[Senate Hearing 111-]
[From the U.S. Government Publishing Office]


 
  COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2011

                              ----------                              


                        THURSDAY, MARCH 4, 2010

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:59 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Barbara A. Mikulski (chairwoman) 
presiding.
    Present: Senators Mikulski, Pryor, and Shelby.

                         DEPARTMENT OF COMMERCE

                         Secretary of Commerce

STATEMENT OF HON. GARY F. LOCKE, SECRETARY
ACCOMPANIED BY APRIL BOYD, ASSISTANT SECRETARY FOR LEGISLATIVE AND 
            INTERGOVERMENTAL AFFAIRS


            opening statement of senator barbara a. mikulski


    Senator Mikulski. Good morning. The Subcommittee on 
Commerce, Justice and Science will come to order.
    This is the first hearing of the--on the President's 
appropriations, and we will be taking testimony from the 
Department of Commerce and its Secretary, The Honorable Gary 
Locke. We note that the Secretary has been asked to be with the 
President at 11:30, so we would hope to conclude his testimony 
no later than 11:15.
    And, Mr. Secretary, we'll try to work with you on that.
    My colleague, Senator Shelby, is on his way, but I wanted 
to move to some other items before we turn to the Secretary for 
his testimony.
    This subcommittee, in the spirit of reform, wants very much 
to get, really, value for the taxpayers' dollar. We will be 
availing ourselves of the excellent work done by the Inspector 
General and by our own arm, the Government Accountability 
Office, to give us advice and direction on how we can make 
wiser use of the taxpayers' dollars, stand sentry over cost 
overruns, and either clean up, or avoid, boondoggles.
    At the conclusion of Mr. Locke's testimony, we will turn to 
the Inspector General, Mr. Zinser, to give us his observations, 
insights, and recommendations on how, using the power of the 
purse, we get more value in the purse. And we will take the 
inspector general's report that he sent to the Office of the 
Secretary in January, and we will be using that as guiding 
principles.
    And I will be asking, Mr. Secretary, some of those 
questions ourselves--the issues related to the census, the 
issues related to the overruns at NPOESS, the insurance of 
cybersecurity initiatives, and also how to really deal with the 
perennial and persistent backlog at the Patent Office.
    We're excited about you being here today, and as we 
listened to the President's State of the Union, and carefully 
noted his appropriation request, we were heartened that the 
President and you share the same vision as this subcommittee, 
which is that the Commerce Department has all of the incredible 
agencies that form national assets to generate jobs in the 
United States of America, whether it's a robust effort on trade 
and export, making trade a two-way street--and not only for the 
big--not only for the big guys that are international, iconic 
brands, but small- to medium-sized businesses that are 
flourishing in my own State, be they Ellicott Machinery, which 
you visited and we appreciated, that has been dredging since 
the Panama Canal days, but how we can make sure that exports 
and the way we function--make sure that small- and medium-sized 
business know how to really participate in this dynamic new 
global market.
    The other, looking at the Economic Development 
Administration, how that can be used as engines in local 
communities, not to just recycle the thinking of the old, like, 
``Give us the money and we're going to build an industrial park 
and hope a warehouse comes.'' Been there, done that, think we 
can get more value for our dollar, and more business growth, 
more job growth, if we use it. And we look forward to your 
vision and whether it has a realistic revenue request to it.
    We're very proud of the National Institute of Standards and 
Technology, because you cannot compete in a global marketplace 
without standards. You can't--you can invent a product, but in 
order to produce the product, there must be standards.
    We want those standards invented in the United States of 
America, working with our treasured allies. We want it to be 
``The Freedom Standard,'' not ``The China Standard''--that is 
not a xenophobic reaction, but where there are democracies that 
have shown a robust desire for open and free markets, just like 
open and free speech.
    You have the EU standard, we have our standard, there's the 
great harmonization. This gives us a great trading way, where 
we're not fighting over it. But he who controls the standard 
can control production and trade. So, that's why I want a 
freedom standard, looking at those countries that believe in 
freedom.
    So, we're looking at the appropriations. We are pleased to 
be joining, again, with Senator Richard Shelby from Alabama. 
This subcommittee has always enjoyed a bipartisan effort.
    So, our goal will be, No. 1, to be able to create jobs, 
generate jobs using the tools of the Federal Government to do 
that in the private sector. At the same time, there are 
constitutional obligations in the census.
    We know that the President has provided, for the overall 
Commerce Department, an $8.9 billion request. This is less than 
last year, but it doesn't truly reflect the ongoing basic needs 
of the agency. There's a $5 billion decrease, because we will 
be in the final stages of the 10-year census, and we'll be 
scaling back from $7.3 billion to $1.2 billion.
    We'll have questions on the census, because we're really 
apprehensive about how the census will be conducted. We believe 
that every person here counts, and every person ought to be 
counted; and we've got to be able to count on the census to get 
it right.
    As I said, few other departments have all of the agencies 
in place for America to be competitive and innovative in the 
new economy. Commerce's science and research programs use tech 
transfer to help and manufacture small businesses. Funding for 
the EDA continues to create financial links for high 
unemployment communities. We want to connect business with our 
agencies to be able to move ahead.
    The new technologies and ideas deserve protection. This is 
why we support so strongly the Patent and Trademark Office. 
Last year--or this year--four--it sounds like a number in a 
lotto--four-four-four million--$444 million in fee revenue from 
this year allowed them to better protect intellectual property.
    In the area of international trade, there is going to be an 
increase of $87 million, which we will--hope will be a new 
export push. Often, in the past, the Secretary of Commerce, and 
his agency, was looked upon to be the super sales agent for 
American business. And that wasn't a bad model, in another 
century, in another economy.
    Now, we need our Secretary to be the chief executive 
officer of the Commerce Department, using every resource, and 
leveraging it, and making sure that we're in the global 
business, which is IT.
    We also want to make sure that these agencies carry out 
their mission, and we will be looking to be sure that we are 
dealing with any potential issues related to boondoggle.
    We have to keep an eye on the 2010 census operations. The 
overall census will cost $14.7 billion, making this the 
highest-cost census ever. Even though the 2011 request from the 
census has decreased, the oversight and accountability must be 
continued.
    Two years ago, we learned that the hand-held computer 
system that we bought was a techno-boondoggle, forcing the 
census takers to revert back to a paper-based system. Now we've 
learned that, without any real-time data this year, the Bureau 
of the Census may be unable to move resources quickly to 
achieve a complete count, and to ensure that that is accurate. 
I want to know what the census is--what is the issue around the 
census, to make sure we're functioning properly.
    I also want to talk about NPOESS and NOAA. And I'll ask 
more questions about NOAA. We're very concerned that NPOESS, 
under the old framework, was eating as much as 36 percent of 
the NOAA appropriations. Wow, when they have so much to do--
other weather issues, the management of our fisheries, climate 
data--that's important for policymakers to determine the nature 
of global warming. And what we understand now is that there's 
going to be a divorce between NASA, the Air Force, and NOAA. We 
would like to know what it will be and how to ensure that these 
very costly--that the overruns don't continue, that for all of 
the money that we spent, we actually get science and 
information that greater protects the planet, and that we will 
now come to the point to have increased discipline.
    The other issue is the Patent Office. And in the Patent 
Office, we've been continually concerned about cost overruns. 
We will be interested to know, in your testimony or in the Q&A, 
how you intend to reduce the backlog, which was a persistent 
problem often tied to poor morale, poor communication--gosh, we 
have lots of GAO and other internal reports that do that. 
Knowing of your strict adherence to management principles, we'd 
like to know how you've gotten a handle on this, even if you've 
gotten one at all; what would be the path forward. If we invent 
it, we want to protect it.
    So, we look forward to hearing your testimony, and I want 
to turn to Senator Richard Shelby.


             opening statement of senator richard c. shelby


    Senator Shelby. Thank you, Senator Mikulski--Madam 
Chairwoman.
    This is the beginning of our fifth year working together on 
this subcommittee. We work closely together, sharing many of 
the same goals and expectations for the agencies that we 
oversee here. I'm pleased to serve beside you, once again, and 
want to thank you for your continued leadership on so many of 
these subjects.
    I also welcome you back, Mr. Secretary--Secretary Locke--
along with Inspector General Zinser, and look forward to 
learning more about your 2011 budget request for the Department 
of Commerce and what the Inspector General is doing to ensure 
that the Department's programs are being run efficiently.
    The Nation relies heavily on the Department of Commerce to 
maintain America's competitiveness within the markets around 
the world. The Department provides avenues to promote the 
products and services of U.S. businesses, and then helps level 
the playing field by expanding, strengthening, and enforcing 
our international trade agreements.
    Although, through the Department of Commerce, our country 
is able to maintain high technical standards as well as staying 
on the cutting edge of scientific research--all of which are 
fundamental to our Nation's leadership in the global 
marketplace--in particular, one area of the budget requests 
that accomplish this objective is a 7.3 percent increase in the 
National Institute of Standards and Technology's budget line. 
The $918.9 million request maintains the commitment to budget 
levels authorized by the COMPETES legislation.
    Key thrusts of this request will enable NIST to expand 
research on measurements and standards related to 
cybersecurity, health IT, the Smart Grid, and manufacturing 
applications.
    Mr. Secretary, today we will also hear about programs that 
are not nearly as successful, and some that are complete 
failures. The administration has put forth a Department of 
Commerce budget request that attempts to balance priorities 
with a freeze on discretionary spending. Yet, this budget 
proposes $1.1 billion increase, accomplished by offsetting 
reductions in the one-time cost of the decennial census and 
providing the Department of Commerce with a significant 
increase in base spending. This budget simply hides a massive 
spending increase under the guise, I believe, of fiscal 
discipline through a hidden spending reduction.
    Mr. Secretary, over the past year, we've learned of cost 
and schedule overruns within NOAA--within the NOAA Satellite 
Acquisition Programs--numerous information technology failures, 
disconcerting treatment of our fisheries, and glaring failures 
at the census. The National Oceanic and Atmospheric 
Administration, NOAA, faces many challenges in the year 2011, 
including the creation of the National Climate Service, the 
reorganization of the National Polar Orbiting Satellite 
Program, as well as addressing the system vulnerabilities of 
NOAA weather satellite data to security breaches.
    Mr. Secretary, there are some proposed improvements in the 
management of NPOESS, but these changes are only cosmetic, I 
think. This restructuring will cost the taxpayers $5 billion 
more than the original estimate. And, ``What will this 
additional funding get the American taxpayer'' is the question. 
Two satellites, which is four less than the six originally 
required.
    I wish the failure of NPOESS was the only bad news to 
report about the management of national environmental satellite 
data and information services, but I believe there's more. For 
at least 4 years, NOAA has operated high-impact systems without 
the required security controls. The inspector general's 2009 
Federal Information Security Management Act assessment of the 
Environmental Satellite Processing Center indicates that 110 of 
134--or 82 percent--of the required security controls that 
should be implemented to control access to devices and 
information at the Center are lacking or nonexistent.
    The inspector general indicates that, because of the lack 
of any security planning, the number of security 
vulnerabilities cannot ever be calculated. These failures show 
that the Department of Commerce is lacking in the competencies 
required to procure, operate, and protect the Government 
systems and the information they contain. The Department's 
total disregard for the sensitive information to which it's 
entrusted is an abomination. And if there is not a significant 
correction in the Department's direction, I will recommend that 
these programs, and any others that the IG questions, be ended.
    From this point forward, the Department should be better 
served--would be better served to focus its attention on 
addressing the shortcomings and less on providing commentary to 
the IG's findings. Mr. Secretary, as NOAA attempts to actually 
manage NPOESS adequately, I'm concerned it may be doing the 
exact opposite of our Nation's fisheries, through over-
regulation.
    The Red Snapper Fishery provides valuable commercial and 
recreational opportunities in my State of Alabama, as well as 
being an enormous contributor to the economy. Both the 
fishermen's observations in my State and NOAA's own data show a 
dramatic increase in the nature of catchable red snapper in the 
Gulf of Mexico, and that's good. And yet, catch limits remain 
low and the season is shortened every year.
    While we need to promote the health of this fishery, I 
believe we must balance environmental concerns with economic 
well-being. We cannot overburden the hardworking men and women 
in the gulf whose livelihood depends on fishing by restricting 
their catch based on faulty science and data collection.
    Today in the gulf, NOAA is continuing to put catch limits 
on fishermen when it lacks any comprehensive independent 
fisheries data that is critical to making accurate assessments 
of the health of the red snapper populations.
    Without this independent, scientific information, the 
fishery and NOAA must rely on the fishery-dependent data, which 
are inherently biased against the fishermen and do not provide 
an accurate picture of the red snapper population.
    I understand NOAA is required to end overfishing and 
rebuilt overfished stocks; we're all for that. But, fishermen 
along the gulf coast have suffered severe cutbacks in their 
catches for many years. If the science shows that stock is as 
healthy as it seems to be, I believe it's time for fisherman to 
benefit from their sacrifices.
    Mr. Secretary, I want to work with you to make certain that 
NOAA has the resources to collect the independent data to 
implement fair and adequate fisheries management, and I believe 
you do, too.
    Finally, Mr. Secretary, the Department is about to reach 
the height of, arguably, it's most important mission this year, 
the 2010 census. The census is vastly important to the 
representation in Congress and the allocation of Federal funds. 
It must proceed in as reliable and accurate manner as possible. 
This is an enormous undertaking that's already faced many 
challenges, as we both know.
    During the 2010 census, the Department intended to 
incorporate new technology to reduce cost and to improve 
accuracy. Instead, we--the U.S. taxpayer--paid $595 million for 
a technology that could not be operated and cannot be 
implemented.
    The census has now turned back to the antiquated, paper-
based accounting method. After wasting millions for the 
Department to revert back to paper and pencil counting, the 
Census Office spent $2.5 million on a Super Bowl commercial to 
advertise that the census is required by law.
    Further, the Bureau of the Census will also hire hundreds 
of thousands of temporary workers as part of their effort to 
count every single person in the Nation. There are disturbing 
news reports that 10,000 temporary hires were paid $3 million 
for doing no work, another $1.5 million was wasted on paying 
5,000 people who worked for a single day or less, while an 
additional 581 employees have submitted questionable mileage 
reimbursement requests, and so on.
    Mr. Secretary, there are many managerial failures at the 
Department of Commerce--and I realize it's big--many of which 
are highlighted today. The acquisition history of NPOESS, the 
overly restrictive management of the gulf fisheries, as well as 
the failed acquisition of the census hand-held demonstrates 
that management and acquisition oversight does not exist at the 
Department. Just these few examples show a systematic failure 
in the leadership at the Department I believe you need to 
address, and I believe you will.
    Thank you.
    Senator Mikulski. Mr. Secretary, we've got a big agenda and 
a little bit of time, so why don't you proceed?


                    statement of hon. gary f. locke


    Secretary Locke. Thank you very much, Chairwoman Mikulski 
and Ranking Member Shelby. It's a pleasure to be here.
    All right, there we go.
    Chairwoman Mikulski and Ranking Member Shelby, thank you 
very much. We're really pleased to join you to talk about the 
Department of Commerce's fiscal year 2011 budget, as proposed 
by President Obama.
    With the 2010 census field operations ending this year, the 
President's $8.9 billion budget request decreases overall 
spending from fiscal year 2010, but funds targeted increases 
for vital economic priorities, because, in these challenging 
times, the central mission of the Department of Commerce could 
not be more straightforward: helping American businesses become 
more competitive so they put more people back to work.
    I want to highlight four areas where the Commerce 
Department's efforts, described in the fiscal year 2011, budget 
are integral to that goal of putting more people back to work.
    First, businesses use our unparalleled statistical and 
technical research to develop new products, identify new 
markets, and make long-term investments. The National Institute 
of Standards and Technology, NIST, provides metrics that enable 
development of everything from a national Smart Grid, advanced 
manufacturing processes, to airport screening devices and new 
cybersecurity measures. As well, NIST provides consulting 
services to American manufacturers to become more efficient and 
profitable so they become more viable and competitive in a 
global economy.
    Increasingly, businesses are turning to NOAA for its 
unmatched weather and climate observations, and much of NOAA's 
2011 budget increase will finance NOAA's added responsibilities 
to implement that long-called-for restructuring of the National 
Polar-orbiting Operational Environmental Satellite System, 
called NPOESS. This effort will help us better meet civil and 
military weather forecasting, storm tracking, and climate 
monitoring requirements.
    At a time where both businesses and President Obama have 
called for more accurate and readily available climate 
information, the 2011 budget assigns additional 
responsibilities to NOAA's proposed new Climate Service line 
office, which is the result of a proposed reorganization to 
bring together its observational and analytical resources, now 
scattered throughout NOAA, all under one roof.
    A second key function of the Department of Commerce is 
overseeing the patent protection that has incentivized American 
inventors and entrepreneurs to create for more than 200 years. 
When I came to the Department of Commerce, the Patent and 
Trademark Office had a backlog of almost 800,000 patent 
applications and an over-3-year waiting period for an up-or-
down determination on a patent application. We've already taken 
important steps to fix these problems, working with the 
employees and their representatives, knowing that every patent 
application waiting in line could be a new product not going to 
market and a new job not being created.
    And through its short-term fee surcharge and other fee 
provisions, as well as make critical investments and upgrades 
to outdated IT systems, the 2011 budget will, along with 
management innovations and employee-driven process 
improvements, help the Patent and Trademark Office to whittle 
down the time it takes to grant or deny many patent 
applications to within 12 months by the year 2014, except those 
innovations that are also seeking FDA approval.
    Area No. 3, Commerce provides direct consultation and 
funding to help communities develop crucial economic 
infrastructure. And through the Recovery Act's Broadband 
Technology Opportunities Program, or BTOP, by tomorrow we will 
have provided over $1 billion to lay or activate over 20,000 
miles of networked, high-speed Internet lines in underserved 
communities. The 2011 budget provides critical funding to 
ensure that all projects have rigorous oversight.
    And this is a true public/private partnership, because just 
as the Federal Government might fund construction of a highway 
across a State and then have local governments build the 
streets that branch off of it, our infrastructure grants for 
high-speed Internet funds super high-speed Internet lines, or 
highways, that local providers, private sector, will then 
connect to, or tap into, to bring high-speed Internet service 
directly to homes and businesses.
    The 2011 budget also provides $75 million to our Economic 
Development Administration for planning and infrastructure 
grants to help communities identify their unique economic 
strengths and then develop regional innovation clusters, 
similar to what we've seen in Silicon Valley or the famous 
Route 128 corridor in Boston.
    Area No. 4, in foreign countries, the Commerce Department 
serves as the lead advocate for U.S. companies looking to break 
into new markets or to grow their share in existing ones. The 
2011 budget proposal provides a 20-percent increase to the 
International Trade Administration, which, among other things, 
will allow us to hire some 328 new trade specialists, mostly 
stationed in foreign countries, to seek out new customers and 
buyers for American-made goods. When American companies export 
more, they manufacture more. When they manufacture more, they 
hire more people.
    International Trade Administration will play a key role in 
implementing the President's National Export Initiative, which 
aims to double America's exports over the next 5 years and 
support 2 million new jobs.
    As we implement all of these programs, results, cost-
effectiveness, and accountability are paramount objectives. So, 
we take to heart the Department's managerial challenges and 
operational issues, as identified by our inspector general, 
Todd Zinser, and his staff. His findings are acted upon and 
used to reevaluate other operations and serve as benchmarks or 
metrics of performance improvement. And we support the 
President's proposed 2011 budget to provide increased funding 
to the inspector general's office for increased oversight of 
our Department's acquisitions and contracts.


