0694.0119.SuppStmt.02032016 UPDATED

SUPPORTING STATEMENT

U.S. Department of Commerce

Bureau of Industry and Security

National Security and Critical Technology

Assessments of the U.S. Industrial Base

OMB Control No. 0694-0119

A. Justification

This is a request to extend the Office of Management and Budget’s approval of this generic clearance information collection.

1. Explain the circumstances that make the collection of information necessary.

Under authority of Section 705 of the Defense Production Act of 1950, as amended and related Executive Order 12656, the Bureau of Industry and Security (BIS) conducts surveys and assessments of critical U.S. industrial sectors and technologies. Undertaken at the request of various policy, research and development (R&D), and program & planning organizations within the Department of Defense and the Armed Services, Department of Homeland Security (DHS), NASA and other agencies, BIS research, data collection and analysis provide needed information to benchmark industry performance, and raise awareness of diminishing manufacturing capabilities.

Many Defense and other agencies can no longer afford to conduct such comprehensive surveys and assessments themselves, nor do they possess the analytical capabilities or legal authority to require industry responses. This has made BIS’s survey authority, combined with staff expertise and experience, a cost-effective tool for monitoring the U.S. defense industrial base. BIS has a long history of assisting government agencies and industries to better understand critical industrial supply chains, economic trends and trade issues that impact vital sectors and technologies, and overall U.S. national security.

Historically, such assessments were conducted under individual information collection authorizations obtained by BIS from the Office of Management and Budget (OMB), a process that can require a considerable amount of time to obtain. In all cases, the reason for OMB authorization were to obtain permission (under the Paperwork Reduction Act) to collect sensitive business information, generally through the use of a mandatory survey of an industry sector or technology deemed critical to the nation’s security. It is not unusual for BIS to submit similar survey instruments in support of each unique assessment, the primary difference being the particular industry/technology being targeted. The use of a generic clearance process (fast- track) allows BIS to conduct the data collection and final assessments in a shorter timeframe, thus providing policy and program offices with needed results in a timely manner.

Most surveys, under this generic clearance, include questions to obtain essential employment, supply chain, financial, production, technology and service capabilities, R&D, investment, competitive outlook, export control and other needed data. Some surveys include a few non-standard questions, depending on the industry and the needs of the client agency.

BIS utilizes the Defense Production Act of 1950 (DPA), as amended, to collect as well as protect the business confidential information submitted by the survey respondents. Executive Order 12656 delegates to the Department of Commerce the authority to assess the capabilities of the U.S. industrial base to support the national defense and defense program needs, and develop policy recommendations to improve the international competitiveness of specific domestic industries.

By conducting these surveys and assessments, in cooperation with experts from the private sector, academia and other government agencies, BIS ensures that the final assessments provide useful findings and recommendations for government policy-makers and industry leaders.

The following survey assessments were conducted since the previous extension approval. Two completed assessment reports (NASA Supply Chain Network and DHS Healthcare Foreign Sourcing) are included with this request.

Survey Titles:

NASA Supply Chain Network

DHS Healthcare Foreign Sourcing

DOD Telecom Survey

Night Vision Focal Plane Arrays, Sensors & Cameras

Defense Supply Chain Network

Navy CAD/PAD Survey

Consumers of U.S. Commercial Electro-Optical Satellite Imagery

Space Deep Dive Industry Assessment

U.S. Infrastructure for Underwater Acoustic Transduction Systems

Command, Control, Communications, Computers, Intelligence, Surveillance,

and Reconnaissance(C4ISR) Survey

2. Explain how, by whom, how frequently, and for what purpose the information will be used. If the information collected will be disseminated to the public or used to support information that will be disseminated to the public, then explain how the collection complies with all applicable Information Quality Guidelines.

The collected information is used by BIS’s Office of Technology Evaluation (OTE) to prepare an assessment of the financial health, production capabilities and competitiveness of the targeted industry sector or technology. Factors including employment, financial, supply chain, production, R&D, investment, export control, competitive outlook, technology and service capabilities, and foreign sourcing of domestic facilities engaged in activity that is deemed critical to defense program needs and overall national security are reviewed. This may include both prime contractor and subcontractor entities, and limited public entities and organizations.

The number of surveys required per assessment varies with the size of the sector and the scope of the project.

BIS surveys usually request three years of actual historic data, and estimated data for 1 year into the future. BIS typically conducts a survey and furnishes a final report within 12 to 18 months of the formal request.

The Section 515 Information Quality Guidelines apply to this information collection and comply with all applicable information quality guidelines, i.e., OMB, Department of Commerce, and specific operating unit guidelines.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological techniques or other forms of information technology.

