Intragovernmental Revolving Funds: Commerce Departmental and Census Working Capital Funds Should Better Reflect Key Operating Principles
Released: 2011-11-18T00:00:00

Letter

Background

IRFs generally do not receive appropriations directly. Instead, they are accounts that may receive reimbursements and advances from other federal accounts. In addition, they may accept fees collected from nonfederal sources for the sale of government products or services. The use of IRFs to fund consolidated or shared services allows agencies to benefit from economies of scale or take advantage of specialized expertise that they may not have. The market-like atmosphere promoted by IRF-supported services is intended to create incentives for federal customers and managers to exercise cost control and economic restraint. IRF management affects the success of the programs they support.

Within the Department of Commerce (Commerce), there are six IRFsthat support either management and administrative services—such as building security and human capital management—or specialized services based on the unique nature of the agency’s mission. For example, Census maintains a nationwide survey infrastructure and has expertise and address lists that would be uneconomical for others to replicate. Thus, it conducts surveys on behalf of other organizations (e.g., Department of Housing and Urban Development’s (HUD) American Housing Survey and the Bureau of Labor Statistics’ (BLS) Consumer Expenditure Survey).

The Commerce Departmental and the Census WCFs were established to support services and projects that are performed more advantageously when centralized, such as information technology services and acquisition management. The statutory authority requires both funds to charge rates that recover agencies’ actual costs of operations. Customers of both WCFs either pay in advance or reimburse the fund depending on the terms of the agreement.

Three entities play important roles in the management of the Commerce Departmental WCF. First, the Commerce Office of Executive Budgeting (OEB) is responsible for overall management of the Commerce Departmental WCF. Second, the algorithm review group, which includes representatives from the fund’s customer bureaus and OEB, convenes every other year to review rate-setting formulas. At this meeting, service providers present their billing methods and implement any changes to the rate-setting formulas that are agreed upon within the group. Finally, the Commerce Chief Financial Officer Council (Commerce CFO Council) is comprised of the CFOs from each of Commerce’s bureaus, giving each customer bureau a “seat at the table.” This Commerce CFO Council has an important role related to WCF increases and changes to the algorithms used to determine charges. It meets at least annually to review and update service rates, but may meet more frequently as needs arise.

Management responsibility for the Census WCF is delegated across various divisions of the bureau. For example, the Budget Division leads the setting and reviewing of service rates each year as well as fund reconciliation. The Finance Division records and tracks customer charges and payments in the Commerce Business System (CBS), which is the financial system used throughout the Department of Commerce. The Acquisition Division reviews, approves, and tracks the status of interagency agreements with Census’ external customers. The program offices—also referred to as the sponsoring divisions—are responsible for the day-to-day management of the agreements and build relationships with the customer agencies.

Both WCFs Support Management and Administrative Services, but the Census WCF Also Supports Mission Activities

Both the Commerce Departmental and Census WCFs primarily support centralized management and administrative services (M&A) for their respective bureaus and programs. For example, almost all of the Commerce Departmental WCF collections support centralized M&A services for its 13 bureaus. In contrast, about half of the Census WCF collections support M&A services for its internal divisions; most of the remaining collections support survey-related services Census performs for other federal agencies and a small share is provided to nonfederal entities. This range of activities complicates management of the fund. Accordingly, Census maintains separate fund components to account for these different activities.

Figure 1 illustrates the flow of funds from customers into the Commerce Departmental WCF for the provision of M&A services. The majority of activity is attributed to services provided by four offices—General Counsel, Human Resources Management, Security, and Administrative Services. Customers of the Commerce Departmental WCF are billed directly for services provided.

A combination of mostly federal customers, including internal Census divisions/offices, pay into each of the various components of the Census WCF: Reimbursable, Cost Collection, and Cost Allocation. As shown in figure 2, the Reimbursable component supports services purchased by a single federal agency or nonfederal entity, such as the American Housing Survey for HUD, or services for New York City and Duke University. The Cost Collection component supports services where multiple federal agencies or customers share the costs and benefits of a single project, such as the Current Population Survey.indirect costs for customers are distributed among separate components of the Census WCF: direct costs are distributed to the Reimbursable and Cost Collection components whereas indirect costs are distributed to the Cost Allocation component.

