[Senate Hearing 113-]
[From the U.S. Government Publishing Office]



 
  COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2014

                              ----------                              


                        THURSDAY, APRIL 11, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:05 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Barbara A. Mikulski (chairwoman) 
presiding.
    Present: Senators Mikulski, Reed, Pryor, Shaheen, Merkley, 
Shelby, Murkowski, and Boozman.

                         DEPARTMENT OF COMMERCE

                        Office of the Secretary

STATEMENT OF HON. REBECCA BLANK, ACTING SECRETARY


            opening statement of senator barbara a. mikulski


    Chairwoman Mikulski. Good morning. The Subcommittee on 
Commerce, Justice, Science, and Related Agencies (CJS) will 
come to order.
    Today is our very first hearing for the fiscal year 2014 
appropriations cycle. And we just received the President's 
budget yesterday and are beginning to look at it. I will have a 
few quick words about that.
    We want to welcome Dr. Rebecca Blank, the Secretary of 
Commerce, for her testimony on the specifics of the Commerce 
Department.
    But as we begin, really our first order of business--today 
is the day where many of the subcommittees within the Senate 
Appropriations Committee are holding their first hearing. The 
Agriculture, Rural Development, and Food and Drug 
Administration Subcommittee is meeting as we speak. The 
Transportation, Housing and Urban Development, and Related 
Agencies Subcommittee is also meeting. We look forward to a 
robust schedule and also following regular order.
    Since this subcommittee met in a hearing mode, many changes 
have occurred, one of which is the passing of our beloved 
leader, Senator Daniel K. Inouye. I really want to thank 
Senator Cochran who was so helpful to me and Senator Shelby.
    Senator Shelby--not only have we been pals and partners 
from the House of Representatives, but really he played a very 
important role in steering the continuing funding resolution 
through the U.S. Senate and giving us really the right 
direction or helpful strategy in terms of what were the 
parameters, both political and fiscal, that we could get the 
job done. I just want to say publicly, Senator Shelby, we could 
not have the continuing funding resolution without your help 
and the help of your excellent, excellent staff. And I am going 
to need more from you. We need to be all in it together.
    We do have the President's budget, and I just want to give 
a few quick observations.
    I support the President's budget level of $1.5 trillion. 
That is the same deal we made 3 months ago in the American 
Taxpayers Relief Act of 2013, and I believe it will be to $1.5 
trillion that this full committee will be marking up.
    In terms of dealing with the sequester, we need a balanced 
approach, and we call upon the leadership and the President to 
help come up with that balanced approach so that we can cancel 
it.
    Second, we want to support the President's initiative in 
having a more focal Government, emphasizing cutting wasteful 
spending, cutting improper payments, and reducing 
administrative overhead. We are going to be working with him on 
that and with our friends on both sides of the aisle to show 
that this Committee can have a great sense of frugality.
    I also want to commend the President's focus on creating 
jobs, the focus on manufacturing, innovation, and technology, 
particularly revitalizing infrastructure, be it the super 
information highway or our real highway, and also an investment 
in education and training.
    I have a very serious concern about his approach to earned 
benefits and also to Federal employees. But those are comments 
for another day.
    In terms of you, Dr. Blank, we really want to say thank 
you. You stepped in as the chief executive of the Commerce 
Department during a difficult time, an illness of a Secretary, 
but you took it over. But at first you were acting, and you did 
act. And we want to thank you for that. You provided 
leadership. You provided guidance. You helped people get 
through a troubled time. I know what it is like to get a 
battlefield promotion, and you really carried the mantle of 
leadership very well.
    I particularly want to thank you for the fact that you dove 
deep into areas that were very complex and were identified by 
both yourself and the inspector general as really hot spots. An 
example of that would be in the weather satellites and not only 
their cost overruns but what is the direction we were going in.
    So we want to thank you for your leadership, your 
management skill, and your willingness to work with us in the 
spirit of reform where we do the mission of the agency and use 
our taxpayers' money in a way that we really got value for the 
dollar. So we want to thank you for it.
    We know that the Commerce Department is a major economic 
engine. The request for $11.7 billion for the Department also 
is very important. It includes a particular focus on protecting 
intellectual property by having almost one-third of the budget, 
$3.1 billion, in patent and trademark fees.
    Today, I want to examine how these funds will advance 
America's interests. That is a question we wish to ask. How do 
we advance America's interests, protecting America's ideas, 
safeguarding their intellectual property, enforcing trade laws 
so that while we are advancing our competitive products selling 
overseas, we make sure we do it?
    We also believe that if you invent it here, it should not 
be stolen over there. So we are going to be looking at how to 
deal with not only the patent backlog but also the whole issue 
of cyber security.
    The Secretary of Commerce has been a spokesman for American 
business and the chief manager. With that, again as I have 
said, you worked on the National Oceanic and Atmospheric 
Administration (NOAA) satellite procurement, and the census. I 
have been through three censuses and nobody has ever been 
happy. The patent backlog and then, of course, the whole issue 
of cyber security.
    The agencies within Commerce are not a conglomeration but a 
mosaic that if you put them together, really do add to 
America's competitiveness and safety.
    The National Institute of Standards (NIST) is a critical 
leader in this in terms of setting the American standard. And 
when I look at products that are going to be invented and sold 
around the world in a global economy, I want them built to an 
American standard, not to the Chinese standard. We have got to 
support NIST, just the way we support our private sector, to be 
entrepreneurial and come up with the new ideas that are going 
to be the new products for the new jobs, but they have to be 
built to standards, and we want those standards to be American 
standards. And I believe that NIST has a spectacular role and 
technical competency in working with the private sector to do 
it. Very rarely--maybe it is because they are not regulatory in 
the usual sense of that word. And then, of course, in the 
President's Executive order on cyber security, they are one of 
the anchor tenets.
    This then, of course, takes us to the International Trade 
Administration (ITA) and also into the United State Patent and 
Trademark Office (USPTO) so that we can protect our 
intellectual property overseas.
    Then we have the National Oceanic and Atmospheric 
Administration. Every member of this subcommittee is interested 
in it, and I see some of my two newest members, Senator Merkley 
and Senator Shaheen. From fisheries disasters to ensuring that 
we look out for our fishing industry and also the future of our 
oceans, we owe it to our communities and to the coastal States 
who depend on accurate hurricane forecasts and the interior 
States that demand on tornadoes that are done through the 
weather. And yet at the same time, many of us know that our 
coastal areas and the economy associated with it are part of 
our psychic identity of our States and our economy.
    Then, of course, the census will be also something that we 
will bring under scrutiny.
    So we want to hear from you what you recommend, on behalf 
of the President, the budget ought to be. But you play a very 
unique role as you move to a new post at the University of 
Wisconsin--Madison--and we know the Secretary will be leaving 
May 31, colleagues--to give us a bit of a retro-look back on 
what you think we have really accomplished in advancing 
America's interests and where you think we need to provide 
additional oversight and stand sentry on it.
    So having said that, I would like to turn to my ranking 
member, Senator Shelby.
    I also want to note that we have Senator Boozman who is 
also joining with us. Are you still on the Commerce authorizing 
committee?
    Senator Boozman. No.


                           prepared statement


    Chairwoman Mikulski. So you came over here where the action 
is?
    We really want to welcome all of our new members in the 
warmest and look forward to working with you.
    [The statement follows:]
           Prepared Statement of Senator Barbara A. Mikulski
    Welcome to the Commerce, Justice and Science (CJS) Subcommittee's 
first hearing on the fiscal year 2014 budget. I would also like to 
welcome back to CJS our Ranking Member and my Full Committee Vice 
Chairman, Senator Richard Shelby. Senator Shelby and I have worked 
together on Appropriations for many years, and I'm glad to have him 
back with me on CJS. Having the Full Committee leaders serve as the 
leaders of CJS means that this subcommittee will lead by example. We 
will try to finish our work on time, working across the aisle and 
across the dome.
    In my first 90 days as Chairwoman, we passed the urgent Hurricane 
Sandy supplemental, as well as the continuing resolution for funding, 
which avoided a Government shutdown and closes the books on fiscal year 
2013. The continuing resolution gave us the certainty that we could 
keep the Government open, and showed that we can govern. As the Full 
Committee Chairwoman, I am committed to bringing the Appropriations 
process back to regular order. I know that Senator Shelby shares this 
goal.
    As of yesterday, we have the President's budget request, and I just 
want to give a few quick observations. I support the President's budget 
level of $1.058 trillion. That is the same deal we made 3 months ago in 
the American Taxpayers Relief Act of 2013 and I believe that it will be 
at the $1.058 trillion level that this Full Committee will be marking 
up.
    In terms of dealing with sequester we need a balanced approach, and 
we call upon the leadership and the President to help come up with that 
balanced approach so that we can cancel the sequester. Also, we support 
the President's initiative in having a more frugal Government; 
emphasizing cutting wasteful spending, cutting improper payments, and 
reducing administrative overhead. We're going to be working with him on 
that and with our friends on both sides of the aisle to show that this 
Committee can have a great sense of frugality.
    I also want to commend the President's focus on creating jobs, the 
focus on manufacturing, innovation, and technology--particularly 
revitalizing infrastructure, be it the super information highway or our 
real highways--and also our investment in education and training. I 
have a very serious concern about his approach to earned benefits, and 
also to Federal employees, but those are comments for another day.
    Today, we're meeting to examine the Commerce Department's fiscal 
year 2014 budget request. We welcome Acting Commerce Secretary Dr. 
Rebecca Blank and Commerce's Inspector General Todd Zinser, who we will 
speak to a little later. Dr. Blank has been serving as Acting Secretary 
since June 2012, and has been a leader in the Department since June 
2009. I understand that Dr. Blank will soon be leaving the Department 
to become the next Chancellor of the University of Wisconsin--Madison. 
Congratulations on your new position.
    I want to thank Dr. Blank for doing a fantastic job under 
enormously difficult circumstances. She has been a true reformer for 
Commerce. She personally oversaw the accountability to correct the 
Weather Service Antideficiency Act violations, and responded to NOAA 's 
satellite mismanagement problems. We are sorry to see her go, but we 
look forward to hearing from her today about the Department's budget 
and priorities.
    The Commerce Department is a major economic engine for America. The 
President's request totals $11.7 billion for the department, including 
$3.1 billion in patent and trademark fees. Today, my goal is to examine 
how these funds will advance America's interests in protecting American 
ideas. This includes safeguarding our intellectual property, enforcing 
our trade laws, and protecting our citizens with forecasts and warnings 
about severe weather. It also means protecting taxpayer dollars.
    The Secretary of Commerce is the chief spokesperson for American 
business and the chief manager to fix major challenges at the 
Department. The Inspector General and the GAO have identified 
persistent problems that need strong oversight. Namely, these are NOAA 
's satellite procurement, the next Census and the patent backlog.
    The Department of Commerce needs to be cyber-obsessed. It needs to 
create ways to protect its own Dot-Gov systems, while working with the 
private sector to better protect Dot-Com. The National Institute of 
Standards and Technology (NIST), Commerce's outstanding science and 
research agency, is helping the private sector find new ways to solve 
today's cybersecurity problems.
    The President issued an Executive order in February calling for a 
national strategy to better protect ``critical'' U.S. infrastructure 
from cyber attacks. NIST is a critical leader in executing this 
executive order. NIST's budget request of $934 million includes $95 
million for cyber activities. I want to know how these funds will be 
used to protect consumers' identities and companies' intellectual 
property.
    NIST is not the only agency standing sentry to protect American 
innovation. The International Trade Administration (ITA) enforces our 
trade laws and agreements, and protects entire American industries. 
ITA's budget request of $529 million includes $20 million for the 
Interagency Trade Enforcement Center, which increases our ability to 
challenge unfair trade practices.
    The United States Patent and Trademark Office (USPTO) protects 
American ideas and inventions, which are the heart of prosperity and 
jobs. While the USPTO has made progress in reducing the patent backlog 
over 650,000 patents are waiting for approval, and it takes 2\1/2\ 
years to grant a patent. I also want to make sure that USPTO's networks 
are secure. American inventors are filing applications electronically. 
We must make sure the filing process is secure so no one can steal 
inventions that Americans worked hard to create.
    When it comes to protecting people, every member of this 
subcommittee is pro-weather and pro-science. America has experienced 
several severe weather events these past few years, and scientists 
suggest that the freaky weather will continue. NOAA's satellites need 
to be fit for duty. We owe it to our communities--to the coastal States 
that depend on accurate hurricane forecasts, and to the interior States 
that depend on timely tornado warnings. Commerce's budget highlights 
new reforms to NOAA's satellite programs in response to recommendations 
I made to move these programs to NASA, and of critical reviews made by 
outside groups. I welcome these changes, but remain critical and 
skeptical of the stability of these important programs.
    The Inspector General has identified several serious issues that 
continue to challenge the Department, particularly the planning and 
management of the next decennial census. Controlling costs for the 2020 
census remains one of my top concerns, and is a top oversight concern 
for the Inspector General and the Government Accountability Office. 
Cost overruns were a major problem during the 2010 census, but the 
fiscal year 2014 budget request suggests that the Census Bureau intends 
to reduce the 2020 Census costs back down to fiscal year 2010 levels. I 
want to know what is being done to keep this cost profile on track, on 
schedule and on budget.
    I want to thank all the men and women of the Commerce Department--
all the trade experts, statisticians, patent and trademark examiners, 
scientists and engineers, weather forecasters. They work hard every day 
to promote American businesses, protect American ideas and resources, 
and keep our economy moving forward.
    Thank you, Dr. Blank, for your service to the Department of 
Commerce. We look forward to hearing your testimony.

    Chairwoman Mikulski. Senator Shelby.

                 STATEMENT OF SENATOR RICHARD C. SHELBY

    Senator Shelby. Thank you, Madam Chair.
    I am pleased to be working with you again, Madam Chair, on 
the CJS Subcommittee and I am eager to begin the discussion of 
the President's fiscal year 2014 budget proposal.
    The Department of Commerce--represented today by Dr. 
Blank--contains some of our Nation's most important economic 
development, economic analysis, and science and research 
agencies, including the Economic Development Administration 
(EDA), NIST, and NOAA.
    The President's budget proposes a total of $8.6 billion to 
fund the Department of Commerce, which is an increase of $1 
billion more than fiscal year 2013. This is a significant 
increase in funding given our current budget environment, and 
it is proposed as a new mandatory program. That troubles me a 
little bit, Dr. Blank.
    I hope that you, Dr. Blank, can enlighten us here this 
morning with the details of the proposal and why the 
administration is asking this subcommittee to establish a new 
mandatory program when the mandatory side of the ledger is 
already growing unrestrained. This is the area of Government 
spending that most budget experts agree needs to be reformed.
    NOAA represents more than 60 percent of your Department's 
budget at $5.6 billion. NOAA provides important support for our 
Nation's fisheries, severe weather prediction, and navigation 
of the waters surrounding our country. NOAA's work is critical 
to the shipping industry, as well as the fishing industry, and 
provides essential support services in the aftermath of a 
disaster. These are areas in which they excel.
    Yet, in spite of these operational successes, which are 
many, NOAA continues to struggle with a number of significant 
issues. In particular, managing their ongoing satellite 
procurement programs remains a challenge and an expense that we 
need to keep our eye on. I am eager to hear what the 
Department, working in concert with NOAA, can do to ensure that 
future missteps do not occur, Dr. Blank.
    We also have with us today the inspector general for the 
Department of Commerce, Mr. Zinser, who has worked diligently 
to ensure that the entire Department is on the right track. I 
look forward to hearing about his work on NOAA's satellite 
program but also about some of the other financially 
troublesome areas within the Department and the steps that are 
being taken to bring these programs in line with the IG 
recommendations.

                           PREPARED STATEMENT

    The Department of Commerce and each of its components 
provide essential services to the United States. However, the 
recurring issues the Congress must contend with each year 
because of mismanagement of programs or resources or both must 
stop. I am hopeful that this budget provides not only the 
resources necessary for the Department but ensures that there 
is a plan in place to keep the ship righted.
    [The statement follows:]
            Prepared Statement of Senator Richard C. Shelby
    Thank you Madame Chair.
    I am pleased to be working with you on the Commerce, Justice, 
Science, and Related Agencies Subcommittee again and am eager to begin 
the discussion of the President's 2014 budget proposal.
    The Department of Commerce, represented today by Dr. Blank, 
contains some of our Nation's most important economic development, 
economic analysis and science and research agencies, including the 
Economic Development Administration (EDA), National Institute of 
Standards and Technology (NIST), and National Oceanic and Atmospheric 
Administration (NOAA).
    The President's budget proposes a total of $8.7 billion to fund the 
Department of Commerce, an increase of $1 billion over 2013. This is a 
significant increase in funding given our current budget environment 
and is proposed as a new, mandatory program.
    This troubles me.
    Dr. Blank, I hope that you can enlighten us with the details of the 
proposal today and why the administration is asking this subcommittee 
to establish a new mandatory program when the mandatory side of the 
ledger is already growing unrestrained. This is the area of Government 
spending that most budget experts agree needs to be reformed.
    The National Oceanic and Atmospheric Administration (NOAA) 
represents more than 60 percent of the Department's budget at $5.6 
billion. NOAA provides important support for our Nation's fisheries, 
severe weather prediction, and navigation of the waters surrounding our 
country.
    NOAA's work is critical to the shipping industry as well as the 
fishing industry and provides essential support services in the 
aftermath of a disaster. These are areas in which they excel. Yet, in 
spite of these operational successes, NOAA continues to struggle with a 
number of significant issues. In particular, managing their ongoing 
satellite procurement programs remains a challenge. I am eager to hear 
what the Department, working in concert with NOAA, can do to ensure 
that future missteps do not occur.
    We also have with us today the Inspector General for the Department 
of Commerce, Mr. Zinser who has worked diligently to ensure that the 
entire Department is on the right track. I look forward to hearing 
about your work on NOAA's satellite program but also about some of the 
other financially troublesome areas within the Department and the steps 
that are being taken to bring these programs in line with your 
recommendations.
    The Department of Commerce and each of its components provide 
essential services to the United States; however, the recurring issues 
Congress must contend with each year because of mismanagement of 
programs or resources or both, must stop. I am hopeful that this budget 
provides not only the resources necessary for the Department but 
ensures that there is a plan in place to right the ship.
    I look forward to hearing from the witnesses.
    Thank you Madame Chair.

    Senator Shelby. Madam Chairman, I look forward to the 
hearing.
    Chairwoman Mikulski. Thank you very much.
    I want to note to my colleagues that we have a vote at 11 
o'clock. We also have the testimony of the inspector general 
after the completion of Dr. Blank's testimony and our 
questions. What I am asking my subcommittees to do is to invite 
the inspector general to come and give us ideas on oversight of 
troubled areas that we should be watching and observing, how we 
also have to avoid techno-boondoggles and to give us advice and 
direction so we have a sense of frugality and actually smart 
Government and smart funding. So where there is Cabinet 
testimony, we will have an inspector general, and I am 
encouraging my other subcommittee chairs to follow the same. So 
I hope that even after the vote, if you could return, I think 
you will find it very interesting. And Mr. Zinser has done a 
great job.
    But now, Dr. Blank, let us hear from you. And any opening 
statements will be for the record and you can include them 
perhaps as you have your line of questioning. Let us get to 
you, Dr. Blank.

                SUMMARY STATEMENT OF HON. REBECCA BLANK

    Dr. Blank. Chairman Mikulski, Vice Chairman Shelby, and 
distinguished members of the subcommittee, I am pleased and 
honored to be here this morning to discuss President Obama's 
budget request for the Department of Commerce for fiscal year 
2014.
    As we continue to recover from a deep recession, the 
Commerce Department has helped thousands of American businesses 
grow, innovate, and compete around the world. Our work remains 
central to the top national priority of economic growth and job 
creation.

            HIGHLIGHTS OF THE DEPARTMENT OF COMMERCE BUDGET

    This request of $8.6 billion makes crucial investments that 
are needed to support U.S. competitiveness and build on the 
progress that we have seen in the past 3 years. I will 
highlight several examples and then I will look forward to our 
discussion.
    First, the budget includes $113 million to launch an 
interagency effort called ``Investing in Manufacturing 
Communities''. This will help local communities position 
themselves to attract inbound manufacturing investment by 
helping them build an attractive economic infrastructure. The 
program will assist towns with key projects ranging from 
research and tech transfer programs to physical infrastructure 
and improvements to workforce development. Importantly, these 
Federal dollars will leverage additional private and non-
Federal funds. The goal is to accelerate regional economic 
growth by helping America's communities attract manufacturers 
and build their supply chains.
    Second, in fiscal year 2012, the Manufacturing Extension 
Partnership Program helped more than 30,000 mostly small- and 
medium-sized manufacturers. The new budget provides an 
additional $25 million more than the fiscal year 2012 enacted 
level to establish manufacturing technology acceleration 
centers, each focused on a major area of advanced technology 
that would help more of these small manufacturers innovate and 
integrate into our national supply chain.
    Third, as many of the world's economies have slowed, U.S. 
companies will be challenged to build on their record $2.2 
trillion in exports last year. Therefore, the budget proposes a 
14-percent increase more than fiscal year 2012 for ITA to work 
harder to promote key industries and markets where U.S. 
companies have a strategic advantage. Particularly important in 
this request is the proposal to hire additional Foreign 
Commercial Service officers and staff in fast growing markets.
    Fourth, and to complement the support in exporting, we 
propose $20 million to expand the workload of the new 
Interagency Trade Enforcement Center, a joint effort with the 
U.S. Trade Representative's Office, to level the playing field 
for U.S. business by reducing unfair trade and investment 
barriers.
    Fifth, the United States is positioned to attract a 
significant share of new domestic and foreign investment 
dollars due to our expanded domestic energy supplies and 
decreased energy costs, our increased labor productivity, our 
projected gross domestic product (GDP) growth, and many other 
economic factors that are to the benefit of the United States 
these days. Therefore, the budget includes $20 million to fully 
support the SelectUSA Program which works in partnership with 
State and local authorities to help them attract these 
investments into American communities.
    Sixth, the budget invests in environmental stewardship such 
as ocean and coastal research, observing, and conservation 
activities, including $929 million for the National Marine 
Fisheries Service.
    And seventh, the budget includes approximately $2 billion 
to support crucial weather satellite programs which are 
critical to accurate forecasts and warnings that protect lives 
and property.
    Other ongoing priorities, such as supporting minority-owned 
enterprises, improving cybersecurity, continuing export control 
reform, improving public safety communications, and many more 
are also reflected in this budget.
    Throughout the process of defining and developing these 
priorities, the Department of Commerce has remained focused on 
responsible stewardship of taxpayer dollars. In this 
challenging climate, we have made smart and tough choices to 
cut costs while building on programs that truly work. We are 
only proposing new investments in areas that have great 
potential for success, such that ignoring them would be 
irresponsible.
    And we are reducing costs where we can. At the operational 
level, we reduced administrative costs by $185 million in 
fiscal year 2012, an estimated $176 million in fiscal year 
2013, and will project another $194 million savings in this new 
budget for fiscal year 2014.
    By combining crucial investments with fiscal 
responsibility, the Commerce Department's fiscal year 2014 
budget is a meaningful and timely plan to further strengthen 
the economic recovery, to stimulate private sector job 
creation, and to promote American competitiveness for years to 
come. With each of our 12 bureaus working together, I am 
confident in our ability to realize that vision.

