2). Almost all of NIST’s federal  clients advanced funds to NIST for those agreements. Unfinished Interagency Agreements Significantly Contribute to NIST’s Working Capital Fund Carryover Balance

		The Working Capital Fund’s Carryover Balance Is Largely Driven by Pending and Ongoing Work Associated with Interagency Agreements

The carryover balance in NIST’s working capital fund is largely driven by  pending and ongoing work associated with interagency agreements as well  as work for which NIST has accepted advanced funds but not yet started. NIST accepts most of its agreements  in the second half of the fiscal year. Further, since most agreements cross  fiscal years, many are also likely to extend into the next fiscal year. NIST’s Management Practices Related to Interagency Agreements Do Not Ensure Compliance with Applicable Fiscal Laws

		NIST Lacks Processes to Ensure It Complies with the Time Limitations of Advanced Funds

Our previous work has established that a high carryover in working capital  funds may indicate poor workload planning, which could lead to  inefficient use of agency resources and missed opportunities to use those  funds for other needs. If the client does not  have such funds available, they could be exposed to possible  Antideficiency Act violations. NIST Does Not Monitor Interagency Agreements to Ensure that Work Begins within a Reasonable Time

NIST does not record or monitor whether it begins working on agreements  within a reasonable amount of time after it received funds advanced by  client agencies. Long delays between when an agency accepts funds advanced from  clients and when it begins work on its agreements may lead to the  improper use of appropriated funds. Because NIST has not  considered what a reasonable standard for starting its work might be, we  use 90 days as a point of reference for the purposes of this report. We estimate that NIST took, on average, 125 days to begin work on its  interagency agreements in fiscal years 2004 through 2009. NIST Lacks Strategic Workload Management and Client Focus for Its Interagency Agreements

NIST lacks a high-level, senior management focus on managing its  interagency agreement workload. A key principle of  strategic workforce planning is the effective deployment of staff to achieve  the agency’s mission and goals. NIST places a high priority on its  interagency agreements. However, NIST senior managers play no role in  determining whether the appropriate resources are available agencywide  to support its interagency agreement workload. Without strategically managing its workload, NIST cannot be  sure that it is effectively managing this high-priority area. Although NIST shares responsibility with its federal clients for ensuring  the proper use of appropriated funds, it does not sufficiently communicate  to clients important information about the status of work and the use of  these funds—information that would help its clients know whether their  funds are being properly used. Such a coordinator could communicate important information—including  when NIST expects to begin work on agreements—that would better  inform client decisions about how best to use their appropriated funds. NIST does not  monitor the period of availability of appropriations advanced from client  agencies and therefore cannot ensure that funds are legally available when  it bills against them. Recommendations for Executive Action

To improve the management of NIST interagency agreements and provide  reasonable assurance that NIST is efficiently using its resources and  complying with applicable fiscal laws, we recommend that the Secretary  of Commerce direct the NIST Director to take the following five actions:  (1) To help ensure efficient, effective deployment of NIST’s workforce and  be a responsible steward of federal resources, hold senior management  accountable for strategically managing its interagency agreements. (2) To meet its responsibilities in ensuring the proper use of federal funds,  (a) develop, implement, and communicate to its clients policies regarding  reasonable time frames for beginning work on interagency agreements; (b)  track and monitor the work start date for each agreement; and (c) monitor  and report internally, and periodically inform federal clients about, the  amount of time elapsed between when funds were advanced to it from  client agencies and when it actually began billing against an agreement. Appendix I: Proposed Changes to NIST’s Interagency Agreement Process

In August 2010, the National Institute of Standards and Technology (NIST)  provided information about the steps it is taking to improve the overall  internal control of interagency agreements and funding it receives, as a  result of our review.
Why GAO Did This Study

GAO previously found that a significant portion of the National Institute of Standards and Technology's (NIST) working capital fund contained a growing carryover balance. Almost all of the fund's resources come from appropriations advanced from federal clients for NIST's technical services through interagency agreements. Monitoring and tracking key information about agreements and the funds advanced for them is critical for both NIST and its clients to make well-informed budget decisions, comply with applicable fiscal laws and internal controls, and ensure the proper use of federal funds. GAO was asked to review (1) the factors contributing to the working capital fund's carryover balance and (2) NIST's processes for managing its interagency agreements and workload. To do so, GAO reviewed laws and fiscal requirements, analyzed NIST budget data and policies related to its interagency agreements, analyzed a random sample of agreements, and interviewed NIST officials.

What GAO Found

NIST's working capital fund carryover balance is largely driven by appropriations advanced from federal clients to support interagency agreements. Most agreements cross fiscal years and because more than half were accepted in the second half of the fiscal year, some carryover of funds and work is expected. NIST's processes for managing agreements are insufficient to help ensure compliance with applicable fiscal laws. 1) NIST does not monitor the period of availability of appropriations advanced from client agencies and therefore cannot be sure that funds are legally available when it bills against them. If NIST were to use funds after an account closes, its clients could be exposed to possible Antideficiency Act violations. GAO found two reasons for this. First, NIST treats these funds as being available without fiscal year limitation. Second, NIST does not manage agreements in a way that would allow it to monitor the availability of client advances. 2) NIST does not ensure that it starts work on its agreements within a reasonable amount of time after client agencies advance funds to NIST. Long delays in starting work may lead to the improper use of appropriated funds. There is no governmentwide standard for a reasonable time in which to begin work. NIST has not considered such a standard for itself, but some agencies use 90 days as a general guide. NIST took, on average, an estimated 125 days to start work. Further, GAO estimates that NIST began work about 7 months after receiving funds advanced from clients for about half of its agreements. In some cases the delay was 1-2 years. There were several reasons for this, including that NIST does not record or monitor the date it begins work on agreements, and does not consider whether it has the appropriate resources agencywide before accepting new work. NIST lacks a high-level, senior management focus on managing its interagency agreement workload. Strategic workforce planning requires the effective deployment of staff to achieve agency goals. NIST places a high priority on its interagency agreements; however, senior managers play no role in determining whether appropriate resources are available agencywide to support its workload. Further, although NIST shares responsibility with its federal clients for ensuring the proper use of appropriated funds, it does not sufficiently communicate important information to clients--such as when work is expected to begin on agreements--that would better inform client decisions about how to best use their funds. Absent strategic workload management and improved client communications, NIST cannot meet the needs of this high-priority area. As a result of our review, NIST began revising its interagency agreement process. Because NIST did not provide this information to GAO until after the review was complete, GAO was unable to determine the effect of those changes.

What GAO Recommends

GAO is making 5 recommendations to improve NIST's management of its interagency agreements, including holding senior managers responsible for strategic workload management, improving internal monitoring and reporting, ensuring compliance with applicable fiscal laws, and communicating key information to clients on its agreement status. NIST agreed with all 5 recommendations and is taking action to implement them by the end of this fiscal year.