Trade Adjustment Assistance: Commerce Program Has Helped Manufacturing and Services Firms, but Measures, Data, and Funding Formula Could Improve
Published: 2012-09-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over the past decade, U.S. imports of goods and services have almost doubled, reaching $2.7 trillion in 2011. Although trade expansion can enhance economic welfare, many firms and workers experience difficulties adjusting to import competition. The TAA for Firms program assists tradeimpacted, economically distressed U.S. firms in making adjustments that may enable them to remain competitive in the global economy. The Department of Commerce's EDA administers the $15.8 million program through 11 TAA Centers throughout the United States. In 2009, the Trade and Globalization Adjustment Assistance Act, as part of American Recovery and Reinvestment Act, amended the TAA for Firms program and mandated that GAO review its operation and effectiveness. GAO examined (1) the results of the legislative changes on program operations and participation, (2) the performance measures and data EDA uses to evaluate the program and what these tell us about the program's effectiveness, and (3) how program funding is allocated and spent.
GAO reviewed pertinent legislation, program documentation, and data; conducted an economic analysis and a survey of participant firms; and met with EDA officials, representatives of the 11 TAA Centers, and others.
section_title: What GAO Found
paragraphs: Changes to the Trade Adjustment Assistance (TAA) for Firms program mandated by the Trade and Globalization Adjustment Assistance Act led to program improvements and increased participation, but participation declined when the legislative changes lapsed and the program faced funding uncertainty. The changes resulted in reduced time to certify firms, new performance reporting, and increased participation. For example, officials told GAO that creating a director position and other full-time positions for the program reduced time to certify firms. In fulfilling new reporting requirements, the Economic Development Administration (EDA) collected information on performance measures and issued three annual reports. Also, EDA certified 26 services firms not previously eligible, as well as 32 additional firms based on more flexible certification requirements to demonstrate trade impacts. Although EDA increased the number of certified petitions and approved business recovery plans from fiscal years 2008 through 2010, the lapse in the legislative changes from February to October 2011 and uncertainty about program funding contributed to a decline in certified petitions and approved plans in fiscal year 2011.
EDA's performance measures and data collection for the TAA for Firms program provide limited information about the program's outcomes, although GAO's economic analysis found that participation in the program is statistically associated with an increase in firm sales. EDA collects data to report on 16 measures to gauge the program's performance, such as the number of firms that inquired about the program and the number of petitions filed, but most of these measures do not assess program outcomes. EDA is exploring better ways to assess the effect of their efforts on firms. In addition, EDA does not systematically maintain data collected by the TAA Centers on the firms they assist, resulting in gaps in centralized data that EDA could use to evaluate the program and meet reporting requirements. However, GAO's analysis of data collected from the centers showed that the program was associated with increased sales and productivity for manufacturing firms, although some factors were more strongly correlated with improved performance than was participation in the TAA for Firms program. GAO's survey of and interviews with firms participating in the program found that many firms reported satisfaction with the program's impacts. Notably, 73 percent reported that the program helped them with profitability; 71 percent that it helped them retain employees; and 57 percent that it helped them hire new employees.
To allocate funding to the TAA Centers, EDA uses a formula of weighted factors, such as each center's share of approved business recovery plans. However, the formula does not factor in differences in program need and costs in centers' service regions, even though centers varied in their use of program funds. For example, the formula does not take into account potential need for the program based on its objective of assisting firms that have lost sales and employment due to import competition. The formula also does not take into account the considerable differences in the costs of operating the centers to assist firms. As a result, some centers had spent their entire allocation by the conclusion of the most recent grant period, while other centers had not. Although EDA de-obligates and reallocates any unspent funds, it uses its allocation funding formula to do so, thus perpetuating the deficiency of failing to consider variable needs and costs.
section_title: What GAO Recommends
paragraphs: GAO recommends that Commerce establish more effective measures of program outcomes, improve its data collection, and allocate funds in a way that considers program needs and costs. Commerce concurred with GAO's findings and recommendations.

section_title: Letter
paragraphs: From 2001 to 2011, U.S. imports of goods and services grew sharply,  almost doubling from about $1.4 trillion to about $2.7 trillion. During the  same period, the United States entered into free trade agreements that  liberalize trade with 14 partner countries. The World Trade Organization  also admitted China, Vietnam, and 11 other members during this time. In  2012, bilateral free trade agreements with South Korea and Colombia  went into effect. Further trade liberalization is being pursued, including a  Transpacific Partnership among 11 nations in the Asia-Pacific region and  North America regions.
Although trade expansion can enhance the economic welfare of all trade  partners, many firms and workers experience difficulties adjusting to  import competition. Congress has responded to concerns about these  difficulties with trade adjustment assistance (TAA) programs, including  the TAA for Firms program administered by the Department of  Commerce’s (Commerce) Economic Development Administration (EDA).Established in 1962, the TAA for Firms program provides technical  assistance to help trade-impacted, economically distressed firms make  adjustments that may enable them to remain competitive in the global  economy. In fiscal years 2009 through 2012, EDA received $15.8 million  annually for the TAA for Firms program, an amount far smaller than the  funding provided for other TAA programs. EDA uses its appropriation for  the TAA for Firms program to fund 11 TAA Centers, which provide  assistance to U.S. manufacturing, production, and service firms in all 50  states, the District of Columbia, and the Commonwealth of Puerto Rico.  We last examined the TAA for Firms program in 2000.
Congress authorized and amended the TAA for Firms program under the  American Recovery and Reinvestment Act’s Trade and Globalization  Adjustment Assistance Act (TGAAA) of 2009 and mandated that we  review the operation and effectiveness of these amendments by  September 30, 2012. In response, this report examines (1) the results of  the legislative changes on program operations and participation, (2) the  performance measures and data that EDA uses to evaluate the program  and what these tell us about the program’s effectiveness, and (3) how  program funding is allocated and spent.
To describe the results of the legislative changes on program operations  and participation, we reviewed relevant program legislation, regulations,  and agency documentation, including those outlining the operational and  administrative changes to implement the program amendments in the  TGAAA. We analyzed agency data on firms’ program participation and  interviewed EDA officials, including the Director of the TAA for Firms  program, the Chief Counsel, and certifying officials, to determine the  impact of the legislative changes on the program’s operations. We  conducted site visits or teleconferences with the 11 TAA Centers. During  these visits, we interviewed staff, firm representatives, and consultants to  learn about their procedures for conducting outreach and assisting firms  and to learn about the results of the legislative changes on the program.  We selected the eight site-visit locations to take into account geographic  diversity and a mix of nonprofit and university-affiliated TAA Centers, as  well as a range of industries, and number of submitted and approved  petitions and business recovery plans. In addition, we collected and  analyzed data from EDA and the 11 TAA Centers to determine the  number of firms receiving assistance from fiscal years 2008 through  2011. We assessed the reliability of the data by checking for accuracy  and completeness. We determined that the data were sufficiently reliable  for the purposes of reporting numbers of submitted and approved  petitions and business recovery plans.
To determine the extent to which EDA’s performance measures capture  program effectiveness, we used criteria from our prior work. We also  reviewed EDA guidance and conducted interviews with EDA officials to  identify their data collection procedures and to learn how program data  are used. We reviewed two prior studies of the effectiveness of the TAA  for Firms program—our 2000 report and a report issued by the Urban  Institute in 1998. To gauge the impact of the program, we collected data  on a group of firms that completed at least one project in their business  recovery plans during fiscal years 2009 through 2011, as well as data on  general economic indicators, and conducted a regression analysis with  these data. Because the data we collected did not include any information  about firms that did not participate in the program, this analysis allows us  to make inferences from the regression estimates only for the firms that  participated in the program during this time period. In addition, we  conducted a survey of 163 firms to obtain their views about the quality of  the assistance received and its impact. We received usable responses  from 117 of them, for a final response rate of 72 percent. We conducted  an analysis of our survey results to identify potential sources of  nonresponse bias by comparing respondents with nonrespondents on key  characteristics. Our analysis did not identify any large differences  between respondents and nonrespondents for these characteristics. As a  result, we determined that the survey results for the 117 respondents  were sufficiently reliable to present in our report. This report does not  contain all of the results from the survey. The survey and a more  complete tabulation of the results can be viewed online in an   e-supplement to this report at GAO-12-935SP.
To examine how EDA allocates and spends program funding, we  interviewed EDA officials and TAA Center staff, reviewed EDA and TAA  Center program data and reports, and analyzed documentation of the  funding formula and the allocation of program funding. We reviewed  EDA’s 2003 spending plan defining the factors included in the formula;  using equity standards from social science research to evaluate and  design funding allocation formulas, we assessed the program’s current  funding formula and the data used to measure each of the factors. We  also analyzed EDA’s spending plans for cooperative agreement years  2009 to 2011 to assess the measures used to allocate program funding to  the TAA Centers during each of those cooperative agreement years.   For a more complete discussion of our scope and methodology, see  appendix 1.