Key Operating Principles Provide a Framework for Effective WCF Management

We identified four key operating principles that offer a framework to effectively manage WCFs. As previously discussed, to identify key principles, we reviewed governmentwide guidance on business operating principles, internal controls, managerial cost accounting, and performance management. In addition, we met with staff from the two WCFs and OMB to obtain their views on the use of these principles to assess WCFs. Commerce Departmental, Census, and OMB staff generally found the principles to be reasonable. Moreover, we considered our past work. The significance of these four principles is described below. 1. Clearly Delineate Roles and Responsibilities: Appropriate delineation of roles and responsibilities promotes a clear understanding of who will be held accountable for specific tasks or duties such as authorizing and reviewing transactions, implementing controls over WCF management, and helping ensure that related responsibilities are coordinated. In addition, this reduces the risk of mismanaged funds and tasks or functions “falling through the cracks.” Moreover, it helps customers know who to contact in the event they have questions. 2. Ensure Self-Sufficiency by Recovering the Agency’s Actual Costs: Transparent and equitable pricing methodologies allow agencies to ensure that rates charged recover agencies’ actual costs and reflect customers’ service usage. If customers understand how rates are determined or changed including the assumptions used, customers can better anticipate potential changes to those assumptions, identify their effect on costs, and incorporate that information into budget plans. A management review process can help to ensure the methodology is applied consistently over time and provides a forum to inform customers of decisions and discuss as needed. 3. Measure Performance: Performance goals and measures are important management tools applicable to all levels of an agency, including the program, project, or activity level. Performance measures and goals could include targets that assess fund managers’ responsiveness to customer inquiries, the consistency in the application of the funds’ rate-setting methodology, the reliability of cost information, and the billing error rates. Performance measures that are aligned with strategic goals can be used to evaluate whether, and if so how, WCF activities are contributing to the achievement of agency goals. A management review process comparing expected to actual performance allows agencies to review progress towards goals and potentially identify ways to improve performance. 4. Build in Flexibility to Obtain Customer Input and Meet Customer Needs: Opportunities for customers to provide input about WCF services, or voice concerns about needs, in a timely manner enable agencies to regularly assess whether customer needs are being met or have changed. This also enables agencies to prioritize customer demands and use resources most effectively, enabling them to adjust WCF capacity up or down as business rises or falls.

By incorporating these principles in written guidance, agencies promote consistent application of management processes and provide a baseline for agency officials to assess and improve management processes. Moreover, agencies can use the guidance as a training tool for new staff and as an information tool for customers, program managers, stakeholders, and reviewers.

Figure 3 summarizes the four principles and their underlying components.

Principle 1: Clearly Delineate Roles and Responsibilities

Agencies’ Guidance Does Not Identify Roles and Responsibilities of All Key Personnel

The responsibility for managing and overseeing aspects of the Commerce Departmental and Census WCFs is segregated across a number of offices and entities, thus minimizing the risk of error in fund management. However, neither agency’s WCF guidance includes complete information on the roles and responsibilities of all key personnel.

The Commerce Department’s Office of Executive Budgeting has created a working environment that promotes communication, according to customers and service providers. This has resulted in a clear understanding among Commerce Departmental WCF managers, service providers, and customers about the roles and responsibilities of key personnel who manage the Commerce Departmental WCF. Customers and service providers we interviewed said that OEB is where they go to get answers or raise concerns. In addition, customers and service providers said they communicate directly with each other or through OEB about services they receive and rates charged. Service providers expressed appreciation for OEB’s role in facilitating and coordinating regular communication between the service providers and customers. For example: two of the four service providers said they interact with OEB on a daily basis, and all four service providers said that communication occurs on at least a monthly or quarterly basis through meetings or status reports.

However, while the Commerce Departmental WCF handbook includes the roles and responsibilities of many key personnel and review groups involved with fund management, it leaves out information on the cross- departmental role of the Commerce CFO Council, which is comprised of the CFOs from each of Commerce’s bureaus and has an important role regarding increases or changes to the WCF. The absence of this entity from the handbook results in an incomplete reflection of the process and a missed opportunity to promote understanding by new staff and customers.

