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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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Fast Facts

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

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Highlights

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.

Recommendations

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.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Commerce 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)
Open
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. 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 as amended. Moreover, our recommendation specifically pertained to developing performance goals for the Manufacturing USA program, not individual institutes. 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. According to an August 2023 update from NIST, the interagency working team working on the triennial Manufacturing USA Strategic Plan has agreed to work on developing and implementing network-wide performance goals for the Manufacturing USA program. The team agreed to adapt the NIST-developed framework, including new strategic objectives for the program, as a first step toward strengthening network-wide performance measures. According to NIST's update, the framework, first developed for Commerce-sponsored institutes, leverages GAO recommendations, and links network-wide performance measures to network-wide performance goals, Manufacturing USA strategic objectives and program goals, and the program's statutory purposes. The participating sponsoring agencies also agreed to consider network-wide measurable targets and time frames. According to a NIST official, the interagency consensus described above has been incorporated into the draft triennial strategic plan, which is under review as of August 2023. We will provide a further update when we receive additional information from the agency.
Department of Commerce 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)
Open
Commerce partially concurred with this recommendation according to its response to our report. In March 2020, Commerce stated that it supported the alignment of performance measures with performance goals only for Commerce-sponsored institutes because the other institutes (at the time of our report) were authorized under authorities other than the RAMI Act and were sponsored by agencies other than Commerce. We recognize that Commerce does not have management authority over other the institutes sponsored by other agencies. We believe our report sufficiently characterized 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, as amended. 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. According to an August 2023 update from NIST, the interagency working team working on the triennial Manufacturing USA Strategic Plan has agreed to work on developing and implementing network-wide performance goals for the Manufacturing USA program. The team agreed to adapt the NIST-developed framework, including new strategic objectives for the program, as a first step toward strengthening network-wide performance measures. According to NIST's update, the framework, first developed for Commerce-sponsored institutes, leverages GAO recommendations, and links network-wide performance measures to network-wide performance goals, Manufacturing USA strategic objectives and program goals, and the program's statutory purposes. The participating sponsoring agencies also agreed to consider network-wide measurable targets and time frames. According to a NIST official, the interagency consensus described above has been incorporated into the draft triennial strategic plan, which is under review as of August 2023. We will provide a further update when we receive additional information from the agency.
Department of Commerce 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)
Closed – Implemented
According to information Commerce provided, the agency developed and implemented sustainability criteria in October 2020, and the Manufacturing USA institute Commerce sponsors--the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL)--revised its sustainability plan in December 2020 in response to those criteria. Commerce officials said they will evaluate the sufficiency of an institute's sustainability plan during annual performance assessments, and that, going forward, such assessments will factor into renewal funding decisions.
Department of Defense 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)
Closed – Implemented
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.). Then, in March 2021, DOD provided additional information stating that it had incorporated sustainability criteria into its long-term planning for institutes. DOD officials stated their evaluation process to make recommendations about DOD's continued partnership and funding for its institutes, in part, considers sustainability criteria related to financial metrics, such as institute membership revenue, project funding, and cash reserves.
Department of Energy 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)
Closed – Implemented
In March 2020, DOE reported agreement with its institutes on an initial set of criteria and metrics to assess progress toward financial sustainability, and DOE-sponsored institutes began reporting on financial sustainability metrics in early 2020. According to DOE officials, the metrics focus on three areas: 1) the ability of the institute to cover management and operation expenses once DOE baseline financial assistance ends; 2) the "value proposition of the institute to its members" (e.g. as reflected by member retention and member attendance at institute meetings); and 3) "providing continued value to U.S. manufacturing" (e.g. as reflected by number and value of projects funded by non-federal sources). DOE officials said institute implementation of these financial sustainability metrics has resulted in a consistent and quantitative approach to report and evaluate progress for DOE-sponsored institutes, and has helped institutes refine their sustainability plans.

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Topics

U.S. competitivenessFederal agenciesPublic and private partnershipsFederal fundsFinancial assistanceManufacturingPerformance goalsPerformance measurementResearch and developmentScience and technologyTechnological innovations