    [Senate Hearing 113-660]
    [From the U.S. Government Publishing Office]

      COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2015

                                  ----------

                            THURSDAY, APRIL 10, 2014

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:01 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Barbara A. Mikulski (chairwoman)
    presiding.
        Present: Senators Mikulski, Reed, Merkley, Coons, Shelby,
    Collins, and Kirk.

                             DEPARTMENT OF COMMERCE

                            Office of the Secretary

    STATEMENT OF HON. PENNY PRITZKER, SECRETARY

                OPENING STATEMENT OF SENATOR BARBARA A. MIKULSKI

        Senator Mikulski. Good morning, everybody. The CJS
    Subcommittee will come to order.
        Today we will take the testimony of the Department of
    Commerce for the 2015 fiscal year. This is their budget
    request, and we will be listening to the Commerce Secretary,
    Penny Pritzker, testifying for the first time at CJS. One might
    recall that Secretary Pritzker was appointed in July of 2013.
    We had already had our hearings, though we've had many
    substantive and constructive conversations.
        Also, we want to note that we will be putting into the
    record the testimony of the Inspector General, Todd Zinser. But
    in the interest of time, we're just going to enter that. We
    want to thank Mr. Zinser and the Inspector General Service
    Corps for all of the work that they do that gives us important
    insights on how we can manage our people and our resources
    better. We want to thank him for that. Just the fact that we're
    going to have many votes today, we've had to condense it.
        His statement will not only be part of the record, but I
    will be including some of the issues he raises in my questions.
        There is a vote at 10:30 a.m., so it will be the goal of
    Senator Shelby, my vice chairman, and myself to make our
    statements and listen to you, Madam Secretary, and then we'll
    return for questions.
        This is one of 60 hearings that we're holding in six weeks
    because we want to complete our hearings as promptly but
    diligently as we can so we can mark up our bills and strive,
    for the first time since 1996, not to have a lame duck.
        Madam Secretary, we look forward to hearing from you on
    both the budget request and the priorities of the Department of
    Commerce. We know that you bring to us a strong business
    background and that the tradition of the Secretary of Commerce
    has always been a President's liaison to the business
    community. We note that one of the signature priorities that
    you put forth is that America is open for business, and we look
    forward to hearing about that.
        One of the things we agree about on a bipartisan basis are
    the great words of Ronald Reagan when he said ``the best social
    program is a job,'' and we want to hear how the Department of
    Commerce helps generate jobs in our country and retain jobs in
    our country, and maybe even in manufacturing bring some of
    those jobs back home.
        We know that today we want to hear about trade, innovation,
    and jobs. We want to know how the Department of Commerce is
    helping generate jobs by increasing exports and promoting
    economic growth. We need to also hear about spurring
    innovation, safeguarding our intellectual property and
    enforcing our trade laws, but at the same time having strong
    oversight.
        The Department of Commerce has been plagued by some
    persistent problems, problems with the Census, problems with
    the NOAA satellite program, but I must say that under your
    diligent management you have really tried to solve those
    problems, and we appreciate that.
        One of the areas that we see as one of the future jobs in
    this country is in the area of information quality assurance.
    The trendy, chic word now is ``cyber-security.'' But if you
    lose your identity or somebody steals your intellectual
    property, it's not a trendy phrase; it is a harsh economic
    reality affecting either a person, a business, or the future of
    our country.
        We see NIST, the National Institute of Standards and
    Technology, as one of the greatest and yet most undervalued
    agencies in the Federal Government constellation, and it
    provides the private sector a civilian portal in which they can
    engage in both inventing products, talking with each other, and
    working constructively. We want to hear the role of NIST in
    today's world and what does it take to do that, though we know
    that NIST plays a very important role in manufacturing.
        The other thing of great concern is the stealing of our
    intellectual property, and that goes to, again, cyber security.
    But in this array of agencies you have the Patent and Trade
    Office, which is absolutely crucial. We believe in private
    property. We're capitalists on this committee. We believe in
    private property and that if you invented it, you should get to
    keep it and make sure that nobody steals it.
        But we need an aggressive Patent Office. We know the
    Judiciary Committee is looking at this. We know that we've had
    a backlog.
        There's the International Trade Office and the
    International Commercial Service where we actually have people
    overseas that help our American businesses connect. We don't
    always talk about that in this committee, and we want to hear
    about it.
        And also very important is NOAA, the National Oceanic and
    Atmospheric Administration. NOAA is important to all of us who
    are coastal Senators. I'm sure they'll be coming in later.
    You're not a coastal Senator unless you--I mean, the coastal
    Senators are united that we're all concerned about fisheries,
    about the species decline, and also, the very important weather
    satellites and the Weather Service.
        Most people think weather comes from the Weather Channel.
    We think it's wonderful the way the private sector has taken
    the data and information NOAA generates and turns it into such
    a useful, exciting product for the American people. But you
    can't have the Weather Channel unless you have the Weather
    Service. And quite frankly, whether you're a military, a
    maritime service, or you are a municipal leader wondering what
    to do on a snow day or how to have tornado alerts in your
    community, you need NOAA. So we need to hear more about that.

                               PREPARED STATEMENT

        There are other questions and things that I'm going to say.
    I'm going to yield any time I have back, ask unanimous consent
    that my full statement be in the record so that Senator Shelby
    can speak, we can get you to your testimony before the vote.
        [The statement follows:]
               Prepared Statement of Senator Barbara A. Mikulski
        This is one of 60 hearings the Appropriations Committee will hold
    over a 6 week period. We are doing our due diligence and the necessary
    work to get the job done. Our goal is to enact all 12 Appropriations
    bills before October 1, for the first time since 1996, in order to
    restore regular order--which means certainty and reliability in the
    appropriations process.
        Today we will hear from Secretary Penny Pritzker about the
    Department of Commerce's fiscal year 2015 budget request and
    priorities. We also have written testimony from Commerce's Inspector
    General Todd Zinser.
        We welcome Secretary Pritzker, who joined the Commerce Department
    in June of last year. We are very lucky to have her. She has a strong
    business background and has been a great leader at Commerce. Now she is
    the CEO of the Department of Commerce and America's Businesswoman in
    Chief, a leader to keep the economy rolling through trade, innovation,
    and jobs.
        The Commerce Department is a major economic engine for America. The
    President's request totals $8.8 billion for the Department. Today my
    goal is to examine how these funds will spur innovation. That includes
    safeguarding our intellectual property, and enforcing our trade laws. I
    want to know how the Department will create jobs, increase exports, and
    promote economic growth. We will also discuss how Commerce protects our
    citizens through forecasts and warnings about severe weather. Finally,
    is Commerce doing all it can to protect taxpayer dollars and use funds
    wisely?
        The Secretary of Commerce is the spokesperson for American
    business. But the Secretary is also the chief manager responsible for
    addressing major challenges and persistent problems that need strong
    oversight including the National Oceanic and Atmospheric
    Administration's satellite procurement and the 2020 Census.
        The Department of Commerce needs to be cyber-obsessed, creating
    ways to protect its own DOT.GOV systems, while working with the private
    sector to better protect DOT.COM. I want to be clear--cybersecurity is
    not surveillance. Cybersecurity means understanding and protecting us
    and our information from criminals out to steal our credit card
    information and personal identities, and to rob companies' intellectual
    property.
        The total fiscal year 2015 National Institutes for Standards and
    Technology (NIST) budget request is $900 million, and includes $91
    million for cybersecurity, research, and partnerships with private
    sector. NIST's job is to partner with the private sector to solve
    today's cybersecurity problems. Earlier this year, NIST issued the
    voluntary Framework for Improving Critical Infrastructure
    Cybersecurity. Through research in the labs and at the National
    Cybersecurity Center of Excellence, NIST is generating innovation that
    protects people and companies, and creates cybersecurity jobs of the
    future that can never leave the United States.
        NIST is not the only agency standing sentry over American
    innovation. The Patent and Trademark Office (PTO) protects ideas and
    inventions helping America's economy thrive. Inventors' new ideas
    become new products and, through entrepreneurship, new companies that
    create jobs. But inventors need a patent office to protect their ideas.
    The PTO is improving and getting patents out faster, but it can do
    more. More than 600,000 patents are waiting for approval, and it takes
    almost 2\1/2\ years to get a patent. PTO needs strong oversight from
    the Secretary and Congress. The PTO has been functioning without a
    Director since February 1, 2013.
        Once a product is invented, we need to sell it around the world.
    The International Trade Administration (ITA) enforces our trade laws
    and agreements, protecting entire American industries. It promotes
    American products internationally and brings companies and jobs home to
    the United States. ITA's budget request of $507 million is an increase
    of $37 million above the fiscal year 2014 level of $470 million. The
    ITA's Foreign Commercial Service helps American companies sell more
    goods overseas, getting products from American manufacturers to
    international customers. Exporting American goods and services supports
    roughly 10 million jobs in the United States.
        The Economic Development Administration (EDA) invests in
    communities in all 50 States. EDA provides funding for projects such as
    water infrastructure for new hospitals, supporting thousands of local
    workers. Projects that promote infrastructure and innovation set our
    small businesses up for success. Every dollar put into the community
    through EDA grants leverages $10 in local investment and creates jobs
    throughout the country.
        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 extreme weather will continue. NOAA's satellites need to
    be fit for duty. We owe it to our communities, especially to the
    coastal States that depend on accurate hurricane forecasts and to the
    interior States that depend on timely tornado warnings. One-third of
    our GDP is directly affected by the weather. While Commerce's budget
    shows continued reforms to NOAA's satellite programs in response to
    critical reviews from this Committee and expert outside analysts, I
    remain concerned about the stability of these important satellite
    programs.
        The Inspector General identified Census planning and management as
    a key challenge for the Department of Commerce. Controlling costs for
    the 2020 Census is a top oversight concern for the Inspector General,
    the Government Accountability Office, and the Appropriations Committee.
    The budget request of $1.2 billion for the Census is an increase of
    $266 million above the fiscal year 2014 level of $945 million to
    prepare for 2020 Census. I want to know what is being done to make the
    2020 Census less expensive than the 2010 Census and to prevent techno-
    boondoggles that caused 2010 Census costs to skyrocket.
        I want to thank all the men and women of the Commerce Department--
    trade experts, statisticians, patent and trademark examiners,
    scientists and engineers, ocean surveyors, and weather forecasters.
    They work hard every day promoting American businesses, protecting
    American ideas and resources, keeping our economy moving forward and
    creating jobs. Secretary Pritzker--thank you for your leadership and
    also for your continued oversight of the Department of Commerce. We
    look forward to hearing your testimony.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Thank you, Madam Chairman.
        Welcome, Secretary Pritzker. As the chair said, this is
    your first hearing, your first appearance before this
    committee.
        The Department of Commerce, as everybody knows, is
    responsible for a broad range of activities critical to our
    Nation. Weather forecasting, fisheries management, economic
    development, and trade enforcement are just a few of the
    Department's responsibilities.
        In a time of constrained budgets, prioritization and strong
    oversight are essential to keeping the Department on the right
    path, and the request for 2015 is $8.7 billion, $568 million
    more than the 2014 enacted level.
        The budget request attempts to balance, as I understand it,
    the wide range of activities under the purview of the
    Department. Finding that balance remains a challenge. Costly
    satellite procurements and the build-up to the 2020 Census adds
    significant budget pressures that could impact other important
    core programs.
        Ensuring that priority satellite projects stay on schedule
    and on budget is essential to the overall budget picture. As
    the Department develops long-range plans for satellite
    procurements, I believe it must maintain a focus on these
    projects that ensure weather forecasters have the data and
    information they need to protect life and property. And while
    there are a number of satellite projects on the books,
    resources are limited.
        I am concerned that the Department has not prioritized
    these costly projects yet based on the value of services they
    provide to the core mission of the agency. Madam Secretary,
    when it comes to projects of this magnitude and this cost, the
    Department, I believe, must differentiate between the must-
    haves, must-haves such as JPSS and GOES-R and the nice-to-
    haves, nice-to-have projects like Cosmic, and Cosmic-2.
        Unfortunately, I'm not convinced that all of the satellite
    projects that the Department is focused on are truly necessary
    to the core mission of NOAA, which is very important to all of
    us that the chairman referenced. My concern is exacerbated by
    reports from the GAO and the Department of Commerce Inspector
    General suggesting that a gap in polar satellite data is
    likely.
        Without this data, weather forecasters would be unable to
    do their jobs and the safety of millions of Americans could be
    in jeopardy. Yet the Department thus far has failed to present
    a viable gap mitigation plan in the 2015 request, choosing
    instead to advance nice-to-have satellite projects. I wish you
    would look at that very, very closely. It certainly troubles a
    lot of us.
        Finally, I want to touch on the Department's request for
    Economic Development Administration funds. The Department has
    once again proposed to shift support away from traditional
    effective economic development programs that help distressed
    communities to fund a new community planning program. The
    Investing in Manufacturing Communities Partnership Program
    proposes to support 25 communities in this country, just 25
    communities that the Administration believes have the best
    economic development planning regime in place.
        The program gives selected communities a seal of approval
    intended to signal to business and industry around the world
    that the community has been chosen by the Government, by the
    Administration, as worthy of investment. Additionally, chosen
    communities will be granted priority access to Federal
    resources. Sounds like central planning to me.
        I'm concerned that this type of system allows the
    Administration ultimately to pick a lot of winners and losers,
    and there are many communities that have worked diligently in
    this country to recruit business and industry, and I worry that
    their future efforts might be disadvantaged by this new program
    if they're not chosen. And what's more, I'm concerned that they
    might be further disadvantaged in obtaining Federal grants
    because their grant applications won't be given the same
    consideration as a chosen community.
        I believe sustained growth and competitiveness should be a
    priority for communities everywhere in this country. It should
    not be restricted to a few manufacturing communities hand-
    picked by this Administration or any administration, and I look
    forward to working with you at the Department on these issues
    because I think they're very important.
        We welcome you again to the committee.
        Senator Mikulski. We want to note that Senator Jack Reed
    from Rhode Island, Senator Merkley, and Senator Mark Kirk are
    here.
        Understanding the vote, I'd like to get to Secretary
    Pritzker's testimony and try to get in as many questions as we
    can before the vote.
        Madam Secretary, why don't you proceed with your testimony?

                      SUMMARY STATEMENT OF PENNY PRITZKER

        Secretary Pritzker. Thank you very much. Chairwoman
    Mikulski, Vice Chairman Shelby, and members of the
    subcommittee, thank you for this opportunity to discuss
    President Obama's fiscal year 2015 budget request for the
    Department of Commerce.

                HIGHLIGHTS OF THE DEPARTMENT OF COMMERCE BUDGET

        The Department of Commerce budget request of $8.8 billion
    reflects President Obama's commitment to support American
    businesses and create economic opportunity, while building upon
    the important investments that Congress enacted in fiscal year
    2014.
        As you may know, the Department recently rolled out its
    priorities and strategic plan called the ``Open For Business
    Agenda.'' The budget reflects our priorities in several ways.
    First, we will build on the four consecutive record-breaking
    years of American exports and the trend of rising business
    investment into the United States. We propose that the
    International Trade Administration receive an 8 percent
    increase, which will bolster our work to support current and
    potential exporters, boost in-bound investment through our
    highly effective SelectUSA program, and strengthen trade
    enforcement.
        I should also note that 2015 will conclude the biggest
    element of the President's Export Control Reform Initiative,
    which strengthens our national security and allows for more
    trade with our allies.
        Second, we will continue to support American innovation.
    The Commerce Department is becoming known as the Department of
    Innovation. Over the past few years, we have laid down more
    than 100,000 miles of broadband, bringing more opportunity to
    businesses and communities across the country. We have also
    reduced the patent application backlog, though we still have
    more work to do.
        To continue driving innovation, the budget includes
    increased funding for research at bureaus such as the National
    Institute for Standards and Technology; as you know, NIST
    attracts private sector partners to collaborate with us in
    areas ranging from advanced manufacturing to cyber security.
        Looking forward, we will expand efforts to help small
    manufacturers adopt new technologies and increase their
    competitiveness through AMTech and our MEP program.
        In addition, the budget reflects the President's call for a
    national network of manufacturing innovation, a powerful model
    focused on pre-competitive research which already has
    bipartisan support in the House and the Senate.
        We will also drive innovation through regional capacity
    building, continued support for minority-owned businesses, and
    both executive and legislative efforts to continue
    strengthening our patent system, an issue that Congress is
    currently working to address.
        Third, we will do more to unleash the potential of data.
    The budget proposes a significant increase, to $754 million, to
    prepare for an efficient and effective 2020 Census. We have
    embarked on aggressive research and testing programs that will
    help us identify ways to make it easier for people to respond
    to the Census. We will consistently review the benchmarks of
    this program to ensure that we are better able to meet our
    goals.
        As you know, business and government leaders across the
    country use crucial data to make decisions about growth and
    hiring. Also, I recently announced that we will partner with
    the private sector to make more NOAA data accessible and usable
    for entrepreneurs and the public. This budget supports this
    effort into fiscal year 2015.
        Fourth, we will gather and act on environmental
    intelligence. The budget includes $2 billion for satellites
    which provide weather and climate data to protect lives and
    property. These funds will also help businesses and communities
    adapt to a changing planet.
        I should note that these satellite programs are currently
    on schedule and on budget thanks to our rigorous monitoring and
    management efforts.
        The budget also includes $519 million for our National
    Ocean Service, which provides the resilience of our coasts, as
    well as $917 million for our National Marine Fisheries Service.

                              PREPARED STATEMENTS

        In closing, as a former business leader, I strongly believe
    that this budget reflects wise, targeted investments of
    taxpayer dollars, investments that will be highly valued by the
    Commerce Department's stakeholders. I look forward to answering
    your questions and achieving the important vision laid out in
    our Department's strategic plan.
        [The statements follow:]
                   Prepared Statement of Hon. Penny Pritzker
        Chairwoman Mikulski, Vice Chairman Shelby, and members of the
    subcommittee, thank you for this opportunity to discuss with you
    President Obama's fiscal year 2015 budget request for the Department of
    Commerce. The investments included in the fiscal year 2015 budget
    request build upon the important investments you enacted in fiscal year
    2014 and I am grateful for your support.
        Our fiscal year 2015 budget requests $8.8 billion, a 7 percent
    increase over fiscal year 2014. This budget supports the Department's
    ``Open for Business Agenda'' by promoting trade and investment;
    spurring innovation; fueling our data-driven economy; and producing
    environmental intelligence. Investing in these areas builds on
    President Obama's vision for creating economic opportunity for all
    Americans. This budget will help drive economic growth and job creation
    and reflects his confidence in the Department's ability to help
    businesses grow, compete, and innovate as the voice of business in the
    administration.
        The President's vision for creating economic growth is further
    supported through the Department's request in the Opportunity, Growth,
    and Security Initiative. This fully paid for initiative lays out a
    roadmap for additional investments in critical areas such as research
    and development, climate resilience, economic development, and
    manufacturing.
        We are committed to working with the Congress to pass a budget that
    will continue to help create the conditions necessary for businesses to
    grow and hire, and for the U.S. economy to thrive.
                         promoting trade and investment
        Increasing trade and investment is a critical component of growing
    our economy. Exports have driven nearly one-third of economic growth
    since 2009 and support 11.3 million jobs. Ninety-six percent of
    companies that export are small and medium enterprises (SMEs). Today,
    95 percent of potential customers are outside our borders and growing
    the number of export-related jobs, which pay 18 percent more on
    average, will require expanding our ability to reach these foreign
    markets. To promote exports and greater investment in the U.S.,
    including foreign direct investment and U.S. companies reinvesting in
    America, the budget includes $497 million for the International Trade
    Administration (ITA), an 8 percent increase over the 2014 enacted
    level. I want to thank the subcommittee for their support of SelectUSA
    in fiscal year 2014 and we plan to put more muscle behind this new
    program, which will bring more foreign investment dollars to the United
    States and encourage American companies to reinvest in America.
        To reinforce the important role that investment plays in the health
    of our economy, the budget also proposes to rename the International
    Trade Administration to the International Trade and Investment
    Administration (ITIA). This new name more accurately reflects the
    Commerce Department's commitment to expanding exports while also making
    inbound investment and reshoring a bigger part of the DNA of our
    economy. Five million six hundred thousand jobs are supported by
    inbound investment and the trends are in our favor to attract more. The
    additional resources requested in the fiscal year 2015 budget will
    enable ITIA, and specifically SelectUSA, to help more states and
    regions attract additional investments and create more jobs.
        Funding requested for ITIA includes $15 million, a $7.7 million
    increase from fiscal year 2014, to accelerate operations of the
    Interagency Trade Enforcement Center (ITEC), an interagency effort to
    address unfair trade practices and barriers to boost U.S. exports, and
    $20 million, a $13 million increase from fiscal year 2014, to expand
    SelectUSA.
        The budget includes $4 million for the Bureau of Economic Analysis
    (BEA) to improve the measurement and understanding of U.S. foreign
    direct investment in support of the SelectUSA initiative. The
    additional funds will support increased export promotion activities in
    underserved markets around the world. The budget also supports the
    administration's BusinessUSA initiative, a one-stop shop to connect
    business with Federal Government resources more effectively and
    efficiently.
        The budget includes $111 million for the Bureau of Industry and
    Security (BIS), a $9 million increase, to enforce our export control
    laws to ensure that our national security is protected even as we
    foster trade. This will support BIS's continuing work on export control
    reform, which will help advance national security and economic
    competitiveness by better focusing U.S. controls on transactions to
    destinations or end users of concern, while facilitating secure trade
    for controlled items with U.S. allies and close partners by expanding
    export control officers operations, enhancing current intelligence
    efforts, and expanding the bureau's national enforcement and analytical
    capabilities.
                              spurring innovation
        Much of what makes America unique is our spirit of innovation and
    entrepreneurship. Today, the United States has 6 million workers
    employed in technology and the highest concentration of knowledge and
    technology intensive industries in the world, representing 40 percent
    of our GDP.
        To foster a more innovative U.S. economy, the budget will support
    increased regional and national capacity for innovative manufacturing,
    continue to support research and development (R&D) that leads to
    transformative changes in technology, promote intellectual property
    policy that supports innovation, and continue to strengthen the
    Nation's digital economy.
        The budget provides $141 million, a $13 million increase over the
    fiscal year 2014 enacted level, for the Hollings Manufacturing
    Extension Partnership (MEP), with an increased focus on expanding
    technology and supply chain capabilities to support technology adoption
    by smaller manufacturers to improve their competitiveness.
        The budget also provides $15 million for the Advanced Manufacturing
    Technology Consortia (AMTech), a public-private partnership that will
    support industry-led consortia developing technologies to address major
    manufacturing challenges faced by American businesses. The
    administration has also launched four manufacturing institutes to date
    and is planning to launch at least four additional manufacturing
    institutes in 2014 utilizing existing Federal funding.
        The budget provides $680 million for the National Institute of
    Standards and Technology (NIST) laboratories, an increase of $29
    million over fiscal year 2014, to accelerate advances in top research
    priorities, including advanced manufacturing, forensics, cybersecurity
    and disaster resilience, and improved scientific facilities. Included
    in this amount is $6 million for NIST to accelerate and expand
    technology transfer across the Federal Government, which will enhance
    the competitiveness of U.S. industry by sharing innovations and
    knowledge from Federal labs. NIST contributes to the success of
    businesses on issues ranging from cybersecurity to advanced
    manufacturing. This funding will enable NIST to continue to support
    economic growth in the future.
        To continue expanding broadband capacity and promoting policies to
    ensure a free and open Internet, the budget requests a total of $51
    million for the National Telecommunications and Information
    Administration (NTIA), an increase of $5 million over fiscal year 2014.
    This increase will support increasing wireless broadband access and
    critical telecommunications policy coordination.
        The budget includes $210 million for the Economic Development
    Administration (EDA) to support innovative economic development
    planning, regional capacity building, and capital projects. This
    includes $25 million for the Regional Innovation Strategies Program to
    promote economic development projects that spur entrepreneurship and
    innovation at the regional level. This investment will make our Nation
    and communities more competitive.
        The budget also includes $28.3 million for the Minority Business
    Development Agency (MBDA) that will enable the agency to continue
    supporting the national growth of minority-owned U.S. businesses, with
    additional focus on impacting regional economies and expanding into new
    markets. Minority owned firms make a significant and valuable
    contribution to our economy and export at a higher rate compared to all
    U.S. firms. This investment will promote further growth.
        Through implementation of the America Invents Act, the U.S. Patent
    and Trademark Office (USPTO) continues to make it easier for American
    entrepreneurs and businesses to bring their inventions to the
    marketplace sooner, converting ideas into new products and new jobs.
    Last year alone, the USPTO received more than 35,000 design patent
    applications and recently commemorated its 700,000th design patent.
    PTO's estimated fee collections in fiscal year 2015 are $3.4 billion.
        The budget also proposes several legislative reforms designed to
    improve the transparency and efficiency of the American patent system,
    complementing a series of administrative actions the administration
    announced in June 2013, which will help protect innovators from
    frivolous litigation and ensure the highest-quality patents in our
    system.
                         fueling a data-driven economy
        Data powers the 21st century economy, and Commerce Department data
    touches every American and helps existing businesses make better
    decisions while also providing opportunities for more entrepreneurs to
    launch startups. The budget will support data-related efforts ranging
    from our preparations for the 2020 Census to unleashing more NOAA data
    through public-private partnerships. Each day, NOAA collects and
    produces 20 terabytes of environmental data--from weather forecasts to
    climate change to ocean currents. Yet, only a small percentage of this
    valuable data, roughly two terabytes, is made easily accessible to the
    public.
        The budget includes $754 million, an increase of $260 million over
    the 2014 enacted level, for the U.S. Census Bureau to research and test
    innovative design methods necessary to achieve an efficient and
    effective 2020 Decennial Census. The budget also requests $12 million
    to invest in the development of three Commerce statistical measures
    that will improve evidence-based decisionmaking across the Federal
    Government and the private sector. This includes $5 million for the
    Census Bureau to improve the supplemental poverty measure to allow for
    more fair and accurate indexing and analysis of poverty programs.
        The budget also includes $5 million for the Census Bureau to
    increase access to critical business datasets and create a new field of
    research into the conditions and outcomes of business investments in
    research, development, and innovation by expanding existing data
    projects. An additional $2 million within BEA will initiate ``Big Data
    for Small Business,'' a new data program that will collect a Small
    Business GDP measure to support decisionmaking by business owners and
    investors as well as small business analyses.
               gathering and acting on environmental intelligence
        The President's budget makes crucial investments in our
    environment, including efforts to protect our natural resources and to
    help businesses and communities adapt to a changing planet. Through our
    network of satellites, ships, and worldwide sensors, the Department
    generates models, assessments, forecasts, and tools that provide
    information to help communities and businesses prepare for and prosper
    in a changing environment. Importantly, the proposed budget will also
    keep our satellite programs on track by providing $2 billion to fully
    fund the National Oceanic and Atmospheric Administration's (NOAA's)
    next generation of weather satellites, which are critical to its
    ability to provide accurate information to decision-makers throughout
    the government and private sector, as well as time-sensitive weather
    forecasts and warnings that help protect lives and property. This
    includes $60 million to procure additional weather instruments for the
    polar program and helps address the robustness of the polar
    constellation.
        The budget requests $519 million for the National Ocean Service to
    make critical investments in products, services and capabilities that
    will improve the resilience of the Nation's coasts. The budget also
    requests $917 million for the National Marine Fisheries Service to
    conserve, protect, and manage living marine resources, including
    important increases for next-generation stock assessments, and
    electronic monitoring and coral reef protection.
                                   conclusion
        The smart investments proposed in President's fiscal year 2015
    budget will support a globally competitive economy by promoting trade
    and investment, spurring innovation, fueling a data-driven economy, and
    gathering and acting on environmental intelligence. I look forward to
    working with the subcommittee to achieve these important goals.
                                     ______

          Prepared Statement of Hon. Todd J. Zinser, Inspector General
        Chairwoman Mikulski, Ranking Member Shelby, and members of the
    subcommittee:
        I appreciate the opportunity to provide testimony today as you
    consider upcoming appropriations for the Department of Commerce. The
    President's fiscal year 2015 budget requests $12.2 billion for the
    Department, including $3.4 billion for U.S. 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.
        We addressed these areas in our recent Top Management Challenges
    (TMC) report,\1\ which we prepare annually as required by the Reports
    Consolidation Act of 2000.\2\ Our TMC reports in depth what we
    consider, from our oversight perspective, to be the most significant
    management and performance challenges facing the Department:
    ---------------------------------------------------------------------------
        \1\ U.S. Department of Commerce Office of Inspector General,
    November 25, 2013. Top Management Challenges Facing the Department of
    Commerce, OIG-14-002. Washington, DC: DOC OIG.
        \2\ 31 U.S.C. Sec. 3516(d).

      --Challenge 1. Strengthen Commerce infrastructure to support the
            Nation's economic growth.
      --Challenge 2. Strengthen oversight of National Oceanic and
            Atmospheric Administration (NOAA) programs to mitigate
            potential satellite coverage gaps, address control weaknesses
            in accounting for satellites, and enhance fisheries management.
      --Challenge 3. Continue enhancing cybersecurity and management of
            information technology investments.
      --Challenge 4. Exercise strong project management controls over 2020
            Census planning to contain costs.
      --Challenge 5. Continue to foster a culture of management
            accountability to ensure responsible spending.