                           prepared statement


    So, I thank you for the opportunity to come before you 
today. I know you have several questions, as you've already 
indicated. We thank you for your continuing support of the 
Department of Commerce and its programs, and we look forward to 
this exchange.
    [The statement follows:]
                Prepared Statement of Hon. Gary F. Locke
    Chairwoman Mikulski, Ranking Member Shelby, and distinguished 
members of the subcommittee, I am pleased to join you today to talk 
about the Department of Commerce and the President's budget for fiscal 
year 2011. It has been my privilege to serve the American people for 
the past year, and I am grateful for President Obama's continued 
confidence in my ability to lead this great agency. We have 
accomplished a great deal since the beginning of this administration, 
and the subcommittee has played a critical role both in providing 
resources and conducting oversight to ensure that the Department 
achieves its mission.
    Having steered the economy back from the brink of a depression, the 
administration is committed to moving the Nation from recession to 
recovery by sparking job creation to get millions of Americans back to 
work and building a new foundation for the long-term prosperity for all 
American families. To do this, the fiscal year 2011 budget makes 
critical investments in the key areas that will help to reverse the 
decline in economic security that American families have experienced 
over the past decade.
    But even as we meet the challenge of the recession and work to 
build an economy that works for all American families, we must also 
change the way Washington does business--fixing programs that don't 
work, streamlining those that do, cracking down on special interest 
access, and bringing a new responsibility to how tax dollars are spent. 
I have been working hard to improve the way the Department of Commerce 
serves its customers, especially American entrepreneurs and businesses, 
the backbone of our Nation's economy. The Department is focused on 
strengthening the conditions for economic growth and opportunity by 
promoting innovation, entrepreneurship, competitiveness, and 
stewardship. The fiscal year 2011 budget reflects this ethic and will 
allow the Department of Commerce to better meet the needs of the 
American people.
    The request of $8.9 billion will enable the Department to 
effectively promote strong and equitable trade relationships critical 
to sustaining our Nation's ability to successfully compete in the 
global marketplace, improve our scientific and technological 
capabilities, upgrade our capabilities for weather and climate 
observations and forecasting, and ensure the long-term economic and 
ecological sustainability of our natural resources. This request is a 
significant decrease from our fiscal year 2010 appropriation, since 
major field operations for the decennial census will be completed in 
the current year.
    The decennial census is an enormous undertaking, and we are urging 
everyone to mail in their forms this month. An increase of just 1 
percent in the response rate will save the taxpayers roughly $80 
million. The Census Bureau is focusing extensive advertising and 
partnership activities on hard-to-reach populations, to encourage a 
high response rate and help meet our goal of achieving the most 
complete and accurate count of the Nation's population to date. We have 
expanded and accelerated those activities, with the subcommittee's 
support, using funds provided in the Recovery Act. Our partnership 
efforts have been well-received--we have already enlisted 207,000 
partners. For comparison, at the end of the census in 2000 we had 
140,000 partners. Our decision to advertise during the Super Bowl 
succeeded in reaching a massive audience--it was the most-watched TV 
event in history, with 116 million viewers. The results of these 
activities are promising: in the last 3 months, the share of people who 
have heard something about the census has increased from 35 percent to 
75 percent, and the share of people who say they definitely or most 
likely will complete the census has gone from 77 percent to 85 percent.
    Implementing all our Recovery Act programs effectively and 
efficiently remains a key priority for the Department this year and in 
the future. We have completed the Digital TV Converter Box Coupon 
program and returned unused funds to the Treasury. The pace of our 
grant and contract awards is increasing, and we remain on schedule to 
complete all awards this year. By the end of this week, we will have 
awarded 111 Broadband Technology Opportunity Program (BTOP) grants 
totaling $1.1 billion. For example, a $39.7 million broadband 
infrastructure grant to the ION Upstate New York Rural Broadband 
Initiative will serve more than 70 rural communities in upstate New 
York and parts of Pennsylvania and Vermont by constructing a 1,308 mile 
network and immediately connecting more than 100 anchor institutions, 
including libraries, State and community colleges, and health clinics. 
Our second round of grants will focus on expanding Middle Mile 
broadband infrastructure that connects critical community anchor 
institutions--such as schools, hospitals, libraries, and public safety 
agencies--and attracts end-user connections provided by the private 
sector to consumers and businesses, creating a ripple effect of 
economic development throughout communities.
    Having addressed such critical needs, the fiscal year 2011 
President's budget is designed to help put our country back on a 
fiscally sustainable path. This will require a high level of budgetary 
discipline and a number of hard choices and painful tradeoffs. 
Nonetheless, the budget includes targeted investments in Commerce 
programs that meet major national needs, like export promotion that 
supports job creation, and research and development that can spur new 
ideas, new products, and new industries.
    The budget provides $534 million, a 20-percent increase, to the 
International Trade Administration (ITA), for its role in the National 
Export Initiative, a broad Federal effort to increase American exports. 
ITA will strengthen its efforts to promote exports from small- and 
medium-size enterprises, help enforce U.S. trade law, fight to 
eliminate barriers to sales of American products and services and 
improve the competitiveness of U.S. firms. President Obama has issued a 
challenge to double U.S. exports over the next 5 years. By increasing 
the number of U.S. firms that export and enabling them to increase 
their volume of exports, new higher-wage jobs will be created, and U.S. 
companies will be better able to compete in the expanding global 
marketplace.
    The budget includes $919 million for the National Institute of 
Standards and Technology (NIST), as part of the President's Plan for 
Science and Innovation. This proposed increase reflects the critical 
role that measurement science, standards, and technology services play 
in fostering innovation and encouraging economic growth. To support and 
enhance our world leadership in the physical sciences and technology, 
the NIST laboratories would address critical challenges in 
manufacturing, advanced alternative energy sources, cyber security, the 
Smart Grid and other important areas, and ensure that its facilities 
meet its needs to continue to produce world-class research. The budget 
also includes $80 million for the Technology Innovation Program, which 
invests in game-changing new technologies that address critical 
national needs. The Hollings Manufacturing Extension Partnership will 
receive $130 million to continue expanding its services to help smaller 
manufacturers adopt technological innovations that spur economic 
growth, and develop new products, expanded markets, process 
improvements, and more green technology jobs.
    The request provides more than $5.5 billion for the National 
Oceanic and Atmospheric Administration (NOAA), including investments to 
improve fisheries and the economies and communities they support, and 
to help green and blue businesses with a solid foundation of 
environmental information and stewardship. Much of this year's increase 
is to fund a major restructuring of the National Polar-orbiting 
Operational Environmental Satellite System (NPOESS). As it stands, the 
program is years behind schedule and billions over budget; independent 
reports and an administration task force have concluded that the 
program cannot be successfully executed with the current management and 
budget structure. However, the need for a successor system of polar-
orbiting environmental satellites remains a national priority and is 
essential to meeting both civil and military weather-forecasting, 
storm-tracking, and climate-monitoring requirements. The restructured 
Joint Polar Satellite System will keep what works--common operating and 
ground systems, run by NOAA--but NOAA will separately procure the 
spacecraft for its highest priority orbit, as will the Air Force. 
NOAA's spacecraft procurement will be managed by the National 
Aeronautics and Space Administration, as has been the case with prior 
polar satellites and all geostationary satellites, and is fully funded 
in the NOAA request rather than shared with the Air Force.
    Strengthening our knowledge on climate, weather and ecosystem 
sciences, as proposed in the budget, will also increase America's 
competitiveness. For example, the requested increase for the multi-
agency Next Generation Air Transportation System would support enhanced 
weather information that, when fully integrated into the Federal 
Aviation Administration's operational decisionmaking process, could 
significantly reduce flight delays. There are also increases to 
strengthen NOAA's climate research and observation capabilities, 
including upgrades to climate science and improved modeling and 
assessments at the global, national and regional levels. In addition, 
we recently announced our plans to develop a NOAA Climate Service, and 
we look forward to working with the subcommittee toward that goal.
    The budget includes $2.3 billion for the U.S. Patent and Trademark 
Office (USPTO) to put the agency on a path to reduce first action 
pendency to 10 months and total pendency for patent applications to 20 
months, implement a new, targeted hiring model, and make critical 
investments in its information technology, to support companies and 
innovators seeking to bring new products to market. The budget also 
gives USPTO full access to its fee collections and will strengthen its 
efforts to improve the speed and quality of patent examinations through 
an interim fee increase and fee-setting authority to better reflect the 
costs of providing services. Shorter pendency times at USPTO, in 
combination with patent reform legislation and other mechanisms for 
improving patent quality, can reduce legal uncertainty over rights and 
drive commercialization of new technologies.
    In fiscal year 2011, with funding of $46 million, the National 
Telecommunications and Information Administration (NTIA) will continue 
its important policy, spectrum management, and research programs that 
support emerging technologies and affordable, alternative 
communications services that can drive economic growth and create jobs. 
The administration and NTIA have moved aggressively to create an 
economic and regulatory environment in which innovations in information 
and communications technologies can flourish. In addition, as noted 
above, NTIA will focus on administering the billions of dollars in 
broadband grants being awarded this year; broadband is a central part 
of the infrastructure necessary for the economy to create jobs and 
thrive. The budget provides $23.7 million for post-award administration 
and oversight of BTOP grants for construction and mapping, and for 
ongoing work with the FCC to maintain the national broadband map.
    The budget includes $1.3 billion for the Economics and Statistics 
Administration's (ESA) Census Bureau to process, tabulate, and release 
2010 census data, conduct extensive evaluations of the census, improve 
the data collection methods of the American Community Survey (ACS), and 
begin a continuous update process of the Census Bureau's geospatial and 
address data, which is expected to produce long-run cost savings for 
the taxpayer. Understanding the demographic profile and economic 
structure of the Nation is key to any business or policy decision 
designed to promote job creation or to improve the economic well-being 
of American families. For example, the budget proposes to expand the 
ACS sample size, which will increase the reliability of ACS data, 
especially for areas with a population of 20,000 or less. This 
increased reliability will greatly benefit entrepreneurs and businesses 
by informing their decisions about where to expand their operations and 
providing better data on the changing economic, social, and demographic 
trends of their workforce and customers. It also will lead to more 
efficient allocations of more than $400 billion in Federal funds to 
communities, ensuring that even the smallest of towns, communities, 
rural areas, and tribal lands get their fair share of funding for 
schools, transportation projects and job training.
    The request also provides $109 million for ESA's Bureau of Economic 
Analysis to develop new statistics that provide greater detail on key 
economic sectors to ensure that regulators, policymakers and businesses 
have all the necessary data at their disposal to make the most 
effective investment and economic policy decisions. This includes data 
on the American family's income, spending, savings and debt. More 
accessible data will help businesses of all sizes make better 
investment decisions that can, in turn, lead to job growth. The Bureau 
will also reinstate statistics on new direct foreign investment into 
the United States and produce data critical to analyzing the energy 
sector's contribution to U.S. economic growth, productivity, inflation, 
the trade balance, and income.
    In fiscal year 2011, with funding of $113 million, the Bureau of 
Industry and Security's (BIS) Office of Export Enforcement will step up 
its efforts to prevent illegal exports of sensitive dual-use goods and 
technologies that could endanger the Nation. Enhancements included 
within a $10 million increase will strengthen counter proliferation, 
counterterrorism, and other national security programs and 
investigations. These funds will allow BIS to expand its field presence 
and increase coordination and liaison with the intelligence community 
as well.
    The budget includes $286 million for the Economic Development 
Administration (EDA), since competitive, high-performing regional 
economies are the building blocks of sustainable growth. As part of the 
administration's place-based initiative, the budget targets $75 million 
toward planning and matching grants within EDA to support the creation 
of Regional Innovation Clusters that leverage regions' competitive 
strengths to boost job creation and economic growth. For example, EDA 
and NIST's Hollings Manufacturing Extension Partnership are currently 
partnering with the Departments of Energy, Education, and Labor, as 
well as the National Science Foundation and Small Business 
Administration on a joint Federal opportunity announcement for the 
Energy Regional Innovation Cluster. These agencies have issued a unique 
joint funding opportunity encouraging consortia from regions across the 
country to compete for a combined investment of up to $129 million to 
accelerate the development of a Regional Innovation Cluster 
specializing in energy-efficient building technologies.
    The $32 million requested for the Minority Business Development 
Agency (MBDA) will further implement the Department's responsibilities 
under the Native American Business Development, Trade Promotion, and 
Tourism Act of 2000 and the Indian Tribal Regulatory Reform and 
Business Development Act of 2000. These funds will increase the 
activities and outreach of MBDA's Office of Native American Business 
Development and support research on Native American trade promotion and 
economic disparities.
    The budget provides $84 million for Departmental Management, 
including $17.5 million toward renovation of the Herbert C. Hoover 
Building, the Department's 73-year-old headquarters in downtown 
Washington, DC. This long-term project, developed in coordination with 
the General Services Administration, addresses major deficiencies in 
the building's antiquated mechanical, electrical, plumbing, fire safety 
and security systems. The subcommittee's continued support for this 
project will yield great benefits for our working conditions. Also 
within the Departmental Management account, the budget provides small 
increases to improve cyber security by protecting sensitive information 
from increased malicious activities, and to strengthen our acquisition 
management workforce that is responsible for oversight of Department-
wide activities. We are also requesting $29 million for the Office of 
Inspector General, including additional funds to increase its oversight 
of Departmental acquisitions and contracts, and to support the Council 
of the Inspectors General on Integrity and Efficiency (established by 
the Inspector General Reform Act of 2008).
    As part of the administration's line-by-line review of the budget 
to identify programs that are outdated, ineffective, or duplicative, we 
are proposing to terminate the Public Telecommunications Facilities 
Program and consolidate support for public broadcasters in the 
Corporation for Public Broadcasting. The budget also proposes to 
eliminate a yearly subsidy to a small number of firms in the worsted 
wool manufacturing industry that have already received about $25 
million over the past 5 years. Finally, we would rescind $43 million of 
unobligated balances for the Emergency Steel Guaranteed Loan Program, 
which currently has no active loans, but leave $5 million in the 
account in case there are future guarantee requirements.
    In closing, the Department of Commerce has a broad mandate to 
advance economic growth, jobs and opportunities for the American 
people. While we are currently facing challenging economic times, this 
budget provides a blueprint for us to carry out that mandate and help 
the Nation rise to the challenge and forge ahead. Thank you for the 
opportunity to come before you today, and for your continuing support 
of the Department of Commerce and its programs. I look forward to your 
questions.

                     ADMINISTRATIVE STAFF VACANCIES

    Senator Mikulski: Thank you, Mr. Secretary.
    Well, we believe, in order to create jobs and also fulfill 
the mission of the Commerce Department and its agencies, you 
need the right resources, one of which is the money that is 
being requested in the President's budget.
    However, I have another question related to management. You 
can't do your job without the right people. You've been in 
office less than 18 months, and we've asked you to be, not only 
the chief executive, but really the turnaround specialist at 
Commerce for many of the problems you've inherited. The 
boondoggle at Census, the boondoggle at NPOESS, the backlog at 
Patents preceded you. How many vacancies do you have in your 
top administrative staff that are pending confirmation?
    Secretary Locke. We've actually made progress in the last 
few weeks, but we still have, I think, about a half a dozen 
still-pending confirmation, and notably the Under Secretary for 
the International Trade Administration. He just had his 
hearing, I believe, 2 days ago in the Senate Finance Committee, 
so we're very hopeful that that's a good sign.

               INTERNATIONAL TRADE ADMINISTRATION FUNDING

    Senator Mikulski. Well, we would hope that these 
confirmations would move ahead.
    Which then takes me to jobs, jobs, jobs, something that I 
know we share, on a bipartisan basis. Looking at the 
President's request, there have been requests for increased 
funding in the International Trade Administration. What would 
that increased funding do, and how would it help small- to 
medium-sized business be able to get into the trade arena?
    Secretary Locke. Well, as I indicated, a large amount of 
that funding will be to bring on some 328 trade specialists, 
most of them stationed in our foreign countries. It is part of 
the President's National Export Initiative whose goal is to 
double American exports over the next 5 years. And we're 
primarily focusing on small- and medium-sized companies.
    The United States, compared to other developed countries, 
does not export as much as other countries. And here's an 
interesting statistic. Of those companies in the United States 
that do export, 58 percent export to only one country. So, part 
of our program is to partner up with other organizations, 
including FedEx, UPS, the U.S. Postal Service--all of them have 
incredible databases, they know exactly who exports, what 
sectors, to what countries, volume. And if we can partner with 
them--and we've already received word from them that they do 
want to work with us--along with export/import----
    Senator Mikulski. Yes, but that's not $87 million. So, you 
want to hire more commercial officers to be in foreign 
countries.
    Secretary Locke. That's right.
    Senator Mikulski. We understand that. But, it means, then, 
if you're small- to medium sized, you've got to pick your 
country, and you've got to find your foreign commercial service 
officer. So, my small- to medium-sized business, that could 
export, won't know which country to call, who's going to need 
them. So, what, of your $87 million, or of your International 
Trade Administration, will go so that these-sized businesses 
would know where to go, how their Government would be on their 
side, so they get out there and compete on the basis of 
everyone--cost, service, product ingenuity? So, what would be 
going on--are you going to be spending money in our own 
country?
    Secretary Locke. Oh, yes. For instance, the partnership I 
announced indicated--with respect to FedEx or UPS--will 
actually be reaching out to today's exporters here in America 
and analyzing where they export to and say, ``Based on our 
information, with the contacts and the people we have in 
foreign countries, if you now export to, let's say, Europe, we 
really think that you can export to Latin America or to 
Southeast Asia.'' So, we will be intensifying our outreach 
efforts to small- and medium-sized companies that are already 
engaged in exporting and say, ``We believe, from the additional 
trade specialists stationed around the world, that we will find 
buyers and customers for you.''