We conducted this performance audit from July 2011 to September 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The purpose of the TAA for Firms program is to help trade-impacted,  economically distressed U.S. manufacturing, production, and service  firms make adjustments that may enable them to remain competitive in  the global economy. The program delivers technical assistance to firms  by developing business recovery plans and providing matching funds to  implement the projects in the plans. EDA uses its appropriation for the  TAA for Firms program to fund 11 TAA Centers, signing a cooperative  agreement with each center. The centers provide assistance to U.S.  manufacturing, production, and service firms in all 50 states, the District  of Columbia, and the Commonwealth of Puerto Rico. Each TAA Center  uses the funding that EDA allocates under the cooperative agreement to  cover its administrative and operational costs and works directly with  firms in its geographic region to provide assistance on a cost-share basis.  None of the program funds go directly to firms; instead, funds go to third- party consultants to implement firms’ projects. The centers cover  geographic regions of varying size, composed of one to eight states. A  TAA Center may be affiliated with a university, private firm, or nonprofit  organization; however, as shown in figure 1, nonprofit organizations  currently manage four centers, while the other seven centers are affiliated  with universities.
Staff at the TAA Centers generally target their outreach to small and  medium-sized firms in the manufacturing, agricultural, and service  sectors.firms, including the following:   They use a variety of outreach methods to identify potential analyzing industry databases;  conducting cold calls and providing information via websites, e-mail,  and mail; presenting at seminars and meetings hosted by banking consortia,  business and trade associations, and members of Congress;  collaborating with state and local entities, including local departments  of commerce and agriculture, economic and small business  development centers, and chambers of commerce;  targeting firms with workers who qualify for the TAA for Workers  program or firms involved with International Trade Commission  antidumping lawsuits; and acting on referrals from program consultants and current and former  clients.
Once a firm connects with a TAA Center, staff may use various methods  to determine whether firms are financially able to participate in the  program. Some centers review preliminary financial documentation in an  effort to help ensure that firms are eligible for assistance and committed  to participating in the program. One center developed a series of eligibility  questions on its website, so that firms can determine whether they are  eligible for the program before applying for assistance.
The TAA for Firms program process has three phases—petition for  certification, recovery planning, and business recovery plan  implementation—requiring collaboration among firms, TAA Centers, and  EDA. Figure 2 presents a flowchart summary of the process.
A firm seeking TAA program benefits must submit a petition to EDA to  receive certification of its eligibility to participate in the program. TAA  Center staff collect documentation from a firm to demonstrate in the  petition each of the following:  1.  A significant number or proportion of the firm’s workers have been or  are threatened to be totally or partially separated.  2.  Total sales and/or production or sales and/or production of a product  that represents at least 25 percent of the firm’s total have decreased  absolutely during the 12-month period preceding the most recent 12- month period; or total sales and/or production, or that of a product that  represents at least 25 percent of the firm’s total, have decreased  during the most recent 12-month period compared with the preceding  12-, 24-, or 36-month period.  3.  Increases in imports of articles or services comparable to, or directly  competitive with, the firm’s articles or services contributed importantly  to worker separations (or threat thereof) and the declines in sales or  production. Firms must generally demonstrate that import impact has  occurred, using a combination of import data or statements from their  customers to certify that imports were a factor in the decreased  purchase of the firm’s products.
Once EDA approves the petition and certifies the firm, the firm and TAA  Center staff have 2 years to develop a business recovery plan and submit  it to EDA for approval. Center staff work closely with the firm’s  management to identify the firm’s strengths and weaknesses and develop  a customized plan designed to stimulate its recovery and growth. EDA  requires standard information in each business recovery plan, such as a  description of the firm’s competitive problems, prospects for recovery, and  specific technical assistance projects. However the length, level of detail,  and amount of information provided in the plans vary across the TAA  Centers. EDA officials review and approve the plans on the basis of  whether they meet regulatory requirements and supply the necessary  supporting documents.
A firm that requests $30,000 or less in total assistance to implement an approved  business plan must pay at least 25 percent of the cost of the assistance. Firms that  request more than $30,000 in total assistance, up to $75,000, must pay 50 percent of the  total cost.
TAA Centers proposed four types of projects in firms’ business recovery  plans (see fig. 3).
To assist a firm in implementing the projects in its business recovery plan,  TAA Center staff work with firm management to identify and competitively  select third-party consultants with the specific expertise needed. In some  instances, center staff said that they collaborate with consultants from  Commerce’s Manufacturing Extension Partnership program to implement  projects in the TAA firms’ business recovery plans. (Please see app. II for  a discussion of the similarities, differences, and interactions among the  TAA for Firms, Manufacturing Extension Partnership, and other  Commerce programs.)
In addition to mandating that we report on the TAA for Firms program, the  TGAAA mandated that we report on the other TAA programs. In July  2012, we issued our report on the TAA for Farmers program. Our reports  on the TAA for Workers and Communities programs are forthcoming.
section_title: TGAAA Changes Led to Program Improvements and More Participation
paragraphs: The 2009 legislative changes to the TAA for Firms program resulted in  reduced firm certification processing times, new performance reporting,  and increased firm participation. However, EDA officials and TAA Center  staff said that the lapse of these legislative changes from February 2011  to October 2011 and the uncertainty regarding program funding  contributed to a decrease in firm participation in fiscal year 2011.
subsections: section_title: Some TGAAA Changes Resulted in Reduced Firm Certification Processing Times, New Performance Reporting, and Increased Firm Participation
paragraphs: The TGAAA marked the first major change in the TAA for Firms program  since 1986 (see table 1). The 2009 legislation included changes to the  program, such as eligibility for service sector firms and more flexible  certification requirements. However, TGAAA provided that the provisions  that expanded eligibility would expire and that on January 1, 2011 the  TAA for Firms program be administered as if the expanded provisions  had not been enacted. As authorization of the program was about to  expire on January 1, 2011, Congress passed the Omnibus Trade Act of  2010 to extend the program through February 2012. However, this  legislation did not reinstitute the TGAAA changes, which resulted in a  lapse of the TGAAA changes from February 2011 until October 2011. In  October 2011, the TAA Extension Act of 2011 reinstituted many of the  TGAAA’s changes, including service sector firm eligibility and the more  flexible certification requirements.
Four changes mandated by the 2009 legislation contributed to  improvements in program operations and increased participation:
Creation of director’s and other full-time positions. The creation of a  director’s position and other full-time positions for the program  resulted in reduced certification processing times for petitions. Prior to  the 2009 legislation, the TAA for Firms program was administered by  rotating staff members and interns. TAA Center staff said that this  resulted in inconsistent review of petitions. Center staff reported that  with the full-time professional staff now available, reviews are  dependable. In addition, EDA stated in its 2011 annual report that its  staff reduced the average processing time for petitions to 21 days—a  48 percent reduction from fiscal year 2010 and a faster turnaround  than the 40 days required by the TGAAA.
New annual reporting on performance measures. The TGAAA  required EDA to gather information on performance measures and  submit annual reports to Congress. EDA has submitted three annual  reports to Congress on these performance measures as a result of  the legislation.
Inclusion of service sector firms. According to our analysis of EDA data,  the inclusion of service sector firms allowed EDA to certify 26 firms not  previously eligible for assistance in fiscal years 2009 through 2011.  Examples of service sector firms assisted by some TAA Centers  include architectural engineering firms, telecommunications firms, and  software development firms.
Expansion of the “look-back” period from 12 months to 12, 24, or 36  months. Our analysis of EDA data shows that 32 additional firms  participated in the program in fiscal years 2009 through 2011 as a  result of the expanded the look-back period. Prior to the legislative  changes, firms were allowed to compare sales and production data in  the most recent 12 months only with data from the immediately  preceding 12-month period. Staff at the TAA Centers told us that it  was difficult to certify some firms with the 12-month look-back period,  because that amount of time was often not adequate to demonstrate  declines in sales and production. Center staff said that the expanded  look-back period was particularly helpful during the recent recession,  because it enabled more firms to demonstrate the requisite declines.
Although these legislative changes generally improved the program and  increased participation, TAA Center staff noted some challenges in  assisting service sector firms. For example, some service sector firms  had difficulty establishing import impact along with requisite declines in  sales and production. Because service sector firms do not have industry- specific codes that allow TAA Center staff to analyze import data, EDA  allowed the use of certification letters from firm customers to demonstrate  import impact in lieu of import data. However, many of the firms’  customers did not want to certify in writing that they were outsourcing  services, according to center staff. As a result, staff said that some  service sector firms could not provide sufficient evidence of import impact.  In addition, some Center staff expressed concern that they did not have  sufficient funding to serve both manufacturing and service sector firms.
section_title: Participation Increased after TGAAA Changes but Declined after Changes Lapsed and Future of Program Became Uncertain
paragraphs: From fiscal year 2008 through fiscal year 2010, EDA certified and  approved an increased number of petitions and business recovery plans  (see fig. 4). In addition, with a few exceptions, the TAA Centers generally  submitted an increased number of petitions and business recovery plans  during this period. According to center staff, the economic downturn  contributed to the increase in firms applying for and receiving assistance  from the TAA for Firms program from fiscal year 2008 through fiscal year  2010, because more firms could demonstrate a decline in sales and  employment. Additionally, EDA officials and TAA Center staff stated that  the 2009 legislative changes increased interest in, and demand for, the  program by prospective firms. For example, EDA officials and TAA Center  staff said the news of the increased funding authorization generated  many inquiries from firms, and one TAA Center official noted that the  large increase in authorized funding in the TGAAA led to the expectation  that the program would be able to service a greater number of firms. EDA  officials also stated that demand for the program increased because more  firms were eligible under the expanded look-back period.
