The Results Act: Observations on Commerce's June 1997 Draft Strategic
Plan (Correspondence, 07/14/97, GAO/GGD-97-152R).

Pursuant to a congressional request, GAO reviewed the draft strategic
plan submitted by the Department of Commerce as required by the
Government Performance and Results Act.

GAO noted that: (1) Commerce's draft strategic plan is incomplete in
several important respects; (2) of the six elements required by the Act,
four are included in the draft plan--a mission statement, goals and
objectives, strategies to achieving goals and objectives, and a
discussion of key external factors--but each of these has weaknesses,
some more significant than others; (3) two of the elements--the
relationship between long-term goals and objectives and annual
performance goals and the description of program evaluations used to
establish general goals and objectives and a schedule for future program
evaluations--are missing from the draft plan; (4) the draft plan
provides much useful information on Commerce's statutory authorities;
(5) however, the draft plan could be more useful to Commerce, Congress,
and other stakeholders if it provided a more explicit discussion of
crosscutting activities and the major management challenges the
Department faces; (6) also, with respect to Commerce's ability to
provide reliable program performance information, there is evidence that
Commerce's capacity to measure achievement of its goals is questionable
in several respects; (7) the draft plan does not explicitly discuss
information required by the Act on the other two required elements; (8)
for one of these--relating long-term goals and objectives to annual
performance goals--the draft plan says only that this type of
information will be provided in annual budget requests because, in the
Department's view, annual budget requests are the more appropriate
vehicle for such a discussion; (9) for the other element--concerning a
discussion of the past and future role of program evaluations--the draft
plan makes limited references in various sections to a few studies, but
those references do not respond to the Act's requirements; (10) the
draft plan appears to reflect Commerce's consideration of its major
statutory responsibilities and provides a separate section under each
strategic theme that spells out the statutory support for the goals
articulated and helps stakeholders understand the complexity and
diversity of Commerce's activities; (11) the draft plan also does not
adequately account for the major management challenges the Department
faces, such as the need to implement a sound financial management system
to ensure that programs are managed efficiently and effectively to
achieve the goals identified in the draft plan; and (12) the Department
reported that its financial systems are seriously outdated and
fragmented and are unable to provide reliable information.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-97-152R
     TITLE:  The Results Act: Observations on Commerce's June 1997 Draft 
             Strategic Plan
      DATE:  07/14/97
   SUBJECT:  Agency missions
             Program evaluation
             Intergovernmental relations
             Strategic planning
             Interagency relations
             Financial management systems
             Internal controls
             Economic development
             Management information systems
             Congressional/executive relations
IDENTIFIER:  NIST Capital Improvements Facilities Program
             NOAA Fleet Modernization Plan
             2000 Decennial Census
             NWS Modernization Program
             
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Cover
================================================================ COVER



September 1997


GAO/GGD-97-152R

Commerce's Draft Strategic Plan

(410159)


Abbreviations
=============================================================== ABBREV

  EDA - Economic Development Administration
  GSA - General Services Administration
  ITA - International Trade Administration
  NIST - National Institute of Standards and Technology
  NOAA - National Oceanic and Atmospheric Administration
  NTIA - National Telecommunications and Information Administration
  NWS - National Weather Service
  OMB - Office of Management and Budget
  SBA - Small Business Administration
  TPCC - Trade Promotion Coordinating Committee

Letter
=============================================================== LETTER


B-277427

July 14, 1997

The Honorable Richard K.  Armey
Majority Leader
House of Representatives

The Honorable John Kasich
Chairman, Committee on the Budget
House of Representatives

The Honorable Dan Burton
Chairman, Committee on Government
 Reform and Oversight
House of Representatives

The Honorable Bob Livingston
Chairman, Committee on Appropriations
House of Representatives

Subject:  The Results Act:  Observations on Commerce's June 1997
Draft Strategic Plan

On June 12, 1997, you asked us to review the draft strategic plans
submitted by the cabinet departments and selected major agencies for
consultation with Congress as required by the Government Performance
and Results Act of 1993 (the Results Act).  This letter is our
response to that request concerning the Department of Commerce. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :1

Our overall objective was to review and evaluate the latest available
version of Commerce's draft strategic plan.  As you requested, we (1)
assessed the draft plan's compliance with the Act's six requirements
and its overall quality, (2) determined if the Department's key
statutory authorities were reflected, (3) identified whether
discussions about crosscutting functions and coordination with other
agencies having similar functions were included, (4) determined if
the draft plan addressed major management challenges, and (5)
provided a preliminary assessment of the Department's capacity to
provide reliable information about performance. 

We obtained the June 1997 draft strategic plan that Commerce provided
to the House of Representatives staff team working with the agency. 
As agreed, our review of the Department's draft plan was generally
based on previous work.  In recent years, congressional requests for
work at Commerce have generally been limited to examinations of
discrete issues relating to the Department's components and
functions, such as preparations for the decennial census and the
National Weather Service's modernization effort. 

Our overall assessment of Commerce's draft strategic plan was
generally based on our knowledge of Commerce's operations and
programs, our reviews of the Department's entities, and other
existing information available at the time of our assessment. 
Specifically, the criteria we used to determine whether Commerce's
draft strategic plan complied with the requirements of the Results
Act were the Act itself, supplemented by the Office of Management and
Budget's (OMB) guidance on developing the plans (Circular No.  A-11,
Part 2).  To make judgments about the overall quality of the draft
plan and its elements, we used our May 1997 guidance for
congressional review of the plans as a tool.\1

To determine whether the draft plan contained information on
interagency coordination and addressed major management challenges,
we relied on our general knowledge of Commerce's operations and
programs and the results of our previous reports. 