                  PATENT AND TRADEMARK OFFICE FUNDING

    Senator Mikulski. Well, we want to elaborate on that more, 
because I think you shared, in our office visit, the fact that 
you actually want to be running workshops around the country to 
do that.
    But, let me get right on to the Patent Office. Maryland 
really is a State, from its innovative biotech and IT 
industries, and others, that really use the Patent Office. This 
includes our great iconic universities, Hopkins in Maryland, 
and our private sector. We hear two problems with the Patent 
Office. One is the incredible backlog. The second is that, 
while they're standing in line, they are worried that their 
ideas have been stolen, in this new cybersecurity world, and 
that, while we're working, in cybersecurity, to secure 
.military, or CyberShield, there's .gov. So, it's not like 
they're going to break into the Net of an individual company, 
they can just go cruising at the Patent Office.
    So, my question to you: What is the amount that you're 
requesting? And do you think it's sufficient to do two things: 
help you reduce the backlog at PTO so that they can get 
decisions in a timely way--time is competitiveness; and, at the 
second time, that, while they're standing in line for approval, 
their idea is not being stolen by a foreign and economic 
adversary?
    Secretary Locke. First of all, with respect to 
cybersecurity, this is an issue that the Inspector General's 
Office has identified, and I'm really pleased that the 
President's 2011 budget does call for significant increases in 
efforts on cybersecurity throughout the Department of Commerce, 
as well as with NIST, to help develop increased standards for 
all businesses, as well as government. And the Department of 
Commerce has been an integral player with the President's task 
force on identifying cybersecurity risk to our entire Nation.
    But, with respect to the issue of the backlog, the 
President's proposed budget calls for letting us take advantage 
of fee increases, other fee, temporary measures, as well as 
more staff, so that we can reduce the backlog.
    But, we just can't hire more staff. We also have to be 
smarter about how we use, and do things, within the Department 
of Commerce and the Patent and Trademark Office. You know, the 
office that patents innovations should also be using those 
innovations to help us significantly speed up our flow. We've 
worked with the labor unions already; we've changed the 
notorious count system, which was really a disincentive for 
high quality and faster processing of patents. And under the 
new evaluation system and the way of working with employees, 
employees now are encouraged to actually sit down and consult 
with those seeking a patent, so that they're not talking past 
each other and filing paperwork that doesn't address each 
others' concerns, so that we're able to resolve these issues 
and provide that guidance.

                  PATENT AND TRADEMARK OFFICE BACKLOG

    Senator Mikulski. So, what is the nature of the backlog 
now?
    Secretary Locke. The backlog is around 700,000 
applications. When we first took office, or joined the 
Department of Commerce, it was around 800,000, we've got it 
down to 700,000. And the timeframe, though, for determination 
is still over 3 years. Our goal is to get it down to 12 months, 
unless you're also seeking FDA approval, because drugs or 
medical devices oftentimes take many years to go through the 
FDA process.
    Senator Mikulski. Right. So, FDA is over here, but let's go 
to the other patents. So, your goal was to reduce it to 12 
months.
    Secretary Locke. Twelve months.
    Senator Mikulski. When do you think you'll achieve that 
goal?
    Secretary Locke. Our goal is to achieve that by the year 
2014. We've already seen significant improvements, and, as a 
result we're already beginning to see increased revenue 
collections, just by using paralegals to take care of some of 
these issues where you have stacks and stacks--thousands of 
patent applications that have been tentatively approved by the 
patent examiners, but where some of the documents don't match 
up, the exhibits aren't properly labeled, and so forth. Instead 
of having patent examiners do that work, we're having 
paralegals and other clerical staff address those issues, then 
we're able to issue the patent, we collect more fees; because 
once a patent is approved there's a fee associated with that. 
We then turn around and----
    Senator Mikulski. So, what----
    Secretary Locke [continuing]. Use those fees to hire more 
people.
    Senator Mikulski [continuing]. You're saying is that part 
of the money, then, is to be using appropriate staff, not just 
only lawyers trained in science and technology--which is not 
easy to come by, because whatever they can make in the 
Government, they could make four times as much in the private 
sector. Having said that--what you're saying, the use of other 
types of support staff will expedite this.
    Secretary Locke. As well as upgrading our IT systems.
    Senator Mikulski. Okay.
    Secretary Locke. And, as we do so, making sure that they're 
not vulnerable to cyber attacks.
    Senator Mikulski. Right. Senator Shelby.

                      RED SNAPPER STOCK DATA FLAWS

    Senator Shelby. Thank you, Senator Mikulski.
    Mr. Secretary, in the area of red snapper stocks--you're 
familiar with that, on the gulf--in the Gulf of Mexico, I 
think, you know, the management of it is troubling. NOAA 
continues to use, we've been told, flawed data methods and 
survey programs that lack any real independent data. This--the 
fishery-dependent data and the flawed survey programs NOAA is 
basing its current decisions on seems inherently biased against 
the fishermen in the gulf and fails to provide any accurate 
picture of the real health of the fish stock. NOAA, with this 
unsound data, is imposing severe restrictions on the fishermen 
in my State. When will you be--begin to require NOAA to use 
transparent surveys and real, verifiable, independent data 
before assessing the health of a fish stock in the gulf? And 
why is your Department not doing more to ensure that the 
Government obtains and uses rigorous and timely data before 
undercutting the livelihoods of the hardworking people in this 
industry?
    You know, we're all interested in fish stocks, we want them 
to flourish. It's been my information, from talking to people 
and reading stuff that the red snapper has made a tremendous 
comeback, which we all like, in the Gulf of Mexico. We don't 
ever want it to be overfished, we want it to flourish. But, if 
this is true, if it's made this comeback, and NOAA's data is, 
maybe, not up-to-date, you know, not transparent, what can we 
look forward to there? What can you do there?
    Secretary Locke. Well, first of all, Senator Shelby, I 
appreciate the concern, because, coming from the State of 
Washington, where we also have fishing issues----
    Senator Shelby. I know.
    Secretary Locke [continuing]. In the Pacific, it's a very 
delicate balance.
    Senator Shelby. It is.
    Secretary Locke. We understand that people's livelihood 
depend on, whether recreational fishing or commercial fishing--
--
    Senator Shelby. Both, sure.
    Secretary Locke. We cannot allow overfishing, because if we 
decimate the stocks, then we ruin the livelihood for----
    Senator Shelby. Oh, I agree----
    Secretary Locke [continuing]. Generations to come.
    Senator Shelby [continuing]. With you, totally. We all 
agree on that.
    Secretary Locke. So, let me just say that, with respect to 
the red snapper, we do know that the stock seems to be 
reviving, and that's perhaps due to the conservation efforts of 
the past.
    Senator Shelby. True.
    Secretary Locke. What we can say is that, I think, the--
there's a council, the Gulf of Mexico Fisheries Management 
Council, that has recommended an increased catch quota for 
2010, above the 2009 level, and it's our goal to approve and 
implement the Council's proposal. And we believe that the new 
fishing quota will be set higher than 2009 in time for the June 
start date of this recreational red snapper season.
    Senator Shelby. And you think this will happen soon, now. 
This is March, end of June, before June?
    Secretary Locke. We believe that it will be announced in 
time so that everyone knows just how much more they will be 
able to catch. But, everyone's recommendation and recognizes--
everyone recognizes the stock has recovered, and it's our 
belief, based on the Scientific Committee's recommendations, to 
increase the catch share above the 2009 level.
    Senator Shelby. Do you have any data, at your table now, 
that would tell us how much that would be? Or would that be a 
decision for the Scientific Committee?
    Secretary Locke. I don't have that----
    Senator Shelby. Okay.
    Secretary Locke. I don't have that specific information.
    Senator Shelby. But, it will be--it will be up some.
    Secretary Locke. Yes.
    Senator Shelby. Based on the stock's recovery.
    Secretary Locke. Based on the stock's recovery.
    Senator Shelby. Okay.
    Secretary Locke. That's good news.
    [The information follows:]
                        NOAA Red Snapper Update
    The health of the red snapper stock is improving. The recent 
Southeast Data, Assessment and Review (SEDAR) assessment projected that 
overfishing of Gulf of Mexico red snapper ended in 2009. Mathematical 
models indicate the stock's reproductive potential increased 
significantly in recent years. The ratio of current to target spawning 
stock biomass (biomass of spawning fish) reached a low of 6.2 percent 
in 1988, gradually increased to 13.1 percent in 2006 before rapidly 
increasing to 21.9 percent in 2009. This means the red snapper stock is 
rebuilding, but remains below target biomass levels.
    Based on this assessment, the Gulf of Mexico Fisheries Management 
Council's Scientific and Statistical Committee (SSC) recommended an 
increased catch quota from 5.0 million pounds (MP) to 6.945 MP in 2010. 
At its February meeting, the Gulf of Mexico Fisheries Management 
Council approved a regulatory amendment that would increase the Total 
Allowable Catch (TAC) from 5.0 MP to 6.945 MP and the commercial and 
recreational quotas to 3.542 MP and 3.403 MP, accordingly.
    NOAA is currently reviewing the Gulf Council's proposal to increase 
the red snapper total allowable catch (TAC) from 5.0 MP to 6.945 MP. 
NOAA expects to publish a proposed rule for public comment in the 
coming weeks and a final rule implementing the TAC increase sometime 
this month (April) if we determine the proposed increase is consistent 
with applicable law. NOAA's goal is to approve and implement the 
Council's proposed TAC (if consistent with applicable law) and quota 
increases prior to the June 1 start date of the 2010 recreational red 
snapper fishing season. These increases are believed to still allow 
NOAA to prevent overfishing and remain on schedule for rebuilding.
    In fiscal year 2011, the requested funding will target both 
fishery-dependent and fishery-independent research. Regarding fishery-
independent research activities, funds will be used to create high-
resolution habitat maps, provide needed biological and other data, 
conduct tagging and genetic studies, build new and improve existing 
ecosystem/stock assessment models, examine the effect of decreases in 
shrimp effort on red snapper populations; and develop fishery-
independent catch and effort estimates for comparisons with commercial 
and recreational data.

              NIST'S ROLE IN THE AREA OF FORENSIC SCIENCE

    Senator Shelby. In the area of forensic science, Mr. 
Secretary, in February 2009 the National Academy of Sciences 
published its investigative report, quote, ``Strengthening 
Forensic Science in the United States: A Path Forward,'' which 
was highly critical of the current status of forensic science 
in this country. The investigation found that forensic science 
testing, conducted in the 400 U.S. crime laboratories, lacks 
rigorous peer-reviewed scientific validation. That's troubling.
    Secretary Locke, of the NAS's 13 recommendations--National 
Academy of Science--7 are core to the strength and capabilities 
of NIST. NIST is identified, dozens of times in the body of the 
report, as a critical partner, as you know, in the criminal 
justice system in resolving these deficiencies. And since this 
report was published, how has NIST supported forensic science 
in the criminal justice system? Has anything changed? Do you 
have any thoughts on that?
    Secretary Locke. Well, as a former----
    Senator Shelby. And will they change?
    Secretary Locke. As a former deputy prosecutor, and having 
worked with some of these issues----
    Senator Shelby. Right.
    Secretary Locke [continuing]. About breathalyzers, 
machines----
    Senator Shelby. Sure.
    Secretary Locke [continuing]. The reliability, and then 
seeing convictions tossed out or prosecutions halted, I have a 
great interest in making sure that--whether it's DNA profiling, 
biometric measures to fingerprint analysis to measurements and 
analysis of firearms----
    Senator Shelby. That it works, in other----
    Secretary Locke. We've got to make sure they work and that 
there are national standards that everyone agrees to--very high 
standards--and that they're very clear, so that the operators 
of these machines, the police officers, the State patrolmen are 
not----
    Senator Shelby. They're well trained.
    Secretary Locke [continuing]. Responsible for--or expected 
to run and maintain these machines, and, if not properly done 
so, inadvertently, having all of these convictions tossed out.
    Senator Shelby. Sure.
    Secretary Locke. So, NIST does play a very critical role, 
and we have about $7.5 million annually that they spend to 
actually support the establishment and refinement of standards 
in the forensic science community.
    For instance, NIST, right now, is even focusing on 
standards for the airport screening devices, to determine to 
what degree of accuracy they'll be able to detect certain 
things. And so, we're very proud of the work that NIST is 
doing.
    Senator Shelby. That's good.
    Mr. Secretary, are you supportive--I assume you would be--
of NIST taking on a larger role in supporting forensic science 
disciplines, including an increase in appropriations for this 
purpose?
    Secretary Locke. Well, we very much support a greater role 
for NIST, because we think that, with its Nobel Laureate 
scientists, that it's a great resource and has really done 
great things for the country.
    Senator Shelby. Sure. I agree.
    Secretary Locke. And so, we always look forward to a 
bigger, expanded role, within available dollars. But, more work 
for NIST, I think is a good thing.

                       NATIONAL EXPORT INITIATIVE

    Senator Shelby. Moving into different subjects, but it's 
all covered by Commerce, the National Export Initiative. As you 
mentioned in your opening statement, Mr. Secretary, the 
administration has created a National Export Initiative to meet 
the President's goal of doubling exports in 5 years, which we 
all support. Commerce leads the initiative and received a $79 
million increase for the International Trade Administration, 18 
percent above 2011. ITA plans to hire 151 new Federal 
employees, but 51 will be headquarters staff of the 151--in 
other words, one-third--of which 15 employees will help with 
anti-dumping cases. This is important. But, the remaining new 
headquarters hires seem large for an initiative that was 
designed to expand markets overseas. Could you explain?
    Secretary Locke. Well, we also need to make sure that, to 
help American companies compete and create jobs----
    Senator Shelby. Sure.
    Secretary Locke [continuing]. That we have investigation, 
with the increased caseload and allegations raised, in terms of 
anti-dumping or countervailing duties, improper subsidies by 
different companies. That's equally important, because we are 
required to investigate those as quickly as possible. And by 
making sure that we have impartial and fair determinations, but 
quick determinations, we can also help U.S. companies. We want 
to make sure that they're operating on a level playing field. 
And if we can help those companies by adjudicating these cases, 
we can actually increase their competitiveness, not just here, 
but around the world. So, that's also part of an export 
strategy.
    Also, we are making sure that we focus on addressing 
barriers, trade barriers, market access issues imposed by other 
countries, to make sure that our companies can sell their 
products and services around the world. So, it's not just 
having foreign specialists around the world.
    And I want to point out that the FTEs that we talk about, 
that are contained in the President's budget, are U.S. 
citizens. A lot of people that we're hiring are not U.S. 
citizens, but they are trade specialists--let's say, Hungarians 
stationed in Hungary, Brazilians stationed in Brazil, French 
stationed in France--to find customers and buyers for U.S. 
products and services. So, that's where we get a--come up 
with----
    Senator Shelby. I think that's smart.
    Secretary Locke [continuing]. That's why we have some--
that's why I say we're hiring close to 328----
    Senator Shelby. Okay.
    Secretary Locke [continuing]. Trade specialists.

                               SATELLITES

    Senator Shelby. Okay. I want to get into the area of--and 
the chairwoman has been generous with our time, here--NOAA 
satellites, quickly.
    The inspector general, as you know, highlighted the 
mismanagement of the National Polar-orbiting Operational 
Environmental Satellite System, pronounced ``en-pose'' 
[NPOESS]. It continues to be a--what a lot of us think is a 
disaster for the Department. In 1995, this program was 
projected to be six satellites with 13 instruments for $8.5 
billion, big ticket. In December 2008, the program was adjusted 
to four satellites with nine instruments for $14 billion. This 
year, after reorganization and a name change to the Joint Polar 
Satellite System, the taxpayer gets two satellites with only 
five instruments for $12 billion and a launch date delayed 
until 2016. What's going on here, Mr. Secretary?
    Secretary Locke. Well, first of all, I believe that the two 
satellites you're talking about are the two satellites that 
would be under the control and jurisdiction and management and 
oversight of NOAA and NASA.
    Senator Shelby. That's right.
    Secretary Locke. It's my understanding that we're still 
looking at a--the original NPOESS called for six, dropped to 
four. We're now engaging in a divorce, joint custody. I think 
there will be two that will be monitored by NOAA and NASA.
    Senator Shelby. Divorce first, and then joint custody.
    Secretary Locke. Right, that's true. The program changes 
best reflect each agency's priorities.
    Senator Shelby. Okay.
    Secretary Locke. Divorce first and joint custody. But there 
will be two that will be under the purview of NOAA----
    Senator Shelby. Okay.
    Secretary Locke [continuing]. And two under the purview of 
Defense. So, it's still four.
    But, you're right, originally six----
    Senator Shelby. It's a lot of money.
    Secretary Locke [continuing]. Down to four, from $8 billion 
for the six, now $14 billion for the four. It----
    Senator Shelby. Is it going to work? I guess my bottom 
line----
    Secretary Locke. It's going the wrong direction.
    Senator Shelby. Okay.
    Secretary Locke. And that was----
    Senator Shelby. Well----
    Secretary Locke [continuing]. Highlighted by the inspector 
general, as well as blue ribbon commissions, who basically 
said, ``You've got to fix it, you've got to change it, you need 
a divorce; otherwise, you scrap the whole program.''
    Senator Shelby. Are you going to do that?
    Secretary Locke. That's why the President has supported, 
and the White House supports, this divorce. NOAA and--NOAA will 
be in charge of some of the ground and operational systems----
    Senator Shelby. Sure.
    Secretary Locke [continuing]. For Defense satellites, as 
well as our satellites, but NASA, with its capabilities, proven 
acquisition capabilities, which now really runs the GOES-R 
Program----
    Senator Shelby. Sure.
    Secretary Locke [continuing]. Which, over the last few 
years, has remained within budget; a troubled program before, 
but now pretty much on track--we're now using the GOES-R model, 
which is where NASA is responsible for the acquisition and the 
management, and we do the support.
    So, we're hopeful, confident that this is a much better 
management structure, as recommended by everyone, including 
this committee.
    Senator Shelby. Absolutely.
    Secretary Locke. And so, we're moving ahead.
    Senator Shelby. Thank you.
    Thank you, Madam Chair.
    Senator Mikulski. Senator Pryor.
    Senator Pryor. Thank you, Madam Chairman. Thank you for 
having this hearing today.
    Secretary Locke, always good to see you, thank you, and----
    Secretary Locke. Senator.
    Senator Pryor [continuing]. Welcome back to the 
subcommittee. And thanks again for coming to Arkansas last 
year; it was a great trip.

