 

promulgated by executive order.4  

Our review sought to (1) evaluate whether CS’s 

allocation of domestic resources meets its mission 

and goals, (2) assess CS’s level of cost recovery, and 

(3) determine the extent to which the level of 

coordination between USEACs and their federal and 

nonfederal partners is sufficient to meet 

Administration priorities with respect to the NEI. 

For this review, we conducted interviews with 

managers and staff at CS headquarters, visited 12 

USEACs, interviewed network directors and local 

staff to obtain their feedback on issues related to 

our objectives, and reviewed CS, ITA, 

Departmental, and external financial and management documentation (see appendix A for our 

methodology). In addition, we sent an online survey to domestic trade specialists asking specific 

questions related to our objectives and received an overall response rate of 85 percent (see 

appendix D for the survey methodology). 

Overall, we found the USEACs deliver a broad range of services to U.S. companies seeking to 

export. Trade specialists counsel clients, attend networking events, conduct outreach, and 

work with partners to deliver services that U.S. exporters need. However, we found that CS 

could improve resource allocation by closing offices that are vacant, poorly located, or 

producing consistently lower output relative to other offices. CS could further maximize 

resources by minimizing the administrative tasks performed by specialists, as well as addressing 

issues with overseas offices that negatively impact service delivery. Additionally, CS could 

improve its level of cost recovery by (a) updating its cost model with current and more 

accurate information and (b) resolving weaknesses with certain internal financial controls. 

Finally, CS could improve collaboration and coordination with partners by providing enhanced 

guidance and online training and work to resolve legal impediments to sharing client 

information. By implementing our recommendations, we believe CS could realize $1.5–5 million 

in funds put to better use over 2 fiscal years (see appendix C). 

4 National Export Initiative, Exec. Order No. 13534, 75 Fed. Reg. 12433 (March 11, 2010). 

FINAL REPORT NO. OIG-13-010-I 3 
                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Findings and Recommendations 

I. Commercial Service’s Allocation of Resources Is Not Optimal 

Domestic trade specialists at USEACs perform a broad range of client facing-activities, such 

as providing fee-based services, coordinating with overseas posts to ensure service delivery, 

attending trade shows, and developing marketing events to identify potential clients. 

Although the average specialist earns approximately $100,000 (excluding benefits) annually, 

a significant amount of specialists’ time is spent performing administrative tasks that prevent 

them from performing more substantive client-related services.5

 Also, USEACs with 

location and performance issues consume CS’s limited resources. Finally, approximately 20 

percent of USEAC-initiated services go unfulfilled due to delivery issues at overseas posts. 

A. Administrative tasks limit trade specialists’ performance of export promotion duties 

Based on survey responses, trade specialists reported spending nearly one-third of their 

time performing administrative tasks6

, which many said prevented them from performing 

client work such as outreach and services to U.S. exporters. As one trade specialist 

noted: 

We have no one to answer the main phone line, coordinate event 

arrangements, alleviate the administrative burden of inventory, pricing and 

ordering supplies . . . all time killers to trade specialists that are trying to 

focus on client development, service delivery, and solutions for their clients. 

Another trade specialist wrote: “We have so many administrative burdens, and 

someone has to do them.” 

At each USEAC, individual employees maintain the office website, recruit and process 

student interns, manage office inventory, troubleshoot IT problems, and order supplies. 

According to CS staffing information, there are only 5 remaining administrative 

assistants working at USEACs.7

 Through our interviews and review of survey responses, 

we found that while some duties, such as inventory management, must be performed at 

each USEAC, others could be centralized, and many could be performed by 

administrative staff. For example, each office is responsible for its own website content, 

development, and maintenance, resulting in a trade specialist having to learn computer 

programming languages to assist with website upgrades and maintenance. 

5

 We derived this figure based on the following equation, using CS time and attendance data from 2011: 

Average salary = Total wages, divided by total hours worked, multiplied by 2,087 hours (i.e., 1 work year) 

6 Trade specialists reported spending approximately 17percent of their time on data entry and 15 percent on 

administrative tasks that included ordering supplies, managing the website, hiring and training student interns, and 

coordinating events. 

7

 CS phased out these administrative assistant positions as part of an earlier restructuring of its domestic field 

network. There is also a separate National Field Support Team, comprised of 16 field support specialists located at 

USEACs nationwide exists; however, team members perform primarily financial management, not programmatic 

administrative duties. 

FINAL REPORT NO. OIG-13-010-I 4 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

FINAL REPORT NO. OIG-13-010-I 5 

While each USEAC should provide website content about its respective office and 

market, development and maintenance are functions that could be centralized, thus 

freeing up specialists to perform client services. 

In addition, data entry is another task 

that could be assigned to local 

administrative staff if available. Trade 

specialists document their client 

interactions, communications, and 

trade leads using a custom 

application called the Client Tracking 

System (CTS). Our survey showed 

only 15 percent of trade specialists 

considered the system effective. The 

remaining 85 percent reported that it 

often freezes, fails to accept new 

data, operates slowly, and is difficult 

to use. Represented graphically 

below, trade specialists’ responses 

tended to articulate the “slow,” “cumbersome” nature of the system much more often 

than the sense that the system is “working” and in “sync” (see the trade specialists’ 

responses in the word cloud presented in figure 2, above left).8 We also observed these 

problems during our site visits. Despite these issues, trade specialists must record client 

data into CTS without administrative professionals to assist them. 

Figure 2. Frequency of Trade Specialist 

Responses on the Effectiveness of the 

Client Tracking System

Source: OIG survey of CS domestic trade specialists

8

 This “word cloud” is a visual presentation of comments provided by survey respondents: the larger the word, the 

more times respondents mentioned it relative to other words. 

Since trade specialists reported spending one-third 

of their time performing administrative tasks, we 

estimate they were paid nearly $10 million in FY 

2011 (based on CS data) to perform tasks that 

could be completed by lower-grade positions (see 

figure 3, right). CS informed us that it plans to hire 

interns to perform trade specialist and 

administrative duties at offices where there is a 

need. This option is more cost-effective than 

hiring higher-grade trade specialists to perform 

administrative tasks. However, an internship 

provides a potential career path to becoming a 

full-time trade specialist; therefore, the long-term 

savings anticipated by hiring interns may not be as 

great as expected, as compared to hiring 

administrative staff. Further, if interns are not 

eventually hired as full-time specialists, CS would 

be faced with turnover of these positions every 

                                                            

Figure 3. Trade Specialist 

Wages by Reported Activity 

(in Millions), FY 2011

Source: OIG survey of CS domestic 

trade specialists 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

FINAL REPORT NO. OIG-13-010-I 6 

few years. According to our analysis, shifting administrative duties to lower-graded 

positions could save CS $1.5–5 million in the next 2 fiscal years without a decrease in 

efficiency. We calculated this figure by subtracting the cost of a Washington, DC-based 

GS-7’s salary and benefits total of $54,000 from the average trade specialist’s salary and 

benefits total of $131,000, yielding a “per employee” savings of $77,000.9

 CS could 

increase efficiency and realize cost savings by better aligning job responsibilities with 

grade levels.

B. USEACs with location and performance issues consume CS’s limited resources 

Based on our analysis of CS data, there are four USEACs that, compared to others, are 

relatively low-producing: three in the same Metropolitan Statistical Areas (MSA)10 as 

other USEACs and one in an area with low export potential. We assessed office 

performance by examining services provided and export successes recorded across all 

USEACs (see appendix B for the quantitative methodology). To identify USEACs in 

areas with low export potential, we used CS’s Domestic Resource Allocation Model 

(DRAM), which assesses the export potential of MSAs. Along with other considerations 

(e.g., performance, policy needs, and coverage), the level of export potential in a 

particular MSA helps guide CS with USEAC network resource allocations. After 

assessing DRAM’s inputs and methodology, we 

found it to be a reasonable and sufficient tool 

for determining the export potential of an 

area. We also found that there were several 

higher-producing USEACs in areas with low 

export potential, where USEACs can 

nonetheless produce successes effectively. 

However, CS should consider whether to 

move those USEACs in areas with limited 

export potential performing at a comparatively 

low-output rate. 

