2010 Census: Census Bureau Should Take Action to Improve the	 
Credibility and Accuracy of Its Cost Estimate for the Decennial  
Census (16-JUN-08, GAO-08-554). 				 
                                                                 
The 2010 Census will be the most expensive census in our nation's
history, even after adjusting for inflation. The Census Bureau	 
(Bureau) estimates that the life cycle cost of the 2010 Census	 
will be from $13.7 billion to $14.5 billion. GAO was asked to (1)
assess the extent to which the Bureau's 2010 Census life cycle	 
cost estimate adheres to characteristics defined for high-quality
cost estimation, (2) report on the relationship between the	 
estimate and the Bureau's budget, and (3) assess whether the	 
Bureau's existing policies and resources are sufficient to	 
conduct cost estimation. To assess the reliability of the	 
Bureau's cost estimate, GAO analyzed the Bureau's methods and	 
approaches to determine if the estimate is well-documented,	 
comprehensive, accurate, and credible.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-554 					        
    ACCNO:   A82390						        
  TITLE:     2010 Census: Census Bureau Should Take Action to Improve 
the Credibility and Accuracy of Its Cost Estimate for the	 
Decennial Census						 
     DATE:   06/16/2008 
  SUBJECT:   Budget updates					 
	     Census						 
	     Cost accounting					 
	     Cost analysis					 
	     Cost control					 
	     Cost overruns					 
	     Cost-based budgeting				 
	     Data collection					 
	     Data integrity					 
	     Documentation					 
	     Future budget projections				 
	     Human capital					 
	     Information management				 
	     Life cycle costs					 
	     Risk assessment					 
	     Skilled labor					 
	     Strategic planning 				 
	     Cost estimates					 
	     Cost growth					 
	     Policies and procedures				 
	     2010 Decennial Census				 

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GAO-08-554 

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Report to the Subcommittee on Commerce, Justice, Science, and Related 
Agencies, Committee on Appropriations, House of Representatives: 

United States Government Accountability Office: 

GAO: 

June 2008: 

2010 Census: 

Census Bureau Should Take Action to Improve the Credibility and 
Accuracy of Its Cost Estimate for the Decennial Census: 

2010 Census: 

GAO-08-554: 

GAO Highlights: 

Highlights of GAO-08-554, a report to the Subcommittee on Commerce, 
Justice, Science, and Related Agencies, Committee on Appropriations, 
House of Representatives. 

Why GAO Did This Study: 

The 2010 Census will be the most expensive census in our nationï¿½s 
history, even after adjusting for inflation. The Census Bureau (Bureau) 
estimates that the life cycle cost of the 2010 Census will be from 
$13.7 billion to $14.5 billion. GAO was asked to (1) assess the extent 
to which the Bureauï¿½s 2010 Census life cycle cost estimate adheres to 
characteristics defined for high-quality cost estimation, (2) report on 
the relationship between the estimate and the Bureauï¿½s budget, and (3) 
assess whether the Bureauï¿½s existing policies and resources are 
sufficient to conduct cost estimation. To assess the reliability of the 
Bureauï¿½s cost estimate, GAO analyzed the Bureauï¿½s methods and 
approaches to determine if the estimate is well-documented, 
comprehensive, accurate, and credible. 

What GAO Found: 

The Bureauï¿½s 2010 Census life cycle cost estimate is not reliable 
because it lacks adequate documentation and is not comprehensive, 
accurate, or credible. The Bureau could not provide detailed 
documentation on data sources, significant assumptions, or changes in 
assumptions for the cost estimate. The cost estimate is not 
comprehensive because the Bureau did not include the potential cost to 
fingerprint temporary workers or clearly define some of the cost 
elements in the model. The cost estimate is not accurate because it 
does not reflect updated information on address canvassing productivity 
that was identified during the dress rehearsal and that should result 
in a significant cost increase. Further, the Bureau does not maintain 
historical data in a centralized way that is easily accessible for 
analysis. The cost estimate is not credible because the Bureau did not 
perform sensitivity or uncertainty analyses, which would have helped 
quantify the risk and uncertainty associated with the cost model and 
provided a level of confidence for the estimate. The Bureau also did 
not validate the estimate with an independent cost estimate. 

The Bureau uses the life cycle cost estimate as the starting point for 
annual budget formulation and revises the life cycle cost estimate 
based on appropriations received and updated budget information. 
However, the Bureau does not update the cost estimate to reflect actual 
costs. Further, because the life cycle cost estimate is not reliable, 
annual budget requests based on that estimate are not fully informed. 

The Bureau has insufficient policies and procedures and inadequately 
trained staff for conducting high-quality cost estimation for the 
decennial census. The Bureau does not have established cost estimation 
guidance and procedures in place or staff certified in cost estimation 
techniques. While the Bureau is developing a new budget management tool 
called the Decennial Budget Integration Tool, which will support the 
cost estimation process, the Bureau will need to establish rigorous 
cost estimation policies and procedures and use skilled estimators to 
ensure that future cost estimates are reliable and of high quality. 

On April 3, 2008, the Secretary of Commerce announced a redesign of the 
2010 Census plan that included significant cost increases of $2.2 
billion to $3 billion. The details of this cost increase were not 
available at the time of this review; however, until the Bureau makes 
fundamental changes to its cost estimation process, uncertainties about 
the ultimate cost of the 2010 Census will remain. Without improvements 
to the cost estimation process, the Bureauï¿½s ability to effectively 
manage operations will be hampered and Congressï¿½s ability to oversee 
the 2010 Census will be constrained. 

What GAO Recommends: 

GAO recommends that the Secretary of Commerce direct the Bureau to (1) 
thoroughly document the 2010 Census life cycle cost estimate; (2) 
update assumptions; (3) update the estimate with actual costs; (4) 
perform sensitivity and uncertainty analyses on the estimate; and (5) 
for future estimates, establish policies and procedures for cost 
estimation. Although the Department of Commerce raised concerns about 
how GAO characterized the accuracy of the estimate, it generally agreed 
with the reportï¿½s findings and said that the Bureau would prepare an 
action plan to address GAOï¿½s recommendations. 

