M&A Services for NOAA Are Funded in a Variety of Ways

Commerce, NOAA’s headquarters, line offices, and FMCs use a variety of  mechanisms to fund M&A services. NOAA’s Headquarters Funds the M&A Services It Provides to the Agency through Funds Appropriated for M&A Services and through Direct Billings

According to NOAA officials, NOAA’s appropriation for corporate  administrative services funds the following four types of M&A services  that NOAA’s headquarters provides to the agency:    services provided by NOAA’s Undersecretary and related staff offices,  including executive management policy formulation and direction;   NOAA-wide corporate services and agency management, including  activities such as financial, procurement, and human resource services; information services provided by the Office of the Chief Information  Officer; and  facilities management services, such as repairs, restoration, construction,  and environmental compliance and safety for NOAA-owned buildings. Additional services requested by line offices. Some FMCs Fund M&A Services through Assessments and Other FMCs Do Not Track or Separately Define Their M&A Costs

FMCs at two of NOAA’s line offices use assessments to fund the M&A  services they provide, and some or all the FMCs at the other three line  offices do not track their costs for M&A services. NOAA’s Documentation of Its Policies and Procedures for M&A Services Does Not Always Conform to Applicable Federal Standards

NOAA’s headquarters, line offices, and FMCs have documented some  aspects of their policies and procedures for M&A services, but not to the  full extent called for by applicable federal cost accounting and internal  control standards. For example, NOAA’s headquarters has documented  some of its policies and procedures for M&A services, but it has not done  so in a handbook or manual as called for by applicable federal standards. In addition, the five line offices and the FMCs have no or limited  documentation of their policies and procedures for the M&A services they  provide. FMCs’ Documentation of Their Policies and Procedures for M&A Services Generally Do Not Adhere to Applicable Federal Standards

According to line office officials at NESDIS, NOS and NWS, FMCs within  their line offices do not document (1) their policies regarding the types of  M&A services they provide; (2) the procedures they use each year to  determine the budget for their M&A services; (3) their policies and  procedures for assigning the costs of their M&A services to specific  programs, activities, or outputs that benefit from the services and the  results of that cost assignment; and (4) the justification for why those  assignments are appropriate. Estimated Salaries and Expenses For NOAA Were About $3.8 Billion for Fiscal Year 2009

Using object class data provided by NOAA officials, we estimated that  NOAA’s salaries and expenses were about $3.8 billion for fiscal year 2009. These estimates are approximate because salaries and expenses could be  higher if they were accounted for in object classes that we did not include  in our estimate. Recommendation for Executive Action

To improve the management and oversight of the National Oceanic and  Atmospheric Administration’s management and administration services  and related costs, we recommend that the Secretary of Commerce direct  the Administrator of NOAA to require that NOAA’s headquarters, line  offices, and FMCs document in a manual or handbook their policies and  procedures for the M&A services they provide in line with internal control  and federal cost accounting standards. In response to this  comment, we incorporated information on these accounts into the report. Appendix I: Objectives, Scope, and Methodology

This report (1) examined how management and administration (M&A)  services at the Department of Commerce’s (Commerce) National Oceanic  and Atmospheric Administration (NOAA) are funded, (2) assessed the  extent to which NOAA’s policies and procedures for accounting for M&A  services conform to applicable standards, and (3) estimated salaries and  expenses for NOAA’s budget for fiscal year 2009. We  interviewed officials and gathered and reviewed cost data on M&A  services from NOAA at each of four levels—Commerce, NOAA’s  headquarters, line offices, and a subset of FMCs. We used object class  data to estimate NOAA’s salaries and expenses because NOAA does not  separately report salaries and expenses.
Why GAO Did This Study

The National Oceanic and Atmospheric Administration (NOAA) is a bureau within the Department of Commerce (Commerce). To help achieve NOAA's program goals, it relies on management and administration (M&A) services, such as legal support and information technology. In response to the fiscal year 2010 Consolidated Appropriations Act Conference Report, GAO (1) examined how NOAA's M&A services are funded, (2) assessed the extent to which NOAA's policies and procedures for M&A services conform to applicable standards, and (3) estimated salaries and expenses for NOAA's budget for fiscal year 2009. Among other things, GAO reviewed documents on M&A services and data on M&A costs from NOAA officials for its headquarters; line offices, which are responsible for executing NOAA's programs; and a subset of financial management centers (FMC) within the line offices, which manage specific programs and projects.

What GAO Found

M&A services at NOAA are provided at four levels--Commerce, NOAA's headquarters, line offices, and FMCs--and each level funds its services in different ways. First, Commerce uses NOAA payments to the department's Working Capital Fund to support M&A services, such as legal services, that can be more efficiently provided centrally. It also uses payments to its Advances and Reimbursements Account for, among other things, payments to external parties for M&A services provided to the department as a whole. Commerce uses funds appropriated for departmental management to provide leadership services for the whole department, including NOAA. Second, NOAA's headquarters funds most of its M&A services using its corporate administrative services appropriation. NOAA's headquarters also uses a direct billing process to provide some unplanned services, such as issuing new identification cards, as well as pooled and additional services requested by line offices. Third, line offices fund the M&A services they provide by assessing their programs, projects, and activities in various ways. Finally, some FMCs fund M&A services through assessments of their subunits, while others do not track or separately define their M&A costs. NOAA's headquarters, line offices, and FMCs have documented some of their policies and procedures for M&A services, but they have not done so to the full extent required by applicable internal control and federal cost accounting standards. Taken together, these standards require agencies to document in a manual or handbook (1) their policies regarding the types of M&A services they provide; (2) the procedures they use each year to determine the budgets for their M&A services; (3) their policies and procedures for assigning the costs of their M&A services to specific programs, activities, or outputs that benefit from the services, and the results of that assignment; and (4) the justification for why those assignments are appropriate. NOAA's headquarters has documented some of its policies and procedures for its M&A services in written yearly operating and spending plans, but has not done so in a manual or handbook. In addition, the line offices and FMCs have no or limited documentation of their policies and procedures for the M&A services they provide. This lack of documentation limits the availability of information on M&A services for agency officials and congressional decision makers and may hamper financial management and management decision making. Estimated salaries and expenses for NOAA were about $3.8 billion for fiscal year 2009, with approximately $1.38 billion in estimated salaries and $2.46 billion in estimated expenses. NOAA does not separately report salaries and expenses for each line of its budget. Therefore, GAO estimated salaries and expenses based on budget object class data. These estimates are approximate because salaries and expenses could be higher if they were accounted for in object classes that GAO did not include in its estimates.

What GAO Recommends

GAO recommends that NOAA require its headquarters, line offices, and FMCs to document in a manual or handbook their policies and procedures for the M&A services they provide in line with federal cost accounting and internal control standards. NOAA reviewed a draft of this report and concurred with the recommendation.