The four lower-producing and poorly located 

USEACs cost approximately $1.1 million to 

operate in FY 2011 (see figure 4, right).11 We 

calculated this figure using time and attendance 

and office cost (i.e., rent and equipment) data 

                                                            

9

 We calculated the savings at USEACs with four or more trade specialists ($5 million) and six or more specialists 

($1.5 million). If one-third of a trade specialist’s time is spent doing administrative work, offices with four or more 

staff could absorb the loss of a trade specialist with an administrative specialist taking over the administrative tasks. 

If CS could shift only 20% of the administrative work to lower-graded specialists, or if CS implements other 

solutions to reduce the administrative workload, then offices with six or more staff could maintain a similar level of 

work with an administrative specialist instead of a trade specialist. 

10 A Metropolitan Statistical Area (MSA) is a metropolitan area with a core urban population of at least 50,000. 

Adjacent counties with a high degree of social and economic integration are included in the MSA. 

11 While we do not identify the four offices in this public report, we have provided this information to CS for its 

consideration. 

Figure 4. The Cost of 

Underperforming USEACs in 

Suboptimal Locations, FY 2011

Source: OIG analysis of CS data
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

                                                           

for that fiscal year provided by CS. We believe CS could have performed more services 

and generated additional export successes if these resources had been allocated to 

more advantageous locations. Additionally, there are nine currently vacant USEACs 

located in Anchorage, Alaska; Bakersfield and Cabazon, California; Libertyville, Illinois; 

Shreveport, Louisiana; Ypsilanti, Michigan; Toledo, Ohio; Harrisburg, Pennsylvania; and 

McAllen, Texas. Closing these offices would save CS nearly $28,00012 annually in 

additional real estate costs alone. 

C. Some USEAC-initiated services that warrant a response go unfulfilled after referral to 

overseas offices 

According to our survey of domestic trade specialists, approximately 20 percent of 

client requests that warrant response by overseas offices go unfulfilled. Domestic trade 

specialists assist U.S. companies by determining the services they need while CS staff at 

overseas posts perform and deliver the service requests, ideally resulting in export 

successes. USEACs reported that overseas posts often fail to respond to service 

requests in a timely manner, incurring considerable delays. After experiencing excessive 

wait times, some companies opt to seek assistance elsewhere, resulting in unfulfilled 

services. 

CS management stated several factors 

contribute to these delays, including: 

declining overseas staff, communication 

lapses between domestic and overseas 

staff, and time spent by overseas staff 

organizing and supporting trade missions 

and official government visits. During FYs 

2009–2011, overseas posts completed 

8,699 USEAC-initiated services with an 

average fee of $756 for each service.13 If 

overseas posts had completed the number 

of unfulfilled services estimated by the 

trade specialists in our survey, CS could 

have collected an additional $1.6 million in 

fees (see figure 5, right), and clients would 

have benefited from additional export 

successes. Formulating a more accurate 

estimate regarding the cost of service delivery delays must take into account the value 

and importance of Departmental and CS activities, such as trade missions and 

Secretarial visits, that take precedence over normal operations at overseas posts. 

Nonetheless, the problem regarding these service delays is significant enough that one 

12 We calculated this figure based on the offices’ current annual lease rates and telecommunications costs 

(provided by CS). 

13 We calculated this figure by dividing the amount of fees collected ($6,579,940.90) by the number of paid services 

(8,699). 

FINAL REPORT NO. OIG-13-010-I 7 

Figure 5. Fees from Unfulfilled 

Requests, FYs 2009–2011 

the survey of domestic trade specialists 

Source: OIG analysis of eMenu data and 
 

                                                           

 

In setting fees for client services, 

OMB Circular A-25 requires 

federal agencies to: 

	 Use the best available data

 Update the data biennially 

	 Include all direct (e.g., salaries) 

and indirect costs (e.g. rent, IT, 

travel, equipment)

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

USEAC network in FY 2012 is piloting a tool to track each service submitted to an 

overseas post. The tool will track the time that overseas posts take to respond to each 

request, whether services are accepted or declined, and the reasons behind unfulfilled 

services. If CS deems the pilot successful and expands the program to all USEACs, this 

tool would identify overseas posts where staff is unable to fulfill services, enabling CS to 

investigate the cause of the delays and, if necessary, reallocate resources to assist the 

posts causing the delays. 

Recommendations 

We recommend the Director General of the U.S. & Foreign Commercial Service take the 

following actions: 

1.	 Develop strategies for minimizing the administrative duties of trade specialists. 

2.	 Upgrade or replace the current Client Tracking System. 

3.	 Determine why some USEACs are underperforming and take corrective action or 

explore the following options: (1) consolidate lower-producing USEACs with higherproducing USEACs located within the same MSA, (2) close lower-producing USEACs 

operating in MSAs with low export potential, and (3) consider closing vacant USEACs. 

4.	 Track overseas posts that are unable to deliver services in an adequate manner and use 

the pilot tracking tool to provide estimated service delivery times to clients based on 

post performance and service type. 

II.	 Commercial Service’s Cost Recovery Model and Certain Internal Financial 

Controls Have Weaknesses 

CS’s model for recovering costs through fees for 

its client services is based on outdated 

information, cannot accurately track the time 

required to perform services, and does not 

account for all costs associated with providing 

those services. CS charges fees for its services 

using a standard fee schedule in effect since 2008. 

For the period FYs 2009–2011, CS received 

appropriations totaling $750 million and 

recovered $34 million in fees for services. In 

keeping with its mission, CS charges small- and 

medium-sized companies (i.e., having fewer than 

500 employees), which often have limited resources due to their size, less than large 

companies for the same service so as to help them export. The requirement to charge fees 

is mandated by Office of Management and Budget (OMB) Circular A-25 (A-25),14 which 

establishes federal policy regarding fees assessed for government services. 

14 OMB Circular A-25, User Charges, July 8, 1993. 

FINAL REPORT NO. OIG-13-010-I 8 
                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

We could not accurately determine CS’s level of cost recovery because CS does not track 

trade specialists’ time spent on performing client services. This lack of key financial and 

workforce information has previously been identified by both our office and the 

Government Accountability Office (GAO) as an issue CS needs to address.15 We also found 

that certain internal controls on financial information were deficient. The controls in 

question involved the handling of check payments for client services and the reconciliation 

of CS’s accounts with the Department’s. 

A. CS’s fee schedule is outdated, inaccurate, and does not include all recoverable costs 

Prior OIG and GAO reports found that CS does not include all costs in its methodology 

for calculating fees, as required by OMB Circular A-25. We reviewed CS’s fee schedule, 

cost recovery model, and financial data for FYs 2009–2011 to assess the extent to which 

CS recovers the cost for the services it provides to U.S. exporters. We found 

weaknesses remain, specifically in that CS: 

Uses outdated information. CS’s current fee schedule, introduced in 2008, uses a time 

estimate based on a USEAC survey for its 2005 fee schedule adjustment.16 Its current 

$70 hourly rate is based on FY 2007 appropriations and staffing data of $229 million and 

1,566 employees, respectively. Applying that methodology using FY 2012 budget ($270 

million) and staffing (1,381 employees) data, CS’s hourly rate should have risen to $94— 

a 34 percent increase over the current hourly rate. Had CS applied that rate to its 

services, it could have recovered more money per service delivered. However, it is 

possible many U.S. companies would not purchase services at the new prices. OMB 

Circular A-25 requires biennial review, based upon best available information, to set 

fees. An in-depth analysis would help CS determine the effect of applying the revised 

hourly rate on the demand for its services. 

Does not accurately track employee time. CS does not track its trade specialists’ 

time spent on performing client services. Currently, it uses only one accounting code to 

track trade specialists’ time in its online timekeeping system, as opposed to using 

multiple codes that could track time by service or task. Without accurate data on the 

amount of time trade specialists spend on particular services, CS fees may not account 

realistically for the time trade specialists require to complete their services. CS’s 

timekeeping system has the functionality to record specialists’ time in greater detail, 

tracking the amount of time specialists spend performing administrative activities, and 

thus help determine future fees. 

