Since the recent recession, policymakers have emphasized the role exports can play in strengthening the U.S. economy and in creating higher paying jobs. In March 2010 the President signed an Executive Order creating the National Export Initiative (NEI), with a goal of doubling U.S. exports in 5 years. However, since 2004 the workforce of the U.S. and Foreign Commercial Service (CS) has shrunk, calling into question the ability of this key agency to increase its activities to assist U.S. businesses with their exports. In response to a conference committee mandate, GAO reviewed (1) how well CS managed its resources from 2004 to 2009, and (2) the completeness of CS's workforce plans and the quality of its fiscal year 2011 budget request. GAO analyzed data from the Departments of Agriculture, Commerce, and State; reviewed agency documents; and interviewed agency officials.

CS had management control weaknesses over its resources from 2004 to 2009. During this period, CS's budgets remained essentially flat as per capita personnel costs and administrative costs increased. However, CS leadership did not recognize the long-term implications of these changes because it lacked key financial and workforce information and risk analysis necessary for good management control. CS continued to pay fees associated with positions it maintained in U.S. embassies that were vacant but not officially eliminated. As CS's financial constraints grew, officials delayed their impact by using a variety of financial management practices. For example, the International Trade Administration (ITA), CS's parent agency, attributed some of CS's centralized costs to other units. However, as the availability of offsetting funds declined and costs continued growing, CS leadership failed to recognize the risks from these changes in accordance with good management controls, and reached a "crisis" situation in 2009. Officials froze hiring, travel, training, and supplies, compromising CS's ability to conduct its core business. CS's workforce declined by about 14 percent from its peak level in 2004 through attrition--affecting the mix and distribution of personnel. CS intends to rebuild its workforce but lacks key planning elements for doing so, and its budget request has weaknesses that could affect its ability to meet its goals. CS will have a central role in implementing the NEI. The President's 2011 budget requested $321 million for CS, $63 million more than its 2010 appropriation. The budget would fund a major staff increase. CS is allocating $5.2 million of its 2010 appropriation to begin recruiting new staff. However, as new executive-level leadership was arriving, GAO found that CS lacked key planning elements, including a clear sense of strategic direction and an analysis to determine its workforce needs. Also, it had not updated its workforce plans to address staffing gaps since fiscal year 2007. Adding more staff could be delayed because CS's human resources office is itself understaffed and because CS requires up to 2 years to hire and train new Foreign Service Officers. GAO also found that the 2011 budget request, though sound in many respects, has weaknesses; it lacks some documentation, and it lacks risk analysis and contingency plans for highly variable program costs, which could lead to cost overruns. GAO recommends to the Secretary of Commerce that CS (1) strengthen management controls, (2) improve workforce planning, and (3) improve cost estimating related to CS's budget estimate. Commerce agreed with our findings and recommendations.

Status Legend:

Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

• In Process
• Open
• Closed - implemented
• Closed - not implemented

Recommendations for Executive Action

Recommendation: To better ensure CS effectively and efficiently uses its resources in support of its strategic goals and the President's National Export Initiative, the Secretary of Commerce should direct the Undersecretary for International Trade to strengthen management controls over CS's financial and workforce resources.

Agency Affected: Department of Commerce

Status: Open

Comments: In written comments on a draft of this report, Commerce concurred with our findings and recommendations. The Secretary of Commerce indicated that he has directed the International Trade Administration (ITA) to use this report to develop stronger management controls, improve workforce planning, and improve cost estimates during the budget process. The Secretary of Commerce also indicated that ITA has been engaged in a vigorous strategic planning effort to align its focus, activities, and personnel to strengthen CS and support the President's National Export Initiative, since January 2010. GAO continues to monitor Commerce's efforts to implement the recommendation.

Recommendation: To better ensure CS effectively and efficiently uses its resources in support of its strategic goals and the President's National Export Initiative, the Secretary of Commerce should direct the Undersecretary for International Trade to improve workforce planning and better align CS's workforce with its strategic goals and available resources on a routine basis.

Agency Affected: Department of Commerce

Status: Open

Comments: In written comments on a draft of this report, Commerce concurred with our findings and recommendations. The Secretary of Commerce indicated that he has directed the International Trade Administration (ITA) to use this report to develop stronger management controls, improve workforce planning, and improve cost estimates during the budget process. The Secretary of Commerce also indicated that ITA has been engaged in a vigorous strategic planning effort to align its focus, activities, and personnel to strengthen CS and support the President's National Export Initiative, since January 2010. GAO continues to monitor Commerce's efforts to implement the recommendation.

Recommendation: To better ensure CS effectively and efficiently uses its resources in support of its strategic goals and the President's National Export Initiative, the Secretary of Commerce should direct the Undersecretary for International Trade to improve cost estimating to better ensure that CS's budget estimate includes sufficient resources to support its planned operations and addresses potential risks.

Agency Affected: Department of Commerce

Status: Open

Comments: In written comments on a draft of this report, Commerce concurred with our findings and recommendations. The Secretary of Commerce indicated that he has directed the International Trade Administration (ITA) to use this report to develop stronger management controls, improve workforce planning, and improve cost estimates during the budget process. The Secretary of Commerce also indicated that ITA has been engaged in a vigorous strategic planning effort to align its focus, activities, and personnel to strengthen CS and support the President's National Export Initiative, since January 2010. GAO continues to monitor Commerce's efforts to implement the recommendation.