                           PREPARED STATEMENT

    Thank you and I very much look forward to our discussion.
    [The statement follows:]
                Prepared Statement of Hon. Rebecca Blank
                              introduction
    Chairwoman Mikulski, Vice Chairman Shelby, and distinguished 
members of the subcommittee, I am pleased to be here to discuss 
President Obama's budget request for the Department of Commerce for 
fiscal year 2014.
    As we continue to recover from the worst recession since the Great 
Depression, the Commerce Department works to help America's businesses 
grow, innovate, and compete around the world. Our mission is central to 
the President's top priority of economic growth and job creation. Over 
the past 4 years, the hard work of our 12 bureaus and 43,000 employees 
has helped thousands of entrepreneurs, business owners, and workers. In 
fiscal year 2012 alone, one Commerce program helped more than 30,000 
manufacturers retain or increase sales and jobs,\1\ while another 
Commerce program helped more than 2,700 exporters break into or expand 
in international markets,\2\ helping achieve yet another all-time 
record in U.S. exports last year of $2.2 trillion.
---------------------------------------------------------------------------
    \1\ http://www.nist.gov/mep/upload/MEP-PARTNERING-IMPACTS-2013-
2.pdf.
    \2\ http://www.commerce.gov/news/fact-sheets/2013/02/19/fact-sheet-
national-export-initiative.
---------------------------------------------------------------------------
    The President's fiscal year 2014 budget request of $8.6 billion for 
the Commerce Department makes crucial investments that are needed to 
support U.S. competitiveness and to create more, good jobs. This budget 
includes continued support for advanced manufacturing, innovation, and 
exporting. It also reflects the importance of increasing the flow of 
business investment into the United States. And, the budget includes 
foundational investments that protect and sustain economic growth and 
societal well-being in areas ranging from cybersecurity to high-quality 
weather forecasting. Finally, the budget reflects the Commerce 
Department's ongoing Federal leadership in support of scientific 
research and development, technological advances, environmental 
stewardship, information collection and dissemination, public safety 
communications, direct assistance to businesses and communities, and 
more.
    Throughout the process of developing this budget, the Department of 
Commerce has remained steadfastly committed to responsible stewardship 
of taxpayer dollars. In this challenging budget climate, we are making 
smart and tough choices to cut costs while only building on programs 
that truly work. Moreover, at the operational level, we have reduced 
administrative costs by $143 million in fiscal year 2012, an estimated 
$176 million in fiscal year 2013, and a projected $194 million in this 
new budget for fiscal year 2014. Finally, the budget reflects a 
commitment to improving customer service both internally and externally 
by modernizing outdated systems and streamlining services to be even 
more responsive to the needs of American citizens and businesses.
                          high-priority areas
Strengthening U.S. Manufacturing and Innovation
    This budget maintains the administration's strong commitment to 
accelerating the growth of U.S. manufacturing. This sector has created 
more than half-a-million manufacturing jobs over the past 3 years, 
reflecting the strongest job growth in manufacturing since the 1990s.
    There is a powerful link between America's ability to make things 
and America's ability to innovate, compete and create good jobs. 
Manufacturing is responsible for 70 percent of our private sector 
research and development (R&D) and 60 percent of our exports. Among 
manufacturers, 70 percent rely on patents to protect their innovative 
ideas.
    The fiscal year 2014 budget recognizes that we must build strength 
in key areas, such as advanced manufacturing, which will be crucial for 
our economy's long-term competitiveness. The budget invests heavily in 
the manufacturing expertise at the National Institute for Standards and 
Technology (NIST), with $934 million for NIST to continue its research 
and development work with companies in cutting edge fields such as 
flexible electronics, robotics, and bio-manufacturing. Within NIST, the 
budget provides a $25 million increase more than the fiscal year 2012 
enacted level for the Hollings Manufacturing Extension Partnership to 
establish Manufacturing Technology Acceleration Centers that would help 
manufacturers adopt advanced technologies and strengthen their supply 
chains. The budget also provides $21 million for the Advanced 
Manufacturing Technology Consortia program, a public-private 
partnership that will support roadmaps and research to address common 
manufacturing challenges faced by businesses across the country.
    The budget also includes $1 billion in mandatory funding to launch 
up to 15 institutes to establish a National Network of Manufacturing 
Innovation (NNMI). Each institute would bring together businesses, 
universities and community colleges, and government to invest in 
cutting-edge manufacturing technologies. The administration has already 
launched a pilot institute focused on the fast-growing field of 3D 
printing in Ohio and Pennsylvania, and the President announced that we 
will be launching three more this year using existing funds from the 
Departments of Defense and Energy. Importantly, many of our competitor 
countries have already made major investments in public-private 
partnerships similar to the NNMI and are experiencing success.
    Also, the budget includes $113 million in the Economic Development 
Administration's (EDA) budget to launch the Investing in Manufacturing 
Communities (IMC) Partnership, a program the Department will lead. As 
part of that, the IMC Fund will help communities, especially hard-hit 
towns, build the public goods needed to attract manufacturers and their 
supply chains. It will provide targeted financial assistance to support 
key projects such as industrial parks, research and tech transfer 
programs, infrastructure expansion, or workforce development efforts 
that will spur long-term economic growth. This will involve leveraging 
private-sector resources as well as other non-Federal funds, with the 
goal of leveraging $2 of non-Federal funds for every $1 awarded by the 
Fund. Many Federal agencies will contribute to the IMC Partnership 
aligning the full array of their resources and programs to support 
these locally driven efforts.
Increasing U.S. Exports
    The fiscal year 2014 budget reflects a commitment to building on 
the recent record levels of U.S. exports of goods and services ($2.2 
trillion in fiscal year 2012) while also ensuring that U.S. exporters 
can compete on a level playing field.
    This growth has been strongly supported by the International Trade 
Administration (ITA), which has worked hard to implement the 
President's National Export Initiative. For example, over the past 5 
years, ITA has increased the number of cases where U.S. exporters were 
able to successfully break into new foreign markets by 40 percent.
    The budget proposes $520 million for ITA, a 14-percent increase 
more than the fiscal year 2012 enacted level, to continue these and 
other efforts to increase U.S. exports. ITA is particularly focused on: 
identifying high-potential international markets for U.S. goods and 
services, promoting key industries where U.S. companies have an 
advantage in the global market, empowering small U.S. exporters that 
comprise an increasing share of total U.S. exports, strengthening trade 
enforcement, and supporting trade agreement initiatives such as the 
Trans Pacific Partnership and upcoming negotiations with the European 
Union.
    The Economic Development Administration also plays a crucial role 
in supporting U.S. exports. The fiscal year 2014 budget includes $12 
million for the Regional Export Challenge. This program will assist 
communities in the development of robust and sustainable export action 
plans that support jobs, international trade, and export expansion.
    ITA's Import Administration will continue to support leveling the 
playing field for American companies, by administering U.S. antidumping 
(AD) and countervailing (CVD) trade law remedies which curtail market 
distortions caused by unfair trade practices by other countries. They 
will also administer the Foreign Trade Zone program and other import 
programs that support U.S. jobs. ITA will also continue to enforce U.S. 
rights under bilateral and multilateral trade agreements as well as 
through the World Trade Organization.
    In addition, the new Interagency Trade Enforcement Center (ITEC)--a 
joint effort between the Commerce Department and the Office of the U.S. 
Trade Representative--will work to identify, reduce, and remove unfair 
trade and investment barriers. This budget includes $20 million for 
ITEC to expand its efforts.
Attracting More Business Investments to and Within the United States
    Due to a number of factors (decreasing energy costs, increasing 
labor productivity and comparative cost advantages, projected GDP 
growth, etc.), the United States is becoming a highly attractive 
location for business investment by both U.S. and foreign-based firms. 
Already, foreign companies support more than 5 million U.S. jobs. 
Maximizing the influx of inbound business investments--such as new 
facilities and high-tech production sites--in the near future is 
crucial to ensuring long-term U.S. job retention and growth for decades 
to come.
    Over the past 2 years, the administration has made a strong 
commitment to promoting the United States as the premier world 
investment location. The President launched the SelectUSA Initiative--
housed at the Commerce Department--which is the first Governmentwide 
effort to attract more investment into the United States. The fiscal 
year 2014 budget calls for $20 million to fully establish this crucial 
program in which we will partner with State and local authorities who 
are working to attract more investment in their communities.
    SelectUSA serves firms and economic development groups by: 
promoting the benefits of investing in the United States; responding to 
inquiries about the U.S. business climate; helping investors 
encountering confusion, delays, or obstacles in the Federal regulatory 
process; advocating on behalf of the U.S. Government in large globally 
competitive business location decisions; offering guidance on rules, 
regulations, procedures and policy positions that impact our global 
competitiveness; and offering aftercare to companies that have already 
invested in the United States.
    The fiscal year 2014 budget also provides $3.9 million for the 
Bureau of Economic Analysis (BEA) to improve State-level measurement 
and capture small-to-mid-size investment activity of foreign direct 
investment in the United States.
                           ongoing priorities
Supporting Invention and Innovation
    The budget provides full spending authority for the $3.1 billion 
that the U.S. Patent and Trademark Office (USPTO) receives in fees to 
continue supporting the innovation and intellectual property that is 
crucial to economic growth and facilitating the deployment of new goods 
and services into the marketplace. This includes support for the 
continued rollout of key provisions flowing from the Leahy-Smith 
America Invents Act.
Supporting Minority-Owned Enterprises
    The fiscal year 2014 Commerce Department budget funds the Minority 
Business Development Agency (MBDA) with $29.3 million to maintain 
current efforts. In recent years, MBDA's efforts have helped minority-
owned firms attract about $4 billion in contracts and capital while 
creating thousands of jobs.
Collection and Dissemination of Valuable Data and Information
    The Commerce Department's Economics and Statistics Administration 
(ESA), including the Census Bureau and the Bureau of Economic Analysis 
(BEA) is responsible for generating and disseminating timely data, 
information, and analysis to support effective decisionmaking for 
leaders in both the public and private sectors. For example, the U.S. 
Census Bureau provides quality data about our citizens, our 
communities, and our economy through a number of surveys and other 
instruments. The resulting information provides an important foundation 
for fostering economic growth, advancing scientific understanding, and 
facilitating informed decisions for all levels of government as well as 
entrepreneurs and businesses.
    As the last year of research and testing in advance of the 2020 
census, fiscal year 2014 is a critical year for the Census Bureau in 
which we will establish how best to improve the design and 
administration of the decennial census. For that reason, the budget 
includes an increase of $154.2 million for 2020 census research. 
Without this level of funding, the Department will not be able to 
consider the range of design alternatives that will allow the Census 
Bureau to reach people through 21st century technologies while still 
controlling the cost of the 2020 census and maintaining quality.
Environmental Stewardship and Weather Forecasting
    Prudent management of our Nation's oceans, coasts, and fisheries 
promotes economic sustainability and ensures that future generations 
are able to enjoy and benefit from these resources. At the same time, 
monitoring the ocean and atmosphere is crucial to supporting business 
activities and local economies while also providing critical 
information during severe weather that helps to limit destruction and 
to save lives. The budget provides $5.4 billion for the National 
Oceanic and Atmospheric Administration (NOAA), which will help 
strengthen ocean and coastal science and stewardship while also 
investing in life-saving weather forecast improvements.
    The budget invests in NOAA's ocean and coastal research and 
observing programs and increases support for habitat and species 
conservation activities that are essential to restoring and maintaining 
healthy, sustainable fisheries. Increased funding for NOAA's research 
and development and Earth Observations activities will enhance the 
agency's ability to detect, understand, and forecast global and 
ecosystem changes and provide sound, science-based information to 
support decisionmaking and to help communities prepare for the 
consequences of climate change. The budget also supports investments 
that promote well-coordinated ocean and coastal science and management 
activities. Overall, the budget provides $929.3 million for the 
National Marine Fisheries Service, $529.2 million for the National 
Ocean Service, and $472.4 million for the Office of Oceanic and 
Atmospheric Research.
    NOAA generates tremendous value by advancing the ability to 
understand and anticipate changes in the Earth's environment and 
improving society's ability to make scientifically informed decisions. 
The budget maintains NOAA's essential missions to monitor and model the 
environment in order to forecast daily weather; warn the public of 
severe weather; inform communities of long-term trends affecting 
coastal areas; and support private enterprise with vital information to 
sustain economic growth.
    NOAA's satellites are critical to its ability to provide accurate 
weather forecasts and warnings that help to protect lives and property. 
The fiscal year 2014 budget provides approximately $2 billion to 
support satellite programs including the Geostationary Operational 
Environmental Satellite-R Series (GOES-R), the Deep Space Climate 
Observatory (DSCOVR), the altimetry mission (Jason-3), and the Joint 
Polar Satellite System (JPSS). As compared to the fiscal year 2012 
enacted budget, the two major increases in funding are $339 million for 
GOES-R and $17 million for Jason-3, both of which are expected 
increases.
    We recognize the need to reduce cost and risk to the weather 
mission, which includes increasing the robustness of JPSS. The budget 
for JPSS is $824 million which reflects a number of changes such as: 
the technical transfer of the Free Flyer-1 mission to a separate budget 
line called the Polar Free Flyer, the proposed transfer of select 
climate sensors to NASA, a renewed focus on NOAA's weather mission, and 
a number of efficiencies. These changes are proposed, in part, because 
of recent feedback from Congress and the Independent Review Team (IRT). 
We are currently in the process of completing an Independent Cost 
Estimate (ICE) for JPSS with options to reduce scope, risk, and 
lifecycle cost. In an effort to simplify NOAA's mission, the budget 
proposes to transfer to NASA climate sensors originally planned for 
follow-on missions to JPSS-1 and Free Flyer-1, including the Clouds and 
Earth Radiant Energy System (CERES), the Ozone Mapping and Profiler 
Suite-Limb (OMPS-Limb), and the Total Solar Irradiance Sensor (TSIS).
    The fiscal year 2014 budget includes approximately $1.1 billion for 
the National Weather Service (NWS) to continue its vital role in 
providing the weather forecasts and warnings that Americans have come 
to rely on and that save lives. This budget provides the funding for 
NWS to meet its operational needs. As compared to the fiscal year 2012 
enacted budget, the fiscal year 2014 budget includes an increase of 
$16.9 million for labor and operations, and provides increases for 
weather research, weather modeling, and supercomputing capacity to 
accelerate advancements in weather forecasting. The budget also 
supports infrastructure investments to both the NWS Telecommunications 
Gateway and the Ground Readiness Project to ensure that NOAA is 
prepared to handle the expected increase in satellite data.
National Security and Export Control Reform
    The Bureau of Industry and Security (BIS) advances national 
security, foreign policy, and economic objectives by ensuring an 
effective export control and treaty compliance system and promoting 
continued U.S. strategic technology leadership. The budget recognizes 
the important role of BIS programs and supports its national security 
mission with a request of $112 million. This increase of $11 million 
from the fiscal year 2012 enacted level supports the bureau's expanded 
export licensing and export enforcement operations for controlled items 
which were recently shifted from the State Department to the Commerce 
Department's jurisdiction due to the President's Export Control Reform 
Initiative.
Strengthening Cybersecurity
    Under the President's new Executive order on Improving Critical 
Infrastructure Cybersecurity, NIST is helping to lead a broad national 
effort to develop a ``Cybersecurity Framework'', working with hundreds 
of private sector partners. The goal is to promote the adoption of best 
practices in cybersecurity in order to support both national security 
and continued economic growth.
    This leadership role is an outgrowth of the work that NIST has done 
in its Laboratory Programs, for which the fiscal year 2014 budget 
request is $754 million. The Information Technology Laboratory (ITL), 
in particular, will develop standards and technology to protect 
information systems against threats to the confidentiality, integrity, 
and availability of information and services. In particular, NIST is 
currently working on initiatives associated with cybersecurity 
automation, cybersecurity information, and the National Strategy for 
Trusted Identities in Cyberspace. NIST has also recently established a 
public-private partnership to operate a Cybersecurity Center of 
Excellence with the State of Maryland to foster the development and 
rapid adoption of cybersecurity platforms that support automated and 
trustworthy government and industry business operations and e-commerce.
Enhancing Public Safety Communications
    The Middle Class Tax Relief and Job Creation Act of 2012 allocated 
$7 billion of spectrum auction proceeds and valuable spectrum bandwidth 
towards deployment of a nationwide wireless broadband network 
(FirstNet) that will enable police, firefighters, emergency services 
personnel, and other public safety workers to better communicate with 
one another during emergencies. By empowering them with new public 
safety communications technologies, they will improve response times, 
keep communities safe, and save lives. Last year, I consulted with the 
National Telecommunications and Information Administration (NTIA) to 
appoint 12 leading experts on public safety and wireless broadband 
communications to serve on the Board of FirstNet. The Congress also 
provided $135 million to NTIA to administer a State and Local 
Implementation Grant Program which will support the planning work of 
State, regional, tribal, and local jurisdictions who will work to 
ensure that FirstNet meets their wireless public safety communications 
needs. FirstNet will also seek to leverage existing commercial and 
government infrastructure for the new network.
Reducing Waste and Streamlining Operations
    The President's Campaign to Cut Waste strives to use Government 
assets more efficiently and to eliminate unnecessary spending. 
Consistent with this, the Commerce Department has moved ahead to 
realize core organizational efficiencies. We have focused on finding 
administrative savings through initiatives in acquisition reform, 
strategic sourcing, travel, human resources, facilities, and 
information technology.
    The fiscal year 2014 budget reduces or terminates programs that are 
either: lower priority to our critical mission needs, such as the 
National Undersea Research Program; or have finished pieces of their 
core work and can operate at a lower funding threshold in fiscal year 
2014, such as the Economic Census Program. This budget also defers some 
necessary investments, such as a planned replacement of IT hardware and 
research on late-stage 2020 decennial activities at the Census Bureau, 
until a future year.
    While the Census Bureau requests an increase in funding for the 
final research and testing year of the 2020 census (see above), this 
amount actually reflects major revisions to the design plan which 
decreased our anticipated costs by more than $100 million. In addition, 
in comparison to--an fiscal year 2013 annualized continuing resolution 
funding level, the Census Bureau is implementing planned reductions to 
cyclical programs, including cuts such as $55.5 million from the 2010 
census, $20.9 million from the economic census, and $1.7 million from 
the Census of Governments. We are also reducing Geographic Support 
Systems (GSS) by $10 million through decreases to the Boundary and 
Annexation Survey (BAS) and the evaluation of partner-supplied files, 
as well as trimming $7 million from the Survey of Income and Program 
Participation (SIPP) as it moves from the old survey panel format to a 
new, more efficient format.
    This commitment to streamlining and reducing waste extends to the 
Commerce Department's interagency work with Federal partners such as 
BusinessUSA, a collaboration with the Small Business Administration. 
Launched by the President, BusinessUSA is a national enterprise 
assistance network that creates a ``No Wrong Door'' approach to quickly 
connect entrepreneurs and businesses with the Federal tools, services, 
and information to meet their needs. In fiscal year 2012, BusinessUSA 
released the first fully-integrated online platform that taps into 
hundreds of national, State, and local resources and events aimed at 
helping businesses find solutions to their challenges. BusinessUSA also 
deployed a unique online ``widget'' which partner organizations use on 
their Web sites to connect their stakeholders to BusinessUSA. In 
addition, BusinessUSA initiated a single customer service phone line to 
field calls and provide program contact referrals. The Department of 
Commerce fiscal year 2014 budget includes $3.6 million for BusinessUSA.
Modernizing Commerce Department Assets
    The Commerce Department is modernizing several key assets to meet 
the 21st century needs of its employees and customers. Modernization 
efforts are important to protect the safety of employees while also 
providing quality service to citizens and taxpayers. Many of these 
efforts will ultimately result in future savings.
    The fiscal year 2014 budget requests $14.8 million for the 
renovation and modernization of its headquarters, the Herbert C. Hoover 
Building. The complete renovation plan calls for eight phases, and this 
funding request supports Phase 4 activities and planning for Phase 5. 
Additionally, this funding moves in consort with GSA's resources and 
will support an efficient and on-schedule project completion. The 
renovation provides solutions to replace deteriorating building systems 
which have aged beyond useful life, including: mechanical, electrical, 
plumbing, heating, ventilation, air conditioning, and life-safety 
systems.
    The fiscal year 2014 budget requests $16 million to design a 
Department-wide solution for an integrated suite of financial 
management and business applications, replacing the Department's legacy 
financial system known as the Commerce Business System (CBS). Since 
2009, Commerce has been assessing the long-term viability of the 25-
year-old CBS and has found that the stability and reliability of the 
system is questionable. Further, CBS is not certified by the Financial 
System Integration Office, nor is it section 508 compliant. This 
funding request provides for the design phase of the replacement system 
and Phase 1 of implementation which includes modernization of the 
Census Bureau's core financials, acquisitions, and property 
activities--critical to ensuring timely migration in advance of 
conducting the 2020 census.
    The fiscal year 2014 budget includes $5.5 million for the 
relocation and facility improvements of four weather forecasting 
offices to mitigate operational risks and maintain continuity of 
weather forecast and warning operations. These facility repairs and 
improvements are important to avert unacceptable conditions that will 
impact operations critical to the Weather-Ready Nation mission to save 
lives and livelihoods and maintain compliance with weather office 
standards. The budget also includes $1 million in one-time funding for 
a study analyzing alternative observing and research platforms to the 
current Hurricane Hunter (P-3) aircrafts that are used for NOAA 
hurricane research and reconnaissance. Although these aircraft will 
receive service-life extensions in 2015, they will reach the end of 
their operational lifetimes by 2030 and 2031, respectively.
                               conclusion
    The President's fiscal year 2014 budget request reflects the 
crucial role that the entire Department of Commerce plays in making 
public investments that help to accelerate job growth, strengthen the 
economic recovery, and support American businesses across our country. 
At the same time, we fully recognize the challenging budget climate in 
which we find ourselves, and the budget reflects difficult choices that 
meet the need for responsible reductions.
    By combining crucial investments with fiscal responsibility, the 
budget sets forth a meaningful plan to further stimulate private sector 
job creation and promote American competitiveness for years to come. 
With each of our 12 bureaus working together, I am confident in our 
ability to realize that vision.

    Chairwoman Mikulski. Well, we note that the Secretary has a 
more amplified statement and also you will have a description 
of the actual budget submission. Where can new members get 
this, Jean?
    Ms. Eisen. They have it in front of them and we will 
distribute it to their offices, Senator.

                         SATELLITES AND WEATHER

    Chairwoman Mikulski. Madam Secretary, I want to talk about 
protecting America, and the first is weather. We know that our 
military does such a great job protecting us, but really 
weather protects Americans, whether it is people on farms 
worrying about tornadoes or in coastal areas about hurricanes. 
And the world depends upon us for air traffic control and so 
on.
    Weather really begins with our satellites in the sky. We 
have been deeply troubled about the cost overruns in weather 
satellites and whether they are modern, and for all the money 
we are spending, are we getting value for our dollar. You have 
led a reform effort with us. Would you tell us if we want to 
have a modern weather service where we are as good as the 
European model--remember, we all heard a lot about this 
European model during Hurricane Sandy, but we hear about it all 
the time. Could you share with us, starting with the satellites 
and then some other questions, where are we to make sure that 
we are both modernizing weather? And then I always fear that 
where there is technology, there is a techno-boondoggle. What 
have we done to un-boondoggle?
    Dr. Blank. Thank you for that question. I very much agree 
with the statement that the weather satellites are very 
important buttresses for what is, I think, the Department's 
most important priority for protecting life and property, which 
are our weather forecasting services.
    So as you well know, Senator, we have been through a 
variety of changes in our satellite program. We had an 
independent team review it this past summer. They were 
reasonably complimentary about our Geostationary Operational 
Environmental Satellite-R Series (GOES-R) program, which is the 
geostationary satellite orbiting program which has been under 
NOAA's authorization since its very beginning and is largely on 
budget and on track for a launch later in this decade.
    There have been more concerns about the Joint Polar 
Satellite Systems (JPSS) program, which was transferred over to 
the Department of Commerce about 2\1/2\ years ago because it 
was a very troubled program where it was currently sited. We 
have taken a number of steps, particularly over this past year, 
as a result of the independent review team's recommendations 
and as a result of some of the very hard questions that you and 
your team have asked, to improve the management of that 
program. We have furthermore--this goes to your technical 
boondoggle question--focused the program on its primary 
mission: weather. We have a lifecycle cost of $11.3 billion, 
which I think is within the cost range that you had asked us to 
aim. I am quite confident that if we receive the budgets we 
need to keep these satellites on track, then we will be able to 
stay within that lifecycle cost.
    But I do have to emphasize that both of these satellites 
are going toward launch, and these particular years are quite 
critical years for making the progress that needs to be made. 
So the fiscal year 2014 budget request, which I think is 
absolutely crucial that this be met in order for these 
satellites to stay on track in the way that they currently are.
    Chairwoman Mikulski. First of all, we want to thank you for 
embracing the spirit of reform. You know that I have been 
deeply concerned, particularly about the JPSS. Not only were 
Senator Mikulski and Shelby concerned about it, but the 
Government Accountability Office (GAO) added it to its top 
high-risk problems in the U.S. Government and, at the same 
time, the inspector general, who I know will talk about it, 
did. I think you have got us on the right track. We want to 
make sure we have the right resources and, in your departure, 
that we have the right management and the right commitment.
    As you know, I wanted to take the satellites away from NOAA 
and give them to the National Aeronautics and Space 
Administration (NASA). I have now stopped that because of your 
reform efforts. In my mind, the satellite program is on 
probation, not to cancel it, but where we will continue to do 
it. And I say to my colleagues keep an eye on this with me 
because I think this is how we modernize ourselves. This is the 
building block.
    The second question about weather is this: if we need to 
modernize ourselves, why is the President advocating 
eliminating information technology (IT) workers?
    Dr. Blank. The proposal is for a reorganization of the 
National Weather Service (NWS) IT offices. What we are 
basically trying to do here is to modernize IT services. The 
current model that we have is one that worked in the 1990s, but 
it is not one that is currently used in the private sector and 
it is not one that is considered a best practice in Government 
either. We want to use de-centralized services, which would 
mean we need fewer workers out in the field, but we need more 
expertise at certain central locations. I think this is the 
best practice model that most of the public and private sector 
is moving toward. We would like to move NWS that direction. I 
think it is an important step in both being responsible with 
taxpayer dollars and modernizing those services within NWS 
offices.
    Chairwoman Mikulski. Well, I have many more questions to 
ask, but we want to thank you and we really want to thank you 
for your service.
    Dr. Blank. Thank you.
    Chairwoman Mikulski. Senator Shelby, I am going to stick to 
the 5-minute rule.
    Senator Shelby. Thank you, Madam Chairman.
    Dr. Blank, recent data suggests that manufacturing in this 
country is experiencing a real resurgence, and we are all happy 
for that. This is not because the Federal Government is 
throwing money at it. It is happening because it makes good 
economic sense, I believe, for companies to locate their 
facilities here.
    Given that the market appears to be working, as it relates 
to manufacturing, and the fact that the Federal Government is 
already making significant investments in manufacturing 
technology advancement, would it not be more cost effective to 
allow the market to work and instead support these industries 
by eliminating some of the severely burdensome tax and 
regulatory policies that are a true hindrance to doing business 
in the United States rather than create a mandatory $1 billion 
program? Explain. Explain first briefly what is this program. 
Why are you creating it, and what is it supposed to do?
    Dr. Blank. So the National Network for Manufacturing 
Innovation is a one-time mandatory proposal--it is not an 
ongoing program--to create 15 innovation centers inside the 
United States. And as I am sure you know, we launched a pilot 
for this last summer in eastern Ohio, western Pennsylvania, and 
northern West Virginia that is focused on 3-D printing. The 
idea here is to put together a consortium of private sector 
companies, top research universities, and tech transfer and 
community-based foundations to move certain areas of 
technology, that are incredibly promising and are moving very 
fast so the United States remains at the forefront in these 
technologies. And companies that are located here, particularly 
within these clusters, take advantage of being on the front end 
of technological progress.
    Basically it is an effort to make sure that the United 
States stays competitive. It is matching things that a number 
of our competitor nations currently do. Germany, for instance, 
has 30 such institutes, and has had them for a number of years. 
They have been very effective in helping German manufacturing. 
We essentially want to copy and improve upon that model.
    Senator Shelby. Well, how will this work? Give me a 
particular.
    Dr. Blank. This would be a competitive proposal overseen by 
NIST within the Department of Commerce, but working in close 
collaboration with the Department of Energy (DOE) and the 
Department of Defense (DOD) and a number of the other agencies 
around the Federal Government. The idea is that local regions 
would propose a particular institute based on their expertise. 
So you could imagine one institute that is focused on high-
sensory robotics, and one institute that is focused on some of 
the new materials. You could imagine a number of other 
institutes that might also focus on 3-D printing since there 
are a number of very interesting----
    Senator Shelby. Institutes. You mean like the university 
engineering and everything?
    Dr. Blank. Yes. The idea is that this is really a 
partnership between research communities, the public sectors, 
and the private sector in these regions. And the private sector 
would drive the research agenda. What do they need to know to 
make more progress in this area and to develop the next set of 
advanced products?
    Senator Shelby. But what will particularly the Government 
do here? Will they award money to create a dynamic that is 
already there, or will they enhance the dynamic?
    Dr. Blank. So the Government does two things in this role. 
First of all, it invites these consortia to form, to get 
together and talk to each other, with the promise of seed money 
from the Government. And in the one that we set up in Ohio-
Pennsylvania, we put in, I think, about--I do not know if I can 
get this number right--somewhere between $30 and $40 million. 
We had a 2-to-1 match of private sector to public sector funds. 
The companies themselves put quite a bit of money into the 
consortium, which show that the companies thought this 
consortium was real value added to them and a program that was 
worth running.
    Senator Shelby. And you say this is built on something the 
Germans have done over the years?
    Dr. Blank. A number of other countries do this. I think 
Germany probably does it best.
    Senator Shelby. Dr. Blank, I have got to find out more 
about that.
    Dr. Blank. I would be happy to make sure you get more 
information.
    [The information follows:]
                overview of the german fraunhofer model
  --The German Fraunhofer Society consists of 66 separate institutes 
        spread throughout Germany, each focusing on a different field 
        of applied science, and each affiliated with a particular 
        university. Examples of Fraunhofer Institutes are Applied 
        Optics and Precision Engineering, Applied Polymer Research, 
        Machine Tools and Forming Technology, and Laser Technology. 
        Basic research, by contrast, is funded through the Max Plank 
        Society.
  --Fraunhofer Institutes directly employ a total of around 18,000 
        researchers, with a total annual research budget of about $2.2 
        billion.
  --Of this budget, the German federal government provides \1/3\ base 
        funding for ongoing operations and facilities. The remaining 
        \2/3\ are for applied research projects, with funding split 
        between government (federal, state and EU) and industry.
  --The federal funding for Fraunhofer Institutes is recurring, 
        although non-viable Fraunhofer Institutes can be closed.
  --Fraunhofer Institutes are motivated to perform contract research, 
        as the German federal government provides a match (euro for 
        euro) for such contract work.
  --The Fraunhofer Society is a non-profit organization that conducts 
        research and demonstration projects between basic research done 
        at Universities and the new products created at Industry; this 
        roughly correlates to the TRL 4-7 space envisioned for the 
        National Network of Manufacturing Innovation (NNMIs). According 
        to the Fraunhofer website, ``The Management Model of Fraunhofer 
        is driven by the intermediary position between science and 
        Industry''. There is a strong focus is on SMEs, which have not 
        yet developed their own in-house R&D capabilities.
  --Fraunhofer Institutes are membership based, with members paying 
        annual dues.
  --Each Institute is run by one or more Directors, each of whom has a 
        double role as a professor at the local University, where he 
        guides Ph.D. students. He can also recruit the best students 
        for research at the Institute. The Director has significant 
        autonomy and can decide where to spend the government funds.
  --Every 2 years, the Fraunhofer Society has a strategic meeting where 
        an attempt is made to forecast trends, and assess the need for 
        new Institutes. If a new Institute is warranted, negotiations 
        are conducted with the state governments, who are interested in 
        attracting Institutes since this spurs economic development. A 
        new center has a 5-year plan to demonstrate viability.
  --Similarities between the Fraunhofer Institutes and envisioned 
        Institutes for Manufacturing Innovation (IMI):
    --They both focus on the TRL 4-7 stage of product development.
    --They foster the marshaling of a region's resources to address a 
            technical problem: federal and state governments, industry 
            and academia partner together.
  --Principal differences between the Fraunhofer Institutes and the 
        envisioned IMIs:
    --The Fraunhofers are funded at a higher level each year than the 
            one-time request associated with the NNMI. The annual 
            Fraunhofer budget is about $2.3 billion, while the NNMI is 
            a one-time only $1 billion request. Note that Germany's 
            economy is roughly one quarter the size of the U.S. 
            economy.
    --The NNMI is not an open-ended commitment; NNMI funding is an 
            investment to establish the space for an applied research 
            consortia, similar to the one time investment in SEMATECH.
    --NNMI has a stronger focus on education and workforce development, 
            and on access for small and medium size manufacturers.

