[Senate Hearing 105-40]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 105-40


 
                 OVERVIEW OF MANAGEMENT ISSUES FOR THE
                         DEPARTMENT OF COMMERCE

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                  OVERSIGHT OF GOVERNMENT MANAGEMENT,
              RESTRUCTURING, AND THE DISTRICT OF COLUMBIA

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 10, 1997

                               __________

      Printed for the use of the Committee on Governmental Affairs



                               


                      U.S. GOVERNMENT PRINTING OFFICE
 38-833 cc                   WASHINGTON : 1997
_______________________________________________________________________
           For sale by the U.S. Government Printing Office, 
 Superintendent of Documents, Congressional Sales Office, Washington, DC 20402


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOHN GLENN, Ohio
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              JOSEPH I. LIEBERMAN, Connecticut
SAM BROWNBACK, Kansas                DANIEL K. AKAKA, Hawaii
PETE V. DOMENICI, New Mexico         RICHARD J. DURBIN, Illinois
THAD COCHRAN, Mississippi            ROBERT G. TORRICELLI, New Jersey
DON NICKLES, Oklahoma                MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania
             Hannah S. Sistare, Staff Director and Counsel
                 Leonard Weiss, Minority Staff Director
                    Michal Sue Prosser, Chief Clerk

                                 ------                                

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING, AND 
                        THE DISTRICT OF COLUMBIA

                    SAM BROWNBACK, Kansas, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
ARLEN SPECTER, Pennsylvania          MAX CLELAND, Georgia
                        Ron Utt, Staff Director
      LaurieRubenstein, Minority Staff Director and Chief Counsel
                      Esmeralda Amos, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Brownback............................................     1

                               WITNESSES
                         Monday, March 10, 1997

Frank DeGeorge, Inspector General, U.S. Department of Commerce, 
  Washington, DC.................................................     2
Raymond G. Kammer, Jr., Acting Chief Financial Officer and 
  Assistant Secretary for Administration, U.S. Department of 
  Commerce, Washington, DC.......................................    32

                     Alphabetical List of Witnesses

DeGeorge, Frank:
    Testimony....................................................     2
    Prepared statement...........................................     6
Kammer, Raymond G. Jr.:
    Testimony....................................................    32
    Prepared statement...........................................    39

                                APPENDIX

Letter from Raymond G. Kammer, Jr. to Senator Brownback, dated 
  April 30, 1997.................................................    53
Questions and responses from Senator Brownback for the Department 
  of Commerce....................................................    54
Questions and responses submitted to Raymond Kammer, Jr..........    54



      OVERVIEW OF MANAGEMENT ISSUES FOR THE DEPARTMENT OF COMMERCE

                              ----------                              


                         MONDAY, MARCH 10, 1997

                                   U.S. Senate,    
                         Subcommittee on Oversight of      
                  Government Management, Restructuring,    
                            and the District of Columbia,  
                  of the Committee on Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 1:32 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Sam 
Brownback, Chairman of the Subcommittee, presiding.
    Present: Senator Brownback.

             OPENING STATEMENT OF SENATOR BROWNBACK

    Senator Brownback. I think we will go ahead and get the 
Subcommittee hearing going this afternoon. I want to hold as 
informal a session as possible.
    I am Sam Brownback, and I will be chairing this 
Governmental Affairs Subcommittee on Oversight of Government 
Management, Restructuring, and the District of Columbia.
    We are going to start a series of hearings regarding the 
Department of Commerce, an overview of management issues 
concerning the Department of Commerce. This is the first of 
several hearings where we will look at Department of Commerce 
management issues that have previously been raised by the 
people from the Inspector General's Office, Congress, the 
General Accounting Office, and even the National Performance 
Review.
    Today we will get an overview of these issues and learn 
what progress the Department has made in addressing them. Our 
witnesses will be Frank DeGeorge, Inspector General of the 
Department of Commerce, and Ray Kammer, who is Acting Chief 
Financial Officer and Assistant Secretary for Administration at 
the Department of Commerce, will be on the second panel.
    Congress has given the Department a number of directives 
and recommendations, many of which Commerce has not adequately 
addressed. We want to look into some of those areas today. I 
have particular concern about the NOAA Corps and the NOAA fleet 
and what has been taking place there after a number of years of 
questions being raised about the fleet and the people managing 
and operating it. There have been directives regarding the 
fleet from a number of different entities and there does not 
seem to be much progress being made in that particular area.
    Senator Brownback. I want to open up with our first 
witness, Frank DeGeorge, Inspector General of the Department of 
Commerce. Mr. DeGeorge, we have your written testimony, and I 
appreciate that very much.
    It is my desire in these hearings, and I think it will be 
reflected by some of the other members who will come in and 
out, that you just lay out with as much clarity and feeling as 
you have about what we should be focusing on regarding the 
Department of Commerce. Where do you think the real problems 
areas are, and what do you think we ought to be doing about 
those problem areas?
    Previous Inspectors General have been very critical of some 
of the areas, and I want to look at what those areas are and 
what we can do to try to address those problems. So you can go 
off your written text if you would like, or you can go off your 
heart if you would like. I will have some questions that I 
would like to engage in an informal dialogue with you about, 
and we will have other members joining us periodically.
    So with that introduction, Mr. DeGeorge, we appreciate you 
joining us today, and the floor is yours.

TESTIMONY OF FRANK DEGEORGE, INSPECTOR GENERAL, U.S. DEPARTMENT 
                          OF COMMERCE

    Mr. DeGeorge. Thank you, Mr. Chairman.
    I have an abbreviated version of my statement which will 
probably run longer than we both wish, but there are three or 
four items I really do want to get across to the Subcommittee.
    I would like to begin with a brief discussion of my 
personal observations about management in the Federal 
Government in general and the Department of Commerce in 
particular.
    Let me first discuss what is happening in government and 
why we should all be concerned. Available resources are 
decreasing. The emphasis on balancing the budget will make 
programmatic choices more difficult each year. Projected 
increases in income transfer programs such as Medicare, 
Medicaid and Social Security will only make the problem worse, 
and the choices more difficult.
    Like all agencies, Commerce must review its programs to 
ensure they represent the best possible investment of Federal 
dollars. Audited financial statements are now required of all 
agencies. Strategic plans, along with performance indicators 
that provide the detailed measurements necessary to judge 
agency performance, are to become the blueprint for agency 
operations, and budgets are expected to be consistent with 
those plans. Agencies are further expected to produce detailed 
operating plans from their budgets and reports that show what 
is actually happening and, based on this information, exercise 
the discipline required to deal with failure as well as 
success.
    While these reforms are designed to provide the information 
needed to monitor and evaluate agency performance, we cannot 
ignore the basic problem--a lack of senior political and career 
staff charged with responsibility for improving management and 
the willingness to hold operating agencies accountable.
    Secretary Daley and I have discussed the need to improve 
the management of the Department, and I am certain that he will 
deal positively with the issue. He has indicated as much to me 
and to the Chairman of the Appropriations Committee, I know, 
and will talk more in depth about that.
    Under financial management, one major component of 
improving the Department's financial management system is the 
development and deployment of the Commerce Administrative 
Management System, or CAMS, which integrates a new Core 
Financial System with a complete set of functional systems, 
including any necessary interfaces with bureau-unique programs.
    Two major departmental initiatives are placing pressure on 
the Department to complete CAMS prior to the year 2000. The 
2000 decennial Census, of course, which GAO recently identified 
as one of the government's ``high risk'' programs, will need to 
be supported with an updated accounting system. Also, some of 
the Department's accounting and feeder systems use two-digit 
year dates that cannot function beyond December 31, 1999. 
Rather than undertake a costly and time-consuming reprogramming 
effort, the Department is relying on CAMS to replace these 
systems. The Department is developing cost containment plans 
for CAMS and is working to strengthen project management. 
However, without close departmental oversight, delays could 
extend the deployment scheduled even further.
    Unqualified opinions on financial statements represent only 
the beginning. The real value of financial statements is to be 
found in the overviews and the coverage of performance 
measures. Meaningful analyses of performance data will provide 
useful information to enable the Congress, OMB and other 
external users to assess the efficiency and effectiveness of 
the Department.
    We recently completed a general assessment of the overviews 
of the fiscal year 96 financial statements. The overviews 
provide a variety of information; however, many portions 
contains misleading or inaccurate information. We found that 
many performance standards and measures were not directly 
relevant to a bureau's activities, did not consistently portray 
a clear picture of the outcomes of activities, and did not 
include benchmarks to allow the reader to compare statistics 
and evaluate the results achieved by the bureaus.
    On procurement management, as you are aware, many 
significant changes have been made to the procurement laws in 
recent years. Unfortunately, the Department has not provided 
strong central leadership or direction to ensure that 
departmental procurement operations incorporate these changes 
while maintaining appropriate management controls.
    Since 1995, we have discovered a number of significant 
procurement abuses within the Department. In fact, some of the 
most troubling abuses we identified originated with 
departmental supervisor personnel. Such abuses would normally 
be discovered only through routine management review, 
engagement, and participation in the issues of each 
procurement, which does not now occur.
    On facilities management, in recent years, the Department 
and its bureaus have been involved in numerous real estate 
activities involving millions of dollars. Moreover, there are 
plans to lease space or acquire or construct other multi-
million-dollar facilities. Hence, we have increasingly examined 
how the bureaus and departmental managers have handled these 
activities. We have often found recurring problems, indicating 
that the Department does not provide the involvement and 
oversight necessary to better ensure that the government's 
interests are protected.
    On information resources management, Commerce spends more 
than $600 million a year--and that is not a high number. Since 
I have been with the Department, it has been at least $300 
million a year--on information technology. It is in the midst 
of four costly, complex and critical modernization programs--
the National Weather Service, the systems for conducting the 
2000 decennial Census, the Department's accounting and 
administrative systems that I previously mentioned, and the 
Patent and Trademark Office.
    However, Commerce, like many other civilian agencies, often 
does a poor job of planning, acquiring and managing its 
systems. As a result, there are serious problems in most of 
Commerce's major systems modernization programs, and pervasive 
inefficiency and mismanagement in planning and purchasing 
commercial systems and equipment.
    Unfortunately, the Department has not provided the needed 
leadership, guidance and oversight to effectively address the 
information technology issues.
    Now I want to spend a little time, Mr. Chairman, discussing 
the actual operations of programs. First, the 2000 decennial 
Census. Given the size, complexity, cost, and national 
importance of the decennial Census, as well as my longstanding 
concerns about Census Bureau management, we have made decennial 
planning oversight a top priority.
    Over the past 18 months, we have issued reports, testified 
and briefed bureau, Department and congressional principals and 
their staffs on our concerns about the lack of adequate 
progress on major design components and inadequate decennial 
management. In addition, last fall, we recommended to the 
Secretary that decennial management be identified as a material 
weakness in the Departments 1996 year-end report to the 
Congress under the Federal Managers' Financial Integrity Act. 
This designation emphasizes the Department's recognition of the 
seriousness of the decennial management concerns. Demonstrating 
the same level of concern, GAO recently added the decennial 
Census to the Comptroller General's government-wide list of 
high-risk programs. This list identifies Federal programs 
identified as especially vulnerable to waste, fraud, abuse or 
mismanagement.
    Next, the NOAA fleet. Since 1992, when NOAA began 
implementing a 15-year fleet replacement and modernization plan 
at an estimated cost of $1.9 billion, we, the Congress, OMB and 
others have repeatedly urged NOAA to explore alternatives to 
agency-designed, owned and operated fleet for acquiring marine 
data.
    In our 1996 report on our program evaluation of NOAA's 1995 
fleet operations and modernization plan, we recommended that 
NOAA terminate its fleet modernization plan efforts, cease 
investing in its ships, begin immediately to decommission, sell 
or transfer them, and contract for the required ship services.
    Frankly, we believe that NOAA should not be in the business 
of designing, owning, maintaining and operating ships. Instead, 
NOAA should articulate its needs for ship services to the 
private sector, academia, and other government ship operators 
who can provide more cost-effective and modern platforms.
    Unfortunately, NOAA is not aggressively pursuing these 
kinds of changes and approaches necessary to achieve greater 
efficiencies and improved effectiveness. Instead, NOAA 
continues to plan investments of millions of dollars in its 
aging in-house fleet rather than using these funds for more 
cost-effective alternatives.
    In summary, we continue to believe that most of NOAA's 
planned fleet investments and expenditures are wasteful and 
should not be made. We also continue to believe that NOAA can 
obtain better data collection and ship services at lower cost 
if it acquires such services from the private sector.
    Outsourcing would give NOAA program managers greater access 
to the latest technologies and more cost-effective platforms. 
The private sector has both the capacity and interest in 
meeting this challenge. The National Science Foundation has had 
success in acquiring the services of new research ships by 
entering into long-term arrangements with private companies. It 
is time for the administration and the Congress to direct NOAA 
on the future of its fleet.
    Next, the NOAA Corps. NOAA has drafted legislation and a 
transition plan to eliminate its Commissioned Corps. Both the 
Congress and the administration have provided direction on this 
issue. Traditionally, NOAA's Commissioned Corps has had three 
primary functions--operate and maintain NOAA's ships, operate 
and maintain NOAA's aircraft, and provide scientific and 
engineering support for NOAA's line offices, including 
temporary duties on hydrographic ships.
    The draft legislation proposes to eliminate the Corps by 
converting 299 officer positions to civilian positions without 
any overall changes in NOAA's organizational structure. Very 
simply, we do not feel that this proposal complies with the 
intent of the Congress or the National Performance Review's 
suggestions.
    The preliminary results of our ongoing review of the 
proposed elimination of the NOAA Corps suggest that greater 
efficiencies and economies can be achieved by outsourcing for 
ship operations and maintenance, eliminating aircraft 
activities that are not directly related to NOAA's mission, and 
converting to civilian status only those line officer billets 
that are fully funded by line offices.
    We estimate that, at most, only 100 to 150 of the current 
NOAA Corps billets should be converted to civilian positions. 
By converting fewer officers, NOAA would have an additional $10 
to $15 million available annually for acquiring ship-related 
and aircraft-related services from outside sources. As a 
result, NOAA's programs will have greater flexibility in the 
choice of platforms, will be able to increase the number of 
public-private and Federal-academia partnerships, and will 
avoid the need for additional capital investments in ships.
    I am going to skip the polar satellite funding, Mr. 
Chairman, in order to save some time and get directly into your 
questioning, and I will move essentially into the Weather 
Service modernization.
    Last August, because of serious defects with the contractor 
that developed AWIPS software, NOAA decided to abandon 
substantial portions of it and to use software originally 
developed by NOAA's Forecast Systems Laboratory, WFO-Advanced, 
as a basis for continued AWIPS development. WFO-Advanced is a 
risk reduction project designed to evaluate meteorologic 
techniques. Forecast Systems Laboratory's system was deployed 
to the Denver Weather Forecast Office in May of 1996, and by 
August, it was effectively supporting forecast operations with 
meteorological capabilities that would not be available in the 
AWIPS for at least 2 more years.
    The decision to use WFO-Advanced was a dramatic change in 
direction, leaving many questions to be answered regarding how 
further development would proceed, which AWIPS components would 
be retained and how they would be integrated with WFO-Advanced, 
and how the resulting system would perform.
    Consequently, Secretary Kantor decided to delay Key 
Decision Point-IV, which was the milestone that would allow 
nationwide AWIPS deployment to begin. The decision point is now 
scheduled for December 1997. Meanwhile, Secretary Daley has 
authorized NOAA to procure and deploy 21 systems, with an 
option for 18 more contingent upon adequate development and 
deployment progress with the first 21 systems.
    Because of its superior capabilities and performance, WFO-
Advanced is crucial to making progress on AWIPS. However, as 
noted, serious issues and decisions remain. In particular, use 
of WFO-Advanced requires transferring most design 
responsibilities from the contractor back to the government; 
determining the respective technical responsibilities of the 
National Weather Service, Forecast Systems Laboratory, and the 
AWIPS contractor per se; and carefully planning the work needed 
to complete AWIPS development, and finally, revising the 
contract.
    Although 6 months have passed since this decision, this 
planning is far from complete and, according to NOAA, may not 
be finished until this summer. NOAA lacks but must obtain a 
detailed definition of the work and has not yet identified 
organizational roles and responsibilities. Nevertheless, it has 
recently established a $550 million estimate for AWIPS 
development and deployment, an increase of $25 million since 
last year. This cost estimate, in our opinion, has significant 
uncertainties due to the lack of detailed planning to define 
development activities and responsibilities.
    And one P.S., Mr. Chairman. I do support the decision to 
move to WFO-Advanced, and I do believe it was a very fortunate 
state that the Weather Service had worked with the Forecast 
Systems Lab to develop this system. IT is a better, more 
operationally ready system than AWIPS, and basically should be 
implemented as soon as the necessary sorting out of 
responsibilities is completed.
    Thank you. I would be glad to answer any questions, Mr. 
Chairman.
    [The prepared statement of Mr. DeGeorge follows:]
                  PREPARED STATEMENT OF FRANK DEGEORGE
    Mr. Chairman and Members of the Committee, I am pleased to appear 
before you today to discuss management issues confronting the 
Department of Commerce and its major operating units, as highlighted in 
our recent audit and inspection reports, and to discuss progress the 
Department has made in implementing management suggestions and 
directives issued by the Congress, the OIG, and the National 
Performance Review.
    I have been a senior government manager for over 25 years--at HEW, 
Energy, Social Security, and Commerce. Prior to that, I worked in the 
private sector for 18 years in both large and small companies. I began 
my career in the private sector as a cost accountant and was a Vice 
President of Operations for a major manufacturer of electronics 
components at the time I left the private sector to join the Federal 
Government. On the basis of this extensive experience, I consider 
myself a qualified financial and general manager in both the government 
and the private sector. I should add that throughout my Federal service 
I have been a constant critic of government management, or the lack 
thereof. Thus, before I discuss the specific management issues 
confronting the Department and its major operating units, I would like 
to briefly share with you my personal observations about management in 
the Federal Government in general and the Department of Commerce in 
particular.
    Let me first discuss what is happening in government and why we 
should all be concerned. Available resources are decreasing. The 
emphasis on balancing the budget will make programmatic choices more 
difficult each year. Projected increases in the income transfer 
programs, such as Medicare, Medicaid, and Social Security, will only 
make the problem worse and the choices more difficult. Like all 
agencies, Commerce must review its programs to ensure that they 
represent the best possible investment of Federal dollars.
    Audited financial statements are now required of all agencies. 
Strategic plans, along with performance indicators that provide the 
detailed measurements necessary to judge agency performance, are to 
become the blueprint for agency operations, and budgets are expected to 
be consistent with these plans. Agencies are further expected to 
produce detailed operating plans from their budgets and reports that 
show what is actually happening, and, based on this information, 
exercise the discipline required to deal with failure as well as 
success. While these reforms are designed to provide the information 
needed to monitor and evaluate agency performance, we cannot ignore the 
basic problem--the lack of senior political and career staff charged 
with responsibility for improving management and the willingness to 
hold operating agencies accountable.
    Even if it had adequate financial and program reporting, the 
Commerce Department, over the past 15 years, has generally had other 
priorities. It has selected Deputy Secretaries, Under Secretaries, 
Assistant Secretaries, and other senior appointees for such reasons as 
their program expertise or policy background. I think it is fair to say 
that there is little departmental leadership or oversight in key 
administrative areas. Commerce is a complex Department, with a wide 
array of diverse programs and missions. It is therefore crucial that 
the Department have a strong central management team capable of 
providing the vision, leadership, and guidance necessary to ensure 
effective and efficient operations.
    Indeed, much of the Department's oversight capability has been 
deliberately dismantled. The only effective departmental oversight 
capability remaining is in the Budget Office, which I think does a 
credible job with limited information. However, once the Department's 
budget is in place, all effective Department-level control and 
oversight cease. Secretary Daley and I have discussed the need to 
improve the management of this Department, and I am certain that he 
will deal positively with this issue.
    We must hold managers accountable. Yet, how do we do this? First, 
let me commend this Committee for doing what I think should also be 
done by managers throughout the executive branch: Trying to find out 
what is going on and to understand what really is in the budget 
proposals and justifications. These budget documents contain much 
valuable information. However, all too often we don't read them, don't 
understand them, and don't really seek to get involved. I urge you to 
have your staffs address the issues discussed in these documents, 
understand them yourself, and demand answers to your questions. There 
are also other things you can do:

     Push the Department to appoint, at all levels, managers 
who accept the management responsibilities that go with their 
positions. This is particularly important for the positions of Deputy 
Secretary and Assistant Secretary for Administration/Chief Financial 
Officer. While I'm at it, let me add that the key position of the 
Department's Chief Information Officer should be separated from the 
position of Assistant Secretary for Administration/Chief Financial 
Officer.
     Support all efforts to improve the Department's financial 
management.
     Insist that the Department re-institute the departmental 
management controls and oversight capabilities that have been 
abandoned.
     Remove non-performers at all levels, both political and 
career employees, and take a tough look at the Federal personnel rules 
that make it so difficult to remove non-performers.
     LMake all agencies live within their budgets. When 
development programs get out of hand, insist that agencies absorb the 
increased costs.
     Finally, find some way for the legislative branch to deal 
analytically with the system and program options that confound us all. 
In this regard, it would help if a way could be found to minimize the 
political partisanship that seems to consume so much energy. Start by 
asking the General Accounting Office and the Inspectors General for 
detailed answers. We all know the problems. What we need are specific 
solutions. Discuss your concerns with everyone involved, recognizing 
that we are all in this together. When appropriate, suggest meaningful 
alternatives to just saying ``No.''

