2010 Census: Costs and Risks Must be Closely Monitored and	 
Evaluated with Mitigation Plans in Place (06-JUN-06,		 
GAO-06-822T).							 
                                                                 
The decennial census is a constitutionally mandated activity,	 
with immutable deadlines. It produces data used to allocate about
$200 billion yearly in federal financial assistance, reapportion 
the seats of the House of Representatives, and provide a profile 
of the nation's people to help guide policy decisions. The U.S.  
Census Bureau (Bureau) estimates the 2010 Census will cost $11.3 
billion, making it the most expensive census in the nation's	 
history, even after adjusting for inflation. Based primarily on  
GAO's issued reports, this testimony addresses the extent to	 
which the Bureau has (1) developed detailed and timely cost data 
for effective oversight and cost control, (2) reduced nonresponse
mail follow up costs, and (3) produced risk mitigation plans to  
address identified challenges.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-822T					        
    ACCNO:   A55159						        
  TITLE:     2010 Census: Costs and Risks Must be Closely Monitored   
and Evaluated with Mitigation Plans in Place			 
     DATE:   06/06/2006 
  SUBJECT:   Census						 
	     Cost analysis					 
	     Cost control					 
	     Data collection					 
	     Internal controls					 
	     Life cycle costs					 
	     Mechanization					 
	     Risk management					 
	     E-government					 
	     Cost estimates					 
	     2000 Decennial Census				 
	     2010 Decennial Census				 
	     Census Bureau Master Address File			 
	     Census Bureau Topologically Integrated		 
	     Geographic Encoding and Referencing		 
	     System						 
                                                                 

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GAO-06-822T

     

     * The Bureau's $11.3 Billion Cost Estimate for 2010 Census Lac
          * Cost for Each Decennial Census Continues to Significantly In
          * 2010 Cost Estimate Lacks Timely and Complete Information
     * Bureau Has Taken Steps to Reduce Nonresponse Follow-up Costs
     * Bureau Lacks Risk Mitigation Plans for Certain Challenges
          * Increased Reliance on Contractor Support for the 2010 Census
          * Address and Mapping Challenges Pose a Risk to a Cost-Effecti
          * Bureau Does Not Have a Plan to Assess Resources Needed to Up
     * Contacts and Acknowledgements
     * Appendix I: Related Products by GAO
          * GAO Products
               * Order by Mail or Phone

Testimony

Before the Subcommittee on Federal Financial Management, Government
Information, and International Security, Committee on Homeland Security
and Governmental Affairs, U.S. Senate

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:30 p.m. EST

Tuesday, June 6, 2006

2010 CENSUS

Costs and Risks Must be Closely Monitored and Evaluated with Mitigation
Plans in Place

Statement of Brenda S. Farrell Acting Director, Strategic Issues

GAO-06-822T

Mr. Chairman, Mr. Carper, and Members of the Subcommittee:

Thank you for the opportunity to be here today to discuss the life-cycle
costs of the 2010 Census as well as the actions that the U.S. Census
Bureau (Bureau) is taking to contain those costs. The Bureau estimates the
2010 Census will cost $11.3 billion, which would make it the most
expensive census in our country's history, even after adjusting for
inflation. Since the 2000 Census, we have monitored how the Bureau has
incorporated lessons learned from the 2000 Census into its planning for
the next decennial census, as well as its cost and design. My overall
point today is that the decennial's cost and risks must be closely
monitored and evaluated, with mitigation plans in place to help ensure
that accurate results are delivered on time and within projected costs.
Based primarily on our issued reports, this testimony addresses the extent
to which the Bureau has (1) developed detailed and timely cost data for
effective oversight and cost control, (2) reduced nonresponse mail
follow-up costs, and (3) produced risk mitigation plans to address
identified challenges, such as assessing the resources that may be needed
to update address files and maps in areas affected by hurricanes Katrina
and Rita. I will also present the preliminary results of ongoing work-on
which we plan to issue a report later this month-on the Bureau's efforts
to build a complete and accurate address list, the foundation of a
successful census.

As you know, Mr. Chairman, the decennial census is a crucial,
constitutionally mandated activity undertaken by the Bureau. The stakes
for a successful census are very high. The data that the census produces
are used to reapportion the seats of the U.S. House of Representatives;
realign the boundaries of the legislative districts of each state;
allocate about $200 billion dollars each year in federal financial
assistance; and provide a social, demographic, and economic profile of the
nation's people to guide policy decisions at each level of government.
Further, businesses use census data to target new services and products
and to tailor existing ones to demographic changes.

Mr. Chairman, I would like to commend the subcommittee for calling today's
hearing, as past experience has shown that strong and continuing
congressional involvement-especially while there is still time to make
cost-effective decisions and influence the direction of the decennial
census-is essential to the decennial's ultimate success. Today's hearing
is particularly timely because the Bureau is currently holding the 2006
Census Test in the central portion of Travis County, Texas, and at the
Cheyenne River American Indian Reservation and Tribal Trust Lands in South
Dakota, where the Bureau is evaluating key operations and equipment it
plans to employ for the full enumeration in 2010. After this test, the
Bureau will have only one more opportunity to assess its
census-taking-procedures-a "Dress Rehearsal" scheduled for 2008. Moreover,
after the Dress Rehearsal, the Bureau will begin to transition from
preparatory to operational activities, leaving little room for delays or
design changes, which at that point could significantly increase the cost
of 2010 Census.

Importantly, for decades we have been reviewing the national enumeration
on behalf of Congress. Over the years, through a series of reports and
testimonies, we have acquired broad institutional knowledge that gives us
a historical view of the census. I want to highlight several broad themes
that have emerged from our work.