In contrast to the centralized management of the Commerce Departmental WCF, management responsibilities for the Census WCF are delegated across several divisions including the Census Budget, Finance, and Acquisition Divisions. Although decentralization provides segregation of duties, Census does not have a formal process to coordinate and consolidate information managed by these disparate divisions to provide a corporate view of the WCF. In addition, information about the roles and responsibilities of Census management is incomplete, spread across three documents, and contains varying levels of detail and clarity. For example, the Census WCF Manual lists key personnel responsible for management of the WCF but does not describe their duties and responsibilities or provide specific contact information. This limits the usefulness of the guidance for bureau staff, customers, and other stakeholders. For example, one of the Census WCF’s larger customers we interviewed was unsure who to speak with about questions relating to service needs (e.g., the level of service to expect and the wait times before receiving services) and suggested that the Census WCF develop guidelines about service needs and expectations.

Commerce Business System Does Not Facilitate Appropriate Tracking and Use of Funds

The Commerce Business System (CBS), which is the financial system used throughout most of Commerce, does not provide a mechanism to record the period of availability of appropriations advanced from customer agencies. The Commerce Department advised us that both WCFs accept advances or reimbursements. When customers pay in advance, those advances have not yet been “earned” in performance of an agreed-upon service and still retain the period of availability from the original appropriation. If the providing agency were to obligate against advanced funds after the appropriation account closes, the customer agency would be required to transfer currently available funds to the WCF. If the customer does not have such funds available, they could be exposed to possible Anti-Deficiency Act violations. Thus, to appropriately manage the use of funds, agencies need a way to track whether funds remain available for purposes of the interagency agreement when it bills against the advance.

Similar to what we found in our prior work at NIST, Census tracks customer funds by the period of performance, which may not always coincide with the availability of the funds. Although customer agencies bear ultimate responsibility for proper use of their funds, we have previously reported that the performing agency shares responsibility with its customer agencies to ensure the proper use of federal funds when entering into interagency agreements. Census officials can verify the availability of advanced funds through the Treasury Account Symbol (TAS); however, TAS is not electronically captured in CBS. Unless CBS is updated to include a mechanism for tracking the availability of funds, the performing agency cannot ensure that funds are legally available when it bills against the advances. This is an indication of a potential internal control weakness over resources and, as mentioned above, creates a risk that customer agencies may incur an Anti-Deficiency Act violation.

Principle 2: Ensure Self-sufficiency by Recovering the Agency’s Actual Costs

Commerce Has a Transparent Process for Ensuring Recovery of Actual Costs

According to service providers and customers, the rate-setting processes for the Commerce Departmental WCF are transparent, clearly coordinated, and designed to recover annual actual costs. For example, the meetings of the Commerce CFO Council—which is comprised of CFOs from each of the Commerce Department’s bureaus—provide a regular source of information on the status of funding recommendations to Commerce’s CFO. In addition, the algorithm review group and OEB review rates charged at least annually to determine how much each customer bureau will pay into the Commerce Departmental WCF. These rates are based on algorithms that include variables such as prior year actual costs associated with customers’ service usage. For example, when determining rates for building maintenance, one important variable is the square footage of the customer office space. Similarly, when determining rates for human resource management services, the number of full-time equivalents is an important variable. This rate-setting process, including the method for setting and distributing charges among users, is clearly explained in the Commerce Departmental WCF handbook. Moreover, Commerce customers said they understood how rates were determined and were satisfied with the amount of input they had in the process. Managers of the Commerce Departmental WCF said that their goal each year is to set rates that cover annual WCF costs and maintain at least the same level of services as the prior year. OEB officials said that the WCF has a limited number of significant cost increases, so a large carryover balance is not needed to sustain the fund.