    The balance of my statement will discuss the specific management 
issues confronting the Department and its major operating units, and 
progress the Department has made in implementing management suggestions 
and directives issued by the Congress, the OIG, and the National 
Performance Review.
                        DEPARTMENTAL MANAGEMENT
    Commerce bureaus unilaterally control most of their own 
administrative operations, regardless of the increased overall costs. 
The Department has provided insufficient leadership to the bureaus as 
they independently pursue their own information technology and systems 
development activities. Departmental managers have, for all practical 
purposes, abdicated their procurement and contacting oversight 
responsibilities, with dire consequences. The Department's financial 
managers lack systems that provide accurate and reliable financial and 
performance data. The Department's pursuit of franchising initiatives 
threatens to divert attention from other, higher priorities. I do not 
believe governmental administrative franchises are a viable option to 
competitive procurement. Despite the hundreds of millions of dollars 
being spent for the leasing, construction, and refurbishing of Commerce 
facilities, departmental managers have not provided the oversight, 
guidance, and direction needed to ensure that these projects are 
properly justified and completed. Because the Department stopped 
conducting internal personnel management evaluations several years ago, 
it has little assurance that the bureaus are complying with governing 
laws, regulations, and guidelines.

Financial Management
    The Chief Financial Officers (CFO) Act of 1990 and the Government 
Management Reform Act of 1994 (GMRA) were designed to improve the 
overall financial management practices of Federal agencies. The acts 
require financial statements that present an entity's financial 
position and results of operation and provide other information needed 
for the Congress, agency executives, the public, and others to assess 
management's performance and stewardship. The overview section of the 
financial statements should relate financial data and other measures of 
performance, discuss trends in financial indicators, and make the 
Congress and other organizations with oversight responsibilities aware 
of future funding needs or other potential problems. The Government 
Performance and Results Act of 1993 (GPRA) further expands the use of 
performance information beyond the overview and presentation of 
critical performance data required in the CFO Annual Report. GPRA now 
involves managers, by requiring the development of a strategic plan by 
the end of fiscal year 1997, identification of performance indicators 
and performance plans by the end of fiscal year 1998, and annual 
performance reports by the end of fiscal year 2000.
    We recently issued reports on our CFO/GMRA audits of FY 1996 
financial statements for 13 Commerce bureaus and two departmental 
funds, as well as for the Department's first consolidating financial 
statements. Six bureaus (BEA, ESA, MBDA, NIST, NTIA, PTO), and the 
Department's Working Capital Fund received unqualified opinions. 
However, the Department received a disclaimer of opinion on its FY 1996 
consolidating financial statements. This is mainly due to the 
disclaimer of opinion received by NOAA, which is by far the largest 
accounting entity in Commerce. EDA, ITA, and BXA also received 
disclaimers. Census, NTIS, and the Department's Salaries and Expenses 
Fund received a qualified opinion and TA an unqualified opinion on 
their balance sheets. There is a lot of work to be done if the 
Department and all of its bureaus' financial statements are to receive 
unqualified opinions.
    The Department's current financial management structure has not 
proven to be effective in establishing adequate financial management 
systems and controls. Financial internal controls across most bureaus 
are not sufficient to preclude financial reporting problems. For 
example, internal reviews, audit surveys, and audits have found (1) 
inadequate accountability for capital assets; (2) inadequate controls 
over inventories; (3) deficiencies in accounting for disbursements and 
payables; (4) inad- 
equate accountability over accounts receivable; (5) insufficient cost 
accounting; (6) insufficient procedures relating to administration of 
grants; (7) inadequate presentation of financial information on 
financial statements; and (8) weaknesses in automated data processing 
security. Without a comprehensive and coordinated effort, the 
Department's operations are likely to remain disjointed, with its 
bureaus continuing to operate their own independent financial 
management systems.
    The Department's CFO and Deputy CFO need a strong cadre of CFOs in 
all of the major bureaus to provide candid assessments of business 
problems and unbiased and sound business advice to bureau heads and 
senior managers. Although some initiative has been taken, the positions 
remain unfilled in three of the eight bureaus we identified as needing 
CFOs.
    One major component to improving the Department's financial 
management and achieving unqualified opinions is the development and 
deployment of the Commerce Administrative Management System (CAMS), 
which integrates a new Core Financial System (CFS) with a complete set 
of functional systems, including any necessary interfaces with bureau-
unique program systems. CAMS is substantially over its estimated costs 
and continues to experience unanticipated performance shortfalls 
causing schedule slippage and placing the project in jeopardy. 
Originally $41 million, the cost estimate for the basic system has 
increased $15 million, about 37 percent, since FY 1992. Further, the 
original estimate did not include about $34 million in-house CAMS staff 
resources and earlier pre-development costs, which should be 
capitalized as CAMS development costs. In addition, the Department has 
been considering three CAMS-related initiatives projected to cost up to 
another $14 million, which would bring the total estimated cost of CAMS 
to more than $100 million. We believe these initiatives should be 
delayed indefinitely. Also, the CAMS deployment schedule has been 
significantly extended, with some Commerce bureaus adjusting their 
estimated deployment dates by 1 or 2 years.
    Two major departmental initiatives are placing pressure on the 
Department to complete CAMS prior to the year 2000. The 2000 decennial 
Census, which GAO recently identified as one of government's ``high-
risk'' programs, will need to be supported with an updated accounting 
system. Also, some of the Department's accounting and feeder systems 
use two-digit year dates that cannot function beyond December 31, 1999. 
Rather than undertake a costly and time-consuming reprogramming effort, 
the Department is relying on CAMS to replace these systems. The 
Department is developing cost containment plans for CAMS and is working 
to strengthen project management. However, without close departmental 
oversight, delays could extend the deployment schedule even further.
    Unqualified opinions on financial statements represent only the 
beginning. The real value of financial statements is to be found in the 
overviews and the coverage of performance measures. Meaningful analyses 
of performance data will provide useful information to enable the 
Congress, OMB, and other external users to assess the efficiency and 
effectiveness of the Department.
    We recently completed a general assessment of the overviews of the 
FY 1996 financial statements. The overviews provide a variety of 
information; however, many portions contain misleading or inaccurate 
information. We found that many performance measures were not directly 
relevant to a bureau's activities, did not consistently portray a clear 
picture of the outcomes of activities, and did not include benchmarks 
to allow the reader to compare statistics and evaluate the results 
achieved by the bureau. Further, many of the overviews were incomplete 
or insufficient, information was often inaccurate or inconsistent with 
information provided in the financial statements, and information was 
not consistently supported by a system of internal controls or 
appropriate documentation. The Department needs to take corrective 
action to ensure that the overviews and financial statements properly 
reflect its operations.
Procurement Management
    As you are aware, many significant changes have been made to the 
procurement laws in recent years. Unfortunately, the Department has not 
provided strong, central leadership or direction to ensure that 
departmental procurement operations incorporate these changes while 
maintaining appropriate management controls. The departmental 
procurement oversight organization was disbanded and its personnel were 
relocated to the various bureaus. While the changes were intended to 
place the oversight function in direct, ongoing contact with 
procurement issues, its effectiveness has suffered. For example, 
although the deployed oversight personnel nominally report to the 
Department, the head of the contracting office to which they are 
assigned has direct input into their performance appraisals, thereby 
compromising their ability to remain independent.
    The methods used to conduct procurement oversight reviews also have 
drastically changed. Before 1994, departmental personnel routinely 
conducted acquisition management reviews (AMR) to evaluate the 
performance of the bureaus' procurement offices. AMRs used structured 
interviews and procurement file reviews to determine (1) whether 
acquisitions were made in accordance with applicable regulations, 
policies, and procedures; (2) whether socioeconomic goals were being 
met; (3) the efficiency and effectiveness of the office; (4) the 
soundness of business judgments made by contracting officers; and (5) 
the adequacy of management controls.
    In 1994, the Department suspended the use of AMRs and adopted the 
Performance Measurement Assessment Tool (PMAT) as the primary method 
for assessing bureau procurement offices. PMAT was developed by the 
Procurement Executives Association to measure customer and employee 
satisfaction, management effectiveness, and productivity through the 
use of surveys and other statistical data obtained from the Commerce 
Procurement Data System. However, since PMAT is being used in lieu of 
structured interviews and file reviews, the Department can no longer 
determine whether statutory, regulatory, and socioeconomic requirements 
are being met, evaluate the adequacy of management controls, or assess 
the soundness of business judgments made by the contracting officer.
    Nonetheless, the Department plans to create a new statistics branch 
to facilitate the collection of even more empirical data such as that 
used in the PMAT model. We believe this is a serious misuse of 
resources as it promotes measuring customer satisfaction at the expense 
of ensuring that the underlying procurement practices meet minimally 
acceptable standards. We recommended that the Department incorporate 
independent file reviews into PMAT. Although the Department agreed with 
our recommendation, it has not prepared a plan of action or assembled 
the personnel resources needed to conduct the reviews.
    Since 1995, we have discovered a number of significant procurement 
abuses within the Department. In fact some of the most troubling abuses 
we identified originated with departmental supervisory personnel. None 
of these abuses would have been detected by PMAT. Rather, such abuses 
would normally be discovered only through routine managerial review, 
engagement, and participation in the issues of each procurement. 
Examples include:

     Our review of the ill-conceived CyberFile project 
involving the Department, the National Technical Information Service, 
and the Internal Revenue Service identified numerous procurement 
abuses, including issuance of verbal advance work authorizations to 
contractors without defining prices, deliverables, or statements of 
work; use of an SBA 8(a) contractor as a ``front'' to direct contracts 
to ineligible large firms; and improper use of interagency agreements, 
which avoided competition requirements and drove up costs.
     Contracts and interagency agreements also were used to 
shelter excess funds from budget scrutiny. In this manner, NOAA 
inappropriately obligated $90 million on a polar orbiter satellite 
interagency agreement with NASA. Similarly, NIST used several contracts 
to inappropriately obligate approximately $32 million in excess funds 
at a time when the Congress was scrutinizing unobligated funds.
     ``Indefinite Delivery, Indefinite Quantity'' contracts 
were issued without establishing ceiling values and other mandatory 
clauses, perpetuating sole-source contracting and raising costs to the 
government. In one case, an 8(a) computer services contractor was 
awarded a $720,000 contract for relatively simple support services. In 
practice, the contract was improperly used to purchase almost $5 
million of computer hardware over a 3-year period. This phenomenal 
growth of the contract consisted exclusively of unauthorized sole-
source procurement actions. Yet, this contract was administered by the 
Department and these abuses were undetected by the departmental 
procurement oversight personnel.
     Within NIST, we discovered that the acquisition plan for 
a large omnibus task order construction contract was ill-conceived. The 
contract went forward to the proposal phase despite indications that it 
would be wasteful. The acquisition plan allowed for the sole-source 
award of a $540 million, 10-year Indefinite Delivery, Indefinite 
Quantity cost-type task order contract for the construction of 
facilities. After the sole-source concept was criticized, NIST modified 
the solicitation to allow for the possibility of more than one award 
under the contract, in keeping with the Federal Acquisition 
Streamlining Act. The contract has since been suspended for lack of 
funding. We have discovered a lack of acquisition planning in other 
bureaus.
     Many Commerce bureaus either do not conduct or do not 
adequately document market surveys in determining the course of a 
procurement or in decid- 
     Ling if prices paid are fair and reasonable. Greater emphasis is 
now placed on market prices and commercial off-the-shelf procurement 
actions, but procurement officials still have the responsibility to 
determine that prices to the government are fair and reasonable.
     Although there have been many changes in the procurement 
arena in the past few years, particularly in the use of commercial off-
the shelf procurement actions, market surveys, and competition, we have 
not seen the Department take a strong lead in explaining these new 
rules to its many procurement professionals.
Facilities Management
    In recent years, the Department and its bureaus have been involved 
in numerous real estate activities involving millions of dollars. 
Moreover, there are plans to lease space or acquire or construct other 
multimillion-dollar facilities. Hence, we have increasingly examined 
how the bureaus and departmental managers have handled these 
activities. We have often found recurring problems, indicating that the 
Department does not provide the involvement and oversight necessary to 
better ensure that the government's interests are protected.
    The Department's CFO and Assistant Secretary for Administration, 
through his Office of Security and Administrative Services, is 
responsible for establishing Department-wide policy and procedures for, 
and overseeing the acquisition, management, and disposal of real 
property. However, in our recent reviews, we have often found that the 
Department has taken a ``hands off'' attitude toward oversight of space 
acquisitions. We have found also that the Departments real property 
guidelines and procedures are inadequate. A few illustrations follow:
             National Institute of Standards and Technology
    In a recent report on NIST's Capital Improvements Facilities 
Program (CIFP), we concluded that the Department was not sufficiently 
involved in the planning and implementation of this major construction 
effort to upgrade NISTs laboratory facilities in Gaithersburg, 
Maryland, and Boulder, Colorado. Nor did it stay abreast of key changes 
in the scope and funding of the CIFP that should have altered the 
Departments support for key components of the construction program. 
Consequently, the Department unwittingly assisted NIST in acquiring 
expensive leased space, with a likely $30 to $47 million price tag, 
that our office concluded was unjustified and unnecessary. The 
Department now agrees the space was not being used as construction 
``swing space,'' the purpose for which it was justified. We believe 
that if the Department had clear, written guidance and established 
procedures in place and had stayed more actively involved in the 
oversight of the CIFP, this procurement could have been avoided or 
significantly scaled back, thus freeing up funds for higher priorities, 
such as health and safety upgrades. Subsequently, the Department has 
agreed to strengthen its oversight procedures and involvement in major 
property activities.
    In other reports involving the CIFP, we emphasized the need for 
NIST and departmental managers to work together to more effectively 
manage this large and expensive undertaking. We were concerned, for 
example, that the CIFP is being revised without first making some key 
adjustments. As might be expected, the CIFP will occasionally require 
revisions and adjustments to reflect significant changes in program 
direction and other circumstances. Based on our recent discussions with 
NIST officials, the agency is revising its CIFP to more accurately 
reflect the current thinking on its facilities improvement needs. 
However, at the time of our discussions, the revised plan still 
contained at least $212.7 million in unjustified or inadequately 
explained program elements. Specifically, the plan still includes:

     $92.7 million for the planned Advanced Measurement 
Laboratory in Boulder, which is not justified and should not be 
constructed. Rather, the modest needs for advanced space in Boulder 
should be merged with similar plans in Gaithersburg.
     $120 million for renovation of the some existing 
facilities in Gaithersburg, which have not been justified.

    Moreover, there is recognition within NIST and the Department that 
its original $540 million plan cannot be completed within this 
estimate, due primarily to inflation of cost estimates for completing 
certain projects and additions to the original plan, such as the new 
chemistry building. The CIFP will cost, according to more recent 
estimates, at least $940.3 million, and will take at least 4 years 
longer than originally projected. Because of this, the Department must 
provide even closer scrutiny and oversight of the CIFP. We have 
emphasized the need for NIST and the Department to have the most 
accurate, defensible, and fiscally responsible CIFP possible. Given the 
recent questions concerning NIST's management of its CIFP funds that 
surfaced as a result of an improper obligation, it is also imperative 
that NIST and the Department keep the Congress fully informed on its 
CIFP plans, justifications, and likely cost to the taxpayer.
                 National Technical Information Service
    For more than 4 years, NTIS has spent a great deal of time and 
effort attempting to consolidate its operations at a better site. 
NTIS's efforts to relocate have been complicated by a number of 
factors, including GSA's slow pace in reviewing and addressing NTIS' 
request for space, and the Department's failure to adequately fulfill 
its oversight role in the acquisition process. And while there was a 
great deal of finger-pointing between NTIS and the Department about who 
should have done what, the result is nonetheless the same: NTIS is 
still in the same unacceptable facilities.
                      Other Facilities Initiatives
    In the coming months, we plan to closely monitor some of the 
Department's key real estate activities, including:

    NOAA's Proposed Operations and Research Center: NOAA has requested 
FY 1998 funding to begin planning for the design and construction of a 
$97 million research center to be located at the NASA Goddard Space 
Flight Center in Greenbelt, Maryland. The proposed new 350,000-square-
foot facility will house 1,200 NOAA employees involved in satellite and 
weather services.
    Census Bureau Nationwide Offices: The Bureau of the Census acquires 
short-term space to conduct its decennial Census. Since GSA has been 
reluctant to handle this effort, the bureau marshals its staff every 10 
years to acquire the necessary space for the decennial Census. For the 
2000 Census, the bureau will require between 3.9 to 4.3 million square 
feet of office and related space in 1,383 locations.
    PTO's Headquarters Offices in Northern Virginia: PTO is seeking 
replacement space for 16 leases expiring between March 1996 and April 
1997 and is working with GSA to obtain approximately 2.4 million square 
feet of replacement and expansion space. The Department estimates that 
the 20-year lease proposal will cost $26 million, with delivery 
beginning in 1998.
Information Resources Management
    Commerce spends more than $600 million each year on information 
technology. It is in the midst of four costly, complex, and critical 
modernization programs--of the National Weather Service, of the systems 
for conducting the 2000 decennial Census, of the Department's 
accounting and administrative systems, and of PTO. However, Commerce, 
like many other civilian agencies, often does a poor job of planning, 
acquiring, and managing its systems. As a result, there are serious 
problems in most of Commerce's major systems modernization programs, 
and pervasive inefficiency and mismanagement in planning and purchasing 
commercial systems and equipment. Unfortunately, the Department has not 
provided the needed leadership, guidance, and oversight to effectively 
address the information technology issues.
    Because of the importance of information technology to the 
Department's many critical missions and its poor track record, we are 
pleased that the Congress has given information technology reform high 
priority. A key part of such reform establishes the position of Chief 
Information Officer at Executive Level IV in the executive agencies. 
The size, diversity, complexity, and difficulty of Commerce's systems 
make the CIO position extremely important. As we reported in our March 
1996 Semiannual Report to the Congress, to be effective, the position 
should have organizational stature, responsibilities, expertise, and 
resources commensurate with its importance. As such, we believe that 
the CIO should report directly to the Secretary and that information 
resources management should be the CIO's only duty. We do not believe 
that this job can be performed adequately if the CIO is also the CFO or 
has other duties. We also believe that the CIO should be highly 
experienced in the planning, development, acquisition, and operation of 
complex systems; should be supported by a staff also having significant 
experience in these areas; and should have authority over significant 
budget and policy decisions involving information technology.
    The new CIO position offers the Department a good opportunity to 
improve the planning, acquisition, and management of information 
technology. With the combination of the appropriate technical and 
management experts; a proactive approach; and the ability to set policy 
and provide leadership, assistance, and consultation based on 
experience, the CIO and his staff can identify the high-leverage issues 
and offer practical, timely, and effective solutions to problems. 
However, the Department has not yet established the organizational 
capability to perform effective information technology oversight. That 
is why the choice, placement, and support, as well as the timely 
selection, of the CIO are so critical. We believe that an important 
goal of a new CIO should be to improve the capabilities and 
understanding of agency and program managers and staff with regard to 
the acquisition and management of information technology. Oversight is 
extremely important, but improvements in information technology 
planning, acquisition, and management cannot be obtained without 
improvements in the bureaus as well. A highly skilled systems 
management workforce is vital.

Human Resources Management
    We believe that the Department's managers should routinely ensure 
that the bureaus' numerous human resources operations are functioning 
as expected. Historically, the Department has used the Personnel 
Management Evaluations (PMEs) as its primary tool for assessing human 
resources office operations. However, these evaluations were terminated 
several years ago, in the name of streamlining. Among other benefits, 
PMEs helped support the bureaus by examining their compliance with 
applicable personnel laws, regulations, and guidelines. Moreover, PMEs 
help determine whether the bureaus are properly exercising their 
fundamental responsibilities by identifying and seeking correction of 
improper personnel actions, as well as regularly providing information 
on the status of internal personnel programs to the senior departmental 
and bureau officials. We have discussed our concerns with the Director 
of Human Resources. She advised us that an individual was recently 
hired by the Department to help fill this oversight void. Nonetheless, 
a great deal needs to be done to regain the necessary level of 
departmental oversight of human resources offices.
    We are also concerned that although the Department, with its 
bureaus, has embarked upon a number of human resources automation 
initiatives, it needs to do more to ensure that it has the necessary 
systems capability to properly handle these initiatives. We learned, 
for example, that the deployment of the Electronic System for 
Personnel, an important human resources automation initiative, had been 
stalled due to the Department's inability to provide appropriate 
technology links. The Department also needs to take greater measures to 
upgrade its ability to provide adequate telecommunications and 
computers systems support as new automation initiatives are 
implemented.

Franchising Initiatives
    The Department has received approval to be one of six franchise 
pilot programs government-wide. Commerce has been working to implement 
its franchise program through its Springfield, Virginia, Computer 
Center and the four Administrative Support Centers. We have previously 
reviewed the Computer Center and the ASCs and found major problems with 
their operations. Hence, we question whether these entities--from an 
overall efficiency and effectiveness perspective--are ready for the 
expected levels of franchising. The franchising concept poses many 
potential problems and obstacles that could jeopardize these entities' 
ability to fulfill their primary responsibilities to the Commerce 
Department and its bureaus. We have found, for example, that both the 
Department and the ASCs already have difficulty delivering 
administrative services to Commerce clients in a cost-effective manner 
and that many changes are needed to streamline and improve ASC 
services. Similarly, their antiquated accounting and financial systems 
would make effective franchise operations difficult.
    Before proceeding further on its franchise plan, Commerce needs to 
thoroughly address a number of questions: (1) Should NOAA be 
encouraging expanded use of its outdated computer systems and adding 
personnel to support non-Commerce bureaus? (2) How will the ASCs fare 
under franchising if the bureaus can come and go from the ASCs at will? 
(3) Will the new franchise efforts divert the ASCs' attention and 
services away from improving their support of Commerce agencies? (4) 
How effectively can Commerce and the ASCs compete with other potential 
providers of service? Other issues that need to be addressed are the 
eventual number of service delivery points, the types of services to be 
centralized or outsourced, and the impact of the transition to full 
electronic support on the ASCs and their customers. There is also the 
more fundamental concern of how aggressively the ASCs should be 
pursuing and working for external clients when they still need to do a 
better job of handling their primary responsibilities to efficiently 
and effectively serve Commerce agencies.
    We believe that departmental officials must address these problems 
and issues before sanctioning expansion of franchising. A decision to 
go forward with franchising should be based on sound, calculated 
business reasons that involve in-depth analysis of the market, costs, 
and business competitors.