To view the full product, including the scope and methodology, click on 
[http://www.gao.gov/cgi-bin/getrpt?GAO-08-554]. For more information, 
contact Mathew Scire at (202) 512-6806 or [email protected]. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The Census Bureau's 2010 Census Life Cycle Cost Estimate Is Not 
Reliable: 

Unreliable 2010 Census Cost Estimate Does Not Fully Inform Annual 
Budgets: 

The Bureau Has Insufficient Policies and Inadequately Trained Staff for 
Conducting High-Quality Cost Estimation; However, a New System May Help 
Improve the Bureau's Cost Estimation Practices: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Commerce: 

Table: 

Table 1: Bureau's Revised August 2007 Estimate of Life Cycle Costs for 
the 2010 Decennial Program (Nominal Year Dollars in Millions): 

Figures: 

Figure 1: Decennial Census Costs from 1970 through 2010 (Projected) in 
Constant 2010 Dollars: 

Figure 2: Decennial Census Average Cost per Housing Unit from 1970 
through 2010 (Projected) in Constant 2010 Dollars: 

Figure 3: 2010 Census Life Cycle Cost Estimate Adjustments for 2003, 
2005, 2006, and 2007 (Differences from the 2001 Cost Estimate): 

Figure 4: Total Estimated Life Cycle Costs of $11.5 Billion for 2010 
Decennial Census, Broken Down by Component (as of August 2007): 

Figure 5: Breakdown of Census Life Cycle Costs and Portion of Total 
Costs Analyzed for Uncertainty: 

Abbreviations: 

ACS: American Community Survey: 

DAU: Defense Acquisition University: 

DBiT: Decennial Budget Integration Tool: 

DOD: Department of Defense: 

FDCA: Field Data Collection Automation: 

HHC: handheld computer: 

IG: Inspector General: 

LUCA: Local Update of Census Addresses: 

MAF: Master Address File: 

OMB: Office of Management and Budget: 

TIGER: Topologically Integrated Geographic Encoding: 

and Referencing: 

WBS: work breakdown structure: 

United States Government Accountability Office: 

Washington, DC 20548: 

June 16, 2008: 

The Honorable Alan B. Mollohan: 
Chairman: 
The Honorable Rodney P. Frelinghuysen: 
Ranking Member: 
Subcommittee on Commerce, Justice, Science, and Related Agencies: 
Committee on Appropriations: 
House of Representatives: 

At an estimated cost from $13.7 billion to $14.5 billion, the 2010 
Census will be the most expensive census in our nation's history, after 
adjusting for inflation. The U.S. Census Bureau (Bureau) faces the 
challenge of cost effectively counting a population that is growing 
steadily larger, more diverse, and increasingly difficult to enumerate 
with a reengineered design that relies in part on automation to locate 
housing units. In an environment of constrained resources, containing 
costs is a stated goal of the Bureau's design for the 2010 Census. 

Earlier this year, we designated the 2010 Census as a high-risk area, 
in part because of uncertainty over costs and long-standing weaknesses 
in the Bureau's management of information technology intended to 
automate the census. In February 2008, the Director of the Bureau 
initiated a replanning of the Field Data Collection Automation (FDCA) 
program, a major acquisition that includes systems, equipment 
(including handheld computers (HHC)), and infrastructure for field 
staff to use in collecting data for the 2010 Census. After analyzing 
several options to revise the design of the 2010 Decennial Census, the 
Secretary of Commerce on April 3, 2008, announced that the Bureau would 
no longer use HHCs in its largest field operation--nonresponse follow- 
up--in which field workers interview households that did not return 
census forms. Additionally, the Bureau decided to have the contractor 
for the FDCA program reduce deployment of field technology 
infrastructure; provide HHCs for address canvassing, in which field 
workers verify addresses; and develop the information system for 
controlling all field operations. The Bureau estimated that along with 
updating its assumptions, this option would result in a cost increase 
of $2.2 billion to $3 billion over the previously reported estimate of 
$11.5 billion. 

Concerned about the challenges of conducting a cost-effective census, 
you asked us to assess the Bureau's life cycle cost estimate for the 
2010 Census. As agreed with your offices, our objectives for this 
report were to (1) assess the extent to which the Bureau's 2010 Census 
life cycle cost estimate adheres to characteristics defined for high- 
quality cost estimation, (2) report on the relationship between the 
life cycle cost estimate and the Bureau's budget, and (3) assess 
whether the Bureau's existing policies and resources are sufficient to 
conduct high-quality cost estimation. 

For this review, we evaluated the 2010 Census life cycle cost estimate 
using the exposure draft of GAO's Cost Assessment Guide.[Footnote 1] 
The guide contains criteria for developing reliable cost estimates, 
which are aligned with four characteristics: high-quality cost 
estimates should be well-documented, comprehensive, accurate, and 
credible. During our review we shared the Cost Assessment Guide with 
Bureau officials. There are three components of the life cycle cost 
estimate: the American Community Survey (ACS),[Footnote 2] the Master 
Address File/Topologically Integrated Geographic Encoding and 
Referencing (MAF/TIGER) system,[Footnote 3] and the short form census. 
To address our first objective, we performed sensitivity analysis to 
identify significant cost drivers, and limited uncertainty analysis on 
a portion of the 2006 version of the 2010 short form census life cycle 
cost estimate that the Bureau provided to quantify the uncertainty and 
provide a level of confidence for the estimate. We also analyzed Bureau 
data sets and documents related to the life cycle cost estimate and 
interviewed Bureau officials. To address our second objective, we 
reviewed policies and procedures for preparing annual budgets and 
analyzed Bureau documents related to the annual budget process, 
including Bureau budget estimates and worksheets on life cycle costs 
prepared for the budget process. We also interviewed Bureau census 
program and budget officials to understand the relationship between the 
cost estimate and the annual budget process. To address our third 
objective, we analyzed Bureau documents related to the life cycle cost 
estimate; attended a demonstration of a new Bureau automated budget 
system currently being developed that should enable the Bureau, among 
other initiatives, to produce better cost estimates; and interviewed 
Bureau officials. Appendix I provides additional information on our 
scope and methodology. Our analysis of the 2010 life cycle cost 
estimate was conducted prior to the redesign of the census and the 
subsequent revision of the FDCA program. Detailed cost information was 
not available for the Bureau's proposed redesign in time to be analyzed 
as part of our scope. We conducted our work from October 2006 to June 
2008 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Results in Brief: 

