United States General Accounting Office

GAO Testimony

Before the Subcommittee on Procurement, Exports and

Business Opportunities, Committee on Small Business,

House of Representatives

For Release on Delivery

Expected at

10:00 a.m., EDT

Thursday,

July 25, 1996

U.S. EXPORT ASSISTANCE

CENTERS

Customer Service

Enhanced, But Potential to

Improve Operations Exists

Statement of JayEtta Z. Hecker, Associate Director,

International Relations and Trade Issues, National

Security and International Affairs Division

G O A

years

1921 - 1996

GAO/T-NSIAD-96-213

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to testify before this Subcommittee on our

work regarding efforts by the Department of Commerce, the U.S.

Export-Import Bank (Eximbank), and the Small Business Administration

(SBA) to create a nationwide network of “one-stop shops,” called U.S.

Export Assistance Centers (USEAC). My testimony will address both the

benefits realized at the first four USEACs established as well as

opportunities for improving their operations. As part of our review, we

visited each of the four original USEACs1

 for a period of 1 week during

May-June 1995 and obtained information, using interviews and surveys,

from USEAC staff members, selected customers, and officials of nonfederal

partner organizations that work closely with them. (See the appendix for

more detailed information on our surveys.)

Summary Staff and customers of the four USEACs we visited believed that co-locating

agency staff helped to improve the provision of federal export services.

For example, about 80 percent of USEAC staff responding to our survey said

that establishment of the USEACs had substantially increased customer

access to the full range of federal export promotion services. Services

provided by the USEACs include export finance services as well as export

promotion services, such as providing trade leads and lists of overseas

agents and distributors. Similarly, respondents to a survey of these USEACs’

“best customers” indicated a high level of satisfaction with the services of

individual agencies. However, these customers also saw room for

improvement in USEAC agency efforts to work as a unit to deliver services

to clients.

Approximately 40 percent of the customers surveyed who stated that they

had used more than one USEAC agency also indicated that they had found

the second agency on their own, rather than through their USEAC contact.

Several told us in interviews that USEAC staff member(s) they regularly

work with did not inform them of the full range of services provided by the

USEACs, even after they had expressed a need for the services of another

USEAC agency. Staff we interviewed at certain USEACs stated that they were

reluctant to recommend the services of another agency, even to clients

who expressed a need, because they were unfamiliar with that agency’s

performance in delivering the service.

1

In Baltimore, Chicago, Long Beach, and Miami.

Page 1 GAO/T-NSIAD-96-213
Currently, USEAC directors do not have the basic management tools to

assure that creation of the USEACs substantially improves federal export

promotion services. For example, they do not have (1) the ability to

contribute to the performance appraisals of all USEAC staff with regard to

intra-USEAC teamwork, (2) a USEAC-wide client tracking system with

information on clients and the services provided to them, and (3) adequate

authority over USEAC expenditures and a USEAC-wide accounting system

that would permit USEACs to accurately identify and allocate costs and

better manage expenditures.

With this overview, let me provide some background to put these points

into the proper context and then go into more detail about the benefits

being derived from the USEACs, the opportunities to strengthen USEAC

operations, and our recommendations.

Background Creation of the USEAC network can be best understood in the context of

sweeping efforts made during this decade to strengthen federal delivery of

export promotion services. During 1991-93, we conducted a number of

reviews of federal export promotion activities. We then reported on a

governmentwide effort that cost over $2.7 billion and that was fragmented

among several agencies with no overarching strategy or explicit set of

priorities. Among our specific findings, we reported that U.S. firms seeking

export assistance were likely to become confused and discouraged by the

multiple networks of domestic offices maintained by federal agencies for

delivering export services.2

Partially in response to our work, Congress enacted the Export

Enhancement Act of 1992 (Public Law 102-429, Oct. 21, 1992), which

created in statute the interagency Trade Promotion Coordinating

Committee (TPCC) and tasked it with developing a strategic plan for

strengthening federal export promotion services. This legislation also

directed the U.S. & Foreign Commercial Service3

—the Commerce

Department agency responsible for managing its domestic field

network—to utilize its district offices as “one-stop-shops.” These shops

would be able to (1) provide exporters with information on all U.S.

government export promotion and export finance services, (2) assist

exporters in identifying which federal programs may be of greatest

assistance, and (3) help exporters make contact with those federal

programs.