A list of our major products related to Commerce's operations is
attached to this letter.  As you requested, we coordinated our work
on the Department's key statutory authorities and its capacity to
provide reliable information with the Congressional Research Service
and Commerce's Inspector General's (IG) office, respectively. 
Commerce officials provided comments on a draft of this
correspondence, which are reflected in the Agency Comments section on
page 15. 


--------------------
\1 Agencies' Strategic Plans Under GPRA:  Key Questions to Facilitate
Congressional Review (GAO/GGD-10.1.16, May 1997). 


   BACKGROUND
------------------------------------------------------------ Letter :2

The Results Act seeks to shift the focus of federal management and
decisionmaking away from a preoccupation with staffing, activity
levels, and tasks completed to a focus on results--that is, the real
difference that federal programs make in people's lives.  Under the
Results Act, executive agencies are required to develop (1) strategic
plans by September 30, 1997; (2) annual performance plans for fiscal
year 1999 and beyond; and (3) annual performance reports beginning
March 31, 2000.  The Act states that agencies' strategic plans should
cover a period of at least 5 years and that these plans should
include, among other requirements, a set of strategic goals.  The
Results Act does not require that all of an agency's strategic goals
be explicitly results oriented, although the intent of the Act is to
have agencies' focus their strategic goals on results to the extent
feasible. 

Commerce's missions and functions are among the most diverse of the
cabinet departments in the federal government.  They include
responsibilities for management and stewardship of national
resources, advancement of commerce, economic development, scientific
research and technology, and statistical information collection and
dissemination.  Because of the diversity of its functions, Commerce
historically has not been managed on the basis of a unifying mission
and shared goals.  Further, this diversity of functions raises a
number of challenges for the Department in its development of a
comprehensive strategic plan that adequately addresses all of its
responsibilities. 

Commerce chose a thematic approach to present its draft strategic
plan.  Specifically, Commerce identified three themes that are linked
to its mission statement, which, according to the draft plan,
collectively "encompass the full breadth of the Department of
Commerce's mission." Under each theme, there are sections on (1)
goals and objectives; (2) partnership activities; (3) the economic
contributions of the programs under each goal; (4) the programs'
legislative bases; (5) the programs' international aspects; and (6)
current trends, opportunities, challenges, and issues influencing the
programs.  Dispersed throughout each of these six sections is a
discussion on the responsibilities of the relevant Commerce
component's programs. 

Commerce's strategic plan is currently in its fourth draft.  The
Results Act anticipated that it may take several planning cycles to
perfect the process and that strategic plans would be continually
refined as various planning cycles occur.  Thus, our comments reflect
a snapshot status of the draft plan at a given point in time.  We
recognize that developing a strategic plan is a dynamic process and
that Commerce officials, with input from OMB and congressional staff,
are continuing work to revise the draft. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :3

Commerce's draft strategic plan is incomplete in several important
respects.  Of the six elements required by the Act, four are included
in the draft plan--a mission statement, goals and objectives,
strategies to achieving goals and objectives, and a discussion of key
external factors--but each of these has weaknesses, some more
significant than others.  Two of the elements--the relationship
between long-term goals and objectives and annual performance goals
and the description of program evaluations used to establish general
goals and objectives and a schedule for future program
evaluations--are missing from the draft plan.  The draft plan
provides much useful information on Commerce's statutory authorities. 
However, the draft plan could be more useful to Commerce, Congress,
and other stakeholders if it provided a more explicit discussion of
crosscutting activities and the major management challenges the
Department faces.  Also, with respect to Commerce's ability to
provide reliable program performance information, there is evidence
that Commerce's capacity to measure achievement of its goals is
questionable in several respects. 

The four required elements that are included in the draft plan
contained some, but not all, of the attributes that would be
desirable to meet the purposes of the Act and be consistent with OMB
Circular A-11, Part 2.  Specifically: 

  -- The mission statement includes the core functions of the
     Department and mentions the role of businesses and universities
     as partners in the mission.  However, the mission statement does
     not address the important role also played by other government
     entities. 

  -- While there are useful linkages among themes, goals, objectives,
     and responsible components, the goals and objectives are not as
     results oriented as they could be.  For example, the goal to
     "restructure export controls for the twenty-first century" could
     be made more results oriented by identifying the purpose of the
     restructuring (for example, to increase export flexibility or,
     alternatively, better protect national security). 

  -- The strategies to achieving the goals and objectives do not meet
     the purposes of the Results Act and are not consistent with OMB
     guidance in that, for example, the strategies do not discuss the
     resources needed to achieve the goals identified. 

  -- Many key external factors are discussed in the draft plan, but
     they appear to be used to justify programs rather than to show
     how these factors may affect the achievement of Commerce's
     goals.  In addition, some key external factors that could affect
     the achievement of Commerce's goals are not identified. 

The draft plan does not explicitly discuss information required by
the Act on the other two required elements.  For one of
these--relating long-term goals and objectives to annual performance
goals--the draft plan says only that this type of information will be
provided in annual budget requests because, in the Department's view,
annual budget requests are the more appropriate vehicle for such a
discussion.  For the other element--concerning a discussion of the
past and future role of program evaluations--the draft plan makes
limited references in various sections to a few studies, but those
references do not respond to the Act's requirements.  In particular,
the draft plan does not describe how the studies were used to
establish general goals and objectives, nor does the draft provide a
schedule for future program evaluations.  Under the Results Act, an
evaluation strategy is considered to be a critical source of
information for ensuring the validity and reasonableness of strategic
goals, as well as for designing improvement strategies when goals are
not met. 

