he first piece of paper Ron Lawson faces each morning is the revenue report from the previous day. Other issues demanding his attention these days include allocating funds for investment in promising new lines of business, watching the effect of staff costs on his bottom line and assessing how the explosion of free information on the Internet is affecting sales of his products.
Lawson is not the CEO of a publishing company, though. He is the director of a federal agency-the National Technical Information Service. NTIS has a unique perspective on the push for agencies to act more like businesses and to be more entrepreneurial and customer service oriented. NTIS says it has been doing just that for years, as the self-funding clearinghouse for the government's research and other technical information.
Yet NTIS is caught between mandates to make money-but not too much-and to keep up with the times while being restricted in how it can invest and reshape itself. Most of all, it is caught in the middle of a tug of war among its parent Commerce Department, the federal information community and other agencies over its future.
In July 1999, Commerce proposed shedding NTIS and sending its archives to the Library of Congress-arguing that the two agencies perform essentially the same kind of work. A year later NTIS hasn't budged, and indications are that the agency's collection won't be going to the Library-or anywhere else-anytime soon.
Perceptions of Obsolescence
The NTIS collection of more than 3 million titles includes business and management studies, international marketing reports, materials and chemical science data, and technology innovation and training tools, among others. It collects titles from government agencies, international organizations and the private sector, selling them in print, CD-ROM, diskette, microfiche, online and other formats.
One major hurdle the agency faces is the view that selling information is an outdated concept in the era of the Internet, when virtually anyone can get much of the same information for almost no cost.
"The growth of the Internet has rendered outmoded the business model NTIS uses to carry out its core mission," Commerce Deputy Secretary Robert Mallet said at a Senate hearing last fall. "For years, NTIS and the department have struggled with how to ensure public access to government information at a reasonable cost, while keeping NTIS self-sufficient. Looking to the future, the department believes that the economics of the Internet will dramatically affect NTIS' ability to remain solvent. It already has."
The Commerce Department declined to make an official available for comment for this story.
But the choice is not as simple as free vs. for-charge information. Agencies that post information on their Web sites incur a cost, and many potential users of that information either don't have the ability to get it electronically or can't find it outside an indexed system like the one NTIS offers. And even those who could find it and get it online might not want to tie up their own equipment by printing it, ending up with stacks of paper rather than a bound report.
"This Web thing that everybody's talking about that's putting NTIS out of business really isn't putting NTIS out of business," Lawson says. "It's the same type of reports and documents that we're getting anyway. What it has done in many cases is hurt our current sales. That's why our costs are higher or are exceeding our revenues, because we had to change over [to electronic media] to reflect that."
The growth of self-publishing by agencies on the Web also has brought similar growth in the problem of fugitive documents-those publicly available for a time but wiped out when sites are updated, with the public having little or no means to find them afterward. That means agencies don't bear the costs of keeping those documents available indefinitely. NTIS does. Two-thirds of the documents requested from the agency are at least three years old.
"We are mandated to keep all of our products in perpetuity. We've got to maintain that collection and we've got to maintain it in a way that enables us to deliver it to our customers in any one of these various mediums," says NTIS Deputy Director Alan Neuschatz.
"If we were the NTIS Corporation instead of the NTIS federal agency, we could decide, 'We're no longer going to deliver it that way. We're no longer going to keep these particular reports. We're no longer going to do a whole variety of things, on a business basis.' But as a federal agency with a special mandate from Congress, we don't have that luxury."
Government as Business
As a non-appropriated agency, NTIS is expected to break even and is allowed to carry forward profits into future years. Its profits have to be sufficient to keep the agency afloat, just like a company. If it went through its retained earnings-profits that have built up over the years-it would go into a deficiency status.
NTIS, meanwhile, is mandated to operate only on a cost-recovery basis, meaning it cannot make too much of a profit. That restricts the agency's ability to move into the new technologies that the suppliers of the reports it publishes are using.
"Our ability to invest is limited by the fact that we don't have access to capital, and our pricing policies have got to be constructed in ways that we are recovering not much more than our actual costs," says Neuschatz. "If we were the NTIS Corporation, we could run down the street here to the bank and ask for a loan to help us invest in the technologies and the products and services that we felt were ultimately going to increase our revenue. But we can't do that. Where does the seed capital come from to reinvest in what any sensible business would reinvest in? That's one of our real problems."
NTIS also is required to take in all scientific and technical reports under its charter. It can't refuse to accept a title that appears unlikely to turn a profit, as a private publisher would. And the electronic information explosion has made the intake, indexing and cataloging processes more complicated due to the lack of standards in formatting.
"We don't tell people how to give it to us. In the old days, it came on paper. Today it is whatever it is. It's a lot of work to do that. We believe from our mission that we should be doing it. But it's costing us money," Lawson says. "The mistake people make is in thinking everything is automated. It is automated for the user, but behind it is where the problem is."