First, completing the decennial census is a monumental undertaking, and
the Bureau recognizes that streamlined and efficient operations are
critical for the census' cost-effectiveness. The Census' sheer size and
complexity make it a risky and fragile enterprise. The 2000 Census, for
example, involved the hiring of more than 500,000 enumerators on a
temporary basis, opening 511 local census offices nationwide and 24,000
questionnaire assistance centers, processing 1.5 billion sheets of paper,
and in 10 weeks following up with 42 million nonrespondent households. The
size of the census means that small problems can magnify quickly, and big
problems could be overwhelming. For example, 60 seconds might seem like an
inconsequential amount of time, but in 2000, if enumerators had spent just
1 minute more at each household during nonresponse follow-up, it could
have added almost $10 million to the cost of the census, assuming a pay
rate of around $13 per hour (wages ranged from $8.25 to $18.50 per hour
for enumerators in 2000, depending on location).

Second, sound risk management is important to a successful census because
many risks are interrelated, and a shortcoming in one operation could
cause other operations to spiral downward. For example, a low mail
response rate would drive up the follow-up workload, which in turn would
increase staffing needs and costs. (Of course, the reverse is also true,
where a success in one operation could have a number of positive
downstream impacts.) Rigorous up-front planning and testing, and where
needed, risk mitigation plans are the best ways to stave off these
problems. In the 2000 Census, the Bureau successfully planned and
mitigated risk in recruiting and hiring workers by using management
information systems capable of tracking key operations with real-time
measures. To recruit the vast army of people needed to fill the ranks of
its workforce for the 2000 Census, the Bureau set a recruitment goal of
2.4 million qualified applicants. Because the Bureau tracked the progress
local census offices were making in meeting their individual goals, it was
able to mitigate risk by quickly raising pay rates and taking other
actions at those offices where recruitment was lagging. In the end, the
Bureau exceeded its recruitment goal by 100,000 people.

Third, the census is conducted against a backdrop of immutable deadlines,
and the census' elaborate chain of interrelated pre- and post-Census Day
activities are predicated upon those dates. The Secretary of Commerce is
legally required to (1) conduct the census on April 1 of the decennial
year, (2) report the state population counts to the President for purposes
of congressional apportionment by December 31 of the decennial year, and
(3) send population tabulations to the states for purposes of
redistricting no later than 1 year after the April 1 census date. To meet
these legally mandated reporting requirements, census activities need to
take place at specific times and in the proper sequence. Bureau officials
have recently stated, and we agree, that the design and plans being
implemented are too far down the road and time is too short to allow for
significant adjustments. In fact, as Census Day approaches, the tolerance
for any operational delays becomes increasingly small. Indeed,
considerable risk and cost increases could accompany design changes that
occur late in the decade. This requires the Bureau to have risk-based
mitigation plans in place now to ensure that 2010 Census operations are
ready and that few, if any, changes to the fundamental design happen after
the 2008 Dress Rehearsal.

Based on the Bureau's desire to address the issues associated with the
2000 enumeration, in designing the 2010 Census the Bureau had four goals
in mind: (1) increase the relevance and timeliness of data, (2) reduce
operational risk, (3) increase coverage and accuracy, and (4) contain
costs. To achieve these goals, three components-all new operations-are
important to the Bureau's plans for 2010:

           o  enhancing procedures for its address list (the MAF-Master
           Address File) and the associated geographic information system
           (the TIGER(R)-Topologically Integrated Geographic Encoding and
           Referencing database1),
           o  replacing the census long-form questionnaire with the American
           Community Survey (ACS)2, and
           o  conducting a short-form only decennial census that is supported
           by early research and testing.

1 The TIGER database is a mapping system that identifies all visible
geographic features, such as type and location of streets, housing units,
rivers, and railroads. To link TIGER to the master address file (MAF), the
Bureau assigns every housing unit in the MAF to a specific location in the
TIGER, a process called "geocoding." TIGER is a registered trademark of
the U.S. Census Bureau.

My remarks today are based primarily on reports that GAO issued from 2002
through May 2006 on the planning and development of the 2010 Census. These
reports are listed in appendix I. We analyzed Bureau documents and data
and interviewed key Bureau officials regarding the 2004 and 2006 Census
Tests. In that regard, we visited the Texas and South Dakota test sites;
Queens, New York; and several counties in rural south-central Georgia,
where an earlier field test was held in 2004. During these visits we
observed the address canvassing operation-where workers go door to door
verifying addresses and updating maps as part of the Bureau's effort to
build a complete and accurate address list, and we observed the
nonresponse follow-up operation-where enumerators collect information from
those households that do not return their initial questionnaire. We
conducted our work in accordance with generally accepted government
auditing standards.

The Bureau's $11.3 Billion Cost Estimate for 2010 Census Lacks Timely and
                                 Complete Data

The Bureau's $11.3 billion life-cycle cost estimate for the 2010 Census
lacks timely and complete supporting data. The supporting data of the
estimate is not timely because it does not contain the most current
information from testing and evaluation. Also, the supporting data of the
estimate is not complete because it does not provide sufficient
information on the how changing assumptions could affect cost.

Cost for Each Decennial Census Continues to Significantly Increase

In January 2004, we reported that the Bureau's cost projections for the
2010 decennial census continue an escalating trend.3 As noted above, the
Bureau now estimates the 2010 Census will cost $11.3 billion, making it
the most expensive in history, even after adjusting for inflation.
Although some cost growth can be expected, in part because the number of
housing units-and hence the Bureau's workload-has become larger, the cost
growth has far exceeded the increase in the number of housing units. The
Bureau estimates that the number of housing units for the 2010 Census will
increase by 10 percent over 2000 Census levels. At the same time, as shown
in figure 1, the average cost per housing unit for 2010 is expected to
increase by approximately 29 percent from 2000 levels (from $56 per
housing unit to $72 per housing unit in 2000 inflation-adjusted dollars).4

2 ACS is intended to be a monthly survey of 250,000 households that, under
the Bureau's plans, will replace the long-form census questionnaire.