        Today I will summarize several challenges facing the Department,
    based on recent and ongoing audits, evaluations, and investigations.
    Recently, the Secretary and Departmental leadership published a
    strategic plan for fiscal years 2014-2018. We consider the plan a
    significant achievement in establishing a framework for the diverse
    missions of the Department and its organizational units. The plan
    established 5 strategic goals: trade and investment, innovation, data,
    environment, and operational excellence. Much of our work addresses the
    goal of ``operational excellence,'' which will be the focus of our
    testimony.
    addressing issues with national oceanic and atmospheric administration
                       (noaa) weather satellite programs
        The Department must actively manage risks associated with the
    acquisition and development of the next generation of NOAA
    environmental satellites, as they are its largest investments at more
    than 20 percent of its $8.8 billion budget request. The Joint Polar
    Satellite System (JPSS) program's challenge is to keep JPSS-1
    development on track to meet its second quarter fiscal year 2017 launch
    schedule--while taking steps to mitigate a potential data gap in the
    afternoon polar orbit, as well as implementing NOAA's Independent
    Review Team recommendations to make the constellation more robust. The
    Department must also ensure that the Geostationary Operational
    Environmental Satellite-R Series (GOES-R) program continues to meet
    requirements within its long-standing cost and schedule baselines for a
    launch readiness date of October 2015 for the first satellite.
        Of note, NOAA has improved its communication with stakeholders, as
    well as the efficacy of satellite program leadership and staffing, and
    developed a comprehensive polar satellite data gap mitigation plan.
    Mitigating Potential JPSS Coverage Gaps
        In its fiscal year 2015 budget submission, NOAA requested $916.3
    million for its JPSS program, reporting that the $95 million increase
    from the prior year would not change the program's life-cycle cost of
    $11.3 billion through fiscal year 2025. The first JPSS-developed
    satellite (JPSS-1) is scheduled for launch no later than the second
    quarter of fiscal year 2017.
        The JPSS program must successfully execute to cost, schedule, and
    performance baselines established August 1, 2013. The program must also
    ensure that flight and ground schedules are fully integrated for the
    JPSS-1 mission. NOAA leadership must also ensure the program is able to
    effectively manage ongoing development while responding to concerns
    about the robustness of program development activities (e.g., the need
    for spare parts for JPSS-1 and JPSS-2 instruments and spacecraft) and
    the need for further gap mitigation.
        NOAA has begun to mitigate potential degradation to weather
    forecasting capabilities during polar-orbit data coverage gaps through
    the use of supplemental funding it received as part of the Disaster
    Relief Appropriations Act, 2013. NOAA should ensure that its gap
    mitigation plan is executed before the November 2016 design-life end of
    Suomi National Polar-orbiting Partnership (NPP), a risk-reduction
    satellite launched in October 2011.
        Consistent with our September 2012 JPSS audit report,\3\ we
    continue to project a potential 10-16-month gap between Suomi NPP's end
    of design life and when JPSS-1 satellite data become available for
    operational use. NOAA's medium-range weather forecasting (3-7 days)
    could be degraded during the period of time JPSS data are unavailable,
    but NOAA must do more research using past and current weather events to
    determine the extent to which forecasts may be affected.
    ---------------------------------------------------------------------------
        \3\ DOC OIG, September 27, 2012. Audit of the Joint Polar Satellite
    System: Continuing Progress in Establishing Capabilities, Schedules,
    and Costs Is Needed, OIG-12-038-A. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
        In March 2014, we learned that the JPSS program had revised its
    projections for a coverage gap between Suomi NPP and JPSS-1. During
    2013, the program analyzed the expected reliability of Suomi NPP and
    concluded that the potential gap had narrowed to 3 months or less. It
    also determined that, should Suomi NPP have an early failure, data or
    imagery loss would be partially mitigated by data provided by legacy
    satellites. Regardless of NOAA's revised gap projection, in the long
    term those legacy satellites can no longer be expected to function,
    leaving the JPSS constellation as the sole provider of key data from
    the afternoon polar orbit. This reinforces the need to make the
    constellation more robust, as recommended by NOAA's independent review
    team.
    Managing GOES-R Program Issues With Launch Readiness and System
            Development
        With four satellites (the -R, -S, -T, and -U series), the GOES-R
    program is estimated to cost $10.8 billion over the course of its life
    cycle. GOES-R, with scope and importance comparable to JPSS, has
    experienced development and budgetary challenges that could delay the
    launch readiness date of its first satellite from the first to the
    second quarter of fiscal year 2016.
        The GOES-R program must continue to manage its ground system,
    instrument, and spacecraft development to meet requirements within its
    long-standing cost and schedule baselines--and successfully complete
    the integration and test phase. In addition, the program must
    effectively manage activities between flight and ground projects in a
    compressed development schedule environment.
        In our 2013 GOES-R audit report,\4\ we found that schedule slips
    and a potential reduction in testing activities have raised concerns
    about the satellite's readiness to launch. Funding stability in fiscal
    year 2014 and beyond is the program's top risk; an appropriation amount
    below the fiscal year 2015 requested level may delay launch. For these
    reasons, one of our recommendations was that NOAA implement a
    comprehensive plan to mitigate the risk of potential launch delays and
    communicate to users (e.g., in the National Weather Service and
    Department of Defense) and other stakeholders (e.g., the
    Administration, Congress) the changes that may be necessary to maintain
    GOES-R's launch readiness date of 2015.
    ---------------------------------------------------------------------------
        \4\ DOC OIG, April 25, 2013. Audit of Geostationary Operational
    Environmental Satellite-R Series: Comprehensive Mitigation Approaches,
    Strong Systems Engineering, and Cost Controls Are Needed to Reduce
    Risks of Coverage Gaps, OIG-13-024-A. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
        In a March 2014 memorandum \5\ to the NOAA Administrator, we shared
    our initial audit observations on the GOES-R core ground system
    development and made critical observations about the performance of
    NOAA and its contractor. We observed (1) poor planning assumptions, (2)
    inability to execute the first re-plan, and (3) inadequate transparency
    about progress. Further, we found that NOAA oversight and GOES-R
    program management did not sufficiently address problems with the first
    re-plan that could now lead to increased costs--and NOAA may have to
    launch a satellite without all of the core ground system capabilities
    implemented. Based on previous performance we believe that, without
    leadership's attention, the core ground system may not meet minimum
    requirements for launch in October 2015. As a result, we believe that
    the Under Secretary of Commerce for Oceans and Atmosphere and NOAA
    Administrator should establish periodic discussions with both
    Departmental and contractor leadership to ensure the core ground system
    will meet the October 2015 launch readiness date.
    ---------------------------------------------------------------------------
        \5\ DOC OIG, March 6, 2014. Interim Memo re: Audit of NOAA's
    Geostationary Operational Environmental Satellite-R Series Core Ground
    System, OIG-14-014-M. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
    Ongoing OIG Investigation
        In mid-2013, OIG received an anonymous whistleblower tip about a
    team-building exercise conducted by the GOES-R ground segment project
    staff that was improperly billed to the Government. In our subsequent
    investigation, we found that 21 Government employees and consultants
    employed by private companies were invited to attend a group lunch at a
    local restaurant, followed by a daytime showing of Star Trek: Into
    Darkness. Twenty individuals working on the GOES-R ground project
    attended the lunch and 18 attended the movie; the vast majority of
    participants mischarged the Government for participating in these
    activities. As a result of our investigation, those participants worked
    with NOAA to amend their records to claim personal leave for time spent
    at the lunch and movie. As a result of our investigative activities,
    approximately $3,500 that was mischarged to the Government was
    returned. OIG suggested that clear written guidance on proper
    timekeeping be communicated to agency and contractor staff in advance
    of any similar work group outings. Commendably, one consultant made a
    self-disclosure that more time was spent at the offsite event than
    determined by the program office; OIG is currently looking into whether
    the amount returned is adequate.
        For further details, see Appendix A, ``Addressing Issues with NOAA
    Weather Satellite Programs.''
     managing the census bureau's 2020 decennial planning and other census
                                 bureau issues
        The 2020 decennial census, though years away, is a massive
    undertaking that requires extensive planning and testing. For 2020, the
    Census Bureau plans to design and conduct a high-quality decennial
    operation that will cost less per household on an inflation-adjusted
    basis than the 2010 Census. Research and testing for the 2020 Census
    must be completed early in the decade, to design a census that will
    meet congressionally-mandated deadlines and to succeed at the task of
    counting millions of people and housing units. Recent and ongoing OIG
    reports on the Census Bureau meeting these challenges concern decennial
    planning, design decisions, and integration of schedule and budget.
    2020 Census Planning
        During our December 2013 evaluation \6\ of 2020 Census planning
    efforts to design a 2020 decennial census that costs less per household
    than the 2010 Census, we noted significant schedule slippage in the
    Census Bureau's key research and testing programs. If continued, missed
    deadlines will translate into an untenable continuation of an already
    expensive design. According to the Bureau, the cost (in constant
    dollars) of counting each housing unit in 2010 was $94--and could reach
    an estimated $148 if the same design is repeated for 2020. Using the
    same 2010 design, and assuming no changes in the number of housing
    units over the next 10 years, the 2020 Census would cost more than $19
    billion.
    ---------------------------------------------------------------------------
        \6\ DOC OIG, December 3, 2013. 2020 Census Planning: Research
    Delays and Program Management Challenges Threaten Design Innovation,
    OIG-13-003-A. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
    2020 Census Design
        To reduce 2020 Census costs, the Bureau is conducting research that
    focuses on several design features, such as offering the Internet as a
    response option, conducting a targeted address canvassing operation,
    and using administrative records to follow up on cases of nonresponse.
        An ongoing challenge we have identified is the lack of an
    established schedule. The Census Bureau revises baselines (i.e., re-
    baselines), which can mask delays and give the appearance that
    schedules are met. For example, major decision points for the 2020
    Census have been re-baselined several times, with original deadlines
    pushed back from September 2014 to September 2015 (see figure 1).

    2020 Census Integrated Schedule and Budget
        Last decade, OIG recommended that the Census Bureau integrate cost
    and schedule activities to enable managers to better track the status
    of available funds, as well as forecast impending underruns and
    overruns, so that funds can be reallocated promptly. In response, the
    Bureau planned to incorporate earned value management, a process that
    combines measures of a project's schedule and cost to forecast
    performance problems. As of March 2014, the Bureau had not incorporated
    earned value management into its activity schedules, limiting its
    ability to make decisions based on objective data.
        To effectively manage a program of the size, complexity, and cost
    of the 2020 Census--and assess the return on investment of research
    efforts--managers require accurate accounting records. However, we
    recently found that many Census Bureau staff stated that they are
    charging their time to projects based on budgeted hours rather than
    actual hours worked. Inadequate accounting of employees' actual work,
    as well as inaccurate project costs, hinder the Bureau's ability to
    assess the return on investment of research efforts. Additionally,
    these issues affect the Bureau's ability to make informed decisions
    about how to accomplish budget reductions.
    Ongoing OIG Investigation
        OIG is currently reviewing allegations of survey data falsification
    within the Census Bureau's Philadelphia Regional Office. OIG received
    allegations of data falsification in 2010 related to activities in this
    region, which were investigated and subsequently returned to the Census
    Bureau in 2011 for appropriate action.
        In late 2013, a whistleblower contacted OIG and provided a related
    but new complaint, which was also covered in various media outlets. The
    most recent information we received also contained new allegations that
    the Philadelphia Regional Office, through the systemic falsification of
    survey data, attempted to manipulate the unemployment report in advance
    of the 2012 Presidential election. As a result, we opened a new
    investigation, which reviewed the allegations from 2010 and also
    significantly expanded the scope to include new information. We plan to
    release our public report in 2014.
        For further details, see Appendix B, ``Managing the Census Bureau's
    2020 Decennial Planning and Other Census Bureau Issues.''
                      enhancing departmental cybersecurity
        To deal successfully with cyber threats, the Department needs to
    establish a robust incident response capability, specifically within
    the Department of Commerce Computer Incident Response Team (DOC CIRT).
    In addition, the Department must deploy a sustainable implementation of
    its three enterprise-wide cybersecurity initiatives that are underway
    to continuously monitor its IT systems, provide cyber security
    situational awareness, and meet requirements to optimize and
    standardize its individual external network connections.
        While the Department is making progress in these areas, the
    challenge the Department faces--largely because of its highly
    fragmented operating environment--is to ensure productive collaboration
    among all bureaus to effectively improve the Department's cybersecurity
    posture.
    Enhancing the Department's Cyber Incident Detection and Response
        The Department needs to establish a robust cyber incident response
    capability, specifically within DOC CIRT. Furthermore--because DOC CIRT
    primarily provides incident response services only to bureaus located
    at the Department's Herbert C. Hoover Building headquarters--ensuring
    productive collaboration among all bureaus is critical for the
    Department to effectively respond to a cyber event.
        OIG recently conducted an audit of the incident detection and
    response capabilities of several bureaus within the Department. Our
    audit complemented work already done by the Department and identified
    further improvements needed in its incident detection and response
    practices. Specifically, we tested Department public-facing Web sites
    by simulating a cyber event consisting of prolonged suspicious network
    traffic that mimics real-world hacking techniques and cyber attacks. We
    found that bureaus' actions in response to our suspicious network
    activities may not stop cyber attacks in a timely manner--and are
    recommending that the Department ensure that bureaus follow NIST
    guidance to take timely action in response to a potential cyber attack.
    Implementing Enterprise Cybersecurity Initiatives
        We noted, in our fiscal year 2014 TMC report, that the Department
    has three enterprise cybersecurity initiatives underway to address
    mandates from the Office of Management and Budget (OMB). The Enterprise
    Cybersecurity Monitoring and Operations (ECMO) and Enterprise Security
    Oversight Center (ESOC) initiatives support OMB's mandate \7\ to
    continuously monitor security-related information from across the
    enterprise. The Trusted Internet Connections (TIC) initiative supports
    the mandate \8\ that Federal agencies optimize and standardize their
    individual external network connections, including connections to the
    Internet. Collectively, these undertakings should significantly improve
    the Department's cybersecurity posture.
    ---------------------------------------------------------------------------
        \7\ Executive Office of the President Office of Management and
    Budget, April 21, 2010. Fiscal year 2010 Reporting Instructions for the
    Federal Information Security Management Act and Agency Privacy
    Management, Memorandum M-10-15. Washington, DC: OMB, 1.
        \8\ OMB, November 20, 2007. Implementation of Trusted Internet
    Connections (TIC), Memorandum M-08-05. Washington, DC: OMB, page 1.
    Also, see OMB, September 17, 2009. Update on the Trusted Internet
    Connections Initiative, Memorandum M-09-32. Washington, DC: OMB, 1.
    ---------------------------------------------------------------------------
        Timely implementation of these initiatives is crucial to the
    Department's cybersecurity program, particularly in light of the ever-
    increasing cyber threats facing government systems. The ECMO and ESOC
    initiatives are critical to maintaining cybersecurity best practices to
    protect network components, implementing continuous monitoring, and
    providing timely cyber situational awareness across the Department.
    Thus, the Department needs to ensure that current efforts for these
    initiatives move forward as planned and that operating units cooperate
    and participate to the fullest extent. The Department projects
    spending, from the fiscal year 2015 working capital fund, $4.2 million
    for each of the ECMO and ESOC initiatives (for a total of $8.4
    million).
        Our recent audit of the Department's incident detection and
    response practices included four bureaus that have complied with the
    TIC initiative through a Managed Trusted Internet Protocol Services
    (MTIPS) provider. We found that these bureaus are not realizing the
    full benefits of incident detection and response capabilities provided
    by MTIPS. The bureaus are not working with the MTIPS provider to more
    effectively use MTIPS services to supplement their security operations
    center capabilities to fill gaps in monitoring coverage during
    nonbusiness hours. Furthermore, only one bureau is exploring
    opportunities to leverage MTIPS security services to reduce or
    eliminate services that are currently handled by the bureau.
    Ongoing OIG Work
        As part of our annual Federal Information Security Management Act
    audit work, we are assessing the effectiveness of NOAA's IT security
    program by determining whether key security measures adequately protect
    its mission capabilities supported by the National Environmental
    Satellite, Data, and Information Service (NESDIS) and the National
    Weather Service (NWS). The assessments focus on NESDIS' Polar-orbiting
    Operational Environmental Satellites (POES), Geostationary Operational
    Environmental Satellites (GOES), Joint Polar Satellites System (JPSS),
    Environmental Satellite Processing Center (ESPC), Search and Rescue
    Satellite Aided Tracking (SARSAT), and NWS' Aviation Weather Center
    (AWC), Space Weather Prediction Center (SWPC), Storm Prediction Center
    (SPC), National Hurricane Center (NHC), and National Centers for
    Environmental Prediction (NCEP) Central Operations. We are currently
    making recommendations to address weaknesses we found during our
    assessments.
        For further details, see Appendix C, ``Enhancing Departmental
    Cybersecurity.''
                            reducing uspto backlogs
    Reducing Patent Backlogs
        USPTO, as the authority for reviewing and adjudicating all patent
    and trademark applications, must continue to focus on issues with the
    time applicants wait before their patent applications or appeals are
    reviewed. Its longstanding challenge has been to reduce backlogs of new
    patent applications, Patent Trial and Appeal Board (PTAB) ex parte
    appeals, and requests for continued examination (RCEs). As it works to
    reduce its patent backlog and pendency--while meeting the requirements
    of the 2011 American Invents Act (AIA)--USPTO must ensure that the
    quality of its patent examination process is not adversely affected and
    to avoid requiring applicants and the public to file unnecessary and
    costly challenges to examiners' decisions.
        Since we issued the fiscal year 2014 TMC report in November 2013,
    the new application backlog has increased to 604,700 (as of February
    2014). The patent appeals backlog--which we reported on in our 2012
    audit \9\--has begun to slowly decrease and, as of November 2013,
    stands at approximately 25,000, still almost twice the size of the
    backlog in October 2010.
    ---------------------------------------------------------------------------
        \9\ DOC OIG, August 10, 2012. USPTO's Other Backlog: Past Problems
    and Risks Ahead for the Board of Patent Appeals and Interferences, OIG-
    12-032-A. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
        However, USPTO's backlog for requests for continued examination
    (RCE) has experienced the most variability, growing from 17,800
    applications in October 2009 to approximately 78,000 in September 2013,
    an increase of more than 340 percent. As a consequence, during the same
    period, the average waiting time between filing an RCE and receiving an
    initial decision has grown from 2.1 to 7.8 months. From the beginning
    of the fiscal year until February 2014, the RCE pendency has decreased
    to 6.9 months, but the RCE backlog still hovers near 80,000. (For
    further details on backlogs and pendency over the last 5 full fiscal
    years, see table 1. Pendency statistics as of February 2014 may reflect
    month-to-month variations; as a result, we cannot determine an overall
    trend for fiscal year 2014.)

        The goal of AIA is to allow USPTO to process patent applications
    faster, reduce the patent backlog, increase patent quality through
    expedited patent challenges, and improve examiner recruitment and
    retention. AIA includes fundamental revisions to patent laws and USPTO
    practices, such as moving to a ``first inventor to file'' patent
    process to align the U.S. system with others worldwide, granting the
    agency authority to set and retain fees to ensure it has sufficient
    resources for its operations, and establishing satellite offices. The
    law also introduced new avenues for the public to challenge granted
    patents and replace previous options deemed inefficient. In September
    2013, OIG issued a report \10\ on the status of USPTO's efforts to
    implement the provisions of AIA and found that most were successfully
    implemented. As of March 26, 2014--more than 2 years since AIA's
    enactment--USPTO successfully implemented 29 of the 35 provisions they
    were responsible for on-time; 4 are not yet due, and 2 are overdue.
    ---------------------------------------------------------------------------
        \10\ DOC OIG, September 30, 2013. USPTO Successfully Implemented
    Most Provisions of the America Invents Act, but Several Challenges
    Remain, OIG-13-032-A. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
    Ongoing OIG Work
        Modernizing IT and managing high-risk contracts at USPTO. As part
    of our fiscal year 2014 work plan, we are auditing USPTO's IT
    modernization projects. Our audit objectives are to:
      --Assess the impact of IT contract termination decisions made as a
            result of the $110 million IT budget reduction, as well as the
            appropriateness of project funding in the reduced budget
            environment.
      --Review the progress USPTO has made in implementing the
            recommendations from OIG's fiscal year 2011 Patent End-to-End
            (PE2E) audit \11\--specifically, the technical progress it has
            achieved to date, its use of the Agile methodology, and its
            plans for future PE2E development.
    ---------------------------------------------------------------------------
        \11\ DOC OIG, September 29, 2011. Patent End-to-End Planning and
    Oversight Need to Be Strengthened to Reduce Development Risk, OIG-11-
    033-A. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
      --Assess the project management and technical progress USPTO has made
            in its development and implementation of the Trademark Next
            Generation project, including its use of the Agile methodology.
        Examining USPTO use of high-risk contracts. We have also initiated
    an audit of USPTO's management of T&M/LH contracts, which constitute
    high risk to the Government.\12\ In fiscal year 2013, USPTO obligated
    approximately $572 million on contracts for goods and services; our
    objective is to determine whether its T&M/LH contracts are properly
    awarded and administered.
    ---------------------------------------------------------------------------
        \12\ This audit is part of our risk-based oversight strategy
    developed to help the Department address management challenges in its
    acquisition function; for more on high-risk contracts, see ``Incurring
    risk from the use of high-risk contracts'' in the ``Managing the
    Department's Finances, Contracts, Grants, and Operations'' section of
    this testimony.
    ---------------------------------------------------------------------------
    Ongoing OIG Investigation
        We are looking into the work activities of paralegals in USPTO's
    Patent Trial and Appeals Board (PTAB), many of whom were brought on
    board in anticipation of the hiring of additional administrative law
    judges. In 2008, USPTO had planned to significantly increase the number
    of judges in PTAB, in order to help reduce the backlog of appeals being
    reviewed by the Board. According to USPTO, due to budget reasons,
    judges were not hired according to plan; in 2013, OIG received a
    whistleblower complaint alleging that paralegals were not being
    assigned an adequate workload to occupy a full-time schedule. We
    referred this matter to USPTO management, which conducted an
    administrative inquiry and found that--over the 4.5 years from October
    2008 to May 2013--approximately $4 million dollars was billed to
    nonproduction time. After completion of USPTO's inquiry, we
    subsequently initiated a follow-up analysis and expect to release a
    public report this later in 2014.
        For further details, see Appendix D, ``Reducing USPTO Backlogs and
    Other USPTO Issues.''
     managing the department's finances, contracts, grants, and operations
    Department-Wide Oversight
        Challenges to the Department's operational excellence include
    controls over budgetary resources, procurement, and overall financial
    management. Departmental leadership is addressing a number of related
    issues, including (A) the management of appropriated funds, (B) the
    Department's and bureaus' unliquidated obligations, (C) funds spent on
    conferences, (D) funds spent on premium class travel, (E) modernizing
    the enterprise financial management system, (F) the Department's
    working capital fund, and (G) other obligations, including contracts
    and grants.
        A. Addressing the unauthorized reprogramming of funds. In response
    to hotline complaints about mismanagement of appropriated funds within
    NOAA's National Weather Service (NWS) in 2010 and 2011, the Department
    conducted a review that highlighted mismanagement of budgetary
    resources throughout NWS. The Department found significant management,
    leadership, budget, and financial control problems at NWS. Following
    the release of the report on its review, the Department identified
    specific actions for correcting the conditions that led to the report's
    findings. The Department also reported related Antideficiency Act
    violations.
        In our September 2013 review \13\ of these actions, we found that
    the Department and NOAA have taken steps to address the findings
    identified in the Department's internal inquiry and completed many
    action items, but that additional work was needed to complete several
    key action plan items to ensure proper stewardship of funds and
    compliance with laws and regulations. Although several actions needed
    to be finalized or added, the Department has made progress in
    addressing most of the original action items related to these budget
    issues. In addition to its existing action plan items, we specifically
    recommended that the Department document an analysis of NOAA's
    financial management leadership that addresses improper past practices
    and how the current leadership team can provide effective financial
    management direction. Continued Departmental leadership attention is
    essential to ensuring a culture of transparency, accountability, and
    effective oversight.
    ---------------------------------------------------------------------------
        \13\ DOC OIG, September 13, 2013. Status of Departmental Actions to
    Correct National Weather Service Mismanagement of Funds, OIG-13-029-1.
    Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
        B. Monitoring the Department's obligation balances. Our June 2013
    report \14\ on the Department's controls over the management and
    closeout of obligation balances as of December 31, 2011, found
    inconsistent policies and processes, as well as inadequate monitoring
    activities. Specifically, we found original obligation balances that
    could not be verified, accounting records that did not accurately
    reflect Department obligations, bureaus that did not know the status of
    its obligations, and improperly liquidated contract obligations.
    ---------------------------------------------------------------------------
        \14\ DOC OIG, June 20, 2013. Monitoring of Department's Obligation
    Balances Needs Strengthening, OIG-13-026-A. Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
        As a result of our work, we estimated that the amount of
    unliquidated obligation balances that the Department needed to
    deobligate was $159 million as of December 31, 2011. The Department did
    not have adequate internal controls, policies, and procedures to ensure
    that bureau obligations were adequately monitored and deobligated when
    appropriate. To address these challenges, the Department's financial
    management and acquisitions units agreed to (1) issue joint final
    guidance on monitoring open obligations to their respective communities
    and (2) include routine obligation monitoring as a discussion topic
    during annual finance and acquisition training sessions. The guidance
    has not yet been finalized.
        C. Overseeing conference spending. Since fiscal year 2012, the
    Department has developed and updated conference-related guidelines.
    These guidelines pertain to events that either require Office of the
    Secretary pre-approval or entail the Department or one of its bureaus
    to represent itself publicly as a host or co-host. The Department must
    continue to be transparent and responsive in its efforts to avoid
    conference mismanagement or missteps similar to those resulting in our
    recent audit report covering conferences hosted by NIST's Manufacturing
    Extension Partnership (MEP) program.
        In response to a congressional request, we audited NIST-MEP
    conference spending to develop a reasonable cost estimate of the 2012
    NIST-MEP annual conference held in Orlando and determine the legitimacy
    and reasonableness of travel costs for major conferences in fiscal
    years 2011 and 2012.\15\ OIG found that, for conferences held in fiscal
    years 2011 and 2012, NIST-MEP lacked adequate controls over much of its
    conference spending. We concluded that a NIST-MEP event planner
    retained concessions and benefits that could have been used to reduce
    the fiscal year 2012 conference's $1.1 million cost--$700,000 of which
    was spent by NIST-MEP. We recommended that NIST-MEP make a
    determination on the recovery of $148,000 that its event planner
    collected for sponsorship fees and more than $88,000 that the planner
    retained for both registration fees and a concession refund. Similarly,
    an evening reception, paid for with funds raised through the sale of
    sponsorships at the same conference, was held in lieu of reducing the
    overall cost. Further, NIST-MEP agreed to room rates for Government
    attendees that exceeded allowable maximum conference lodging rates in
    order to standardize rates for Government and nongovernment attendees,
    essentially subsidizing lodging costs to nongovernment attendees.
    ---------------------------------------------------------------------------
        \15\ DOC OIG, February 21, 2014. Manufacturing Extension
    Partnership Incurred Avoidable Conference Costs, OIG-14-013-A.
    Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
        D. Overseeing premium travel spending. We recently examined fiscal
    year 2012 information on the Department's total premium-class travel
    approved for flight time in excess of 14 hours, as well as for medical
    disability, which totaled nearly $1.4 million. The difference in cost
    between premium and coach fares for travel due to flight time in excess
    of 14 hours was approximately $540,000, while the cost difference due
    to medical disability was approximately $475,000. With the serious
    fiscal challenges requiring Federal Departments to operate as
    efficiently as possible, we advised the Department to (1) collect,
    analyze, and report data on premium-class travel on a periodic basis to
    the Office of Commerce Services and (2) examine ways to reduce premium
    travel costs. Additional OIG work in this area of the Department's
    operations will focus on premium-class travel, specifically on the
    effectiveness of controls over approving exceptions to premium-class
    travel restrictions.
        E. Updating the enterprise financial management system. The
    financial control problems at NWS highlight the Department's need to
    implement stricter control over funds Department-wide. A lack of
    centralized data systems poses reporting and oversight challenges to
    the Department, such as effectively reporting financial data and
    monitoring financial activity across its bureaus.
        The Department and most of its bureaus use a financial system
    developed with aging technology and augmented with in-house software
    that is increasingly difficult to maintain. This system currently
    addresses core financial accounting, financial management, grants
    management, acquisition management, and property management. However,
    limitations such as high support costs and a lack of system integration
    and lack of centralized reporting capability impede the Department's
    ability to oversee and manage Department-wide financial activities.
        The Department plans to replace these legacy systems--collectively
    known as the Commerce Business System (CBS)--with Business Application
    Solutions (BAS), a commercially available system, by fiscal year 2018.
    The Department requested nearly $40 million to support BAS
    implementation activities in fiscal year 2015. While the Department has
    provided OIG with regular updates on the status of this modernization
    project, significant challenges remain because (1) the implementation
    schedule is aggressive; (2) the Census Bureau must be successfully
    converted prior to the 2020 decennial; (3) BAS will be hosted by a
    shared-service provider; (4) separate component systems will need to
    interface with BAS; and (5) adequate funding is needed.
        F. Managing the working capital fund. On March 28, 2014, we issued
    a draft report covering billing control issues related to the Office of
    the Secretary's working capital fund (WCF). This fund provides 62
    services throughout the Department valued at nearly $150 million
    annually. Our audit addressed issues on whether the Office of the
    Secretary's Financial Management Directorate charged customers using
    the correct billing rates and in accordance with Departmental
    guidelines. For 10 of the projects reviewed, we found that the Office
    of the Secretary Financial Management Directorate did not use current
    billing rates and/or the service providers did not have accurate
    supporting documentation for amounts charged to the customers. This
    problem was most noteworthy within the Office of General Counsel.
    Consequently, the customers receiving services from these projects were
    not billed correctly. We recommended that the Department require a
    process for all WCF service providers to capture and retain supporting
    documentation that accurately reflects the level of services provided
    to customers, and that the Office General Counsel develop an automated
    process to track attorney time, by customer and services provided. We
    provided the Department with our draft results and will issue our final
    report later in 2014.
        G. Administering high-risk contracts and grant awards. In fiscal
    year 2013, the Department obligated about $2.3 billion for goods and
    services that include satellite acquisitions, intellectual property
    protection, broadband technology opportunities, management of coastal
    and ocean resources, information technology, and construction and
    facilities management. Although the Department's spending requirements
    for goods and services have not diminished, available funding resources
    likely will remain uncertain. For this reason, the Department must
    maintain 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.\16\ Continuing to
    address high-risk contracts and maintaining a qualified acquisition
    workforce will enable better management of the Department's day-to-day
    spending.
    ---------------------------------------------------------------------------
        \16\ The President has acknowledged contract oversight as a Federal
    Government-wide priority; see The White House, Office of the Press
    Secretary, March 4, 2009, Memorandum for the Heads of Executive
    Departments and Agencies: Government Contracting.
    ---------------------------------------------------------------------------
        OIG also provides oversight of the Department's management of more
    than 70 programs authorized to award grants or cooperative agreements.
    Each program has its own rules, regulations, and eligibility
    requirements. In addition, OIG provides oversight to the National
    Telecommunications and Information Administration's management of the
    Department's most significant grant-awarding initiative over the last 5
    years, the Broadband Technology Opportunities Program (BTOP). Of the
    Department's grants programs, BTOP entails the most challenging awardee
    spending issues.
        Incurring risk from the use of high-risk contracts. In July 2009,
    the Office of Management and Budget's (OMB's) Office of Federal
    Procurement Policy issued contracting guidance to chief acquisition
    officers and senior procurement executives. The guidance--stating that
    time and materials/labor hour (T&M/LH) contracts, cost-reimbursement
    contracts, and noncompetitive contracting pose special risks of
    overspending--directed agencies to reduce by at least 10 percent the
    use of high-risk contracting authorities for new contract actions. For
    fiscal year 2013, the Department reported that it exceeded its goals in
    reducing the dollar amount of high-risk contracts, and it continues to
    track its goal based on OMB's 2009 guidance. However, our audit results
    indicate that a critical challenge remains in the use of high-risk
    contracts.
        In a report issued in November 2013,\17\ we reported weaknesses in
    the awarding and administering of T&M/LH contracts. We found that
    Departmental contracting officers did not award T&M/LH contract actions
    in accordance with the requirements of the Federal Acquisition
    Regulation and the Commerce Acquisition Manual. T&M/LH contracts are
    considered high-risk because the contractor's profit is tied to the
    number of hours worked. We also noted that contract actions in our
    sample were incorrectly coded in the Federal Procurement Data System
    (FPDS).
    ---------------------------------------------------------------------------
        \17\ DOC OIG, November 8, 2013. The Department's Awarding and
    Administering of Time-and-Materials and Labor-Hours Contracts Needs
    Improvements, OIG-14-001-A. Washington, DC: OIG.
    ---------------------------------------------------------------------------
        The Department's challenge is to better monitor and evaluate its
    T&M/LH contracts through the acquisition review board and investment
    review board processes, which are used to manage the Department's major
    acquisitions of goods and services. A further challenge it faces is to
    improve the processes for entering accurate and complete data in FPDS.
    Effective implementation of the Department's measures will be crucial
    to ensuring that the Department properly awards, administers, and
    reports high-risk T&M/LH contracts.
        Tightening controls over use of Federal funds by award recipients.
    Grant oversight requires that recipients of awards meeting certain
    dollar thresholds submit either a Circular A-133 single audit report or
    a program-specific audit report. For the period January 1, 2011--
    December 31, 2013, these programs issued approximately 4,166 awards
    amounting to $3.8 billion. We review an average of 350 finding reports
    a year; of those, about 8 percent will have significant procedural or
    internal control findings. These types of awards pose particular
    oversight challenges for the Department. OIG continues to review these
    audit reports to identify trends in findings across bureau programs, as
    well as to monitor whether findings are resolved in a timely manner.
    Twice annually, we provide the Department an analysis of our review's
    results and post it on our Web site.
        Table 2 presents averages of the single audit and program-specific
    audit reports that OIG reviewed during the period January I, 2011--
    December 31, 2013, the number of material findings, and amounts of
    questioned costs and funds to be put to better use reported. We have
    noted a problematic indicator in the Economic Development
    Administration's (EDA's) revolving loan fund program, NTIA's BTOP, and
    the National Institute of Standards and Technology's (NIST's) Advanced
    Technology/Technology Innovation Program. It is important that all
    Departmental program and grants management offices review these
    findings and implement internal controls to address the root causes of
    the findings, which may require program or grant operations changes in
    order to improve grant recipients' compliance with laws and
    regulations.

