Growth services. 1). To receive federal financial assistance from NIST, MEP centers must  match the federal contribution with a nonfederal contribution. According to NIST’s 2017 congressional  budget request, recompetition would increase the capacity and capability  of the MEP centers to help small and medium-sized manufacturers,  including very small manufacturers—those with fewer than 20  employees—and rural manufacturers. Most Centers Reported that the Cost Share Adjustment Has Helped Them Better Serve Manufacturers, but Some Officials Noted that the Impact Is Hard to Measure

In response to our survey, most MEP centers reported that the AICA cost  share adjustment has helped them serve manufacturers, but some center  officials indicated that the impact is hard to measure. Specifically, most  MEP centers we surveyed reported that the AICA’s adjustment of the cost  share to 1:1 for the life of a center’s cooperative agreement has increased  their financial stability and helped them serve very small and rural  manufacturers. One center official said that the cost share adjustment has allowed the  center to provide new services that it was not able to provide prior to  the adjustment because the center struggled to meet its cost share  requirement. For example, in response to an open- ended survey question, centers provided the following as possible factors  other than the cost share adjustment that could have impacted their  operations:  the strength of the overall economy of the nation or of the state in  which they are located (19 centers), budgetary or political stability in their state (e.g., stability of state  funding) (19 centers), and
NIST’s recompetition of nearly all MEP centers’ cooperative  agreements between 2014 and 2017 (10 centers). Should the cost share structure revert to what it was before the 2017  adjustment, most of the 51 MEP centers that we surveyed stated that  they likely would be less able to serve manufacturers, particularly very  small and rural manufacturers. NIST Data Show Some Changes in Centers’ Finances and Activities, but the Changes Generally Predate the Cost Share Adjustment

Our analysis of NIST data indicates that there have been some changes  in MEP centers’ finances and activities since the 2017 AICA cost share  adjustment. NIST data on funding for the MEP centers show that, from fiscal year  2017 to fiscal year 2018, the amount of federal assistance to the MEP  centers increased and funds reported by MEP centers to meet cost share  requirements decreased. However, these changes generally began  around fiscal year 2013. With  enactment of the AICA, all MEP centers operated under a 1:1 cost share  in fiscal year 2017. When we analyzed NIST’s data, we found that the total  number of manufacturers and the number of very small manufacturers  served began increasing around fiscal year 2014, when NIST started  recompeting centers’ cooperative agreements, and this increase  continued through fiscal year 2018. Looking forward, NIST  officials said one impact of the 2017 cost share adjustment is that it will  help sustain recent increases in the number of very small and rural  manufacturers served by MEP centers. Appendix I: Objectives, Scope, and Methodology

The objectives of our review were to describe (1) Manufacturing  Extension Partnership (MEP) centers’ views regarding the extent to which  the recent cost share adjustment has helped them serve manufacturers  and (2) the extent to which National Institute of Standards and  Technology (NIST) data show impacts of the cost share adjustment on  centers’ finances and activities. What has changed since the AICA set the cost share at 1:1? We also reviewed NIST  guidance for the MEP program and interviewed NIST and MEP center  officials to gain an understanding of the MEP center activity data NIST  collects. Since the number of rural manufacturers served fluctuated during this  time period, however, we were unable to determine whether complete  data would indicate a general increase in the number of rural  manufacturers served similar to the increases in the total number of  manufacturers and the number of very small manufacturers served.
Why GAO Did This Study

Small and medium-sized manufacturers are an important part of the U.S. economy. In 1988, to enhance the competitiveness, productivity, and technological performance of U.S. manufacturing, NIST established what is now called the MEP program. The program supports manufacturers through services provided by MEP centers. The centers, located in all 50 states and Puerto Rico, are operated by nonfederal organizations. The MEP centers provide assistance, either directly or through third parties, to help improve manufacturing firms' processes and productivity; expand their capacity; and help them adopt new technologies, utilize best management practices, and accelerate company growth. NIST enters into a cooperative agreement with the nonfederal organization that runs each center to provide federal financial assistance conditional upon the center contributing nonfederal matching funds—known as a cost share.
The AICA included a provision for GAO to review the effect of the 2017 cost share adjustment. This report describes (1) the MEP centers' views regarding the extent to which the recent cost share adjustment has helped them serve manufacturers and (2) the extent to which NIST data show impacts of the cost share adjustment on centers' finances and activities. GAO surveyed all 51 MEP centers, analyzed NIST data on the MEP program, and interviewed NIST and MEP center officials.

What GAO Found

Most Manufacturing Extension Partnership (MEP) centers reported that the January 2017 American Innovation and Competitiveness Act (AICA) cost share adjustment has helped them serve manufacturers, especially very small (i.e., less than 20 employees) and rural ones. The AICA adjusted the cost share ratio to remain at 1:1, that is, $1 of nonfederal contributions for each $1 of federal assistance. Before the adjustment, MEP centers' cost share requirement increased over the course of their cooperative agreements from 1:1 to 2:1, requiring centers to obtain a greater proportion of revenue from nonfederal sources. In GAO's survey of all 51 MEP centers, 44 centers cited positive effects of the adjustment on center operations, such as helping to improve center services or better reach underserved manufacturers. Also, 41 centers indicated the adjustment increased their financial stability, which some centers stated has allowed them to focus less on revenue generation and to serve very small and rural manufacturers. However, some MEP center officials observed that the AICA cost share adjustment impact is hard to distinguish from other factors, such as the National Institute of Standards and Technology's (NIST) recompetition of nearly all centers' cooperative agreements between fiscal years 2014 and 2017. The recompetition increased the level of federal financial assistance for most centers and reset many centers' cost share ratio from 2:1 to 1:1 prior to the 2017 adjustment. Still, center officials said that if the cost share requirement reverted to what it was prior to the 2017 adjustment, centers would be less able to serve manufacturers, particularly very small and rural ones.
NIST data show that there have been some changes in MEP centers' finances and activities since the AICA cost share adjustment; however, these changes generally began prior to the adjustment. For example, NIST data on centers' finances show an increase in federal assistance and a decrease in reported nonfederal contributions from fiscal year 2017 to 2018, but these changes generally began around fiscal year 2014, when NIST began the recompetition process. Similarly, NIST data on centers' activities show an overall increase in the numbers of very small and rural manufacturers served from fiscal year 2017 to 2018. While the change in the number of very small manufacturers served began around fiscal year 2014, the number of rural manufacturers served fluctuated from fiscal years 2014 through 2018. Like MEP center officials, NIST officials said the impact of the AICA cost share adjustment is intertwined with the recompetition impacts and, going forward, the AICA adjustment may help sustain recent increases in the number of very small and rural manufacturers served.