3 GAO, 2010 Census: Cost and Design Issues Need to Be Addressed Soon,
GAO-04-37 (Washington, D.C.: Jan. 15, 2004).

Figure 1: Decennial Census Average Cost per Housing Unit (Fiscal Year 2000
Inflation-Adjusted Dollars)

The risk exists that the actual, final cost of the census could be
considerably higher. Indeed, the Bureau's initial cost projections for
previous censuses proved to be too low because of such factors as
unforeseen operational problems or changes to the fundamental design. For
example, the Bureau estimated that the 2000 Census would cost around $4
billion if sampling was used, and a traditional census without sampling
would cost around $5 billion. However, the final price tag for the 2000
Census (without sampling) was over $6.5 billion, a 30 percent increase in
cost. Today's climate of large federal deficits and other fiscal
challenges requires holding the decennial's costs as low as possible,
while promoting an accurate, timely census.

4 These figures include the 10-year costs for ACS replacement for the
census long form and the costs of MAF/TIGER.

2010 Cost Estimate Lacks Timely and Complete Information

Despite a history of cost increases, the Bureau's most recent cost
estimate is not based on timely and complete information. Table 1 shows
the Bureau's latest revised estimate that was released in September 2005.
Based on this table, the bulk of the funds will be spent between fiscal
years 2007 through 2013.

Table 1: Bureau's Revised September 2005 Estimate of Life-cycle Costs for
the 2010 Decennial Census Program (in millions of dollars, nominal)

                                                               FY 2007-           
                                              FY 2006                             
                                                      Subtotal  FY 2013     Total 
Program         FY    FY     FY     FY     FY  budget                   
component     2001  2002   2003   2004   2005 request  FY01-06   (est.)    (est.)
American     $23.6 $29.0  $56.8  $64.1 $144.1  $169.9   $487.5 $1,219.8  $1,707.3 
Community                                                               
Survey                                                                  
MAF/TIGER       $0 $15.0  $47.0  $82.4  $81.2   $79.8   $305.4   $228.9    $534.3 
Enhancements                                                            
Program                                                                 
Short Form      $0 $21.0  $41.6 $106.0 $163.0  $214.5   $546.1 $8,466.8  $9,012.9 
2010 Census                                                             
Total        $23.6 $65.0 $145.4 $252.5 $388.3  $464.3  1,339.0 $9,915.5 $11,254.6 

Source: U.S. Census Bureau.

Note: These figures have not been audited by GAO.

As we stated in our January 2004 report5, in June 2001, the Bureau derived
its 2010 cost estimate by using the actual cost of the 2000 Census
combined with assumptions about cost drivers, such as (1) staffing needs,
(2) enumerator productivity, (3) pay rates for census workers, (4) the
nonresponse rate for mailing back the questionnaires6, and (5) inflation.
However, the most recent life-cycle cost estimate7 does not incorporate
current information about those 2001 assumptions. One key assumption, that
has not been updated pertains to the use of a new technology-specifically,
new hand-held, GPS-enabled mobile computing devices (MCDs)-that would be
important to the success of the 2010 census by automating and streamlining
address canvassing, nonresponse follow-up, coverage measurement, and
payroll operations. The Bureau anticipated that the use of MCDs would
facilitate reductions in administrative and support costs in the Bureau's
field offices, including a 50 percent reduction in clerical and
administrative local census office staff costs and a 50 percent reduction
in space at each local census office. However, the Bureau's existing
assumptions about the use and reliability of the MCD were not updated to
reflect information from the 2004 test, which showed that assumptions
about staffing and space associated with the new technology had changed
since the June 2001 estimate. The Bureau's evaluations about those test
results indicate that more help desk staff at the local census office were
needed to support the use of the MCD, and additional storage space was
needed for the devices. However, the Bureau did not use this information
when revising its cost estimate in 2005 because, according to Bureau
officials, they conduct field tests for operational purposes only-not to
inform the cost estimates. In our view, revising cost estimates on the
most recent information-including test results that are pertinent to cost
assumptions-can assist the Bureau and external decision makers to oversee
costs and make necessary resource allocations to help ensure a successful,
cost-effective, census.

5 GAO-04-37 .

6Lower mail-back response rates increase costs by necessitating costly
follow-up visits by enumerators to nonresponding households and/or the
mailing of a follow-up questionnaire.

7U.S. Census Bureau, Census Bureau Estimated Life Cycle Costs for
Reengineering the 2010 Decennial Census Program (Washington, D.C.: Sept.
2005).

The Bureau's cost estimate lacked complete information, such as a
sensitivity analysis regarding assumptions that could affect cost drivers.
OMB Circular A-94 provides guidelines for cost-benefit analysis of federal
programs and recommends that agencies develop a sensitivity analysis for
major projects with significant uncertainty, like the decennial census.
The circular provides a method for determining how sensitive outcomes are
to changes in assumptions. In January 2004, we reported that the Bureau
could provide more robust information on the likelihood that the values
the Bureau assigned to key cost drivers could differ from those initially
assumed and be timelier-previously the life-cycle cost estimate had been
provided at 2-year intervals.8 The Bureau's latest life-cycle cost
document does not contain a sensitivity analysis on assumptions that
impact cost; it did, however, indicate that the life-cycle cost would be
updated annually.