                            BROADBAND GRANTS

    I have a question about rural broadband and a bottom-line 
question on that. What steps are you all taking there to make 
sure that the grants that are being allocated are being awarded 
to areas that need the grants and don't already have sufficient 
access to the Internet?
    Secretary Locke. That is--thank you very much, Senator, 
that's a critical question. And the criteria that we use in the 
Department of Commerce for our broadband, high-speed Internet 
grants are a ``but for'' test. But for this funding, would the 
private sector jump in? Or, absent this funding, would the 
private sector jump in? And if they will, then we don't get 
engaged, because there's no need to duplicate what the private 
sector is doing. With the scarce resources, we could be 
providing these dollars in other parts of the country that 
really need it.
    As of tomorrow--or by the end of tomorrow, we will have 
announced over $1 billion in broadband grants for this first 
round, another $3 billion in the next round. We will have all 
of these completed and announced before the end of this fiscal 
year; and then, of course, the budget calls for increased 
funding for oversight.
    But, I can tell you that what we're doing under the 
Department of Commerce is what we call our ``middle-mile 
projects''; basically, highways, rings, interstates of high-
speed Internet, fiber-optic cable, or even using wireless 
systems. We're connecting major institutions, hospitals, 
clinics, government facilities, libraries, colleges, and 
universities. And from this 20,000 miles of high-speed Internet 
fiber-optic that we're deploying, private-sector providers--
whether telephone companies, cable operators, whomever--are 
then able to tap into, or connect to, this ring and then 
provide the direct service to businesses and to homes.
    Senator Pryor. All right.
    Secretary Locke. And without--and our test is, without this 
investment by the Government, the private sector does not have 
the funds to move into these communities. They don't have the 
funds to build the main highway. And so, we're making it easier 
for them.
    Senator Pryor. Are you confident that, as of tomorrow, when 
you finish your announcements, that all of the projects awarded 
will meet your ``but for'' test?
    Secretary Locke. Yes. Yes. In fact, we've had 1,000--I 
think, 1,800 applications requesting some $19 billion from this 
first-round pool of just a little over $1 billion.
    Senator Pryor. Right. And then, when you do the subsequent 
rounds, you'll still keep that ``but for'' test?
    Secretary Locke. Yes. In fact, we're clarifying it, we're 
streamlining the process. We had to rely on thousands of 
independent reviewers, the same way like the National Institute 
of Health or other scientific foundations issue grants. We had 
three independent reviewers reading all the applications. We 
didn't want to have an application rejected because of the 
quirks of one reviewer. So, we're streamlining that process. 
We're going to have at least two reviewers--outside, 
independent reviewers reading these various files and then 
submitting it. And then we still have to do a lot of due 
diligence within the Department of Commerce.

                      REGIONAL INNOVATION CLUSTERS

    Senator Pryor. Great.
    You know that I'm interested in research parks. You and I 
have talked about that before. And I know you are, as well. And 
it seems that the research park idea--and they've had a lot of 
success in Maryland and Alabama with these research parks--but 
it seems like that, that idea works very well with the 
administration's idea of regional innovation clusters. Am I 
right in that? And are we moving in the right direction on 
trying to get more of these research parks around the country 
to tap into the innovative spirit of our country?
    Secretary Locke. Very much so, and the President's budget 
does call for moving funds into the--I can't remember the 
specific--within the Economic Development Administration are--
let me see, what is that--what's that program? EAA?
    Voice. Economic Adjustment Assistance Program.
    Secretary Locke. The Economic Adjustment Assistance 
Program. And that's a more flexible program, where we can 
provide grants for communities to focus on planning and 
assessments of their strengths, and then also provide 
infrastructure grants to help them actually implement their 
ideas.
    The whole notion of the regional innovation clusters is to 
have each community, or regions of the country, focus on their 
natural strengths, their assets--whether it's colleges, 
universities, highways, some of the existing industries that 
are already there--to have them really focus on what they think 
is most viable, sustainable over the next several decades, and 
make sure that our grants are helping them further that vision 
and their goal.
    And each part of the country may have totally different 
goals. One part might be on recreation, one part might be on 
tourism, another part might be on scientific research parks. 
But, we need to help each of the regions determine what their 
natural strengths are. And they may have several different 
goals, not just one. But, make sure that the grants that 
they're applying for actually are consistent with, and in 
furtherance of, those regional innovation priorities.

    PUBLIC TELECOMMUNICATIONS FACILITIES--PLANNING AND CONSTRUCTION

    Senator Pryor. Let me ask about public television. You--
apparently the administration believes that the Public 
Telecommunications Facilities Program, the PTFP, at NTIA is no 
longer needed now that the digital transition is complete. And 
is it--am I right on this that the administration recommended 
the PTFP not be funded in 2011? I'm not sure that makes sense 
to me. Could you talk about that for a sec?
    Secretary Locke. That is the recommendation of the 
administration, to not fund that, and to have--because, I 
think, in the past, 70 percent of the grants provided under 
that program went for digital equipment. And now that all the 
stations have converted to digital television, we think that it 
makes more sense to consolidate all the requests and programs 
under funding for the Corporation for Public Broadcasting.
    Senator Pryor. I may have that wrong, but I think that that 
program has been around much, much longer than digital 
transition. I think it's been around 45 years, or something 
like that. And, I think you ought to at least look at that, to 
maybe try to continue that, because I'm sure there's public 
television stations all over the country that have benefited 
from that funding over time.

     COMMERCE'S ROLE IN THE PRESIDENT'S NATIONAL EXPORT INITIATIVE

    The last thing I wanted to ask is a little bit of a follow 
up on Senator Shelby's question about the goal of trying to 
double our exports over the next 5 years. I think that's a 
great goal; I think, like Senator Shelby says, everybody agrees 
with that. But, I would like to know what role the Department 
of Commerce is playing in there. You touched a little bit on it 
with Senator Shelby, but how does the Department of Commerce 
fit into achieving that goal?
    Secretary Locke. Well, I think the Department of Commerce 
is really going to be the lead agency on that, but, of course, 
the President's National Export Initiative also calls for 
significant expansion of our agricultural exports, which is 
why, I believe, some $50 million is allocated for the U.S. 
Department of Agriculture to help promote U.S. agricultural 
exports, reducing trade barriers that our agricultural 
communities and farmers face, as well as developing new 
overseas markets.
    The President has also called for increased activity by the 
Export-Import Bank, especially focused on medium and small 
businesses, to make their loans; to increase loans that would 
benefit small- and medium-sized companies from the current $4 
billion to $6 billion.
    And the Department of Commerce, for instance, is the lead 
agency with respect to the Trade Promotion Coordinating 
Committee, which brings all the Federal agencies together. 
We've had several meetings already, and this working group of 
all of the different agencies will be to complement and 
actually do the work, as recommended, coordinated by the 
National Export Initiative.
    What's different about the National Export Initiative from 
other efforts by other administrations--which have always 
focused on trying to increase exports--is that it is a Cabinet-
level attention, with participation and direction by the 
President himself. And this is something that the President 
cares very, very deeply about; increasing exports. Because if 
we increase our exports, we're increasing manufacturing, and if 
we increase manufacturing to fill those orders, we're providing 
more jobs for the people.
    Senator Pryor. I agree. I think it's great.
    Thank you, Madam Chair.

                              NOAA FUNDING

    Senator Mikulski. Mr. Secretary, I want to come back to 
NOAA. The reason is that, if you look at your appropriations 
request, it's $8.9 billion for the entire Commerce Department, 
which deals with everything from national standards, which we 
hope become the international freedom standards, to trade 
policy, to economic development in local areas. But, if you 
look at it, of the $8.9 billion, $5 billion is NOAA. Half of 
your total appropriation is NOAA. And if you look at NOAA, 35 
to 36 percent are in this satellite program. This is why we are 
obsessive about this. You have a big job to do to really be an 
economic engine. Of that 35 percent, we are apprehensive about 
getting our value.

                            STIMULUS FUNDING

    I'll just switch gears for a moment to the stimulus 
funding.
    Four billion dollars went into building rural broadband. We 
held a separate hearing on that. You testified, you answered 
many of the questions, some of which Senator Pryor raised.
    And, Senator, you'd find it very interesting, because they 
really did due diligence in anti-boondoggle, and yet moved it. 
But, it's going to end. Well, the need doesn't end. And over 
there, we've got NPOESS. Its apples and oranges. But, the fact 
is, is that for $2 or $3 billion, we wonder, what are we 
getting? And will what we're doing make a difference?

                            NOAA SATELLITES

    So, for--one--I'll come to management issues at NOAA--but, 
what are we getting, with these two satellites that will have 
less answers than the original plan? And, are we truly saving 
money?
    Then the other part of this is--you spoke about NOAA, which 
is under your purview, NASA, which is an independent agency but 
key to procurement, but the other partner at the table has been 
DOD, but they don't seem to be very involved in this divorce, 
and I wonder if they're picking up the money. We go from $14 
billion to $11.9--close to $12 billion. The NPOESS money, 
though there is a drop in it, jumps $650 million a year. That's 
a lot of money.
    And we wonder, are we going to see more escalating costs, 
and then you--or Dr. Lubchenco--has to go to other services, 
like the Weather Service, which we're so dependent upon, to pay 
for the increase in the satellite program.
    So, here is my question. Now you're going to have the 
divorce--we have interesting metaphors about custody and so 
on--but, the fact is, for the NOAA part, it's going to cost 
more. And are we getting less science? And do you feel that 
there's a real disciplinary effort going on now to deal with 
this cost overrun?
    There's a whole other school of thought that's advising us 
just to pull the plug on the program altogether. I don't want 
to do that, because it's been a lot of science and a lot of 
technology that's been developed here. And could you share with 
us this--can you see why--we are afraid that the vociferous 
appetite of NPOESS will eat NOAA alive. And NOAA is already 
half of your appropriations request, and it's because of this 
particular satellite program.
    Secretary Locke. I share those concerns, exactly, which is 
why the reports that I read, when I first became Commerce 
Secretary, from the expert committees, as well as the Inspector 
General's report, were very, very alarming.
    As Senator Shelby indicated, originally it was supposed to 
be $8 billion for six satellites, and then, more recently, its 
$14 billion for only four satellites. NOAA and NASA will 
operate two of those four satellites--the afternoon orbits; the 
Defense Department will be in charge of the morning orbits and 
their satellites.
    And it was a 50/50 cost-share arrangement. It was 
originally a 50/50 cost-share arrangement. So, what's really 
happening now is that, instead of the Defense Department paying 
one-half of our satellites and NOAA paying one-half of the 
Defense Department's satellites--that's why the increase in 
cost--we're now paying and responsible for, our satellites 
completely. But, it means that we will not be paying for the 
Defense Department's satellites later on, as they move forward.
    We are very, very concerned that we have to have better 
management, for the very reason that it will eat up the budget 
of NOAA and the Department of Commerce. And that's why everyone 
recommended a complete restructuring; otherwise, the current 
trajectory was untenable, unacceptable. And either we make the 
changes or we terminate the program altogether. But, 
terminating the program would have left incredible 
vulnerabilities to our Weather Service. And people rely on that 
weather, whether it's forecasting hurricanes, to storms, to 
ocean conditions, and for fishing, and for business.
    And it also impacts our defense capabilities, because even 
our NOAA satellites, in the afternoon, have military value and 
provide data to our defense forces. So, we cannot leave our 
defense forces and our men and women in armed services in 
harm's way because of a lack of data.
    If we did nothing, some of our existing satellites will 
soon lose their operational capability, will end, and even fall 
from the sky. So, we would have a gap in weather and climate 
data, with no replacement in sight. So, that was also 
untenable. And that's why we moved very aggressively, urging 
the White House to convene a task force to really study this 
issue, brought together the experts that had advised us, issued 
the reports, and brought this to the attention of the highest 
levels within the White House. And we're pleased that decisions 
were made.
    Senator Mikulski. Is this up at the Secretary's level? In 
other words, not just sitting at NOAA, is this with you?
    Secretary Locke. I was engaged in those meetings. I was the 
one who went to the White House and presented the reports and 
said, ``We have to do something. The current course is 
unacceptable.'' And we kept pushing and pushing. We got OMB, 
NASA, Defense, the Office of Science and Technology, and 
everyone else involved in the table, brought those experts in, 
and we kept pushing them. So, we're very pleased that a 
decision was made that followed the recommendations of both the 
inspector general's and the expert review panel's calling for a 
complete restructuring.
    Now, of course, I tell the folks at NOAA, ``You've gotten 
what you've asked for, the turd is in your pocket, and now we 
have to deliver.'' So, we're watching this--I am watching this 
very, very, very carefully.
    Senator Mikulski. Well, we worry about NOAA. I'm very proud 
of the fact that it is headquartered in Maryland, as is NIST 
and the Census. The previous administrator had kind of a more 
hands-off, laissez-faire. But, as Senator Shelby has raised in 
his questions about NOAA, accurate numbers for red snapper, 
it's the same with crabs, it--the whole issue of overfishing 
and the decline of species is an issue.
    We know that NOAA has very strong scientific capability, 
and we're really proud of that. But, now it needs very strong 
management capability that matches its scientific capability. 
And as it looks at creating new areas, like climate services--I 
understand the word is ``climate services,'' not a ``climate 
service.'' Am I correct in that? There's a difference that you 
provide data, but you're not standing up a new agency within an 
agency?
    Secretary Locke. No, we're not standing up a new agency. It 
is a budget-neutral reorganization pulling together--we have 
climate data----
    Senator Mikulski. I don't want to go into that, I want to 
come to the census.
    Secretary Locke. All right.
    Senator Mikulski. We need to have strong management at 
NOAA, and we'll come back to that.

                              2010 CENSUS

    Secretary Locke. All right.
    Senator Mikulski. I've got to go to the census, which is 
giving us heartburn. The last big part of it--so just know 
that, that there's a big distinction between a ``National 
Climate Service'' and providing ``national climates services,'' 
which is data.
    The last big part of the 2010 census operation, quote, 
``addressing canvassing,'' had a 25-percent cost overrun. If we 
see this now with the next big phase, the so-called 
``nonresponse followup,'' a 25-percent cost overrun would be 
another $675 million and be--have catastrophic consequences, in 
terms of really providing an accurate count in the timely 
manner, as what the founders and the constitutional mandate 
gave us. So, my question to you, how are we going to make sure 
we really have the nonresponse followup without adding a whole 
new 25-percent cost overrun, given the fact that our technology 
has failed?

                    ADDRESS CANVASSING COST OVERRUNS

    Secretary Locke. It's of great concern to us. As both of 
you indicated, Senator Mikulski and Senator Shelby, we had to 
junk the hand-held computers. We did use hand-held computers 
for the address canvassing operation but reverted to a paper 
system for the nonresponse followup operation. We now have 
issues with respect to the software in--and assigning people, 
tracking their work performance, their hours, et cetera, et 
cetera. We've had--not had sufficient time to fully test that, 
so we're--everything is behind on that. But, that is 
proceeding. We're cautiously optimistic that there will be no 
problems with respect to that.
    But, we do--we have had cost savings in other areas. We 
have had various other parts of the operation come in under 
budget, ahead of schedule, so we are amassing a reserve. We 
have also set aside a significant reserve of almost, I think, 
$500 million with respect to the nonresponsive followup, the 
people going door-to-door.
    Part of the cost overruns on that address canvassing dealt 
with the fact that we hire a lot of people, we train a lot of 
people, to have them ready to go. We always assume that some 
people, after a day or two, don't like the work and will quit, 
or that they simply don't show up. Because of this tough 
economy, we had very little attrition. We didn't have that many 
people not showing up, not many people quitting, not many 
people finding another job and saying, ``Well, I don't need 
this temporary work.''
    The sources for the address canvassing overrun about which 
the Secretary testified, the training costs cited in the 
testimony, accounted for $7 million of the cost growth in the 
operation. Other sources included the fact that the initial 
workload assumptions in the budget were too low. In fact, the 
Census Bureau increased its estimate by $41 million before the 
operation even began. The additional workload came from various 
sources including State and local governments and the post 
office. Another $33 million of costs is attributed to the 
quality control (QC) component of the operation, which took 
more hours and mileage than expected. This was in large part 
due to the number of addresses that were found to be 
duplicates, or were otherwise deleted by the production 
listers, and had to be verified by the quality control listers. 
Last, the actual results included fingerprinting costs, for 
which $7 million was budgeted separately.

                REFINED ASSUMPTIONS FOR THE 2010 CENSUS

    So, we've now built those--learned those lessons, and 
revised our estimates, in terms of how many people we need to 
actually bring on board when it's time to go knocking on the 
door. So, we're trying to incorporate all these lessons 
learned, to refine our models. In fact, based on some of the 
audits, as well as findings and our experience on the address 
canvassing, where we had to go find out--is the home still 
here? Is this building still here? Is this a new structure 
that's not listed on the Post Office rolls or the rolls of the 
local government? And that was the address canvassing.
    We have taken a lot of that work and the lessons learned to 
completely rescrub all of our assumptions with respect to the 
nonresponsive followup. So, we have taken these issues to try 
to constantly refine, we're cautiously optimistic. We'll have a 
better sense, around April 20, quite frankly, what we can 
expect by way of the workload expected for nonresponsive 
followup.
    Based on past experience, by March 22, when we see how many 
people are actually sending in--sending back their census 
forms, we'll have a good indicator.
    The Census Bureau will know the workload for the 
nonresponse followup operation around April 20. By around March 
22, an interactive map showing the 2010 census participation 
rates as compared to the census 2000 will be made available to 
the public for tracking the current response rate down to the 
census tract level.

