[Senate Hearing 110-1039]
[From the U.S. Government Publishing Office]




                                                      S. Hrg. 110-1039
 
CENSUS IN PERIL: GETTING THE 2010 DECENNIAL BACK ON TRACK--PARTS I AND
                                   II

=======================================================================

                                HEARINGS

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                       MARCH 5 AND APRIL 15, 2008

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs

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41-456 PDF                 WASHINGTON : 2010



        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
               Kristine V. Lam, Professional Staff Member
 John P. Kilvington, Staff Director, Subcommittee on Federal Financial 
Management, Government Information, Federal Services, and International 
                                Security
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                   Jennifer L. Tarr, Minority Counsel
      Christopher J. Barkley, Minority Professional Staff Member, 
 Subcommittee on Federal Financial Management, Government Information, 
              Federal Services, and International Security
                  Trina Driessnack Tyrer, Chief Clerk
         Patricia R. Hogan, Publications Clerk and GPO Detailee
                    Laura W. Kilbride, Hearing Clerk
                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper............................................... 1, 41
    Senator Coburn............................................... 5, 44
    Senator McCaskill............................................    37
Prepared statements:
    Senator Lieberman............................................    69
    Senator Collins............................................. 70, 71

                               WITNESSES
                        Wednesday, March 5, 2008

Hon. Carlos M. Gutierrez, Secretary, U.S. Department of Commerce.     9
Hon. Steven H. Murdock, Director, U.S. Census Bureau, U.S. 
  Department of Commerce.........................................    14
David A. Powner, Director, Information Technology Management 
  Issues, U.S. Government Accountability Office..................    26
Mathew J. Scire, Director, Strategic Issues, U.S. Government 
  Accountability Office..........................................    28

                        Tuesday, April 15, 2008

Hon. Carlos M. Gutierrez, Secretary, U.S. Department of Commerce.    47
Hon. Steven H. Murdock, Director, U.S. Census Bureau, U.S. 
  Department of Commerce.........................................    57
Mathew J. Scire, Director, Strategic Issues, U.S. Government 
  Accountability Office..........................................    59
David A. Powner, Director, Information Technology Management 
  Issues, U.S. Government Accountability Office..................    60

                     Alphabetical List of Witnesses

Gutierrez, Hon. Carlos M.:
    Testimony.................................................... 9, 47
    Prepared statement......................................... 72, 107
Murdock, Hon. Steven H.:
    Testimony................................................... 14, 57
    Prepared statement......................................... 80, 113
Powner, David A.:
    Testimony................................................... 26, 60
    Prepared statement......................................... 83, 117
Scire, Mathew J.:
    Testimony................................................... 28, 59
    Prepared statement......................................... 83, 117

                                APPENDIX

Questions and responses for March 5, 2008, Record from:
    Mr. Gutierrez................................................   132
    Mr. Murdock..................................................   144
    Mr. Powner...................................................   155
    Mr. Scire....................................................   155
Questions and responses for April 15, 2008, Record from:
    Mr. Gutierrez................................................   162
    Mr. Murdock..................................................   169
PowerPoint presentation titled ``Decennial Census Progress Review 
  and Program Replan,'' submitted by Mr. Gutierrez...............   173

 
   CENSUS IN PERIL: GETTING THE 2010 DECENNIAL BACK ON TRACK--PART I

                              ----------                              


                        WEDNESDAY, MARCH 5, 2008

                                     U.S. Senate,  
                       Committee on Homeland Security and  
                                      Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:36 a.m., in 
Room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, presiding.
    Present: Senators Carper, McCaskill, and Coburn.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Senator Carper. The Committee will come to order.
    All right. Let me begin by welcoming our witnesses, 
Secretary Gutierrez, Director Murdock, and our two other 
witnesses, who will be joining us on the second panel from the 
U.S. Government Accountability Office (GAO), for being here on 
such short notice.
    Your cooperation with our oversight efforts and your 
commitment to working with us to get the 2010 Decennial Census 
back on track are deeply appreciated.
    My thanks as well to Senators Lieberman and Collins for 
allowing us to hold this hearing at the full Committee level.
    As my colleagues are aware, the Constitution requires the 
Federal Government to conduct a census every 10 years. The data 
collected as a result of these efforts is used to support and 
ensure the equitable and effective operation of a number of 
programs here at the Federal level and in the States as well--
programs that involve literally tens of billions of taxpayer 
dollars.
    The data obtained through the census is also used, as we 
know, to determine the make up of the Federal Government 
itself, at least a portion of the Federal Government in the 
Legislative Branch.
    The information that the Census Bureau collects about 
people and their communities once every 10 years is utilized to 
decide how the 435 seats in the U.S. House of Representatives 
are apportioned.
    Senator Coburn and I called this hearing today because 
information we have learned from the Commerce Department, from 
the Census Bureau, and in the press indicates that the 2010 
Decennial Census could be at risk of failure unless prompt and 
dramatic corrective action is taken.
    Right now, the Census Bureau is supposed to be in the midst 
of a period it calls the ``dress rehearsal.'' And during the 
dress rehearsal, all the procedures and technology that will be 
used in 2010 are to be tested so that adjustments can be made 
before the counting actually begins.
    Instead of being out in the field this month, though, doing 
a final run through, it appears that Census staff is stuck in 
headquarters trying to salvage a project that for years had 
been billed as the cornerstone of the Bureau's 2010 efforts.
    The project, called the ``Field Data Collection 
Automation,'' involves hand-held computers that canvassers and 
census-takers will use to go into the communities and collect 
information from individuals who do not initially respond to 
the census forms that are mailed to them.
    The handhelds are supposed to lead to a more accurate 
census than the largely paper-based efforts conducted in 2000 
and in previous decennials.
    The handhelds also were supposed to be the key to the 
Census Bureau's projected cost savings this time around since 
using hand-held computers instead of paper would hopefully mean 
fewer staff and less office space to be acquired.
    However, the Department of Commerce and the Census Bureau 
officials decided very recently, after preparations for the 
2010 decennial began, that the hand-held project may not be 
viable.
    As we will hear from Secretary Gutierrez and Director 
Murdock today, Census staff is working now to come up with a 
series of options for how to conduct major portions of the 2010 
count.
    Among those options, I assume, could be a complete 
abandonment of the hand-held project and a return to a paper 
census. It is my understanding that all the options on the 
table at this point will come with a significant price tag.
    I am profoundly disappointed in this outcome. My 
disappointment comes not so much from the fact that the Census 
Bureau has tried and, in all likelihood, failed to use 
technology to improve the Decennial Census. It comes, in part, 
because we may wind up paying more for a poorer quality census 
in 2010 because the Census Bureau did not heed the warnings 
coming from GAO and others that its hand-held project was 
troubled and in jeopardy.
    The Subcommittee on Federal Financial Management, 
Government Information, Federal Services, and International 
Security that Senator Coburn and I lead has held a number of 
hearings over the years on preparation for 2010. We take our 
obligation seriously.
    At all of those hearings--and also at some hearings held by 
our counterparts in the House--we heard warnings that the hand-
held project was not where it should be. GAO witnesses 
testified that, years into the contract with the hand-held 
maker, the Harris Corporation, the Census Bureau had not 
finalized what it wanted done and when they wanted it 
completed.
    GAO's findings were supported recently by the MITRE 
Corporation, an outside group hired by the Census Bureau to 
examine the contract with Harris. MITRE briefed top Census 
officials on two occasions--once in June and once this past 
November--that the hand-held project may not achieve the goals 
the Census Bureau initially had for it. MITRE even suggested 
that the entire project may need to be scrapped.
    Our goal in holding this hearing, and airing these problems 
is not to point fingers and not to raise or sound alarm bells.
    We want to find out what needs to be done to ensure that 
all of us live up to our constitutional obligation to conduct a 
2010 decennial that is accurate and timely.
    And, while it may become necessary at some point to pay 
what we need to pay to get the census done and done right, I 
want to make sure that we are doing all we can to try to 
control those costs, and my hope is that the Department and the 
Bureau will as well.
    One of my favorite old movies was ``Cool Hand Luke,'' where 
Paul Newman was a convict on the lam and finally was tracked 
down. And you probably remember the line there at the end of 
the movie where the warden of the prison said what we have is a 
failure to communicate.
    I think what we have here is a failure to communicate, but 
that is only part of the failure. I think there was a failure 
on the part of the Census Bureau to figure out what your needs 
are going to be in terms of this project and to be able to 
clearly state those needs at an early point in time.
    What we have here is a failure to manage this project. What 
we have here is a failure to listen to GAO and to others who 
raised the warning flags about the project and the direction 
that it was going. What we have here is a failure to 
communicate to us and to our colleagues in the House of 
Representatives the real status of this project and to let us 
know early on.
    The census in this country is nothing new. We have been 
doing them every 10 years for over 200 years, and censuses in 
the world are nothing new either. They have been doing them 
since Jesus was a baby and even long before that.
    In a day and age when other countries are using the 
Internet, harnessing technology to do at least a portion of 
their census, and when my family and I and millions of others 
submit our tax returns to the Internal Revenue Service (IRS) 
electronically, rather than talking here today about how we are 
harnessing the Internet to be able to electronically conduct 
part of the census, now we are looking at the one significant 
step forward on technology, the computer handhelds, and find 
that they may not even be working as well.
    I read the testimony submitted to the Committee before this 
hearing. I will be honest with you. I read the testimony last 
night from GAO, and I am just in disbelief as I tracked the 
last several years where we have come from and where we are 
today.
    We cannot tolerate any more failures. You cannot, 
obviously, as the Secretary of Commerce, Mr. Guiterrez. We 
cannot either.
    And from this point forward, what we have to figure out is 
how to be successful. A lot of people in this country, a lot of 
tax dollars, are at stake in this. Getting it right and getting 
it done right soon is what we need to do now.
    Senator Coburn has been on top of this from day one as the 
former Chairman of the Subcommittee on Federal Financial 
Management, Government Information, Federal Services, and 
International Security, and he is probably going to revisit 
with us some of the back and forth that he had with your 
predecessor, Dr. Murdock, and that is very telling in itself.
    [The prepared opening statement of Senator Carper follows:]
                  OPENING STATEMENT OF SENATOR CARPER
    The committee will come to order.
    My thanks to our witnesses--Secretary Gutierrez, Director Murdock, 
and our two witnesses from GAO--for being here on such short notice. 
Your cooperation with our oversight efforts and your commitment to 
working with us to get the 2010 decennial census back on track are 
greatly appreciated.
    My thanks as well to Senator Lieberman and Senator Collins for 
allowing us to hold this hearing at the full committee.
    As my colleagues are aware, the Constitution requires the Federal 
Government to go out every ten years and conduct a census. The data 
collected as a result of these efforts is used to support and ensure 
the effective operation of a number of programs here at the Federal 
level and in the states as well.
    The data is also used to determine the make up of the Federal 
Government itself. The information the Census Bureau collects about 
people and their communities once a decade is used to decide how the 
435 seats in the House of Representatives are divided up.
    Senator Coburn and I called this hearing because information we've 
learned from the Commerce Department, the Census Bureau, and in the 
press indicates that the 2010 decennial census could be at risk of 
failure.
    Right now, the Census Bureau is supposed to be in the middle of a 
period it calls the ``dress rehearsal.'' During the dress rehearsal, 
all of the procedures and technology that will be used in 2010 are 
supposed to be tested so that adjustments can be made before the 
counting actually begins. Instead of being out in the field doing a 
final run through, however, it appears that Census staff is stuck in 
headquarters trying to salvage a project that for years had been billed 
as the cornerstone of the Bureau's 2010 efforts.
    The project--called ``Field Data Collection Automation''--involves 
handheld computers that canvassers and census-takers will use to go 
into communities and collect information. It was supposed to lead to a 
better quality census than the largely paper-based efforts conducted in 
2000 and in previous decennials. It was also supposed to be the key to 
the Census Bureau's projected cost savings this time around since using 
handheld computers instead of paper would likely mean fewer staff and 
less office space.
    However, Commerce and Census officials decided very recently--about 
a decade after preparations for the 2010 decennial began--that the 
handheld project may not be viable. As we will hear from Secretary 
Gutierrez and Director Murdock today, Census staff is working now to 
come up with a series of options for how to conduct major portions of 
the 2010 count. Among those options, I assume, will be a complete 
abandonment of the handheld project and the return to a paper census. 
It is my understanding that all of the options on the table at this 
point will come with a hefty price tag.
    I am, of course, very disappointed in this outcome. My 
disappointment comes not so much from the fact that the Census Bureau 
has tried and, in all likelihood, failed to use technology to improve 
the decennial census. It comes because we could wind up paying more for 
a poorer quality census in 2010 because the Census Bureau did not heed 
the warnings coming from GAO and others that their handheld project was 
troubled.
    The Subcommittee that Senator Coburn and I lead has held a number 
of hearings over the years on preparations for 2010. At all of those 
hearings--and also at some hearings held by our counterparts in the 
House--we heard warnings that the handheld project was not where it 
should be. GAO witnesses testified that, years into the contract with 
the handheld maker, the Harris Corporation, the Census Bureau had not 
finalized what they wanted done and when they wanted it completed.
    GAO's findings were supported recently by the MITRE Corporation, an 
outside group hired by the Census Bureau to examine the contract with 
Harris. MITRE briefed top Census officials on two occasions--once in 
June and once in November--that the handheld project may not achieve 
the goals the Census Bureau initially had for it. MITRE even suggested 
that the entire project might need to be scrapped.
    My goal in holding this hearing and airing these problems is not to 
point fingers and raise alarm bells. I want to find out what needs to 
be done to ensure that we live up to our constitutional obligation to 
conduct a quality 2010 decennial. And, while it may become necessary at 
some point to pay what we need to pay to get the census right, I want 
to make sure that we're doing all we can to control costs.
    So I applaud you, Mr. Secretary, for involving yourself personally 
in the process currently underway and for seeking the advice and 
counsel of outside experts as you prepare to make a decision on how to 
move forward.
    My thanks to you again for coming here on such short notice and for 
being as open with us as you have been since you realized that you had 
this problem on your hands.

    Senator Carper. Dr. Coburn, welcome.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Thank you. And I appreciate you coming 
before us. I would like to ask unanimous consent that my 
statement be made a part of the record.
    Senator Carper. Without objection.
    [The prepared statement of Senator Coburn follows:]
                  PREPARED STATEMENT OF SENATOR COBURN
    Good morning, I would like to start by first thanking Chairman 
Lieberman and Chairman Carper for holding this hearing today. I would 
also like to thank Secretary Gutierrez and Director Murdock for being 
here as well.
    We are here today because the Census Bureau finds itself in the 
midst of a crisis. So serious is the crisis that if it is not dealt 
with immediately, it could threaten the integrity of the 2010 count. At 
issue is a $600 million contract designed to create handheld computers 
for automating the way that census data is collected. Unfortunately, 
the contract has been managed so poorly that it might fail to produce 
fully functioning handheld computers, which could set off a chain 
reaction of events from which the Bureau might never recover. I hope 
that we can avoid such a worst-case scenario, but the question is: How? 
I hope that today's hearing will shed some light on that subject.
    Most Americans are no doubt unaware of how much time and effort 
goes into planning for a census since it happens only every 10 years. 
But, because a census is such a large undertaking, the decisions that 
are made in the years beforehand are those that have the biggest impact 
on how much it will cost and, most importantly, how well it will be 
done. The Census Bureau has now reached a point in which decisions that 
should have been made months ago--if not years ago--must be made over 
the next few weeks. There decisions will determine whether the census 
in 2010 can be rescued from the brink.
    The problem that the Bureau faces is not mystery: Many of the 
functions that it planned to automate using the handheld computers may 
now have to be done on paper. How we got here is also not a mystery: 
Thousands of changes were made to the contract over the last two years, 
making it nearly impossible to know what the final product would be and 
when it needed to be completed--even if it could be completed.
    It should be noted that the problems with this contract seemed 
apparent to everyone except the Census Bureau. For years, the 
Government Accountability Office has warned that constantly adding new 
requirements to the contract could have disastrous effects. This 
Committee, as well as our counterparts in the House, held hearings to 
discuss the growing problems associated with the handheld contract. 
Internal reports from the MITRE Corporation and the contractor itself, 
dating back to June 2007, warned that serious problems were on the 
horizon. Inexcusably, the warnings were largely ignored.
    We now find ourselves facing a situation in which we might have to 
revert to conducting the census entirely by paper--no differently than 
it was done in the 19th Century. It is ironic that this hearing is 
happening in the middle of tax season, considering that electronic 
filings are hitting all time high. Just this week, the IRS is reporting 
that of the 47 million returns that were filed as of the third week in 
February, 38 million were done electronically. If we can file tax data 
electronically--which is far more sensitive than census data--we should 
be able to collect census data electronically. Unfortunately, the 
likelihood of this seems low.
    What is most important now, though, is what we do from this point 
forward to fulfill the constitutional mandate to count the population. 
The opinions are either to use the handhelds, revert to paper, or do 
something in between. As the Census Bureau, and ultimately the 
Secretary of Commerce, makes a final decision, I would like to outline 
four concerns I have.
    First, I'm afraid that the timetable for decisions is unreasonably 
slow. Information we have received from the Secretary's office would 
push off final decisions until late this month or early April. 
Considering the problems have been well known by high-level Census 
Bureau executives since at least early January, taking three months to 
make decisions is too long.
    Second, I'm concerned that technology could be abandoned too 
quickly in favor of reverting back to a paper census. Because paper 
seems like the comfortable choice for those at the Census who have 
always relied on it in the past, I know it may be tempting to think 
that the technology is the villain here. Technology is not the 
villain--only the poor management of technology. We need to look at 
what the technology can offer us. Huge investments of time and money 
have already been made into producing handheld computers, which might 
still be used. Decisions about whether to use paper or handheld 
computers need to be based on sound analysis and not simply be based on 
what is more comfortable.
    Third, I'm extremely concerned that taxpayers might be unfairly 
stuck with an enormous bill to pay for the Census Bureau's 
mismanagement. While no one has given Congress any reliable figures on 
what the possible impact would be, I've been assured that the dollar 
amount could be significant. For years, the Census Bureau has estimated 
that the 2010 count will cost between $11.3 billion and $11.8 billion--
I hope that the Secretary of Commerce will work to ensure that the cost 
does not increase beyond that, even with these trying circumstances. 
However, let me be perfectly clear--if costs go over that amount, 
taxpayers should not have to subsidize this mismanagement more than 
they already have. If more money is needed, I fully expect that the 
Department and the Bureau will work internally and with the Office of 
Management and Budget (OMB) to find offsets out of programs that 
already exist. This subcommittee has identified billions of dollars in 
wasteful programs over the years, and I will not support any request 
that forces taxpayers to bail out the Census Bureau with an off-budget, 
emergency supplemental.
    Finally, and most importantly, I am concerned that the 2010 census 
may suffer significantly in the area of quality. The Constitution 
itself demands an accurate count as an essential element of our 
representative democracy. Allowing the quality of the count to diminish 
even slightly is unacceptable because of the impact it can have on 
those who deserve full representation. Every effort should be made to 
provide the American people full confidence in the apportionment 
process, which can only be accomplished by an accurate census count in 
2010.
    I again want to thank our witnesses for being here today and look 
forward to their testimony.

    Senator Coburn. And I will try not to spend a lot of time 
on it.
    I do not think this is a communication problem. I think 
this is an arrogance and management problem, and I am not 
saying that to the Secretary, nor to the present Director.
    But I am going to read you in a moment the testimony that 
we had with the former Director of the Census about this very 
issue, and I think it is very telling in light of what the GAO 
was saying at the time.
    Here are Mr. Kincannon's words:

        Senator Coburn: What happens if these do not work? What is your 
        plan B?

        Mr. Kincannon: They will work. They have worked. You might as 
        well ask me what happens if the Postal Service refuses to 
        deliver the census forms.

        Senator Coburn: I am not asking it facetiously. I am asking 
        what happens if there is a computer glitch and these hand-held 
        devices do not work. What is plan B?

        Mr. Kincannon: The computer devices have been tested and proven 
        to work.

    That is the testimony. At that time, they had not been 
proven to work, but that was his testimony.

        Senator Coburn: All I want you to do is answer my question. 
        What if they do not work.

        Mr. Kincannon: We have a big problem then.

        Senator Coburn: So are you going to have to hire more people to 
        do the non-response follow up?

        Mr. Kincannon: I do not believe that condition will obtain, so 
        I do not----

        Senator Coburn: So there is no planning.'' So, as we have 
        talked about planning for what-ifs and----

        Mr. Kincannon: We could hire more people. Yes, we could hire 
        more people, sir.

        Senator Coburn: Is it not true that GAO has said that this 
        handheld device is a huge risk in their testimony?

        Mr. Kincannon: I do not know the precise formulation of words, 
        but they say there is a risk associated with using handhelds.

        Senator Coburn: So your testimony to me is that there is no 
        alternative plan if that does not work?

        Mr. Kincannon: We have no reason to believe that there is any 
        systematic risk in all the handhelds. That system will work.

        Senator Coburn: Your testimony today is if that does not work--
        if GAO's concerns happen to be borne out--there is no 
        alternative plan if it does not work?

