2002 Report on Management of Commercial Activities

United States Patent and Trademark Office
Annual Report on Management of Commercial Activities
Ficsal Year 2002

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 USPTO's annual inventory will be made available to the public on the Internet or can be requested from the agency 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 2001 Inventory Process - The Chief Financial Officer and Chief Administrative Officer (CFO/CAO) at the USPTO has the responsibility for developing the commercial inventory. To ensure a balanced approach to the effort, an interoffice team was established with members from each of the business units within the organization. The team identified a specific pay period in the fiscal year as a basis for the agency's total FTE count. The team then: (1) developed a draft inventory, (2) met with staff from each individual business unit to review/discuss the draft and make changes as appropriate, (3) developed a final inventory, (4) briefed the USPTO senior management from each of the business units, and (5) 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 report and inventory to the Office of Management and Budget for review and approval..

Challenges and Appeals to the FY 2001 Inventory - - The USPTO received one challenge to its FAIR Act commercial inventory from the National Treasury Employees Union (NTEU). The USPTO declined the challenge on the basis that it was submitted past the allowed timeframe as mandated by OMB.

Fiscal Year 2002 Inventory Process - The USPTO took a similar proactive role this year in conducting our fiscal year 2002 FAIR Act inventory. Before the process started, the USPTO senior management were briefed regarding OMB's FY 2002 FAIR Act guidance (M-02-04) and the President's management initiatives to expand competition and to produce a more accurate FAIR Act inventory. The result of having senior management commitment in the early stages, and throughout the process, provided the assistance needed to conduct a thorough and accurate inventory. In addition, our new Strategic Plan, completed during the preparation of the fiscal year 2002 inventory, strengthened our commitment to achieving future performance enhancements and cost-savings through the process of additional competitive sourcing. The USPTO will seek improved effectiveness in the following areas: patent and trademark searching, patent document classification, and information technology and logistical support operations.

The actual compilation of the fiscal year 2002 inventory essentially consisted of the same approach as described above in developing the fiscal year 2001 inventory.

Competitive Sourcing Management Plan for FY's 2002 and 2003 - The USPTO fiscal year 2000 FAIR inventory identified over 30 percent of our FTE positions as performing functions that were commercial in nature. Of these positions, we made a decision to contract out the duties of the Legal Instrument Examiner (LIE) in the Office of Initial Patent Examination (OIPE). To accomplish this, we decided to directly convert these jobs to the private sector (contracted to Diversified Tech and Services of Virginia, Inc.) and reassign the affected federal employees, thereby eliminating the need to perform an A-76 direct cost-comparison study. As a result, 101 GS-7 employees (five percent of our FAIR commercial inventory) were reassigned to the Patent Technology Centers where they were assigned to multi-faceted LIE tasks. The reassignment will help the Patent Technology Centers address the high volume of workload within that area. To ensure a successful transition, management along with the National Treasury Employees Union, Chapter 243 entered into a Partnership Agreement to establish an 18-month training plan for these employees. The reassignment and training of these employees will be completed in calendar year 2002.

In fiscal year 2001, the USPTO FAIR Act commercial inventory identified approximately 44 percent or 2,834 of our federal workforce as performing commercial type activities. Of the positions identified as performing commercial type work, we have scheduled 228 positions to be contracted out which equates to 8 percent of our commercial inventory.

The mandate to publish patent applications 18 months after filing, pursuant to the Pre-Grant Publication provision of the American Inventors Protection Act of 1999, placed a tremendous additional burden upon the USPTO. In response, the USPTO contracted out the preparation and printing of documents to a contractor. It is important to note that the USPTO does not get credit for contracting out this work, as it is new work versus a change in current practices. However, from the fiscal year 2001 inventory, we also intend to contract out the Pre-Grant Publication classification functions currently being performed by patent professionals, as well as other classification duties required to maintain the U.S. classification system. This initiative will allow the Patent Business to redirect at least 30 full-time equivalent patent examiners and associated hours back to examination thereby assisting in our effort to reduce patent pendency.

In addition, we plan to initiate pilot projects to outsource some of our Patent Business workload on international applications that do not lead to patent issuance, including the search related to completion of Patent Cooperation Treaty (PCT) Search Reports. This initiative will allow the Patent Business to redirect approximately 100 full-time equivalent patent examiners and associated hours back to examination and again will assist in our effort to reduce patent pendency. In May 2002, the USPTO issued a Request for Information (RFI)) regarding the search and examination support for the USPTO. This RFI was used to determine the private sector's capability and capacity to perform searches and prepare search reports for PCT applications for either Chapter I or Chapter II services.

Finally, the Trademark Business made a decision to contract out the duties of the Legal Documents Review Clerks (LDRC) in the Law (Examination) Offices and in the Office of Trademark Publication, beginning in fiscal year 2002 and accounting for a total of 98 LDRC positions. To accomplish this, the USPTO decided to directly convert these jobs to the private sector as the terms expired for the existing temporary LDRCs currently on board. Beginning in October 2001, approximately 70 LDRC positions were filled by contractors, effectively contracting out the LDRC services in 14 of the 16 Trademark Law Offices by May 2002. An additional 10 positions in the last two Law Offices will be contracted out by the end of FY 2002. In some cases where displacement was premature but inevitable, LDRC positions were reassigned elsewhere in the organization, thereby eliminating the need to perform an A-76 direct cost-comparison study. As a result, 24 GS-5 employees were reassigned to the Trademark Publication and Intent to Use offices where they perform multi-faceted LDRC tasks. This reassignment was completed in April 2002. However, 18 of these 24 LDRC positions will be contracted out as the terms of these temporary positions expire in Fiscal Years 2002 and 2003. The USPTO plans to replace 12 of those positions with contractors by the end of FY 2002, with the remainder occurring in FY 2003.