2

See One-stop Shops (GAO/GGD-93-1R, Oct. 6, 1992).

3

Now called the “Commercial Service.”

Page 2 GAO/T-NSIAD-96-213
TPCC, on September 30, 1993, issued its first National Export Strategy

report, which contained 65 recommendations for federal action to help

U.S. exporters. Among these, the strategy recommended the creation of

“one-stop shops” that would integrate primarily representatives of the

Department of Commerce and SBA—two federal agencies with extensive

export promotion field networks—and Eximbank. It further recommended

that the agencies establish four pilot “one-stop shops” in Baltimore,

Chicago, Los Angeles, and Miami. As envisioned by the strategy, these

“one-stop shops” would exceed the minimum requirements of the 1992

Export Enhancement Act in that they would actually contain the staff of

the three agencies rather than simply have Commerce staff provide

information about these and other agencies’ export programs.

In commenting on the National Export Strategy, we presented our views

on the process for creating the network of “one-stop shops.” We stated

that, before establishing an expansive network, the participating agencies

should first evaluate the results of the four pilots to determine whether

providing the full range of export promotion services in an integrated way

can increase the value to the business community of federal export

promotion assistance. We further stated that the aim of the USEAC network

should not simply be to co-locate or even coordinate, but “to integrate

and make more accessible a range of export services aimed at small- to

medium-sized export-ready firms.”4

 (Emphasis added.)

With Commerce taking the lead, the three agencies by January 1994 had

established the four pilot “one-stop shops”—now called U.S. Export

Assistance Centers. Although the TPCC’s export strategy stated that these

USEACs would go through a rigorous evaluation process, Commerce and its

partner agencies decided to move forward with expanding the network

before such evaluations could be concluded. By late February 1996, the

three agencies had expanded the network to 14 USEACs, along with 10

District Export Assistance Centers (DEAC), which have only Commerce

staff and are connected to the USEACs in a hub-and-spoke system.

Commerce and its partner agencies opened four additional DEACs by

June 1996 and have plans to further expand the network in the future.

4

See Export Promotion: Governmentwide Plan Contributes to Improvements (GAO/T-GGD-94-35, Oct.

26, 1993), Export Promotion: Initial Assessment of Governmentwide Strategic Plan

(GAO/T-GGD-93-48, Sept. 29, 1993), and Export Promotion Strategic Plan: Will it be a Vehicle for

Change? (GAO/T-GGD-93-43, July 26, 1993).

Page 3 GAO/T-NSIAD-96-213
Benefits Being

Derived From

USEACs

USEAC staff and customers, and officials of nonfederal partner

organizations told us that, because of the USEACs, U.S. firms are more

knowledgeable about and have access to a broader range of federal and

nonfederal export services. Customers, however, also indicated that

USEACs can improve the delivery of those services to the U.S. export

community.

Approximately 63 percent of the USEAC staff responding to our survey said

that establishment of the USEACs had increased the overall quality of export

services to a great or very great extent. About 80 percent of our

respondents stated that the USEACs had, in particular, substantially

increased customer access to the full range of federal export promotion

services to a great or very great extent. Eighty-two percent of the survey

respondents also cited significant increased cooperation among the staffs

of the three participating agencies, which we believe would help to expand

the availability of federal export services as USEAC staff work

collaboratively or refer clients to partner agencies.

During our visits to the four USEACs, we learned of some specific examples

of USEAC staff taking the initiative to enhance the value of their services to

exporters by working closely with federal and nonfederal partner

organizations. These examples demonstrate the potential benefits that can

be derived from creation of the USEACs.

• At the Baltimore USEAC, the Commerce staff made an effort, as part of their

counseling activities, to generate clients for the Maryland Industrial

Development Financing Authority, a state agency that provides export

financing.

• At the Long Beach, California, USEAC, the director introduced the

“Export-Trade Assistance Partnership” program,5

 which sought to utilize

the skills and knowledge of federal and nonfederal partner organizations

to increase the export know-how of firms that are not yet ready to export.

• At the Chicago and Miami USEACs, the Eximbank and SBA staffs closely

coordinated their outreach efforts. These individuals were familiar with

the financing services of both agencies and referred clients when

appropriate.