        To improve controls over award recipients' use of Federal funds,
    bureaus need to review these single audit and program-specific audit
    reports and take action on the report findings.
        Ongoing OIG investigation into NOAA grants. As a result of a
    whistleblower's disclosures to OIG, we are currently looking into
    grants issued by NOAA to nine National Estuarine Research Reserve
    System (NERRS) facilities for approximately $1 million. In January
    2013, Congress appropriated $7 million to NOAA ``to repair and replace
    ocean observing and coastal monitoring assets damaged by Hurricane
    Sandy.'' The whistleblower, whose identity is being protected by OIG,
    alleged that a NERRS facility applied for and was awarded grant funds
    even though their equipment was not damaged by Hurricane Sandy, as
    required under the law. Our public report will be released in 2014.
    Agency Oversight
        Managing Broadband Technology Opportunities Program (STOP) award
    closeouts. With approximately $3.9 billion in grant awards, the
    Recovery Act-funded BTOP represents the Department's largest grant
    program over the last 5 years. Of the Department's grants programs,
    BTOP entails the most challenging awardee spending issues.
        As of March 17, 2014, about 15 percent of BTOP funds remain to be
    disbursed--and only 21 of 224 projects had been closed, with another
    174 in the closeout process and 29 (representing about $900 million in
    awards) remaining active. Some of these awards have been extended to
    September 30, 2015. Management must remain committed to monitoring BTOP
    recipient compliance with grant award terms and achievement of intended
    benefits as the program nears completion.
        Addressing concerns with BTOP grants' closeout process. The audit
    closeout process \18\ calls for particular attention. OIG's December
    20, 2013, report \19\ identified that BTOP's award closeout process (a)
    is taking longer than expected, particularly with infrastructure
    projects and (b) could be improved by strengthening closeout policies
    and procedures and ensuring the consistent implementation of those
    policies and procedures in place. NTIA and the grants offices (NOAA and
    NIST) supporting NTIA in the implementation of BTOP have taken or are
    in the process of taking to strengthen the closeout process.
    ---------------------------------------------------------------------------
        \18\ This process entails the award recipient and the grants office
    ensuring that project activity is complete and the award recipient has
    met all the requirements under applicable laws, regulations, OMB
    circulars, and award terms and conditions.
        \19\ DOC OIG, December 20, 2013. Closeout Procedures for the
    Broadband Technology Opportunities Program Need Strengthening, OIG-14-
    010-A. Washington, DC: OIG.
    ---------------------------------------------------------------------------
        Answering congressional questions about a BTOP awardee. Recently
    completed and ongoing audit work has indicated the need for continued
    management attention to awards that remain open and significant issues
    that they entail. On May 9, 2013, we received a request from the House
    to review a $100.6 million grant that BTOP awarded to EAGLE-Net
    Alliance (ENA). In responding to questions relating to the grant in a
    January 23, 2014, letter, our review found that the revised project
    will involve additional miles of constructed and leased fiber, with
    some of the completed fiber being laid in proximity to existing fiber.
    In addition, we found that two-thirds of the grant funds had been spent
    before NTIA addressed problems that led to suspension of the award in
    December 2012. Further, ENA faces challenges that include the project's
    ability to fully achieve the award's intended results (e.g.,
    connections will be achieved with only 131 of 223 intended community
    institutions) and continued internal control issues.
        Examining issues with BTOP equipment acquisitions. Previous OIG
    oversight identified BTOP equipment (e.g., fiber, base tower stations,
    switches, microwave radio equipment) as a concern. As a result, we
    initiated a review with objectives to determine whether NTIA has the
    personnel and processes in place to monitor grantees' equipment
    acquisitions and assess whether grantees have appropriately acquired,
    tested and implemented the most effective equipment. As part of this
    review, we performed site visits of six recipients of BTOP awards for
    deploying broadband. On March 24, 2014, we issued a draft report to
    NTIA that credits the agency with establishing processes to monitor
    recipient's implementation of awards--but identifies weaknesses in
    grantee acquisition and implementation of equipment and recommends
    steps to improve NTIA's oversight controls.
        Supporting International Trade Administration (ITA) export programs
    under a new organizational structure. Promotion of U.S. exports is a
    critical mission of the Department. For fiscal year 2015, the
    Department has requested $497 million to support export promotion and
    regulation. ITA's U.S. and Foreign Commercial Service, within the
    Global Markets business unit, provides a broad range of services and
    counseling to U.S. exporters; other ITA business units--such as
    Enforcement and Compliance, as well as Industry and Analysis--enforce
    trade agreements and protect domestic industries such as manufacturing
    and textiles.
        ITA's challenge is to complete its internal reorganization.
    Effective October 1, 2013, the Department consolidated ITA's four
    existing business units into three to eliminate overlapping functions
    and streamline operations. ITA states that the functional realignment
    will consolidate regional expertise, strengthen industry expertise and
    strategic partnerships, and consolidate trade agreement compliance and
    trade law enforcement. In February 2014, we initiated an audit of ITA's
    consolidation to evaluate its progress, assess whether any cost savings
    have been realized, and identify any remaining challenges to this
    effort.
        Reforming Bureau of Industry and Security (BIS) export control. The
    United States' export control system is distributed among several
    different licensing and enforcement agencies. Within the Department of
    Commerce, the Bureau of Industry and Security (BIS) administers and
    enforces the Export Administration Regulations, which apply to
    controlled dual-use items and technology. These regulations serve to
    support and advance the national security, foreign policy,
    nonproliferation, and short supply interests of the United States. BIS'
    two primary functions, licensing and enforcement, are handled by Export
    Administration and Export Enforcement, respectively.
        The Export Control Reform (ECR) Initiative, launched in April 2010,
    is a three-phase effort to streamline the Nation's export control
    system by consolidating the export control efforts of multiple Federal
    agencies. As part of the export control reform, BIS has begun assuming
    increased licensing and enforcement responsibilities for former
    munitions items that have moved under Department of Commerce
    jurisdiction. The challenge for BIS will be to ensure that it has
    adequate licensing and enforcement resources to handle its new
    responsibilities.
        In May 2013 we initiated an audit in response to a congressional
    request and as part of our annual audit plan. Our objectives were to
    (1) review the adequacy of BIS' program plans and budget requests to
    address the increased workloads for licensing, outreach, and
    enforcement activities in fiscal years 2014 through 2016 and (2)
    evaluate existing BIS licensing, outreach, and enforcement activities
    and identify any areas for increased efficiencies. We focused our
    analysis on areas of BIS most affected by ECR--namely its licensing
    divisions, outreach office, and enforcement offices (excluding
    antiboycott compliance).
        On March 19, 2014, as a result of our fieldwork--and in response to
    a whistleblower complaint--we issued a memorandum to the BIS Under
    Secretary and the Department of Commerce's Chief Information Officer
    expressing our concerns with BIS' compliance with the Presidential
    directive to consolidate its export licensing system with the
    Department of Defense's U.S. Export Systems (USXPORTS) automation
    initiative. The Department of Commerce, in response to our memorandum,
    scheduled a May 1, 2014, Commerce IT Review Board meeting to discuss
    the status of BIS migration.
        Addressing issues with NOAA satellite accounting. Over the past 3
    fiscal years, the accounting firm KPMG noted several significant
    control weaknesses at NOAA related to accounting for satellites.
    Specifically, KPMG identified that NOAA in fiscal year 2013 incorrectly
    classified a satellite instrument not operational at year end as
    completed property. This error resulted in a $125 million adjustment to
    correct property values originally recorded by NOAA. In addition, NOAA
    capitalized all costs associated with JPSS without review to ensure
    that only capitalizable costs are included in construction work-in-
    progress. Further, KPMG identified that NOAA did not receive and review
    the supporting documentation for $182.6 million in costs included in
    intragovernmental payments.
        Managing NOAA real property leases. Senate Appropriations Committee
    Report 113-078, related to the fiscal year 2014 budget, stated that
    NOAA (a) has a large inventory of real property commercial leases being
    held over beyond their agreed occupancy and (b) had hundreds of real
    property leases expiring over the next 4 years that will likely go into
    holdover, unless NOAA took action. Regarding these issues, we collected
    information on over 2,500 real property leases from NOAA's inventory
    valued at over $166 million. As of February 2014, NOAA had 122
    properties with nearly $2 million in annual rent in holdover status.
    This represents a 31 percent reduction from the 177 lease holdovers
    NOAA reported in August 2012. NOAA must continue to address each of its
    existing holdover leases--and look ahead to those about to expire to
    ensure that these numbers do not rise.
     strengthening first responder network authority (firstnet) to support
                                economic growth
    Overseeing the First Responder Network Authority and the Implementation
            of the Nationwide Public Safety Broadband Network
        The Middle Class Tax Relief and Job Creation Act (The Act), signed
    by the President on February 22, 2012, included language that allocated
    some existing public safety radio frequency spectrum--along with the
    ``D-Block'' spectrum--and authorized $7 billion in funding for the
    establishment of an interoperable Nationwide Public Safety Broadband
    Network (NPSBN). To oversee the existing public-safety spectrum and
    deployment of the NPSBN, the law requires the establishment of an
    independent authority within NTIA called First Responder Network
    Authority (FirstNet).
        FirstNet faces several challenges as it works toward providing
    emergency responders with a high-speed network dedicated to public
    safety. The initial challenge to FirstNet is establishing an
    organizational structure with strong internal controls. Building an
    effective organization will be essential to meet the subsequent
    challenges it faces in establishing the NPSBN. Those include:
      --Fostering cooperation among various State and local public safety
            agencies. Committing iterative effort to effective outreach and
            forging cooperation will be essential to building the NPSBN and
            obtaining participation from the public safety personnel the
            network is designed to serve.
      --Integrating existing STOP grants into the NPSBN. FirstNet should
            use four previously funded BTOP public safety wireless projects
            \20\ as an opportunity to learn about telecommunications
            network equipment, best practices for NPSBN deployment, and
            other issues.
    ---------------------------------------------------------------------------
        \20\ Before the creation of FirstNet, NTIA made approximately $382
    million in grant awards to seven public safety projects to deploy
    public safety wireless broadband networks. On May 11, 2012, NTIA
    partially suspended these seven public safety projects. Subsequent
    negotiations were held to determine whether they would be beneficial to
    FirstNet; as a result, FirstNet established spectrum lease agreements
    with four of the seven public safety BTOP projects.
    ---------------------------------------------------------------------------
      --Creating a nationwide long-term evolution network. The limited
            funds available to implement a nationwide network that meets
            public safety grade standards will make implementation of NPSBN
            a challenge, particularly in geographic areas that are not
            profitable for commercial provider operations. To ensure a
            cost-effective NPSBN implementation, FirstNet must identify
            existing assets through coordination efforts.
        FirstNet held its first meeting in September 2012 and has since
    made certain key hires; established a headquarters in the Washington,
    DC, area; and awarded three contracts for technical support and one
    contract for general program management and acquisition support.
    Ongoing FirstNet Oversight
        In October 2013, the FirstNet board requested that OIG take over
    the review of certain allegations concerning the board's procurements
    and potential conflicts of interest. We initiated an audit in November
    2013 with the objectives of assessing (1) the rationale used to support
    the decision for selecting time and material and sole-source contract
    types for the three contracts with a total ceiling price of
    $14,350,000; (2) whether those contracts were fairly awarded and
    appropriately administered; (3) whether the services purchased under
    those contracts met industry standards, and were consistent with the
    needs of the project; and (4) FirstNet's process of reviewing ethics-
    related matters as they pertain to the board, as well as any associated
    ethical determinations. We expect to issue our report later in 2014. We
    are also following up on any specific issues relating to our audit.
        The subcommittee should be aware that, since FirstNet is not funded
    through appropriations, the Department, responding to OIG's request,
    agreed that OIG would submit a request to FirstNet for oversight
    funding, which we did in September 2013. While we are yet to receive
    any funding--and the details of the transfer have not been finalized--
    we now understand that FirstNet intends to transfer funding sufficient
    for 3 full-time equivalents to OIG for the balance of fiscal year 2014.
    Without funding in First Net's authorizing legislation, OIG will be
    required to make annual requests for funding from FirstNet.
        resolving ethics and compliance issues raised by whistleblowers
        Over the past year, the Department has made progress in dealing
    with issues raised by whistleblowers over OIG's hotline. In addition to
    allegations of fraud and serious misconduct which we investigate, OIG
    often receives complaints from employees and members of the public
    raising ethics, compliance, or management issues; we provide these
    complaints to operating unit leadership to address and resolve. This
    program ensures that information about potential risks received over
    our hotline is communicated promptly to operating unit management, so
    that they may quickly address problems. In some cases, OIG asks that
    operating units respond and summarize their findings, to ensure that
    management has sufficiently addressed the matter.
        In fiscal year 2013, OIG received almost 1,300 contacts over our
    hotline, of which about 600 were whistleblower complaints related to
    the Department's programs and operations. Since the beginning of fiscal
    year 2013, operating units have worked effectively to resolve issues
    provided to them on OIG hotline complaints, reducing by more than half
    what had become a major backlog in early fiscal year 2013. As of the
    end of the second quarter of fiscal year 2014, the Department had only
    40 hotline complaints for which OIG was awaiting an initial findings
    report--compared to 98 pending only 1 year prior (see figure 2).

        As a result of the Department and operating units prioritizing and
    addressing OIG hotline referrals, several issues have been resolved,
    resulting in better management practices and administrative remedies.
    In fact, of the hotline referrals resolved in fiscal year 2013, the
    Department's leadership found about one in four contained issues that
    were substantiated in their management inquiries. Even in cases where
    inquiries did not find issues, the process of looking into issues often
    helps communicate to staff that compliance and ethics issues are taken
    seriously. Examples of successfully resolved issues from OIG hotline
    referrals include the following:
      --In early fiscal year 2013, OIG referred a whistleblower complaint
            to NTIA, which confirmed that a BTOP grantee had not paid
            employees appropriate wages as mandated by the Davis-Bacon Act.
            NTIA informed the grantee of the issue, and appropriate action
            was taken to remunerate employees as required by the law.
      --In late 2011, OIG received a whistleblower's hotline complaint
            alleging that a Census Bureau employee was publishing political
            opinions while on duty. Census looked into the issues and, with
            additional support from OIG, uncovered evidence demonstrating
            that the employee had used Twitter to publish political
            opinions while at work. In 2012, we referred our file to Office
            of Special Counsel (OSC), which has the authority to look into
            Hatch Act violations. In February 2014, OSC issued a press
            release announcing that it had confirmed the allegations, and
            was concluding its investigation. The employee resigned prior
            to OSC concluding its case.
      --In mid-2013, as the result of a whistleblower tip to OIG's hotline,
            USPTO confirmed that an employee had been improperly claiming
            work time and overtime while on vacation in a foreign country.
            During the course of its inquiry, USPTO discovered that the
            employee had provided username and password information to a
            second USPTO employee, who logged into his account and
            submitted previously-completed work while on leave. This gave
            management the impression that the employee was working while
            actually on vacation. Administrative action is pending against
            both.
        While the Office of the Secretary and most operating units have
    made progress handling OIG hotline complaints, NOAA still faces
    challenges in this area. Leadership needs to give more timely attention
    to resolving recommendations made at the conclusion of OIG
    investigations and its own management reviews. When OIG or management
    substantiates allegations, we frequently transmit to program management
    our concluding report--which may be accompanied by recommendations to
    take appropriate administrative, disciplinary, or other policy actions.
    Departmental policy requires operating units to respond to OIG within
    60 days of receiving our report to inform us of any actions that have
    been taken or that are planned. Improved coordination among the
    Department's Office of General Counsel, operating unit leadership, and
    human resources offices would help ensure that appropriate action is
    executed in a timely manner.
        NOAA, however, currently has five pending OIG investigations that
    it has yet to take adequate action on, including two cases where senior
    scientists used Government computers to view inappropriate online
    content. Four of these five investigations were transmitted to NOAA
    more than 180 days ago, including two that remain older than 1 year
    without any action. In order for NOAA to comply with Departmental
    policies and foster a culture of management accountability, leadership
    must more diligently resolve OIG's investigative recommendations.
       appendix a: addressing issues with noaa weather satellite programs
        Managing risks in the acquisition and development of the next
    generation of environmental satellites is a continuing challenge for
    the Department. In February 2013, GAO added ``Mitigating Gaps in
    Weather Satellite Data'' to its high-risk list.\21\ The two most
    prominent programs,\22\ the Joint Polar Satellite System (JPSS) and the
    Geostationary Operational Environmental Satellite-R Series (GOES-R),
    together account for one-third of NOAA's fiscal year 2015 budget
    request. They are also the largest investments in the Department,
    accounting for more than 20 percent of the Department's $8.8 billion
    budget proposal.
    ---------------------------------------------------------------------------
        \21\ U.S. General Accountability Office, February 2013. High-Risk
    Series: An Update, GAO-13-283. Washington, DC: GAO, 155-160.
        \22\ Other satellite acquisitions include Jason-3, which will
    measure sea surface height, and Deep Space Climate Observatory, which
    will provide advance warnings of solar storms affecting Earth.
    ---------------------------------------------------------------------------
        NOAA's JPSS and GOES-R satellites will provide data and imagery for
    weather forecasting--including severe-storm tracking and alerting--and
    the study of climate change--and help lead and sustain the Nation
    during severe weather events. However, because of cost overruns,
    schedule delays, and the aging of NOAA's current constellation of
    satellites, NOAA has had to take steps to mitigate potential coverage
    gaps for these critical assets.
        JPSS evolved from a predecessor program fraught with cost overruns
    and schedule delays. NOAA's JPSS program uses the National Aeronautics
    and Space Administration (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 2015 budget submission, NOAA requested $916.3 million
    and reported that the JPSS program, running through 2025, would cost
    $11.3 billion. The first JPSS-developed satellite (JPSS-1) is scheduled
    for launch no later than the second quarter of fiscal year 2017. GOES-
    R, with scope and importance comparable to JPSS, experienced
    development and budgetary challenges that could delay the launch
    readiness date of its first satellite from the first to the second
    quarter of fiscal year 2016. NOAA requested $980.8 million for fiscal
    year 2015 for the GOES-R series of satellites that 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 $10.8 billion over the course
    of its life cycle.
    JPSS
        In November 2013, NOAA's independent review recommended that NOAA's
    polar satellite launch policy be changed so that two satellite failures
    must occur in order for a gap in data to be realized. It recommended
    that NOAA promptly start a ``gap filler'' mission--likely a smaller
    satellite with key instruments--to provide additional fault tolerance
    to the JPSS constellation. Further, it recommended that NOAA
    immediately procure additional satellites to extend the JPSS
    constellation beyond JPSS-2, which would protect against future gaps
    and make current development more robust and efficient by providing
    needed spare parts and flexibility in fabrication and testing.
        NOAA has begun to mitigate potential degradation to weather
    forecasting capabilities during polar-orbit data coverage gaps through
    the use of supplemental funding it received as part of the Disaster
    Relief Appropriations Act, 2013. NOAA should ensure that its gap
    mitigation plan is executed before the November 2016 design-life end of
    Suomi National Polar-orbiting Partnership (NPP), a risk-reduction
    satellite launched in October 2011 that is flying the first versions of
    JPSS sensors.
        Consistent with our September 2012 JPSS audit report,\23\ we
    continue to project a potential 10-16-month gap between Suomi NPP's end
    of design life and when JPSS-1 satellite data become available for
    operational use (see figure A-1). NOAA's medium-range weather
    forecasting (3-7 days) could be degraded during the period of time JPSS
    data are unavailable.
    ---------------------------------------------------------------------------
        \23\ U.S. Department of Commerce Office of Inspector General,
    September 27, 2012. Audit of the Joint Polar Satellite System:
    Continuing Progress in Establishing Capabilities, Schedules, and Costs
    Is Needed to Mitigate Data Gaps, OIG-12-038-A. Washington, DC:
    Department of Commerce OIG.

    GOES-R
        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. Currently, GOES-13, GOES-14, and
    GOES-15 are in orbit (see figure A-2). However, GOES-13 is due to be
    retired in fiscal year 2015, at which time GOES-14 is projected to
    become operational. GOES-15 is due to be retired in fiscal year 2017.
    GOES-R is scheduled to be launched in October 2015, but there is a risk
    of launch delay. NOAA may not be able to meet its policy of having an
    on-orbit spare, even without a GOES-R launch delay, based on current
    GOES satellites' projected retirement dates. Furthermore, a launch
    delay for GOES-R beyond October 2015 increases the risk that only one
    geostationary imager will be in orbit--which would severely limit
    NOAA's capability to visualize and track severe weather events.

        appendix b: managing the census bureau's 2020 decennial planning
    2020 Decennial
        Through our ongoing work on the Census Bureau's approach to and
    progress on planning for 2020 decennial census we have identified three
    time-sensitive Bureau management priorities:
      --Completing timely research for making evidence-based design
            decisions.
      --Integrating schedule and budget to provide valid, timely, accurate,
            and auditable performance information on which to base project
            management decisions.
      --Accurately recording costs in the accounting system.
        Completing timely research for making evidence-based design
    decisions. To reduce 2020 Census costs, the Bureau is conducting
    research that focuses on several design features. Conducting research
    and testing is necessary to implement the changes needed to save the
    Government hundreds of millions of dollars (see table B-1).

        Integrating schedule and budget to provide valid, timely, accurate,
    and auditable performance information on which to base project
    management decisions. Last decade, OIG recommended that the Census
    Bureau integrate cost and schedule. In response, the Bureau planned to
    incorporate earned value management (EVM), a process that combines
    measures of a project's schedule and cost to forecast performance
    problems. As of March 2014, the Bureau had not incorporated EVM into
    its activity schedules. Because of the Bureau's budget and time
    constraints, management must be able to recognize at-risk projects by
    adopting EVM to make sound project management decisions.
        Accurately recording costs in the accounting system. To effectively
    manage a program of the size, complexity, and cost of the 2020 Census--
    and assess the return on investment of research efforts--managers
    require accurate accounting records. However, we recently found that
    many Census Bureau staff stated that they are charging to projects
    based on budgeted hours rather than actual hours worked. Inadequate
    accounting for an employee's actual work and level of effort required
    in accomplishing project goals, as well as inaccurate project costs,
    hinder the Bureau's ability to assess the return on investment of
    research efforts. Additionally, these issues affect the Bureau's
    ability to make informed decisions about how to accomplish budget
    reductions.
                appendix c: enhancing departmental cybersecurity
    Cyber Incident Response
        During the past year, the Department has made improvements to
    incident detection and response capabilities at DOC CIRT. For example,
    the Department conducted an internal assessment of DOC CIRT policies,
    procedures, and capabilities. It focused on strengthening DOC CIRT's
    organizational structure; its roles and responsibilities; and operating
    unit procedures for incident identification, analysis, response, and
    reporting. The Department's chief information officer has also (a)
    taken steps to ensure that all DOC CIRT staff meet Department training
    and certification requirements and (b) implemented an incident tracking
    system. In addition, the Department arranged to have the Department of
    Homeland Security conduct an independent assessment, focusing on
    incident management capabilities within the Department of Commerce.
    Enterprise Cybersecurity Initiatives
        Table C-1, below, provides the goal, along with updated
    implementation status and issues, for each initiative since we issued
    the fiscal year 2014 TMC report:

        NOAA continues to make progress toward becoming its own TIC
    provider and the Census Bureau and BIS have made notable progress
    toward acquiring TIC services. The TIC initiative should significantly
    reduce the risks associated with external network and Internet
    connections. Accordingly, the Department has encouraged NOAA to
    complete its TIC implementation quickly.
    ---------------------------------------------------------------------------
        \24\ Title 13 guarantees the confidentiality of information
    obtained by the Census Bureau and establishes penalties for disclosing
    this information.
    ---------------------------------------------------------------------------
                      appendix d: reducing uspto backlogs
    Reducing Patent Application Backlogs
        USPTO, as the authority for reviewing and adjudicating all patent
    and trademark applications, must continue to focus on the challenge of
    reducing the time applicants wait before their patent applications or
    appeals are reviewed. The agency's recent efforts to address its
    application and appeal backlogs and related pendency issues have
    yielded mixed results. Both the backlog and pendency for patent
    applications decreased in fiscal year 2013 (see figure D-1a). Between
    October 2009 and September 2013, the patent backlog decreased from
    approximately 720,000 unexamined new applications to approximately
    585,000. Since we issued the fiscal year 2014 TMC report in November
    2013, the new application backlog has increased to 604,700 (as of
    February 2014). The patent appeals backlog--which we reported on in our
    2012 audit \25\--has begun to slowly decrease and, as of November 2013,
    stands at approximately 25,000, still almost twice the size of the
    backlog in October 2010.
    ---------------------------------------------------------------------------
        \25\ U.S. Department of Commerce Office of Inspector General,
    August 10, 2012. USPTO's Other Backlog: Past Problems and Risks Ahead
    for the Board of Patent Appeals and Interferences, OIG-12-032-A.
    Washington, DC: DOC OIG.
    ---------------------------------------------------------------------------
        However, USPTO's backlog for requests for continued examination
    (RCE) has experienced the most variability, growing from 17,800
    applications in October 2009 to approximately 78,000 in September 2013
    (see figure D-1b), an increase of more than 340 percent. As a
    consequence, during the same period, the average waiting time between
    filing an RCE and receiving an initial decision has grown from 2.1 to
    7.8 months (see figure D-1b). From the beginning of the fiscal year
    until February 2014, the RCE pendency has decreased to 6.9 months, but
    the RCE backlog still hovers near 80,000. By law,\26\ USPTO must
    provide a patent term adjustment \27\ for an issued patent when it
    takes USPTO more than 4 months to issue a preliminary RCE
    determination.
    ---------------------------------------------------------------------------
        \26\ 35 U.S.C. Sec. 154(b)(1).
        \27\ A patent term adjustment legally requires USPTO to extend the
    20-year patent term because of agency delays, subject to limitations.

        To address the substantial increases in the RCE backlog and average
    waiting time, USPTO (a) initiated outreach efforts to identify why
    applicants file RCEs and (b) implemented policy changes in April 2013
    and October 2013. These policy changes affected the amount of credit
    examiners received for reviewing RCEs, as well as the docketing
    procedures. Our current audit, initiated in June 2013, examines the
    causes for this backlog and assesses USPTO's efforts to remedy it. We
    anticipate issuing a final report with our findings and recommendations
    in late spring 2014.
        As it works to reduce its patent backlog and pendency (see figure
    D-1a), USPTO's challenge is to ensure that the quality of its patent
    examination process is not adversely affected and to avoid requiring
    applicants and the public to file unnecessary and costly challenges to
    examiners' decisions.

        Senator Mikulski. Well, Madam Secretary, thank you for that
    testimony.

                               WEATHER SATELLITES

        I would bring everyone's attention to the Department of
    Commerce's strategic plan. We actually have one called ``Open
    for Business,'' how the Secretary is cutting across a variety
    of her agencies to generate jobs.
        But, Madam Secretary, 62 percent of the Department of
    Commerce budget lies in NOAA.
        Secretary Pritzker. Yes.

                                 NOAA SATELLITE

        Senator Mikulski. And that 62 percent in NOAA really goes
    primarily to satellites, and it also goes to Weather Service.
    Many of the questions here, however, will be related to
    fisheries management, which is one of the issues that
    frequently comes up from this coalition of coastal Senators.
        But my question will go exactly to the satellite questions
    raised by Senator Shelby and strongly felt by myself.
        As you know, there was an independent review about closing
    or eliminating the weather gap, also of great concern to
    Senator Murkowski because of the way the satellites work, what
    it does for Alaska, what it does for us in the world.
        When will we get your comprehensive plan, and how do you
    see that you want to continue to right the concerns that have
    been addressed in both the Inspector General's report and in
    that independent review commissioned by this commission, so we
    get a dollar's worth of value for our satellites?
        Secretary Pritzker. Well, thank you all for your support of
    the satellite programs. They're extremely important; and, as
    you are aware, satellite procurement is a very complex process.
    It really involves procuring instruments, procuring a bus,
    procuring a launch vehicle, and procuring a ground station, and
    getting all of that to occur at the same time.
        So the NOAA satellites program have been recently, through
    the outside report that we received, well managed and are on
    time and on budget as we speak today, and these are obviously,
    as I said in my testimony, critical assets to provide accurate
    information to decision-makers.
        As we address the issue, the challenge of the gap that was
    discussed, first of all I want to thank you for taking the most
    important and first step of funding the instruments that can be
    used for a gap filler, because that is an essential step, a
    critical step in the procurement process, as I described. We
    need to make sure those are procured first.
        As we look at the gap right now, the potential for a gap is
    still too high. So our approach to addressing this is to first,
    as it relates to JPSS-1, is to make sure that it is on
    schedule, which it is. And what we're trying to do now is to
    move JPSS-2 so that there's greater overlap with the JPSS-1
    program.
        To do that, we need to have the procurement of, as I said,
    the instruments, the bus, the ground system, and the launch to
    all occur.
        Senator Mikulski. Well, Madam Secretary, I'm going to jump
    in because we all each are going to follow the 5-minute rule.
        Secretary Pritzker. Sure.
        Senator Mikulski. I'm going to get in as many of my
    colleagues as I can.
        As I understand it, you are standing really sentry over
    this.
        Secretary Pritzker. Yes.
        Senator Mikulski. We expect also a further cost estimate
    later in April. Am I correct in that?
        Secretary Pritzker. I'm not sure of the exact timing, but
    we will get you that cost estimate----
        Senator Mikulski. We understand NOAA says they're actively
    working on a plan to be issued with the latest independent cost
    estimates as late as April 2014. We need that----
        Secretary Pritzker. Yes.
        [The information follows:]

        NOAA is currently examining options for what comes after JPSS 2. As
    we develop these options, we will work with the Committee on the best
    way forward.

        Senator Mikulski [continuing]. As we get ready to--and let
    me finish. The other thing is I want to just thank you in terms
    of your personal involvement, and also Dr. Kathy Sullivan, the
    new CEO of NOAA.
        First of all, I've heard from my other colleagues her
    availability to discuss issues, particularly these prickly
    fisheries issues. So we want to thank the fact that we feel
    communication has improved with NOAA. We feel that the
    oversight on satellites and some other programs have improved
    with NOAA. We want to keep that momentum going to get value for
    our dollar, and at the same time this communication, we resolve
    problems without trying to put it in report language.
        So I can't tell you how important it is. If you listen to
    our fishermen and our watermen, if they're cranky, then
    literally these fishermen put their hooks into us.
        And I don't want to be caught in a cranky waterman's net in
    Maryland. So I think we all get that.
        I could pursue my questions because I'm going to come back
    to the Weather Service.
        I want to also advise my colleagues that we will be having
    a separate hearing on NIST in May because of the crucial issues
    of manufacturing to cyber security, an innovative hearing.
        Senator Shelby.
        Senator Shelby. Thank you, Madam Chairman.

                           PRIORITIZATION WITHIN NOAA

        Secretary Pritzker, the Department has invested billions of
    dollars in next-generation weather satellites to provide
    critical data for forecasting and storm monitoring. We think
    that's important. And while the importance of these satellites
    cannot be overstated, NOAA also conducts a host of other
    important activities critical to our Nation's fisheries and
    coastal shorelines.
        With existing satellite programs consuming more than a
    third of NOAA's budget proposal, I believe--and I mentioned it
    in my opening statement--that prioritization of mission-
    critical activities is very important. You've got so much
    money, you've got to decide where are the priorities. You did
    it in business, where you were very successful.
        Secretary Pritzker. Right.
        Senator Shelby. Are mission-critical activities, Madam
    Secretary, such as fisheries management or marine research
    deteriorating due to an insatiable appetite for new satellites
    that may not be critical to NOAA's core mission? Some of us
    believe that. Do you have any comment?
        Secretary Pritzker. Yes, I do, Senator. First of all, the
    way that we approach the NOAA budget is to really try and
    balance among a number of issues. We're trying to balance
    between the oceans and the atmosphere, between how much
    research we do internally, how much gets done externally, and
    between the short term, the medium term, and the long term, so
    that we can try and arrive at--for our dollar, that we're
    getting the most value trying to address all of the issues that
    NOAA is responsible for.
        So it is a balancing act that we undertake, as you pointed
    out, and one that we do our best to try and make sure that we
    have sufficient funds to do all the things that NOAA is asked
    to do.
        Senator Shelby. But the fisheries are not just in our
    individual States, but they're important to all of Americans,
    are they not?
        Secretary Pritzker. Absolutely. Our fisheries, as you're
    well aware, are both a source of commercial endeavor as well as
    recreational endeavor, and have significant economic impact--
    both do--on the country's GDP. And I've come as Secretary to
    really respect and appreciate the size and the complexity of
    that responsibility that NOAA has, and work very closely with
    Dr. Sullivan to make sure that we're trying to acquit our
    responsibility to the highest standard.

                   FISHING RED SNAPPER IN THE GULF OF MEXICO

        Senator Shelby. Madam Secretary, I'm going to reference the
    red snapper fish that's very prevalent in the Gulf of Mexico.
    In recent years, the Department has curtailed red snapper
    season in the Gulf of Mexico due to questionable stock
    assessments and poor management decisions. In fact, two weeks
    ago a Federal judge ruled that the Department mismanaged the
    red snapper fishery in the Gulf, and the result could be an 11-
    day red snapper season this year, down from 40 days last year.
    The red snapper population has really grown. It probably needed
    to grow at one time.
        I believe, Madam Secretary, that we must use sound science
    and accurate data to evaluate the health of the snapper stock,
    like anything else. If we continue with today's ad hoc
    approach, we will have little certainty about the true status--
    in other words, the truth--of the red snapper, and there will
    be negative economic outcomes for both commercial and, you
    mentioned, recreational fishermen in the Gulf of Mexico.
        What is the Department, in light of all this, doing to
    ensure that it can obtain more timely data to better understand
    and to manage the fisheries, including the red snapper?
        Secretary Pritzker. Senator, first of all, let me talk a
    little bit about the red snapper, then talk more about what
    we're doing in terms of stock assessment.
        So in terms of the red snapper, last summer's stock
    assessment showed additional catch could be allowed, which we
    did.
        Senator Shelby. We did.
        Secretary Pritzker. And we worked hard to update the catch
    limits. And as I understand, the 40 days was something that we
    felt we were making progress. The challenge, of course, is the
    fish, as I understand, have gotten bigger. This is good because
    this is a step toward a continuing growing of the fish
    population. And I'm well aware that recreational fishing
    spending in this country is about $4.6 billion. This is a
    significant industry, and the multiplier effect is quite large.
        Senator Shelby. What about the commercial fishing? What's
    that worth?
        Secretary Pritzker. Well, it's even larger.
        Senator Shelby. Larger.
        Secretary Pritzker. Right. So the point being this is
    extremely important, the red snapper, and the court finding is
    disappointing in the sense of it questions the science.
        So one of the things that we've asked for in our fiscal
    year 2015 budget; our stock assessments are critical data that
    obviously are affecting the decisionmaking around catch limits.
    So we've asked for a modest increase, up to $72 million, for
    next-generation stock assessment research so that we can
    continue to improve the quality of the stock assessment.
        I clearly understand the importance that this work has and
    the implications it has on both the commercial as well as the
    recreational fishing all across our coastlines. So this is
    important that we get this right and something that we
    undertake very seriously, and Undersecretary Sullivan is very
    focused on this.
        Senator Shelby. Do you agree with me, you can't just do
    things in an ad hoc way, you need real data?
        Secretary Pritzker. Absolutely, and the data needs to be
    something that we all have confidence in.