    Senator Shelby. My next question is about the satellite gap 
mitigation. While NOAA has developed a gap mitigation plan to 
address satellite coverage issues, I am concerned that much of 
the plan is contingent upon additional changes and engagement 
with the Chinese to access their data. Such a plan raises 
eyebrows with a lot of us in light of recent cyber attacks a 
lot of people think are linked to China.
    Do you believe that accessing data, obtaining data from the 
Chinese is the best solution to address the gap? And if so, 
why?
    Dr. Blank. So this is a problem in terms of the JPSS 
satellite program with its transfer with some of the funding 
issues that it has hit. There is a projected gap between when 
the expected lifetime of a satellite that is currently up there 
will end and when the new satellite goes into orbit. We are 
trying very hard to work as fast as possible to get that new 
satellite up there, which is one reason why the fiscal year 
2014 funding for this is so important. The best way to deal 
with this gap is to make sure it is not there.
    But if indeed we do face a gap, that the one satellite 
there would die before we get this next one up in orbit, then 
we unfortunately do not have a satellite that provides us with 
this orbiting coverage. The two countries that are closest to 
us that provide close-term coverage are China and France. I 
would prefer not to have to use data from either of those two 
countries for our weather forecasting. I would much prefer for 
us to rely upon our own resources and get our satellites up 
there much more quickly and----
    Senator Shelby. What do they get from us for allowing us to 
access their data? I mean, they are bound to get something, a 
quid pro quo.
    Dr. Blank. Yes. There is a world satellite data sharing 
effort around world weather forecasting. For instance, we share 
all the time with the European satellites. The European 
Geostationary Meteorological Satellites (EUMESAT) is their 
program, and we share the data with them. They share their data 
with us. That makes it a little more cost effective. We do not 
have to cover the whole world. We can focus on North America.
    Senator Shelby. Will this give them a leg up on maybe 
accessing some of our intellectual property that we have? Is 
that not always dangerous?
    Dr. Blank. Yes. We can come back and talk about China and 
intellectual property, which I think is an important issue.
    With regard to weather data, I do think you actually want a 
world in which everyone shares their observations with each 
other so that we can all benefit. We can track long-term 
weather much better if we can track it globally.
    Senator Shelby. Thank you.
    Dr. Blank. Thank you.
    Chairwoman Mikulski. I just want to say that this 
subcommittee is going to focus on weather. We think it is 
important to our economy. We think it is important to our 
international relations, and we certainly think it is important 
to the safety of our people. And I intend to hold a roundtable 
on weather rather than this kind of more rigid hearing 
structure in which members will be invited. And we hope to hear 
from Dr. Uccellini and thinkers in the field of weather about 
what is the best way to modernize and yet stay within our own 
fiscal limits here.
    I would like now to turn to Senator Merkley. Then we will 
have Senator Boozman, if he returns, Senator Shaheen, and 
Senator Murkowski.
    Senator Merkley. Thank you very much, Madam Chair. A 
pleasure to be here.
    And thank you, Madam Secretary.

               ECONOMIC DEVELOPMENT ADMINISTRATION GRANTS

    I wanted to ask you first about the EDA budget. EDA grants 
have been very significant to Portland's smaller communities, 
some of our rural communities. One has used EDA grants for a 
marine terminal and docks, another for industrial parks, 
another for fiber optic upgrades, yet another for sewage and 
water infrastructure. So using these grants is a very flexible 
strategy to address key challenges in smaller communities.
    So this budget is reduced from $111 million approximately 
in fiscal year 2012 to about $70 million. Can you give a little 
sense, since this has been such a flexible fund for rural 
infrastructure, why the downgrade in funding?
    Dr. Blank. Thank you, Senator Merkley. I appreciate the 
chance to answer your question.
    So the public works budget we have reduced, but we have 
expanded our budget in other areas that we actually think are 
slightly more flexible areas. The economic adjustment 
assistance and this new proposed program on Investing in 
Manufacturing Communities--both of these are programs that 
allow funding for infrastructure and can be used for public 
works, but also allow communities to combine their public works 
requests with other things that oftentimes are equally 
important for them to build the economic infrastructure they 
need such as workforce development programs, science parks, or 
tech transfer programs.
    I think the argument that we would like to make with regard 
to this budget is that we are moving the money into a more 
flexible category so that communities that need public works 
can still access it, but they can combine those requests to ask 
for a host of things that together might move them further 
along than focusing just singly on a public works road project 
or some such thing.
    Senator Merkley. It sounds like I can assure those 
communities that they will have very similar flexibility to 
address the same sorts of needs.
    Dr. Blank. Yes, I believe that is true. I certainly would 
make that assurance to you.

                         PACIFIC COASTAL SALMON

    Senator Merkley. Thank you.
    I want to turn next to NOAA's Pacific Coastal Salmon 
Recovery Fund. This is a fund that has been essential to my 
State and much of the Northwest that have significant salmon 
runs because it is such a challenge restoring streams, habitat 
for transitioning salmon coming up and down the river, so on 
and so forth, for spawning. That budget also is cut 
significantly, a $50 million reduction from fiscal year 2012.
    Salmon actually have up and down cycles, but the challenges 
remain huge, the challenges of dam transit, international 
shipping, changing water conditions, changing types of 
predators. The challenge is just as large. Can you give a 
little bit of thought to this?
    Dr. Blank. We gave a lot of thought to that, Senator, as 
you might imagine. We knew that we would get asked questions 
about this.
    So our Pacific Salmon Recovery Fund is important and we are 
leaving a substantial number of dollars in that fund. But we 
were at a point where we had as much money in that particular 
fund for one specific species as we had in all of our species 
recovery funds to cover all other endangered species in the 
fisheries area.
    If indeed salmon remains the most important species in this 
Nation, we can use our species recovery grants to cover salmon 
as well as other species. But it gives us more flexibility 
across a whole host of fishery issues while still retaining a 
substantial amount of funding directed toward salmon.
    Senator Merkley. I will just note that one of the keys is 
try to keep the runs from being listed, if you will, because 
once that happens all kinds of other crazy things happen. So 
the investment up front for something that is very significant 
to our economy--both sport fishing and commercial fishing are 
huge drivers, and we would like to keep maintaining and 
improving the habitat so we do not get listed.

             NATIONAL NETWORK FOR MANUFACTURING INNOVATION

    I want to turn next to the $1 billion for the 15 
institutes, the National Network for Manufacturing Innovation, 
and first praise the administration for focusing on 
manufacturing. Oregon is a very significant manufacturing State 
and has one of the highest proportions of its economy in 
manufacturing, which is a little bit of a surprise to folks 
because they do not necessarily think of Oregon that way.
    But you mentioned that this was a one-time appropriation, 
one-time mandatory appropriation, this $1 billion. So let us 
say we set these up for 1 year. What happens the next year?
    Dr. Blank. So these are actually set up, and the money 
would be spent out over a series of years. We do not spend it 
all in 1 year. Usually these institutes are 5- to 7-year 
projects with substantial amounts of matching funds. The hope 
is that if these are successful enough--and this does go back 
to Senator Shelby's comment--that the private sector will find 
resources to continue a good deal of this research if, indeed, 
it is returning to the companies processes and products that 
they are able to go sell and can keep them on the forefront of 
the economy.
    Senator Merkley. Well, thank you for this focus on 
manufacturing because if we do not make things in America, we 
will not have a middle class.
    In closing, just a comment that all of the efforts for 
trade enforcement that are involved in ITA are extremely 
important for American manufacturers to have a fairer playing 
field. Thank you.
    Dr. Blank. Yes. Thank you.
    Chairwoman Mikulski. We are going to turn to Senator 
Murkowski, then Pryor.
    Senator Murkowski. Thank you, Madam Chairman. Good morning.

                               FISHERIES

    I want to talk a little bit about fish this morning. The 
first question will address the NOAA Observer Programs in the 
North Pacific groundfish fisheries. As you remember, that has 
been expanded to the groundfish vessels under 60 feet, as well 
as commercial halibut vessels that have not previously been 
covered. There has been a lot of back and forth on this working 
with the North Pacific Fisheries Management Council and NOAA 
fisheries. I think I can state very clearly that Alaskans are 
very supportive of making sure that we have good, reliable 
data. We understand the importance of the observers, but we 
also recognize that on many of these vessels--these are small 
vessels, that only have room for a very limited number. And so 
when you have human observers on board, there are issues that 
are created.
    So electronic monitoring is the option that Alaskans are 
very interested in implementing. We have been told that the 
electronic monitoring option was going to be forthcoming, but 
it seems that not only is the process slow, it gives the 
appearance that NOAA is actually putting impediments in the way 
of implementing the observer program.
    I guess the question to you is whether or not you will work 
to ensure the implementation of the electronic monitoring 
option as soon as we can possibly make this happen.
    Dr. Blank. So I know that NOAA is looking closely at 
electronic monitoring options. As I understand it, the 
technology at this point is still not good enough to fully 
replace the sorts of observations that human observers are able 
to collect.
    Senator Murkowski. I think that this is under dispute.
    Dr. Blank. Perhaps we should ensure that my staff and your 
staff talk and share all their information so everyone feels 
like we have got some agreement on that point.
    But when we have an electronic monitoring system that we 
think is as accurate as the human monitoring systems that we 
currently have in place, we certainly will do what we can to 
implement them in Alaska, as well as elsewhere around the 
country.
    Senator Murkowski. Well, I would like to follow through 
with this issue with you because, again, that commitment that 
we would work toward an electronic monitoring system has been 
made. It does not seem that we are getting the level of 
cooperation that we would like on this. The promise has been 
made that it is forthcoming. So I need to have a little more 
information to go back to my constituents that are very 
concerned about this. So if we can work with you on that.
    Dr. Blank. We will follow up with you on that one.

               NATIONAL OCEAN POLICY IMPLEMENTATION PLAN

    Senator Murkowski. I would like to ask you about the 
National Ocean Policy and Coastal Marine Spatial Planning. We 
have made very clear in Alaska--and I have had many 
conversations with Director Lubchenco on this issue. Alaska has 
consistently expressed their concerns with a federally driven 
National Ocean Policy leading to the coastal marine spatial 
planning. I am told that the administration is on the verge 
here of releasing its National Ocean Policy Implementation Plan 
and that Alaska will, in fact, be excluded from the requirement 
to form a regional planning body.
    So the question to you is whether or not you can confirm 
that Alaska will be excluded from the National Ocean Policy 
Implementation Plan.
    Dr. Blank. So that implementation plan is under the 
oversight of the Council of Economic Quality and Office of 
Science and Technology Policy and the White House, and they are 
the ones that are putting it together. I have also heard that 
it is going to be released relatively soon, but I simply cannot 
speak to a report that is not under my control and has not yet 
been released.
    Senator Murkowski. Okay. Well, this is an important issue 
to us. And I appreciate the chairman here working with us to 
ensure that in fact any funding for implementation of Coastal 
Marine Spatial Planning has been zeroed out in the past. This 
is something, of course, that we are monitoring very carefully. 
And it has been represented to us that those States that do not 
want to participate will not have to participate. So I would 
certainly hope that Alaska would be excluded when that 
implementation plan comes out.

                             MARINE DEBRIS

    Moving on to marine debris after the Japanese tsunami in 
2011, an estimated 1.5 million tons of debris is floating out 
there in the ocean. We have seen it come up on the shores in 
Hawaii, out in Oregon. In Alaska, we are seeing it. And we know 
that it is still coming our way years after the fact.
    The question to you, in terms of budget issues, is what 
funding has the President requested to address the tsunami 
debris that we anticipate will be coming forward not only this 
year but going into next.
    How is NOAA working with the various Federal agencies, the 
States, the tribes, the local governments to deal with the 
ongoing tsunami marine debris?
    Dr. Blank. I know that there is a lot of concern about the 
potential debris problems that we are going to be facing, and 
NOAA has been working closely with all of the States that are 
potentially going to be involved in this.
    This particular budget has $6 million for marine debris 
activities. That is a $1 million increase over the budget of 
last year.
    Senator Murkowski. And that is general marine debris?
    Dr. Blank. Yes, though I think the expectation is that 
almost all of it will be focused in the areas that are facing--
it is one reason why we are asking for an increase because we 
think there are going to be increased problems and needs in 
that area.
    As you also know, the Japanese Government has pledged $5 
million which I think NOAA will be administering and we will be 
able to spend as well if indeed we see these sorts of problems 
emerging along the coastline.
    Senator Murkowski. Well, Madam Chairman, I appreciate your 
focus on coasts and keeping our coasts clean. This is something 
that is ongoing. We would like to think that years after the 
tsunami we are not going to be seeing this impact, but we know 
in Alaska there is still an incredible amount that is out 
there. Unfortunately it is costly to recover, but the 
alternative is that our beaches and our coastlines are greatly 
impacted.
    Chairwoman Mikulski. First of all, we understand you and 
the west coast are under a lot of stress with this, and you 
should not have to bear the burden of another country's 
problems. The Japanese want to help and we want to help. And I 
think we need to look at report language so that whatever money 
we are doing on coastal debris, because we all have it, is put 
to agreement. So let us work together.
    Senator Murkowski. Good. Thank you.
    Chairwoman Mikulski. Senator Shaheen representing the east 
coast, all 9 miles of your shoreline.
    Senator Shaheen. Eighteen miles, Madam Chair.
    Dr. Blank. It is an important 18 miles.
    Senator Shaheen. It is a very important 18 miles. And thank 
you.
    Chairwoman Mikulski. And I apologize. With this job, I need 
to up my math here.
    Senator Shaheen. Good, good.
    Well, I appreciate being on the subcommittee.
    And thank you very much, Secretary Blank, for being here 
this morning and for taking over the Commerce Department at a 
critical time.

                         FISH-CATCH LIMITATIONS

    I want to continue the line of questioning from Senator 
Murkowski and continue to talk about fish a little bit because 
despite the fact that our coastline is only 18 miles long, 
fishing is a very important industry to that coast and it has 
been historically very important to the way of life in New 
Hampshire. And sadly, because of the catch limitations that 
have been placed on fishermen in the Northeast, we are looking 
at a fishing industry in New Hampshire that is likely to go out 
of business entirely.
    Unfortunately, the calculations that have been made in 
recent years have been wrong, and now our fishing industry has 
to accept about an 80-percent reduction in the amount of cod 
that they are permitted to catch.
    So I wonder if you can tell me how the budget might reflect 
what specific steps we can take to help the fishermen and their 
families in New Hampshire and in the Northeast who are affected 
by these draconian catch limits and what I can tell them about 
what we are trying to do to address really the loss of their 
livelihood.
    Dr. Blank. I understand the really serious problems that 
the fisheries throughout New England have been facing in the 
last couple of years. The observed declines in cod and 
yellowtail flounder and a number of other species are seriously 
threatening the economic livelihoods of lots of fishermen. I 
know that this is a problem close to the hearts of many people 
in that area.
    This is one of the main reasons why we declared a fishery 
disaster in New England. Unfortunately, like other types of 
disasters, we do not have money in our immediate budget to fund 
the response to that disaster. That has to come through a 
special appropriation, and we certainly stand ready to work 
with you and with others in whatever way--and in whatever 
vehicle is best in which such an appropriation can be developed 
and funded.
    We do have the ongoing money that exists inside NOAA to 
work closely with fishery councils to keep observations on what 
is happening with stock and to use the best science that we 
have available to project how those stock assessments should 
translate into annual catch limits. I know that has been 
causing a lot of pain in the region, and it is one that we have 
to stay in close conversation about. We do work very closely 
with the local fishery councils which are the people on the 
ground in this industry, and really try to coordinate all of 
our actions and not have any surprises through those local 
fishery councils to the local fisheries.
    Senator Shaheen. Well, I appreciate that and I appreciate 
the support that I know the chairwoman and hopefully the 
ranking member will give to us as we try and provide some 
relief.
    Chairwoman Mikulski. Let me just--well, you finish your 
question because I do not want to take your time.

                          INTERNATIONAL TRADE

    Senator Shaheen. I want to go on next to trade because I 
certainly appreciate the increased support for various trade 
activities within the budget. And it has been very important to 
the State of New Hampshire and I think to the country as a 
whole. My favorite statistic is that more than 95 percent of 
markets are outside of the United States, but only 1 percent of 
small- and medium-sized businesses do business outside of the 
United States. So clearly we have got to do better.
    I wonder if one of the challenges is getting out to small 
businesses in New Hampshire and across the country about what 
efforts are available to help them. And I wonder if you could 
talk about how the budget reflects efforts to help small 
businesses understand what is available. And then could you 
also respond to whether there is a single window that you might 
be looking at to help with not just all of trade, but as we 
look at the changes in our export regulations, how businesses 
access that information?
    Dr. Blank. The International Trade Administration (ITA), 
has a domestic commercial service which has offices all 
throughout the United States and is the front line at the 
Department of Commerce in working with small- and medium-sized 
businesses to try to encourage exports. ITA's Foreign 
Commercial Service (FCS) assists particularly small businesses 
that might be thinking about developing an export business or 
expanding what they already have, as they often do not have the 
resources to do the research in a new country with all of the 
various questions and barriers and issues that arise when you 
are trying to sell in a new country. That is what our Foreign 
Commercial Service is all about.
    And there are resources in the fiscal year 2014 budget 
request to expand our Foreign Commercial Service. One of the 
biggest things that I hear from the private sector, and when I 
go overseas, and from people inside the State Department as 
well is that we do not have enough boots on the ground to 
support American businesses who want to sell abroad. So this 
budget addresses that issue very directly.
    I should also note that our Minority Business Development 
Administration has increasingly focused resources on trying to 
work with minority-owned businesses to get them into the export 
and trade area. As you may know, minority-owned businesses 
export at a much higher rate than do other businesses. So that 
is an area where we are trying to grow as well.
    Senator Shaheen. Well, thank you. I applaud the increase in 
the Foreign Commercial Service because our businesses have 
found that very helpful.

                          FISHERIES DISASTERS

    Thank you, Madam Chair.
    Chairwoman Mikulski. I am going to just make a quick 
comment before we turn to Senator Reed and Senator Pryor.
    I am really worried about the fisheries disasters and how 
to respond to them on either coast and also Alaska. I was also 
worried that during Hurricane Sandy, when Senators raised 
issues related to fisheries disasters, agricultural disasters, 
and wildfire disasters, we could not accommodate their needs. 
We were bare-cleated in some of those, and I pledge that I will 
work with each Senator in those sectors. I do not quite know 
how we are going to crack that code, but that is the full 
committee.
    But in terms of the fisheries disasters, there is a total 
misunderstanding that was not certified by the Federal 
Emergency Management Agency (FEMA) and that somehow or another 
it was extraneous to the Hurricane Sandy bill.
    So I say to you, to my colleagues, the coastal Senators on 
this subcommittee, that I really want to work with you and work 
with my vice chairman, Senator Shelby, because they faced it on 
the gulf with the oil spill and they have had some really 
terrible events that have occurred to them, both natural and 
manmade.
    First of all, there is no pot. Like FEMA has a pot for 
disaster, and then if it is a big event like an earthquake, we 
supplement. But we do not even have a threshold. And I do not 
know how to create a pot yet--yet--without violating my budget 
caps. So let us put our thinking caps on.
    I say to my colleagues if you have got the ideas--we are 
going to be working on it, but I thought we could convene those 
who are most affected by the current fishery disaster to see 
what we could do.
    But I am deeply troubled by this. Ordinarily in a disaster, 
it does not count against the budget caps, but if I create a 
fund now, it would. And that also goes to agriculture and it 
goes to the wildfires. But I made a pledge and I intend to do 
everything I can to keep it.
    Senator Reed.
    Senator Reed. Well, Madam Chairwoman, thank you for those 
strong words of support because I join Senator Shaheen. The 
Rhode Island fishermen are as badly affected as the New 
Hampshire fishermen. In fact, we are the Ocean State. We have 
major fishing activities, and our fishing industry has been, 
not the last few years but for a decade, in serious decline 
because of many factors, and your help would be instrumental. I 
know my colleague from Alaska has the same issues with respect 
to her fleets. So this is something that we have to deal with.
    It is not just also--and actually Secretary Blank has been 
very helpful--it is not just jobs. It is a whole lifestyle. It 
is a whole community. It is a whole social network that is 
under threat of being destroyed. So thank you, Madam Chairman, 
very much.
    Since the question has been covered, I will move on to 
another question. But first, I understand you are leaving 
shortly to assume the chancellorship at the University of 
Wisconsin--Madison?
    Dr. Blank. Yes, I am.
    Senator Reed. Well, I think dealing with us might prepare 
you somewhat for dealing with faculty and coaches.
    Dr. Blank. Coaches are a whole other world.
    Senator Reed. I understand that. You can report back in a 
year, Madam Chancellor, to see if you are looking back 
wistfully at your happy days here with the Senate or you are 
happy in Wisconsin. Good luck.
    Dr. Blank. Thank you.
    Senator Reed. I want to thank you. You have been very 
responsive to the many needs of Rhode Island.

                           MANUFACTURING HUBS

    There is one issue--and I know Senator Shelby has raised 
the justification for the mandatory funding for the 
manufacturing hubs. I want, if you can, to explore how you 
intend, if this is provided to you, to engage. Rhode Island has 
a proud manufacturing tradition, but once again, that is in 
decline also. And we are trying to innovate and restart 
manufacturing. We are very much interested in these hubs being 
deployed. I know DOE and DOD are, with your help, promulgating 
three at least. But can you give us again an idea of how you 
are going to engage the process, and also going right back to 
Rhode Island, is there going to be sensitivity to areas that 
have traditional manufacturing but are suffering acutely--we 
have a 9-percent unemployment rate--where a hub like this could 
be incredibly helpful vis-a-vis other areas of the country 
which for many reasons are doing much better?
    Dr. Blank. So let me mention two programs here. The 
National Network for Manufacturing Innovation (NNMI) is really 
focused on keeping American industry at the front end of 
technology, and these hubs between the private sector and 
research universities are designed to do that. NNMI is going to 
be competitively awarded so that we are encouraging regions to 
put the consortia together and come up with proposals once we 
get approval to start this program. The whole New England area 
has quite a strong set of schools which think they would be 
able to put together a proposal that is going to look very 
attractive.
    But let me also mention the other new program that is in 
the budget here, the Investing in Manufacturing Communities 
Program, which I think goes directly to your concerns. I do 
have the sense that too many American communities have been 
focused for the last three decades on how to deal with the 
flight of manufacturing. We are, in the next 5 to 10 years, in 
just the opposite world where manufacturing is going to want to 
come to the United States, particularly advanced high-tech 
manufacturing. And the Investing in Manufacturing Communities 
Program is designed to give some seed money and some push to 
communities that may have experienced some hardships and some 
loss of jobs in the past to start developing a strategy to 
build the infrastructure they need to attract new manufacturing 
to America. It is a program I am really quite excited about. I 
think it is aimed at exactly the sort of problems that you are 
discussing and has a real opportunity to bring even more 
investment, both retaining domestic investment and bringing 
foreign investment into this country, and through that, 
creating jobs and economic growth.
    Senator Reed. Well, thank you, Madam Secretary. Obviously, 
we look forward to working with you for as long as you are 
there and continue this work. But I think you have identified 
in these programs areas of significant concern and significant 
potential as the world economy rebalances, as companies come 
back, as we have to get ahead.
    I think the other factor too is that for a long time we 
thought manufacturing was something we could do without, that 
it was relatively low-skilled, that financial engineering was 
much more the way of the future than good, old-fashioned 
mechanical engineering. And I think we have been awoken to the 
idea that we need manufacturing as a country and we need it in 
Rhode Island particularly.
    Thank you, Madam.
    Chairwoman Mikulski. Colleagues, the vote has just started, 
and here is what I dearly would like to do. Senator Pryor, 
please proceed with your questions. And then I would like to 
thank you, Dr. Blank, and then to have the inspector general 
testify, keep it to 5 minutes so that we could get you on the 
record. I will come back for questions and invite every other 
member who could. You are too important. We are going to do it, 
but let us squeeze in your testimony before we have to dash. 
Does that sound good, Senator Pryor.
    Senator Pryor. Thank you, Madam Chair.
    Secretary Blank, welcome back to the subcommittee. I 
appreciate you and your service. Good luck to you in your next 
role at the University of Wisconsin--Madison.

                   SCIENCE PARKS/INNOVATION CLUSTERS

    I want to talk to you about science parks or as some people 
call them innovation clusters. They have been very, very 
successful around the country. We have one in Arkansas. It may 
be small by some standards, but it has been a real success 
story for us. We are working on another one in Little Rock, and 
we hope that one is going to be successful as well.
    In the America COMPETES Act, we have section 603 that 
authorizes, or establishes a regional innovation program that 
would include grants, loan guarantees, et cetera. My 
understanding is that the Department has not yet promulgated 
the regulations and has not set up that loan guarantee program. 
Obviously, we have had fiscal issues on our end. So I am not 
throwing all the blame on you, but I would like a status report 
and to know how quickly you think we can get this loan 
guarantee program set up and how effective you think it will 
be.
    Dr. Blank. Science parks, I agree with you, are an 
incredibly important piece of bringing manufacturing back, of 
keeping the United States on the front end of innovation. And 
the Economic Development Administration has funded a number of 
these through their regular funding.
    With regard to the loan guarantee program, this is a 
program that we want to set up right, and we have been 
consulting closely with the Department of the Treasury about 
how to do this. I understand that there is a request for 
information that is formally going out to ask banks and 
manufacturers for their advice. There is a process you have to 
follow to collect all of the input before you actually start 
this.
    I do not have a specific timetable for exactly when we are 
going to be ready to launch this, but I would like to make sure 
that our staff and your staff stay in close conversation about 
this. I know it is an issue that is very important to you.
    Senator Pryor. Yes, thank you. It is and it is important to 
the subcommittee, to the full committee and really the whole 
Senate to get this program going. It is like Senator Reed was 
saying a few moments ago: we should not give up on U.S. 
manufacturing. We should not give up on U.S. innovation. We can 
do this, and these science parks or regional innovation 
clusters can be very, very critical to success in those areas.

                            EXPORT PROMOTION

    Let me ask about export promotion. Last year I filed the 
Export Promotion Act of 2012 with Senator Blunt. It did not 
make it all the way through the process. I plan to talk with 
Senator Blunt and see if we can get through the entire process 
this year.
    Part of the bill would assist businesses with exports by 
addressing issues with the Trade Promotion Coordinating 
Committee (TPCC), as outlined in a recent GAO report. I would 
like to get your thoughts on making the TPCC more efficient, 
more effective, and a better coordinator for U.S. businesses 
who are trying to export more products.
    Dr. Blank. So we chair the TPCC. I care a lot about trying 
to make that particular coordinating agency as useful as 
possible, and I am more than happy to engage in ongoing 
conversations and discuss any ideas that you have, including 
things that we can be doing and need to do even before any 
legislation might potentially be enacted.
    There are a host of different agencies that do trade. We 
try through TPCC to get them to talk to each other as much as 
possible. I think we have been relatively effective at trying 
to establish some common priorities particularly around areas 
of the world and industries where we think there are real 
advantages and opportunities for U.S. business. And so the Ex-
Im Bank and our advocacy and OPIC are all working together in 
some of those areas. But we can always do this better.
    And I have to mention that for trade promotion, the part of 
the budget that calls for additional funds in our Foreign 
Commercial Service efforts is just crucial. That is one place 
where we are falling down right now. We need more people out 
there around the world helping U.S. businesses who are trying 
to enter new markets.
    Senator Pryor. Thank you.

                       STATUS OF INNOVATION HUBS

    And let me ask one last question. I know the President has 
talked about the National Network for Manufacturing Innovation. 
These institutes would be regional hubs to accelerate 
development, adoption of cutting-edge manufacturing, et cetera. 
I know at one point there was discussion of doing three of 
those this year. Are we on track to do that?
    Dr. Blank. So the President has announced that there will 
be three new pilots. We started one last year. I think there 
will be one or two funded by DOD and one or two funded by DOE. 
I am not quite sure where that is in the process. It is great 
to be able to launch more of these.
    My concern, in part, is that the sort of things that DOE 
and DOD can fund are quite limited. They are important but they 
do not cover the full range of technologies where we need to 
establish these consortia. That is one of the reasons why I 
hope these pilot programs hopefully lead to a bigger program.
    Senator Pryor. And I hope as you do those, they will be 
geographically dispersed, not just concentrated around urban 
areas.
    Dr. Blank. Yes.
    Senator Pryor. Thank you, Madam Chairman.
    Chairwoman Mikulski. Dr. Blank, we want to thank you for 
your service. It has been a delight working with you. We are 
going to work right up with you all the way through Memorial 
Day, and we hope to keep in touch with you in Madison. You have 
two great Senators, one of which is new in Tammy Baldwin. So 
thank you.
    We are going to try to move in a quick step if our 
inspector general could come up.
    Dr. Blank. Thank you very much.
    Chairwoman Mikulski. Thank you.
    Mr. Zinser. First of all, we want to welcome you. We love 
inspector generals and the role that they play, and you are 
needed really now more than ever because we have to make sure 
we get value for every nickel we spend. So we ask you to go 
full speed ahead. We will excuse ourselves to vote, and any 
Senators who wish to return would be great. I will return or 
else submit questions to the record.
    Senator Shelby, did you want to say something to Mr. 
Zinser?
    Senator Shelby. No.
    Chairwoman Mikulski. Go ahead.
STATEMENT OF TODD J. ZINSER, INSPECTOR GENERAL, OFFICE 
            OF INSPECTOR GENERAL
    Mr. Zinser. Thank you, Chairwoman Mikulski and Vice 
Chairman Shelby and members of the subcommittee. We appreciate 
the opportunity to be here today.
    I recently completed my fifth year as inspector general, 
and I am beginning my 30th year of Federal service. And I am 
very proud of our contributions at the inspector general's 
office and I am very proud of the hardworking staff there.

