	DOE’s Authority for Conducting Trade Missions and Role in Export Promotion Activities

Before discussing the specifics of DOE trade missions, I would first like to provide some context by reviewing DOE’s statutory authority for conducting overseas trade missions and its role within the federal export promotion apparatus. DOE’s high-level advocacy on behalf of U.S. energy companies is conducted in emerging energy markets like China, India, and Pakistan. Value of the Business Agreements Reported by DOE

Despite the difficulties in measuring the impact of federal advocacy activities, DOE has reported the results of its advocacy based on the value of signed business agreements. In a December 28, 1995, letter to the Chairman of this Committee, the Secretary of Energy stated that the Secretary’s four trade missions resulted in $19.7 billion in potential and finalized agreements. These agreements include memorandums of intent or understanding (the first and necessary step to any business deal), fuel supply and power purchase agreements for power plants, oil and gas exploration and production agreements, and other steps necessary to advance business deals. Finalized Agreements

DOE has reported that of the $19.7 billion in agreements, about $2.03 billion in business agreements have reached either “financial closure” or “sales agreement,” that is, have been finalized. According to program officials, the planning for these missions was complicated by time constraints and frequent, last-minute changes in plans. These planning difficulties were further compounded by DOE’s lack of familiarity with the requirements for conducting large, overseas trade missions. These new procedures are designed to help assure that DOE’s future international missions are more cost-effective and better managed, but they have yet to be fully tested in practice. DOE’s total cost of the four missions was about $2.8 million (see app.
Why GAO Did This Study

GAO discussed four trade missions sponsored by the Department of Energy (DOE), focusing on: (1) DOE authority and role in these missions; (2) the results of the missions; and (3) management weaknesses inherent in DOE-sponsored trade missions.

What GAO Found

GAO noted that: (1) the Secretary of Energy has explicit statutory authority to undertake export promotion activities; (2) in 1995, DOE funding for export promotion totalled $14 million; (3) DOE performed advocacy on behalf of U.S. energy companies seeking to capture some of the emerging energy markets in China, India, and Pakistan; (4) it is difficult to measure the impact of these federal advocacy activities because sales forecasts are unclear, of the numerous participants involved, and of problems in calculating the value of sales agreements and maintenance contracts; (5) the four trade missions resulted in $19.7 billion in potential and finalized fuel supply and power purchase agreements and oil and gas exploration agreements; (6) DOE subsequently reported that finalized agreements totalled $2.03 billion, but export data show that the value of these agreements seem to be overstated by over 50 percent; (7) most companies participating in DOE trade missions support DOE efforts, but a few said that they could complete their business agreements without DOE involvement; (8) the planning for these missions is complicated by time constraints, last minute changes in plans, and lack of familiarity with conducting large, overseas trade missions; and (9) DOE has introduced new procedures to correct DOE management weaknesses, but they have not been fully tested in practice.