National Institute of Standards and Technology: Carryover Balances for Fiscal Year 1997

Published by the Government Accountability Office on 1997-04-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States
General Accounting Office
Washington, D.C. 20548

Resources, Commnnity, and
Economic Development Division


April 30, 1997

The Honorable Judd Gregg
The Honorable Ernest F. Hollings
Ranking Minority Member
Subcommittee on Commerce,
  Justice, State, and the Judiciary
Committee on Appropriations
United States Senate

The Honorable Harold Rogers
The Honorable Alan B. Mollohan
Ranking Minority Member
Subcommittee on Commerce,
  Justice, State, the Judiciary, and
  Related Agencies
Committee on Appropriations
House of Representatives

Subject:    National Institute of Standards and Technologv: Carrvover Balances
            for Fiscal Year 1997

As agreed with your offices, we are providing you with information on our
review of the National Institute of Standards and Technology’s (NISI’) carryover
balances for fiscal year 1997. Our objective was to identify the unobligated and
obligated but unexpended balances carried over from fiscal year 1996 to fiscal
year 1997 that could be used to reduce NIST’s fiscal year 1998 budget request-l
We first identified these balances for NIST’s major programs by obtaining
relevant budget data from NIST’s budget office and then obtaining explanations
from program managers of the reasons for these carryover balances. The NIST
programs included in our review were the Advanced Technology Program

Unobligated carryover balances represent the portion of prior years’ budget
authority that has not yet been obligated. Obligated but unexpended balances
represent the portion of NIST’s budget authority that has been obligated for
goods and services but for which the agency has not yet incurred costs.
                                          GAO/RCED-97-144R   NIST   Carryover   Balances

(ATP), the Manufacturing Extension Partnership (MEP) program, and the NIST
new construction program.


As discussed in enclosure I, the budget for NIST’s major program areas has
declined from about $851 million in fiscal year 1995 to about $588 million in
fiscal year 1997-a reduction of about 31 percent. Most of this decrease can be
attributed to a reduction of over $200 million in the ATP budget and a
congressional decision not to provide new funding for the new construction
program in fiscal year 1997. During this same period, the unobligated carryover
balances of the programs we reviewed also declined significantly, from about
$267 million to an estimated $6.7 million, or 1 percent of NIST’s obligational
authority available during fiscal year 1997.

A number of factors contributed to the decline in unobligated carryover
balances, including the reduction in available budget authority and MST’s
decision to obligate funds during fiscal years 1995 and 1996 for the future years
of ongoing ATP projects. By forward funding, or obligating funds for the future
years of ongoing ATP projects, NIST was able to reduce its unobligated
carryover balance at the end of fiscal year 1996 to about $42 million. We also
note in our enclosure that as unobligated carryovers for ATP and the other
NIST programs have declined, carryovers of obligated but unexpended funds
have increased. This increase can be explained by the increase in program
obligations, caused, in part, by the forward funding for ATP and the NIST grant
process, which may delay the expenditure of funds for some time after they are

ATP officials told us that they expect to obligate all of the funds available to
them-$225 million in new appropriations in fiscal year 1997, plus the $42
million in unobligated carryover from 1996-by the end of fiscal year 1997.
However, we question ATP’s ability to completely obligate all of these funds.
At the time of our review, ATP had not yet begun to review most of the
proposals for the seven separate new competitions announced earlier in fiscal
year 1997. The review, selection, and approval of individual ATP project
proposals from the private sector can be a lengthy process. In addition, the
Department of Commerce was just beginning a study of ATP’s funding policy in
response to congressional concerns about the size and potential growth of the
ATP program. Actions taken as the result of this review could affect the timing
 and award of new ATP projects throughout the remainder of fiscal year 1997.