The draft plan appears to reflect Commerce's consideration of its
major statutory responsibilities and provides a separate section
under each strategic theme that spells out the statutory support for
the goals articulated and helps stakeholders understand the
complexity and diversity of Commerce's activities.  To Commerce's
credit, few, if any, of the other draft strategic plans we have seen
provided this much detail about the agency's statutory
responsibilities. 

Commerce shares responsibility for certain core national issues, such
as natural resources and environment or community and regional
development, with a number of other federal departments and agencies. 
Despite the potential for program duplication or overlap generated by
such shared responsibilities, the draft plan does not address how
these crosscutting activities correspond to or intersect with those
of other agencies or whether such shared responsibilities were
coordinated in the development of the draft plan. 

The draft plan also does not adequately account for the major
management challenges the Department faces, such as the need to
implement a sound financial management system to ensure that programs
are managed efficiently and effectively to achieve the goals
identified in the draft plan.  The Department reported that its
financial systems are seriously outdated and fragmented and are
unable to provide reliable information.  The Department's financial
management weaknesses undermine its ability to generate needed
information about program performance and costs. 


   COMMERCE'S DRAFT STRATEGIC PLAN
   DOES NOT FULLY ACHIEVE THE
   PURPOSES OF THE RESULTS ACT,
   AND THE QUALITY OF INDIVIDUAL
   ELEMENTS COULD BE IMPROVED
------------------------------------------------------------ Letter :4

Of the six elements required by the Results Act, four are included in
Commerce's draft strategic plan--a mission statement, goals and
objectives, strategies to achieving goals and objectives, and key
external factors--but each of these could be improved.  The other two
required elements of a strategic plan--the relationship between
long-term goals and objectives and annual performance goals and the
description of program evaluations used to establish general goals
and objectives and a schedule for future program evaluations--are
missing from the draft plan. 


      MISSION STATEMENT
---------------------------------------------------------- Letter :4.1

The Results Act and OMB Circular A-11, Part 2, state that an agency's
strategic plan is to contain a comprehensive mission statement
defining the basic purpose of the agency, with particular focus on
its core programs and activities.  In addition, the Circular states
that the mission statement may include a concise discussion of
enabling or authorizing legislation, as well as identification of
issues that Congress specifically charged the agency to address. 
Commerce's mission statement, along with its three strategic themes,
includes the core functions of the Department, as follows: 

"The Department of Commerce promotes job creation, economic growth,
sustainable development, and improved living standards for all
Americans, by working in partnership with business, universities,
communities, and workers to: 

1.Build for the future and promote U.S.  competitiveness in the
global marketplace, by strengthening and safeguarding the nation's
economic infrastructure;

2.Keep America competitive with cutting-edge science and technology
and an unrivaled information base; and, 3.Provide effective
management and stewardship of our nation's resources and assets to
ensure sustainable economic opportunities."

In its mission statement, Commerce recognizes the role played by
"business, universities, communities, and workers." The statement
seems incomplete in this regard since other federal agencies and
state and local governments also play major roles.  For example,
Commerce shares responsibility for major budget functions with 14
other departments and agencies.\2


--------------------
\2 Budget Issues:  Fiscal Year 1996 Agency Spending by Budget
Function (GAO/AIMD-97-95, May 13, 1997). 


      GOALS AND OBJECTIVES
---------------------------------------------------------- Letter :4.2

According to the Results Act, the strategic plan is to contain
general goals and objectives for the major functions and operations
of the agency.  The goals and objectives are to elaborate or provide
greater specificity on how an agency will carry out its mission
through its programs and activities.  Commerce's draft plan provides
linkages among themes, goals, objectives, and responsible Commerce
components.  That is, for each of its strategic themes, the Commerce
draft plan lists general goals and objectives for specific program
efforts within Commerce agencies.  For example, under its first
strategic theme, economic infrastructure, Commerce has identified as
a goal "enforce U.S.  trade laws and agreements to promote free and
fair trade." The objective associated with that goal is "expand trade
law enforcement and compliance monitoring." Commerce's International
Trade Administration (ITA), which has responsibility for promoting
world trade and strengthening the international trade and investment
position of the United States, is the Commerce component identified
as having responsibility for the objective. 

While Commerce's draft strategic plan includes a number of goals that
are results oriented, other goals are not as results oriented as they
could be.  For example, one of the goals in the draft plan is to
"implement the President's National Export Strategy in conjunction
with the Trade Promotion Coordinating Committee." Commerce could make
that goal more results oriented by explicitly stating the outcome
that is intended to be achieved through the implementation of the
President's export strategy.  In another example, Commerce has a goal
to set policies for managing the federal use of the radio spectrum. 
Such efforts may be critically important but do not directly relate
to the result that is to be achieved.  In a third example, the goal
to "restructure export controls for the twenty-first century" could
be made more results oriented by identifying the purpose of the
restructuring (for example, to increase export flexibility or,
alternatively, better protect national security). 


      STRATEGIES FOR ACHIEVING
      GOALS AND OBJECTIVES
---------------------------------------------------------- Letter :4.3

Under the Act, strategic plans are to briefly describe the
operational processes, staff skills, and technologies, as well as the
human, capital, information, and other resources, that are needed to
achieve the goals and objectives.  According to OMB Circular No. 
A-11, Part 2, such strategies should also outline how the agency will
communicate strategic goals throughout the organization and hold
managers and staff accountable for achieving these goals. 