The Bureau's 2010 Census life cycle cost estimate is not reliable 
because it lacks adequate documentation and is not comprehensive, 
accurate, or credible. The Bureau was unable to provide documentation 
to support two components of the 2010 Census life cycle cost estimate-
-the ACS and MAF/TIGER--which together accounted for almost 20 percent 
of the 2007 total life cycle cost estimate. The Bureau also could not 
provide detailed documentation on data sources, significant 
assumptions, or changes in assumptions for the third component of the 
life cycle cost estimate--the estimated cost of the short form census. 
Without detailed documentation, the validity and reliability of the 
entire cost estimate cannot be verified. The life cycle cost estimate 
for the 2010 Census is not comprehensive because the Bureau did not 
include the potential cost to fingerprint temporary workers[Footnote 4] 
or clearly define some of the cost elements in the cost model for the 
short form component of the census. Without the fingerprinting costs 
and without clearly defined cost elements, the Bureau cannot be sure 
that all relevant costs have been included, which increases the risk of 
underfunding and cost overruns. The life cycle cost estimate for the 
2010 Census is also not accurate because the estimated cost of the 
short form component does not reflect updated information on 
productivity identified during the address canvassing dress rehearsal 
operation. As part of our review, we updated the assumption for address 
canvassing productivity in the 2006 version of the cost model that was 
provided by the Bureau to reflect productivity data from the dress 
rehearsal. Updating productivity resulted in a significant increase to 
the cost of the address canvassing operation of approximately $270 
million. In addition, the Bureau cannot readily demonstrate the 
accuracy of the estimate because it does not maintain historical data 
in a centralized way that is easily accessible for analysis. Finally, 
the life cycle cost estimate for the 2010 Census is not credible 
because the Bureau did not perform sensitivity or uncertainty analysis 
for the short form component of its cost estimate. Absent this 
analysis, the Bureau's ability to identify and focus on major cost 
drivers, better understand the potential for cost growth, quantify the 
risk and uncertainty associated with the cost model, and provide a 
level of confidence for the cost estimate is impeded. Further, the 
Bureau did not have an independent cost estimate prepared to try to 
validate the life cycle cost estimate. 

The Bureau uses the life cycle cost estimate as the starting point for 
the annual budget formulation process and revises the life cycle cost 
estimate based on appropriations received and updated budget 
information. However, the Bureau does not update the cost estimate to 
reflect actual costs as they take place over the decade. Further, 
because the Bureau does not meet best practices for developing and 
maintaining the life cycle cost estimate, annual budget requests based 
on the cost estimate are not fully informed. 

The Bureau has insufficient policies and inadequately trained staff for 
conducting high-quality cost estimation for the decennial census. The 
Bureau does not have established cost estimation guidance and 
procedures in place, a centralized office that is dedicated to cost 
estimation, or staff skilled in cost estimation techniques. The Bureau 
is developing a new Decennial Budget Integration Tool (DBiT),[Footnote 
5] a budget management tool that will support the cost estimation 
process. If properly implemented, DBiT should secure, standardize, and 
consolidate budget information and enable the Bureau to maintain better 
documentation for cost estimation. However, the Bureau will need to 
establish rigorous cost estimation policies and procedures and use 
skilled estimators to ensure that future life cycle cost estimates are 
reliable and of high quality. 

Without improvements in its cost estimation practices, the Bureau's 
ability to produce and maintain well-documented, comprehensive, 
accurate, and credible life cycle cost estimates for the 2010 and later 
censuses, as well as its ability to make informed decisions and 
effectively manage costs, will continue to be hampered. Further, 
without reliable, valid cost estimates and well-informed budgets, 
Congress's ability to oversee the decennial census will be constrained. 
To improve the Bureau's life cycle cost estimate for the 2010 Census, 
we are recommending that the Secretary of Commerce direct the Bureau to 
thoroughly document the estimate, update the assumptions, input actual 
cost data so that the estimate reflects current information, and 
perform sensitivity and uncertainty analyses on the estimate. To help 
ensure that the Bureau produces a reliable, high-quality life cycle 
cost estimate for the 2020 decennial census, we recommend that the 
Secretary direct the Bureau to establish guidance, policies, and 
procedures for conducting cost estimation that would meet best 
practices criteria and ensure that it has staff qualified in cost 
estimation. 

On May 23, 2008, the Department of Commerce (Commerce) forwarded 
written comments on a draft of this report. Although Commerce raised 
concerns about how GAO characterized the accuracy of the estimate, 
Commerce generally agreed with our findings, and indicated that the 
Bureau would prepare an action plan in response to the recommendations. 
Overall, Commerce stated that as part of the Bureau's action plan, it 
would examine GAO's Cost Assessment Guide to determine if it was 
possible to make improvements in the short term to its cost estimate 
and methods. Commerce further noted that the Bureau already has efforts 
under way to improve future cost estimation methods and systems through 
the development of the DBiT and was considering hiring additional 
skilled cost estimators. Commerce made some suggestions where 
additional context or clarification was needed and where appropriate we 
made those changes. 

Background: 

The Bureau's cost projections for the 2010 decennial census continue an 
escalating trend, with the 2010 Census currently estimated to cost 
approximately $13.7 billion to $14.5 billion. At a March 2008 hearing, 
Commerce and the Bureau stated that the FDCA program was likely to 
incur significant cost overruns and that a redesigning effort was under 
way to try to get the decennial census back on track. In early April, 
the Secretary of Commerce chose from among several alternatives for 
redesigning the FDCA program, and elected an option that involves 
dropping the HHCs from the nonresponse follow-up operation. 
Additionally, he decided that the Bureau would reduce deployment of 
field technology infrastructure by the contractor and have the 
contractor provide HHCs for address canvassing and develop the 
information system for controlling field operations. The Bureau has 
estimated that, with the redesign option, the total life cycle cost 
estimate for the 2010 Census will be from $13.7 billion to $14.5 
billion. 

Prior to this recent, major redesign of the FDCA program, the Bureau 
had estimated the life cycle cost of the 2010 Census to be $11.8 
billion (in constant 2010 dollars). As shown in figure 1, this estimate 
of $11.8 billion represented a more than tenfold increase over the $1 
billion spent on the 1970 Census. Although some of the cost increase 
could be expected because the number of housing units--and hence the 
Bureau's workload--has increased, the cost growth far exceeded this 
increase. Factors contributing to the increased costs include an effort 
to accommodate more complex households, busier lifestyles, more 
languages and greater cultural diversity, and increased privacy 
concerns. The Bureau estimated that the number of housing units for the 
2010 Census will increase by almost 14 percent over 2000 Census levels 
(from 117.5 million to 133.8 million housing units). At the same time, 
the average cost per housing unit for 2010 was expected to increase by 
approximately 26 percent over 2000 levels, from $69.79 per housing unit 
to $88.19 per housing unit (see fig. 2). 

Figure 1: Decennial Census Costs from 1970 through 2010 (Projected) in 
Constant 2010 Dollars: 

This figure is a bar graph showing Decennial Census costs from 1970 
through 2010 (projected) in constant 2010 dollars. The X axis 
represents the census year, and the Y axis represents the cost in 
billions of dollars. 

Census year: 1970; 
Cost in billions of dollars: $1.0. 

Census year: 1980; 
Cost in billions of dollars: $2.6. 

Census year: 1990; 
Cost in billions of dollars: $4.1. 

Census year: 2000; 
Cost in billions of dollars: $8.2. 

Census year: 2010; 
Cost in billions of dollars: $11.8. 

[See PDF for image] 

Source: GAO analysis of U.S. Census Bureau figures. 

Note: This figure does not reflect the Bureau's estimated increase in 
the 2010 Census life cycle cost estimate to a range from $13.7 billion 
to $14.5 billion, which the Bureau announced on April 3, 2008, with the 
replan of the FDCA program. 