                    CHALLENGES FACING THE DEPARTMENT

    We issue a report every year on the top management 
challenges facing the Department. We issued our most recent 
report in November 2012, and those challenges that we 
identified--there are five overarching challenges. I have 
identified those in my written statement.
    Today, I would like to concentrate on four specific areas 
that we think are most challenging.
    First, NOAA and the Department must reduce the risk of NOAA 
satellite cost overruns, schedule delays, and coverage gaps. 
NOAA satellite programs represent almost 20 percent of the 
Department's budget and are critical to the Nation's weather 
forecasting enterprise.
    Second, the Census Bureau and Department must make 2020 
design changes to contain lifecycle costs while maintaining the 
quality of the census. Without changes to how the census is 
carried out, the latest cost estimates indicate that the 2020 
census could cost anywhere from $18 to $30 billion. Even if the 
Census Bureau is able to maintain the costs per household it 
achieved in 2010, which was $94 per household, the cost is 
estimated to be $18 billion, or around $6 billion more than 
2010. Census has to stick to its research and testing schedule 
and make key decisions over the next 2 years. By the end of 
2014, the Congress and the Department need to have the design 
of the 2020 decided.
    Third, USPTO must reduce its backlogs, improve processing 
times, and effectively implement the reforms enacted in the 
Leahy-Smith America Invents Act of 2012 (AIA). Our testimony, 
for example, discusses three backlogs.
    What we call the traditional backlog is around 600,000 
patent applications. It takes almost 3 years to complete a 
patent review. That is backlog number one.
    The time it takes a rejected applicant to receive a 
decision on their ex parte appeal has doubled over the past 2 
years. There are more than 25,000 appeals in the backlog and it 
can take around 20 months to get a decision. So ex parte 
appeals is backlog number two.
    And over the past 2 years, the backlog of annual requests 
for a continued examination (RCE) has more than doubled and 
currently stands at around 100,000. The RCE backlog is backlog 
number three.
    So the workload is significant at USPTO and it also has a 
significant amount of work to do to implement AIA and carry out 
its key modernization project called Patent End to End.
    Fourth, the Department and each of the bureaus must 
strengthen operational controls and oversight under constrained 
budgets. Our concerns in this area range from issues of 
financial management, such as the reprogramming issues found at 
NWS, to persistent problems we have found in IT security, to 
the increase we have seen in compliance and ethics issues 
reported to us via our hotline that require management 
attention. These issues are further detailed in our written 
statement and in our Top Management Challenges report. The 
Department and our office, I believe, are in sync on these 
challenges. I also believe that Deputy Secretary Blank has set 
the proper tone at the top for addressing these issues.
    I would also like to take the opportunity to thank Dr. 
Blank for her support and wish her all the best at the 
University of Wisconsin--Madison.

                           PREPARED STATEMENT

    That completes my statement. I would be pleased to respond 
to your questions.
    [The statement follows:]
                  Prepared Statement of Todd J. Zinser
    Chairwoman Mikulski, Ranking Member Shelby, and members of the 
subcommittee: I appreciate the opportunity to testify today as you 
consider upcoming appropriations for the Department of Commerce. The 
President's fiscal year 2014 budget requests $11.7 billion for the 
Department, including $3.1 billion for United States Patent and 
Trademark Office (USPTO) user-fee financing. The Department plays a 
pivotal role in implementing the President's initiatives for economic 
recovery and job creation--and, like other Federal agencies, faces 
significant challenges in the upcoming year.
    Today, I will briefly summarize several challenges facing the 
Department. These areas are addressed in greater depth in our recent 
Top Management Challenges (TMC) report, which we prepare annually as 
required by the Reports Consolidation Act of 2000.\1\ Our TMC report 
identifies what we consider, from our oversight perspective, to be the 
most significant management and performance challenges facing the 
Department:
---------------------------------------------------------------------------
    \1\ 31 U.S.C. 3516(d).
---------------------------------------------------------------------------
  --Challenge 1.--Stimulate economic growth in key industries, increase 
        exports, and enhance stewardship of marine fisheries.
  --Challenge 2.--Increase oversight of resources entrusted by the 
        public and invest for long-term benefits.
  --Challenge 3.--Strengthen security and investments in information 
        technology.
  --Challenge 4.--Implement framework for acquisition project 
        management and improve contracts oversight.
  --Challenge 5.--Reduce risks of cost overruns, schedule delays, and 
        coverage gaps for the National Oceanic and Atmospheric 
        Administration's (NOAA) satellite programs.
    The challenges I will highlight today focus on the following areas:
  --NOAA Satellites--Reduce risks of cost overruns, schedule delays, 
        and coverage gaps (challenge 5).
  --2020 Census--Implement design changes to contain lifecycle costs 
        while maintaining enumeration quality (from challenge 2).
  --U.S. Patent and Trademark Office--Reduce the patent backlog, 
        improve processing times, and effectively implement patent 
        reform (from challenge 1).
  --Departmental Operational Controls and Oversight--Strengthen 
        operational controls and oversight under constrained budgets 
        (from challenges 1, 2, 3, and 4).
 noaa satellites--reduce risks of cost overruns, schedule delays, and 
                             coverage gaps
    Satellite programs remain the largest investment in the Department, 
comprising nearly 20 percent of the Department's budget. The two most 
prominent programs, the Joint Polar Satellite System (JPSS) and the 
Geostationary Operational Environmental Satellite-R series (GOES-R), 
together accounted for one-third of NOAA's fiscal year 2013 budget 
request. Strong program management and close oversight of these 
programs are needed to manage risks that, if not mitigated, could lead 
to cost overruns, schedule delays, and coverage gaps for the critical 
capabilities these programs will provide. Based on our work with these 
programs, we have identified four areas for management attention:
  --Communicating with stakeholders to define JPSS capabilities, 
        schedule, and cost baselines.
  --Ensuring adequate leadership and governance structure over Joint 
        Polar Satellite System development.
  --Developing a plan to support NOAA weather forecasting capabilities 
        during coverage gaps.
  --Reducing program risks associated with GOES-R development.
Communicating With Stakeholders To Define Joint Polar Satellite System 
        Capabilities, Schedule, and Cost Baselines
    In our September 2011 audit report,\2\ we recommended that NOAA 
develop a mechanism to provide executive and legislative decision 
makers, on a recurring basis, with complete, objective, and 
understandable information that illustrates the consequences of 
limiting satellite observational capabilities. Recently, the Senate 
Committee on Appropriations expressed frustration with NOAA's 
``inability to control procurement costs or articulate reliable funding 
profiles.'' \3\ This resulted in the Senate Committee losing confidence 
in NOAA's ability to manage its portfolio of satellite acquisitions and 
the Committee considered transitioning these acquisitions entirely to 
National Aeronautics and Space Administration (NASA).
---------------------------------------------------------------------------
    \2\ U.S. Department of Commerce Office of Inspector General, 
September 30, 2011. Audit of the Joint Polar Satellite System: 
Challenges Must Be Met to Minimize Gaps in Polar Environmental 
Satellite Data, OIG-11-034-A. Washington, DC: Department of Commerce 
OIG.
    \3\ Senate Report 112-158 (discussing Committee rationale for 
transfer to NASA); Commerce, Justice, Science, and Related Agencies 
Appropriations Act, 2013, S. 2323, 112th Cong. (2012).
---------------------------------------------------------------------------
    NOAA's JPSS program uses NASA as its acquisition agent, leveraging 
that agency's procurement and systems engineering expertise-an 
arrangement based on previous partnerships between the two agencies. In 
its fiscal year 2011 budget submission, NOAA reported that the two-
satellite JPSS program, running through 2024, would cost $11.9 billion. 
Requirements changes and an extended lifecycle through 2028 resulted in 
a December 2011 revised program cost projection of $14.7 billion. In 
its fiscal year 2013 budget submission, however, NOAA committed to 
capping the cost of the program at $12.9 billion and submitted a nearly 
flat-line annual fiscal years 2013-2017 budget estimate of 
approximately $900 million, plus the cost of climate sensors previously 
budgeted under a different NOAA program. Although the program has since 
constructed a cost estimate to support the $12.9 billion cost cap, its 
high-level requirements were recently finalized in October 2012. 
Pending decisions on lower-level requirements, acquisition strategies, 
and system design-particularly for the ground system and ``free-flyer'' 
satellites-could have ramifications for launch schedules and cost:
  --The ground segment project recently completed its requirements 
        review 5 months later than planned, in August 2012; it was 
        originally scheduled to precede the program-level review that 
        occurred in May 2012. Program officials have told us that there 
        is a need to move to a more open, adaptable, standardized 
        architecture that will allow the program to save costs by 
        interfacing with international and other partners for mission 
        data.
  --There is a significant amount of uncertainty in requirements for 
        free-flyer satellites, which will host search-and-rescue and 
        data collection instruments, separate from the program's 
        primary satellites. For the free flyers, information security 
        requirements had to be analyzed and ground support options 
        determined. This uncertainty in requirements translates to 
        uncertainty in the program's lifecycle cost estimate.
    During fiscal year 2012, NOAA has made progress in prioritizing 
high-level JPSS requirements to support its commitment to capping the 
lifecycle costs at $12.9 billion. While this approach shows serious 
management commitment, fitting requirements into a previously 
authorized budget increases the risk that requirements will be dropped 
or launches delayed in order to remain within the budget. NOAA needs to 
revisit the lifecycle cost estimates after finalizing JPSS requirements 
and work with the Department and Congressional representatives in 
adjusting its budget estimates.
Ensuring Adequate Leadership and Governance Structure Over Joint Polar 
        Satellite System Development
    More progress defining JPSS capabilities, schedule, and cost may 
have been possible if not for delays defining the program's management 
control plan, which identifies governance structure and key program and 
NOAA positions. NOAA and NASA finally agreed to a management control 
plan for JPSS in February 2012, nearly 2 years after the program was 
started. The agencies are currently revising the management control 
plan to ensure the NOAA JPSS Director has the necessary authority and 
responsibility to direct all elements of the program and to ensure that 
systems engineering is integrated under a single program chief systems 
engineer.
    Further, NOAA and its JPSS program have had key staff in acting, 
rather than permanently filled, capacities for extended periods of time 
(see table 1). Only the Under Secretary of Commerce for Oceans and 
Atmosphere and the Assistant Administrator for National Environmental 
Satellite, Data, and Information Service (NESDIS), positions have been 
permanently filled since the program's inception. The Under Secretary 
recently returned to academia, resulting in a new discontinuity in 
senior management oversight of the program.

                 TABLE 1.--NOAA JPSS PROGRAM AUTHORITIES
------------------------------------------------------------------------
                                   Status at program
            Position               start  (February     Current status
                                         2010)
------------------------------------------------------------------------
Under Secretary of Commerce for   Filled............  Acting (February
 Oceans and Atmosphere/NOAA                            2013)
 Administrator.
Assistant Secretary for           Vacant............  Filled (May 2011)
 Environmental Observation and
 Prediction/Deputy Administrator.
Deputy Under Secretary for        Filled............  Acting (January-
 Operations.                                           June 2012);
                                                      Filled (July 2012-
                                                       January 2013);
                                                       and
                                                      Filled (new
                                                       appointee,
                                                       January 2013)
Assistant Administrator, NESDIS.  Filled............  Filled
NESDIS Deputy Assistant           Filled............  Acting (February
 Administrator for Systems.                            2010-May 2012);
                                                       Currently vacant
JPSS Director...................  Acting............  Filled (September
                                                       2011)
------------------------------------------------------------------------
Source.--OIG analysis of NOAA information.

    Qualified officials, who can make timely decisions and take 
management action, are essential to the success of JPSS development. 
For example, NOAA's Deputy Under Secretary for Operations is deemed the 
final authority for the program's high-level requirements, schedule, 
and budget submissions. The former official retired in January 2012 and 
was not permanently replaced until July 2012. The interim period 
included the fiscal year 2013 President's budget submission and other 
decisions on high-level requirements. NOAA had additional turnover at 
this position after a little more than 6 months. The NESDIS Deputy 
Assistant Administrator for Systems (DAAS) position, which has served 
as NOAA's single source of programmatic direction and guidance to NASA 
for NOAA programs, has been vacant since May 2012; NOAA does not expect 
to fill the position until summer 2013. Previously, this DAAS position 
was staffed in an acting capacity. Detailed employees, in acting 
capacities, occupy several other key positions within NESDIS and the 
program. NOAA needs to fill open positions overseeing JPSS development 
and govern the program according to an effective management plan.
Developing a Plan To Support National Oceanic and Atmospheric 
        Administration Weather Forecasting Capabilities During Coverage 
        Gaps
    Over the course of the program to date, we have analyzed Suomi 
National Polar-orbiting Partnership (Suomi NPP, a recently launched, 
risk-reduction satellite that is flying the first versions of JPSS 
sensors) and JPSS schedules to assess expected gaps in weather forecast 
data. Currently, we project a 10-16-month gap between Suomi NPP's end 
of design life and when JPSS-1 data become available for operational 
use (see figure 1). NOAA's medium-range weather forecasting (3-7 days) 
could be significantly degraded during the period of time JPSS data are 
unavailable.
  Figure 1. Potential Continuity Gaps for Polar-Satellite Operational 
                             Forecast Data

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Source.--OIG analysis of JPSS program data.

    In our September 2011 report, we reported on activities within NOAA 
to use other sources of data to mitigate gaps and recommended NOAA 
coordinate efforts from across its line offices to minimize the 
degradation of weather and climate forecasting. In response, NOAA 
indicated that it was looking at both foreign and commercial sources of 
data. More recently, NESDIS developed a gap mitigation plan to minimize 
JPSS-1 schedule risks and possibly extend Suomi NPP's lifetime. The 
plan includes options and strategies whose implementation is contingent 
upon further prioritization and funding decisions. NOAA has also begun 
an analysis of alternative sources of data and other ideas for 
minimizing the degradation of its weather forecasting capabilities in 
the event a gap in polar satellite data occurs. In the Disaster Relief 
Appropriations Act of 2013, the Congress provided NOAA $111 million for 
a weather satellite data mitigation gap reserve fund; NOAA was to 
submit its spending plan to the House and Senate Appropriations 
Committees in March 2013.
    The risk of a near-term gap between NOAA-19 (NOAA's primary 
operational polar-orbiting satellite) and Suomi NPP has been largely 
mitigated and the program formally transferred operations to NOAA in 
February 2013.
Reducing Program Risks Associated with Geostationary Operational 
        Environmental Satellite-R Development
    GOES-R is also a NOAA/NASA partnership; however, unlike JPSS, NOAA 
is managing the acquisition and development of the GOES-R ground system 
while NASA is directing the flight segment (spacecraft, instruments, 
launch vehicle, and services). The GOES-R series of satellites will 
provide uninterrupted short-range severe weather warning and ``now-
casting'' capabilities through 2036. With four satellites (the GOES-R, 
-S, -T, and -U), the program is estimated to cost $10.9 billion over 
the course of its lifecycle.
    Previous efforts to reduce risks and control costs resulted in 
reductions in the scope of the GOES-R program and deferred the delivery 
of some capabilities (see table 2, below). An instrument \4\ that would 
more accurately measure moisture and temperature at different heights 
in the atmosphere was removed in 2006 because it was technically 
complex. Two capabilities added in July 2010 were subsequently deferred 
indefinitely in an effort to control costs:
---------------------------------------------------------------------------
    \4\ The Hyperspectral Environmental Suite measures temperature and 
moisture in the atmosphere with improved accuracy.
---------------------------------------------------------------------------
  --Improvements in the frequency and speed at which data products are 
        delivered to users; the program has returned to meeting the 
        original frequency and speed requirements; and
  --Plans to add 31 weather prediction and climate monitoring data 
        products to the existing 34 baseline products.

                                TABLE 2.--GOES-R CAPABILITIES REMOVED OR DEFERRED
----------------------------------------------------------------------------------------------------------------
      Program content/Capability                 Date                Current Status             Rationale
----------------------------------------------------------------------------------------------------------------
Hyperspectral Environmental Suite....  August 2006............  Similar information      To reduce program risk
                                                                 will be produced using   (the instrument
                                                                 data from another        included unproven
                                                                 instrument.              technology).
Improvements in the frequency and      September 2011.........  Returned to original     Necessary to meet cost
 speed at which data products are                                (baseline)               limits.
 delivered to users.                                             requirements.
An additional 31 data products used    September 2011.........  Products are deferred    Necessary to meet cost
 for weather predication and climate                             for an undetermined      limits.
 modeling.                                                       time.
----------------------------------------------------------------------------------------------------------------
Source.--OIG analysis of NOAA information.

    The GOES-R program recently held a key technical milestone review 
in August 2012. Subsequently, the program downgraded, from green to 
yellow, its assessment of schedule and technical development because of 
various issues with the spacecraft and instruments and the need to 
aggressively manage dependencies with the ground project's development. 
The ground segment's schedule has become more incremental--which will 
increase schedule flexibility, as well as better align the delivery 
schedule for GOES-R spacecraft, instruments, and documentation. Despite 
progress made, there is less than a 50-percent chance the GOES-R 
satellite will be launched on schedule, in October 2015, based on the 
program's own models used to assess GOES-R development. Also, the 
program has identified increased risk in flight segment development 
that could hinder its ability to launch on schedule. NOAA must 
implement solid program management and system engineering principles to 
control costs, keep schedules on track, and maintain required technical 
performance.
    NOAA is currently assessing impacts to the GOES-R schedule due to 
sequestration and rescission of funds in the recently enacted 
appropriations law. The program's standing review board also warned at 
an August 2012 technical review that should the program's request in 
the President's fiscal year 2013 budget submission (an increase of 
nearly $200 million, or 30 percent, from fiscal year 2012) not be 
realized, a launch delay is nearly certain, which could significantly 
limit NOAA's capability of providing short-range severe weather 
warning. NOAA's policy for its geostationary satellites is to have 
three satellites in orbit-two operational satellites with overlapping 
coverage and one spare for backup (see figure 2). As we reported last 
year, NOAA may not be able to meet its policy of having an on-orbit 
spare even without a GOES-R launch delay, because of retirement of 
current GOES series satellites. A launch delay beyond October 2015 
increases the risk that just one geostationary imager will be on orbit, 
a scenario in which NOAA's capability to visualize and track severe 
weather events would be severely limited.
      Figure 2. Continuity of Geostationary Operational Satellites

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Source.--OIG, adapted from NOAA geostationary satellite schedules.
2020 census--implement design changes to contain lifecycle costs while 
                    maintaining enumeration quality
    Because of the long planning cycles for the decennial census, one 
of the biggest challenges the Census Bureau faces is maintaining 
leadership with a consistent vision. Currently, the Bureau is 
approaching the 7-month mark without a permanent director, increasing 
the likelihood that it might fall back on old ways and institutional 
habits. The Bureau has vowed to contain the costs of the 2020 decennial 
census to an amount close the average cost per home of the 2010 
decennial census--a lifecycle cost of no more than $18 billion. To 
achieve cost savings, the Bureau is exploring new and innovative design 
alternatives based on evidence from its research and testing 
operations. However, the Bureau may be seeing signs of delays due to 
budget reductions and schedule slippage in its 2010 decennial census 
evaluation program and the 2020 decennial research and testing program. 
Schedule delays could impede the Bureau's preliminary 2020 decennial 
design decision scheduled for September 2014. We have identified the 
following issues requiring senior management attention.
Maintaining Leadership Continuity and Departmental Oversight
    Leadership continuity is essential to maintain momentum as planning 
progresses for the 2020 decennial census. The Presidential Appointment 
Efficiency and Streamlining Act of 2011 (Public Law 112-166), signed 
into law on August 10, 2012, specifies a fixed 5-year term for the 
Census Bureau Director, which represents progress toward ensuring the 
leadership continuity required to direct the 2020 decennial lifecycle. 
While the current leadership has extensive knowledge and experience, 
the lack of a confirmed director adds risk to the Bureau's management 
of critical issues (e.g., budget, operational design, and questionnaire 
content). Absent stable, committed leadership, any organization tends 
to revert to its embedded culture. Reverting to historical practices 
and limited design changes experienced in recent decennials will result 
in unsupportable cost growth for the next decennial. To coordinate 
ongoing activities leading to a cost-effective fiscal year 2014 design 
decision, the appointment of a new director must be a priority.
    Departmental oversight also should play a key role: early in the 
decennial census development process, oversight can reveal whether the 
Census Bureau has considered all reasonable project alternatives or 
whether it is assuming too much risk. In this way, the Department can 
work with the Bureau to address problems before unnecessary costs 
accumulate. For example, one difference this decade is the Department's 
early attention to decennial planning efforts. Recently, the Commerce 
Information Technology Review Board examined decennial information 
technology (IT) planning efforts and requested additional information 
from the Bureau. It is critical that Departmental management continues 
close oversight to help ensure decennial cost containment and quality.
Refining the American Community Survey and Multiple Response Options
    The American Community Survey (ACS) infrastructure allows for the 
creation and testing of enterprise-wide solutions to obstacles that the 
Census Bureau faces in all of its survey and decennial operations. In 
our final 2010 Census report to Congress,\5\ we suggested that the 
Bureau use the ACS to explore areas such as questionnaire content and 
design, multiple response options (such as the Internet), use of 
administrative records, and targeted field data collection procedures 
and methodologies. The Bureau's preliminary 2020 decennial cost 
estimates were based on the assumption that the ACS program would 
continue. With Congress debating the elimination of funding for this 
survey, management needs to factor into 2020 decennial planning efforts 
the significant uncertainty this would create.
---------------------------------------------------------------------------
    \5\ DOC OIG, June 27, 2011. Census 2010: Final Report to Congress, 
OIG-11-030-I. Washington, DC: DOC OIG.
---------------------------------------------------------------------------
    In January of this year, the Census Bureau implemented an ACS 
Internet response option. Although the survey's response rate is about 
the same as it was a year ago, the Bureau collected more than 50 
percent of the initial responses via the Internet, versus mail or 
telephone. Early 2020 decennial research and testing operations have 
not used the ACS, although there are plans to integrate testing mid-
decade. The Bureau should seek opportunities to use the ACS in 
decennial operations as testing progresses to the development of 
production systems. Using this approach, the Bureau can minimize its 
reliance on creating single-use systems that must operate flawlessly in 
a decennial production environment. Instead, it could build systems 
over many developmental cycles (e.g., the ACS) during the decade.
Facilitating the Ability To Use Administrative Records
    Currently, one of the focal points of 2020 decennial census 
research and testing agenda is using administrative records to improve 
the address list and reduce the number of visits to housing units that 
do not return the questionnaire. The Census Bureau's use of these 
records could potentially save billions of dollars over the lifecycle 
of the next decennial. However, obtaining access to these records can 
be difficult because relevant statutes governing other Federal agencies 
do not compel them to provide their records to the Bureau. In addition, 
as we recently reported,\6\ although tribal, State, county, and local 
governments share address information with the Bureau, title 13 forbids 
the Bureau from reciprocating with those partners and Federal 
agencies--with a few, very narrow, exceptions, such as the once-a-
decade address-updating known as the Local Update of Census Addresses 
program. According to the Bureau, it is trying to identify 
opportunities that will provide detailed feedback to local governments 
throughout the decade for address list improvements. However, to 
facilitate a wide-ranging use of administrative records--key to 
containing 2020 decennial costs--management needs to seek congressional 
guidance.
---------------------------------------------------------------------------
    \6\ DOC OIG, May 10, 2012. High-Quality Maps and Accurate Addresses 
Are Needed to Achieve Census 2020 Cost-Saving Goals, OIG-12-024-I. 
Washington, DC: DOC OIG.
---------------------------------------------------------------------------
Completing 2020 Decennial Census Research and Testing
    During fiscal years 2012-2014, key Census Bureau research and 
testing occurs to support early design decisionmaking in fiscal year 
2014. As a result of a reduction in its budget request for fiscal year 
2012, the Bureau canceled 20 of 109 studies to measure its performance 
in the 2010 decennial census, and four evaluations remain outstanding. 
We are currently reviewing the implementation status of the Bureau's 
2020 decennial research and testing program, including the extent of 
implementation, timeframes for completion, milestones, and 
deliverables. We are concerned about the Bureau's ability to deliver 
the required results to make an informed preliminary design decision by 
September 2014. If this necessary research is not completed on time the 
Bureau may determine, as it has in the past, that the risks are too 
high to implement significant design changes--and revert to a familiar 
mailout-mailback, pencil-and-paper questionnaire without major cost-
saving improvements. The Department, Office of Inspector General (OIG), 
the Government Accountability Office, and the Congress should pay 
particular attention to the Bureau's progress over the next year. 
Decisions made during the next 2 years will set the course for how well 
the 2020 decennial count is performed and how much it will ultimately 
cost.
 u.s. patent and trademark office--reduce the patent backlog, improve 
       processing times, and effectively implement patent reform
    The U.S. Patent and Trademark Office (USPTO) fosters innovation and 
protects inventors' intellectual property rights by registering 
trademarks and granting patents, which support $5 trillion of the U.S. 
economy. Long waits for application decisions could adversely affect 
innovation, economic development, and job growth-inhibiting, for 
example, U.S. companies from exporting until they procure the 
appropriate patents for their products. Further challenges to economic 
growth arise as USPTO meets the challenges of implementing new 
legislation and the requirements of its general patent processing 
operations.
Addressing Backlogs
    Over the past decade, the patent backlog has almost doubled, and 
the completion of patent reviews takes almost 3 years. Initially, the 
Under Secretary of Commerce for Intellectual Property set forth the 
goals of reducing the backlog of applications awaiting examiner action 
to a 10-month inventory (approximately 329,500 applications as of March 
2012) \7\ through decreasing the total processing time for patent 
applications to 10 months for the first office action by fiscal year 
2014 and 20 months total by fiscal year 2015. (See figure 3 for 
pendency rates over the last 3 fiscal years of patent applications, 
appeals, and requests for continued examination, or RCEs.) USPTO later 
postponed these target dates to fiscal years 2015 and fiscal year 2016, 
then to fiscal years 2016 and fiscal year 2017 respectively.\8\ To 
reduce the long waits for patent application decisions, it is 
imperative that USPTO increase its efforts to address these challenges.
---------------------------------------------------------------------------
    \7\ The exact number of applications that would comprise a 10-month 
inventory will vary based on the size of the patent examiner corps.
    \8\ Sources for USPTO target dates for decreasing patent 
application processing time: USPTO's fiscal years 2010-2015 strategic 
plan (fiscal years 2014 and 2015), Fiscal year 2013 President's budget 
request (fiscal years 2015 and 2016), and the Department's response to 
OIG's October 2012 draft TMC report (fiscal years 2016 and 2017).
---------------------------------------------------------------------------
    USPTO also has the challenge of reducing a second backlog: ex parte 
\9\ appeals for rejected patent applications. As the number of patent 
examiners has grown, the number of new ex parte appeals has grown 
significantly. Although it is difficult to estimate the exact increase 
in the number of new appeals before fiscal year 2010 because of 
inaccuracies in the appeal data, new ex parte appeals have averaged 
nearly 12,800 annually between fiscal year 2010 and fiscal year 2012. 
The time it takes an appellant to receive a decision on an ex parte 
appeal has doubled in the past 2 years.
---------------------------------------------------------------------------
    \9\ USPTO uses a Patent Trial and Appeal Board to help ensure that 
inventors have the opportunity to protest patent examiner decisions. 
Patent applicants may submit an ex parte appeal to the Board of Patent 
Appeals and Interferences (USPTO's administrative law body) after any 
of their claims have been rejected twice by patent examiners.
---------------------------------------------------------------------------
        Figure 3. Patent Backlogs and Their Associated Pendency


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Source.--OIG analysis of USPTO data.
    Note.--PTAB measures for January 2013 or end of first quarter 2013 
are not available.

