Federal Trade Commission

The Federal Trade Commission (FTC) has a dual mission: protecting the public from unfair and deceptive trade practices and promoting competition in the marketplace. FTC's consumer protection and competition activities are now carried out in the agency's headquarters in Washington, D.C., and in its 10 regional offices across the country. In June 1998, FTC approved a proposal to restructure its regional operations, including reconfiguring, closing, and merging several of the regional offices. Under the plan, FTC's regional work on competition or antitrust matters would be done primarily at three proposed regional antitrust centers most probably in San Francisco, Cleveland, and New York City with the other regions continuing to do this work only on a limited basis. This report discusses (1) FTC's rationale for proposing the restructuring, (2) the process FTC followed in developing its restructuring proposal, (3) the factors that FTC used and could have used in deciding how to restructure, (4) other options to the proposed restructuring identified in earlier FTC studies or by Boston and Denver regional officials, and (5) the views of selected stakeholders on the impact that the proposed restructuring could have in the areas covered by the Boston and Denver regional offices.

GAO noted that: (1) FTC's rationale for developing its proposal to restructure its regional operations was to address its growing concerns about an increased and more complex workload in the face of limited staffing resources; (2) the proposal was to accommodate increased and more complex workloads for both its competition and consumer protection missions; (3) FTC's decisionmaking process for developing its proposal consisted of deliberations among headquarters officials during the early months of 1998; (4) the process for developing the current proposal did not include discussions with staff or managers in its Boston and Denver offices or with external stakeholders that work with these regions; (5) in its strategic plan, FTC identified some of these stakeholders as partners in helping to carry out its mission; (6) after FTC developed the restructuring proposal, but prior to submitting it to the Commissioners for approval, FTC consulted with concerned Members of Congress and officials of the Department of Justice's Antitrust Division about the proposal; (7) according to FTC's proposal, the decision to close the Boston and Denver regional offices and to retain the remaining eight offices was based on three factors--population, gross state product, and the percentage of consumer fraud cases FTC filed in federal courts within each region; (8) according to FTC headquarters officials, FTC also considered staff expertise and geographic location as factors for retaining offices; (9) FTC officials said that FTC used geographic location as a principal factor in deciding where it would locate the three antitrust centers; (10) FTC staff from the Boston and Denver offices and GAO's review of FTC documents identified other factors--productivity, future population growth, and cost--that FTC could have used in making its decision to restructure regional operations; (11) FTC presented a single approach for restructuring its regional operations because it considered other options to be impractical or unrealistic; (12) concerning consumer protection matters, most of the external stakeholders who expressed a view said that they believed the closures would have a negative impact; (13) their primary concerns were: (a) FTC staff from different regions of the country would not be able to devote the time to or did not have knowledge of regional issues; and (b) FTC would not be able to adequately replace the service and assistance provided by the FTC Boston and Denver regional offices; and (14) Boston and Denver FTC officials said they believed consumer protection and competition matters would be negatively affected.