                 INVESTMENT IN MANUFACTURING COMMUNITY PROGRAMS

        Senator Shelby. Madam Chairman, I've got one quick
    question, and I will be quick on it, if you'll allow me, and I
    mentioned this earlier, the Investing in Manufacturing
    Community Program. That seems like to a lot of people central
    planning. You're choosing 25 communities out of the whole
    Nation as favoritism, so to speak, and that's very dangerous, I
    think, and sounds like central planning to me. I'll talk with
    you about that again, but my time is short now.
        Thank you, Madam Chair.
        Secretary Pritzker. Thank you.
        Senator Mikulski. Senator Reed.
        Senator Reed. Thank you, Madam Chairwoman.
        And thank you, Madam Secretary. I want to raise an issue
    which is important to NOAA and particularly important to my
    home State of Rhode Island.

                         RELOCATION OF THE NOAA VESSEL

        The fishing survey vessel Henry Bigelow has been stationed,
    home-ported in Newport, Rhode Island since 2009. But because of
    the changes with respect to the Coast Guard and Navy there,
    they might not be able to stay there past roughly 2016, and
    there's some talk of moving it to Woods Hole, which would be
    about a $20 million investment, dredging and improvements;
    when, in fact, about a 5-minute cruise across the bay there is
    former Quonset Naval Station but now Quonset Point, which is
    already the home to the NOAA vessel Okeanos Explorer, which has
    a shore-side facility there, NOAA facility. It's already been
    developed. The money has been invested.
        I would just ask you to seriously consider the option of
    not taking the ship out of Narragansett Bay and spending $20
    million for it elsewhere but spending very little and simply
    transferring it across.
        And I would add another point. The Narragansett Bay complex
    is the home to URI School of Oceanography, to a laboratory of
    the Marine Fishery Service, to the Naval on the Water Warfare
    Center, to all of the facilities that are available at the
    Newport Naval Base. So for those reasons also, to me this is a
    very simple choice, which would be Narragansett Bay. Could you
    look at that option?
        Secretary Pritzker. Absolutely, we are, and Vice Admiral
    Devany is working on this issue as we speak. We have the idea
    of spending the $15 million at Woods Hole as one that is a
    challenge. So he is really working on this issue.
        In terms of the science and the laboratories that are
    there, those are very important and ones that we're rebuilding
    after they took a bit of a hit during the sequestration period.
    But we're very committed to those.
        Senator Reed. Given the tightness of your budget, and
    that's being mild, the idea of generating $20 million to do
    something that, frankly, could be done as well, and I would
    argue better, by simply moving the ship across the bay would
    make sense to me.

                              FISHERY SERVICE LABS

        A similar issue with respect to Narragansett Bay, but it
    also has a larger impact, and that's the National Marine
    Fishery Service's labs in the Northeast have taken cuts because
    of sequestration, because of other aspects. They are truly
    important as to not only the research they do but connecting
    our local fishermen into the process, getting their feedback
    and their assessment. And frankly, my fishermen feel that when
    they go to the Science Center, they get rebuffed. They're told,
    ``You're not a scientist; go away.'' When, in fact, every day
    they're on the water, they have an understanding of the stocks
    and everything else that is not associated with that.
        And once again, this is so close to the School of
    Oceanography, URI, there is a reinforcement there, too.
        So I would ask you to avoid cuts in the future, but also to
    look at ways that we can invest in a partnership through the
    labs with the fishing men and women and the fishing industry,
    not just in Rhode Island but all through the Northeast.
        Secretary Pritzker. As I said, the labs are very important,
    and the rebuilding of our capacity at those labs is something
    that we're focused on, and working with the local fishing
    industry is something that we're absolutely open to and happy
    to work with you on.
        Senator Reed. Thank you, Madam Secretary.

                               OCEAN EXPLORATION

        A final point is that you have a significant cut, 27
    percent, $7 million, in ocean exploration, and it becomes more
    and more important. We are all spellbound by the fact that we
    know so little about the Indian Ocean as we search desperately
    for the remains of that aircraft, and it just shows the gaps we
    have in our knowledge. And as we cut back on ocean research
    which is valuable to understand particularly climate change,
    the opening up of the Arctic, changes globally, I would ask
    that you look closely at this item.
        Our vessel, the Okeanos Explorer, can only go to sea if the
    resources are there for exploration, and I ask you to look at
    that.
        Secretary Pritzker. I appreciate it. I mean, our fiscal
    year 2015 budget does propose $19 million for ocean exploration
    and research. While we know this is a cut, we think that's
    robust funding for us. But I'll take a look at it.
        Senator Reed. Thank you, Madam Secretary.
        Thank you, Madam Chairwoman.
        Senator Mikulski. I'm going to suggest this. We're all
    Senators and we need to trust each other. So what I mean by
    that is ordinarily they would recess the committee and come
    back for the vote. I'm going to say that Senator Kirk wants to
    ask a question and Senator Merkley wants to stay to answer a
    question, I'm going to dash to the vote and dash back, but I'm
    going to keep the committee in session and let the Senators
    ask, or let's go back and forth. Let's presume we can all trust
    each other and act according to old-school rules and Senate
    rules.
        The committee will continue to operate, and I turn to
    Senator Kirk.
        Secretary Pritzker. Thank you, Chairwoman.

                            NTIA, INTERNET CONTRACT

        Senator Kirk. Penny, I just wanted to ask you a question
    about this rolling story in the Internet media that somehow the
    Obama administration is going to give up control of the
    Internet to the U.N. or something like that. I think the guts
    of that story is the ending of a contract between NTIA and
    ICANN I think it's called. I want to make sure the essence of
    accountability to American values for an institution that we
    have built continues with First Amendment values surging
    through the Internet to make sure that those countries like
    China, which would totally interrupt those values.
        Secretary Pritzker. Senator, let me talk a little bit about
    that for a minute. First of all, I want to be absolutely clear,
    the Department of Commerce and the NTIA, which oversees this
    contract, we are committed to a free and open Internet. The
    stated policy since 1998 was--what we oversee at NTIA is a
    contract, as you said, between ICANN and the various
    organizations--there are three--that get the benefit of this
    contract, the International Engineering Task Force, the
    Regional Internet Registry, and the companies who run the
    domains. We simply monitor whether that contract is being
    implemented effectively.
        The proposal that we are suggesting is as follows. We're
    not going to proceed with anything unless we are satisfied with
    the following, which is that ICANN can continue to move forward
    as a multi-stakeholder model of governance. Two is that we
    maintain the security, the stability, and the resilience of the
    Internet's domain name system. Three, we have to meet the needs
    and the desires of our global customers, and we've got to have
    the openness of the Internet.
        But there's a final criteria that everyone needs to keep in
    mind. We will not accept a proposal where ICANN is replaced
    with a government or intergovernmental organization like the
    U.N.
        So this is not a handing over of the Internet to some other
    government. This is an evolution that was anticipated at the
    beginning that eventually NTIA would step back from this
    oversight role of a contract that actually exists between two
    parties.
        We as the United States remain a very important voice,
    would remain a very important voice in the multi-stakeholder
    process. So it's not like we're going away from this at all.
    And the thing that is important to keep in mind is we're doing
    this at a time when there's plenty of time to see if our
    criteria can be satisfied. We have a year left on the existing
    contract, our oversight contract, and then we have two 2-year
    extensions at our unilateral right. So we have a long runway to
    make sure that we're going to be confident that ICANN can
    undertake this without our continued oversight of this
    contract.
        Senator Kirk. I'm not done. Let me close by saying that the
    First Amendment, which kind of runs through your blood, and
    American involvement in ICANN to make sure that left-wing
    dictators around the world who would like to shut off the
    Internet. We need to make sure that it can't be shut off.
        Secretary Pritzker. I completely agree, and I want you to
    be reassured that the Department of Commerce and NTIA, we are
    committed to a free and open Internet.
        Senator Kirk. Thank you, Madam Secretary.
        Secretary Pritzker. Thank you.
        Senator Shelby [presiding]. Senator Merkley.

                      ANTI-DUMPING AND SUBSIDY ENFORCEMENT

        Senator Merkley. Thank you, Mr. Chair, and thank you, Madam
    Secretary, thank you for the work that your Department does
    facilitating exports which are so important to nurturing
    manufacturing, the jobs that are associated with it here in the
    United States.
        I wanted to ask about one part of this puzzle, and that is
    how the International Trade Administration handles anti-dumping
    and subsidy enforcement issues, which is a central function to
    trying to create something close to a level playing field. We
    face a variety of foreign subsidies that are unannounced.
        I find it very interesting when the WTO calls for nations
    as part of their responsibility to lay out the subsidies they
    provide, and when they don't do so, another nation has a choice
    of posting such known subsidies. And when I proposed an
    amendment to this, with two weeks a list of 200 Chinese
    subsidies was produced. It was very helpful in trying to
    understand many of the things that happen behind the scenes.
        We had testimony in my Economic Policy Subcommittee earlier
    this year about many of the things that we face, and I'm
    referring specifically to China in this case, but may well
    apply to some other countries where local officials make it
    their normal business to take land from farmers without
    adequate compensation, friends at local banks finance the
    construction of a trade development zone, they give away land,
    factories and utilities to foreign investors, which certainly
    is attractive to moving your factory to a place where these
    types of subsidies exist, and that doesn't even count the
    State-owned enterprises and the State-backed banks that not
    only control companies in China but begin to acquire companies
    here in the United States.
        I found it quite interesting that China had its first-ever
    corporate bond default. That tells you something about how
    subsidized the system is, that folks who have companies that go
    down the wrong path always seem to get bailed out.
        This process is a challenge for us to sustain jobs here in
    manufacturing in the United States, and I just wanted to ask
    about your thoughts on this. These types of subsidies are hard
    to capture, they're hard to bring cases on, and in general I
    don't think we have many in that category. But I thought I
    would ask you about that, whether the Department has been able
    to bring cases addressing the types of subsidies that I'm
    talking about, whether there is a deliberate effort to evaluate
    these strategies that are certainly not consistent with the
    structure of the WTO and their impact on our U.S. economy.
        Secretary Pritzker. Senator, first of all, let me start by
    saying both the President and I are absolutely committed to
    trade enforcement, and the Department works on this. It is a
    major focus as part of our ITA work. And I have a lot of
    confidence in the leadership team that we have that do our
    trade enforcement work. They're very, very dedicated to trying
    to address these issues.
        The question of whether we would self-initiate anti-dumping
    in countervailing duty cases, it's very rare to do that, to
    self-initiate, because a case requires the involvement of the
    industry, but we're happy to arrange consultation for any
    industry with our experts if they feel there's an area that
    needs relief. We work very closely to make sure that that
    process is very transparent.
        In terms of strengthening our trade remedy laws,
    particularly with China, I co-chair with the U.S. trade reps
    something called the U.S.-China Joint Commission on Commerce
    and Trade (JCCT), which is our annual dialogue with the Chinese
    on trade issues, and this is a constant thing that we are
    focusing on. It's a very challenging process. I won't say that
    it's easy, but it's something where our goal is really to
    prevent U.S. businesses and workers from being subject to
    unfair trade practices around the country, around the world. So
    it's something that we're very, very focused on.
        Senator Merkley. Another type of subsidy is the lack of
    enforcement of environmental standards and extremely predatory
    labor conditions in some cases, and a proposal or an idea is to
    allow companies to use the anti-dumping strategies to bring
    cases when their competitors are subsidized by the failure of
    enforcement, basically the failure to abide by the basic, core
    principles of the WTO. Have you given any thought to that
    particular approach?
        Secretary Pritzker. I have not focused myself on that, but
    it's something I'd be happy to discuss with my team.
        Senator Merkley. Thank you very much.
        Secretary Pritzker. Thank you.

                       ELECTRONIC MONITORING FOR TRAWLERS

        Senator Merkley. Can I have one sentence?
        Electronic monitoring for trawlers in the Pacific.
        Secretary Pritzker. Yes.
        Senator Merkley. They're very concerned that they're not
    getting the intention or the speed, and for these small
    trawlers to get observers flown in from other cities, San
    Francisco or Seattle, extremely inconvenient, extremely
    expensive. We need a lot of cooperation in trying to pursue the
    electronic monitoring. Thank you. I'll follow up with that.
        Secretary Pritzker. Please do, and we're very focused on
    that. Thank you.

                               MARKET COMPETITION

        Senator Shelby. Madam Secretary, I'm going to pick up on
    the mission of Commerce, and this comes out of your bulletin. I
    like the stated mission, ``to create the conditions for
    economic growth and opportunity.'' That's what we want to do in
    America, starting with education, good infrastructure, and so
    forth. All States, from Maine to California, from Florida to
    Michigan. And I like the slogan, ``America is Open for
    Business.'' The more we talk about that and the more we, in
    reality, do that, the better off we are, and that includes the
    domestic market and the foreign market, everything.

                 INVESTMENT IN MANUFACTURING COMMUNITY PROGRAM

        You know this. You come out of the business community.
        But it's troubling, really troubling to a lot of us, not
    just me, where you would select, try to select 25 communities
    for special treatment in the U.S. and exclude thousands of
    communities. That's picking winners and losers, in a sense, in
    the marketplace, which is what we don't do. We let the market
    decide that.
        So this is a deviation, basically, from the principles that
    built this country and sustained this country, and that's why
    Congress has not supported this. This is something in your
    proposal that you're wanting to do that I think will run into
    trouble again in the Senate and in the House. It's something
    that maybe we ought to talk about again.
        Secretary Pritzker. Well, I would be happy to talk about
    it, and I appreciate the concern. There's no intention to pick
    winners and losers but rather to allow regions to coordinate
    their planning and to tell the Federal Government how they
    intend to address multiple areas of investment that are
    required in order for those communities to be able to support
    growth in manufacturing.
        The goal is really more to see that there are communities
    and encourage communities to create an integrated plan. It's
    not meant to pick winners or losers.
        So I would be happy to work with you to make sure that we
    address the concern.
        Senator Shelby. Well, I'd like to meet with you further.
    We'll call you and see where we go from here. But the idea of
    picking winners and losers in the marketplace, that's the tenet
    of communism, socialism, and so forth.
        Secretary Pritzker. That's not our intent.
        Senator Shelby. And it's something I think is abhorrent to
    that we're open for business.
        Secretary Pritzker. Terrific. Well, that's not our intent.
        Senator Shelby. Ultimately the market will decide winners
    and losers in the marketplace, and the government should not do
    that, should it?
        Secretary Pritzker. Senator, you and I agree on that.
        Senator Shelby. We're hoping somebody comes back.
        She's on the subway. I'll wait just a few minutes, try to
    keep this hearing going.
        We'll recess just for a few minutes until the chairperson
    comes.
        Secretary Pritzker. Terrific. Thank you, Senator.
        Senator Shelby. Thank you.
        [Recess.]

                                  JOB CREATION

        Senator Mikulski [presiding]. Madam Secretary, while we
    expect Senator Collins and some other Senators to return, I'm
    going to go back to the job issue. One priority is to create
    more jobs. The other is to retain the jobs we have, and even
    the possibility of bringing jobs back home from overseas.
        But here goes to my question about trade and trade
    missions. The job of the Secretary of Commerce has been, as I
    said, the President's ambassador to business, and the
    ambassador of business to the President. And often, they have
    led trade missions around the world. So it's been both an
    executive position and a sales position.

          DEPARTMENT OF COMMERCE'S ROLE IN CREATING AND RETAINING JOBS

        You have 11 different agencies, from NIST to NOAA to Trade.
    So we're talking about everything from red snapper quotas to
    import quotas and export quotas, and so on.
        So here goes to my question. Often, the traditional role is
    assumed by the Secretary of Commerce. Tell us what you're
    doing. Are you leading trade missions? How do you see your role
    in generating jobs, retaining jobs, and even trying to bring
    jobs back home?
        Secretary Pritzker. Well, Senator, first of all, thank you
    for the question. Since day 1 when I took this job, I brought
    with me a sign to my office, and it says ``Open for Business.''
    To me, this is my area of focus. Why is this my area of focus?
    It's my area of focus because I know that if we create the
    conditions for the private sector to thrive, they will create
    jobs.
        So one of the first things I've done is spend a lot of time
    with business leaders to understand what do they need in order
    to be successful. I've met with probably over 1,000 CEOs and
    private sector business leaders since I've been in this
    position. And what have they said to me that they need in order
    to grow their businesses?
        For example, in terms of trade and investment, I'm very
    focused on the fact that 95 percent of customers live outside
    our borders. So while American businesses are growing within
    the United States, our job with both our U.S. Export Assistance
    Center and our Foreign Commercial Service is to help those
    businesses continue to export. Why? Because 11.3 million
    Americans today, their jobs depend upon exports, and that's up
    1.6 million jobs since 2009. That's why funding of our Foreign
    Commercial Service is so important.
        At the same time, we're also trying to attract foreign
    direct investment; 5.6 million American jobs today are
    supported by American subsidiaries of foreign-owned companies.
    That's why funding of Select USA is so important, that we build
    upon these good jobs. We know they're good jobs because the
    jobs from foreign direct investment companies pay over $77,000
    a year.
        I recently as well returned from several trade missions.
    First I was in Mexico, and then I was in the Middle East. I
    will tell you that on our trip to Mexico I took a company from
    Los Angeles called Louroe Electronics. They came back and said
    that because of the five different potential business
    opportunities that they found, they're increasing their
    workforce by 10 percent.
        So we know that all of these efforts are helping to grow
    jobs in this country.
        I'm also very focused on innovation, competitiveness, and
    entrepreneurship. Why? Because I know that I think it's 40
    percent of our GDP--and I'll confirm that statistic--depends
    upon new innovation, growth in our GDP, 40 percent depends upon
    new innovation. What are we doing specifically? I made skills
    and workforce development a priority of the Department for the
    very first time in history, working with the Department of
    Labor to say how does the Department of Labor and Commerce
    affect something that I think is very important, which is
    workforce training needs to be business-led. We can no longer,
    as the Secretary of Labor would say, train and pray. We have
    got to offer people the kind of nationally recognized stackable
    credentials that they know, when they go and get that training,
    that there are jobs at the end of that endeavor.
        So, to me, that's a very important part of helping to grow
    and fill the 4 million open jobs that we have today in this
    country by helping the long-term unemployed be prepared for
    those jobs.
        Another thing that we at the Department are focused on in
    job creation is we're working across the agencies to promote
    the passage of the NNMI bill and develop these regional
    manufacturing hubs. Building a bridge between R&D and getting
    to market is something that requires some catalyst from the
    Federal Government, and those will also lead to good jobs. The
    institutes, I think, are a brilliant conception by both
    Congress and the President because of the Federal money. Why is
    the Federal money important?
        I've talked to the people who have put together these
    institutes, and they said without the catalyst of the Federal
    dollars, they would not have come together, the universities,
    the private sector, the community colleges, and the workforce
    training system, as well as the supply chains, in order to
    address this need for pre-competitive research in our country.
    And we are doing so much less of this than other countries
    around the world, and I think this is something that is very,
    very important to job creation.
        Senator Mikulski. Madam Secretary, I think I've got the
    picture there. We want to work with you.
        I want to make sure that Senator Collins has a chance to
    ask her questions.
        Secretary Pritzker. Terrific. Thank you.
        Senator Mikulski. She's on about three other subcommittees.
    So we'll come back to pick up----
        Secretary Pritzker. Sorry.
        Senator Mikulski. No, no. That was excellent. We could
    spend all day just on that, as well as the need for interagency
    cooperation. My smaller manufacturers say they need the Import
    Export Bank, they need the Foreign Commercial Service Office,
    and they need to be able to know how to use the resources of
    their own government.
        Senator Collins.

                         FISHERIES DISASTER ASSISTANCE

        Senator Collins. Thank you very much.
        First let me thank you, Madam Chairwoman, for your work,
    and that of the Vice Chairman, for your support in
    appropriating fisheries disaster assistance in last year's
    omnibus funding bill. This was no easy task but a very
    important development.

                        FISHERY DISASTER RELIEF FUNDING

        I also want to thank you, Madam Secretary, for exercising
    your authority to waive the 25 percent State matching
    requirement for fishery disaster funding. Waiving that match
    was absolutely critical given the constraints that the States
    have and to ensuring that the funding will be used in ways that
    have both immediate impacts and constructive long-term effects.
        We've been working closely with the Regional Administrator,
    John Bullard. He is making quite an effort to try to achieve a
    consensus among the affected States regarding the allocation of
    the funding, which is no easy task, I will tell you.
        Secretary Pritzker. It's not easy.
        Senator Collins. Although consensus among the affected
    States has not yet been achieved, one thing is clear to me, and
    that is that our Maine fishermen are struggling now, and
    they're very worried about what the future is going to bring.
        So there's a delicate balance between what needs to be
    addressed for the very real and immediate needs of our
    fishermen and making those targeted investments for the long
    term that will allow the fleet to survive and become more
    sustainable, and there are a lot of creative ideas out there,
    as I've learned when I attended the Fishermen's Forum this
    year.
        We're concerned about not only the short-term survival of
    our fishing communities but their long-term success also. We
    really don't want to find ourselves going from crisis to crisis
    year after year. How will you encourage NOAA to ensure that the
    $32.8 million in disaster relief is used in ways that will have
    positive, lasting effects on New England's historic ground
    fishery industry?
        Secretary Pritzker. Well, Senator, first of all, I want to
    assure you that I am very sensitive to the fact that fishing is
    a lifeblood to so many New England communities, and I
    appreciate the challenges that are created for both individual
    businesses, families, et cetera, that are affected by the
    stocks and the level at which the stocks exist.
        We are very focused on making sure that--two things: first
    of all, stock assessment is improved, which is why in our
    budget we've called for $72 million to continue improving the
    quality of our stock assessment so that we have better and more
    transparent information. So first of all, to not go from crisis
    to crisis, we need good information.
        The second is to work--you know, John Bullard, I think, as
    you said, he does not have an easy task ahead of him, but
    making a priority that we also make wise investments is one
    that I know is part of his criteria. I will make sure that
    Undersecretary Sullivan and John work closely so that we're not
    making short-sighted, if you will, investments with the scarce
    resources that we have to invest.
        Senator Collins. Thank you.
        Madam Chairwoman, could I ask a second question?
        Senator Mikulski. You absolutely can.
        Senator Collins. Thank you so much.
        Senator Mikulski. You know, your questions about these
    disasters and these data and so on affect all of us. Prior to
    your arrival, Senator, I was saying that there are so many
    members on this subcommittee, coastal Senators who have such
    common interests. Please proceed and take whatever time you
    need.

                        TRADE AND FOOTWEAR MANUFACTURING

        Senator Collins. Thank you.
        Madam Secretary, I want to switch now to a trade issue,
    especially given the emphasis that you are putting on
    increasing exports and trying to get more American
    manufacturing, which are goals that I wholeheartedly support.
        Just a few decades ago, there were more than 50,000
    footwear manufacturing jobs in this country, and many of them
    were in my State and throughout New England.
        Senator Mikulski. The famous Dexter loafers.
        Senator Collins. Exactly. That is one of them.
        Today there are fewer than 5,000, which is just incredible.
    A thousand of those jobs are in the State of Maine at three New
    Balance factories, and we have some other specialty shops in my
    State. Those jobs support many other small businesses and local
    economies, particularly in our smaller towns--Norridgewock,
    Skowhegan, Norway, Maine, for example.
        With the Trans-Pacific Partnership (TPP) discussions well
    under way, I, along with Senator King, have repeatedly met with
    the trade rep and have asked for assurances from this
    administration that any agreement is crafted in a way that
    allows those companies that continue to make shoes here and
    want to grow here have the opportunity to do so. To me, we
    ought to be rewarding those manufacturers who did stay and keep
    some of their manufacturing here in America rather than moving
    overseas.
        If done improperly, I am very concerned that TPP could have
    a disastrous effect on the remaining athletic footwear workers
    in my State.
        What update could you provide on the negotiations regarding
    these extraordinarily important issues that directly affect
    jobs?
        Secretary Pritzker. Senator, first let me start by saying I
    know how important this issue is, and it's one of great
    importance not just to you and your constituents but as a New
    Balance wearer I appreciate my Made in America running shoes,
    if you will, that I wore this morning.
        Senator Collins. Good taste.
        Secretary Pritzker. The Commerce Department works with the
    U.S. Trade Representative on negotiating these deals, and we
    have been in constant consultation with you, with the various
    stakeholders on the views regarding this and TPP.
        The latest state of negotiation, I would have to get back
    to you as to where it is, but I want you to know that we
    recognize and are well aware of how significant this issue is,
    and it has been foremost as the negotiations have--it's been
    front of mind as the negotiations have been proceeding. But I
    will have to get back to you as to what the current state of
    play is.
        Senator Collins. Thank you. That would be very helpful.
        Thank you very much.
        [The information follows:]

                           athletic footwear and tpp
        Commerce and USTR are engaging with all of our TPP partners,
    including Vietnam, on a continual basis to discuss market access
    issues, including apparel and footwear. In these discussions, we
    continue to represent the concerns of our domestic athletic footwear
    manufactures. The next set of face-to-face meetings with all TPP
    partners is scheduled for mid-May. We will continue to ensure that the
    discussions regarding market access for footwear take into account the
    interests of domestic stakeholders.

                                FISHERY DISASTER

        Senator Mikulski. Before, Senator Collins, we go to Senator
    Coons, on this whole fishery disaster, one of the first issues
    we had was our very own colleagues didn't understand how
    fisheries disaster certification worked. They thought it was
    FEMA that designated it, as compared to you, Madam Secretary.
    So one of the areas we really need to do is educate our own
    colleagues, and we need to look forward to doing that
    communication.
        Fisheries disasters have affected pretty much every area of
    the coast. As we worked on the New England fisheries disaster,
    we note that our colleagues on both sides of the aisle from the
    Pacific Northwest--Merkley, Murray, Murkowski--regardless of
    the zip code they lived in, were facing that.
        And we see that it's three things, environmental
    consequences, but mostly over-fishing, and it's not over-
    fishing by us and how we enforce those laws. And then also the
    ability to collect better data. And then if over-fishing is
    caused by poachers, why punish the American fishermen as
    they're trying to make their comeback?
        And we need clear guidelines, too, on how we do help with
    fishery disasters. We want to avoid them. We saw the near
    collapse of Georgia's bank. We heard what was happening in the
    Pacific Northwest. The decline in crabs in Maryland was due to
    the decline in the Chesapeake Bay. That was environmental. So
    we've got a lot to do.
        But this is big business, and it's also, I might add, a
    part of our identity. When you think of Maine and you think of
    Maryland and you think of the great Pacific Northwest, yes, you
    might think of Microsoft, and when you have Senator Shelby
    talking about the red snapper, I've heard Senator Shelby speak
    about many things, but this shows the concern we have. So,
    let's work together on it.
        Thank you very much.
        Senator Coons.

                                 MANUFACTURING

        Senator Coons. Thank you, Chair Mikulski.
        Thank you, Secretary Pritzker. Great to be with you again.
    And I'll ask a few questions, if I might, and I'll try to keep
    them focused, first about manufacturing, which we've spoken
    about before.
        American manufacturing has been making a comeback over the
    last 4 years. We lost nearly 6 million manufacturing jobs in
    the first decade of the century, but we've regained about
    600,000 in the last 4 years, and I'm eager to continue to work
    with you on initiatives that can strengthen manufacturing.
        First, I was pleased that your budget suggested an
    increased investment in the Manufacturing Extension
    Partnership, which I've seen very effectively work with small,
    local manufacturers to allow them to access the latest thinking
    and skills in terms of lean manufacturing. I'd love to hear a
    little bit about your plans for the MEP.
        And second, the National Network for Manufacturing
    Innovation is something the President is moving forward with
    existing budget authority in DOD and DOE, and I'll mention that
    the University of Maryland, the University of Maine, and the
    University of Delaware are actually collaborating on the next
    application to be a composite Center of Excellence.
        What are your plans in terms of moving forward with support
    for the authorizing bill that Senator Brown and Senator Blunt
    currently have, and how would you see the benefits of that
    network moving from something that is purely an administration
    initiative to something that is authorized legislatively and
    could then be sustained over a longer, broader range?
        Secretary Pritzker. Well, thank you, Senator. First of all,
    manufacturing is near and dear to my heart. It's something that
    I've been involved with literally all my life.
        I'll start with the Manufacturing Extension Partnerships.
    When I came into this job, I had spent 27 years in business,
    but I really did not understand what the Manufacturing
    Extension Partnerships were, and I went out to actually see and
    talk to manufacturers about is this really valuable, how could
    the Federal Government really be providing that kind of value
    added, and I was, frankly, blown away, and I had my head turned
    by the impact of the MEP. Hence, the reason we believe we
    should expand the MEP.
        Obviously, they are partnerships, they're local, and they
    work with local manufacturers to help them adopt processes
    that, frankly, large companies have easy access but it's very
    hard for a small company to do on their own. And to me, this is
    one of the great services that we provide at the Department of
    Commerce. Frankly, it's not understood well enough.
        One of the things I hope is that, along with our Foreign
    Commercial Service and our U.S. Export Assistance Centers
    (USEACs), that I could try and raise the profile of these great
    services that we offer.
        As it relates to NNMI, I'm passionate, as you know, about
    this bill. I believe that it's absolutely essential that the
    Federal Government plays a role in helping to be a catalyst for
    the development of these institutes. The gap that needs to be
    filled between R&D and deployment to market is one that very
    often a single company cannot do by themselves. And so I've
    talked to a number of the folks who have competed for the
    existing NNMI programs, and they all tell me we would not have
    come together but for the Federal catalyst of dollars.
        So I think this is really important. I have offered to
    Senator Blunt and Senator Brown--in fact, Senator Graham
    reached out to me about 10 days ago and asked me to work with
    the group to try and help get this legislation passed.
        I think one of the important parts of the legislation is
    the fact that the Commerce Department will play a role in terms
    of taking the best practices of the institutes and sharing them
    among the institutes. I think there's an enormously important
    role that today is not provided for. So I'm all in on both of
    these.
        Senator Coons. Thank you. As a co-sponsor, I'd welcome your
    assistance as an advocate for the collaboration between our
    three States and many, many others in the existing
    collaborations.
        Secretary Pritzker. Whatever I can do.
        Senator Coons. We would be grateful.

                          FOREIGN COMMERCIAL SERVICES

        Let me briefly touch on three things. The Foreign
    Commercial Service has been brought up before. I believe in
    their value. I want to work with you to strengthen their
    efficacy and reach. I'm pleased to see you've updated the model
    that's more forward-looking, and it is my hope that the African
    continent will be considered as a place where we are really in
    competition and where I think we need more of the FCS.
        The program I've mentioned to you before. This is very
    small in scale but means a lot to our coastal States, where
    providing some of the support for the operation and maintenance
    of the program helps particularly those of us who have rivers
    where there is navigational challenge. We had put report
    language in or suggested report language last year. I was
    disappointed the operations and maintenance wasn't in this
    year's budget, and I'd love to work with you on that.

               IMPROVING THE FUNCTION OF PATENT AND TRADE OFFICE

        Last, any comments you've got for me on the Patent and
    Trademark Office. Ending fee diversion was something that was a
    key piece of the American Invents Act. Making sure the Patent
    and Trademark Office is strong and that patents are high
    quality, and that they are being issued in a timely and
    appropriate manner is a real concern to me. I just, in closing,
    would love to hear your thoughts on how we can ensure an
    appropriately funded, fully functioning, strong Patent and
    Trademark Office.

