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July 6, 2011

The Honorable Darrell E. IssaChainnanCommittee on Oversight andGovernment RefonnHouse of RepresentativesWashington, DC 20515Dear Chainnan Issa:

UNITED STATES DEPARTMENT OF COMMERCEChief Financial OfficerAssistant Secretary for AdministrationWashington, D.C , 20230

Thank you for your letter of March 8, 2011, regarding oversight of agency financialmanagement.

The Department ofCommerce is committed to sound fmancial management and has created anenvironment that complies with federal laws and regulations; provides its executives with timely,accurate financial and perfonnance infonnation; and ensures strong internal controls remain apriority. This is evidenced by the Department's continuing compliance with the FederalFinancial Management Improvement Act (FFMIA), maintaining a single integrated financialsystem, and achieving clean audit opinions. Fiscal year (FY) 2010 marked our twelfthconsecutive clean opinion as detennined by an independent auditor.Enclosed are details regarding the Department's financial management systems used to supportbusiness and accounting functions; grants and loans management; contracts management; andreporting to government-wide systems.If you have any further questions, please feel free to call the Office ofLegislative andIntergovernmental Affairs at 202-482-3663.

Sincerely,

Lisa CasiasDirector for Financial Management andDeputy Chief Financial Officer

cc: The Honorable Elijah CummingsRanking MemberCommittee on Oversight andGovernment Refonn

Enclosure

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DEPARTMENT OF COMMERCEFinancial Management SystemsThe Department's Federal Financial Management Improvement Act (FFMIA)-compliantfmancial management system is the Commerce Business Systems (CBS). The financialinformation from CBS is integrated in the Corporate Database for c o n s o ~ i d a t e d financialreporting, resulting in a single integrated financial management system.CBS consists of a Core Financial System (CPS), which includes the Commerce Purchase CardSystem (CPCS) and the Budget and Execution Data Warehouse. CBS is interfaced with theCommerce Standard Acquisition and Reporting System (CSTARS), the National Finance CenterPayroll System, and the Automated Standard Application for Payments (ASAP). CBS providesreliable, timely information within a sophisticated security infrastructure. The system is capableofproducing both financial and budget reports from information generated within the financialmanagement system.CBS is the financial management system of record for the Office ofthe Secretary (OS), theCensus Bureau (Census), the Office of the Inspector General (OIG), the Economic DevelopmentAdministration (EDA), the Minority Business Development Agency (MBDA), the Economicsand Statistics Administration (ESA), the Bureau ofEconomic Analysis (BEA), the NationalOceanic and Atmospheric Administration (NOAA), the Bureau of Industry and Security (BIS),the National Institute of Standards and Technology (NIST), the National Telecommunication andInformation Administration (NTIA), and the International Trade Administration (ITA). TheDepartment's remaining two bureaus-theNational Technical Information Service (NTIS) andthe United States Patent and Trademark Office (USPTO}-use different financial managementsystems. Details of these two systems follow the information regarding CBS.CBS is fully integrated with all its feeder systems through an enterprise application interface orautomated feeds. Information generated from the integrated financial management system andthose ofNTIS and USPTO is consolidated and submitted to various government-wideaccounting systems maintained by the Treasury Department. The consolidated closing packagedata (fmancial statements, notes, and other data reclassified into Financial Management Service[FMS] specific format) are submitted,annually by the Department through a combination ofmanual and electronic means to the government-wide financial report system (GFRS).Consolidated pre-closing adjusted trial balances using the United States standard general ledger(SGL) proprietary accounts are submitted electronically by the Department to the FederalAgencies' Centralized Trial Balance System I (FACTSI) on a quarterly basis. Budgetaryaccounting data required for the Report on Budget Execution and Budgetary Resources (SF-133)are submitted using a combination ofmanual entry and file upload to the F ACTSII system byeach respective reporting entity (bureau) on a quarterly basis. Consolidated SGL proprietaryfiduciary account balances relating to any investments with the Bureau of the Public Debt(BPD), borrowing from BPD or the Federal Financing Bank, Federal Employees' CompensationAct transactions with the Department ofLabor, and Employee Benefit Program transactions withthe Office ofPersonnel Management are submitted manually into the intragovernmentalfiduciary (IFCS) by the Department on a quarterly basis.

