[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:
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    \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.
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    \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.
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    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.
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    \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.
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    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.
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    \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.
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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.
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    \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.
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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.
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    \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.
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    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.
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    \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.
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    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.
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    \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.
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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.
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    \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.
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  --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.
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    \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.
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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.
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    \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.
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    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.
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    \14\ DOC OIG, June 20, 2013. Monitoring of Department's Obligation 
Balances Needs Strengthening, OIG-13-026-A. Washington, DC: DOC OIG.
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    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.
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    \15\ DOC OIG, February 21, 2014. Manufacturing Extension 
Partnership Incurred Avoidable Conference Costs, OIG-14-013-A. 
Washington, DC: DOC OIG.
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    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.
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    \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).
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    \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.
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    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.
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    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.
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  --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.
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    \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.
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    \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.]