    Although USPTO hired additional judges in fiscal year 2012 and 
enhanced their performance benchmarks, this backlog requires continued 
management attention.\10\
---------------------------------------------------------------------------
    \10\ DOC OIG, August 2012. USPTO's Other Backlog: Past Problems and 
Risks Ahead for the Board of Patent Appeals, OIG-12-032-A. Washington, 
DC: Department DOC OIG.
---------------------------------------------------------------------------
    USPTO has made reducing its backlog of unexamined patent 
applications and patent appeals key performance goals in its 2010-2015 
strategic plan. It has initiated efforts to reduce both backlogs--
which, as of January 2013, stood at 597,579 and 26,474, respectively:
  --First, USPTO began a program called Clearing the Oldest Patent 
        Applications (COPA) in February 2011 to reduce patent pendency 
        by eliminating the backlog of all unexamined patent 
        applications filed on or before June 7, 2009. This program 
        began with 233,780 unexamined applications and, as of February 
        2013, it only had 193--at which point USPTO ended the COPA 
        program. USPTO added more than 1,700 total examiners in fiscal 
        years 2011 and 2012 to help reduce its patent application 
        backlog. In fiscal year 2010, USPTO began with a backlog of 
        more than 700,000 unexamined applications. They have made 
        significant progress by reducing that backlog to 597,579 
        unexamined applications in January 2013.
  --Second, the Patent Trial and Appeal Board (PTAB) has increased its 
        staff of administrative patent judges from 100 in fiscal year 
        2011 to 152 in fiscal year 2012 and anticipates having 218 by 
        the end of fiscal year 2013 to help reduce its current backlog 
        of 26,474 ex parte appeals.\11\ My office reviewed PTAB's 
        backlog and operations and issued an audit report on August 10, 
        2012, indicating that PTAB's staffing did not increase as the 
        number of patent examiners increased. As a result, PTAB's 
        backlog has significantly grown over the last 2 years. Our 
        report made recommendations to improve PTAB operations.
---------------------------------------------------------------------------
    \11\ Before September 16, 2012, the Patent Trial and Appeal Board 
was known as the Board of Patent Appeals and Interferences.
---------------------------------------------------------------------------
    USPTO faces a third backlog of RCEs. The American Inventors 
Protection Act of 1999 allowed applicants to request continued 
examination of a patent application for a fee after USPTO had provided 
its final decision. Over the last 2 years, the annual RCE backlog has 
more than doubled: from more than 48,000 in October 2010 to more than 
109,000 in January 2013.
    Although a new examiner count system implemented in February 2010 
aimed to reduce the number of RCEs, new filings have remained fairly 
steady at around 155,000 per year over the last 3 years. As a result, 
on December 6, 2012, USPTO requested comments through the Federal 
Register to solicit public feedback on the factors that cause 
applicants to file RCEs. Although the comment period through the 
Federal Register notice closed on February 4, 2013, USPTO continues to 
accept online comments through its Web site. Additionally, USPTO is 
providing its examiners, through the end of fiscal year 2013, 
incentives to reduce its backlog of RCEs.
Implementing Patent Fees and AIA Provisions
    In addition, USPTO faces new administrative and operational 
challenges in implementing the Leahy-Smith America Invents Act (AIA; 
Public Law No. 112-29). This September 2011 law contains many 
fundamental changes to patent laws and fees, as well as USPTO 
practices, such as moving the United States to a ``first inventor-to-
file'' system from a ``first-to-invent'' system. These significant 
changes required USPTO to issue new regulations. USPTO has successfully 
met both its September 2012 and March 2013 deadlines to issue new rules 
required by the AIA. These fundamental changes required significant 
planning, outreach, and communication with stakeholders.
    AIA allowed the USPTO Director to set or adjust any patent or 
trademark fee to cover the aggregate estimated USPTO costs for patent 
and trademark processing, services, and materials (including 
administrative costs). USPTO issued its final rule on setting and 
adjusting patent fees on January 18, 2013, and implemented those fees 
on March 19, 2013. USPTO anticipates its new fees will provide a 
sufficient amount of aggregate revenue to cover its aggregate costs of 
operation, implement a sustainable funding model, reduce the current 
patent backlog, decrease patent application pendency, improve patent 
quality, and upgrade the office's IT capability. However, USPTO 
continues to face challenges in effectively developing and implementing 
technology solutions to support AIA requirements and its general patent 
processing operations. My office is conducting an audit on the agency's 
efforts to implement the provisions of this legislation and anticipates 
issuing a final report in late fiscal year 2013.
    AIA also contains 37 provisions for implementation within 4 years. 
As of February 19, 2013, we determined that 26 of 37 provisions (70 
percent) had been implemented. Of the remaining 10 provisions, some 
reports are overdue while others have not yet reached their deadlines. 
Table 3 below summarizes the status of the 37 provisions:

                           TABLE 3.--STATUS OF AIA PROVISIONS, AS OF FEBRUARY 19, 2013
----------------------------------------------------------------------------------------------------------------
                   Deliverable                      Implemented       Overdue       Not yet due        Total
----------------------------------------------------------------------------------------------------------------
Rules...........................................              20  ..............               3              23
Reports.........................................               2               3               4               9
Programs........................................               4  ..............  ..............               4
Requirement.....................................  ..............  ..............               1               1
                                                 ---------------------------------------------------------------
      Total.....................................              26               3               8              37
----------------------------------------------------------------------------------------------------------------
Source.--OIG analysis of USPTO data.

departmental operational controls and oversight--strengthen operational 
            controls and oversight under constrained budgets
    Since fiscal year 1999, the Department has received unqualified 
audit opinions on its financial statements. While these results have 
been successful from a financial reporting perspective, it is not an 
adequate benchmark for internal controls and management oversight of 
day-to-day operations, especially in today's constrained budget 
environment. As emphasized in our most recent TMC, there is a greater 
risk that management will take shortcuts, loosen internal controls, and 
deemphasize oversight in order to devote resources to other 
requirements.
    While management has increased Departmental-level oversight in 
recent years, such as reviewing high-risk IT investments and reducing 
use of high-risk contracts, more needs to be done. Recent concerns over 
conference spending and unauthorized reprogramming of funds have 
highlighted the importance of strong internal controls and the 
continued need for effective oversight.
Meeting Funds--Control Challenges
    Budgetary mismanagement.--In June 2012, the Appropriations 
Subcommittee approved the Department's $35.6 million reprogramming 
request to support NOAA National Weather Service (NWS) operations. An 
internal inquiry report prepared by the Department highlighted 
mismanagement of budgetary resources throughout NWS, as well as 
specific instances where accounting records were manipulated. This 
highlights the need for increased oversight and transparency.
    To its credit, the Department has issued directives requiring 
immediate and across-the-board corrective actions and expanded 
management's review of internal controls (per Office of Management and 
Budget [OMB] Circular A-123) \12\ in response to this incident. 
However, the 6-month-long investigation of this incident and subsequent 
development and implementation of corrective actions have diverted 
management away from other critical functions. Departmental management 
needs to instill an accountability culture with increased transparency, 
readily available support, and independent validation. We are currently 
conducting a review of the Department's and NOAA's progress on its 
actions in response to the internal inquiry report.
---------------------------------------------------------------------------
    \12\ Office of Management and Budget, December 21, 2004. 
Management's Responsibility for Internal Control, OMB Circular A-123. 
Washington, DC: OMB.
---------------------------------------------------------------------------
    Conference spending.--In April 2012, we evaluated the Department's 
quarterly conference reporting process, in which it submitted to OIG 
costs, its report validation process, and an explanation of ongoing 
improvements to conference reporting guidance. Our objective was to 
determine whether the Department had established controls and provided 
guidance to bureaus for reporting quarterly conference data in the 
first quarter of fiscal year 2012.
    Our review found that the Department established initial 
operational processes and reporting guidance. However, these processes 
are still in development and need to become clearly established before 
the information in its periodic reports is fully reliable. We noted 
that:
  --The bureaus over- and under-reported costs by $37,000 and $70,000, 
        respectively, and reported $280,000 in unsupported costs; and
  --The Department accepted bureaus' conference spending data with only 
        a limited validation of the reported data and planning 
        procedures, which resulted in incorrect reporting for select 
        conferences.
    The Department has also not been timely in submitting its quarterly 
conference spending reports to OIG as required. However, it recently 
provided the three previous quarter reports (through the first quarter 
of fiscal year 2013) that were overdue.
    The Department needs to address these concerns to ensure the 
reliability of conference data in future submissions. In addition, we 
are reviewing fiscal years 2011-2012 conference costs associated with 
the Manufacturing Extension Partnership program, based on a 
congressional request.
Addressing Issues of Ethics and Compliance Concerning Departmental 
        Employees
    Loosened internal controls and relaxed oversight can increase the 
misuse of Federal funds and lessen public confidence in the Government. 
The following investigative case examples underscore the need for 
stronger controls and more vigilant oversight to prevent fraud, waste, 
and abuse within the Department and among its grant recipients and 
contractors:
  --Former executive directors of a commission that received a NOAA 
        grant misused $575,000 in grant funds; subsequently, they were 
        indicted--and plead guilty--to charges of theft, bribery, and 
        wire fraud;
  --A NIST grantee diverted more than $100,000 from a $2 million NIST 
        grant to a related company for non-grant-related expenses; and
  --Several recipients of Departmental funds committed price fixing, 
        used defective merchandise, conducted money laundering, and 
        made false statements.
    Over the past several quarters, Department-related complaints made 
to the OIG hotline have generally increased (see figure 4), driven 
largely by growth in complaints related to NOAA and other smaller 
bureaus. While some complaints may have been caused by misunderstanding 
or miscommunication, OIG reviews all complaints with due diligence.
      Figure 4. OIG Hotline Department-Related Complaint Activity
    (First Quarter Fiscal Year 2012-Second Quarter Fiscal Year 2013)


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Source.--OIG data, April 2013.

    OIG provides complaints related to mismanagement and minor 
misconduct to the responsible bureaus for proper handling. However, 
many cases referred to bureaus for inquiry have not been handled in a 
timely manner (see figure 5 below). As of April 10, 2013, OIG had 98 
cases pending an initial response from bureaus, of which 70 (71 
percent) were older than 60 days. Departmental policy requires that 
bureaus provide OIG with a written response within 60 days of receiving 
a complaint referral.
Figure 5. OIG Hotline Complaint Referrals Older Than 60 Days Without an 
                            Initial Response


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Source.--OIG data, April 2013.

    To provide effective oversight, the Department must address 
complaints referred by OIG promptly and work to provide effective 
internal controls to help prevent issues before they occur. We will 
continue working with the Department to enhance handling of these 
complaints.
Strengthening IT Security and Investments
    In fiscal year 2012, the Department planned to invest $2.4 billion 
in IT. This is about 25 percent of its annual budget, one of the 
highest percentages devoted to IT among all civilian agencies. The 
Department and its operating units rely on IT to support major mission 
activities, such as producing the decennial census; releasing vital 
economic statistics (e.g., the gross domestic product and consumer 
spending); granting patents and trademarks; issuing severe weather 
alerts; and operating weather satellites. However, we have identified 
major concerns in the Department's IT security posture and fragmented 
IT governance.
    While the Department's Office of the Chief Information Officer 
(OCIO) has taken steps to strengthen IT governance, we continue to find 
significant security vulnerabilities in bureau systems that could lead, 
and already have led, to service disruptions and loss of sensitive 
information. Four priorities for management attention are:
  --Continuing to improve the Department's IT security posture by 
        addressing persistent security weaknesses;
  --Developing resilient incident response and recovery capabilities 
        with increased monitoring of Internet traffic;
  --Managing the Department's IT portfolio with enhanced governance 
        structure; and
  --Strengthening oversight of IT investments.
    Continuing to improve the Department's IT security posture by 
addressing persistent security weaknesses.--In recent years, we have 
repeatedly identified significant weaknesses in basic security measures 
protecting IT systems and information, such as high-risk 
vulnerabilities, deficient patch management, inadequate secure 
configurations, and ineffective vulnerability scanning. In January 
2013, the Department's OCIO started deploying an enterprise-wide 
solution--the Enterprise Cybersecurity Monitoring and Operations 
(ECMO). This solution will provide an automated mechanism to address 
these persistent security weaknesses on information system components, 
such as workstations and servers. ECMO is funded through yearly working 
capital fund contributions from all Commerce operating units. When 
completed, it should provide ongoing awareness of information security 
vulnerabilities and threats to support risk management decisions for 
the entire Department, as required by OMB.
    Developing resilient incident response and recovery capabilities 
with increased monitoring of internet traffic.--Later this year, we 
will issue a report based on our ongoing review of the Economic 
Development Administration (EDA) incident that began in December 2011. 
Our report will highlight the challenges that the Department faces when 
responding to a cyber event. To address these challenges, the 
Department OCIO recently completed an internal review of its Computer 
Incident Response Team (DOC CIRT) capability. This review provides 
recommendations to improve incident identification, analysis, response, 
and reporting. In addition, OIG has initiated an audit of Department-
wide incident handling capabilities.
    The Department has made a concerted effort to implement OMB's 
Trusted Internet Connection (TIC) Initiative, which should better 
monitor cyber threats from the Internet. All operating units, except 
the Census Bureau, have definite timelines for TIC implementation. Due 
to the concern over TIC's inspection process, which could allow third 
parties to access sensitive information that must be protected against 
disclosure by title 13 of the United States Code. The Census Bureau has 
no definite timeline for TIC implementation. In our TMC report, we 
asked the Department to assign a high priority to helping the Bureau 
resolve its concern about potential violation of title 13 requirements. 
So far, no significant progress has been made.
    Also, the Department OCIO considering options for implementing an 
Enterprise Security Operations Center, which will support centralized 
monitoring of the Department's networks in near real-time, 24 hours a 
day, 7 days a week.
    Managing the Department's IT portfolio with enhanced governance 
structure.--We previously attributed the Department's long-standing 
information security weaknesses to its fragmented CIO governance, which 
resulted in stovepipes in IT investments and difficulties in fixing 
persistent security weaknesses. In June 2012, the Acting Secretary 
issued the ``Department IT Portfolio Management Strategy'', which 
expanded the role of the Department's CIO. Previously limited to 
policymaking and infrastructure maintenance, the Commerce CIO now 
implements Department-wide IT shared commodity services, approves 
bureaus' IT investments, and provides at least 25 percent of 
performance appraisals of individuals responsible for IT commodity 
services. Under the new strategy, there will be only one CIO per bureau 
for better accountability.
    This new strategy is an important step. However, it is too early to 
judge its effectiveness for two reasons. First, historically, operating 
units have functioned independently on IT matters with little 
Departmental direction. Second, the new strategy focused on increasing 
the Department CIO's influence on IT shared commodity services such as 
networks, data centers, and emails, which account for only about 25 
percent of the Department's total IT investments. Senior management 
should consider further enhancing the IT governance structure to help 
ensure the Department's success with major IT investments.
    Strengthening oversight of IT investments.--The Department's IT 
review board, led by the CIO and Chief Financial Officer (CFO), reviews 
major IT investments for status updates and requests for additional 
spending authority and conducts TechStat reviews, which focus on 
putting troubled investments back on track. The Department's CIO has 
taken steps to improve the IT investment review process, such as having 
operating units submit project information to the CIO's subject matter 
experts for analysis before the review meeting. In our November 2012 
Top Management Challenges, we noted that three of six troubled IT 
investments had remained at high risk for more than 12 months, and 
about 25 percent of the Department's major IT investments were 30 
percent or more behind schedule. The situation has improved since then: 
as of February 2013, two investments are at high risk. However, the CIO 
and CFO, in conjunction with operating unit heads, must continue to 
ensure that program management is more aggressively addressing 
investments with a history of high risk.
Improving Contracts Oversight
    In fiscal year 2012, the Department obligated approximately $2.4 
billion on contracts for goods and services, including satellite 
acquisitions, intellectual property protection, broadband technology 
opportunities, management of coastal and ocean resources, IT, and 
construction and facilities management. Table 4 illustrates the amounts 
that the Department's operating units have obligated through contracts 
in recent years.

                           TABLE 4. AMOUNTS OBLIGATED BY DEPARTMENTAL OPERATING UNITS
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                Fiscal year 2010       Fiscal year 2011       Fiscal year 2012
----------------------------------------------------------------------------------------------------------------
                                               Contract               Contract               Contract
        Commerce Acquisition Office          actions \1\   Amount   actions \1\   Amount   actions \1\   Amount
----------------------------------------------------------------------------------------------------------------
NOAA.......................................      16,087     $1,624      14,159     $1,160      13,939     $1,204
Census.....................................       3,187      1,312       1,849        522       1,957        249
USPTO......................................       1,619        431       2,134        388       2,540        588
NIST.......................................       4,992        505       5,224        253       5,792        244
Office of the Secretary....................         870         53       1,161         44       1,023         64
                                            --------------------------------------------------------------------
      TOTAL................................      26,755     $3,925      24,527     $2,367      25,251     $2,349
----------------------------------------------------------------------------------------------------------------
\1\ Include contracts, delivery orders, task orders, and contract modifications.
Source.--Department of Commerce Office of Acquisition Management.

    To maximize the effective use of these funds, the Department needs 
to strengthen its acquisition and contract management practices. While 
it has made some progress--such as reorganizing the Office of 
Acquisition Management to more directly address major acquisition 
initiatives and implementing an Acquisition Center of Excellence-our 
audit work continues to find weaknesses in how the Department plans, 
administers, and oversees its contracts and acquisition programs. We 
have identified three tasks for management attention:
  --Oversee high-risk contracts;
  --Maintain a sufficient acquisition workforce; and
  --Implement an effective suspension and debarment program.
    Oversee high-risk contracts.--In fiscal year 2011, the Department 
reported progress in reducing dollar amounts of high-risk contract 
awards. Despite this progress, overseeing existing high-risk contracts 
remains a challenge to management. We continue to find weaknesses in 
the use of cost-plus-award-fee (CPAF) and cost-plus-award-term (CPAT) 
contracts, which put the Department's contract dollars at risk. CPAF 
and CPAT contracts can encourage excellence by providing financial 
incentives based on performance, but they require effective contract 
provisions and monitoring to ensure contract dollars are spent wisely 
and award fees and terms are justified.
    In May 2012, we reported that NOAA did not use measurable 
evaluation criteria or payment structures to motivate exceptional 
performance. Ultimately, NOAA consistently gave contractors high 
ratings and substantial award fees and contract extensions, despite 
lacking adequate support for their actual performance, as measured by 
evaluation criteria and required by OMB. Based on our audit, we found 
that more than $40 million was paid in award fees or approved for 
contract extensions without proper justification. While NOAA has 
recently stated it has updated its policies and taken steps to improve 
oversight of CPAF and CPAT contracts, effective implementation of its 
measures will be critical to ensuring it does not pay improper award 
fees and extend contract terms.
    Poor data systems could also undermine the Department's efforts in 
managing its high-risk contracts. Our audits have found that 
Departmental acquisition information reported in the Federal 
Procurement Data System-Next Generation (FPDS-NG) is incomplete and 
inaccurate. For example, in May 2012, we reported that the complete 
picture of NOAA's use of CPAF and CPAT contracts was unclear. Data 
reported in FPDS-NG and NOAA records on the use of CPAF and CPAT 
contracts were also inaccurate and incomplete.\13\ To continue our 
focus in areas of high-risk contract practices within the Department, 
we initiated an audit of the Department's management of time and 
material and labor hours contracts and will be reporting on this issue 
later this year. These contracts are considered high-risk award actions 
because they offer little or no incentive to contractors to operate 
efficiently and minimize costs to the Government.
---------------------------------------------------------------------------
    \13\ NOAA is the largest of all of the Department's procurement 
offices, obligating nearly half of the fiscal year 2011 funding.
---------------------------------------------------------------------------
    Maintain a sufficient acquisition workforce.--In a March 2009 
memorandum, the President acknowledged that the Federal Government 
needs to ensure that it has the workforce needed to carry out robust 
and thorough oversight of contracts to help program management achieve 
goals, avoid significant overcharges, and curb wasteful spending. 
However, the capacity and the capability of the Department's 
acquisition workforce to oversee and manage contracts face major 
challenges due to high turnover and employee retirement, coupled with a 
significantly reduced budget, gaps in key competency areas, and 
expanded workload. Like many Federal agencies, the Department is faced 
with the major challenge of replacing existing talent because of a 
large number of retirements expected over the next several years. Of 
the approximately 200 contracting officers and specialists that the 
Department employs, more than one-half can retire within 10 years. In 
addition, 14 percent of them are eligible for immediate retirement. 
Replacing these employees represents a significant challenge, as many 
possess unique skills and institutional knowledge that will be 
difficult to replace.
    Implement an effective suspension and debarment program.--We 
previously reported on the challenges facing the Department in ensuring 
that it contracts with and provides funding assistance only to 
responsible parties.\14\ Since finalizing its first suspension or 
debarment action in more than 15 years, in April 2011, the Department 
has made progress toward establishing an efficient and durable 
suspension and debarment program. OIG has referred 10 matters, 
including 5 since September 2011, to the Department's suspending and 
debarring official (SDO). Based on these referrals, as of March 1, 
2013, the SDO has taken 48 total actions and declined one referral.
---------------------------------------------------------------------------
    \14\ DOC OIG, October 2011. Top Management Challenges Facing the 
Department of Commerce, OIG-12-003. Washington, DC: DOC OIG.
---------------------------------------------------------------------------
    The SDO continues efforts toward establishing a strong program, 
including:
  --Regular attendance at monthly meetings of the Interagency 
        Suspension and Debarment Committee;
  --Designation of a Suspension and Debarment Coordinator, who serves 
        as a focal point for the program;
  --Preliminary planning for routine intradepartmental training on 
        suspension and debarment; and
  --Establishment of regular meetings with the Department's Office of 
        General Counsel and OIG's Office of Counsel.
    However, certain issues present ongoing challenges. Although the 
SDO's office has begun drafting policy documents to institutionalize 
processes and procedures regarding the referral, review, and issuance 
of suspension and debarment matters, the adoption process needs to be 
finalized. Also, even though the SDO's processing efficiency has 
increased over the past year, there is room for improvement regarding 
the prompt review of referrals. In addition, the program lacks a clear 
delineation of roles and responsibilities in such important areas as 
revising and adapting draft documents prepared by OIG for possible use 
in suspension and debarment actions and appropriately following up on 
actions once taken.
Overseeing Use of Federal Funds Awarded to Grantees
    The Department has more than 70 programs authorized to award 
grants. Between fiscal years 2009 and 2011, these programs issued 
almost $10 billion in American Recovery and Reinvestment Act of 2009 
(ARRA) and non-ARRA awards. Ensuring timely resolution of grant audit 
findings and corrective actions is an essential aspect of grant 
oversight. In December 2012, we reported to the Department that there 
were 12 unresolved audits, including 1 that was past due.
    With approximately $3.8 billion in grant awards, the ARRA-funded 
Broadband Technology Opportunities Program (BTOP) represents the most 
significant investment of Federal funds in the Department. As of 
December 31, 2012, about 33 percent of BTOP funds remain to be 
disbursed. As these projects near their required 3-year completion 
dates (between November 2012 and September 30, 2013), the potential for 
fraud, waste, and abuse associated with such large-dollar-amount awards 
will increase as recipient spending increases. Management needs to 
remain committed to monitoring BTOP recipient compliance with grant 
award terms and achievement of intended benefits.
Strengthening Spectrum Management and Public Safety
    On February 22, 2012, the President signed the Middle Class Tax 
Relief and Job Creation Act of 2012, which assigned the D-Block 
spectrum and provided $7 billion to NTIA to establish an interoperable 
nationwide Public Safety Broadband Network (PSBN). As required by the 
legislation, NTIA has established an independent authority called First 
Responder Network Authority (FirstNet) to be the holder of the existing 
public safety spectrum and be responsible for the establishment and 
deployment of the PSBN. It is important for NTIA to take into 
consideration the lessons learned from earlier public safety network 
efforts when establishing FirstNet, such as establishing local/state 
governance structures in compressed timeframes.
    Radio frequency spectrum provides an array of wireless 
communications services critical to the U.S. economy and supports a 
variety of government functions.\15\ In June 2010, the President 
requested that 500 MHz of spectrum be freed up for commercial sale. The 
National Telecommunications and Information Administration (NTIA) 
announced in March 2012, that the Federal Government intends to 
repurpose 95 MHz of prime spectrum for commercial use, if certain 
challenges are met. However, the $18 billion price tag to relocate 
existing Federal users could make this cost prohibitive. A July 2012 
report by the President's Council of Advisors on Science and Technology 
recommended that up to 1000 MHz of Federal spectrum be made available 
for a ``shared use spectrum superhighway'',\16\ between Federal 
agencies and commercial providers. Recent technology advances make the 
shared-use architecture feasible in the near future; however, many 
challenges such as lack of incentive for commercial providers to bid 
for shared spectrum, revenue generation, and rights of use issues must 
be addressed to make this effort a possibility. A strong partnership 
between the Federal Government (i.e., NTIA and the Federal 
Communications Commission) and commercial providers will be needed to 
make this program a reality.
---------------------------------------------------------------------------
    \15\ U.S. Government Accountability Office, April 2011. Spectrum 
Management, Washington, DC: GAO, 1.
    \16\ President's Council of Advisors on Science and Technology, 
July 2012. Realizing the Full Potential of Government-Held Spectrum to 
Spur Economic Growth. Washington, DC: President's Council of Advisors 
on Science and Technology, 11.
---------------------------------------------------------------------------
    This concludes my prepared statement, and I will be pleased to 
respond to any questions you or other subcommittee members may have.

    Chairwoman Mikulski. Mr. Zinser, thank you very much for, 
first of all, the work that you do and this crisp testimony.
    I am going to return.
    Senator Shelby.
    Senator Shelby. I have some questions, Madam Chairman, I 
would like to put in the record just for convenience.
    Chairwoman Mikulski. The subcommittee stands in recess. I 
will go vote and I will be back and invite any other Members to 
do so. Thank you very much.
    The CJS Subcommittee will reconvene.
    Mr. Zinser, that was a terrific testimony, and you stuck 
within the 7 minutes and we appreciated it. As you know, it is 
a big vote. It is our cloture on gun control. But we wanted you 
at the table.
    Speaking now as the chair of the full committee, our 
Committee wants to be known not only as the Committee that 
spends, but that we spend wisely. If you read the history of 
our Committee--and of course, our Senator Robert C. Byrd of 
blessed memory often spoke of us as the quiet guardians of the 
purse. Well, we intend to be the guardians of the purse and not 
be quiet about it.
    Rather than just pop off politics where we ask Departments 
to function based on what we think, I am a data-driven Senator, 
and I believe that the tools of the inspector general and GAO 
are really our two basic tools where professionals have really 
dived deeply into these programs and offer us advice on better 
management, getting more value for our fiscal expenditures, and 
also something that I have witnessed over the years is techno-
boondoggles where good intentions do not necessarily result in 
sound technology, technology that has efficacy, 
interoperability, all of those things. So really, we count on 
you and I count on you. And it is really the entire inspector 
general corps that I think we value.

       NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION SATELLITES

    Now, I want to go right to the questions that you raised, 
and I would like to go to the NOAA satellite program because an 
out-of-control NOAA weather satellite program could eat our 
subcommittee's appropriation alive. It could just really be a 
carnivorous whale. And my question to you is are we on the 
right track? And if we are, how do we on this subcommittee take 
demonstrable steps to keep us on the right track? If you do not 
think we are, what are those steps? And number three, should we 
return to Tom Young and ask for another independent analysis?
    Mr. Zinser. Thank you, Madam Chairwoman.
    In talking about NOAA satellite programs, you have to talk 
about JPSS and the GOES-R program somewhat separately.
    Chairwoman Mikulski. You talk to us any way you want about 
how we make sure that we really do the reforms necessary for 
satellite programs, not only one of them.
    Mr. Zinser. The President's budget proposal that was just 
announced proposes significant changes to the JPSS program. 
Prior to the administration's budget proposal, our concern was 
that the JPSS program lacked an independent cost estimate that 
could be used to validate the program's cost estimate.
    Well, the proposal, as best as I can understand it, for 
JPSS removes a number of instruments or sensors from the 
satellite, from JPSS and thereby changes the entire landscape 
for that program where I think it would be very important, even 
more important now, to get that independent cost estimate, and 
then if you were to bring Tom Young back in, the independent 
review team back in, my sense is that you ask that they focus 
on the JPSS program. Their report back in July, as Dr. Blank 
mentioned, was fairly satisfied with the GOES-R program and had 
more concerns about the JPSS program.
    Now, next week or the week following, we are planning to 
issue a report on the GOES-R program. Our concern with GOES-R 
or the issue with GOES-R is really meeting the October 2015 
launch date. Right now, the program is suggesting that there is 
less than a 50-percent chance that they are going to meet that 
date. As a result, they are going to have to make----
    Chairwoman Mikulski. Could you repeat that?
    Mr. Zinser. Yes. The most important thing for GOES-R right 
now is that they meet their October 2015 launch date, and the 
program itself is indicating that there is less than a 50-
percent chance that they are going to meet that date. And so 
there is a lot of work that has to be done to meet that date. 
And of course, that date is important because of a potential 
gap that could occur to where if they do not meet that launch 
date, then their policy of having two satellites operational 
and one spare on orbit becomes at risk. Right now, the GOES-R 
program has three satellites: one looking at the east coast, 
one looking at the west coast, and one in spare. And last fall 
in September, they actually had to take the spare out and put 
it in operation because of problems with GOES-13. Now, if that 
October 2015 launch date slips, then the risk of having those 
three satellites in place and being able to use them becomes at 
risk.
    So in trying to meet that 2015 launch date, the program may 
have to make some tradeoffs. For example, they may have to do 
less testing on the ground of some instruments or less testing 
than they would prefer in order to meet that date. So they have 
to make those tradeoffs. And what we think is that they have to 
prioritize those tradeoffs, identify the triggers, and then 
make sure that all the stakeholders understand exactly what 
they are doing. So from our perspective, that is the biggest 
issue on the GOES-R program.
    Chairwoman Mikulski. Well, I think that is enormously 
helpful. And after this testimony and the conclusion of this 
hearing, I hope over the next several weeks as we look at our 
spending, you could offer us the kind of guidance that we can 
insist upon in our bill, and we welcome that, and also issues 
that I will raise with the next appointee for the Secretary of 
Commerce. I am concerned that no one has been named. I think 
Dr. Blank has had the spirit of a reformer, and we cannot let 
this lag.
    So the other is that I am concerned that as they moved into 
the cost overruns--we really want to modernize the NWS. Dr. 
Uccellini has spoken about it. America is now asking questions 
about the European model and why were they more accurate. And 
there are three models. And I was out at our new weather 
facility, in fact, several times. And the fact is that NWS is 
so crucial to the functioning of our country and our 
international relations, that we have got to be prime time, and 
I cannot have satellite mismanagement or satellite misfocus or 
missed priorities or missed deadlines just taking our money 
when there is so much else we need to do with NWS.
    Mr. Zinser. Yes. I think there is some good news in the 
satellite.
    Chairwoman Mikulski. Can you share it?
    Mr. Zinser. I think that the Suomi-NPP satellite and the 
instruments on that satellite are providing exceptional data, 
and it is data that the rest of the world is anxious to get. 
And I think that with Dr. Uccellini in place, he understands 
more than probably anybody the importance of modeling and what 
is needed there to modernize the models that NWS is using. But 
I do think that on those two fronts, there is some reason to be 
optimistic.

                              2020 CENSUS

    Chairwoman Mikulski. In the time we have, I also want to 
cover the census. You know, when I became the chair of this 
subcommittee--this is at the beginning of the Obama 
administration--and even when we worked with then Secretary 
Gutierrez, going back to the census, under President Bush, the 
Census never seems to get it together here with this. Could you 
advise us--when you then gave the idea of how much more it will 
cost than it did in 2010--and it was really this subcommittee, 
working with Secretary Gutierrez, that drove the reforms that 
got us through the 2010. We want to practice preventive 
medicine here.
    And again, this is a Department without a leader. We are 
not saying that it is rudderless. What you have is a dedicated 
civil service that has been pounded on and battered both in the 
budget and elsewhere, and we are asking them to stay on track. 
But you need a chief executive.
    What would you also say to us about the census and what we 
should be looking at here?
    Mr. Zinser. Well, currently the Census is engaged in a very 
extensive research effort to try to determine how the 2020 
should be designed, what exactly they will do to carry out the 
2020 decennial. And there is a whole list of research projects 
that they have been engaged in. They cannot fund all the 
projects that they would like to fund. So the process that they 
are engaged in right now is prioritizing which research 
projects that they absolutely need to complete. We think that 
this priority should look at three different areas.
    The first area I think that the Census Bureau needs to 
maintain their research and testing on is in the area of their 
address listing. The address list is the key to the Census, and 
they need to develop ways to keep that address list current 
throughout the decade as opposed to what they have done in the 
past, which is very expensive, end-of-the-decade exercises to 
update the list. So they need to do research to figure out how 
they can keep their list up to date throughout the decade and 
avoid expensive costs at the end of the decade trying to update 
that list. And that also involves their mapping. It is called 
GSS right now, the project that they have to keep that current. 
I do think that there has been some money that has been reduced 
from their budget for that program. I do not know what the 
impact of that would be. But we think that the address list and 
the mapping is critical.
    Second, they have to continue their research on how they 
could use administrative records to reduce the cost of a 
nonresponse follow-up. You know, a nonresponse follow-up--right 
now their process is to go out to a household four, five, six, 
seven times trying to get the resident there to respond to 
their questionnaire. A lot of the information that they would 
get is already existing in records that the Government has. So 
they need to keep their research in the area of administrative 
records. So that would be the second area that they need to 
prioritize.
    And then third is their technology. The biggest techno----
    Chairwoman Mikulski. Boondoggle.
    Mr. Zinser [continuing]. Boondoggle was the handheld 
computer in 2010. There was an elaborate effort to use a 
handheld computer for many, many different functions. It was 
overly complicated. They have to go back and find out how they 
can use mobile technology to reduce the costs of the 
nonresponse follow-up. That is going to be critical.
    And if I could add one other area that they need to focus 
on. It is kind of an inside issue. Last time, the Census did a 
very good job in scheduling. They did a fair job in budgeting, 
but they did not combine those two efforts. So they had a 
schedule and they had a budget, but they did not know how the 
schedule impacted the budget. We have been pushing them to make 
sure that the budget is integrated this time around so that 
they know how much they are spending and how much they have 
left to spend.
    Chairwoman Mikulski. Well, this is very insightful, and I 
think it helps us as we look at the resources and where we 
direct the resources. It also gives us excellent questions that 
we want to ask in the confirmation hearing.
    And I think also one of our recommendations is that whoever 
is the Secretary of Commerce, who is supposed to be the 
President's ambassador to business and also the new head of the 
Census, that they really engage with the digital world. You 
know, we cannot have an adversarial relationship with business. 
And business, apart from getting contracts and worrying about 
their intellectual property themselves--the world of digital is 
changing so rapidly. We cannot buy the latest thing today 
because the latest thing for 8 years from now is going to be 
ridiculous. Just look at the smart phone. You and I--I mean, 
just look at the last decade, Sir. From the advent of the smart 
phone to the iPad, which was too klutzy for me, too big--not 
klutzy--to the mini which would be now ubiquitous. And our 
question is not buying new technology but how we could use it 
to help take the census and yet protect the information, which 
I am going to get to. And I just think we need to be involved 
with the private sector.
    Do you agree with that?
    Mr. Zinser. Absolutely.
    Chairwoman Mikulski. To just say, you know, this is where 
we think we will be in 5 years to help you, be able to help 
fulfill your--the Census is a constitutionally mandated 
responsibility. It is the only thing in our bill that is 
constitutionally mandated.
    Mr. Zinser. I do think that the Census Bureau is reaching 
out to that community, and I do not know exactly what the 
results are. But I am confident they are reaching out to that 
community.
    Chairwoman Mikulski. Well, let me go to one other question 
because I am going to have to wrap up as well.

                        CYBER AND CYBERSECURITY

    This goes to cyber and cybersecurity. And within the 
Commerce Department, you have agencies that will play a role in 
protecting America, NIST, and that which can be incredibly 
victimized, one of which would be USPTO, the cyber espionage, 
stealing our intellectual property. And there it is in USPTO 
like pigeons being plucked.
    First of all, as the inspector general, are you looking 
across the Department for their efforts in cybersecurity to 
protect dot gov? By protecting dot gov, we protect then the 
customers of dot gov.
    Mr. Zinser. Yes. Right now, for example, we have an audit 
underway to look at the Department's ability to respond to 
these kind of incidents and how they investigate incidents of 
hacking. We have engaged in IT security audits of individual 
bureaus. Last year we looked at ITA. We looked at NTIA. We have 
examined what happened at EDA and we are planning to issue that 
report in about a month or so. So we have looked across the 
Department. There are some common problems in the Department 
that I do not think are unique to the Department of Commerce. 
And that involves just nuts and bolts IT security measures.
    Chairwoman Mikulski. What they call cyber hygiene.
    Mr. Zinser. Yes.
    Chairwoman Mikulski. In other words, the functional 
equivalent of what you need to do to keep yourself clean.
    Mr. Zinser. Exactly. Properly classifying your systems, 
having a robust patch management process, making sure that your 
workforce is properly certified and trained, those types of 
things we find problems at the Department.
    Chairwoman Mikulski. And where does the Department go to 
for advice on what to do to protect themselves, to protect dot 
gov?
    Mr. Zinser. Well, the leader in the Government in terms of 
security is now the Department of Homeland Security (DHS). I 
know that they work closely with the Department of Homeland 
Security. They do rely on the National Security Agency (NSA) 
for help and guidance.
    Chairwoman Mikulski. Through DHS.
    Mr. Zinser. Yes.
    Chairwoman Mikulski. Yes.
    Mr. Zinser. And, of course, we do have NIST as kind of the 
policymaker for IT throughout the Government.
    I think the Department is very responsive to our work. We 
work very closely with the Department's Chief Information 
Officer (CIO), and I think that the order that Secretary Blank 
issued last year on kind of changing governance issues of IT in 
the Department was very responsive to some of the 
recommendations we have made over the years.
    Chairwoman Mikulski. Well, that is very insightful. And I 
am going to be turning back to you for advice in this area, 
Sir.

            CYBERSECURITY IN THE INSPECTOR GENERAL COMMUNITY

    I want to ask, though, in terms of our inspector general, I 
know you are each independent and you are supposed to be. But 
among yourselves, is there an organization or a collaborative 
where you say these seem to be common issues that some of us 
are facing and have a way of thinking about it?
    So let me go to exactly what I worry about, and it goes to 
cyber. And my four concerns about cyber are always the 
governance, technology development so we are on the cutting 
edge, workforce development so we have the people available to 
work not only in the public domain but the private sector, and 
of course, the constitutional responsibilities in our country 
of protecting civil liberties and privacy, that Government 
itself does not become part of the problem, but we also, in 
protecting America, make sure we ensure their privacy. So those 
are always my questions.
    Now, as a member of both the Intelligence Committee and the 
chair of the full Appropriations Committee, I am looking at 
moving the funding of this subcommittee in the direction of 
implementing the President's directive on cyber and, at the 
same time, for agencies, particularly those that are high-risk 
and most vulnerable, to protect dot gov. My thinking is that in 
protecting dot gov, we do not ask the private sector to do 
something we are not doing ourselves.
    I worry about techno-boondoggles. I worry that overburdened 
CIOs at agencies are not getting guidance, that the directors 
of agencies are like CEOs in the private sector. They do not 
know that they are being hit, though we do have now the 
resources of the National Cyber Joint Task Force that looks at 
these hits.
    So let me tell you where I am heading. I want to make sure 
that I am myself not a boondoggle. And I wonder if the 
inspector generals are working in a common way on this problem 
of making sure that we are looking at how we protect dot gov in 
the area of cyber in the absence of a strong, clear person 
being in charge of the overall Government effort.
    I want to correct myself. I am not saying that Secretary 
Napolitano is not strong. She has got a couple of inches on me, 
and we are both pretty spunky and outspoken. Cyber czars do not 
work.
    So my question is I want to make sure we are all heading in 
the same direction and we do it through funding, achieving the 
President's implementation, looking at the protection of dot 
gov, not doing everything all at one time, but in this year's 
appropriations, making sure the building blocks are there.
    Am I on the right track? And what could the inspector 
generals do to help me be and stay on the right track?
    Mr. Zinser. Madam Chairwoman, the issue of IT security 
across the inspector general community is one which we all talk 
about, not so much as a group. But, for example, one area that 
causes a lot of confusion and consternation is the way we 
implement the Federal Information Security Management Act 
(FISMA). Every year we do a FISMA report, and exactly what that 
report should cover and how it should cover it, quite frankly, 
is not very satisfactory. There is, for example, a 
questionnaire that the Office of Management and Budget (OMB) 
and now DHS sends to all the inspector generals to answer. And 
they are asking us to answer questions about an entire 
Department when oftentimes we have not done in-depth enough 
audit work to answer about an entire Department, but we have 
looked at various aspects of the Department. So that whole 
questionnaire process is very unsatisfactory in terms of 
getting----
    Chairwoman Mikulski. They are asking you the wrong 
questions?
    Mr. Zinser. Yes.
    Chairwoman Mikulski. I think we have a real star in our new 
head of OMB that is coming. We think Mr. Zients has done a 
great job as acting, but it is a new day. I would like you to 
think about what they should be asking from you all so that we 
can really begin to be asking the right questions because if 
you do not ask the right question, there is no way you can get 
the right answer, or ask the question in a way that gets you to 
the answer or the problem-solving you need to do.
    Mr. Zinser. I think the community is moving in the right 
direction. It is now moving toward this continuous monitoring 
of systems versus the old way which we would look at whether or 
not a system was properly certified and accredited. So I think 
that move is correct. But I am not sure that the FISMA rules 
and statute has kind of kept up with that move, and I think 
that is an area where I would start.

               GOVERNMENT INFORMATION TECHNOLOGY SECURITY

    Chairwoman Mikulski. I think this is very good, and I think 
we will probably maybe have a roundtable or a conversation with 
inspector generals. I have got a lot to learn.
    Do you think I am heading in the right direction? And feel 
free to speak plainly and candidly. This is the way we are 
going to get jobs done around here.
    Mr. Zinser. Yes, I think you are headed in the right 
direction. I also think that your emphasis on having the heads 
of the agencies engaged in this issue is very important. Just 
getting the heads of a bureau or the head of the Department to 
start asking their CIOs questions like how many systems do I 
have, who owns the system, who is the security officer for that 
system, just having somebody in charge asking those kind of 
questions of the IT staff will keep the IT staff on their toes 
and send a signal to them that this is very important.
    Chairwoman Mikulski. Well, it is a problem. Without 
divulging the names of an agency yesterday that was not 
necessarily in this subcommittee's jurisdiction, I asked that 
executive about IT security. Well, I saw a good number in the 
President's request, but that was for general IT services. Then 
I said, well, what is in there for cybersecurity. Well, it was 
modest. And then I said, well, are you being hit? Well, you 
know, I leave to my CIO. And I said, now, I want to protect 
you. I mean, I want to make sure there is the money there to 
protect you. And her response was, well, we work with--that was 
again--just like Commerce is a cluster of departments, we have 
a lot of departments that are the cluster of departments. Well, 
they are working with the head of that agency. And I said, 
well, who do they work with. I do not know.
    And when you think about what we ask these agency heads, 
they are trying to manage sequester. They have just lived 
through the fear of a Government shutdown, a sequester every 10 
years. You know how demoralized the workforce is. So to ask 
them to be on top of their game on info tech and being warm and 
fuzzy with their CIOs, it is a lot to be asking.
    But I need to be asking it because they are getting ready 
to spend money, and I am not sure the CIOs at agencies know 
what to do. I really do not know if they know what to do. And 
that is not being critical, but there are basic techniques. In 
other words, if the Centers for Disease Control and Prevention 
were here, they could tell us what we need to do to protect us 
in a flu. You take a vaccine. You wash your hands and you do 
not kiss strangers. All three of those things are important. 
But it is the same thing here.
    So I am going to come back to you for your advice because I 
think DHS cannot do it by itself, and I think NIST and other 
agencies can play a role. But we are definitely going to play a 
role in this subcommittee to do this. But I want to be sure 
that as I lead this effort on this subcommittee, that we are 
all going in the same direction across Government, that I 
myself just do not accelerate the spending of money on things 
that ultimately at the end of the day the only thing that is 
accomplished is that we spent money. That is not my goal to 
spend money. My goal is the outcome of the protection of dot 
gov for the American people's interests and at the same time 
for the private sector to see you can do it without 
overregulation and overspending. So it is a big goal.

               ETHICS COMPLIANCE AND CONFERENCE SPENDING

    Now, talking about overspending, this is my last area. I 
really was taken aback about the ethics compliance and the old 
conference problems. And when I bring bills to the floor, this 
is exactly where we become a subject of ridicule. Do you feel 
that we are getting better at it or are you troubled that these 
things continue to surface?
    First of all, they are two separate issues. Do you feel we 
are getting conference spending under control?
    Mr. Zinser. Yes. I think that OMB and the Department, at 
least the Department of Commerce, have put controls in place 
that will keep the conference spending issue in check.
    I think that there is also, though, an issue with travel in 
general, not necessarily the Department hosting conferences, 
but attendance at some conferences. I think there are some 
folks that are in the departments that like to travel. And some 
travel is necessary; some travel is less necessary. And I think 
in addition to the controls that have been put in place in 
terms of conference spending, it would be a good idea to put in 
controls on foreign travel for conferences by individual 
members of the departments.
    Chairwoman Mikulski. That is good.
    What about the ethical compliances? Some of these were 
really surprising to read, you know, money laundering in a 
Federal agency. Was that by employees or contractors?
    Mr. Zinser. Are you referring----
    Chairwoman Mikulski. Let us see.
    Mr. Zinser. We cited a few examples in our testimony.
    Chairwoman Mikulski. Page 15 of your testimony, Sir, at the 
bottom. You said former executive directors of a commission 
misused $575,000 in grant funds. They were indicted to theft, 
bribery, and wire fraud.
    Page 16. Several recipients of departmental funds committed 
price-fixing, used defective merchandise, and conducted money 
laundering.
    Mr. Zinser. None of those examples involve----
    Chairwoman Mikulski. And this was at the Justice 
Department.
    Mr. Zinser. None of those examples involve Federal 
employees. They primarily involve Federal grantees or Federal 
contractors. The issue of Federal grantees misapplying grant 
funds or converting grant funds for their personal use is 
really the biggest what I call crime problem at the Department 
of Commerce.
    Chairwoman Mikulski. Well, let us talk about that and let 
us see. I could go to page 20 of your testimony. Your 
recommendation identified three tasks for management in this 
area. First of all, they really need to have an aggressive 
management to oversee high-risk contracts like the satellites. 
Second, they have to maintain a sufficient acquisition 
workforce and really train them. And then they have to 
implement an effective suspension and debarment program. In 
other words, the word has got to get out if you misuse it, you 
lose it. Is that not it?
    Mr. Zinser. Exactly.
    Chairwoman Mikulski. And no nonsense, no second chances, 
no, gee, I am sad and I did not know I was only supposed to 
keep receipts in a cigar box.
    Mr. Zinser. Exactly.
    Five years ago when I got to Commerce, we learned that 
Commerce had not suspended or debarred a contractor or grantee 
in more than 15 years. And so we have worked with the 
Department to improve that record and we have improved that 
record. They are now fully on board with using suspension and 
debarment processes to protect the taxpayers' dollar.
    Chairwoman Mikulski. I think this is so. And my very good 
colleague, Senator Tom Coburn, is an active user of your 
reports and the GAO. And I support many of his efforts. I 
remember one of our hearings. It was like, you know, $4 for a 
meatball. You know, my constituents work so hard for their 
money, and when they pay their taxes on April 15th, they have 
got to have confidence in us. And in the big scheme of the 
Commerce budget to hear about, well, $500,000, what is $500,000 
when you are spending billions. But to them $500,000 and then 
to like one of my nonprofits, $500,000 could be the viability 
and survivability of a real youth program that we are talking 
about today in terms of after-school. After-school is not only 
safety, but after-school is the kinds of things that mean so 
much.
    So I really think that this is recommendations, and you 
have given us really a very good MRI of these challenges. And I 
want to thank you for it, and we look forward to additional 
conversations on these subjects and particularly the overall 
conversation with Inspector Generals on the cyber issue. Thank 
you very much.
    Mr. Zinser. Thank you.