In total, EDA certified 878 petitions and approved 761 business recovery  plans for fiscal years 2008 through 2011. Because TAA Centers use a  variety of methods prior to completing a petition to determine if a firm is  financially able to participate in the program, center staff told us that EDA  approved almost all of the finalized petitions they received. In addition,  center staff said that EDA rarely rejected submitted business recovery  plans, owing to the firms’ in-depth diagnostics and detailed business  recovery plans.
Figure 4 also shows that EDA certified fewer petitions and approved  fewer recovery plans in fiscal year 2011 than in fiscal year 2010. Certified  petitions decreased from 330 in fiscal year 2010 to 149 in fiscal year  2011, and approved business recovery plans decreased from 264 in fiscal  year 2010 to 183 in fiscal year 2011. EDA officials and TAA Center staff  attributed the decline to three factors:
Lapse of TGAAA changes. EDA officials and TAA Center staff  reported that the lapse of the legislative changes from February to  October 2011 meant that service sector firms were no longer eligible  to receive assistance. Center staff also said that the lapse in the  TGAAA provisions disrupted the certification and approval process for  several service sector firms and excluded them from participating. In  addition, center staff stated that without the option to use the  expanded look-back period, some petitioning firms that would have  been eligible before the lapse could not show the requisite declines in  sales or production during this time.
Program uncertainty. The President’s fiscal year 2012 budget  proposed to eliminate the TAA for Firms program. EDA reported that  the uncertainty regarding the program’s future funding caused the  TAA Centers to focus on existing clients instead of identifying new  firms. One center stated in its 2010 annual report that the possibility  that the program might be cancelled required the center to reserve  sufficient funds to cover closeout costs rather than bring new firms  into the program. Other center staff confirmed that uncertainty about  the program affected outreach efforts and budgeting, because of  concerns that the program would be eliminated.
Improvement in the economy. Some TAA Center staff said that fewer  firms were eligible to participate in the program because the  economy’s improvement from fiscal year 2010 to fiscal year 2011  prevented some firms from demonstrating a decrease in employment,  sales, and production.
section_title: EDA’s Performance Measures and Data Collection Limit Its Ability to Gauge Program Effectiveness, but Our Analysis Shows Positive Impact
paragraphs: EDA collects data on 16 measures reported in its annual report to  Congress and in Commerce’s performance and accountability report, but  we found that these performance measures, and EDA’s use of them, do  not adequately focus on program outcomes. In addition, EDA’s lack of  centralized, comprehensive, and reliable data on participating firms limits  its ability to improve program management and program outcomes.  However, we found the program may have had positive outcomes that  are not captured in EDA’s performance measures and data collection.  Our data analysis showed that participation in the program was positively  associated with an increase in sales, and our survey respondents  reported satisfaction with the assistance they received from the program.
subsections: section_title: Limitations in Performance Measures Hinder EDA’s Ability to Determine Program Effectiveness
paragraphs: As TGAAA requires, EDA currently collects data on 14 performance  measures to include in its annual report on the TAA for Firms program, as  well as two measures to include in Commerce’s annual performance and  accountability report. However, we found that these measures are largely  output measures rather than measures of program outcomes. We define  performance measurement as the systematic ongoing monitoring and  reporting of program accomplishments, particularly progress toward  preestablished goals or standards. Performance measures may address  inputs: program staffing and resources; outputs: the type or level of program activities conducted or the direct  products or services delivered by a program; or outcomes: the results of those products and services.
Outcome-oriented goals and performance measures assess the results of  a program, compared with its intended purpose, and are important for  ensuring accountability. We characterize most of EDA’s performance  measures as output measures, since they measure goods and services  delivered by a program—for example, the number of firms certified as  eligible for the program or the number of business plans approved by  EDA. We characterize only three of the measures— measures 10, 15,  and 16—as outcome measures, as shown in table 2.
Outcome measure 10—sales, employment, and productivity of each firm  on completion of the program and in each of the 2 years after  completion—is closely tied to the program’s intended purpose of helping  firms adjust to international trade competition. However, in its 2011  Annual Report on the TAA for Firms program, the primary analysis that  EDA offers for its data on performance measures notes how the  program’s participants fared relative to the nationwide average for all  manufacturing firms. Specifically, employment for participating firms  decreased less for TAA for Firms participants than for firms nationwide   (a 1.9 percent decrease for program participants, compared with a 4.5  percent decrease nationwide, according to Bureau of Labor Statistics  data). Likewise, productivity for TAA for Firms participants increased by  less than 1 percent, whereas average productivity increased by 10  percent nationwide since 2009. However, comparing performance data  for trade-impacted firms with data for the nationwide manufacturing  industry is not sufficient for determining whether the program is effective  in helping firms. TAA for Firms recipients are in distress, having already  been certified as adversely impacted by international trade. These firms  demonstrated lost sales and employees to qualify for the program and  cannot be expected to perform at the same level as the national average,  which includes firms not impacted by trade competition. Nevertheless,  EDA has not attempted to isolate the impact of the program’s assistance  on firms from other influences. In November 2009, we reported that using  program evaluation methods to rule out plausible alternative explanations  for outcomes that may be influenced by a variety of external factors, such  as changes in the economy, can help strengthen evaluations. In June  2010, EDA outlined plans for an objective evaluation of the effectiveness  and efficiency of the program and individual TAA Centers. However, the  evaluation was not implemented because of a lack of funding for it,  according to the program’s director.
Several TAA Center officials noted that data from the performance  measures do not adequately show the effect that the program has on its  participants, and they further commented that they do not find these  measures particularly useful for improving program management. For  example, a representative from one TAA Center said that an important  measure of success is firm survival, which determines the number of jobs  that are saved or created, but firm survival is not measured in the annual  performance metrics. A representative of another TAA Center noted that  a weakness in measuring sales, employment and productivity 2 years  after program completion is that the nature of the business cycle is such  that sales and production must increase to the point where orders cannot  be filled before the firm believes it is justified in hiring new staff. As a  result, there is a time lag between increased sales and production and  increased employment that might not be reflected in the 2-year data.
EDA acknowledges that the program’s performance measures should be  improved and has made improving the measures a goal and taken steps  toward it. According to the director of the program, EDA has entered into  a partnership with economists from the George Washington University  and the University of North Carolina-Chapel Hill to improve the  performance metrics for all EDA programs under the Government  Performance and Results Act. Planned activities include the creation of a  new logic model that will map out inputs, outputs, and outcomes for  EDA’s programs. The economists will also assist EDA in creating more  expansive performance metrics for all programs, including TAA for Firms.  EDA anticipates that this project will be completed by fall of 2014.
section_title: Lack of Centralized, Comprehensive, and Reliable Data Affects Program Management and Analysis
paragraphs: Although EDA and the TAA Centers independently collect data on  participating firms and program operations that may be useful for  evaluating the TAA for Firms program, gaps in centralized,  comprehensive, and reliable program data limit EDA’s ability to analyze  program trends and inform decisions to improve results.
The issues with EDA’s data that we identified fall into four clear but  interconnected categories:
Gaps in centralized data. According to EDA officials, the agency  maintains a database of information from petitions, such as firm  location, sales or production, employment, and the basis for eligibility.  EDA staff also maintain a separate database of information from firms’  approved business recovery plans, including the total dollar amount of  assistance and types of projects approved. However, TAA Center  staff do not have access to EDA’s databases and maintain their own  independent program data and information. We found that EDA does  not maintain the necessary data, such as whether the firm is a public  or private firm or a multiplant firm, to conduct a quantitative analysis of  the effects of TAA for Firms assistance on participating firms, but that  the TAA Centers collected the time-series data required to perform an  economic analysis. Although we were able to conduct an analysis of  the program’s impact on firms, doing so required us to compile more  complete and comprehensive firm-level data that the centers had  collected for other purposes. For example, in the absence of  centralized program data, we utilized the firm-level data cited in the  conference report on Commerce appropriations compiled by the  centers for fiscal year 2012, including firms’ current and prior sales  and employment and the fiscal years in which firms completed  projects in their approved business recovery plans.commented that the program would benefit from having a complete  data set on firms to respond to future data requests from stakeholders  and analyze the effectiveness of the program; however, the data EDA  currently has accessible are not sufficient for such an analysis.
EDA makes multiple data requests of TAA Centers. EDA frequently  makes multiple requests to the TAA Centers for program data when  preparing required reports, and center staff noted that they are often  asked to provide or validate program data and information they have  already reported, including the data for the program’s annual reports.  Staff at several centers that we visited stated that they were able to  comply with repeated requests for data, but they cited concerns about  the use of limited staff time to prepare reports of data they had  previously reported.
Data requests require verification but can still result in inaccuracies. In  addition, EDA relies on each of the TAA Centers to validate its data.  However, when we compared EDA’s data with data provided by the  centers, we identified errors in EDA’s data. For example, we found  that EDA’s certification data did not include 30 of the 32 firms that  were certified on the basis of the expanded look-back period in fiscal  years 2009 to 2011. EDA officials also could not ensure the reliability  of data on petition and business recovery plan approvals prior to fiscal  year 2008, because EDA had not validated these data with each of  the centers.
Lack of guidance results in dissimilar information across TAA Centers.