15 U.S. Department of Commerce Office of Inspector General, September 29, 2004. USEACS Are Meeting Client 

Needs, but Better Management Oversight Is Needed, IPE-16728. Washington, DC: Commerce OIG, 15; and U.S. 

Government Accountability Office, March 4, 2009, Commerce Needs Better Information to Evaluate Its Fee-Based 

Programs and Customers, GAO-09-144, Washington, DC: GAO, 15. 

16 CS calculated the hourly rate by dividing its FY 2007 budget ($229 million) by the total number of hours 

incurred by a staff of 1,566 in a work year totaling 2,087 hours (approximately 3.2 million hours). It charges the 

client for any third-party services, such as interpreters and equipment. 

FINAL REPORT NO. OIG-13-010-I 9 
 

                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

In response to our draft report, CS provided additional information about a 2010–2011 

survey that will assist CS in determining user fees.17 CS employed a contractor to survey 

its offices to determine whether its fees aligned with program costs. The survey asked 

office directors to estimate the amount of time staff needed to perform discrete steps 

to complete client services. Having reviewed the survey, we identified a number of 

problems with the methodology. CS management selected a nonprobability sample of 

only 25 of 108 USEACs18 to participate in this survey and received 18 survey responses. 

Even though CS also sent the survey to 125 overseas offices,19 it only received 

responses from 54 (43 percent). Unreliable survey results may result from: 

	 A nonprobability sampling of USEAC offices; 

	 No measurement of the extent or direction of statistical bias caused by the 

nonprobability sampling of USEACs or the low response rate from overseas 

offices—as responsive offices may have systematically differed from 

nonresponsive ones (e.g., had over- or underworked staff relative to the 

population, staffing composition, or type of country); 

	 No documented pretesting instrument to ensure clarity of questions and reduce 

respondent burden; and, 

	 No systematic, statistically sound approach to identify outliers, which the 

methodology stated CS removed on an ad hoc basis. 

Despite the weaknesses found in the survey’s design, its results represent the best 

available data for CS to use to determine its user fees at this time. CS, which is 

currently reviewing the results to determine appropriate user fees, plans on using such a 

survey as part of future biennial updates of user fees. A survey conducted once every 2 

years may yield imprecise time estimates, impacting the accuracy of user fees. CS staff is 

aware of the problems and is working toward making improvements. To implement a 

methodologically sound survey, CS should address the issues identified above. In 

addition, CS should sample specific participation agreements for client services to 

validate the survey results. 

17 The formulation of user fees takes into account and impacts both domestic and overseas operations. While the 

focus of our evaluation was on domestic operations, our analysis of the user fee methodology and our
 

recommendation should improve CS operations worldwide. 

18 At the time of the survey in 2010, there were 108 USEACs. 

19 At the time of the survey in 2010, there were 125 overseas CS offices. 

FINAL REPORT NO. OIG-13-010-I 10 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

                                                           

Figure 6. CS Costs (in 

Millions), FYs 2009–2011	 

Source: OIG analysis of CS financial data	 

Cannot determine whether its fee schedule 

methodology includes all costs. When CS 

released its current fee schedule in 2008, it 

claimed nonsalary personnel costs (e.g., travel, 

rent, information technology) were accounted 

for in a flat-rate overhead charge of 12 percent 

of salaries and benefits.20 However, GAO noted 

in its March 2009 review of CS’s fee schedule 

methodology that CS provided documentation 

which estimated overhead at only 6.25 percent 

of salaries and benefits, rather than 12 percent. 

GAO also reported that CS did not document 

its methodology for estimating overhead costs, 

making it impossible to assess which costs are 

accounted for and at what level. In our analysis, 

the costs for rent, information technology, and travel, and other nonsalary and benefits 

costs accounted for $308 million (41percent) of $750 million in total costs for FYs 

2009–2011 (see figure 6, above). 

Without a clearly documented methodology or sound method of measuring time spent 

on services, we could not determine how CS accounted for these costs or identify 

where it could devise additional cost recovery improvements. 

B. Certain internal controls for processing and reconciling client transactions are deficient 

Trade specialists manually enter client contact and financial information into eMenu, 

CS’s operation control system. This system automatically generates a unique code for 

each project. For a system of record for financial transactions, CS uses the 

Department’s Commerce Business System (CBS), operated by the National Institute for 

Standards and Technology (NIST). CS’s accounting staff manually assigns CBS accounting 

codes to each financial transaction with an eMenu project code. Field support specialists 

manage USEAC budgets, approve expenditures, process payments, and reconcile 

accounts between CBS and eMenu. We found several weaknesses in internal financial 

controls that, left unaddressed, would leave the agency susceptible to fraud or incorrect 

financial information. 

Payments made by check lack proper internal controls. During FYs 2009–2011, CS 

received 19 percent of total domestic services revenue from check payments (see table 

1, below). Clients who pay by check often mail payments directly to the trade 

specialists, who then forward it to their field support specialists. This practice is not 

consistent with OMB Circular A-123 on management controls, which requires a 

segregation of duties when processing financial transactions.21 In contrast, CS allows 

clients to make secure electronic credit card payments through a link to CS’s online 

20 OMB Circular A-76, Competition in Commercial Activities, May 29, 2003, establishes the 12 percent rate as a 

guideline to estimate overhead in a cost-absorption model.
 

21 OMB Circular A-123, Management’s Responsibility for Internal Control, December 21, 2004. 

FINAL REPORT NO. OIG-13-010-I 11 
 

                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

eMenu system. Clients often pay by check for more expensive services, such as a trade 

mission22 or a Gold Key Service, and by credit card for lower cost services (e.g., market 

research, webinars, and seminars). Nonetheless, the credit card payment option 

removes the risk of fraud that could result from trade specialists collecting payments for 

services they initiate. Although we did not discover any evidence of wrongdoing, 

allowing trade specialists to handle checks exposes the USEACs to the risk of diverted 

payments. CS should take steps to maintain the separation of duties. 

Table 1. Client Payments to Domestic Offices 

by Check and Credit Card, FYs 2009–2011 

Total Checks Credit Cards 

Number of transactions 28,728 1,601 27,127 

Total revenue 

(in millions) $9.57 $1.82 $7.75 

Percent of total 

transactionsa 5.6 94.4 

Percent of total revenuea 19.1 80.9 

Source: CBS data on CS financial transactions, FYs 2009–2011
 a

 Totals represent the combined number of transactions and amount of cumulative 

revenue collected via check or credit card by USEACs and network offices. 

CS lacks official guidance on reconciling accounts. Departmental guidelines for 

managing financial data require regular, well-documented reconciliation activities subject 

to second-party review.23 We found that CS field support staff may not regularly 

reconcile accounts, such as travel, mailing services, rent, telecommunications, and 

supplies, between eMenu and CBS.24 When finding problems during reconciliation (see 

figure 7, below), the field support staff notifies the appropriate CBS staff at NIST. NIST 

staff, however, do not consistently follow up on problems or confirm corrective actions 

with CS. Additionally, reconciliation activities are currently not subject to higher-level 

review. 

22 Trade mission payments can only be made by check; are typically larger amounts than standard services; and can 

be accepted at a USEAC, overseas post, or mailed directly to CS headquarters.
 

23 The U.S. Department of Commerce Cash Management Policies and Procedures Handbook (September 2011 revision) 

requires the segregation of all cash related duties; see chapter 8, section 5.0, item J.
 

24 We could not assess the level of disparity between all eMenu and CBS accounts because eMenu lacks data on 

services performed without PAs. 

FINAL REPORT NO. OIG-13-010-I 12 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Figure 7. CS Process for Reconciling Payments 

with eMenu and CBS Accounts 

Source: OIG analysis of CS documentation 

CS informed us it is working with the Department to develop policies to strengthen 

internal controls. Without a specific policy prohibiting trade specialists from handling 

client payments and standardized policies requiring second-party review of account 

reconciliation activities, CS is vulnerable to payment fraud and may use inaccurate 

financial data. 

Recommendations 

We recommend the Director General of the U.S. & Foreign Commercial Service take the 

following actions: 

5.	 Standardize the review process for the fee schedule to ensure biennial updates, as 

required by OMB Circular A-25. 

