Advanced Manufacturing:

Innovation Institutes Have Demonstrated Initial Accomplishments, but Challenges Remain in Measuring Performance and Ensuring Sustainability

GAO-19-409: Published: May 23, 2019. Publicly Released: May 23, 2019.

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The Departments of Commerce, Defense, and Energy have together spent $1 billion to establish 14 institutes that develop advanced manufacturing capabilities. Most of the institutes are operating under an initial 5- to 7-year period of federal financial assistance.

These institutes expect possible negative consequences once this initial assistance ends. For example, they may need to focus on short-term projects for industry use to raise revenue, rather than projects that advance U.S. manufacturing innovation as a whole.

We recommended the departments evaluate whether their institutes can sustain operations without additional federal assistance.

3D printing, an example of advanced manufacturing technology

A component of 3D printing technology

A component of 3D printing technology

Additional Materials:

Contact:

John Neumann
(202) 512-6888
neumannj@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

Since December 2016, the Manufacturing USA network has grown from 11 to 14 manufacturing innovation institutes that are implementing a wide array of activities aimed at developing manufacturing capabilities in promising new advanced technologies, as shown in the figure. As of March 2019, most institutes were operating under an initial 5- to 7-year period of federal financial assistance.

Additive manufacturing (or 3D printing), an example of advanced manufacturing.

Additive manufacturing (or 3D printing), an example of advanced manufacturing.

The Department of Commerce, through a national program office, along with the Departments of Defense (DOD) and Energy (DOE) have developed long-term goals for the Manufacturing USA program, such as increasing the competitiveness of U.S manufacturing, but have not developed measurable near-term goals with associated targets and time frames to assess progress over time. Prior GAO work has shown that systems of performance measures benefit from certain key practices, such as creating a hierarchy that breaks down broad, long-term goals and objectives into more specific, near-term performance goals with measurable targets and time frames. Commerce officials said that they are not in a position to set targets for the network-wide performance measures because they do not manage or fund individual institute activities. However, by developing and implementing network-wide performance goals with targets and time frames, Commerce would have better assurance that it could observe and report on progress toward Manufacturing USA long-term goals and objectives.

Commerce, DOD, and DOE have taken steps to support their institutes' sustainability planning for the years after the initial 5- to 7-year period of federal financial assistance. All 14 institutes have conducted various levels of sustainability planning and foresee generally negative impacts if baseline federal financial assistance ends, such as the need to focus more on short-term projects for industry use rather than projects that advance the manufacturing innovation ecosystem as a whole. However, as of February 2019, while the agencies had taken steps to support institute sustainability planning, they had not developed criteria to evaluate whether the institutes will be able to sustain their operations. Developing criteria for evaluating institutes' progress toward sustainability would provide Commerce, DOD, and DOE greater assurance that decisions about providing additional federal financial assistance for the institutes will be based on an analysis of the risks the institutes face in successfully carrying out the statutory purposes for the Manufacturing USA program.

Why GAO Did This Study

Manufacturing USA is a national network of manufacturing innovation institutes. Commerce, DOD, and DOE have together provided $1 billion to establish the network's institutes and to promote research, development, and commercialization of advanced manufacturing technologies.

The Revitalize American Manufacturing and Innovation Act of 2014 includes a provision for GAO to assess the Manufacturing USA program. This is GAO's second report in response to the provision. Among other objectives, this report (1) describes the status of the Manufacturing USA network; (2) evaluates actions taken by Commerce, DOD, and DOE to assess progress of the Manufacturing USA program; and (3) examines planning for institute sustainability beyond the initial 5 to 7 years of federal financial assistance.

GAO reviewed documentation and interviewed agency and Manufacturing USA institute officials, as well as a nongeneralizable sample of seven institute members from different-sized companies and academia.

What GAO Recommends

GAO is making five recommendations, including that Commerce work with DOD and DOE to develop performance goals with measurable targets and time frames, and the three agencies develop criteria to evaluate their institutes' sustainability. Commerce requested changes to the performance goals recommendations that would have altered their scope and intent. GAO maintains the recommendations are valid as stated. The three agencies generally agreed with the criteria development recommendations.

For more information, contact John Neumann at (202) 512-6888 or neumannj@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: Commerce partially concurred with this recommendation according to its response to our report. Commerce stated that it lacks the legal authority to compel action by other federal agencies, and that legal constraints aside, it believes it is bad management practice to ask institutes to respond to performance goals issued by different bodies. As of March 2020, Commerce stated that it plans to report on performance goals for Commerce-sponsored institutes effective with the 2019 annual report, which it expects to issue by September 2020. Commerce also agreed to continue working closely with other sponsoring federal agencies on program and network goals for the Manufacturing USA institutes, but did not commit to working with sponsoring federal agencies to develop and implement network-wide performance goals with measurable targets and time frames. We recognize that Commerce does not have management authority over other the institutes sponsored by other agencies. We believe our report sufficiently characterizes the development of network-wide performance goals, targets, and time frames as a collaborative effort between Commerce and sponsoring agencies that is in keeping with Commerce's network-wide coordination functions under the RAMI Act. Moreover, our recommendation specifically pertained to developing performance goals for the Manufacturing USA program, not individual institutes. As we stated in our report, this would not necessarily entail new performance measures but, rather, could consist of measurable near-term performance goals corresponding to program performance measures already in place. Further, as stated in our report, GAO's prior work has shown that systems of performance measures benefit from certain key practices, such as creating a hierarchy that breaks down broad, long-term goals and objectives into more specific, near-term performance goals with measurable targets and time frames. Our recommendation was designed to ensure that the Manufacturing USA program performance measurement structure that Commerce has already worked with the other sponsoring agencies to develop more fully aligns with these key practices. We continue to believe that by working with other sponsoring federal agencies to develop and implement network-wide performance goals with targets and time frames, Commerce would be better able to observe and report on progress toward long-term Manufacturing USA program goals and objectives.