Census’ Process to Recover Actual Costs Could Be More Transparent

The Census WCF is also designed to recover actual costs and bases its M&A service rates on algorithms linked to expected service usage. In contrast to the Commerce Departmental WCF, managers of the Census WCF maintain an operating reserve to help keep rates stable throughout the decennial census cycle. The Census WCF charges rates that are higher than needed earlier in the decennial cycle to break even later in the decennial cycle. Information about how rates are charged and costs distributed is incomplete and dispersed across three documents. Census customers we spoke with had mixed responses about how M&A costs are determined. For example, five of the seven customers we spoke with said Census informed them of the charges in general terms but did not describe how the individual costs that make up the total M&A costs are determined. However, the customers provided no detail about their efforts to obtain such information from Census. Nonetheless, the lack of clarity in how M&A costs are determined makes it difficult for customers to challenge rates or suggest improvements. A recent Census task force report on cost-saving opportunities related to survey work performed for other federal agencies found that no one Census division had authority to oversee and manage the allocation of resources or the timing of delivering services to any one customer. This report recommended that Census provide greater details on survey costs and establish a “single point of authority” for communicating with customers.

Both Commerce and Census Have a Management Review Process, but Census’ Process Could Be Improved

Both Commerce and Census WCFs have a management review process that examines how rates are set. However, the level of transparency differs between the two organizations. For example, each month OEB creates and updates a “status of funds” document that tracks available funding in the Commerce Departmental WCF throughout the fiscal year. Commerce officials said OEB uses this document to regularly monitor the WCF and the document is shared with the Commerce CFO each month. In addition, OEB reconciles actual obligations with estimates to identify and investigate variances of 10 percent or more. The service providers meet quarterly with OEB to review budget status and any changes in customer service needs. This process is also documented in the Commerce WCF handbook and helps ensure that rates recover the agency’s actual costs.

In contrast, Census’ WCF reconciliation and review process lacks transparency. Census provides a fragmented and limited description of how it sets rates and there is no formal process to communicate with customers. According to Census officials, the rates for the M&A services are reviewed annually and the costs of the survey services are reconciled when a project concludes. However, two of the three Census WCF internal customers said they have limited discussions and input with Census WCF managers about how rates were determined. Moreover, it is unclear what information is provided, or when, to senior Census management (e.g., Census’ CFO). Documentation provided by Census officials did not show what assumptions were used to set rates, whether they were applied consistently, and if actual costs are fully recovered. Although the Census WCF is subject to periodic reviews conducted by the Budget Division to compare revenues generated with the costs captured, it does not include further details on how this is done or with whom the information is shared. Census officials said the WCF is discussed during quarterly budget review meetings with senior management. However, the document that Census officials shared with us, which is used to explain the components of the WCF balance, includes amounts only related to the Cost Allocation component. Without transparent processes for reviewing and updating the service rates, Census misses the opportunity to assure customers and other stakeholders that rates charged are set fairly and to receive suggestions from stakeholders on potential improvements.

Principle 3: Measure Performance

Both WCFs Could Benefit from Performance Measures to Assess Operational Effectiveness

OEB has processes in place that help it manage the operations of the Commerce Departmental WCF. For example:

A “status of funds” report is updated monthly and provided to Commerce’s CFO. This report helps WCF managers track the remaining balance of customers’ funds to pay for WCF services.

Variances of 10 percent or more in the Commerce Departmental WCF’s estimated and actual obligations are investigated to obtain justification. In addition, OEB meets quarterly with the director of each office to review the current status of the organization’s budget.

Customers are surveyed annually about the quality of OEB’s assistance and written guidance for the services OEB provides. However, this survey asks broad questions that are not targeted to a specific activity or level of performance. For example, the only references to the Commerce Departmental WCF are general questions about customer interactions with OEB staff and whether the Commerce WCF handbook is useful.

While OEB finds these processes helpful in day-to-day management of WCF activities—such as tracking available balances of customer funds— it does not define these processes as measures to assess WCF performance. We believe that Commerce could use these processes as a starting point to determine what specific measures would be helpful to continuously improve WCF management.

As part of its strategic plan, Commerce outlined departmentwide strategic goals and performance measures in its “balanced scorecard approach.”