    This was June 2006, 21 months ago. There was no alternative 
plan, if they did not work. I will not continue the rest of it.
    Mr. Secretary, I had a meeting with you in September 2006 
raising some concerns on just Web-based and computer issues, 
trying to get you to look at some of the things. We did not 
alert you to the significance of what we thought this was, and 
so we cannot hold you accountable to what we knew at that time. 
I am not going to try to do that at this time.
    But here is what the IRS said this week: It has received 47 
million returns as of February 22, 2008. Thirty-eight million 
were filed electronically, up 5 percent from 2000. Twenty-six 
million e-files. Self-prepared electronic returns went up to 
12.3 million; 12.3 million people without the help of 
accountants for their tax return or anybody else filed their 
tax returns, which are much more complicated and require much 
more serious data collection protection. Thirty-nine million 
returns were qualified for a refund, with the vast majority of 
those having direct deposit through the computer. Thirty-three 
million of them.
    We have been saying since 2005 to the Census, when they 
turned down looking at an information technology (IT) response 
for the Census that they ought to be doing that. And probably 
had they gone in that direction, we probably would not have 
some of the pressure points we have today.
    The other point I would make is we know that there are 
experts out there to help you, and you have a committee that 
you are putting together, but a guy like Dave Brady from 
Stanford University is not on that committee.
    He is the guru who has written all the statistical analysis 
of how you do things, but he has not been invited to be on the 
committee--he is the guy from Stanford who knows the basis 
under which all this statistical data is used. He wrote it. And 
yet, he had not been contacted. He had not been asked to be a 
part of the solution for your problems.
    And I would just hope that you broaden the scope of the 
people who are going to advise you in this short period of 
time. There are real experts in this country who have written 
the programs that the Census Bureau has used in the past to 
accomplish this, and let them help dig us out of this.
    I hold the Secretary in great regard. I appreciate him 
coming, and our new Director of the Census, he has the 
capability. But we have a real problem, and the problem is two-
fold.
    One is the risk that we will not have an accurate enough 
census with which to do apportionment, which there is 
absolutely no excuse for, even being in a risk situation, given 
what GAO said; and two, we did not have testimony, I do not 
believe, of what the additional costs are going to be, and that 
may be because you do not know.
    But I stated before this Committee over a year and a half 
ago that we are looking at probably $3 billion in increased 
costs based on what we saw as incompetence at that time coming 
out of the Census Bureau.
    So I hope I am wrong on that. I know Senator Carper and I 
both are worried about the increased cost for the value that we 
are going to get.
    I look forward to your testimony, and this cannot be that 
hard to figure out, especially because we know that the 
enumerators entering data into a handheld, if it is not 
working, we know we can always go to Web-based phones.
    You only got six questions. You already got the connection. 
So you do not even need the Harris Corp.
    You can get Web-based phones and enter six questions and 
transmit it. So, the question is there are a lot of 
alternatives out there that have not been looked at yet that 
certainly are not going to cost $600 million for us to be able 
to accomplish the census.
    I look forward to your testimony. Our goal right now is to 
help us work this problem out and continue in oversight.
    What is truly disappointing, Mr. Chairman, is that the 
Census Bureau did not listen to the Government Accountability 
Office and Inspector General. I mean, it was kind of like you 
guys do not know what you are talking about. You could not have 
good insight; so therefore, we are going to ignore you.
    And the consequence of ignoring the warning signs is that 
we find ourselves where we are today. And, to me, I think that 
is arrogance and mismanagement.
    The fact is they were not there to be critical. They were 
there to assess what they saw, and a good manager takes all 
options and looks at them and considers them and goes and 
checks the validity of them. And I do not think that happened 
in the Census Bureau.
    And my hope is that the good professionals--and there are 
tons in the Census Bureau--look at this and say this is a great 
learning experience. Let us use everything we can use in the 
future to help us do our job better. Thank you, Mr. Chairman.
    Senator Carper. Thank you, Dr. Coburn, and in a moment, 
Secretary Gutierrez, I am going to ask you and Dr. Murdock to 
stand and take an oath before you testify--but not yet.
    I just want to take a moment to provide a brief 
introduction.
    Carlos Gutierrez is the thirty-fifth Secretary of Commerce. 
Before joining this President's Cabinet in 2005, he served, as 
I understand, as both chairman and CEO of the Kellogg Company, 
having risen through the ranks of that company since starting 
out there I believe in 1975?
    Secretary Gutierrez. That is right.
    Senator Carper. Nineteen seventy-five.
    Dr. Steven Murdock is the Director of the U.S. Census 
Bureau. He was confirmed to that position by the Senate this 
past December after serving for more than 25 years, a quarter 
of a century, as head of the Texas State Data Center and the 
Texas Population Estimates and Projections Program.
    The first-ever state demographer in Texas, Dr. Murdock 
played a leadership role in the State's decennial census 
activities in 1980, 1990, and 2000.
    Questions have been raised about the veracity of some of 
the testimony provided in the House of Representatives on this 
issue last year, and we just want to take the steps suggested 
by Dr. Coburn, and I think it is a good idea.
    And with that, I am going to ask you to stand.
    If you would please rise and raise your right hand and 
repeat after me. Do you swear the testimony you will give 
before this Committee will be the truth, the whole truth, and 
nothing but the truth, so help you, God?
    Secretary Gutierrez. I do.
    Mr. Murdock. I do.
    Senator Carper. Thanks very much. Please be seated. And 
normally we set 5 minutes as the target time for testimony. We 
are just going to ignore that today, and encourage you to take 
the time that you need within reason, and your full statement 
will be made a part of the record.
    Secretary Gutierrez.

   TESTIMONY OF HON. CARLOS M. GUTIERREZ,\1\ SECRETARY, U.S. 
                     DEPARTMENT OF COMMERCE

    Secretary Gutierrez. Thank you, Chairman Carper and Senator 
Coburn. Thank you both for your interest in the census, and I 
know that you have taken a leadership role in this, and you 
have shown interest throughout the years, not just in recent 
times.
---------------------------------------------------------------------------
    \1\ The prepared statement of Secretary Gutierrez appears in the 
Appendix on page 72.
---------------------------------------------------------------------------
    And I appreciate the opportunity to discuss preparations 
for the 2010 census, specifically our efforts to implement the 
Field Data Collection Automation, known as FDCA.
    Preparing and executing the Decennial Census is one of the 
highest priorities and most important responsibilities of the 
Commerce Department.
    I am working closely with Census Director Steve Murdock to 
ensure that the Census Bureau and all of its dedicated hard 
working employees have the support necessary to carry out this 
constitutionally required task.
    I especially want to thank the Committee Members for your 
interest, for your concern and for your support on every aspect 
of the Decennial Census.
    The complexity of the 2010 census is compounded by our 
efforts to reengineer the historically paper-based Decennial 
Census by automating as much of it as possible to improve data 
collection and operations.
    The planning for the 2010 census began after the completion 
of the 2000 census and includes several key components:
    First is replacement of the Decennial Census long-form with 
the American Community Survey, which provides more timely 
information on demographic, housing, social, and economic data; 
a short-form only Decennial Census, which counts the population 
and gathers basic demographic characteristics; improved 
mapping, including use of global positioning technology for 
Master Address File/Topologically Integrated Geographic 
Encoding and Referencing (MAF/TIGER); technology data capture 
from paper, telephone and field sources; replacement of legacy 
systems for tabulating and disseminating results; and the Field 
Data Collection Automation.
    While most of these components are on schedule and meeting 
current cost estimates, FDCA is experiencing significant 
schedule, performance, and cost issues that I will focus on 
today.
    We have discovered serious problems with the FDCA program, 
and I am personally involved in bringing key issues to the 
surface and developing a way forward.
    In short, the situation is unacceptable. As I know it is 
unacceptable to you, I want you to know that it is unacceptable 
to me.
    The American people expect and deserve a timely and 
accurate Decennial Census and the Department, and I will not 
rest until they have it and they have it on time.
    For background, FDCA has three major parts: One, automated 
data collection using hand-held devices both to verify 
addresses, called Address Canvassing or AdCan, and to collect 
data during the non-response follow-up (NRFU) of those 
households that do not return their census form by mail; the 
Operational Control System (OCS), that tracks and manages 
Decennial Census workflow for all the field operations, 
including those operations conducted on paper; and then finally 
the Census Operations Infrastructure, which provides office 
automation and support for regional and local Census Offices.
    The bid request for the FDCA contract was released in late 
2005, and the Harris Corporation won the contract in April 
2006.
    The first major test of FDCA systems occurred in the spring 
of 2007 when the hand-held devices were used for an Address 
Canvassing dress rehearsal.
    Concerns about the FDCA program grew over time and Census 
and Commerce officials became increasingly aware of the 
significance of the problems through GAO and Office of 
Inspector General reviews, the 2007 dress rehearsal, and 
internal assessments.
    In his testimony on December 11, 2007, then-Director 
Kincannon mentioned that Census was addressing concerns that 
had been raised about the gap between the capacity to get the 
work done and the amount of time remaining.
    One of the main reasons for this gap was significant 
miscommunication concerning technical requirements between the 
Census Bureau and Harris.
    The lack of clarity in defining technical requirements was 
a serious problem especially with regard to testing and 
functionality of the hand-held devices in a full Census 
environment.
    For example, discrepancies arose over data upload times, 
screen change speed and data storage capabilities.
    In response, Census Deputy Director Jay Waite in mid-
November initiated an integrated project team, essentially a 
SWAT team, to define the problems associated with the FDCA 
program and develop solutions that would ensure a successful 
2010 census.
    The integrated project team focused on clarifying the 
remaining technical requirements where questions were still 
outstanding, identifying opportunities to reduce the scope of 
the contract if necessary, and examining the potential for the 
Census Bureau to absorb some of the activities originally 
planned for the contractor.
    The integrated project team undertook an in-depth review of 
all the technical specifications and provided Harris with an 
updated set of requirements in mid-January 2008.
    Harris conducted its evaluation of these requirements and 
provided a rough order of magnitude cost estimate in late 
January.
    The estimate highlighted potentially substantial increases 
in the contract cost, and raised new questions about staying on 
schedule.
    Clearly, the problem was more significant than had been 
conveyed in the December 11, 2007, hearing. What we had 
perceived as serious, but manageable, problems that were being 
addressed, we now view as critical and urgent.
    There is no question that both the Census Bureau and Harris 
could have done things differently and better over the past 
couple of years.
    I should add at this point that in late 2006 leadership 
changes did take place, and I would like to thank this 
Committee and the Senate for confirming Dr. Murdock, as the new 
Director of the Census Bureau, with whom I am working very 
closely to further clarify the problems and to develop a set of 
options for getting the Decennial Census back on track.
    Senator Carper. Secretary Gutierrez, let me interrupt for 
just a moment. In your testimony, you say that leadership 
changes occurred in late 2006. Was it late 2007? Is that a 
misprint?
    Secretary Gutierrez. I am sorry. Which?
    Senator Carper. Because Director Murdock was confirmed late 
last year.
    Secretary Gutierrez. Well, that is correct.
    Senator Carper. But are you alluding to other changes?
    Secretary Gutierrez. The agreement to undertake the 
leadership changes was decided in late 2006. It actually did 
not take place until 2007.
    Senator Carper. Thank you.
    Secretary Gutierrez. So, OK. In January 2008 after being 
confirmed, Director Murdock began a top-to-bottom review of all 
the components of the Decennial Census, including FDCA.
    Given the growing problems with FDCA and other possible 
impacts of building a more automated 2010 census, we want to be 
sure there are no other major issues or surprises.
    As part of that review, for example, we are carefully 
examining the Census cost estimating assumptions related to 
such matters as hours worked per enumerator and implications 
for supervisory and other costs. If necessary, adjustments will 
be made accordingly.
    As part of this broader review, Director Murdock launched 
the 2010 Census FDCA Risk Reduction Task Force on February 6, 
2008, after receiving Harris' response to the integrated 
project team requirements.
    The task force is headed by a former Acting Director of the 
Census Bureau, members from various parts of the Census Bureau 
and the Department of Commerce, and outside consultants from 
MITRE.
    The task force was charged with identifying and analyzing 
options for ensuring the success of FDCA.
    These options include reexamining the current contract to 
determine what changes could be made if there was a decision to 
shift some of the work back to the Census Bureau. The task 
force will soon present its findings to Director Murdock.
    We are essentially 2 or 3 weeks away from the findings and 
from the recommendations.
    The first phase of the task force's work focused on 
evaluating risks and options to manage these risks. Harris was 
not directly involved in this part of the analysis, which is 
one of the reasons why cost estimates are not yet available.
    Preliminary estimates do suggest the potential for cost 
overruns for the remaining life-cycle of the Decennial Census, 
we believe most occurring in 2010.
    While I have seen some of the same estimates that you 
have--I have not heard the number that you just mentioned, 
Senator Coburn, but I have heard a lot of different numbers--we 
are in the process of assessing these costs so that we can 
bring you what we believe is the right number.
    At this time, I am able to share the basic conceptual 
elements of the options being considered. All of these options 
call for using the hand-held computers for Address Canvassing, 
and we are continuing to work to ensure this requirement is 
met.
    For the other major components of the FDCA, each of the 
options considers a combination of responsibilities between 
Harris and Census in terms of capabilities, expertise, 
staffing, timing and costs.
    Option one is what we call the baseline. The first option 
is continuing with the current baseline largely as envisioned 
in the original FDCA project plan and contract.
    Harris would complete the hand-held computers for Address 
Canvassing and non-response follow-up. Harris would also 
complete the development of the operations control system and 
the field operations infrastructure.
    Harris has already developed major parts of the operations 
control system and has the IT infrastructure and staff to 
support further testing and development.
    However, given various issues related to handhelds, we 
would simultaneously evaluate the feasibility of a paper-based 
back-up plan for non-response follow-up should the next FDCA 
dress rehearsal not succeed.
    In the second option, we would shift everything but Address 
Canvassing back to the Census Bureau, including non-response 
follow-up, the operations control system and the field 
operations infrastructure.
    The non-response follow-up would be paper based and 
handhelds would not be used for NRFU. Census has extensive 
experience in conducting paper-based non-response follow-ups.
    The third option would shift non-response follow-up and 
field operations infrastructure to Census, but Harris would 
continue to develop the operations control system.
    As noted, Harris has already developed major parts of the 
operations control system. Again, this option would mean a 
paper based non-response follow-up.
    Option four would shift only non-response follow-up back to 
Census and Harris would keep responsibility for the operations 
control system and field operations infrastructure.
    This option depends on Harris being able to successfully 
complete both. Again, the non-response follow-up would be 
paper-based.
    So we are now at a critical juncture, and we must move fast 
to evaluate these options and make decisions for moving 
forward.
    I am appointing an expert panel to quickly evaluate 
independently each of the options and report back to me before 
the end of the month.
    The expert panel will be composed of five to seven members, 
including former Census Bureau Directors Ken Prewitt and Vince 
Barabba, former House Speaker Dennis Hastert, and other 
knowledgeable experts in Census-type operations and large IT 
system development programs. And, Senator Coburn, we will 
definitely call Dave Brady at Stanford and get his experience 
onto this group.
    I know you will have many questions, some of which I will 
not be able to answer today, and I do not have a specific cost 
number today. There is so many numbers floating around that we 
are reluctant to throw another one around. The next time I give 
you a number, I want it to be the number. And you will have 
that number, Senators, as soon as I have that number.
    After the task force and expert panel complete their work 
and report back to me at the end of the month, we will brief 
you on our findings at that time.
    We know how seriously you take this and that the American 
people expect and deserve a correct and thorough census, so let 
me stress that I take this very seriously; and I take the 
constitutional responsibility to conduct an accurate Decennial 
Census extremely, extremely seriously.
    Over the past month, I have been briefed by the Director 
and Deputy Director of the Census Bureau, senior management at 
the Department of Commerce, our Inspector General, 
representatives of the task force, Harris Corporation, the 
MITRE Corporation, and GAO.
    And I can assure you that I will be extremely active in 
this project until my last day that I am in office. And if I 
need to be involved after that, I will be as well. I have one 
interest and one interest only and that is to have a good 
census in 2010 and perhaps even the best census in 2010.
    So I am fully committed, along with Director Murdock, to 
work in partnership with the Congress. And I appreciate, in 
advance, your support in allowing us to focus on solving these 
problems, addressing the issues, and looking forward.
    Senator Carper, if I may, just on your question. The former 
Director, Mr. Kincannon, left when Dr. Murdock was confirmed 
and then the other management change was Deputy Director Waite, 
in January 2007. So those were the decisions that were made in 
2006, and one of them just took longer to implement while we 
recruited and got Director Murdock confirmed. Thank you.
    Senator Carper. Thank you. Thank you for your testimony. 
Dr. Murdock, you are recognized. Your entire testimony will be 
made part of the record. You are welcome to summarize as you 
see fit.