[End of figure] 

Figure 2: Decennial Census Average Cost per Housing Unit from 1970 
through 2010 (Projected) in Constant 2010 Dollars: 

This figure is a vertical bar graph showing Decennial Census average 
cost per housing unit from 1970 through 2010 (projected) in constant 
2010 dollars. The X axis represents the census year, and the Y axis 
represents dollars. 

Census year: 1970; 
Dollars: $14.39. 

Census year: 1980; 
Dollars: $29.05. 

Census year: 1990; 
Dollars: $39.61. 

Census year: 2000; 
Dollars: $69.79. 

Census year: 2010 (projected); 
Dollars: $88.19. 

[See PDF for image] 

Source: GAO analysis of U.S. Census Bureau figures. 

Note: This figure does not reflect the Bureau's estimated increase in 
the 2010 Census life cycle cost estimate to a range from $13.7 billion 
to $14.5 billion, which the Bureau announced on April 3, 2008, with the 
replan of the FDCA program. 

[End of figure] 

The bulk of total life cycle funds for the 2010 Census has yet to be 
spent. As shown in table 1, which reflects the Bureau's life cycle cost 
estimate for the 2010 Census that was released in September 2007, the 
majority of spending will occur from fiscal year 2009 through fiscal 
year 2013. 

Table 1: Bureau's Revised August 2007 Estimate of Life Cycle Costs for 
the 2010 Decennial Program (Nominal Year Dollars in Millions): 

Program component: American Community Survey; 
FY 2001: $23.6; 
FY 2002: $29.0; 
FY 2003: $56.8; 
FY 2004: $64.1; 
FY 2005: $144.1; 
FY 2006: $167.8; 
FY 2007: $176.4; 
FY 2008 request: $187.2; 
Subtotal FY01-08: $849.0; 
FY2009-2013 (est.) $884.6; 
Total (est.) $1,733.5. 

Program component: MAF/TIGER enhancements program; 
FY 2001: 0; 
FY 2002: 15.0; 
FY 2003: 47.0; 
FY 2004: 82.4; 
FY 2005: 81.2; 
FY 2006: 78.8; 
FY 2007: 64.6; 
FY 2008 request: 58.7; 
Subtotal FY01-08: 427.6; 
FY2009-2013 (est.) 85.9; 
Total (est.) $513.5. 

Program component: 2010 Census (short form portion); 
FY 2001: 0; 
FY 2002: 21.0; 
FY 2003: 41.6; 
FY 2004: 106.0; 
FY 2005: 163.0; 
FY 2006: 201.2; 
FY 2007: 272.3; 
FY 2008 request: 551.3; 
Subtotal FY01-08: 1,356.3; 
FY2009-2013 (est.) 7,923.0; 
Total (est.) $9,279.3. 

Program component: Total; 
FY 2001: $23.6; 
FY 2002: $65.0; 
FY 2003: $145.4; 
FY 2004: $252.5; 
FY 2005: $388.3; 
FY 2006: $447.8; 
FY 2007: $513.3; 
FY 2008 request: $797.1; 
Subtotal FY01-08: $2,623.9; 
FY2009- 2013 (est.) $8,893.4; 
Total (est.) $11,526.4. 

Source: U.S. Census Bureau. 

Notes: The estimates reflect actual appropriations through fiscal year 
2007 and the President's budget request to Congress for fiscal year 
2008. These figures have not been audited by GAO. Moreover, these 
figures do not reflect the Bureau's estimated increase in the 2010 
Census life cycle cost estimate to a range from $13.7 billion to $14.5 
billion, which the Bureau announced on April 3, 2008, with the replan 
of the FDCA program. 

[End of table] 

In reengineering the 2010 Census, the Bureau has four goals: to (1) 
improve the relevance and timeliness of census long form data, (2) 
reduce operational risk, (3) increase the coverage and accuracy of the 
census, and (4) contain costs. To achieve these goals, three new 
components are key to the Bureau's plans for 2010: 

* modernizing and enhancing the nation's road map through the MAF/TIGER 
enhancement program, which includes realigning the TIGER map to take 
advantage of global positioning system capabilities, modernizing the 
processing system, and expanding geographic partnerships;[Footnote 6] 

* replacing the census long form questionnaire with a more frequent 
sample survey, the ACS; and: 

* conducting a short-form-only census using automation to collect 
census data. 

Prior to 2010, the decennial census collected data using both a short 
and long form questionnaire: the short form counted the population, and 
the long form obtained demographic, housing, social, and economic 
information from a 1-in-6 sample of households. The ACS is a nationwide 
survey that is replacing the decennial long form in the reengineered 
2010 Census. The ACS, which was first implemented in 2005, collects 
detailed characteristics data every year throughout the decade using a 
large household survey. The ACS has allowed the Bureau to simplify the 
2010 Census since it will now only involve the short form. 

In June 2001, the Bureau issued a document describing the process for 
reengineering the 2010 Census, which included a life cycle cost 
estimate for the 2010 decennial census, projected at $11.28 
billion.[Footnote 7] Since June 2001, the Bureau has updated the life 
cycle cost estimate for the reengineered 2010 Census and issued formal 
documents describing the estimate in June 2003, September 2005, June 
2006, and September 2007.[Footnote 8] In February 2008, the Bureau's 
Budget Estimates as Presented to Congress, Fiscal Year 2009 included a 
new life cycle cost estimate for the 2010 Decennial Census of $11.546 
billion, an increase of $20 million over the previous year's 
estimate.[Footnote 9] As described above, in April 2008, the Secretary 
of Commerce testified that the current estimate for the 2010 Census is 
from $13.7 billion to $14.5 billion. 

The 2001 through 2007 life cycle cost documents issued by the Bureau 
illustrate that the costs of the three components--the ACS, MAF/TIGER 
modernization, and short-form-only census--fluctuated slightly over 
that period. The total life cycle costs ranged from a low of $11.2546 
billion in the September 2005 and June 2006 documents to a high of 
$11.5264 billion in the September 2007 document. Figure 3 depicts how 
the estimated life cycle cost for the 2010 Census fluctuated in Bureau 
documents from 2001 to 2007. This year, however, the Bureau estimates 
that the life cycle cost of the census will increase by up to $3 
billion--dwarfing all previous increases. 

Figure 3: 2010 Census Life Cycle Cost Estimate Adjustments for 2003, 
2005, 2006, and 2007 (Differences from the 2001 Cost Estimate): 

This figure is a bar graph showing 2010 Census life cycle cost estimate 
adjustments for 2003, 2005, 2006, and 2007. The dollars are represented 
as dollars in millions. 

2001 initial estimate: $11,280 million dollars; 

Programs: ACS; 
Dollars in millions: -$124.7; 
2003 total estimate: $11,309.7. 