As one of its strengths, the Commerce draft plan links each of the
objectives of the general goals with a specific Commerce component
and the activities to be performed.  For example, the draft plan
links the National Oceanic and Atmospheric Administration's (NOAA)
objective, "examine the role of the ocean as a reservoir of both heat
and carbon dioxide to address a major source of uncertainty in
climate models," to the goal "predict and assess decadal to
centennial change." Also, the goal to "strengthen the intellectual
property rights system and disseminate intellectual information
effectively" is linked to an objective for the Patent and Trademark
Office to "promote awareness of and provide effective access to
patent and trademark information."

However, the draft plan does not identify how the strategic goals are
to be communicated throughout the organization and how managers and
staff will be held accountable for achieving the goals.  Further,
critical information on the skills, technologies, and other resources
required to meet goals and objectives is not generally included. 
Such a discussion is important because, in an era of fiscal
constraint, an agency's planning processes should support an agency
in making intelligent resource allocation decisions that minimize, to
the extent possible, the effect of funding reductions on mission
accomplishment. 


      KEY EXTERNAL FACTORS
---------------------------------------------------------- Letter :4.4

Strategic plans are to identify and discuss key factors external to
the agency and beyond its control that could occur during the period
covered by the strategic plan and could significantly affect the
agency's achievement of its strategic goals.  Without this
assessment, it would be difficult to judge the likelihood of the
agency achieving the strategic goals and actions needed to better
meet those goals.  According to OMB Circular No.  A-11, Part 2, the
agency should briefly (1) describe each key external factor, (2)
indicate its link with a particular strategic goal or goals, and (3)
describe how the factor could affect achievement of the goals. 

The Commerce draft plan identifies external factors and in some
cases--although not consistently--indicates the linkages between the
factors and particular strategic goals.  Moreover, the discussions of
external factors often appear to be focused on justifying the need
for the programs rather than on identifying factors that may impede
the Department's ability to achieve its strategic goals.  For
example, in discussing its goal to sustain healthy coasts and clean
coastal waters for recreation and the production of seafood, Commerce
recognized the threat posed by increasing populations living on
coastlines:  "by 2010, coastal populations will increase 65 % from 80
million in 1960 to 132 million.  .  .  .  Without NOAA's information
and management capabilities, careless or uninformed development
decisions will lead to .  .  .  losses of habitats for commercial and
recreational species, .  .  .  and degraded coastal water quality."
This seems to offer a justification for current NOAA programs rather
than providing insights into how the growth in coastal populations
will affect NOAA's ability to achieve Commerce's goal. 

Also, in describing its goal to monitor and assess international
research and development and the barriers faced by U.S.  industrial
sectors, Commerce's draft plan discusses the "increasing recognition
of the important role technology plays in generating economic growth. 
.  .  .  Internationally, other nations are implementing science and
technology policies to develop cutting-edge domestic industries and
attract the engines of economic expansion to their shores." The draft
plan discusses how technology policy has changed from a tool for
management of research budgets to an important complement to economic
and trade policy, but it does not discuss how other nations'
technology efforts may affect Commerce's economic development goals. 

Finally, some major external factors that appear to threaten
Commerce's ability to achieve its goals are not discussed.  For
example, regarding the goal to improve national and local census
data, the draft plan does not mention congressional concerns about
the Census Bureau's plan for conducting Census 2000. 


      RELATIONSHIP BETWEEN
      LONG-TERM GOALS AND
      OBJECTIVES AND ANNUAL
      PERFORMANCE GOALS
---------------------------------------------------------- Letter :4.5

An agency's strategic plan is to describe how the performance goals
included in the agency's annual performance plans are related to the
goals and objectives in its strategic plan.  Such a discussion is
important to show that the agency is striving to link long-term
strategic goals to annual performance plans and the day-to-day
activities within the agency.  However, Commerce's draft plan does
not include the required discussion of the relationship between
long-term goals and the annual performance goals.  Instead, Commerce
believes that "annual budget requests, which can be more responsive
to annual priorities and performance measures/targets, are the proper
vehicle for that information to be displayed and analyzed."


      PROGRAM EVALUATIONS
---------------------------------------------------------- Letter :4.6

Commerce's draft plan does not discuss how program evaluations were
used to establish general goals and objectives, nor does the draft
provide a schedule for future program evaluations.  Program
evaluations are defined in the Results Act as objective and formal
assessment of the results, impact, or effects of a program or policy. 
Program evaluations are to include assessments of the implementation
and results of programs, operating policies, and practices. 
According to OMB Circular No.  A-11, Part 2, the plan's program
evaluation section should briefly describe program evaluations that
were used in preparing the strategic plan and outline (1) the general
scope and methodology for the planned evaluations, (2) key issues to
be addressed, and (3) a schedule for future evaluations.  While
Commerce's draft plan includes limited references to a few studies
that have been done on specific Commerce programs, a fuller
discussion would be needed to meet the purposes of the Act in this
area. 

Program evaluations are particularly important for a department like
Commerce that shares functions with many other departments and
agencies.  One of the purposes of the Results Act is to enable
Congress to direct resources to the programs and agencies that use
them to the best effect.  We reported in 1996 on a study of the
effectiveness of the Department of Commerce's Economic Development
Administration (EDA) programs.  The study found that income in the
counties that received EDA funding grew significantly faster than
income in the counties that received no aid.\3 However, when the
researchers simultaneously considered EDA's programs and factors
unrelated to EDA, they found that EDA's programs had a very small
effect on income growth rates during the period that the aid was
received and had no significant effects in the 3 years after the aid
ceased. 