                     2010 CENSUS DATA AVAILABILITY

    And it's--in fact, Members of Congress and the mayors and 
the Governors will all have software, or programs, they can tap 
in, to actually see what's happening in their own communities 
and compare it against what happened in the year 2000. And that 
will give us the ability to immediately read just more public 
service announcements by local public officials, more outreach, 
more--a whole host of strategies to try to get more people to 
send back.
    Senator Mikulski. That's how we'll do it, but we're--again, 
we're into the cost overrun.
    The Secretary has to leave, momentarily, for an event at 
the White House, and we want to hear from the inspector 
general.
    I'm going to say to my two colleagues, turning first to 
Senator Shelby, if we could stick to the theme of the census, 
which I know has been of great concern--did you have any 
questions on the census?
    Senator Shelby. I don't have any more. I think the 
Secretary understands my concern, and I think he shares that, 
and we just--and a lot of that happened before you came here, 
and I know that.
    Senator Pryor.
    Senator Pryor. No.
    Senator Mikulski. Well, Mr. Secretary, we know we've got a 
lot of followup to do. We want you to be able to keep your 
obligation to President Obama. And we really--we do look 
forward to staying in touch with your staff on these very vital 
issues that are affecting us.
    So, thank you, and your presence here is----
    Secretary Locke. Thank you.
    Senator Mikulski [continuing]. Excused.
    We now are going to ask Mr. Zinser to come up, our 
inspector general, to give us what he thinks are the big 
challenges and where we can--and his observations and insights 
on how we can get a better handle--using the appropriations 
process to get more value for our dollar.
    Mr. Zinser, we're glad to see you. And really, on behalf of 
the subcommittee and, I think, of the Nation, we want to thank 
you for the job that you're doing.
    I am a great believer in the inspector general process. The 
whole idea was waste, fraud, and abuse, and that we would have 
an independent force giving us this evaluation. And to the 
extent that you see, particularly, where there is waste or the 
possibility of cost overruns, where the boondoggle banging on 
our budget, banging on the mission of the agency, we welcome 
your observations about the Commerce Department, and any 
recommendations that you think we need to take in our 
appropriations process to ensure that we have smart government.
    Please proceed.
STATEMENT OF HON. TODD J. ZINSER, INSPECTOR GENERAL
    Mr. Zinser. Thank you, Madam Chairwoman, Mr. Pryor. Thank 
you for the invitation to be here today.
    As you well know, and as the Secretary just testified, the 
Department of Commerce faces many challenges. We have submitted 
a written statement that summarizes our January report on those 
issues, as we consider the top management challenges facing the 
Department.
    Trying to narrow that list to a manageable number of 
priorities is a challenge in and of itself, given the very 
diverse mission of the Department. We drafted our report based 
on a thinking that too many priorities result in no priorities, 
so we identified five specific risk areas, which I will list in 
a moment.
    But, our list does not include what is perhaps the 
overarching priority of the Secretary, which has his lead 
responsibilities in the area of economic growth and job 
creation. We recognize the importance of those 
responsibilities.
    Our A list includes the decennial census, IT security, 
departmentwide, NOAA's Environmental Satellite Program, the 
American Recovery and Reinvestment Act, and the U.S. Patent and 
Trademark Office, to include significant financial management 
and process issues.
    And if I could just make two more points, Madam Chairwoman. 
First, our list is not meant to criticize anyone or any 
program. We hope that it helps all of us focus on important 
problems.
    And second, I think the subcommittee should know that I 
have found the leadership of the Department, almost to a 
person, to be very management-minded. They have rolled up their 
sleeves and seem intent on implementing much-needed management 
reform, and I think that's good for the Department and for the 
taxpayers.

                           PREPARED STATEMENT

    With that, I'll conclude my remarks and respond to any 
questions you or other members of the subcommittee may have.
    [The statement follows:]
               Prepared Statement of Hon. Todd J. Zinser
    Chairwoman Mikulski, Ranking Member Shelby, and members of the 
subcommittee: Thank you for inviting us to testify today as you 
consider the fiscal year 2011 appropriations for the Department of 
Commerce. Today I will highlight five areas that we identify in our 
recent Top Management Challenges report and that the subcommittee may 
want to include on its short list of watch items. I will also address 
several organizational issues and other matters of importance to the 
Department.
    The challenges I will discuss focus on the following five areas:\1\
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    \1\ A more detailed discussion of these challenges is presented in 
our January 12, 2010, report, Top Management Challenges Facing the 
Department of Commerce, Final Report No. OIG-19884 (http://
www.oig.doc.gov).
---------------------------------------------------------------------------
  --Decennial Census.--Mitigating issues with the 2010 decennial while 
        addressing future census challenges.
  --Information Technology (IT) Security.--Continuing to enhance the 
        Department's ability to defend its systems and data against 
        increasing cyber security threats.
  --National Oceanic and Atmospheric Administration (NOAA) 
        Environmental Satellites.--Effectively managing technical, 
        budgetary, and governance issues surrounding the acquisition of 
        NOAA's two environmental satellite programs.
  --American Recovery and Reinvestment Act.\2\--Meeting the challenges 
        of accountability and transparency with effective oversight of 
        program performance, compliance, spending, and reporting.
---------------------------------------------------------------------------
    \2\ American Recovery and Reinvestment Act of 2009, Pub. L. 111-5.
---------------------------------------------------------------------------
  --United States Patent and Trademark Office (USPTO).--Addressing the 
        Patent Office's resource and process issues.
    Most of our audit and evaluation efforts this fiscal year are being 
expended in these areas. In planning our work for fiscal year 2011, we 
are, for the first time, conducting a formal risk assessment of 
Commerce activities to identify those most in need of oversight. 
Specifics on our current Top Management Challenges follow.
  decennial census--census needs to ensure accuracy and contain 2010 
       decennial costs while addressing future census challenges
    With a life-cycle cost estimate now projected to total $14.7 
billion, the 2010 census is a massive undertaking made up of many 
moving parts. The bureau must integrate 44 separate operations (with a 
total of some 9,400 program- and project-level activities). In just 
over a week, the public will begin receiving their census forms in the 
mail. The rate at which they return their responses will be critical in 
determining the overall cost of the census. Households that do not mail 
back their forms will be visited by an enumerator during nonresponse 
follow-up (NRFU). The most expensive operation of the decennial, it is 
estimated that NRFU will cost $2.3 billion.
    The fiscal year 2010 decennial budget for carrying out the 2010 
census involving the 10 question short form was $6.9 billion, which 
included $100 million carried over from fiscal year 2009. For fiscal 
year 2011, the bureau has requested slightly more than $477 million to 
complete the 2010 census.
    The mission of the census--to count each of the over 300 million 
people in more than 130 million households in the United States once, 
only once, and in the right place--is a daunting task. For decennial 
field operations, temporary bureau management staff must run just under 
500 local offices and manage over 600,000 temporary workers--while 
recruiting substantially more.
    While much of the bureau's plan is on track, NRFU efficiency and 
accuracy are at some risk, and final decennial costs remain uncertain. 
The success of NRFU--which begins in just 8 weeks--hinges on how 
effectively Census controls the enormous NRFU workload and workforce, 
and it must do so using a Paper-based Operations Control System (PBOCS) 
which, because of system development problems, will have less 
functionality than planned and is currently experiencing performance 
problems. PBOCS is essential for efficiently making assignments to 
enumerators, tracking enumeration forms, and reporting on the status of 
the operation.
Cost Containment is Essential for Field Operations, but Requires Strong 
        Budget Estimation Capability and Effective Internal Controls
    The ability to produce valid budget estimates is essential for cost 
containment. Yet Census reported a 25-percent cost overrun for address 
canvassing and spent 41-percent less than anticipated for group 
quarters validation.\3\ Inaccuracies of this magnitude in estimated 
budgets, combined with wide variances among early local Census offices 
in address canvassing costs, indicate significant weaknesses in the 
bureau's budget estimation capabilities.
---------------------------------------------------------------------------
    \3\ The group quarters validation operation is aimed at verifying 
information from all potential group quarters--such as dormitories and 
prisons--nationwide.
---------------------------------------------------------------------------
    Also essential to cost containment is better management of Census 
fieldwork. We found inefficiencies in wages, travel, and training 
during the address canvassing operation, including workers being paid 
to attend training classes but who subsequently performed little or no 
work, workers who made excessive mileage claims, and workers who were 
reimbursed for mileage at a higher-than-authorized rate. Given the 
significantly larger scale of NRFU, it is important that Census develop 
effective internal controls and ensure that managers scrupulously 
follow them during this operation.
    The final decennial cost remains uncertain; three key factors could 
have significant cost impact. According to the bureau, the mail 
response rate could have the greatest impact, with enumerator 
productivity a second major cost driver. The third issue concerns the 
capabilities and performance of PBOCS for NRFU. This, along with the 
bureau's ability to implement effective workarounds for PBOCS 
shortfalls, will determine the ultimate schedule and degree of 
efficiency, and thus the final cost.
OIG Oversight Plan For Decennial Operations
    The Office of Inspector General (OIG) will continue to monitor the 
bureau's progress on PBOCS and other key decennial activities. In 
addition, over the next several months, about 100 members of our staff 
will be participating in what is for us an unprecedented effort in 
scope and resource commitment to go on the road and observe Census 
workers in action. Such oversight, while census activities are ongoing, 
will allow us to immediately observe successes as well as any problems 
that might arise, and notify the bureau without delay.
The Groundwork for an Improved and Cost-effective 2020 Census Should be 
        set This Year
    The cost of the decennial census has doubled every decade since 
1970 (not adjusted for inflation). On the current trajectory, the price 
of the 2020 census could total more than $30 billion. Census must find 
ways to rein in costs while maintaining or enhancing accuracy. It is 
crucial for the bureau to lay the groundwork now for the 2020 census.
    The Supplemental Appropriations Act of 2008 \4\ gave the Census 
Bureau an additional $210 million to help cover spiraling 2010 
decennial costs. As directed in the explanatory statement accompanying 
the act, OIG has been providing quarterly reports to congressional 
appropriations committees that assess the bureau's progress against its 
2010 decennial plan. In our first quarterly report, we reported that 
the bureau's ability to effectively oversee decennial progress has long 
been hampered by inherent weaknesses in its systems and information for 
tracking schedule activities, cost, and risk management actions. Our 
recommendations to address these problems for the 2020 decennial 
emphasized the need for an integrated method for planning and tracking 
of budget, schedule, and progress.
---------------------------------------------------------------------------
    \4\ Pub. L. 110-252, title II.
---------------------------------------------------------------------------
    To effectively plan and manage the next decennial, Census needs to 
significantly improve its cost estimation capabilities and provide a 
well-documented cost estimate as early as possible. Our first quarterly 
report also noted that Census needs to develop transparent decision 
documentation for the 2020 census that clearly identifies the basis for 
spending decisions and the rationale for changes to plans provided to 
Congress and other stakeholders.
    The findings of our two subsequent quarterly reviews, combined with 
other evaluations we conducted throughout the decade, demonstrate that 
Census needs to identify more cost-effective approaches to the 
decennial and should give serious consideration to the use of such 
alternatives as administrative records, the Internet, and targeted 
address canvassing. These and other possible approaches have the 
potential to contain costs while increasing accuracy and efficiency.
information technology (it) security--commerce must continue enhancing 
    the department's ability to defend its systems and data against 
                   increasing cyber security threats
    Commerce's budgets for information technology have increased since 
fiscal year 2008, primarily for investments at Census and NOAA (see 
table). Despite the millions of dollars spent on cybersecurity, 
Commerce's approximately 300 computer systems, many that process and 
store sensitive mission-critical data, are not always adequately 
protected.

                                     COMMERCE BUDGET FOR IT AND IT SECURITY
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percentage of
                                                                                    IT Security    Budget Spent
                           Fiscal Year                             IT Budget \1\    Budget \1\    on IT Security
                                                                                                        \1\
----------------------------------------------------------------------------------------------------------------
2008............................................................          $1,789            $116               7
2009............................................................          $2,273            $170               8
2010............................................................          $3,042            $240               8
2011............................................................          $2,631            $307             12
----------------------------------------------------------------------------------------------------------------
\1\ Rounded.Source: Estimates provided by the Department of Commerce, Office of the Chief Information Officer.

    While maintaining IT security is inherently challenging, Commerce's 
decentralized management structure adds to the difficulty. Commerce 
operating units have separate management structures that preclude 
direct accountability to the Department's Chief Information Officer 
(CIO). This decentralization gives the CIO only limited authority over 
the daily management of IT security within Commerce's operating units, 
and adds complexity to Department-wide information security 
initiatives.
Commerce is Taking Steps to Strengthen its IT Security Workforce
    An audit we conducted in fiscal year 2009 found that the Department 
needed to devote more attention to the development, guidance, and 
performance management of its IT security personnel. We made 
recommendations to improve employee training, professional development, 
and performance management. Among the numerous improvements that the 
Department is now making, it plans to require professional 
certifications for employees with significant IT security 
responsibilities. This is a noteworthy step in building a highly 
competent IT security workforce--one that few, if any, civilian 
agencies are taking.
Departmental Actions to Resolve Material Weakness in IT Security Are 
        Showing Progress, but More Work Will Be Necessary
    The Federal Information Security Management Act of 2002 \5\ (FISMA) 
requires agencies to certify that their systems and data are protected 
with adequate, functional security controls before systems are 
authorized (accredited) to operate. If a management control weakness is 
sufficiently serious that the agency head determines it should be 
reported in the annual Performance and Accountability Report, it is 
termed a material weakness. IT security has been reported as a material 
weakness since fiscal year 2001 pursuant to the Federal Managers' 
Financial Integrity Act of 1982.\6\ While the Department is continuing 
to make progress, our fiscal year 2009 FISMA review identified 
vulnerabilities in technical security controls that leave Department 
systems and data at risk for internal and external malicious attacks. 
Therefore, we recommended--and the Department agreed--that the material 
weakness should stand until more improvements are made.
---------------------------------------------------------------------------
    \5\ Pub. L. 107-347, title III, Sec. Sec. 301-302, 44 U.S.C. 
Sec. Sec. 3541-3549, 40 U.S.C. Sec. 11331.
    \6\ Pub. L. 97-255 (codified as amended in scattered sections of 31 
U.S.C.).
---------------------------------------------------------------------------
    We report on USPTO separately for purposes of FISMA because, as a 
performance-based organization, it submits a separate Performance and 
Accountability Report. Although the two USPTO systems we evaluated in 
fiscal year 2009 met FISMA requirements, we did not have sufficient 
evidence to recommend removal of the material weakness. In our view, 
the bureau has not demonstrated a consistent, effective process for 
certification and accreditation, and we continued to identify problems 
that we reported on in the past. Nevertheless, USPTO management 
determined that its IT security issues have been adequately resolved 
and did not report IT security as a material weakness in its fiscal 
year 2009 Performance and Accountability Report--a position with which 
we disagree.
    In this fiscal year, the Department's CIO will begin implementing a 
3-year plan that takes a Department-wide, holistic approach to 
improving Commerce's overall security posture. The plan addresses 
continuous monitoring of security controls, situational awareness, 
incident detection and response, and other aspects of an effective IT 
security program, including improving IT workforce competencies.
 national oceanic and atmospheric administration (noaa) environmental 
  satellites--noaa must effectively manage technical, budgetary, and 
  governance issues surrounding the acquisition of two environmental 
                           satellite systems
    NOAA is modernizing its environmental monitoring capabilities, in 
part by spending an estimated total of nearly $20 billion on two 
critical satellite systems: the National Polar-orbiting Operational 
Environmental Satellite System (NPOESS) and the Geostationary 
Operational Environmental Satellite-R Series (GOES-R). Space 
acquisitions such as NPOESS and GOES-R are highly technical and 
complex; such programs have a history of cost overruns, schedule 
delays, and reduced performance capabilities.
    The NPOESS and GOES-R programs have already suffered significant 
cost increases and delays. Because of serious problems with NPOESS, the 
program is beginning to undergo a restructuring, as discussed below. 
These programs will continue to require close oversight to minimize 
further disruption to the programs and prevent any gaps in satellite 
coverage. Such gaps could compromise the United States' ability to 
forecast weather and monitor climate, which would have serious 
consequences for the safety and security of the Nation.
NPOESS Background
    The objective of NPOESS was to provide continuous weather and 
environmental data for longer term weather forecasting and climate 
monitoring through the coming two decades. NPOESS has been managed 
jointly by NOAA, the National Aeronautics and Space Administration 
(NASA), and the Department of Defense. NOAA and Defense shared the cost 
of the NPOESS program equally. The initial project plan called for the 
purchase of six satellites at a cost of $6.5 billion, with a first 
launch in 2008. But problems with a key sensor raised costs and delayed 
the date of the first launch, even as the number of satellites in the 
system was reduced to four.
    By December 2008, NPOESS' total estimated life-cycle cost had grown 
to $14 billion. NOAA announced in March 2009 that it would delay the 
first launch to 2014 because of continuing problems with the sensor. It 
also delayed the planned NPOESS Preparatory Project \7\ launch date 
from 2010 to 2011.
---------------------------------------------------------------------------
    \7\ The NPOESS Preparatory Project was planned as a risk-reduction 
effort to test NPOESS' new instruments in flight. NASA is taking the 
lead in this activity.
---------------------------------------------------------------------------
Restructuring of the NPOESS Program Deemed Critical to Its Success
    In the spring of 2009, an independent team was appointed to examine 
the program's status. The team, comprising satellite experts from 
industry, academia, and government, found that the NPOESS program had a 
low probability of success. In the fall of 2009, NOAA, NASA, and 
Defense worked with the White House Office of Science and Technology 
Policy and the Office of Management and Budget to select the best 
option for restructuring. The option chosen, called Divergence, was 
considered the most feasible because it would not require Defense and 
NOAA to continue to try to resolve their conflicting perspectives and 
priorities. As a result, NOAA and NASA plan to acquire a separate 
satellite, called the Joint Polar Satellite System (JPSS).
    The three agencies have formed a transition team to implement the 
Divergence plan. Although the complete details of the plan are still 
being developed, NOAA/NASA intend to use the applicable components for 
JPSS that were funded and developed under the previous NPOESS 
structure.
    Under Divergence, Defense will be responsible for the early morning 
orbit, Defense and the European Organization for the Exploitation of 
Meteorological Satellites will cover the mid-morning orbit, and a NOAA/
NASA-managed JPSS acquisition will cover the afternoon orbit. The 
orbits are based on the local time that the satellite crosses the 
equator as it circles the earth. Satellite coverage in all of these 
orbits allows the same point on the earth to be sampled frequently 
enough and at the correct time of day (under sunlight or darkness) to 
meet each agency's operational requirements, provide sufficient data 
for both severe storm prediction and detection, and provide climate 
monitoring for our Nation's safety and security.
    NOAA, NASA, and Defense will implement the transition plan from now 
into fiscal year 2011. To accomplish this, NOAA'S fiscal year 2011 
budget request for JPSS totals $1.1 billion, a $679 million increase 
over the fiscal year 2010 budget. The JPSS program will continue 
development of the instruments needed for the afternoon orbit. The JPSS 
management structure is planned to be similar to NOAA's next generation 
GOES-R, in which NOAA manages the overall program with assistance from 
NASA. NOAA will acquire two JPSS satellites and will continue climate 
sensor acquisitions under the NOAA climate program. The cost estimate 
for JPSS is $11.9 billion; this includes funding for transition of 
instrument acquisitions from Defense to NASA, NOAA's share of NPOESS 
contract termination costs, and procurement of two JPSS satellites.
    Defense is also conducting a study to evaluate the best approach 
for maintaining continuity of its polar satellites. It has two 
remaining satellites under the ongoing Defense Meteorological Satellite 
Program (DMSP). The availability of DMSP satellites through 2018 could 
significantly delay the need to acquire a replacement satellite. 
However, it is essential that Defense maintain funding to account for 
the long lead time required to build satellite capability because it 
remains responsible for data continuity in the early-morning orbit 
beyond the last DMSP satellite's life span.
GOES-R Background
    The GOES-R \8\ system is intended to offer an uninterrupted flow of 
high-quality data for short-range weather forecasting and warning, as 
well as provide climate research data through 2028. NOAA is responsible 
for managing the entire program and for acquiring the ground segment, 
which is used to control satellite operations and to generate and 
distribute instrument data products. NOAA awarded the ground segment 
contract in May 2009, which has a 10-year duration and a total 
estimated value of $736 million, if all options are exercised.
---------------------------------------------------------------------------
    \8\ Since 1975, the GOES series of satellites have provided the 
United States with critical meteorological data for weather 
observation, research, and forecasting. Satellites in production are 
given letter designations, which are changed to numbers after the 
satellites reach orbit.
---------------------------------------------------------------------------
    NASA's Goddard Space Flight Center in Greenbelt, Maryland, is 
responsible for acquiring the spacecraft and instruments for the 
program. In December 2008, NASA's award of the GOES-R spacecraft 
contract--with a total estimated value of $1.1 billion for two 
spacecraft, including the options for two additional spacecraft--was 
protested by the losing bidder. Work stopped until the protest was 
withdrawn in August 2009. As a result, launch readiness for the two 
satellites was deferred by 6 months.\9\
---------------------------------------------------------------------------
    \9\ The first satellite's launch date has been delayed from April 
to October 2015; the second from August 2016 to February 2017.
---------------------------------------------------------------------------
    According to program documentation, the overall GOES-R program 
acquisition is on track and within budget to meet the revised launch 
schedule for systems engineering and integration and both the flight 
and ground segments. The next significant program events are the system 
design reviews for the spacecraft and ground segment, scheduled for 
this month and next, respectively.
    Any further delays in the satellite's launch readiness will 
increase the risk of NOAA's not meeting its requirement to have an on-
orbit spare and two operational GOES satellites available to monitor 
the Pacific and Atlantic basins in 2015. We will monitor the program's 
cost and schedule to ensure that the bureau mitigates the risk of any 
further delays.
   american recovery and reinvestment act--meeting the recovery act 
challenges of accountability and transparency with effective oversight 
      of program performance, compliance, spending, and reporting
    The Department of Commerce received $7.9 billion in funding under 
the American Recovery and Reinvestment Act of 2009 (see table). In 
addition to OIG, five Commerce agencies received stimulus funding. Of 
the $5.3 billion going to the National Telecommunications and 
Information Administration (NTIA), $4.7 billion was for the Broadband 
Technology Opportunities Program (BTOP). With the goal of developing 
and expanding broadband services in areas that have no service or are 
underserved, as well as improving broadband access among public safety 
agencies, BTOP is by far Commerce's most challenging stimulus program.