Administrative Support Centers
    In a study underway of the Administrative Support Centers, which 
provide administrative services and support to Commerce's field 
offices, we have found that departmental managers have been lax in 
directing and monitoring the delivery of administrative support to 
Commerce field offices. By essentially ceding complete responsibility 
for the ASCs to NOAA, the host management agency for ASCs, the 
Department has allowed NOAA to constrain the ability of ASCs to 
adequately support Commerce field units. This has fostered 
inefficiencies, weakened the centers, and even resulted in one major 
bureau, Census, abandoning the ASCs. Another large bureau, the 
International Trade Administration, is on the verge of doing the same.
                         2000 DECENNIAL CENSUS
    Given the size complexity, cost, and national importance of the 
decennial Census, as well as my longstanding concerns about Census 
Bureau management, we have made decennial planning oversight a top 
priority. Over the past 18 months, we have issued reports, testified, 
and briefed bureau, departmental, and congressional principals and 
their staff members on our concerns about the lack of adequate progress 
on major design components and inadequate decennial management. In 
addition, last fall we recommended to the Secretary that decennial 
management be identified as a material weakness in the Department's FY 
1996 year-end report to the Congress under the Federal Managers' 
Financial Integrity Act. This designation emphasizes the Department's 
recognition of the seriousness of decennial management concerns. 
Demonstrating the same level of concern, GAO recently added the 
decennial Census to the Comptroller General's government-wide list of 
high risk programs. This list identifies Federal programs identified as 
especially vulnerable to waste, fraud, abuse, or mismanagement.
    We have developed a wide range of concerns--policy and 
programmatic, technical and statistical, and organizational and fiscal. 
Let me explain each of these areas, beginning with the policy and 
programmatic concerns. To date, major design decisions remain 
incomplete, with those concerning statistical sampling being the most 
visible. Members of Congress, among others, have expressed concern 
about the bureau's plans and their implications, yet the bureau has not 
provided them with satisfactory responses to their inquiries. The 
bureau's failure to effectively select, communicate, and defend a 
complete 2000 Census design has contributed to serious congressional 
concerns about the use of statistical sampling.
    Technical and statistical concerns also are numerous. While we 
certainly believe that increased reliance on technology, automated 
systems, and statistical methods is appropriate and necessary for 2000, 
their inclusion creates a more interdependent environment that requires 
a new level of rigor and planning not needed in a ``lower tech'' 
environment. We are concerned because we do not see in the bureau an 
appreciation of the need for such rigor and planning. The large number, 
diversity, and complexity of automated systems needed to support the 
various decennial processes present management and technical challenges 
beyond the bureau's experience. Further, the bureau will be relying on 
state-of-the-art imaging technology to capture Census data from over a 
billion pages of questionnaires. There is a significant amount of 
development work to be completed on this technology, and other 
agencies, such as the IRS, have encountered problems and delays in 
developing their imaging systems. We support the bureau's move from its 
antiquated data capture system to electronic imaging, but we are 
concerned about the limited time-remaining to develop, integrate, test, 
and correct problems.
    As for statistical issues, our primary concern is not bureau 
scientific capability. Rather, the results of a tremendous amount of 
pending critical research are needed soon to address important 
questions about how sampling will affect apportionment and 
redistricting. Until these questions are adequately answered, the 
controversy over sampling, and hence the overall 2000 Census design, 
will remain unresolved.
    Finally, organizational and fiscal concerns also needed to be 
addressed. In a 1995 report, we recommended that the bureau organize 
the decennial area to create a central integrating function reporting 
to a manager with adequate authority to coordinate the entire complex, 
interdependent enterprise. We hoped such a change would, among other 
things, clarify how, by whom, and on what basis decisions are made. 
Almost 2 years later, the bureau is taking a step in the right 
direction, but the adequacy of its actions at this late date is 
unclear.
    As for the fiscal concerns, the estimate projected by the bureau's 
cost model has remained unchanged for 3 fiscal years despite only 
partial appropriations. This incongruence with actual funding has 
hindered the model's potential use as a manage- 
ment tool. Currently, the bureau is in the process of updating the 
model, which, hopefully, will improve its usefulness. Further, until 
recently, decennial managers responded to funding cuts by deferring 
work to later fiscal years, rather than scaling back or eliminating low 
priority items in order to adequately advance high priority items. We 
believe that theme conditions have contributed to the appearance that 
the decennial is proceeding in a somewhat ad hoc fashion, with 
attention given on a component-by-component basis, rather than in the 
context of a focused, coherent design based on priorities and budgets.
    The problems that I have discussed are being exacerbated by an 
alarming loss of experienced senior and mid-level managers and staff. 
At this time, none of the senior decennial managers have broad 
operational experience. Further, two senior agency officials are 
leaving the bureau. Several decennial line managers with substantial 
decennial experience have left their positions, leaving at least one 
vacant. Likewise, staffing levels for key activities, such as sampling 
and estimation, seem inadequate. Finally, in part because of the 
staffing shortage, the bureau has moved away from in-house development 
efforts to increased dependence on contractors. Consequently, managers 
with little or no procurement experience are having to build a 
procurement organization from scratch. What all this means, of course, 
is that the decennial Census is facing obstacles and risks on every 
front. The challenge before the bureau is to take immediate steps to 
understand, reduce, and manage risk more effectively.
    There is some good news. First, the Census Bureau does have a cadre 
of talented staff with a proven track record of conducting the 
decennial under difficult and, in the case of 1990, nearly impossible, 
circumstances. Second, it has selected some promising methods and 
initiatives that still hold great potential. Third, it has at its 
disposal potentially powerful project management tools, such as its 
management information system's decision path (which provides an 
integrated view of design components, relationships, and decision 
points) and an updated decennial cost model that accurately reflects 
costs and budgets. My hope is that fuller use of those tools will 
enable managers to make better decisions, and to do so swiftly and 
confidently.
    We are working on three major fronts to address these issues. 
First, we will encourage the bureau to adopt the discipline of 
completing, then using, these management tools. Second, we will work 
with senior managers as both advocates and critics with regard to 
departmental policies, management support, and funding levels. Finally, 
we will conduct focused major program area reviews to work with bureaus 
managers to reduce risk, contain costs, and simplify their plans.
                               NOAA FLEET
    Since 1992, when NOAA began implementing a 15-year fleet 
replacement and modernization plan at an estimated cost of $1.9 
billion, we, the Congress, OMB, and others have repeatedly urged NOAA 
to explore alternatives to an agency-designed, owned, and operated 
fleet for acquiring marine data. In our 1996 report on our program 
evaluation of NOAA's 1995 fleet operations and modernization plan, we 
recommended that NOAA terminate its fleet modernization plan efforts; 
cease investing in its ships; begin immediately to decommission, sell, 
or transfer them; and contract for the required ship services. Frankly, 
we believe that NOAA should not be in the business of designing, 
owning, maintaining, and operating ships. Instead, NOAA should 
articulate its needs for ship services to the private sector, academia, 
and other government ship operators who can provide more cost-effective 
and modern platforms.
    Unfortunately, NOAA is not aggressively pursuing the kinds of 
changes and approaches necessary to achieve greater efficiencies and 
improved effectiveness. It is, in large part, for this reason that the 
Congress recently divided the former NOAA-wide marine services budget 
category into three separate ``acquisition of data'' appropriations. In 
doing this, the Congress made clear its intention that NOAA seek 
alternatives to meeting its data collection needs, that NOAA program 
offices determine how to meet their operational needs, and that this 
funding not be used simply to support the status quo.
    However, despite this specific guidance from the Congress, and 
similar recommendations from our office and prestigious scientific 
panels, NOAA continues to plan investments of millions of dollars in 
its aging in-house fleet rather than using these funds for more cost-
effective alternatives. It should not be surprising then that we 
continue to challenge many of NOAA's actions and plans. We question, 
for example, NOAA's current plans to spend money in fiscal years 1997 
and 1998 to design six new fishery research vessels. Likewise, we 
believe that it is inappropriate for NOAA, as currently planned, to (1) 
use $2 million of carryover funds to invest further in the Oregon II 
this year, (2) spend $4.5 million to extend the service life of the 
Miller Freeman in fiscal year 1998, and (3) spend millions of 
additional dollars on the David Starr Jordan in fiscal year 1999, 
without having first explored creative build/lease and other charter 
options. In addition, we do not agree with NOAA's plan to spend $6 
million over a 4-year period to buy hydrographic survey and data 
processing equipment, which would further position NOAA to compete, 
unwisely, with private sector surveyors. Moreover, our concerns extend 
to NOAA's request for funds to conduct extensive, but narrowly-defined, 
A-76 cost comparison studies on specific vessels. Rather than comparing 
the costs of operating individual ships, NOAA should, as we recommended 
over a year ago, be evaluating the costs of alternative means of 
obtaining the same services from private industry through long-term 
leases and other arrangements.
    In summary, we continue to believe that most of NOAA's planned 
fleet investments and expenditures are wasteful and should not be made. 
We also continue to believe that NOAA can obtain better data collection 
and ship services at lower cost if it acquires such services from the 
private sector. Outsourcing would give NOAA program managers greater 
access to the latest technologies and more cost-effective platforms. 
The private sector has both the capability and interest in meeting this 
challenge. The National Science Foundation has had success in acquiring 
the services of new research ships by entering into long-term lease 
arrangements with private companies.
    If you were to ask NOAA why it has not followed our recommendations 
or the Congress's direction, it might claim that it has made progress, 
and then provide a few isolated examples of movement in this direction, 
such as:

     Chartering private fishery vessels--but only when a NOAA 
ship is unavailable.
     Contracting for hydrographic data--but for far less than 
the $6 million that the Congress directed.
     Planning to use up to one-half year of University-
National Oceanic Laboratory System vessel time in 1997--but far less 
than what NOAA could use.
     Exploring private sector interest in bringing a 
deactivated NOAA hydrographic survey vessel back online and operating 
it for NOAA--but without having first explored whether private 
hydrographic survey firms would think it makes sense to use such an 
expensive ship to collect the same data.

    I do not believe that NOAA has adequately explained:

     Why it decided to spend millions during the current and 
next 2 years investing in existing deteriorating ships without first 
fully exploring private build/lease or charter options like those we 
recommended in our March 1996 report.
     Why it needs to buy new cutting-edge hydrographic survey 
technology and data processing equipment when the private sector is 
quite capable of doing the work for NOAA--at a lower cost.
     Why it already is spending appropriated money to prepare 
designs for six new fishery research vessels before first having (1) 
asked the Congress for the money to do so, (2) completed an independent 
analysis of the performance requirements and ship support or data 
required by each program mission, or (3) described its performance 
specifications to the private sector.

    We believe that NOAA's very costly plans to continue to build, 
acquire, and modernize its own in-house fleet would ensure that NOAA 
will:

     be the only logical user of the vessels for their entire 
life and the vessels will have no significant future market value,
     have to pay the full capital cost of the vessels,
     be tied for 30-plus years to vessels that may soon become 
technically outdated,
     be precluded from using creative build/lease and charter 
arrangements that rely on the private sector to provide platforms based 
on science and mission performance specifications, and
     expose its research and data collection efforts to the 
unnecessary risks associated with prolonged reliance on its aging 
fleet.

    It is time for the Administration and the Congress to direct NOAA 
on the future of its fleet.
                               NOAA CORPS
    NOAA has drafting legislation and a transition plan to eliminate 
the NOAA Commissioned Corps. Both the Congress and the Administration 
have provided direction on this issue. Traditionally, NOAA's 
Commissioned Corps has had three primary functions: (1) operate and 
maintain NOAA's ships, (2) operate and maintain NOAA's aircraft, and 
(3) provide scientific and engineering support for the line offices, 
including temporary duties on hydrographic ships. The draft legislation 
proposes to eliminate the Corps by converting 299 officer positions to 
civilian positions without any overall changes in NOAA's organizational 
structure. We believe such a one-for-one conversion is unnecessary 
since many of these positions will be eliminated when NOAA eventually 
follows congressional guidance by outsourcing for more of its ship-
related services. Very simply, we do not feel that this proposal 
complies with the intent of the Congress or the National Performance 
Review suggestions.
    The preliminary results of our ongoing review of the proposed 
elimination of the NOAA Corps suggest that greater efficiencies and 
economies can be achieved in the following ways:

     Outsourcing for ship operations and maintenance. This 
recommendation is based on the results of our 1996 program evaluation 
of the NOAA fleet and 1995 modernization plan. NOAA's programs can 
stagger the implementation of our recommendations and still achieve 
full outsourcing within 3 years. For example, the National Ocean 
Service can begin outsourcing immediately, the Office of Oceanic and 
Atmospheric Research can merge its ships with the University-National 
Oceanographic Laboratory System fleet by FY 1999, and the National 
Marine Fisheries Service can have long-term leases in place by FY 2000.
     Eliminating aircraft activities that are not directly 
related to NOAA's mission. NOAA's 14 aircraft are used for unique 
scientific missions, routine operational missions, and reimbursable 
missions. We believe only unique scientific missions must be retained 
in-house. Routine and reimbursable missions can be outsourced. Our 
preliminary recommendation is based on our ongoing analyses of in-house 
costs, in-house utilization rates, private-sector costs based on 
historical data, and other agencies' contracting practices.
     Converting to civilian status only those line-office 
billets that are fully funded by the line officers. To accommodate the 
NOAA Corps rotation policy, up to 200 shore side billets are assigned 
to NOAA's line offices: the National Marine Fisheries Service, the 
Office of Oceanic and Atmospheric Research, the National Ocean Service, 
the National Weather Service, and the National Environmental Satellite, 
Data, and Information Service. According to NOAA data, fewer than 100 
of these line-office billets are funded from line-office 
appropriations; the remaining funds are primarily from the 
``acquisition of data'' appropriation, formerly ``marine services.'' We 
believe that only the positions currently funded by the line offices 
should be converted. Otherwise, funds will have to be taken from future 
``acquisition of data'' appropriations to pay for the additional 
converted positions.

    Based on these preliminary findings, we estimate that, at most, 
only 100 to 150 of the current NOAA Corps billets should be converted 
to civilian positions. Our office will have a more precise number when 
our review is completed. By converting fewer officers, NOAA will have 
an additional $10 to $15 million available annually for acquiring ship-
related and aircraft-related services from outside sources. As a 
result, NOAA's programs will have greater flexibility in the choice of 
platforms, will be able to increase the number of public-private and 
federal-academic partnerships, and will avoid the need for additional 
capital investments in ships.
                     EXCESS POLAR SATELLITE FUNDING
    NOAA manages two weather satellite programs: Polar Orbiting 
Environmental Satellites and Geostationary Operational Environmental 
Satellites. NOAA determines the general requirements for new satellites 
and operates them once they are in orbit. The National Aeronautics and 
Space Administration (NASA) handles the acquisition and launch of the 
satellites. Our recent work on the polar satellite program discovered 
poor financial management and budgeting practices in acquiring new 
satellites.
    In our recent review of the polar satellite program, we found about 
$90 million in excess funding. In fiscal years 1994 through 1996, NOAA 
received more funding than it needed for acquiring new polar satellites 
because it failed to adequately reduce its budget requests to reflect 
slowed spending in the program. By sending the excess funds it received 
to NASA, which then obligated them to its various polar satellite 
contracts, NOAA avoided having to identify the unspent funds as 
unobligated carryover. These actions enabled it to escape the scrutiny 
such funds receive from the Department, OMB, and the Congress. Included 
in the $90 million was $28.1 million unrelated to the NASA satellite 
acquisition that NOAA transferred to NASA because it was unable to 
immediately use the funds.
    In response to our findings and recommendations, the Department 
took immediate steps to eliminate the excess funding and strengthen 
management controls by:

     Assigning a full-time analyst to work directly with NASA 
staff to obtain better funding information,
     Reporting unobligated carryover funds and making plans to 
provide decision-makers with better program performance and spending 
information, and
     Agreeing to limit transfers to NASA that are not needed 
for forward funding and monitoring fund transfers to ensure that 
funding is being used for its intended purpose.

    We have also found indications of excess funding in some of NOAA's 
other satellite budget accounts that we are reviewing. We are 
continuing to work with the Department and NOAA to strengthen 
management controls.
    The current series of NOAA polar satellites will be the last. We 
will also be involved in reviewing the replacement program, which is in 
the early stages of development, by an integrated DOD, NOAA, and NASA 
team. This program is expected to save $1.3 billion by consolidating 
the number of U.S.-owned operational satellites from four to two while 
increasing the operational life span of each satellite. Our work in 
this area is not new. In the early 1990s, we recommended that OMB 
initiate a government-wide study to help identify opportunities for 
consolidating environmental satellite programs and avoid unnecessary 
duplication. We were pleased to see the convergence concept endorsed in 
the National Performance Review and adopted as a Presidential 
Initiative in 1994.
                        GEOSTATIONARY SATELLITES
    NOAA operates a two-satellite configuration of Geostationary 
Operational Environmental Satellites (GOES) that constantly view 
weather patterns affecting the United States and neighboring countries. 
The ability of GOES to provide the National Weather Service with data 
for advance warnings of severe storms, such as tornadoes and 
hurricanes, has been credited with reducing the lose of life and 
property.
    However, in developing the current series of replacement 
satellites, called GOES-Next, NOAA and NASA have been unable to 
maintain the required two-satellite coverage or adequately control 
development costs. From 1989 to 1993, NOAA had just one operational 
GOES and was under a serious threat of completely losing GOES coverage 
because of a 5-year delay in developing GOES-Next. GAO has reported and 
we agree that the delay and a fourfold increase in GOES-Next 
development costs are attributable to inadequate management, poor 
contractor performance, and the complexity of the satellite design. The 
first two GOES-Next satellites, GOES-8 and GOES-9, have now been 
launched, and are providing high quality meteorological data.
    In our current inspection of the GOES program, we found that NOAA's 
plans for acquiring satellites to follow the GOES-Next series were 
flawed. NOAA management seemed more interested in maintaining the 
status quo--buying the follow-on series from the current GOES-Next 
contractor and continuing to use a cost-reimbursement contract--than in 
focusing on controlling costs and requirements growth, and taking 
advantage of an invigorated, competitive satellite industry. We were 
concerned that without a more controlled procurement, NOAA would repeat 
the mistakes of the GOES-Next program, and we have issued a draft 
inspection report with recommendations for avoiding these problems.
    NOAA was slow in selecting an appropriate acquisition strategy--
i.e., a competitive fixed price procurement--for the follow-on series 
and only did so after pressure from the Congress, NASA, the satellite 
industry, and our office. Because of NOAA's delay in agreeing to a 
competitive procurement and the reliability problems with GOES-8 and 9, 
additional measures are needed to insure against a coverage gap 
projected for early next decade. Accordingly, NOAA is also purchasing 
an additional satellite from the current GOES-Next contractor. The 
satellite will be built and bought in stages, contingent upon the 
health of GOES-8 and 9 and the remaining GOES-Next satellites. While 
the need to purchase this satellite is inescapable at this point, we 
believe that it might have been avoided had NOAA management been 
willing to pursue a suitable procurement approach sooner.
    NOAA plans to launch GOES-K in April 1997, 2 years earlier than 
previously scheduled, and store it in space to ensure continuity of 
coverage now that GOES-8 and 9 are experiencing reliability problems. 
While early launch is a reasonable contingency for insuring continuity 
of coverage in this instance, we do not believe that NOAA and NASA have 
demonstrated that launching a satellite early for storage in space as a 
backup is a cost-effective policy for insuring continuity in the 
future. Although the agencies cite numerous cost and risk advantages to 
storing satellites in orbit rather than on the ground, we believe NOAA 
should develop more complete analyses of costs, benefits, risks, and 
backup alternatives. Also, NOAA should develop firm criteria for when 
to activate the instruments on GOES-K.
                 NATIONAL WEATHER SERVICE MODERNIZATION
    We have performed continuing oversight of the NWS' $4.5 billion 
program to modernize its observing and information systems and to 
reduce more than 250 field offices to 119. We have been heavily 
involved in trying to improve the planning and management of the 
modernization and in securing improvements in a number of areas. We 
fostered the establishment of a management organization, the Systems 
Program Office (now the Systems Acquisition Office), with the objective 
of having a qualified and experienced acquisition workforce acquire the 
modernized systems. That office was effective initially, reversing the 
substantial cost growth, schedule delays, and technical performance 
problems of the new radars (NEXRAD) and satellites (GOES-Next), 
although it no longer has the influence, authority, or resources that 
were intended.
    At this point, many of the problems of the modernization have been 
largely overcome. With the exception of three systems that need to be 
added because of coverage concerns, NEXRAD is fully deployed and 
operating throughout the country. However, there have been many 
difficulties in achieving this result, including the need to 
renegotiate the prime contract in order to correct numerous cost, 
schedule, technical, and legal problems. In addition, through our 
oversight efforts, we discovered that poor planning, neglect of cost 
issues, and lax contract administration by NOAA resulted in the 
government's being overcharged for certain spare parts. As a result of 
our inspection, and with the cooperation of NOAA, an improved spare 
parts procurement plan was developed, resulting in a $39 million 
savings and an independent determination by the NEXRAD contracting 
officer that the government had been substantially overcharged for 
spare parts.
    Although NOAA expected the contract for the Automated Surface 
Observing System (ASOS) to be completed this year, work will continue 
into next fiscal year, requiring a contract extension. The extension is 
needed, in part, to complete ASOS deployment, as well as for 
modification and evaluation of sensors, which have had continuing 
problems with accuracy and reliability. Initially, ASOS was intended to 
monitor a specific domain of meteorological conditions without the 
intervention of human observers. However, human observers are needed to 
augment ASOS due to numerous sensor malfunctions and the need to 
monitor meteorological conditions that ASOS was not designed to handle 
in order to ensure aviation safety at airports with control towers.
    The most troubling aspect of the modernization that remains is the 
Advanced Weather Interactive Processing System (AWIPS), which has 
continued to experience serious difficulties. AWIPS will provide the 
capability to acquire data from the advanced observing systems coming 
on-line and to provide forecasters with tools to rapidly analyze the 
data, integrate it with the information provided by the weather service 
guidance centers, and prepare timely and accurate warnings and 
forecasts for dissemination to the public and the media. AWIPS is the 
key integrating element of NWS's modernization program and is essential 
to achieving operational improvements and staff reductions.
    However, as we have noted in previous reports and testimony, AWIPS 
development has been characterized by continual cost growth, schedule 
delays, management instability, and sluggish technical progress. In 
1986, NWS estimated that the program would cost $350 million and be 
completed in 1995. The latest estimate is $550 million, with a 1999 
completion date. Since 1992 alone, AWIPS has had four different program 
managers and is in the midst of its third major restructuring. We have 
conducted three inspections of AWIPS and are currently working on our 
fourth. We have found that the problems on AWIPS have occurred for a 
variety of preventable reasons, including inordinate self-imposed 
schedule pressure; an incomplete, disorganized, and ambiguous 
solicitation and contract; the need for improved management and 
engineering expertise at senior levels both by the contractor and NOAA; 
and the need for clear lines of authority and responsibility within 
NOAA. Although we made numerous recommendations to NOAA to help solve 
these problems, it has never been able to effectively take command of 
this project.
    Consequently, last August, because of serious defeats with the 
contractor-developed AWIPS software, NOAA decided to abandon 
substantial portions of it and to use software recently developed by 
NOAA's Forecast Systems Laboratory (FSL), called WFO-Advanced, as the 
basis for continued AWIPS development. WFO-Advanced is a risk reduction 
project designed to evaluate advanced meteorological techniques. FSL's 
system was deployed to the Denver weather forecast office in May 1996, 
and by August it was effectively supporting forecasting operations with 
meteorological capabilities that would not be available in AWIPS for at 
least 2 years. The decision to use WFO-Advanced was a dramatic change 
in direction, leaving many questions to be answered regarding how 
further development would proceed, which AWIPS components would be 
retained and how they would be integrated with WFO-Advanced, and how 
the resulting system would perform. Consequently, Secretary Kantor 
decided to delay Key Decision Point-IV, the milestone that would allow 
nationwide AWIPS deployment to begin. The decision point is now 
scheduled for December 1997. Meanwhile, Secretary Daley has authorized 
NOAA to procure and deploy 21 systems, with an option for 18 more 
contingent upon adequate development and deployment progress of the 
first 21 systems.
    Because of its superior capabilities and performance, WFP-Advanced 
is crucial to making progress on AWIPS. However, as noted, serious 
issues and decisions remain. In particular, use of WFO-Advanced 
requires transferring most design responsibilities from the contractor 
to the government; determining the respective technical 
responsibilities of NWS, FSL, and the AWIP contractor; carefully 
planning the work needed to complete AWIP development; and revising the 
contract. Although six months have passed since the decision to use 
WFO-Advanced, this planning is far from complete, and, according to 
NOAA, may not be finished until the summer. NOAA lacks a detailed 
definition of the work and has not yet identified organizational roles 
and responsibilities. Nevertheless, it has recently established a $550 
million estimate for AWIPS development and deployment, an increase of 
$25 million since last year. This cost estimate, in our opinion, has 
significant uncertainties due to the lack of detailed planning to 
define development activities and responsibilities.
    This completes my statement. A listing of the reports discussed in 
my statement is included as an attachment. Mr. Chairman, I would be 
happy to answer any questions you and other Members of the Committee 
may have.
                               ATTACHMENT
          oig reports discussed in frank degeorge's statement
                        departmental management
Financial Management
    1. LDepartment of Commerce's Consolidating Financial Statements 
Fiscal Year 1996, FSD-9355-7-0001, March 1997.
    2. LGeneral Administration's Working Capital Fund and Salaries and 
Expenses Fund Financial Statements Fiscal Year 1996, FSD-8873-7-0001, 
February 1997.
    3. LBureau of Export Administration Financial Statements Fiscal 
Year 1996, FSC-8834-7-0001, February 1997.
    4. LBureau of the Census Financial Statements Fiscal Year 1996, 
FSC-8836-7-0001, February 1997.
Procurement Management
    5. LManagement and Procurement Deficiencies Related to the 
CyberFile Project, IPE-9364-7-0001, February 1997 (draft).
    6. LOffice of Acquisition Policy and Programs Needs to Reevaluate 
its Mission and Organization, EDD-8279-7-0001, December 1996.
Facilities Management
    7. LContinued Progress of NIST's Capital Improvements Facilities 
Program Endangered by Certain Inadequately Justified Plans and 
Decisions, IPE-837-3, January 1997.
    8. L$32 Million in NIST's Capital Improvements Facilities Program 
Funds Improperly Obligated, IPE-8377-6-0002, July 1996.
    9. LContinued Progress of Capital Facilities Improvement Program 
Endangered by Certain Inadequately Justified Plans and Decisions, IPE-
8377-7-0003, January 1997.
2000 Decennial Census
    11. LInadequate Design and Decision-Making Process Could Place 2000 
Decennial Census at Risk, OSE-7329-6-0001, November 1995.
NOAA Fleet
    12. LNOAA Should Decommission Its Ships and Terminate the Recent 
Billion-Dollar Fleet Modernization Plan, IPE-7794-6-0001, March 1996.
Excess Polar Satellite Funding
    13. LExcess Funding in Polar Orbiting Satellite Program, OSE-8797-
7-0001, November 1997 (draft).
Geostationary Satellites
    14. LNational Strategy for Remote Sensing Is Needed, AIS-0003-0-
006, February 1991.
    15. LGeostationary Satellite Acquisition Strategy Improved, But 
Store-in-Orbit Approach Needs Re-evaluation, OSE-8784-7-0001, January 
1997 (draft).
NWS Modernization
    16. LMissed Opportunities for Significant Savings in the 
Acquisition of NEXRAD Spare Parts, SED-5579-4-0001, December 1993.
    17. LAWIPS Re-Baselining and Associated Issues, SED-4585-2-0001, 
May 1992.
    18. LManagement and Engineering Problems Halt AWIPS Progress, SED-
6623-4-0001, September 1994.
    19. LUnrealistic Schedule and High-Risk Decisions Continue to 
Jeopardize AWIPS Success, OSE-7355-6-0001, February 1995.