--------------------
\3 Economic Development:  Limited Information Exists on the Impact of
Assistance Provided by Three Agencies (GAO/RCED-96-103, Apr.  3,
1996). 


   KEY STATUTORY AUTHORITIES ARE
   GENERALLY REFLECTED IN
   COMMERCE'S DRAFT STRATEGIC PLAN
------------------------------------------------------------ Letter :5

The Commerce draft plan generally reflects the Department's primary
statutory responsibilities.  Considering the panoply of programs,
authorities, and components that fall under the aegis of the
Department of Commerce, we recognize the challenge presented by the
need to craft a comprehensive mission statement that captures all of
the Department's significant responsibilities and presents them in a
coherent, integrated fashion.  Although the Results Act does not
require a statement of the Department's major statutory
responsibilities, the draft plan denotes a separate section under
each strategic theme to spell out statutory support for the goals
articulated.  This information helps stakeholders understand the
complexity and diversity of Commerce's activities.  To Commerce's
credit, few, if any, of the other draft strategic plans we have seen
provide this much detail. 


   CROSSCUTTING ACTIVITIES ARE NOT
   FULLY DISCUSSED
------------------------------------------------------------ Letter :6

Commerce's shared responsibilities include, for example,

  -- natural resources and environment with the Departments of
     Agriculture, Defense, the Interior, State, and Transportation;
     the Environmental Protection Agency; and 3 independent agencies;

  -- commerce and housing credit with the Departments of Agriculture,
     Housing and Urban Development, and Treasury; the General
     Services Administration (GSA), the Small Business Administration
     (SBA), the Library of Congress, and 10 independent agencies;

  -- community and regional development with the Departments of
     Agriculture, Housing and Urban Development, the Interior, and
     Treasury; GSA; SBA; and 6 independent agencies; and

  -- education, training, employment, and social services with the
     Departments of Education, Health and Human Services, the
     Interior, and Labor; National Aeronautics and Space
     Administration; the Library of Congress; and 20 independent
     agencies. 

Commerce's draft strategic plan could do a better job of addressing
crosscutting program activities.  The draft plan describes, in very
general terms, some of the existing "partnerships" and "synergy"
between Commerce agencies and various public and private entities. 
However, the draft plan does not (1) adequately identify crosscutting
activities in key areas, (2) fully disclose Commerce's coordination
with the other federal departments and agencies that share
responsibility for these areas, or (3) address Commerce's progress in
minimizing duplication or overlap in these areas generated by such
shared responsibilities.  More specifically, despite the potential
for program duplication or overlap, the draft plan does not discuss
how crosscutting program efforts correspond to or intersect with
Commerce's established strategic themes, goals, and objectives.  For
example: 

  -- In the technology area, Commerce's draft plan acknowledges some
     potential overlap in radio spectrum and international
     telecommunications activities but not in the access to and use
     of advanced telecommunications.  Specifically, the National
     Telecommunications and Information Administration (NTIA) is
     responsible for, among other things, managing federal government
     use of radio spectrum; and the Federal Communications Commission
     is responsible for managing spectrum use by others.  However,
     the draft plan does not discuss the crosscutting nature of
     NTIA's efforts to promote the use of advanced
     telecommunications, which is similar to the responsibilities of
     several other agencies.  For example, NTIA operates a grant
     program to promote the use of advanced telecommunications in the
     public and nonprofit sectors, and a number of other federal
     agencies support telecommunications projects for similar
     constituencies.  These agencies include the Departments of
     Agriculture, Education, and Health and Human Services, as well
     as the National Science Foundation.\4

  -- Commerce has a lead role in promoting U.S.  exports.  Several
     other federal agencies, including the Departments of Agriculture
     and Energy, the Trade Development Agency, and the U.S. 
     Export-Import Bank, also have programs directed at promoting
     U.S.  exports.  The draft plan states that the export promotion
     efforts of these agencies are coordinated under the auspices of
     the Trade Promotion Coordinating Committee (TPCC), an
     interagency mechanism chaired by the Secretary of Commerce. 
     However, the draft plan does not include a substantive
     discussion of how the International Trade Administration's (ITA)
     role in export promotion differs from the roles of these other
     agencies.  The draft plan also does not discuss efforts on the
     part of these agencies to coordinate joint activities, such as
     trade missions and trade fairs.  Further, the draft plan does
     not address how Commerce will further TPCC's efforts to develop
     a unified budget that supports a governmentwide export promotion
     strategy.\5 As we have testified in the past, one obvious
     measure of the success of the unified budget process would be
     the extent to which the unified budget changes the distribution
     of resources to the various priorities, programs, and
     agencies.\6

  -- The Commerce draft plan also does not acknowledge the export
     licensing consultative responsibilities of other federal
     agencies.  In addition, the draft plan does not indicate how
     Commerce's emphasis on restructuring export controls to promote
     economic growth complements or contrasts with the strong
     emphasis of two other organizations responsible for licensing
     exports overseas on safeguarding against proliferation of
     dual-use technology.\7


--------------------
\4 See, for example, Rural Development:  Steps Towards Realizing the
Potential of Telecommunications Technologies (GAO/RCED-96-155, June
14, 1996). 

\5 The 1992 Export Enhancement Act required that TPCC establish a
governmentwide strategy for promoting U.S.  exports and a unified
budget that supports the strategic plan. 

