Export Promotion:

Increases in Commercial Service Workforce Should Be Better Planned

GAO-10-874: Published: Aug 31, 2010. Publicly Released: Aug 31, 2010.

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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.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Commerce concurred with our recommendations and the Secretary of Commerce directed the International Trade Administration to use this report among other things, to develop stronger management controls. Commerce has taken several steps in response to the recommendation. First, in fiscal year 2012, Commerce completed a detailed program and unit level gap analysis with the goal of better understanding and assessing current demand, existing coverage, and market opportunities, based on solid data and sound professional judgments, and is using this analysis to shift resources to higher priority countries. Second, to strengthen management controls over its financial resources, CS started using of a new Strategic Analysis Tool in October, 2011. The tool provides CS management with up-to-date information on funding, personnel, and requests by location and was used as the basis for making staffing and budget allocation decisions in fiscal year 2012. Third, ITA instituted a bi-weekly Resource Coordinator's meeting starting in mid-2011 at which topics such as budget and administration management are routinely discussed. Finally, we noted that CS lacked key workforce planning elements and that its personnel office was understaffed, thus making it difficult to handle the potentially large increase in staffing planned for in its fiscal year 2011 budget request, To further improve management control over workforce planning and decision-making, CS consolidated several personnel-related offices that had overlapping functions into the Office of Foreign Service Human Capital and elevated the role of this office by having it report directly to CS's Director General, whereas previously the different officers all reported to different managers. The new office is almost fully staffed as of June 2012.

    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

  2. Status: Closed - Implemented

    Comments: Commerce concurred with our recommendations and the Secretary of Commerce said he had directed the International Trade Administration to use this report among other things, to develop stronger workforce planning. The Commercial Service has taken several steps in response. First, a new human capital plan, completed in June 2012, should help set strategic direction by aligning CS's human capital with its strategic priorities. Under this plan, CS also intends to develop data to support workforce decision making; strengthen the CS workforce through training; develop strategies to attract and hire staff; and improve its processes for evaluating and rewarding staff performance. These steps, if correctly implemented, could help address the deficiencies identified by our report. To help strengthen the workforce, the CS training budget for FY 2012, including funds to train locally-employed staff and Senior Commercial Officers, was to be about $400,000, an increase of about 65% from FY 2011. Second, to help assess workforce needs and analyze workforce gaps, in July, 2011, CS began using its updated Overseas Resource Allocation Model (ORAM), in conjunction with a gap and opportunity analysis, to make repositioning decisions. For example, CS notified its appropriators[in July 2011 that it was planning to eliminate its presence in 7 countries and close 9 CS constituent offices in 8 other countries based on an analysis using the ORAM model. Similarly, the Domestic Resource Allocation Model is now in place and used to make decisions about where to place staff in the domestic field including Foreign Service Officers on domestic tours, as well as allocate limited discretionary funds to top tier locations. Finally, we noted that CS lacked key workforce planning elements and that its personnel office was understaffed, thus making it difficult to plan and implement the potentially large increase in staffing planned for in its fiscal year 2011 budget request. As of July 2012, a CS official said the newly reorganized office was almost fully staffed.

    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

  3. Status: Closed - Implemented

    Comments: In August 2010, GAO recommended that the Secretary of the Commerce should direct the Under Secretary for International Trade to improve cost estimating to better ensure that Commercial Service's budget estimate includes sufficient resources to support its planned operations and address potential risks. GAO found that U.S. and Foreign Commercial Service's (CS) 2011 budget request lacked a risk analysis and contingency plans that would help avoid overly optimistic cost estimates and cost overruns. A risk analysis would identify the assumptions driving the estimate, and provide a range of costs that spanned the best and worst case scenarios; among other things the budget lacked explanations about assumed salary increases, currency fluctuations, and travel costs. GAO also noted that the International Trade Administration's (ITA) budgeting methodology, under which CS's falls, lacked sufficient supporting documentation, making it difficult to understand how the budget request was developed. Commerce agreed with the findings and recommendations in the GAO report and the ITA was directed to use the report to improve cost estimates during the budget process. To address our recommendation, CS explored one type of risk analysis in 2014 that GAO considers a best practice, but decided not to adopt it. However, during FY 2012-2014 ITA and CS, which is now know as Global Markets, took several actions to improve its cost estimating and financial management. For example, in 2013, ITA created a Centralized Services Governing Board that improved the process for allocating administrative costs between administrative units, including Global Markets by making it more transparent and increasing communication. This was a problem in the past, as it was unclear how unit's portions of administrative costs were determined by ITA. Further, ITA established a Financial Working Group to improve its financial planning and execution. Global Markets officials said they had also provided budget training, created a formalized process for reviewing financial information and budget needs from the field, and managers now hold regular meetings to review the status of funds and identify risks. To that end, beginning in fiscal year 2012, Global Market's Monthly Financial Analysis summaries were used to discuss significant financial issues and potential risks based on funding and spending data, and to recommend management actions. These documents are then shared with managers to help them improve contingency planning, develop more timely and realistic operating plans, and better recognize financial challenges and constraints in managing their programs.

    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

 

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