 TESTIMONY OF HON. STEVEN H. MURDOCK,\1\ DIRECTOR, U.S. CENSUS 
              BUREAU, U.S. DEPARTMENT OF COMMERCE

    Mr. Murdock. Thank you, Mr. Chairman and Senator Coburn. I 
appreciate the opportunity to come here before you and to talk 
about our preparations for the 2010 census, particularly the 
Field Data Collection Automation Program, what we call FDCA.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Murdock appears in the Appendix 
on page 80.
---------------------------------------------------------------------------
    Reviewing and evaluating all Census preparations has been 
the focus of my Directorship since I was sworn in on January 4, 
2008, and, of course, FDCA is at the heart of the reengineered 
short form of the 2010 census.
    When the Census Bureau reengineered the 2010 census at the 
beginning of the decade, the plan was really threefold: 
Leverage Global Positioning System (GPS) technology to bring 
GPS alignment of our street center lines and geographic 
features to improve our geographical database, or what we call 
MAF/TIGER; replace the Decennial Census long form with the 
American Community Survey to provide more timely, accurate 
household and demographic data; and automate census data 
collection operations for the short-form 2010 census.
    This was a bold vision, and the Census Bureau has taken 
great strides toward making it a reality.
    MAF/TIGER is on schedule for completion next month. This 
means that census maps and addresses are more accurate than 
ever before, and operations that depend on them, from censuses 
and surveys to commercial applications like MapQuest, are 
better than ever.
    The American Community Survey (ACS) is now fully 
implemented, and we are mailing forms to 250,000 households per 
month. And the ACS response rate is at 97 percent, and produces 
yearly estimates for municipalities of 65,000 and more people, 
and by 2008, will be producing multi-year estimates for 
municipalities of 20,000 or more.
    As a result, government officials and data users have more 
accurate and timely data to inform policy and planning 
decisions. These are important accomplishments that 
dramatically improve the Census' ability to achieve its 
mission.
    However, as you have just heard from Secretary Gutierrez, 
most components of the Census are proceeding according to plan; 
but the Field Data Collection Automation program is facing 
significant schedule, performance and cost issues.
    There are really two sets of problems. The first concerns 
the functionality of the hand-held computers.
    Assessments of the Address Canvassing operation for the 
dress rehearsal revealed that there were difficulties in 
obtaining efficient transmission to and from the hand-held 
computers, resulting in enumerator downtime.
    In addition, the hand-held computers did not function well 
if the number of addresses in the enumerator assignment areas 
were too large.
    The second set of problems concerns the requirements for 
the Operations Control System (OCS). The sheer volume of 
requirements, as well as the complexity of the operations that 
FDCA supports, contribute to problems that are particularly 
significant in the development of the OCS.
    Contract deliverables in the fall indicated that problems 
remained despite steps taken to clarify and strengthen the 
process we use to define contract requirements.
    As we grapple with these problems, I am committed to 
working with the Secretary and the Task Force and Expert Panel 
he described to finalize a plan to get the 2010 census back on 
track.
    The Task Force will provide rough cost estimates and risk 
assessments for each option they are outlining. We will then 
analyze their report and provide a recommendation to the 
Secretary and his panel of experts.
    Mr. Chairman, Senator Coburn, I cannot overemphasize the 
seriousness of these issues. My colleagues and I recognize that 
we must move quickly to implement solutions. While we still 
have an enormous challenge ahead, I am confident that we are 
close to defining and implementing a strategy that will ensure 
a successful 2010 census.
    Under the current structure and with the continued support 
of Congress, we will fulfill our mission. Thank you for the 
opportunity to testify, and I am happy to answer your 
questions.
    Senator Coburn [presiding]. Thank you, Director Murdock. I 
will go on and start with the questioning while we are waiting 
on Senator Carper to come back.
    One of my pet peeves since I have been in Congress is cost-
plus contracting, and when we asked Director Kincannon about 
this, he was unaware that it was a cost-plus contract.
    You can go back and check that in the testimony if you 
want.
    We are where we are. There has to be some lessons learned 
from where we are. When we say the requirements were not 
spelled out enough, Director Murdock, to Harris, does that 
imply we did not do a good enough job of creating expectations? 
We did not delineate what was expected or did Harris 
Corporation fail to supply what was asked for and just did not 
meet the needs of the Census Bureau? Which is it?
    Mr. Murdock. I would say that the major difficulty was in 
their getting an understanding of our business, of what we do, 
of how it needs to be done. We often thought that we were 
communicating effectively, in our own terminology, in our own 
processes, but at the same time, we were not providing the kind 
of detail that the contractor needed to implement the process.
    As I have indicated to you before, I think we did not 
properly scope this. We did not look at the detail that was 
needed in the way that we needed to in order to communicate it 
effectively to the contractor.
    Senator Coburn. Were there indications from the contractor 
that they were having trouble understanding what your need was? 
Was there communication from Harris that said, hey, we are 
having trouble? We do not think you all know what you want 
here. You need to give us a little more direction. Was there 
that communication from the Harris Corporation?
    Mr. Murdock. Well, obviously, I was not there at the time.
    Senator Coburn. Well, what does your staff tell you?
    Mr. Murdock. Certainly, we were interacting with them 
continuously, and we perceived that we were making progress, 
that we were working through the issues. And only lately, 
starting in November when Deputy Director Waite began to look 
in great detail at this, did we see that we had not specified 
the requirements in a way and in a level of detail that was 
needed by our contractor.
    Senator Coburn. Why is it that the GAO knew that a year 
ahead of the Census Bureau? That is the thing I do not 
understand. The GAO knows this problem is occurring. They are 
putting it out there. They are telling you that it is 
occurring, and they are saying there is a problem a year ahead 
of this or soon after the contract was let that this was high 
risk.
    Mr. Murdock. These are the very kinds of issues that I have 
been raising and looking at as I have come into this position. 
They are the kind of things we know we have got to solve. We 
cannot continue to have these kinds of practices. We cannot 
continue to fail to communicate. We are working very 
strenuously now, including a very intense effort going on this 
week with the contractor to determine just how we can most 
effectively ensure that these problems are behind us; that we 
are going forward; and that we are communicating effectively.
    And one of my charges I think is to ensure that that 
communication continues, that we get good communication, and 
that we are effectively communicating with the contractor and 
vice versa.
    Senator Coburn. Is it disconcerting to you that, if the 
American people were to look at this and say, well, what is the 
cost per household of doing the Decennial Census plus the 
American Community Survey, we have gone from about $70 per 
household to $130 in 10 years and that, even figuring in 
inflation, we have gone from $90 to $130 per household? Is 
there any concern that there is a legitimate explanation to the 
American people why we would have a 40 percent increase in the 
cost of answering six questions? I mean, it is a pretty good 
question that we are going to have, with deference to the 
Secretary; we are going to spend $14 billion plus on this. I 
just will promise you.
    I was here in 2000. I saw us come with the emergency money 
to bail us out in 2000. There was $2.6 billion that you all 
came for as an emergency money request for the Census in 2000.
    So, we are just talking, $2.2 billion versus the 
Secretary's latest estimate of $11.8 billion I think is the 
last thing that you gave us before this came up. So, does the 
American people have a right to say, well, what is going on 
here? We are spending more money than we have, and now we are 
going to do a census, something we have been doing every 10 
years since we were formed as a Nation, and why should the cost 
of it be growing 40 percent?
    Mr. Murdock. Well, certainly, as the Secretary has 
indicated, it is premature to indicate any cost estimates at 
this time. We have the task force working and still coming to 
its decisions and its recommendation to me.
    Senator Coburn. I am not asking you to do that.
    Mr. Murdock. Yes.
    Senator Coburn. The fact is if you have to take back a 
paper survey for a NRFU to follow up--the people, the hours, 
and the time--that is a big cost. We all know that. You did it 
the last time.
    If you have to take that back up, that is a large cost that 
is on top of the $11.8 billion. And so the question really is 
not focusing on the problems, just on the total cost, even at 
$11.8 billion, are they getting value out of the Bureau of the 
Census for what they are getting?
    Now I know a lot of that has to do with the American 
Community Survey and the great data we get out of that, but 
this kind of growth every 10 years, if you extrapolate it, the 
next one is going to cost $28 billion.
    Mr. Murdock. Well, obviously costs are a concern to us. 
They are a concern to me. I appreciate as a taxpayer these 
kinds of issues, and we certainly want to keep the costs as low 
as we possibly can.
    There are a lot of benefits from the census, Senator, as 
you have just indicated. Not only is it used for 
reapportionment, but it is used in a variety of programs to 
help administer them more effectively.
    But the increase in cost is a concern of mine. It is a 
concern of the Bureau.
    Senator Coburn. OK. One last question and this is to both 
of you.
    And I do not know that this is the case, but I am assuming 
it is the case.
    Why has the Internet not been considered as an option for 
helping the enumerators enter the data if the handhelds will 
not work? For instance, there are only six questions. Right?
    Mr. Murdock. Yes.
    Senator Coburn. We know that we have the technical 
capability to authenticate the enumerators remotely. We know 
that is out there, since that is what the handhelds were based 
on. So why would we not give them Web-enabled cell phones and 
allow them to enter the information over a Web-based 
application? I mean, that is not rocket science.
    I mean, are we considering that?
    Secretary Gutierrez. Senator, if I could just--and I will 
answer the Internet question. I share your overall concern on 
cost-plus contracts, and I have read much of what you have been 
saying about cost-plus contracts.
    When we get back the options, if we have a different scope, 
I think it may be an opportunity to review what kind of a 
contract are we going to have. We have already awarded Harris 
two bonuses as part of their fee award. The first year, they 
were rated a 93; and the second year, 91.
    So I think that says something about what we asked them 
for. What they thought they had been asked for and how we 
perceived their work.
    So that is something that we bring back to you; I would 
like to lay out what changes, if any, this makes to the 
contract.
    Senator Coburn. So you would say that there really had not 
been great problems with Harris as far as what you expected of 
them, based on the ratings of the contract?
    Secretary Gutierrez. Well, the ratings would suggest that 
we were pleased with the work they delivered at that time.
    Senator Coburn. That should really concern us, should it 
not?
    Secretary Gutierrez. Well, it is all part of what we are 
trying to figure out. And it is all part of this management 
quandary that you mentioned.
    My understanding with the Internet is as yours, and I know 
you have been on this for a while, we did do a test. The 
response was low. However, as you pointed out, we did not 
advertise. So we did not advertise the fact that people could 
go online. So we had a 7 percent response--very low. We know 
countries like New Zealand and----
    Senator Coburn. Canada.
    Secretary Gutierrez [continuing]. Canada have done this. 
They have done it well. Obviously, they are different 
countries, but I do not believe we have time.
    Senator Coburn. Well, I am not talking about starting anew. 
I am talking about the fact that you already have the technical 
capability to authenticate the enumerators. So, you could 
really walk away from the hand-held devices you have now and 
use a Web-based phone and do the same thing.
    Secretary Gutierrez. Yes.
    Senator Coburn. I mean, that technical capability is out 
there for you, and my question is are you even looking at it? 
Are you considering it?
    Secretary Gutierrez. When we come back, I would like to 
look at the Web-based phone, because you mentioned that this 
morning, very specifically, and get back to you with an 
assessment of that option.
    Senator Coburn. OK.
    Mr. Murdock. One of the difficulties, of course, is that 
our Operating Control System, which is key to what we have been 
planning for a Web-based operation that keeps track of who has 
responded, and who has not. It is a very complex system that 
has to interact and provide reports on how enumerators perform 
other functions. The initial assessment is that this would be a 
difficult operation on a cell phone. But I agree with the 
Secretary.
    Obviously, we can get back to you and look at this in more 
detail.
    Senator Coburn. OK. Thank you. Mr. Chairman.
    Senator Carper. [Presiding.] Secretary Gutierrez, I am 
going to ask you to put on your old Kellogg hat that you wore 
for all those years as the chairman and CEO. And obviously 
during that period of time, the folks who work for you 
developed and worked on any number of IT projects that had 
significant ramifications for the company.
    Put that hat on. Take the situation in which we find 
ourselves today. Explain to us what you would have done as CEO 
of Kellogg to have made sure this did not happen. And if it did 
on your watch, what you would have done as CEO of Kellogg to 
fix it.
    Secretary Gutierrez. That is a good question. Actually, Mr. 
Chairman, this reminds me of a similar project. On one hand you 
have a very longstanding, proud organization like the Census 
Bureau, which has traditionally done the work on its own, and 
then we inserted an outside player, as I think through this 
because this is a management problem. It is an organizational 
problem. In the end, we may say it is a technical problem, but 
technical problems are rarely technical problems.
    So we brought in an outside third party to take over what 
the Census had been used to doing for a long time, and that 
requires two sets of challenges.
    One is a cultural change, which sounds easy. It sounds 
fluffy, but I have seen so many acquisitions fail and 
integrations fail because the cultures do not fit and then to 
be able to manage through that culture. You need some pretty 
experienced project management skills that bring together two 
organizations that do not come together naturally; that pay 
attention to an incredible amount of detail and ensure that 
people are talking to each other when they normally would not 
be talking to each other.
    For example, in one of the schedules, we noticed that the 
delivery date that Harris had for a certain product was 
different than when we needed it. That just says somebody did 
not bring them together and somebody did not pay attention to 
that level of detail, but it does require--and I mentioned this 
the other day--an autocrat with technical literacy, someone who 
is going to say this is where we are going, we have decided, 
and everybody get on board; this is how decisions will get 
made. We need to have a process in place where Harris and the 
Census Bureau are talking every day; people looking at 
schedules; people looking at flowcharts; people following up on 
the tremendous amount of details.
    I just do not think people did this on purpose. I do not 
think people did this maliciously. I just do not think that 
they had ever been involved in an integration of this 
magnitude. And the skills were not there to recognize that.
    So what I would do in a case of my experience in something 
like this is start at the top and ensure that the leadership is 
there and that the skills are there--the project management 
skills to do something as complex as this. I mean, this is not 
a simple thing to pull off. And regardless of where those 
skills are, whether they are inside or outside, the important 
thing is to bring the skills into the company. In the case of 
Harris, if the skills are in Harris, then Harris should come 
in, and the leadership should be there to inform the Census 
Bureau that Harris is going to provide a leadership role. That 
would be very difficult for that culture, but if that is what 
it takes, that is what it takes.
    And I cannot tell you if that is where we are. And I cannot 
tell you that Harris has that kind of discipline, but it is an 
integration challenge, a cultural challenge, and a skills 
challenge across the board, and this is why acquisitions fail. 
This is why 70 percent of all acquisitions fail. And I think 
what we are looking at is essentially an acquisition project.
    Senator Carper. You mentioned this is really a management 
problem, and I agree. Senator Coburn leaned over to me and 
mentioned the word incompetence in kind of characterizing the 
way this whole thing has unfolded.
    But as I read the GAO testimony, it sounds to me like the 
Census Bureau was not really sure what they were asking for. 
And the requirements changed as time went by. There was a 
requirement creep, as requirements were modified from time to 
time.
    And Harris was being asked to do more and more. I do not 
know how well those communications were going. And you had the 
GAO out here saying something is wrong here. I presume the IG 
as well. And somehow that never seemed to get to you. I presume 
it was getting to Dr. Murdock's predecessor, and I presume once 
he got on board, he certainly got an earful of what was wrong. 
But somehow these warnings never got to you.
    Secretary Gutierrez. Yes. Again, I do not believe that 
people were hiding information. I truly believe that they 
thought that--in a meeting room things have a way of working 
themselves out. And it is new technology. We are going to work 
it out, and people convince each other. We like to work, and in 
the Commerce Department what we have said is, look, what we 
want to achieve as a culture is that bad news travels quickly. 
I like to hear bad news quickly, and once we get it, do 
something about it.
    There is no such thing as a CEO who never has mistakes 
happen in his company. The difference is which one addresses it 
quickly, and which one procrastinates. And the only thing I can 
do is assure you that once I knew that this was a problem, this 
became a top priority, and we are going to put it on the table, 
let the whole world know, because the important thing is that 
we solve it, not who looks good and who looks bad. And that is 
where we are today.
    But I do think that part of this communication problem was 
just not really knowing what Harris was supposed to know and 
what we were supposed to know, if they were saying do not worry 
about it. It is going to work. There is a lot of aspiration 
unfortunately involved in many of these projects, and sometimes 
you need a technical realist to say forget it. We are going to 
change or it is not working or--but that did not happen; that 
there is a human component here that----
    Senator Carper. Senator Coburn says that is what is wrong 
with a cost-plus contract. Well, you are not the only 
Department that has problems with IT projects. We had them in 
Delaware when I was governor of our State and then businesses 
and governments have them all too often.
    One of the things I find troubling here today is you 
mentioned the grade, if you will, that was assigned to the work 
that Harris was doing--a 91 in one instance, and a 93 in other 
instances.
    Senator Coburn and I get evaluated all the time on the work 
that we do. There are polls and so forth that are taken of our 
constituents, and we are evaluated by any number of interest 
groups, too, and sometimes I kid folks when they are giving us 
our evaluations of the work that we are doing. I ask them if 
they are grading on a curve, if we are being assessed on a 
curve. And all I can think is with a 91 and a 93, either you 
all are grading on a curve or the folks at Harris are doing a 
better job than maybe I was inclined to give them credit. Which 
is it?
    Secretary Gutierrez. Well, I would say two things. One is 
that because it was so early on in the contract that the 
requirements were minimal and they were able to achieve them or 
that we thought they were doing a better job than they actually 
were doing because we were not really sure what they were 
supposed to be doing.
    And I would like to find out those two, because in the 
course of this involvement, this is something that has come up, 
this award fee. We paid them over $3 million in the first year; 
over $7 million in the second year. And I just need to 
understand why. Let us see the paperwork. Let us see the 
evaluation. Let us see the analysis. Let us see why we got to 
those numbers.
    But I can assure you that as we move forward, I will know 
why we are rating them what we are rating from here on.
    Senator Carper. All right.
    Mr. Murdock. And I am also looking into that----
    Senator Carper. Thank you.
    Mr. Murdock [continuing]. To see why we created the awards 
fees that we did.
    Senator Carper. All right. Dr. Coburn, why don't you jump 
in for some more questions, and then I have a couple more.
    Senator Coburn. I just have a couple. In early February, 
did you all have Harris Corporation stop all work on this 
contract? There has never been a work stoppage on this 
contract?
    Mr. Murdock. There has not been a work stoppage----
    Senator Coburn. OK.
    Mr. Murdock [continuing]. On the contract.
    Senator Coburn. One of the options that you have listed is 
bringing some of the IT stuff back in, that you are not going 
to be able to handle potentially under the options you laid 
out, Mr. Secretary. Do you all presently have the expertise in 
house to handle these IT functions?
    Mr. Murdock. We have expertise, but we clearly would need 
to augment it. We have, for example, the people who designed 
the OCS system for the 2000 census are still there. But they 
would have to be augmented extensively----
    Senator Coburn. OK.
    Mr. Murdock [continuing]. Because their number are not 
sufficient to be able to form this without some additional 
hiring in the Bureau and some additional contractors.
    Senator Coburn. OK. So what you are talking about is using 
people in house plus contracting out with additional 
contractors to be able to bring it back in house?
    Mr. Murdock. I think that is the most likely case--simply 
getting the number--as in the 2000 census, in order to meet 
this need. That was the combination that we used then, and we 
had a substantially larger number of in-house IT people at that 
time than we do now.
    Senator Coburn. If I was Oracle and wanted to bid this 
contract, my bid would be pretty high right now because you are 
over a barrel, right?
    Mr. Murdock. I understand.
    Senator Coburn. So it is going to have a major impact on 
costs; right? I mean, we are not going to get any really 
efficient skinny deal because they know it has to happen in 
2010, and you ask them to bid on it, nobody is going to be 
cutting this thing close. They are going to be cutting it high 
and fast, because you have to have it; correct?
    Mr. Murdock. Well, we have to have it. That is for sure.
    Senator Coburn. OK.
    Secretary Gutierrez. Well, I think that any company that 
bids and works with the Census and the Federal Government will 
know that people like you will be around next time, and I am 
sure they are going to want future contracts, so----
    Senator Coburn. But, if they got something to offer and you 
need it, it is a market, and they are going to advantage 
themselves, and I would, too, because you all have created the 
opportunity for them to do that.
    Mr. Secretary, we do not know what the increase in cost is. 
One thing I would like for you to think about is one good 
message to the American people is if this increased cost is 
coming, and some of it is mismanagement, the offsetting of the 
cost should not be the Census Bureau coming back to the 
Congress. It should be offset within the Department of Commerce 
through reprogramming.
    Why should the American people pay for this by borrowing 
additional money against the deficit rather than have the 
Department of Commerce become much more efficient in other 
things to pay for it themselves? In your Kellogg hat, that is 
what would happen. And the question is why do the American 
taxpayers deserve to have that happen on the Census?
    Secretary Gutierrez. Well, there is no question they 
deserve the best management that the country has on something 
like this, and we are going to look at all alternatives, 
Senator. We have to figure out first the timing, 2008, 2009, 
and 2010. We think that the increases will fall in 2010. We 
will have to look at that. But we will look at all options.
    Senator Coburn. Yes.
    Secretary Gutierrez. We will look at that.
    Senator Coburn. Yes. With most of the increases falling in 
2010, that really relates back to the paper-based NRFU, right?
    Secretary Gutierrez. If that is where we end up. And I want 
to leave you a diagram, both of you, just so you get a sense of 
what we are looking at.
    Senator Coburn. OK. Was there ever any time that you 
believe Harris Corporation was under the impression in recent 
months that they should halt most work on this contract, to 
either of your knowledge?
    Mr. Murdock. There was a period of time when they 
interpreted a limitation of funds letter, or at least indicated 
they may have interpreted it, as a stop work order. But it was 
not--our contract lawyers say it was not such a letter. And it 
simply indicated what we had to spend and indicated what we 
would like to have them emphasize for the present period 
activities related to Address Canvassing.
    Senator Coburn. OK. Thank you.
    Senator Carper. Well, gentleman, I am encouraged at least 
to the point that you both seem to be saying you are going to 
take personal responsibility for getting this done and done 
right.
    It is possible that neither of you will be here for the 
next full 2 or 3 years in order to be able to do that. Usually, 
when people sign up to be Cabinet Secretaries, they do so for 
the balance of a President's term. I just checked with my 
staff, Dr. Murdock, to see that your tenure as Census Director 
is one that is for a set period of time, and apparently you 
serve at the pleasure of, I guess, the Secretary and the 
President.
    My guess is if you do a good job, if you are able to get 
this project out of the ditch and back on track, then we are 
going to be wanting and needing you to stay around.
    And, Secretary Gutierrez, as you think about your legacy 
and you are prepared to move on I suspect next year--maybe 
not--but I am sure you do not want to leave as part of your 
legacy a census that turns out to be a failure. Let me say 
failure is not an option. It is not an option for you; it is 
not an option for us. And it is not an option for our country.
    But let me just ask what steps you all are planning to take 
to ensure that the career staff at the Commerce Department, and 
the career staff at the Census Bureau are going to be ready to 
carry on with whatever decisions that you make in the coming 
weeks given the options that you are looking at. What are you 
doing to ensure that the problems that you are currently facing 
are not a drag on morale on those who work in this case for 
you, Dr. Murdock?
    Secretary Gutierrez. If I could just----
    Mr. Murdock. Yes, go ahead.
    Secretary Gutierrez. We met with the top 40 people at the 
Census Bureau just recently. And my sense is these are very 
highly skilled people who understand their work. And they 
understand what they do. Perhaps they had never been involved 
in managing an outside contractor, but from the standpoint of 
the technical aspects of the census, I walked away saying these 
people want to get it done. They have a certain amount of pride 
in their job, they do not want this to fail, and they are as 
frustrated as anyone else.
    But your comment is a good one and from here on, aside from 
getting the options in the technical part, the notion of people 
working together, understanding their roles, being able to 
follow one direction, I think, from here on is a big part of 
this. It is just as big as designing the software. And Director 
Murdock knows that. Deputy Director Waite knows that. This is 
all about management and leadership.
    Mr. Murdock. Yes. There is one clear thing that the staff 
of the Census Bureau has said to me repeatedly and that is when 
we get a decision, we are going to make this work. We are going 
to make the census work. This is an incredibly dedicated group 
of professionals, and they are ready to follow the Secretary's 
lead in terms of determining and getting a very good census. 
There is no doubt about the motivation. Certainly, there has 
been some concern about where we have been in terms of things, 
but they are ready to go forward and with the Secretary's 
leadership, we are going to get a good census.
    Senator Carper. I think it is fair at this point to assume 
that most of the options, and you went through, I think, about 
four of them that you are currently considering for addressing 
the problem with the hand-held contract, are going to come with 
a price tag.
    Both Senator Coburn and I have been skeptical probably from 
the beginning about the Census Bureau's estimates for the 2010 
census. I think we have got every reason to be skeptical.
    We saw the lifecycle costs of the decennial go up from 
about, I think, $11.2 billion to $11.5 billion just before our 
last Subcommittee oversight hearing. And then very recently our 
staff was told in a budget briefing that $11.5 billion was 
still an accurate number only to hear that Senator Coburn and I 
were told later that day that the real cost by the end of the 
process would be some $11.8 billion; this does not inspire our 
confidence. I am sure you can see why.
    Well, how can we be sure that the numbers associated with 
the different options that you are putting on the table here 
today in the coming weeks are going to be any more accurate?
    Secretary Gutierrez. Well, I would just say that we 
understand that we do not have a lot of different shots at 
this. We have one shot to get this right, and time is not on 
our side. And one of the things that the people at Census are 
asking us is give us a decision because we need to start 
moving.
    So, as you said, we do not have an option to get this wrong 
again. So we are going to be putting the best brains and the 
best people and the best minds and experience on that number 
and on those options, and when we come to you, that will be as 
much my number as anyone else's. And I will stand behind it.
    Senator Carper. This is probably not a fix. It is a mission 
you've got to accomplish, and there are ways to do it, and it 
is going to cost some money. But I would ask you to, as you 
figure out how to go about it and which of these options to 
pick, just think about how much money we are going to borrow 
today from China, South Korea, Japan or other countries, in 
order to fund our budget deficit. So I just want you to keep 
that in mind as we try to squeeze those dimes.
    The last thing I want to say is it is not enough for us to 
hold oversight hearings.
    It is not enough for us just to put a spotlight on what is 
not going well. We have an obligation also to ask how can we 
help, and I hope that we are helping a little bit just through 
this dialogue today and some that we had earlier in the year. 
But what else can we do to help, to be constructive?
    Secretary Gutierrez. Well, I would just like to say just 
the tone of this hearing has been very helpful, and I know that 
you both have been frustrated. I have read a lot of your 
testimony, Senator Coburn, and I know what you said 4 years ago 
and 2 years ago. But the fact that you are approaching this 
from the standpoint of what can we do to get the right 2010 
census, if we can continue to do that, and I told the folks at 
the Census we are going to look back only to inform the future, 
but not to find out who was at fault. Let us get this thing 
right. And if we can continue to work that way, I can assure 
you that you will have the information you need. And I want you 
to be involved, and you are like my board of directors and you 
will have the information.
    My request to you would be just help us get this done, as 
you are doing now.
    Senator Carper. All right.
    Secretary Gutierrez. I appreciate that.
    Senator Carper. Dr. Coburn.
    Senator Coburn. We will have a couple of questions that we 
are going to submit for the record.
    Mr. Secretary and Director Murdock, we are getting ready to 
have the testimony of those who are going to follow you. I 
think it is very important you stay here and listen to them. I 
mean, the big mistakes that have been made within the Census 
Bureau was ignoring the big warnings. And we have GAO to 
testify here, even though you may have read their report, I 
think it is really important that you have your critical people 
here to hear what they have to say. In fact, you do not have to 
believe all of it, but at least you need to hear it in the 
context in which it is given because there has certainly been a 
lack of response to what they had to say in the past. That is 
all I have, and I thank you. And we will work with you.
    Senator Carper. And in closing before you leave the table, 
let me just say Dr. Coburn and I have not talked about this, 
but my guess is we are going to invite you to come back and 
talk with us some more. Tell us again when you are expecting to 
make a decision on the options that you outlined for us.
    Secretary Gutierrez. I would say later this month.
    Mr. Murdock. That is the schedule. Yes, sir.
    Secretary Gutierrez. So the task force does their work. We 
will run it by the expert panel, and I would make a decision on 
that.
    Senator Carper. Yes. We will talk about this. We will 
probably want you to come back some time next month and give us 
an update, and we are going to ask how are you doing and we 
we're going to again ask what can we do to help to make sure we 
get this done right.
    The last thing I would say is not so much to either of you 
directly, but really to the people that work for you, Dr. 
Murdock. The responsibility that you and the folks who serve 
with you hold to our country is large and growing as we 
approach 2010. For those people that take their responsibility 
seriously and who are determined to do a good job and to get 
this right and get us back on track I would just say good. We 
are here to support those efforts. And for those who do not 
approach it with that spirit, we want to say get out of the 
way, and let those who are going to help us make this 
successful to do the work that needs to be done.
    Mr. Murdock. Senator, we just appreciate your concern, and 
we appreciate your support. It is important to all of us in the 
Census, and have no doubt about our dedication and about our 
assurance that we are going to meet the mission that is 
required.
    Senator Carper. All right. Thank you both very much.
    We are pleased to welcome our second panel here today.
    You fellows look familiar. I think we may have seen you 
before. And my guess is before we are done in 2010, we will see 
you a lot more.
    Let me just say from the outset, we are grateful for the 
work that you have done. Dr. Murdock, I am pleased that you are 
able to stay and listen. What you hear will be instructive to 
you and to the folks that you lead at the Census Bureau.
    Let me just briefly introduce our witnesses. I understand, 
Mr. Powner, I understand you may speak initially, and then as 
sort of tag team hand it off to Mr. Scire, is that correct?
    Mr. Powner. Correct.
    Senator Carper. All right. David Powner, Director of GAO's 
IT Management Team, where you focus on systems development and 
IT investment management.
    Before joining GAO, I understand that you held several 
executive level positions in the telecommunications industry 
that involved overseeing IT projects.
    And Mathew Scire is the Director on the GAO's Strategic 
Issues Team. And your work is focused on the Census Bureau and 
on regulatory issues. We are told that you have more than 25 
years of experience in evaluating the effectiveness of Federal 
programs, which should put you in good standing for the work 
that lies ahead.
    Both of your testimonies will be entered in the record, and 
you are welcome to summarize as you see fit.
    And, Mr. Powner, we will recognize you first. Thank you for 
joining us and for your work.

