Commerce Working Capital Fund: Policy and Performance Measure Enhancements Could Help Strengthen Management
Fast Facts
Federal agencies need services like payroll and IT to support their work, and they can save money by sharing those services with other agencies. The Department of Commerce's Working Capital Fund finances some of these shared services.
Since our last review in 2011, Commerce has taken many steps to more effectively manage the Fund. For example, it established performance standards for service providers. But it doesn't consistently monitor whether the providers meet these standards. It also hasn't established standards for the Fund as a whole—so it can't measure the Fund's overall effectiveness.
Our recommendations address these and other issues.
The Working Capital Fund, which is generally self-sufficient, committed to spending $269 million in FY 2021—an increase from $145 million in 2011.
Highlights
What GAO Found
Created in 1944, the Department of Commerce's Working Capital Fund (WCF) supports services that are performed more efficiently when centralized. WCFs may also allow agencies to benefit from economies of scale and take advantage of specialized expertise. Since GAO's last review in 2011, obligations in Commerce's WCF have increased from $145 million in fiscal year 2011 to $269 million in fiscal year 2021.
The funding increase reflects the 2016 creation of a new Enterprise Services office to consolidate certain shared services (such as acquisitions and human capital), increased information technology spending (for cybersecurity, labor, and products), and inflation. Officials said the COVID-19 pandemic had a minimal effect on WCF spending.
Commerce has taken many steps to incorporate GAO's key operating principles for effective WCF management, but opportunities exist to further strengthen its management in some areas (see table).
Commerce's Implementation of Key Operating Principles for Effective Working Capital Fund (WCF) Management
|
Key Principle |
Summary of Commerce's Implementation |
|
Clearly delineate roles and responsibilities |
Commerce has defined most of the key roles and responsibilities involved with managing the fund, but has not documented the process for determining how a particular activity is funded. Commerce officials said they have an informal process for deciding what activities Commerce funds through the WCF. However, clearly documenting that process would promote greater transparency and consistency over time. |
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Ensure self-sufficiency by recovering the agency's actual costs |
Commerce generally has a transparent rate-setting and billing process to recover its actual costs, but has not documented its process for managing the WCF's unexpended balance. Commerce officials stated that they have not documented this process because they want to maintain flexibility in operating the fund. However, clearly documenting it would promote greater transparency and consistency, and help ensure the self-sufficiency of the fund. |
|
Measure performance |
Commerce has performance measures for many of its WCF services. However, Commerce does not have performance measures for the overall management of the WCF. There is also inconsistent monitoring of existing performance measures for WCF services. Commerce officials said they believe the existing performance measures for specific WCF services are sufficient to evaluate the performance of the fund. However, additional performance measures and more consistent monitoring of performance would give Commerce a fuller picture and clearer understanding of the WCF's effectiveness and help identify potential improvements. |
|
Build in flexibility to obtain customer input and meet customer needs |
All three WCF customers GAO interviewed—the Census Bureau, the National Oceanic and Atmospheric Administration, and the International Trade Administration—stated that they have opportunities to provide input about services in a timely manner. |
Source: GAO. | GAO-23-104624
Why GAO Did This Study
Consolidating and sharing services within and among agencies is one way agencies can operate more efficiently. Such shared services may be financed or supported through a centralized WCF to conduct business-like activities within and between federal agencies.
The Joint Explanatory Statement for the Consolidated Appropriations Act, 2020, includes a provision for GAO to review Commerce's WCF. This report examines (1) how the WCF and the services it supports have changed since GAO's last review in 2011, including any changes related to the COVID-19 pandemic; and (2) the extent to which Commerce is applying key operating principles for effective WCF management.
GAO reviewed Commerce policies, documents, and budget data, and interviewed Commerce officials. GAO also interviewed selected service providers and officials from the Census Bureau, the National Oceanic and Atmospheric Administration, and the International Trade Administration about their experiences as WCF customers. GAO selected these customers and service providers because they represented the largest share of the WCF's total activity.
Recommendations
GAO is making four recommendations to Commerce, including that Commerce more clearly document certain policies, create additional performance measures, and create a process to regularly review performance measures. Commerce agreed with the recommendations and plans to implement them.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Commerce | Commerce's Chief Financial Officer/Assistant Secretary for Administration should document in the WCF Handbook the process, including roles and responsibilities, for determining and reviewing whether activities should be funded through the WCF or through another account, such as Commerce's Salaries and Expenses appropriation account. (Recommendation 1) |
Closed – Implemented
In February 2023, Commerce updated its Working Capital Fund (WCF) Handbook to include the process for determining and reviewing whether activities should be funded through the WCF or another account. The new WCF Handbook also assigns responsibility to Commerce's Office of the Secretary Financial Management, in consultation with the Office of General Counsel, for making that determination. The newly documented process will help promote transparency and understanding among WCF stakeholders. It will also help ensure consistency in implementation over time.
|
| Department of Commerce | Commerce's Chief Financial Officer/Assistant Secretary for Administration should document a policy for managing the WCF's balances—including the end-of-year unobligated and obligated balances—that describes how fund managers should evaluate, use, and maintain the balances over time. (Recommendation 2) |
Open – Partially Addressed
In its comments on our report, Commerce agreed with this recommendation and stated that it planned to document a policy for managing the Working Capital Fund's (WCF) balances in the next WCF Handbook. In February 2023, Commerce updated its WCF Handbook and documented its goal of maintaining the WCF's year-end carry-over balance at four percent of the annual final operating budget. However, the WCF Handbook does not document Commerce's policy for managing the fund's obligated balance. We sent follow-up questions to Commerce about that policy in July 2023, but as of December 2023, Commerce had not responded to those questions. We will provide updated information when we receive Commerce's responses.
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| Department of Commerce | Commerce's Chief Financial Officer/Assistant Secretary for Administration should create performance measures and a process for evaluating the WCF's overall management, such as measuring the billing error rates or the reliability of cost information. These performance measures should be aligned with Commerce's strategic goals to help determine if the WCF is operating effectively. (Recommendation 3) |
Open
In its comments on our report, Commerce agreed with this recommendation. In June 2023, Commerce stated that it plans to survey Working Capital Fund (WCF) customers annually to collect feedback on services provided through the WCF. WCF managers also plan to work with Commerce's Performance Office to develop additional performance measures. Commerce expects to complete these actions by December 2023. When we confirm what actions Commerce has taken in response to this recommendation, we will provide updated information.
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| Department of Commerce | Commerce's Chief Financial Officer/Assistant Secretary for Administration should coordinate with OSFM and WCF service providers to create and document a process to regularly review the results of WCF performance measures. (Recommendation 4) |
Open
In its comments on our report, Commerce agreed with this recommendation. In June 2023, Commerce stated that the Office of the Secretary Financial Management (OSFM) plans to work with Commerce's Performance Office to document a process to regularly review Working Capital Fund (WCF) performance measures. OSFM also plans to communicate the results of those measures to WCF service providers and customers. Commerce expects to complete these actions by December 2023. When we confirm what actions Commerce has taken in response to this recommendation, we will provide updated information.
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