The offices that provide services supported through the Commerce Departmental and Census WCFs are assessed as part of this approach, but currently this does not include measures to assess how the WCFs are operating or if they could each function better as an entity.

Customers corroborated receiving surveys from other service providers, such as the Acquisition and Finance Divisions, but were unable to provide copies of these surveys. participating divisions. Further, Census WCF managers could not provide any examples of fund-specific performance measures.

Opportunities Exist for Management to Potentially Consolidate WCF Services

Although the Commerce Departmental and Census WCFs are intended to achieve economies of scale by supporting services and projects that are performed more advantageously when centralized, both WCFs support similar M&A services that could potentially be supported by one WCF. Officials at Commerce and Census were unable to clearly explain why each WCF provides the same or similar services, or why these services could not be consolidated. For example, both the Commerce Departmental and Census WCFs support a range of space management, travel, and training services for staff, as well as other personnel-related activities. These are potential areas that could be consolidated. In addition, by establishing WCF-specific performance measures, fund managers could benchmark or compare fund performance, which would be useful in identifying improvement opportunities and deciding whether or not to consolidate services.

Principle 4: Build in Flexibility to Obtain Customer Input and Meet Customer Needs

Both WCFs Regularly Obtain Customer Input and Allow Some Flexibility to Adjust to Customer Needs, but Challenges Exist

In general, customers we interviewed said they had regular and ongoing interactions with fund managers or service providers. Commerce Departmental customers said they communicate regularly about the type and amount of services received and rates charged. Census customer concerns about overhead costs initiated the recent Census task force report previously described. As a result of the report findings, Census made several rate changes. Also in response to customer input, the Census Bureau recently decided to close six field offices.

The Commerce CFO Council actively seeks WCF managers’ involvement in setting customer priorities and addressing customer needs. The council meets to discuss individual bureau requests and recommends final allocations to Commerce’s CFO, including identifying any potential need to shift funds across programs. When prioritizing customer demand, Commerce Departmental WCF managers also have to incorporate the statutory cap that limits the amount NOAA pays into the Commerce Departmental WCF. Because fund managers strive to ensure self- sufficiency of the WCF and equitably distribute costs across customers, this cap limits the amount other bureaus pay into the Commerce Departmental WCF and thus the level of services that can be supported for all customers. As a result, Commerce Departmental WCF managers in the past have had to propose reductions to services to compensate for the NOAA cap and still provide needed services. When the needs of customers exceed the capacity of the Commerce Departmental WCF, the department and the customer enter into a memorandum of understanding (MOU), outside of the standard suite of services offered through the WCF. However, this additional process somewhat works against the efficiencies that WCFs are intended to provide as WCF managers must rely on a separate mechanism to provide the same type, but a higher level, of service to customers.

Although the Commerce Departmental WCF carries over some balances, the NOAA cap’s effective limit on revenues hinders the ability to build a reserve. During fiscal years 2001 through 2010, the Commerce Departmental WCF carryover balance ranged from $3 million to $13 million. Census uses its operating reserve to maintain price stability for customers throughout the decennial cycle. During fiscal years 2001 through 2010, the Census WCF carryover balance ranged from $21 million to $430 million as reported in the President’s budget. According to Census officials, the operating reserve is a portion of the Census WCF carryover balance. In fiscal year 2010, they estimated the amount of the operating reserve ranged from $45 million to $75 million. However, they did not provide documentation to support this range.

In certain cases, Census also provides separate services to customers outside the WCF’s standard offerings. Census’ process to meet changes in customer demand is designed to address the fluctuating costs of providing services to internal customers during the decennial cycle while equitably distributing costs among all internal customers. For example, in the peak years of the decennial cycle, the decennial program requires such an increased level of M&A services to support temporary staff that not all of those costs can be supported by the WCF reserve without undermining the goal of equitable cost distribution among customers. Therefore, Census directly bills these additional costs to the decennial program.