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Information from CBS is manually entered into the F ACTSII Treasury system used in Decemberand January of each year to help generate the prior year's amounts which are updated andsubmitted to the President's Budget Request in the MAX system. Several line entries areautomated in the MAX system and pull from FACTSI!. A few detailed line entries, however,must be entered manually. In addition, information generated from the Department's integratedfinancial management system is consolidated into quarterly and annual financial statements andsubmitted to OMB electronically using the MAX federal community.The Department's consolidated financial statements are published annually in the Department'sPerformance and Accountability Report and online on the Department's website for publicvIewmg.The Department is conducting the future financial and administrative planning business analysisand will use this data to examine the Department's financial and administrative environment(acquisition, grants, property, travel, and webTA) to determine the long-term viability of theCBS platform and to evaluate CBS against other potential options to support Commerce'sfinancial management environment.All bureaus except NIST, Census, and USPTO use Sunflower Assets as an enterprise PersonalProperty Management System (PPMS): NIST uses Oracle Assets; Census, Automated PropertyManagement System; and USPTO, Enterprise Asset Management System.All bureaus use Kronos webTA for recording time and attendance. USPTO, EDA, and MBDAuse the government-wide COTS software product, Hewlett Packard's FedTraveler, for travelmanagement. Both NIST and NOAA use a COTS software product (Travel Manager) andCensus uses an internally-developed travel management system (Travel ManagementInformation System) for travel management.NTIS uses the budget and accounting purchase system (BAPS) as its financial managementsystem. BAPS' functions include general ledger, budget execution, accounts payable,disbursement, accounts receivable, cost accumulation, planning, training, travel, procurement,inventory, personal property management, and real property management. Transactions feedelectronically or manually between the various functions.As with bureaus that use CBS, information generated from BAPS is consolidated into quarterlyand annual financial statements and are submitted to OMB electronically using the MAX FederalCommunity. The Department's consolidated financial statements, including those ofNTIS, arepublished annually in the Department's Performance and Accountability Report which is alsopublished on the Department's website for public viewing. No migration or modernizationprojects are planned for BAPS.USPTO uses CGI's off-the-shelf (COTS) software product, Momentum Financials, for financialmanagement, financial management reporting, acquisition, and travel accounting. Momentum isfully integrated with a real-time integration between Momentum financials and FedTraveler to

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record the financial impact oftravel authorization and voucher transactions. Momentum has nointeraction with Remedy or webTA.As with bureaus that use CBS, information generated from Momentum Financials isconsolidated into quarterly and annual financial statements which are submitted to OMBelectronically using the MAX Federal Community. The Department's consolidated financialstatements, including those ofUSPTO, are published annually in the Department's Performanceand Accountability Report which is also published on the Department's website for publicviewing. As a PBO, USPTO also publishes a separate audited financial statement in itsPerformance and Accountability Report (PAR).The budgetary data from Momentum Financials' SF-133s is periodically submitted to OMBwhen the Department completes apportionment requests in MAX (data is manually entered andsubmitted through the automated MAX Apportionment application) and when submitting datarequired by OMB Circular A-II to prepare the President's budget in MAX (data is manuallyentered and submitted into the MAX data entry system). The budgetary general ledger accountinformation, which is input into F ACTSII on a quarterly basis, feeds the MAX system based onactions by the Treasury staff. An upgrade to Momentum version 6.4.1 was completed in July,2010, and there are no plans for additional upgrades. USPTO is activating the revenuesubsidiary functionality in Momentum Financials to replace the USPTO legacy custom feecollection system. As noted above, USPTO uses Enterprise Asset Management System as itsPPMS; an update from version 6.3 to 7.6 is ongoing.

Systems For Managing Grants, Direct Loans and/or Loan GuaranteesThe Office of Acquisition Management (OAM) is responsible for the Department's enterprisewide grants management policy, projects, and oversight. The Department's focus is tostandardize policy and procedures for its grant and cooperative agreement programs in order tostrengthen compliance, work toward a single automated grants management system, and enhanceand formalize workforce education. Targeted efforts continue to transform the decentralizedDepartment grants management community into an effective and efficient partnership. Thesharing of resources and responsibilities to accomplish enterprise goals is a recurring themethroughout the partnership effort.Integral to the Department' s effort to migrate to electronic grants is the continued use ofNOAA's Grants-Online system, a back-office solution to the Grants.gov storefront. The systemis designed to facilitate efficiencies through standardized business processes and provide a directinterface with other Department systems with grant recipients. Grants Online continues todemonstrate significant success in reducing paperwork, increasing accountability, andsimplifying the post-award process. The Grants Online system has also been identified as thesolution to standardizing grants procedures in the Department. It is a paperless electronic grantsmanagement system that has gained department-wide recognition for streamlining andaccelerating the grant application process. This standardization effort is successfully aligninginternal processes to allow for consolidation of systems in line with government-wide efforts toincrease operational efficiency.