 2                                         GAO/RCED-97-144R   NIST Carryover   Balances

We provided a draft of this report to the Department of Commerce for review
and comment. The Department said that it generally agreed with our report,
indicating that the data and conclusions were consistent with the information
agency staff provided to us. In addition, the Department said that our concern
about the ability of the ATP program to obligate available funds was
“understandable,” but that it anticipates selecting all awat-dees by the end of the
fiscal year. Also, Commerce provided us with a technical clarification,
regarding budget terminology, which we incorporated into our report.

We performed our review from October 1996 through March 1997 in accordance
with generally accepted government auditing standards. If you have any
questions, please contact me on (202) 512-3841. Major contributors to this
report were Ronald E. Stouffer and Richard E. Iager.

Victor S. Rezendes
Director, Energy, Resources,
   and Science Issues


3                                           GAO/RCED-97-144R   NIST Carryover   Balances
ENCLOSURE I _                                               ENCLOSURE I

 MCI Resources Community, and Economic
     Developrn&t Division

           Review of National Institute of Standards
           and Technology’s Carryover Balances
           for Fiscal Year 1997


                                  GAOIRCED-97-144R   NIST Ckryover   Balances
ENCLOSTJREI                                                        ENCLOSURE I

 GAo Objectives

     l   For selected National Institute of Standards and
         Technology (NIST) programs, determine program
         funds and carryover balances of unobligated and
         unexpended funds.
     l   Obtain agency explanations for any carryover
         balances and make judgments on their

                                      GAOiRCED-97-144R   NIST Carryover   Balances
ENCLOSURE I                                                           ENCLOSURE I

 MO           Background--Overview of NET
    l   The NIST mission is to

        -- assist industry in the development of technology to
           improve product quality,

        --   modernize manufacturing    processes to ensure
             product reliability, and

        -- facilitate rapid commercialization     of products based
           on new scientific discoveries.

                                           GAO/RCED-97-144R   NIST Carryover   Balances
ENCLOSURE I -                                                      ENCLOSURE I

           Background-NET           Program Areas

      0 The major program areas of NIST are:

          --Advanced Technology Program (ATP),

          --Manufacturing   Extension Partnership (MEP),

          --NIST Laboratory System, and

          --National Quality Program (NQP)
      l   NIST has also been pursuing a IO-year program of new
          construction and renovation of its campuses in
          Gaithersburg, MD, and Boulder, CO.

                                       GAOLRCED-97-1&R   NIST Carryover   Balances
ENCLOSURE1 -.                                                      ENCLOSUREI

 MCI NIST Appropriation Accounts

        l    Industrial Technology Services (ITS), which funds
             ATP and MEt?
        l    Scientific and Technical Research and Services
             (STRS), which funds the NIST Laboratory System
             and the National Quality Program.     _
         l   Construction of Research Facilities (CRF), which
             funds new construction, renovation, and
             maintenance of NIST facilities in Boulder and

                                        GAO/RCED-97-144R   NIST Carryover   Balances
ENCLOSURE I .-                                                     ENCLOSURE I

 MCI NIST Appropriations Summary-
     (Dollars in millions)
 l   Appropriated funds for the major activities have declined
     since 1995 because of major cuts in ATP and CRF. NIST
     appropriations are available until expended.

                          FY       FY          FY         -      Percent
         Program        1995      1996        1997               chancre
          ATP           $431 .o $221 .o $225.0                    -47.8
           MEP            90.6     80.0   95.0                     +4.9
         STRS            265.0   259.0   268.0                      +I.1
         CRF              64.7    60.0     0.0                   -100.0
         Total         $851.3   $620.0 $588.0                     -31.0

                                      GAOIRCED-97-144R   MIST Carryover   Balances
ENCLOSTJREI ‘.                                                     ENCLOSURE I

           FOR FY 1998 (Dollars in millions)
  l   NIST has requested $692.6 million for its major programs
      for FY 1998. Only maintenance funds were requested for

           Prouram       1998 reauest            Increase
              ATP            $275.6                $50.6
              MEP             123.4                 28.4
            SRTS              276.9                  8.9
            CRF                16.7                 16.7
           Total             $692.6               $104.6

                                        GAO/BCED-97-144B   NIST Carryover   Balances
ENCLOSURE I -                                                      ENCLOSURE I

 MY* Program Areas Selected for Review

         l   On the basis of funding levels and program
             importance, we selected ATP, MEP, and CRF for
             detailed review. There has been strong
             congressional interest in ATP and the efforts to
             construct new NIST facilities.