EDA has not developed guidance on the format and types of program  data that TAA Centers should collect, which has contributed to a lack  of comparable data on program activities across the centers. Though  TAA Centers have begun to track expenses by specific program  activities—such as outreach, petition development, and business  recovery plan development and implementation—EDA has not  clarified how the centers are to record these activities, according to  EDA officials. As a result, Commerce’s Office of Inspector General  reported that TAA Centers do not appear to be consistent in how each  records and allocates costs among program activities. Many of the  centers conduct customer satisfaction surveys, but each has its own  set of questions and method of administering the survey. Without  consistent information, EDA cannot monitor activities across TAA  Centers or conduct a comparative program analysis.
EDA officials noted that they had been working toward establishing a  centralized database, accessible online, in which TAA Centers and EDA  could enter and verify program information. According to officials, this  effort is currently on hold pending Commerce’s response to guidance  from the Office of Management and Budget (OMB) on the establishment  of shared information technology services for federal agencies. Further,  EDA headquarters experienced a computer virus during our review, which  demonstrated the value of the centers’ systems for obtaining and  reporting historical data. However, without centralized comprehensive  and accurate data on program operations, EDA is hindered in its ability to  effectively evaluate the program, such as by determining the effects of  program assistance on firms.
section_title: Our Analysis Shows Participation in the TAA for Firms Program Is Statistically Associated with Increases in Firm Sales and Productivity
paragraphs: Given the weaknesses we found in EDA’s performance measures and  data collection, and because few other studies have examined the  effectiveness of the program, we undertook further analysis to determine  the impact of the TAA for Firms program. We found that participation in  the program was associated with increased sales, although other factors,  such as a firm having multiple plants, had a stronger effect on  performance. We used a regression analysis to determine the sales  performance of firms that participated in the TAA for Firms program from  1998 through 2011, both before and after program participation, while  controlling for other variables, such as the size of the firms and conditions  in the economy. By comparing firm sales before and after participation  in the program, rather than comparing firms in the program with firms that  did not receive assistance, we were able to examine whether participation  in the TAA for Firms program was associated with positive outcomes for  firms that actually received assistance under the program.
We collected data from the TAA Centers on firms’ sales and employment  2 years prior to having a business recovery plan approved and 2 to 3  years after, along with industry information. Our data included about 570  firms in more than 250 5- and 6-digit North American Industry  Classification System (NAICS) industries that had experienced a  decrease in either sales or employment owing to import penetration.
About 85 percent of the firms in our analysis were small to medium sized.  About one-third had fewer than 25 employees, and about two-thirds had  fewer than 50 employees; only about 5 percent had more than 300  employees. We also created overall industry and macroeconomic  variables using Bureau of Labor Statistics and Census data, to isolate the  effect of the program on firm sales while accounting for other factors in  the general economy. We found that some firm- and market-related  factors had a stronger and more significant effect on firm sales than did  participation in the TAA for Firms program, such as whether the firm was  a multiplant firm, and whether it was a publicly or privately held firm. With  regard to the effect of program participation on sales, we determined the  following:
There is a small positive and statistically significant relationship  between program participation and sales. Overall, we estimate that  the effect of participation in the program was an increase in firm sales,  ranging from 5 to 6 percent on average, if all other factors are held  constant. This translated into an average increase of about $280,000  to $350,000. The effect was greater for the firms with 300 or fewer  employees that accounted for 95 percent of the firms in our sample.  Using productivity (firm sales divided by employment) as one outcome  variable, we also found that the effect of the program on productivity  was about a 4 percent increase.
As imports rose, sales declined for TAA for Firms clients. Our  analysis shows that import penetration was highly statistically  significant and most likely had a very negative effect on firm sales.  According to our estimates, for every 1 percentage point increase in  the industry import penetration ratio, sales of firms included in our  analysis decreased by about 16 percent on average. Our analysis  also shows that import penetration increased from an average of 34  percent in 2000 to 39 percent in 2011 for industries associated with  the firms in our study.
TAA for Firms participation combined with market growth increased  firm performance. We found a statistically significant and positive  effect of industry market growth on firm sales after firms participated  in the program.the percentage change in firm sales increased as market growth  increased. For firms in relatively high-growth industries, such as  certain types of metal manufacturing, plastic pipe manufacturing, and  flooring industries, the combination of participation in the program and  industry growth affected sales more positively, with such firms  experiencing a 6 to 10 percent increase in sales. This result suggests  that firms that participated in the TAA for Firms program during the  1998 through 2011 period were better able to take advantage of  growth in their markets or to translate overall market growth into firm  sales, compared to before participating in the program. For low- growth markets, the effect was not as positive. Specifically, firms  selling products in the lowest-growth (or negative-growth) markets— the bottom percentile of our sample’s industry growth ranges—still  experienced declines in sales ranging from -0.5 percent to -2.8  percent. Since our analysis captured marginal effects, this may simply  mean that the negative factors weighing on the firm outweigh the  positives, including the effects of program participation.
section_title: TAA for Firms Clients Reported Satisfaction with Program and Its Outcomes
paragraphs: Our survey of TAA for Firms participants also showed that the program  had a positive effect. We conducted a survey of 163 firms that had a  recovery plan approved in fiscal year 2009 to obtain their views about  their experience with the program; we received responses from 117 of the  163 firms, with a final response rate of 72 percent. The survey included  questions about the TAA Center, the consultants who carried out the  projects included in the business recovery plans, and the outcomes of the  firm’s participation in the program.
More than 90 percent of responding firms reported that they were either  very or generally satisfied with the services they received from the TAA  Center and the consultants who performed work for them (see fig. 5).  Over 80 percent reported that the program helped them to identify  projects and business process improvements, and 62 percent said that  the program helped them to identify management weaknesses.
In terms of outcomes, survey results indicate that responding firms  believed the program was particularly helpful in improving marketing and  sales (84 percent); helping them to stay in business (82 percent); helping  to improve profitability (73 percent); helping them to retain employees (71  percent); and helping them to hire new employees (57 percent). In  narrative responses to our survey’s open-ended questions, 22 firm  representatives said that the program helped their business to grow or  improve. In addition, 30 respondents wrote positive comments about the  TAA Centers’ attentiveness to their needs and the ease of working with  the centers.
Only 34 percent of respondents wrote that the program helped their firm  with export sales, although we heard in interviews with staff at several  TAA Centers that they encourage small firms to increase exports. One  survey respondent noted, “TAA Centers should undertake a program  which would encourage small businesses to export. In my experience  most small businesses do not export because they believe (incorrectly)  that exporting is difficult.” Our survey respondents also suggested that the  program could be improved by increasing the availability of funding, and  allowing funds to be used for capital improvements. (For the complete  results of our survey, please see GAO’s e-supplement, GAO-12-935SP.)
During the course of our work, representatives of firms and the TAA  Centers identified the following specific ways that the program had   helped firms.
In California, a metal parts manufacturer was certified in 2007  because of increased competition from Taiwan and China. The firm  faced a 15 percent decline in employment over a 2-year period before  certification. The TAA Center helped improve the firm’s manufacturing  technology, enabling it to produce more high-end products, increase  production efficiency, and lower costs. The Center also helped the  firm to develop a marketing strategy and website upgrade to improve  the firm’s name recognition. This assistance helped the firm increase  its sales by about 8 percent, and productivity has more than doubled.  Over the past 2 years, the firm reported that it has hired two additional  employees.
In North Carolina, a TAA Center assisted a manufacturer of sheet metal  roofs and artisan works with financial consulting and a website  upgrade. The company reportedly hired an additional three employees  since it began working with the TAA Center and was able to employ  more crews than it could previously. The owner said that his company  might have had to lay off half its staff without the TAA Center’s help.
In New York, a TAA Center helped a teak furniture manufacturer that  sold its products through catalogues. The firm was impacted by  competition from imports. The TAA Center encouraged the firm to  rebrand itself in order to penetrate higher-end markets through a  higher-quality catalogue and targeted advertising. As a result, the firm  reportedly doubled sales and hired 16 new staff.
In Massachusetts, a TAA Center helped an environmental  management firm that faced growing competition from international  trade. The TAA Center provided $10,000 for an improved website,  which, according to the president of the company, resulted in a 10 to  15 percent increase in sales in the first year.
section_title: EDA’s Allocation of Program Funds Falls Short of Meeting Key Standard for Funding Formulas
paragraphs: EDA allocated funding to the 11 TAA Centers for cooperative agreement  years 2008 to 2011 using a funding allocation formula that comprises a  set of weighted factors; however, the formula does not take into account  the potential number of firms in need of the program and differences in  costs across the centers. According to beneficiary equity—a key standard  for designing and evaluating funding formulas—funds should be  distributed to regions according to the needs of their respective  populations and should take into account the costs of providing program  services, so that each service area can provide the same level of services  to firms in need. However, TAA Centers varied considerably in their  costs and use of the allocation they received. Though EDA deobligates  and reallocates any unspent funds, it uses its allocation funding formula  to do so, thus perpetuating the deficiency of failing to consider variable  needs and costs in allocating its funds.
subsections: section_title: EDA Uses Funding Formula to Allocate Program Funds to TAA Centers
paragraphs: The TAA for Firms authorizing legislation does not specify how EDA  should allocate funding to the TAA Centers. In September 2003, EDA  developed, in consultation with the centers, a funding allocation formula  that it uses to allocate grant funds to each center. EDA intended that the  funding allocation formula would develop consistency in the yearly  allocation process and provide TAA Centers with sufficient funds to  operate a productive program. EDA recognized that such consistency in  funding allocations was necessary, in part because of the complexity of  the program and the provision of the centers’ professional business  advice to assist in the firms’ recovery planning and projects. EDA’s  funding formula divides two-thirds of allocated funding equally among the  11 centers according to base funding and two fixed factors:
Geographic size: The TAA Center’s service region in square miles
Number of firms: The service region’s share of the nation’s firms in the  agricultural, mining, and manufacturing sectors  The funding formula divides the remaining one-third of allocated funding  among the TAA Centers according to three variable factors:
Approved business recovery plans: The center’s share of the total  number of business recovery plans approved by EDA within the past  2 fiscal years
Employees in approved recovery plans: The center’s share of the total  number of employees in the business recovery plans approved in the  last 2 fiscal years
Firms achieving expected results: The center’s share of the total  number of firms that reported achieving anticipated outcomes from  actions the firms took as a result of the program assistance they  received during the past fiscal yearOnce it had determined the funding formula factors and measures for  each, EDA weighted the factors to determine how it would distribute  annual funding to the 11 TAA Centers. The pie chart in figure 6 shows  how the funding formula weighs each of the different factors. The bar  chart in figure 6 shows the resulting allocation to each center based on  each of the factors for cooperative agreement year 2011. For a  discussion of the data used to produce the allocation and of the resulting  allocation, see appendix IV.