    STATEMENT OF DAVID A. POWNER,\1\ DIRECTOR, INFORMATION 
 TECHNOLOGY MANAGEMENT ISSUES, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Mr. Powner. Chairman Carper, Dr. Coburn, we appreciate the 
opportunity to testify on the problems associated with the 
Census' Field Data Collection Project.
---------------------------------------------------------------------------
    \1\ The joint prepared statement of Mr. Powner and Mr. Scire 
appears in the Appendix on page 83.
---------------------------------------------------------------------------
    With me today is Matt Scire, Director with GAO's Strategic 
Issues Team. Not only has he been looking at the performance 
issues with the hand-held devices, but overall he looks at the 
management of the 2010 Decennial Census.
    Our work has highlighted the key IT management gaps that 
unfortunately have not been addressed and now place the success 
of the 2010 Decennial at risk.
    In 2004, we started looking at the Bureau's institutional 
IT management capacity and concluded from this review that it 
was not prepared to manage the $3 billion it was planning to 
spend on IT.
    In March 2006, we testified after our detailed look at the 
integration system and the Field Data Collection System that 
neither project had the full set of capabilities needed to 
effectively manage these acquisitions.
    At that hearing, we stated that incomplete management 
activities, including those with requirements management, risk 
management, and contract monitoring, increased the risk that 
the Decennial acquisitions will encounter problems in meeting 
cost and schedule deadlines.
    At that time, we specifically recommended that the Field 
Data Collection System program office approve and validate 
baseline requirements. We highlighted that not doing so placed 
the Bureau at risk of cost overruns, schedule delays, and 
performance shortfalls.
    This past October we reported to your Subcommittee that due 
to growing requirements, FDCA was experiencing cost increases 
and schedule delays.
    In addition, poor cost estimates were also a cause of the 
increases in delays. We also reported that due to the delays in 
these projects, the dress rehearsal would not include key 
systems functionality which raised the importance of systems 
testing post dress rehearsal.
    Given that relevant test plans were not completed, we 
recommended to the Bureau that such plans, including end-to-end 
test plans to test the full complement of systems, be completed 
and executed.
    In October, we also reported that the Bureau had identified 
and was managing certain risks associated with its key 
acquisitions, several risk management weaknesses needed to be 
immediately addressed.
    Acknowledged risks include changing baselines, increasing 
requirements, and aggressive test schedules. Despite this, we 
found three areas that could be strengthened: Identifying 
risks, establishing mitigation plans, and reporting these risks 
to executives.
    For example, the mobile computing device performance issues 
associated with slow and inconsistent data transmissions had 
not been identified and tracked by the project office despite 
the problems arising during the dress rehearsal.
    Because these devices are a keystone to the reengineered 
census, it is essential that the Bureau perform the appropriate 
oversight of how the device performance compares to what is 
expected and ensure that all performance limitations are 
effectively addressed.
    We made a number of recommendations to the Bureau to 
improve its risk management activities and to its credit, it 
has been working on an action plan to strengthen these areas.
    I would like to expand on the requirements issue. This is 
particularly troubling because even before our extensive body 
of work that started in 2004 on this topic, a Commerce IG 
report on lessons learned from the 2000 Decennial identified 
the need for more disciplined IT management due to cost 
increases that were primarily attributable to ever increasing 
requirements.
    Last July, when we testified before your Subcommittee, Mr. 
Chairman and Dr. Coburn, we expressed great concern about 
requirements creep and the potential for significant cost 
increases.
    At that time, an independent assessment of the FDCA program 
found requirements problems similar to those we reported. The 
assessment found that the contractor was overwhelmed by a 
substantial increase in requirements.
    The study was not disclosed to us until the December time 
frame, and was not mentioned at your July hearing.
    Mr. Chairman and Dr. Coburn, this lack of transparency is 
unacceptable, as is not acting timely on this key risk.
    In late December, the Bureau further defined its 
requirements for the FDCA program. Nearly 20 months after our 
March 2006 recommendation to do so and 7 months after the 
independent assessors told the Bureau to immediately stabilize 
requirements.
    Now the Bureau is faced with the crisis that could cost 
somewhere from $600 million to $2 billion to fix.
    As we just heard from the Secretary, the exact amount is 
uncertain, as are the specific technology acquisitions 
affected, the operations affected, the amount of manual paper-
based contingencies that will be pursued, and the game plan to 
move forward.
    This uncertainty is currently being addressed by a task 
force. It is imperative that the task force act quickly with 
its decisions. If the task force decides to move forward with 
the FDCA program, the Bureau should swiftly take the following 
steps:
    First, put someone in charge who has a proven track record 
of rescuing troubled projects;
    Second, demand from the prime contractor their A-team and 
top attention; and
    Third, manage the program risk daily and aggressively.
    Addressing the FDCA problem is one issue, but other issues 
also need to remain on the Bureau's radar screen, including the 
delivery on the other contracts.
    There was a comment made from the Secretary that the other 
contracts were on schedule. We would not agree with that 
comment.
    In addition, conducting disciplined testing post dress 
rehearsal needs to occur, especially since late deliveries and 
deferred functionality makes the dress rehearsal less important 
now.
    Because of these issues and others, today we are adding the 
2010 Decennial to GAO's list of high-risk programs, and I will 
turn it over to Mr. Scire to expand on this further. But before 
I do so, I would like to thank you, Mr. Chairman and Dr. 
Coburn, for your leadership and oversight of the Decennial 
Census.
    Senator Carper. Mr. Scire, thank you for joining us.

 STATEMENT OF MATHEW J. SCIRE,\1\ DIRECTOR, STRATEGIC ISSUES, 
             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Scire. Thank you, Mr. Chairman, Senator Coburn. Thank 
you for the opportunity to be here today to discuss the 2010 
Decennial Census.
---------------------------------------------------------------------------
    \1\ The joint prepared statement of Mr. Scire and Mr. Powner 
appears in the Appendix on page 83.
---------------------------------------------------------------------------
    In our written statement, we highlight a number of 
longstanding and urgent issues facing the Census Bureau. My 
colleague just described the need for urgent action in managing 
IT acquisitions that are central to the reengineered Decennial 
Census.
    Today, there remains much uncertainty, as the dress 
rehearsal continues to unfold. The magnitude of how well the 
hand-held computers performed in their first field dress 
rehearsal operation Address Canvassing is not clear. The 
ultimate cost of the Decennial Census is uncertain.
    Already it is estimated to be the most expensive, even 
after adjusting for inflation.
    Also the Bureau has dropped certain dress rehearsal 
operations, in part, to devote greater attention to testing 
information technology. The dress rehearsal is the Bureau's 
last opportunity to identify potential risks in operations 
under census-like conditions. Because of these critical issues 
today, we designate the 2010 Decennial Census as a high risk 
area.
    There is much the Bureau can do to address these issues. My 
colleague just described what the Bureau could do to address 
longstanding issues in managing information technology 
investments and the urgent steps the Bureau must take to 
address pressing risks.
    We have also recommended that the Bureau establish 
performance measures and benchmarks for the hand-held 
computers, measures that would enable the Bureau to not only 
assess the performance of these devices, but also to hold 
contractors accountable.
    We have recommended that the Bureau use tools, such as a 
comprehensive integrated project plan and sensitivity analysis 
that would help the Bureau better measure and manage the costs 
associated with individual operations and to provide the 
Congress with credible, accurate, and lifecycle cost estimates.
    Going forward it will be important for the Bureau to 
demonstrate that it not only is committed to addressing these 
longstanding and pressing issues, but that it has concrete 
plans in place, is making substantial progress, and has 
effective solutions to the root causes of these problems.
    Mr. Chairman, we believe that the challenges highlighted 
today require careful monitoring and oversight. As in the past, 
we look forward to supporting the Committee's efforts to 
promote a timely, complete, accurate, and cost effective 
census.
    Thanks again for the opportunity to be here today. I would 
be glad to take any questions that you may have.
    Senator Carper. Mr. Scire, thank you so much.
    Let me just ask you. Sort of set aside your prepared 
testimony. Just talk to us from your hearts. What went wrong 
here?
    Mr. Powner. Well, from a requirements perspective with 
FDCA, I mean, clearly what you want to do is define to the 
contractor early in as much detail as possible what you want 
the system to provide. That was not done.
    Our recommendations in March 2006--that was prior to 
contract award. The contract was awarded in April, and our 
point is you want to do this early or soon after contract award 
so that you do not get into these change requests that 
typically result in increased costs. We see it on all the high-
risk and watch-list projects that we discuss at other hearings.
    And what happened was that the list of 418 requirements 
should have been defined and validated soon after contract 
award, not 2 years later.
    Senator Carper. So this is the kind of thing that we see 
not just in this instance, but a lot of times when we end up 
with these similar problems.
    Mr. Powner. Well, I think requirements creep and not 
defining requirements up front is a common problem--one of the 
core reasons why we have overruns and delays.
    But to this extent, when you are talking about a doubling 
or potentially even a tripling in cost--those are the rough 
numbers that are being thrown out right now. Typically, you do 
not see it to this extent.
    Senator Carper. All right. Mr. Scire, you want to add to 
that?
    Mr. Scire. Yes. I think I would add to what was talked 
about earlier and that was lack of communication or poor 
communication, and I would go beyond the communication 
difficulties between the Bureau and the contractor, but also 
between the Bureau, the Department, the oversight committees, 
and the GAO; there is a lack of transparency as to where things 
stood as they progressed or did not progress as the case may 
be.
    Senator Carper. We talked with our first panel and I think 
Secretary Gutierrez said this is a leadership problem, and I 
appreciate the fact that he has assumed responsibility, and he 
is, in his words, embarrassed by the situation that the 
Department and the Bureau find themselves in. We are 
embarrassed, too.
    If you were able to turn around and just to talk with Dr. 
Murdock--he is sitting behind you--and say these are the things 
that you and your folks need to do to get this project back on 
track, what would you say? Because he is there taking notes.
    Mr. Powner. Several items, and we talked to Secretary 
Gutierrez about a similar program within his Department. It was 
a large environmental satellite acquisition, referred to as the 
National Polar-orbiting Operational Environmental Satellite 
System (NPOESS).
    When NPOESS went from a $6 billion to a $12 billion 
project, what did we do? We secured a key program executive to 
oversee it, who had a history of rescuing troubled projects. We 
need to find someone like that to manage this. So you need 
someone to manage that on a daily basis, and then Director 
Murdock and Secretary Gutierrez need to stay on this on a 
weekly, if not a daily, basis on progress. I mean, we are under 
the gun in terms of time.
    I think the Secretary mentioned about a solid program 
manager. That is fine. But the executives--what drives solid 
program management is executives being on their case daily, 
reporting progress, disclosing risk, and making sure that 
things get done.
    And if there are issues with the contractor, those 
executives ought to be picking up the phone and having those 
real tough discussions with the executives at the Harris 
Corporation.
    Senator Carper. All right. Mr. Scire, you want to add to 
that please?
    Mr. Scire. Yes. I think that it is important to ask some 
tough questions here about what it is that FDCA will ultimately 
produce so that you are looking at not just what it is going to 
cost. Three of these options suggest that they will not be 
using the handhelds for non-response follow up. In all options, 
they are planning on using the hand-held computers for Address 
Canvassing.
    And we have said for a while now, that it is important to 
lay out what the costs are, but also what the expected benefits 
are, what the expected savings are of utilizing that 
technology.
    So I would advise Dr. Murdock that he delve into that, to 
find out whether or not you now are getting something out of 
the investment during Address Canvassing that rationalizes the 
potential reward that you could be getting by the use of this 
technology.
    Senator Carper. All right.
    Mr. Scire. That is part of it. I think it is also important 
to take a look at the opportunity costs for loss of being able 
to do a late-mail return, and so that is another aspect that 
needs to be looked at in making the decisions as to which of 
these options you are going to take is what you are getting and 
what you are going to pay for it.
    Senator Carper. All right. Over the years, GAO has made a 
number of recommendations on how the Census Bureau could 
improve the way that they are managing not just this hand-held 
contract, but really contracting in general. And it appears 
that a lot of those recommendations were, frankly, ignored.
    Do you have any sense that the Bureau might finally be 
starting to understand why it is important that they make 
changes? Dr. Murdock has been on the job for less than 2 
months. But have you had the opportunity to meet with him, to 
brief him, to brief his senior management team since he has 
come on board, and to just get a sense that they are feeling a 
sense of urgency and listening and acting on what you have 
recommended?
    Mr. Scire. We have not yet met with Dr. Murdock and his 
management team to talk about these issues. I spoke with Dr. 
Murdock yesterday actually about the possibility of setting 
something up, and he is interested, and wants to make that 
happen, where we could go through and talk about all of the 
different areas that we have had recommendations in and what we 
think they could today.
    Mr. Powner. Mr. Chairman, we did meet with the Secretary 
and discussed our recommendations.
    Senator Carper. When was that?
    Mr. Powner [continuing]. Two weeks ago----
    Senator Carper. All right.
    Mr. Powner [continuing]. We met with the Secretary. One 
comment here is obviously with GAO's recommendations, and we 
sat down with key executives during the course of our reviews, 
not just when we issued a report, to go over our 
recommendations. So we made an effort to convey our concerns 
personally with individuals within the Bureau.
    Senator Carper. At what level did that take place?
    Mr. Powner. At Mr. Waite's level.
    Senator Carper. OK.
    Mr. Powner. One of the things that is troubling here is 
that obviously with GAO's work, we have inconsistent 
application of our recommendations across the Federal 
Government. But one of the things that was particularly 
troubling was the MITRE study in June, which reiterated exactly 
what we said back in March 2006. And it still took 7 months to 
immediately validate the requirements. Seven months is not 
immediate, and we need a sense of urgency here to get this on 
track.
    Senator Carper. Let me yield to Dr. Coburn, and I have 
another question or two for you once he has asked whatever 
questions he would like to.
    Senator Coburn. Thank you. First of all, thank both of you 
for your efforts in this regard. And my staff handed me a note 
that said it might be very interesting for the Secretary to 
have David Powner on his team looking at how we respond and fix 
this. If you really want the people who have had the critical 
eye looking at it, you might want them on the advisory team 
that is helping to solve the problems. So if anybody from 
Commerce is still here, you might take that message back.
    Mr. Powner. Dr. Coburn, he asked that we attend those 
meetings, and we agreed to do that.
    Senator Coburn. Great. One thing you said, Mr. Powner, 
which really concerns me is that in our last hearing in July, 
they knew the MITRE report was there and did not tell us. Is 
that correct? Is that your testimony?
    Mr. Powner. Yes, sir.
    Senator Coburn. We did not get this in June. We had no 
receipt of the MITRE report.
    Mr. Powner. There is a MITRE briefing. It is dated June. So 
our understanding is that the MITRE information, with these 
comments and recommendation to stabilize requirements 
immediately--that was the recommendation--was known in the June 
time frame.
    Senator Coburn. We had a hearing in July, and Census said 
nothing to us about this report in their testimony? Is that 
right?
    Mr. Powner. Correct. We found out about all the MITRE 
efforts in the December time frame.
    Senator Coburn. But you all did not find out until 
December?
    Mr. Powner. We had an ongoing review for you because we 
testified on our preliminary findings at that point in time and 
issued a report in October. And we were not aware of that MITRE 
assessment until the December time frame after our report was 
issued.
    Senator Coburn. So there are really two problems. One is 
the lack of response to it, and two, the lack of disclosure----
    Mr. Powner. Correct.
    Senator Coburn [continuing]. That is here. And that is the 
part that is unacceptable. And I do not know about Senator 
Carper, but after we are through with this, we are going to 
find out.
    It is like the little kid in the corner who did something 
and is trying to hide it, and it is obvious that he is hiding 
it. And it does not change anything. As a matter of fact, it 
makes things worse. And that kind of behavior is why we are in 
the situation we are in; rather than fess up and say, hey, we 
have this problem, the problem is hidden. It does not go away 
when you hide it.
    Mr. Powner. Right. Well, Dr. Coburn, to add to that, you 
mentioned the IRS--they use MITRE extensively--and you 
mentioned some of their successes with using technology. The 
IRS approach to using MITRE is to disclose exactly what MITRE 
and other independent assessors, the Software----
    Senator Coburn. Right.
    Mr. Powner [continuing]. Engineering Institute of Carnegie 
Mellon, identify to say that, hey, we are on top of these 
risks, and we want to let everyone know we are effectively 
managing them instead of not disclosing them.
    Senator Coburn. Is it your gut feeling, based on what you 
know on the contract with the handhelds, that they can use any 
aspect of the handhelds in the 2010 census? I am asking for an 
educated guess. I am not holding you on it. You do not have to 
be right or wrong.
    Mr. Scire. Well, it seems that what is being proposed here 
is to use it for Address Canvassing.
    Senator Coburn. Only.
    Mr. Scire. Only, essentially, insofar as the handhelds are 
concerned. There is a separate issue in terms of other items--
the Operating Control System and so forth.
    I think it is a fair question to ask if that is the case. 
What will it deliver? Are we now at a point where we are trying 
to find a use for the technology as opposed to asking the hard 
question about whether or not the cost for just doing Address 
Canvassing, say, is outweighed by the benefit.
    The greatest selling point for the handhelds up until now, 
as I have heard, is the ability to pull late-mail returns. And 
this is the non-response follow-up operation.
    What we are talking about there is the ability to quickly 
identify those individuals who returned their questionnaire, 
but returned it late, and be able to pull it from the workload 
of those who go door-to-door to follow up.
    Last time, there were 4 million forms that were returned 
late, where the Bureau knocked on the door and followed up. As 
you can pull those out, there are potentially great savings 
there. I have heard that is the greatest argument for the 
technology.
    It seems that, in three of these options, that is off the 
table. So that is why I add----
    Senator Carper. I am sorry. Say that again. Start that 
sentence over again.
    Mr. Scire [continuing]. The greatest selling feature that I 
have heard for the handhelds----
    Senator Carper. Right.
    Mr. Scire [continuing]. Is ability to use the technology to 
pull these late-mail returns.
    Senator Carper. Yes. I got that.
    Mr. Scire. So if it is not going to deliver on that, and 
that is where you are expecting a lot of the cost savings, what 
will it deliver in the Address Canvassing operation?
    Senator Coburn. What will it save?
    Mr. Scire. Yes. Now it should improve MAFs, and that should 
have an implication in terms of non-response follow up.
    The Bureau knows quite a bit actually about what happened 
during the Address Canvassing dress rehearsal. So it should 
have some information to tell you what benefit you are getting 
out of this. Is it going to improve the MAF to such a point 
that it is worth whatever the cost is?
    Now there is a trade-off here, too, because there is a risk 
in taking on an Address Canvassing operation or going back to 
block canvassing or some other technique that is not tested in 
a dress rehearsal. It actually was used in 2000.
    So I do not want to diminish that, but I think it is still 
important to ask what are you getting out of this technology if 
you take out its ability to deliver on this one feature, 
pulling late-mail returns.
    Mr. Powner. Dr. Coburn, if I could also add, too, I think 
that is a key question. What will it deliver and ultimately 
save? But if you look at these 400 requirements, roughly a 
fifth of these are associated with the handhelds, so there is a 
fundamental question about getting them to work as expected and 
desired in addition to that basic fundamental question.
    Senator Coburn. All right. I want to follow up on another 
question, which was disturbing to Senator Carper and me, as 
well, which is that we paid bonuses on a cost-plus contract 
where we knew requirement creep was happening, and yet the 
assessment system that Commerce and Census used to evaluate 
that contract said that everything was hunky-dory and that we 
are going to pay a bonus because you are performing.
    To me, there seems to be some type of problem in contract 
assessment if, in fact, we are paying a bonus based on premium 
performance that ends up with where we are today.
    So would you comment for me on the bonus assessment system 
of how they evaluate contract performance and whether or not it 
was accurate in this case.
    Mr. Powner. Dr. Coburn, we did not look at the award fees 
that were paid, the $3 million and $7 million that were 
mentioned by the Secretary. But a couple comments here. We have 
seen instances on projects within the Department--and I will 
mention NPOESS--where they were actually getting close to a 
hundred percent of their award fee when there were significant 
overruns and schedule delays.
    So typically, it is hard to figure out here whether they 
were actually delivering on what was expected and they deserved 
these scores of 91 and 83 or whether the contract oversight was 
just so poor from a program office perspective that the Bureau 
did not know.
    Senator Coburn. Well, I think that is an important question 
for you all to look at so we know the answer to that.
    Mr. Powner. OK.
    Senator Coburn. That is important. Is there any reason why 
you think that this Harris contract could not be converted to a 
fixed-price contract now that we know what the requirements 
are, why cannot we have a fixed-price contract and know what it 
is going to cost us?
    Mr. Powner. I think that is clearly a possibility, and I 
also think we understand why we do not have fixed-price 
contracts on some things that are extremely complex. What we 
are trying to do here is not on this far end of complexity.
    Senator Coburn. Yes.
    Mr. Powner. It really is not. The technology is there to do 
it, and this should--now that it is more clearly defined, that 
should clearly be an option.
    Senator Coburn. I will just say one other thing. In all of 
the oversight hearings, we know GAO has done great work on 
these fees, on fixed-plus contracts and the $8 billion per year 
problem what we have in DOD in terms of this same thing, of 
paying for performance bonuses on non-performing contracts. So 
it is a big issue within the Federal Government, and it is not 
surprising that it is here, too. But it is really important, I 
think, that you go back and look at that.
    How in the world did we give a great rating to a contract 
that obviously was not performing? I do not mean that to be a 
reflection on Harris Corporation. We were making the 
assessment. And we were paying the bonus. With that, I will 
yield back to the Chairman.
    Senator Carper. A couple more and I will turn it back over 
to Dr. Coburn for any other questions that he might have, and 
we will wrap it up.
    But gentlemen, this is probably more for Mr. Scire. But do 
you think we are running the risk right now of having a census 
in 2010 that might actually be poorer in quality than that 
which was conducted in 2000 or do you think the risk is that we 
will not be able to live up to our constitutional obligation to 
conduct the decennial on time and at a level of quality that 
can be used not just for congressional apportionment, but for a 
whole myriad of other purposes that the decennial serves?
    Mr. Scire. I believe those risks are there. I would say 
that at this point, there is an awful lot that we do not know. 
I would say that it is also very important to make decisions 
about which way the Bureau is going to be going with non-
response follow up.
    It seems as if three of the options are saying that they 
are going to go to paper. That dress rehearsal was scheduled to 
start within the next month.
    And if you back up from that, you have to get training 
material and so forth going. So I guess the fundamental 
decision here is whether you are choosing between option one 
and the other three. That decision needs to be taken sooner 
rather than later, and again what I mentioned before about 
whether or not it makes sense to keep this and the technology 
for Address Canvassing needs to be looked at, too.
    You asked earlier about what it is that we would advise 
that the Bureau could do right now. And we have for a number of 
years made recommendations about how the Bureau could make more 
credible and accurate the lifecycle cost estimates that they 
are providing to you.
    And we have serious concerns about the accuracy of the 
estimates that are being provided. I would advise Dr. Murdock 
to look carefully at the assumptions going into these estimates 
right now; whether or not those assumptions reflect what has 
been learned already in the Address Canvassing dress rehearsal. 
That also has the potential to increase costs--as we heard 
today for the first time, I think, from the Bureau and from the 
Department that productivity was an issue.
    If that is the case, then you will need more people. You 
might need more hand-held devices. You will need more resources 
in order to complete the operation in the same amount of time. 
And you really do not have a lot of flexibility of adding time.
    So is that reflected in this $11.5 billion estimate that 
was delivered to the Congress this February? I think that is 
important to know so that you have a full idea of what the 
potential cost increases are.
    Senator Carper. Thank you. We have been joined by Senator 
McCaskill. And I have one more question to ask, and then we are 
going to kick it over to you. And we are just glad you are 
here, and I know you were trying to get here for the first 
panel.
    Senator McCaskill. I think you guys have covered a lot of 
it.
    Senator Carper. Well, we have tried to, but I am sure we 
have not covered it all.
    Senator McCaskill. You always do.
    Senator Carper. Well, we have uncovered some things that 
are mighty disturbing, but that we knew some of this already.
    Let me just ask one last question of our panel. As we have 
discussed, I think, before, the 2010 census is going to be 
expensive, but it is hard to be certain just how expensive it 
is going to be by the end of the day.
    And since Dr. Coburn and I have started our oversight in 
preparation for 2010, the projected lifecycle costs of the 
Decennial has gone up several times. I mentioned that before.
    Are you any more confident than you were before in the cost 
estimates that we are now getting out of the Census Bureau? And 
what is your best guess as to what the final cost is likely to 
be? And I underline best guess.
    Mr. Scire. We are no more confident than we have been in 
our prior reports, where we said that the process for 
developing lifecycle cost estimates was not documented and that 
assumptions are not reflected. So we are looking at that right 
now as a matter of fact, and we have serious questions about 
the accuracy and the credibility. And in terms of credibility, 
we are thinking there is more the Bureau can do to do 
sensitivity analysis and uncertainty analysis so that they can 
present to the Congress more than a simple point estimate, but 
it can also express some level of confidence in that or even a 
confidence interval and what the price ranges could be.
    Right now, the Bureau does not do the analysis to provide 
you that kind of information. And it is not clear. There is not 
the transparency for us or anybody else to go and independently 
assess the estimate and say that all the assumptions are 
updated in the lifecycle cost model.
    Senator Carper. Before Dr. Coburn has to leave, I am going 
to ask you one last question. And I asked this of our first 
panel. But be thinking about it while you answer his question. 
What advice do you have for us? Not just for those who serve on 
this Committee, but for the Legislative Branch, in terms of 
what we can do, what our responsibilities are to make sure we 
get this right and get it straightened out. Just be thinking 
about that, and, Dr. Coburn, go ahead and ask your question.
    Senator Coburn. Are there other IT systems at Census that 
you have significant concerns over?
    Mr. Powner. Dr. Coburn, I would not say significant at this 
point in time, but the comment that was made that everything 
was within cost and schedule, we would not agree to that. The 
DRIS Program that we have testified on there is a comment--what 
has occurred, and this occurred with FDCA, is they delayed or 
deferred functionality. OK. So you pushed out.
    So things that were planned during the dress rehearsal, you 
push it post dress rehearsal, and that is why we made the point 
that the post dress rehearsal testing is so important.
    But when you defer functionality, you are not on schedule.
    Senator Coburn. Right.
    Mr. Powner. And that is what, in fact, is occurring with 
the Decennial Response Integration System (DRIS) also. So we 
need to keep an eye on DRIS. That also is a large contract. It 
is very important for the integration of the paper and phone 
responses.
    Senator Coburn. Is that a cost-plus contract as well?
    Mr. Powner. Yes.
    Senator Coburn. Is there any reason that you all know why 
all these contracts are cost-plus at Census?
    Senator McCaskill. Unbelievable.
    Senator Coburn. Yes. You cannot give an explanation for why 
they are rather than a fixed-price contract?
    Mr. Powner. No, I can not.
    Senator Coburn. OK. All right. Thank you. And thank you 
both for your testimony.
    Mr. Scire. If I could add to that on the mention of the 
DRIS contract, this is another key point looking forward is the 
ability for the Bureau to do a targeted second mailing. And 
this will depend in part on DRIS, and the Operating Control 
System.
    We had estimated that doing a targeted second mailing has a 
potential for saving over $400 million. So I think it is 
important that that be tested as part of the dress rehearsal 
and that DRIS be in place and capable of testing that second 
mailing.
    Senator Coburn. OK. Thank you.
    Senator Carper. Dr. Coburn, thank you. And thanks very much 
for your intensive involvement in this for several years now.
    Let me just yield at this time to Senator McCaskill. And 
then I will come back and ask my closing question. Senator 
McCaskill, delighted that you are here. Thank you.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Thank you very much. I know that this 
subject matter has been covered. I am disappointed I could not 
get here for the first panel because you all have done the work 
of basically fleshing out the details of this particular 
contractual train wreck, but you obviously are not the ones 
responsible for it, and my questions would be more 
appropriately directed to them.
    The cost-plus part, the lack of specification in terms of 
the requirements part, I mean, I keep hearing the same song 
over and over again. It is like it is an old-fashioned record 
and the needle is stuck: Cost-plus specifications not laid out, 
award performance fees when there has not been performance. And 
this is whether we are talking about reconstruction in Iraq or 
whether we are talking about the Census Bureau.
    Now the issue for me is how do we fix it. And the only way 
you fix something that is broken is by requiring 
accountability. Has GAO discussed or do you all have any 
ideas--and obviously, I will direct these questions to the 
Census Bureau and to Secretary Gutierrez about accountability--
but has anybody been demoted? Has anybody lost their job over 
the failure to enter into a contract that was going to function 
appropriately for the taxpayers and not reward a company that 
was not doing what we needed to do? Are you aware of anybody 
who has been held accountable for these mistakes?
    Mr. Powner. We are not aware of anyone who has lost their 
job, Senator.
    Senator McCaskill. Are you aware of anyone who has been 
accountable in terms of being demoted or anyone who has been 
reprimanded or during your audit was there anyone who said that 
person made this mistake, and we took this action because of 
it?
    Mr. Scire. I am aware that there is at least one individual 
who will be taken out of their current position, but that 
decision I do not believe has been taken.
    Senator McCaskill. Well, and as so often happens in this, 
it rolls downhill. One of our challenges in government is 
making the accountability go to the levels where you change the 
culture. And is it your opinion the problem as it relates to 
contracting at the Census Bureau, is it cultural? Is it 
systematic? Or is it leadership?
    Mr. Powner. I think it is a little bit of everything. Our 
work starting in 2004 definitely showed they did not have the 
management processes in place to effectively manage these large 
acquisitions. It got into requirements management, risk 
management, and contractor oversight--all things that have come 
true.
    But the other thing that you want to make sure--that is all 
typically focused at the project level. You want to make sure 
that the key executives are performing the appropriate 
governance-related----
    Senator McCaskill. Right.
    Mr. Powner [continuing]. Accountability at the executive 
level. And we have addressed that in numerous reports calling 
for more executive level oversight of key risks, where they 
take ownership and accountability.
    Senator McCaskill. Well, I do not know if I will be around 
in the next one, but I think we need to help GAO in this regard 
by taking your report seriously, demanding accountability as it 
relates to the failures of this contracting exercise, and being 
on top of the next contracting exercise that is going to occur 
because it would be one thing if this was the first time this 
had happened. But obviously, this is not the first time it has 
happened. This is a recurring theme, and I am very concerned 
about it.
    I have some other specific questions, but I do not want to 
ask them because I think most of them have been asked and 
answered. But I will check the record and make sure that all 
these questions have been answered and I will submit them in 
writing if they have not because I do not want to subject the 
great folks from GAO to my railing against the Census Bureau 
and the leadership thereof in terms of their contracting 
failures.
    Thank you very much, Mr. Chairman.
    Senator Carper. Senator McCaskill, my guess is you will 
still be here when the next one rolls around in 2020. And my 
hope is that when it happens, you probably will be chairing the 
Committee, and you will be----
    Senator McCaskill. I am way down on the food chain, 
Senator.
    Senator Carper [continuing]. Getting a report that says 
that we learned from our mistakes in 2006, 2007, 2008, and that 
we ended up coming out OK in 2010 and the census in 2020 would 
be one that our people can be proud of and that the rest of the 
world will use as a model. So that is a goal, and my guess is 
you are going to be in a position to help make sure that 
happens.
    Thanks so much for being here today.
    The closing question again, as I telegraphed before, is 
your advice to us. I asked you to give advice to the Census 
Bureau and their leadership. Your advice to us in the 
Legislative Branch, and what we need to do, and can do, to make 
sure we get this right.
    Mr. Powner. Well, first of all, Mr. Chairman, I want to 
thank you for your oversight and also, too, for Senator 
McCaskill's comments. I mean not only was this raised as part 
of our work for you on the Census Bureau, but FDCA and DRIS 
came up as part of our hearings on high-risk and watch-list 
projects, where initially they were not included on the OMB's 
list, and we got them on the list. And now OMB is focused and 
helping hold some folks accountable. So that is all a move in 
the right direction.
    I think the key going forward is to continue to apply 
pressure. There are key dates coming up. There was a key date 
last Friday, where Harris was to come up with a rough order of 
magnitude. And I know the Secretary and the Director--no one 
wants to throw out a point estimate, but there are numbers 
floating around, and we need to get those numbers sooner rather 
than later, and we also need this decision in 2 or 3 weeks from 
now.
    So I think the more you can apply pressure in the short 
term, the better.
    Senator Carper. All right. Mr. Scire.
    Mr. Scire. I agree with all of that. I would also point out 
that the Bureau is scheduled to complete its draft assessment 
of the Address Canvassing dress rehearsal the middle of this 
month. And so I think that is something that you need to hold 
the Bureau accountable for presenting the results of this 
because it will talk about more than just the hand-held 
computers.
    I think that it is important for the Committee to keep a 
focus also on the Operating Control System, and how that is 
performing, not only in the operation where the handhelds were 
used, but also in the paper-based operations. It is also a 
central system that is important to all of the field 
operations.
    So those are a couple areas that in the short run, I think, 
need attention and so I think there is more that the Bureau 
could do to describe what they are learning about those.
    And the other issue is, I think, to encourage greater 
transparency on the part of the Bureau. In many ways, GAO is 
your eyes and ears, and so I think it is important that the 
Bureau be more transparent and forthcoming and more quickly 
respond to the information that we are looking at for you.
    Senator Carper. All right. Well, on behalf of all of us, 
the Senators who have been here today and those who are not, 
and I think really on behalf of the American people, I thank 
you very much for your stewardship on this and for being our 
watchdogs, and we need you to continue to be vigilant. Thank 
you very much. And with that, this hearing is adjourned.
    [Whereupon, at 11:35 a.m., the Committee was adjourned.]