                                       GAOIBCED-97-144B   MST Carryover   Balances
ENCLOSURE I                                                        ENCLOSURE I

 (~0         Unobligated Carryovers for the
             Selected NET Programs

         l   Unobligated carryovers, in millions, for NIST
             programs have been declining and are expected to
             decrease to $6.7 million by the end of FY 1997.

             Program     FY 1995    FY 1996’ FY 1997 (est.)
             ATP         $136.4      $41.7         0.0
             MEP            35.8       30          00
             CRF            94.5      46.b       $6’7
             Total        $266.7     $90.7        $6.7

                                        GAOIRCED-97-144R   NIST Carryover   Balances
ENCLOSURE 1.                                                          ENCLOSURE I

 m*         Explanation of Unobligated

        l   ATP officials told us that the $41.7 million carryover
            for FY 1996 was largely the result of delays in
            obligating funds to certain joint venture projects, as
            well as the termination of several others. ATP
            officials currently say that there will be little or no
            carryover of unobligated funds at the end of FY 1997.

                                         GAOLRCED-97-144R   NIST Carryover   Balances
ENCLOSURE I -                                                          ENCLOSURE I

 a*            Explanation of Unobligated
               Carryovers--ATP Continued
    l       Traditionally, ATP has obligated projects only on a
            year-to-year basis. Only two competitions from FY 1994
            have been multiyear obligated (forward funded) at the
            point of award.
    l       In FY 1995 and FY 1996, ATP multiyear obligated all of the
            in-progress, annually funded projects from FY 1994 and
            prior-year competitions because of concern about the
            future of the program. This helped to decrease the
            program’s unobligated balance.
        l   In FY 1997, ATP said that it will only fund (obligate)
            projects on a year-to-year basis, although Commerce is
            “relooking” at ATP’s funding policy as the result of
            conaressional interest.

                                           GAO/RCED-97-14-4R   NIST Carryover   Balances
ENCLOSURE I -                                                       ENCLOSURE I

 a*        Explanation of Unobligated
           Carryovers--ATP Continued
   l   ATP may have difficulty obligating all funds in FY 1997 for
       the following reasons:

       -- Slow start announcing new competitions           (most were not
          announced until after January 1997).              -

       -- Heavy workload. Seven new competitions announced
          and general competition from the end of FY 1996 to

       -- At the end of March 1997, no funds had been
          obligated for the new competitions.

                                        GAO/RCED-97-144R   NIST Carryover   Balances
ENCLOSURE I                                                             ENCLOSURE I

 w             Explanation of Unobligated Carryovers-
          l   MEP officials told us last year, during our review,
              that they did not anticipate any substantial carryover
              of unobligated funds. MEP ended the year with an
              unobligated carryover of only $3 million. MEP
              officials said that they do not anticipate any
              unobligated carryover at the end of FY 1997.

                                             GAO/RCED-97-14&t   NIST Carryover   Balances
ENCLOSURE I .-                                                      ENCLOSURE I

 a*        Explanation of Unobligated
  l   CRF had an unobligated carryover of $46.1 million at the
      end of FY 1996 for several reasons. This amount was
      reduced by a $16 million rescission of funds.
      --The Congress informally directed the de-obligation of
        $43 million, because of concerns expressed by the
        Department of Commerce’s Inspector General.