Distribution of surveys and the obligation to respond will be accomplished and conveyed electronically through the Internet. Some companies prefer to send the completed survey on an encrypted disk, hand delivered to BIS. Other respondents are offered the option of receiving the survey in manual form in instances where the respondent=s access to the Internet is limited.

All reasonable information technology will be incorporated into the execution of the survey in order to reduce the overall burden on industry respondents, especially small businesses.

BIS has conducted numerous industry and technology surveys in the past 25 years and actively pursues the constant refinement and updates of its survey techniques and information technology to minimize the burden on the respondents.

4. Describe efforts to identify duplication.

In partnering with other agencies, including the Census Bureau and private organizations involved with the targeted industry or technology, BIS will avoid duplication of information being gathered. The vast majority of information that BIS will collect from each targeted industry or technology is not obtainable elsewhere.

5. If the collection of information involves small businesses or other small entities, describe the methods used to minimize burden.

Most technology and industry sectors have a spectrum of large, medium and small (less than

500 employees) businesses. For small firms, BIS has developed and implemented estimate thresholds to relieve these entities from the obligation of responding to portions of the survey instrument. For example, small businesses may only have to provide financial data in aggregated figures while the remaining survey respondents provide full balance sheet and income statement results.

Moreover, BIS makes every effort to minimize the information collection burden that a survey will impose on the public prior to submission to OMB. BIS circulates a draft survey to government and university experts and representatives of companies within the target industry or sector as a “field test”. Comments received are factored into the survey form. Additional inputs obtained from facility site visits and outside research are also added to the survey. The survey form, in Excel format is constructed for clarity and ease of completion. Drop down and check the box answers are used throughout the survey form, thus reducing the overall burden on industry, especially small businesses.

In addition, to minimize the time needed to complete the survey form, questions are clearly labeled and grouped by subject. Most of the data requested is common organization management information, requiring a minimal amount of time to gather and insert. There are a minimal number of open-ended questions (typically the most time-consuming and low-yield format) but it does allow respondents to better explain their views on topics of concern. BIS surveys usually request three years of actual historic data, and estimated data for 1 year into the future.

6. Describe the consequences to the Federal program or policy activities if the collection is not conducted or is conducted less frequently.

The data obtained from industry and other organization surveys is essential for BIS to adequately assess the health and competitiveness of the key U.S. industry sectors and critical technologies. Questions addressing fundamental business activities such as supply chain management, production, technological development, financial performance, capital investment, R&D expenditures and foreign sourcing all contribute to the robustness of the final report. Limited or total shutdown of data collection would seriously impact the ability of BIS to complete what have been unique, comprehensive assessments for the Defense Department, other agencies and the related industrial community. This could have serious programmatic and in some cases, national security consequences, especially during times of budget uncertainty.

An industry survey and assessment represents the beginning of a mutually beneficial relationship between BIS, the subject industry, and key defense-related agencies. The data, and the findings and recommendations generated from the data, are essential elements to fully understanding the challenges and future prospects facing U.S. industry. BIS final reports allow industry and government leaders to develop informed strategies to address the many issues facing critical sectors and technologies.

7. Explain any special circumstances that require the collection to be conducted in a manner inconsistent with OMB guidelines.

There are no special circumstances that will result in the collection of information in a manner inconsistent with the guidelines of 5 CFR 1320.6.

8. Provide information of the PRA Federal Register Notice that solicited public comments on the information collection prior to this submission. Summarize the public comments received in response to that notice and describe the actions taken by the agency in response to those comments. Describe the efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported.

The notice requesting public comment was published in the Federal Register on January 25, 2016, page 4016.

BIS received an inquiry from Andrew Reamer, Research Professor, The George Washington Institute of Public Policy. Mr. Reamer states that future ICRs should include sample surveys and provide a link to recent assessments; ask BIS to describe how it partners with the Census Bureau; indicate how BIS works with the Census Bureau and the National Center for Science and Engineering Statistics (NCSES) to reduce response burden of the 28,000 firms it surveys each year; and describe how BIS will provide its survey responses to the Census Bureau’s Center for Economic Studies (CES) for inclusion in various CES longitudinal databases. In response to Mr. Reamer’s inquiries, Mr. Brad Botwin, Program Director, Industrial Studies, Bureau of Industry and Security provided Mr. Reamer with a copy of the regulation governing the program's data collection authorizations (attached). Mr. Botwin described the industrial base survey and assessment process including discussion of the program's survey development steps, procedures for field testing surveys, and report drafting, among other areas. Mr. Botwin also shared survey instruments with Mr. Reamer.

9. Explain any decisions to provide payments or gifts to respondents, other than remuneration of contractors or grantees.

