DOC FY 2006 PAR - Actions Taken to Address the Management Challenges

Each year, the Department’s Office of Inspector General (OIG) reviews the Department’s and its component bureaus’ program activities to ensure that the management, financial, and operational activities are sound and meet the requirements of the Chief Financial Officers (CFO) Act and the Government Performance and Results Act (GPRA).

The emphasis by the President, the Office of Management and Budget (OMB), and Congress on improved government accountability underscores the Department’s resolve to enhance transparency within the Department while promoting improved efficiency and effectiveness. Progress in these endeavors requires strong commitment from the Department’s senior leadership and staff at all levels.

The following is the Department’s description of its actions to address the management challenges identified by the Inspector General (IG).

2006 MANAGEMENT CHALLENGES
CHALLENGE	RESPONSE
1. Strengthen Department-wide information security	Made significant progress in information technology (IT) security, with 100 percent of systems covered by IT security plans, 84 percent with tested controls, 100 percent with contingency plans, 93 percent with certification and accreditation (C&A) packages, and with much-improved quality and thoroughness of the C&A documentation. Operating Units are addressing C&A process and documentation issues that OIG identified as needing further improvement.
2. Effectively manage Departmental and bureau acquisition processes	Revised acquisition planning policy to make sure that the acquisition and program offices partner early to develop and implement effective and timely contracts which support the Department’s mission. Continued major communication and outreach program to acquisition and program communities focusing on acquisition planning, the training of contracting officer’s representatives (COR), and development of a performance-based acquisition enterprise. Continued COR training in the four required areas of expertise: business/industry; general management; project management, and procurement knowledge. For individuals who spend more than 20 percent of their time working on contracts, ensured that the COR element is included in their performance plan. Undertook refinement of a database to track the education and training of the acquisition workforce including the CORs. Launched an initiative to develop and implement a comprehensive human capital plan for the acquisition community. Sponsored a joint Acquisition and COR Conference in November 2005 with 485 attendees. This training was offered at no cost to the attendees and provided guidance on critical acquisition issues. Expanded the Acquisition Review Board to cover interagency agreements over $5 million and real property. The board met 13 times this fiscal year and reviewed 27 cases with an estimated value of $11.7 billion. Launched a new risk management initiative which will address the major business investment process. Led by the Departmental Procurement Executive (PE), the Office of Acquisition Management and Financial Assistance (OAMFA) developed an enterprise-wide strategic plan to improve acquisition management. This plan was actively supported by the Commerce Acquisition Council and the Heads of Contract Offices across the Department. Implemented the acquisition strategic plan which is transforming the acquisition community into a performance-based enterprise. The PE implemented a major outreach program to the acquisition community and to program officials stressing that acquisition is much broader than procurement or contracting and that the acquisition community partnering with program officials are being transformed into business brokers for program mission success. Met monthly with the Commerce Acquisition Council to keep the bureaus informed on issues and concerns which impact the acquisition community. Re-designed the Balanced Scorecard (BSC) for Acquisition using an enterprise-wide working group to revise its performance metrics, customer and employee surveys, and standardized reports. Obtained in January 2006 direct hire authority for the bureaus’ contracting offices. It is being used to bring contract specialists on board quickly. Leading the effort to standardize the definition and description of data elements and processes in the acquisition and requisition systems. Implementing the financial and acquisition systems interface, the acquisition and financial partners are changing the requisition process. OAMFA is leading the deployment program and designed and implemented training modules to support these efforts.
3. Strengthen internal controls over financial, programmatic, and business processes	In 2005, the Department received an unqualified opinion on the financial statements for the seventh consecutive year. Only two reportable conditions were identified: Construction in Progress (new) and IT Security. Corrective action plans (CAP) were developed and implemented for both reportable conditions. As a result of the Department’s internal controls improvements, the auditors removed the Construction in Progress reportable condition for the FY 2006 audit. The Department continues to monitor the remaining CAP and requires and monitors CAPs for management letter comments to address issues before they are raised to the level of internal control reportable conditions. The Department is participating in a government-wide initiative to strengthen internal controls. While revisions to the government-wide guidance contained in OMB Circular A-123 focus on financial controls, efforts are under way to enhance both financial and non-financial controls. Within the Department, this activity is being coordinated between the Office of the CFO/Assistant Secretary for Administration (ASA), bureau CFOs and OIG. The FY 2006 implementation of A-123 included the following: Establishment of the Senior Management Council that provides oversight for these activities and the Senior Assessment Team that conducts day-to-day activities. Evaluation of the overall control environment at the Department and compilation of an inventory of both Department-wide and bureau-specific key process cycles and approximately 630 key controls. Development of a communications plan to inform Department employees about the importance of internal controls in carrying out their responsibilities. Implementation will begin during the fourth quarter. Development of a Department-wide testing approach and plan. Review of the testing results and determination as to the significance of any deficiencies (i.e., whether they constitute an internal control deficiency, reportable condition, or material weakness) by the Senior Management Council and Senior Assessment Team. During the first quarter of FY 2007, bureaus will develop CAPs as needed to address any level of deficiency. Evaluation of the results and documentation of the adequacy of the Department’s internal controls resulting in an unqualified annual statement of assurance issued by the Secretary and published in the Performance and Accountability Report (PAR).