Conclusions

WCFs provide agencies with an opportunity to operate more efficiently by consolidating services and creating incentives for customers and managers to exercise cost control and economic restraint. Given the fiscal pressures facing the federal government, consolidating operations could potentially achieve cost savings and help agencies provide more efficient and effective services. Agencies can maximize the potential of these opportunities by following four key WCF operating principles. Incorporating these principles in written guidance could promote consistent application, provide a baseline for officials to assess and improve management processes, and serve as an information tool for customers, program managers, stakeholders, and reviewers.

Clear guidance on the roles and responsibilities of key personnel for managing the WCF promotes understanding of who will be held accountable, helps ensure that related responsibilities are coordinated, and reduces the risk that funds will be mismanaged. While the roles and responsibilities of the Commerce Departmental WCF’s management are well understood by customers, the guidance does not include complete information about all key participants. Because Census WCF guidance is fragmented and incomplete, it lacks clarity and is of limited use for employees and customers. Additionally, Census does not have a process to facilitate coordination among key WCF personnel to ensure appropriate tracking of funds.

To appropriately manage the use of funds advanced from customers for projects spanning multiple fiscal years, performing agencies need a way to track whether funds advanced remain available to bill against. Both Commerce and Census use the Commerce Business System (CBS) to manage funds, but the system does not track a key element to confirm that funds advanced in support of an interagency agreement are available to cover the costs of performance. Modifying CBS would help ensure that customer funds are legally available and avoid potential Anti-Deficiency Act violations for the customer agencies. A transparent rate-setting process helps assure that customers are being charged accurately and fairly for services supported through the WCF. Commerce clearly explains its rate-setting process and customers feel they have sufficient input on the process. Census’ rate-setting process is less transparent, which limits the ability of fund managers to confirm that the WCF is self-sufficient and makes it difficult for customers to make appeals.

WCF managers can better foster a results-oriented environment focused on continuous improvement by establishing performance measures and goals for WCF operations, ensuring those performance measures and goals align with the agency’s strategic goals, and by establishing a management review process to track WCF performance. The purpose of the WCFs is to achieve economies of scale through shared services. However, the lack of performance measures makes it difficult to know whether these economies are being achieved. Moreover, WCF-specific performance information and a corresponding management review process could be used to hold fund managers accountable for achieving the efficiencies that WCFs were designed to produce. Furthermore, the two WCFs may provide services in overlapping areas, which warrants further examination.

Recommendations for Executive Action

We make seven recommendations to the Secretary of Commerce.

To improve the management of the Commerce Departmental Working Capital Fund, we recommend that the Secretary of Commerce take the following actions: 1. Update the Commerce Departmental WCF handbook to include a description of the Commerce CFO Council and its roles and responsibilities. 2. To meet its responsibilities in ensuring the proper use of federal funds and to help guard against the use of canceled appropriations, revise its financial systems to electronically record and monitor the period of availability of appropriations advanced to Commerce and its bureaus from client agencies. 3. Establish performance measures to assess performance of WCF operations, such as billing error rates, and determine what additional measures would be helpful to improve WCF management. 4. Coordinate with the Census Bureau to examine the M&A services provided through both WCFs to determine what services might be consolidated.

To improve the management of the Census Bureau Working Capital Fund, we recommend that the Secretary of Commerce require the Under Secretary for Economic Affairs as well as the Census Director to take the following actions: 5. Develop guidance that clarifies and consolidates existing WCF policies to include: a. roles and responsibilities of key personnel responsible for WCF management, and b. a process to coordinate information managed by disparate divisions to provide an overarching view of the WCF and ensure the appropriate tracking of funds. 6. Include a more detailed explanation in WCF guidance on the rate- setting process for all components of the fund, such as an explanation of how rates are determined and costs distributed, and establish a formal process similar to the Departmental WCF’s process to communicate with customers. 7. Establish performance measures to assess performance of WCF operations and determine what would be helpful to improve WCF management.

Agency Comments and Our Evaluation

We provided a draft of this report to the Secretary of the Department of Commerce for official review and comment. In his letter that is reprinted in appendix II, the Secretary agreed with our findings and recommendations and has directed the managers of both the Commerce Departmental WCF and the Census Bureau WCF to begin implementing our recommendations. Commerce and Census provided technical comments that were incorporated into the report as appropriate. We also provided portions of the report to the customer agencies with which we met. None of these customer agencies offered any technical comments.