We surveyed the four USEACs’ 60 “best customers” (15 for each USEAC) who

had received services from more than one USEAC agency, as identified by

5

Firms chosen to participate in this program are to receive training from members of the local export

assistance community that is suited to their needs. They are expected to translate that training into

concrete business decisions before moving to the next level of training.

Page 4 GAO/T-NSIAD-96-213
the USEAC directors. Of the 40 “best customers” who responded to our

survey, a majority stated that they were very satisfied with the export

services provided by the USEACs. Their satisfaction was based on such

factors as timeliness, staff knowledge, and usefulness of the services

obtained.

However, the customers responding to our survey also saw room for

improvement in USEAC agency efforts to work as a unit in the delivery of

services. Of the 28 customers who acknowledged receiving services from a

second USEAC agency, 11 (40 percent) indicated that they had found the

second agency by themselves, rather than through their USEAC contact. We

also found that, of the 17 customers who did acknowledge receiving

services from the second agency as a result of their USEAC contact, 12

stated that they had received useful services from more than one

government agency. Several of the customers we interviewed told us that

the USEAC staff member(s) they regularly worked with did not inform them

of the full range of services provided by the USEACs, even after they had

expressed a need for the services of another USEAC agency.

Opportunities to

Strengthen USEAC

Operations

The decision by Commerce and its partner agencies to co-locate staff

(rather than just meet the minimum requirements of the 1992 Export

Enhancement Act) presented an opportunity to substantially improve the

delivery of federal export promotion services. On the basis of our site

visits, surveys, and discussions with USEAC staff, customers, and

nonfederal partners, we identified certain basic interagency mechanisms

that, if established, could better ensure an improved delivery of services.

Intra-USEAC Cooperation

and Teamwork

Despite the increased cooperation among agency staffs, we found during

our interviews with USEAC staff that they did not consistently work as a

team. For example, we learned that individuals at certain USEACs were

reluctant to recommend the services of another agency, even to clients

who expressed a need, because they were unfamiliar with that agency’s

performance in delivering the service.

To better promote teamwork, USEAC directors told us they needed

authority to contribute to USEAC staff appraisals with regard to intra-USEAC

teamwork. To do this, the agencies would need to include on their

appraisals a performance factor on intra-USEAC teamwork and develop

relevant performance measures. These performance measures could

specify, for instance, the number of referrals among USEAC staffs and,

Page 5 GAO/T-NSIAD-96-213
possibly, how often such referrals led to export promotion or financing

services.

Currently, each agency appraises its own staff. The appraisal forms for

Commerce and SBA staff contain at least one factor directly relating to

intra-USEAC teamwork. Commerce officials informed us that the agency

informally permits USEAC directors (i.e., those who are not Commerce

employees) to contribute to appraisals of Commerce staff with regard to

several USEAC-related factors. SBA officials informed us that the agency has

formally given USEAC directors (i.e., those who are not SBA employees)

authority to contribute to appraisals of SBA staff with regard to one

USEAC-related factor. The Eximbank has this issue under consideration as

part of a major restructuring of the agency’s performance appraisal

system.

USEAC-Wide Client

Tracking System

To further improve the quality of services to customers, USEAC directors

and staff acknowledged their need for a USEAC-wide, computer-based client

tracking system. With such a system, USEAC staff would be able to readily

obtain information that another agency might have on a potential client or

determine whether it has already received services from another USEAC

agency. We believe that having this ability would help ensure that USEAC

staff do not suggest inappropriate services or make duplicate requests for

information. Such a system could also serve as a source for identifying

potential clients to pursue in marketing export services.

At the time of our visits, the agencies at each of the four USEACs used a

separate client tracking system. Commerce staff used the agency’s

“Commercial Information Management System”—a worldwide data base

that links Commerce headquarters, its domestic field network, and

overseas offices. Eximbank staff used an off-the-shelf computer program for

maintaining information on customers. SBA staff used mostly paper filing

systems but sometimes employed the Commerce or Eximbank data bases.

Commerce had offered to make its system available to all USEAC staff but

staff we spoke with did not support such a move. They generally

characterized the Commerce system as slow, cumbersome, and otherwise

not able to meet their needs. Some also expressed concern that placing

proprietary business information on a worldwide data base could

compromise its confidentiality. Although Commerce staff are required to

use this system, we found that they have done so to widely varying

degrees. These ranged from using it as a true client data base, with

Page 6 GAO/T-NSIAD-96-213
detailed information on each customer and Commerce services received,

to using it as nothing other than a list of contacts.