The TAA for Firms funding formula places an emphasis on an equal  distribution of program funding across the centers, as it allocates about  two-thirds of program funding using base funding and relatively fixed  factors (see fig. 6). As a result, TAA Centers’ share of total program  funding has remained relatively equal and constant over cooperative  agreement years. For example, during the cooperative agreement years  2008 to 2010, each center’s portion of total funding ranged from 7.2  percent to 10.2 percent. Between the 3-year cooperative agreement  period of 2008 to 2010 and the 1-year cooperative agreement period of  2011, the change in TAA Centers’ share of total program funding ranged  from 0.2 percent to 1.6 percent.
EDA included the formula’s three remaining factors to account for  differences in TAA Centers’ performance.
EDA included each center’s share of the total number of firms that  reported achieving anticipated outcomes from actions they took as a  result of the assistance they received during the past fiscal year and  the total number of business recovery plans approved within the past  2 fiscal years.
To offset the potential of those factors to motivate centers to increase  their individual funding levels by targeting a large number of very  small firms, EDA also included as a final factor each center’s share of  the total number of employees in the business recovery plans  approved in the past 2 fiscal years.
section_title: Funding Allocation Formula Does Not Take into Account Differences in Program Need
paragraphs: EDA’s TAA for Firms funding formula does not include a direct measure  of the number of firms potentially in need of the program based on the  program’s key objective of providing technical assistance to firms that  have lost sales and employment because of increased competition from  imports. As a result, the formula falls short of a key criterion that we  previously established for the evaluation of allocation formula  approaches. Under the beneficiary equity standard, a funding allocation  formula should include a factor that distributes funding to each service  area according to the respective target population needing assistance so  that each service area can provide the same level of services to the  population in need. To meet this equity standard, the formula should use  reliable and appropriate measures of need in each state or region.  Consequently, TAA Centers that may have a greater number of  distressed firms because of import competition potentially receive similar  amounts of funding as centers serving a much smaller number of trade- impacted firms. For example, there are wide differences in the numbers of  certified petitions and approved business recovery plans among the  centers. In addition, staff at some centers stated that they undertake  outreach efforts to identify firms. Staff at other centers stated that they  identify client firms without conducting much outreach, and still others  have so many current clients that they do not seek new ones. However,  the program lacks information to determine whether it is achieving equity  for trade-impacted firms across TAA Centers’ service regions.
section_title: Funding Allocation Formula Does Not Take into Account TAA Centers’ Varying Costs
paragraphs: EDA’s allocation of funding also does not take into account variations in  TAA Centers’ costs of providing firms assistance. To meet the beneficiary  equity standard, a formula should account for differences in the cost of  providing services in each region, so that each firm may receive the same  level of assistance. The centers provide EDA with information on  programmatic costs by cost categories. However, we found that TAA  Centers’ direct and indirect operating costs varied considerably during the  cooperative agreement years 2008 to 2010 (see fig. 7). For example,  during that time period, centers’ costs for personnel salaries and fringe  benefits ranged from approximately $877,000 to $2.1 million, and  centers’ costs for travel and for equipment and supplies ranged from  $52,000 to $260,000.
In addition, indirect cost rates are set according to OMB guidelines and  vary depending on whether the TAA Center is affiliated with a university  or an independent nonprofit organization.
For university-affiliated centers, indirect costs tend to be higher than  those of nonprofit-affiliated centers. The indirect costs for the  university-affiliated centers ranged from 12.9 percent of total costs to  30.3 percent of total awarded funds, or about $473,000 to $958,000,  for cooperative agreement years 2008 through 2010.
For nonprofit-affiliated centers, the indirect costs ranged from 5.5  percent to 14.1 percent of total awarded funds, or about $251,000 to  $662,000, for cooperative agreement years 2008 through 2010 (see  fig. 8).
The direct and indirect costs of operating the centers to provide  assistance to firms affect the amount of program funding that centers  have available for direct assistance to firms. During cooperative  agreement years 2008 through 2010, the share of program funding for  third-party consultants implementing projects in firms’ approved business  recovery plans varied widely across the centers, ranging from 21.2  percent of total expenditures or $670,000 for the Western Center to 73.7  percent or $3.4 million for the New England Center.
In part because of the variation in the direct and indirect costs of  operating the centers to provide assistance to firms, marked differences  exist in the centers’ backlogs of approved but unfunded assistance to  firms. The TAA for Firms program’s total backlog of unfunded assistance  approved from cooperative agreement year 2008 to April 2012 exceeds  $24 million for a total of 796 firms, but this backlog ranged from $1 million  for 27 firms assisted by the Western Center to $3.9 million for 133 firms  assisted by the New England Center (see table 3).
EDA’s approach to allocating funding resulted in differences in the  centers’ use of the allocations they received. Five centers spent their  entire funding allocation by the conclusion of the 3-year cooperative  agreement period 2008 through 2010, while six centers did not. The total  proportion of unspent funds among the six centers ranged from 1.3  percent to 9.8 percent. In addition, some centers that spent their full  allocation had a backlog of unfunded assistance for projects approved  since fiscal year 2008, totaling more than $3.4 million as of April 2012. At  the same time, some centers that had unspent funds had smaller  backlogs totaling less than $1.2 million. Although EDA deobligates any  unspent funds and reallocates these funds for the following cooperative  agreement period, it uses its allocation funding formula to do so, thus  perpetuating the deficiency of not including centers’ variable needs and  costs in allocating funds among them.
To meet the beneficiary equity standard, a funding allocation formula  should use reliable and appropriate measures of the cost of providing  services in each region. Because EDA’s funding formula does not take  into account variations in TAA Centers’ costs of providing assistance to  firms, EDA cannot ensure that trade-impacted firms in different service  areas receive the same opportunities for assistance through the centers.  The available evidence we analyzed suggests wide variation in the  number of firms that the centers are able to assist and the amount of  funding that they may provide to implement approved business recovery  plans, raising questions about whether limited program funding is being  used effectively.
section_title: EDA Is Undertaking Efforts to Revise Its Funding Allocation Formula
paragraphs: EDA officials have begun discussions with TAA Center staff to revise the  program’s funding allocation formula. In February 2012, EDA convened a  conference of center directors that included a discussion of potential  changes to the formula. According to EDA officials, these discussions are  still in the early stages and there have been no specific proposals of the  factors and weights that might be included in a revised formula. The  director of the TAA for Firms program stated that EDA’s current effort to  improve performance measures for all of its programs may identify  measures that could be used in a revised funding formula. Although EDA  officials stated that they recognize the importance of including a factor in  the formula that would account for potential program need, they have not  identified data that would enable them to measure and account for  differences in the numbers of trade-impacted firms across the centers’  service regions. The agency is considering using Commerce’s Census  Bureau databases to explore the possible use of available data in a  revised funding allocation formula. It is unlikely that any new formula  would be finalized before July 2014, according to EDA officials.
Directors at two TAA Centers we visited stated that they have undertaken  efforts to reduce their centers’ operational costs in an effort to provide  additional funding to implement firms’ projects. One center director noted  that the center’s management initiated cost-reduction efforts, even though  EDA’s funding formula does not provide incentives to reduce such costs.  Several center directors further noted that, since the centers’ operational  costs are relatively fixed, any reduction in costs results in an increased  amount and proportion of funding to assist firms. The data we analyzed  support this inference. For example, although funding for the program  remained at $15.8 million in fiscal years 2009 and 2010, the centers  helped 114 more firms petition for certification and gained EDA approval  for 93 more business recovery plans in fiscal year 2010 than in fiscal year  2009. In addition, for cooperative agreement years 2009 and 2010, the  centers increased the total portion of awarded funding for consultants by  about 12 percent while reducing costs in other categories.
In revising EDA’s funding allocation formula, the agency and the TAA  Centers will likely need to consider how to strike a balance among several  key factors—need, costs of providing services, and available resources.  Revising EDA’s funding formula presents challenges and risks, which will  require flexibility in implementing any allocation under a new formula. For  example, center directors stated that a revised formula should be  carefully designed to avoid unintended incentives and should encourage  centers to reduce indirect costs and maximize the funding available to  assist firms. In addition, because revising the formula will likely result in  decreased funding for some centers and increased funding for others,  any change to the funding formula should include a transition period so  that funding recipients have time to adjust, as our prior work has shown.