    Senator Brownback. Thank you for your statement and for 
your written statement.
    To start off, overall, you have been the Inspector General 
for the Department since 1988?
    Mr. DeGeorge. Yes, sir.
    Senator Brownback. And you have seen how many Secretaries 
come and go?
    Mr. DeGeorge. Seven or eight.
    Senator Brownback. Seven or eight; you have lost count?
    Mr. DeGeorge. Six actual, a couple acting.
    Senator Brownback. You have noted management problems 
previously in the Department of Commerce, and my guess is that 
you have had talks with previous Secretaries about some of the 
deficiencies in the agency; is that correct?
    Mr. DeGeorge. That is correct.
    Senator Brownback. As a matter of fact, I even see reports 
here from 1992, citing some of the same things that you have 
cited today as problems--is that correct? It is the GAO study 
in 1992.
    Mr. DeGeorge. Well, I guess the best way to put it, sir, is 
that when Mr. Brown came on board 4 years ago, we discussed in 
detail what some of the problems in the Department were, and 
some of them are still there. You cannot really point to one 
person. Commerce is a very large agency with many operating 
problems, and some of them have been solved while others have 
not.
    Senator Brownback. Did you have the same conversation with 
Secretary Kantor as well about some of the management problem 
areas?
    Mr. DeGeorge. Yes, sir. We discussed three problem areas, 
specifically. Mr. Kantor was only there for 8 or 9 months, but 
early on, I discussed with him and his chief of staff the 
Bureau of the Census and the preparation for the decennial, the 
AWIPS redesign for part of the Weather Service modernization, 
and other issues as well.
    I do not think there has ever been a lack of interest at 
the Secretarial level. The problem is really that we either 
have not had Deputy Secretaries, or we have not had Deputy 
Secretaries who ac- 
cept as an active role the day-to-day operations of the agency. 
And since Secretaries by nature travel a lot, particularly Mr. 
Brown and others, you really need strong in-house management in 
the number two job.
    Senator Brownback. Have we not had enough Deputy 
Secretaries or Assistant Secretaries at the Department of 
Commerce to manage the agency?
    Mr. DeGeorge. The best way to answer that, sir, is that the 
Deputy Secretary left over a year ago and has not yet been 
replaced in the Department of Commerce. He went to General 
Services Administration and was Acting Administrator over 
there. I think with the changes, the shutdown and all the other 
problems of last year, there may be other acceptable reasons 
for the lack of management.
    The problem for a long time has been that you really need 
to look at agencies as if they do not run themselves. You 
really have to look at it from the departmental level and see 
what kind of oversight is necessary. Management, in my mind, is 
not simply issuing orders; it is holding managers accountable, 
and we do not do that very well.
    Senator Brownback. What seems to be the problem? Why aren't 
people being held accountable?
    Mr. DeGeorge. I do not know that there is any easy answer. 
It is a combination of a lot of things. The first problem is 
that as we move more and more away toward a thesis under the 
National Performance Review that in effect says delegation is 
the better technique, we concentrate on placing the authority 
and responsibility at the levels of the operating agencies.
    The second point is that normally, under-Secretaries are 
not picked because they are managers, they are picked because 
they are policy experts, people who know the programs. So, at 
the Secretarial, Deputy Secretary or under-Secretary level 
seldom pick the type of general management people they should.
    I want to point out that this is not unique to the 
Department of Commerce, and it is not unique to this Democratic 
administration. I have had these kinds of discussions with 
Secretary Bob Mosbacher and Secretary Barbara Franklin as well. 
The issue is really accepting the premise that beyond obtaining 
a budget, there is a necessary responsibility to manage the 
budget, and I don't think that premise has been implemented 
very well.
    It is not a very sexy subject, if I can put it this way, 
sir. I mean, most committees and oversight committees are very 
interested in programs, very much interested in policy issues. 
Issues are dealt with at the authorization level and the 
appropriations level, and on the budget formulation side, but 
there are not normally critiques or reviews at the Senate or 
House levels, the oversight levels; Government Reform and 
Governmental Affairs have not normally dealt with such 
management oversight, either.
    There are a lot of players here, and without throwing rocks 
at anyone, management has generally not been on the agenda. 
Maybe that is because budgets have not been as difficult to 
obtain in the past years, but as they have gotten much more 
difficult to obtain, management as an issue has not been looked 
at in the way that I think it should be.
    Senator Brownback. And you have been in the agency since 
1988 as Inspector General, and you have been looking at it and 
probably commenting since then that it has not been run well or 
efficiently under Republican or Democrat administrations.
    Mr. DeGeorge. That is correct.
    Senator Brownback. What do we need to do to get at this? I 
read through your report, just some highlighted portions of it, 
and at page 7, you say: ``Since 1995, we have discovered a 
number of significant procurement abuses within the Department. 
In fact, some of the most troubling abuses we identified 
originated with departmental supervisor personnel.'' And you 
state some pretty strong language in here in several areas of 
management oversight. I mean, it seems like somebody or a lot 
of us are not quite doing what we should to make sure this 
agency is managed properly.
    Mr. DeGeorge. Well, the Department, starting several years 
back, decided that the preferred place to have the management 
presence was at the agency level. And they deliberately 
dismantled, as I say in my statement, some of the oversight 
capabilities in the Office of Systems Evaluation, the Office of 
Procurement Oversight.
    Not Mr. Kammer, the gentleman behind me, but his 
predecessors deliberately decided in many cases that they would 
be better served by giving the agencies those responsibilities. 
Unfortunately, the agencies in many cases did not pick up the 
oversight responsibilities.
    We did not have financial statements, or even the 
requirements for them, 5 years ago. We did not have performance 
results. We did not have standards by which to measure 
performance then. The only measurement government has had is 
the budget formulation process, and if, on some occasion, an 
agency had anti-deficiencies, someone would yell about it.
    And I want to reemphasize, Mr. Brownback, that I really do 
not think this is limited to the Department of Commerce. I 
think a lot of civilian agencies, if you talk to the deputy 
secretaries, their assistant secretaries, CFOs and others, 
would say that there are missing pieces.
    The way I am trying to look at it is how can we get it 
fixed from here on out, and I think this Subcommittee and 
others who accept the responsibility are saying, ``If I am 
wrong, please tell me I am wrong; but if not, let us get on 
with fixing it.''
    Senator Brownback. And that is what we are all after, is 
how do we fix these kinds of management problems that are 
identified here. And we want to hold some hearings on some of 
the other agencies as well and take a look at where we have 
management deficiencies taking place there as well, and how do 
we fix those in this time of budgetary constraints.
    It seems to me that one of the key ways that we can go 
forward in solving some of our own budgetary problems, is to 
make sure we are spending our resources wisely.
    Mr. DeGeorge. I agree with you, Mr. Chairman. I think that 
oversight on the part of this Subcommittee and others would be 
useful, and I think that begrudgingly, we are all being dragged 
into the 21st century as far as accounting systems go, and what 
they tell us about where we are going. I think that that is 
part of the movement for government corporations, that is part 
of the move- 
ment on loosening up the procurement authority so we can go 
outside. But I do not think going outside is a substitute or 
any proxy for replacing what you expect of a Deputy Secretary.
    As I said, I have discussed with Secretary Daley, and I 
know he would be the first to tell you that he is looking for a 
Deputy Secretary who accepts those oversight responsibilities, 
and I think that that is probably the way it is going to come 
out, and you will have to ask them what they expect to change.
    As we get performance requirements over time, as we get 
data that we can all look at, as we get some kind of plans to 
measure it against--in other words, what we expect to achieve--
then I think we will make more progress than we have lately.
    Senator Brownback. On page 8 of your testimony, you talk 
about the Department assisting ``NIST in acquiring expensive 
leased space, with a likely $30 to $47 million price tag, that 
our office concluded was unjustified and unnecessary.'' Could 
you speak to that a little more, please?
    Mr. DeGeorge. NIST has the responsibility, which I accept 
of remodernizing the laboratories in Gaithersburg. Over the 
past 3 or 4 years, they have put together a very large, 
comprehensive plan which involved various replacements of old 
buildings and building of new buildings.
    There were several changes in their planning depending on 
the funding that was received from Congress, etc., but during 
that process, they decided to have a leased building built to 
their specifications to provide turnaround space.
    Subsequent reviews by my office concluded that, in effect, 
there was no need for that space and we recommended that they 
move as fast as they could to give it away or turn it back or 
lease or sublet it to someone else.
    In another case, there was no pressure on the agency once 
they had the money to spend, once it was in their budget, not 
to do it. They do not normally go out of their way to tell you 
that their plans have changed. In this case, plans had changed, 
and they should not have gone ahead and leased that space, but 
by the time we heard about it, it had been done. We wrote a 
report that strongly suggested that they not utilize that 
space, or that they back out of the lease as soon as possible.
    Senator Brownback. And have they done that?
    Mr. DeGeorge. The commitment we have from the Department is 
that as soon as they finish the present chemistry building, 
they will backfill into that building, which I presume will be 
completed in the next year or 18 months. They now plan to get 
out of that building during that period of time, yes, sir.
    Senator Brownback. So you are satisfied they are going to 
make progress on that particular issue?
    Mr. DeGeorge. The commitment as I understand it--and I will 
have to verify this--is that the Department has indicated that 
they will move out of the leased building into the chemistry 
building and backfill as soon as they can, which I guess will 
be when the chemistry building is completed.
    Senator Brownback. On departmental management, you note on 
page 3 of your testimony that the Department stopped conducting 
internal personnel management evaluations several years ago. 
Why was that move made to not do personnel management 
evaluations--apparently, at all?
    Mr. DeGeorge. Well, they do some. I hold Liz Stroud, the 
director of the office, in high regard, but there were 
substantial cuts in the Department, and each agency also has 
its own operating personnel department.
    I will tell you that they have committed to reinstate a 
limited evaluation program within the last 6 months, and are 
moving in the direction of holding the personnel staffs 
accountable. They have backtracked somewhat on that commitment.
    Senator Brownback. So are we going to be seeing internal 
personnel management evaluation, then, in the future?
    Mr. DeGeorge. I fully expect to, yes, sir.
    Senator Brownback. But that has not been going on for the 
past several years; is that correct?
    Mr. DeGeorge. That is correct.
    Senator Brownback. Do you think if they had done that over 
the past several years, some of these issues would have come up 
sooner, or we would have noticed some of the problems that you 
have noted here sooner?
    Mr. DeGeorge. Well, in the personnel area, the process, 
fortunately or unfortunately, is pretty much procedurally 
bound. I am less concerned in the personnel area as I am in 
systems oversight and procurement oversight.
    Senator Brownback. Which you have trouble with, both the 
systems and procurement oversight.
    Mr. DeGeorge. Yes, sir. As of now, I feel the Department 
does not have an active role in those areas and should have.
    Senator Brownback. And you have made recommendations 
internally in the Department, as well, for ways that they can 
have that oversight?
    Mr. DeGeorge. Yes, sir.
    Senator Brownback. Good.
    Mr. DeGeorge. Several years back, they decided that the 
Office of Information Resources Management, which is the large 
systems oversight organization, would be dismantled, and that 
they would hold agencies accountable for their own large 
systems acquisitions. I have had many discussions with 
departmental management then and since, saying that I thought 
that was inherently the wrong way to go; that that is where we 
have had numerous problems. And I do not know what they are 
going to do now, except the Secretary has talked to me--or, 
rather, his staff has, about separating the new Chief 
Information Officer job from the Assistant Secretary, CFO 
position, which I think would create a presence reporting 
directly to the Secretary in a way that I think would be 
positive.
    Senator Brownback. Now, if I have it correct here, you cite 
within the agency the problems that you see, just going through 
the testimony, as financial management, procurement management, 
just as an overview area, and facilities management. You have 
direct concerns about what is going on in each of those three 
areas that are of substantial nature----
    Mr. DeGeorge. Yes, sir.
    Senator Brownback [continuing]. And that have been ongoing 
for some period of time.
    Mr. DeGeorge. Yes.
    Senator Brownback. For years?
    Mr. DeGeorge. Yes, sir.
    Senator Brownback. Since 1988?
    Mr. DeGeorge. No, not all of my concerns go back that far. 
The Office of Information Resources Management was--maybe Ray 
would remember--abolished about 3 years ago; Systems 
Management, 2 or 3 years ago. Space Management has always 
generally accepted agencies' requirements without scrutiny. I 
do not think there has been real active oversight in that area 
for some time, but I could not tell you how long.
    Senator Brownback. Those are three big areas, though, for 
overall management problems, it seems to me.
    Mr. DeGeorge. I agree with you.
    Senator Brownback. You have stated that you think it is not 
necessarily a well-run agency, and you have cited problems in 
these areas over the years, and yet we have not been able to 
get anywhere on making those changes.
    Mr. DeGeorge. Well, let me give you one positive note, Mr. 
Chairman. I think that whenever we have come across one of 
these problems, the Department has reacted positively in effect 
to each of our reviews or sets of questions. But I do not think 
management should be initiated only when the IG looks at it; I 
think it ought to be an ongoing management prerogative; indeed, 
a responsibility.
    Senator Brownback. But you paint the picture of an overall 
agency from 1988 that has had significant major management 
problems.
    Mr. DeGeorge. I think that that is a fair evaluation from 
my perspective, yes, sir.
    Senator Brownback. Let me talk for a minute with you about 
the NOAA fleet, because this is an issue I worked on on the 
House side, and I see it coming up again and again.
    As I understand, there are 18 vessels in the NOAA fleet; is 
that correct--or, maybe it is 17--didn't one of them sink in 
the harbor?
    Mr. DeGeorge. I do not know the number, sir; it is in the 
middle teens, 15, 16, 17 right now, yes, sir.
    Senator Brownback. Didn't one of them sink in the harbor?
    Mr. DeGeorge. Yes. One recently acquired vessel did sink at 
dockside; but I think they retrieved it.
    Senator Brownback. What happened to it?
    Mr. DeGeorge. I really do not know, sir. Apparently, it--I 
really do not know. I have some of my staff here who could 
probably answer the question in detail. What I do know is that 
it was recently acquired from another government agency, and 
that when they transported it to one of the Great Lakes, it had 
a problem, but I do not know what the problem was.
    Senator Brownback. It is an antiquated fleet, though.
    Mr. DeGeorge. The fleet, by and large, is fairly old, and 
the Congress and the administration have got to make a decision 
whether to buy the services or upgrade the fleet. That is the 
decision that I have been trying to push the Department into 
making. You really cannot continue to limp along with the 
present fleet; that is not a viable option.
    The question is do you buy the services from others, or do 
you spend a lot of money, maybe billions of dollars, for new 
ships or do you let some third party provide the services from 
universities or from outside firms or other privately-owned 
ships. There are alternatives.
    I presume you have seen our report that we issued last year 
which says NOAA should decommission its ships and terminate the 
recent proposed billion-dollar fleet modernization plan. We 
have made it very clear that that is a more viable option, that 
you get better services, and that those services cost less, and 
the Congress has not funded the ship modernization. We are in 
the worst of all worlds right now. NOAA is not getting the 
money to modernize its fleet, yet, despite a requirement to buy 
services, they are not buying them.
    Senator Brownback. I noticed, going through some of the 
appropriations language last year, the Senate Appropriations 
Committee report urged NOAA to take action now to find creative 
alternatives to a NOAA owned and operated fleet.
    Have proposals been forthcoming?
    Mr. DeGeorge. A draft plan has been submitted to the 
Department--as to how NOAA proposes to address the fleet.
    Senator Brownback. So the agency is now engaged in selling 
the fleet and----
    Mr. DeGeorge. I do not know that for a fact. I know that 
NOAA has presented a draft fleet plan to the Department. I 
think it envisions building some new ships. How many, I am 
uncertain. You had better ask the Department.
    Senator Brownback. We will ask the Department about that.
    But you have no doubt in your mind, or the Inspector 
General's Office, that the Commerce Department should not have 
a fleet of ships for the NOAA service; is that correct?
    Mr. DeGeorge. That is correct, yes, sir.
    Senator Brownback. And you have held that opinion for some 
period of time.
    Mr. DeGeorge. Yes, I have.
    Senator Brownback. And that there are less expensive ways 
to procure the information that NOAA seeks, rather than 
operating 17 or 18 ships.
    Mr. DeGeorge. Yes. sir.
    Senator Brownback. OK. And that would, then, also deal with 
the NOAA Corps as well; correct?
    Mr. DeGeorge. Yes, sir. If you do not have a fleet, there 
is a real question if you need the NOAA Corps.
    Senator Brownback. Why has there been any hesitation about 
this one? I mean, this seems to me to be a no-brainer. Have we 
just been caught in this netherland between Congress not 
appropriating the moneys to decommission the ships, or has 
there been hesitancy on the agency's part? This one just 
baffles me.
    Mr. DeGeorge. Well, I think there is an honest 
disagreement. It is the Inspector General's job to write 
reports, do the analytical work and come to conclusions. NOAA 
does not agree with us. The NPR decided the NOAA Corps would go 
away by 1999--in other words, there would be no more uniformed 
services--and there is draft legislation also within the 
Department to deal with that issue.
    As far as the fleet goes, Congress has asked for revised 
plans. They have told NOAA to maximize the purchase of services 
and through leased contracts while they are doing their plan, 
and that plan is due, or was due, to the Department, and you 
will have to talk to the Department, sir; I do not know exactly 
what approach the Department is going to take.
    Senator Brownback. And I apologize. I am not trying to 
quarrel with you at all. It is just that some of these things 
are striking to me, and I do not understand why it is not 
happening. I do not know if it is our fault for what we have 
not appropriated or what we have not told the Department to do. 
I am just trying to get at the root of that.
    Mr. DeGeorge. Well, all the IG can do, sir, is propose, and 
sometimes the IG is not right--certainly from the agency's 
viewpoint, we do not always come to the right conclusions. But 
I feel very strongly that there is no longer a continuing need 
for a NOAA Corps and a NOAA fleet, and we are not refinancing 
the fleet. The fleet is getting older. The fleet cannot 
continuing the way it is going. You will either have to spend a 
couple billion dollars to purchase new ships, or someone else 
is going to have to provide the services.
    I think everyone recognizes that, and everyone is trying to 
deal with that, but it has not yet come to any conclusion.
    Senator Brownback. Let me direct your attention to 
something that was not in your testimony, if I could, and this 
is from prior Appropriation Committee language and direction on 
the Minority Business Development Administration.
    There were suggestions in both Senate and House 
appropriation language last year that it and the SBA look at 
consolidating, merging offices and functions. Are you familiar 
with that?
    Mr. DeGeorge. I am familiar with the requirement, yes, sir.
    Senator Brownback. What progress has been made along that 
line?
    Mr. DeGeorge. Well, Congress also cut the MBDA 
administrative budget quite severely, so the Minority Business 
Development Agency is looking very intensely at how it will 
continue doing business and providing services to the minority 
community.
    I know there have been discussions between the director of 
Minority Business Development and the Small Business 
Administration, and there have been several changes in both of 
those positions, and I really do not honestly know, sir, what 
the current status is.
    Senator Brownback. Is that something that you have cited in 
prior IG reports?
    Mr. DeGeorge. I have cited in prior IG reports that I 
thought all the bits and pieces of Minority Business 
Administration should be put together in one agency.
    There are other agencies in addition to SBA and Commerce 
that spend money in the same area--Defense does, Energy, and 
other agencies. We have issued reports two or three times over 
the years saying that in effect we thought all of those pieces 
should be consolidated, and the placement was not nearly as 
important to me as eliminating the redundant overheads that 
went with five or six agencies doing business essentially with 
the same clientele.
    Senator Brownback. Yes. Something I hope we can push in the 
Congress as well, is getting some of that pulled together, 
because as we go into times of tighter budgets, we need to make 
sure that our dollars are stretching as far as they can and 
that we do not have the redundancies that are just not 
necessary.
    Mr. DeGeorge. I think that that is a place where you can 
look at all the programs and actually increase the amount of 
services that people receive by consolidating.
    Senator Brownback. Now, on the 2000 Census, as I look at 
your testimony--and I understand your concern--you are saying 
there have been a number of needed decisions that have been put 
off regarding choices that need to be made regarding the 
Census?
    Mr. DeGeorge. I would put it slightly differently. There 
are two basic problems--the senior management team that has 
deteriorated at the Census, plus the need to make design 
decisions in order to arrive at a sampling base and a sampling 
plan that would be acceptable to Congress and to the agency, 
and that would produce a better decennial at lower cost, higher 
efficiency, and greater accuracy.
    The issue is that if you send out 100 million forms, you 
can expect to get only 55 to 60 percent of them back. The 
question is how do you count the remaining people? Census did 
it in 1990 by knocking on doors and trying to count and 
recount. I have been a strong supporter of statistical 
sampling, mainly because if Census conducts the 2000 Census the 
way it did the 1990 Census, it is going to cost a great deal 
more money and would, in my judgment, be less accurate.
    So finishing the design for the statistical sampling, 
convincing Congress of its necessity, and basically, getting 
some kind of consensus as to how the 2000 Census is going to 
proceed, is one issue that needs to be addressed.
    The second issue is that we have lost a lot of senior 
people in the decennial area, and this decennial is much more 
complex than any of the previous Censuses. We need a lot more 
technical people to help bring it together. We need 
procurement, contracts, financial management, and program 
management staff, and that team has not yet been assembled. On 
one hand, we are proposing a statistical sampling technique 
that is more efficient; on the other hand, we have not yet 
built the technical team that is needed to implement it.
    So while we are trying to convince Congress of the need for 
statistical sampling, which I think is vital, and the bureau of 
the need to design decisions, we also need to build the kind of 
technical team needed to run a program of this complexity, and 
we are behind on that as well.
    Senator Brownback. Let me direct your attention to 
something that you raised here and also in your written 
testimony. You said, ``There has been an alarming loss of 
experienced senior and mid-level managers and staff'' for the 
Census, and a lot of big decisions are made off of that Census. 
Why are we losing that sort of management and staff, and are 
there things that we should be doing to see that they stay for 
such a monumental task?
    Mr. DeGeorge. Well, there is no easy answer. A lot of 
people have reached normal retirement age--that is one answer--
but the more important answer is that the Census traditionally 
has been run in a more collegiate, university-type atmosphere. 
It has not been run--and I hate to use this term again--in a 
more business-oriented way.
    So you really have three things going on at once. Very 
capable technical people, statistical people and economists, 
are leaving, the bureau does not have the necessary systems 
people to evaluate large data-handling equipment or to enter 
into large, sophisticated contracts for mapping, geographical 
mapping and other aspects, and it has unnecessarily delayed 
putting together this technical team.
    I do not know why the middle-level people have left. I do 
know that some of the senior people are getting ready to 
retire--that is a normal occurrence. However, several of the 
other people in the office--both the chief financial officer 
and the systems manager, have recently resigned. You would have 
to talk to them. But they need to be replaced quickly, and that 
is the important thing--whether it is a coincidence, or they 
feel troubled by some aspect of the present situation, they 
need to be replaced.
    Senator Brownback. Because key decisions need to be made 
and moved forward with.
    Mr. DeGeorge. Absolutely.
    Senator Brownback. I am sorry to keep questioning you on 
this, but you have put a lot of time into looking at this, and 
you have put nearly 10 years into looking at this agency, and I 
want to get as much of your expertise and knowledge as I can.
    Rank your priority concerns as the Inspector General for 
the Department of Commerce. If you were to look at where you 
are going to succinctly focus your time to get at most of the 
problems, to hoe where most of the weeds are, what are the top 
three areas that are your biggest concern as the IG looking at 
Department of Commerce?
    Mr. DeGeorge. Well, if I had to list five, I would say the 
first three are the Census, to give you some sense of 
proportion. But certainly, completing the Weather Service 
modernization and certainly, rebuilding the Department's 
management capabilities at the Secretarial level, and finally, 
whether or not we make the transition of the Patent and 
Trademark Office to a government corporation, and all the other 
open issues as to the type and methodology in the change of the 
patent process, would also be important.
    I am less concerned about the trade relationship problems, 
export licensing, economic development, or the laboratory 
structures, which I mention just to point out the complexity of 
the Department. There are many other management issues that, 
while less important, still need to be corrected.
    To summarize, I think the Census, the Weather Service 
modernization, the Corps, and the fleet are the big four that 
we need to deal with because they are all expensive, they are 
all vital, they all have to continue because they all provide 
services that are not going to go away, whether or not you have 
a Department of Commerce, and the Census is most important.
    We are only 1 year away from the Census demonstration, and 
2 years after that is the actual Census. I have heard that 
500,000 people, maybe a million people will need to be hired, 
if you want to go back to actually trying to count households 
the way we did in 1990. With more sophisticated systems, I do 
not know that we could find half a million people who could 
operate laptops or were not employed 3 years from now.
    So you have got technological change, you have the need to 
upgrade the way we look at the Census, and you have a lot of 
management vacancies. I know the Secretary is meeting with 
people on the Hill this week, and both Appropriations 
Committees, House and Senate, will be talking with him. I know 
he feels intensely about the need to deal with the Census.
    Senator Brownback. Hiring a million people, so it would be, 
obviously, just going out and head-counting people.
    Mr. DeGeorge. I misstated--interviewing a million people in 
order to hire 300,000 or 400,000 people is more likely.
    Senator Brownback. Still, that is a number of people to be 
hiring. But it would be going out and actually physically 
counting people.
    Mr. DeGeorge. Yes, sir.
    Senator Brownback. That would be tough.
    Mr. DeGeorge, thank you very much for preparing your 
testimony and for answering the questions. I certainly do not 
want to appear antagonistic on this, but I am concerned that we 
get to the bottom of some of these issues that you have raised 
of a very troubling nature, so I want to try to inquire as I 
could.
    We may ask you back at some time when we bring forward 
other ideas or to inquire of you or your office for further 
information. So I appreciate your participation here, and we 
will be contacting you again in the future.
    Mr. DeGeorge. Thank you, Mr. Chairman.
    Senator Brownback. Thank you.
    The next presenter will be Raymond Kammer, who is the 
Acting Chief Financial Officer and Assistant Secretary for 
Administration at the U.S. Department of Commerce.
    Mr. Kammer, I appreciate very much you joining us today. I 
think you have heard all of the testimony and statements of Mr. 
DeGeorge and undoubtedly you are familiar with some of those. I 
want to give you an open floor to answer those issues. You can 
present your written testimony if you would like to. We do have 
that. And then I will be asking you some questions that are 
much along the same lines as those that I asked Mr. DeGeorge so 
that we can try to get to the bottom of some of these issues 
that have been raised, as best I can tell from the 
documentation, since 1988, at least since then. So I want to 
see if we cannot start to get some focus on that.
    So with that, thank you for being here, and I look forward 
to your presentation.