      --The Inspector General’s concerns about a proposed
        solicitation designed to simplify the contracting
        approach, referred to as the “Omnibus Contract
        approach,” halted the contracting initiative for the
        construction for the Advanced Technology Laboratory

                                       GAOLRCED-97-144R   NIST Carryover   Balances
ENCLOSURE I‘                                                               ENCLOSURE I

 GAOExplanation of Unobligated Carryovers
    --CRF Continued
             l   CRF officials told us that all but $6.7 million of the
                 carryover from FY 1996 will be used for safety and
                 capacity maintenance of NIST facilities. The $6.7
                 million will be used to furnish and equip the
                 Advanced Chemical Sciences Laboratory, now
                 under construction. According to NIST officials, the
                 Congress told them that no more funds would be
                 provided for the construction or equipping of this


                                               GAO/RCED-97-14-4R   NIST Carryover   Balances
ENCLOSURE I -                                                       ENCLOSURE I

 GA* Unexpended Carryovers for Selected
     NIST Programs--( Dollars in millions)
   l    Carryovers of unexpended obligations have been
        increasing, as unobligated funds have been decreasing.
        Since FY 1995, ATP and MEP unexpended balances
        have increased by about 43 percent and 300 percent,

        Proaram      FY 1995      FY 1996            FY 1997 (est.)
        ATP           $308.7      $419.3              $442.6
        MEP             34.2        104.2               136.6
        CRF             67.5         74.1                63.3
        Total         $410.4      $597.6               $642.5

                                       GAOIRCED-97-144R   NIST Carryover   Balances
ENCLOSURE I .’                                                      ENCLOSURE I

  GM        Explanation for Carryovers of
            Unexpended Obligations--ATP
  l   ATP officials provided several reasons for the balances.

      --The timing of obligations and expenditures are tied to the
        cycles of individual competitions and renewals for those
        competitions. Many times obligations of one year are not
        expended until the following year or longer.

      --Changes in the planned renewals contributes to this

      --Multiyear obligation (forward funding) for all
        competitions/projects   initiated in FY 1994 and prior
        years increased this balance.

                                         GAO/RCED-97-144R   NIST Carryover   Balances
ENCLOSURE I _                                                       ENCLOSURE I

 MO         Explanation for Carryovers of
            Unexpended Obligations--MEP & CRF

       l   MEP officials said that the timing of their
           competitions for centers and other program activities
           are not always closely linked to the fiscal year time
           frame and, therefore, contribute to the carryovers.
       l   According to CRF officials, unexpended obligations
           are to be expected with construction contracts. The
           prudent management and expense of obligations or
           delays in contract phases can contribute to the size
           of unexpended balances.

                                        GAOiRCED-97-1&R   NIST Carryover   Balances
ENCLOSURE I ~                                                     ENCLOSURE I

 G4o Summary

    l   Total appropriations for the NIST major programs have
        declined over the past 3 years, especially for ATP and
        CRE Cutbacks have resulted in an overall budget
        reduction of $263.3 million in NIST appropriations since
        FY 1995.
    l   The unobligated balances for each of our selected
        programs has also declined. According to NIST budget
        officials, this is due primarily to reduced congressional
        funding for certain NET programs, specifically ATP
        and the construction program. NIST currently
        estimates that for FY 1997, unobligated carryovers will
        be about $6.7 million.

                                        GAO/RCED-97-1&R   NIST Carryover   Balances
ENCLOSURE I                                                          ENCLOSURE I

 GACJ Summary Continued

        l    ATP officials may be more hopeful than justified in
             their ability to process, select, award, and obligate
             most of their funds for the seven new competitions
             and the FY 1996 general competition by the end of
             this fiscal year.

        l    ATP’s apparently flexible policy on when to
             multiyear obligate projects permits control of
             unobligated balances but increases their
             unexpended obligations. ATP’s funding could be
             controlled by setting limits in the appropriations act.

                                          GAO/WED-97-144R   NIST Carryover   Balances
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