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The Department currently uses the following system to manage our grants: Grants.gov - A government-wide web portal used for Federal Funding Opportunity(FFO) notices with corresponding application packages to manage initial grant

applications. This web portal allows members of the public to find any government-widegrant opportunity and apply for it. Grants Online - As described above, this is NOAA's back-end system to Grants.govwhich supports the evaluation, award, and business processes for grant management.Grants Online manages NOAA, ITA, MBDA, and OS grant reporting. It has a "publicsearch" link where the general public can find information and provides a searchabledatabase of awards that have been made. Operations, Planning and Control System (OPCS) - This is EDA's back-end system toGrants.gov and is used to support the evaluation, award, and business processes for grantmanagement. Grants Management Information System (GMIS) - NIST's back-end system toGrants.gov and is used as a means of supporting the evaluation, award, and businessprocesses for grant management. Loan Billing and Management System (LBMS) - System of record used by EDA tomanage, monitor, and administer its outstanding Pre-Credit Reform Act loans. As EDA

does not have lending authority, LBMS is used solely to record loan payments and trackany delinquency.LBMS does not interface with any of the Department's business or accounting systems.Grants.gov interfaces with Grants Online, OPCS, and GMIS but does not interface with CBS,BAPS, or Momentum Financials. Grants Online will interface with CBS in mid-October, 2011,and currently interfaces with the Management Analysis and Reporting System (MARS). CBSrefreshes into OPCS nightly so that all transactions in CBS are identical with those in OPCS.OPCS does not interface with any of the Department's other financial systems. GMIS interfaceswith CBS but does not interface with Hyperion; CSTARS; Oracle Assets; Travel Manager;Automated Classification System (ACS), the human resources system used by NIST; or withCBS, BAPS, or Momentum Financials.None of these systems maintain data that is submitted to the Catalogue ofFederal DomesticAssistance (CFDA).Grants Online, OPCS, and GMIS interface with USASpending.gov (where Federal AssistanceAwards Data System [FAADS] PLUS data is submitted) for monthly submittals and use the DataSystem Validation Tool (DSVT) to upload data; FAADS reporting is no longer required perOMB memo dated February 10,2011. Grants.gov does not have data that is submitted to any ofthe reporting systems; LBMS doesn't interface with USASpending.gov. The Department'sgrants offices use FederalReporting.gov and Recovery.gov to interface with grantees. However,FedReporting.gov and Recovery.gov are not interactive with the Department's grants systemsnamed above and are, therefore, a manual process. Bureaus are able to go into the systems andupdate when appropriate. .There are no recent, current, or planned migration or modernization projects for Grants.gov,GMIS, or LBMS. Within the past two years, Grants Online had migration ofgrants data for OS,

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ITA, and MBDA to its system. The Department is exploring the feasibility ofmigrating EDAand NIST grants data into NOAA's Grants Online system. The first step in the process is toconduct the Gap Analysis with NOAA Grants Online. The MOU is being finalized and the GapAnalysis is planned for completion by September 30,2012.The Department currently operates the following direct loan and loan guarantee programs:NOAA Direct Loan and Loan Guarantee Programs; EDA Direct Loan and Loan GuaranteePrograms; and the Emergency Steel Loan Guarantee Program. EDA does not issue any newdirect loans or loan guarantees. Its loan portfolio consists of pre- 1992 Drought LoanPortfolio direct loans and Economic Development Revolving Fund direct loans. The EmergencySteel Loan Guarantee Program does not have any receivables, nor are there any outstanding nonacquired guaranteed loans. The program has the authority to issue loan guarantees untilDecember 31, 2011.NOAA has many direct loan program receivables, including Fisheries Finance TraditionalLoans, Crab Buyback Loans, and Bering Sea Pollock Fishery Buyback loans. NOAA alsooperates the Fishing Vessel Obligation Guarantee Program (loan guarantees). NOAA uses thefollowing systems to calculate loans:

The National Marine Fisheries Service (NMFS) Program Office developed and maintainsa database system known as SHARK. The financial data in this system is maintained byNOAA Finance/Accounting Operations Division (AOD). NOAA Finance/General Ledger Reporting Branch (GLRB) uses sophisticated MicrosoftExcel cash flow templates to financially manage the direct and guaranteed loan programs. NOAA Finance (AOD and GLRB) use CBS to manage direct and guaranteed loanprograms. NOAA Finance (GLRB) uses Oracle Discoverer database queries to manage the directand guaranteed loan programs. NOAA Finance (GLRB) uses OMB CSC2 calculator and R.Summary systems to managethe direct and guaranteed loan programs.