4. Ensure that the U.S. Patent and Trademark Office (USPTO) uses its authorities and flexibilities as a performance-based organization to achieve better results	USPTO is continuing the transformation to a performance-based organization and to its credit, the Agency reports it accomplished 94 percent of its key performance measures in FY 2006. USPTO has also had a clean audit opinion for 14 consecutive years. USPTO faces numerous challenges, such as continuing workload increases, hiring and training over 1,000 patent examiners, and continuing a transition to an electronic processing environment. USPTO must fully utilize its expanded authority over personnel decisions and processes, procurement, and IT operations. OIG has assessed systemic human resources and program issues, and has examined USPTO’s computer systems security. A recent evaluation found that while most USPTO contracts include information security clauses, important requirements are not implemented properly or enforced. USPTO has taken decisive action to address problems the OIG identified.
5. Control the cost and improve the accuracy of the decennial census	The 2010 Decennial Census program continues to be the highest priority of the Census Bureau. In response to the lessons of Census 2000, and to better meet expanding needs for social, demographic, and geographic information in the United States, in 2001 a multi-year effort to completely modernize and re-engineer the 2010 Census of Population and Housing was developed. This effort has four major goals: (1) Improve the relevance and timeliness of census long-form data, (2) Reduce operational risk, (3) Improve the accuracy of census coverage, and (4) Contain costs. The re-engineered 2010 Census program consists of three integrated components designed to take advantage of opportunities for innovations made possible through the expanded use of technology, major changes in the business process for data collection, and the use of focused coverage improvement procedures. American Community Survey (ACS) Master Address File/Topologically Integrated Geographic Encoding and Referencing Enhancement Program (MAF/TIGER) Short-form only 2010 Census Full implementation of the ACS, completion of the MAF/TIGER Enhancement Program (MTEP), and continued development of a fully tested, redesigned plan for a short-form only 2010 Census must all occur for the Census Bureau to achieve its long-range performance goals for the 2010 Census. With respect to the OIG’s specific observations concerning the Group Quarters Enumeration operation for the 2006 Census Test, the Census Bureau has sent a formal response to the OIG which includes in depth comments on many of the observations. The Census Bureau concurs with some of the findings and recommendations, but disagrees with others, including the recommendation about using the Internet for student population response. The Census Bureau has tested the use of the Internet for the 2010 Census a number of times, and believes offering the option would provide limited benefits. Also, the Bureau is concerned about the increased security risk an Internet option would add to the Decennial Census. For these reasons, the Census Bureau leans against offering an Internet option for the 2010 Census, though they continue to evaluate the feasibility of such an option.
6. Effectively manage the development and acquisition of environmental satellites	The National Oceanic and Atmospheric Administration (NOAA) has responded to the final OIG audit report on the National Polar-orbiting Environmental Satellite System (NPOESS) program issued in May 2006. NOAA developed an action plan that describes the efforts of NOAA and provides a schedule for completion. Actions address each of OIG’s recommendations on program oversight and contractor award fees. They are: The first annual Independent Program Assessment (IPA) to implement the IG recommen-dations is scheduled to begin in January 2007. The second action is to revise the NPOESS award fee plan. An interim award fee plan covering the 18 month period from April 2006 to September 2007 will be implemented in early FY 2007. The third action is to separate award fee determination from system program direction. NOAA has completed this action and has appointed a Program Executive Officer (PEO) with responsibility as the fee determination official.