6.	 Ensure that surveys used to determine user fees are methodologically sound and sample 

participation agreements for client services to validate the survey results. 

7.	 Analyze and document the methodology for estimating overhead costs and include 

appropriate costs in the fee schedule to approximate full-cost recovery. 

8.	 Develop (a) formal policies prohibiting trade specialists from handling checks and (b) 

appropriate internal controls for check payments, consistent with those in place for 

credit card payments. 

9.	 Create official policies for account reconciliation, providing second-party review of 

reconciliation activities and guidance for corrective action. 

FINAL REPORT NO. OIG-13-010-I 13 
                                                           

 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

III.	 Survey Respondents Reported That CS Actions to Implement the National 

Export Initiative Have Had a Limited Effect on USEAC Collaboration with 

Partners and Guidance to Enhance Collaboration is Inadequate 

Since their establishment, a key objective of USEACs has been to enhance and expand 

federal export promotion services through cooperation and coordination with trade-related 

partners. The recently created Export Promotion Cabinet has reported that enhancing such 

collaboration is necessary to achieve the goals of the NEI, which aims to double U.S. 

exports by the end of 2014. The Export Promotion Cabinet identified four overarching 

actions to implement the NEI Executive Order,25 three of which relate to coordination. The 

cabinet also developed 68 recommendations to address the eight priorities identified in the 

NEI, seven of which specifically address the four priorities most directly related to USEAC 

operations: (1) exports by small- and medium-sized enterprises,(2) federal export 

assistance, (3) commercial advocacy, (4) export promotion of services (see appendix E). 26 

Similarly, to enhance collaboration among federal agencies, GAO has identified eight 

practices that result in joint activities that produce more value than could be produced 

when organizations act alone.27 These practices can also apply to federal collaboration with 

nonfederal entities. 

Through staff interviews and an analysis of survey results and CS data, we found that 

USEACs collaborate extensively with partners; however, CS actions to implement the NEI 

have had a limited effect on the extent and quality of that collaboration. In addition, 

specialists—less than half of whom had attended interagency training in Washington, DC, 

focused on export promotion—reported that CS management guidance on collaboration 

was lacking. Finally, we found that collaboration between CS and its partners is inhibited by 

legal restrictions on the sharing of client information, even among federal agencies. 

A.	 Trade specialists report the National Export Initiative has had a limited effect on 

collaboration 

Fifty-five percent of survey respondents reported the NEI had not affected their 

collaboration with partners. An additional 11 percent responded that NEI programs 

have actually made collaboration with partners more difficult. Only 34 percent stated 

that NEI activities have improved collaboration with their partners (see figure 8, below). 

25 National Export Initiative, Exec. Order No. 13534, 75 Fed. Reg. 12433 (March 11, 2010). 

26 See Export Promotion Cabinet, September 2010, Report to the President on the National Export Initiative: The Export 

Promotion Cabinet’s Plan for Doubling Exports in Five Years, Washington, DC: Trade Promotion Coordinating 

Committee. 

27 These are: (1) define and articulate a common outcome; (2) establish mutually reinforcing or joint strategies; (3) 

identify and address needs by leveraging resources; (4) agree on roles and responsibilities; (5) establish compatible 

policies, procedures, and other means to operate across agency boundaries; (6) develop mechanisms to monitor, 

evaluate, and report on results; (7) reinforce agency accountability for collaborative efforts through agency plans 

and reports; and (8) reinforce individual accountability for collaborative efforts through performance management 

systems. See GAO, October 21, 2005. Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration Among Federal Agencies, GAO-06-15, Washington, DC: GAO. 

FINAL REPORT NO. OIG-13-010-I 14 
                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Figure 8. Has the NEI Changed 

Partner Collaboration? 

Source: OIG survey of CS domestic 

trade specialists 

Historically, USEACs have collaborated with a 

wide range of partners in fulfilling CS’s mission 

of promoting U.S. exports. These partners 

include other ITA business units, 

Departmental bureaus and federal agencies; 

state and local governments; and private 

sector organizations. OIG previously reported 

that USEACs have developed strong 

relationships with federal and nonfederal 

partners, and all the USEAC Network 

Directors with whom we spoke for this 

review generally characterize their USEACs 

collaboration with partners as both extensive 

and generally effective. 28 

Survey respondents reported that during FYs 

2009–2011 they collaborated most frequently 

with District Export Councils,29 state trade offices, and the Export–Import Bank of the 

United States. Their most frequent collaboration activities were (1) jointly promoting 

their respective services through client outreach, such as seminars; (2) directly referring 

clients to each other, when appropriate; and (3) sharing client contact information. 

Our review of CS “highlights” reports supports the survey respondents’ assessment that 

the NEI has not significantly affected the outcomes of USEAC collaboration with 

partners. Highlight reports summarize nonquantifiable trade activities, accomplishments, 

and outreach of USEAC staff that do not result in export successes. During FYs 2009– 

2011, the number of approved USEAC highlights that identified partners, as well as the 

numbers of partners themselves, were fairly constant (see figure 9, below). Conversely, 

the proportion of total export success attributable to USEAC-led activities and which 

credited a partner declined over the same period (see figure 10, below). With improved 

collaboration, CS should expect to see a positive change. 

28 Commerce OIG, USEACs Are Meeting Client Needs, but Better Management Oversight Is Needed, 21. 

29 District Export Councils are comprised of local business leaders who advise local small- and medium-sized 

companies with exporting and work with USEACs to help promote trade-related activities. 

FINAL REPORT NO. OIG-13-010-I 15 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

This survey, which elicited feedback from 230 trade specialists, provided opportunities 

for descriptive narrative responses. Not every question elicited the same number of 

narrative responses. Twenty-eight percent of 134 respondents who provided narratives 

explaining their responses about the NEI’s impact on collaboration stated that the NEI 

was accompanied by no substantive change in CS policies or practices. Twenty percent 

responded that they have always collaborated with partners to identify clients and 

enhance service, thus the NEI has not affected their existing coordination with them. 

Sixteen percent of respondents stated that, while the NEI has highlighted the 

importance of exporting to companies and increased demand for export promotion 

services, the roles and responsibilities of the entities involved in export promotion 

across all government levels are poorly defined. This lack of clarity about export roles 

and responsibilities has led to competition and duplication of effort among service 

providers. 

B. Trade specialist guidance and training on enhancing collaboration is inadequate 

Our survey asked domestic trade specialists whether they had received guidance from 

CS headquarters on collaborating with partners in support of the NEI. Only 50 percent 

reported having received specific guidance; 32 percent could not recall having received 

such guidance, while 18 percent stating receiving no guidance at all. Of the 118 

respondents who provided narratives explaining their responses to this question, 24 

percent reported having received guidance about formalizing relationships with partners 

through signed agreements, and 15 percent reported receiving guidance on how to 

work with partners to implement the New Market Exporter Initiative.30

                                                            

30 The New Market Exporter Initiative is a national marketing and data mining effort to identify U.S. exporters 

currently exporting to one or two markets that are capable of expanding to additional markets. Under this 

FINAL REPORT NO. OIG-13-010-I 16 

Figure 9. USEAC Highlights,

FYs 2009–2011

Source: OIG analysis of Highlights data

Figure 10. USEAC Export Successes 

with Partners, FYs 2009–2011

Source: OIG analysis of export success data
                                                                                                                                                                                               

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Our survey also asked for suggestions to improve collaboration with partners. Thirteen 

percent of 189 respondents who provided suggestions said receiving additional guidance 

and training would improve their ability to work with partners, given the importance of 

the Administration’s initiative to double exports by the end of 2014. Thirteen percent of 

respondents also stated that CS should revise trade specialist performance measures to 

better promote collaboration with partners or align them more closely with those of 

partners. 

With regard to specific training, CS participates in Trade Promotion Coordinating 

Committee (TPCC) Trade Officer Training. This interagency program provides client 

management skills training and broader knowledge of the programs and resources 

available to assist U.S. firms in the international marketplace and facilitates collaboration 

and problem solving for clients across the TPCC agencies. Several trade specialists who 

attended the training described it to us as being very valuable in developing the 

knowledge and skill needed to effectively perform their jobs. However, according to 

TPCC records, less than half of trade specialists currently working at USEACs have 

attended TPCC Trade Officer Training. The TPCC’s deputy director identified 

constrained USEAC travel budgets and limited class capacity as the primary impediments 

to expanding the training; developing web-based training options available to all 

domestic trade specialists would mitigate these problems. 