 
   CENSUS IN PERIL: GETTING THE 2010 DECENNIAL BACK ON TRACK--PART II

                              ----------                              


                        TUESDAY, APRIL 15, 2008

                                     U.S. Senate,  
                       Committee on Homeland Security and  
                                      Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 3:19 p.m., in 
Room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, presiding.
    Present: Senators Carper and Coburn.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. The Committee will come to order. Welcome, 
Secretary Gutierrez, and other witnesses and guests. We are 
starting a couple minutes late. I explained to Secretary 
Gutierrez we had a couple of special guests who just happened 
to drop by. The Air Force announced today its selection of what 
they describe as the best Air Force base in America. There are 
over 100 Air Force bases in this country and around the world. 
And today, for the first time in the 23 years that this award 
has been given, an airlift command was named as the Air Force's 
finest, and we are proud to say that the Dover Air Force Base 
has been named the best of the best, and we are enormously 
proud. And the wing commander and the commander master chief 
were here just by coincidence. We were exchanging high fives 
out in the hallway. We are just so proud of them, the men and 
women, civilian and military, who work there and have for so 
many years. They fly C-5s and C-17s and take cargo and 
personnel all over the world.
    The Committee is going to come to order, and I want to 
thank Senator Lieberman and Senator Collins for working with us 
again to continue our oversight in this important area.
    My thanks as well to our witnesses for talking with us and 
for taking the time to be here today. You also deserve some 
thanks for all that you have been putting in over the past 
several weeks and months to try to get our planning and early 
preparation for the 2010 Decennial Census back on track.
    Last month, we held a hearing about problems that the 
Census Bureau was having with a project it calls ``Field Data 
Collection Automation.'' The Field Collection Automation 
Project is a project that, for a number of years now, has been 
a major part of the Bureau's efforts to streamline decennial 
operations and to find cost savings.
    The major component of the project is hundreds of thousands 
of handheld computers that census takers would use to verify 
addresses and, later on, to collect information door to door 
from households that do not initially mail in their census 
forms.
    At our last hearing, the Department of Commerce and the 
Census Bureau officials admitted for the first time that the 
handhelds did not work as well as they had originally planned 
and hoped. They also admitted that, contrary to previous 
Administration testimony to Congress, the handhelds may not be 
a viable option come 2010.
    We have been informed now that, due in part to the very 
short amount of time between now and the beginning of major 
decennial operations, the handhelds will be largely set aside 
in favor of the ``pencil and paper'' counting method that we 
have used since the very first census some 200 years ago.
    I know that a limited number of the handhelds will be used 
next year to perform some address verification work in the 
field. And I know that there are some technological and other 
improvements to the census process this time that should result 
in some efficiencies. But I am disappointed that, at a time 
when so many countries are relying to a greater and greater 
degree on technology to do their census work, we are stuck with 
what is probably the most rudimentary enumeration method out 
there. Maybe not the most, but one of the most for an advanced 
country like our own.
    The method the Census Bureau will be using to count non-
responders in 2010 also seems to be the most expensive out 
there. Just over a month ago, you may recall that the life 
cycle cost of the entire 2010 census was expected to be about 
$11.5 billion. Now, due largely to the need to hire more census 
takers, costs could go as high as $14.5 billion. That is 
roughly twice the cost, maybe a little more than twice the 
cost, of the 2000 census.
    I still have some questions about how we got to this point. 
I know some of my colleagues do as well. And Senator Coburn, 
who was here and who will be back shortly, will certainly have 
his questions to ask, as will I and others who join us. It is 
not clear to me, for example, why the top managers at Commerce 
and Census did not know until very recently about the serious 
problems with the handheld contract.
    Mr. Secretary, you and our new director, Director Murdock, 
should be commended for moving quickly to find a solution once 
you were fully informed about the mess, if you will, that is on 
your hands. But I do not know why your predecessors were not 
able to take similar action much earlier, even when experts 
like the Government Accountability Office (GAO) were warning 
that things were not right. Earlier action could have saved the 
handhelds and probably saved a whole lot of money as well.
    That said, we are probably at a point where we need to 
limit the fingerpointing and figure out quickly what needs to 
be done to get us the best, most accurate census that we can 
obtain.
    The Census Bureau has been spending the better part of a 
decade planning--some might say hoping--to use some of the 
hand-held devices for non-response follow-up in 2010. Now the 
Bureau must quickly pivot and develop new plans and procedures 
for handling paper census reforms. Getting the right plans in 
place, testing them, and making the appropriate adjustments 
before the 2010 count begins will be vital to getting a good 
response rate, collecting reliable data, and ensuring that 
decennial operations run smoothly. Poor planning and testing 
can only lead to confusion, wasted resources, and a bad final 
product.
    So I look forward to learning today not only about what 
went wrong with the handheld project, but about what the 
leadership at Commerce and the Census Bureau plan to do to set 
things right. It is clear from the testimony we have before us 
today that reverting to paper does not solve all of the 
problems with the 2010 census. We need to move quickly if we 
really are going to put preparations for the 2010 census back 
on track.
    [The prepared statement of Senator Carper follows:]
                  OPENING STATEMENT OF SENATOR CARPER
    I'd like to start by thanking Senator Lieberman and Senator Collins 
for working with us again to continue our oversight in this area.
    My thanks as well to our witnesses for taking for taking the time 
to be here. You also deserve some thanks for all of the time you've 
been putting in over the past several weeks and months to try and get 
the planning and early preparations for the 2010 census back on track.
    Last month, we held a hearing about problems that the Census Bureau 
was having with a project it calls ``Field Data Collection 
Automation.'' This is a project that, for a number of years now, has 
been a major part of the Bureau's efforts to streamline decennial 
operations and find cost savings.
    The major component of the project is hundreds of thousands of 
handheld computers that census-takers would use to verify addresses 
and, later on, to collect information door to door from households that 
do not initially mail in their census forms.
    At our hearing, Commerce and Census officials admitted for the 
first time that the handhelds did not work as well as they originally 
planned. They also admitted that, contrary to previous administration 
testimony to Congress, the handhelds may not be a viable option come 
2010.
    We've been informed now that, due in part to the very short amount 
of time between now and the beginning of major decennial operations, 
the handhelds will be largely ditched in favor of the ``paper and 
pencil'' counting method used since the very first census more than 200 
years ago.
    I know that a limited number of the handhelds will be used next 
year to perform some address verification work in the field. And I know 
that there are some technological and other improvements to the census 
process this time that should result in some efficiencies. But I'm 
disappointed that, at a time when so many countries are relying to a 
greater and greater degree on technology to do their census work, we're 
stuck with what is probably the most rudimentary enumeration method out 
there.
    The method the Census Bureau will be using to count non-responders 
in 2010 also seems to be the most expensive out there. Just over a 
month ago, the life cycle cost of the entire 2010 census was supposed 
to be about $11.5 billion. Now, due largely to the need to hire more 
census-takers, costs could go as high as $14.5 billion. That is more 
than twice the cost of the 2000 census.
    I still have some questions about how we got to this point. It's 
not clear to me, for example, why the top managers at Commerce and the 
Census did not know until very recently about the very serious problems 
with the handhelds contract.
    Both you, Secretary Gutierrez, and Director Murdock should be 
commended for moving quickly to find a solution once you were fully 
informed about the mess you had on your hands. But I don't know why 
your predecessors weren't able to take similar action much earlier, 
even when experts like GAO were warning that things were not right. 
Earlier action could have saved the handhelds and probably a lot of 
money as well.
    That said, we're probably at a point where we need to limit the 
finger-pointing and figure out quickly what needs to be done to get us 
the best, most accurate census we can get.
    The Census Bureau has been spending the better part of a decade 
planning--some might say hoping--to use some sort of hand-held device 
for non-response follow up in 2010. Now, the Bureau must quickly pivot 
and develop new plans and procedures for handling paper census reforms. 
Getting the right plans in place, testing them, and making the 
appropriate adjustments before the 2010 count begins will be vital to 
getting a good response rate, collecting reliable data, and ensuring 
that decennial operations run smoothly. Poor planning and testing can 
only lead to confusion, wasted resources, and a bad final product.
    So I look forward to learning not only about what went wrong with 
the handheld project, but about what the leadership at Commerce and 
Census plans to so to set things right. It's clear from the testimony 
we have before us today that reverting to paper does not solve all of 
the problems with the 2010 census. We need to move quickly together if 
we really are going to put preparations for the 2010 back on track.

    Senator Carper. And with that having been said, let me call 
on my colleague, Dr. Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Thank you, Senator Carper, and thank you 
and Chairman Lieberman for having this hearing.
    In June 2006, the Subcommittee on Federal Financial 
Management, Government Information, Federal Services, and 
International Sercurity held a hearing titled ``2010 Census, 
Off-Line and Off-Budget: The High Cost of Low-Tech Counting.'' 
That was $3 billion ago and before the handheld computers were 
scrapped. We know things now were far worse than what we knew 
at that hearing. It is not going to do us a lot of good to look 
backwards other than on a couple of things.
    At the last hearing, I asked if there was ever a time at 
which the Census Bureau told the Harris Corporation to stop 
processing on the handhelds, and we were told no, and then we 
were told yes. Well, we did send them a letter as far as non-
response follow-up (NRFU) was concerned, to keep going on the 
geographic but the NRFU stopped. It took 8 days to answer the 
Census Bureau's letter. Two days later, the Harris 
Corporporation sent the Census Bureau a letter, and it was 8 
days after that before the Census Bureau even responded. So, 
that 10 days does not seem like a lot, but that 10 days could 
have been the difference in terms of whether or not non-
response follow-up could have been used on this heavy 
investment we are going to have in these computers. So I think 
that is a breakdown that we ought to think about in terms of 
responsiveness within the Census Bureau. And I am very 
appreciative of the Secretary and Director Murdock. You all 
have been straightforward with us from the start, and this has 
no reflection.
    I have great heartburn over the previous Census Director. I 
will not hide that. ``Incompetency'' comes to my mind, and we 
find ourselves today unprepared because of the incompetent 
answers that we received that were, in fact, untrue, unstudied, 
and unknowledgeable.
    A couple of other things that I think are important that we 
should highlight is why Americans should be outraged at this. 
It is not that we have management problems. It is that we have 
gone from a contract with Harris Corp. for $600 million to $1.3 
billion. That is for a handheld computer that will only do half 
the work we asked it to do before.
    Second, the cost of the handheld computer has increased 
from $400 a unit to $600 per unit--that is according to your 
Department, Secretary Gutierrez--for a mapping function that 
can be done on a $150 BlackBerry.
    So we are still going to pay $600, four times what the 
American taxpayers should be paying for something that could be 
done on a $150 BlackBerry. Right now, we are going to continue 
a contract with a corporation that either did not perform or we 
did not send the right signals for them to perform and pay four 
times what we should be paying.
    And, third, the Census Bureau has contracted for the help 
desk, services for enumerators that are going to have to be in 
the field because we are not going to have computer technology 
to help us, and we have gone from $36 million to $217 million. 
And the reason that has happened is not because the cost went 
up. It is because we did not ask appropriately when we 
contracted the first time and really define what our needs were 
going to be.
    The other thing that is concerning to me is that there is a 
risk that the quality of this census could be lower in 2010 
than what it was in 2000. And the 2000 census was not without 
dispute as far as Utah was concerned, and there is still some 
question of whether or not we accurately reflected the 
enumeration in this country.
    I offered an amendment when I was in the House during the 
2000 census when the Census Bureau came and said, oops, we need 
more money. And I asked for it to be paid for. I asked for us 
to offset spending. And what is going to happen this time is 
the same thing that is going to happen next time--the American 
people are going to get charged for the mistakes that have been 
made. We are not going to trim spending somewhere else, and 
most likely it is going to get added to a supplemental. And 
because we have abandoned our responsibility to do a great job, 
our kids are going to pay for it. That is what it is. It is 
going to be on a supplemental. It is going to get added to the 
debt, and they are going to pay it back three times over.
    I am proud of GAO, I must tell you. They were raising these 
flags the whole time, and we were hearing concerns about the 
NRFU from GAO. And I think there is a great lesson for the 
Census Bureau, which is pay attention to your outside critics 
rather than put up a shield and become defensive--and this is 
not intended for Director Murdock. Rather than put up a shield, 
listen to what they have to say and make absolutely sure there 
is not any credence to what they say because our kids and our 
country pay for it.
    With that, I would yield back.
    [The prepared statement of Senator Coburn follows:]
                  PREPARED STATEMENT OF SENATOR COBURN
    I would like to thank Chairman Lieberman and Ranking Member Collins 
for calling this hearing, the second hearing that the Committee has 
held in recent months, to discuss the 2010 census.
    In June 2006, the Federal Financial Management Subcommittee held a 
hearing titled: ``2010 Census, Off-Line and Off-Budget--the High Cost 
of Low Tech Counting.'' That was three billion dollars ago and before 
the handheld computers were scrapped. We now know that things were far 
worse than this Committee was ever led to believe.
    It has become apparent in recent weeks that the Census Bureau and 
the Department of Commerce should have known about these problems long 
ago, but failed to act. Worse yet, they ignored the problems. Even as 
auditors from the Government Accountability Office sat in this room and 
explained to this Committee in great detail about the problems facing 
the 2010 census, the Bureau sat next to them at the table testifying 
that everything was on track. Somehow the problems were ignored again 
when the MITRE Corporation--hired by the Bureau for its ability to give 
frank advice--warned the agency a year ago that problems with the 
handheld computer contract were threatening the entire 2010 census.
    The consequences will, as usual, be laid at the feet of those who 
had nothing to do creating the problem in the first place--taxpayers. 
This is exactly what happened in 1999 when Congress decided to increase 
spending for the 2000 census by $2.8 billion more than it originally 
planned. Instead of cutting funding someplace else it simply declared 
that the additional amount was ``emergency spending.'' This provided a 
convenient way to bust through the spending caps and avoid any budget 
cuts. At the time, I tried to prevent that increase by offering an 
amendment on the floor that would force budget cuts instead of new 
spending--the amendment had bipartisan support but ultimately lost.
    This time is shaping up to be no different. Taxpayers will get 
stuck with the bill for the most expensive census of all time, which 
will be nearly $15 billion even after inflation is factored in. Some in 
Congress again want to take the well-worn path of paying for these 
problems through more ``emergency'' deficit spending rather than to cut 
the funds of programs with bloated budgets. Every single Member of 
Congress who supports paying for these outrageous cost increases and 
reduced deliverable by charging it to our grandkids should be ashamed 
of themselves for punishing taxpayers this way.
    The following few examples highlight exactly why Americans should 
be outraged by the price tag of the next census:

      First, the estimated value of the contract awarded to the 
Harris Corporation has ballooned from $600 million to $1.3 billion, 
even though the handheld computer will have only half of the 
functionality originally planned;

      Second, the cost of the handheld computer has increased 
from about $400 per unit to upwards of $600 per unit, according to the 
Commerce Department, for a mapping function that could easily be 
performed on a $150 Blackberry; and

      Third, the Census Bureau has contracted for help desk 
services for enumerators in the field, but the cost has increased from 
$36 million to $217 million, seemingly overnight.