                             PATENT FEE COLLECTION

        Secretary Pritzker. Well, let me comment on the Patent and
    Trademark Office. Our expectation is that we'll receive about
    $3.4 billion worth of fees this coming year, and that will
    allow us to do a number of things.
        First of all, really address the IT system, which needs
    investment--that was something that was a casualty in the
    fiscal year 2013 situation--so that more easily our examiners
    can access prior art and better understand that, as well as
    streamline the relationship with the patent applicants. One.
        Two, we are planning to expand by 1,000 patent examiners.
    We need to do that. We have a backlog which is not at the place
    we want it to be. We currently have a backlog of about 600,000
    patent applications. We'd like to run with a backlog of about
    450,000. We think that's the right balance of inventory to keep
    our workforce fully deployed, if you will, and that's something
    that we're very, very focused on, the IT system. The additional
    examiners will help us bring that down significantly over the
    next several years.
        And then the other thing that we're doing is we have
    developed an operating reserve, which is something that we
    think is very important, so that as the economy fluctuates up
    and down--a patent examiner is someone that receives, when we
    hire someone, an enormous amount of training. And what we don't
    want to do is if the economy goes up and down, we don't want to
    let go of our very valued human capital because of a
    fluctuation in the economy one year.
        So the reserve is something that we believe in this year's
    fees will allow us to be able to have a good cushion as the
    economy fluctuates.
        So the Patent and Trademark Office is making great
    progress. There is work to be done, but I have a lot of
    confidence in the leadership we have there.
        Senator Coons. Thank you, Madam Secretary. Good luck on
    your upcoming trip to Ghana and Nigeria. I very much look
    forward to hearing about it.
        Secretary Pritzker. I am very excited about it, and thank
    you for all the advice and help you've given us.
        Senator Coons. Thank you, Madam Chair.
        Senator Mikulski. Before Senator Coons goes, I want to
    raise this issue about the Patent Office and its fees. You said
    the fiscal year 2013 situation. Didn't you mean sequester?

                               PATENT OFFICE FEES

        Secretary Pritzker. Yes.
        Senator Mikulski. Didn't the Patent Office have access to
    the fees that were being paid in sequester, or were they denied
    access to fees?
        Secretary Pritzker. There was an amount that was set aside
    that we did not have access to. We feel that the fiscal year
    2015 or the $3.4 billion in fees that we expect this year will
    help address the issues that we experienced back then.
        Senator Mikulski. Well, I'm going to raise the fee issue.
    There are two important agencies that are crucial to
    innovation, in taking products to market and protecting
    intellectual property and the safety of people, the FDA and the
    Patent Office. My biotech community, which is a very thriving
    community, feels they stand in two lines to get approved, FDA
    and the Patent Office.
        So we struggle with backlogs. Both are funded by user fees.
    FDA, under sequester, did not have access to the user fees. The
    biotech, the pharma, the medical device community was
    ballistic. They're paying fees. They think they were going to
    get value--the reason they're paying fees was to get the
    trained workforce that they needed with the new innovative
    technology. They didn't have access.
        Right now, Dr. Hamburg's got $225 million worth of fees she
    thinks she's going to have for this year and maybe into 2016.
    Remember, we have not canceled sequester.
        So then we go to your Patent Office, which is really our
    Patent Office. It is crucial to every new idea, every new
    product, every new thing that could come out of Maine,
    Delaware, Maryland, our great universities, all the things you
    just talked about.
        So here is my question. I worry about this, and I really
    think OMB has to worry about this. And I think they have to
    come to grips with what we would hope--many of us want to work
    on a bipartisan basis to permanently cancel sequester. That
    would be my goal, so that every year talented managers that we
    ask to come into government, like yourself, are not worried
    about sequester, you're worried about fulfilling the mission.
        But if we go to the private sector, we're asking them to
    pay fees so they can have the capacity to fulfill the mission,
    which is patents, food safety, and the safety of
    pharmaceuticals, biotech, and medical devices. They should be
    able to get what they're paying for.
        So I would encourage you to join with Dr. Mary Hamburg at
    FDA and go to OMB and say--not for this year--thanks to the
    Murray-Ryan budget, again, a bipartisan effort, we're able to
    move ahead with this bill, but I'm looking ahead also to 2016
    so that we keep the momentum going in our economy.
        We've come a long way since the economic collapse. We know
    unemployment is going down. We know the deficit is going down.
    We know that the debt is going down. We want to keep that
    momentum going.
        One of the ways to keep it going is to make sure where some
    of the greatest innovation is occurring in our economy is able
    to have access to the government agencies they need to either
    get approval or protect their intellectual property, and
    they're paying for it, not only with their taxes but with an
    additional thing, a fee.
        So if we could get--and I'm going to be raising this with
    Director Burwell herself, that we need to make sure that if
    sequester continues, which I hope it does not, and we'll work
    hard for it not to, that those where fees are paid are not
    disadvantaged, because the private sector says we work with you
    to create a fee structure that is reasonable, rational and
    achievable, and then we put the money in the pot and they can't
    access it.
        So, we can't have this. It's counter-intuitive to what we
    want to do. So I really encourage that to my colleagues to be
    able to raise this because there are also other fees. But these
    are really the two very important ones that I think have a
    direct impact on jobs and also the direct impact on our
    economy, and we look forward to working with you and the
    administration on solving this.
        Well, I think we've covered a lot of ground here today. The
    Department of Commerce has 11 different agencies in it, from
    taking the Census to minority business development. It's a lot
    to keep an eye on. Did you feel like this was a pop quiz?
        Senator Mikulski. Well, we wish you well in your trade
    missions----
        Secretary Pritzker. Thank you.
        Senator Mikulski [continuing]. And really working
    throughout these agencies to really, again, create the kind of
    jobs that we need to create.
        I thank you very much for participating.

                         ADDITIONAL COMMITTEE QUESTIONS

        If there are no further questions, Senators may submit
    additional questions to the subcommittee for the official
    record. We request that the Department of Commerce respond to
    our colleagues within 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. Penny Pritzker
               Questions Submitted by Senator Barbara A. Mikulski
                          financial management system
        Question. The switch to a new accounting software system, the
    Business Application Solutions project (BAS), aims to consolidate the
    12 different systems that the Department of Commerce currently uses for
    managing finances, acquisitions, grants, and properties.
        What is the Department doing to manage the risks and ensure the
    system is not a techno-boondoggle?
        Answer. The project has a robust risk management plan that
    documents the processes, tools and procedures that are being used to
    manage and control project risks. The Department of Commerce utilizes a
    risk register which: evaluates enterprise and project risk impact,
    likelihood, and severity; identifies alternatives to achieve cost,
    schedule, and performance goals; supports informed decisionmaking on
    budget and funding priorities; provides risk information for project
    reviews and milestone decisions; and, establishes continuous monitoring
    of the health of the project over time.
        The BAS project risk is monitored routinely during extensive
    recurring executive review board sessions where risks are transparently
    discussed and mitigation strategies are reviewed and updated as
    warranted.
        In addition, the Project Manager is a Certified Project Management
    Professional (PMP) and both the Program Manager and Project Manager are
    certified as Senior Experts in the Federal Acquisition Certification
    for Program and Project Managers (FAC-P/PM).
        Question. What contingencies are being put in place to address
    delays and unexpected expenses?
        Answer. In accordance with industry standard project management
    methodology, the BAS project scope, cost, and schedule include
    contingencies commensurate with other similar-sized Federal agency
    financial management system implementations identified during market
    research interviews with other Federal agencies. There is planned
    contingency within the BAS project's schedule that would allow Census
    to be delayed until the end of fiscal year 2017 without impact to the
    2020 Decennial. The BAS project implementation approach includes
    multiple planned activities to validate deployment readiness, including
    mock conversions, significant system and user acceptance testing and
    comprehensive end user training. Any issues identified during these
    activities will be documented, actively tracked and remediation
    solutions enacted. As part of our risk assessment activities, we
    maintain a list of alternative options that is updated throughout the
    project to use if remediation activities are deemed necessary. (Note:
    BAS inserted a 5 percent management cost reserve).
                                truck scrapping
        Question. The U.S.-Colombia Trade Promotion Agreement has helped to
    broaden our trade relationship with Colombia, and the Colombian heavy
    duty truck market is very important for America's manufacturers.
    However, following the trade agreement, American truck manufacturers
    have been harmed by Colombia's adoption of a restrictive series of
    decrees regarding the scrapping and registration of commercial
    vehicles. These regulations appear to violate both the spirit and
    letter of Colombia's obligations under the bilateral Trade Promotion
    Agreement and its commitments to international obligations under the
    World Trade Organization.
        What steps has the Commerce Department taken to restore American
    truck exports to Colombia?
        Answer. The Department has been working to address the changes in
    Colombia's truck scrapping program since April of 2013. We have worked
    with other U.S. Federal agencies, including the Department of State and
    the Office of the United States Trade Representative, to analyze the
    scrapping requirements, including their legal basis, their impact on
    U.S. trade, and the political situation in Colombia leading to the
    increasingly restrictive decrees.
        The Department is working with other U.S. Government agencies and
    industry to address the problems with the new scrapping regime. These
    efforts have also included coordinating with the European Union, Japan
    and Mexico, as well as engaging in outreach to the Organization for
    Economic Cooperation and Development (OECD) which is considering
    Colombia for membership. The Department raised the issue at the
    Ministerial level during President Santo's trip to the United States in
    December. Most recently, the Department worked to arrange and
    participate in a March meeting between members of U.S. industry and
    Colombian High Counselor Jaime Bueno, Vice Minister of Trade Claudia
    Candela, and Vice Minister of Transportation Nicols Estupian. This
    March meeting has led to follow-up meetings between industry and senior
    Colombian officials.
        Question. Is the Department satisfied with the Colombian response
    to date?
        Answer. No. However, industry recently reported that follow up
    talks to the March meeting have been constructive and offer hope for a
    positive outcome. The Department will continue to explore ways to
    effectively engage the Colombian authorities on this issue.
        Question. Does the Department plan to undertake additional steps to
    resolve this dispute?
        Answer. The Department is continuing to engage the Colombian
    Government on this issue on behalf of U.S. industry. Actions are being
    considered as needed to help reopen this important market.
                         nist cyber-security framework
        Question. NIST issued the Framework for Improving Critical
    Infrastructure Cybersecurity in February 2014.
        How are you encouraging ``critical'' U.S. infrastructure to adopt
    the Framework?
        Answer. NIST plans to work with industry, the Department of
    Homeland Security (DHS), and other Government agencies to support and
    improve the Framework. The Framework is a living document that will
    evolve based on industry feedback, and best practices, including
    changes in the threat environment, as well as changes in information
    technology and cybersecurity capabilities.
        Question. NIST also issues standards and guidelines for Government
    systems. How are those standards being aligned with the Framework?
        Answer. As noted in our companion publication, ``NIST Roadmap for
    Improving Critical Infrastructure Cybersecurity,'' NIST will continue
    to serve as a convener and coordinator to work with industry, DHS, and
    other Government agencies to help organizations understand, use and
    improve the Framework. In addition, Executive Order 13636 called for
    the Framework to ``identify areas for improvement that should be
    addressed through future collaboration with particular sectors and
    standards-developing organizations.'' Based on stakeholder input, NIST
    continues to work with stakeholders on high-priority areas for
    development, alignment, and collaboration that will inform future
    revisions of the Framework.
        As the Framework evolves, NIST will lead discussions of models for
    future governance of the Framework, such as potential transfer of the
    convener role to a non-government organization, while maintaining NIST
    involvement.
        Question. What does the Department of Commerce need to do to secure
    its IT systems so it can become the role model for protecting dot-gov?
        Answer. The Department is the principal defender and champion of
    the digital economy in the Federal Government. It plays a critical role
    in working with industry and other government stakeholders on the
    development of cybersecurity standards to help protect the Nation's
    critical infrastructure assets. Within the Department of Commerce, the
    Office of the Chief Information Officer (OCIO) has developed a cyber
    security strategic plan that establishes the mission, vision, goals and
    objectives as an effort to establish itself as a role model for
    protecting dot-gov.
        In doing so, the Department has embraced the President's Cyber
    Security Cross-Agency Priority (CAP) initiatives, in collaboration with
    the Department of Homeland Security, in information security continuous
    monitoring, trusted Internet connection capabilities and traffic
    consolidation, and strong logical access authentication using Homeland
    Security Presidential Directive (HSPD-12) Personal Identify
    Verification (PIV) cards. Strengthening these key areas, as well as
    maintaining best-practices in cyber security policy, workforce
    training, and compliance, will ensure the Department continues to
    protect the Department's information and information systems, and
    remains a role model for protecting dot-gov.
        Last but not least, as an effort to achieve operational excellence
    set forth by the Department's Cyber Security Strategic Plan, the
    Department's Chief Information Officers (CIO) Council is recommending
    an enterprise security shared-service portfolio approach delivering
    efficient and effective solutions.
                                trade promotion
        Question. The fiscal year 2015 request for the International Trade
    Administration is 8 percent above the fiscal year 2014 level of $470
    million, including a $7 million increase the Interagency Trade
    Enforcement Center and a $13 million increase for SelectUSA. However,
    the President's fiscal year 2015 request has only a 1 percent increase
    for expanding trade promotion through the U.S. and Foreign Commercial
    Service, and the request does not propose opening any new overseas
    offices.
        If the trade promotion budget stays flat, how will the
    International Trade Administration (ITA) reevaluate its Overseas
    Resource Allocation Model (ORAM) to ensure that Commercial Service
    Officers are posted in the most promising export markets?
        Answer. ITA uses the Overseas Resource Allocation Model (ORAM) and
    the Gap and Opportunity (GO) Analysis to inform staffing decisions.
    Whether or not the trade promotion budget stays flat, then Global
    Markets will continue to utilize both quantitative and qualitative data
    gathered from these resource allocation tools to make informed staffing
    decisions that ensure the proper allocation of existing resources,
    including the movement of resources, especially Foreign Commercial
    Service Officers. ITA updates the ORAM on an annual basis to ensure
    that the most up-to-date data, including growth projections, are
    included in the model. The model uses economic data to rank countries
    on two indices--market size and market structure. These two indices are
    then weighted and combined to generate a composite index that allows
    the model to group countries into three tiers based on overall
    rankings. The results generated by the model are intended to be used as
    a starting point for identifying countries with the highest potential
    as a destination for U.S. exports. The model does not attempt to
    estimate an absolute level of ``appropriate'' staffing for each market
    or take into consideration the budgetary climate. Rather, the focus is
    on providing objective economic data in a consistent and rigorous
    analytical structure for allocating available resources.
        In addition to the ORAM, Global Markets utilizes the GO Analysis to
    gather qualitative data to assist senior leadership with staffing
    decisions. The GO Analysis is designed to gather primary data from the
    overseas field, providing insight to challenges and opportunities at
    each post. The GO survey allows for a formal, standardized channel for
    overseas offices to request additional support.
        The qualitative data from the GO Survey and the quantitative ORAM
    data is combined to develop country summaries, which are further
    reviewed by senior leadership, including regional leadership, before
    any resource allocation recommendations are made.
        Final staffing decisions are made by senior leaders, who after
    evaluating both the ORAM and GO survey take budgetary and any other
    factors into consideration.
                                     ______

                Questions Submitted by Senator Dianne Feinstein
                           fisheries--western region
        Question. Secretary Pritzker, the National Marine Fisheries Service
    (NMFS) plays a significant role in California. NMFS is tasked with
    managing and protecting endangered salmon species, and thus it
    participates in every major decision involving the State and Federal
    water projects in California to balance water needs for fish, the
    environment, farms, and communities.
        As I understand it, NMFS is involved in the Bay Delta Conservation
    Plan, revision of the remanded salmon biological opinion, emergency
    water operations for the current drought, and a variety of salmon
    restoration and management programs.
        In your view, is the current budget allocated to the Western Region
    of NMFS adequate to keep pace with the demands of the various
    California water initiatives?
        Answer. NOAA Fisheries' work in the Sacramento and San Joaquin
    watersheds occurs in three main program areas:

      --Regulatory and Administrative functions for the Central Valley/
            State water project;
      --Endangered Species Act (ESA) administration for the broader suite
            of actions across the entire Central Valley/San Joaquin
            geography; and
      --Monitoring and technical support associated with these two areas.

        NOAA Fisheries has a long history of working with its partners to
    fulfill its goals in the Sacramento and San Joaquin watersheds. These
    partners include the State of California and the Bureau of Reclamation.
    While the recent drought has increased short-term stress on completing
    regulatory requirements and highlighted the need for a more
    comprehensive management of the system focused on the long-term
    protection and recovery of salmonids, NOAA Fisheries has been able to
    keep pace with the demands of the various California water initiatives
    through its partnership efforts.
        Question. Can you please provide me with a detailed breakdown of
    your activities, the resources required, and the funding gaps to meet
    your obligations?
        Answer. NOAA Fisheries focuses resources on highest priority
    actions in the California Central Valley. Activities are supported by
    the ESA Pacific Salmon budget line. The fiscal year 2014 budget
    includes approximately $6.6 million from the line for activities in the
    California Central Valley. Actions are focused on three primary
    activity areas: (1) Endangered Species Act (ESA) review and permitting,
    (2) ESA administration, and (3) monitoring and science. See below for a
    breakdown of current activities.

      --Approximately $180,000 to assist in the immediate drought response
            effort.
      --Approximately $400,000 per year supports biological opinion remand
            effort, now due in February 2018.
      --Approximately $5.0 million supports ESA administration across the
            Central Valley.
      --Approximately $1.0 million in funds are being used to support
            monitoring and science.
      --Current work on the life cycle model is being funded through an
            interagency agreement with the U.S. Bureau of Reclamation for
            $1.4 million.
      --NOAA Fisheries is also conducting 3-year predation experiment
            funded by the by the California Department of Fish and Wildlife
            for $2.0 million.

        The fiscal year 2015 budget includes level funding for these
    activities.

        Question. Besides operation of the State and Federal water
    projects, what other factors have you identified as the major
    influences and drivers of the health and abundance of salmon?
        Answer. In addition to the impacts associated with the construction
    and operation of the Central Valley Project/State Water Project
    facilities, other main factors limiting the health and abundance of
    salmon in the Central Valley include:

      --the loss of the majority of spawning and rearing habitat by dams;
      --the loss of floodplain and riparian habitat availability along the
            main rivers and tributaries resulting from levee construction
            and maintenance;
      --the loss of wetland habitat in the Delta;
      --predation by non-native species;
      --hatchery production causing reduced fitness of wild fish;
      --the commercial and recreational ocean salmon fisheries;
      --poor water quality resulting from agricultural and urban land use;
            and
      --changing river and ocean conditions due to climate change.

        Question. What has your Department done to address non-water
    project factors?
        Answer. NOAA Fisheries is the Federal agency responsible for
    managing, conserving, and protecting living marine resources in inland,
    coastal, and offshore waters of the United States. NOAA Fisheries is
    contributing to the recovery of salmon and rebuilding of the Central
    Valley aquatic systems through its West Coast Region's California
    Central Valley Area Office. We work in the Central Valley river basins
    to protect species listed under the Endangered Species Act by
    evaluating the impact of proposed Federal actions, developing recovery
    plans, seeking conservation partnerships with local governments and
    landowners, and ensuring safe fish passage.
        Pacific salmon have a unique life cycle that includes time in both
    inland and ocean habitats. They have particular needs at each stage of
    this cycle. Young salmon need clean, cool water and safe passage to the
    ocean, where they spend 3 to 6 years feeding and growing. They then
    need healthy habitat when they return to freshwater as adults to spawn.
    The work of NOAA Fisheries reflects the uniqueness of the salmon life
    cycle with biologists and engineers who:

      --restore and protect important freshwater habitat for healthy
            rearing and spawning of salmon, such as riparian areas and
            floodplains;
      --design safe fish passage solutions at hydropower facilities, such
            as Federal and non-Federal dams requiring Federal licenses, and
            at water diversions throughout California;
      --manage hatcheries to minimize impacts on wild salmon populations;
            and
      --work with States and tribes to ensure sustainable commercial,
            recreational, and tribal fisheries.
                        fisheries--real-time monitoring
        Question. It is my understanding that real-time monitoring of
    salmon throughout its life cycle can be extremely beneficial not only
    for managing the fish, but also for enabling more precise water
    operations. However, I have been told that NMFS's real-time monitoring
    capabilities are very limited right now.
        What are the obstacles to developing and deploying the real-time
    monitoring tools?
        Answer. Obstacles to real time monitoring of salmon include access
    limitations on private lands and labor intensive efforts and equipment
    needed over the long-term to collect the data. To take advantage of the
    best available real-time monitoring tools, an extensive fish tagging
    program is needed. Program needs include development of protocols,
    equipment (e.g., tags), adequate numbers of fish and a release strategy
    for tagged fish. In addition, receivers to detect fish movement would
    need to be installed in key locations. The receivers must be monitored
    frequently to ensure data transmission and operation is correct and the
    data must be carefully scrutinized to properly identify fish
    detections.
        Real-time monitoring requires either direct biologist reporting
    and/or remote reporting (e.g., fish tags and receiving stations in the
    river to monitor fish movements) of information on a daily (or more
    frequent) basis to inform decisionmaking needed by agency managers at
    NOAA Fisheries, California Department of Fish and Wildlife, and other
    Federal and State agencies. Frequently, other information (e.g., flow
    gauge information and water release data) related to understanding the
    impacts of water operations on salmon does not require daily reporting,
    but is needed in a timely fashion to inform the real-time management
    cycle. Currently, NOAA Fisheries partners with State and other Federal
    agencies who are already collecting the information.
        For salmon in coastal watersheds of California, NOAA Fisheries is
    engaged in technical, management, and policy discussions with the State
    of California regarding the State's Coastal Monitoring Plan. This Plan
    aims to document in real-time the status and trends of coastal
    California salmonids throughout their life cycles, and the condition of
    freshwater and estuarine habitats. However, the Plan currently lacks
    long-term State funding, dedicated staff, and able stakeholders to
    participate in monitoring.
        Question. What is needed to overcome these obstacles, and by when
    do you think you can achieve these capabilities?
        Answer. The first thing that is needed is a long term monitoring
    and science plan. As identified in the Bureau of Reclamation
    (Reclamation) and the California Department of Water Resources' Drought
    Operations Plan for April through November 2014, due to the necessity
    of rapid management decisions to achieve potential benefits to water
    storage or the conservation of species, agencies (including NOAA
    Fisheries) are interested in greater real-time operational
    decisionmaking, which the current monitoring system does not adequately
    address. To meet these real-time information needs, State and Federal
    agencies have committed to developing a robust multi-objective
    emergency fisheries monitoring and science plan, which includes
    improvements to current technology, to significantly improve the
    ability to make real-time operational decisions. NOAA Fisheries is
    developing additional temperature monitoring capabilities in the
    upstream Sacramento River area this summer. In addition, tools and
    research are also needed to improve understanding of biological effects
    associated with water operations regardless of hydrologic conditions.
    This overall plan will be developed by October 1, 2014, through a
    collaborative process led by NOAA Fisheries and the California
    Department of Water Resources in coordination with the other agencies.
    Once the plan is developed, NOAA can best determine what is needed on
    its part to move forward to monitor salmon in real time, in partnership
    with State and other Federal agencies.
                         fisheries--california drought
        Question. In the meantime, NMFS has been involved in discussions
    about emergency water operations to address California's drought
    conditions.
        Besides the operational plan released jointly by State and Federal
    agencies last week, what other actions do you plan to take to assist
    California during this historic drought?
        Answer. NOAA Fisheries, along with our Federal and State
    colleagues, are working diligently to balance all water needs while
    ensuring protections for threatened and endangered species, including
    Central Valley winter and spring-run Chinook salmon, Coastal California
    coho salmon, southern California steelhead, and the southern population
    of North American green sturgeon. Key concerns for these species
    include providing adequate cold water for salmon spawning and rearing
    and maintaining sufficient carryover storage in the event that drought
    conditions persist. Working with partners, NOAA is applying flexible
    management measures to meet multiple demands. For example, we recently
    worked with Sacramento River Settlement Contractors on options to shift
    a significant portion of their diversions this year out of the April
    and May period and into the timeframe where Keswick releases are higher
    to achieve temperature objectives on the upper Sacramento River. This
    will have benefits for both fish species and agriculture.
        In addition to the current Drought Operations Plan, the
    Administration released a white paper entitled, ``Federal Program
    Support For the California Bay-Delta Region'', which describes the wide
    array of Federal activities and programs across several agencies, that
    complement the California Water Action Plan and goals for the Bay-Delta
    and the rest of the State. The white paper is available at: http://
    www.doi.gov/news/upload/Federal-Investments-for-the-California-Bay-
    Delta-
    Region.pdf.
        Question. Do I have your personal commitment that you will do
    everything within your authority to exercise maximum flexibility under
    the law so that more water supplies can be made available to California
    such that our farms and communities will not bear a disparate burden in
    the regulation of California's water resources?
        Answer. Droughts are hard on everyone, and we concur with the basic
    tenet that everyone ``share the pain'' in a drought farmers, urban
    residents, commercial fisherman, and the species that we work so hard
    to protect. In this extraordinarily dry year, all water users,
    including agricultural, municipal, and fish and wildlife uses will
    suffer hardship. Since December 2013, NOAA Fisheries has worked daily
    with other State and Federal agencies that supply water, protect fish
    and wildlife, and regulate water quality to cope with this serious
    drought in California. Together, along with our State and Federal
    colleagues, we have maximized regulatory flexibility to adjust quickly
    to changes in the weather and environment and bolster water supplies
    when possible while minimizing impacts to fish and wildlife.
    Importantly, this rapid intra- and inter-agency coordination has sought
    to make real-time decisions within the existing regulatory framework
    rather than waive or overrun applicable law. We share common goals with
    our Federal and State partners and seek to ensure the best possible use
    of limited water supplies.
        We are currently exploring ways in which we can work directly with
    water users and apply regulatory flexibilities to help reduce the
    negative effects of the drought on species listed under the Endangered
    Species Act (ESA) while also supporting California's agricultural
    activities. During the drought, water withdrawals from salmon and
    steelhead-bearing streams and rivers could result in a take under the
    ESA, and we are looking to work in partnership with individual water
    users to help them identify steps they can take to avoid the risk of
    takes. You have our commitment that collectively, with our partners in
    State and Federal agencies, as well as with other organizations and
    individuals, we will continue to work to meet health and human safety
    needs, legal requirements, and conservation objectives.
                                     ______