Commerce, Eximbank, and SBA officials recently told us that they see the

development of a client tracking system as a high priority for the USEACs.

They plan to install at all the USEACs an off-the-shelf client tracking system

that is currently under development.

USEAC Financial

Accounting and

Procurement Systems

Some USEAC directors also saw the need for (1) adequate authority over

USEAC expenditures and (2) a USEAC-wide accounting system that would

permit USEACs to accurately identify and allocate costs and better manage

expenditures. With regard to the former, our review indicated that USEAC

directors did not have authority to make routine expenditures for such

things as printing marketing brochures, using temporary employees to fill

in for staff on long-term leave, or buying copiers or other office equipment.

USEAC directors and staff told us that, to make purchases, they currently

must use Commerce’s procurement approval process. They characterized

this process as being very lengthy and time-consuming, due largely to

paperwork requirements and multiple layers of review. USEAC staff told us

that they saw themselves devoting too much time to these purchases,

which often were made long after the need arose.

With regard to the need for a USEAC-wide accounting system, USEAC

directors told us that they could not identify the costs associated with

creating and maintaining the USEACs and allocate these costs among the

three participating agencies. They told us that, if they had an adequate

system, they could also better assess the relative cost-effectiveness of

various tools used by USEACs to reach and deliver export services to U.S.

firms. For example, USEAC directors may use a variety of ways to market

their services, including mailings to exporters, participation in trade

events and export shows, and/or through making cold telephone calls to

exporters. Knowing the relative cost of these activities, as well as the

results, would help in determining which of these (either singly or in

combination) is most cost-effective. Currently the USEACs do not have such

information.

Further, we learned that under memorandums of understanding

negotiated by the three agencies, Commerce’s International Trade

Administration (ITA) was to cover all USEAC-related expenditures, allocate

them among the participating agencies, and seek reimbursement. Eximbank

and SBA officials told us that Commerce had been unable to allocate

Page 7 GAO/T-NSIAD-96-213
USEAC-related costs among the three agencies and, as a result, had not

provided them with an adequate accounting of USEAC costs.6

 Instead, ITA

forwarded invoices for “USEAC expenses” that lacked detail. Commerce,

Eximbank, and SBA officials recently told us that they have agreed to allocate

expenses based on a formula that reflects the limited capabilities of ITA’s

financial accounting system. This agreement is to be reflected in a revised

memorandum of understanding, which has not yet been signed by all

USEAC agencies.

To obtain whatever financial data might be available on the USEAC

network, we asked the three agencies to compile information on their

USEAC-related expenditures. Commerce sought to get the information

requested from the individual USEACs, who themselves had no common

accounting mechanism to track costs. The Eximbank and SBA relied on

centralized financial management systems for the requested information.

The data Commerce officials provided to us was heavily qualified and

could not be reconciled with Eximbank and SBA data. Therefore, the actual

cost of creating and maintaining the USEAC network was not known.

The agencies recently told us that they are currently piloting a separate

financial management system for the USEACs. They anticipate that this

system will provide a more precise accounting of expenditures.

Recommendations Based on our review, we recommend that the Secretary of Commerce,

working with the Chairman of the Eximbank and the Administrator of SBA

• give all USEAC directors the authority to contribute to the performance

appraisals of all USEAC staff with regard to intra-USEAC cooperation and

teamwork (including development of an appropriate performance factor

for staff appraisals and performance measures),

• establish a USEAC-specific customer tracking system that contains

information on clients and services provided to them, and

• set up an accounting system that accurately tracks the full costs of

creating and operating the USEAC network and, as part of that process,

incorporate ways to give USEAC directors greater authority over USEAC

expenditures.

6

Work performed by Commerce’s Office of the Inspector General and our office regarding ITA’s overall

ability to manage its finances found that ITA lacked the financial management system needed to

accurately account for its expenditures. See Semiannual Report to the Congress, U.S. Department of

Commerce, Office of the Inspector General (Washington, D.C.: U.S. Government Printing Office, Mar.

31, 1994). Our office communicated its findings to Commerce in a letter dated August 11, 1995.

Page 8 GAO/T-NSIAD-96-213
Mr. Chairman, this concludes my prepared statement. I will be happy to

answer any questions you or other Members of the Subcommittee may

have.