\6 See Export Promotion:  Initial Assessment of Governmentwide
Strategic Plan (GAO/T-GGD-93-48, Sept.  29, 1993).  See also Export
Promotion:  Governmentwide Plan Contributes to Improvements
(GAO/T-GGD-94-35, Oct.  26, 1993); and Export Promotion Strategic
Plan:  Will It Be a Vehicle for Change?  (GAO/T-GGD-93-43, July 26,
1993). 

\7 These two organizations are the State Department's Office of
Defense Trade Controls and the U.S.  Nuclear Regulatory Commission. 


   COMMERCE'S DRAFT STRATEGIC PLAN
   DOES NOT ADEQUATELY ADDRESS
   MAJOR MANAGEMENT CHALLENGES
------------------------------------------------------------ Letter :7

Although the draft plan contains a section on current trends,
opportunities, challenges, and issues under each of the three
strategic themes, it does not adequately address major management
challenges facing the Department.  We and Commerce's IG have reported
in recent years that Commerce faces numerous serious management
challenges.  Commerce could improve its draft plan by including an
explicit discussion of such challenges.  Such a discussion would help
to assure Congress and other key stakeholders that Commerce has a
clear roadmap for addressing the serious management weaknesses that
can undermine its ability to achieve the Department's strategic
goals. 

We recently worked with the Commerce IG to provide the Senate
Committee on Science, Transportation and Commerce with a joint
analysis of the 10 major management challenges facing the Department. 
Of the 10 problem areas, Commerce's draft strategic plan only
mentions 4, but it does not discuss how the problems will be
addressed.  The following are among the management challenges that do
not receive sufficient attention in the draft plan. 

  -- The National Institute of Standards and Technology's (NIST)
     Capital Improvements Facilities Program to upgrade NIST's
     laboratories has escalated in cost from $540 million to at least
     $940 million and will take at least 4 years longer than
     originally projected. 

  -- Along with Congress, OMB, Commerce's IG, and others, we have
     repeatedly urged NOAA to explore alternatives to using an
     agency-designed, -owned, and -operated fleet for acquiring
     marine data.  The IG recommended that NOAA terminate its fleet
     modernization plan efforts.  However, NOAA continues to plan on
     investing millions of dollars in its aging in-house fleet,
     rather than using those funds for more cost-effective
     alternatives. 

  -- With the year 2000 fast approaching, the Census Bureau's ability
     to design and manage a satisfactory decennial census on time and
     at a reasonable cost is in question.  The Commerce Department
     has failed to convince Congress that it can equitably and
     efficiently manage its proposed census design.  Consequently,
     this year we added the census to GAO's governmentwide list of
     high-risk programs.\8

  -- We have issued numerous reports on problems with information
     technology modernization at the National Weather Service (NWS)
     and have included this area among our 25 high-risk areas in our
     February 1997 report.  We consider NWS modernization to be high
     risk because of its estimated $4.5 billion cost, its complexity,
     its criticality to NWS' mission of helping to protect life and
     property through early forecasting and warnings of potentially
     dangerous weather, and its past problems.\9

In addition to helping address risks associated with the NWS
modernization, the Paperwork Reduction Act of 1995 and the
Clinger-Cohen Act of 1996 direct agencies to implement a framework of
modern technology management based on practices followed by leading
private sector and public sector organizations that have successfully
used technology to dramatically improve performance and meet
strategic goals.  Yet, it is not clear from Commerce's draft plan how
it intends to implement these provisions and address any significant
information security weaknesses or the "year 2000 problem"--which
concerns the need for computer systems to be changed to accommodate
dates beyond 1999. 


--------------------
\8 High-Risk Series:  Quick Reference Guide (GAO/HR-97-2, February
1997). 

\9 High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, February 1997). 


   COMMERCE'S CAPACITY TO PROVIDE
   RELIABLE INFORMATION ON
   ACHIEVEMENT OF STRATEGIC AND
   PROGRAM PERFORMANCE IS
   QUESTIONABLE
------------------------------------------------------------ Letter :8

To efficiently and effectively operate, manage, and oversee its
diverse array of responsibilities, Commerce needs reliable data. 
Commerce relies on a number of automated management information
systems to carry out its various roles.  In its fiscal year 1996
Federal Managers' Financial Integrity Act Report, Commerce reported
that it is not in compliance with central agency requirements for a
single, integrated financial system.  In addition, Commerce reported
that its financial systems are considered a material weakness, as
these systems are seriously outdated and fragmented; unable to
provide timely, complete, and reliable financial information;
inadequately controlled; and costly and difficult to maintain. 

In the report on the audit of Commerce's fiscal year 1996
Consolidating Financial Statements, the IG identified 11 material
weaknesses in the internal control structures of the Department and
its bureaus.  Because of the material deficiencies in accounting
policies, practices, internal controls, data, and automated systems,
Commerce's IG was unable to determine whether the fiscal year 1996
financial statements fairly presented the Department's financial
position and the results of operations and changes in its net
position for fiscal year 1996. 

In addition, the IG reported that many portions of the overview of
Commerce's financial statement contained misleading or inaccurate
information.  Several weaknesses pertaining to performance measures
in the overview were noted, including:  (1) many performance measures
were not directly relevant to the components' activities, (2) the
performance measures did not consistently portray a clear picture of
the outcomes of activities, and (3) the performance measures often
did not include benchmarks to allow the reader to compare statistics
and evaluate the results that the components achieved.  The IG
further noted that the Department needs to take the necessary
corrective actions to ensure that its overview and financial
statements properly reflect its operations. 