  TESTIMONY OF RAYMOND G. KAMMER, JR., ACTING CHIEF FINANCIAL 
   OFFICER AND ASSISTANT SECRETARY FOR ADMINISTRATION, U.S. 
            DEPARTMENT OF COMMERCE, WASHINGTON, DC.

    Mr. Kammer. Thank you, sir. What I think I would like to do 
is just call out some of the high points from my statement and 
then go from that directly to questions.
    Senator Brownback. OK, fine.
    Mr. Kammer. The President has issued a challenge to us all 
to do more with less and to do it better. I would like to share 
some of our efforts to reduce costs and to work smarter.
    We have reduced the costs of the Department of Commerce 
while we have maintained our core mission. In May of 1996, when 
Secretary Mickey Kantor came on board, he set a challenge to us 
to reduce the total size of the staff by 5 percent; this was in 
addition to the 7.5 percent reduction that Secretary Ron Brown 
had already brought to the Department. We met that goal by 
September of 1996. We also, since 1994, have been able to 
reduce headquarters staff by 20 percent and supervisors across 
the Department by 18 percent.
    Recently, Secretary Daley set a goal of reducing the number 
of political appointees by 100, from a base of 256 to 156 by 
the end of this calendar year. We currently have about 202 on 
board, so we are about halfway there.
    We have also proposed termination of 17 programs in the 
1998 budget. These programs include two in the International 
Trade Administration, the National Textile Center and the 
Tailored Clothing Technology Center, and one in the National 
Telecommunications and Information Administration, the Public 
Broadcasting Facilities Planning and Construction Program. The 
remaining program terminations are in NOAA, and the value of 
these terminations on an annual basis would be $61.202 million 
if we actually were to terminate them all.
    We are also, as Inspector General DeGeorge mentioned, in 
the process of disestablishing the NOAA Corps, and we expect to 
both save FTEs and save money there. I might add 
parenthetically that the current state of analysis is that we 
expect that there would be about 170 converted, not 299.
    Senator Brownback. So 170 would actually stay on in a 
civilian-type role.
    Mr. Kammer. And the rest would be retired and some of those 
positions would be filled by civil servants.
    Senator Brownback. From about 300 currently?
    Mr. Kammer. Currently about 300, and in 1994 when this 
discussion started, there were 425, so actually, quite a bit of 
progress has been made simply by not hiring anybody new in and 
by letting people retire.
    We have done a lot to try to streamline the Department of 
Commerce regulations and the like. In fact, in the last 12 
months, the Department eliminated two regulations for every 
single new one that had to be imposed. This initiative alone 
has been of tremendous assistance to the business community.
    The Bureau of Export Administration and the Economic 
Development Administration have totally revised their 
regulations. EDA eliminated 62 percent of its regulations; NOAA 
has eliminated 35-40 percent of its regulations. The Bureau of 
Export Control has changed the export controls on computers and 
telecommunications equipment in such a way as to eliminate the 
requirement for prior approval before export on over $32 
billion worth of exports annually.
    We are also working with the Defense Department and with 
NASA to try to converge what are now two separate polar 
orbiting weather observation programs, one run by the 
Department of Defense and one run by NOAA, into one civilian-
run program.
    NOAA is also closing about 200 Weather Service field 
stations for a savings over a 5-year period of about $275 
million. They are also streamlining their field structure.
    In response to the National Performance Review, Commerce 
shifted significant resources into the field to better serve 
our customers. Mr. DeGeorge alluded to the Minority Business 
Development Agency. They have had a reduction in force of 56 
headquarters positions, and in the process, they have changed 
from two people at headquarters to one person in the field 
operation and now one person in headquarters to every two 
people in the field operation.
    By the end of 1997, EDA will have reduced its staffing 
level by 28 percent from a high of 357 in 1995 to 256.
    We are also a key participant in the Performance-Based 
Organization Initiative, which is designed to make Federal 
agencies more flexible and autonomous and make managers more 
accountable for measurable results. We hope to shortly submit 
legislation both to convert the Patent and Trademark Office to 
a PBO and also within the National Oceanic and Atmospheric 
Administration, we have a voluntary fee-paid seafood inspection 
program which we think could also become a PBO.
    Senator Brownback. Are you also proposing on Patents and 
Trademark that it be put into a private government-sponsored 
corporation, or just performance-based?
    Mr. Kammer. It would be a performance-based organization, 
incorporating many features if a wholly-owned government 
corporation, and the notion is that the vast majority of the 
activity is very businesslike. It is paid for with fees. It is 
very production-oriented. You give money. There is a patent 
examination process or trademark examination process. We call 
that ``the factory.'' And of the maybe 5,500 people, 5,400 of 
them do that. And then there are perhaps another hundred who 
are focused on intellectual property, negotiating international 
agreements for exchange of patents and things like that.
    We think that those two functions can be separated, and one 
can be run in a very businesslike fashion; the other is clearly 
a governmental function and requires policy and political 
decisions.
    Senator Brownback. So you are not proposing that it be spun 
out into a government-sponsored corporation?
    Mr. Kammer. No, it would not. It would be a Government 
Performance-Based Organization.
    Senator Brownback. OK. Now, you do--and I am sorry to get 
you off the testimony, but while we are on it----
    Mr. Kammer. That is OK. Go right ahead.
    Senator Brownback [continuing]. In your proposed budget, 
you are proposing reducing the budget for Patent and Trademark 
substantially.
    Mr. Kammer. Right.
    Senator Brownback. Where are you gaining those resources, 
then?
    Mr. Kammer. The way the Patent and Trademark Office is 
financed is very unusual. There are fees paid--the whole 
organization is paid for by fees--however, a part of those 
fees, roughly 20 percent, as a result of a budget negotiation 
in 1990, is not available to the Patent Office unless it is 
appropriated. So $119 million out of the total fees collected, 
which would be roughly $700 million that are collected, has to 
then be appropriated. And historically, what has happened is 
the administration would propose that the $119 million--or, a 
smaller number each year, but getting larger because it 
actually is a percentage of the total collected--would be made 
available to the Patent Office, and Congress has considered 
this and typically decided that out of the roughly $110, $120 
million, maybe $80 million would be made available.
    Last year in the budget negotiation process, about $62 
million was made available rather than $80 million, and this 
year in the review process, OMB decided that it would only be 
$27 million and that the other 90-some-odd would just stay in 
the Treasury as an offset to the deficit. With that $27 million 
and the other fees that are available PTO actually will be 
operating at $656 million.
    Senator Brownback. OK. Please proceed.
    Mr. Kammer. We are also reengineering our procurement 
system. We have been trying to make improvements to create a 
more open system of communication with potential contractors, 
to automate the listing of contract opportunities in the 
Commerce Business Daily, and to shorten cycle times. For 
instance, the cycle time for acquiring computer hardware has 
been reduced from 12 to 15 months to less than 6. EDA now 
processes completed grant applications in 60 days.
    In response to the 1996 Clinger-Cohen Act, which is the 
Information Technology Management Reform Act, Commerce is using 
the best practices of private firms to improve information 
management technologies.
    Some of our accomplishments here include creating a Census 
Web Site that makes all of the publicly available information 
that Census has available over Internet; Weather Service 
modernization--in 1998, the Weather Service will complete the 
facility modernization program; the modernized weather service, 
including the Advanced Weather Interactive Processing System, 
and new supercomputers--which will help provide greater 
advanced warning of weather events.
    An example of that was actually just presented to us as the 
tornadoes passed through Arkansas in the last couple of weeks. 
You can get an example of the vast improvement that we have 
been able to get. Ten years ago, forecasters could not issue a 
tornado warning until the twister was actually on the ground. 
This time, the first warning by the National Weather Service 
that a tornado was imminent provided lead times of 18 to 32 
minutes in the coun- 
ties around Little Rock, and 10 to 31 minutes in parts of 
northern Mississippi and western Tennessee.
    We have also reengineered the year 2000 decennial Census. 
We are trying to use a simple new machine-readable 
questionnaire, coupled with sampling techniques that will 
complete enumeration without requiring the vast army that Mr. 
DeGeorge alluded to that we would otherwise have to have if we 
did traditional enumeration.
    We recently received a copy of a February 25th letter from 
House Speaker Newt Gingrich to OMB Director Frank Raines 
regarding this year's implementation of the Government 
Performance and Results Act. Among others, this letter, of 
course, was also signed by Senator Fred Thompson, the Chairman 
of this Committee. I want to assure you that the Department 
will work with OMB, our stakeholders, and Congress in 
developing an effective, forward-looking Commerce Strategic 
Plan. We plan to come back later this spring to consult with 
Congress on our draft Strategic Plan.
    We actually began working to implement GPRA 3 years ago 
when we began pilot tests under the Act. One of our pilots, 
NOAA's, was judged to be among the 10 best out of the 75 
developed government-wide. And 2 years ago, we began initial 
performance measures in our budget request. Last year we 
developed a Strategic Plan which OMB said was among the very 
best they saw government-wide.
    I would like to just give you a brief outline of the 
general structure of the plan. As the mission of the Department 
of Commerce, we ``promote job creation, economic growth, 
sustainable development, and improved living standards for all 
Americans by working in partnership with business, 
universities, communities and workers.'' The strategic themes 
are economic infrastructure, science, technology and 
information, and resource management and stewardship.
    Secretary Daley has called out seven specific priorities 
within that that he intends to focus on. The first is 
aggressive export promotion; second, technology for economic 
growth; third, expanding opportunity for all Americans and 
communities; fourth, performing the best Census in our Nation's 
history; fifth, resource management and environmental 
stewardship; sixth, accountability and results-oriented 
management; and seventh, building partnerships with America's 
businesses and communities.
    I think the biggest challenge under the GPRA is developing 
meaningful, outcome-oriented performance measurements. In some 
areas such as PTO, the Import Administration, and the National 
Weather Service, we really have excellent measures. In other 
areas, especially the research-intensive and policy-intensive 
areas, I do not think the measures really yet relate that well 
to output, and they are not that good an indication, so that 
needs more work.
    As part of our commitment to make government cost less and 
work better, we work very closely with the IG. We consider the 
IG audit recommendations, and we develop appropriate follow-up 
plans. We view this as a central management tool. We also work 
closely with the IG in our management control program, 
overseeing the Federal Managers' Financial Integrity Act.
    On December 31, 1996, Secretary Kantor was able to report 
that, with the exception of four material weaknesses--one of 
which was Census, as we discussed earlier--reasonable assurance 
could be provided that the objectives of the FMFIA have been 
achieved.
    Finally, I want you to know that we take very seriously the 
guidance we receive from Congress, and I have instituted a 
system to track the status of all Appropriations suggestions 
and requests. I know your staff has inquired about a number of 
such directives, and I would be happy to provide a copy of the 
report for the record if that would be useful.
    Thank you.
    [The report referred to follows:]

    [GRAPHIC] [TIFF OMITTED] TH40.001
    
    [GRAPHIC] [TIFF OMITTED] TH40.002
    
    [GRAPHIC] [TIFF OMITTED] TH40.003
    
    [The prepared statement of Mr. Kammer follows:]
              PREPARED STATEMENT OF RAYMOND G. KAMMER, JR.
    Mr. Chairman, Members of the Committee, thank you for the 
opportunity to appear before you today to present highlights of the 
Department of Commerce's management reforms. The Department of Commerce 
has been very fortunate in that we have already had two very 
experienced and effective leaders during the Clinton Administration--
the late Secretary Ron Brown and former Secretary Mickey Kantor. Their 
dedication to the goals and mission of the Department and to promoting 
American businesses by creating a culture that encourages innovation 
never wavered. Under their stewardship, the Department has become more 
streamlined and results-oriented. It is on this foundation of 
management reform and improvement that Secretary Daley will continue to 
lead the Department of Commerce.
    The President has issued an awesome challenge to us all--do more 
with less and do it better. This is an on-going challenge--and one we 
will never complete. Today, I want to talk to you about what we have 
done so far at the Department of Commerce to improve our performance in 
a balanced budget world. I would like to start by sharing with you our 
efforts to reduce costs and work smarter. I will describe our specific 
strategies and techniques and will end by telling you what we are doing 
to help restore public confidence in government.
A Commerce Department that Costs Less
    Today, Commerce is a reinvention success story. Many of our 
efforts, such as reducing the workforce and eliminating activities and 
programs which do not support our core mission, have resulted in a 
government that costs less. Here are some of our accomplishments.