                     ADDITIONAL COMMITTEE QUESTIONS

    Chairwoman Mikulski. This subcommittee--if there are no 
further questions--others will be submitted. Senators may 
submit additional questions for the subcommittee's official 
hearing. We request the Department of Commerce's response in 30 
days.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
               Questions Submitted to Hon. Rebecca Blank
             Questions Submitted by Senator Jeanne Shaheen
    export control reform--getting the word out to small businesses
    Question. Trade is critical for New Hampshire's economy, and 
exporting represents an exciting opportunity for our small businesses 
to grow. More than 95 percent of the world's customers live overseas, 
but only 1 percent of small businesses in the United States sell into 
foreign markets.
    The Department of Commerce plays an important role, along with 
other agencies, in helping those companies export their goods and 
services. One way we can help American small businesses reach foreign 
market is to cut red tape and reduce regulatory burdens related to 
exporting.
    I have been a strong supporter of the administration's efforts to 
overhauling our export control system, especially because it will cut 
red tape and reduce export barriers for small businesses. As you know, 
the current system is a complex, antiquated and restrictive set of 
regulations designed during the cold war that often gets in the way of 
trade opportunities, especially for small businesses.
    As this effort unfolds, it will be critical that the business 
community, especially small businesses and downstream suppliers, 
understand what the administration is doing and how this effort might 
benefit them.
    Secretary Blank, what kind of steps are you taking to help 
businesses--particularly small businesses--understand the changes that 
are being made?
    Answer. A key goal for ensuring the success of Export Control 
Reform (ECR) is an informed regulated community. The Bureau of Industry 
and Security (BIS) has developed and is implementing a targeted and 
multifaceted outreach program to educate organizations of all sizes on 
the new regulatory requirements resulting from the new rules. During 
fiscal year 2012, BIS conducted more than 250 outreach and education 
activities, of which 87 were devoted to ECR. To date in fiscal year 
2013, BIS has conducted more than 160 outreach activities, with more 
than 100 focusing on ECR.
    The goals of the reform effort are to enhance national security by 
improving interoperability with our close military allies, strengthen 
the defense industrial base, and optimize government resources. The 
benefits to exporters, regardless of size, whose items transition from 
the United States Munitions List (USML) to the Commerce Control List 
(CCL) are many. For small and medium size firms, the benefits include 
relief from the expense of registration and license fees imposed by 
State that are not imposed by Commerce; flexibility to apply for a 
license before having a firm contract or purchase order; availability 
of certain license exceptions; and availability of de minimis 
provisions that help remove the incentives for foreign manufacturers to 
design out U.S. parts and components.
    As part of its ECR outreach strategy, BIS is developing services 
and programs to support the educational requirements of the small 
defense exporters whose items will transition from the USML to the CCL 
licensing jurisdiction. At its 2012 Update Conference, BIS initiated, 
for small firms specifically, an ``Exporting for Small & Medium 
Enterprises Forum.'' The forum, which was well attended by small firms 
and their advocates, included BIS specialists, Small Business 
Administration policy and legal staff, international trade specialists, 
and foreign trade officials. The presenters focused on the impact 
export control reform requirements have on small firms and their 
activities in various dimensions of international trade, such as 
marketing, financing, sales, and distribution. This forum resulted in 
BIS receiving input on the areas in which small firms could use 
additional assistance to raise their awareness, capability, and 
resources to understand and comply with export controls. Small firm 
constituents expressed appreciation for raising the visibility and 
scope of attention to export control and compliance issues. BIS has 
also increased its focus on identifying small firms through 
registration for its 2013 Update Conference by requesting responses to 
registration questions that identify small firm constituents. This will 
assist BIS in developing program segments intended to address the 
concerns of small firms. Finally, at the 2013 BIS Update Conference 
(July 23-25, 2013) BIS will again present a Small and Medium 
Enterprises (SMEs) roundtable to focus on SME needs and concerns and 
the intersection of the existing Export Administration Regulations 
(EAR) with the ECR provisions effective on October 15, 2013.
    In October 2012, BIS began partnering with the Society for 
International Affairs (SIA) on outreach activities. In May 2013, BIS 
and SIA conducted a 2-day conference which served as the initial 
outreach to many small firms (mainly parts and components suppliers and 
manufacturers) whose transactions have typically fallen under the 
jurisdiction of the Department of State's International Traffic in Arms 
Regulations (ITAR). At the conferences, BIS presented an overview of 
the changes contained in the initial ECR implementation rules published 
on April 16, 2013. In addition, BIS discussed the impacts of the final 
rules, which include many changes that will benefit small firms.
    In response to questions posed by the exporting community, BIS has 
complemented this outreach by conducting a weekly teleconference or 
webinar on specific ECR topics hosted by the Assistant Secretary for 
Export Administration. BIS has also worked with industry associations 
(e.g., National Defense Industry Association, National Customs Brokers 
and Forwarders Association of America, National Association of Small 
Business, Association of Importers and Exporters, Freight Forwarders 
Association of America), local District Export Councils, the 
President's Export Council Subcommittee on Export Administration 
(PECSEA), and prime contractors with vast supplier networks to further 
identify and educate small firms about export controls and the reform 
effort.
    BIS will continue to help assure the readiness of exporters to 
comply with the new licensing requirements. For instance, BIS has 
already developed and posted on its Web site two Web-based decision 
tools to help organizations understand two important concepts of the 
initial rule--the order of review for classifying items on the Commerce 
Control List (CCL) in light of the addition of the ``600 series'' 
items, and the use of the new definition of ``specially designed.'' 
These new tools, in addition to the existing online training materials 
on the BIS Web site, will greatly assist those less familiar with the 
Export Administration Regulations (EAR). These are for the free use of 
all companies, but should be particularly helpful for companies with 
limited resources. We intend to develop additional Web-based decision 
tools in 2013, such as for deemed exports.
    While there will be an initial learning curve, through the use of 
more positive lists and more clearly defined terms, we expect ECR to 
make export licensing for small and medium sized businesses less 
complicated which will benefit U.S. exporters' ability to compete in 
global markets.
    BIS is engaging in additional outreach activities to expand 
services to small and medium exporters. BIS is also working through the 
PECSEA's Outreach Subcommittee to partner with the Small Business 
Association (SBA) on educational outreach activities. A senior SBA 
official participated in a recent quarterly meeting of the PECSEA. The 
most recent PECSEA was held on June 4, 2013. We are in the process of 
creating a dialogue with the SBA and various representatives of the 
Small Business and Technology Development Center (SBTDC) to help us 
identify particular issues of concern to the SMEs in the face of 
changes to the EAR under Export Control Reform. The SBA and 
representatives of development centers are at the forefront of contact 
with SMEs. Such perspective will help BIS to more effectively target 
issues and methods of enhancing SMEs' compliance and improve the 
administration and enforcement of export controls, especially those 
transformed by ECR.
    As discussed above, BIS personnel are hosting many outreach events, 
attending exporter conferences, and hosting weekly teleconferences to 
enable the exporting community to obtain a more in-depth understanding 
of the upcoming regulatory requirements before the October 15, 2013 
date when the first rules go into effect. We expect the reform to make 
export licensing for small and medium sized businesses less 
complicated, more consistent, and much timelier--thus, an expected 
ancillary outcome of ECR is an increase in U.S. global competitiveness.
    As items are transferred from USML to CCL, small and medium sized 
exporters can submit license applications and commodity classification 
requests (for pre-positioning) to BIS for ``600 series'' items and 
receive assistance from our ``600 series'' licensing officers and the 
BIS exporter counseling center to answer their specific export 
licensing questions. BIS's trained export counselors provide licensing 
assistance via phone and e-mail. In recent years, BIS has responded to 
more than 30,000 calls annually. In addition, BIS is adopting 
procedures to respond to exporter product certification requests prior 
to the end of the 180-day waiting period. Organizations are currently 
able to submit prospective commodity classification requests 
(``CCATS'') prior to the effective date for items impacted by the 
initial implementation rule. CCATS for ``600 series'' items will 
undergo interagency review and will be issued to the submitter. 
Prospective CCATS will not become valid until the final rule's 
effective date of October 15, 2013.
    As BIS moves forward with various rules to implement Export Control 
Reform, BIS will continue to analyze the impact of each rule on small 
businesses.
 trade promotion coordinating committee--state and federal coordination
    Question. At a field hearing I conducted for the Senate Small 
Business Committee on exporting, one of the issues I heard is that, at 
times, State and Federal agencies involved in helping small businesses 
reach foreign markets can operate at cross purposes.
    In New Hampshire, our State office and Federal agencies, including 
the Department of Commerce's Commercial Service, have a great 
relationship and work hand in hand. But in other States, that is often 
not the case.
    One suggestion that came out of the field hearing was to have the 
Trade Promotion Coordinating Committee, which is tasked with 
coordinating export programs, work with State agencies so that we can 
leverage resources more effectively and prevent overlap.
    Secretary Blank, do you agree with this recommendation? Do you 
think there is more of an opportunity for State and Federal agencies to 
work together in a more constructive fashion?
    Answer. Thank you for your continued interest and support in the 
trade promotion area. The continued outreach effort to the business 
community by Members of Congress is one reason we had record exports in 
2012 and based on the latest data available, a record number of 
companies exporting in 2011. I am a strong supporter of coordinating 
our export programs with the States, and I also want to make sure 
Federal, State, and local government partners are collectively devoting 
more attention and resources to equipping U.S. companies with the tools 
and knowledge they need to export.
    A major reason why we are setting records in the exporting area is 
because all levels of government are focusing on the subject. With a 
much smaller percentage of our companies exporting relative to other 
major competitor countries around the world, I would like to focus on 
elevating the resources collectively devoted to helping U.S. companies' 
export. The U.S. Department of Commerce's U.S. Export Assistance 
Centers (USEACs) are asked to work with State partners when they 
develop their annual plans, but a number of States do not have export 
programs with which USEACs can coordinate. Our focus should be on 
helping these States devote resources to this effort.
    To this end, I have directed the Trade Promotion Coordinating 
Committee (TPCC) to continue to offer its interagency training 
programming (which includes State government economic development 
officers), continue to serve as a liaison between different levels of 
government, and continue to support regional export efforts through the 
Metropolitan Export Initiative (MEI). The Federal Government partners 
with the Brookings Institution on the MEI, which focuses on helping 
metro regions to develop their export assistance infrastructure and 
also includes working with State partners. As an example of our recent 
collaborative work with local and State partners, the U.S. & Foreign 
Commercial Service (US&FCS) recently signed an agreement with the 
Bluegrass Economic Advancement Movement (BEAM) in Kentucky to 
coordinate on local trade promotion. Through this agreement, US&FCS 
will coordinate with BEAM to advance U.S. exports, including through 
advancing the State's goals as outlined in the Kentucky Export 
Initiative. This agreement is a good example of how efforts to bring 
the National Export Initiative to the local level are fostering 
increased alignment and collaboration between local, State, and Federal 
entities.
                ``single window'' for export compliance
    Question. At a field hearing I held for the Senate Small Business 
Committee focused on exporting, one of the challenges we heard from 
small businesses was the paperwork associated with exporting. One 
witness from the President's Export Council, Dick Friedman, pointed out 
that the Council had recommended the creation of a single window that 
allows exporters to submit all of their regulatory compliance 
information in one place, instead of submitting it to multiple 
agencies. The Council noted that the average time it takes to export 
products from the United States is 6 days, and that reducing this time 
by 1 day would translate into an increase in U.S. trade by about $29 
billion, according to the World Bank. That would mean thousands of new 
jobs. I understand that there are multiple agencies that would need to 
be involved in such an effort, and that there are many steps agencies 
would need to take to make this recommendation a reality.
    Secretary Blank, are there any efforts underway to take a look at 
that issue? What steps would the administration need to take to begin 
offering a single window for export regulatory compliance?
    Answer. The single window is one of the most important things 
government can do to help U.S. exporters. Today traders must submit the 
same clearance information for exports and imports to multiple agencies 
multiple times through a process that is largely paper based and 
manual. As you point out this adds additional costs both in terms of 
time and price to a U.S. export. The Department of Homeland Security is 
working with an interagency team to establish the Automated Commercial 
Environment (ACE) as the Single Window--the one system through which 
the trade community will report imports and exports and the government 
will determine their compliance. The Administration sees this as a 
major priority and the White House has assigned an National Security 
Staff (NSS) staff person to monitor progress on this project. Commerce 
is engaged in this interagency process through Census, the 
International Trade Administration, and the Bureau of Industry and 
Security.
                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby
               eda and the manufacturing communities fund
    Question. On average, the Economic Development Agency (EDA) has 
twice as many qualified applications than it can fund in any given 
year. Despite this demand, the budget proposes to dedicate 35 percent 
of EDA's total budget to a new manufacturing investment initiative. 
This shift away from EDA's traditional focus is troubling and raises 
concerns that communities may discard their well thought out plans to 
chase after these targeted funds.
    Dr. Blank, what is the justification for the shift in EDA's focus 
and what documentation can you share that will show how this change 
will serve communities better than the current program structure?
    Answer. The President's fiscal year 2014 budget proposal is 
designed to provide a portfolio of resources that advance catalytic 
investments in regions across the country. Through the agency's diverse 
programs, EDA can and will continue to provide a wide array of 
construction, technical assistance, financing, and strategic planning 
tools that local and regional entities can utilize to support their 
communities' unique economic development goals--many of which support 
the building or expansion of manufacturing facilities. Given the 
declining cost of energy in the United States, and the fact that many 
other countries are facing more economic recovery challenges that are 
much greater than the United States, there is a window of opportunity 
to lure manufacturing back to America's communities that has been 
missing for many years.
    EDA awards grants that build on and advance strong regional 
economic development strategies. Over the past 3 years, the 
administration has proven, through ``modest'' pilots (Jobs and 
Innovation Accelerator Challenges, i6 Challenges, and other regional 
economy initiatives), the success of coordinated and streamlined, 
multi-agency national challenges that leverage Federal resources in a 
highly effective way to meet the diverse hard and soft infrastructure 
needs of regional economies and specific industry sectors. The 
Investing in Manufacturing Communities (IMC) Partnership (IMCP) is the 
next logical step in the progression. This successful approach is 
breaking down silos in Washington and at the regional level, creates 
effective regional partnerships, while providing significant 
infrastructure, workforce and innovation capacity resources to American 
communities to bring manufacturing back.
    The IMC Fund represents the scale-up to more resources and a 
continued focus on inbound investment and manufacturing. The 
investments made through the IMC will result in increased capacity for 
U.S. innovation and manufacturing, higher skills for the American 
workforce, attraction and retention of small businesses serving as 
suppliers and expanded opportunities for U.S. exports.
    Question. In preparing for this program shift, why was a focus 
placed on manufacturing rather than a generic emphasis on job creation, 
since creating jobs seems to be the focus of this effort?
    Answer. IMCP is not just about jobs today, but re-building our 
innovation infrastructure that has deteriorated significantly due to 
the outsourcing of manufacturing. Recent studies have shown how 
outsourcing has removed a critical element of our innovation ecosystem, 
and thus places the United States at a competitive disadvantage with 
other nations who are investing in advanced research and development 
capacity alongside the manufacturing facilities that were outsourced 
from the United States.
    IMCP seeks to reverse this trend and create more sustainable, 
higher paying jobs with strategic investments in manufacturing and 
supply chain hubs located in regions that include access to advanced 
research and development resources that will fully support our ability 
to recapture our manufacturing leadership, which is essential to our 
long-term economic health.
                              u.s. census
    Question. Dr. Blank, the IG recommendation encourages the 
Department to oversee the census in their preparations for the next 
decennial census in an effort to reduce the amount of financial and 
operational risk.
    What steps has the Department taken to become part of the planning 
process for the next census and how does the Department plan to monitor 
the Bureau's plans as they begin to gear up for the next decennial 
census?
    Answer. The Under Secretary of Economic Affairs is actively 
overseeing census preparations for the 2020 decennial. He meets at 
least weekly with the Census Bureau's Acting Director and the 2020 
Census preparations are discussed each week. In addition, the Under 
Secretary meets twice each month with the career executive team 
responsible for directly orchestrating the 2020 decennial census 
efforts. These biweekly meetings include the Census Acting Director, 
Census Deputy Director, and the Associate Director for the 2020 Census. 
Topics of these meetings include Census Bureau efforts to address 
previous IG and GAO recommendations, strategic planning, operational 
risk management, budget planning, research and testing efforts, 
stakeholder engagement, and critical design decisions. These meetings 
are expected to continue throughout the decade.
                           ntia-icann process
    Question. Since 2005, the Internet Corporation for Assigned Names 
and Numbers or ICANN has been working on a plan to expand the number of 
top level domains available on the Internet. The National 
Telecommunications and Information Administration (NTIA) is the 
official representative of the U.S. Government to ICANN and is 
responsible for ensuring that our country's interests are being 
protected as the Internet evolves. It is my understanding however, that 
while NTIA has participated; they have done little to protect U.S. 
companies or consumers.
    Dr. Blank, can you tell me what actions NTIA has taken on behalf of 
U.S. companies and consumers?
    Answer. NTIA has done much to protect U.S. companies and consumers 
at ICANN but we have done so in the context of ICANN's multi-
stakeholder process where governments are one set of stakeholders who 
help shape the development of consensus policies at ICANN. Our role is 
fully consistent with last year's Senate Resolution (S. Con. Res. 50) 
that states that it is the ``unequivocal policy of the United States to 
promote a global Internet free from government control and preserve and 
advance the successful multi-stakeholder model that governs the 
Internet today.''
    After 6 years of multi-stakeholder policy development and 
implementation planning, including input from governments through the 
Government Advisory Committee (GAC), the ICANN Board of Directors 
(Board) approved the rules for the new generic top level domain (gTLD) 
program in June 2011, publishing the rules in the form of an Applicant 
Guidebook.
    One of the underlying motivations for the introduction of new gTLDs 
has been the promotion of competition in the registration of domain 
names. Expansion of the gTLD space is expected to provide alternatives 
to existing gTLDs, as well as a platform for city, geographic, and 
internationalized domain names. The latter will allow new gTLD 
operators to create and provide content in native languages and scripts 
beyond the existing ASCII or Latin scripts. These changes to the domain 
name system (DNS) should enhance consumer trust and choice and 
reinforce the global nature of the Internet. A number of applications 
are brand-focused and may provide brand holders a platform to 
authenticate products online, potentially helping to combat online 
piracy. In addition, the GAC has agreed to specific safeguards for new 
gTLD strings representing sectors vulnerable to piracy.
    NTIA has engaged in consultations with a broad range of commercial 
interests, and has acknowledged that certain trademark owners and other 
stakeholders have concerns regarding the new gTLD program. Ensuring 
that the new gTLD program includes effective intellectual property (IP) 
protection mechanisms to mitigate the costs of defensive registrations 
and cybersquatting has been a long-standing objective of the commercial 
interests represented in ICANN's multistakeholder model. Accordingly, 
the final Applicant Guidebook contains a number of IP-related tools to 
meet the stated concerns of the business community. Safeguarding the 
rights of trademark owners and ensuring appropriate consumer 
protections as the new gTLD process moves forward has been and will 
remain a priority.
    The Department, through the NTIA, has been an active member of the 
GAC that provides input into ICANN's policymaking processes. We believe 
that ICANN has made progress in ensuring that its new gTLD program has 
adequate law enforcement and intellectual property protections. 
However, we also continue to encourage ICANN to make additional 
progress. Within the past several months, we have urged ICANN to 
improve its Trademark Clearinghouse and Uniform Rapid Suspension system 
that would protect intellectual property and trademarks. We have also 
urged ICANN to include strong public interest commitments for new gTLD 
applicants. More recently, NTIA successfully advocated to include 
coordinated U.S. agency views, including those of law enforcement and 
consumer protection agencies, in consensus GAC advice on a broad range 
of safeguards intended to promote consumer protection and to mitigate 
against potential abuses in new gTLDs.
    All of these measures demonstrate that, in fact, NTIA has done much 
to protect U.S. companies and consumers as the program to expand gTLDs 
unfolds. Nonetheless, NTIA is committed to continue collaboration with 
U.S. agencies and other interested stakeholders as the new gTLD program 
progresses to mitigate any unintended consequences.
    Question. Will NTIA become a vocal advocate for U.S. interests and 
formally request a delay to ensure that companies and consumers are 
protected?
    Answer. NTIA has been a strong advocate for U.S. interests serving 
in its role as the U.S. Government representative to the Governmental 
Advisory Committee (GAC). However, as the Senate admonished in last 
year's Senate Resolution (S. Con. Res. 50), if we are to advance the 
multi-stakeholder model of Internet governance, we cannot unilaterally 
intervene to seek delays or take other actions whenever one group of 
stakeholders does not want to accept the outcome of the multi-
stakeholder process. The most effective means of influencing outcomes 
at ICANN is for all interested stakeholders to participate actively in 
the ICANN process. For our part, NTIA routinely consults with 
interested U.S. stakeholders, and particularly with U.S. agencies, to 
develop and advance U.S. public policy concerns related to the domain 
name system. As noted above, NTIA's most recent efforts include 
successful advocacy for a significant number of consensus GAC 
safeguards applicable to new generic top level domains (gTLD)s, which 
are outlined in the April 11, 2013 GAC Beijing Communique. These 
safeguards improve the tools developed by the ICANN community to 
promote consumer confidence, protect intellectual property, and to 
broaden the responsibilities of ICANN's accredited Registrars through 
an improved Registrar Accreditation Agreement.
                           satellite budgets
    Question. In an effort to address their satellite management 
challenges, the National Oceanic and Atmospheric Administration (NOAA) 
has worked diligently to bring its satellite program in line with a 
specific budget number. While I appreciate NOAA's efforts to constrain 
spending on this troubled program, I am concerned that long-term 
capability may be sacrificed for short-term authority to manage the 
program.
    Dr. Blank, do you believe that the components that are being 
sacrificed due to budget constraints are wise or is NOAA making 
decisions that can be described as penny wise and pound foolish 
requiring us to pay a higher price in the future by having to recreate 
these capabilities?
    Answer. The administration's fiscal year 2014 budget request for 
NOAA's satellite portfolio is the result of many months of discussion 
with our partners NASA, DOD, European Meteorological Satellite 
(EUMETSAT), the French Space Agency, and the Canadian Defense 
Department to ensure that development of the space and ground segments 
of these critical programs can be achieved within the funds requested. 
The budget request reflects congressional direction provided in the 
fiscal year 2012 and fiscal year 2013 appropriations bills and the 
administration's efforts to find cost savings and efficiencies while 
strengthening satellite management and likelihood of success.
    The fiscal year 2014 budget request will provide the funding 
necessary to complete and integrate the JPSS-1 spacecraft bus and to 
complete the Advanced Technology Microwave Sounder (ATMS), Cross-track 
Infrared Sounder (CrIS), the Nadir Ozone Mapping Profiler Suite (OMPS-
Nadir), and the Visible/Infrared Imager/Radiometer Suite (VIIRS) 
instruments, supporting numerical weather prediction and other 
forecasting activities for the benefit of the American public. The 
request reflects the administration's decision to maintain all weather 
instruments within the Joint Polar Satellite System (JPSS), and thus 
there will be no reduction in NOAA's ability to forecast weather due to 
lack of space-based observations. Additionally, although NOAA will 
transfer responsibility of some climate instruments to NASA, this 
budget provides a transition where select climate observations are 
retained at NOAA until they will be maintained by NASA.
    Full funding of the President's fiscal year 2014 budget request is 
necessary to achieving planned launch dates, to stay within each 
program's lifecycle cost, and to maintain control of any technical 
risk.
                        cybersecurity workforce
    Question. NIST has been tasked with leading the National Initiative 
for Cybersecurity Education (NICE). I applaud the goals of NICE and I 
am hopeful that it can provide the coordination and leadership needed 
to protect us from cyber-attacks. However, I am concerned that our 
efforts to develop our cybersecurity capability are not being matched 
with a similar effort to develop a cybersecurity workforce.
    Dr. Blank, one of the goals of the NICE strategic plan is to 
broaden the pool of individuals prepared to enter the cybersecurity 
workforce. Could you tell us what efforts are being made by NIST and 
the Department to advance that goal? Developing a workforce in this 
area is essential.
    Answer. The goal of the National Initiative for Cybersecurity 
Education (NICE) is to enhance the overall cybersecurity posture of the 
United States by accelerating the availability of educational and 
training resources designed to improve the cyber behavior, skills, and 
knowledge of every segment of the population, enabling a safer 
cyberspace for all.
    The Department of Commerce and NIST, through its role as lead 
agency and coordinator of NICE, has focused on establishing and 
promoting a strategic plan for NICE while simultaneously enabling the 
creation of a cybersecurity workforce framework. The framework is 
essential to meeting the NICE strategic goals focused on broadening the 
pool of individuals prepared to enter the cybersecurity workforce and 
cultivating a globally competitive cybersecurity workforce.
    More than 20 Federal departments and agencies participate in the 
NICE effort. Leads for the four NICE components (awareness, education, 
workforce, and training/professional development) include the 
Department of Defense, the Department of Education, the Department of 
Homeland Security, the National Science Foundation, the Office of the 
Director of National Intelligence, and the Office of Personnel 
Management.
    The development and dissemination of the National Cybersecurity 
Workforce Framework (NCWF) (http://csrc.nist.gov/nice/framework/) 
provides a common understanding of and lexicon for cybersecurity work. 
Defining the cybersecurity population consistently using standardized 
terms is an essential step in ensuring that we are able to educate, 
recruit, train, develop, and retain a highly qualified workforce.
    As part of the Initiative's broad outreach campaign, we have also 
engaged extensively with academia and the private sector to increase 
awareness of the goals of NICE and to encourage the sharing and 
leveraging of best practices for developing and sustaining a robust 
cybersecurity workforce. Improving the Federal cybersecurity workforce 
is also essential, and these efforts of NICE are directly enabling the 
Administration's Cross-Agency Priority Goal to close the critical IT/
Cybersecurity skills gap in the Federal workforce (http://my-
goals.performance.gov/sites/default/files/images/
Closing_Skills_Gaps_FY13-Q1-CAP_Goal_Update.pdf).
                                 ______
                                 
           Questions Submitted by Senator Frank R. Lautenberg
    Question. Superstorm Sandy took a heavy toll on New Jersey's 
recreational and commercial fishing industry, causing severe damage to 
equipment and other property. In response, the Department of Commerce 
declared a Federal fisheries disaster for both New Jersey and New York. 
Congress then appropriated $5 million for these fisheries disasters as 
part of the fiscal year 2013 Disaster Supplemental Appropriations bill. 
However, these funds have not yet been released to the States to help 
fishing communities recover.
    What is the National Oceanic and Atmospheric Administration's 
(NOAA) timeline for providing this fisheries disaster funding to the 
States?
    Answer. NOAA recognizes the urgent need for funding to assist 
fishing communities in their recovery from Superstorm Sandy. The 
agency's timeline is to make disaster funding awards to the States 
within 90 days of receiving State spending plans that meet disaster 
program and grant requirements. We will continue to work closely with 
the States of New York and New Jersey on this issue.
    Question. Superstorm Sandy revealed the importance of predicting 
both the path and the intensity of hurricanes. While the predictions 
regarding Sandy's path were quite accurate, the storm's intensity was 
much stronger than expected. Had there been better predictions, lives 
may have been spared and property saved.
    How will NOAA incorporate observation networks, such as the 
Integrated Ocean Observing System (IOOS), into its efforts to improve 
hurricane forecasting?
    Answer. NOAA, through its Hurricane Forecast Improvement Program 
(HFIP) is actively reviewing and evaluating both the current and 
potential future observing systems needed to predict hurricane track 
and intensity. The National Hurricane Center in collaboration with HFIP 
uses all relevant observations in its forecast process such as 
satellite, ship observations, buoys, radiosondes, and radar. In recent 
years HFIP has brought an increased focus on improving NOAA's 
predictions of intensity. As a part of this increased focus on 
intensity, it is developing improved modeling capabilities that are key 
improvements from HFIP. The new models take additional observational 
data such as aircraft Doppler radar. The Integrated Ocean Observing 
System is one of the potential future systems under review and 
evaluation. HFIP is reviewing data sets available from IOOS Regions, 
especially data sets that describe conditions below the ocean's surface 
and conditions at the surface from ocean areas sparsely sampled, to 
determine their potential to improve intensity predictions. If 
potential is demonstrated, the HFIP program will also evaluate use of 
IOOS regional models to support National Hurricane Center operations. 
As these evaluations proceed, recommendations will be made when 
appropriate to routinely acquire and use these observations 
operationally.
    Question. The fiscal year 2014 budget request for the Economic 
Development Administration (EDA) cuts funding for Public Works grants 
by more than 60 percent relative to fiscal year 2012. A significant 
portion of this funding is reallocated to the proposed Investing in 
Manufacturing Communities Fund. I am concerned that some hard hit 
communities in New Jersey that would have been eligible for grants 
under the Public Works Program may not qualify for grants from the 
Investing in Manufacturing Communities Fund.
    What assurances can you offer to distressed New Jersey communities 
seeking to construct job-creating infrastructure that Federal 
assistance will be available?
    Answer. EDA's programs are designed to provide a full range of 
tools and resources to help communities capitalize on their full 
economic potential. In order to compete in a 21st century economy, 
communities need both hard and soft infrastructure that is tied to a 
larger, strategic regional innovation plan. To support these place-
based strategies, which are tailored to the unique assets and economic 
development dynamics of each region, a broad portfolio of solutions is 
required.
    Assisting economically distressed communities create and implement 
economic recovery strategies that result in sustainable, well-paying 
jobs is at the core of what EDA does. This will not change and 
assistance for infrastructure will continue to be made available 
through both EDA's Public Works and Economic Adjustment Assistance 
programs.
    The Investing in Manufacturing Communities Partnership (IMCP) is a 
U.S. Governmentwide effort, to help communities adopt best practices in 
attracting direct investment in the United States. IMCP awards will 
favor communities committed to long-term development strategies, and 
incentivize communities-whether distressed, rural, or metropolitan--to 
leverage their comparative advantages. EDA expects much of the funding 
awarded through the IMCP to go toward the construction of 
infrastructure that will help communities attract and retain business 
investment; thus continuing to recognize and provide substantial 
assistance for job-creating hard and soft infrastructure investments.
    To launch the IMCP in fiscal year 2013, EDA intends to allocate up 
to $4 million, distributed evenly amongst EDA's six Regional Offices, 
to support approximately 20-25 grants to help communities develop 
regional strategies that are implementation-ready. These strategies 
will enhance distressed regions' efforts to compete for large scale 
IMCP grants in the future (50 to 100 times the size of the 
implementation strategy grants).
    In addition to the request for the IMCP, the President's budget 
includes an increase in the Economic Adjustment Assistance (EAA) 
Program, which is EDA's most flexible program. The EAA Program provides 
the Agency a robust array of resources that can be brought to bear to 
help support construction, technical assistance, and financing projects 
that will help distressed communities become more competitive and more 
prosperous. This program allows regions to compete for infrastructure 
funding, and also other critical non-infrastructure support needed for 
businesses to successfully compete in global markets.
    Question. Many families struggle to make ends meet in New Jersey 
because it is a high cost-of-living State. I understand that the Bureau 
of Economic Analysis (BEA) has been working on a statistic to help 
measure regional price variations, and that such a statistic could be 
utilized to adjust Federal assistance to account for geographical 
differences in cost of living.
    When do you expect this Regional Price Parity measure will be made 
available?
    Answer. Geographic variation in costs is an important issue, and 
yet also a very challenging one to resolve with respect to economic 
measurement. BEA has made great progress in the design and 
implementation of a cutting edge regional price parity index which will 
allow for the adjustment of key regional statistics for price parity.
    The process for developing new official statistical products 
involves a series of prototypes and feedback loops, as consensus on 
methodology is essential. BEA has published prototype estimates of this 
index for the past 2 years, and expects to publish a final prototype 
index in June 2013. Based on feedback from customers after the final 
prototype phase, the expectation is that this new index will become an 
official series beginning in 2014 with adjusted regional data 
following.
                                 ______
                                 
            Questions Submitted by Senator Susan M. Collins
    Question. Maine's groundfish industry continues to face a great 
deal of uncertainty as it continues to transition to a new management 
system, especially given the condition of stocks and commensurate low 
quotas for the next fishing year.
    The National Oceanic and Atmospheric Administration ()NOAA) 
Fisheries has recently promoted and implemented two multispecies catch 
share programs, one in New England and one on the West Coast, and has 
also invested considerable resources into both programs. NOAA Fisheries 
describes the West Coast Program as a ``model system of management''. 
Yet, fishermen from Maine involved in the catch share program tell me 
that they are struggling to make the system work and that they cannot 
absorb the cost of the at-sea monitoring that is essential to the 
success of the program.
    I very much appreciated the comments of the Deputy Assistant 
Administrator Samuel Rauch in his March 11 letter to me that NOAA is 
committed to ``doing everything we can to help them transition through 
these difficult times''. The letter acknowledges that the National 
Marine Fisheries Service (NMFS) is working to cover as much of the cost 
of at-sea monitoring as possible, which remains an ongoing and serious 
concern for the groundfish industry.
    Looking forward, will NOAA Fisheries continue to prioritize the 
necessary monitoring funding so that the New England catch share 
program can be a model system of management? What is the status of 
electronic monitoring? Could, in your estimate, electronic monitoring 
be a more cost effective way to monitor fisheries?
    Answer. NOAA will cover as much of the New England monitoring costs 
in fiscal year 2013 as possible within available funding. NOAA is 
working to ensure that there is a mechanism in place for fishing 
operations to obtain and pay for required monitoring this coming 
fishing year, as well as in the future, as monitoring costs eventually 
transition to the industry. However, our support for monitoring will 
not apply to special exemptions from fishery regulations that require 
100 percent at-sea monitoring coverage. For example, Northeast 
groundfish sectors can request an exemption from the current minimum 
mesh size to target redfish, but would be required to pay for the 100 
percent observer coverage needed to monitor bycatch in this fishery.
    NMFS is working to develop regional implementation plans for the 
use of electronic monitoring (EM) and electronic reporting (ER) tools; 
however, EM/ER implementation will require regulatory changes and close 
collaboration with the industry and Councils to ensure that EM models 
are practicable, economical, and effective. The New England Fisheries 
Management Council and Mid-Atlantic Fisheries Council will convene an 
EM working group to identify existing barriers to EM implementation in 
New England, and what next steps are necessary to implement EM there. 
We will work closely with the Council's working group to identify data 
collection needs, and consider transitional requirements from current 
to future regulatory programs.
    It is important to have realistic expectations of potential 
benefits and costs of implementing EM. Costs associated with 
implementation of EM are uncertain and vary depending on the overall 
monitoring system design, the complexity of equipment installation and 
maintenance, requirements for reviewing video records, and 
infrastructure required to collect, process, manage and analyze 
resulting data. While EM-based solutions are perceived to be more cost-
effective than conventional approaches to collect data on full catch, 
this perception has not yet been validated.
    Question. In 2011, the NOAA Fisheries was petitioned to list river 
herring as threatened under the Endangered Species Act. Given the 
potential impacts that even a threatened listing could have on our 
Nation's fishing communities, I hope you will urge NOAA Fisheries to 
carefully consider effective management plans already in place, such as 
the programs in my home State of Maine.
    River herring are an effective source of bait for Maine fishermen 
who already adhere to restrictions mandated by the Maine Department of 
Marine Resources (DMR). The Maine DMR's river herring management plan 
has proven effective in increasing river herring populations through 
habitat restoration and improvements, fish passage construction, 
stocking and transfer programs, and catch limits.
    My questions are the following: in your status review of the 
species, how are you working with State agencies that have successful 
management programs in place? What more can be done by working 
proactively with States, particularly States that already have 
successful management programs in place, to avoid a listing under the 
Endangered Species Act? And, broadly speaking, when it comes to listed 
species, does NOAA Fisheries have the necessary resources for 
monitoring to know when to down-list a species?
    Answer. In order to ensure that NMFS has the best available 
information on alewife and blueback herring throughout their range, we 
have been working closely with the Atlantic States Marine Fisheries 
Commission (ASMFC). We are utilizing the information that the ASFMC's 
River Herring Stock Assessment Committee compiled in the recently 
completed stock assessment. The Stock Assessment Committee consisted of 
representatives from various States including Maine. The Committee 
sought information on State management measures for both species as 
well as information regarding the status of both species in State 
waters. This information was considered in the stock assessment, which 
we are using as an important component of the review of the status of 
these two species. We have also been coordinating with both the New 
England and Mid-Atlantic Fishery Management Councils regarding 
management measures being considered in Federal waters. Additionally, 
we held three workshops during summer 2012, which were open to the 
States and the general public, to obtain information for consideration 
in the ongoing review of the status of river herring. All of this 
information will be considered in the listing determination. Any river 
herring conservation efforts/programs that are planned or that have 
just been implemented will be considered in the listing determination 
under the joint NMFS/U.S. Fish and Wildlife Service Policy for the 
Evaluation of Conservation Efforts. Such efforts/programs are evaluated 
for the certainty that conservation efforts will be implemented and the 
certainty that the efforts will be effective.
    We always welcome opportunities to work proactively with States and 
other partners to further conservation of species. NMFS believes that 
such efforts are essential to reduce barriers to migration of river 
herring that are limiting the range of the species and preventing 
access to key spawning habitat. We have been working closely with the 
State of Maine on recovering federally endangered Atlantic salmon, 
including addressing passage issues at migratory barriers such as dams. 
Much of this work also benefits river herring, and we will continue to 
address the passage issues in the State of Maine including through work 
on smaller watersheds, as river herring are an important component of 
the diadromous species complex in Maine.
    We intend to continue working closely with the Atlantic States 
Marine Fisheries Commission and interested States on proactive 
conservation for river herring. We hope to coordinate with ASMFC on its 
work on a conservation plan for both species, which would address some 
of the very significant data gaps for this species (e.g., genetic 
analysis to better inform population structure, ocean migration 
patterns, and effects of climate change on the species), as well as 
implement appropriate conservation efforts to address some of the 
significant threats.
    Generally speaking, efforts that reduce threats to a depleted 
species and improve access to important habitats are likely to reduce 
the need to list the species under the Endangered Species Act or to 
facilitate recovery so that any necessary listing is for the minimum 
amount of time possible. Once a species is listed under the Endangered 
Species Act (ESA), NMFS is required to develop a recovery plan for that 
species that identifies criteria that, when met, would result in a 
determination that the species be removed from the list. NMFS makes 
every effort to actively monitor listed species to continually assess 
their status and progress towards meeting the criteria in a recovery 
plan. In addition, we are required to review the status of listed 
species every 5 years to determine whether that species is properly 
classified under the ESA. In conducting that review, we rely on the 
best available scientific information. While we make every effort to 
actively monitor listed species, once a species is listed, the ESA 
mandates a broad range of new management responsibilities including 
designating critical habitat, conducting section 7 consultations, 
developing and overseeing implementation of a recovery plan, and 
issuing enhancement permits, incidental take permits, and scientific 
research permits.
    Question. On August 26, 2010 the Department of Commerce announced 
approximately 14 initiatives to strengthen the enforcement of U.S. 
trade laws, consistent with U.S. WTO obligations. While Commerce has 
implemented a number of these initiatives, others have been held up for 
a number of years. For example, one announced initiative that has not 
been implemented involves the use of ``sampling'' in Anti-dumping and 
Countervailing Duty reviews. When there are too many exporting 
companies for Commerce to individually review each one, Congress has 
authorized Commerce to either review the largest exporters (usually 
just two or three companies) or review a random sampling of companies. 
Commerce rarely uses this authority. Why hasn't Commerce implemented 
measures like ``sampling''?
    Answer. The Department has, in the past, employed a sampling 
methodology in those rare cases where there were large numbers of 
exporters involved and the agency already had a sufficient 
understanding of the nature and structure of the relevant industry to 
permit the development of a sampling method in the early stages of the 
proceeding without undue administrative burden or litigation risk. 
However, the Department recognized the desirability of establishing a 
more uniform and predictable practice in this area.
    On December 16, 2010, the Department published in the Federal 
Register a proposed sampling methodology that would be applied in 
certain antidumping duty (AD) administrative reviews, along with a 
request for public comment. After granting parties' request for 
extension of the public comment period, the Department received 
numerous comments from a variety of interested parties, including 
foreign governments that highlighted the complex nature of the issues. 
In the near future, the Department will finalize the rules, standards 
and procedures for sampling respondents in administrative reviews 
through a Federal Register notice (planned to publish this summer).
                                 ______
                                 