To support the Results Act implementation and to ensure that the
Department is complying with federal cost-accounting system
standards, Commerce will need to relate costs to financial and
program performance data.  Key requirements of the Chief Financial
Officers Act are the development of cost information to enable the
systematic measurement of performance and the integrations of systems
(meaning program, accounting, and budget systems). 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

We provided a copy of a draft of this letter to the Secretary of
Commerce for review and comment.  On July 14, 1997, the Director for
Budget, Management and Information/Deputy Chief Information Officer
provided us with comments.  He agreed with our observations as
discussed below and said that he found our suggestions constructive. 

The Director said that he and his staff have seen a number of other
agencies' plans and did not consider them to be as extensive as
Commerce's.  However, he agreed that Commerce's draft plan does not
include the required discussion of the relationship between long-term
goals and the annual performance goals.  He said this relationship is
not discussed because Commerce looks to the annual performance plan
as the appropriate vehicle for stressing that relationship but
suggested that the point may warrant further discussion between
agencies, OMB, and Congress.  We believe that without this
relationship, Congress, the agency, and other stakeholders may not be
able to assess progress toward achieving long-term goals. 

The Director also agreed that Commerce's draft plan could do a better
job of addressing crosscutting program activities.  He said that to
date, most agencies have devoted priority efforts to getting their
internal strategic planning activities underway effectively, and are
only then able to begin reaching out to other agencies with
complementary programs or goals. 

Regarding our statement that the draft Commerce plan does not
adequately account for its major management challenges, he said that
earlier drafts of the Commerce plan had a specific chapter on
management issues.  Instead of retaining this chapter, Commerce chose
to discuss the importance of effective management in the conceptual
framework underlying its planning approach.  It is Commerce's view
that management initiatives should be undertaken in support of
program missions, rather than being viewed or conducted as
"standalone" activities but they will consider replacing that
chapter. 

We agree that management initiatives should be undertaken in support
of program missions, rather than being viewed or conducted as
"standalone" activities.  A fuller discussion than the draft plan
contains about the most pressing management issues confronting the
Department and how they will be addressed is critical to providing
Congress with assurance that Commerce is positioned to meet its
program missions, and we encourage Commerce to integrate that
perspective into its discussion, whether or not it uses a separate
chapter to do so. 

Finally, the Director agreed that Commerce did not fully address the
role of program evaluation activities in setting goals and objectives
and said they will add a greater discussion of that in their next
draft.  Similarly, he agreed that some of the goals and objectives
were not as results-oriented as they could be and said they will make
changes where appropriate. 


---------------------------------------------------------- Letter :9.1

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this letter
until 30 days from its issue date.  At that time, we will send copies
of this letter to the Minority Leader of the House of
Representatives; Ranking Minority Members of your Committees; the
Chairmen and Ranking Minority Members of other Committees that have
jurisdiction over Commerce activities; the Secretary of Commerce; and
the Director, Office of Management and Budget.  Copies will be made
available to others on request. 

Please contact me on (202) 512-8676 or J.  Christopher Mihm, Acting
Associate Director, Federal Management and Workforce Issues, on (202)
512-3236 if you or your staffs have any questions concerning this
letter. 

L.  Nye Stevens
Director, Federal Management and
 Workforce Issues


============================================================ Chapter 0


============================================================ Chapter 1


============================================================ Chapter 2


RELATED GAO PRODUCTS
============================================================ Chapter 3

High-Risk Program:  Information on Selected High-Risk Areas
(GAO/HR-97-30, May 16, 1997). 

Federal Management:  Addressing Management Problems at the Department
of Commerce (GAO/T-GGD/AIMD-97-115, May 14, 1997). 

Budget Issues:  Fiscal Year 1996 Agency Spending by Budget Function
(GAO/AIMD-97-95, May 13, 1997). 

Statistical Agencies:  Consolidation and Quality Issues
(GAO/T-GGD-97-78, Apr.  9, 1997). 

High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, February 1997). 

High-Risk Series:  Quick Reference Guide (GAO/HR-97-2, February
1997). 

Foreign Affairs:  Perspectives on Foreign Affairs Programs and
Structures (GAO/NSIAD-97-6, Nov.  8, 1996). 

Statistical Agencies:  Statutory Requirements Affecting Government
Policies and Programs (GAO/GGD-96-106, July 17, 1996). 

Managing For Results:  Key Steps and Challenges In Implementing GPRA
In Science Agencies (GAO/T-GGD/RCED-96-214, July 10, 1996). 

Federal Statistics:  Principal Statistical Agencies' Missions and
Funding (GAO/GGD-96-107, July 1, 1996). 

Addressing the Deficit:  Updating the Budgetary Implications of
Selected GAO Work (GAO/OCG-96-5, June 28, 1996). 

Rural Development:  Steps Towards Realizing the Potential of
Telecommunications Technologies (GAO/RCED-96-155, June 14, 1996). 

Weather Forecasting:  Recommendations to Address New Weather
Processing System Development Risks (GAO/AIMD-96-74, May 13, 1996). 

Economic Development:  Limited Information Exists on the Impact of
Assistance Provided by Three Agencies (GAO/RCED-96-103, Apr.  3,
1996). 

National Export Strategy (GAO/NSIAD-96-132R, Mar.  26, 1996). 

Government Statistics:  Proposal to Form a Federal Statistical
Service (GAO/T-GGD-96-93, Mar.  22, 1996). 

Weather Forecasting:  NWS Has Not Demonstrated That New Processing
System Will Improve Mission Effectiveness (GAO/AIMD-96-29, Feb.  29,
1996). 