                      COMMERCE STIMULUS FUNDING \1\
------------------------------------------------------------------------------------------------------------------------------------------------
NTIA........................................  $5 billion
Census......................................  $1 billion
NOAA........................................  $830 million
NIST \2\....................................  $610 million
EDA \3\.....................................  $150 million
OIG.........................................  $16 million
------------------------------------------------------------------------
\1\ Rounded.
\2\ National Institute of Standards and Technology.
\3\ Economic Development Administration.Source.--OIG.

    We have taken several steps to implement an appropriate oversight 
framework to track the stimulus activities undertaken by Commerce. 
These steps include the assignment of dedicated Recovery Act staff; 
advisory participation in Department steering committees and working 
groups; and development of training programs to include fraud 
awareness, administration of grants and contracts, and development and 
execution of a risk-based audit plan. Some of the larger challenges 
that Commerce faces, as identified by this oversight, are summarized 
below.
Oversight Burden Will Increase in Fiscal Year 2011
    The sheer amount of Recovery Act money Commerce agencies received, 
coupled with the unique requirements of the act, makes ensuring 
appropriate spending--while also providing economic stimulus as quickly 
as possible--a particular challenge. Commerce agencies must spend funds 
appropriately with little time to prepare for the many new and expanded 
programs, grants, and contracts established under the act.
    Attached to our testimony is a table that presents Department of 
Commerce Recovery Act obligations and spending. As of February 19 of 
this year, the Department had obligated approximately $2.1 billion in 
funds and spent approximately $649 million.
    Although spending volumes are currently low, all funds must be 
obligated by fiscal year 2011. The need to distribute funds quickly to 
communities and businesses increases the risks for fraud, waste, and 
abuse in both Recovery Act-funded activities and those Commerce 
operations with more traditional funding mechanisms. Recovery Act 
agencies will need sufficient resources to ensure that programs are 
delivering as intended, while providing oversight to guard against 
misuse of funds. The Recovery Act substantially increases the 
Department's contracting and grants workload, particularly at NIST and 
NOAA, whose grants and contracts offices must manage not only the over 
$1.4 billion they received under the Recovery Act but also the $4.7 
billion BTOP program. NTIA relies on NIST and NOAA for grants 
administration because it does not have its own staff and systems for 
this purpose. Such increases place added pressure on these agencies to 
hire and retain qualified personnel.
    The Recovery Act has provided a relatively significant funding 
increase for NIST and NOAA construction projects. To complete them 
successfully, these agencies will need to dedicate construction 
managers across Recovery Act grants, contracts, and regular 
appropriation-funded projects.
Meeting Agency and Recipient Reporting Requirements
    The Recovery Act establishes specific reporting requirements for 
both agencies and fund recipients. Federal agencies must report key 
information such as awards, obligations, outlays, and major activities 
on a weekly basis. Fund recipients need to report on a quarterly basis 
the projects and activities created and their completion status, as 
well as jobs funded by stimulus money. Available to the American 
public, these data reports must accurately reflect the use and impact 
of Recovery Act funds. An effectively designed internal control 
structure that detects and prevents errors and omissions is vital to 
data integrity.
    We recently reviewed the adequacy of key information technology and 
operational controls of the primary (source) grants, contracts, and/or 
financial systems for Census, EDA, NIST, NOAA, and NTIA, to determine 
whether their controls ensure that the Commerce reports posted on 
http://www.Recovery.gov are complete, accurate, and reliable. 
Generally, the Commerce systems we reviewed had adequate data input/
edit controls. However, the lack of automated data transmission or 
interfaces from the grants systems to Commerce's financial system could 
lead to errors.
    Without additional automation, it will become more difficult for 
Commerce agencies to effectively manage their own reporting as the 
volume of grants and contracts increases; it will also be difficult to 
ensure complete and accurate recipient reporting. Additional automation 
would add efficiencies to the reporting process and decrease the risks 
of reporting errors and delays.\10\
---------------------------------------------------------------------------
    \10\ More Automated Processing by Commerce Bureaus Would Improve 
Recovery Act Reporting, Final Report No. OIG-19779, December 2009 
(http://www.oig.doc.gov/recovery/reports/ARR-19779.pdf).
---------------------------------------------------------------------------
    In fiscal year 2009, the Recovery Accountability and Transparency 
Board asked Inspectors General to audit bureaus receiving Recovery Act 
funding to assess their ability to perform reviews, identify reporting 
omissions and errors, and notify recipients who should make appropriate 
and timely changes. Our audit found that Commerce and its bureaus have 
proactively ensured that Recovery Act recipients recognize and meet 
reporting requirements and deadlines. In addition, the Department has 
provided policy, guidance, and oversight to bureau grants and contracts 
officials to facilitate department-wide standard review processes. The 
Department agreed with our recommendations to fine-tune review 
procedures.\11\
---------------------------------------------------------------------------
    \11\ Commerce Has Implemented Operations to Promote Accurate 
Recipient Reporting, but Improvements Are Needed, Final Report No. OIG-
19847, October 30, 2009 (http://www.oig.doc.gov/recovery/reports/
Final%20Audit%20Report%20ARR-19847.pdf).
---------------------------------------------------------------------------
Effectively Setting Up and Managing the New Broadband Technology 
        Opportunities Program
    A major Recovery Act initiative, NTIA's BTOP, faces significant 
application and pre-award review challenges to achieving its goals. The 
program aims to award over $4.5 billion in grants in fewer than 18 
months, a level of grants-award activity that no Commerce operating 
unit has ever undertaken.
    With BTOP, NTIA has had to staff a program office, develop grants 
program rules and regulations, coordinate activities with several other 
departments and agencies (including Agriculture and the Federal 
Communications Commission), award grants, and perform effective 
oversight activities--all while limiting expenditures to 3 percent of 
the program's appropriation ($141 million).
    In early January, we met with the Assistant Secretary for 
Communications and Information to discuss the status of our evaluation. 
We communicated program challenges that--if unaddressed--we believed 
could cause NTIA to face difficulties in meeting its statutory deadline 
of issuing broadband grants by September 30, 2010, and in monitoring 
the grants after they are awarded. We shared the following concerns:
  --NTIA faces operational challenges with its current staffing levels, 
        especially given the program's complexity and deadline.
  --Documentation is not consistently available for operational program 
        procedures, program staff roles and responsibilities, and key 
        management decisions.
  --NTIA encountered problems with the application-intake system during 
        the first round of the application process because the system 
        was unable to handle the volume of applications submitted; this 
        resulted in extending the deadline for receiving applications. 
        While system modifications were made, there was only a short 
        period of time in which to sufficiently test the system and 
        ensure that adequate functionality and capacity were delivered 
        for the second-round application cycle.
  --NTIA also encountered challenges with the application review 
        process. Volunteer peer reviewers failed to complete reviews or 
        submit review scores in a timely manner. Supplemental contract 
        reviewers were subsequently used to complete many of the 
        application reviews. The review of applications was delayed 
        nearly 3 months.
    As NTIA enters its second round of issuing broadband grants, it 
needs not only to avoid the problems with applications intake and 
recruitment of sufficient reviewers but also to enhance internal 
program management operations for grants already awarded. In our 
opinion, the program is at risk of not being able to efficiently and 
effectively issue its second round of awards by the September 30, 2010, 
statutory deadline while simultaneously providing post-award monitoring 
of first-round recipients. Continued focus on improving program 
operations in these areas is critical.
 united states patent and trademark office (uspto)--uspto must address 
                    its resource and process issues
    With an enacted budget of $1.7 billion in fiscal year 2010 and an 
fiscal year 2011 budget request of $2 billion for patent operations, 
USPTO continues to struggle with increasing patent backlogs and the 
need to improve patent examination efficiency and quality.
    As shown below, since fiscal year 2000, the number of patent 
examiners has more than doubled, yet the length of time to process a 
patent has increased 40 percent. Further, the backlog of applications 
awaiting review increased 139 percent.

            COMPARISON OF ANNUAL PATENT WORKLOAD AND PENDENCY, FISCAL YEAR 2000 AND FISCAL YEAR 2009
----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal Year     Fiscal Year       Change
                                                                       2000            2009          (percent)
----------------------------------------------------------------------------------------------------------------
Patent Examiners................................................           2,900           6,200             114
Total Time to Process (months)..................................              25              35              40
Applications Backlog............................................         308,000         736,000             139
Applications Filed..............................................         312,000         486,000             56
----------------------------------------------------------------------------------------------------------------
Source.--USPTO.

    Over the years, USPTO has worked to increase the number of patent 
examiners to address the growing backlog; however, simply adding to the 
workforce without improving processes and quality control will not 
suffice. The bureau must consider how to reform and reengineer the 
various components of the patent application process to ensure timely 
and high-quality application review. Further, its IT systems need to be 
updated to ensure that they are able to process increasingly complex 
applications safely and securely, and provide greater management 
oversight.
Fee Structure, Funding Mechanisms Intertwined
    USPTO must also address challenges with its funding mechanisms and 
fee structure. It is now funded entirely by application, maintenance, 
and other fees paid by patent and trademark applicants and owners. 
Congress is also involved in this process by setting many of the fees 
legislatively and establishing a ceiling, through the appropriations 
process, as to the maximum amount of fees USPTO can spend in a given 
year. For fiscal year 2011, the administration proposes a 15-percent 
increase in certain patent fees to generate additional revenue to cover 
operating expenses. It also proposes that USPTO be given fee-setting 
authority and the authority to establish an operating reserve to manage 
operations on a multiyear basis.
    In November 2008, our Top Management Challenges report suggested 
that USPTO's unique financing structure could become increasingly 
risky. Subsequent downturns in the U.S. and global economies quickly 
showed the structure's vulnerabilities. In the President's fiscal year 
2009 budget, the bureau estimated that it would collect over $1.8 
billion in patent fees. However, by the end of that year, patent fee 
collections totaled just over $1.6 billion. Multiple factors 
contributed to this difference, including a reduction in the number of 
patent applications filed and a decline in maintenance fees collected 
for existing patents. To align expenses with actual patent fee 
collections, USPTO took steps that included deferring the hiring of 
patent examiners, and curtailing or suspending overtime and training.
    These reductions increase the risk to USPTO's ability to operate 
effectively in current and future years, and its capacity to ensure 
that America's intellectual property system encourages investment in 
innovation and contributes to a strong global economy. More 
immediately, USPTO may not be able to process as many patent 
applications, which will add to the backlog instead of working toward 
reducing it. In effect, fewer maintenance fees will be available to 
collect in the future because fewer patents are being issued today.
    As a result, in our view, the Department and Congress must require 
transparency and quality with respect to USPTO's cost data. This could 
include a review of USPTO's cost accounting system and how the system 
could be used to support decisionmaking in general--and in the event of 
cost reductions in the future, such as those that were necessary in 
fiscal year 2009.
    The Under Secretary of Commerce for Intellectual Property, who is 
also the Director of USPTO, has publicly acknowledged these and other 
difficulties. A 5-year plan contained in the President's fiscal year 
2011 budget sets forth bold goals, such as reducing the time it takes 
for a patent application to be initially reviewed to 10 months (from 
the present 26 months) by fiscal year 2013. Similarly, by fiscal year 
2014, the bureau's goal for making a decision on a patent application 
is 20 months, down from the present 35.
           other challenges facing the department of commerce
    In addition to these five top management challenges, we have 
identified several organizational issues facing the Department in the 
coming year:
Centralized Management and Oversight
    The Department needs to continue its actions to centralize 
management and oversight in order to make departmental operations more 
efficient, consistent, and productive. The Department's operating units 
have long-standing and independent business models, cultures, and 
practices. This decentralized structure has created obstacles to 
Department efforts to integrate and administer internal processes such 
as financial services, human resources, grants and contracts 
management, IT, and major acquisitions. Increased centralization has 
the potential to yield cost savings.
    Commerce awarded over $2.2 billion in grants to some 4,000 
recipients and over $3.2 billion in contracts to over 7,000 contractors 
during 2009. Grants and contracts are administered by five separate 
bureaus, using three different grants systems and four different 
procurement systems. Additionally, the Department's Office of 
Acquisition Management has limited authority over the agency's grants 
and procurement offices, which further contributes to the inconsistent 
management approaches across the Department and adds to the difficulty 
in overseeing the effectiveness of operations and programs.
Contracts and Grants Management Workforce
    Sufficient staffing for the contracts and grants management 
workforce has also been a long-standing issue for the Department. Now, 
primarily as a result of the Recovery Act, the Department and its 
operating units are issuing more grants and contracts than ever. 
According to Department data, there are more than 1,500 Commerce 
employees holding certifications in various acquisition positions (see 
table). While the Department does not track the number of grants 
personnel, we recently conducted a survey of the sufficiency and 
qualifications of the Recovery Act acquisition and grants workforce. 
Based on our survey, for the five Commerce agencies receiving Recovery 
Act funding, the grants workforce totaled over 800 employees. This 
includes grant officers, grants program managers, and grants 
specialists.

      COMMERCE ACQUISITION WORKFORCE--NUMBER OF CERTIFIED PERSONNEL
------------------------------------------------------------------------
                        Position                             Personnel
------------------------------------------------------------------------
Contracting Officer/Specialist..........................             180
Contracting Officer's Representative/Contracting                   1,313
 Officer's Technical Representative \1\.................
Program/Project Manager \1\ \2\.........................              49
                                                         ---------------
      Total.............................................           1,542
------------------------------------------------------------------------
\1\ Employees in these positions may not all be currently working on
  acquisitions.
\2\ Certifications are only required if managing major acquisitions.Source.--Commerce Office of Acquisition Management.

    Despite these numbers, however, the Department's ability to 
appropriately issue and oversee grants and contracts is hampered by a 
serious shortage of skilled, specially trained staff. To ensure that 
grants and contracts are issued effectively and funds properly spent, 
the Department needs to build up the size and skills of this workforce 
and improve its oversight processes.
NOAA Headquarters Leadership Structure
    NOAA continues to face the challenge of carrying out its 
multifaceted mission of understanding and predicting changes in the 
earth's environment and conserving and managing coastal and marine 
resources to meet our Nation's economic, social, and environmental 
needs. NOAA is realigning its headquarters leadership structure to 
streamline decisionmaking and provide greater policy-level attention to 
day-to day management and oversight of its programs. The realignment is 
intended to provide additional strategic guidance and leadership 
direction for the bureau's stewardship responsibilities, including 
fisheries.
    One of the key components of this mission is management, research, 
and services related to the protection and rational use of living 
marine resources. We discussed NOAA's need to balance conservation and 
commercial fishing in last year's Top Management Challenges report. 
Over the past year, we have issued two reports that demonstrate, in 
particular, the difficulty of achieving this balance. In our first 
report, we evaluated a series of issues regarding the work and 
scientific methods of the National Marine Fisheries Service's (NMFS) 
Northeast Fisheries Science Center.\12\ Our second report, which we 
recently completed, provides an assessment of the policies and 
practices of the Office for Law Enforcement within NMFS and NOAA's 
Office of General Counsel for Enforcement and Litigation.\13\
---------------------------------------------------------------------------
    \12\ Memorandum to National Marine Fisheries Service re: Northeast 
Fisheries Science Center, February 26, 2009. (http://www.oig.doc.gov/
oig/reports/correspondence/
Northeast%20Fisheries%20Science%20Center.pdf).
    \13\ Review of NOAA Fisheries Enforcement Programs and Operations, 
Final Report No. OIG-19887, January 21, 2010 (http://www.oig.doc.gov/
oig/reports/2010/OIG-19887.pdf).
---------------------------------------------------------------------------
Commerce Headquarters Renovation
    Finally, the Department's headquarters, the General Services 
Administration (GSA)-owned Herbert C. Hoover building in Washington, DC 
is undergoing an extensive renovation. The renovation will take about 
13 years and is estimated to cost almost $960 million to complete. The 
project is being funded mostly by GSA, but has the greatest potential 
to disrupt Commerce operations and affect its workforce. Accordingly, 
the Department has a primary interest in ensuring that the renovation 
is completed on time, within budget, and free of fraud. To meet this 
goal, Commerce and GSA need to provide comprehensive oversight 
throughout the project's life cycle.
    In conclusion, Madam Chairwoman, there is no doubt that the 
Commerce Department faces much important yet challenging work in fiscal 
year 2011. Accomplishing it will require continual management 
oversight, and we intend to perform our role as well in monitoring the 
progress of these essential programs. This concludes my prepared 
statement. I would be happy to respond to any questions that you or 
other members of the subcommittee may have at this time.