C. Collaboration between USEACs and their partners is hampered by restrictions on sharing 

client information 

The Export Promotion Cabinet recommends strengthening interagency information 

sharing and coordination to implement the NEI. Trade specialists tended to support this 

recommendation: when asked for suggestions to improve collaboration, 23 percent of 

189 survey respondents provided narratives about improving information sharing among 

partners. In addition, one of the USEAC network directors with whom we spoke cited 

their inability to share relevant information about clients with partners as hindering their 

efforts to enhance collaboration and avoid duplication of effort. Further, the Trade 

Secrets Act31 generally prohibits federal employees from disclosing commercial 

confidential information. According to the Office of General Counsel’s legal 

interpretation on behalf of CS, this information cannot be disclosed without the 

permission of the submitter of such information (i.e., CS's clients). Therefore, CS must 

seek a client’s written permission to share that client’s commercial information with 

others, including other federal entities like SBA and the Export–Import Bank. One state 

trade office director who partners with a USEAC told OIG that sharing client 

information is integral to true collaboration, and that the USEAC’s inability to do so has 

hindered their relationship. 

CS currently exchanges publicly available client information with the Export–Import 

Bank on a quarterly basis. However, personal privacy information about individuals is 

program, ITA collaborates with shipping, finance, and other U.S. companies to identify its customers who already 

sell to an international market and direct them to Department trade specialists.
 

31 18 U.S.C. § 1905. 

FINAL REPORT NO. OIG-13-010-I 17 
   

                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

not provided by either agency, nor is any information protected by law (e.g., the Trade 

Secrets Act). At the request of state recipients of STEP grants,32 CS also is exploring 

ways to provide information on client services funded by the program. 

Recommendations 

We recommend the Director General of the U.S. & Foreign Commercial Service take the 

following actions: 

10. Determine why guidance on collaboration is not effectively communicated to trade 

specialists working in the field and take corrective action. 

11. Develop guidance on how to incorporate GAO practices for enhancing collaboration to 

structure partnerships to add value in achieving the USEACs’ mission. 

12. Develop and provide training to USEAC and partner staff on collaboration strategies 

and techniques. 

13. As chair of the TPCC, request expanded TPCC Trade Officer Training with a webbased alternative that is available to all domestic trade specialists. 

14. Explore the possibility of requiring CS clients to waive confidentiality, in whole or in 

part, as a condition for receiving services. 

32 The State Trade and Export Promotion (STEP) program is a 3-year pilot trade and export initiative authorized 

by the Small Business Jobs Act of 2010, Pub. L. No. 111-240. Funded by federal grants and matching funds from the 

states, the STEP program is designed to help increase the number of small businesses exporting and to raise the 

value of exports for those small businesses currently exporting. 

FINAL REPORT NO. OIG-13-010-I 18 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Summary of Agency Response and OIG 

Comments 

On October 19, 2012, we received CS’s formal comments to our draft report, which we 

include as appendix F of this report. Separately, the agency provided technical comments that 

we addressed in the report where appropriate. We had subsequent communications with CS 

officials to resolve issues stated in their written response summarized below. 

Finding I, recommendation 1: Develop strategies for minimizing the administrative duties of 

trade specialists. Agency concurred with our recommendation, but is uncertain about the resultant cost 

savings. 

CS agreed with our recommendation to develop strategies to minimize trade specialists’ 

administrative duties but disagreed with our estimates of cost savings. (see finding 1, section A). 

CS stated that (a) trade specialists can efficiently perform certain administrative duties and (b) 

the anticipated upgrade or replacement of its customer relationship management system could 

reduce time spent on administrative tasks, making administrative positions unnecessary. 

However, the majority of domestic trade specialists we surveyed reported administrative duties 

taking up a significant amount of time and detracting from their client-facing duties. We 

continue to believe that this warrants management attention. Finally, CS also stated website 

management throughout the federal government is handled by staff above the GS-7 level. We 

agree that any question of position classification would best be answered by management. 

The examples in this report illustrate how cost savings can be realized by adjusting the duties of 

trade specialists. The monetary benefit value in our model represents a low estimate of 

achievable cost-savings over 2 years. CS states it is currently uncertain about cost savings that 

could result from strategies for minimizing administrative burdens, which are under 

development. We look forward to its proposed approach to decrease trade specialist 

administrative burdens and the estimate of cost savings, both of which are part of their action 

plan which is due within 60 calendar days. 

Finding I, recommendation 2: Upgrade or replace the current Client Tracking System. 

Agency concurred. 

CS is in the process of developing a new Customer Relationship Management system to replace 

the Client Tracking System. 

Finding I, recommendation 3: Determine why some USEACs are underperforming and 

take corrective action or explore the following options: (1) consolidate lower-producing 

USEACs with higher-producing USEACs located within the same MSA, (2) close lowerproducing USEACs operating in MSAs with low export potential, and (3) consider closing 

vacant USEACs. Agency concurred. 

FINAL REPORT NO. OIG-13-010-I 19 
 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

CS agreed that savings could be achieved by eliminating vacant offices and will consider 

objective criteria, including the resource allocation model (DRAM) and performance metrics, 

for future office resource allocation efforts. 

Finding I, recommendation 4: Track overseas posts that are unable to deliver services in an 

adequate manner and use the pilot tracking tool to provide estimated service delivery times to 

clients based on post performance and service type. Agency concurred. 

Finding II, recommendation 5: Standardize the review process for the fee schedule to 

ensure biennial updates, as required by OMB Circular A-25. Agency concurred. 

Finding II, recommendation 6: Ensure that surveys used to determine user fees are 

methodologically sound and sample participation agreements for client services to validate the 

survey results. Agency concurred with revised recommendation. 

Our initial recommendation proposed that CS trade specialists to track the time they spent 

performing client services, by type of service, using existing online timekeeping functionality. CS 

considered this requirement to be an increased administrative burden on staff that would 

require implementation in both domestic and overseas offices. CS maintained it was better to 

measure the average time spent on client services and calculate cost recovery fees through a 

survey that accounted for discrete process steps, which we found problematic. 

Although a survey could be a viable alternative to biweekly timekeeping, we identified a number 

of weaknesses that may not produce precise time estimates—all of which would still result in 

inaccurate user fees. Therefore, we modified this section of the report to discuss the survey 

and revised recommendation 6, to prompt CS to take corrective action to ensure surveys used 

to determine user fees are (a) methodologically sound and (b) validated by a statistical review 

of time spent on specific participation agreements for client services. 

Finding II, recommendation 7: Analyze and document the methodology for estimating 

overhead costs and include appropriate costs in the fee schedule to approximate full-cost 

recovery. Agency concurred. 

Finding II, recommendation 8: Develop (a) formal policies prohibiting trade specialists from 

handling checks and (b) appropriate internal controls for check payments, consistent with those 

in place for credit card payments. Agency concurred. 

Finding II, recommendation 9: Create official policies for account reconciliation, providing 

second-party review of reconciliation activities and guidance for corrective action. Agency 

concurred. 

Finding III, recommendation 10: Determine why guidance on collaboration is not 

effectively communicated to trade specialists working in the field and take corrective action. 

Agency concurred. 

CS stated that a recent Export Promotion Cabinet report established a national protocol for 

client services to improve coordination among agencies. 

FINAL REPORT NO. OIG-13-010-I 20 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Finding III, recommendation 11: Develop guidance on how to incorporate GAO practices 

for enhancing collaboration to structure partnerships to add value in achieving the USEACs’ 

mission. Agency concurred. 

CS stated that, in FY 2012, more than 100 memoranda of understanding were signed with its 

partners to work together more closely. 

Finding III, recommendation 12: Develop and provide training to USEAC and partner staff 

on collaboration strategies and techniques. Agency concurred. 

Finding III, recommendation 13: As chair of the TPCC, request expanded TPCC Trade 

Officer Training with a web-based alternative that is available to all domestic trade specialists. 