Having transparent information about cost estimates is especially
important because decennial costs are sensitive to many key assumptions.
In fact, for the 2000 Census, the Bureau's supplemental funding request
for $1.7 billion in fiscal year 2000 primarily involved changes in
assumptions related to increased workload, reduced employee productivity,
and increased advertising. Given the cost of the census in an era of
serious national fiscal challenges, it would be beneficial for the Bureau
and Congress to have sensitivity information about the likelihood-high,
medium, or low-that certain assumptions would drive costs. By providing
this information, the Bureau would better enable Congress to consider
funding levels in this uncertain environment.

8 GAO-04-37 .

Our January 2004 report also highlighted the challenge that the Bureau
would have in containing the cost of the 2010 Census. To increase the
transparency of the census' life-cycle costs for Congress, we recommended
that Office of Management and Budget (OMB) establish triggers that would
signal when the annual 2010 Census costs and/or life-cycle 2010 Census
costs exceeded some predetermined amount. We also recommended, among other
things, that OMB ensure the Bureau analyzes the sensitivity of the cost
figures to specific assumptions. However, OMB disagreed with our
recommendation, because it said it already has internal procedures within
its budget reviews to monitor 2010 Census costs. OMB shared our view that
the costs and risks associated with the 2010 Census must be carefully
monitored and evaluated throughout the decade. OMB also agreed that it is
essential to understand the key cost drivers and said that it is working
with the Bureau to ensure that the Bureau develops high-quality,
transparent life-cycle cost estimates.

In addition, we recommended in our 2004 report that the Bureau develop a
comprehensive project plan that would be updated as needed to (1) include
milestones for completing key activities; (2) itemize the estimated cost
of each component; (3) articulate a clear system of coordination among
project components; and (4) translate key goals into measurable,
operational terms to provide meaningful guidance for planning and
measuring progress. Some, but not all, of this information is available in
various documents, and to be useful, it would need to be pieced together.
As a result, we recommended that the Bureau combine this information into
a single, comprehensive document. The Bureau disagreed with our
recommendation, although it said it would develop such a plan nonetheless
and provide it to GAO, Congress, and other stakeholders. The Bureau has
not yet issued such a document.

  Bureau Has Taken Steps to Reduce Nonresponse Follow-up Costs, But Challenges
                             with Technology Remain

Since 2000, the Bureau has reengineered the decennial census and has begun
to implement new initiatives. These include (1) using a short-form-only
census questionnaire; (2) automating field operations; and (3) using a
targeted second mailing to households that fail to respond to the initial
census questionnaire, instead of sending an enumerator to visit houses
that have not responded. These initiatives could reduce the workload and
cost of nonresponse follow-up. While these initiatives show promise, the
Bureau will need to address technological challenges with the MCD that
will be used to collect data for nonresponse follow-up.

The Bureau is finding it increasingly difficult to locate people and get
them counted in the census. As in previous censuses, the major cost for
the 2010 Census is what the Bureau calls "field data collection and
support systems," accounting for over half of the life-cycle costs of the
decennial census.

First, the Bureau plans to contain the cost of nonresponse follow-up by
increasing mail response through a short-form-only census. The overall
mail response rate has been declining steadily since 1970. In the 1980
Census, the mail response rate was 75 percent, 3 percentage points lower
than it was in the 1970 Census. In the 1990 census, the mail response rate
dropped to 65 percent and, in 2000, appeared to be leveling off at about
64 percent. Contributing to this decline is the public's unwillingness to
complete the long form. Specifically, the response rates in 1990 and 2000
to the short form have been higher than the response rate to the long
form. Bureau data suggest a 1 percent increase in the mail response rate
would result from conducting a short-form-only census.

Secondly, by using the MCD, the Bureau plans to automate field data
collection to contain the cost of nonresponse follow-up. The MCD allows
the Bureau to automate operations and eliminate the need to print millions
of paper questionnaires and maps used by census workers to conduct address
canvassing and nonresponse follow-up, as well as managing field staff's
payroll. As stated above, the benefits of using the MCD have been tested
in the 2004 and 2006 tests. For example, during the 2004 Census Test, the
MCD allowed the Bureau to successfully remove over 7,000 late mail returns
from enumerators' assignments, reducing the total nonresponse follow-up
workload by nearly 6 percent. The ability to remove late mail returns from
the Bureau's nonresponse follow-up workload reduces costs, because census
workers no longer need to make expensive follow-up visits to households
that return their questionnaire late, after the mail-back deadline. If the
Bureau had possessed this capability during the 2000 Census, it could have
eliminated the need to visit nearly 773,000 late-responding households and
saved an estimated $22 million (based on our estimate that a 1 percentage
point increase in workload could add at least $34 million in direct
salary, benefits, and travel costs to the price tag of nonresponse
follow-up9). Moreover, operations that traditionally had to be done in
sequence, such as nonresponse follow-up and then verifying the housing
unit status for addresses marked vacant, can now be performed
simultaneously by using the MCD, which may shorten the time needed for
local census offices to stay open.

However, the Bureau's ability to collect and transmit data using the MCD
is not known and, at this point, constitutes a risk to the cost-effective
implementation of the 2010 Census. During the 2004 test of nonresponse
follow-up and the 2006 test of address canvassing, the MCDs experienced
significant reliability problems.

During the 2004 Census Test, the MCDs experienced transmission problems,
memory overloads, and difficulties with a mapping feature-all of which
added inefficiencies to the nonresponse follow-up operation.10 During the
2006 Census Test, for address canvassing, the device was slow to pull up
and exit address registers, accept the data entered by the census workers,
and link map locations to addresses for multiunit structures. Furthermore,
the MCDs would sometimes lockup, requiring workers to reboot them.

