DEPARTMENT OF COMMERCE

     The Commerce Department provides information, technology services, and science that assist American business and society. It makes possible the weather reports heard every morning; it facilitates technology that Americans use daily in the workplace and at home; it supports the collection and development of statistical information essential for competitive business and our representative democracy; it helps American firms and consumers benefit from open and fair international markets; it seeks to manage our marine fisheries; and it supports environmental and economic health in the communities where we live.

     This array of activities is reflected in Commerce’s three strategic goals:

• Provide the information and economic framework to enable the U.S. economy to operate efficiently and equitably, both nationally and globally;

• Provide the infrastructure for innovation with cutting-edge science and technology to enhance American competitiveness; and

• Observe and manage the Earth’s environment to promote sustainable growth.

Homeland Security

     The President’s Budget provides an additional $30 million for homeland security and critical infrastructure protection activities at the Bureau of Export Administration (BXA). BXA regulates exports of critical goods and technologies that could be used to damage national interests, while furthering the growth of legitimate U.S. exports to maintain our economic leadership. The funding increases in 2003 strengthen BXA activities that inhibit the global spread of dual-use goods and technologies that could be used in biological, chemical, and nuclear weapons of mass destruction. To reduce the risk of proliferation, beginning in 2003, BXA will post attaches in China, Egypt, India, Russia, Singapore, and the United Arab Emirates to reduce risks of trans-shipments through these countries to terrorist states. Also, BXA's Critical Infrastructure Assurance Office will work with the Office of Homeland Security to ensure that information technology systems and procedures are in place to provide broad access to relevant homeland security information for appropriate federal, state, and local government agencies.

     Homeland security investments will also be made in the National Oceanic and Atmospheric Administration (NOAA) and central departmental management offices. Specifically, the 2003 Budget addresses vulnerabilities in weather and satellite systems to ensure NOAA is able to maintain critical operations in crisis situations. The 2003 Budget also will strengthen physical and information technology security at the Department.

Status Report on Select Programs

     The Administration proposes a variety of measures to address Commerce Department performance issues, including increasing funding where needed for core activities, reducing funds for low-priority or unnecessary programs, and instituting management reforms where necessary. Below are summary ratings and explanations for major Commerce bureaus and programs. The summary ratings were developed by the Office of Management and Budget based upon Commerce performance data and evaluations conducted by the General Accounting Office (GAO), Commerce’s Inspector General, and groups such as the National Academy of Sciences.

Congressional Earmarks

     Congressional earmarks for non-competitively awarded projects divert resources that could more effectively meet the mission of the Department. For example, projects steering money to particular universities or localities sometimes draw funds from programs with far different purposes. Moreover, the dollar value of earmarks has been increasing in recent years. In 2000, there were about 100 unrequested projects costing about $170 million in the Department of Commerce. The Department’s 2002 appropriations include over $225 million for 96 unrequested projects. NOAA has over two-thirds of the Department’s congressionally directed earmarks—74 projects costing over $160 million. The 2003 Budget cuts many of these unrequested projects and redirects funds to activities that can most effectively meet the Department’s three strategic goals.

Strengthening Economic Information and Framework

     The President’s Budget proposes to strengthen core Commerce activities in areas such as statistical programs and international trade compliance.

     The Bureau of Economic Analysis (BEA) supplies the nation’s key economic statistics, including gross domestic product (GDP), which are crucial ingredients for business and government decision making. An additional $10 million in 2003 will enable BEA to improve the statistical processing systems for its economic data, accelerate the release of major economic estimates, and incorporate new international economic data classification systems. Although the U.S. GDP statistics are widely regarded as among the best in the world, they require continued improvements to keep pace with the nation’s rapidly changing economy.

     This budget proposes a $223 million increase for the Bureau of the Census for a variety of activities, including the Department’s efforts to reengineer the 2010 Census. As a major part of this work, Census will launch the American Community Survey, which will provide detailed demographic data on an annual—rather than decennial—basis. During 2003, Census also will be collecting data for two other cyclical censuses, the Economic Census and the Census of Governments. The Economic Census paints a detailed portrait of the national and local economies every five years, with information on the nearly 23 million businesses and establishments in the nation. Funding in 2003 also supports dissemination of Census 2000 data, including detailed results from the census long form. The challenge for the Department will be to retain a highly accurate decennial census in 2010, while avoiding per capita real cost growth.

     This budget also proposes $177 million for the first of two new buildings for the Census Bureau in Suitland, Maryland. Census’s current facilities are among the worst in the inventory of the General Services Administration and have decayed beyond the point where renovation would be cost-effective.

     The International Trade Administration (ITA) is responsible for assisting the growth of export businesses, enforcing U.S. trade laws and agreements, and improving access to overseas markets by identifying and pressing for the removal of trade barriers. The 2003 Budget provides increased funding for ITA’s trade compliance activities. In addition, ITA will be undertaking a study of fee options in 2002 to develop an appropriate model for cost recovery from firms that receive trade promotion services.

     The budget proposes a small reduction in funding for the Economic Development Administration (EDA) to bring resources in line with congressionally authorized levels and program needs. EDA is supposed to help communities across the nation create economic opportunity by promoting a favorable business environment to attract private capital investments and high-wage jobs, principally through infrastructure investments and capacity building. While the 2003 Budget streamlines EDA programs, it increases Trade Adjustment Assistance to firms, which provides technical assistance to U.S. manufacturers injured by increased imports. EDA is reviewing its performance measures to ensure that it can evaluate its effectiveness in creating sustainable employment in distressed communities.