Further, none of the information NTIS distributes is copyrighted. It receives no royalties from anyone who reproduces one of its reports. "In many cases we up-front all the costs of collecting the documents, indexing and abstracting, cataloging. And then many companies buy that from us, and they escape all those costs, and then they have lower prices," Lawson says. "Basically we are doing this public service for them and for the country. But it makes it very difficult for us to break even."
NTIS was not breaking even when Lawson became director in January 1999; the agency was more than $600,000 in the red and in danger of being deficient for the fiscal year. A report by the Commerce inspector general several months later said that agencies "are increasingly bypassing NTIS as a distribution channel" and that "even with significant efforts to improve its profitability, NTIS can no longer generate sufficient revenue to remain self- supporting."
The Commerce Department made its recommendation to move NTIS several months later, including a pointed observation that a report Commerce had just released, "The Emerging Digital Economy II," cost $27 through NTIS but was available for free on Commerce's Web site.
After downsizing, a Commerce-imposed hiring freeze, space consolidations and other cost-saving steps, however, the NTIS finished fiscal 1999 with more than $650,000 in profits. Still, the administration repeated its transfer proposal in its fiscal 2001 budget plan and continues to push the idea.
For fiscal 2000, NTIS is expecting about a $1 million profit on a $34 million operating budget. "We feel very confident we'll be able to do that well," says Lawson. "But again, it's not sufficient. It looks good-you broke even. Sometimes it's difficult for government managers to understand that breaking even is only the name of the game if you're being appropriated in some other manner. We're not."
Waiting Game on the Hill
So far lawmakers have done little about the agency except to deny the administration's request for seed money to begin the transfer of NTIS to the Library of Congress. House and Senate hearings late last year revealed little interest, except from the Commerce Department, in moving the agency.
The Library of Congress submitted a statement to Congress that showed little enthusiasm for taking over NTIS, saying that while some NTIS functions "dovetail" with its own activities, functions such as high-volume document distribution, brokering agency databases and publication of information products of executive agencies "are beyond the Library's current mandate." The Government Printing Office, meanwhile, volunteered to take over NTIS if Congress decided to move it from Commerce, saying the agency's functions would fit better there.
Spokespeople for the Library and the GPO say their agencies' positions haven't changed since then.
Earlier this year, Rep. Tom Davis, R-Va.-who represents the Springfield, Va., home of the agency-and several other members defeated a White House request for transfer funds as part of a special supplemental spending bill for fiscal 2000. Davis and other members of the Virginia delegation criticized the Commerce plan at the hearings as hastily drawn and done without consulting stakeholders, including Congress and NTIS customers.
"It's not an absolute that this place doesn't need to evolve; he's just saying it's a little drastic to move it all to the Library of Congress at this point," says David Marin, spokesman for Davis. "There are issues to be resolved-the fugitive document issue, how the government intends to capture the information to make sure information is available not only immediately but also three or 10 years from now. We think the function of NTIS is important and needs to be reexamined but not to the extent that the administration wants."
The Senate Commerce, Science and Transportation Committee shares the concerns about the process Commerce used in making the transfer proposal and about ensuring that scientific and technical information remains readily available, says a committee staff member. "That's been the role of NTIS. If the government is making an $80 billion investment in R&D and the results are not being captured and archived, that's a concern," he says. "Someone's got to do it, that's what it comes down to. If they're not there to do it, someone else has got to."
At last fall's hearing, the Commerce Department's Mallet said: "We certainly did consult with the management at NTIS [before making the proposal]. It would be a fair criticism to say that the department was not deeply involved with the union on this. We did have conversations, but this is a criticism that I am willing to take, that we didn't have full-blown consultations. I don't think the positions would be different today had we done so."
He also said the work of NTIS is "an essential government function. [But] it can be performed elsewhere." Of the recent improvement in NTIS finances, he said: "I don't think it would be dispositive. Looking back on the history of the last few years, there has been a deficit in the clearinghouse function every year. It was touch and go there much of the time."
Davis is working to give the agency relief from the hiring freeze, possibly by adding language to an appropriations bill, while awaiting a General Accounting Office audit of NTIS finances. And the Senate committee is considering asking the National Commission on Libraries and Information Science, the primary body overseeing federal library and information policy, to do a full examination of NTIS.
In a preliminary report issued in March, the commission recommended leaving NTIS in place, at least for now. The report also said NTIS should get a direct appropriation to cover its public service functions, should set sales prices sufficient only to cover costs and should introduce new products or services only after "careful consideration of the capabilities of the private sector."
However, a wide range of options was raised during the commission's work and "there are seven or eight alternatives still on the table," says Forest Woody Horton, the consultant who co-directed the study of NTIS.
One point of agreement, though, was that no other technical-intensive agency-such as NASA or the Energy Department-wants NTIS' job.
"We're saying give [NTIS officials] the money to ensure organizing and applying bibliographic control of the information that's got to be disseminated, then make sure they do update and modernize their business model," Horton says. "They've got to start making arrangements under the context of the impending e-government model and make sure the information that is coming to them from the [agencies] is increasingly coming to them in electronic form and they make it available electronically."