     Reducing the Workforce. In May 1996, former Secretary 
Kantor set a goal of reducing employment by an additional five percent 
beyond what both the Congress and this Administration called for. We 
met that goal in September 1996. We are also pleased to report that 
since FY 1994 headquarters staff has been reduced by 20 percent and 
supervisors 18 percent.
      LSecretary Daley has set a goal of reducing the number of 
political employees by 100 from a base of 256 by the end of 1997. With 
202 currently on board, we are over halfway to that goal.
     Terminating Programs. We look forward to working with the 
Congress to terminate 17 programs in three of its bureaus in the FY 
1998 budget. These programs include two in the International Trade 
Administration--the National Textile Center and the Tailored Clothing 
Technology Center; one in the National Telecommunications and 
Information Administration--the Public Broadcasting Facilities Planning 
and Construction program; and 13 in the National Oceanic and 
Atmospheric Administration. Examples of programs eliminated in NOAA are 
the Regional Climate Centers, the Charleston Fisheries Lab Repairs 
program, the Alaska Fisheries Center and the New Hampshire 
Environmental Technology Facility. These terminations will result in an 
FY 1998 savings of $56,202,000.
     NOAA Corps. We are disestablishing the NOAA Corps. This 
action is expected to provide more efficient and effective service at a 
lower cost.
     Finding Other Savings. Every dollar counts at Commerce, 
and so we continue to look for ways to find administrative savings. For 
example, the Department has seen a savings of $57,856 in the last 6 
months in its travel fund by taking advantage of frequent flier miles 
resulting from official trips. We believe these little savings can add 
up and we believe the taxpayers will agree.
A Commerce Department that Works Better
    Today, Commerce works better for its customers because we have: 
reduced red tape; improved customer service; tapped into emerging 
technologies for service delivery; and formed alliances and 
partnerships to better serve the American public. Here are some of our 
accomplishments.

     Eliminating Regulations. During the past 12 months, the 
Department eliminated two existing regulations for every single new one 
imposed. This one initiative alone has provided tremendous assistance 
to the business community. In addition, we have undertaken thorough 
revisions of key sets of regulations. The Bureau of Export 
Administration and the Economic Development Administration have totally 
revised their regulations, and NOAA has eliminated or streamlined 20 
percent of its regulations.
     Creating One Stop Shops. To better meet our customers' 
needs the Department, working with the Trade Promotion Coordinating 
Council, created the Export Assistance ``One Stop'' Centers to help 
business people seeking information and guidance on exporting. 
Historically, business people have had to go to several Federal 
agencies to get the information and guidance they needed to export 
goods. These centers provide a single office that brings together in 
one location information and often staff from Commerce, the Small 
Business Administration, the Export-Import Bank and State or local 
agencies. This initiative proved to be such a success that the original 
four pilot centers have been expanded to 19 located throughout the 
country.
     Using Emerging Technologies for Service Delivery. We are 
using emerging technologies to make government information readily 
accessible and easier to find. For example, the National Technical 
Information Service (NTIS) currently operates FedWorld, an on-line 
system that provides effective and comprehensive access to government 
information. FedWorld connects users to hundreds of agency resources 
and information--from Federal job opportunities, to automobile emission 
system repair instructions, to information on starting a small 
business. NTIS will continue to operate and enhance the system using 
earned revenues.
     Easing the Burden on the Business Community. Besides 
reducing staff, streamlining operations, and cutting regulations, we 
have also taken initiatives to ease the burden on the business 
community. Activities here include: changing export controls on 
computers and telecommunications equipment, thus eliminating 
requirements for prior approval on over $32 billion worth of exports; 
reducing grant processing time across the Department by 25 percent; 
simplifying forms, encouraging electronic filings, and coordinating 
data sharing with other statistical agencies to reduce respondent 
burdens.
     Core Activities. The Department has learned several 
valuable lessons from the business community in its efforts to improve 
management. These efforts include:

      --LTri-Agency Convergence Program: We are working with the 
Defense Department and NASA to establish a civilian operational 
environmental polar satellite program that will converge current polar-
orbiting satellites. This Tri-Agency (NOAA, DOD, and NASA) effort is 
designed to integrate the polar-orbiting satellite programs into a more 
effective and efficient means of providing data to scientists, the 
maritime industry, and coastal zone managers.
      --LWeather Service Stations: Weather service modernization is a 
reinvention in the making. NOAA has closed about 200 National Weather 
Service field stations for a savings of $273 million over the next 5 
years and is realigning its field structure to take advantage of 
emerging new technologies.
Commerce Strategies and Techniques--Our Toolkit
    Our strategies for a Commerce Department that works better and 
costs less fall into four broad categories: restructuring; reforming 
Federal procurement; becoming more entrepreneurial; and following 
private sector best practices in using information technology.

     Restructuring. Our efforts have centered on changing the 
way government operates. We are doing this by creating more flexible, 
decentralized structures and creating more efficient, performance based 
organizations.

      --LDecentralized Structures: In response to the National 
Performance Review, Commerce shifted significant resources into the 
field to better serve our customers. In the first quarter of FY 1997, 
the Minority Business Development Agency headquarters staff were pared 
back. This reduction-in-force affected 56 headquarters positions. 
Additionally, two Office of Inspector General field offices have been 
closed or collocated, and administrative staff at headquarters have 
also been reduced. The Bureau of Export Administration closed two field 
offices--Nashua, New Hampshire and Santa Clara, California. The 
Economic Development Administration has taken efforts to streamline and 
simplify its management structure, more closely align similar 
functions, and implement a geographic team-based approach by aligning 
and integrating field and regional staff. The results of this 
reorganization are: reduced funding levels, improved operational 
efficiency, and reduced staffing levels. By the end of FY 1997 EDA will 
have reduced it staffing level by 28 percent--from a high in FY 1995 of 
357 to 256 by the end of FY 1997. The International Trade 
Administration's U.S. and Foreign Commercial Service transferred 
several headquarters staff personnel to the Export Assistance Center 
field offices.
      --LPerformance Based Organizations: The President has labeled the 
creation of Performance Based Organizations (PBOs) a priority for his 
second term. Commerce is a key participant in the PBO initiative which 
is designed to make Federal agencies more flexible and autonomous, and 
make managers accountable for measurable results. As in a private 
business, a PBO is designed to delineate clear accountability for 
operating results. A key PBO characteristic is that the agency is 
granted considerable administrative and regulatory flexibilities in 
return for increased measurable performance. We are in the final stages 
of preparing legislation to convert both the Patent and Trademark 
Office and the National Oceanic and Atmospheric Administration's 
seafood inspection program into PBOs, and we are looking at additional 
PBO opportunities in other bureaus.

     Reforming Federal Procurement. Previous efforts for 
reform were often thwarted by the government's heavily rule-driven 
acquisition system. The National Performance Review challenged us to 
make dramatic improvements in our service delivery practices. In 
response, Commerce is focusing special attention on our acquisition 
process. Following expensive review of private and public sector 
acquisition practices, a business process reengineering team proposed 
dramatic streamlining for the Department's current procedures. Under 
the new system, empowered project teams responsible for acquisition are 
formed around program objectives identified through the strategic 
planning process. Improvements include a more open system of 
communication with potential contractors, automated listings of 
contract opportunities in the Commerce Business Daily, and shorter 
cycle times. For example, the cycle time for acquiring computer 
hardware has been reduced from 12-15 months to less than 6.
     Becoming More Entrepreneurial. The Administration 
believes that competition will spur efficiency, and we at Commerce 
agree. We have undertaken several efforts to expand competition and 
improve services. We believe these efforts will ultimately reduce costs 
to the taxpayer. Some of efforts include the following:

      --LPrivatizing Weather Services: NOAA has privatized specialized 
NOAA weather services. This will result in commercial weather services 
playing a bigger role in providing information to marine and 
agriculture users and a savings of $44 million by the year 2002.
      --LCreating Franchise Activities: The Government Management and 
Reform Act authorized six franchise fund pilots to provide common 
administrative services on a competitive basis to other government 
agencies. Commerce is one of the six agencies approved by OMB to 
participate in the program. As in the private sector, if Commerce's 
franchise pilots fail to provide excellent products and services, they 
will be driven out of business. We have two franchise pilot activities 
currently underway: NOAA's Administrative Service Centers and the 
Office of the Secretary's Office of Computer Services.

     Following Private Sector Best Practices. Under the 1996 
Clinger-Cohen Act (previously the Information Technology Management 
Reform Act), the Department will use the ``best'' practices of private 
firms to improve information management technologies. These ``best'' 
practices such as reengineering, buying and managing smart, and 
integrating information ensures that the technology provides a workable 
solution to real problems at a reasonable cost. Some of our 
accomplishments here include:

      --LCensus Web Site: The Census Bureau moved its information to 
the World Wide Web to let researchers draw from the vast stores of 
Census data.
      --LWeather Service Modernization: In FY 1998, the National 
Weather Service will complete a major facility modernization program. 
This initiative involves restructuring the duties of its forecasters, 
using advanced workstations to increase their productivity, and the 
accuracy and timeliness of weather forecasts. This modernized weather 
service--which includes doppler radars, automated surface observation 
systems, Advanced Weather Interactive Processing System (AWIPS), new 
supercomputers, etc.--will help provide greater advance warnings for 
tornados, giving communities more time to take appropriate precautions, 
such as moving children off playgrounds, and giving business and 
industry more time to protect valuable property and resources.
        LThe tornadoes that destroyed parts of Arkansas, unfortunately 
and fortunately, provide the perfect example of the importance of 
timely weather service warnings. A decade ago forecasters weren't able 
to issue tornado warnings until a twister was actually spotted on the 
ground. The first warning that a tornado was imminent was issued 
provided lead times of 18 to 32 minutes in surrounding counties of 
Little Rock, Arkansas, and 10 to 31 minutes in parts of northern 
Mississippi and west Tennessee.
      --L2000 Decennial Census: Commerce is reengineering the year 2000 
decennial Census by using a simple new machine-readable questionnaire, 
coupled with sampling techniques to complete the enumeration. 
Additionally, in cooperation with the private sector, the Census Bureau 
will market custom tabulations, with copyright protection, of decennial 
Census data. We project that this venture will yield a revenue of $50 
million through the year 2000.
      --LCommerce Administrative Management System: Under the Chief 
Financial Officer's Act, Commerce began to overhaul its financial 
management systems, developing a program to link all bureaus around a 
common accounting system. The Commerce Adminsitrative Management System 
(CAMS) will replace existing financial and administrative systems, and 
will provide the Department with an integrated, user-friendly, and 
flexible financial and administrative system to support program 
managers, improve productivity, and reduce costs. In August 1996, the 
Department took delivery of the central part of the system--a new off-
the-shelf Core Financial System (CFS). In October, we marked a key 
milestone in our implementation efforts when the Census Bureau began 
operating several components of the CFS. NOAA began using a critical 
component of the CFS in August 1996, and they plan to begin 
implementing other parts of the CFS in their Washington-based offices 
this summer. We expect full NOAA-wide implementation by FY 1999.
Rebuilding Public Confidence in Government
    We believe that public confidence in government can be rebuilt in 
two ways. First, we need to show the public that the programs actually 
accomplish what they are meant to accomplish. This means becoming more 
accountable and focusing on outcomes. Second, we need to assure the 
public that there is adequate oversight of their programs.

      --LImplementing the Results Act. We recently received a copy of a 
February 25 letter from House Speaker Newt Gingrich to OMB Director 
Frank Raines regarding this year's implementation of the Government 
Performance and Results Act (GPRA). Among others, the letter was also 
signed by Senators Trent Lott and Fred Thompson, Chairman of this 
Committee. I want to assure you that the Department will work with OMB, 
our stakeholders and Congress, in developing an effective forward-
looking Commerce Strategic Plan. We plan to come back here later in the 
Spring to consult with the Congress on our draft Strategic Plan. This 
Strategic Plan will give the Department an opportunity to further focus 
our mission, long-term goals and strategies, and performance measures 
and to document the benefits they provide for American businesses, 
communities, and families.
        LOur work to implement the GPRA began 3 years ago when we began 
pilot tests under the Act. One of our pilots--NOAA's--was judged to be 
among the 10 best out of 75 developed government-wide. And 2 years ago 
we began including initial performance measures in our budget requests. 
Last year, we developed a draft Strategic Plan which OMB said was among 
the very best they saw, government-wide.
        LTo assure you of our commitment, I would like to briefly lay 
out the general structure of the Department's strategic plan. It will 
include a mission statement and three strategic themes.
        LThe mission statement states: ``The Department of Commerce 
promotes job creation, economic growth, sustainable development, and 
improved living standards for all Americans, by working in partnership 
with business, universities, communities, and workers.''

    The Strategic-Themes are to:
      --LBuild for the future and promote U.S. competitiveness in the 
global marketplace, by strengthening and safeguarding the Nations 
economic infrastructure. We call this the Economic Infrastructure 
theme, and it addresses our trade development and export control 
programs, much of our economic and businesses development efforts, 
weather service activities, and the job-creation results of our 
technology program.
      --LKeep America competitive with cutting-edge science and 
technology and an unrivaled information base. This is the Science 
Technology and Information theme, and it includes the bulk of our 
technology and scientific programs, our Census and economic data 
efforts, and our intellectual property programs.
      --LProvide effective management and stewardship of our Nation's 
resources and assets to ensure sustainable economic opportunities. This 
theme is called Resource Management and Stewardship, and it includes 
(but goes beyond) hands-on management of fishery or endangered species 
resources, and covers areas such as the Federal portion of the radio 
frequency spectrum, and intellectual property rights.
        LFurther, the plan will contain a comprehensive set of goals 
and objectives which links these Strategic Themes to the program 
activities of specific bureaus.
        LEach year, we will reflect on our Mission Statement, Strategic 
Themes, and goals and objectives, and determine the program priorities 
for the year that will enable us to make progress on reaching our goals 
and objectives. Our seven priority areas for the coming year are:

            --aggressive export promotion,
            --technology for economic growth,
            --expanding opportunity for all Americans and all 
communities,
            --performing the best Census in our Nation's history,
            --resource management and environmental stewardship,
            --accountability and results-oriented management, and
            --building partnerships with America's businesses and 
communities.

        LWe believe our draft Strategic Plan is a good one because the 
Mission Statement it is based on, and the three inter-dependent 
Strategic Themes it includes, provide an effective way to link all of 
Commerce's programs together. The framework that this linkage 
establishes, and the ways it will facilitate our increased focus on 
program performance and results, are GPRA's short-term benefits for 
Commerce. In the longer run, GPRA will enable the American people to 
have a clearer understanding of the ways in which Commerce programs 
measurably help them, every day.
        LAll of Commerce's bureaus have already begun to prepare for 
the law's full implementation next year. Our programs--trade 
development, economic and business development, statistical analyses, 
science and technology--are developing program-specific goals and ways 
to measure performance against them. Some of these are simple to 
establish and are already available, such as workload indicators or 
other output measures. But Commerce and all other agencies are now 
focusing on the more complex issue of developing outcome measures--
these tell us the results or impacts of our activities, not just how 
much of the activity we conducted. This process is complex: there may 
be factors beyond our control that effect outcomes; it may take years 
for program results (such as long-term R&D) to be seen; numbers alone 
might not tell the whole story, or; the information we need simply may 
not be available. In this year prior to full GPRA implementation, we 
are inventorying our measures and are determining which additional ones 
we will need for next year's major GPRA analysis.

     Working with the Inspector General. We are fully 
committed to making our government cost less and work better. In this 
endeavor, we value the role of the Inspector General in helping us to 
save money, improve the quality of government services and improve 
productivity. We consider the Inspector General audit recommendations 
and appropriate follow up to be an important management tool and are 
committed to using the audit process to strengthen our programs. In the 
audit follow up area, we have an effective system in place and report 
to Congress semiannually on our progress. Here, we believe our track 
record is good. In our last semiannual, we reported our cooperative 
effort with the IG as a success--with very few exceptions, the 
outstanding IG audits were resolved.
      LWe are also working closely with the IG in our management 
control program, overseeing the Federal Managers' Financial Integrity 
Act (FMFIA). Last year we reengineered our management control program 
allowing our operating units to tailor specific strategies for meeting 
FMFIA requirements. On December 31, 1996, Secretary Kantor was able to 
report that, with the excep- 
      Ltion of four material weaknesses, reasonable assurance could be 
provided that the objectives of FMFIA had been achieved. In 1997, we 
will continue to work closely with the IG to resolve our outstanding 
material weaknesses and strengthen our management.

    I again thank you for this opportunity to share with you a few of 
our successes and examples of our accomplishments. We are fully 
prepared to meet the President's challenge to work better and cost 
less. I believe we have made great strides but know that our greatest 
work is ahead of us. We look forward to the continuing challenges and 
opportunities and hope to work closely with you.
    Finally, I want you to know that we take very seriously the 
guidance that we receive from Congress and I've instituted a system to 
track the status of all Appropriations suggestions and requests. I know 
your staff has inquired about a number of such directives and I would 
be pleased to provide a complete report for the hearing record.
    Mr. Chairman, this completes my remarks. I will be glad to answer 
any questions you may have.