    On top of the spending problems we face, the Director of the Census 
has also told us that the quality of the census could be lower than it 
was in 2000. This has a direct impact on the Bureau's constitutional 
duty to apportion the House of Representatives. Even after the 2000 
census, which was billed as the most accurate census ever, there was 
significant controversy about whether Utah should have been given an 
additional seat. I fear what may result from a less accurate census in 
2010.
    Admittedly, the picture I've just painted is bleak. There is no 
good way to put a positive spin on this situation and I don't believe 
that the American people are looking for excuses. I have serious 
questions about the decision to abandon the handheld computers for non-
response follow up. And I hope to receive some more of the detailed 
justification for that decision at this hearing. Regardless, the 
decision has been made and we need to ensure that the plan for moving 
forward is a sound one. I want to thank the witnesses for being with us 
today and look forward to their testimony.

    Senator Carper. Thank you, Dr. Coburn.
    Senator Coburn. Here is the difference, a $400 iPhone can 
do twice as much as the $600 handheld computer. You can buy 
iPhones that do all this, plus the NRFU. The American people 
should know that they are pating 50 percent more. Here is the 
latest technology in telephones, and it can do everything this 
can do.
    Senator Carper. All right. Mr. Secretary, thank you for 
joining us. We look forward to your testimony. And I understand 
you can be with us for about another 45 minutes and then you 
need to be excused.
    Secretary Gutierrez. Thank you.
    Senator Carper. We will be sure to make that happen.

   TESTIMONY OF HON. CARLOS M. GUTIERREZ,\1\ SECRETARY, U.S. 
                     DEPARTMENT OF COMMERCE

    Secretary Gutierrez. Well, thank you, Chairman Carper and 
Senator Coburn. Thank you again for your interest in the 
census, and I have a brief oral statement, and then I will 
submit my written testimony for the record. And I do appreciate 
your interest and I appreciate your wanting to look forward and 
figure this out and have the best census possible. And I 
appreciate that.
---------------------------------------------------------------------------
    \1\ The prepared statement of Secretary Gutierrez appears in the 
Appendix on page 107.
---------------------------------------------------------------------------
    I am here to update you on the progress toward addressing 
the challenges facing the 2010 census and to seek the 
Committee's support in ensuring success. The American people 
expect and deserve a timely and accurate census, and we are 
working diligently to ensure they get it.
    While taking the census sounds simple, it is anything but. 
As you well know, its scope and complexity have steadily 
increased, whether it be that we have more households or it is 
harder to reach households, and there is more fragmentation of 
media. And it is today the largest peacetime mobilization in 
the United States. And, of course, the challenges have only 
increased with time.
    To deal with some of these challenges, at the beginning of 
the decade, the 2010 census was reengineered to build a better, 
faster, and simpler census. The plan was to leverage 
technology; eliminate the long-form and conduct a short-form-
only decennial census--and that would reduce time from perhaps 
45 minutes to 10 minutes an interview; introduce the American 
Community Survey; take further steps toward conducting a multi-
language census; and coordinate and target messaging with 
integrated communications and partnerships.
    While the majority of these elements are on track, problems 
have developed with the Field Data Collection Automation (FDCA) 
program. The FDCA program has experienced significant schedule, 
performance, and cost issues. A lack of effective communication 
with one of our key contractors has significantly contributed 
to the challenges.
    To address these issues, we sought advice from a wide range 
of respected sources, including our Inspector General, the GAO, 
the MITRE Corporation, the 2010 Census Risk Reduction Task 
Force, and an independent panel of experts.
    Based on these inputs and serious consideration, we have 
decided to move forward with a paper-based non-response follow-
up in the 2010 census. And I know how disappointing this is for 
you, Chairman and Senator Coburn. This allows the Census Bureau 
and the Harris Corporation to focus on what they do best and 
represents a significant step in the use of automation. We will 
continue to use the handhelds for Address Canvassing.
    The effect of moving forward with this alternative as well 
has placed the non-FDCA-related planning challenges that we 
have faced and will require an increase of anywhere from $2.2 
to $3 billion through fiscal year 2013, bringing the total life 
cycle cost of the 2010 census to between $13.7 billion and 
$14.5 billion. And as you mentioned, the last number we brought 
the Committee was $11.5 billion.
    The broadest reason behind the cost growth is the initial 
lack of sufficient communication between Harris and the Census 
Bureau. And while the revised plan does shift some duties away 
from Harris, the amount of work that Harris is responsible for 
has actually increased. So while it is a reduced level of 
activities, they have more work within each activity.
    To successfully pursue this course, we estimate an increase 
of approximately $160 million to $230 million is needed for 
fiscal year 2008. While we continue to assess the cost impact 
for fiscal year 2009 and beyond, our current rough estimate for 
additional funding in 2009 is approximately an increase of $600 
to $700 million. We expect to have more concrete numbers for 
2009 when we submit to Congress an amendment to the President's 
2009 budget that will be fully offset. Most of the life cycle 
cost increase occurs in 2010, and we are evaluating all options 
to keep the cost increase towards the low end of the range, 
while ensuring an accurate count.
    To address the funding needed for 2008, we have developed a 
transfer proposal from existing Department resources that will 
cover the needs for the 2010 census. Our transfer proposal 
would require legislative authority to remove certain limits on 
our ability to make intra-departmental transfers. I believe it 
is responsible in light of the importance of the decennial 
census and our shared need to avoid additional burdens on the 
American taxpayer.
    Both at the Census Bureau and at the Department of Commerce 
we have made substantial management changes to address the 
challenges facing the 2010 census. It will remain a top 
priority for me and for the Department, and I look forward, as 
always, to continuing to work with you as we move ahead.
    Again, I thank you for your interest, and I will be glad to 
answer any questions. Thanks.
    Senator Carper. Thank you for that statement.
    I want to start off by looking back a bit, and then I want 
us to pivot and to look forward. Again, let me start by 
commending you for taking swift action once you were fully 
briefed on the situation with the handhelds and for taking 
control of things and doing what you needed to do to try to set 
things right. And while I am disappointed that we will not be 
taking more advantage of the technology that is out there--I 
know Senator Coburn is at least as disappointed as I am about 
that--to find cost savings and to get a better census result, I 
believe that the decision you have shared with us is probably 
the only decision you could make at this point in time.
    Having said that, I think it is unlikely that we would find 
ourselves in the situation if the top leadership at the 
Commerce Department and the Census Bureau were more fully and 
practically involved in what anyone can see is a very 
complicated and very important project.
    Again, looking back, why is it that--I will not say that 
nobody, but the right people were not paying attention to the 
warnings from GAO and from MITRE. I read some of the comments 
from work done by MITRE at the behest of the Census Bureau. But 
why wasn't somebody paying attention to those warnings about 
the risks that were associated with the project? And I think I 
know the answer to this question, but are you taking steps to 
ensure that you and the other key people in the Department and 
at the Bureau are more involved in major investments like this? 
And if so, what are some of those steps? And if not, why not?
    Secretary Gutierrez. Sure. I suppose, and to put it in 
simple terms, I think the folks who were on this felt confident 
in what was being talked about in meeting rooms, and they felt 
that they were on the right track and that either GAO or others 
who were informing them of the risks did not have the full 
story right. But I think it is one of those senses of false 
confidence that things always have a way of working out without 
necessarily having the plan, the process, or the mechanism to 
make it work. And for all of us, it is a great management 
lesson that these projects are complicated and they tend to get 
worse before they get better. Problems tend to happen more 
easily than one expects, especially with something as large as 
this. To take it lightly is a big mistake.
    So I recall that the first meeting I had when it was 
clearly a problem, the way the meeting started was somebody 
saying we have a problem, and at least what we have talked 
about inside of the Commerce Department is that we would like 
to think that our culture is one that bad news should travel 
just as quickly or more quickly than good news. And so once we 
heard about this, we have tried to move forward, confront it, 
face up to it, but not try to step back and hope that things 
just all of a sudden got better.
    I think Director Murdock would say that he is getting a 
little bit too much help from the Commerce Department. This has 
clearly been what we have spent the most time on over the last 
month or so. And looking forward, a lot of it does depend on 
the Commerce Department, and we have had daily involvement. At 
some point we would like to move to weekly involvement. At some 
point we would like to move to a monthly board involvement. And 
what is happening inside the Census Bureau, I believe, is very 
positive--daily meetings, accountability, decisiveness. Harris 
is going to collocate with Census. It is a concept that the 
Director calls ``embedding.''
    I have said this to Harris, and I do not think I would be 
speaking out of school, that where I would fault the Harris 
Corporation is if they saw that things were not moving forward, 
if they saw that decisions were not being made, they should 
have either knocked my door down, knocked the Deputy Director's 
door down, or knocked the Under Secretary's door down, but 
somehow it is too big of a project to be diplomatic about it.
    But we have processes, we have systems, we have information 
systems going forward, and I feel good about the people and 
about the systems and about the processes that we have moving 
forward to the 2010 census.
    Senator Carper. I will just say one thing on this point, 
and then we will look forward. The idea that we had GAO out 
there consistently ringing the alarm, sounding the alarm, and 
MITRE Corporation, which is--is the MITRE Corporation a 
nonprofit?
    Secretary Gutierrez. Yes.
    Senator Carper. MITRE Corporation in there basically 
saying, ``Houston, we have a problem here.'' And then to have 
literally within weeks of that the kind of exchange that Dr. 
Coburn had with the former, I think, acting director, which 
almost suggested that he had never seen or heard of the 
findings reported by MITRE is just very disappointing and 
almost hard to believe.
    Well, let me set that aside, and let's just talk about 
going forward. Just lay out for us, if you will, Mr. Secretary, 
the path forward, step by step as we proceed through this month 
and next month and the balance of this year getting us ready 
for next year, please.
    Secretary Gutierrez. I would say that the most critical 
time period is the next couple of months. In our estimate, we 
know we have a void of anywhere from $160 to $230 million this 
year. In 2009, within the President's budget, we plan to look 
inside of Commerce and look elsewhere and get an amendment for 
the budget. But this year, we have approached this saying we 
believe that the responsible thing is because it is not as much 
as next year and it is an amount that is somewhat manageable, 
that we should try to get it from inside the Department.
    We have a couple of months to do that, but in order to be 
able to give ourselves some breathing room to July, we have 
requested the ability to move $33 million within Census. And my 
understanding is that we only need to inform, but we would like 
to have at least a sense from the House Committee that this is 
acceptable, that this is fine. Without that $33 million, which 
we believe is not a high risk, we are then facing a June 
deadline. And if we are facing a June deadline, then sometime 
in May we have got to tell Harris to stop working. And it 
begins to roll up into a major problem because we incur more 
delays.
    So, for me, that is one of the things that concerns me the 
most is just----
    Senator Carper. Let me just interrupt for a second. What 
you are saying to us is that you need the ability to move $33 
million within Census from one pot to the other?
    Secretary Gutierrez. That is right.
    Senator Carper. And it is your understanding that you do 
not need legislation to do that; it is something that can be 
done administratively?
    Secretary Gutierrez. Yes, I just want to let you know 
because--for me, that is perhaps the single biggest issue in 
the very short term. We are also in the process of 
renegotiating the contract with Harris, and that should be done 
toward the back half of the summer. We want to pay a lot of 
attention to that. We want to get it right. And that is also a 
big activity that needs to get done correctly.
    We are also looking at what programs within the contract 
can we make fixed price as opposed to making the whole contract 
cost-plus. And Harris has been very supportive, and we are 
trying to parcel out as much as we can and fix it as opposed to 
leaving it on a cost-plus basis. That is another major 
activity. And then getting the processes right----
    Senator Carper. Let me just interrupt again. One of the 
things that became apparent to me in reading the testimony for 
today is, given the hundreds of changes that the Census Bureau 
was making in the requests of Harris, it is hard to have a 
fixed-price contract when you are working in that kind of 
environment. And my hope is that this time you actually have a 
pretty good handle on what you want, what your deliverables are 
so that you could actually expect from them a fixed-price 
contract. Go ahead.
    Secretary Gutierrez. Yes, well, one of the things that we 
are talking about this morning is that, in the event of some 
technological, infrastructure, or material need, that could be 
fixed price. So maybe not all of it can be fixed price. We are 
trying to get as much of it as we can, and we will obviously 
get back to the Committee. We know your interest in this. So 
that is a major part of immediate steps that we have to take.
    I think it is safe to say within the Census Bureau, there 
is a lot of management change, process change, and a lot more 
intensity. There should be daily meetings and decisions made 
daily. People should be feeling pressure because decisions 
cannot be delayed. So, really, the heart and the nerve system 
are right there in the Census Bureau, and that is where the 
management changes are being made, not in terms of perhaps 
moving a lot of people around, but in terms of how people work 
together, how they communicate, what kind of information they 
look at, what kind of deadlines are put in place, and what kind 
of pressure is put on the system. And that needs to be 
happening as of today, and those are the things that I think 
about. We have got to redesign the whole non-response follow-up 
system. Even though it is something we have done in the past, 
we were not headed in that direction. We were headed in the 
direction of the handhelds. Granted, it is still lower risk 
than going to the handhelds, but that requires an awful lot of 
work to kind of get that wheel restarted again. And Address 
Canvassing has to go on. That needs to be happening. We have a 
higher requirement of Census workers than we thought we had 
sometime back, one, because we are doing paper and, two, 
because our productivity assumptions were wrong. So that needs 
to be fired up as well.
    So, in terms of the $3 billion, about $2.2 billion--if you 
take the upper range--are non-Harris. So we have got the Harris 
contract to deal with. But then we have a lot of other costs 
that were underestimated within the system. So there is a lot 
to get right, a lot to get into timetables. We need milestones, 
we need deadlines. And very importantly, we need a tremendous 
amount of management focus and intensity, which I believe we 
have.
    Senator Carper. I am over my time. Let me just ask you to 
clarify one point, please: $33 million to move within the 
Census Bureau, and then for this fiscal year, do I understand 
there is roughly another $150 to $200 million that needs to be 
moved within the Department of Commerce's budget? Does that 
require legislation in your view? Or is that something that you 
believe you can do administratively?
    Secretary Gutierrez. Yes, that does require legislation.
    Senator Carper. All right. Thanks.
    Secretary Gutierrez. Thank you.
    Senator Carper. Dr. Coburn.
    Senator Coburn. Thank you again for being here. Let me make 
a couple of points. This is not a question.
    It is not against human behavior when somebody has a cost-
plus contract for them not to tell you when things are not 
going well because they have every economic advantage for them 
not to go well. So that is a lesson on cost-plus contracts.
    The second lesson on cost-plus contracts is if you do not 
know what you want, it is always going to cost a whole lot more 
than what the estimate is. And Census did know what they 
wanted, and they changed it all the way down through the deal.
    Why do you have to redesign the non-response follow-up? We 
have done it for 4 or 5 decades in a row, and we have done it 
on paper for 4 or 5 decades in a row. Why does that have to be 
redesigned?
    Secretary Gutierrez. You are right, there is a lot that we 
have done before in the past. I suppose the part that does 
require sort of bottoms-up work at this point is how to 
integrate manual information into an operating system that was 
designed for handhelds. So that would be a part that is 
probably different than what we have done in the past. A lot of 
it, we should be able to dust it off, but we have got to crank 
it up, which is something that we had not done.
    Senator Coburn. That cannot be that expensive. Let me ask 
another question. We have got $33 million in additional costs 
over the next 3 months, correct?
    Secretary Gutierrez. Right.
    Senator Coburn. Until July. What makes up the $33 million?
    Secretary Gutierrez. Well, a big part of that is getting 
the work on the new requirements for the handhelds, the Address 
Canvassing, which is happening as we speak.
    Senator Coburn. But Address Canvassing was always part of 
the contract, so why is there a $33 million increased cost in 
the Address Canvassing?
    Secretary Gutierrez. You are right. The Address Canvassing 
work was underestimated. Part of the new requirement, the 419 
requirements that you have heard about, many of those came out 
of the Address Canvassing dress rehearsal. So Address 
Canvassing was underestimated.
    Senator Coburn. So if, in fact, we were right on track and 
we had NRFU on the handhelds, would you still be wanting $33 
million for Address Canvassing? Is that the answer?
    Secretary Gutierrez. Yes, sir.
    Senator Coburn. So it does not have anything to do with the 
previous incompetency. That is just a function of asking for 
more stuff on a cost-plus contract.
    Secretary Gutierrez. Well, this is what came out of the 
dress rehearsal that was done in mid-2007.
    Senator Coburn. Do you buy the fact that Harris says that 
this thing that works slowly is because the people could not 
use it faster, it is designed to be slow? I mean, I have seen 
it work. I have seen them go through the handheld. Do you buy 
that, or have you asked for it to be speeded up to the 
operation of what an eighth grader could use it at? I know I 
cannot use it that fast, but I know my eighth-grade 
grandchildren can.
    Secretary Gutierrez. Yes, I had not heard this notion that 
it cannot be faster. I believe it can be designed to be faster. 
I do not see why it would not----
    Senator Coburn. Well, we were told it was specifically 
designed to be slow by Harris. That is just something else--
that is just another problem.
    And we have got a mess. I know you are trying to solve the 
mess, and I know the people at Census are trying to solve the 
mess. There is a measure of this Congress that is going to come 
out of this census, and the measure is going to be whether or 
not somebody takes responsibility and is culpable for what has 
happened here. And I will bet you now, I will bet Senator 
Carper a steak dinner in Delaware, that the vast majority of 
these funds will be charged to our grandchildren rather than 
Members of Congress say we are going to have to sacrifice 
somewhere else in Commerce to pay for this error. And that is 
the real problem the American people have with Washington. 
There is no accountability.
    And what you are doing and trying to do is admirable. I 
applaud you for trying to do it. But as sure as I am sitting 
here, they are not going to let you do it because they got 
their little fiefdoms and they have got their little special 
things, and they are not going to want any of them cut even 
though we have made mistakes.
    A final point: We had a hearing in June 2006 where the 
Director of the Census was asked: What is Plan B? With your 
background, there has always got to be a Plan B. There always 
has to be a Plan B. It is Murphy's law. What can go wrong, 
will. We were told and we were reassured then that there is no 
reason to have a Plan B, everything is on track.
    Was that Director misinforming us or just totally clueless? 
Which was it? Because it cannot be anything either than he was 
misleading this Committee or he was totally out of touch with 
reality. Which is it, Mr. Secretary?
    Secretary Gutierrez. I think he believed that he could pull 
it off, that the Census Bureau could pull it off. I think he 
was truly confident that this would work out. As in many 
information technology (IT) projects I have seen in the past, 
somehow there is a belief that the technology will take care of 
itself, and we know it does not.
    Senator Coburn. Mr. Chairman, I would like to submit some 
written questions. I do not want to keep the Secretary any 
longer. I would be happy to have those questions back in a 
couple of weeks. I know you have got plenty to do.
    Senator Carper. Thank you, sir.
    Senator Coburn. Thank you.
    Senator Carper. Mr. Secretary, I asked you to do this last 
time you were before us, and that is, put on your hat from your 
job when you headed up Kellogg and do that for us again today. 
As I have read today's testimony, yours and that of the 
Director and GAO, I was trying to figure out why does it cost 
twice as much to do this year's census, more than twice as much 
as it did almost 10 years ago? And among the things that I 
read, there are more people. In some cases people do not speak 
the same language. They do not all speak English so that is a 
challenge. They may live in more dispersed locations. That is a 
problem as well.
    And one of the other comments that I read is sometimes 
people are less inclined to open their mail. They get a lot of 
mail. Some of it is solicitations. It took me about half an 
hour to go through our mail last night when I got home to 
Delaware just on a regular day. And some people maybe get the 
request from the Census for information and just throw it away. 
So that increases the requirement for us to do our non-response 
follow-up.
    I am trying to think--and you have probably tried to think 
this through, too, and the folks at the Census--how do we 
increase the likelihood that people who receive something in 
the mail are actually going to fill it out and mail it back in? 
As I recall, the expectation is something like 60 to maybe 70 
percent of the folks who receive the questionnaire, a short 
questionnaire, in the mail are going to respond to it. And I am 
just trying to think, how can we inspire people to do more?
    I will just give you a different kind of example. We have 
been trying to encourage people to recycle more in the city of 
Wilmington, where I live. One of the things that has been done 
is we have bar-coded the cans that people put their recyclables 
in, and when they are loaded into the recycling truck, the 
truck actually measures and apportions back to my account for 
my family so many points based on how much we are recycling. 
And at the end of some period of time, we can use the points 
that are accumulated for tickets to theaters or for discounts 
on restaurant dinners. We actually incentivize people, so not 
only are we doing something that we think is right for our 
environment, but there is also some financial incentive for us 
to recycle.
    But have you given any thought to incentivizing folks to 
actually comply? For example, if you send it in, you have a 
chance to--not to win the lottery, but you have a chance to win 
something, and it is something that might be of value to you 
and your family.
    Secretary Gutierrez. I think that the question you are 
asking is an important question, and it may be the question in 
order to get the cost down. We are estimating, I think, 64-
percent response. If that becomes 65 percent, we save $75 
million. So for every 1 percent, it is a $75 million reduction.
    I have met with the advertising agency, because that is my 
background, to see how they can help us because they should 
have that goal. Their advertising is only good if that response 
is higher than what we had expected or what we had 10 years 
ago. So we have challenged them, and they are going to come 
back.
    We also have a huge number of partnerships locally which 
are designed to do that--church groups, local community groups 
who are asked to go out and tell people, please, respond to the 
census. It is not intruding into your privacy. It is not going 
to be used against you.
    The other thing that we have working for us--and it is hard 
to put a number on this--is that the questionnaire is a lot 
shorter. Because we did the American Community Survey (ACS) 
over the last decade, we have pushed a lot of the questions to 
a monthly survey, so now people have to spend 10 minutes 
instead of 45 minutes. And it is hard to imagine in this day 
and age somebody giving an enumerator 45 minutes. Now they only 
have to give him 10 minutes. So those things should work.
    The incentive, we have talked about it, and I do not know 
if the Census has--that we have gone into it as much as we 
have, but I would be glad to go back to that because I think 
these are all good questions, and if we can get that number up, 
we could probably figure out something to do, perhaps in the 
second response--which we are doing this time. We are doing one 
mailing, and then we are doing a second mailing. Perhaps there 
is room there to do something to motivate people more.
    Senator Carper. Well, this is 1 a percentage point 
increase, $75 million saving?
    Secretary Gutierrez. Yes.
    Senator Carper. If you can go from 64 percent to 74 
percent, that is three-quarters of a billion dollars?
    Secretary Gutierrez. That is correct.
    Senator Carper. You can probably come up with some pretty 
clever ways to incent people for that kind of money.
    Secretary Gutierrez. That is, if whoever comes up with the 
idea to get 80 percent, I think they should be classified as a 
genius, because that is the ultimate challenge we have every 10 
years.
    We are looking at the Internet. Can we get 1 percent from 
the Internet, additional to what we are doing? If we do that, 
that would be anything that we can do, that is the big number. 
And then my understanding is the rest of the job is less 
difficult than it would have been had we just started out with 
64 percent.
    Senator Carper. Senator Coburn says maybe a $5 certificate 
for Starbucks or McDonald's. But look back a couple years ago 
when everyone wanted to get an iPod. The idea that you turn in 
your census on time, you do not need a non-response follow-up, 
and your name goes into the hat for a new iPod, something that 
people are excited to get, interested in getting, something 
that is highly timely.
    Secretary Gutierrez. It is a great thought.
    Senator Carper. I would urge you to consider that.
    In terms of language barriers, how do you cope at a time 
when a lot of folks are concerned that there is a great deal of 
Spanish spoken in our country, but it is not just Spanish. I 
mean, people--a friend of mine, Roy Romer, who used to be 
Governor of Colorado, ended up as superintendent of the public 
schools in L.A. for a number of years. He told me that one of 
his challenges--he said, ``This is the toughest job I have ever 
had, superintendent of the school district. I have got 110, 115 
languages that are being spoken in my school district.'' You 
probably have there, and in other places around the country, 
folks who are going door to door talking to people and maybe 
speaking Laotian or Haitian or whatever, not just Spanish.
    Secretary Gutierrez. Right.
    Senator Carper. How do we deal with that?
    Secretary Gutierrez. On the Spanish part, because of the 
ACS--and this is one of the benefits of ACS--we know where we 
need to provide a Spanish language questionnaire. So we will be 
able to do that from the start, targeted at those households. 
We also have a multi-language manual of how to go about 
answering the questionnaire.
    A big part of how we get to these other hard-to-reach 
communities--Vietnamese, Croatian--will be through these 
community partnerships where they should know where people live 
who do not speak English or who could use some help in speaking 
English. So that is where the partnerships will come in 
tremendously handy. But that is another part that makes it more 
complex.
    I would like to think that we may have more languages today 
than we did 80 years ago or 100 years ago, although we have 
always had that problem. I mean, 100 years ago it was Europeans 
who did not speak English yet, and we were doing a census. So 
maybe we do have more languages today, but I think it is a 
problem that we have had before. But no question about it, it 
is one of the variables that makes this so complex.
    Senator Carper. And I do have one more question, and that 
will be it. I understand from what you are telling us that you 
are going to stick with Harris, they are going to be involved 
in the portion of the project that I think involves Address 
Canvassing, but there is other work that you want for them to 
do as well. Explain the other piece that you have negotiated or 
are negotiating with them to do. I do not fully understand what 
that other piece is.
    Secretary Gutierrez. I will give you the primary examples. 
The integration of the paper non-response follow-up into the 
automated Operating Control System is a big part of what they 
have to redesign. We have given them more work in the Address 
Canvassing. We had assumed that we could manage a help desk for 
$34 million. We now have $197 million into the help desk. So 
there are things that on the one hand we have increased the 
requirements. There are others when we have realized we got 
this wrong. But it is a combination of those, and I would be 
glad to provide you with a list of how that $700 million is 
made up.
    Senator Carper. Fair enough. Dr. Coburn, anything else?
    Senator Coburn. No. Thank you.
    Senator Carper. All right. Secretary Gutierrez, thanks for 
being with us today. Thanks for your testimony. Thanks for 
responding to our questions, and thanks for making this the 
kind of priority that it needs.
    Secretary Gutierrez. Thank you, and thank you for your 
suggestions.
    Senator Carper. You bet.
    Secretary Gutierrez. Thank you, sir. I appreciate it.
    Senator Carper. All right.
    Gentlemen, we welcome you here. We have appreciated your 
testimony before, and we look forward to your testimony here 
today.
    This panel includes Dr. Steven Murdock, who is Director of 
Census for almost 4 months now. It probably seems like 4 years.
    Mathew Scire, we welcome you as the Director of Strategic 
Issues at the GAO.
    I was over there the other day when we said good-bye to 
David Walker, Dr. Coburn. Did you have a chance to stop by 
there? As it turned out, Comptroller General Walker shares the 
same birthday, same day, month, year, with Sting.
    Senator Coburn. That is notable.
    Senator Carper. It really is, when you think some people 
consider GAO a sting operation. I thought it was more than just 
a coincidence. I enjoy music, and as it turns out, General 
Walker does, too. And I think he is especially fond of the 
music of Sting. So I looked through Sting's portfolio, and I 
found a CD called ``Brand New Day'' and presented that to him 
in front of all of his folks, because, really, it was his last 
day at GAO, and he is looking forward to a brand new day. But 
we appreciate the work that you and David Powner have done to 
make Comptroller General Walker look pretty good during the 
time that he was in charge of GAO. But we welcome you here 
today, and thanks for your input.
    Dr. Murdock, we have your testimony. You are welcome to 
proceed, and we will make it all a part of the record so 
summarize as you see fit. Thanks for joining us.