Programs: MAF/TOGER; 
Dollars in millions: $1.6; 
2003 total estimate: $11,309.7. 

Programs: 2010 Census; 
Dollars in millions: $152.8; 
2003 total estimate: $11,309.7. 

Programs: Net difference from 2001;  
Dollars in millions: $29.7; 
2003 total estimate: $11,309.7. 

: ACS; 
Dollars in millions: -$12.7; 
2005 total estimate: $11,254.6. 

Programs: MAF/TOGER; 
Dollars in millions: -$0.7; 
2005 total estimate: $11,254.6. 

Programs: 2010 Census; 
Dollars in millions: -$12.1; 
2005 total estimate: $11,254.6. 

Programs: Net difference from 2001; 
Dollars in millions: -$25.4; 
2005 total estimate: $11,254.6. 

Programs: ACS; 
Dollars in millions: -$18.1; 
2006 total estimate: $11,254.6. 

Programs: MAF/TOGER; 
Dollars in millions: -$0.7; 
2006 total estimate: $11,254.6. 

Programs: 2010 Census; 
Dollars in millions: -$6.6; 
2006 total estimate: $11,254.6. 

Programs: Net difference from 2001;  
Dollars in millions: -$25.4; 
2006 total estimate: $11,254.6. 

Programs: ACS; 
Dollars in millions: $13.5; 
2007 total estimate: $11,526.4. 

Programs: MAF/TOGER; 
Dollars in millions: -$21.5; 
2007 total estimate: $11,526.4. 

Programs: 2010 Census; 
Dollars in millions: $254.3; 
2007 total estimate: $11,526.4. 

Programs: Net difference from 2001;  
Dollars in millions: $246.4; 
2007 total estimate: $11,526.4. 

[See PDF for image] 

Note: This figure does not reflect the Bureau's estimated increase in 
the 2010 Census life cycle cost estimate to a range from $13.7 billion 
to $14.5 billion, which the Bureau announced on April 3, 2008, with the 
replan of the FDCA program. 

[End of figure] 

In January 2004, we reported that the Bureau's approach had the 
potential to achieve the first three goals for reengineering the 2010 
Census, although reducing operational risk could prove to be difficult 
because each of the three components actually introduced new risks, and 
the Bureau would be challenged to control the cost of the 2010 
Census.[Footnote 10] To manage the 2010 Census and contain costs, we 
recommended in our 2004 report that the Bureau develop a comprehensive, 
integrated project plan for the 2010 Census that should include 
itemized estimated costs of each component, including a sensitivity 
analysis, and an explanation of significant changes in the assumptions 
on which these costs are based. In response, the Bureau provided us 
with the 2010 Census Operations and Systems Plan, dated August 2007. 
This plan represented an important step forward at the time. It 
included inputs and outputs and described linkages among operations and 
systems. However, it did not include sensitivity analysis, risk 
mitigation plans, a detailed 2010 Census timeline, or itemized 
estimated costs of each component. With the redesign, this plan will 
need to be updated. 

The Census Bureau's 2010 Census Life Cycle Cost Estimate Is Not 
Reliable: 

The 2010 Census Life Cycle Cost Estimate Is Not Adequately Documented: 

The Bureau's life cycle cost estimate for the 2010 Census is not 
adequately documented. The Bureau could not provide adequate 
documentation to support the costs of two of the three components of 
the total life cycle cost estimate, the ACS and MAF/TIGER components, 
which together accounted for close to 20 percent of total life cycle 
costs in the 2007 life cycle cost estimate. Figure 4 shows the three 
major components of the total life cycle cost of $11.5 billion as of 
August 2007. 

Figure 4: Total Estimated Life Cycle Costs of $11.5 Billion for 2010 
Decennial Census, Broken Down by Component (as of August 2007): 

This figure is a pie chart of total estimated life cycle cost of $11.5 
billion for 2010 Decennial Census broken down by component (as of 
August 2007). 

Estimated life cycle costs for 2010 Decennial Census Program August 
2007 (Nominal year dollars in millions): 

2010 Census Short Form: ($9,279.30): 81%; 
MAF/TIGER: ($513.50): 4%; 
ACS: ($1,733.50): 15%. 

[See PDF for image] 

Source: GAO analysis of U.S. Census Bureau figures. 

Note: This figure does not reflect the Bureau's estimated increase in 
the 2010 Census life cycle cost estimate to a range from $13.7 billion 
to $14.5 billion, which the Bureau announced on April 3, 2008, with the 
replan of the FDCA program. 

[End of figure] 

Costs for the ACS and MAF/TIGER are estimated outside of the cost model 
that is used for the 2010 short form census. According to Bureau 
officials, they were not able to locate specific documentation for how 
the Bureau first calculated the costs for those components of the 2010 
Census life cycle cost estimate in 2001, although they explained that 
experienced staff derived the estimates based on professional 
expertise, similar surveys, comparative costs for similar projects, and 
other factors. 

We requested documentation that supported the assumptions for the 
initial 2001 life cycle cost estimate as well as the updates, but 
Bureau officials were unable to demonstrate that support existed. The 
Bureau did not provide detailed documentation for data sources and 
significant assumptions used in estimating the cost of the short form 
2010 Census. For example, the Bureau's first document describing the 
life cycle cost estimate for the 2010 Census, which was issued in June 
2001,[Footnote 11] includes a number of assumptions for expected areas 
of savings that would be achieved by the reengineered design. One 
assumption is that the follow-up workload for the Local Update of 
Census Addresses (LUCA) program[Footnote 12] will be reduced by 25 
percent as a result of updating the address list throughout the decade 
and using HHCs to reduce time and travel costs. However, the document 
does not fully describe how the 25 percent reduction was calculated or 
what the associated savings might be. 

Similarly, the Bureau did not provide detailed documentation for the 
updated life cycle cost estimate for the 2010 short form that was 
issued in 2003, which includes several changes to assumptions.[Footnote 
13] For example, the Bureau describes how increases of $128 million 
have been made to the life cycle cost estimate based on new 
requirements, including the need for more research on ways to reduce 
duplicate enumerations, more testing and development on how to identify 
and enumerate special places/group quarters, and additional efforts to 
research and test methods for enumerating Americans overseas. However, 
the document does not describe how the $128 million increase was 
derived, the costs associated with each of the new requirements, or the 
data sources and calculation methods used. 

Cost estimates are well documented when they can be easily repeated or 
updated and can be traced to original sources. The documentation should 
explicitly identify the primary methods, calculations, assumptions, and 
sources of the data used to generate each cost element. The estimating 
process should be described and an explanation provided for why 
particular methods and data sets were chosen and why these choices are 
reasonable. All the steps involved in developing the estimate should be 
documented so that a cost analyst unfamiliar with the program could re- 
create it with the same result. In addition, documentation for the cost 
estimate should reflect changes in technical or program assumptions or 
new program phases or milestones. 