                                          DEPARTMENT OF COMMERCE RECOVERY ACT SPENDING, AS OF FEBRUARY 19, 2010
                                                                  [Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Total           Total           Total       Remaining    Percentage
                    Bureau                                  Purpose              Appropriation  Obligations \1\  Disbursements    Unspent     Remaining
--------------------------------------------------------------------------------------------------------------------------------------------------------
EDA..........................................  Economic Investment--Economic             $150            $148              $6          $144           96
                                                Adjustment Assistance Program.
Census.......................................  2010 Census--Additional                 $1,000            $340            $210          $790           79
                                                personnel, training, targeted
                                                media purchases, and risk
                                                reduction.
NTIA:
    Broadband................................  Competitive grants to accelerate        $4,690            $705             $18        $4,672           99
                                                broadband deployment in
                                                unserved and underserved areas
                                                and to strategic institutions.
    Digital Television.......................  Digital-to-analog converter box           $650            $338            $332          $318           49
                                                coupon program.
NIST:
    Science/Technical Research/Services......  Research, grants, research                $220             $87             $16          $204           93
                                                fellowships, and advanced
                                                research/measurement equipment
                                                and supplies.
                                               Transfer from HHS for the Health           $20              $1              $1           $19           98
                                                Information Technology Program.
                                               Transfer from Energy for the               $10              $2              $1            $9           94
                                                Smart Grid Interoperability
                                                Framework.
    Construction of Research Facilities......  To address NIST's backlog of              $360            $186              $7          $353           98
                                                maintenance and renovation and
                                                for construction of new
                                                facilities and laboratories.
NOAA:
    Operations, Research, & Facilities.......  For backlog of research,                  $230            $212             $47          $183           80
                                                restoration, navigation,
                                                conservation, and management
                                                activities.
    Procurement, Acquisition, & Construction.  For construction and repair of            $600             $30             $10          $590           98
                                                NOAA facilities, ships, and
                                                equipment; to improve weather
                                                forecasting; and to support
                                                satellite development.
OIG..........................................  ARRA oversight..................       \2\ $16              $1              $1           $15           94
                                                                                ------------------------------------------------------------------------
      TOTALS.................................  ................................        $7,946          $2,050            $649        $7,297          92
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The obligation amount does not include activity for contracts awarded to other Federal agencies and referred to as interagency transfers. This is to
  remain compliant with OMB reporting guidance, which requires only the receiving agencies of funds to record obligation and spending activity to avoid
  double-counting of activity across Recovery Act programs. Given this, the obligation and spending levels reported are lower than the activity tracked
  in Commerce's financial records. The Department estimates amounts not included in the reporting to total $355 million in obligations, which relate
  primarily to the NTIA Broadband Technology Opportunities Program and the NOAA Procurement, Acquisition, and Construction programs.
\2\ Includes $6 million from the Recovery Act that is available until September 30, 2013, and $10 million transferred from the $4.7 billion NTIA
  appropriation for oversight of the Broadband Technology Opportunities Program.Source: Department of Commerce and OIG.

                             CYBERSECURITY

    Senator Mikulski. Well, I want to get right to the 
information technology issues and I'm going to translate that 
to the words of cybersecurity. And I would prefer that we 
continue, with staff, that conversation in a secure 
environment.
    As a member of the Intelligence Committee--I know Senator 
Pryor is a member of the Armed Services Committee--we've both 
seen it from the purview of .military. We feel we need to 
protect .gov so we can ensure the future of .com. It's a klutzy 
metaphor, but there are issues that we believe need to be 
raised. We would like you really to look at the Commerce 
Department request to ensure that we're making prudent 
building-block investments on our cybersecurity, knowing you 
can't do this in a day. But, we believe that if we look at a 
properly planned, appropriately sequenced building-block 
approach, that, over the next few years, we could really secure 
.gov, particularly in those agencies that are most ready to be 
under these phishing expeditions--``p-h,'' not the kind that we 
enjoy on the bay. And we feel that that would be better in a 
more staff-oriented and classified environment where we could 
do that.
    And I know this would be a keen interest of Senator Pryor 
and Senator Shelby, who once chaired the Intel Committee.
    So, we get it, and we want to talk about it. We want this. 
Do you think the building-block approach is the good way to do 
it?
    Mr. Zinser. Yes. We have been working with the Department. 
We think they have a--they have a 3 year plan that they have 
developed; we think that plan has a lot of merit. But, we'd be 
happy to work with the staff and get into the details.

                         NOAA SATELLITE PROGRAM

    Senator Mikulski. Well, let me, right then go to one of my 
favorite topics, which is NOAA. You heard my comments to the 
Secretary. Close to a $9 billion appropriations request, $5 
billion of that in NOAA; and of that, 35 percent, this 
satellite program that seems vociferous.
    You've heard his recommendation--and it's not a debate with 
the Secretary; it's really your professional assessment--what 
tools would you recommend that we put in the appropriation, or 
report language, to encourage the agency to follow certain 
directions to ensure that, as we move forward with the new 
path, we get scientific value for our dollar and we really end 
this cost-overrun situation. Do you have thoughts that you 
could share with us on that?
    Mr. Zinser. Yes, Senator. I think that the NPOESS program, 
or now the JPSS program, can learn some lessons from GOES-R. 
And GOES-R did learn lessons from the problems with NPOESS.

           DEPARTMENT-LEVEL OVERSIGHT BOARD FOR ACQUISITIONS

    But, one of the key things that remain for the Department 
to do is to establish a Department-level oversight board of 
some type to--and not just for JPSS or GOES-R; this really 
applies to major acquisitions, in general, but especially for 
the satellite program. Right now, the Department is still 
trying to develop a Department-level acquisition oversight 
process, and they really need to do that for the satellite 
program.
    Senator Mikulski. Mr. Zinser, are you talking about at 
Commerce or are you talking about at NOAA?
    Mr. Zinser. I'm talking about at Commerce, at the 
Secretary, Deputy Secretary level, some process for them to get 
some type of independent review of what NOAA is doing in the 
management of the program.
    Senator Mikulski. Well, NOAA--you know, Commerce and--I 
know, it's an old saw now, as the Democrats have taken over, to 
say, ``Oh, we inherited a mess from the last administration,'' 
but we did. In the census, you know, the techno-boondoggle 
there with Harris, where we gave them $600 million and don't 
even have a bag of microchips to show for it. Now--and then we 
have the NPOESS model. Commerce doesn't seem to, within its 
various departments; know how to buy big technology. Do you--is 
this what you're looking at, in terms of an overall department? 
Perhaps you could flesh that out with us and give us your 
insights. Because we're not creating departments just for the 
sake of creating it, but we just can't have this at the 
Commerce Department. Money is too scarce, the missions are too 
important for it to go into something where we don't have 
anything to show for it at the end of the day. That's why the 
taxpayers are so grouchy. And we're grouchy, too.
    My colleague, here, from Arkansas, has a reputation for, 
you know, frugality and thrift, and I feel the same way in this 
subcommittee. So----
    Mr. Zinser. Well, I think one of the big lessons from the 
hand-held computer debacle--when the committees called the 
Secretary up to answer about that issue, the Secretary--
Secretary Gutierrez--wasn't all that well informed on what the 
problems were, because his staff did not have a system in place 
to review those projects.
    When Secretary Locke came in, I recommended that the heads 
of the agencies should have, at the administrator level, some 
type of dashboard of the mission-critical contracts that their 
bureau has, and they ought to visit those contracts on a 
regular basis to see how well they're progressing. I think that 
the--that leadership of the agencies have to be that involved 
in these major acquisitions.
    Senator Mikulski. I think that's a very important lesson, 
and we would like to talk with you more about it, about the 
practicality of implementing some, working in conjunction with 
the Secretary.
    I want to come back to the census issue, but--Senator 
Pryor.

                    INTERNET SECURITY/CYBERSECURITY

    Senator Pryor. Well, thank you, Madam Chair.
    Let me just kind of follow up on one of the chairwoman's 
questions, here, about Internet security, cybersecurity. Are 
you generally confident about the Department of Commerce's 
ability to protect itself against cyberattacks?
    Mr. Zinser. We think there are a lot of risks involved. 
There are approximately 300 systems in the Department, and what 
we're trying to do is look at, departmentwide, the types of 
policies and procedures that they have in place at a 
departmental level.
    One of the issues is that the management of IT security is 
very fragmented. There are----
    Senator Pryor. Is part of that the contractor issue, where 
they contract some of this out?
    Mr. Zinser. That's part of it. The other is just the 
structure for the chief information officers. There's a chief 
information officer for every bureau, and some bureaus have 
more than one. And trying to get all of those people on the 
same page and implementing the processes and procedures 
necessary is not easy.
    And then the other part of the problem is individual 
systems and--the security of critical, individual systems--
those systems involving weather, for example, or export control 
licenses and things like that.
    Senator Pryor. And is this sort of fractured management 
system--has that just evolved over time?
    Mr. Zinser. Sir, that is the nature of the Commerce 
Department. And, to their credit, the new leadership is trying 
to get a handle on that, and one of their goals is much more 
integrated management of the Department, and we've been pushing 
that for a long time.
    Senator Pryor. Okay. So, do you have a set of 
recommendations on how they should handle this?
    Mr. Zinser. We have been working with the CIO's office. 
They do have a plan in place. Some of it involves a ``C'' word 
that is not comfortable for people, which is ``consolidation'' 
of some of these responsibilities, but we have been working 
with them on that.
    Senator Pryor. Okay. And does it sound like they are taking 
those steps?
    Mr. Zinser. We're working with them on that, sir.
    Senator Pryor. Okay.
    And I guess the last question is--back to, sort of, my 
original question--as they go through this process, is it your 
belief that the Commerce Department will become more secure 
from an Internet cybersecurity standpoint?
    Mr. Zinser. Yes, I do.
    Senator Pryor. Okay.
    Thank you, Madam Chair.
    Senator Mikulski. Senator Pryor, our next hearing will be 
with the FBI, and we will have--we'll follow the policy I 
established last year, which is, we'll have an open hearing. 
But, then, because the FBI has national security, 
counterterrorism, other counter issues, we're going to have a 
classified hearing. And I would welcome your--once again, your 
participation. But, some of these issues will also be a very 
good place to raise this with the FBI, because they're our law 
enforcement agency. And in many ways, what's happening at 
Commerce is, its cybertheft, of a grand scale, but, instead of 
stealing your money, they're stealing your intellectual 
property, coming in through .gov back to .com. Interesting, 
isn't it?
    And we'll be able to go into more on that. And we're going 
to ask the Director to elaborate on it in his testimony.
    Senator Pryor. Great. Well, thank you for doing that, 
because I think that's the right approach. Thank you.

                              2010 CENSUS

    Senator Mikulski. Census. We're going into--we've now 
landed. You know, the 10 questions that take 10 minutes that 
determine 10 years are now in mailboxes, et cetera, and there's 
this magic number of March 22. Do you have any advice and 
direction on things that we could actually be doing right now, 
working with the--working with Commerce--Census, so that we 
don't have more cost overruns? And do you have any ideas on how 
we can recoup any of the money we spent that we didn't get 
value for our dollar?
    Mr. Zinser. Yes, Madam Chairwoman. The major risks for the 
decennial at this point--it is true, they are at battle 
stations at this point, and it is, in many respects, like a 
battle. There are a lot of things that are going to happen, and 
the experience of the field staff to work through those 
problems is a key.
    Unfortunately, there are two critical systems that are 
having performance problems and functionality problems. The 
Secretary referenced them, they are aware of them. One involves 
something called a Paper-Based Operation Control System, which 
they'll use to deploy and manage all the 600,000 enumerators 
that will be doing nonresponse followup. The other is a more 
basic system, called DAPPS, which is a Decennial Applicant 
Personnel and Payroll System which is used to hire people and 
keep track of their time and pay them. Very important 
functions, both of those systems are having problems.
    On the Paper-Based Operation Control System, it's to the 
point they're--they're developing, testing, and implementing in 
stages--kind of, in time for the specific operations. And the 
key is that they have to stop developing, and, for those 
functions they've got to drop, they've got to come up with 
workarounds. And the key is to develop those workarounds and 
have those applied uniformly across the country.
    For example, one of the problems could be that not enough 
people in the regional offices can get onto this system all at 
the same time. Right now, the latest number I have is that five 
people in the local Census office can access the system at one 
time. Well, that wasn't the original criteria. There needs to 
be more people accessing that system. So, they have to come up 
with workarounds.
    Another problem, for example, is that people at a lower 
level, their passwords--they can't access the system with their 
password. Well, one way to get around that, that we've heard, 
is that a supervisor will start giving people their passwords. 
You can't do that. You have to come up with a more uniform, 
acceptable workaround.
    So, that's what we've recommended, they've got to come up 
with standard workarounds for those functionalities that they 
weren't able to sufficiently develop and implement.
    Senator Mikulski. I think those are very good observations. 
And I know Secretary Locke has asked his team to stay behind, 
and we really encourage them to work with some of the insights 
provided by the inspector general so that really--I guess it's 
really the next 100 days.

                     NONRESPONSE FOLLOWUP OPERATION

    I have a question for Secretary Locke's management team. 
When will you be hitting the streets on the nonresponses, and 
when will you come to closure on that?
    Ms. Boyd. I would love to have Dr. Groves follow up with 
you on that. I know the Secretary is doing a lot of work in 
order to lessen the----
    Mr. Zinser. Madam?
    Ms. Boyd [continuing]. Need for nonresponse followup.
    Senator Mikulski. Yes. Do you have the answer?

                   TIMEFRAME FOR NONRESPONSE FOLLOWUP

    Mr. Zinser. Yes. The nonresponse followup operation runs 
from May 1 through July 10, so it'll be about a 10-week period.
    Now, right now, as they start to ramp up and hire, 
employees go into training sometime before that, but they will 
actually hit the streets around May 1.
    Senator Mikulski. So, they have to be hired and have 
their--remember that famous background check----
    Mr. Zinser. That's correct.
    Senator Mikulski [continuing]. That gave us pause last 
year, because of access to vulnerable populations with an 
official badge from the United States of America? So that 
hiring has to be completed, and all appropriate background 
checks, by May 1. So, they have to be kind of street-ready--
which is not like shovel-ready, but street-ready----
    Mr. Zinser. That's correct.
    Senator Mikulski [continuing]. May 1.
    Mr. Zinser. That's correct.
    Senator Mikulski. So, then it'll be May, June, and July.
    Mr. Zinser. Yes.
    Senator Mikulski. Those 3 months are really the follow-up 
months.
    Mr. Zinser. Yes.
    Senator Mikulski. So, that's the time that we really are 
concerned about----
    Mr. Zinser. Yes. What----
    Senator Mikulski [continuing]. Underestimating what it's 
going to take.
    Mr. Zinser. What we have planned for our office, Senator, 
we have identified a number of operations, and our staff is 
going to go out and form observation teams. We're ramping up. 
And probably within about a month, I will have 75 percent of my 
staff out making observations about the way the enumeration is 
being conducted.
    Senator Mikulski. But, the Secretary referenced that, on 
March 22, he'll have a picture of how the returns are going. I 
presume that would be based on the rate of return, by then, and 
projections of the next phase that--there's always the ``Oh 
gosh, I forgot.'' So, we have to remind people to do the census 
when it arrives--the 10 minutes, the 10 questions, 10 years--
and then, near the end of March, a really significant public 
education campaign, ``Get your form in.''
    Mr. Zinser. That----
    Senator Mikulski. And the greater the rate of return, the 
less this--enumerators----
    Mr. Zinser. Correct.
    Senator Mikulski [continuing]. Will be needed, isn't that--
--
    Mr. Zinser. The estimate is that, for every 1 percent 
increase in the mail response rate, the cost of the decennial 
will be reduced between $80 million and $90 million. So, right 
now the response rate is estimated to be 64 to 65 percent. If 
you can get that up to 75 percent, you're going to save $800 
million to $900 million. And again, all of that is because of 
how labor-intensive and how many people have to be hired to go 
out and actually knock on doors and try to get this information 
in person.
    And what the March 22 date represents is the tracking of 
that response rate. And the Census Bureau has plans to track 
that on a daily basis and target additional outreach to areas 
with a lower-than-expected response rate, and to get their 
partnerships involved in trying to get the response rate up.
    Senator Mikulski. Well, thank you, this has been very 
insightful.
    And before we conclude, is there anything that you feel you 
wanted to tell me, that we haven't covered?
    Mr. Zinser. No. We appreciate the opportunity to be here. I 
think that the risk areas that we've identified in our written 
statement are ones that we're going to continue to work on and 
try to keep the Department's attention focused on.