Restructuring Staff, Services
NTIS says it has been restructuring itself exactly along those lines, however. It has cut more than 100 positions over two years to bring its staff down to 215. Much of the reduction was handled through a negotiated agreement with the National Federation of Federal Employees, in which positions at the same grade level at other Commerce agencies were found for surplus employees.
"It's tough. We downsized, and of course our payroll is a lot less, but the employees are doing two and three jobs. The jobs still are here. It's really been a hardship for all of us," says Louisa W. Day, an agency acquisitions specialist who is president of NFFE Local 1627, representing nearly 200 NTIS employees.
"If you look at the bargaining unit, we've been very instrumental in terms of helping NTIS restructure itself and making it fiscally sound and also in terms of making sure it's focusing on the mission," says Bill Clark, an executive committee member of the NFFE local who works at the NTIS office of business development.
Management officials agree that the two sides have worked well together in the downsizing but say the result still isn't perfect. The hiring freeze has left NTIS unable to fill vacated positions-much less new ones-that reflect the skills it needs to keep up with technology.
"There's a whole host of things that require a different technological skill. We have too many people left over from the older way of doing business," says Neuschatz. "If we were a business and could tailor our workforce to our current needs, I'd think you'd see the clearinghouse being a lot more profitable."
Meanwhile, the agency has been shifting to electronic gathering and dissemination of information, including information management and multimedia services available to agencies on a reimbursable basis. That shift is reflected in an increase in electronic transactions with an accompanying decrease in sales of traditional paper and microfiche products. And the number of times its FedWorld system-which provides online integration services, including imaging, virtual warehousing and production services-was accessed and the number of files downloaded from it each increased by about a factor of six between 1997 and 1999.
"One of the challenges is that as new media come out and grow, they don't really replace old media," says Neuschatz. "You never stop doing what you were doing before. So we need to maintain a very, very diverse staff with all the technical skills. We'll be doing everything forever. That's one of our real virtues but one of our millstones as well."
New Sources of Revenue
While the agency has been restructuring its offerings and cutting internal costs, it also has been finding additional revenues by offering services such as Web site hosting and other electronic information services to agencies such as Agriculture, Labor, Veterans Affairs, Health and Human Services, Federal Aviation Administration, Customs Service, IRS and the Supreme Court.
Similarly, for several years it's been the NTIS that produces and sells the popular IRS tax form CD-ROMs. That contract, from which NTIS nets about a half-million dollars annually, represents a large part of what makes the agency profitable. Last year, the IRS put the job up for bid, resulting in a competition between NTIS and the Government Printing Office. While the bids were fairly comparable, NTIS won the right to continue the job largely on the basis of its track record on customer service.
"We're customer-oriented," says Lawson. "We have to be because we receive no other funds. If I mail a letter, it's 33 cents out of pocket. Nothing goes through the Department of Commerce mail room where it's free. There's nothing free here. We need to service customers. If we don't, the sales report will reflect it."
NTIS also hosts the Defense Acquisition University's virtual campus, handling several courses, with the prospects for more in the future, not only with the Defense Department but also with other agencies' distance learning programs. "We see that as a great growth area because that gives us the expertise to approach other federal agencies and say if you want to have this, we're able to do it," says Lawson.
Other ideas include the capability of selling just parts of reports instead of entire documents and further forays into audiovisual services, satellite broadcasting and other new technologies.
But NTIS has come under criticism for taking such initiatives, including some ventures that did not work well in the past, such as bringing into its collection industry standards and military specifications that were readily available elsewhere. The March NCLIS report, while generally favorable to NTIS, concluded that pressure to be self-funding "has led NTIS to expand services to agencies and develop products that are beyond its mission."
"The biggest share of their revenue right now is from the program with the IRS to bring out their tax forms," says Horton, the study's co-director. "That doesn't have a thing to do with the collection and dissemination of federally financed R&D information. You're really stretching things if you're having to depend upon that kind of a revenue source to keep yourself afloat. Something's radically wrong.
"The other argument is that it doesn't seem kosher for one government agency to be paying another government agency to be doing something it could be doing for itself. That's an arguable point. But that's been used by Commerce as part of their justification for dumping the agency."
While the arguments continue back and forth, NTIS remains in limbo, hearing exhortations to all agencies to be more customer-oriented, entrepreneurial and businesslike, and seeing opportunities for which it is well positioned, but being limited in its ability to move ahead.
"The platform we have for electronic information dissemination lends itself to many opportunities," Lawson says. "We believe that they're only going to grow, and exponentially. We need to be ready to go one way or the other. If they keep us open, we can't say in four years we'll be ready to do something."
"But we can't do too much of anything that would require investment," he adds. "It would be crazy to make the investment if they're going to close us down. We have to see what the Hill says first."
Eric Yoder is a veteran Washington journalist and a regular contributor to Government Executive.