An abrupt reduction in funding levels could disrupt a center’s ability to  provide assistance to firms. Flexibility in transitioning to a new funding  formula would allow centers greater predictability and stability to develop  long-range plans and meet their current commitments.
section_title: Conclusions
paragraphs: The United States has arguably gained much from its engagement in the  global economy and its active pursuit of trade liberalization. Lowering  trade barriers such as tariffs offers benefits to consumers and creates  new opportunities for American exporters abroad. Yet these long-term,  widely disbursed gains are also accompanied by adjustment costs borne  directly and in a more concentrated manner by import-competing firms  and their workers. Over the past decade, the pace of trade liberalization  has been vigorous, as has been the growth in U.S. imports. Although  funding for Commerce’s TAA for Firms program, at less than $16 million,  is small relative to the $1.3 trillion rise in imports over the past decade,  our economic analysis and survey results show that the program has  delivered positive results for participating manufacturing and services  firms. We found that these firms receive individual attention from TAA  Center professionals located in their regions, practical help in developing  business recovery plans, and federal matching funds to pursue projects  designed to address competitive weaknesses and capitalize on strengths.  Many participating firms that were negatively impacted by trade have  recorded gains in sales and productivity since starting the program. Our  analysis of more than 500 firms’ financial data and other firm and  economic factors shows that this sales growth is positively associated with  participation in the TAA for Firms program.
The changes to the TAA for Firms program that Congress enacted in the  TGAAA in 2009 gave EDA and TAA Center officials more flexibility in  certifying firms, strengthened professional management of the program,  and improved transparency regarding the program’s performance.  However, enhanced accountability can be accomplished only through  better measures of how the program is helping firms adjust to import  competition. EDA collects performance data, but few of its performance  measures are outcome oriented. EDA also has several interrelated  weaknesses in its collection of data that make needed reporting  burdensome and unreliable at times. Better and more readily retrievable  data would give EDA and Congress a more comprehensive and complete  picture of program activities and enable more meaningful and ongoing  analysis of impact. Given its small budget relative to the demonstrated  need for trade adjustment assistance—as suggested by the substantial  backlog of approved but unfunded projects—EDA can do more to ensure  that its allocations reflect firms’ and regions’ varied needs for assistance  and TAA Centers’ varied costs in providing this assistance. EDA can also  encourage more efficient program administration by making the cost of  services a criterion in its funding formula and by incentivizing TAA  Centers’ cost-containment efforts, so that more funds are available to  serve firms. EDA has recognized many of these weaknesses and has  made initial efforts to address them. Given the current pursuit of further  trade liberalization, following through with these improvements to the TAA  for Firms program is essential to ensure that the program uses its budget  in the most efficient manner possible.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Commerce take the following three  actions:  1.  To ensure that the performance measures used to evaluate the TAA  for Firms program demonstrate program results and to help ensure  that EDA can comprehensively evaluate the effectiveness of the  program, broaden the program’s evaluation approach, for instance, by  developing additional quantifiable outcome-oriented performance  goals and measures for key program areas and conducting further  analysis of the data to isolate the impact of the TAA for Firms  program from other influences, such as economic trends.  2.  To improve the data available to manage and evaluate the TAA for develop a data system to consistently collect, maintain, and  analyze sufficiently reliable and up-to-date data on program  operations and participant firms.  3.  To ensure that EDA’s allocation of funding to TAA Centers reflects  varied program needs and costs,  revise the program’s funding formula by reevaluating the factors  and weights it uses to allocate funding under its cooperative  agreements, and include measures of need, such as the number  of import-impacted firms in each center’s service region and the  center’s costs in providing assistance to firms.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Commerce for  comment. We received written comments from Commerce, which are  reprinted in appendix V. Commerce concurred with our findings and  recommendations and provided additional information and observations  on implementing our recommendations. For example, Commerce stated  that EDA intends to focus on developing improved performance  measurement and accountability. In addition, Commerce noted that EDA  intends to take steps to improve its data collection and examine the  funding allocation formula used to distribute program funds to the TAA  Centers in collaboration with the centers and Congressional stakeholders.  Commerce expects to complete these efforts by 2014.
We also received technical comments from Commerce, which we  incorporated as appropriate.
We are sending copies of this report to the appropriate congressional  committees, the Department of Commerce, and other interested parties.  In addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4101 or gomezj@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: The Trade and Globalization Adjustment Assistance Act of 2009  (TGAAA), part of the American Recovery and Reinvestment Act of 2009,  mandated that we report on the operation and effectiveness of the Trade  Adjustment Assistance (TAA) for Firms program. We examined (1) the  results of the legislative changes on program operations and participation,  (2) the performance measures and data that EDA uses to evaluate the  program and what these tell us about the program’s effectiveness, and (3)  how program funding is allocated and spent.
To determine the results of the legislative changes on the program’s  operations, we reviewed relevant program legislation and regulations as  well as agency documentation and data on the number and type of firms  participating in the TAA for Firms program. We reviewed program  regulations and agency guidance outlining the operational and  administrative changes to implement the amendments under the TGAAA.  We collected from the Department of Commerce’s (Commerce) Economic  Development Administration (EDA) and the 11 TAA Centers’ data on  certifications and approved adjustment plans from fiscal years 2008 to  2011. We analyzed these data and the data reported in the TAA for Firms  annual reports for fiscal years 2009 through 2011 to determine the types  of services firms received and how the legislative changes impacted  program participation. We assessed the reliability of the data by  checking for accuracy and completeness. We determined that the data  were sufficiently reliable for the purposes of reporting the number of  submitted and approved petitions and approved business recovery plans.  We interviewed EDA officials, including the TAA for Firms program  Director, Chief Counsel, and certifying officials, to determine the effects of  the legislative changes on the program. We also conducted a site visit or  teleconference with each of the 11 TAA Centers, interviewing staff,  representatives of participant firms, and consultants to understand  procedures for identifying and assisting eligible trade-impacted firms and  to obtain their opinions and observations on the legislative changes’  effects on the program.
We conducted site visits to eight TAA Centers—in Ann Arbor, Michigan;  Atlanta, Georgia; Blue Bell, Pennsylvania; Boulder, Colorado; Chicago,  Illinois; Los Angeles, California; North Billerica, Massachusetts; and  Seattle, Washington. We conducted teleconferences with the remaining  three centers—in Binghamton, New York; Blue Springs, Missouri; and  San Antonio, Texas. We selected our site visit locations to achieve  geographic diversity and a mix of nonprofit and university-affiliated  centers, as well as a range of industries, numbers of submitted and  approved petitions, and numbers of business recovery plans. To  determine how the TAA for Firms program relates to other economic  development programs that assist manufacturers, including Commerce’s  Manufacturing and Extension Partnership (MEP) program, we interviewed  TAA Center staff, MEP consultants, and officials at Commerce  headquarters. We also reviewed documentation of program objectives,  eligibility requirements, and services provided.
We assessed EDA’s performance measures and data for the program.  We analyzed the two performance measures reported for the TAA for  Firms program in the agency’s performance and accountability reports as  well as the 14 measures specified by TGAAA and included in the TAA for  Firms annual reports. Using criteria from prior GAO work, we assessed  the extent to which the program’s performance measures reflect the  characteristics of effective performance measures. We reviewed other  reports about the program: one conducted by the Urban Institute in  November 1998 and our prior report on the program. To examine how  program data are collected and used to manage the program, we  interviewed EDA officials and TAA Center staff and reviewed EDA and  TAA Center program data and reports. We interviewed EDA officials  responsible for collecting and reporting program data, as well as TAA  Center staff, to determine the procedures for collecting, validating, and  reporting data on program operations. We also reviewed data and  documents, including quarterly and annual reports from EDA and the  centers, to understand the types of program data collected and the  purposes for which the data are used.
To estimate the impact that the TAA for Firms program assistance has  had on firm performance, we collected data on a group of participant firms  with business recovery plans approved in fiscal years 2009 through 2011  and data on general economic indicators, and we conducted a regression  analysis with these data to assess the effects of the assistance on this  group of participating firms, controlling for firm, industry, and  economywide factors. From each of the 11 TAA Centers, we obtained  financial data on firms that had an approved business recovery plan and  had completed at least one project in their approved recovery plan in  fiscal years 2009, 2010, and 2011. We assessed the reliability of the data  we received from the centers by testing the data for obvious errors and  completeness. In addition, we interviewed and received written responses  from staff at the centers who had knowledge of the data, to obtain  information on the procedures for collecting and verifying the data  reported. The centers drew their responses to our data collection  instrument primarily from the petition and business recovery plan  approval data they collect from firms. In doing so, they used the data that  they had previously compiled for a conference report on Commerce  appropriations for fiscal year 2012. This helped ensure the accuracy,  completeness, and consistency of the data. We found the data sufficiently  reliable for the purposes of our analysis. For our dependent variable or  outcome variable, we used data on yearly firm sales during this period as  a proxy for firm performance. We combined these data with data on  industry-wide and firm-specific variables that determine performance,  such as firm-specific financial data, growth rates, firm size, age, and other  qualitative firm and industry indicators. To control for factors in the  general economy, we incorporated macroeconomic variables in our  analysis, including the Census Bureau’s regional unemployment rates  and a yearly time trend. In addition, to estimate the effects of trade on firm  performance, we calculated and incorporated an international trade  variable—the import penetration ratio for each firm’s industry. Our  regression model determined whether participation in the TAA for Firms  program had a statistically significant effect on firm performance after the  firm received assistance under the program. Because the data we  collected did not include any information about firms that did not  participate in the program, this analysis allows us to make inferences  from the regression estimates only for the firms that participated in the  program during this time period. We present more complete information  about the data and methodology of the analysis in appendix III.
