Information Policy:

NTIS' Financial Position Provides an Opportunity to Reassess Its Mission

GGD-00-147: Published: Jun 30, 2000. Publicly Released: Jun 30, 2000.

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Linda D. Koontz
(202) 512-3000


Office of Public Affairs
(202) 512-4800

Pursuant to a legislative requirement, GAO reviewed the National Technical Information Service's (NTIS) financial position, focusing on whether: (1) NTIS can continue to be self-sufficient and, if not, what issues need to be addressed; and (2) NTIS' World News Connection's (WNC) online foreign news service exceeds NTIS' statutory authority to the detriment of private firms offering similar news services.

GAO noted that: (1) NTIS may be able to remain self-sufficient for a few years, but its solvency beyond fiscal year (FY) 2003 remains in doubt; (2) solvency for a few years may be possible because the Department of Commerce and NTIS officials acted in FY 1999 to reduce costs when it appeared there would not be sufficient funds to operate; (3) for example, Commerce officials transferred 45 NTIS employees to other agencies within the department; (4) these actions allowed NTIS to report a $600,000 profit in FY 1999, and NTIS officials project an estimated $1 million in profit for FY 2000; (5) however, NTIS' solvency beyond FY 2003 is in doubt based on GAO's forecast of NTIS' revenues and costs that suggests that losses will begin in FY 2001 and continue; (6) if these losses are realized, retained earnings from previous years' operations could be absorbed, and NTIS could run out of operating funds after FY 2003; (7) however, if any of three events not included in GAO's financial analysis occur, they could cause financial reversals that would threaten NTIS' self-sufficiency before FY 2003; (8) the 5-year decline in NTIS' revenues from selling reports may accelerate, as larger segments of the public gain access to the World Wide Web and as more agencies make their research reports available for free over the Web; (9) NTIS' costs may increase faster than accounted for in GAO's financial analysis because NTIS officials say they have nearly exhausted their plans to reduce costs; (10) the fees that federal agencies pay NTIS for various brokerage and Web services may begin to decline rapidly if agencies decide to obtain those services elsewhere because of an announced plan to close NTIS or for other reasons; (11) because of NTIS' precarious financial position, policymakers may want to address the question of whether the government still needs NTIS (or another agency) to serve as a permanent repository and disseminator for research reports; (12) to help in this reassessment, congressional committees could benefit from the annual financial and operational reports on NTIS that Commerce is required to submit to Congress but has not submitted since FY 1995; (13) WNC's foreign news service falls within NTIS' statutory mission to disseminate technical information; and (14) nevertheless, WNC's service may have a detrimental impact on private sector firms that offer similar electronic news services because NTIS does not pay to obtain or translate the foreign news, or pay taxes as private firms do.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Since our report was issued, the Congress has taken several actions to reassess the role of NTIS, and has reaffirmed that the agency should continue to serve as a disseminator of federal research information on a self-sustaining basis (no appropriations). For example, in December 2003, Congress passed the 21st Century Nanotechnology Research and Development Act which provided a coordinated federal approach to stimulating nanotechnology research and development across the government. It directed the Secretary of Commerce to establish a nanotechnology clearinghouse using the resources of NTIS to the extent possible(absent appropriations)and NTIS is in the process of establishing this service.

    Matter: While NTIS is still solvent, Congress may wish to reassess whether NTIS should continue to serve as a disseminator of federal research and, if so, whether it should be required to do so on a self-sustaining basis.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: As part of the annual audited report of the financial statements of NTIS for the period ending March 31, 2001, that was sent to Congress, Commerce included information to satisfy the law's requirement to report various information to Congress including a detailed operating plan, details of modernization progress, and long-term plans. As a result, Congress should have additional information with which to make policy and funding decisions about NTIS' future.

    Recommendation: In order to keep the appropriate committees of Congress fully informed about NTIS' activities and comply with current law, the Secretary of Commerce should submit the annual reports in accordance with Section 3704b(f)(3) of Title 15 of the U.S. Code.

    Agency Affected: Department of Commerce


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