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. 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. 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.