To report the views of certified firms on program operations and on the  quality and impact of program services, we interviewed firm representatives  and consultants during our site visits to TAA Centers. We also conducted a  survey of firms that had a business recovery plan approved by the Trade  Adjustment Assistance for Firms program in fiscal year 2009. We selected  this population to ensure that those surveyed had received assistance from  one of the TAA Centers and had some experience with implementing a  recovery plan. Our research at the beginning of our review indicated that it  would be feasible to survey these firms within our time frame and achieve  an acceptable response rate. We conducted formal pretests with  representatives of three firms and considered comments from EDA officials  to ensure that our questions were appropriate and could be understood by  respondents. Our survey covered the following topics:how the firms learned  of the program, the types of assistance the firms received from the TAA  Centers, the level of the firms’ satisfaction with the assistance, and the  impact of the assistance on the firms. We administered our survey between  March 2012 and April 2012. We surveyed the 163 firms for which we  obtained contact information, of the 171 firms that had a business recovery  plan approved in fiscal year 2009. We received responses from 117 of the  163 firms, with a final response rate of 72 percent. However, because we  did not randomly select the firms we surveyed, the survey results do not  permit us to draw conclusions about all firms participating in the TAA for  Firms program. We conducted an analysis of our survey results to identify  potential sources of nonresponse bias by comparing respondents to  nonrespondents on three key characteristics: total sales, number of  employees, and total amount of technical assistance approved. This  analysis did not indicate any large differences between respondents and  nonrespondents for these three characteristics, and we determined that the  survey results for the 117 respondents were sufficiently reliable to present  in our report. The survey and a more complete tabulation of the results can  be viewed online at GAO-12-935SP.
To examine the funding formula EDA uses to allocate program funds and  to examine how funds were spent, we reviewed EDA’s 2003 spending  plan, which defines the factors included in the formula as well as the data  used to measure each of the factors. In addition, we analyzed EDA’s  available spending plans covering cooperative agreement years 2009  through 2011 to assess the measures used to allocate program funding to  the TAA Centers during each of those cooperative agreement years. We  used equity standards from social science research for evaluating and  designing funding allocation formulas to assess the TAA for Firms  formula. To determine the amount of funding allocated to each of the 11  centers, as well as the centers’ direct and indirect costs, we analyzed  EDA’s budget data for cooperative agreement years 2008 through 2011.  We also analyzed centers’ data on the amount of approved, unfunded  assistance for cooperative agreement years from fiscal year 2008 to April  2012, and the number of firms affected. We reviewed published work of  the Commerce Office of Inspector General’s assessment of the  administrative costs of the centers.
We conducted this performance audit from July 2011 to September 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Trade Adjustment Assistance for Firms and Other Department of Commerce Programs
subsections: section_title: TAA for Firms and Manufacturing Extension Partnership Program
paragraphs: The MEP program, like the TAA for Firms program, is a Commerce- administered program aimed at helping manufacturers. The MEP  program was established in 1988 and is administered by Commerce’s  National Institute of Standards and Technology (NIST) to enhance  productivity and technological performance and to strengthen the global  competitiveness of small and medium-sized U.S. manufacturers, helping  them create and retain jobs. Under this program, NIST has established  relationships with 60 nonfederal organizations, called MEP centers,  located throughout the United States and Puerto Rico. NIST enters into  annual cooperative agreements with each of the 60 MEP centers,  whereby NIST provides federal funding to the centers subject to the MEP  centers’ providing matching funds from state and local entities and  meeting performance measures. These centers provide services to small  and medium-sized manufacturers to help them develop new customers,  expand into new markets, and create new products. MEP centers focus  on helping manufacturers in five key areas––technology acceleration,  supplier development, sustainability, workforce, and continuous  improvement. Specifically, MEP centers enter into contracts with firms to  deliver technical assistance to improve their manufacturing processes  and productivity, expand capacity, adopt new technologies, utilize best  management practices, and accelerate company growth. Table 1  provides a comparative overview of the TAA for Firms and MEP  programs.
As shown in table 4, trade-impacted firms can qualify for either program,  although the eligibility requirements for each program differ. For example,  the TAA for Firms program requires applicants to complete a certification  process that demonstrates trade impact on the firm’s employment, sales,  and production. In contrast, the MEP program does not require applicant  firms to go through a certification process. Firms must only demonstrate  they are a manufacturer under industry-specific codes, according to MEP  officials. Officials from the TAA for Firms program said that in some  instances, trade-impacted firms may choose to participate in the MEP  program rather than the TAA for Firms program because they can receive  faster assistance. In addition, officials confirmed that participant firms in  the TAA for Firms program have subsequently participated in the MEP  program for additional services, and vice versa. However, officials from  both programs did not have data to determine the extent to which this has  occurred.
Although trade-impacted firms can qualify for both programs, and some  trade-impacted firms have received assistance from both programs, TAA  for Firms and MEP program officials said that the programs are more  complementary than duplicative in nature. For example, the programs  collaborate at the state, regional, and national levels to provide services  to manufacturing firms. At the state and regional levels, MEP consultants  often bid on and win contracts to implement projects in the TAA  participant firms’ business recovery plans, according to TAA Center and  MEP staff. Staff from both programs also said that MEP consultants  sometimes refer firms to the TAA for Firms program and that TAA for  Firms officials sometimes refer firms to the MEP program. At the national  level, EDA officials informally consult with MEP officials at NIST on best  practices and opportunities for collaboration. For example, EDA staff said  that they have spoken at MEP conferences to educate consultants about  the TAA for Firms program.
section_title: TAA for Firms and Commerce’s Economic Adjustment Assistance Program
paragraphs: In addition to administering the TAA for Firms program, EDA administers  the Economic Adjustment Assistance (EAA) program through six regional  offices. The EAA program’s purpose is to help economically distressed  communities by supporting a wide range of construction and other  assistance using flexible tools to address pressing economic recovery  issues. TAA Center officials said they had little interaction with EAA  officials or the EDA regional offices because the EAA program assists  communities rather than firms.
section_title: Appendix III: Economic Analysis of the Effect of Trade Adjustment Assistance Policy on Firm Market Performance
paragraphs: We examined the impact of the TAA for Firms program on participant  firms’ performance and effectiveness using statistical analysis. For this  analysis, we obtained a sample of financial data on firms from the 11 TAA  Centers that had an approved business recovery plan and were certified  from 1998 through 2010. We used regression analysis to assess whether  there was a statistically significant relationship between firm performance  and participation in the TAA for Firms program, controlling for other firm- specific, industry-specific, macroeconomic, and trade factors. Using firm  sales and firm productivity as proxies for firm performance, we found a  positive and statistically significant relationship between participation in  the TAA for Firms program and the performance of the firms in our  sample. Using different model specifications, we estimated that the firms  participating in the TAA for Firms program experienced yearly increases  in sales of 5 to 6 percent, all else held constant. Our results also suggest  that participation in the TAA for Firms program was associated with  increased firm productivity, measured by the ratio of yearly sales to  employment, of about 4 percent per year, all else held constant.  Moreover, we observed higher performance when participating firms were  in growing markets, which may suggest that participation allowed them to  leverage the market expansion.
subsections: section_title: Policy Evaluation Methodology
paragraphs: The aim of our analysis was to evaluate the policy impact of the TAA for  Firms on firms participating in the program. Typically, we do not observe  the counterfactual state—how firms that participated would have  performed had they not participated—and we do not observe outcomes  associated with a control group of firms that did not participate. A control  group would require identifying a group of firms that is as much like the  firms in our sample as possible but did not participate in the program.  However, selecting a group that was affected by import penetration  similarly to the actual participant group would be quite difficult. Moreover,  using a control group has weaknesses. For example, macroeconomic and  other trends could affect the two sets of firms differently.
Given these data challenges, we measured the average effect of TAA for  Firms participation on the firms in our sample. We made inferences from  our regression estimates only for this sample. While this approach  allowed us to focus on the firms that actually participated, it cannot  determine whether these firms might have improved in the absence of the  program. It is possible that participating firms have some unobservable or  unmeasured characteristic—such as superior management—relative to  firms that did not participate. In such circumstances, participation in the  program might be incidental to improved performance.
section_title: Discussion of Empirical Model, Data, and Variables
paragraphs: Overall, our data set included 579 firms, or panels, and 2,711  observations. We used a panel of cross-sectional, time-series data that  included values for variables across a number of years for a group of  firms. To obtain data on performance of the various firms in the program,  we sent a data collection instrument to TAA Centers, requesting data on  firms that had completed at least one project in their business recovery  plan in 2009, 2010, or 2011. Our data collection instrument requested  data on sales and employment 2 years prior to entry into the program, in  the certification year, and 2 to 3 years after entry into the program as well  as other quantitative and qualitative data for each firm. The panel of data  had unequal time periods, as firms in our sample entered and exited the  program at different times. For example, two firms that completed a  project in 2009 might have entered into the program in different years. In  addition, the data were nonsequential in time and included gaps. For  instance, EDA did not collect data on sales and employment for every  year and explained that some of the data could not be obtained or was  missing. Although some regression methods can accommodate  unbalanced panels, others cannot, and this placed certain constraints on  our regression methods. The time periods of the panels for each firm  averaged 4 years, with a minimum of 2 years and a maximum of 6 years.