Officials acknowledged that the Bureau does not have a centralized 
location in which to keep detailed documentation to support the 
assumptions and decision-making process. Further, Bureau officials 
stated that there is no written documentation of the process used by 
management to agree upon particular assumptions for use in the life 
cycle cost estimate, and that there is no systematic documentation 
regarding management decisions to make changes to the cost model or 
life cycle cost estimates. According to an official, changes to the 
cost model have not always been well documented, and sometimes a 
decision memo is created to justify a change but not always. Best 
practices call for management approval of the cost estimate. Management 
approval of the cost estimate should also be documented, including 
management approval memorandums or recommendations for change, as well 
as management feedback. 

Lack of documentation was also identified as an issue for the 2000 
Census life cycle cost estimate. An independent assessment of the prior 
Census 2000 life cycle cost model that was issued in 1997 found that 
input data and assumptions used in the 2000 model typically came from 
other offices and were based on historical observation, professional 
judgment, or both. The assessment concluded that the Bureau did not 
have documentation readily available for external use on the underlying 
basis of the 2000 cost estimate, input assumptions, or process 
characteristics.[Footnote 14] 

As a result of insufficient documentation, the validity and reliability 
of the Bureau's life cycle cost estimate for the 2010 Decennial Census 
cannot be verified. Not having adequate documentation also impedes the 
Bureau's ability to support the decennial decision-making process, 
inform future estimates, and facilitate oversight by Congress. 

Bureau officials indicated that they understand that the Bureau's cost 
estimation process needs to be improved and are currently developing 
DBiT, which should improve documentation for the cost estimates. DBiT, 
which is described in more detail later in this report, is being 
incrementally implemented and will not be fully functional until after 
2010. 

The 2010 Census Life Cycle Cost Estimate Is Not Comprehensive: 

The 2010 Census life cycle cost estimate is not comprehensive because 
the Bureau did not include all potential costs or clearly define some 
of the cost elements in the model for the short form Census. In 
February 2008, Commerce's Inspector General (IG) reported that the 
fiscal year 2009 budget request did not include the cost to fingerprint 
some 900,000 temporary workers to be hired for the 2010 Census. In 
addition, the Bureau provided documentation that the life cycle cost 
estimate did not include the cost to fingerprint temporary workers. A 
cost estimate is comprehensive when it accounts for all possible costs. 
According to the IG, the Bureau has not included the cost for 
fingerprinting temporary staff. After discussions with Commerce, the 
Office of Personnel Management, and the Federal Bureau of 
Investigation, the Bureau decided to require fingerprinting.[Footnote 
15] In the previous two decennials, the Bureau obtained criminal 
history records for temporary decennial applicants using only a name 
check. The Bureau estimates that the cost to fingerprint all temporary 
staff could be about $450 million. Thus, there is a risk that the life 
cycle cost estimate has been substantially understated. 

The Bureau also did not have detailed descriptions for some of the cost 
elements in the model or explanations of how individual cost elements 
were related. For example, when we analyzed the fiscal year 2006 
version of the cost model for the short form component of the 2010 
Census, we found that $2.7 billion in the Other Objects category were 
fixed dollar amounts. The Bureau did not provide detailed descriptions, 
equations, or support to explain how individual cost elements within 
the Other Objects category were produced or related. Bureau officials 
stated that most of the costs in this category were associated with 
contracts, travel, supplies, and training. Further, the Bureau does not 
have a work breakdown structure (WBS) that clearly identifies and 
defines all costs contained in the short form cost estimate. A WBS 
defines the work necessary to accomplish a program's objectives. 

A comprehensive cost estimate's level of detail ensures that all 
pertinent cost elements are included and that no costs are double 
counted. A comprehensive cost estimate also includes a clearly defined 
WBS. A WBS reflects the requirements, resources, and tasks that must be 
accomplished to develop a program. The WBS should have a dictionary 
that defines each cost element and how it relates to others, clearly 
describes what is and is not included in each element, describes 
resources and processes necessary to produce the element, and links 
each element to other relevant technical documents. A WBS clearly 
defines the logical relationship of all program elements and provides a 
systemic and standardized way for collecting data, communicates to 
everyone what needs to be done and how activities relate to one 
another, and is an essential part of developing a cost estimate for a 
program. 

When we asked for documentation for the cost elements in the Other 
Objects category, the Bureau was not able to provide support for all 
the cost elements and agreed that the documentation supporting cost 
elements in the model was not clear. Without clearly defined cost 
elements or a well-developed WBS, the Bureau cannot be sure that the 
cost estimate captures all relevant costs, which increases the risk of 
underfunding and cost overruns. Having cost, schedule, and technical 
information organized by the WBS hierarchical structure would allow the 
Bureau to summarize data, provide valuable information at any phase of 
the program, and assess progress against the cost estimate plan. This 
would help keep program status current and visible, so that risks could 
be managed or mitigated quickly. Without a WBS, it is difficult (if not 
impossible) for Bureau managers to analyze the causes of cost, 
schedule, or technical problems and choose an optimum solution to fix 
the problems. As part of the new DBiT system, the Bureau expects to 
have the capacity to develop a WBS that includes a data dictionary that 
defines variables, key terms, and categories. 

The 2010 Census Life Cycle Cost Estimate Is Not Accurate: 

The Bureau's 2010 Census life cycle cost estimate is not accurate 
because it does not reflect an important change to a key assumption 
that affects cost. The assumption for productivity during address 
canvassing that was in the Bureau's fiscal year 2009 President's Budget 
life cycle cost estimate of $11.546 billion did not reflect recent 
productivity data from last year's address canvassing dress rehearsal. 
According to the Bureau, the 2010 Census cost model initially assumed 
productivity for address canvassing to be 25.6 addresses per hour for 
urban/suburban areas. However, results from the 2008 address canvassing 
dress rehearsal showed productivity of 13.4 addresses per hour for 
urban/suburban areas. According to the 2009 President's Budget request, 
the life cycle cost estimate did increase by $20 million, but this 
increase was attributed to other factors and not to lower-than-expected 
address canvassing productivity. 

An estimate is accurate when it is based on an assessment of the costs 
most likely to be incurred. When costs change, best practices require 
cost model assumptions to be updated as new information becomes 
available. Although the Bureau assessed productivity for the address 
canvassing operation, it is not clear why the cost estimate was not 
updated. A senior Bureau official confirmed that the estimate had not 
been updated but was now being updated to reflect changes in 
assumptions. It is important that as part of the replan, the Bureau 
update assumptions for productivity. The Bureau also expects to update 
assumptions for the number of hours field staff may work in a given 
week. The model assumes 27.5 hours per week, but the Bureau now expects 
this to be 18. This will make it necessary to hire more workers and, 
therefore, procure more HHCs. 