Agency concurred. 

The agency hopes to fund training for 30 field-based trade specialists in FY 2013 and agreed to 

explore web-based training options. 

Finding III, recommendation 14: Explore the possibility of requiring CS clients to waive 

confidentiality, in whole or in part, as a condition for receiving services. Agency concurred. 

FINAL REPORT NO. OIG-13-010-I 21 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix A: Objectives, Scope, and 

Methodology 

To conduct this review, we sought to (1) evaluate whether CS’s allocation of domestic 

resources meets its mission and goals, (2) assess CS’s level of cost recovery, and (3) determine 

the extent to which the level of coordination between USEACs and their federal and 

nonfederal partners is sufficient to meet Administration priorities with respect to the NEI. 

Our methodology included interviewing senior CS managers and staff, as well as reviewing 

documentation related to our objectives, for the period FYs 2009–2011 (unless otherwise 

noted). Specifically, we: 

	 Interviewed CS headquarters officials to discuss 

issues involving domestic resources, cost 

recovery, and the coordination of trade 

promotion functions. 

	 Interviewed OMB officials to gain an 

understanding of CS’s cost recovery efforts. 

	 Interviewed CS’s partners at the federal, state, 

and local levels to assess the level of coordination 

and collaboration on trade promotion activities. 

	 Interviewed all eight USEAC network directors. 

	 Conducted site visits to select USEACs (see box 

at right) in four of the eight networks to meet 

with trade specialists to discuss and observe local 

operations. 

	 Conducted an online survey of domestic trade 

specialists to solicit their feedback on domestic 

OIG Site Visits 

to U.S. Export 

Assistance Centers, 

February–April 2012 

Atlanta 

Arlington, Virginia 

Austin, Texas 

Baltimore 

Denver 

Detroit 

Houston 

Philadelphia 

Pontiac, Michigan 

Richmond 

San Antonio 

Trenton 

CS operations. 

	 Reviewed Administration and Commercial Service trade promotion initiatives. 

	 Reviewed policies, procedures, and guidelines, related to USEAC operations. 

	 Reviewed CS’s domestic resource allocation model and USEAC performance data. 

	 Reviewed relevant federal government criteria and requirements for full cost recovery 

of specialized services. 

	 Reviewed CS’s fee schedule on client services and assessed the amounts collected to 

determine the extent of cost recovery efforts. 

FINAL REPORT NO. OIG-13-010-I 22 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

We conducted this review from November 2011 through May 2012, under the authorities of 

the Inspector General Act of 1978, as amended, and Departmental Organization Order 10-13, 

dated August 31, 2006, as amended. The review was conducted in accordance with the Quality 

Standards for Inspection and Evaluation (January 2011) as published by the Council of the 

Inspectors General on Integrity and Efficiency. 

FINAL REPORT NO. OIG-13-010-I 23 
 

 

                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix B: Quantitative Methodology 

Our review sought to evaluate whether CS's allocation of domestic resources meets its mission 

and goals. We reviewed individual USEAC performance to assess whether CS could reallocate 

resources from lower-producing offices to more productive areas. To accomplish this, we used 

four sources of data (three of which spanned the period FYs 2009–2011): 

	 eMenu services data 

	 eMenu export success data 

	 Time and Attendance data 

	 Domestic Resource Allocation Model (DRAM) data (completed in 2011) 

The eMenu services data contain one observation for each participation agreement, including 

active, completed, and canceled services. To conduct our analysis, we first aggregated all paid 

active and completed services at the USEAC level to determine the total number of services 

provided and the total amount of fees collected by each USEAC. 

Because the eMenu export success data also contains one observation for each export success, 

we then aggregated all export successes for each USEAC to obtain the total number of export 

successes and the dollar value of those export successes. Time and attendance data contains 

one observation for each employee pay period and includes information on salary, benefits, and 

the number of hours worked by each domestic trade specialist. Therefore, we aggregated all 

salary, benefits, and hours worked data from each USEAC. 

The DRAM contains one observation for each Metropolitan Statistical Area (MSA) in the 

United States and estimates each MSA’s export potential. We transformed the dataset into one 

observation for each USEAC, retaining the MSA ranking and export potential for each 

USEAC.33 

Once the four datasets had a parallel structure (i.e., one observation for each USEAC), we 

merged them into a single database and developed the following performance metrics and 

export potential criteria. 

Our performance metrics were: 

	 OIG Metric 1: USEAC services per hour (number of services divided by the total 

hours worked by trade specialists for each USEAC). 

	 OIG Metric 2: USEAC fee collection per hour (sum of fees collected for services 

divided by the total hours worked by trade specialists for each USEAC). 

33 For example, the Los Angeles and New York metropolitan areas count as two MSAs but are served by 3 and 5 

USEACs, respectively. 

FINAL REPORT NO. OIG-13-010-I 24 
                                                           

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

	 OIG Metric 3: USEAC export successes per hour (number of export successes 

divided by the total hours worked by trade specialists for each USEAC).
 

	 OIG Metric 4: USEAC export success value per hour (total export success value 

divided by the number of hours worked by trade specialists for each USEAC). 

Our export potential criteria were: 

	 Criteria 1: USEAC is in the same MSA as another USEAC. 

	 Criteria 2: USEAC is in an MSA that ranks in the bottom half of MSAs in the United 

States in terms of export potential, according to the DRAM. 

We used 3 years of trade specialist data by USEAC, rather than 1 year, to better evaluate 

USEAC performance based on our 4 metrics.34 If a USEAC underproduces in terms of providing 

services and generating export successes over 3 years, it does not necessarily mean that the 

individual trade specialists are also underproducing. Still, it does indicate that the USEAC is 

contributing significantly less than other offices. We converted all values to hourly rates to 

avoid biasing the results against USEACs with fewer employees, more part-time employees, or 

employees who left the organization during the three-year period. 

Additionally, trade specialists perform other duties besides client services: they refer clients to 

other federal agencies that can assist them with business development, provide general advice 

without charge, and help companies locate data online. However, alternative measures of 

performance are either unreliable (e.g., data self-reported by USEACs) or unquantifiable. 

Offices with consistently low rates of both export successes and services provided over 3 years 

would need to provide considerably more nonquantifiable services than other offices to make 

up for those deficiencies. Again, individual trade specialists are not necessarily low-producing; 

rather, some USEACs could be located in areas with low export potential or that are served by 

other USEACs. 

Therefore, we combined performance metrics (services and export successes) with criteria 

about office location, such as multiple USEACs in the same MSA and USEACs in MSAs with 

low-export potential, to identify opportunities for cost savings. All four OIG metrics were 

“right-skewed,” meaning high performers raised the mean substantially above the median. 

Therefore, we used medians and quartiles to evaluate dispersion to ensure low-performing 

offices were not penalized for the strong performance of a few offices. To be considered 

underperforming, offices had to be in or near the bottom 25th percentile of at least 3 of the 4 

OIG metrics. We then identified underperforming USEACs that were located in MSAs with low 

export potential or in MSAs with multiple USEACS. We do not identify the four offices in this 

public report but have provided this information to CS for its consideration. 

34 Measuring a trade specialist’s performance based on 1 year’s worth of data for export successes and completed 

client services may not be representative of long-term performance. For example, a trade specialist may deliver an 

outstanding service for a client who ends up not making a sale, resulting in no export success for the specialist. By 

contrast, a specialist may arrange a single meeting for a client that leads to an export success with a high dollar 

value that exceeds the value of all export successes from the previous year. 

FINAL REPORT NO. OIG-13-010-I 25 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix C: Monetary Benefits 

Questioned 

Costs 

Unsupported 

Costs and 

Write-offs 

Funds Put to 

Better Use 

Centralize administrative 

duties where possible and 

better align job 

responsibilities with grade 

level. (see Section IA, 

pages 5–6) 

$0 $0 $1,500,000a 

Close vacant USEACs 

(see Section IB, pages 6–7) $0 $0 $28,000 

Source: OIG analysis a

 CS agreed to develop strategies to minimize trade specialists’ administrative duties but was uncertain about 

achievable cost savings. The $1.5 million estimated savings were based on a conservative data model that OIG 

used. However, we look forward to CS’s cost estimates based on its proposed approach to decrease trade 

specialist administrative burdens, both of which are part of the action plan due within 60 calendar days. 

