2000 Report on Management of Commercial Activities

U.S. Patent and Trademark Office
Annual Report on Management of Commercial Activities

Fiscal Year 2000


Background – The Federal Activities Inventory Reform (FAIR) Act codifies the Office of Management and Budget (OMB) Circular A-76 and requires the head of each agency to submit to OMB a list of activities performed by the Federal government that, in the judgement of the head of the agency, are not inherently governmental functions. The inventory is useful in strategic planning, thereby enabling agencies to maximize resource management by identifying functions suitable for outsourcing.

OMB has provided guidance for developing this inventory in Circular A-76 and its supplemental handbook, and has instituted use of a coding schema to standardize the definition of activities across government. The FY 2000 inventory will be made available to the public on the Internet or can be requested from the USPTO in hard copy.

Agency decisions to include or exclude specific functions from the inventory may be challenged by interested parties including federal employees, private industry, unions, and professional associations. The challenge process takes place after approval of the inventory by OMB and notification in the Federal Register of its availability from the USPTO.

Fiscal Year 1998/99 Inventory Process – The Chief Financial Officer and Chief Administrative Officer (CFO/CAO) at the USPTO has the responsibility for developing the commercial inventory. To assure a balanced approach to the effort, an interoffice team was established with members from various operating units within the organization. The team as a basis for the total FTE count used a specific pay period in the fiscal year. The team (1) developed a draft inventory, (2) met with staff from each individual operating unit to review/discuss the draft and make changes as appropriate, (3) developed a final inventory and briefed the USPTO Operations Council which consists of senior management from each of the operating units, and (4) briefed the Under Secretary and Director of the United States Patent and Trademark Office regarding the items composing the commercial inventory. The CFO/CAO submitted the final inventory to the Office of the Secretary at the Department of Commerce for inclusion into the Department’s inventory.

Challenges and Appeals to the FY 1998/99 Inventory – The Department of Commerce received two challenges to the USPTO’s commercial inventory:

- The National Treasury Employees Union (NTEU) specifically challenged as erroneous the classification of six groups of FTE as Category B. Category B activities are those performed by Federal employees that are subject to cost comparison or direct conversion under OMB Circular A-76 and the Supplemental Handbook. The FTE identified by NTEU do not determine policy, do not make decisions regarding Federal property, do not make decisions regarding acquisition of supplies or services, and are not contracting officials. Therefore, they meet the standards laid out for Category B FTE. The Department responded to the challenge on December 16, 1999. No further action required.

- The Information Technology Association of America (ITAA) challenged the USPTO’s failure to include reference to any ADP or communications functions in its inventory. The USPTO responded that it had already contracted for a number of services in the area of information technology. At the time of the challenge, the USPTO had over 860 individuals under contract to provide support in this area. When compared to the 237 government employees reported in the inventory, this indicates a contractor to employee ratio of 3.5 to 1. The Department responded to the challenge on December 16, 1999. No further action required.

Fiscal Year 2000 Inventory Process – The preparation of the USPTO’s commercial inventory for FY 2000 essentially consisted of the same approach used in developing the FY 1998/99 inventory, with one exception. For FY 2000, the Partnership Council, composed of senior managers and union officers, was briefed by the CFO/CAO as to the reporting requirements and other pertinent information regarding the FAIR Act. In addition, an intranet website will be established to provide copies of the inventory to our employees.

Review of Commercial Activities Process – With the passage of the American Inventors Protection Act of 1999, the USPTO officially became a Performance Based Organization (PBO). As a PBO, we will manage growth while improving processing times, enhance quality and customer satisfaction, and invest in information technology for future performance. To assist us in accomplishing these tasks, we have developed many tools.

We were one of the first Federal agencies to successfully implement an enterprise-wide activity-based cost (ABC) accounting system. The incremental deployment of ABC began in FY 1998 and will continue through FY 2001. By using ABC, we are able to collect and analyze the costs associated with processes and services provided to internal and external customers on a USPTO-wide basis. During FY 1999, we began leveraging our ABC system to provide activity-based management (ABM). ABM can provide for better management and control of costs against revenue, enable more effective decision-making, and provide greater accountability over incurred costs.

As we continue to transition to a fully operational PBO, the commercial activities process along with our ABC and ABM activities will be just a few of the tools which will enable us to review all of our activities on an ongoing basis to assure that they are done efficiently and effectively. This, in turn, will provide the best return on investment to our customers.