None ofthe information in the loan systems identified above is submitted to CFDA, nor do anyof these systems contain data that is submitted to any of the government-wide management andreporting systems. Loan data is updated in USASpending.gov via manual entry. Pertinent datafrom SHARK and from the NOAA Finance GLRB systems is extrapolated and manually enteredinto CBS. There have been no recent, current, or planned migration or modernization projectsfor any of these systems.Interactions for NOAA's loan systems are that SHARK (NMFS Program Office and NOAAFinance AOD), NOAA Finance GRLB (Excel cash flow templates and OMB CSC2 calculatorand R.Summary) all have pertinent data extrapolated and manually entered into CBS. CBS is thesystem utilized to store data that has been manually entered in the aforementioned systems forthe NOAA Finance (AOD and GLRB) CBS system. The NOAA Finance (GLRB) OracleDiscoverer database queries are an output and data source derived from the data manuallyentered into CBS.

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Systems for Managing ContractsThe Office ofAcquisition Management is responsible for the Department's enterprise-wideacquisition management policy, projects, and oversight. The Department's focus isstandardizing acquisition policy and procedures in order to.strengthen compliance, work towardsa web-based contract-writing system, and enhance workforce education. Efforts continue totransform the decentralized Department acquisition community into an effective, efficientpartnership through sharing of resources and responsibilities to better achieve acquisitionsavings, meet program requirements, and manage risks.The Department and its bureaus utilize Comprizon.Buy (C.Buy), Momentum Acquisition,Comprizon.Request (C.Request), and the Forecasting and Advance Acquisition Planning System(FAAPS) to conduct acquisition forecasting and planning, prepare requisitions, and writecontracts, purchase orders, delivery orders, and modifications.C.Buy is a COTS web-based acquisition management and contract-writing system whichprocesses contract awards and is used by OS, Census, NIST, and NOAA. These bureaus provideacquisition services to other, smaller bureaus. This system provides commitment and obligationdata to the Department's C.Request system, the Commerce Financial System (CFS), and contractdata to the NIST portal. C.Buy interfaces with FPDS-NG with data electronically submitted inreal-time. There is a planned upgrade to a modern, web-based product, Comprizon.Award,scheduled for December, 2011.USPTO uses Momentum Acquisition, a COTS web-based acquisition management and contractwriting system, to process contract awards. Momentum Financial integrates with MomentumAcquisition and directly records commitments and obligations. Momentum Acquisition alsointerfaces with FPDN-NG with electronically submitted data in real time. There are nomigration or modernization projects planned.OS, Census, NIST, and NOAA use C.Request, a COTS web-based requisition managementsolution that processes requisitions. C.Request interfaces with both C.Buy and CFS. There areno migration!modernization plans at this time for C.Request.F AAPS, a web-based advance acquisition planning system for identifying forecasts forrequirements above the simplified acquisition threshold, is used by OS, Census, NIST, andNOAA. FAAPS does not interface with any system, and there are no migration! modernizationplans.The Department does not provide to the public the information it submits to the governmentwide contract management and reporting systems.For data submitted to USASpending.gov, Department acquisition offices perform monthlyreconciliations of actions submitted and housed in the contract-writing systems against actionsreported as final in FPDS-NG. Differences are investigated, necessary corrections made, and thetwo databases are regularly balanced. During this review, spot checks are made for data elementanomalies. If anomalies are found, they are researched and any required corrective action is

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taken. In addition, acquisition,offices utilize the "Status ofActions" and "Draft and Error"FPDS-NG reports to audit contract entry and erroneous data. All contract data provided toUSASpending.gov is submitted through government-wide systems that feed intoUSASpending.gov.There were 26,405 total transactions recorded in FPDS for the Department during FY 2010 witha total dollar value of $3,938,195,964. Through a random sample of contract action reports, theDepartment has certified an overall accuracy rate of98% for FY 2010.As all data required under FFATA interfaces with data submitted through existing governmentwide systems (Le., FDPS-NG and USASpending.gov), the Department does not incur anadditional burden in fulfilling FFATA reporting obligations.In compliance with the "Open Government Directive - Framework for the Quality ofFederalSpending Information" memorandum issued by OMB on February 8, 2010, the Departmentdeveloped a Data Quality Plan that established'a framework for implementing internal controlsand strategies to improve the quality and integrity ofFederal spending information that isdisseminated through such public venues as USAspending.gov. The Data Quality Plan includesdeveloping an oversight process through Acquisition Management Reviews and GrantsManagement Reviews to evaluate efficiency, effectiveness, data quality, and to ensuretransparency. The Plan also requires annual reporting on fulfillment of action items aligned withOMB's data quality metrics.Scott Quehl, Chief Financial Officer and Assistant Secretary for Administration, serves as theDepartment's senior accountable official over federal spending data quality.

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