FINAL REPORT NO. OIG-13-010-I 26 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix D: Survey Methodology 

To complete our review, we conducted an online survey of all CS domestic trade specialists, 

which included network directors, USEAC directors, career trade specialists, and commercial 

officers on domestic rotations. We asked questions related to our three objectives: resource 

allocation, cost recovery, and coordination/collaboration with partners. Overall, we achieved a 

response rate of 85 percent (see table D-1, below). 

Table D-1. Trade Specialist Survey Response Rate by Network

Network Responses Population Response 

Rate (%) 

Great Lakes 23 32 72

Mid-Atlantic 39 42 93

Midwest 29 32 91

Northeast 24 30 80

Pacific North 30 34 88

Pacific South 29 34 85

Southern 25 34 74

Southwest 31 34 91

Totals 230 272 85

Source: OIG survey of CS domestic trade specialists

Of the specialists who did not reply, many were on leave or on assignment, suggesting that 

much of the nonresponse is random. Additionally, there were no underrepresented strata: 

comparing regional response rates and trade specialist with commercial officer response rates 

show no evidence of nonresponse bias. Specialists, over half of whom have more than 10 years’ 

experience with CS (see figure D-1), were required to answer each question to submit their 

responses. 

To refine the survey instrument, we conducted four rounds of 

interviews during February and March, 2012 in Arlington, 

Virginia; Baltimore; Philadelphia; and Trenton. After each 

series of interviews, we modified the questionnaire to target 

the most relevant information and reduce question bias. 

Additionally, we provided a copy of the questionnaire to CS 

management on March 13, 2012, to ensure that our questions 

were not misleading or off-topic. We sent the survey to all 

domestic trade specialists via SurveyMonkey on March 16, 

2012, and closed it on April 6, 2012, allowing them 3 weeks to 

complete the questionnaire. The list of survey questions is 

included below: 

 

Figure D-1. Survey 

Respondent Years with 

Commercial Service

Source: OIG survey of CS domestic 

trade specialists

FINAL REPORT NO. OIG-13-010-I 27 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Survey Questions 

1.	 Name 

2.	 Title 

3.	 USEAC Location 

4.	 USEAC Region 

5.	 Years of CS Experience 

6.	 Email 

7.	 Phone 

8.	 Please identify the industries for which you are currently responsible. 

9.	 For FYs 2009–2011, please estimate the percentage of your time spent performing the 

following tasks. 

10. From the following list, please identity the administrative tasks that you performed at 

your USEAC from FY2009–2011. 

11. Please estimate the percentage of your clients located within 50 miles of your USEAC. 

12. On average, how many active clients do you work with simultaneously (e.g., at least one 

registered counseling session in CTS or open PA)? 

13. What percentage of your clients' service requests are unfulfilled because of issues at 

overseas posts? 

14. Please describe any problems related to fulfilling client service requests. 

15. Where do you meet with your clients? Please provide the percentage for each location. 

16. Please assess the efficiency and effectiveness of the following systems: eMenu. 

17. Please assess the efficiency and effectiveness of the following systems: Client Tracking 

System (CTS). 

18. Please describe any issues with the systems: 

19. Are your clients satisfied with the CS fee schedule? 

20. Are CS services appropriately priced for small and medium-sized businesses? 

21. If CS fees were raised, would you lose potential clients? 

22. Have you lost business to other organizations that provide similar services to CS due to 

cost, scheduling/timing of service delivery, or for some other reason? 

23. How do you verify whether a company is a small to medium sized business or a large 

company? 

24. How do you verify that a client's product satisfies the US content requirement? 

25. Rate the extent to which you collaborated/coordinated in export promotion activities 

with the following non-CS entities from FYs 2009–2011 (list of entities provided). 

26. How often did your collaboration with the following partners result in export successes 

in FYs 2009–2011 (uses the same list as the previous question)? 

27. Please identify the non-CS partner that contributed to the greatest number of your 

export successes from FYs 2009–2011. 

FINAL REPORT NO. OIG-13-010-I 28 
 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

28. From the following list, please identify your collaboration/coordination activities with 

the entities you identified. 

29. Has the NEI changed your coordination/collaboration efforts? 

30. Have you received any specific guidance from CS HQ management relating to 

collaboration/coordination with non-CS partners in support of the NEI? 

31. Do you routinely record coordination/collaboration activities with non-CS entities in 

CTS? 

32. Do you routinely record or track referrals to other federal agencies, such as SBA or 

Ex–Im Bank? 

33. Please provide any suggestions for improving CS coordination/collaboration with US 

government and non-US government entities. 

34. Please provide any suggestions for improving the operation of the USEACs. 

FINAL REPORT NO. OIG-13-010-I 29 
 

 

                                                           

 

 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix E: Export Promotion Cabinet 

Recommendations Related to Collaboration 

The Export Promotion Cabinet (EPC) has identified three overarching coordination-related 

actions to implement the National Export Initiative Executive Order35 and developed seven 

specific recommendations to address the four priority areas most directly related to USEAC 

operations: (1) exports by small- and medium-sized enterprises, (2) federal export assistance, 

(3) commercial advocacy, and (4) export promotion of services. Quoted verbatim from EPC, 

below, are only those priorities—and only those corresponding specific recommendations— 

most directly related to USEAC operations.36 

Priority: Exports by Small and Medium-Sized Enterprises (SMEs) 

Identify SMEs that can begin or expand exporting 

Coordinate, expand, and leverage Federal outreach resources to identify 

potential exporters. These resources include the interagency U.S. Export 

Assistance Centers (USEACs); field offices of the SBA, Commerce, and Agriculture; 

State and local governments; and non-government partners that provide services to 

SMEs. International trade specialists from Commerce, Agriculture, and SBA will team 

up with business assistance agencies to form local “Export Outreach Teams.” 

Increase collaboration with the private sector, including businesses, trade 

associations, lenders, District Export Council members, and local chambers of 

commerce, to identify both new SME exporters and those with export expansion 

potential. It is in the interest of these private sector partners to link their clients and 

members to Government resources that can help them enter and/or grow in 

international markets. 

Connect SMEs to export opportunities 

Develop export assistance packages that effectively combine the programs of 

different agencies. For example, fees for Commerce’s Gold Key Service or 

participation in trade missions could be paid for with an SBA Export Express loan. 

Or, an SME could receive a discounted Ex-Im Bank credit insurance policy in 

connection with an SBA Export Working Capital Program loan. 

35 National Export Initiative, Exec. Order No. 13534, 75 Fed. Reg. 12433 (March 11, 2010). 

36 A full list of the priorities and recommendations can be found in “[Section] II: Recommendations” of the report. 

Export Promotion Cabinet, September 2010. Report to the President on the National Export Initiative: The Export 

Promotion Cabinet’s Plan for Doubling U.S. Exports in Five Years [Online]. www.whitehouse.gov/the-pressoffice/2010/09/16/white-house-releases-report-president-national-export-initiative (accessed on July 24, 2012).
 

FINAL REPORT NO. OIG-13-010-I 30 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Priority: Federal Export Assistance 

Short-term Recommendations: 

Emphasize the New Market Exporter Initiative. This program is a national 

marketing, data mining, and lead generation effort to identify U.S. exporters 

currently exporting to one or two markets, but capable of expanding into additional 

markets. The New Market Exporter Initiative enhances partnerships with shipping, 

finance, and other U.S. companies that specialize in providing exporting services. 