As a result of not updating the cost estimate to reflect an expected 
decrease in productivity, the cost estimate for the 2010 address 
canvassing operation in the fiscal year 2009 President's Budget is 
understated. As part of our review, we updated the assumption for 
address canvassing productivity in the 2006 version of the cost model 
that was provided to us by the Bureau to reflect the productivity data 
for the number of addresses completed per hour from the dress 
rehearsal. Updating this productivity assumption resulted in a 
significant increase of approximately $270 million to the cost of the 
address canvassing operation. 

Further, the Bureau cannot readily demonstrate the accuracy of its cost 
estimates because it does not maintain historical data, which include 
previous versions of the estimate, in a centralized, standard format 
that is readily available. We requested all documentation for the life 
cycle cost estimate, including support for the initial estimate created 
in 2001 and for updates in 2003, 2005, 2006, and 2007. However, the 
Bureau did not have previous versions of the estimate available for 
analysis. Best practices for ensuring an accurate cost estimate call 
for historical data to be maintained for evaluation purposes, 
documenting lessons learned, and informing future cost estimates. 
Bureau officials told us that the Bureau maintains historical cost data 
in data warehouses that are separate from the cost model, and that this 
information was not easily accessible. Not having historical data 
readily available in a standardized, accessible format hampers the 
Bureau's ability to track and evaluate changes in the cost estimate 
over time, document lessons learned, and inform future cost estimates. 

The 2010 Census Life Cycle Cost Estimate Is Not Credible: 

The Bureau has not carried out analyses that would demonstrate that its 
life cycle cost estimate for the 2010 short form Census is credible. 
Specifically, Bureau officials told us that the Bureau has not 
conducted formal sensitivity analysis to fully assess how sensitive the 
short form cost estimate is to changes in key assumptions and 
parameters. The Bureau also has not conducted uncertainty analysis to 
quantify the uncertainty of its short form cost estimate or provide a 
level of confidence associated with the point estimate.[Footnote 16] 
Finally, the Bureau did not have the 2010 short form Census life cycle 
cost estimate validated through an independent cost estimate. 

Cost estimates are credible when major assumptions have been varied and 
other outcomes recomputed to determine how sensitive outcomes are to 
changes in the assumptions, when risk and uncertainty analyses have 
been performed to determine the level of risk associated with the 
estimate, and when the estimate's results have been cross-checked and 
an independent cost estimate has been developed to determine whether 
other estimating methods produce similar results. Sensitivity analysis 
should be included in all cost estimates as a best practice because all 
estimates have some uncertainty. A sensitivity analysis addresses some 
of the estimating uncertainty by testing discrete cases of assumptions 
and other factors that could change. By examining each assumption or 
factor independently, while holding all others constant, the cost 
estimator can evaluate the results to discover which assumptions or 
factors most influence the estimate.[Footnote 17] However, because many 
parameters could change at the same time, uncertainty analysis should 
also be performed to capture the cumulative effect of additional risks. 
Uncertainty analysis adds to the credibility of a cost estimate because 
it quantifies the uncertainty and provides a level of confidence 
associated with the point estimate. The results of a high-quality, 
reliable cost estimate should also be cross-checked, and an independent 
cost estimate should be developed to determine whether other estimating 
methods produce similar results. An independent cost estimate is 
considered to be one of the most reliable validation methods. An 
independent cost estimate is typically performed by organizations 
higher in the decision-making process than the office performing the 
baseline cost estimate, using different estimating techniques and, 
where possible, different data sources from those used to develop the 
baseline cost estimate. 

Bureau officials told us that while staff have not conducted formal 
sensitivity analysis, they have carried out some "what-if" analysis to 
assess the impact of changes to some assumptions. According to Bureau 
officials, DBiT, which is under development, will provide the Bureau 
with the capability to perform sensitivity and uncertainty analyses for 
the life cycle cost estimate for the decennial census in the future, 
although officials did not confirm that the Bureau plans to do these 
analyses. 

Given the importance of sensitivity and uncertainty analyses for 
producing a high-quality cost estimate, we conducted these analyses for 
the short form census life cycle cost estimate, using cost model data 
provided by the Bureau in November 2006. However, as described in 
earlier sections, the Bureau provided incomplete documentation on cost 
elements and assumptions included in the short form life cycle cost 
estimate. As a result, we would only be able to conduct uncertainty 
analysis on a portion of the total life cycle costs of the 2010 Census. 
We determined that the results of uncertainty analysis conducted on 
only a portion of the total life cycle costs would not be meaningful. 
See appendix I for a more detailed explanation of the portion of total 
life cycle costs for which the Bureau provided information that would 
permit uncertainty analysis. 

Performing sensitivity analysis for the 2010 Census life cycle cost 
estimate would help Bureau managers identify and focus on key elements 
with the greatest effects on cost and understand the potential for cost 
growth and the reasons for it. It could also influence Bureau decisions 
affecting the design and operation of the census. Because the Bureau 
has not conducted uncertainty analysis, it is unable to provide 
Congress with a confidence level for its total 2010 Census life cycle 
cost estimate. Performing uncertainty analysis would enable the Bureau 
to quantify the risk and uncertainty associated with the cost model; 
provide a level of confidence for its cost estimate; and give decision 
makers perspective on the potential variability of the cost estimate 
should facts, circumstances, and assumptions change. It would also 
identify the amount of increased investment needed to reach specific 
higher levels of certainty and could help establish a defensible level 
of contingency reserves. The results of an independent cost estimate 
could help validate the Bureau's 2010 Census life cycle cost estimate 
and provide an objective and unbiased assessment of whether the cost 
estimate can be achieved, reducing the risk that the census would be 
underfunded. 

Unreliable 2010 Census Cost Estimate Does Not Fully Inform Annual 
Budgets: 

The Bureau uses the life cycle cost estimate as the starting point for 
annual budget formulation. However, the Bureau does not follow best 
practices for developing and maintaining the life cycle cost estimate, 
as previously described, so annual budget requests based on the cost 
estimate are not fully informed. In addition, while the Bureau revises 
the life cycle cost estimate based on appropriations received and 
updated budget information, the Bureau does not update the cost 
estimate to reflect actual costs. 

The Bureau uses the 2010 Census life cycle cost estimate to set initial 
allocations when preparing the annual budget submission. The decennial 
census life cycle cost estimate is the starting point for the budget 
formulation process each year. Officials explained that the Decennial 
Management Division sends information from the life cycle cost estimate 
to the Budget Division, which uses that information to determine 
program allocations by subactivity in the "budget call" memo that goes 
out to program offices in January or February.[Footnote 18] However, 
because the life cycle cost estimate is not valid and reliable, as 
described above, budget requests based on that estimate are not fully 
informed. 

