As of 2010, 20 U.S. agencies have a role in export  promotion. From 2004 to 2009, CS’s budgets remained  essentially flat as per capita personnel costs and administrative costs  increased. Additionally, CS was not  fully aware of the costs associated with positions it maintained in U.S.  embassies that were vacant but not officially eliminated and did not take  steps that would have saved money on them. As CS’s financial constraints  grew, officials delayed their impact through a variety of financial  management practices such as using unobligated funds from prior years’  appropriations. However, as the availability of these offsetting funds  declined and costs continued growing, CS leadership failed to recognize  the risks entailed by the financial problems, and the organization 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 240 staff from its peak level in 2004 through  attrition—affecting the mix and distribution of personnel. For example, in 2009, ITA redistributed $3  million of CS’s centralized costs to other ITA units (Market Access and  Compliance, Manufacturing and Services, and Import Administration) to  assist CS. CS Lacks Key Planning Elements to Rebuild Its Workforce, and Its 2011 Budget Request Has Some Weaknesses

Although CS is taking steps to rebuild its workforce, it lacks key elements  in its workforce planning, and its 2011 budget request has some  weaknesses that could affect its ability to meet its goals. The 2011 budget  requests $321 million for CS, $63 million more than its 2010 appropriation. CS has also lacked a clear sense of strategic direction. CS’s Understaffed Human Resources Office and the Long Lead Time Needed to Hire and Train FSOs Could Delay Staffing Increases

Besides the lack of a quality workforce plan, CS’s capacity to implement  what CS officials said may be the biggest hiring effort in CS history is  compromised because its human resources office is understaffed. However,  CS planned to increase the number of staff in 2010. These opportunities include improving long-term  financial and workforce information necessary to recognize significant  changes affecting the organization; routinely reviewing operations to  identify potential cost savings, such as administrative fees related to  overseas posts; and recognizing risks and considering alternative  responses to significant resource changes in a systematic manner so as to  minimize actions such as freezing hiring, travel, and training that  compromise CS’s ability to conduct its core business. Recommendations for Executive Action

To better ensure CS effectively and efficiently uses its resources in  support of its strategic goals and the President’s National Export Initiative,  we are making the following three recommendations:  The Secretary of Commerce should direct the Undersecretary for  International Trade to    strengthen management controls over CS’s financial and workforce  improve workforce planning and better align CS’s workforce with its  strategic goals and available resources on a routine basis, and improve cost estimating to better ensure that CS’s budget estimate  includes sufficient resources to support its planned operations and  addresses potential risks. Agency Comments and Our Evaluation

In written comments on a draft of this report, Commerce concurred with  our findings and recommendations. Appendix I: Objectives, Scope, and Methodology

In response to a Congressional mandate, GAO reviewed (1) how well the  U.S. and Foreign Commercial Service (CS) managed its resources from  2004 to 2009, and (2) the completeness of CS’s workforce plans and the  quality of its 2011 budget request. We also interviewed CS officials responsible for  managing the budget. Data. Documentation. Risk analysis.
Why GAO Did This Study

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.

What GAO Found

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.

What GAO Recommends

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.