     The Minority Business Development Agency (MBDA) works to facilitate access to resources for the minority business community in order to help grow minority businesses. MBDA is seeking to transform from an administrative agency to an entrepreneurial organization. The budget proposes that MBDA work more closely with the Small Business Administration (SBA), to take advantage of SBA’s very large network of offices (including over 1,000 Small Business Development Centers) and extensive programs for minority and disadvantaged firms. This strengthened cooperation and other MBDA efforts are intended to help the agency meet its mission to deliver high-quality services nationwide. In 2000, MBDA exceeded its target for the dollar value of contracts received by assisted minority businesses, but fell short of its targets for the number and dollar value of loans received by assisted businesses.

Providing Infrastructure for Technological Innovation

     The 2003 Budget strengthens key Commerce programs that provide infrastructure to enable U.S. businesses to maintain their technological edge in world markets, while reducing two programs that have provided subsidies in the past.

     The budget provides increased funding for the laboratories of the National Institute of Standards and Technology (NIST), which works with industry to develop and promote measurement standards that support technological innovation. NIST laboratories specialize in electronics, manufacturing engineering, chemical science, physics, materials science, building and fire research, and information technology. The 2003 Budget provides $50 million to make the Advanced Measurement Laboratory, a new facility designed to meet state-of-the-art research requirements, fully operational. The budget also provides $17 million for NIST’s Boulder, Colorado facilities.

     Consistent with the Administration’s emphasis on shifting resources to reflect changing needs, the 2003 Budget also proposes to significantly reduce federal funding for the Manufacturing Extension Partnership (MEP). MEP’s original legislative design called for a phase-out of federal monies to each center after six years of funding, with the goal of making each center self-sufficient. The 2003 Budget restores the program’s original design; most MEP centers are now far more than six years old.

     MEP was designed to provide information and consulting services to help businesses adopt more advanced manufacturing technologies and business practices. To the extent that evaluations demonstrate that MEP-assisted firms are more productive and competitive, firms should be able to pay for the services that help increase their profits.

     The budget also reduces funding for the Advanced Technology Program (ATP) from $185 million in 2002 to $108 million in 2003. In 2003, new ATP awards will be reduced to $35 million. The rationale for ATP, which makes research and development grants to commercial firms, has declined since it was first enacted in part to respond to a belief that U.S. firms were being out-competed by foreign, and especially Japanese, firms. ATP also will be modified in 2003 to address criticism that the program constitutes an unwarranted corporate subsidy. Past GAO reports have criticized ATP, stating that the program was funding projects similar to those already underway in the private sector. In addition, ATP monies have gone to some of the nation’s largest corporations. The proposed changes will expand university participation, limit large-firm involvement, and include a cost-recoupment mechanism to protect American taxpayers.

     The budget strengthens the spectrum management capabilities of the National Telecommunications and Information Administration by providing $3 million to begin the process of spectrum management reform and to upgrade its radio quiet zone test facility in Colorado. In addition, the Administration will propose legislation to streamline the current process for reimbursing federal agencies that must relocate from spectrum auctioned to commercial users. However, the budget proposes to terminate the Technology Opportunities Program, which provides grants for applications of telecommunications technologies. With the expansion of the Internet and related technologies into all sectors of society, federal subsidies are not justified to prove the usefulness of such technologies.

     The 2003 Budget funds a 21-percent increase (+$239 million) in resources available to the U.S. Patent and Trademark Office (USPTO) to address the agency’s growing workload in the area of intellectual property. USPTO issues patents and registers trademarks. It also works to promote the protection of U.S. intellectual property rights around the world through international treaties. With the passage of the American Inventors Protection Act of 1999, USPTO was designated as a “performance-based-organization,” which provides the agency additional management flexibilities while ensuring that senior managers' tenure and compensation are at risk based upon their achieving organizational performance targets.

     After a few years of relatively flat patent and trademark production, USPTO expects to meet the following increased performance targets with its 2003 funding:

• Complete (i.e., issue or deny) 286,000 patents, a 20-percent increase over 2002;

• Register 138,600 trademarks, a 13-percent increase over 2002; and

• Reduce total trademark pendency to 13.5 months, a 13-percent improvement.

Observing and Managing the Nation’s Oceanic and Atmospheric Environment

     The budget provides an additional $93 million for the National Oceanic and Atmospheric Administration (NOAA) to improve forecasts of severe storms and the satellite infrastructure needed to support weather and climate prediction and research. Funding is also provided to improve fisheries management. However, many earmarks and funds that do not support NOAA’s core stewardship missions have been redirected. In addition, funding will support critical infrastructure and homeland security activities within NOAA.

     The accuracy of NOAA’s National Hurricane Center hurricane “track” forecasts has improved by about 50 percent over the past 30 years. Errors for three-day track forecasts decreased on average from over 400 nautical miles in 1970 to about 200 miles today. In 2003, resources will be directed to advanced observational systems and modeling to further improve hurricane intensity and track forecasts. NOAA expects these advances to provide more timely evacuations and to increase the lead time for hurricane warnings from 24 hours in 2002 to 28 hours in 2005.

     Similarly, following modernization investments, tornado warning lead times have almost doubled—from six minutes in 1993 to more than 10 minutes today. The National Weather Service aims to further increase lead times to 15 minutes by 2005.