These companies, including but not limited to FedEx, UPS, and the U.S. Postal 

Service, identify their customers, many of whom are SMEs, who already sell to an 

international market and direct them to local Commerce trade specialists. The 

Commerce trade specialists work with these SMEs to help them enter additional 

international markets. This effort includes mining internal TPCC partner client 

databases to identify businesses with potential for entering new markets 

Long-term Recommendations: 

Increase coordination with State export promotion programs and 

nonprofit associations. State governors, the National Association of State 

Departments of Agriculture, State Regional Trade Groups, and the State 

International Development Organization are key players in this country’s trade 

promotion efforts. Most States have offices devoted to export promotion for inState companies, and many governors lead at least one trade mission a year. At the 

local level, the States work very closely with their Federal Government partners. In 

many States, the offices of the State and Federal export promotion agencies are colocated and work together to develop annual operating plans. Federal agencies 

should strive to make joint planning the standard procedure in all States that have 

export promotion programs. The Administration’s proposed FY11 Budget would 

also provide increased funding for the Market Development Cooperator Program 

(MDCP). The MDCP grant program provides matching funds for public-private 

partnerships that expand export opportunities for U.S. businesses. The 

Administration has also requested an increase in funding to expand Agriculture’s 

activities to promote exports of U.S. food and agricultural products. 

Priority: Commercial Advocacy 

Short-Term Recommendations 

Enhance interagency coordination. Commercial advocacy can be enhanced by 

better coordinating the resources of the Federal Government. The Advocacy 

Center must continue to bring all key resources to bear on specific export 

transactions to enhance opportunities for success. This means rapidly directing U.S. 

exporters to appropriate agencies that can assist them with export opportunities 

and address potential vulnerability to foreign regulatory and trade actions. TPCC 

agencies will coordinate their leadership’s efforts to provide advocacy on behalf of 

U.S. exporters. The Secretary of Commerce, at the urging of the President, has 

FINAL REPORT NO. OIG-13-010-I 31 
 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

requested that senior Government officials consider commercial issues as part of 

their agenda when communicating with their foreign government counterparts. As 

noted by the Michigan District Export Council-West in comments submitted in 

response to the NEI Federal Register notice: 

Attention from the President and relevant cabinet-level agencies on aggressively 

expanding exports will show the world that we plan to compete. Our 

competitors’ longstanding commitment to trade advocacy begins at the highest 

levels of government. 

This can only occur productively with improved interagency communication. 

Interagency cooperation on advocacy can be especially effective for SMEs. SMEs 

benefit when the full range of Federal government services are coordinated to 

enhance their ability to export. Obtaining a key overseas contact through advocacy 

can have a huge impact. The Department of State’s Commercial and Business Affairs 

Office is working to enhance communication between the State Department and 

TPCC agencies to ensure that Ambassadors, U.S. officials, and senior leadership at 

all levels can engage on specific export opportunities. Since January 2010, this overall 

effort has led to increased activity for the Advocacy Center, and to an increase in 

advocacy successes that support U.S. jobs. 

Priority: Export Promotion of Services 

Short-Term Recommendations 

Continue to assess and focus on key growth priority sectors and markets to better 

coordinate export promotion efforts aimed at the services sector. The TPCC 

agencies will continue to work closely with industry and key stakeholders to identify 

and assess the services sectors which hold significant growth potential for the 

United States, and match those sectors with growing sales opportunities in key 

overseas markets. In concert, the TPCC agencies will heighten focus on U.S. service 

exports by deploying the full range of trade promotion tools, including targeted 

trade missions (see Priority 3 [“Trade Missions”]), bringing foreign buyers to the 

United States, and participating in services-oriented trade shows. 

FINAL REPORT NO. OIG-13-010-I 32 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL
 

Appendix F: Agency Response 

UNITED STATES DEPARTMENT OF COMMERCE 

International Trade Administration 

WoohlngiX>" O.C 20230 

OCT 1 8 2012 

MEMORANDUM FOR: Ron Prevost 

Assistant Inspector General for Economic and 

Statistical Program Assessment 

Office of the Inspector General 

FROM: Antwaun Griffin 

Deputy Assistant Secretary 

Office of Domestic Operations 

U.S. and Foreign CommercialS rvice 

SUBJECT: Response to Draft Report: U.S. Export Assistance Centers Could 

Improve Their Delivery of Client Services and Cost Recovery 

Efforts, September 7, 2012 

The U.S. and Foreign Commercial Service (CS) welcomes the September 7, 2012, Office of 

Inspector General's (OIG) draft repon, U.S. Export Assistance Centers Could Improve Their 

Delivery of Client Services and Cost Recovery Efforts. The report focuses on three areas: I) 

CS's allocation of domestic resources; 2) CS's level of cost recovery; and 3) coordination levels 

between CS domestic offices, or U.S. Export Assistance Centers (USEAC), and federal and 

nonfederal partners under the National Export Initiative (NEI). The draft report includes 14 

recommendations for CS action. We appreciate the thorough and thoughtful review of these 

issues. While we generally agree with the fmdings and conclusions, we do have some concerns 

as noted herein. 

Regarding the allocation of domestic resources, we agree in concept with the recommendation to 

develop strategies for minimizing the administrative duties of trade specialists. However, we 

respectfully disagree with the specific proposals and conclusion. We contend that trade 

specialists most efficiently and effectively perform certain administrative burdens. This includes 

the bulk of the client management responsibilities associated with entering data, obtained from 

client interaction, into the Customer Relationship Martagement (CRM) system. Furthennore, 

given the anticipated upgrade or replacement to the CRM system in the near future, any 

estimated cost savings from shifting such administrative duties are uncertain. Additionally, we 

disagree that the centralizing of domestic field office website management duties would result in 

any cost savings; throughout the government, such services are performed by persollllel at grades 

higher than GS-7. 

For recommendation 3, consolidating lower-producing USEACs and closing domestic offices, 

CS currently employs a Domestic Resource Allocation Model and a Gap and Opportunity 

Analysis to assist in allocating domestic field resources. These models provide indicators of 

export intensiveness at the Metropolitan Statistical Area level, as well as indicators for demand 

and performance at the USEAC level, respectively. CS will take this 010 recommendation into 

consideration when utilizing these resource allocation models for taking appropriate action. ~'\ 

'-Y ............. , T a A 0 I ····••It•••·•· 

FINAL REPORT NO. OIG-13-010-I 33 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL
 

In reference to recommendation 6, you propose that CS require staff to use existing online 

timekeeping functionality to account for employee time spent on client services. While such 

information could assist in determining the level of cost recovery, we are concerned about the 

increased administrative burden that such a system would necessarily place on CS personnel 

worldwide. Additionally, the May 2011 independent study by Paradigm Technologies Inc., 

titled, Fee-Based Export Promotion Program Pricing, Financial and Operational Management 

Review Support has documented that statistically sound time tracking metrics on client services 

can be obtained via a survey, which is less administratively burdensome on CS personnel overall 

than having all CS personnel fully utilize online timekeeping. 

The NEI remains the top priority for the Commercial Service, and we are committed to helping 

realize President Obama's goal of doubling exports from 2010 levels by the end of2014. As 

citied in the report, the Export Promotion Cabinet has reported that enhancing cooperation and 

coordination with trade-related partners is necessary to achieve the goals of the National Export 

Initiative. To this end, in fiscal year 2012, CS signed over I 00 Memoranda of Understanding 

(MOU) with private and public-sector partners across the country. These MOUs commits us and 

our partners, in specifically defined areas, to work together more closely. These partnerships are 

furthering export awareness through outreach activities and leading to better coordination and 

collaboration in the provision of export assistance services. 

Additionally, the Export Promotion Cabinet's recent report titled, Maximizing the Effictiveness of 

Federal Programs that Support Trade and Investment, informs that Federal trade promotion 

agencies will (among other objectives) establish a national protocol for client services that will 

optimize how clients are served across Federal networks and increase the level of coordination 

among Federal agency and partners by including a clear process for referring clients to the 

correct Federal export assistance services. 

The OIG report also recommends that CS " ... request expanded [Trade Promotion Coordinating 

Committee] Trade Officer Training with a web-based alternative that is available to domestic 

trade specialists." Since 2003, 120 of our 240 domestic trade specialists have attended the Trade 

Promotion Coordinating Committee (TPCC) training in Washington, D.C. We hope to have the 

funds in FY 2013 to train an additional 30 field-based trade specialists and to explore web-based 

training alternatives. 

We appreciate the continued opportunity to engage with OIG on these important findings and 

recommendations. We look forward to the fmal report. 

011200000133 

FINAL REPORT NO. OIG-13-010-I 34