Page 9 GAO/T-NSIAD-96-213
Appendix 

Scope and Results of U.S. Export Assistance

Center Staff and Customer Surveys

During our week-long visits to each of the four pilot USEACs (in Baltimore,

Chicago, Long Beach, and Miami) in May-June 1995, we administered two

survey instruments. One survey sought the views of USEAC staff and

focused on various operational issues such as cooperation among USEAC

agency staff (as well as with nonfederal partners) and the quality of

services delivered. The other survey sought the views of USEAC customers

and focused on a number of dimensions of program delivery such as

access to export services, USEAC staff knowledge, and the timeliness and

usefulness of the USEAC services obtained.

Survey of USEAC

Staff

We surveyed and interviewed the USEAC directors and every member of the

staff that was available during the time of our visit. Individuals to be

surveyed were determined jointly by the USEAC directors and our staff. The

surveys were completed anonymously. In all, we received 44 replies,

which represented a response rate of about 85 percent. Highlights of our

survey results follow.

• The overwhelming majority of USEAC staff believed that the establishment

of the USEAC had increased cooperation among the USEAC agencies

(82 percent “to a great/very great extent”) and substantially increased

customer access to federal export promotion services (80 percent). With

respect to other factors, USEAC staff believed the USEACs had (1) improved

the quality of services they personally deliver (63 percent), (2) increased

export-ready customers’ ability to export (58 percent), and (3) improved

cooperation with nonfederal partners (50 percent).

• USEAC staff rated their USEACs on progress toward integrating operations

across several dimensions using a 10-point scale (with a score of 10

representing complete integration). They gave referrals an average

integration score of 7.0 (out of a possible 10). Other dimensions were

given a lower score, such as administrative resources (an average score of

4.5) and customer tracking systems (an average score of 4.2).

• Overall, USEAC staff gave high satisfaction ratings (e.g., “very” or

“somewhat” satisfied) for various factors, including responsiveness of

agencies to each others’ referrals (97 percent), accessibility of other USEAC

agencies (93 percent), and quality of referrals from other USEAC agencies

(85 percent). The officials were less satisfied with such factors as

information-sharing with nonfederal partners (66 percent), the

relationship between USEAC agency officials and the agency officials at

local regional offices (56 percent), and the recognition they received for

their efforts at promoting the USEACs (37 percent).

Page 10 GAO/T-NSIAD-96-213
Appendix 

Scope and Results of U.S. Export Assistance

Center Staff and Customer Surveys

Survey of USEAC

Customers

In surveying the USEAC customers, we asked the USEAC directors to identify

their 60 “best customers” (15 from each USEAC) who had received services

from more than one USEAC agency. We surveyed all 15 clients at each USEAC

and selected 5 clients to interview, based largely on availability and

proximity to the USEAC. We received 40 survey responses (13 customers of

the Baltimore USEAC, 11 from Chicago, 8 from Long Beach, and 8 from

Miami) for a response rate of 67 percent. Of the 40 survey respondents, 12

indicated that they had not received a service from a second USEAC agency.1

Highlights of our survey results follow.

• The customers who replied to our survey expressed high levels of

satisfaction with the individual agencies from which they had received

services. For example, 83 to 93 percent of the respondents were satisfied

or very satisfied with the timeliness, staff knowledge, and usefulness of

the services provided by the first USEAC agency. Of the 28 customers who

acknowledged receiving services from a second USEAC agency, 17 received

services from the second agency as a result of the USEAC contact, and 12 of

these stated that they had received useful services from more than one

government agency.

• Customers gave the USEAC agencies high marks (92 percent generally high

to very high) for projecting a business image and for providing follow-up.

The USEAC agencies did not receive as high a mark for promoting their

services (75 percent).

• Customer responses regarding USEAC agency referrals to another USEAC

agency showed that referrals were not always made when services were

desired. Of those customers who acknowledged receiving services from

more than one USEAC agency, about 40 percent said that they had learned

about the second agency themselves or through a non-USEAC source and

had initiated the contact.

(280112)

1

Our interviews discovered that several of the 12 customers who recalled receiving services from only

one USEAC agency, in fact, had limited contact with another USEAC agency. However, because of the

brevity of that contact, customers did not believe they had received a service from the second agency.

Page 11 GAO/T-NSIAD-96-213
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