    Senator Brownback. Thank you, Mr. Kammer. I appreciate the 
testimony and your statement.
    Mr. DeGeorge identified a number of longstanding management 
problems at the Department of Commerce. He has been there since 
1988 and has observed the agency for a long period of time. And 
I cannot help but comment that hearing his testimony and 
reading it, and then hearing your testimony and reading it, it 
looks like we are looking at a different agency. I mean, they 
do seem to go different, counter ways on this.
    Particularly, he notes financial management, information 
system problems, procurement problems that have been of a 
longstanding nature. And then, Mr. Kammer, you say here that 
with very few exceptions, the outstanding IG audits were 
resolved.
    Well, it looks like we have had some longstanding systemic 
problems. How do you reconcile his testimony with that 
statement?
    Mr. Kammer. My recollection of our last--we do a quarterly 
review of unresolved audit issues, and I believe there are only 
six unresolved issues in the entire Department.
    I think that what Mr. DeGeorge was doing was trying to take 
a step back and make more of a perspective, and there is a 
piece of information that may help eliminate some of this. The 
central leadership of the Department of Commerce is funded in 
something called the general administration appropriation. In 
the last 2 years, that appropriation has been cut by about 25 
percent, and there has had to be a substantial RIF as a result 
of that, and that has reduced the amount of central analytical 
capacity that is available to us. And, at least in the current 
budget environment, I worry a lot about the ability to grow it 
back.
    Senator Brownback. But his testimony is that we have 
ongoing financial, procurement, information systems problems in 
the agency, and you heard his testimony; he said this is not a 
well-run agency.
    Mr. Kammer. In the case of the financial management, we are 
in the midst of creating a centralized single accounting 
system. We do have very antiquated accounting systems in the 
Department right now; some of them are quite unsatisfactory in 
my opinion. So we have set ourselves the objective of creating 
something called the Commerce Administrative Management System, 
and it is on track. We do expect to have it fully implemented 
before the decennial Census and before the year 2000 computer 
problem comes to pass.
    Indeed, I just hired one of Mr. DeGeorge's senior people to 
run the project because I wanted to be sure we had the best 
leadership we could get.
    Senator Brownback. His testimony, though, is not of a well-
run agency, Mr. Kammer, and I do not mean to put you on the 
spot about that, but that is clearly what he States in both his 
written and his oral testimony, and he cites those generalized 
areas, which are pretty broad--financial, information, and 
procurement.
    Mr. Kammer. Well, the IG is sort of in the bad news 
business, if you will. There are a lot of things that are going 
well in the Department of Commerce, too, in some cases 
extraordinarily well. With all the vexing problems we have had 
doing the modernization of the Weather Service, the results are 
pretty magnificent. The change that I was alluding to on 
warning time for tornadoes is extraordinary; it has gone from 
almost no warning--visual sighting--all the way to now we are 
having experiences all the way up to half an hour. Now, they 
are not all going to be half an hour, but that is still pretty 
wonderful. And our standard is to try to get to 11 minutes.
    Senator Brownback. But you cannot be satisfied at all with 
the sort of statements that he made here today regarding the 
operation, the management and the oversight of the Department 
of Commerce.
    Mr. Kammer. Some of them come from a philosophical 
disagreement as well. Mr. DeGeorge feels very strongly that 
centralized management is the appropriate way to go, especially 
with respect to procurement, and that was what he was alluding 
to earlier.
    With centralized management come very slow cycle times, a 
very rule-driven system that sometimes cannot respond to the 
needs of the programs. With decentralized systems comes the 
potential for abuse, for people going off in directions and 
doing things that would drive you crazy if you knew about them.
    It is a tradeoff. At the moment, the government is trying 
very hard to experiment with a less centralized system. I think 
it is fair for me to--I do not want to speak for Mr. DeGeorge--
but I think he would say that that is a mistake, that we would 
be better off with a centralized system.
    Senator Brownback. Well, we can go through some of his 
statements, but I am perplexed. You basically do not see a 
management problem of any major scope existing in the 
Department of Commerce today.
    Mr. Kammer. I would be much happier if we had more 
centralized analytical capability. The Office of the Secretary, 
the general administration of the Department of Commerce has 
been very dramatically reduced in the last few years. That was 
a decision that was made, and we are doing our best to 
implement it and give the government and the people the best 
management we can for the money that is available to us. I can 
only work with what is there.
    Senator Brownback. Yes, but you do not see major management 
problems existing in the Department of Commerce today?
    Mr. Kammer. Yes, I do. I think the accounting system, if it 
is left as it currently is, is quite unacceptable, but we are 
not going leave it as it currently is.
    I have a fundamental disagreement with Mr. DeGeorge on 
procurement. I think that a decentralized system can be made to 
work with a good enough information system.
    Senator Brownback. But the information system, he has a 
problem with, too.
    Mr. Kammer. That is the accounting system; that will also 
include the other kinds of management information, and we are 
working real hard to get it done.
    Senator Brownback. Well, let us delve into some of these 
particulars that he had identified. The Census is obviously at 
the top of his list from his statements; it has got to be at 
the top of yours, or near the top of yours, I guess.
    Mr. Kammer. It is at the top, it is at the top.
    Senator Brownback. There is concern about people leaving in 
that particular area, and if decisions are being made in a 
timely fashion to prepare for that. What are you doing to 
address his concerns on the Census?
    Mr. Kammer. We have recruited to replace one of the key 
personnel who is leaving, the career Deputy Director of the 
Census Bureau. We have recruited who I view as a topflight 
individual from elsewhere in government to come in and be that 
deputy, and he will be prepared to tell his bosses when he will 
be available pretty shortly, but we hope to have him in at the 
end of March.
    It is an interesting phenomenon, and I will speculate a 
little bit because I have talked with the people out at Census 
about why so many are leaving. There are many people in the 
same age group who have done two prior decennial Censuses, and 
they are now in their mid-60's or early 60's, and they are 
suddenly looking up and asking, ``My God, do I have another 
Census in me?'' ``No.'' ``I do not want to do it.'' And we are 
just at that point where if you stayed another year, you would 
be jumping ship if you left. And these are people that this has 
been their career, and they are very committed to it. So we are 
suddenly seeing a lot of them walk out the door, and we are 
going to have to fill those positions quickly with quality 
people in order to make this Census work.
    But I do not think there is any deeper issue than that. 
They are just sort of the age that they decided not to do yet 
another Census. When you are in the midst of doing the Census, 
you work 80-hour weeks, and that last year is just an 
unbelievably strenuous year.
    In terms of making the management decisions, there was a 
time when I feel that Mr. DeGeorge is correct, that we were 
pushing a bunch of the decisions off. I think most of them have 
been made now, and indeed, most of the remaining ones will be 
announced in the next few days.
    There is one decision that is controversial, though, and 
could become, I think, part of why GAO continues to worry about 
this as a major issue, and it is certainly why I do. If you 
were not to go to a sampling approach with the Census, if you 
were to try to directly enumerate everybody, two bad things 
would happen. One is that you would probably get a less 
accurate result. The 1990 Census was the first time in recent 
history that a Census had ever been run that was less accurate 
than the previous decennial Census, and it was just because the 
nature of our society has changed in the ways it has, and there 
are many people whom you cannot find and do not want to be 
found. In addition to that, it would cost more.
    But there are people who worry about whether or not 
sampling is a good idea, and that has been a controversy that 
has been sort of ongoing. We have been questioned a lot in 
congressional hearings. Indeed, there is a hearing tomorrow 
that will have this as one of its central issues.
    The GAO worries that if that decision is made at the last 
minute, if sampling is prohibited, and they do support sampling 
and, which the IG also supports--that it may not be feasible 
even to conduct a very good decennial Census. That is a real 
fundamental issue, and it is why we all would say Census is 
number one on the hit parade.
    Senator Brownback. Let me direct you to NOAA--and I am sure 
you are going to agree with Mr. DeGeorge and with me and with 
the GAO and the NPR and any other alphabet you can come up with 
that we ought to privatize this operation, ought to sell the 
fleet off and contract out for that service.
    Mr. Kammer. Well, I can agree with parts of it. Abolish the 
NOAA Corps, yes. And as I mentioned in the midst of my overview 
of my testimony, when this first started, we were about 425 
officers; we are currently at about 300, and what we see 
happening is converting about 170 of them to NOAA--civilians. 
If you will, with the rest being retired and their positions 
filled by civilians. I think we are all on the same page there.
    With respect to the fleet, there are three different 
functions that the fleet fulfills. One of them is research, one 
of them is mapping and charting of the ocean floor, especially 
harbors, and the third is estimating fish populations, and 
these fish populations become the basis for deciding how many 
fish can be taken in our $25 billion a year fishery that 
surrounds the United States.
    For the first function, research, I think NOAA, the 
Department, and the IG are all in agreement--and I suspect you 
are, too--that we can collaborate with universities and rent/
lease our time for research. That is a very flexible function.
    For mapping and charting, it appears that there is adequate 
commercial support, bottoms and equipment, to do mapping and 
charting for the lower 48 States. There are people who profess 
to be willing to do it, who already have ships. This seems 
reasonable to us all, and indeed, NOAA is committed to doing an 
advertisement and seeing what turns up.
    It does not appear that there are going to be commercial 
bidders, although we are more than willing to try, for mapping 
around Alaska. It is a very adverse environment that requires 
special, rather expensive ships that are heavy-duty, if you 
will, and it also requires being out of port for 6 months at a 
time, which is not very popular either.
    If we are able to get people to bid on that, we would be 
thrilled; we have no problem with it. NOAA says there will not 
be bids, that they have talked enough with the industry, and 
they do not think there will be, and that they have to plan 
accordingly. My view is let us try it; let us do the 
advertisements, run the experiment and see what happens. And 
NOAA is in accord with that.
    The third function, which is fisheries population counting, 
is a very odd, specialized kind of function. There are certain 
kinds of nets that have to be dragged behind vessels that are 
traveling at a certain rate of speed and creating certain known 
characteristics in the water so they are not scaring the fish 
away in order to do a statistically significant population 
estimate. And this has to be done just at the time when normal 
fishermen would be preparing their vessels to take that fish, 
because you go out and sample the population just ahead of the 
fishing--naturally, that makes sense. So the kinds of vessels 
that might possibly be available are otherwise engaged--or so I 
am advised by NOAA. And I am in the process of analyzing that. 
They have submitted that to me, and I have just given you kind 
of a thumbnail sketch of what they wrote. And I am in the 
process of thinking it through and trying to put it through 
some plausibility tests.
    So yes on research, yes on most mapping and charting, maybe 
yes on all of it if we can get people to bid; and I am not sure 
what the right answer is yet on fisheries vessels. But that 
does not mean we have to have a uniformed corps to operate 
them.
    Senator Brownback. Or that we are going to need 18 ships, 
or I guess----
    Mr. Kammer. No.
    Senator Brownback [continuing]. We lost the one in port. 
Did we really lose a ship at port?
    Mr. Kammer. Yes, sir. It was taken over from the Navy, and 
it appears that it was not particularly rigorously maintained 
once the prior owners knew that they had no future for it; it 
was a surplus ship to them. And when it was towed to another 
port to be assessed, to see what work had to be done and the 
like, it took on water and went to the bottom. They brought it 
back.
    Senator Brownback. It does not endear much confidence when 
you----
    Mr. Kammer. I pretty well decided not to go on that boat. I 
do not think you will get many on that one.
    Senator Brownback. So there is a chance that you will work 
with us on decommissioning the entire fleet, but you have 
questions about mapping and charting around Alaska and the 
fisheries population.
    Mr. Kammer. Yes, sir.
    Senator Brownback. You are going to look at that----
    Mr. Kammer. Yes, sir.
    Senator Brownback [continuing]. Because you are basically 
left standing alone on this one now. I mean, as far as IG, 
congressional statements, GAO, and National Performance Review 
have all suggested that we move forward on decommissioning this 
fleet.
    Mr. Kammer. The NOAA folks who operate the vessels and are 
responsible for the fisheries estimation also, of course, have 
a point of view. They do not really care whether we own them or 
not; their concern is getting the information and getting it at 
the right time. And if they can get it by renting, that is 
fine, not a problem.
    Senator Brownback. I am just reminded that NOAA's proposal 
is to invest in more ships, though. I believe they are asking 
for an additional six ships.
    Mr. Kammer. They have come forward with a variety of 
proposals, as a matter of fact. The view that I just gave you 
is the result of discussions that I have had with the senior 
leadership of the agency and suggesting that maybe there was a 
better way to go, and they are in agreement with me now.
    Senator Brownback. About not asking for additional ships?
    Mr. Kammer. They estimate that they need the work of six 
vessels for fisheries, but they do not now claim that they have 
to own them. That is what we need to determine.
    Senator Brownback. All right. I think this is one we have 
got to resolve this year.
    Mr. Kammer. It is pretty interesting.
    Senator Brownback. I have statements here that I could read 
to you from the appropriators from the Senate and from the 
House saying, look, we have got to do this. Your IG has been on 
you for a long time. This one seems pretty clear, and I would 
hope we could get this one resolved.
    I want to look with you quickly, if I could, at SBA/
Minority Business Development Agency and their consolidation of 
those two functions. Where is the Department on working 
together with SBA in consolidating those two areas?
    Mr. Kammer. We have had discussions with SBA. Indeed, the 
leader of MBDA is meeting the new leader of SBA this week 
sometime. There has not been agreement by the administration 
that consolidating the two programs was a good idea. There has 
been agreement that we will work to avoid duplication. There 
has been strong policy support in the past for maintaining MBDA 
as a separate operation simply because it does focus uniquely 
on minority business development, unlike everyone else, who has 
other missions. Those discussions have yielded a report that 
was requested by the House Appropriations Committee and is one 
of the ones called out in the attachment to your letter 
inviting me here. And we have submitted that report to the 
Appropriations Committee.
    Senator Brownback. So there has been no proposal to 
consolidate SBA and its 8(a) program on minority procurement 
with MBDA?
    Mr. Kammer. Right; not by the administration. And at least 
as I have understood it so far, neither has there been by the 
appropriations committees. They have simply asked us: Is there 
duplication? Show me that there is not.
    Senator Brownback. Overall, there have been other GAO 
studies that have been critical of redundancies that exist in 
the Department of Commerce. Let me in particular point to the 
trade development area, where there have been 19 different 
trade development programs within the Federal Government in one 
place or another. What is Commerce doing to deal with these 
issues of redundancies through the Federal Government? It seems 
as if you have a particularly high number of programs that are 
duplicated somewhere else in the Federal Government--if not in 
complete duplication, at least the circles overlap quite a 
little bit between what you and other agencies are doing.
    Surely, you have got to be focusing on getting at those so 
we can get more yield for the taxpayers' hard-earned dollars.
    Mr. Kammer. The Secretary of Commerce, Secretary Daley, is 
chairman of the Trade Promotion Coordinating Committee, and 
there are 19 members of that committee which represent all of 
the major trade entities in the government. Through that, 
Secretary Ron Brown, Secretary Kantor, and now Secretary Daley 
are able to reach out to the other agencies, and they have had 
some real successes. I think probably the single most 
interesting one to me is they have been able to identify kind 
of trade-distorting package deals that other countries 
sometimes offer--if you buy airplanes from us, we will give you 
very cheap financing--and they have been able to back off quite 
a few other countries from doing that. In fact, the number for 
last year was $5 billion worth of package deal subsidies that 
they were able to back off. They have liberalized export 
controls, which is obviously an interagency issue where the 
interests of national security have to play against our 
interest in selling products, and they have actually been able 
to ease controls on exports amounting to about $42 billion.
    Senator Brownback. That group has had an impact on policy 
within the administration----
    Mr. Kammer. Yes. It is a big deal.
    Senator Brownback [continuing]. And I am familiar with that 
group. But what has happened as far as consolidating some of 
these pieces within the Federal Government so that we do not 
have 19 entities that are playing in the trade field?
    Mr. Kammer. Each of the entities has its own following. I 
think this is an issue that the Department has been very open 
to discussing, historically. But you find that within each of 
the entities, there is a reason, there is a history, and there 
are people who feel very strongly about it.
    Through the TPCC, at least we can try to keep the policy 
message on the same page, and I think they have been 
successful. From a management point of view, I think the 
Department of Agriculture, for instance, has a very large trade 
program, and they feel very strongly that it needs to remain 
with the Department of Agriculture. One would never imagine 
Agriculture driving the trade policy of the country; on the 
other hand, they do sell a heck of a lot of agricultural 
products overseas.
    So that you do come to reasons that make sense when you 
look into it.
    Senator Brownback. But 19 does not seem to make sense with 
that many, particularly when we are so tight on budgets.
    Mr. Kammer. Well, I am not the expert on it, but the 
experts do get together, and when they do, they seem to agree 
that this is a good way to go.
    Senator Brownback. But the agency itself, the Department of 
Commerce, is open to consolidation discussions on that, so----
    Mr. Kammer. Of course we would be.
    Senator Brownback [continuing]. Maybe you would not have to 
do so much negotiating internally in the administration and 
could do more negotiating externally with the other folks on 
the other side.
    You have been very patient and very kind with your time 
with us today. We have cited and the IG has cited a number of 
really tough management problems that he says are systemic and 
have been ongoing for some period of time within the agency. 
You have some quarrel with that, saying that, well, we are 
reducing some of the employment too much, as I understand.
    Now, the figures that I see show that you have a 
considerable number of managers at the Department of Commerce, 
and you correct me if these figures are wrong--that 54 percent 
of Commerce's employees are GS-12 or higher, whereas the 
Federal Government averages about 36.5 percent, and that has 
actually increased since 1992, when your percentage was 46 
percent. It looks like you have a lot of managers.
    Mr. Kammer. Well, we have a lot of specialists. For 
instance, at NIST, there are almost 900 Ph.D.s, very few of 
whom I would advise you to have as managers, but they are good 
scientists, and that is what you have to pay to get a good 
scientist.
    In the Census Bureau, we have many economists, and in the 
Bureau of Economic Analysis, we have many economists; they all 
have advanced degrees, and again, we have to pay.
    A lot of our grade structure is driven not so much by 
management as it is by having to pay specialist categories. 
Since 1994, my understanding is that the total number of 
supervisors has gone down 18 percent in the Department.
    Senator Brownback. Now, you are going to reduce your 
political appointees 100, from a base of 256----
    Mr. Kammer. To 156.
    Senator Brownback [continuing]. To 156.
    Mr. Kammer. We currently have about 202 on board.
    Senator Brownback. You are already at 202. I believe you 
were at 202 when Secretary Daley took over.
    Mr. Kammer. Pretty close. It was a number very near that, 
maybe 206, but yes.
    Senator Brownback. So that actually, you will just be 
removing 50 people who are currently in positions, not 100. I 
remember looking at that number, and you actually have more 
political appointees, though, than the Department of 
Transportation and higher than the average throughout the 
administration. So you ought to have plenty of managers there, 
apparently, to take care of what have been a lot of management 
problems.
    Mr. Kammer. The focus of the political appointees--most 
people come to Washington to do policy, not to do management. 
And it has been my experience that it is exceedingly hard to 
get our political officers to focus on management. I believe 
Secretary Daley will be an almost unique exception to that. 
When I was calling out the seven priorities that Secretary 
Daley has identified, one of them is management and 
accountability; those came right from him as he walked in the 
door. I know he has a strong focus. The IG was alluding earlier 
to Deputy Secretaries often having a policy focus as well, 
wanting to look outside the Department. Secretary Daley has 
sort of recited the criteria he has in mind for a Deputy 
Secretary, and what he wants is someone who is far less 
interested in policy and far more interested in management and 
willing to focus internally. And we are all looking forward to 
that.
    Senator Brownback. Well, I would suggest that that would be 
a good place to be looking, because with that kind of IG's 
report that is there--and it has been there for a number of 
years, that same sort of report, Republican and Democrat 
administrations alike--it just looks like this agency has had a 
lot of longstanding management problems. I would hope that you 
would focus and get right at those issues.
    Mr. Kammer. I must point out, though, that IGs all over the 
United States are in the bad news business; they do not write 
happy talk.
    Senator Brownback. I recognize that, but that is an awfully 
condemning evaluation that he has put forward here, and you can 
look at GAO studies on the agency and others. So I do hope you 
will get at those particular issues, and we can move forward 
together in solving some of those.
    Mr. Kammer, we will be submitting some questions to you in 
writing, if you will allow us that opportunity, and if you 
would like to clarify any of your statements here today in 
writing, we would be happy to receive those as well.
    In budget submissions, you are asking for additional 
resources this upcoming year; is that correct?
    Mr. Kammer. Yes, sir; it is for the 13 percent increases. 
There are three major things. In fact, almost entirely what it 
is is the growth for the Census, which is very important, and 
$312 million of the increase is for two Census items. One is 
the decennial Census, and that is about $278 million; the 
remainder is for what are called the quinquennial Censuses, 
which are the Censuses that provide the basis for the Gross 
Domestic Product estimates, so those are critical also.
    There is about $78 million in NOAA, mostly for weather 
modernization, and there is about $112 million in NIST, $28 
million of which is for taking financial responsibility for 
manufacturing extension partnership facilities that were 
created under a Department of Defense program and have been 
transferred to the Department of Commerce, and the remainder, 
about $75 million--$50 million--is for an increase in the 
advanced technology program.
    We are pretty flat other than that--puts and takes of a 
million here and there--so the overwhelming influence is the 
Census, of course, as you would expect.
    Senator Brownback. As I have it, that is a 13 percent 
increase over the 1996 budget.
    Mr. Kammer. We were at about $3.6 billion in 1996. That 
sounds about right.
    Senator Brownback. OK.
    Thank you very much, Mr. Kammer, for your time and your 
preparation of the testimony and for taking our questions, and 
we will submit some more in writing.
    Thank you very much. The hearing is adjourned.
    [Whereupon, at 3:07 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

                              ----------                              


        LETTER FROM RAYMOND G. KAMMER, JR. TO SENATOR BROWNBACK
                                U.S. Department of Commerce
                                                     April 30, 1997
The Hon. Sam Brownback, Chairman,
Subcommittee on the Oversight of Government
  Management, Restructuring and the District of Columbia
Committee on Governmental Affairs
U.S. Senate
Washington, D.C. 20510-6250

    Dear Mr. Chairman: Thank you for your recent letter regarding the 
changes made to the uncorrected transcript from the March 10 hearing at 
which I testified. I viewed the edits we made as ``minor clarifying 
changes,'' not as an important change in context.
    However, let me make clear our plans. The Administration will soon 
submit a plan and implementing legislation to disestablish the National 
Oceanic and Atmospheric Administration (NOAA) Corps of Commissioned 
Officers. Since 1994, the Corps has been reduced by 25 percent, from 
415 officers to the 299 positions authorized in the Department's FY 
1997 Appropriations Act. There are currently 299 officers on-board. 
These reductions are but a part of the overall NOAA streamlining plan 
which has reduced the FTE levels in the agency from 14,309 in FY 1993 
to 13,244 this year. The President's FY 1998 budget proposes a further 
reduction to 13,023.
    The legislation will terminate the uniformed service Corps, provide 
for the retirement of those eligible to do so, and enable the 
conversion to civilian employment of those current officers not 
eligible to retire (those with less than 15 years of service). There 
are approximately 170 officers in this latter category. That is the 
number referred to in my testimony--the paragraph on page 58 referenced 
in your letter.
    My edit was intended to make clear that there will be a number of 
vacancies in the agency then existent--all within the agency's budget 
and personnel ceiling. These critical vacancies will include pilots, 
hydrographers, fisheries biologists, and hazardous materials response 
specialists. NOAA intends to fill these critical vacancies; retired 
Corps Officers would be eligible to apply for the vacancies as would 
other eligible applicants. It is feasible, therefore, that some 
vacancies would be filled by retired NOAA Corps Officers. We have no 
idea at this time how many that would be. But the Department has no 
intention of maintaining a Corps--no longer commissioned ``of more than 
170 positions and potentially as many as 425'' as referenced in your 
letter.
    The current on-board count in the NOAA Corps is 299. For FY 1998, 
the NOAA request of 13,023 FTE is for all of NOAA. The assumption is 
that in FY 1998, there will be no distinction between former 
Commissioned Corps FTE and other NOAA FTE. Although the FY 1999 process 
is just beginning, NOAA plans to reduce its workforce by 12 percent 
from 1993 levels. The FTE planning ceiling is 12,623, which again 
assumes nothing specific for the Corps.
    I hope this clarifies the matter and reassures you about our 
intent. Alan Balutis, the Department's Director for Budget, Management 
and Information, is available to meet with your staff if any further 
clarification is necessary. He may be reached at (202) 482-3490.
            Sincerely,
                                     Raymond G. Kammer, Jr.
                                 Acting Chief Financial Officer and
                             Assistant Secretary for Administration
                               __________
    QUESTIONS FOR THE DEPARTMENT OF COMMERCE FROM SENATOR BROWNBACK
    Q: What do you know about a ship in NOAA's fleet sinking recently?
    A: The Halcyon, a 60-foot twin-hulled swath vessel, is a ``small 
craft'' that NOAA acquired from the Savannah District of the U.S. Army 
Corps of Engineers in 1996. There was no direct cost for the vessel, 
and its intended use was to support the Great Lakes Environmental 
Research Laboratory based on Ann Arbor, Michigan. The NOAA Corps sailed 
the Halcyon from Savannah, Georgia, to Norfolk, Virginia, where the 
craft spent 2 months being prepared for its upcoming trip through the 
Great Lakes. The vessel later made a scheduled repair stop in Monroe, 
Michigan, for additional repairs and modifications to its hydraulic 
stabilization system. The vessel's new civilian crew then sailed the 
vessel to Muskegon, Michigan, and began winterizing it for expected 
freezes. The Halcyon was found dockside sinking by her stern early on 
the morning of December 2, 1996.
    NOAA has not yet released its final report on the cause of the 
Halcyon's sinking, though the U.S. Coast Guard reported that the 
sinking was caused by a combination of human errors and vessel flaws. 
According to the Coast Guard investigation report, contributing factors 
included several small fractures and an improper weld below the 
waterline, the forward ballast tanks having been pumped empty, several 
55-gallon drums placed on the stern, bilge overboard connections not 
properly tightened, unfavorable wave/weather action, unsecured 
watertight inner hatch covers, and missing stuffing around cable and 
piping penetrations in bulkheads.
    Q: How many ships are in the NOAA fleet?
    A: NOAA owns about 26 ships. However, since NOAA decommissioned 
four ships in fiscal years 1989 and 1990, it has never allocated days-
at-sea to its prograins on more than 18 of its ships in any given 
fiscal year. With additional decommissioning at the end of fiscal years 
1995 and 1996 in conjunction with the recent additions of the Ronald 
Brown and Ka'imimoana to the fleet, NOAA has allocated days-at-sea to 
15 vessels in fiscal years 1996 and 1997.