                  Questions Submitted by Senator Mark L. Pryor
                          unfair steel trade practices
        Question. The U.S. Department of Commerce is responsible for
    conducting antidumping (AD) and countervailing duty (CVD)
    investigations as well as 5-year sunset reviews under Title VII of the
    Tariff Act of 1930. These investigations are triggered when U.S.
    companies bring cases against foreign competitors when they dump their
    products in our market by selling at less than fair value or when they
    receive government subsidies to undercut U.S. competitors in violation
    of U.S. trade law. Moreover, these laws are an integral part of ``the
    rules-based international trading system,'' and they are the last vital
    defense for U.S. manufacturing against foreign unfair trade.
        The first case involves sophisticated, high end steel pipe (Oil
    Country Tubular Goods) used in drilling for oil and natural gas which
    was brought against exports from a number of different countries
    including Korea. Exports from Korea have surged after 2009 when U.S.
    companies successfully brought a similar case against Chinese
    manufacturers over dumping the same product. As Chinese exports fell to
    almost nothing, exports from Korea have surged over the last 4 years.
    Korea is effectively targeting our market since it does not sell this
    product domestically or (in substantial volumes) to other nations.
    Ninety-eight percent of what is produced in Korea is exported directly
    to the United States.
        Currently there are two countervailing duty and antidumping
    investigations being conducted by the United States Department of
    Commerce on imports of steel reinforcing bar (rebar) from Turkey and
    Mexico. Imports from Turkey and Mexico of rebar have nearly doubled
    from 2011 to 2013. The International Trade Commission recently found
    that Mexican and Turkish rebar producers are consistently underselling
    U.S. producers which has resulted in substantial lost sales and
    depressed prices. In addition, the Department of Commerce made a
    preliminary finding that the Government of Turkey gives energy
    subsidies to its rebar industry, but that such subsidies are only de
    minimus in value. You led a letter on this issue that went out this
    week.
        I have been closely following three separate steel dumping cases,
    one involving high end pipe for drilling and two involving rebar. Both
    of these cases are now pending before the Department and are critically
    important to companies and workers in my State. I know you can't
    comment specifically on any of these cases but I have to tell you that
    domestic producers in my State are raising a lot of red flags. It is
    important to me that we get this right since the industry collectively
    employs over 1,800 people and another 500 contract workers in my State
    alone.
        These investigations are a huge responsibility for the Department
    and I understand that these cases are extremely resource-intensive. I
    know domestic companies prosecuting these cases have had difficulty
    getting complete and accurate information from foreign producers, have
    complained about repeated extensions of time given to foreign producers
    to supply information, and about the difficulty U.S. companies then
    have in litigating dumping cases when they only have access to partial
    and untimely data.
        Question. How many investigators do you have on staff and how many
    investigators would be assigned to a typical case?
        Answer. The Department is fully committed to enforcing our trade
    remedy laws so that American industries and workers have the
    opportunity to compete on a level playing field with their foreign
    competitors. The enforcement of the antidumping duty (AD) and
    countervailing duty (CVD) trade remedy laws is one of the Department's
    top priorities. The Department has received numerous steel-related
    petitions in the past months and it is currently conducting 39
    investigations involving steel products from a number of countries. The
    Department has devoted significant resources to these cases to ensure
    that unfair trade practices are identified and remedied at the border.
    Each investigation has unique facts. As such, the number of experts
    that may be assigned to a proceeding will vary from case to case.
    Typically, however, a case team will be staffed by 6 to 8 experts.
        With respect to the ongoing cases on steel products, including
    those on oil country tubular goods and rebar, the Department's
    Enforcement and Compliance Unit, whose primary mission is conducting
    these trade cases, is focused on these matters and is diligently
    scrutinizing the information on the record of this proceeding in order
    to identify the extent of any unfair dumping or subsidization.
        Question. Do you have adequate resources to conduct investigations
    on these matters?
        Answer. With respect to the question of whether the Department has
    adequate resources to conduct these investigations, Enforcement and
    Compliance currently has approximately 115 international trade
    compliance analysts, 23 policy analysts, 20 accountants, and 27 legal
    experts who are tasked with investigating allegations of dumping and
    unfair subsidization. The Department supports the request of the
    President as reflected in his budget proposal and will ensure that the
    vigorous enforcement of U.S. trade remedy laws remains a top priority.
    The Department will continue to conduct all antidumping and
    countervailing duty investigations in a thorough transparent manner, in
    accordance with U.S. law and our international obligations.
        Question. In a case like the Korea Oil Country Tubular Goods (OCTG)
    matter, how many Department of Commerce investigators would travel to
    Korea to conduct the investigation and how long would they be on site?
        Answer. A large portion of the Department's work in an
    investigation or administrative review takes place in the United
    States, with the Department analyzing information that foreign
    producers or exporters provide in response to questionnaires issued by
    the Department. In addition, in accordance with U.S. law, the
    Department verifies information relied upon in making a final
    determination in AD and CVD investigations or the final results of an
    administrative review if certain requirements are met. Typically, two
    analysts and two accountants conduct on-site verifications of each
    responding company's sales and cost of production information. The
    verification process, which may take one week or more, is designed to
    focus on a prioritized, cross section of information, and to check the
    validity of the factual information submitted by the respondent in the
    questionnaire response and confirm whether the Department can rely on
    the factual information to make its final determination.
        Question. As Secretary of Commerce, will you commit to making
    enforcement of our trade laws a top priority of the Department?
        Answer. Yes. The Department takes seriously the enforcement of our
    trade laws which provide U.S. manufacturers a means to remedy the
    market-distorting effects of unfair dumping and subsidization. The
    Department is fully committed to vigorously enforcing our trade laws
    and to addressing unfair trade practices in accordance with our
    statutes, regulations, and international obligations in order to help
    ensure that U.S. firms and workers have the opportunity to compete on a
    level playing field.
        Question. Will you take the lead--in multilateral and bilateral
    negotiations in defending, preserving and enhancing U.S. laws against
    unfair trade, and in opposing any efforts to weaken these laws?
        Answer. The Department strongly supports the goal of defending,
    preserving and enhancing U.S. trade laws. The Department works closely,
    and will continue to work closely, with the Office of the U.S. Trade
    Representative to ensure that any bilateral, multilateral or regional
    trade negotiations pursued by the United States do not undermine the
    strength and effectiveness of the U.S. unfair trade remedies, so that
    U.S. manufacturers, exporters, agricultural interests and workers all
    share the benefits that such trade agreements bring.
                     regional innovation strategies program
        Question. I am pleased to see that the Department's fiscal year
    2015 budget requests $25 million for the Regional Innovation Strategies
    Program. This funding is to be used for both grants and the science
    park loan guarantees authorized in Section 603 of the America COMPETES
    Reauthorization Act of 2010. I am also pleased to learn that the
    Economic Development Administration (EDA) is standing up a loan
    guarantee program for the science park and advanced manufacturing loan
    guarantees.
        How will this funding be apportioned between the grants and the
    loan guarantees?
        Answer. EDA is currently working to stand up the loan guarantee
    program, which is a substantial process that includes the development
    of regulations that will govern program administration. This process is
    expected to take until late 2015, at which time EDA expects to be able
    to provide its first loan guarantees. In the meantime, EDA plans to
    provide competitive grant funding through the Regional Innovation
    Strategies (RIS) program throughout fiscal year 2015 in order to
    accelerate the economic impact of the program. Fund apportionment
    between the grants and loan guarantees will be based on demand for each
    from potential applicants. At this point, it is clear that there will
    be a strong demand for grant funding, while demand for loan guarantees
    will become clearer as EDA moves further along in the program
    development process throughout 2014 and 2015. EDA will have an outreach
    campaign to industry and lenders by January of 2015. EDA would be
    pleased to provide updates on levels of demand for loan guarantees,
    which will inform the process for funding apportionments between grants
    and loan guarantees.
        Question. What results have been realized from the previous rounds
    of the I6 and Jobs & Accelerator grants?
        Answer. EDA has made a number of planning and implementation
    investments in science park projects in recent years across the
    country. For example, last year, EDA awarded a grant to the University
    of Connecticut, Storrs, Connecticut, to support the development and
    implementation of a regional economic development analysis and
    determination of opportunities associated with the 2015 opening of the
    University of Connecticut's Technology Park, which will promote
    economic growth opportunities statewide. EDA also provided funding last
    year to Prairie View A&M University, Prairie View, Texas, to support
    the development and implementation of the Prairie View Comprehensive
    Economic Development Strategy through a collaboration of the various
    academic departments, city officials, and business stakeholders to help
    establish a science and technology research park as an innovative way
    to enhance the area's economy.
        Question. What is the status of the loan guarantee program? When
    will it be operational? When will the Department issue a Federal
    funding opportunity?
        Answer. Planning for these programs is well underway, and EDA has
    consulted with other Federal agencies on best practices for how to
    implement a successful program. EDA is moving forward with standing up
    the science park loan guarantee program and the loan guarantee program
    for innovative manufacturing. A contractor has been hired to help set
    up the program including identifying staffing needs and providing a
    detailed timeline of deliverables.
        The timeline for standing up the loan program is still in
    development, so milestone dates are still tentative. EDA expects to
    have a staff hired and begin outreach to industry and lenders by
    January of 2015. Outreach will be done through the distribution of
    marketing materials and outreach to trade associations and lenders. The
    first loan Commitment is expected to happen by the end of calendar year
    2015.
                                rural broadband
        Question. As Chairman of the Communications, Technology,
    Innovation, and the Internet (CTI) Subcommittee, I have jurisdiction
    over the National Telecommunications & Information Administration
    (NTIA), which is housed under the Department of Commerce. Bringing
    high-speed broadband to all rural consumers is vital to the future of
    the Nation. Broadband is the gateway to the worldwide digital economy,
    and offer access to world-class education, healthcare, entertainment,
    and civic engagement.
        Under your leadership, how would the NTIA continue to support
    broadband deployment and adoption as the Recovery Act grant programs
    wind down?
        Answer. The $4 billion in Broadband Technology Opportunities
    Program (BTOP) grants in which NTIA has invested are helping to ensure
    that Americans have the resources and skills needed to benefit from the
    economic, educational, and civic opportunities the Internet makes
    possible. Our broadband grant projects have created or saved thousands
    of jobs while making an immediate economic impact in some of the
    country's hardest hit communities. BTOP projects have already delivered
    approximately 112,000 miles of broadband networks; connected more than
    21,000 schools, libraries, and healthcare facilities to broadband; and
    deployed more than 46,000 computer workstations across the Nation.
    These projects are making a positive difference in the communities they
    serve and laying a foundation for long-term economic growth.
        The President's 2015 budget request builds upon this success by
    repurposing funds saved from the ramping down of the BTOP grant
    program. NTIA will continue oversight of existing grants and will
    utilize our team's expertise to build coalitions and provide needed
    technical expertise to promote expansion of broadband into communities.
    For example, our team will continue to collaborate with and provide
    technical assistance to the network of State broadband leaders and
    offices like Connect Arkansas, even though our grant funding for the
    State Broadband Initiative has ended. Our strategy utilizes a public/
    private partnership concept and builds on the strong working
    relationships developed with broadband providers, municipal
    organizations, innovation economy firms, non-profit organizations,
    foundations, and other Federal stakeholders. By leveraging these
    partnerships, we will develop national strategies that will encourage
    communities to elevate their broadband preparedness and innovation
    readiness, making significant strides toward meeting the
    Administration's broadband and economic development goals. It also
    enables better identification of opportunities to empower community
    leaders and provide them with tools to advance projects which attract
    new business investments and spur economic growth.
        Question. What do you think are the biggest challenges in bringing
    next generation Internet and communications networks to rural America?
        Answer. Geography, population density, cost, and lagging adoption
    are all significant challenges to bringing broadband to rural
    communities. The Department is committed to expanding broadband across
    America as an engine of economic and social growth. The President's
    2015 budget request includes repurposing funds for the purpose of
    working strategically with communities to enable them to fulfill their
    broadband needs.
                                  buy america
        Question. Buy America and Buy American are separate legislation and
    regulation requirements. Buy America applies solely to grants issued by
    the Federal Transit Administration and Federal Highway Administration.
    Buy American may be applied to all direct U.S. Federal procurement.
        The Buy American Act of 1933 generally requires Federal agencies to
    purchase ``domestic end products'' and use ``domestic construction
    materials'' on contracts performed in the United States exceeding a
    purchase threshold.
        The Buy America Act which is the popular name for a group of
    domestic content restrictions that have been attached to grant funds
    administered by the Department of Transportation (DOT) generally
    requires that steel, iron, and manufactured products made primarily of
    steel or iron and used in infrastructure projects be produced or
    manufactured in the United States.
        One of the great ways to put Americans back to work is to invest in
    U.S. manufacturing and infrastructure. Buy American laws are a proven
    job creation tool that are broadly supported by the American people and
    State and local governments.
        For too long, too many companies have shipped U.S. jobs overseas.
    Meanwhile, companies that used to make things and hire people and pay
    taxes here in the United States continue to lose out on their share of
    Government contracts.
        In the past few years, more than 3 million manufacturing workers
    have lost their jobs. The Nation's infrastructure needs to be rebuilt.
    The American Society of Civil Engineers has given U.S. infrastructure a
    grade of D. Requiring companies to use Federal money to purchase
    domestic materials and manufactured goods will not harm American
    workers. Quite the contrary, it will provide much-needed jobs to
    millions of Americans and will help restore our Nation's economy.
        What can the Department of Commerce do to promote Buy American
    laws?
        Answer. The Department of Commerce works closely with the Office of
    the United States Trade Representative (USTR) to use U.S. domestic
    content laws to the advantage of U.S. exporters when trying to open
    government procurement markets abroad. The Trade Agreements Act of 1979
    generally prohibits the U.S. Federal Government from procuring goods or
    services from countries with which the United States does not have a
    reciprocal government procurement trade agreement. If our trading
    partners guarantee non-discriminatory treatment in their government
    procurement market for U.S. goods and services, the United States
    reciprocates by waiving the Buy American Act for certain procurements
    in our market.
        Question. Why is the Department not demanding more domestic content
    in the products it buys and the grants it issues?
        Answer. The Department of Commerce follows the United States
    Federal Acquisition Regulations in terms of complying with the Buy
    American Act and the domestic content requirements prescribed in the
    Act.
        Question. How can Congress strengthen Buy American?
        Answer. Whatever action Congress decides to take to strengthen Buy
    American laws should be consistent with our international trade
    obligations, as was done when Congress passed the American Recovery and
    Reinvestment Act of 2009. By having measures consistent with our
    international trade obligations, the United States avoids trade
    disputes with our trading partners that would ultimately punish U.S.
    exporters and workers.
                                     ______

                Questions Submitted by Senator Mary L. Landrieu
                                 steel dumping
        Question. Steel producers in my State have alerted me that low
    priced steel products are surging into the U.S. market, leading to
    significant declines in production and sales, and ultimately forcing
    companies to close facilities, lay off workers and cut worker hours.
    They believe these imports are unfairly traded and have filed trade
    cases under our dumping and subsidy laws.
        However, I am concerned that budget constraints at the Department
    threaten to undermine the vigorous application and enforcement of our
    trade laws. For example, over the past several years, the Department
    has been forced to significantly reduce its efforts to verify the
    accuracy of information submitted by foreign producers in trade remedy
    proceedings.
        Can you assure me that the Department will vigorously apply and
    enforce the U.S. trade remedy laws? And do you believe that you have
    adequate resources to do so?
        Answer. The Department is fully committed to enforcing our trade
    remedy laws so that American industries and workers have the
    opportunity to compete on a level playing field with their foreign
    competitors. The enforcement of the antidumping duty and countervailing
    duty trade remedy laws is one of the Department's top priorities. The
    Department has received numerous steel-related petitions in the past
    months and it is currently conducting 39 investigations involving steel
    products from a number of countries. This figure represents roughly 75
    percent of the Department's ongoing investigations and it has devoted
    significant resources to these cases to ensure that unfair trade
    practices are identified and remedied at the border. With respect to
    the ongoing cases on steel products, the Department's Enforcement and
    Compliance Unit, whose primary mission is conducting these trade cases,
    is focused on these matters and is diligently scrutinizing the
    information on the record of these proceedings to identify the extent
    of any unfair dumping or subsidization.
        With respect to whether the Department has the adequate resources
    to enforce U.S. trade remedy laws, the Department supports the request
    of the President as reflected in his budget proposal and will ensure
    that the vigorous enforcement of U.S. trade remedy laws remains a top
    priority. The Department will continue to conduct all antidumping and
    countervailing duty investigations in a thorough and transparent
    manner, in accordance with U.S. law and our international obligations.
        Question. Given budgetary constraints, do you agree that the
    Department should prioritize resources for those offices that have a
    primary role in investigating dumped and subsidized imports (for
    example, the office of enforcement and the office of accounting, as
    opposed to the office of AD/CVD policy)? If not, why not?
        Answer. The Department conducts all trade remedy proceedings in a
    thorough manner, in accordance with U.S. law and our international
    obligations. Enforcement and Compliance's Office of Policy and
    Negotiations is an integral part of the Department of Commerce team
    responsible for investigating allegations of unfair dumping and
    subsidization, and also provides valuable counseling and guidance to
    U.S. companies, including small and medium-sized enterprises, that are
    being harmed by foreign unfair trade practices.
                                     ______

              Question Submitted by Senator Senator Jeanne Shaheen
       international trade administration-trans-pacific partnership (tpp)
        Question. Secretary Pritzker, I'm curious to learn more about the
    role of the Department of Commerce in trade negotiations, specifically
    the Trans-Pacific Partnership (TPP). As you know, I am very interested
    in ensuring that manufacturers in New Hampshire and across the country
    are able to compete on a level playing field globally, especially in
    the areas of textile manufacturing and footwear. As the TPP is
    negotiated, we must ensure that we maintain the competitiveness of
    these industries in New Hampshire and the United States.
        As I'm sure you are aware, Vietnam is pressing for a ``relaxed rule
    of origin'' for textiles. This would run counter to the long-held U.S.
    Government position of supporting a Yarn Forward Rule of Origin, which
    would require all textile and apparel manufacturing to be completed in
    countries that are part of TPP. In fact, my colleagues and I in the New
    Hampshire Congressional delegation feel so strongly that we, as you may
    recall, sent a letter in February to you and Ambassador Michael Froman
    about this issue.
        Can you explain the Commerce Department's role in ensuring strong
    textile rules in the TPP, and how your agency interacts with the U.S.
    Trade Representative to support a TPP outcome that will be beneficial
    to textile producers in New Hampshire and across the country?
        Answer. The Department appreciated hearing from you and your
    colleagues in the New Hampshire Congressional delegation on this
    important trade matter. The Department of Commerce's Deputy Assistant
    Secretary for Textiles, Consumer Goods, and Materials has been
    intimately involved in each round of these negotiations, working with
    the Assistant United States Trade Representative (USTR) for Textiles to
    ensure that the concerns of our domestic industry stakeholders are
    addressed. The Administration strongly supports the ``yarn-forward''
    rules of origin and is committed to reaching an agreement in the TPP
    that benefits the textile and apparel industries in all of the partner
    countries, including our own. The U.S. textile negotiating team
    includes textile experts from Customs and Border Protection to make
    sure that the agreements have strong enforcement provisions. The team
    also works in close consultation with U.S. industry and other
    stakeholders to develop a responsible approach to tariff elimination
    that ensures our textile industry will not be competitively
    disadvantaged. The Department will continue to consult with industry
    and other stakeholders on matters of concern.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                                   fisheries
        Question. The Department plays a primary role in the management of
    our Nation's marine fisheries. I am especially interested in this
    because of Alabama's connection to the Gulf of Mexico. Recent reports
    have suggested there may be lasting impacts on the health of different
    fisheries following the 2010 oil spill.
        What is the Department proposing in 2015 to ensure we understand
    the long-term impacts of the Deepwater Horizon spill and how best to
    address them?
        Answer. The Department is involved in several major initiatives
    that support the environmental and economic recovery of the gulf
    following the Deepwater Horizon spill.
        For the Natural Resource Damage Assessment (NRDA) process conducted
    under the Oil Pollution Act, the Department, through the National
    Oceanic and Atmospheric Administration (NOAA), will be working with our
    State and Federal co-trustees to finalize the analysis of data gathered
    as part of the NRDA injury assessment and developing appropriate
    restoration to address oil spill injuries. This process will result in
    a Damage Assessment and Restoration Plan for which a draft will be
    presented to the public for review and a final version presented to the
    Responsible Party as a requirement under Oil Pollution Act.
        Regarding how best to address impacts, NOAA, on behalf of the
    Department, will also be working with the National Fish and Wildlife
    Foundation and our State partners to fulfill our established role under
    the Gulf Environmental Benefit Fund. In this role, the National Fish
    and Wildlife Foundation consults with NOAA for advice in restoration
    project identification and in maximizing environmental benefits of
    those projects. NOAA views this advisory role as a key opportunity to
    support the States to promote a coordinated and successful approach for
    restoring the gulf.
        NOAA is also deeply involved with the RESTORE program. Under
    section 1604 of the RESTORE Act, NOAA is authorized, in consultation
    with the U.S. Fish and Wildlife Service, to establish and administer a
    ``Gulf Coast Ecosystem Restoration Science, Observation, Monitoring,
    and Technology Program'' (informally, the NOAA RESTORE Act Science
    Program). The mission of the RESTORE Act Science Program is to initiate
    and sustain an integrative, holistic understanding of the Gulf of
    Mexico ecosystem and support, to the maximum extent practicable,
    restoration efforts and the long-term sustainability of the ecosystem,
    including its fish stocks, fishing industries, habitat, and wildlife
    through ecosystem research, observation, monitoring, and technology
    development.
        Question. With regards to red snapper fishery in the gulf, will the
    Department take advantage of current technology such as electronic
    monitoring and reporting to increase the amount of real-time data it
    receives to inform management practices for recreational fishermen?
        Answer. The Department has made progress on employing electronic
    reporting for recreational reporting for Gulf of Mexico red snapper, as
    explained below.
    Electronic Reporting on Headboats
        On March 5, 2014, the final rule became effective that requires
    federally permitted headboats in the Gulf of Mexico to submit their
    logbook data to NOAA Fisheries electronically on a weekly basis. The
    purpose for shifting from paper logbooks, which were submitted monthly,
    to weekly electronic reporting was to ensure effort, landings, and
    discard information of federally managed fish are recorded accurately
    and in a timely manner. The intent of the rule is to ensure annual
    catch limits are not exceeded.
        Additionally, in August 2013 NOAA Fisheries approved an exempted
    fishing permit. The exempted fishing permit, which was developed by the
    Gulf Headboat Collaborative, became effective January 1, 2014. The
    intent of the exempted fishing permit is to evaluate a new electronic
    data collection system and test whether an allocation-based management
    system can more effectively achieve conservation and management goals
    than the existing management system. A total of 17 for-hire headboats
    are currently participating in the exempted fishing permit. Vessels are
    required to have a vessel monitoring system, submit an electronic hail
    out before every trip via their vessel monitoring system, submit an
    electronic hail in via their vessel monitoring system before returning
    to report, and submit an electronic logbook to the SE Headboat Survey
    on the day of the trip. These electronic reporting requirements are
    intended to ensure landings are reported in an accurate and timely
    manner and law enforcement and port samplers have opportunities to
    inspect and validate reported landings.
    Electronic Reporting on Charter Boats
        The South Atlantic and Gulf of Mexico Fishery Management Councils
    have established a joint technical committee to develop recommendations
    on how to best achieve an electronic reporting system for charter
    vessels. The committee will hold its first meeting in late May and its
    recommendations will be provided for the Councils' consideration by
    December 1, 2014. Meantime, Federal scientists and managers have
    collaborated to prepare a white paper that outlines a range of program
    objectives and alternatives for meeting those objectives to serve as a
    starting point for the committee's deliberations. Decisions by the
    Councils and the Department on the use of electronic reporting in the
    charter fleet for red snapper and other recreationally important
    species will be informed by these recommendations.
    Pilot Studies Using Electronic Reporting for Pulse Fisheries
        The baseline Marine Recreational Information Program (MRIP) surveys
    conducted by NOAA Fisheries and its partners are designed primarily to
    obtain reliable estimates of annual catch and effort for unit stocks of
    our most important recreational fisheries. Fisheries such as gulf red
    snapper that are intensively prosecuted for short time periods
    (``pulse'' fisheries), or those that are infrequently encountered in
    our sampling (``rare event'' fisheries), are sampled by the MRIP
    baseline surveys, but the results are not usually available until the
    season is well under way or even ended. Moreover, the catch estimates
    for small geographic areas or short time intervals may not be
    sufficiently precise to meet the needs of managers. Recognizing this,
    the NOAA Fisheries MRIP program is conducting a series of workshops
    with Gulf of Mexico management partners to develop and test a number of
    methods, including modification of the current MRIP survey design,
    which may enable collection of supplemental red snapper catch data that
    better fits the needs of the region's managers.
        MRIP has agreed to fund three pilot projects this year two in
    Alabama and one in Texas that will use electronic reporting technology
    to obtain in-season data on red snapper catch. We believe that testing
    these three designs, and others in Florida and Louisiana that were
    reviewed in the workshops, will result in identification of workable
    approaches to supplemental data collection that are more timely and
    better suited to the challenges of red snapper and similarly managed
    fisheries in the future.
                                     trade
        Question. Secretary Pritzker, the Administration is pursuing an
    aggressive trade agenda. This requires resources to ensure we maintain
    a strong position during negotiations, but also tremendous resources in
    the future to enforce and oversee the agreements reached.
        How will closing out a major trade deal such as the Trans-Pacific
    Partnership impact the Department's future budget proposals?
        Answer. The Department of Commerce's International Trade
    Administration (ITA) plays a critical role in supporting the
    negotiation, implementation, and successful operation of trade
    agreements. Specifically, ITA works to:

      --represent the interests of exporters and investors during
            negotiations;
      --engage our trading partners on implementing the agreement's
            guarantees of market access and fair treatment;
      --monitor an agreement's operation to ensure those guarantees are
            being upheld; and
      --conduct outreach on the agreement to promote exports and
            investment.

        The Department is therefore constantly assessing its resource needs
    so that ITA will be able to fulfill its mission in these respects, and
    to ensure that U.S. industry is receiving the full benefit of the
    United States' trade agreements.

        Question. Does the Department consider the future resource needs
    required by new trade deals before entering into new trade
    negotiations?
        Answer. The Department continually endeavors to ensure that it is
    able to carry out its mission with respect to trade agreements,
    including planning for both new trade negotiations and the
    implementation and monitoring of those agreements already in place.
                   trade--economic development administration
        Question. Secretary Pritzker, the Administration is pursuing an
    aggressive trade agenda. This requires resources to ensure we maintain
    a strong position during negotiations, but also tremendous resources in
    the future to enforce and oversee the agreements reached.
        With such an ambitious trade agenda, why has the Department
    proposed cutting support for programs that help American businesses
    deal with the impacts of trade agreements, such as the Economic
    Development Administration's (EDA's) Trade Adjustment Assistance (TAA)
    program?
        Answer. The Department of Commerce is committed to ensuring that we
    provide assistance to American trade impacted communities and firms.
    The lowered funding is a result of working to achieve the best and most
    balanced allocation of fixed dollars in EDA's budget across all of its
    program areas to achieve the best return on investment and greatest
    impact for the communities we serve. To improve the TAA program, EDA is
    establishing a process where the Trade Adjustment Assistance Centers
    (TAACs) will be required to compete on merit for TAA funding. EDA is
    also working with TAACs to achieve greater efficiency and cost savings.
    In addition, EDA is able to help trade-impacted communities and firms
    through its Economic Adjustment Assistance Program, thereby potentially
    reducing the need for TAA funds. Economic Adjustment Assistance is
    EDA's most flexible program and is critical to the agency maintaining
    its ability to effectively and efficiently respond in real time to
    economic dislocations as they occur, including trade impacts.
                       polar satellite program robustness
        Question. There exists a real risk for catastrophe should JPSS-1
    fail. I find it unacceptable that a program so critical to the safety
    of our Nation should be one failure away from catastrophe.
        Secretary Pritzker, what is the Department proposing in its 2015
    budget to increase the robustness of the JPSS program to ensure that
    NOAA can fulfill its weather forecasting mission in the event of a
    failure?
        Answer. The Administration remains focused on increasing the
    robustness of our polar orbiting weather satellite program and
    mitigating the potential impacts to NOAA's National Weather Service
    (NWS) forecasts, services and products in the event a gap materializes.
    The fiscal year 2015 President's budget allows NOAA to do three things
    to increase the robustness of the polar program. First, the budget
    provides sufficient funds to ensure the primary satellite providing
    operational weather data in the afternoon polar orbit, Suomi NPP, is
    operated and managed to maximize the length of its mission life.
    Second, the budget keeps the JPSS-1 spacecraft on track to launch no
    later than the second quarter of fiscal year 2017. Finally, the budget
    allows the JPSS program to purchase additional, critical long lead sub-
    assemblies and parts to support the build of spare ATMS (Advanced
    Technology Microwave Sounder) and CrIS (Cross-track Infrared Sounder)
    instruments, while also protecting the accelerated JPSS-2 schedules.
    These two instruments ATMS and CrIS are the most critical to the NWS.
        The Department recognizes the need to build robustness into the
    JPSS program to maintain observations in the event of a loss of a
    satellite in the afternoon polar orbit. The formulation and
    acceleration of follow-on missions is a critical component of NOAA's
    strategy to reduce the likelihood of a gap in satellite data through a
    more robust JPSS architecture. NOAA is looking at recommendations made
    by the NESDIS Enterprise Independent Review Team's (IRT) for a robust
    polar follow-on program and a Gap Filler mission to guard against a gap
    in polar data beyond JPSS-1. The Administration acknowledges that the
    first step in any decision is the procurement of long lead parts for
    ATMS and CrIS as quickly as possible.
                            satellite gap mitigation
        Question. The Commerce IG and GAO anticipate a gap in critical data
    from polar orbiting satellites. This would be detrimental to the safety
    of millions of Americans. This is an issue we discussed with your
    predecessor last year and unfortunately, I have not seen any movement
    by the Department that indicates steps have been taken to address the
    potential gap. Great focus has been placed on redundancy but the same
    cannot be said for closing or eliminating the gap.
        Would you describe how the Department's 2015 budget proposal would
    mitigate the impacts of a gap in polar satellite data?
        Answer. The most important way to mitigate a gap in polar satellite
    data is to increase the robustness of the Nation's polar orbiting
    weather satellite program. The fiscal year 2015 President's budget
    allows NOAA to do three things to increase the robustness of the polar
    program. First, the budget provides sufficient funds to ensure the
    primary satellite providing operational weather data in the afternoon
    polar orbit, Suomi NPP, is operated and managed to maximize the length
    of its mission life. Second, the budget keeps the JPSS-1 spacecraft on
    track to launch no later than the second quarter of fiscal year 2017.
    Finally, the budget allows the JPSS program to purchase additional,
    critical long lead sub-assemblies and parts to support the build of
    spare ATMS (Advanced Technology Microwave Sounder) and CrIS (Cross-
    track Infrared Sounder) instruments, while also protecting the
    accelerated JPSS-2 schedules. These two instruments ATMS and CrIS are
    the most critical to the NWS.
        The fiscal year 2015 budget supports NOAA's contribution to the
    Global Navigation Satellite System Radio Occultation (GNSSRO) program,
    an important step to mitigate the impacts of a potential gap in polar
    satellite data on the NWS forecasts, products and services. GNSSRO, a
    partnership among NOAA, NASA, U.S. Air Force, Brazil and Taiwan, will
    provide high quality radio occultation data globally. Radio occultation
    data improves the NWS's models and helps to calibrate all other
    available sources of polar data. High quality radio occultation data
    was found to be an extremely important mitigator to the effects of a
    gap in polar data in the 2013 Riverside report on the subject.
        In fiscal year 2015 NOAA continues to execute and leverage Gap
    Mitigation projects funded through the Sandy Supplemental appropriation
    (Public Law 113-2). These projects are essential in NOAA's efforts to
    mitigate the impact from the potential loss of JPSS-1 data from several
    standpoints: Observations, Modeling and Supercomputing. They expand
    NOAA's Weather and Climate Operational Supercomputing System (WCOSS)
    capacity to fully exploit observational and model improvements and
    support the use of satellite Atmospheric Motion Vectors, cloud-impacted
    satellite sounding data, the Department of Defense Special Sensor
    Microwave Imager (SSM/I) instruments, advanced imagery from
    Geostationary Operational Environmental Satellite-R Series (GOES-R
    Series), and an increased amount of aircraft data to enhance NOAA's
    Global Forecast System (GFS), to name a few. These Gap Mitigation
    projects ensure that the NWS has the ability to support improved GFS
    products in event of a JPSS-1 failure.
        These projects would only provide limited substitute for the type
    and quality of data that the JPSS satellites provide for NWS numerical
    weather prediction. The fiscal year 2015 President's budget request for
    NOAA's satellite acquisition programs ensures that they remain on
    schedule, within cost, and are launched on time to provide support to
    the Nation's weather enterprise.
        Question. Is there an actual plan to fill a gap or are you simply
    analyzing options to mitigate the gap?
        Answer. NOAA is actively planning to reduce the risk of a gap;
    however, there is no viable option for accelerating the launch of JPSS-
    1 at this time. However, Suomi NPP now serves as the primary
    operational polar-orbiting spacecraft for NOAA's operational weather
    forecasting mission and is being operated and managed to maximize the
    length of its mission life. Additionally, there are legacy NASA and
    NOAA satellites that are operating beyond their design lives that are
    still returning quality observations, and which we expect to provide
    mitigation in the event of an unexpected premature failure of Suomi NPP
    or on launch failure or early failure soon after launch of JPSS-1. The
    improved use of existing satellite observations and development of
    advanced data assimilation techniques should lessen, but not eliminate,
    a gap's impact on NWS product quality.
        The Department of Commerce agrees with the November 2013 IRT report
    that the current polar satellite program is not robust. NOAA and NASA
    are currently analyzing options to minimize the length of time in which
    the polar program is ``one failure away from a gap'' and to mitigate a
    gap, should one occur. The intent of this analysis is to determine the
    most viable options for bringing the program to a more robust posture
    as soon as possible.
        This budget invests the resources needed to take the first critical
    steps to building robustness into the polar satellite program by
    beginning the purchase of copies of additional, critical long lead sub-
    assemblies and parts to support the build of spare ATMS and CrIS
    instruments.
        Question. Is the Department still considering obtaining satellite
    data from other countries if there is a gap? If so, does that mean that
    the United States would be dependent on countries such as China or
    Russia for data?
        Answer. The Department already obtains critical polar-orbiting
    weather satellite data from our international partners including the
    European Organisation for the Exploitation of Meteorological Satellites
    (EUMETSAT) and the Japan Meteorological Agency (JMA) and Japan
    Aerospace Exploration Agency (JAXA).
        The Department is not planning to obtain data from Chinese or
    Russian weather satellite programs to mitigate the gap. NOAA's reliance
    on certain international partners for weather satellite data, critical
    to the protection of life and property in the United States, is an
    Administration decision.
                                     census
        Question. The budget request includes an increase in funding for
    the 2020 Census. Most of this increase is tied to investments that, it
    is argued, will produce substantial savings over the entire 2020 Census
    effort. However, the Department had a similar plan for the 2010 Census
    that resulted in lost investments worth hundreds of millions of dollars
    and an increase to the overall cost of the Census by more than a
    billion dollars as the 2010 Census returned to a paper-based non-
    response follow up.
        How confident are you that the proposed investments for the 2020
    Census will actually save money?
        Answer. We are confident that we can save money in 2020 Census
    compared to the 2010 cycle provided we receive the resources required
    in fiscal year 2015 for the research, testing and development program.
        This Administration is committed to conducting the 2020 Census at a
    lower cost per household than the 2010 Census while maintaining high-
    quality results. The Census Bureau updated the lifecycle estimate to
    accompany the fiscal year 2015 request. The preliminary estimate shows
    we could realize a savings of at least $5 billion from the cost of
    repeating the 2010 Census design. However, we must prove that these
    design changes will realize cost-savings through our research and
    testing program.

        The potential design-change activities include:
      --targeting our address canvassing operations to areas experiencing
            change not already reflected in our address list;
      --optimizing self-response to include the use of the Internet and
            other communications innovations;
      --re-engineering field operations using automation, case routing, and
            other techniques; and
      --using administrative records to reduce workload.