    Recommendation: The Secretary of Commerce should direct the National Institute of Standards and Technology (NIST) Director to work with other sponsoring federal agencies to develop and implement network-wide performance goals for the Manufacturing USA program with measurable targets and time frames. (Recommendation 1)

    Agency Affected: Department of Commerce

  2. Status: Open

    Comments: Commerce partially concurred with this recommendation according to its response to our report. In March 2020, Commerce stated that it supports the alignment of performance measures with performance goals only for Commerce-sponsored institutes. Commerce stated that it is unable to commit to this recommendation as 13 of the 14 existing institutes were authorized under authorities other than the RAMI Act and are sponsored by agencies other than Commerce. Commerce also stated that, until additional institutes authorized by the RAMI Act are in place, it does not support additional performance measures for the single Commerce-sponsored institute beyond the RAMI Act requirements, as doing so would impose an unfair level of scrutiny. Commerce agreed to report on performance metrics for department-sponsored institutes effective with the current annual report, which is expected by September 2020. We recognize that Commerce does not have management authority over other the institutes sponsored by other agencies. We believe our report sufficiently characterizes the effort to align the network-wide performance measures with network-wide performance goals and Manufacturing USA program goals as a collaborative effort between Commerce and sponsoring agencies that is in keeping with Commerce's coordination functions under the RAMI Act. Our recommendation does not ask Commerce to compel actions by other agencies, nor to develop any additional performance measures. As noted in our report, the Manufacturing USA program's performance measurement structure aligns near-term performance measures directly to the program's long-term goals. This structure bypasses connecting the performance measures with the program's objectives that have been developed to break down the long-term goals more specifically. GAO's prior work has shown that systems of performance measures benefit from certain key practices, such as creating a hierarchy that breaks down broad, long-term goals and objectives into more specific, near-term performance goals with measurable targets and time frames. Our recommendation was designed to ensure that the Manufacturing USA program performance measurement structure that Commerce has already worked with the other sponsoring agencies to develop more fully aligns with these key practices. We continue to believe that by working with other sponsoring federal agencies to ensure that the Manufacturing USA network-wide performance measures are directly aligned with the Manufacturing USA strategic program goals and objectives and the statutory purposes of the RAMI Act, Commerce would be better able to observe and report on progress made toward achieving the statutory purposes of the Manufacturing USA program.

    Recommendation: The Secretary of Commerce should direct the NIST Director to work with other sponsoring federal agencies to ensure that the Manufacturing USA network-wide performance measures are directly aligned with the network-wide performance goals, the Manufacturing USA strategic objectives and program goals, and the statutory purposes of the Revitalize American Manufacturing and Innovation (RAMI) Act. (Recommendation 2)

    Agency Affected: Department of Commerce

  3. Status: Open

    Comments: Commerce partially concurred with this recommendation according to its response to our report. In March 2020, Commerce stated that it will develop criteria to evaluate the sufficiency of the Commerce-sponsored institute's sustainability plan based on the anticipated operating costs of the institute at fully operational steady state, and the likelihood of sustaining those operations through the specific efforts outlined in the sustainability plan. Commerce stated that it plans to develop the evaluation criteria by April 2020. We will update this recommendation after we learn more about these efforts.

    Recommendation: The Secretary of Commerce should direct the NIST Director to develop criteria to evaluate whether the Commerce-sponsored institute can sustain its operations without additional federal financial assistance after its initial agreement. If an analysis based on such criteria indicates that additional federal financial assistance is needed to help the institute sustain its operations, then the Secretary of Commerce should consider a legislative proposal to amend relevant provisions of the RAMI Act. (Recommendation 3)

    Agency Affected: Department of Commerce

  4. Status: Open

    Comments: DOD partially concurred with this recommendation. According to information DOD provided in March 2020, DOD developed criteria to evaluate whether each DOD-sponsored institute is effectively executing its mission, providing value to the department, and transitioning advanced manufacturing to U.S. manufacturers, while demonstrating progress toward business viability (diversified revenue, controlled costs, etc.). As of March 2020, DOD plans to incorporate these criteria into a strategic management plan, under which the department will review institutes' progress at the end of their agreements to determine the type and level of DOD's continued participation. DOD expects to complete work on the strategic management plan by the end of September 2020.

    Recommendation: The Secretary of Defense should direct the Director of DOD's Manufacturing USA institutes to develop criteria to evaluate whether DOD-sponsored institutes can sustain their operations without additional federal financial assistance after their initial agreements. (Recommendation 4)

    Agency Affected: Department of Defense

  5. Status: Open

    Comments: DOE concurred with this recommendation according to its response to our report. In September 2019, DOE stated that it will direct the Directors of DOE-sponsored institutes to collectively work toward updating institute sustainability plans and activities and collaboratively develop criteria and metrics to assess the institutes' progress toward financial sustainability. After development of the metrics, DOE will track as appropriate. As of March 2020, DOE reported agreement with its institutes on an initial set of criteria and metrics to assess progress toward financial sustainability. We will update this recommendation as we collect more information about these efforts.

    Recommendation: The Secretary of Energy should direct the Director of DOE's Manufacturing USA institutes to develop criteria to evaluate whether DOE-sponsored institutes can sustain their operations without additional federal financial assistance after their initial agreements. (Recommendation 5)

    Agency Affected: Department of Energy

 

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