7. Promote fair competition in international trade	The International Trade Administration (ITA) recognizes the significance of the management challenges regarding U.S. trade with China. ITA’s response to this challenge addresses both operational actions responding to the IG‘s extensive audit in China and key overarching steps that have been taken to deal with trade compliance in China. ITA has committed to an extensive action plan to improve ITA’s US&FCS operations in China. These actions are in response to the IG’s report, “US&FCS China Generally Performs Well, but Opportunities Exist for Commerce to Better Coordinate its Multiple China Operations.” This report contained 36 recommendations for ITA to address. ITA has completed a detailed action plan that outlines all actions taken or planned. ITA has already made considerable progress on completion of open IG recommendations for ITA contained in this report. ITA has completed 75 percent of the recommendations. ITA has also taken several overarching steps to advance policies and implement actions to optimize China trade compliance: ITA is planning extensive follow-up from the commitments made during the Joint Commission on Commerce and Trade (JCCT) meetings through establishment of working groups and analysis of recent JCCT commitments. Through efforts with the JCCT, an action plan has been developed that address several key trade areas of concern. These areas include Chinese commitments to increase U.S. access to the Chinese market, improving enforcement of intellectual property rights (IPR), ensuring the rule of law, structural and regulatory initiatives, and export controls. In addition to these key areas, China committed to progress in a number of other discrete areas. The first was agreement to establish a new working group on the manufacturing of active pharmaceutical ingredients. The second was development of an enhanced steel dialogue that brings the private sector into the progress. ITA is committed to vigorously combating unfair trade practices. It currently maintains 58 antidumping orders on imports from China, including consumer goods, steel products, agricultural products, seafood, and chemicals. These orders represent 22 percent of all current U.S. antidumping orders. The estimated value of trade affected in 2005 by these orders was more than $5.25 billion. ITA has stepped up its engagement with China through the JCCT Structural Issues Working Group and the newly established Steel Dialogue. Subsidy concerns cover a wide variety of programs, including industrial policies, the role of state-owned enterprises, and China’s continued use of price controls. Transparency remains a major obstacle to identifying and measuring subsidies in China, a difficulty furthered by China’s continuing failure to provide its annual subsidy notification to the World Trade Organization (WTO).
8. Effectively manage NOAA’s stewardship of ocean and living marine resources	NOAA is concerned about the mischaracterization of the peer reviews of the Central Valley biological opinion. OIG reports that two independent scientific reviews of the opinion were conducted and that they both found “serious problems with the opinion’s integrity.” None of the three independent reviews provided to NOAA concluded that the underlying scientific integrity of the biological opinion was impaired. The peer review reports raised multiple and complex issues that merit evaluation in the context of future improvements to the Section 7 program and the subject biological opinion. Since several of the peer review recommendations require longer-term research or modeling, NOAA will determine what short-term improvements are possible and what longer-term actions will be undertaken.
9. Aggressively monitor emergency preparedness, safety, and security responsibilities	Focused on optimizing security at the Department, the Office of Security has aggressively worked to monitor the emergency preparedness, safety, and security responsibilities of the Department. Conducted quarterly Department Security Council meetings with key personnel from each bureau to discuss current and ongoing security issues. Met and exceeded the first major milestone of Homeland Security Presidential Directive 12, making the Department one of the only agencies to do so. Developed or enhanced program to monitor, evaluate, and test the Department’s Occupant Emergency Plans (OEP). Continued assessments of OEPs for the Department’s 622 occupied facilities, thus far completing 336 in the current four-year cycle. Tracked implementation of recommended countermeasures designed to mitigate risks identified in the 403 anti-terrorism risk assessments (based on criticality, threat, and vulnerability) that have been conducted thus far in the current four-year cycle for the Department’s 622 occupied facilities. Coordinated closely with the US&FCS and the Diplomatic Security Services to ensure appropriate action was taken to correct deficiencies identified in risk assessments of key overseas locations. Exercised the Department’s readiness for continuity of operations in the government-wide Forward Challenge FY 2006, successfully testing all bureau Continuity of Operations (Plans (COOP). Conducted in-depth reviews of all bureau COOP plans, while continuing to host COOP working groups. Steered bureau declassification activities to meet the December 2006 automatic declassification deadline of the Department’s 25-year-old or older classified permanent records. Received a Green “R” (Results) Card from OMB’s Clay Johnson in recognition of the Depart-ment’s successful implementation of 100 percent Electronic Questionnaires for Investigative Processing (e-QIP) investigations in May 2006.
10. Enhance export controls for dual-use commodities	An IG report in 2004 resulted in the creation of the Deemed Exports Advisory Committee (DEAC). The DEAC which was established in May 2006, will be issuing its report in 2007. BIS continues to evaluate and implement IG recommendations.