Census workers also found it difficult to transmit an address and map
location that were identified for deletion. Because the Bureau could not
fix this problem, workers returned to the local census office so
technicians could address the problem. The MCD's global positioning system
(GPS) receiver, a satellite-based navigational system to help workers
locate street addresses and collect coordinates for each structure in
their assignment area, was also unreliable. Some workers had trouble
receiving signals, and when a signal was available, the receiver was slow
to find assignment areas and correct map locations, according to Bureau
officials. The Bureau extended the operation 10 days and still was unable
to complete the job, leaving census blocks in Austin, Texas and on the
Cheyenne River Reservation, South Dakota, unverified.

9 GAO, 2000 Census: Contingency Planning Needed to Address Risks That Pose
a Threat to a Successful Census, GAO/GGD-00-06 (Washington, D.C.: Dec. 14,
1999).

10 GAO, 2010 Census: Basic Design Has Potential, but Remaining Challenges
Need Prompt Resolution, GAO-05-9 , (Washington, D.C.: January 12, 2005).

The Bureau has acknowledged that the MCD's performance is an issue but
believes it will be addressed through a contract awarded on March 30,
2006, to develop a new MCD. However, the new MCD will not be tested until
the 2008 Dress Rehearsal, and if problems do emerge, little time will be
left to develop, test, and incorporate refinements. Given that, it will be
important that the Bureau have a risk mitigation plan in place to help
ensure the successful testing of the MCD at the Dress Rehearsal. In our
May 2006 report, we highlighted the tight time frames to develop the MCD
and recommended that systems being developed or provided by contractors
for the 2010 Census-including the MCD-be fully functional and ready to be
assessed as part of the 2008 Dress Rehearsal.11 The Department of
Commerce, the Census Bureau's parent agency, noted in its comments on our
draft report that the Bureau provided competitors for the contract with
information about the design, requirements, and specification for the 2006
test in the request for proposals. Commerce also noted that the Bureau
would share preliminary results from the 2006 test with the firm that was
awarded the contract, upon the availability of those results. The Bureau,
however, did not specify when preliminary results would be available.
However, if after the 2008 Dress Rehearsal the MCD is found not to be
reliable, the Bureau could be faced with a remote but daunting possibility
of having to revert to the costly, paper-based census used in 2000.

Finally, a targeted second mailing to households that fail to respond to
the initial census questionnaire could reduce the workload and cost of
nonresponse follow-up. According to Bureau studies, sending a second
questionnaire could yield a gain in overall response of 7 to 10 percent
from non-responding households. In reports, we have highlighted how a
second mailing could boost the mail response rate by several percentage
points, which in turn would result in considerable savings by reducing the
number of costly personal visits enumerators would need to make to
non-responding households. The Bureau has never before included this
operation as part of a decennial census and over the decade has been
testing its feasibility. The targeted second mailing is a part of the 2006
test, the results of which will allow the Bureau to identify and resolve
any operational issues; to demonstrate a more refined plan as part of the
2008 Dress Rehearsal; and, ultimately, to increase the likelihood that the
second mailing will produce the desired cost savings and other benefits in
2010.

11 GAO, 2010 Census: Census Bureau Generally Follows Selected Leading
Acquisition Planning Practices, but Continued Management Attention Is
Needed to Help Ensure Success, GAO-06-277 (Washington, D.C.: May 18,
2006).

           Bureau Lacks Risk Mitigation Plans for Certain Challenges

Recent work that we have conducted has identified several challenges that,
if not properly managed, could increase the cost of the 2010 Census. As
the Bureau moves from testing to demonstrating the design in the Dress
Rehearsal, it will be important for the Bureau to have risk mitigation
plans in place to reduce the severity of challenges to a cost-effective
census. These challenges include (1) overseeing contractors responsible
for conducting key census-taking operations, (2) successfully updating
address and map files, and (3) assessing the resources that will be needed
to update the address files and maps for areas affected by hurricanes
Katrina and Rita.

Increased Reliance on Contractor Support for the 2010 Census Introduces Risk

The Bureau is relying extensively on contractors to supply
mission-critical functions and technologies for the 2010 Census. The
Bureau estimates that they will spend $1.9 billion, or nearly 17 percent,
of the Bureau's overall decennial costs to award seven major contracts for
the 2010 Census. To date, the Bureau has awarded three of its seven major
contracts. These three contracts support (1) MAF/TIGER modernization; (2)
the development and operation of the Decennial Response and Integration
System (DRIS)-a system planned to integrate paper, Internet, and telephone
responses; and (3) the Field Data Collection Automation (FDCA) program-a
system designed to provide field staff with the equipment and
infrastructure needed to collect census data.

Contractors can help the Bureau address the challenges it faces as it
plans for and implements the 2010 Census, especially as it becomes
increasingly difficult for the Bureau to count the nation's population
with its in-house staff and capabilities. The contractors that the Bureau
relied on to perform major decennial activities during Census 2000
generally performed well.12 However, increased reliance on contractors
entails certain management challenges, including the oversight of
contractors to ensure that they meet the Bureau's needs in an effective,
economical, and timely manner. For example, according to the Department of
Commerce Office of Inspector General, the Bureau did not have sufficient
program management staff to efficiently acquire systems and manage
complex, high-dollar contracts during Census 2000.13 As a result, the cost
of the Bureau's data capture system increased from $49 million to $238
million by the end of that decennial.

12 For example, the data capture system exceeded its performance goals for
accuracy, and the advertising campaign blanketed the country with more
than 250 advertisements in 17 languages, which helped boost the response
rate higher than the Bureau had expected.