        Savings ranges associated with these design options are shown in
    the updated lifecycle estimate presented in the fiscal year 2015 budget
    request. While the research we've done so far shows such savings are
    possible, there is still uncertainty. We need to complete the research
    planned for fiscal year 2015 to demonstrate that this redesigned census
    will work and that savings can be achieved.
        Our research program is not strictly focused on how to save money;
    there are other benefits to this program. Innovation will allow us to
    contain costs while maintaining the high quality census that the
    country demands. Obtaining a complete and accurate census every 10
    years becomes more complex and difficult with each successive cycle.
    For the 2020 Census, a larger, more diverse population will be more
    difficult and expensive to count. While we can reduce costs per
    household considerably by utilizing advances in technology and
    innovations in the design of the decennial census, there is a point at
    which reducing costs could lead to a significant reduction in the
    quality of census data. The 2020 research and testing program will help
    us gain a better understanding of this trade off, so we can contain
    costs without sacrificing coverage and data quality, and so we can
    share this information with the Congress and other stakeholders.
        IT projects and acquisition strategies are regularly reviewed by
    governance bodies like the Department of Commerce's Information
    Technology Review Board and Acquisition Review Board respectively.
        Question. What controls have you put in place to ensure that
    taxpayers will not be presented with another billion dollar bill at the
    last minute?
        Answer. From the standpoint of the 2020 Census program as a whole,
    to ensure that we stay on track with these cost-saving design-change
    efforts, we have completed the high-level baseline 2020 Census Schedule
    and detailed baseline schedules for the research and testing program
    including those for the 2014 Census test and will continue to mature
    the integrated master schedule. The 2020 Census Risk Review Board,
    which has representation from across the Census Bureau monitors
    program-level risks and develops mitigation plans for those risks.
    Additionally, the Economics and Statistics Administration and the
    Department of Commerce provide oversight to ensure the Census Bureau is
    on track with the research and testing activities that will drive the
    major design decisions.
        Regarding our approaches to information technology management, in
    order to avoid a repeat of the issues that the program experienced in
    the 2010 Census, which led to late decade census design changes and
    cost increases, the Census Bureau has been taking a more rigorous
    approach to information technology management, program management, and
    risk management. This approach is informed by the lessons we learned in
    the 2010 Census but also anticipates the environment of the 2020
    Census.
        With respect to technology management, the Bureau has implemented
    IT portfolio management and a strong partnership between the Chief
    Information Officer and the Associate Director for Decennial Census
    Programs. In this collaboration, leaders are making decisions about
    information technology to reduce both cost and risk compared to the
    2010 Census.
        The Bureau believes using off the shelf technology greatly reduces
    risks of failure. We also believe use of agile development approach to
    systems development (currently employed by the Census Bureau and our
    contractors) will ensure requirements are being met.
        The Department of Commerce is working with the Census Bureau to
    implement an open and transparent acquisitions process that starts in
    the planning phase of the project lifecycle, is consistent and
    repeatable, and applies to solutions regardless of whether they
    leverage in-house resources or major contracts. In addition, adapting
    program management and system engineering disciplines and best
    practices including risk, scope and cost management will help avoid the
    problems associated with the purchase of handhelds for the 2010 Census.
    These practices were put in place for the 2010 data capture system,
    which was cited by GAO as an exemplary IT investment.
        As part of the efforts to improve the 2020 Census, the Census
    Bureau is taking advantage of technology and operations research
    methods to re-engineer the field data collection operations reducing
    both the infrastructure required to support these operations and the
    actual hours that enumerators spend collecting the data.
        The Census Bureau is field testing automation throughout the
    research period in order to identify and mitigate risks associated with
    technology issues. The enumeration instrument prototype will be used in
    2014 and 2015 Census testing. The Census Bureau has instituted a mobile
    computing strategy for all current surveys and the 2020 Census.
        In addition to these efforts within the 2020 Census itself, the
    fiscal year 2015 budget proposes an initiative to bring an enterprise
    approach to data collection and processing. This Census Enterprise Data
    Collection and Processing (or, CEDCaP) initiative will change the past
    practice of building new and unique data collection processing systems
    for each survey or census including the decennial census. Instead, the
    Census Bureau will build a ``system of systems'' that offers shared
    data collection and processing services across the enterprise. This
    system will both precede and outlast the 2020 Census and will provide a
    solution that is mature and proven for the 2020 Census at an estimated
    cost lower than the cost of the 2010 Census.
        The program management discipline is not limited to the information
    technology aspects of the program. The entire 2020 Census program
    applies industry best practices for program management including the
    preparation and progressive elaboration of detailed cost estimates for
    the lifecycle of the census, and a well-established risk management
    process. As part of the risk management process, the program creates
    and executes risk mitigation plans to reduce the likelihood of these
    risks including those with large budget impacts. As the design
    decisions mature the risk management will mature to include assigning
    costs to any potential contingencies. These risk management practices
    will help us identify the sources of potential cost increases, so we
    can address these issues at the source and keep the budget impacts to a
    minimum should they occur.
        Another best practice is to conduct regular program management
    reviews open to stakeholders to increase the transparency of the
    program. This commitment to transparency will raise issues earlier in
    the program when they are easier and less costly to solve. Since
    December of 2012, the 2020 Census program has conducted quarterly day-
    long Program Management Review meetings with key internal and external
    stakeholders, including representatives from the Economics and
    Statistics Administration, the Department of Commerce, GAO, OIG, OMB,
    both House and Senate oversight and appropriations committees, and the
    National Academy of Sciences. IT projects and acquisition strategies
    are regularly reviewed by governance bodies like the Department of
    Commerce's Information Technology Review Board and Acquisition Review
    Board. These meetings provide an opportunity to keep these stakeholders
    informed and to gain their input and suggestions about plans, issues,
    and research results. Towards the same ends, the 2020 Census program
    also has been actively engaged with the Census Bureau's Scientific
    Advisory Committee, its National Advisory Committee (including its
    working groups focused on key issues such as use of administrative
    records, privacy, and improvements to the Census questions on race and
    ethnicity), and a panel of experts at the National Academy of Sciences.
        All of these efforts are aimed at improving the quality of our
    programs and their results, and reducing the risks of those things that
    can lead to cost over-runs or bad outcomes, e.g., poor requirements
    definition, inaccurate cost estimates, or insufficient engagement with
    stakeholders (and thus poor understanding of their needs and goals).
           national telecommunications and information administration
        Question. NTIA serves a primary role as the representative of the
    United States on the Internet Corporation for Assigned Names and
    Numbers (ICANN) Governmental Advisory Committee (GAC).
        Over the past year, how has NTIA represented the interests of our
    Nation in protecting American companies, consumers, and intellectual
    property?
        Answer. Within ICANN's multi-stakeholder structure, the
    Governmental Advisory Committee (GAC) provides governments a meaningful
    opportunity to participate in the development of policies related to
    Internet domain name system (DNS) issues. NTIA represents the U.S. in
    the GAC, and has actively engaged with its counterparts in the GAC to
    develop consensus advice to ICANN. ICANN improved the new generic top-
    level domain (gTLD) program by incorporating a significant number of
    proposals from the GAC, such as providing law enforcement and consumer
    protection authorities with significantly more tools to address
    malicious conduct, as well as enhanced mechanisms to protect
    intellectual property rights in new gTLDs.
        Over the course of three ICANN meetings in 2013, NTIA coordinated
    U.S. proposals covering a broad range of safeguards intended to
    mitigate against consumer harm and criminal abuse of the DNS, a
    majority of which were adopted and submitted as consensus GAC advice to
    ICANN (also known as the April 2013 GAC Beijing Communique). In this
    context, NTIA has actively engaged in consultations with a broad range
    of commercial interests. Ensuring the protection of the rights of
    trademark owners and ensuring appropriate consumer protections as the
    new gTLD process moves forward has been a priority over the course of
    NTIA's advocacy efforts to develop appropriate safeguards for new
    gTLDs. NTIA also contributed to the development of GAC consensus advice
    in the June 2013 Durban and November 2013 Buenos Aires Communiques that
    provided additional specificity to protect consumers and businesses in
    the new gTLD program. As a result of these efforts, ICANN updated the
    new gTLD Registry Agreements to address government concerns.
        Finally, over the last year NTIA Assistant Secretary Strickling
    personally participated in ICANN's Accountability and Transparency
    Review Team (ATRT) with a broad array of international stakeholders
    from industry, civil society, the Internet technical community, and
    other governments. This team serves as a key accountability tool for
    ICANN by evaluating progress and recommending improvements to ICANN's
    accountability, transparency, and technical competence. ICANN is
    currently implementing the 12 recommendations the ATRT made last
    December.
        Question. In what ways has NTIA altered its activities in dealing
    with ICANN via the Governmental Advisory Committee to be a stronger
    advocate for U.S. business?
        Answer. As described above, NTIA has constantly been a strong
    advocate for U.S. interests serving as the United States GAC
    representative. Specific activities over the past year are detailed in
    the response to the previous questions. NTIA has strengthened its
    outreach to U.S. businesses as new gTLDs are vetted and introduced to
    ensure a more complete understanding of business issues and stronger
    advocacy for U.S. businesses.
                             internet policy center
        Question. Can you explain how the Internet Policy Center (IPC)
    differs from the current activities NTIA performs for the Federal
    Government?
        Answer. The open Internet is a key driver for U.S. innovation and
    economic growth. It is therefore imperative that U.S. Internet policy
    remain forward-looking in its ability to balance innovation,
    resilience, privacy, rights protection, and security. Much is at stake:
    billions in trade, innovation, privacy, free expression, child
    protection, and the integrity of the Internet. NTIA currently
    undertakes significant coordination activities among Federal agencies
    as well as other Internet stakeholders in order to develop
    Administration policy; however, NTIA's capacity has not scaled to match
    the current pace and complexity of policy issues that have the
    potential to impact the Internet and its ability to function as a
    platform for economic growth and the future digital economy. The
    Internet Policy Center (IPC) will provide NTIA with the resources to
    build capacity to face the challenges of today's digital policy
    environment and to convert ad-hoc functions into institutionalized
    mission areas. Among the functions of the IPC will be policy analysis,
    policy development, global outreach, interagency coordination, and
    stakeholder engagement.
        NTIA is unique among Federal agencies in that part of its mission
    is to support, enhance, and protect the Internet as an engine of
    economic growth, innovation, and job creation. In that capacity, the
    IPC will focus on the Internet as a client. The IPC will provide the
    organizational capacity, structure, and means to protect U.S. Internet
    policy principles and equities across a range of fast-moving issue
    areas including privacy, cybersecurity, the free flow of information,
    Internet governance, network evolution, intellectual property,
    broadband and infrastructure development, and law enforcement. Through
    the IPC, the Administration will be better positioned to present a
    unified focus on Internet policy and provide the capacity and
    leadership to address a multitude of Internet policy concerns
    domestically and internationally in a more proactive, proficient manner
    than is currently possible.
        Question. Do any of the activities planned for the IPC currently
    reside in different locations within the Federal Government and if so,
    how will they transition to NTIA?
        Answer. The IPC would not displace or replace any activities or
    authorities of other Federal agencies, but would serve to complement
    and coordinate these activities more effectively to ensure a unified
    and strategic Administration voice. The need for focused policy
    attention to protect and promote innovation, stability, and economic
    growth on the Internet is critical. Without it, there is a much greater
    risk that U.S. policy will perhaps unintentionally harm the ability of
    companies to innovate and thrive and citizens to take full advantage of
    the Internet and other communication and information services. In a
    broad array of policy areas including cybersecurity, intellectual
    property, trade policy, and others, well-staffed agencies of the U.S
    Government pursue their discrete policy objectives, but those agencies
    are sometimes not well equipped to evaluate the full impact of their
    initiatives on Internet innovation, the digital economy, fundamental
    rights, and on the global, multistakeholder approach to Internet
    governance and policymaking. The IPC will advocate strongly within
    interagency discussions for the Internet as a platform to be protected
    and promoted.
        Question. Do any of these activities require a change in statute or
    authorization legislation in order to become a part of the IPC?
        Answer. No.
                          profit for constructed value
        Question. The Department has traditionally used a high profit
    benchmark to measure the fair value of merchandise in dumping cases.
    This better reflects the true value of merchandise in question.
    However, in the case of South Korean merchandise, a low measure of
    profit, based in large part on non-Oil Country Tubular Goods (OCTG)
    pipe sales was used. In addition, the measure was based largely in the
    depressed construction market instead of the more profitable energy
    sector, or an average of the two.
        Why did the Department alter its traditional measure in reaching a
    conclusion in this case?
        Answer. With respect to this very technical issue, the Department
    carefully applied the statute and its regulations to the record
    evidence presented at the time of the preliminary determination. In
    this case, because neither Korean exporter had what the Department's
    regulations refer to as a viable home- or third-country market in OCTG,
    the Department was unable to use the preferred methodology for
    calculating profit, i.e., these companies' own experience in the OCTG
    sector. U.S. law sets forth three alternative approaches to calculating
    profit in such cases, and the Department selected what it believes to
    be the most reasonable alternative based on the available record
    evidence. The Department continues to analyze this issue and will
    consider all evidence and arguments in issuing its final determination.
        Question. What was the Department's basis for choosing the
    construction market as opposed to the energy sector or an average of
    the two sectors?
        Answer. As noted above, because the facts in this investigation did
    not allow the application of the Department's preferred methodology,
    all alternative options available under the statute were considered.
    Since the Department does not have useable profit data for these
    companies' OCTG sales, one alternative specified in the statute is to
    use the profit figures for ``the same general category of products.''
    In this case, that would entail a broad range of tubular products,
    including those sold to the construction segment. If that is not
    appropriate, the statute also provides for the Department to use ``any
    reasonable method'' to value profit. The Department continues to
    evaluate the suitability of these profit figures for the final
    determination.
                           oil country tubular goods
        Question. Secretary Pritzker, the International Trade Commission
    (ITC) recently made a preliminary determination that the American steel
    industry was materially injured by certain Oil Country Tubular Goods
    (OCTG) imports from South Korea.
        What actions are being undertaken by the Department to assist in
    reaching a final determination on this matter?
        Answer. The Department's Enforcement and Compliance Unit, which has
    as its primary mission the conduct of antidumping and countervailing
    duty cases, is focused on this matter. Our analysts recently traveled
    to South Korea to verify the information that the respondents in this
    case placed on the record of the proceeding. Please be assured that the
    Department will carefully analyze all the record evidence, and consider
    the legal arguments of the parties, before issuing a final
    determination in this matter, which will be announced no later than
    July 11, 2014.
        Question. What resources are being utilized to support the final
    investigatory phase?
        Answer. Our Enforcement and Compliance Unit's accountants,
    analysts, and lawyers are diligently scrutinizing the information on
    the record and considering the legal arguments from all parties.
    Further, in accordance with U.S. law, analysts and accountants in our
    Enforcement and Compliance Unit recently traveled to South Korea to
    verify the accuracy of the factual information submitted by the Korean
    exporters.
                                  affiliations
        Question. The issue of affiliations is critical in this dumping
    investigation. The Department acknowledged concerns with a number of
    affiliations and uncertainty in whether the correct sales and cost
    databases were used for its preliminary determination.
        Can you assure the Committee these issues will be completely and
    fully investigated prior to a final determination?
        Answer. Yes. All information submitted by the two Korean exporters
    in this matter has been subject to rigorous verification by the
    Department analysts and accountants to ensure they have reliable sales
    and cost-of-production data. The Department's findings will be included
    in reports it will place on the record, and parties will have an
    opportunity to comment upon those findings prior to the issuance of the
    final determination.
                           south korean manufacturers
        Question. Additional concerns have been raised suggesting South
    Korean manufacturers are misrepresenting facts in this case on a
    variety of issues. This includes information regarding grades and costs
    of hot rolled coil used, sales made from inventory, the presence of
    affiliated warehouses, warehousing costs, as well as overhead.
        Madame Secretary, I understand that while preliminary
    investigations rely heavily on the responses of the parties involved,
    the final phase allows for the Department to deploy much greater
    resources to determine whether concerns raised in the preliminary phase
    could significantly change the findings.
        Can you assure me that the Department will dedicate sufficient
    resources needed to ensure a fair and equitable resolution to this
    case?
        Answer. Yes. The Department conducts all trade remedy proceedings
    in a thorough manner, in accordance with its statute, regulations, and
    international obligations. The Department is fully committed to
    vigorously enforcing its trade remedy laws so that American industries
    and workers have the opportunity to compete on a level playing field
    with their foreign competitors.
        Question. Further, can you assure me that concerns raised during
    the preliminary phase will be properly considered?
        Answer. Yes. The Department's Enforcement and Compliance Unit will
    diligently scrutinize all information on the record and consider the
    legal arguments from all parties before issuing its final
    determination.
                                     ______

                Questions Submitted by Senator Susan M. Collins
                                   fisheries
        Question. First, I would like to thank the Department and NOAA for
    the support it has provided to the Penobscot River Restoration project
    (over $20 million). It is my understanding that this project has raised
    more private dollars than any other river restoration project in the
    country. Through the work of the State, the Penobscot Trust, and NOAA,
    and other Federal agencies, we are on the cusp of completing what could
    be one of the largest and most successful fisheries restoration efforts
    in history.
        Across the Gulf of Maine, the restoration of sea-run migratory fish
    species is essential to rebuilding a thriving ocean fishery and healthy
    river communities. NOAA's investments in projects like the Penobscot
    River Restoration are essential to that goal.
        Completing restoration projects such as this is possible when NOAA
    ensures that funds allocated within the Fisheries Habitat Restoration
    and Species Recovery lines go to projects on the ground (and in
    water!).
        The Penobscot River Restoration Agreement has three main
    components: the removal of the Great Works Dam, the removal of the
    Veazie Dam, and the construction of a bypass of the Howland Dam. The
    first two components are complete; the third is pending. It is
    important to me and to my constituents that NOAA remain committed to
    seeing through the full implementation of the Penobscot River
    Agreement. If NOAA is not able to commit to the agreement, which
    includes the building of a fish bypass, then the work that was
    celebrated at the removal of the Great Works and Veazie dams will be
    incomplete, and the fisheries benefits will not be maximized.
        Will you ensure that NOAA will work with the State of Maine, the
    communities along the Penobscot River, including the Town of Howland,
    and the Penobscot Trust to ensure that the Agreement is fully
    implemented by fiscal year 2015?
        Answer. The Department recognizes the importance of the Penobscot
    River Watershed Restoration project, which will ultimately improve
    access to nearly 1,000 miles of river habitat to eleven species of sea-
    run fish and create new community and economic benefits throughout the
    watershed. NOAA remains committed to seeing through the full
    implementation of this important restoration initiative. NOAA is
    currently working with the State of Maine, Town of Holland, the
    Penobscot Trust, the Penobscot Indian Nation and our Federal, local and
    non-profit partners to develop final plans for the Howland Dam
    restoration project, and anticipates moving towards implementation
    soon.
                international trade administration--u.s./canada
        Question. The 2006 U.S.-Canada Softwood Lumber Agreement was set to
    expire in 2013, but was extended to October 12, 2015. Some of my
    constituents have expressed concern about another extension of this
    agreement. They would much prefer to see an updated long-term agreement
    executed.
        The world timber and lumber markets have evolved since 2006. As you
    are well aware, the U.S. housing market collapse has taken a toll on
    workers in the timber industry. The Maine Forest Products Council
    estimates that we have lost more than 4,000 forestry jobs in my State
    from 2007 to 2011, for a number of reasons. As the housing industry
    recovers, and domestic demand for wood products starts to rise, we must
    ensure an unbalanced playing field between U.S. and Canadian producers
    does not cause more jobs to be lost. That is why we need to secure an
    updated long-term Softwood Lumber Agreement.
        Will you commit to develop an agreement between the United States
    and Canada, with the active involvement of the Maine and U.S. forestry
    stakeholders, with an aim to bring about a new, long-term durable U.S.-
    Canada trade agreement on softwood lumber?
        Answer. The 2006 Softwood Lumber Agreement (SLA) is the most
    successful of several agreements reached over the past three decades to
    address U.S. concerns about Canadian softwood lumber imports. The
    recent extension until mid-October 2015 was made with the support of
    domestic lumber producers, and the SLA continues to provide
    predictability and stability in this very important sector in the U.S.
    economy.
        Over the years, Commerce has worked closely with several other
    agencies on the negotiation and administration of the SLA. The Office
    of the United States Trade Representative (USTR) leads an interagency
    team of experts from Commerce, State, Justice, and Customs and Border
    Protection (CBP) that devote significant time and resources to the
    enforcement and implementation of this agreement. Because Commerce's
    members of this team are very knowledgeable about provincial forest
    practices and subsidy programs that benefit Canadian lumber producers,
    their technical expertise is relied upon heavily as part of the
    interagency team in dealing with our Canadian counterparts, consulting
    stakeholders, and defending U.S. interests in arbitrations under the
    Agreement. We will continue to provide our support as USTR consults
    with Members of Congress and seeks input from all interested
    stakeholders for the evaluation of what is in the best interest of the
    United States.
        In the meantime, I assure you that Commerce will continue to press
    for and work to ensure the full enforcement and implementation of the
    current agreement.
                                     ______

                 Questions Submitted by Senator Lisa Murkowski
                            manufacturing initiative
        Question. The budget provides $141 million, a $13 million increase
    over the fiscal year 2014 enacted level, for the Hollings Manufacturing
    Extension Partnership (MEP), with an increased focus on expanding
    technology and supply chain capabilities to support technology adoption
    by smaller manufacturers to improve their competitiveness.
        The budget also provides $15 million for the Advanced Manufacturing
    Technology Consortia (AMTech), a public-private partnership that will
    support industry-led consortia developing technologies to address major
    manufacturing challenges faced by American businesses. The
    Administration has also launched four manufacturing institutes to date
    and is planning to launch at least four additional manufacturing
    institutes in 2014 utilizing existing Federal funding.
        Your overall manufacturing initiative will create winners and
    losers across the country. Twelve communities will be selected this
    year and they will have the full force of the administration behind
    them. You will use existing authority to fund the program activities.
    Alaska will not fare well. This is on the back of significant cuts over
    the last few years in the EDA budget.
        When small communities are doing good work and developing
    innovative ideas to move their economy forward, grant and low interest
    loan programs should support such initiative. So for Kotzebue, Alaska
    looking to lower the cost of food to outlying villages or Wrangell,
    Alaska completing a remarkable marine park for fishing and other boat
    fleets, I am at a loss for where to send them when looking to complete
    a financial package.
        Secretary, outside of these 12 communities this year, how will you
    provide support to rural, isolated communities doing good work and
    striving to create integrated economic development plans on a small
    scale?
        Answer. The Department of Commerce has not wavered in its
    commitment to rural America. In fiscal year 2013, as part of the
    Investing in Manufacturing Communities Partnership (IMCP) effort, EDA
    provided $1.8M (of approximately $4 million total) in assistance to 12
    rural communities (of 26 total communities) to develop implementation
    strategies, which will initiate public-private partnerships tailored to
    local expertise and assets, identifying targeted industries and
    specific public investments that will enhance the attractiveness of
    regions to private investment.
        EDA also provides ongoing planning support to rural communities as
    part of its Partnership Planning program. These grants facilitate the
    development and implementation of Comprehensive Economic Development
    Strategies (CEDS), which articulate and prioritize the strategic
    economic goals of recipients' respective regions. Partnership Planning
    grants are made to the designated planning organization (e.g., District
    Organization) serving EDA-designated Economic Development Districts
    (EDDs)--of which there are currently 383 across the country--to enable
    these organizations to develop and implement relevant CEDS. Almost all
    of these Districts include, and most are primarily comprised of, rural
    areas. In addition, EDA provides Partnership Planning grants to Indian
    Tribes to help develop and implement CEDS and associated economic
    development activities. The Planning program also helps support
    planning organizations, including District Organizations, Indian
    Tribes, and other eligible recipients, with focused short-term planning
    grants designed to guide the eventual creation and retention of higher-
    skill, higher-wage jobs, particularly for the unemployed and
    underemployed in the Nation's most economically distressed regions
    including many rural areas (EDA's Local Technical Assistance program
    supports these efforts as well).
        In addition, EDA-funded University Centers (approximately 60 across
    the country) provide business solutions and technical assistance to
    public- and private-sector organizations, and conduct other activities
    with the goal of enhancing regional economic development. University
    Center business solutions include basic and applied research, market
    research, feasibility studies, product development, strategic and
    financial planning, seminars and training, and management
    consultations. The University Centers are particularly attractive to
    rural communities and regions that often lack the capacity and
    resources to collect and analyze information and data on the economic
    conditions of their respective areas.
        EDA construction investments in rural America since fiscal year
    2009 are expected to save or create 37,000 jobs. EDA, in conjunction
    with other Federal agencies, devoted $9 million in total Federal funds
    for the Rural Jobs and Innovation Accelerator Initiative which invested
    in 13 best-in-class economic development projects in rural regions.
    Making sure more rural businesses of all types and sizes can compete in
    the global economy is an important step toward integrating trade into
    the DNA of our economy and creating opportunity for all Americans.
        Ensuring that more rural companies can capitalize on international
    opportunities to grow their business is key to advancing economic
    growth in rural areas and a strong rural economy is essential to our
    Nation's overall economic health. Through the International Trade
    Administration, we are working with the White House Rural Council, U.S.
    Department of Agriculture (USDA), other agencies, and partners to:

      --Host five regional forums to provide rural leaders and businesses
            with local connections and information about resources to help
            expand exports. (The Council will announce forum locations in
            the coming weeks.)
      --Provide enhanced export counseling for rural businesses from trade
            specialists in over 100 domestic locations, using the convening
            power of USDA field staff.
      --Train USDA Rural Development staff in all 50 States plus
            territories to expand the network of business counselors able
            to identify export-ready rural businesses and connect them with
            assistance.
      --Coordinate across the Administration to promote rural-produced
            goods and services at trade events.
      --Build understanding among local leaders across the country on the
            economic importance of exports in partnership with the National
            Association of Counties (NACo).
      --Use BusinessUSA to better connect rural businesses with government-
            wide export resources.
                               denali commission
        Question. Secretary Pritzker, in 2013 I asked the Government
    Accountability Office to take a top to bottom look at the Denali
    Commission. This work is expected to conclude in the early summer
    months. It wasn't that I think the Denali Commission is a waste of
    taxpayers funds or that it lacks a mission. The Denali Commission's
    mission is to upgrade the third world living conditions that threaten
    the health and welfare of our Native people in rural Alaska. I abhor
    the notion that people who are desperately in need of aid the newborn
    and the Elder so often have to pay the price for bureaucratic
    infighting. Too often programs are not improved as a result of
    scrutiny. They are simply canned. The reason that I asked GAO to look
    at the work of the Denali Commission was that the ongoing wars
    involving the Commissioners, the Federal Co-Chair and the Inspector
    General fundamentally distracted the Denali Commission from its mission
    and I'm looking for strong reforms.
        My question goes to supervision of the Denali Commission. I think
    the adult supervision of the Commerce Department is very much in need.
    It's not at all evident that the work of the Federal Co-Chair has been
    evaluated, even though that person reports to you. You recently
    reappointed the Federal Co-Chair. I have to tell you that I no longer
    have confidence in that individual and made that known to your staff
    and the White House prior to the reappointment. Assistance from the
    Commerce Department's Office of the General Counsel is lacking. And I
    would submit that the Denali Commission would benefit from the depth
    and breadth of the Commerce Department's Inspector General as an
    improvement over the recently departed ``one man band'' Inspector
    General who spent most, if not all, of his working time (if one can
    call it that) in Arizona rather than Alaska. I am looking for your
    reaction to these ideas.
        I would like to play a role and an active one in the reform of the
    Denali Commission. And I would like a partner in the Commerce
    Department that I can work with.
        Would you designate someone who will work with me to see this
    project through?
        Answer. The Department and the Administration are fully committed
    to improving the livelihood of Alaskans by encouraging long-term public
    and private investments in key sectors, establishing a business
    environment that will help to create high-quality jobs and promoting
    long-term economic development in economically distressed areas of the
    State. For example, the Economic Development Administration (EDA) has
    invested over $3 million with the Alaska Works Partnership to help
    develop the Pipeline Training Center, which is training the next
    generation of pipeline workers in Alaska. EDA has also invested $1.9
    million to expand the Cold Climate Housing Research Center , which is making strides in finding more efficient and
    environmentally friendly means to deal with Alaska's harsh winters.
        EDA maintains the delegated responsibility for reviewing the Denali
    Commission's Annual Work Plan, and in conjunction with the Department
    have provided invaluable programmatic guidance and support to the
    Commission. In certain discrete areas the Department has a statutory
    relationship with the Commission, however, the Department generally
    defers to the Commission as an independent entity in its day-to-day
    decisionmaking, operations and policy-making; including its choice of
    selecting an Inspector General. It remains important for the Department
    to maintain that clear, distinct separation.
        Specifically addressing the Inspector General issue, the Department
    is pleased to inform you that the Denali Commission has entered into a
    memorandum of understanding (MOU) with the Department of Commerce's
    Office of Inspector General (OIG). Pursuant to this agreement, the OIG
    will provide comprehensive, independent audit and oversight services to
    the Commission on a reimbursable basis and will effectively serve as
    the interim Inspector General for the Denali Commission pending a
    permanent selection by the Commission.
        EDA is available as an advisory resource to the Commission and
    communicates with the Commission's Federal Co-Chair and Counsel on a
    regular basis.
                             electronic monitoring
        Question. NOAA acknowledges in its fiscal year 2015 budget request:
    ``The goal is to deliver cost-effective and sustainable electronic data
    collection solutions that enhance monitoring of catch and by catch in
    all U.S. fisheries.'' In general, I am seeing that NOAA supports these
    goals at the Headquarters level, but efforts to make progress on the
    water in Alaska are hampered at the Regional level. The problem appears
    to be Science Center staff who seem more dedicated to designing long
    term research programs than making progress toward practical solutions.
    I am concerned that Science Center staff in the Alaska region are not
    working effectively with fishermen to move forward with the cooperative
    research program required in the fiscal year 2014 Omnibus
    Appropriations bill.
        The goal here is to validate the functionality of cameras,
    facilitate the collection of data, and improve the logistics of
    deploying electronic monitoring equipment on small fishing boats in
    Alaska. When I met with you last year you expressed an understanding of
    the importance of this issue in Alaska, and the potential for it to
    benefit fisheries around the Nation.
        Secretary Pritzker, can you commit to working with me to ensure
    that NOAA is dedicating the resources necessary to make progress toward
    the deployment of viable electronic monitoring technologies on these
    boats in 2014?
        Answer. Yes, NOAA Fisheries is committed to advancing the
    capability to use electronic monitoring (EM) technology in Alaska
    fisheries in situations where EM can provide the data needed to manage
    and conserve these fisheries. We have used EM (video) to monitor
    compliance with retention and fish handling requirements on catcher/
    processors for many years. We have participated in and funded several
    past EM research projects. We are committing funding toward EM research
    in fiscal year 2014 and plan to continue to do so in the future. We are
    actively working with industry representatives and the Pacific States
    Marine Fisheries Commission (Pacific States) to develop and implement a
    cooperative EM research plan to test and compare different EM
    technologies with observers, to work out logistical issues, and to
    estimate implementation costs.

        We are conducting this cooperative research on four tracks. These
    are:

      --Track 1.--deployment of 5 to 10 current EM units from Saltwater,
            Inc., and Archipelago Marine Research Ltd. to evaluate the
            respective system performance, logistics and costs of
            deployment;
      --Track 2.--deployment of 3 to 5 current EM units with observers to
            allow analytic comparisons of data quality and data quality
            trade-offs;
      --Track 3.--deployment of 5 to 10 new stereo camera systems with
            observers to allow similar analysis as in #2; and
      --Track 4.--testing of current electronic logbooks in the fleet and
            further refinement to integrate them with vessel sensor data.