                               __________
        QUESTIONS AND RESPONSES SUBMITTED TO RAYMOND KAMMER, JR.
    Question 1: Aside from nautical charting, which Mr. Kammer 
indicated could be contracted in the lower 48 states, there are other 
mapping, charting and geodesy activities in NOAA that are commercial in 
nature and are candidates for contracting to the private sector. Does 
NOAA agree that increased contracting can occur in aerial photography, 
geodetic field surveys, photogrammetry, GIS services and satellite 
image processing and value added services?
    Answer: NOAA's policy is to contract for mapping, surveying and 
geodesy services when qualified commercial sources exist, and when such 
contracts are the most cost effective method of conducting these 
functions. NOAA recognizes that qualified commercial sources can 
provide competent, professional, cost effective surveying and mapping 
services. NOAA already contracts with commercial sources for many of 
these services. We intend to increase the availability of funds 
necessary for contracting, however, funding levels are dependent upon 
annual appropriations and reimbursable funds provided by other 
agencies.
    Question 2: NOAA has used the Army Corps of Engineers as a contract 
manager for mapping related work. Its experience has been that the 
Corps can select contractors, negotiate contracts and deploy 
contractors considerably faster than NOAA. Does NOAA intend to continue 
to utilize this service of the Corps? If so, how much will the Corps be 
used versus NOAA's own contracting? What strategy does NOAA have on 
using the Corps contracting capability?
    Answer: In the past, NOAA's National Geodetic Survey has used the 
Army Corps of Engineers (Corps) as a contract manager for some types of 
mapping related work due to the Corps' authority to use ``Brooks Act'' 
procedures. The Brooks Act enables the government to contract for 
surveying and mapping services on the basis of demonstrated competence 
and qualifications for the type of professional services required, and 
at fair and reasonable prices. Surveying and mapping services are of a 
highly technical nature, and it is critical that all activities, from 
collection through compilation be performed to high standards of 
accuracy and quality control to meet the NOAA mission of accurate, 
reliable products.
    In general, it is NOAA policy to award contracts for surveying and 
mapping services in accordance with the Brooks Act. NOAA was provided 
temporary authority to use the Brooks Act in FY 96 and FY 97, and is 
currently seeking permanent authority. Under this temporary authority, 
NOAA's Coast Survey is currently soliciting proposals for three 
hydrographic survey contracts in the Gulf of Mexico.
    If permanent Brooks Act authority is enacted, NOAA will re-evaluate 
using the Corps as a contract manager for some types of mapping related 
work performed for the National Geodetic Survey. NOAA may, however, 
determine to continue the Corps' use as a contract manager, as the 
Corps has proven to be a cost effective and timely method for NOAA to 
procure these types of highly specialized services.
    Question 3: In your testimony, you indicated that of nearly 300 on 
board today, only approximately 170 NOAA officers will be converted to 
civilian status next year. How will the reduction of approximately 130 
NOAA Corps members be achieved next year? Given this projected 
reduction in Corps size, how many ships does NOAA anticipate 
decommissioning next year?
    Answer: Since FY 1994, the Corps' streamlining efforts have reduced 
the number of officers by approximately 25 percent and the Corps is on 
target to be at or below the current fiscal year-end authorized 
strength of 299 positions. The Corps performs services essential to 
NOAA's mission which must continue to be performed after 
disestablishment. To meet this need, NOAA will: (1) offer approximately 
170 officers ineligible to retire the opportunity to convert to 
civilian NOAA positions that perform such functions; and (2) recruit 
civilians, who may include some of the retired Corps officers, for 
essential positions which are not filled by the converted officers.
    The disestablishment of the NOAA Corps and the number of ships to 
be operated by NOAA in the future are not directly correlated. NOAA's 
Fleet Replacement and Modernization plan carefully considers the 
appropriate mix of government-owned versus leased or chartered vessels 
and the best means for operating the NOAA fleet. The fleet's size 
reflects NOAA's data collection and research needs and the cost 
effectiveness of the alternatives for meeting these needs. As a 
consequence, NOAA has decommissioned 10 vessels over the last several 
years and maintains a 15 vessel fleet. At this time, no further 
decommissionings are anticipated during the next 3 years.
    Question 4: In your testimony, you pointed out that this year's 
budget included 17 program terminations totaling $56 million. Could you 
provide a list of these programs, including the 1996 funding level for 
each?
    Answer: The Commerce Program Termination list was revised after the 
hearing to correct an error in the dollar value of the programs 
terminated. The revised total value of the 17 program terminations is 
$61.202 million. A list of the specific programs is provided below.

                      Commerce Program Terminations
                            ($ in Thousands)
------------------------------------------------------------------------
                                   1996 Appropriations      1997 Amount
------------------------------------------------------------------------
ITA:
  National Textile Center (NTC)                   $7,000          $7,000
  Tailored Clothing Technology
 Center (TC\2\)................                    3,000           3,000
NOAA:
  Hawaii Stock Management Plan.                      500             500
  Bluefish/Striped Bass........                        0             785
  Gulf of Mexico Mariculture...                        0             300
  Fishery Observer Training....                      417             417
  Hawaiian Fisheries
 Development...................                      750             750
  Regional Climate Centers.....                    2,000           2,000
  Honolulu Fish Lab............                      500           2,000
  Alaska Fisheries Center......                        0           6,000
  Charleston Fisheries Lab
 Repairs.......................                        0           5,000
  Pribiloff Islands Cleanup....                   10,000           5,000
  Newport Marine Science Center                      500           3,500
  National Estuarine Research
 Reserve.......................                        0           1,000
  New Hampshire Environmental
 Technology Facility...........                        0           8,500
  Fishing Vessel and Gear
 Damage Compensation Fund......                      250             200
NTIA:
  Public Broadcasting
 Facilities Planning and
 Construction (PBFPC)..........                   15,500          15,250
                                ----------------------------------------
    Total Program Terminations.                  $40,417         $61,202
------------------------------------------------------------------------

      
    Question 5: In your testimony, you stated that senior Department 
management has abandoned NOAA's plans to invest $6 million in designing 
new vessels which would compete with private sector surveyors. Has NOAA 
been notified of the Department's decision on this matter and will 
NOAA's FY 1998 budget request be revised to reflect this change?
    Answer: The FY 1998 NOAA budget includes $11.8 million for Fleet 
Maintenance and Planning. Included in this amount is $2.1 million for 
design of intermediate endurance fisheries research vessels. These 
designs would be used by either a contractor or NOAA to construct 
vessels to meet data collection requirements. The determination on how 
to proceed would be based on cost effectiveness and programmatic 
efficiency studies that will be conducted in the future. This does not 
represent a change in policy, and NOAA is fully cognizant and 
supportive of this approach.
    Question 6: The CFO Act of 1990 directs Chief Financial Officers to 
provide policy guidance and oversight of agency financial management 
personnel and operations. Yet in testimony before the Subcommittee, Mr. 
DeGeorge stated ``there is little departmental leadership or oversight 
in the Department's key administrative areas. Indeed, much of the 
Department's oversight capability has been deliberately dismantled.'' 
What measures has the Department taken or will take to address these 
deficiencies?
    Answer: The Department's CFO does provide policy guidelines and 
oversight of agency financial management personnel and operations and 
has issued detailed financial management handbooks providing guidance 
on accounting, credit and debt management, and cash management. The 
Department also has been working closely with bureau financial 
management personnel to provide policy guidance and assistance in 
preparing audit action plans to resolve financial statement audit 
findings and implement audit recommendations. We provide ongoing 
assistance at the bureau level in correcting problem areas and will 
continue this close working relationship while maintaining our focus on 
audited financial statements.
    With regard to Mr. DeGeorge's comments, the Department has provided 
a number of delegations to our bureaus in key administrative areas. 
These delegations were done in keeping with the administration's NPR 
initiative to reduce unnecessary controls and empower the frontline 
workers. We have not, however, delegated our leadership or oversight 
roles. Quite to the contrary, we have undertaken a number of 
initiatives to strengthen the Department's oversight efforts in key 
administrative areas. One such example is in the procurement arena. In 
1994, we re-engineered our policy and oversight functions. We developed 
a strategic plan for the Commerce acquisition community and have been 
working to identify areas where our procurement managers need 
assistance to improve the effectiveness and efficiency of their 
operations. By partnering with our operating units up-front in the 
acquisition process, we assist them in acquiring their goods and 
services, while complying with applicable regulations, policies and 
procedures and meeting socioeconomic goals.
    To replace our procurement management reviews, we developed the 
Performance Measurement Assessment Tool (PMAT). The new PMAT is done 
annually, makes better use of our resources, and is much more 
effective. Our PMAT methodology has been endorsed by the President's 
Management Council and is being used by a number of Federal agencies.
    Question 7: Before the Subcommittee, the Inspector General stated 
that ``The overviews [of the Department of Commerce's FY 1996 financial 
statements] provide a variety of information; however, many portions 
contain misleading or inaccurate information. We found that many 
performance measures were not directly relevant to a bureau's 
activities, did not consistently portray a clear picture of the 
outcomes of activities, and did not include benchmarks to allow the 
reader to compare statistics and evaluate the results achieved by the 
bureau.'' What measures have been or will be taken to address these 
concerns raised by the Inspector General?
    Answer: Each bureau in Commerce develops its own performance 
measures under the CFO Act and GMRA requirements. These measures must 
meet bureau standards for relevance and appropriateness. However, both 
the bureaus and the Department acknowledge that performance measurement 
is a new science for many programs, and many agencies with long 
experience at performance measurement have found that several years' 
cycles are required to develop and implement an optimum set of measures 
and data.
    The performance measures used in the FY 1996 financial statements 
will evolve as our bureaus learn what is most meaningful and relevant, 
yet is still measurable. Our bureaus and the Department have agreed 
that it is best to use a single set of measures for both GPRA and CFO 
Act requirements. GPRA requires performance plans beginning with FY 
1999. Commerce will submit its plan in September 1997, as part of the 
FY 1999 budget cycle. We are and will be working with the bureaus to 
improve these measures. The refinement of relevant outcomes will 
continue as our bureaus track and review their performance measures for 
FY 1999. By March 2000, Commerce will report on program performance for 
FY 1999, the first year of the annual reporting requirement of GPRA. As 
the bureaus come closer to implementing final measures, comparative 
benchmarks will be sought and used where applicable.
    Question 8: In your testimony, you stated ``since 1994, 
headquarters staff has been reduced by 20 percent and supervisors by 18 
percent.'' Please provide the Subcommittee with an explanation of how, 
for the purposes of this analysis, supervisors are defined, and the 
actual number of headquarters staff and supervisors for 1994 and 1997.
    Answer: The definition of supervisors used for our analysis is as 
follows: ``Employees, including any SES identified as a supervisor or 
manager in FPM letter 298-46 (dated October 26, 1993) and reported in 
Central Personnel Data File codes 1, 2, or 3.'' This is the definition, 
developed by the National Performance Review and the Office of 
Management and Budget, which agencies were instructed to use for 
streamlining purposes. Our actual number of supervisors in September 
1994 was 4,643; for March 1997, this figure is 3,765 (a 19 percent 
decrease).
    In 1996, we reported a figure of 3,647 for headquarters staff--
representing a 20 percent reduction from the 1994 baseline figure of 
4,550. We do not have a headquarters staff figure for 1997 to report to 
you at this time. Because the headquarters staff definition provided by 
the NPR and OMB is complex and not tied directly to a geographical 
location (such as Washington, D.C.), we do not have the capability to 
produce the headquarters staff figure quickly through our automated 
information systems. (For example, one criterion is that employees be 
located in ``organizations where more than 25 percent of the work of 
the organization is involved in management or direct support 
functions.'') To obtain the headquarters staff number for the 
Department, we must request each operating unit to compile the figure 
and provide it to us. In the very near future, we plan to issue a call 
to our operating units requesting these data. We expect our analysis to 
show an even larger decrease since 1994 because our Minority Business 
Development Agency earlier this year reduced its headquarters staff and 
the National Weather Service plans a significant reduction of their 
headquarters staff. When we have our data for 1997, we will provide it 
to the Subcommittee.
    Question 9: In what year did NOAA discontinue performing 
specialized aviation, marine and agricultural weather forecasts?
    Answer: All specialized forecasts or services provided at the local 
level for special events were discontinued in 1996.
    All marine products prepared today relate directly to the National 
Weather Service (NWS) mission of safety to life and property and to the 
fulfillment of the U.S. obligations under the International Convention 
for Safety of Life at Sea. With regard to marine warnings and forecasts 
to ships at sea, an appeal was made to the private sector to develop a 
plan to assume the responsibility of disseminating these specialized 
forecasts. Since no such plan came forward and because of the critical 
requirement for weather information to support operations of its cutter 
fleet, in FY 1996, the U.S. Coast Guard assumed the costs of 
transmitting charts from the NWS to U.S. Coast Guard marine weather 
facsimile broadcast stations.
    Specialized agricultural weather forecasts were discontinued in 
1996. The private sector has been given the opportunity to expand its 
``value-added'' services to growers; however, many growers have not 
opted to purchase those services (e.g., in the recent Florida freeze, 
most growers who suffered heavy losses said they could not afford to 
pay for private weather services). Some information such as minimum/
maximum temperatures, winds, frost/freeze warning remain as NWS-
provided services as part of its basic public warning and forecast 
programs. However, the more detailed humidity forecasts may not be 
readily available.
    Specialized aviation forecasts were also discontinued in 1996.
    Question 10: Congress has repeatedly directed the Department of 
Commerce to seeks ways to downsize and reduce costs through 
privatization. Apart from discontinuing specialized aviation, marine 
and agricultural weather forecasts in competition with private 
industry, what additional privatizations have been undertaken?
    Answer: Rather than pursuing additional privatization efforts 
beyond those involving specialized aviation, marine and agricultural 
weather forecasts, the Department is seeking to convert some operations 
into performance based organizations (PBOs). A PBO is designed to 
achieve clear accountability for operating results using the best of 
business practices. Our PBO initiative will reinvent operations at two 
bureaus into more flexible and autonomous units and make managers 
accountable for measurable results. The status of our efforts for 
Commerce's two PBO candidates is:

     Patent and Trademark Office. The revised strategy for 
this PBO is the immediate transitioning to an interim PBO through 
reorganization. A reprogramming package has been submitted to our 
Appropriations Committee to reorganize PTO operations and functions. 
Final conversion to a full fledged PBO will be accomplished through 
passage of a new legislative package which will provide the requisite 
legislative flexibilities.

     NOAA's Seafood Inspection Program. Revised legislation to 
convert the seafood inspection activity into a PBO has been drafted and 
will be submitted to OMB in early April 1997. A draft prospectus, 
spelling out the seafood inspection service's business plan and 
rationale for why they believe the PBO can operate successfully, has 
been prepared and shared with representatives of industry, consumers 
and employees.

    Question 11: The National Technical Information Service produces a 
product called World News Connection which competes with products 
produced by private concerns. Because revenues for World News 
Connection do not cover development or translation costs or overhead 
such as rent, equipment and personnel, this product benefits from a 
Federal subsidy. Does the Department plan on continuing World News 
Connection? How much of the total cost of producing World News 
Connection, including development, translation and overhead, does the 
NTIS recover in sales of the product?
    Answer: The information made available through the World News 
Connection is collected and translated by the intelligence community to 
aid Federal policymakers. This information is often important for 
exporting, investment, and other private sector activities which the 
Department of Commerce serves. Therefore, to further the Commerce 
Department's mission, NTIS has distributed this information in paper 
form for more than 25 years. We are not aware that these daily reports 
were ever viewed as a competitor with private sector products. Indeed, 
if any information product of the depth and scope of the daily reports 
had existed from the private sector, the government would not have had 
to collect and translate it independently.
    The intelligence community has decided that, because of printing 
costs and changes or securing copyright law, it could no longer make 
the product available to the public in printed format. NTIS agreed to 
convert it to electronic format and secure the necessary business 
agreements with the several thousand foreign sources to allow continued 
distribution to the public. This meant that an important product that 
is compiled and translated by the intelligence community at 
considerable expense, could continue to be made available to the 
taxpayers with no additional tax dollars.
    NTIS receives no annual appropriated funds with which to subsidize 
the World News Connection or any other product or service. It has to 
operate on a self-sufficient basis. It is recovering all of the 
operating costs associated with this product. NTIS bears no costs 
associated with translation. Most of the material is acquired in 
English or has been translated by the intelligence community. 
Opportunities are available for commercial sub-leases of the data 
stream for repackaging and distribution in niche markets.
    Question 12: The Inspector General has questioned ``from an overall 
efficiency and effectiveness perspective'' whether the Department of 
Commerce should begin franchising its services to other government 
agencies. The IG notes that ``the Department and the ASCs already have 
difficulty delivering administrative services to Commerce clients in a 
cost-effective manner and that many changes are needed to streamline 
and improve ASC services. Similarly, their antiquated accounting and 
financial systems would make effective franchise operations 
difficult.'' In light of this assessment, why is the Department still 
proceeding with its franchising pilots?
    Answer: The Administrative Support Centers have played and will 
continue to play a vital role in helping the Department contain 
administrative overhead costs. As the Administration and Congress 
increasingly look to Federal agencies to pare back costs and staff, 
operations such as the Administrative Support Centers will play a 
critical role in ensuring the ability of the agency to fulfill its 
mission.
    We believe it to be in the best interests of the Department to 
fully support the Administrative Support Centers in their endeavors as 
a franchise operation. The Department of Commerce is one of the 
agencies approved to establish a pilot Franchise Fund as authorized by 
the Government Management and Reform Act of 1994 (P.L. 103-356). In 
March 1995, Secretary Brown submitted a proposal to the Director of OMB 
asking that Commerce's Administrative Support Centers be included under 
the Franchise Fund Pilot Program. Commerce's application was endorsed 
by the Chair and Ranking Member of the Appropriations Committees and 
the Senate Governmental Affairs and the House Government Reform and 
Oversight Commit- 
tees, and on May 20, 1996, Commerce was designated a Franchise Fund 
pilot agency.
    We have made a commitment to the Chief Financial Officers Council, 
the Administration, and these Congressional committees to participate 
in the Franchise Fund. We will proceed cautiously, and feel that built-
in control and guidance mechanisms of the franchise fund will provide 
the necessary structure. The tenets and policies of the Federal 
franchise principle indeed go a long way toward responding to many of 
your concerns and will likewise serve as a solid base from which to 
revitalize the organization.
    Question 13: Please provide to the Subcommittee the number of 
employees dedicated to legislative and governmental affairs, computers 
and information resource management, budget and financial management 
and personnel management for each Department of Commerce agency.
    Answer: Please see the figures provided below.

----------------------------------------------------------------------------------------------------------------
                                                          Legislative    Computers and
                                                              and         Information    Budget and   Personnel
                    Operating Unit                       Governmental      Resource       Finance     Management
                                                            Affairs      Management *
----------------------------------------------------------------------------------------------------------------
Office of the Secretary...............................              24              67           57           62
Office of the Inspector General.......................               0               4            2            4
Economics and Statistics Administration...............               1               2            1            0
Bureau of the Census..................................               0             940          134          120
Bureau of Economic Analysis...........................               0              50            0            0
Bureau of Export Administration.......................               0              13            4            0
Economic Development Administration...................               0              10            3            0
International Trade Administration....................               5              34           34           40
Minority Business Development Agency..................               1               1            4            0
National Oceanic and Atmospheric Administration.......              40             981          338          176
National Telecommunications and Information
 Administration.......................................               0              32            4            0
Patent and Trademark Office...........................              36             200           53           84
Technology Administration.............................               0               0            0            0
National Institute of Standards and Technology........               0             176           86           43
National Technical Information Service................               2              46           32            0
                                                       ---------------------------------------------------------
    Total.............................................             109           2,556          752          529
----------------------------------------------------------------------------------------------------------------
* There are no distinct occupational series attributed to information resource management, these figures reflect
  employees in occupational series for computers.

      
    Question 14: What is the current projection for the total cost of 
the Commerce Administrative Management System including all in-house 
and pre-development costs, and when is it projected to be completed?
    Answer: The Commerce Administrative Management System (CAMS) 
program is an outgrowth of a Department-wide effort to acquire and 
implement a standard Core Financial System (CFS) for use by all the 
Department's bureaus and agencies. Over time, the scope of the CAMS 
program has grown significantly to include other requirements for 
procurement, travel, budget formulation, personal property, real 
property, grants, bankcards, sales order entry, inventory, and labor 
cost reporting. As a result, the cost estimates for CAMS have also 
increased.
    The Department is now facing the Year 2000 with many of its 
existing financial systems incapable of handling Year 2000 processing 
requirements. This has caused the Department to reassess the CAMS 
program, and to focus attention on Year 2000 issues. To address the 
Year 2000 problems with the existing financial systems, the Department 
will now place top priority on implementing the new CFS, and only its 
modules for bankcards, labor cost reporting, and small purchases 
throughout the Department by October 1998. We will be reassessing the 
bureaus' CFS implementation strategies, schedules and cost estimates 
over the next 90 days to reflect this change in priorities. The plan 
will be provided to you upon its completion.
    We are also contracting with an Independent Verification and 
Validation vendor to evaluate bureau strategies, schedules, costs, and 
progress towards implementing the CFS. We will continue to monitor 
schedules and progress at the Bureaus over the course of the CFS 
implementation.
    Question 15: Please provide the Subcommittee the current number of 
political appointees in each Commerce agency.
    Answer: We currently have 200 political appointees within the 
following operating units:




    Office of the Secretary                                             74
    Office of the Inspector General                                      0
    Economics and Statistical Administration                             7
    Bureau of the Census                                                 5
    Bureau of Economic Analysis                                          0
    Bureau of Export Administration                                      7
    Economic Development Administration                                  6
    International Trade Administration                                  50
    Minority Business Development Agency                                 5
    National Oceanic and Atmospheric Administration                     23
    National Telecommunications and Information Administration           5
    Patent and Trademark Office                                          7
    Technology Administration                                           10
    National Institute of Standards and Technology                       1
    National Technical Information Service                               0
                                                             -------------
    Total                                                              200