As we noted in our May 2006 report, the Bureau has not yet awarded four
other major contracts for the 2010 Census, but has already pushed back the
award dates of two of the remaining contracts because of changes in its
acquisition approach. The Bureau's tight schedule for systems development
and testing as well as the interdependence of decennial systems could
affect its ability to develop fully functional and sufficiently mature
systems that can be demonstrated in concert with other operations during
the 2008 Dress Rehearsal. We previously reported that during the 1998
Dress Rehearsal for the 2000 Census, a number of new features were not
test-ready; as a result, the Bureau said it could not fully evaluate them
with any degree of assurance as to how they would affect the census.14
These late design changes and untested systems resulted in additional
costs to the census.

Closely monitoring major contracts continues to be important. In March
2006, we testified that while project offices responsible for the DRIS and
FDCA contracts had carried out initial acquisition management activities,
neither office had the full skill sets needed to effectively manage the
acquisitions.15 For DRIS, the Bureau's project office had established
baseline requirements, but the Bureau had not validated the requirements
and had not implemented a process for managing them. Also, the project
office had identified the project's risks but had not written mitigation
plans or established milestones for completing key risk mitigation
activities. As for FDCA, the Bureau again had specified baseline
requirements but had not validated them. While, the project office had
begun to oversee the contractor's performance, it had not determined which
performance measures it would use, and the office had not implemented a
risk management process. Until these basic management activities are
implemented, both systems could face increased risks of cost overruns,
schedule delays and performance shortfalls. We have made recommendations
addressing those issues, such as developing mitigation plans with
milestones for key activities and regularly briefing senior managers. The
Bureau has agreed to complete these activities as soon as possible.

13 Department of Commerce Office of Inspector General, Improving Our
Measure of America: What Census 2000 Can Teach Us in Planning for 2010,
OIG-14431 (Washington, D.C.: Spring 2002).

14 GAO-05-9 .

15 GAO, Census Bureau: Important Activities for Improving Management of
Key 2010 Decennial Acquisitions Remain to be Done, GAO-06-444T ,
(Washington, D.C.: Mar. 1, 2006).

As part of its effort to allow respondents to use the Internet during the
decennial census, the Bureau proposed to develop the use of the Internet
under the DRIS contract. However, in May 2006, Bureau officials informed
us that the Internet response option was no longer a contract requirement
and that they are uncertain whether Internet response would be an option
for the 2010 Census. The removal of the Internet from the DRIS contract is
an unexpected change, because just 3 months earlier in our March 2006
testimony,16 we reported that the DRIS contract was expected to process
Internet responses for the 2010 Census.

High-level Bureau officials explained that they made the decision to
remove the Internet from the contract partly because of the potential
risks associated with computer security attacks. In addition, according to
a Bureau official, the Bureau's testing to date showed nothing to indicate
that offering an Internet response option would improve overall response
rates or save any money. According to Bureau officials, if the Internet
response option is included in the design, it will be developed in-house
by Bureau staff. Bureau officials emphasized that they only have one
chance every 10 years to collect this information; moreover, any public
perception of an unsecured Internet Web site could result in residents not
responding to the census, and in the long term could cost more than if the
Internet had not been used. It should be noted that there are security
techniques to address Internet attacks, and other federal agencies use the
Internet to successfully meet many missions. According to a Bureau
official, the Bureau believes it made a sound business decision by
removing the Internet from the DRIS contract requirements. Further, the
official told us that the Bureau did not develop a formal business case
document on this decision.

16 GAO-06-444T .

Address and Mapping Challenges Pose a Risk to a Cost-Effective Census

To contain decennial costs, long-standing and emerging issues related to
the Bureau's address lists and maps need to be addressed. A complete and
accurate address list is the cornerstone of a successful census because it
identifies all households that are to receive a census questionnaire and
serves as the control mechanism for following up with households that fail
to respond. Although the Bureau went to great lengths to build a complete
and accurate MAF for the 2000 Census, of the 116 million housing units
contained in the database, the Bureau estimates it incorrectly included
2.3 million housing units and missed another 2.7 million housing units. In
light of these and other problems, the Bureau concluded that enhancements
to MAF/TIGER were necessary to make census data more complete and
accurate.

The Bureau has conducted research and testing to help resolve each of the
problems experienced in the 2000 Census, including addresses that were
duplicated, missed, deleted, and incorrectly located on a map (a problem
known as "geocoding error"). For example, the Bureau is researching ways
to capture missed addresses for housing units that were hard to find-often
associated with apartments in small multiunit structures. However, some
deadlines for completing research are not firm, while other deadlines that
have been set continue to slip. As a result, it is not known whether the
research and evaluation efforts underway will be completed in sufficient
time to allow the Bureau to develop new methodologies and procedures for
improving the MAF by June 2007-the Bureau's announced deadline for
determining the baseline for all program requirements.

In addition, one major research effort using software to identify
duplicate addresses (an estimated 1.4 million duplicate addresses were
removed during the 2000 Census) did not work and will not be used in 2010.
As a result, duplicate addresses may still be a problem for the 2010 MAF,
and if not detected, can result in increased cost when nonresponse
enumerators attempt to collect data from a duplicate address incorrectly
listed in the MAF.

New issues surrounding the schedule of address activities have emerged.
One such issue revolves around the planning and development of the 2010
Census amid tight and overlapping schedules for updating addresses and map
files. For example, Bureau officials estimate that TIGER maps for 600 to
700 counties of 3,232 counties in the United States will not be updated in
time to be part of local update of census address (LUCA)-the Bureau's
program to give local, state, and tribal government officials the
opportunity to review the address lists and maps and suggest
corrections.17 LUCA participation is important because local knowledge
contributes to a more complete and accurate address file. Not having the
most current TIGER maps could affect the quality of a local government's
review and could potentially increase the cost of conducting the census.
For example, to the extent LUCA participants are not able to use the maps
to identify duplicate and nonexistent addresses, and if subsequent address
operations also fail to identify those same addresses, then nonresponse
follow-up enumerators would make unnecessary and costly attempts to locate
these incorrectly included addresses.