        Working in collaboration with industry and Pacific States, we are
    developing study plans for each track of research and deploying EM onto
    boats in 2014. The fishing industry and Pacific States are taking the
    lead on Track 1, and NOAA Fisheries, Pacific States, and industry are
    taking the lead on Tracks 2 through 4. Work on Track 1 is already
    underway with cameras deployed on several boats in the fishery. Tracks
    2 and 3 will be underway by early summer and it will include components
    of Track 4. We look forward to evaluating the results of this work.
        This collaboration between NOAA Fisheries and industry has been ad
    hoc to date; however, in April 2014 the North Pacific Fishery
    Management Council (Council) took action to appoint membership to an EM
    sub-committee dedicated to EM testing and development. This committee
    will bring in additional industry representation ensuring balanced
    participation across the industry. The Council's EM committee is
    scheduled to meet on May 15 and 16 in Anchorage to review progress on
    cooperative research and mapping the processes forward toward
    integration of EM as a tool in Alaskan fisheries management. Several of
    the Council appointed committee members were already participating in
    our ad hoc collaboration.
        NOAA Fisheries has recently sent a letter to the participants in
    the small boat hook and line fleet soliciting their interest in
    participating in cooperative research with us on EM, and we noted that
    selected volunteers will be provided a release from observer coverage
    for the duration of the research. This provides an incentive for
    participation. Several industry members have already installed EM
    equipment and requested retroactive releases from coverage. We have not
    granted these releases because we need a coordinated effort and a
    process that ensures that all in industry are afforded the opportunity
    to participate. We asked for responses from industry for EM
    participation by May 30 and received 17 requests to participate in
    cooperative research. For any of these vessels that are selected to
    participate in the research, NOAA expects to implement EM releases
    based on criteria we develop with our newly formed EM committee.
        NOAA Fisheries is now in the second year of implementing the
    restructured Alaskan observer program, which expanded observer coverage
    to the Pacific halibut fishery, and to vessels between 40 and 60 feet
    in length in the groundfish and halibut fisheries. In implementing the
    program, we provided a mechanism to release vessels from coverage in
    cases where there was insufficient life raft or bunk capacity. This
    avoids displacing fishermen in order to accommodate an observer. The
    Council supported this initial approach to the newly observed fleet,
    and NOAA Fisheries has implemented a consistent release process, with
    verification of industry requests via follow up phone calls and site
    visits. The addition of EM will expand that release process in the near
    term in order to enable EM testing to inform subsequent Council
    decisionmaking on the use of this technology in catch estimation.
        We also are working on cooperative research with a group of trawl
    catcher/processors (``the Amendment 80 sector'') to solve a specific
    halibut bycatch problem. This research will examine the use of video to
    allow halibut to be sorted and counted on the deck of the vessel in
    order to maximize survival of the fish during handling, and to allow
    accurate accounting of the bycatch before it is returned to the sea.
    This industry sector is highly motivated to test and adopt the
    technology we have developed as it has potential to solve a significant
    bycatch issue. This research is currently underway.
                                 marine debris
        Question. The 2011 devastating earthquake and tsunami that struck
    Japan resulted in a large amount of marine debris which in 2012 began
    to reach Alaska, California, Hawaii, Oregon, and Washington. In 2013,
    Alaska experienced significant debris impacts in multiple coastal
    areas, and the volume of Japan-origin debris is predicted to increase
    in 2014. The Commerce Department's fiscal year 2015 Budget Request is
    for $6,000,000, the same as enacted for fiscal year 2014. The fiscal
    year 2014 funding represented a $1 million increase over fiscal year
    2013, and this increase is expected to be used for Japan-origin debris
    activities. I am, however, concerned that this level of funding is
    insufficient to address the volume of debris still hitting Alaskan
    shores, as well as the other Pacific States. I am further concerned
    that your agency does not fully appreciate the magnitude of this
    problem, including the fact that much of the Alaskan coast is Federal
    lands which means clean-up of this marine debris is a Federal
    responsibility.
        Secretary Pritzker, are you willing to work with me to ensure that
    funds in NOAA's Marine Debris Program are allocated on a priority basis
    for grants to support clean-up marine debris clean-up and disposal
    activities in the five affected Pacific States, with priority given to
    clean-up activities on Federal land?
        Answer. I am always happy to work with you, Senator Murkowski. As
    you are aware, the Government of Japan provided $5 million to NOAA's
    Marine Debris Program to support marine debris response efforts, such
    as removal of debris, disposal fees, cleanup supplies, detection and
    monitoring. Of this amount, we provided an initial sum of $250,000 to
    each of the affected States (Alaska, Washington, Oregon, California and
    Hawaii) and the State of Alaska has requested and received an
    additional $750,000. The funding was also used to remove a large dock
    in Olympic National Park. NOAA is holding the balance of roughly $2.5
    million in reserve to distribute as new needs arise. NOAA's agreement
    process for these funds requires NOAA to approve the States' proposed
    work plans for any funding, as well as perform necessary environmental
    compliance reviews.
                             hydrographic charting
        Question. Modern, accurate geospatial information is critical to
    navigation, public safety, infrastructure planning, and resource
    management. This is particularly important in Northwest Alaska where
    increased maritime traffic in the Bering Straits region and in the
    Arctic underscore the need for current hydrographic information. In
    some areas the state-of-the-art mapping information is the result of
    lead-line survey work conducted before the United States purchased
    Alaska from Russia. There is an urgent need for updated charts, yet
    NOAA has indicated that it has an 85 year backlog for hydrographic
    surveys in Alaska.
        Secretary Pritzker, your agency plays a critical role in supporting
    hydrographic charting, including in the Arctic and Bering Straits
    Region. Can you commit to dedicating the necessary resources to conduct
    hydrographic surveys and prepare navigational charts adequate to
    address the increasing maritime traffic in these regions?
        Answer. NOAA must balance the requirements of a particular area
    with requirements of all other areas within available resources. NOAA
    has developed 5-year hydrographic survey plan to identify about 40,000
    square nautical miles of critical area and address the most critical
    survey needs in Alaska. In recent years NOAA has surveyed approximately
    500 square nautical miles annually in Arctic waters. NOAA is also
    planning to build 12 new charts for the Arctic over the next 10-15
    years.
        NOAA plans to resume full Arctic operations in 2015 under the
    President's budget request.
                           national data buoy system
        Question. I am strongly concerned with problems associated with
    NOAA's maintenance of data buoys off the coast of Alaska. These data
    buoys provide important information to mariners, including commercial
    and recreational fishermen. The longstanding outages are resulting in
    critical gaps in weather and sea condition information and contributing
    to less safe operations at sea.
        Secretary Pritzker, will you please provide documentation on how
    NOAA intends to address the maintenance backlog for the National Data
    Buoy System, including specific information on current outages in
    Alaska? I would appreciate information on NOAA's plan to schedule and
    effect repairs to restore existing data buoy operability, as well as
    the strategy to minimize outages in the future.
        Answer. The Department of Commerce and the National Oceanic and
    Atmospheric Administration (NOAA) share your concern with long outages
    for data buoys off the coast of Alaska and around the rest of the
    United States.
        NOAA is conducting maintenance, with ship support from the U.S.
    Coast Guard, for much of the National Data Buoy System from now through
    the end of September 2014. Plans are in place to restore nearly half of
    the current 27 buoy outages, including 4 of the 9 Alaska buoy outages
    that had been backlogged since 2013. Maintenance for the buoys in the
    Bering Sea and Western Aleutians is scheduled for July 2014 to restore
    long outages in that region. Schedules for maintenance for most of the
    remaining outages are being developed between the National Data Buoy
    Center and the NOAA-leveraged U.S. Coast Guard ship resources.
        NOAA will continue aggressive maintenance of the National Data Buoy
    System to improve buoy operability to 73 percent by the end of fiscal
    year 2014.
                             seafood certification
        Question. I am concerned that third party vendors are requiring
    adherence to criteria and labeling of seafood that has not been
    thoroughly vetted and approved through a public process. One of the
    more troubling aspects of this process is the failure of executive
    branch agencies to consult with NOAA on the issue of whether U.S.
    fisheries are being managed sustainably. Specifically, I am referring
    to Seafood Sustainability Guidelines developed by the Department of
    Health and Human Services, General Services Administration, and
    National Park Service that were applied to all Federal agency vendor
    and concession operations. These Guidelines were developed and
    implemented without any consultation no meetings, not even a call with
    anyone at NOAA to ask for their expertise on this issue.
        Secretary Pritzker, can you please articulate the policies and
    procedures have been put in place at NOAA to ensure that this will not
    happen again?
        Answer. Since the National Park Service published its vendor
    guidelines in June 2013 and we were made aware of the General Services
    Administration/Health and Human Service's guidelines published in 2011,
    NOAA Fisheries has worked directly with the entities involved (National
    Park Service, General Services Administration, the Department of Health
    and Human Services, the Food and Drug Administration, and the Centers
    for Disease Control) to introduce their program staffs to NOAA
    Fisheries, its stewardship mission, the reputation of U.S. fisheries as
    a global model of success in sustainable fisheries, and to offer our
    expertise to guide them in any further discussions regarding
    sustainable fisheries and seafood. Based on these interactions, the
    General Services Administration revised and republished its guidelines
    in September 2013 (see below for relevant provision), to take into
    account U.S. managed fisheries as sustainable and to refer to
    FishWatch.gov.
        ``Where seafood options are offered, provide those procured from
    responsibly managed, sustainable, healthy fisheries.44*
        44* The NOAA FishWatch Program defines sustainable seafood as
    ``catching or farming seafood responsibly, with consideration for the
    long-term health of the environment and the livelihoods of the people
    that depend upon the environment.'' Verifying the health and
    sustainability of U.S. and international fisheries is not always
    simple. Domestic fisheries are managed by State and Federal agencies
    under legally established fisheries management plans. International
    fisheries are managed under sovereign laws and international treaties.
    Guidance on how to make sustainable seafood choices is found on the
    NOAA FishWatch site at www.fishwatch.gov/buying_seafood/
    choosing_sustainable.htm.
        The General Services Administration's guidelines are available on
    the General Services Administration's Web site at: http://www.gsa.gov/
    portal/mediaId/170091/
    fileName/Guidelines_for_Federal_Concessions_and_Vending_Operations and
    at the Centers for Disease Control Web site at: http://www.cdc.gov/
    chronicdisease/pdf/
    guidelines_for_Federal_concessions_and_vending_operations.pdf.
        With regard to longer-term procedures and policies to ensure other
    Federal agencies coordinate with NOAA Fisheries on matters of
    sustainable fisheries and seafood, the agency is coordinating with
    stakeholders to help keep apprised of various activities as well as
    proactively introducing itself to inform them of U.S. standards for
    sustainable fisheries and offer its science expertise. It may be
    helpful to note that the issues of sustainability are an ever-
    increasing matter of global interest in the market place and as such,
    the issue of sustainable seafood emerging as a topic of interest in
    other Federal agencies whose missions and expertise do not include
    sustainable fisheries is new. As NOAA Fisheries becomes aware of such
    activities, the agency directly engages one-on-one to formally
    introduce its mission and offer its expertise to advise and guide any
    sustainable seafood matter under consideration by another agency. We
    anticipate these engagements will translate into better awareness of
    NOAA Fisheries as the Federal authority on such matters.
        The most recent examples of these Federal engagements have been
    with the Department of Health and Human Services and its Federal
    advisory committee--Dietary Guidelines for Americans Committee. The
    Dietary Guidelines for Americans Committee is preparing to revise
    nutritional guidelines by 2017 and has decided to include the
    sustainability of seafood within its guidelines. NOAA Fisheries is now
    in formal discussions with the Department of Health and Human Services
    and the support staff assigned to the Dietary Guidelines for Americans
    Committee. In similar fashion, NOAA has recently reached out to the
    Department of Defense, Defense Logistics Agency, which is also
    exploring the matter of sustainable seafood as part of its food
    services mission for Defense personnel.
        Question. Also, can you please explain what steps NOAA is taking
    through FishWatch and any other program to acknowledge the successes of
    sustainable fisheries management in the U.S.?
        Answer. Beginning in 2010, NOAA Fisheries has enhanced its
    strategic communications efforts to build public familiarity and
    recognition of U.S. Federal fisheries as a global model of success in
    responsible fisheries management, and support our fishing and seafood
    industries. Key among the agency's communications assets for delivering
    this message is FishWatch. Over the last 3 years, the agency has
    expanded its proactive, strategic communications to the broader
    spectrum of the seafood supply chain, including one-on-one meetings
    with distributors, retailers, food service and culinary industries, and
    expanding participation in professional meetings, trade forums and
    various national and international initiatives addressing sustainable
    seafood in the market place (e.g. Global Sustainable Seafood
    Initiative, and The Sustainability Consortium). Based on these
    engagements and growing relationships, NOAA Fisheries has received
    extensive input on FishWatch and suggestions for improving FishWatch as
    a useful tool to industry and consumers. In response, NOAA Fisheries
    has drafted a next generation investment strategy for FishWatch
    including mobile access for the broader seafood consuming public, and
    potential capacity to serve as a public interface to acknowledge
    partnerships with the agency, possibly including U.S. fishermen and
    seafood harvested under a U.S. fisheries management plan, a
    recommendation made by NOAA Fisheries' Marine Fisheries Advisory
    Committee (MAFAC), a Federal Advisory Committee Act-compliant body that
    advises the Secretary of Commerce on all living marine resource matters
    that are the responsibility of the Department of Commerce.
        In addition, based on increased interest from the fishing industry,
    in October 2012, the agency asked MAFAC to examine whether NOAA
    Fisheries could or even should have a role in eco-labeling of U.S.
    federally managed seafood. Although MAFAC did not come to any
    consensus, in December 2013, it submitted recommendations which are
    available for public review and comment through the end of May 2014.
    The agency anticipates comments received by the public and seafood
    industries will be helpful for any next steps the agency may take. A
    summary of these recommendations follows:

      --MAFAC recommends that NOAA Fisheries improve awareness of the
            Magnuson-Stevens FisheryConservation and Management Act (MSA)
            and other laws and regulations governing U.S. fisheries and
            domestic aquaculture, particularly in the domestic business-to-
            business environment.
      --MAFAC commends the educational efforts undertaken by NOAA Fisheries
            thus far on FishWatch.gov and encourages more work in this
            direction.
      --MAFAC recommends that NOAA Fisheries utilize the standards and
            requirements of the MSA as the reference points to create a
            business-to-business based approach, recognizing the
            sustainability of wild harvest seafood products from U.S.
            Exclusive Economic Zone (EEZ) fisheries in compliance with the
            MSA.
      --MAFAC recommends adoption of traceability measures, implemented by
            buyers to enable subsequent purchasers to track sustainable
            fishery products in the marketplace.

        Full MAFAC recommendations available at: http://www.nmfs.noaa.gov/
    op/
    Sustainability/Sustainable_Seafood_Certification.html.
                           fisheries finance program
        Question. The President's fiscal year 2015 budget request includes
    proposed language to authorize $100,000,000 for fiscal year 2015 in
    direct loan authority for NOAA's Fisheries Finance Program (FFP)
    Account as authorized by the Merchant Marine Act. FFP loans have a
    negative subsidy rate and no appropriated funds are required. I have
    supporting the proposed language which I believe will increase
    opportunities for vessel owners to build and refinance new vessels and
    make major modifications to existing vessels to improve fishing vessel
    safety. These loans will help the fleet modernize and provide
    significant economic benefits to shipyards and support industries.
        Secretary Pritzker, will you please provide a written update on the
    status of new regulations to support this enhanced authority within the
    Fisheries Finance Program?
        Answer. An Advance Notice of Proposed Rulemaking (ANPR) is
    currently being developed to seek industry input on the potential form
    of a new vessel and vessel reconstruction loan authority. The ANPR will
    help the Department publish regulations that facilitate fleet
    modernization while supporting ongoing efforts to maintain sustainable
    fisheries. Once industry input has been received, the Department will
    publish draft regulations addressing vessel replacement, project cost,
    risk, and other matters related to effective program management. It is
    anticipated that the rulemaking process will be completed by December
    2015.
                                     ______

                 Questions Submitted by Senator Lindsey Graham
                        trans-pacific partnership (tpp)
        Question. I'd like to first acknowledge the Administration's
    commitment to the Yarn Forward Rule of Origin for textiles and apparel
    in the Trans-Pacific Partnership (TPP). As you know this rule is of
    critical importance to the U.S. textile industry and has created
    invaluable supply chains globally but in the Western Hemisphere in
    particularly. Western Hemisphere textile and apparel trade is worth $25
    billion in value and 2 million manufacturing jobs.
        With that in mind, I'd like to ask you about the Trans-Pacific
    Partnership and the status of the Market Access negotiations for the
    most sensitive textile products manufactured here in the U.S. What
    assurances can you give the committee that the Government is seeking
    the longest market access phase outs as possible in the TPP?
        Answer. The U.S. textile negotiating team has worked in close
    consultation with U.S. industry and other stakeholders to develop a
    responsible approach to tariff elimination that ensures our textile
    industry will not be competitively disadvantaged. The Department of
    Commerce's Deputy Assistant Secretary for Textiles, Consumer Goods, and
    Materials has been intimately involved in each round of these
    negotiations, working with the Assistant U.S.Trade Representative for
    Textiles to ensure that the concerns of our domestic industry
    stakeholders are addressed. In the market access talks, the Department
    has proposed a new, unique concept that provides the longest tariff
    phase-outs on the most sensitive textile and apparel products.
        Question. And how are negotiators counterbalancing this position in
    light of Vietnam's insistence on immediate access?
        Answer. The initial duty reduction provides an incentive for
    importers and retailers to source goods in TPP countries to take
    advantage of the agreement while the long phase-outs for full duty-free
    benefits on sensitive products provide domestic stakeholders and
    existing free trade agreement (FTA) and trade preference partners time
    to adjust. In addition, there are additional market access schedules
    for less sensitive textiles and apparel that provide immediate duty-
    free treatment.
                                     steel
        Question. The United States is currently facing a steel import
    crisis, with dumped and subsidized steel imports from a number of
    countries and across various product lines flooding our market. These
    imports are causing injury to our steel industry and its workers.
        In response, the domestic industry has brought new trade cases in
    the past year against unfairly traded imports of rebar and oil country
    tubular goods (``OCTG''). Both of these industries desperately need
    relief. Despite the initiation of these cases, I understand that
    imports continue to flood the market, causing additional injury to the
    domestic industry. For example, U.S. imports of rebar from Turkey have
    continued to rise this year, with the U.S. market becoming the single
    largest destination for Turkish rebar.
        Despite rising imports and the desperate need for relief, the
    Department has made preliminary determinations in both cases that cause
    concern from the domestic industry.
        Can you assure the subcommittee that the Commerce Department will
    vigorously apply and enforce the U.S. trade remedy laws, including with
    respect to the above-noted cases?
        Answer. The Department is fully committed to enforcing our trade
    remedy laws so that American industries and workers have the
    opportunity to compete on a level playing field with their foreign
    competitors. The enforcement of the antidumping duty (AD) and
    countervailing duty (CVD) trade remedy laws is one of the Department's
    top priorities. The Department has received numerous steel-related
    petitions in the past months and it is currently conducting 39
    investigations involving steel products from a number of countries.
    This represents roughly 75 percent of the Department's ongoing
    investigations, and it has devoted significant resources to these cases
    to ensure that unfair trade practices are identified and remedied at
    the border. With respect to the ongoing cases on steel products,
    including those on oil country tubular goods and rebar, the
    Department's Enforcement and Compliance Unit, whose primary mission is
    conducting these trade cases, is focused on these matters and is
    diligently scrutinizing the information on the record of these
    proceedings in order to identify the extent of any unfair dumping or
    subsidization.
        Question. What is the Department doing, and what additional
    resources does the Department need, to address this import crisis on a
    comprehensive and systematic basis?
        Answer. The Department is currently conducting 39 steel-related AD
    and CVD investigations covering such products as grain-oriented
    electrical steel from China, the Czech Republic, Germany, Japan, South
    Korea, Poland, and Russia; non-oriented electrical steel from China,
    Germany, Japan, South Korea, Sweden, and Taiwan, and oil country
    tubular goods from India, South Korea, the Philippines, Saudi Arabia,
    Taiwan, Thailand, Turkey, Ukraine, and Vietnam. Numerous analysts,
    accountants, and legal advisors are assigned to these cases to identify
    the extent of any dumping or unfair subsidization that may be
    occurring. The Department of Commerce team is also working closely with
    colleagues at Customs and Border Protection in an effort to ensure that
    the Department's antidumping and countervailing duty orders are
    implemented properly and that importers are paying all amounts owed.
        In addition to its AD and CVD measures, the Department works
    closely with the Office of the United States Trade Representative in
    bilateral, trilateral and multilateral forums, such as the Organization
    for Economic Cooperation and Development (OECD) Steel Committee, to
    raise concerns with our trading partners about government-funded steel
    capacity and other government policies that cause distortions in the
    steel market both globally and domestically.
        With respect to resources, the Department supports the request of
    the President as reflected in his budget proposal. The vigorous
    enforcement of U.S. trade remedy laws is a top priority and the
    Department will continue to conduct all antidumping and countervailing
    duty investigations in a thorough and transparent manner, in accordance
    with U.S. law and our international obligations.
                                     ______

                  Questions Submitted by Senator John Boozman
                       international trade administration
        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 one 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, U.S. trade with Africa
    has increased by a multiple of only three. That is why I have joined
    with Senators Durbin 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. Two years ago 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. The Administration agrees that there is a need for a
    cohesive and comprehensive approach that the U.S. Government should be
    taking towards developing and increasing our commercial relationship in
    Africa. As noted, 2 years ago President Obama rolled out the Doing
    Business in Africa campaign (DBIA) to encourage U.S. companies to trade
    with and do business in Africa and to take advantage of the tremendous
    opportunities the region has to offer. The Department of Commerce has
    coordinated the efforts of U.S. Government agencies to work through one
    common DBIA strategic plan to:

      --increase trade promotion focused on the region;
      --expand trade financing and risk management programs available to
            American companies; and
      --increase targeted communication activities to engage key
            stakeholders and promote Africa as a strategic trade and
            investment market.

        Consistent with this strategic plan, the Commerce Department wants
    to ensure that American businesses, especially small businesses, are
    equipped with the tools they need to do business in Africa and thereby
    create jobs at home. Several key activities that Commerce is doing this
    year to support the DBIA strategy and U.S. companies include:

      --Leading trade mission: The Department led 20 American companies on
            an Energy Business Development trade mission to West Africa,
            which visited Ghana and Nigeria from May 18-23 of this year.
            This mission promoted U.S. exports and expanded U.S. companies'
            presence in Africa by helping American firms launch or increase
            their business in the energy sector.
      --Doubling staffing presence in sub-Saharan Africa: The Department
            will hire an additional 6 new Foreign Service Officers, 19
            locally engaged staff, and 2 headquarters positions that
            directly work in or on sub-Saharan Africa issues. This
            expansion will add additional staff to existing operations in
            Kenya and Ghana and will open four new posts among Africa's
            fastest growing economies--Angola, Mozambique, Ethiopia and
            Tanzania. These four markets offer considerable opportunities
            to American companies in sectors where we have a proven
            successful track record.
      --Hosting an Africa Business Forum: As part of the upcoming U.S.-
            Africa Leaders' Summit, which will be held August 5-6, 2014, in
            Washington, DC, the Commerce Department will lead a Business
            Forum. The event will bring together hundreds of U.S. and
            African CEOs, as well as African leaders, to explore practical
            ways to increase trade and investment between our respective
            markets. In connection with this Forum, Commerce is also
            exploring ways to encourage African leaders to travel to
            various parts of the United States and engage with local
            business communities both directly before and immediately after
            the Summit. Whether it is through commercial activities such as
            trade missions, promotional outreach activities, or trade
            policy encouraging African nations to strengthen democratic and
            transparent institutions and improve their investment climate,
            Commerce continues to actively support the United States'
            increasing commercial engagement with the African continent.
                                     ______

                   Questions Submitted to Hon. Todd J. Zinser
                Questions Submitted by Senator Richard C. Shelby
                         polar satellite gap mitigation
        Question. Mr. Zinser, your office and the GAO agree that there is
    still a significant risk for a gap in critical satellite data before
    the JPSS-1 satellite becomes fully operational. This data is essential
    for the protection of life and property across our country.
        In your opinion, does the Department's fiscal year 2015 budget
    proposal do enough to address the potential gap in polar satellite
    data?
        Answer. NOAA's options to reduce the likelihood of a gap are
    limited. The JPSS program determined that it could not accelerate JPSS-
    1's launch date without excessive risk. The fiscal year 2015 budget
    continues activities to protect against a JPSS-1 launch delay. However,
    the budget does not specify activities intended to mitigate the
    consequences of a polar satellite data gap (i.e., forecast
    degradation), but some work in this regard was initiated with funds
    received under the Disaster Relief Appropriations Act, 2013.
        Question. Should the Department prioritize filling, or at least
    mitigating, the gap in polar satellite data over other satellite
    projects or activities that are included in the fiscal year 2015
    request?
        Answer. The extent to which the Department should prioritize
    filling or mitigating a potential gap depends, in part, on how
    successfully it can provide congressional stakeholders with a cost and
    benefit rationale of performing that activity compared with performing
    other satellite projects or activities identified in the fiscal year
    2015 budget.
                            program robustness--jpss
        Question. In addition to the potential gap in satellite data, I
    have serious concerns for the robustness of the JPSS program. The
    NESDIS Independent Review Team emphasized the danger of being just one
    failure away from catastrophe--meaning if JPSS-1 fails there is no
    backup to take its place.
        Is the Department taking sufficient steps currently, and within its
    fiscal year 2015 proposal, to ensure JPSS is a robust program that
    includes backup options in case JPSS-1 were to fail?
        Answer. The Department has begun to take steps towards creating a
    robust JPSS program. It began planning additional missions for a
    longer-term JPSS program in response to the independent review team's
    November 2013 report. NOAA's response included initiating a number of
    trade studies to identify longer-term gap filler and mitigation
    options, as well as conducting a gap filler mission concept review at
    the end of March 2014. Also in March, NOAA indicated its intent to
    procure copies of the JPSS instrument suite for JPSS-3 and JPSS-4
    missions, as well as additional spares of Advanced Technology Microwave
    Sounder (ATMS) and Cross-track Infrared Sounder (CrIS), potentially for
    a gap filler mission. The fiscal year 2015 proposal indicates that the
    requested increase in JPSS funds would support additional instrument
    procurements. While these are positive steps, NOAA needs to complete an
    acquisition strategy and other program plans (e.g., cost, schedule, and
    performance baselines) to ensure that it can meet the independent
    review team's criteria for a robust program.
                              working capital fund
        Question. The Department's funding request for Working Capital Fund
    (WCF) continues to increase year-after-year. In its fiscal year 2015
    request, the Department proposes a $25.5 million increase over fiscal
    year 2014 enacted. While requests for WCF continue to rise, along with
    the assessments made on Commerce bureaus, transparency of billing rates
    and services provided has decreased. Transparency and accountability is
    particularly lacking in WCF services provided by the Commerce Office of
    General Counsel.
        Mr. Zinser what is the latest status of your investigation into the
    operation and lack of transparency in the Department's Working Capital
    Fund?
        Answer. We have completed our audit of the Department's WCF and, on
    May 15, 2014, we issued our final report, Office of the Secretary's
    Working Capital Fund Billing Control Issues Resulted in Incorrect
    Charges.
        Question. In your opinion, does the Department take any steps to
    improve transparency and accountability within the operation and
    billing activities of the WCF?
        Answer. We believe that, once the Department implements our final
    report recommendations, it will have taken important steps toward
    improving WCF transparency and accountability.
        The audit found that the Office of the Secretary Financial
    Management directorate (OSFM) and WCF service providers did not comply
    with billing requirements established in the Department's fiscal year
    2013 WCF handbook. The noncompliance occurred because OSFM relied on
    incorrect bases of charge, inaccurate supporting documentation, and/or
    incorrect billing information for 10 of the 34 projects reviewed. As a
    result, customers were either over- or undercharged for services
    provided in fiscal year 2013, compared with the amount that should have
    been billed. (Please see Appendix C attachment at the end of my
    responses to Senator Shelby's questions for a list of fiscal year 2013
    overcharges and undercharges by WCF project that we identified in our
    audit.) The Office of General Counsel (OGC) is the service provider for
    4 of the 10 projects that did not comply with the requirements of the
    WCF handbook.
        To improve the Office of the Secretary's oversight of the WCF, we
    recommended that it:

      --update processes for calculating the correct bases of charge, and
            obtain the most current documentation from the service
            providers;
      --require a validation and certification process for WCF service
            providers to capture and retain supporting documentation that
            accurately reflects the level of services provided to
            customers; and
      --make a determination on whether fiscal year 2013 charges should be
            reviewed and recalculated accordingly, and whether adjustments
            should be considered in calculating charges for fiscal year
            2014.
                                  2020 census
        Question. I continue to be concerned about the Department's ramp-up
    to the 2020 Census. This effort will cause increased budget pressures
    on the Department for the next several fiscal years. It is imperative
    that the Census Bureau carry out activities leading up to the 2020
    Census efficiently and with future budget constraints in mind.
        Mr. Zinser, does the Department take the necessary steps in its
    fiscal year 2015 proposal to ensure proper controls are in place to
    keep costs down and schedule on time leading up to the 2020 Census?
        Answer. My office actively monitors the Census Bureau's development
    of the 2020 Census and makes recommendations in areas where internal
    control weaknesses are identified. Specifically, we have addressed (a)
    the Bureau's research and testing (R&T) progress, in a report issued on
    December 3, 2013, and (b) concerns with the Bureau's formulation of
    budget estimates, in a report that we will issue as final in May 2014.
        Our December 2013 report 2020 Census Planning: Research Delays and
    Program Management Challenges Threaten Design Innovation examined the
    adequacy of the R&T program's governance and internal controls to
    manage the design effort. This audit determined that the current
    schedule suffered from research delays and lacked adequate budget
    integration. The Census Bureau concurred with our findings and
    recommendations and developed the following corrective actions (see
    Table 1) that, if implemented, should ensure that proper controls are
    in place to manage costs and the 2020 Census R&T schedule:

              TABLE 1. SUMMARY OF CENSUS BUREAU CORRECTIVE ACTIONS
    ------------------------------------------------------------------------
                                                  Summary of Corresponding
    Selected December 2013 OIG Recommendations    Census Bureau Corrective
                to the R&T Program                         Actions
    ------------------------------------------------------------------------
    Determine when 2020 Census design           Complete a fully integrated
     decisions must be made, adhere to an        schedule, with established
     activity schedule that aligns with those    critical paths (including
     decision points, and develop a critical     end of fiscal year 2015
     path for the 2020 Census R&T schedule.      deadline for design
                                                 decisions) for meeting the
                                                 goals of the 2020 Census
                                                 R&T program.\a\
    ------------------------------------------------------------------------
    Define and adhere to a final testing        Analyze the testing schedule
     schedule, and determine how iterative       to ensure that the American
     testing and the American Community Survey   Community Survey is
     can be used for the operational testing     leveraged to the greatest
     phase.                                      extent possible.
    ------------------------------------------------------------------------
    Incorporate earned value management and     Develop earned value
     budgets at the project level to             management guidelines,
     prioritize projects, as well as assess      including a resource-based
     and quantify 2020 Census research program   schedule at the project
     results.                                    level.\b\
    ------------------------------------------------------------------------
    Source: OIG
    \a\ A resource-based schedule pilot project for 2020 decennial R&T will
      occur in the summer of 2014.
    \b\ The Census Bureau's full implementation of the EVM process will
      occur in fiscal year 2015.

        Our upcoming May 2014 audit report will identify significant
    internal control weaknesses in the Census Bureau's budget formulation
    and execution process, as well as the method used to record project
    salary costs. Specifically, the 2020 Census R&T program--and likely
    other Census Bureau programs--charge salary costs to projects based on
    budget estimates, instead of actual hours worked on a project. In
    addition, the R&T program was unable to provide support for fiscal
    years 2013 and 2014 budget requests. Finally, the practice of
    transferring budget between projects circumvents spending controls,
    thereby increasing the risk that incorrect or even fraudulent charges
    could be recorded without detection.
        Due to these internal control weaknesses, we were unable to assess
    the impact of recent budget reductions on the 2020 Census R&T program--
    and its goal of reducing the 2020 Census per-household cost--because
    the amount of resources expended cannot be used to analyze whether
    projects are yielding desired results and should continue to be funded.
        Question. In your opinion, what activities should the Committee pay
    most attention to during this process to best ensure its success?
        Answer. In addition to monitoring the Census Bureau's research and
    testing schedule early in the decade--and the implementation schedule
    as 2020 nears--the Committee should monitor the advantages,
    limitations, and risks of:

      --the use of administrative records for decennial census activities;
      --a targeted address canvassing operation (as opposed to canvassing
            every block in the United States) that ensures a quality list;
            and
      --implementing an Internet response option.

        The Census Bureau successfully incorporating these decennial design
    changes could save the Government billions of dollars.
        Finally, conducting regularly scheduled congressional hearings
    provides an ideal forum for the Census Bureau to provide updates and
    respond to oversight concerns.

     ATTACHMENT: APPENDIX C, ``DETAILED OVERCHARGES AND (UNDERCHARGES) BY WCF PROJECTS IN FISCAL YEAR 2013,\1\'' OF OIG FINAL REPORT NUMBER OIG-14-020-A, OFFICE OF THE SECRETARY'S WORKING CAPITAL
                                                             FUND BILLING CONTROL ISSUES RESULTED IN INCORRECT CHARGES, ISSUED MAY 13, 2014
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
          Service Providers             Office of Human Resource            Office of         Office of         Office of                   Office of General Counsel
    ------------------------------             Management                   Financial          Security      Administrative  ------------------------------------------------------
                                  ------------------------------------     Management     -----------------      Service                                                                  Total
                                                                      --------------------  Investigation  ------------------                                                        Overcharges or
             WCF Projects          Office of Policy   Human Resource        Business             and                           Legislation and     Finance and     Administration    (Undercharges)
                                     and Programs       Management         Application       Intelligence      Electronic        Regulations       Litigation
                                                          System            Solutions          Programs      Travel Systems
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Customers:
      OS.........................             (390)           (1,490)             81,231            18,632            2,058             2,298           156,563          (166,712)           92,190
      ITA........................              877            (4,972)              1,801               227              165             1,186           (68,079)          (90,723)         (159,518)
      EDA........................              378            (1,325)                 79                 0              739            (1,441)           11,608            19,105            29,143
      NTIA.......................              958            (2,083)              2,254               227            1,584           (11,448)         (288,937)            2,947          (294,498)
      NTIS.......................              296              (757)                  0                 0              (13)            1,771           109,511            10,150           120,958
      CEN........................            8,819           (90,891)             40,796               227           (3,977)            3,075           326,940           249,345           534,334
      ESA........................              143            (3,598)                110                 0             (117)            7,513            (1,631)           (2,358)               62
      NOAA.......................           (2,542)          129,341             (35,016)              227           (6,649)            3,077          (694,208)         (147,819)         (753,589)
      NIST.......................           (7,087)          (20,198)            (12,741)              227            4,423           (12,146)          (94,772)          140,004            (2,290)
      MBDA.......................             (102)             (505)                224               227              523             2,806           137,334            (5,991)          134,516
      BIS........................               82            (2,544)             (1,687)              227            1,319             6,268             5,039           (53,109)          (44,405)
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Source: Calculated by OIG based on documentation provided by OSFM and the service providers.
    \1\ OGC's Legal Information Retrieval and OFM's Oklahoma Enterprise Application Systems were not included in this table because we did not have fiscal year 2013 data to determine the over- or
      undercharges.

                              SUBCOMMITTEE RECESS

        Senator Mikulski. This subcommittee will now stand in
    recess to May 1st at 10 a.m., when we take the testimony of the
    NASA Administrator, Charles Bolden.
        I also wish to announce that there will be a full committee
    hearing on two things in which we hope to create jobs, one of
    which on April 29th we will be holding a full committee
    hearing, all hands on deck, on innovation, particularly in
    terms of life science and others, where we'll listen to
    everyone from NIH to DARPA to the Department of Energy.
        Also, later on in the spring--the date will be announced
    shortly--we will be having a full committee hearing on physical
    infrastructure, how we have to look across the committees on
    our physical infrastructure needs, whether it's in
    transportation, water and sewer, and our ports.
        Senator Coons. And rail.
        Senator Mikulski. Excuse me?
        Senator Coons. And rail.
        Senator Mikulski. Yes. But that's transportation. But our
    ports themselves. There are big ships coming through the Panama
    Canal. Maryland is ready, but we looked ahead and got ourselves
    ready. But we need viable ports. We want those imports and
    exports, and Japan is one of our great trading partners with
    Toyotas and motorcycles.
        Anyway, we will be holding a full committee hearing on kind
    of an infrastructure appropriation so we know that every
    subcommittee is looking at our physical infrastructure using
    this year's appropriations, how we can have a horizontal view
    on what this means to creating jobs and yet getting value for
    our dollar, solving important problems in transportation, the
    environment through public works, getting our ports ready for
    the new ships in the new century.
        So these are the kinds of things we'll be doing, and
    therefore the committee, for now, stands in recess until the
    full committee hearing on April 29th, and this subcommittee,
    May 1st, for NASA.
        Secretary Pritzker. Thank you very much. Thank you,
    Senator.
        [Whereupon, at 11:25 a.m., Thursday, April 10, the
    subcommittee was recessed, to reconvene at 10 a.m. on Thursday,
    May 1.]