   TESTIMONY OF STEVEN H. MURDOCK,\1\ DIRECTOR, U.S. CENSUS 
              BUREAU, U.S. DEPARTMENT OF COMMERCE

    Mr. Murdock. Thank you, Mr. Chairman and Dr. Coburn. Thank 
you for the opportunity to come before you again to discuss our 
ongoing efforts to address the problems associated with the 
Field Data Collection Automation (FDCA) Program.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Murdock appears in the Appendix 
on page 113.
---------------------------------------------------------------------------
    Secretary Gutierrez has just outlined our plans for going 
forward with the FDCA program. And since the Secretary last 
spoke to you, all of the options that we talked about before 
regarding the FDCA program were thoroughly examined. We have 
considered feasibility, timing, and, of course, costs, while 
placing our greatest emphasis on ensuring the most accurate 
possible census in 2010.
    I fully support his decision. Our contractor will continue 
developing the Address Canvassing operation utilizing the 
handheld computers and develop the Operations Control System, 
and the Census Bureau will implement a paper-based non-response 
follow-up operation and provide the regional census centers 
infrastructure. We will work with our contractor to ensure that 
the other components of the FDCA program are successfully 
completed. This option maximizes our control of 2010 census 
operations, and our decision to do so again gives us 
flexibility and minimizes the risks we identified in the FDCA 
program. At the same time, the plan allows us to leverage 
Global Positioning System (GPS) technologies by using handheld 
computers in the Address Canvassing operation. This will 
improve the accuracy of our address list, which is fundamental 
to an accurate census.
    This is not a decision that any of us have taken lightly. 
The Risk Reduction Task Force, chaired by former Deputy 
Director William Barron and made up of key Census Bureau 
officials from each office involved with decennial census 
operations, as well as personnel from the Department of 
Commerce, and MITRE Corporation, carefully assessed every 
aspect of the FDCA program. Their work was then reviewed by an 
expert panel established by the Secretary. Nearly all of us 
involved with this effort reached the same conclusion: Moving 
to a paper-based NRFU operation significantly reduces risk. 
There are several reasons for this:
    We experienced a series of problems with the handheld 
computers during the dress rehearsal Address Canvassing 
operation.
    The handheld computers often took far longer than expected 
to move between screens, and they occasionally froze up 
resulting in enumerator downtime.
    There were difficulties in obtaining efficient transmission 
to and from the handheld computer. This, too, led to delays for 
the enumerators.
    The handheld computers could not handle assignment areas 
that contained more than 700 addresses, and our contractor does 
not believe that this flaw can be corrected. The result is that 
we now have to develop an alternative outside of the FDCA 
system for situations where we cannot reduce the size of large 
assignment areas.
    We determined that if we had similar problems in the NRFU 
dress rehearsal, it would be too late to correct them and too 
late for us to pursue any alternative.
    Given our efforts to mitigate elements of risk to decennial 
operations, the automated NRFU operation provides less 
flexibility than a paper-based operation because of the lead 
time required for ordering and equipping additional handheld 
computers.
    We know we can successfully complete a paper NRFU since we 
have done so in past censuses. And by taking this work back, 
the Census Bureau can focus the work of the contractor on 
completing work on Address Canvassing and the operational 
control system.
    We recognize that the option we chose is not without risk 
and has cost implications. However, we believe it is the best 
way to ensure a successful census, and we are taking actions 
that mitigate risk, particularly the ultimate risk of a failed, 
incomplete, or inaccurate census.
    As we move forward, I am taking a number of steps to ensure 
that we address the organizational weaknesses that caused the 
problem with the FDCA program. This begins with a new 
management approach.
    Arnold Jackson, a seasoned census manager with extensive 
experience directing information technology projects, has taken 
over as Associate Director for the Decennial Census. He is 
establishing a schedule for daily assessment meetings with the 
Census Bureau and contractor personnel, weekly status 
assessment and resolution meetings with the Deputy Director and 
me, and regular meetings with the Department of Commerce. We 
will continue to keep Congress informed of our progress and of 
any problems that arise.
    We will move quickly to strengthen management planning and 
oversight relative to key areas such as risk management, issue 
identification, product testing, communications, and budgeting 
and cost management.
    We are also instituting an embedding process, which the 
Secretary referred to, of Census Bureau personnel with the 
contractor at the worksite and contractor personnel at Census 
Bureau headquarters. This will help alleviate the 
communications problems that led to the breakdown in the 
requirements definition process.
    We will institute periodic, unscheduled reviews by MITRE 
and departmental specialists in IT, project management, and 
contracting.
    Within the next 30 days we will produce a detailed plan for 
the FDCA re-plan that includes deadlines for key milestones. In 
45 days we will develop an integrated project schedule for the 
program. And in 60 days we will produce a testing program for 
the automated Address Canvassing operation. All of this will 
strengthen implementation of the Decennial Census as we move 
forward.
    I want to stress again that since becoming Director in 
January, addressing the problems associated with the FDCA 
program has been my highest priority. My colleagues and I share 
the concerns of the Congress about the increased costs we are 
now facing. Nonetheless, we must find a way to move forward. 
With the steps I have outlined today, I am confident we can put 
the 2010 census back on track.
    Thank you for the opportunity to be with you today. I am 
happy to answer any questions you may have.
    Senator Carper. Thank you, Dr. Murdock.
    Before I introduce our two witnesses from GAO, let me just 
say that I am going to be asking you to respond to the schedule 
that Dr. Murdock has laid out, which seemed to make sense. Is 
it logical? What questions would you suggest that we ask about 
it or would you have about that timeline? Thank you.
    Mr. Scire.

 STATEMENT OF MATHEW J. SCIRE,\1\ DIRECTOR, STRATEGIC ISSUES, 
             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Scire. Mr. Chairman and Dr. Coburn, thank you very much 
for the opportunity to be here today to discuss the 2010 
Decennial Census. With me today is David Powner, Director of 
GAO's Information Technology Team, who has been reviewing the 
Census Bureau's major information technology investments.
---------------------------------------------------------------------------
    \1\ The joint prepared statement of Mr. Powner and Mr. Scire 
appears in the Appendix on page 117.
---------------------------------------------------------------------------
    Last month, we testified before this Committee on the 
growing uncertainties surrounding plans for the 2010 census. At 
that time, we designed the Decennial Census as a high-risk 
area. We cited longstanding weaknesses in technology 
management, operational planning, and cost estimation. We also 
cited uncertainty over dress rehearsal plans and the ultimate 
cost of the decennial.
    Earlier this month, the Commerce Department and Census 
Bureau announced major changes to how it plans to conduct the 
2010 census. This redesign will have significant implications 
for decennial operations and costs. The redesign also 
highlights again the critical need for aggressive management of 
technology investments.
    First, the redesign will require that the Bureau quickly 
develop and test a paper-based non-response follow-up 
operation. This will require different operations, printing, 
and training programs. Also, because this change comes late in 
the decade, the Bureau will need to provide assurance that this 
huge operation and its linkages with other operations and 
systems will be tested in the absence of a full dress 
rehearsal.
    Second, the redesign calls for using the handheld computers 
for the Address Canvassing operation except for large 
assignment areas. This will require additional planning for 
operations, training, and equipment. Also, there remains some 
uncertainty as to how the Bureau will work around potential 
inabilities to update incorrect address lists once Address 
Canvassing has been completed. In this event, the Bureau may 
elect to deliver census forms by hand rather than via mail. It 
is critical that the Bureau ensure that the technology for 
conducting Address Canvassing is a success and that it tests 
the design for large assignment areas and the linkages among 
Address Canvassing and other operations.
    Third, the redesign will result in additional costs. It is 
important to note that had it chosen to go forward with its 
original design, the Bureau estimated that the cost of the 
decennial would be up to $2.3 billion more than it previously 
estimated. In comparison, the cost of the redesigned decennial 
is expected to be up to $3 billion more than the previous 
census estimate. Regardless, it is not clear that these cost 
estimates fully recognize changes in the expected productivity 
of field workers, and the ultimate cost of the decennial is 
uncertain.
    We recommended that the Bureau use tools such as a 
comprehensive, integrated project plan and sensitivity analysis 
that would help the Bureau better measure and manage the costs 
associated with individual operations. To provide the Congress 
with credible, accurate life cycle cost estimates, it will be 
important for the Bureau to demonstrate that its cost estimates 
reflect the most current understanding of important underlying 
assumptions, including productivity.
    Finally, the redesign makes more urgent the need for the 
Bureau to address significant and longstanding weaknesses in 
managing information technology. Going forward, it will be 
important for the Bureau to aggressively manage its key 
information technology investments, and I will turn it over to 
Mr. Powner to expand on this. But before I do, let me thank you 
again for the opportunity to speak today, and as in the past, 
we look forward to supporting this Committee's efforts to 
promote a timely, complete, accurate, and cost-effective 
census.
    Senator Carper. Thank you, sir. Mr. Powner