Bureau Does Not Have a Plan to Assess Resources Needed to Update Address and Map
Files in Areas Affected by Hurricanes Katrina and Rita

The Bureau does not have a plan to assess additional resources that may be
needed to update the address and map file for areas affected by hurricanes
Katrina and Rita. The task of updating Census address files to reflect the
changes caused by the hurricanes will be formidable and possibly costly,
as much has changed to the landscape since the 2000 Census. On August 29,
2005, hurricane Katrina devastated the coastal communities of Louisiana,
Mississippi, and Alabama. A few weeks later, hurricane Rita hit the border
areas of Texas and Louisiana. Damage was widespread. For example, the Red
Cross estimated that nearly 525,000 people were displaced as a result of
hurricane Katrina and approximately 90,000 square miles were affected. In
some places, entire communities were obliterated. Homes were declared
uninhabitable, and streets, bridges, and other landmarks were destroyed.

For the 2010 Census, locating housing units and the people who reside in
them will be critical to accurate population counts of places hit by the
hurricanes, especially since it is estimated that hundreds of thousands of
people have-either temporarily or permanently-migrated to other areas of
the country. The Bureau anticipates that by 2009, residents will have
decided whether to return to the region. However, Bureau officials have
not provided information regarding the basis of this conclusion. Given the
magnitude of the area, population, and infrastructure affected, it would
be prudent for the Bureau to begin assessing whether new procedures will
be necessary, determining whether additional resources may be needed, and
identifying whether local partners will be available to assist the Bureau
in its effort to update address and map data, as well as other
census-taking activities. Without having done a resource analysis, the
Bureau remains uncertain about whether additional funds will be needed to
help locate and count residents affected by the hurricanes.

17In the Census Address List Improvement Act (Pub. L. No. 103-430, Oct.
31, 1994), Congress required the Bureau to develop a local address review
program giving local governments and tribal governments greater input into
the Bureau's address list development process.

In summary, the 2010 Census is an expensive but vitally important
undertaking, the success of which is needed to meet the information
requirements of policymakers at all levels of government, as well as
business interests, and academic researchers. The Bureau responded to
concerns about the accuracy, completeness, and cost-effectiveness of the
2000 Census by reengineering the heretofore paper-based processes used in
all previous censuses.

At the same time, the projected life-cycle cost of $11.3 billion makes the
next decennial census the most expensive in our history, and many factors
can cause the 2010 Census to be more expensive. It is important to
consider that some factors that may increase the costs of the census-such
as counting more people than ever who do not speak English or who live in
alternative, hard-to-find housing-are inherent in the characteristics of
the population that needs to be counted. Largely, demographically related
cost factors will continue to exist, regardless of actions taken by the
Bureau, and must be treated as givens by Bureau planners. Still, other
factors that can cause cost increases can and should be mitigated. While
needed, the reengineering introduced by the Bureau presents new challenges
and increased risks. The Bureau needs to ensure that its new MCDs work as
designed, and that contractors perform according to requirements, on
schedule, and at cost. Moreover, the Bureau still needs to fully resolve
preexisting issues related to the accuracy and completeness of the address
list.

Overall, we have long recognized that redesigning massive enterprises
entail risks and uncertainties. Such risks and uncertainties need to be
managed through the use of adequate planning and risk management by Bureau
management. Such tools also serve the oversight requirements of external
stakeholders-most notably Congress, which is being asked to authorize and
appropriate more funds than ever to pay for the census.

In January 2004, recognizing the cost escalation risks of the 2010 Census,
we concluded that the Bureau's plans for 2010 lacked the needed budgetary
supporting detail, supporting analysis, and other information, making it
difficult for Congress and us to oversee the Bureau's operations and
assess the feasibility of the Bureau's design and the extent to which it
would lead to greater cost-effectiveness. While the Bureau has made
progress in planning and designing the 2010 Census, the Bureau will need
to continue to take steps to manage and mitigate risks for a
comprehensive, accurate, and cost-effective population count in 2010.

That concludes my statement, Mr. Chairman. I would be pleased to respond
to any questions you or other members of the Subcommittee may have.

                         Contacts and Acknowledgements

For questions regarding this testimony, please contact Brenda S. Farrell,
on (202) 512-6806, or by email at [email protected] Individuals making
contributions to this testimony include Betty Clark, Robert Goldenkoff,
Ernie Hazera, Shirley Hwang, Krista Loose, Lisa Pearson, Scott Purdy,
Cynthia Scott, and Tim Wexler.

Appendix I: Related Products by GAO

                                  GAO Products

2010 Census: Census Bureau Generally Follows Selected Leading Acquisition
Planning Practices, but Continued Management Attentions Is Needed to Help
Ensure Success. GAO-06-277 . Washington, D.C.: May 18, 2006.

Census Bureau: Important Activities for Improving Management of Key 2010
Decennial Acquisitions Remain to Be Done. GAO-06-444T . Washington, D.C.:
March 1, 2006.

2010 Census: Planning and Testing Activities Are Making Progress.
GAO-06-465T . Washington D.C.: March 1, 2006.

Information Technology Management: Census Bureau Has Implemented Many Key
Practices, but Additional Actions Are Needed. GAO-05-661 . Washington,
D.C.: June 16, 2005.

2010 Census: Basic Design Has Potential, but Remaining Challenges Need
Prompt Resolution. GAO-05-09 . Washington, D.C.: January 12, 2005.

Data Quality: Census Bureau Needs to Accelerate Efforts to Develop and
Implement Data Quality Review Standards. GAO-05-86 . Washington, D.C.:
November 17, 2004.