             Questions Submitted by Senator Lisa Murkowski
    Question. I continue to remain concerned about the environmental 
impact statement (EIS) National Marine Fisheries Service (NMFS) is 
working on for the Arctic. First, NMFS has no authority to regulate the 
level of oil and gas activity in the Arctic. The Department of the 
Interior (DOI) has this authority. Second, the EIS covers impacts to 
polar bears and walruses, but these are Fish and Wildlife Service (FWS) 
species and FWS did not participate in the EIS. Third, an EIS is for 
significant impacts so is not necessary for incidental harassment 
authorizations (IHAs) for NMFS species because these are allowed only 
if impacts will be negligible. I expressed my concerns about this EIS 
last year and though a new draft has been issued my concerns remain the 
same. There are still problems with necessary interagency coordination 
and the scope and purpose of the document are unclear. These are big 
problems which left unaddressed will add uncertainty, litigation risk 
and delay to future oil and gas development in the Arctic.
    What is NMFS plan moving forward to ensure these problems are 
addressed?
    Answer. While NMFS does not regulate the level of oil and gas 
activity in the Arctic, NMFS is responsible for managing the impacts of 
oil and gas activity on marine mammals. This means that we must process 
requests for Marine Mammal Protection Act (MMPA) incidental harassment 
authorizations, which requires analyzing the effects of an action on 
marine mammals and working with applicants to identify appropriate 
mitigation and monitoring measures. The Arctic Oil and Gas 
Environmental Impact Statement is a decision support tool that analyzes 
a range of options (i.e., activity levels and mitigation) in order to 
help NMFS understand the likely impacts of our upcoming decisions of 
whether to issue or deny the individual incidental harassment 
authorizations that are expected to be requested and what mitigation to 
require. DOI's Bureau of Ocean and Energy Management (BOEM), however, 
does have authority to directly regulate the level of oil and gas 
activity in the Arctic and that agency is partnering with NMFS on this 
Environmental Impact Statement and intends to use it to support its 
decisions of whether to issue individual permits for geological and 
geophysical operations under the Outer Continental Shelf Lands Act.
    The National Environmental Policy Act (NEPA), pursuant to which 
this Environmental Impact Statement is being developed, requires that 
agencies consider the impacts of their activities on all resources 
(physical, biological, and socioeconomic) in the affected environment, 
not just those resources under their regulatory jurisdiction. 
Therefore, this Environmental Impact Statement analyzes the effects of 
NMFS' issuance of incidental harassment authorizations and BOEM's 
issuance of geological and geophysical permits on all potentially 
affected resources, including polar bears and walruses, as well as air 
quality and other resources for which neither agency has regulatory 
authority.
    Environmental Impact Statements are required when effects of the 
actions being analyzed are expected to be significant. As described in 
NEPA, significance is measured in the context of multiple factors, 
including, for example, public controversy or cumulative effects. As 
noted, the issuance of an incidental harassment authorization requires 
that NMFS find that each individual action will have a negligible 
impact on the affected species. However, NMFS is contemplating the 
issuance of multiple incidental harassment authorizations (and BOEM 
multiple geological and geophysical permits) per year and, based on the 
information provided by the oil industry, the level of oil and gas 
development activities could increase substantially in coming years. As 
required by NEPA, when NMFS considers the combined effects on the 
environment (in the context of all of the relevant significance factors 
that NEPA and its implementing regulations identifies) of issuing 
multiple incidental harassment authorizations for the higher levels of 
activity that are projected by the oil and gas industry for upcoming 
years, the anticipated impacts may be significant and an Environmental 
Impact Statement is appropriate. If an Environmental Impact Statement 
were not developed now, and oil and gas companies submitted a large 
number of incidental harassment authorization and geological and 
geophysical permit applications for a particular year (which they have 
indicated is possible in the near future)--NMFS and BOEM could find 
ourselves in the position of needing an Environmental Impact Statement 
to comply with NEPA, and therefore needing to delay the issuance of 
some incidental harassment authorizations or permits while we developed 
one.
    The purpose of this document is twofold: (1) to ensure and 
streamline NEPA compliance for NMFS' issuance of incidental harassment 
authorization and BOEM's issuance of geological and geophysical 
permits; and (2) to provide a decision support tool for NMFS and BOEM 
to better understand the likely effects of future decisions to issue or 
deny incidental harassment authorization or geological and geophysical 
permits and the effects of utilizing certain mitigation measures. The 
scope of the document covers a range of alternatives, as required by 
NEPA, that cover different levels of potential activity from a very low 
amount up to a much higher amount, as recommended/informed by the oil 
and gas industry and BOEM. The document also analyzes the effects of a 
large suite of mitigation measures.
    Regarding interagency coordination, NMFS continued to work very 
closely with BOEM (as a cooperating agency) in producing the 
Supplemental Draft Environmental Impact Statement that is currently out 
for public review. For this most recent version of the Environmental 
Impact Statement, BOEM wrote several sections of the document and 
reviewed every chapter (providing substantive input on many) before it 
was published. BOEM also organized and participated in the public 
meetings for the Supplemental Draft Environmental Impact Statement. 
Additionally, the Environmental Protection Agency has remained involved 
and provided input to sections of the document for which they have 
regulatory authority.
    Question. The Executive Order regarding Stewardship of the Ocean, 
our Coasts, and the Great Lakes defines Coastal and Marine Spatial 
Planning (CMSP) as ``a comprehensive, adaptive, integrated, ecosystem-
based, and transparent spatial planning process, based on sound 
science, for analyzing current and anticipated uses of ocean, coastal, 
and Great Lakes areas.'' The fiscal year 2012 and fiscal year 2013 
Commerce, Justice, Science, and Related Agencies (CJS) appropriations 
bills zero out funding for CMSP.
    Has the administration undertaken any efforts in fiscal year 2012 
or fiscal year 2013 to develop a comprehensive, adaptive, integrated, 
ecosystem-based, and transparent spatial planning process, based on 
sound science, for analyzing current and anticipated uses of ocean, 
coastal, and Great Lakes areas?
    Answer. NOAA has funded data integration and provided regional 
support for management based on sound science in fiscal year 2012 and 
fiscal year 2013 through on-going work in many programs areas, pursuant 
to legislative mandates. Data integration activities improved State and 
regional resource managers' access to ocean and coastal data, including 
making NOAA data available through ocean.data.gov, developing a 
decision support toolkit, and enabling regional data managers to 
identify standards and best practices and to build a technical 
community of practice around regional portal management and 
development.
    Question. Is there any funding requested for such efforts in the 
President's fiscal year 2014 budget, perhaps by a different name?
    Answer. The fiscal year 2014 budget does not request funding for 
Coastal and Marine Spatial Planning, although NOAA will continue to 
provide scientific support and technical assistance, pursuant to 
existing legislative mandates, to help States and regions advance their 
coastal management goals.
    Question. The fiscal year 2013 Senate CJS Report notes that a 
Governor may ask NOAA that no Regional Ocean Partnership grants be 
awarded to his or her State to prevent funds from being used in 
contradiction to a State policy or to support activities inconsistent 
with a State's coastal management plan.
    How will the administration implement this requirement?
    Answer. NOAA will maintain its current requirement that governors 
support Regional Ocean Partnership (ROP) projects either through 
formally joining an ROP or by submitting a specific letter of support. 
If a governor does not want ROP funds expended in a State, then NOAA 
would address this request through the grant negotiation process.
    Question. The Endangered Species Act continues to present serious 
challenges for Alaskans. With more than 20 species listed as endangered 
or threatened in the State, reasonable economic development initiatives 
on land and offshore are hampered every day. Recent listings have me 
worried about the direction the Federal Government is headed, in 
particular NOAA. On the Friday before Christmas, NOAA listed two 
species of ice seals as threatened based on weather predictions all the 
way out to 2099--86 years from now--even though their populations are 
healthy and not currently in decline. While I appreciate the value of 
preserving wildlife, which is an integral part of the Alaskan way of 
life, I am committed to finding ways to minimize the impacts on the 
State's economic livelihood.
    What assurances can you provide that NOAA will not seek to 
designate critical habitat for these ice seal populations that 
currently are robust and healthy?
    Answer. NOAA published final rules to list ringed and bearded seals 
under the Endangered Species Act (ESA) on December 28, 2012. The 
principal threat to these two species that was identified in the Status 
Reviews is the loss and alteration of habitat associated with climate 
change. Specifically, climate projections indicate that by the end of 
this century, average snow depths on sea ice will be less than the 
minimum needed for successful formation and maintenance of ringed seal 
birth lairs throughout most of the species' range. Without the 
protection of lairs, ringed seals, especially newborn, are vulnerable 
to freezing and predation. Likewise, to adapt to reductions in the 
extent and timing of sea ice projected by the end of this century, 
Beringia bearded seals would likely have to shift their nursing, 
rearing, and molting areas to ice-covered seas north of the Bering 
Strait, where projections suggest there is potential for the spring and 
summer ice edge to retreat to deep waters of the Arctic basin--much 
deeper than the habitat typically used by bearded seals for foraging on 
benthic organisms. These anticipated habitat changes pose significant 
threats to the persistence of ringed and bearded seals within the 
foreseeable future.
    The ESA requires NOAA to designate critical habitat concurrently 
with listing, or, if critical habitat is not determinable at the time 
of listing, to do so within 1 year of listing. NOAA solicited comments 
and information to assist with designating critical habitat for ringed 
and bearded seals during a 60-day period following publication of the 
final listing rules. NOAA staff recently met with the Alaska Department 
of Fish & Game to discuss our approach to identifying critical habitat 
and seek feedback, and we have also discussed the process for 
designating critical habitat with the Ice Seal Committee (an Alaska 
Native organization that has a co-management agreement with NOAA). We 
are now preparing proposed rules to designate critical habitat that we 
anticipate publishing later this year. We will seek additional public 
comments on all aspects of the proposals, including information on the 
economic, national security, and other relevant impacts of the proposed 
designations, as well as the benefits to ringed and bearded seals from 
designation, before developing the final rules.
    Question. There have been longstanding concerns with the science 
underlying the ESA listing of Steller sea lions (SSL) in the Bering Sea 
and Aleutian Islands, which led to NOAA requesting a formal, outside 
scientific review of the NMFS-prepared Biological Opinion (BiOp). In 
September 2012, the three independent scientists selected by NOAA 
released their reports with varying degrees of criticism of the BiOp, 
including this statement by Dr. Brent Stewart:
    ``Speculative and hypothetical suggestions for jeopardy and adverse 
modification do not, I think, meet the standard established by the 
Endangered Species Act to conclude that the actions have a substantial 
chance (likely) of jeopardy and adverse modification.''
    And by Dr. W. D. Bowen:
    ``There is no direct evidence that by removing fish, these 
fisheries compete with the SSL in the central and western Aleutians and 
elsewhere.''
    What steps has NOAA taken to address the findings of its own 
experts, and why hasn't the agency proceeded with reducing the 
restrictions on the fishing industry?
    Answer. NOAA appreciates the input provided by the Center for 
Independent Experts (CIE) on our 2010 Biological Opinion on the effects 
of the Alaska groundfish fisheries on species listed under the 
Endangered Species Act. The three reviewers were selected by the CIE 
rather than by NOAA, which is one of the procedures we use to ensure 
that such reviews are truly independent. The reviewers were asked to 
comment on the adequacy of the best available science and on the 
appropriate interpretation of that science to reach the conclusions 
presented in the Biological Opinion. They were critical of the 
Biological Opinion's evaluation and interpretation of the best 
available science.
    NOAA is undertaking a number of new analyses in response to the CIE 
review. We reexamined Steller sea lion food habits data, taking into 
account the biases and potential inaccuracies of relying upon the 
frequency of occurrence of prey items in sea lion scats and considering 
other methods of diet study. We are evaluating the latest telemetry 
information regarding sea lion movements and possible foraging areas. 
We are completing new analyses to clarify the circumstances under which 
pup/non-pup ratios are useful in making inferences regarding sea lion 
birth rates. We are also conducting a power analysis to determine 
whether factors that influence Steller sea lion survival, such as 
fishery-induced nutritional stress, can be detected with regression 
analyses of fishery effort and sea lion trend data. All of this 
information will be used in future Biological Opinions that evaluate 
the effects of the fisheries on Steller sea lions.
    Working with the North Pacific Fishery Management Council, NOAA is 
in the process of evaluating a new suite of fishery management measures 
for the Aleutian Islands Atka mackerel, Pacific cod, and pollock 
fisheries. NOAA is preparing a court-ordered Environmental Impact 
Statement (EIS) to examine a range of alternative fishery management 
measures to protect Steller sea lions while minimizing to the extent 
practicable economic impacts to the groundfish fisheries. We developed 
the alternatives in the draft EIS based upon recommendations from the 
North Pacific Fishery Management Council, and we released the draft EIS 
for public comment on May 14, 2013. We have also reinitiated 
consultation under section 7 of the Endangered Species Act (ESA), which 
will result in a new Biological Opinion that will address the issues 
raised in the peer reviews and address the effects of the preferred 
alternative on Steller sea lions. The new Biological Opinion will 
include a new weight of evidence analysis to evaluate whether responses 
observed in Steller sea lions are consistent with the nutritional 
stress hypothesis. We will complete the EIS by March 2014, as required 
by the court order, and then undertake rulemaking as needed to 
implement the selected alternative in time for the 2015 fisheries.
    NOAA remains concerned about the fate of the western Distinct 
Population Segment of Steller sea lions, especially in the western 
Aleutian Islands where the population has continued to experience a 
sharp decline. Under the ESA, NOAA is required to insure that 
authorization of the fisheries is not likely to jeopardize the 
continued existence of any endangered or threatened species or result 
in the destruction or adverse modification of designated critical 
habitat.
    Question. As you know, last year extreme weather and other natural 
events wreaked havoc on fishermen across the country, and you declared 
Federal fishery disasters in nine States in response to four different 
events. These disasters are authorized by the Interjurisdictional 
Fisheries Act and Magnuson-Stevens Act, and this Committee recognized 
that and included funding for fish disasters in December's Senate 
supplemental appropriations bill. I want to thank our Chair and Ranking 
Member for their work on that issue, but unfortunately, the funding was 
unfairly targeted as unnecessary or an earmark and was not included in 
the final supplemental package. I know you and this Committee 
understand that this funding is not an earmark, and it's not less 
important than the disaster assistance we provide other industries, 
such as drought assistance for farmers. But I think it's good to get 
that information on the record, recognizing the value of our fisheries 
communities and need to support them when they are experiencing the 
impacts of disasters recognized at the Federal level.
    Will you please speak to this need, what funding is authorized, and 
what the funding is used for?
    Answer. Fisheries are an essential part of coastal economies. They 
provide jobs for fishermen, fish processers, and related maritime 
support industries. Many coastal communities are economically dependent 
on fisheries.
    Commercial fishermen in the U.S. harvested 9.9 billion pounds of 
finfish and shellfish in 2011, earning $5.3 billion for their catch. In 
2011, this industry supported approximately 1.2 million full- and part-
time jobs and generated $129 billion in sales impacts, $37 billion in 
income impacts, and $55 billion in value added impacts.
    In 2011, there were approximately 11 million recreational saltwater 
anglers across the United States who took 69 million saltwater fishing 
trips around the country. These anglers spent $4.5 billion on fishing 
trips and $22 billion on durable fishing-related equipment. These 
expenditures contributed $70 billion in sales impacts to the U.S. 
economy, generated $32 billion in value added impacts, and supported 
more than 455,000 job impacts.
    However, fisheries are subject to a number of factors that can 
cause sudden and unexpected losses, leading to serious economic impact 
for fishers and their communities. These factors include hurricanes and 
typhoons that can destroy fishing grounds and fishing infrastructure, 
oil spills, harmful algal blooms, and other disasters, both natural and 
man-made, that cause a commercial fishery to incur harm or fail. The 
effects of these disasters can impact coastal communities for months, 
or even years.
    The Secretary of Commerce determines whether the circumstances of 
an event are consistent with relevant statutes and warrant a fishery 
disaster determination. Since there is no standing fund available to 
provide disaster assistance, such assistance is dependent on 
congressional action to appropriate funds for each declared disaster. 
Funds are administered by the Secretary through NMFS, which works with 
the affected State(s) to develop spending plans that consider 
information such as: fisheries data from State agencies; income and 
revenue data from fishing businesses; community needs; research and 
monitoring needs; environmental impacts; and infrastructure damage. The 
funds can then be used for a wide range of activities (in accordance 
with statues and congressional guidance), including loan programs, 
monitoring, research, restoration, gear replacement, and shoreside 
fishery infrastructure, depending on the nature of the disaster and the 
needs of the State(s).
    (All fishery statistics can be found in: National Marine Fisheries 
Service. 2012. Fisheries Economics of the United States, 2011. U.S. 
Dept. Commerce, NOAA Tech. Memo. NMFS-F/SPO-118, 175p. Available at: 
https://www.st.nmfs.noaa.gov/st5/publication/index.html.)
    Question. As you know, I have long been concerned about the lack of 
coordinated Federal efforts to respond to marine debris resulting from 
the 2011 Japanese tsunami. An estimated 1.5 million tons of debris was 
floating in the ocean in the immediate aftermath of that disaster, and 
some of that debris is washing up on Alaska's shores, as well as the 
shores of Hawaii and the Pacific Northwest. Our constituents have found 
sports equipment and household items, and we all heard about the docks 
that washed up on Washington and Oregon's shores. The Government of 
Japan made a generous $5 million gift to the United States, which is 
helping Alaska and the other four affected Pacific coastal States with 
clean-up and response efforts. However, the gift exceeds the entire 
annual budget for NOAA Marine Debris Program, and it is clear that a 
coordinated Federal effort is needed to address the anticipated level 
of debris still headed toward our coasts. I've called on the White 
House to establish a task force of all relevant agencies--including 
NOAA--to plan for this issue.
    How will NOAA work with other relevant Federal agencies and 
affected States, tribes, and local governments to plan for and respond 
to the ongoing marine debris impacts from the 2011 Japanese tsunami?
    Answer. NOAA has worked with impacted States on drafting response 
plans to prepare for contingencies involving large, hazardous, or 
unmanageable amounts of debris washing ashore. State-by-State plans 
address the unique natural resources and capabilities of each region. 
For example, the Federal and State agencies involved in drafting the 
Washington State plan recently responded successfully to the 65-foot 
Japanese dock that washed ashore in Olympic National Park. The response 
team included NOAA, the U.S. Coast Guard, the National Park Service, 
the Fish and Wildlife Service, and several Washington State agencies. 
NOAA will continue to support our Federal and State partners with 
science and coordination as needed during these types of responses, in 
all impacted States.
    In December 2012, Japan generously provided $5 million to NOAA's 
Marine Debris Program with the intent to support States' tsunami debris 
response efforts such as removal of debris, disposal fees, cleanup 
supplies, detection and monitoring. NOAA continues to work closely with 
the States to determine immediate needs. NOAA is providing $250,000 to 
each of the impacted States (Alaska, Washington, Oregon, California, 
and Hawaii), and will distribute the remainder of the funds on a case-
by-case basis as needs arise.
                                 ______
                                 
              Question Submitted by Senator Lindsey Graham
    Question. Last year, I worked with your department regarding the 
International Trade Administration's U.S. Commercial Service (CS), and 
their decision to eliminate CS staff in developing countries. Through 
this, I learned of the department's intention to prioritize emerging 
economies over developing economies. While I fully understand the 
budgetary constraints all U.S. Government agencies currently face, I 
worry such action is premature and would weaken opportunities for U.S. 
companies, especially in Africa.
    Under the President's fiscal year 2014 budget, would any commercial 
service professionals be eliminated? How much would it cost to ensure 
no current CS officers are eliminated? How much would it cost for the 
Commercial Service to operate at full capacity, to include strategic 
developing countries?
    Answer. The President's fiscal year 2014 budget request includes an 
additional $40 million for Global Markets (GM), which will include the 
Commercial Service when ITA's internal consolidation takes effect in 
fiscal year 2014. GM will continue the functions and activities 
currently performed by CS to increase staffing in high-growth markets 
and to support the Administration's Asia rebalance and the U.S. 
Strategy towards Sub-Saharan Africa. The request would fully support 
our current 72 country footprint by adding officers and Locally Engaged 
Staff (LES) to critical markets. No current CS officers or LES would be 
eliminated. In fact, with the additional funding we would increase our 
presence from 72 to 82 countries adding seven posts in sub-Saharan 
Africa. Further, we would propose opening a post in Burma, expand to a 
second city in Indonesia, and open our first office in the Baltics.
                                 ______
                                 
               Question Submitted by Senator John Boozman
    Question. Over the past decade, 7 of the 10 fastest growing 
economies in the world have been in sub-Saharan Africa. Demographic 
trends suggest that by 2050 one in four workers in the world will be 
African, and the continent's population will top 1 billion.
    I believe that it is time for the United States to open new avenues 
to help American companies go head to head with their competitors in 
Africa. Over the last 10 years, trade with Africa from China, India, 
and Brazil has increased eight-fold. Over the same period, United 
States trade with Africa has increased by a multiple of only three. 
That is why I have joined with Senators Durbin and Coons to introduce 
legislation to create American jobs by increasing exports of U.S. goods 
and services to Africa by at least 200 percent in real dollar value 
over the next 10 years.
    The eagerness and willingness to be good trade partners on the part 
of African nations is there. They want our goods and services because 
Africans know they are high quality. The desire for American products, 
and along with our ideals, is strong. The only thing missing is a 
cohesive strategy on our end. Last year President Obama rolled out his 
strategy towards sub-Saharan Africa and a large part of his strategy 
was to encourage U.S. businesses to trade with and invest in Africa. 
Can you discuss how the Department is implementing this pillar of the 
strategy?
    Answer. In November, I visited South Africa to launch the Doing 
Business in Africa campaign. Through the President's Doing Business in 
Africa (DBIA) initiative, Commerce has focused on raising awareness of 
opportunities in Africa and promoting the U.S.-East African Community 
(EAC) Dialogue.
    The Department is undertaking a number of efforts with the DBIA. 
These include: (1) increasing the number of trade missions, 
concentrating our commercial advocacy efforts on markets with the 
greatest potential, and expanding our lending activities; (2) working 
with organizations such as Corporate Council on Africa (CCA) and the 
Business Council for International Understanding (BCIU) to launch a 
series of Africa Global Business Summits in the United States later 
this year; and (3) partnering with the Association of State 
International Development Organizations to train economic development 
leaders at the state and regional levels in the United States, with a 
special emphasis on the opportunities and possibilities for doing 
business in Africa.
    The U.S. & Foreign Commercial Service (US&FCS) has increased 
promotion of Africa as an attractive market for U.S. companies 
reporting 64 unique events. These include events such as webinars, 
procurement seminars and trade missions including one led by 
International Trade Administration Under Secretary Sanchez to South 
Africa and Zambia, in addition to my own trip in November. US&FCS in 
sub-Saharan Africa is characterized by its extensive Partnership Post 
network with 25 countries. Key Partner Post activities include 
implementation of US&FCS branded services, trade missions, advocacy 
coordination, business counseling, and coordinating International Buyer 
Program delegations.
    Working with a team led by the Office of the United States Trade 
Representative (USTR), the Department is also using the U.S.-EAC 
Dialogue to seek private sector input on the best ways to increase 
trade and investment flows between the United States and the EAC. This 
is part of a larger partnership strategy under which trade facilitation 
agreements are being advanced.
    Furthermore, the Department's strategy towards sub-Saharan Africa 
figures prominently in the President's fiscal year 2014 budget request 
for Global Markets (GM), which will include functions and activities 
currently accomplished by US&FCS. With the exception of a few core 
posts, US&FCS has never had a major presence in Africa. The additional 
funding requested in the President's budget would allow US&FCS to open 
seven new offices in sub-Saharan Africa. The Department would further 
strengthen our current offices in Ghana, Kenya, Nigeria and South 
Africa to handle regional issues. These 11 offices, working in 
conjunction with the GM's Office of Africa and with our U.S. Export 
Assistance Centers (domestic offices in over 100 U.S. cities), would be 
able to offer the full range of US&FCS services to U.S. companies 
including counseling, matchmaking, trade fairs and trade missions.

                          SUBCOMMITTEE RECESS

    Senator Mikulski. And this subcommittee stands in recess 
until April 25 when we will take the testimony of NASA 
Administrator Charlie Bolden.
    [Whereupon, at 12:10 p.m., Thursday, April 11, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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