DAVID A. POWNER,\1\ DIRECTOR, INFORMATION TECHNOLOGY MANAGEMENT 
         ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Powner. Chairman Carper, I would like to stress two key 
points about moving forward in managing the technology 
acquisitions associated with the redesign.
---------------------------------------------------------------------------
    \1\ The joint prepared statement of Mr. Powner and Mr. Scire 
appears in the Appendix on page 117.
---------------------------------------------------------------------------
    First, a clear, integrated schedule with critical 
milestones of key deliverables and tests needs to be clearly 
articulated so that oversight can be performed by both the 
Department and the Congress. This should include key technology 
deployment and acceptance dates, as well as testing time frame.
    Second, a major concern is whether the Bureau has the 
capability to improve its program management and executive-
level governance of the technology. Although we just heard from 
Dr. Murdock about this new management approach, history tells 
us that sound program management and executive-level principles 
is not something that can be just switched on overnight. 
Because of this, it will be important that the Bureau seek 
advice from the Department of Commerce in performing governance 
over the remaining technology acquisitions, utilizing the 
expertise of MITRE. We heard about this embedding with the 
contractor, and it probably would make sense to embed MITRE a 
bit, too. Sometimes a healthy tension there works.
    In addition, they ought to still consider hiring an 
executive with a proven track record of rescuing these 
projects. One of the things we are doing within the Census 
Bureau is shuffling some chairs right now. Hopefully, the new 
management attention and focus, coupled with the governance, 
will fix things going forward. But that is also something that 
should be on the table.
    Thank you, and I look forward to your questions.
    Senator Carper. Thank you, sir. What was that last point 
there about hiring an executive with a proven track record in 
rescuing these kinds of situations?
    Mr. Powner. Well, if you look historically at some of these 
IT projects, large acquisitions that have not gone as expected, 
we do have certain projects that we can point to where we 
brought in expertise from other departments or other parts of 
the Department where folks have a history of rescuing some 
projects. One of them that I would point to within the 
Department of Commerce, there was a large environmental 
satellite acquisition where they sought the expertise of some 
Department of Defense (DOD) officials to come in and help them 
get their program management and governance processes on track. 
So that is one model to look at.
    Senator Carper. Dr. Murdock, would you just respond to that 
point, please?
    Mr. Murdock. Certainly, we are looking at a number of 
options in terms of improving and increasing management 
intensity. We are open to a number of suggestions. We have been 
looking at this particular area, recognizing the limitations we 
have. We have some very good people in the IT area, but we have 
very small numbers, particularly compared to what we had, for 
example, in 2000. So we are open to looking at a variety of 
options to strengthen that area because we recognize our 
limitations there, and we recognize that we simply have to do 
this right.
    Senator Carper. Dr. Murdock, would you just go back and not 
in its entirety, but truncate, if you will, the timeline that 
you were sharing with us in the latter part of your testimony? 
And then I am going to ask our two witnesses from GAO to 
comment on the reasonableness of that and any recommendations 
they have pertaining to it.
    Mr. Murdock. OK. What I had said is that within the next 30 
days we will produce a detailed operating plan for the FDCA re-
plan effort with setting up key milestones that will allow us 
and others to assess how well we are doing, whether we are on 
schedule, etc.
    In 45 days, we will develop an integrated project schedule 
for this particular part of our program for FDCA, and in 60 
days, we will produce a testing program for the automated 
Address Canvassing operations. That is the part that we had 
tested in terms of a dress rehearsal, the handheld computers 
where we found some difficulties, and we need to make sure now, 
with a thorough and end-to-end kind of testing program, that 
these are up and operating in the way that we need them in 
order to apply them in less than a year now.
    Senator Carper. Gentlemen, any comments as to what you like 
about it, don't like, or any questions you might have of the 
schedule that has been laid out by Dr. Murdock?
    Mr. Scire. A few points, I guess. The FDCA, the Field Data 
Collection Automation----
    Senator Carper. Thank you.
    Mr. Scire [continuing]. Operating plan, obviously that is 
something that would be needed immediately, and that coming to 
terms with what the final requirements are going to be with the 
contractor is something that is needed immediately. So this 
talk about 30 days or less would be desirable. I understand 
that there will be an integrated project schedule and plan. I 
am assuming that part of that would address issues with the re-
planning of the non-response follow-up operation.
    So I think I would like to see more specifics as to what 
might comprise these. We mentioned there are major implications 
to going to paper for this non-response follow-up operation, 
and there we would expect to see specifics in their plans and 
dates and benchmarks for when they will have a printing 
solution or a plan for a printing solution, when they will have 
in place plans that would describe how they are going to manage 
the workload for that particular operation, plans for the 
integration of that paper-based operation with other automated 
operations, for example, the one for collecting and integrating 
responses.
    So there are more specifics, I think, that we would like to 
see in terms of when the Bureau will have in place plans for 
these key implications that we lay out in our statement.
    Senator Carper. All right. Dr. Murdock, any response to 
that?
    Mr. Murdock. The items that we were talking about will 
provide some of that information, but we can certainly lay out 
in greater detail for you and for GAO our plans in much more 
specific terms. We would be glad to do that.
    Senator Carper. Mr. Powner, any reflections you have on 
what Dr. Murdock has laid out?
    Mr. Powner. Well, clearly we want these sooner than later, 
but I do believe the 30-, 45-, and 60-day time frames are 
reasonable, because we want a good plan going forward. I think 
what is more important is that we want to stick to those time 
frames and that they get done and then that we hold folks 
accountable from that point going forward. I mean, we talked 
about this comprehensive testing program. A high-level testing 
program should be part of that integrated schedule that is 
delivered in 45 days. But we need to have those dates set in 
stone, and then we need to march to make sure we are hitting 
those very timely.
    Senator Carper. Earlier in the testimony, Dr. Murdock, I 
don't know if it was you or if it was Secretary Gutierrez, one 
of you was talking about why this effort to automate more of 
the census operation in 2010 failed. And one of you said that 
part of the problem was the failure of communication between 
the Census Bureau and Harris, the provider of the technology.
    Actually, it occurred to me that in part there had been a 
failure to communicate maybe between GAO and the Bureau because 
they were raising questions and raising caution flags for many 
months before we ended up in this predicament, and also a 
failure to communicate with MITRE and the Bureau itself.
    How is that changing now under your watch, not just 
improving communications with Harris, making clear what you 
expect them to do, what your needs are, without changing or 
adding to that, but also what is going on here to improve 
communications with GAO? What is going on to improve 
communications with MITRE? Then I will ask our friends from GAO 
to comment on that as well.
    Mr. Murdock. Well, I am taking as one of my top priorities 
when I came in, before we discovered all of these issues that 
we are dealing with today, that we would improve our 
communication with GAO and other oversight groups. And I am 
trying in a very concerted manner to do this, having 
established a key person, one of our most effective people in 
terms of getting answers to people as a contact person for GAO. 
I have met with them to get their overview on a number of key 
issues. And what I can say is that, for whatever reason that we 
did not listen sufficiently well before, I am dedicated that we 
are going to listen and do our best to meet the kind of 
criticisms that we should have addressed before.
    Senator Carper. All right. Gentlemen, any comment?
    Mr. Scire. Yes, we did sit down and have the conversation 
about how we can improve the communication between the two 
agencies, and I think we have some ideas for how we can do 
that. I am looking forward to an improved relationship between 
the Census Bureau and the GAO, and I will wait and see how that 
plays out.
    Mr. Powner. I agree that communication has improved, but I 
think the characterization that this was due to poor 
communication is an understatement. It was poor communication, 
it was poor program management, and it was poor executive-level 
oversight. The communication has improved, and were not too 
worried about that going forward, but we are worried about 
solidifying the program management and executive-level 
oversight that needs to occur.
    Senator Carper. It would seem to me that just based on what 
I have seen over the last couple of months with the arrival of 
Dr. Murdock in his position and with the attention that 
Secretary Gutierrez is paying to this dilemma, the executive 
oversight, at least executive attention to this problem, has 
certainly ratcheted up a couple of notches. Is that a fair 
statement?
    Mr. Powner. Yes, I think that is fair, but I think we need 
to continue that going forward.
    Senator Carper. OK.
    Mr. Murdock. I think one of the things we recognize is that 
this is not a few-month process. This is going to be an 
intensified management day after day after day to keep us 
moving forward and moving forward on schedule because there is 
no time to lose. Of all the issues facing us, time is our 
biggest enemy, and we recognize that to lose any more time is 
to threaten the very census itself.
    Senator Carper. OK. Dr. Murdock, I will ask you this 
question, and then, gentlemen, if you would respond as well, I 
would appreciate it. But, Dr. Murdock, just take a minute or 
two, if you will, and talk with us about how your plans for 
2010 have got to change in light of the decision that has been 
made to revert to paper for collecting data from those who do 
not response when they get their census forms in the mail. And 
give us some idea what you think you need to do as far as 
hiring more people, training those people, renting additional 
space, and so forth. Just look ahead for us.
    Mr. Murdock. Certainly, as we look forward with a paper-
based NRFU, we are talking about an operation that has a number 
of challenges. One is simply the relatively large number of 
additional people that we will have to hire. Our estimates are, 
for example, in terms of enumerators, probably 95,000 or so 
more enumerators will be needed because of the processes that 
are involved and the fact that we anticipate that not being 
able to use automation in the NRFU process, we will suffer some 
in terms of our ability to catch late returns and second 
mailings.
    In addition, it is going to take more space, and I do not 
have those figures off the top of my head. It is going to 
require more management in terms of field management and in our 
regional centers as you put that many more people into the 
field. It is certainly going to require that we print more 
forms, somewhere in the range, because of the number of ways we 
use it, of over 40 million more forms. So that the big part of 
this does occur in terms of what is happening with the non-
response follow-up.
    But also, as part of the plan, we are taking back some of 
the work relative to the infrastructure for the regional census 
centers, and this, too, involves more technology. It involves 
re-merging what were two systems into one so that we have a 
single system. We were operating two systems that were not 
communicating very well at the regional center. We are going to 
have one integrated system for the regional centers, and that 
will require some additional work, certainly in terms of our 
information technology people. And as we look at this, one of 
our challenges that I think our GAO colleagues here pointed out 
is to get the types of people in IT that can ensure that we are 
able to pull that off, do it in a very thorough manner, and 
ensure that it operates smoothly with the rest of our systems.
    So there are a number of challenges relative to taking this 
back. We did not take it back lightly. What we recognized was 
that given the history we had at the point we had to make this 
decision, that if we had difficulties in the non-response 
follow-up dress rehearsal anywhere near the magnitude that we 
had in Address Canvassing, that there would be insufficient 
time by the time that process was over for us to take another 
alternative. So that we really tried to balance off the 
ultimate risk, that is, the risk of not getting a complete 
census on time or as accurate as we would like it, with 
reverting to processes that we know we can do, we have done 
repeatedly, and that, therefore, we can reduce the overall risk 
to the overall census.
    Senator Carper. OK. Mr. Scire and Mr. Powner, any 
reflection on what you just heard or in response to my 
question?
    Mr. Scire. Yes, if I could add to that, I think what you 
just heard is a fairly daunting task to put in place a paper-
based operation when one was planning up until a month ago to 
use automation. And there are a lot of plans that the Bureau 
needs to lay out specifically as to how it is going to get 
there. I think that is where you will get confidence that they 
will be able to execute this transition to a paper-based non-
response follow-up. And so the testing becomes even more 
important.
    I would point out that ordinarily this would be rehearsed, 
and during a rehearsal, you would see all the interconnections 
between all the various aspects of a non-response paper 
operation. And without doing that dress rehearsal, you do not 
get that opportunity to see all the linkages executed at once. 
And so it is going to be important for the Bureau to simulate 
some of those interfaces and linkages to get as close as you 
can to that sort of a real system test, a dress rehearsal-style 
test, and so we would expect that any sort of plan for testing 
of the non-response follow-up operation would include 
descriptions of those kinds of mini-tests, if you will.
    And the other part of this is there is integration between 
automation and paper. There will be an Operating Control 
System, which will control the workload for the paper-based 
operation, and there will also be a system for integrating 
responses that are coming through this operation. So those 
interfaces also would need to be tested and simulated in as 
close to a census-like condition as you can.
    Senator Carper. Mr. Powner, anything else?
    Mr. Powner. Nothing further, Mr. Chairman.
    Senator Carper. Maybe one more question for GAO. It is a 
great benefit. But it is clear to me that there is a 
significant amount of work that the Census Bureau needs to do 
before we can have some confidence that the plans for 2010 are 
sound.
    What do you need to see them do in the coming weeks and 
months to gain your confidence? And feel free to repeat some of 
what Dr. Murdock and Secretary Gutierrez have said, but add to 
that, if you will.
    Mr. Scire. Well, I think the immediate need is the 
establishment of the final requirements for the Field Data 
Collection Automation, and I think what we are looking for are 
plans, milestones, and benchmarks that lay out specifically 
when some of these things will be occurring, but at a 
sufficiently specific level that you can see that they are 
laying out the plans for how to operationalize a paper-based 
non-response follow-up, that they are setting dates for when 
they will finalize their decisions on a printing solution, 
finalize their decisions on how they will be managing the 
workload from the paper-based operation, what their plans are 
for the late mail returned, and with the absence of the 
handheld computer, this complicates the ability of the Bureau 
to pull late mail returns from the non-response follow-up 
workload. And I know that the Director is contemplating ways 
that can be done without the handhelds. But one would expect to 
see a description of how that will be accomplished.
    In the Address Canvassing operation, there still is a need 
here for some realistic testing of the automation, including 
testing of the automation under a workload that you might 
expect during the actual Address Canvassing operation, sort of 
the stress testing, if you will. Part of the Address Canvassing 
will not use the handheld computers, and there is some 
uncertainty there as to what the Bureau's plans are.
    So we would expect to see a date that would say by this 
date we will have in place a plan that describes what the plans 
are for operationalizing a non-handheld computer Address 
Canvassing operation. And part of that, you would also want to 
see some specification of how this handheld operation and one 
that could be a paper-based operation for Address Canvassing 
will be integrated.
    So those are some of the things that I would expect to see 
in a plan that describes where they are going from here.
    Senator Carper. Mr. Powner, do you want to add to that?
    Mr. Powner. Just two points. I would like to reinforce the 
importance of that integrated schedule so that we get that 
sooner than later and that it is comprehensive. And the other 
point is that the Census Bureau needs to be prepared to scrub 
the numbers that are coming in, and I will give you an example.
    We already heard that the FDCA contract is going to go up 
roughly $700 million, from $600 million to $1.3 billion. Those 
numbers are very rough. There is no preliminary design behind 
that. If you look at the set of requirements, the 400 
requirements, about 250 of those requirements are 
clarifications.
    Now, it has been described that they are all new 
requirements. They are not all new. Some of them are 
clarifications, so supposedly the contractor was working on 
some of those. We just need to really look closely. I 
understand the MITRE Corporation might be taking a look at 
this, but I think scrubbing those numbers that come in on what 
that final contract cost is is very important because there 
potentially could be some savings there.
    Senator Carper. All right. Thank you.
    Dr. Murdock, one last question for you. Talk to us about 
MITRE Corporation, about your interaction with them and their 
involvement.
    Mr. Murdock. Well, MITRE Corporation has been very 
instrumental to our recognizing some of the difficulties that 
we were experiencing. I regret that we did not listen to them 
as well as GAO earlier in the process. We have them employed 
now in a number of ways helping us, and one of the things in my 
new management plan is that I am establishing them to be 
involved with our various processes and report to me weekly on 
issues that they see that may be occurring that we need to 
address. I am using them as, if you will, an inside-outside 
monitoring group to help keep us on track and to inform upper-
level management if there are difficulties arising that we are 
not addressing in a timely manner.
    One of the things that we recognized in the process is that 
we had a difficulty coming to decisions in a timely manner. 
That is very problematic when you have a project like this 
where you have to meet deadlines so that everything else can be 
done. And, in fact, I would say relative to the issues that GAO 
has laid out today, I can tell you that we are desirous of 
having those deadlines and having them all planned out, and we 
are doing that now.
    But we recognize that you cannot know where you are in a 
process until you have those milestones laid out and you are 
holding yourself responsible for meeting those on an ongoing 
basis. So MITRE is in a continuous process with us and is 
helping us in some of our cost accounting processes, and in 
relationship to a comment that was made, we are still analyzing 
costs within many different parts of our process. And we are 
working with the contractor in terms of refining those costs, 
and that will be done over the next several weeks.
    Senator Carper. Mr. Powner, I do not know if it was you or 
Mr. Scire who mentioned embedding and tied that with MITRE. Do 
you recall which one of you said that?
    Mr. Powner. I suggested that, Mr. Chairman.
    Senator Carper. And tell us why you think that might be a 
good idea, and then, Dr. Murdock, would you just share your 
thoughts?
    Mr. Powner. Well, I think it is a good idea, whether it is 
MITRE or a similar organization. They offer some engineering 
expertise, program management expertise, that could help in 
various meetings and settings, having them right there rather 
than just getting minutes of meetings. And sometimes when you 
have a nonprofit, a federally funded research and development 
center (FFRDC) that is coming in more on an independent basis 
and providing some verification of what is going on, having 
them there real time could help and could save us some time.
    Senator Carper. Any thoughts on that?
    Mr. Murdock. Yes, we have thought of their involvement, and 
that could be very helpful to us in a number of ways. One is 
simply extending our resources in the area that we are very 
short of people, in IT. We have discussed this kind of 
arrangement with them. They are willing to provide some of that 
type of work, and we are working out details on that and other 
types of involvement.
    The one I just mentioned about in terms of the kind of 
monitoring process for upper-level management, we have already 
established that, but we are working at other ways that they 
can help us stay on track.
    Senator Carper. Thank you.
    And, finally, to Mr. Powner and Mr. Scire, for almost every 
Subcommittee that I chair or Committee that I chair, I ask for 
advice. What should we be doing in the Legislative Branch as we 
try to do a good job with respect to our oversight 
responsibilities? What advice would you have for us? We have 
asked you to give advice to Mr. Murdock and the folks that he 
leads at the Census Bureau. Any advice that you might have for 
my colleagues and me going forward?
    Mr. Scire. I think that continuing to provide the oversight 
that you are providing is very helpful and demanding that the 
Census Bureau produce these plans to establish a benchmark that 
will help with accountability and oversight in the future is 
very important.
    One thing that I am looking forward to seeing is the Census 
Bureau producing a final assessment of the Address Canvassing 
dress rehearsal so that might be available to you for your 
review and oversight. I know that it raises some issues about 
the Operating Control System, and so I think that is a subject 
that the Census Bureau needs to describe more as to what it 
found during its Address Canvassing dress rehearsal as well as 
its other dress rehearsal operations.
    Senator Carper. Mr. Powner, anything else?
    Mr. Powner. Just to highlight the importance of the 30-, 
45-, and 60-day deliverables. It is important that those are 
delivered on time, and then once they are delivered, your 
oversight that indeed all the aspects of what needs to occur--
key deployment drops, the technology being accepted, the 
operations being tested, the test plans being executed 
effectively, and results reported--all that from an oversight 
perspective will be very helpful.
    Senator Carper. Good. Thank you.
    Dr. Murdock, what else ought we to be doing or could we be 
doing that would be helpful to you and your team?
    Mr. Murdock. Certainly, I think two issues that were raised 
by the Secretary are very important; that is, the timing issue, 
that we get going with the process because the time is very 
short; and equally important is any assistance you can provide 
in helping us to stabilize funding over time so that we can 
move forward and have the resources necessary to get this job 
done. Recognizing all of the issues about the cost and what has 
happened to the cost, the reality is still that in order for us 
to move forward and for us to have a successful census, we need 
to have a dependable flow of funds so that we can continue our 
operations and those of the contractors we may have.
    Senator Carper. All right. Fair enough.
    Well, I would just say in response, our thanks to each of 
you for being here. We do appreciate your testimony, and thank 
you for responding to our questions.
    And Dr. Murdock, to you and the team that you lead, and 
have led now for less than 4 months, just keep working hard and 
work smart, and let us know what we need to do to be helpful.
    And to our friends at GAO, stay on them, stay on the job, 
but in a constructive way, and I know that you will. And with a 
little bit of luck, we will get through this, and at the end we 
will be able to provide the kind of census that the people of 
this country need and deserve.
    With that having been said, this hearing is adjourned. 
Thanks very much.
    [Whereupon, at 4:48 p.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

                OPENING STATEMENT OF CHAIRMAN LIEBERMAN

                             March 5, 2008

    The purpose of today's hearing is to examine problems that, if not 
corrected, will threaten the Census Bureau's readiness for the 2010 
survey.
    I want to thank Senator Carper and Sen. Coburn, the Chairman and 
Ranking Member of HSGAC's Subcommittee on Federal Financial Management, 
who have been closely monitoring this issue, for their steadfastness in 
pursuing the Committee's oversight agenda. And I thank Commerce 
Secretary Guitierrez and Census Director Murdock for taking time from 
their very busy schedules to be here.
    The Bureau's decennial population counts are not only the Census 
Bureau's most important function, they are constitutionally required. 
The nation has been relying on them ever since 1790 when U.S. Marshals 
rode around on horseback to count our young nation's population of 3.9 
million that year.
    Every 10 years since, we have conducted the survey in order to 
divide states up into Congressional districts, to distribute billions 
of dollars in Federal aid, and to make basic decisions at every level 
of government.
    For most of the survey's history, counters have used old fashioned 
methods to tabulate their numbers. As recently as 2000, Bureau 
employees were using paper and pencil. But a decision was made shortly 
after the completion of the 2000 census to move to an electronic system 
to ensure greater accuracy and to streamline the process.
    Now, two years before the 2010 Census, we learn that the 
development of handheld computers is in serious trouble and that they 
may not be functional by the time they are needed. The Census Bureau 
has recently indicated that development of the handheld computers had 
experienced several delays and cost overruns and that the handhelds may 
not meet the Bureau's operational needs and quality controls. With just 
two years to go, this is extremely distressing news.
    So, how did it come to this? In March 2006, the Census Bureau 
awarded Harris Corporation a $600 million contract to develop and 
manufacture the handheld computers in time for the 2010 census. As late 
as December last year, Census Bureau officials reassured Congress that 
development of the electronic counters was on schedule and contingency 
plans were unnecessary.
    But the Government Accountability Office warned Census officials in 
an October 5, 2007, report of the consequences of falling behind 
schedule and questioned the Bureau's ability to manage the project's 
risks. Then, last November, the Mitre Corporation, which Census hired 
to advise it on IT programs, told the Bureau that requirements for the 
handhelds may not be achieved in time for 2010--even if the Bureau 
received an influx of funding. Mitre recommended the Bureau immediately 
develop plans to use paper forms for the 2010 census. A January 2, 
2008, story in the trade publication Government Executive reported that 
Census officials ``have no plans to revert to paper.''`
    The Bureau will very quickly need to decide if problems with the 
handheld computers can be fixed before a 2010 census dress rehearsal 
that starts on May 1, 2008. If the problems can be fixed, Census 
estimates it will need an additional $1 billion in the FY09 Budget to 
do so. If the problems cannot be fixed, the Bureau will need even more 
money to prepare for a paper system both for the 2008 dress rehearsal 
and the 2010 census.
    The situation is clearly troubling, and I am concerned that it 
could have deteriorated to this degree and without proper warning from 
the Bureau. I have noted with concern the failure of other government 
agencies to properly oversee high-priced technology contracts. Too much 
of the taxpayer's hard earned dollars ride on these contracts not to 
manage them closely. Furthermore, 10 years into the 21st century, it is 
inexcusable that the Census Bureau must still rely on paper and pencils 
to perform its most important function.
    I understand that the Bureau is working hard to correct these 
specific problems. A great deal is at stake, and the nation must be 
able to rely on the accuracy of the decennial. Thank you.
                               __________
                 PREPARED STATEMENT OF SENATOR COLLINS

                             March 5, 2008

    Since 1790, any American with faith in the Constitution could 
predict that a Census would occur in 2010. This constitutionally 
mandated function of the Federal Government is nearly as ironclad a 
certainty as death and taxes.
    As we approach the final stages of preparations for the 2010 
census, however, we face a large and alarming uncertainty about whether 
our nation will be able to rely on the results on the 2010 census--
whether for apportionment of representation in the U.S. House of 
Representatives, as required by the Constitution, or for the myriad 
other Federal programs that rely on accurate Census data in their 
operations.
    Given the importance of the Census, we must also examine the 
information-technology failures that have placed the 2010 census on 
such an uneasy foundation. Developing and deploying a customized 
technology against a fixed deadline demand extra diligence and energy 
in defining requirements, negotiating contracts, overseeing progress, 
and devising contingency plans. Here there is little to applaud and 
much to be concerned about the efforts of the Census Bureau.
    This Committee is unfortunately no stranger to tales of Federal 
projects and contracts that have gone awry, often at a heavy cost in 
taxpayer funds. Quite often, these failed projects have involved 
efforts to improve the government's use of information technology. Far 
too often, the results of these projects seem to follow a similar 
pattern--inadequately defined initial requirements, an increase in 
requirements to address both old and new operational challenges, 
substantial cost increases that squeeze program budgets, inability or 
unwillingness of management to control ``requirements creep'' or cost 
overruns, and, finally, a decision to end an acquisition process with 
no deliverables or to accept a system that doesn't meet expectations.
    The 2010 census is notable among projects that have drawn our 
attention, not only because of its great scope and expense, but because 
of its history of unheeded cautions.
    I won't belabor the points made in our Committee's recent hearings, 
news stories, and Government Accountability Office reports. The salient 
fact is that years before the 2010 census, warnings of potential 
dangers came from experts sought out by the Census Bureau itself and 
from the Commerce Department's own Inspector General.
    In 2004, the National Research Council's Panel on Future Census 
Methods cautioned that ``unique risks and challenges'' attended the 
plan to develop a new data-collection and transmission technology on 
the tight schedule for the next Census. Then in 2005, the Commerce 
Inspector General echoed the panel's concerns and noted a ``late 
start'' on imposing effective project-management methods.
    It now appears that some combination of wishful thinking, lax 
management, and tunnel vision have brought us to a point at which the 
new Field Data Collection Acquisition or FDCA technology for hand-held 
devices may not be ready for full service in April 2010.
    The implications appear in the Census Bureau's budget request for 
Fiscal Year 2009. The Bureau has already requested more than a billion 
dollars above the FY 2008 funding level, but has told Committee staff 
that because revisions to the FDCA contract with Harris Corporation are 
incomplete, they could not estimate the future costs of the 2010 
census. And some estimates claim an additional billion dollars or more 
might be required to effectively complete this constitutional 
requirement.
    In other words, it appears that we cannot exclude the possibility 
of going into the 2010 census with a hastily devised and obscenely 
expensive reversion to paper-based data collection to handle data from 
people who do not return the mailed forms or who otherwise require a 
follow-up visit.
    If the recent briefing summary prepared by MITRE Corporation--a 
Census Bureau consultant--is correct in saying that ``immediate, 
significant changes are required to rescue the program'' and that 
``money cannot trump time remaining,'' then the Census Bureau and the 
country face a very serious problem.
    I look to all the witnesses today to describe with complete candor 
on what the outlook for the 2010 census really is, what steps you have 
taken or plan to take to improve that outlook, and what, in your 
judgment, should have been done differently.
    I commend Senator Carper and Senator Coburn for the leadership they 
have shown in aggressively monitoring the challenges facing the 2010 
census and the close attention they have paid to ``at risk'' 
information technology procurements government-wide. Those Senators 
presided over a 2006 hearing that sounded a clear alarm bell for 
Federal information-technology projects in general, citing a GAO 
finding that up to $12 billion of the $64 billion requested for more 
than 850 IT projects in FY 2007 might be wasted--including the Census 
Bureau's FDCA project. The current problems with the 2010 census 
illustrate the pertinence of that warning.
    I sincerely hope that today's hearing will produce some solid 
answers to the concerns that Chairman Lieberman, Senators Carper and 
Coburn, and I raised in our February 22 letter to the Secretary of 
Commerce. Time is too short for us to accept anything less.
                               __________
                 PREPARED STATEMENT OF SENATOR COLLINS

                             April 15, 2008

    The announcement by the Department of Commerce that plans for the 
2010 census are undergoing drastic revision at this late stage and that 
its costs are expected to increase by as much as $3 billion is 
alarming. It is also at odds with previous assessments provided to this 
Committee.
    The fact that our best option is returning to a paper-based Census 
after working for years and obligating more than $200 million on a 
largely failed hand-held computer option indicates, at best, woefully 
inadequate procurement practices, and, at worst, gross mismanagement.
    The Census is too important--not only for its Constitutionally 
mandated use in apportioning the House of Representatives, but also for 
the role its data plays in a myriad of program and policy operations--
for lax management practices to imperil its success.
    For now, the top priority for Congress must be a careful 
examination of the resources the Census Bureau needs--including 
adequate staff and robust project-management protocols--to execute an 
accurate enumeration two years from now.
    But I also believe that Congress must carefully reexamine this and 
other troubled Federal technology projects to identify the flaws, to 
ensure accountability, and to make better use of taxpayers' money.
    As the GAO has stated, ``Again and again, projects have run into 
serious trouble, despite hard work by dedicated staff. They are 
developed late, fail to work as planned, and cost millions--even 
hundreds of millions--more than expected. The results, in missed 
benefits and misspent money, can be found throughout government.''
    That observation was delivered more than 15 years ago. It appeared 
in a December 1992 GAO report to Congress on information-management and 
technology issues. The GAO's judgment reminds us that these technology 
problems are neither isolated nor novel, but that does not in any way 
excuse the failures in the Census project.
    Unfortunately, the record indicates that the Census Bureau has not 
fully implemented GAO recommendations in vital areas like acquisition 
management, operational planning, cost estimation, and performance 
measurement.
    One troubling indicator of inadequate development practices 
appeared in Secretary Gutierrez's testimony last week. Nearly two years 
after the initial contract award and a mere four months away from a 
full-blown test of the handhelds, and despite repeated third-party 
observations about the problems of ``requirements creep,'' the 
Secretary noted that ``more than 400 new or clarified technical 
requirements'' were delivered to contractor Harris Corporation on 
January 16, 2008. That was a remarkable load to pile on the back of a 
project already teetering at the precipice.
    Perhaps the most accurate comment on the recent disturbing news on 
the 2010 census may be a short sentence by Dr. George T. Ligler, a 
technology consultant who has participated in the 2010 Decennial Census 
Expert Panel. In a March 18 letter to Secretary Gutierrez, Dr. Ligler 
said, ``It didn't need to be this way.''
    Prominent among any list of lessons learned is the imperative to 
establish concrete requirements early in the development process, to 
take note of caution flags such as cost overruns and major requirement 
modifications, and to adopt effective risk-management strategies.
    I appreciate the difficulty of the task that Dr. Murdock assumed 
when he took the helm at the Census Bureau, and look forward to hearing 
his plans to put the Census back on track and keep it there.


                                 
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