Census 2000: Design Choices Contributed to Inaccuracies in Coverage
Evaluation Estimates. GAO-05-71 . Washington, D.C.: November 12, 2004.

American Community Survey: Key Unresolved Issues. GAO-05-82 . Washington,
D.C.: October 8, 2004.

2010 Census: Counting Americans Overseas as Part of the Decennial Census
Would Not Be Cost-Effective. GAO-04-898 . Washington, D.C.: August 19,
2004.

2010 Census: Overseas Enumeration Test Raises Need for Clear Policy
Direction. GAO-04-470 .Washington, D.C.: May 21, 2004.

2010 Census: Cost and Design Issues Need to Be Addressed Soon. GAO-04-37 .
Washington, D.C.: January 15, 2004.

Decennial Census: Lessons Learned for Locating and Counting Migrant and
Seasonal Farm Workers. GAO-03-605 . Washington, D.C.: July 3, 2003.

Decennial Census: Methods for Collecting and Reporting Hispanic Subgroup
Data Need Refinement. GAO-03-228 . Washington, D.C.: January 17, 2003.

Decennial Census: Methods for Collecting and Reporting Data on the
Homeless and Others Without Conventional Housing Need Refinement.
GAO-03-227 . Washington, D.C.: January 17, 2003.

2000 Census: Lessons Learned for Planning a More Cost-Effective 2010
Census. GAO-03-40 . Washington, D.C.: October 31, 2002.

The American Community Survey: Accuracy and Timeliness Issues. GAO-02-956R
. Washington, D.C.: September 30, 2002.

(450498)

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www.gao.gov/cgi-bin/getrpt? GAO-06-822T .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact Brenda S. Farrell at (202) 512-6806 or
[email protected].

Highlights of GAO-06-822T , a testimony before the Subcommittee on Federal
Financial Management, Government Information and International Security,
Committee on Homeland Security and Governmental Affairs, U.S. Senate

June 6, 2006

2010 CENSUS

Costs and Risks Must Be Closely Monitored and Evaluated, With Mitigation
Plans in Place

The decennial census is a constitutionally mandated activity, with
immutable deadlines. It produces data used to allocate about $200 billion
yearly in federal financial assistance, reapportion the seats of the House
of Representatives, and provide a profile of the nation's people to help
guide policy decisions. The U.S. Census Bureau (Bureau) estimates the 2010
Census will cost $11.3 billion, making it the most expensive census in the
nation's history, even after adjusting for inflation. Based primarily on
GAO's issued reports, this testimony addresses the extent to which the
Bureau has (1) developed detailed and timely cost data for effective
oversight and cost control, (2) reduced nonresponse mail follow up costs,
and (3) produced risk mitigation plans to address  identified challenges. 

What GAO Recommends

The Bureau is taking action on several of GAO's recommendations to reduce
nonresponse time and mitigate contract-related risks. A January 2004
report contained recommendations to the Bureau for improving the
transparency of the 2010 Census' life-cycle costs. While the Bureau did
not agree with this recommendation, the Bureau stated that in response it
would develop a comprehensive project plan that would include milestones,
itemized estimated costs, and measurable goals.

The Bureau's most recent life-cycle cost estimate for the 2010 Census does
not reflect the most current information from testing and evaluation nor
provide complete information on how changing assumptions may affect cost.
As GAO reported in January 2004, the Bureau derived its initial cost
estimate by considering the cost of the 2000 Census along with certain
assumptions that drive costs, such as staffing needs, the nonresponse rate
for mailing back the census questionnaire, census worker productivity and
pay rates, and inflation; however, GAO's ongoing work has found that the
most recent (September 2005) estimate does not incorporate current
information on certain 2001 assumptions. For example, the 2004 Census Test
suggests some assumptions about staffing and space associated with new
technology have changed. Specifically, Bureau evaluations indicate that
more staff at the local census office was needed to support the use of the
new hand-held mobile computing device (MCD) and additional storage space
was needed for the MCDs.

Since 2000, the Bureau has reengineered the decennial census and has begun
new initiatives to reduce nonresponse follow up costs. Key to the Bureau's
steps to reduce the costs of nonresponse follow up is successfully using
the MCDs to eliminate millions of paper questionnaires and maps.
Importantly, the Bureau must first resolve the MCD's technological
challenges. During 2004 and 2006 tests, the MCDs had significant
reliability problems. For example, in the 2004 test the MCDs experienced
transmission problems, memory overloads, and difficulties with the mapping
feature. Bureau officials have contracted the design and implementation
for a new MCD that will not be ready until the 2008 Dress Rehearsal. If
after the Dress Rehearsal the MCD is found not to be reliable, the Bureau
could be faced with the remote but daunting possibility of having to
revert to the costly paper-based Census used in 2000.

The Bureau does not have risk mitigation plans to address certain
identified challenges to a cost-effective census. Most notably, the Bureau
does not have a plan to assess additional resources that may be needed to
update the address and map file for areas affected by hurricanes Katrina
and Rita. Moreover, the Bureau has not yet assessed whether new procedures
will be necessary nor whether local partners will be available to assist
in updating address and map data. Updating address files to reflect the
changes caused by the hurricanes will be formidable, in part because,
according to Red Cross estimates, nearly 525,000 people were displaced in
a 90,000 square mile area. Another risk to be mitigated stems from the
need to closely monitor the performance of about $1.9 billion in
contracts. The Bureau has agreed to take steps to mitigate some of those
risks. For example, the Bureau has said it will enhance the ability of key
contract project offices to better manage contracts through such actions
as developing mitigation plans with milestones for key activities and
regularly briefing senior managers.
*** End of document. ***