                  OFFICE OF INSPECTOR GENERAL FUNDING

    Senator Mikulski. Well, thank you very much. Last year, the 
Commerce--Justice made sure that we carved out $2 million for 
your office to help with the oversight, not to do it in a 
schoolmarmish way, but we need a lot of red alerts and alarms 
and--to know where, as you say, kind of like the dash--the 
lights on a dashboard--where are we in this process? We only 
have--we have such a mandated timeframe to do it right.
    I believe we need to use all the tools of the new way of 
communicating, particularly the social networking. And when 
people hear ``10 questions''--because the old census form was 
really cumbersome--but ``10 minutes, 10 questions, determine 
Federal funds to your State for 10 years''--I think are a--very 
significant.
    So, we thank you. We need to talk to you about your 
appropriations, as well, to ensure that you have what you need 
to continue this due diligence.
    We'd like to thank you, and the people who work for you for 
giving us this kind of advice. It's really very edifying. And 
would you thank them for me?
    Mr. Zinser. Thank you, Senator.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Mikulski. At this time I would like to ask the 
subcommittee members to submit any additional questions they 
have to the witnesses for the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
           Questions Submitted by Senator Barbara A. Mikulski
                            trade with china
    Question. U.S. paper manufacturers have claimed that China and 
Indonesia have two unfair trade practices for coated paper products:
  --China and Indonesian governments have directly subsidized their 
        countries' coated paper manufactures making it difficult for 
        U.S. companies to compete with cheaper paper imports from Asia. 
        The Department of Commerce's recent preliminary review showed 
        that this claim seems to have some merit and warrants further 
        investigation.
  --China has manipulated its currency, fixing the value of the Yuan 
        against the dollar, undervaluing their currency. Paper 
        companies claim this is also a form of countervailing subsidy--
        same as directly funding paper companies. This currency 
        manipulation affects many commodities than just paper products. 
        To date, the Department of Commerce has not taken any action on 
        this issue.
    What is Commerce's position on China's currency manipulations?
    Answer. President Obama underscored the need to rebalance the 
global economy in his speech at the Export-Import Bank's Annual 
Conference on March 11, 2010, by stating that for China, ``a more 
market-oriented exchange rate will make an essential contribution to 
that global rebalancing effort.''
    The authority to monitor and report on currency manipulation is 
delegated by law to the Department of the Treasury. At the same time, 
as you point out, the Department has received an allegation in an on-
going countervailing duty investigation that China's currency valuation 
represents a subsidy that should be countervailed under U.S. trade 
remedy laws. Let me assure you that the Department of Commerce is 
analyzing the currency allegation carefully and thoroughly to determine 
whether it meets the requirements under our statute for initiating a 
countervailing duty investigation. Finally, I want to reiterate that we 
are committed to vigorously enforcing our trade remedy laws to help 
ensure that U.S. producers and workers have a level playing field on 
which to compete with their foreign counterparts.
    Question. How does Commerce's new National Export Initiative 
resolve this problem of currency manipulation with China, our second 
largest trade partner?
    Answer. The National Export Initiative (NEI) is a critical new 
effort that will lead to long-term economic growth and the creation of 
new jobs. It is not intended to address directly the question of 
Chinese currency practices. However, to the extent that U.S. exporters 
may face a range of barriers to the Chinese market, the NEI is an 
enhanced and comprehensive program to help tackle such barriers and 
enable U.S. firms and workers to better position themselves to reap the 
benefits of expanded export opportunities. The NEI will help solve the 
related problems that stand in the way of our increasing exports to 
China and supporting more jobs being created in the United States.
    This is the first time the United States will have a Government-
wide export-promotion strategy with focused attention from the 
president and his cabinet. Under the NEI, $140 million in additional 
funding--across Federal agencies--will be provided to help meet the 
President's goal of doubling exports during the next 5 years to support 
2 million jobs in America.
    In the State of the Union Address, the President outlined a series 
of proposals to create jobs and put the Nation on the path to 
sustainable economic growth, focusing on help for the Nation's small 
businesses. Proposals include a new tax cut for small businesses to 
encourage them to hire new employees and increase wages for existing 
employees, and a new initiative that will transfer $30 billion from the 
Troubled Asset Relief Program (TARP) to a program that will support 
small business lending. The administration's efforts are focused on 
three key areas: (1) improving access to credit, especially for small- 
and medium-sized businesses; (2) expanding the administration's trade 
advocacy efforts; and (3) increasing the Government's focus on barriers 
that prevent U.S. companies from getting free and fair access to 
foreign markets.
    The Department of Commerce will soon unveil a comprehensive and 
significant effort aimed at ramping up and maximizing exports--and job 
creation--during the next 12 months. President Obama's fiscal year 2011 
budget called for an additional $78.5 million to implement the 
strategies developed through the NEI and ultimately empower U.S. 
exporters as they compete in the global economy. The President's budget 
will allow ITA to bring on as many as 328 trade experts to serve as 
advocates for U.S. companies to grow their export sales in 2011. ITA is 
going to put a special focus on increasing, by 50 percent, the number 
of small- and medium-sized businesses exporting to more than one 
market.
    I have made it clear that one key to the successful implementation 
of the NEI is to address unfair foreign market barriers and to 
vigorously enforce our trade laws. I am committed to promoting a level 
playing field for U.S. companies and will work with Congress to ensure 
that U.S. companies benefit from strong enforcement of U.S. trade 
remedy laws in accordance with our international rights and the 
obligations of our trading partners.
            advanced imaging sounder in geostationary orbit
    Question. A high spectral resolution imaging sounder in 
geostationary orbit, or ``advanced imaging sounder,'' will enable 
advance warning of severe weather events, including tornadoes, an hour 
or more before they are visible from satellite cloud imagery or by 
ground-based Doppler radar. Studies also show that wind profiles 
measured by such an advanced imaging sounder in geostationary orbit 
would enable significantly improved landfall prediction for hurricanes, 
both location and time. The National Academy of Sciences has 
recommended that the U.S. develop and launch an advanced imaging 
sounder in geostationary orbit, and the UN's World Meteorological 
Organization has recommended that such advanced imaging sounders cover 
the globe as a part of the Global Observing System. The European 
advanced imaging sounder in geostationary orbit is scheduled to be 
launched in 2017. Other countries are also developing such advanced 
sounders. China has stated that they plan to launch such a sounder in 
geostationary orbit by 2015.
    What is the status of U.S. plans to deploy an advanced imaging 
sounder in geostationary orbit?
    Answer. Beginning in 2006, NOAA explored the concept for developing 
an advanced sounder and coastal imaging capability, called the 
Hyperspectral Environmental Suite (HES), for deployment on the 
Geostationary Operational Environmental Satellite-R (GOES-R) series. At 
that time and after reviewing other NOAA needs, NOAA determined that 
the concept was too technologically complex and expensive for NOAA to 
develop and implement for GOES-R. Currently, there is no on-going 
research within the United States to address the technological 
impediments we encountered on HES that would provide the needed 
foundation to allow NOAA to build and deploy the sensor on an 
operational GOES platform.
    NOAA is aware that other nations are evaluating their capabilities 
to host an advanced sounder on its operational geostationary weather 
satellites. NOAA is monitoring those efforts and may consider 
developing collaborative partnerships with those agencies in order to 
address the challenges that currently exist with this technology.
    NOAA remains open to hosting an advanced sounder on future GOES 
satellites.
    Question. Is it correct that most of the western hemisphere, 
including the continental United States, may be one of the last regions 
of the globe to have such protection?
    Answer. At this time, there are no advanced sounders in orbit on 
operational geostationary spacecraft and the capability is not 
available to cover any region of the globe. However, the Europeans and 
the Chinese are evaluating the possibility of placing this capability 
on their future operational geostationary satellites. Based on our 
assessment of these agencies plans, the Europeans would be the first to 
fly an advanced sounder capability in geostationary orbit. China has 
stated its interest in developing this capability but we do not have 
enough information to confirm their ability to implement these plans. 
Regardless, of which region gets protection first, NOAA is committed to 
keeping communications open to develop international partnerships that 
could result in benefits beyond any single region.
    Question. What agency within the U.S. Government has responsibility 
for developing and deploying an advanced imaging sounder in 
geostationary orbit?
    Answer. NASA has the responsibility to develop advanced technology, 
which when mature enough for operational use, could be made available 
to NOAA for hosting on an operational geostationary satellite. 
Following that initial technology development phase, NOAA would have 
the responsibility of deploying such new technology on its operational 
satellites. NOAA remains open to hosting an advanced sounder on future 
geostationary satellites once the technological challenges have been 
addressed.
    Question. The Geosynchronous Imaging Fourier Transform Spectrometer 
(GIFTS) was to be a U.S. demonstration of an advanced imaging sounder 
at geostationary orbit. The instrument was built, but never launched. 
Why did we spend money to build GIFTS, and then leave it sitting on the 
ground? What agency is responsible? What value would GIFTS bring to 
NOAA if it were re-furbished and launched?
    Answer. The effort to develop GIFTS is primarily a NASA-funded 
activity. At the time GIFTS was being developed, NOAA considered using 
GIFTS as a risk reduction mission for its plans to develop an advanced 
sounder for GOES-R, such as HES. However, this opportunity was no 
longer available when the GIFTS development was halted. The future of 
GIFTS remains a NASA decision.
    With respect to the value of GIFTS to NOAA, if GIFTS was re-
furbished, launched, and proven on-orbit by NASA, it could potentially 
serve as a useful demonstration as a first flight of a new capability 
for possible use by NOAA. However, since GIFTS was developed in the 
early 2000s, NASA would need to evaluate the use of the dated parts and 
also consider the possibility of more cost effective newer 
developments.
                                 ______
                                 
            Questions Submitted by Senator Dianne Feinstein
                   national marine fisheries service
    Question. In California's Bay-Delta, the restrictions on pumping 
operations due to the Biological Opinions, one of which was issued by 
the National Marine Fisheries Service, are having severe ramifications 
for communities that rely on Delta exports for water supply. What is 
the Commerce Department planning to do to address the many other 
stressors in the Delta, including predator fish, toxic discharges such 
as ammonia, and pesticides such as pyrethroids?
    Answer. The Commerce Department's National Oceanic and Atmospheric 
Administration is undertaking several actions to address the many 
stressors that jeopardize the existence of several threatened and 
endangered species that occur in California's Bay-Delta and are under 
the jurisdiction of the National Marine Fisheries Service (NMFS) 
including the following:
  --NMFS' 2009 Central Valley Project and State Water Project (OCAP) 
        biological opinion Reasonable and Prudent Alternative (RPA) 
        includes a requirement to implement predation control actions 
        including; interim operational restrictions on the Red Bluff 
        Diversion Dam and the Clifton Court Forebay, as well as 
        improvements in the primary and secondary louvers at the fish 
        handling facilities (such as increasing the efficiency of the 
        louvers and decreasing predation at the release sites).
  --The RPA requires development of a salmonid life-cycle model that 
        can be used to assess the impacts of non project-related 
        stressors (other stressors) on juvenile and adult salmonids. In 
        addition, NMFS has also created a process by which it can amend 
        specific measures prescribed in the RPA based on new 
        information such as the effects of other stressors through the 
        annual science panel review required in the OCAP Biological 
        Opinion.
  --NMFS is collaborating with the Interagency Ecological Program to 
        review and fund necessary studies in the Bay-Delta region that 
        will identify impacts of other stressors.
  --NMFS is in the final stages of completing the Central Valley 
        Recovery Plan for salmon and steelhead. This plan identifies 
        and prioritizes actions needed to recover Central Valley 
        salmonids listed under the Endangered Species Act (ESA). The 
        recovery plan lays out a framework for addressing all of the 
        primary stressors that impact these species. Although the 
        recovery plan does not set regulatory requirements it does 
        guide future recovery efforts, consultations and conservation 
        plans.
  --NMFS is participating in the Federal Workplan and the newly formed 
        California Landscape Level Conservation Plan, led by the 
        Department of the Interior that will help bridge data gaps and 
        bring agencies together in developing a multi-species 
        ecosystem-wide plan for the Bay-Delta region.
  --NMFS regularly consults on construction of new waste water 
        treatment facilities, and analyzes the projected effects of 
        nutrients and toxics in wastewater through these consultations.
  --NMFS consults with the U.S. Environmental Protection Agency on 
        water quality standards for toxics and on pesticide 
        registrations.
  --The Central Valley Water Quality Control Board and State Water 
        Resources Control Board regularly request NMFS' technical 
        assistance in analyzing and prioritizing water quality issue 
        and impacts within the range of ESA-listed salmonids.
  --In conducting ESA section 7 consultations on Central Valley 
        projects involving impacts to channel margin habitat, (for 
        example, repairs to levees), NMFS requires action agencies to 
        protect or improve riparian vegetation, shaded riverine habitat 
        and sub-surface channel margin habitat conditions, so as to 
        improve sheltering/refuge habitat for juvenile salmonids and 
        reduce predation by non-native predators.
  --NMFS is participating as a lead Federal agency in the planning and 
        implementation of the Bay Delta Conservation Plan (BDCP). This 
        is a broad-based habitat conservation plan intended to address 
        the many stressors affecting the Bay Delta ecosystem while 
        protecting water supply reliability for the State and Federal 
        projects. A detailed description of NMFS' participation in the 
        BDCP is provided below in the response to the following 
        question.
    Question. California's Natural Resources Agency is developing a 
habitat conservation plan with a group of stakeholders for the Bay-
Delta with the dual goals of ensuring ecosystem restoration and water 
supply security. What resources is the Commerce Department prepared to 
commit to the Bay Delta Conservation Plan to ensure its timely 
completion and implementation?
    Answer. NMFS is fully committed to the completion and 
implementation of the Bay Delta Conservation Plan (BDCP). NMFS has 
participated since the early stages of development of this plan and has 
created an entire branch of the NMFS Sacramento Area Office dedicated 
specifically to the completion and implementation of the BDCP. NMFS 
personnel that make up the BDCP branch include a Supervisor/Branch 
Chief, four full-time fishery biologists, a full time bio-modeler 
(currently being recruited), and a part time hydrologist/hydro-modeler 
(also currently being recruited). The Sacramento Area Office Supervisor 
is also heavily involved in the executive leadership of the BDCP. The 
Area Office Supervisor sits on several executive committees and 
management groups including the BDCP Steering Committee, BDCP 
Leadership Council, and the Program Executive Team (among others). NOAA 
General Council is also fully engaged in the BDCP process, attending 
Steering Committee meetings and other program coordination meetings, 
and providing frequent input into many aspects of the BDCP process. In 
total, NMFS and NOAA General Council participate in approximately 10 
BDCP related meetings per week, often with 2 or more staff members 
attending each meeting.
    NMFS is a lead Federal agency responsible for the development of an 
Environmental Impact Statement for the BDCP. NMFS will also be writing 
an ESA section 10 take permit for this habitat conservation plan, and 
conducting a formal ESA section 7 consultation on the issuance of the 
section 10 permit and the implementation of the BDCP. NMFS intends to 
continue to provide the necessary staff and other agency resources to 
insure the timely completion of these important elements of the BDCP 
and maintain continued involvement in the implementation, monitoring 
and adaptive management of the plan over the long term.
               broadband technology opportunities program
    Question. While broadband penetration is continually improving, and 
clearly a top priority of the broadband stimulus funds, I want to 
emphasize to you the importance of also addressing broadband adoption--
the extent to which families actually get broadband, as opposed to 
being unconnected to the ``pipe'' that passes by their home or 
apartment.
    Adoption was detailed as a priority in the legislation passed by 
Congress. And, the American Reinvestment and Recovery Act mandated that 
at least $250 million of the funds it provided be spent for grants to 
promote adoption. However, I understand that so far only $39 million 
has been awarded to adoption applicants. I am very pleased that one of 
those applicants was in my own State of California, but many adoption 
applications are still pending, and those need to be given serious 
consideration.
    Can you tell us about the NTIA's efforts on the broadband adoption 
grants and your expectations about the speed with which we can get 
these out the door and delivering?
    Answer. I wholeheartedly agree with you regarding the vital role 
that adoption programs play in fulfilling the promise of broadband for 
all Americans. As of April 15, 2010, NTIA has awarded 12 Sustainable 
Broadband Adoption (SBA) grants totaling $81 million in Federal grant 
dollars and impacting 14 States. Combined with $23 million in 
applicant-provided matching funds, there is now a total of $104 million 
dedicated to broadband adoption under the Recovery Act. The grants are 
designed to fund projects that promote broadband demand, including 
projects focused on providing education, awareness, and training, as 
well as access, equipment and support for broadband usage. To date, 
NTIA has awarded two SBA grants, totaling nearly $15 million, that 
directly impact California, including: $7.2 million to the California 
Emerging Technology Fund to increase adoption of broadband in 
vulnerable and low-income communities in Los Angeles, the Central 
Valley, Orange County, San Diego, and the Inland Empire; and $7.6 
million to the Computers for Youth Foundation, Inc. and the Los Angeles 
Unified School District, which plan to expand a successful pilot 
program to increase broadband technology awareness and usage among an 
estimated 34,000 low-income individuals and 15,000 households in Los 
Angeles.
    In the first funding round, NTIA expects to obligate approximately 
44 percent of the statutory minimum allocation for SBA projects. By 
comparison, NTIA has awarded approximately 29 percent of its 
infrastructure funding allocation and 28 percent of its Public Computer 
Center project allocation in round one. NTIA recently received 
approximately 250 SBA project applications requesting approximately 
$1.7 billion in the second round of grant funding. As required by the 
Recovery Act, NTIA is on track to award at least $250 million for SBA 
projects by September 30, 2010.
                                 ______
                                 
             Questions Submitted by Senator Robert C. Byrd
                emergency steel guaranteed loan program
    Question. The economic instability that began in 2008 and continues 
today led to idled steel plants, displaced steel workers, and a very 
tight credit market. For this reason and others, the steel industry 
supported Congressional action to keep an emergency capital loan 
program in place at current levels. In 2009, the Congress agreed to 
extend the Emergency Steel Guaranteed Loan Program until fiscal year 
2011.
    The President's fiscal year 2011 budget includes a proposal to 
cancel $43 million of ESGLP unobligated funds, leaving $5 million as a 
placeholder. In January 2004, the GAO issued an opinion that the 
appropriations available in this fund are not available for rescission 
by any Department, and that only the ESGLP Board has the authority to 
incur an obligation against this appropriation.
    Mister Secretary, this leads me to ask these questions:
    Under what authority does OMB propose to cancel unobligated ESGLP 
funds?
    Answer. The administration has the authority to propose actions 
such as a cancellation of unobligated ESGLP funds, but the Congress has 
the sole authority to actually cancel the funds if you so choose.
    The GAO opinion concerns the authority of the Secretary with 
respect to ESGLP funds, not the authority of Congress. It states that 
the Secretary does not have the discretion to draw on ESGLP funds to 
satisfy a general rescission of the Department's unobligated balances 
in an appropriations act. However, the budget proposes a specific 
legislative rescission of the ESGLP funds, not a general rescission 
that the Secretary would allocate. As a result, the proposal is not in 
conflict with the GAO opinion.
    Question. What is the rationale for leaving $5 million in this 
fund?
    Answer. The Emergency Steel Loan Guarantee Board has not issued a 
loan guarantee in almost 7 years. While it is highly unlikely that 
another application for a loan guarantee will be received, in that 
event the remaining unobligated balance would be available to fund the 
credit subsidy and administrative expenses required.

                          SUBCOMMITTEE RECESS

    Senator Mikulski. This hearing is concluded and we stand in 
recess until March 25 at 10 a.m., when we take the testimony of 
the NASA Administrator.
    [Whereupon, at 11:35 a.m., Thursday, March 4, the 
subcommittee was recessed, to reconvene at 10 a.m., Thursday, 
March 25.]
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