Federal R&D Laboratories (GAO/RCED/NSIAD-96-78R, Feb.  29, 1996). 

Former Soviet Union:  Information on U.S.  Bilateral Program Funding
(GAO/NSIAD-96-37, Dec.  15, 1995). 

Community Development:  Comprehensive Approaches and Local
Flexibility Issues (GAO/T-RCED-96-53, Dec.  5, 1995). 

Decennial Census:  Fundamental Design Decisions Merit Congressional
Attention (GAO/T-GGD-96-37, Oct.  25, 1995). 

Commerce Dismantlement:  Observations on Proposed Implementation
Mechanism (GAO/T-GGD-95-233, Sept.  6, 1995). 

Community Development:  Challenges Face Comprehensive Approaches to
Address Needs of Distressed Neighborhoods (GAO/T-RCED-95-262, Aug. 
3, 1995). 

Economic Development Programs (GAO/RCED-95-251R, July 28, 1995). 

Government Reorganization:  Observations on the Department of
Commerce (GAO/T-GGD/RCED/AIMD-95-248, July 25, 1995). 

Government Reorganization:  Issues Relating to International Trade
Responsibilities (GAO/T-GGD-95-218, July 25, 1995). 

Government Restructuring:  Identifying Potential Duplication in
Federal Missions and Approaches (GAO/T-AIMD-95-161, June 7, 1995). 

Weather Forecasting:  Radar Availability Requirements Not Being Met
(GAO/AIMD-95-132, May 31, 1995). 

Export Promotion:  Rationales for and Against Government Programs and
Expenditures (GAO/T-GGD-95-169, May 23, 1995). 

Weather Forecasting:  Unmet Needs and Unknown Costs Warrant
Reassessment of Observing System Plans (GAO/AIMD-95-81, Apr.  21,
1995). 

Rural Development:  Patchwork of Federal Water and Sewer Programs Is
Difficult to Use (GAO/RCED-95-160BR, Apr.  13, 1995). 

Department Of Education:  Information on Consolidation Opportunities
and Student Aid (GAO/T-HEHS-95-130, Apr.  6, 1995). 

Multiple Employment Training Programs:  Information Crosswalk on 163
Employment Training Programs (GAO/HEHS-95-85FS, Feb.  14, 1995). 

Weather Forecasting:  Improvements Needed in Laboratory Software
Development Processes (GAO/AIMD-95-24, Dec.  14, 1994). 

Management Reform:  Implementation of the National Performance
Review's Recommendations (GAO/OCG-95-1, Dec.  5, 1994). 

High Performance Computing and Communications; New Program Direction
Would Benefit From a More Focused Effort (GAO/AIMD-95-6, Nov.  4,
1994). 

Decennial Census:  1995 Census Test Presents Opportunities to
Evaluate New Census-Taking Methods (GAO/T-GGD-94-136, Sept.  27,
1994). 

Food Safety:  Changes Needed to Minimize Unsafe Chemicals in Food
(GAO/RCED-94-192, Sept.  26, 1994). 

International Trade:  Coordination of U.S.  Export Promotion
Activities in Pacific Rim Countries (GAO/GGD-94-192, Aug.  29, 1994). 

Rural Development:  Patchwork of Federal Programs Needs to Be
Reappraised (GAO/RCED-94-165, July 28, 1994). 

Weather Forecasting:  Systems Architecture Needed for National
Weather Service Modernization (GAO/AIMD-94-28, Mar.  11, 1994). 

Decennial Census:  Promising Proposals, Some Progress, but Challenges
Remain (GAO/T-GGD-94-80, Jan.  26, 1994). 

Export Promotion:  Governmentwide Plan Contributes to Improvements
(GAO/T-GGD-94-35, Oct.  26, 1993). 

Decennial Census:  Test Design Proposals Are Promising, but
Fundamental Reform Is Still at Risk (GAO/T-GGD-94-12, Oct.  7, 1993). 

Export Promotion:  Initial Assessment of Governmentwide Strategic
Plan (GAO/T-GGD-93-48, Sept.  29, 1993). 

Export Promotion Strategic Plan:  Will it Be a Vehicle for Change? 
(GAO/T-GGD-93-43, July 26, 1993). 

Exchange Programs:  Inventory of International Educational, Cultural,
and Training Programs (GAO/NSIAD-93-157BR, June 23, 1993). 

Decennial Census:  Focused Action Needed Soon to Achieve Fundamental
Breakthroughs (GAO/T-GGD-93-32, May 27, 1993). 

Export Promotion:  Improving Small Businesses' Access to Federal
Programs (GAO/T-GGD-93-22, Apr.  28, 1993). 

Export Promotion:  Governmentwide Strategy Needed for Federal
Programs (GAO/T-GGD-93-7, Mar.  15, 1993). 

Commerce Issues (GAO/OCG-93-12TR, Dec.  1992). 

Export Promotion:  Federal Approach Is Fragmented (GAO/T-GGD-92-68,
Aug.  10, 1992). 

Decennial Census:  1990 Results Show Need for Fundamental Reform
(GAO/GGD-92-94, June 9, 1992). 

Export Promotion:  Overall U.S.  Strategy Needed (GAO/T-GGD-92-40,
May 20, 1992). 

Export Promotion:  U.S.  Programs Lack Coherence (GAO/T-GGD-92-19,
Mar.  4, 1992). 

Export Promotion:  Federal Programs Lack Organizational and Funding
Cohesiveness (GAO/NSIAD-92-49, Jan.  10, 1992). 


*** End of document. ***