Exporters, Particularly to SMEs

The goals and activities of the U.S. and Foreign Commercial Service  contribute to the National Export Initiative (NEI) goal of doubling the dollar  value of U.S. exports from $1.57 trillion in 2009 to $3.14 trillion by the end  of 2014. CS also advocates on behalf of U.S. companies interested in competing  for government contracts in foreign countries. Supporting the NEI has not required CS to undertake any new activities;  however, it has prompted CS to direct more of its efforts toward certain  markets, specific kinds of activities, NEI-priority sectors such as services  and clean-energy technology, and firms currently exporting to one or two  markets but capable of expanding into additional markets. CS data indicate that the greatest number of CS  export successes have come from firms that were increasing exports into  markets where the firms were already exporting (increase-to-market  firms). Commercial Service Is Modifying Performance Measures to Align More Closely with the NEI

In fiscal year 2012, CS will implement revised performance measures that  align more closely with the NEI. Although CS did not meet four of six  performance targets in fiscal year 2010, its efforts resulted in increases  for most of its measures as it shifted to address NEI priorities. CS’s new  revised set of performance measures for fiscal year 2012 addresses  some past weaknesses; however, some weaknesses will remain—for  example, underreporting of export successes, especially with regard to  their dollar value. Compared with its 2010 performance measures, CS’s 2012 measures  shift its emphasis in two ways that are consistent with the overarching  NEI goal of doubling the total value of U.S. exports: First, the 2012  measures put new focus on the dollar value generated by CS’s export  promotion activities and on helping firms already exporting to expand to  new markets rather than on helping new-to-export clients. (See measures 2, 3, and 5 in table 2.) Commercial Service’s Resource Allocation Process Does Not Make Full Use of Relevant Information to Guide Its Decisions

Systematic use of economic, performance, and activity data can help CS  allocate resources to achieve its goals more efficiently and effectively. In  keeping with good management practices when making resource  allocation decisions, CS is using a data-driven process to prioritize foreign  markets (and domestic locations) and to help it allocate its staff and other  resources to meet its performance goals and to support NEI objectives. Our analysis of the quantitative parts of the process found that there may  be opportunities to reallocate overseas resources to better reflect NEI  priorities and better achieve CS’s new performance goals. Furthermore,  important available data related to some CS performance goals and  activities are not systematically considered in the current process.   Overseas model. 4). exports to a trading partner  and total imports by the trading partner. While projections and  indicators of the future economic performance of countries necessarily  involve uncertainty, the Overseas Resource Allocation Model, though  designed to reflect export potential, currently gives greater weight to  historical variables that have a high degree of overlap with the other  historical inputs in the resource allocation process. CS does not collect systematic information on how CS  staff divide their time to carry out mission-critical activities.   To improve program management and the information that CS  resource allocation decisions are based upon,  review the Overseas Resource Allocation Model to determine  whether the variables and structure best incorporate available  indicators of potential U.S. exports,  include commercial diplomacy and advocacy data in evaluating  cost-benefit ratios of CS locations, and  systematically include program activity data in making resource  allocation decisions. In its written comments, Commerce welcomed and generally agreed with  our overall findings and recommendations. Information from the six posts is not generalizable but was  used to understand how activity data are collected, input, and used at  posts and in headquarters, as well as to identify potential problems with  the data and to learn about data-audit procedures, topics also discussed  in interviews with CS officials in Washington, D.C.
To determine if CS performance measures accurately reflect its activities  and align with the NEI, we reviewed CS’s fiscal year 2010 performance  measures and assessed its 2012 performance measures to see if they  changed to align with the NEI.
Why GAO Did This Study

Recognizing the potential of increased exports to drive economic growth and create jobs, President Obama in 2010 launched the National Export Initiative (NEI), aimed at doubling the dollar value of U.S. exports by the end of 2014. As requested, GAO examined the extent to which (1) the goals and activities of the U.S. and Foreign Commercial Service (CS) support the NEI, (2) CS performance measures accurately reflect its activities and align with the NEI, and (3) CS incorporates relevant data in allocating resources to help achieve its strategic goals. GAO interviewed Department of Commerce (Commerce) officials, particularly from CS, and CS staff and officials at six overseas posts. GAO analyzed the NEI's priorities, and documents and data related to CS activities and performance.

What GAO Found

CS's goals and activities generally support NEI priorities by, for example, arranging trade missions, assisting U.S. exporters with trade problems, and advocating on behalf of U.S. firms competing for foreign government contracts. The NEI has not required CS to undertake new activities; however, it has prompted CS to direct more of its efforts toward certain markets, activities, and sectors and to shift its focus from firms that are new to exporting to firms already exporting, as firms exporting to new markets or increasing exports to markets in which they are already active produce the greatest share of export successes. In fiscal year 2012, CS will implement revised performance measures that align more closely with the NEI. Although CS did not meet four of its six performance targets in 2010, it achieved increases in most of its measures as it shifted to address NEI priorities. CS's revised performance measures for fiscal year 2012 address some past weaknesses; however, some weaknesses will remain--for example, the lack of a measure for customer-service satisfaction and the clients' underreporting of export successes, especially with regard to dollar value. CS's new measures necessitate that export success data be complete and accurate; otherwise, CS's efforts to support the NEI goal will be undervalued and policymakers will not have an accurate picture of CS's performance. CS's resource allocation management process does not make full use of relevant information to guide its decisions. CS is using a data-driven process to prioritize foreign markets (and domestic locations) and to help it allocate staff and other resources to meet its performance goals and support NEI objectives. GAO's analysis of the quantitative parts of the process, however, found that there may be opportunities to reallocate overseas resources to better reflect NEI priorities and better achieve CS's new performance goals. The overseas model, designed to reflect export potential of partner countries, currently gives greater weight to historical variables that have a high degree of overlap with the other historical inputs in the resource allocation process. Also, the process does not systematically consider important available data on commercial diplomacy and advocacy, which are related to CS performance goals, and program activity data on how CS staff divide their time. Including such data in the process would help Commerce managers make decisions informed by the best available information.

What GAO Recommends

GAO recommends that the Department of Commerce (1) take steps to improve the CS customer-service survey response rate and include customer-service-related data in its performance measures, (2) take further steps to achieve greater cooperation by CS clients in reporting the dollar value of export successes, (3) review CS's Overseas Resource Allocation Model to determine whether its variables and structure best incorporate available indicators of potential U.S. exports, (4) include commercial diplomacy and advocacy data in evaluating cost-benefit ratios of CS locations, and (5) systematically include activity data in making resource allocation decisions. Commerce welcomed and generally agreed with the overall findings and recommendations in the report.