This survey will not involve any payment or gifts to respondents, however final copies of the assessment (public version) will be provided to the respondents upon request.

10. Describe any assurance of confidentiality provided to respondents and the basis for assurance in statute, regulation, or agency policy.

Both the survey, and the accompanying cover letter, will provide assurances to the respondents that the information collected through the survey will be deemed business confidential and will be treated in accordance with Section 705 of the Defense Production Act of 1950, as amended (50 U.S.C.A. app. Section 2061 et. seq. (1993)). This section prohibits the publication or disclosure of such information unless the President determines that its withholding is contrary to the national defense.

Information submitted will not be shared with any non-government entity, other than in aggregate form, and the Department will protect the confidentiality of such information pursuant to the appropriate exemptions from disclosure under the Freedom of Information Act (FOIA) if it is the subject of a FOIA request. BIS, Office of Technology Evaluation has a long and successful track record in protecting confidential business information collected pursuant to the Defense Production Act.

11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly

considered private.

Not applicable.

12. Provide an estimate in hours of the burden of the collection of information.

BIS estimates that the total annual public burden placed on industry by this survey authority will be approximately 308,000 hours. This is based on past surveys and the data collected annually in support of several assessments conducted in a typical year. BIS estimates it will receive surveys from approximately 28,000 companies annually, and that each survey will require an average completion time of 11 hours, with a range of 8 to 14 hours. As noted in Question 5, BIS has taken actions to minimize the burden of the information collection, especially on small businesses and organizations.

This estimate is subject to variations among individual organizations because of differences in record keeping, organization size, and other variables. The estimate is based on past experience of BIS in conducting surveys for more than 25 years. BIS recently conducted surveys of multiple industries and sectors, including: DOD Sector by Sector, Tier by Tier Supply Chain, Healthcare and Public Health Products, Telecommunications, NASA Space Shuttle Supply Chain, U.S. Space Industrial Base, and Small Explosives. The projected burden estimate of future surveys includes feedback obtained from these respondents.

The estimated total labor cost to the 28,000 projected respondents of this information collection is $9,621,150. In calculating this cost, we estimated that respondents would take an average of 11 hours to complete the survey form and that the average hourly cost to each respondent would be approximately equal to that of a Federal employee working on the assessment. The cost was calculated by determining the total number of burden hours the respondents would require to complete the survey form, assuming a response rate of 75 percent (21,000 responses out of 28,000 survey forms distributed), and multiplying those hours (estimated at 231,000 hours with 75 percent response rate) by the hourly cost in salary of a Federal employee at the GS-13 level:

($86,927/2,087 hours) = $41.65 per hour x 231,000 hours = $9,621,150.

13. Provide an estimate of the total annual cost burden to the respondents or record- keepers resulting from the collection (excluding the value of the burden hours in

Question 12 above).

Not applicable.

14. Provide estimates of annualized cost to the Federal government.

The estimated cost to the Federal government for the survey is $415,834. A major portion of this cost is related to the survey questionnaire, which includes survey preparation, collecting and verifying the information, and storing the information for analytical purposes. Other costs will be incurred in preparing the final report summarizing our findings, conclusions and recommendations. The direct costs were estimated by determining the total Federal employee hours allocated to each assessment and multiplying the total hours of the employees assigned to the assessment by the gross average hourly pay of a GS-13, step 1 or $41.65. Since it is estimated that a maximum of 3 such assessments are being conducted by BIS at any one time, the annual costs are calculated as follows: [$86,927/2,087 hours x 40 hours x 52 weeks x 4 persons) = $346,528].

Overhead costs associated with the assigned employee costs were derived by increasing the direct costs by 20 percent. A review of the Office of Technology Evaluation=s budgets from previous years indicates overhead costs for building maintenance, telephone, and space rental charges generally ran about 20 percent of direct costs.

Assuming four GS-13 employees working an average of 40 hours per week for 52 weeks, the estimated time to complete the study, the costs to the federal government are outlined below:

Employee Salaries (52 weeks x 40 hours x 4 employees) $346,528

Federal Government Overhead @20% $69,306

Total: $415,834

15. Explain the reasons for any program changes or adjustments.

The number of respondents/responses (increase) and burden hours (decrease) have been adjusted based upon recent survey and assessment experience.

16. For collections whose results will be published, outline the plans for tabulation and publication.

All data collected will be aggregated before publishing to protect company and organization confidentiality.

17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons why display would be inappropriate.

Not applicable. All manual and Internet-based surveys will display the expiration date.

18. Explain each exception to the certification statement.

Not applicable.

B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

Not applicable. This collection will not employ statistical methods.

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