We are sending copies of this report to the Secretary of Commerce, the Under Secretary for Economic Affairs, and the Director of the Census Bureau. We are also sending copies to the appropriate congressional Committees. In addition, the report is available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact Denise M. Fantone at (202) 512-6806 or fantoned@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 major contributions to this report are listed in appendix III.

Appendix I: Expanded Version of WCF Key Operating Principles

WCF Key Operating Principles

Principle Clearly delineate roles and responsibilities Appropriate delineation of roles and responsibilities promotes a clear understanding of who will be held accountable for specific tasks or duties, such as authorizing and reviewing transactions, implementing controls over WCF management, and helping ensure that related responsibilities are coordinated. In addition, this reduces the risk of mismanaged funds and tasks or functions “falling through the cracks.” Moreover, it helps customers know who to contact in the event they have questions.

Written roles and responsibilities specify how key duties and responsibilities are divided across multiple individuals/offices and are subject to a process of checks and balances. This should include separating responsibilities for authorizing transactions, processing and recording them, and reviewing the transactions.

Written description of all WCF roles and responsibilities in an accessible format such as a fund manual. Discussions with providers and clients confirm a clear understanding.

A routine review process exists to ensure proper execution of transactions and events.

Ensure self-sufficiency by recovering the agency’s actual costs Transparent and equitable pricing methodologies allow agencies to ensure that rates charged recover agencies’ actual costs and reflect customers’ service usage. If customers understand how rates are determined or changed including the assumptions used, customers can better anticipate potential changes to those assumptions, identify their effect on costs, and incorporate that information into budget plans. A management review process can help to ensure the methodology is applied consistently over time and provides a forum to inform customers of decisions and discuss as needed.

Published price sheets for services are readily available. Documentation of pricing formulas supports equitable distribution of costs.

Pricing methodology and accompanying process ensures that, in aggregate, charges recover the actual costs of operations.

Management review process allows fund managers to receive and incorporate feedback from customers. Discussions with customers confirm an understanding of the charges and that they are viewed as transparent and equitable.

Principle Measure performance Performance goals and measures are important management tools applicable to all operations of an agency, including the program, project, or activity level. Performance measures and goals could include targets that assess fund managers’ responsiveness to customer inquiries, the consistency in the application of the funds’ rate-setting methodology, the reliability of cost information, and the billing error rates. Performance measures that are aligned with strategic goals can be used to evaluate whether, and if so how, WCF activities are contributing to the achievement of agency goals. A management review process comparing expected to actual performance allows agencies to review progress towards goals and potentially identify ways to improve performance.

Performance indicators and metrics for WCF management (not just for the services provided) are documented.

Indicators or metrics to measure outputs and outcomes are aligned with strategic goals and WCF priorities.

WCF managers regularly compare actual performance with planned or expected results and make improvements as appropriate. In addition, performance results are periodically benchmarked against standards or “best in class” in a specific activity.

Build in flexibility to obtain customer input and meet customer needs Opportunities for customers to provide input about WCF services, or voice concerns about needs, in a timely manner enable agencies to regularly assess whether customer needs are being met or have changed. This also enables agencies to prioritize customer demands and use resources most effectively, enabling them to adjust WCF capacity up or down as business rises or falls.

Established forum, routine meetings, and/or surveys solicit information on customer needs and satisfaction with WCF performance.

Established communication channels regularly and actively seek information on changes in customer demand and assess the resources needed to accommodate those changes.

Established management review process that allows for trade-off decisions to prioritize and shift limited resources needed to accommodate changes in demand across the organization.

Appendix II: Comments from the Department of Commerce

Appendix III: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

In addition to the contact named above, Carol M. Henn, Assistant Director and Leah Q. Nash, Analyst-in-Charge managed this assignment. Anna Chung, Elisabeth Crichton, Wati Kadzai, Margit Myers, and Amrita Sen made major contributions to this report. Tom Beall, Robert Gebhart, Felicia Lopez, and Jack Warner also made key contributions to this report.