This is reportedly a common pattern in collection of data on countries, states, or firms  and is more the norm than the exception. For example, data for some time periods in  panels cannot be collected because of lack of resources or funding. See Baltagi, Badi H.,  Economic Analysis of Panel Data, 2nd ed. (West Sussex, England: John Wiley & Sons,  Ltd., 2003).
And, we define the independent or control variables as:  Emp = yearly employment for firm (proxy for size of firm)
Emp2 = yearly employment squared for firm  Age = age of firm  Age2 = age squared of firm  Growth = yearly growth in industry value of shipments for each  industry  Growth_lg1 = yearly growth in industry value of shipments, lagged  one year  TAAF Policy = trade adjustment assistance indicator = 0 before  certification and 1 thereafter  PolGrwth = interactive variable: TAAF Policy * growth  Nmulti = indicator variable for multiplant firm; 1 if multiplant firm, 0  otherwise  Nprodmkt = categorical variable indicating which level of the product  market the firm sells to such as raw, intermediate, and final/consumer  Ngeomkt = categorical variable indicating which geographic market  the firm sells to, such as local, regional, domestic, international, or  some combination of these markets  Npubpriv = indicator variable for whether the firm is public or private;  public = 1, private = 0  TPR = industry-level import penetration ratio for each 5 and 6-digit  NAICS code  Unemp = yearly regional unemployment rate (BLS Census Region)
Year = year trend variable (1998 through 2011)
A summary of the panel data showing the variables used, including the  means, standard deviations, minimums and maximums, is shown in   table 5.
For our main dependent variable, we used the natural log of firm sales to  proxy firm performance. We transformed the sales variable into natural  logarithms, because the distribution of firm sales was highly skewed to  smaller sales amounts. When transformed into natural logarithms, the  sales data exhibited more of a normal distribution, making it more useful  for regression analysis and reducing the effects of outliers.
Our policy variable is represented in the model as an indicator variable  denoted by 0 prior to a firm’s certification by a TAA Center and 1 after  certification. Using this variable, we tested whether the policy variable  going from 0 to 1 brought about a statistically significant increase in the  log of sales over time for these firms. When a firm changes from  nonparticipation to participation, sales would change by some percent.  We also created an interactive term—polgrwth—which is the policy  variable times the growth variable. This allows detection of whether  changes in market growth over the period, in combination with the TAA  for Firms policy, had a further effect on firm sales.
For our independent variables, we used firm-specific financial and  qualitative variables, which we transformed into indicator variables. Our  firm-specific variables included employment and firm age. In the data  collection instrument we sent to TAA Centers, we asked for qualitative  data such as reach of the geographic market, level of the product market,  whether the firm was public or private, and whether it was part of a  multiplant firm. These variables represent market structure characteristics  such as size, product differentiation, and economies of scale of the firm.
We also created variables that were market- or industry-specific, such as  growth and lagged growth. For this, we used Census of Manufacturing,  Annual Survey of Manufactures value of shipments data on a yearly basis  from 1998 to 2010, at the five- and six-digit North American Industry  Classification System (NAICS) level.
According to “Frequently Asked Questions” on the NAICS website at url:  http://www.census.gov/eos/www/naics/faqs/faqs in answer to the question, “What is the  NAICS structure and how many digits are in a NAICS code?” The NAICS is a two- through  six-digit hierarchical classification system, offering five levels of detail. Each digit in the  code is part of a series of progressively narrower categories, and the more digits in the  code signify greater classification detail. The first two digits designate the economic  sector, the third digit designates the subsector, the fourth digit designates the industry  group, the fifth digit designates the NAICS industry, and the sixth digit designates the  national industry. The five-digit NAICS code is the level at which there is comparability in  code and definitions for most of the NAICS sectors across the three countries participating  in NAICS (the United States, Canada, and Mexico). The six-digit level allows for the  United States, Canada, and Mexico each to have country-specific detail. A complete and  valid NAICS code contains six digits.
We also created an international trade variable at the six-digit NAICS  industry level for import penetration, using International Trade  Commission (ITC) import and export data from its online Tariff and Trade  Data Web and the Census Annual Survey of Manufacturers’ value of  shipments data. We calculated this variable as follows: Imports / (Value of  Shipments + Imports – Exports). This ratio measures imports as a  proportion of apparent domestic consumption and is often used in the  trade literature as a proxy for import penetration. We found that trade data  were missing in the ITC database for some of the unique NAICS  industries represented in our firm sample from the TAA Centers.  Specifically, although there are about 579 firms in our sample overall,  when matched with the trade data the sample size reduces to about 472  firms. Including this variable yields a smaller data set and somewhat  different regression results.
section_title: Results of Our Analysis
paragraphs: Table 6 below presents the regression analysis results, for three model  specifications, with  1)  the dependent variable as the log of firm sales;  2)  the dependent variable as the log of firm sales including the import  3)  the dependent variable as the log of productivity (sales divided by  employment).
The table also shows the regression coefficients and Z-value of the three  regression equations. We estimated the model specifications using the  feasible generalized least squares (FGLS) estimator because of  autocorrelation or correlation in the error terms over time in the data.
We used the FGLS model, xtgls in Stata, a panel data regression technique that can  correct for serial correlation. We tested for the presence of autocorrelation using the  xtserial command in Stata and found that we could not reject the presence of serial  correlation in the data. Also, in this type of model, the autocorrelation coefficient may be  different across panels, since the dependent variables are likely to be autocorrelated  within a panel or firm. Therefore, this estimator allowed us to specify a model that  corrected for panel-specific autocorrelation. The FGLS model structure can also  accommodate unbalanced panel data with missing observations as we have in our sample  of data and other non-time-varying variables of interest.  Use of the technique improved  model fit, and our primary variables of interest, including the TAA for Firms policy variable,  were significant and had the expected signs.
FGLS estimators are appropriate when one or more of the assumptions of  homoskedasticity and noncorrelation of regression errors fails.
Model 1, which uses log of sales as the dependent or outcome variable,  without the import penetration ratio, used 2,572 observations and 572  panels in the regression. Model 2, which included the import penetration  ratio explanatory variable, reduced the sample to 2,086 observations and  466 panels or firms. Model 3 included productivity as the outcome  variable, defined as the log of firm sales divided by firm employment,  along with the other control and macroeconomic variables in the other two  specifications; it contained the full sample of observations. The  coefficients and Z values for the TAA for Firms policy variable are  consistent across the 3 model specifications. In addition, the Wald Chi- squared test for model significance showed that all model specifications  were statistically significant overall.
The TAA for Firms policy indicator variable, which is 0 prior to  participation in the TAA for Firms program and 1 thereafter, is positively  and significantly related to log of firm sales in our model specifications at  the 1 and 5 percent levels. This implies an average of a 5 percent to 6  percent increase in sales when the firm participates in the program, with  all else constant. However, these model coefficients are relatively small  (0.046 to 0.057 for the sales models) in comparison with other variables  such as the multiplant firm variable, the public/private ownership of the  firm, and the lagged growth variable. Further, the TAA for Firms policy  variable is also positively related and statistically significant at the 5  percent level in our productivity specification. This result translates into  about a 4 percent increase in the level of productivity, on average, for  participation in the program for firms in our sample, all else remaining  constant. The interactive variable—growth—with the TAA for Firms policy  variable is also positively and significantly related to the log of firm sales  in Model 1. The model suggests that participation in the TAA for Firms  program had an effect on sales that was greater in industries that were  experiencing growth than in those that were not. As Mueller and Rogers  point out, there is more room for expansion by fringe firms in the market  when there is greater growth in market demand.
Mueller, Willard F. and Richard T. Rogers, “Changes in Market Concentration of  Manufacturing Industries, 1947-1977,” University of Wisconsin, Madison, and the U.S.  Department of Agriculture, March 1983.
section_title: Appendix IV: Data That EDA Uses for Its Funding Allocation Formula and Share of Funding by Center
paragraphs: The Economic Development Administration’s (EDA) funding allocation  formula includes five factors to allocate funding to each of the 11 TAA  Centers, in addition to base funding divided equally across all of the  centers. Table 7 shows the data that EDA used to measure each of these  five factors to allocate $15.4 million among the centers for the 1-year  2011 cooperative agreement period. The table shows for each factor the  data by center as well as each center’s share of the total. For example,  the Great Lakes Center accounted for 3.8 percent of geographic size, 9.7  percent of the total number of firms, 11.7 percent of the total number of  employees in the program’s approved business recovery plans, and 8.1  percent of the total number of firms that achieved expected results. Table  8 shows the resulting allocation to each of the centers for cooperative  agreement year 2011.
section_title: Appendix V: Comments from the Department of Commerce
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Kim Frankena (Assistant  Director), Christina Bruff, David Dayton, Leah DeWolf, David Dornisch,  Barbara El Osta, Etana Finkler, Bradley Hunt, Ernie Jackson, Erin  Preston, Kelly Rubin, and Andrew Stavisky made key contributions to this  report.