The Bureau updates the 2010 life cycle cost estimate to reflect 
appropriations for specific fiscal years but does not update the cost 
estimate with actual costs as they take place over the decade. 
According to Bureau officials, they continually revise the life cycle 
cost estimate based on changes resulting from the Commerce and Office 
of Management and Budget (OMB) passback processes,[Footnote 19] and 
once they submit the budget to Congress, they revise the life cycle 
cost estimate to match what is in the budget submission, including 
outyears. Bureau 2010 Census life cycle cost estimate documents for 
2003, 2005, 2006, and 2007 contain tables showing enacted 
appropriations figures for past years and text explanations that the 
updated estimates reflect actual appropriations and submitted budget 
requests. However, Bureau officials said that the Bureau does not 
analyze the accuracy of the life cycle cost estimate each year, such as 
by comparing the estimate to actual costs at the end of the year, or 
update the estimate with actual costs. 

A high-quality cost estimate is the foundation of a good budget. A 
major purpose of a cost estimate is to support the budget process by 
providing an estimate of the funding required to efficiently execute a 
program. Because most programs do not remain static but tend to evolve 
over time, developing a cost estimate should not be a onetime event but 
rather a recurrent process. Our Cost Assessment Guide explains that a 
cost estimate should be a "living" document that is continually updated 
as actual costs begin to replace original estimates, so that it remains 
relevant and current. Effective program and cost control requires 
ongoing revisions to the cost estimate and budget. 

When we asked why the Bureau does not update the 2010 life cycle cost 
estimate with actual cost data, a budget official told us that actual 
cost information can be incurred over multiple fiscal years, and it 
would be difficult to compare this information to the annual framework 
used for the cost estimate. For budget purposes, the Bureau updates the 
life cycle cost estimate every year based on appropriations figures 
instead of actual cost data, because appropriations data are attributed 
to single fiscal years and are easier to work with than actual cost 
data. 

Using a reliable life cycle cost estimate to formulate the budget could 
help the Bureau ensure that all costs are fully accounted for so that 
resources are adequate to support the program. Credible cost estimates 
could also help the Bureau effectively defend budgets to a department 
secretary, OMB, or Congress. In addition, the Bureau could use the cost 
estimate to help determine how budget cuts might hinder the census 
program's progress or effectiveness. Moreover, because the Bureau does 
not update the life cycle cost estimate with actual cost data, the 
Bureau will not have the ability to keep the estimate current or 
document lessons learned for cost elements whose actual costs differ 
from the estimate. 

Concerns about the soundness of the life cycle cost estimate and the 
quality of annual budgets related to the 2010 Census are particularly 
important because the bulk of funds will be spent from fiscal years 
2009 through 2013, as shown in table 1. 

The Bureau Has Insufficient Policies and Inadequately Trained Staff for 
Conducting High-Quality Cost Estimation; However, a New System May Help 
Improve the Bureau's Cost Estimation Practices: 

The Bureau has insufficient policies and inadequately trained staff for 
conducting high-quality cost estimation. The Bureau does not have 
formal cost estimation policies and procedures. The Bureau also does 
not have skilled cost estimators or a centralized office dedicated to 
cost estimation. According to Bureau officials, although multiple staff 
members with various census backgrounds and experiences from across 25 
divisions develop information for use in the cost estimate, we found 
that staff are not adequately trained in cost estimation. Bureau 
officials told us that most of the managers have project management 
certificates or training, which includes classes in cost estimation. 
However, the classes were designed more to provide program management 
with a general understanding of cost estimation rather than to provide 
in-depth training to the actual cost estimators. 

In order to consistently develop reliable cost estimates, it is 
important for an agency to have defined policies and procedures to 
govern the process. Cost estimating best practices were developed to 
help agencies establish appropriate policies and procedures for 
producing estimates that adhere to the characteristics of high-quality 
cost estimation. An agency's cost assessment team should include 
members who are experienced and trained in conducting cost estimation. 
Further, centralizing the cost estimating team and process (including 
cost analysts working in one group but supporting many programs) 
represents a cost estimating team best practice. Since the experience 
and skills of the members of a cost estimating team are important, some 
organizations have chosen to establish training programs and 
certification procedures. For example, the Department of Defense (DOD) 
established the Defense Acquisition University (DAU), which provides 
basic, intermediate, and advanced certification training as well as 
continuous learning opportunities. Although DAU's primary mission is to 
train DOD employees, all federal employees are eligible to attend, 
including Bureau employees. 

Bureau officials understand that the Bureau's cost estimation process 
needs to be improved and are currently developing DBiT, a budget 
management tool that will support the process underlying the generation 
of cost estimates by facilitating, managing, and documenting changes in 
variables and assumptions that support the cost estimates. If properly 
implemented, DBiT should secure, standardize, and consolidate budget 
information and enable the Bureau to maintain better documentation for 
cost estimation. Further, DBIT is supposed to enhance access to budget 
data and increase the ability to model, formulate, execute, and report 
the decennial census budget. Officials told us that DBiT would have the 
ability to download data from the budget database, thus facilitating 
linkages between the life cycle cost estimate and budget preparation 
processes. Bureau officials also said that the Cost and Progress 
system, which tracks the actual cost of operations, would not link to 
DBiT. Without this capability, the Bureau will not be able to 
systematically update the estimate with actual costs. However, Bureau 
officials indicated that they might consider linking the two systems in 
the future. 

Bureau officials also said that DBiT will enable the Bureau to save 
different versions of the cost model and will provide them with the 
capability to use software packages such as Crystal Ball to perform 
sensitivity and uncertainty analyses on its estimates. However, 
officials did not assert their intention to conduct these analyses. 
DBiT is being incrementally implemented and will not be fully 
functional until after 2010. 

While DBiT should improve the Bureau's systems for developing budgets 
and the life cycle cost estimate for the 2020 Census, the Bureau will 
still need established policies and procedures for conducting cost 
estimation and skilled estimators. Policies and procedures to govern 
the process as well as a dedicated office that is supported by properly 
trained staff are the foundation for a reliable cost estimate. Not 
having the tools and people in place for the 2010 Census has impeded 
the Bureau's ability to produce a sufficiently documented, 
comprehensive, accurate, and credible cost estimate. 

Conclusions: 

On April 3, 2008, the Secretary of Commerce presented a redesigned 2010 
Census plan with significant cost increases. However, until the Bureau 
makes fundamental changes to how it estimates and updates cost 
information, uncertainties about the ultimate cost of the 2010 Census 
will remain. The Bureau's ability to produce well-documented, 
comprehensive, accurate, and credible cost estimates for the 2010 and 
future decennial censuses and its ability to effectively manage 
operations and contain costs will continue to be hampered unless 
improvements are made to its cost estimation processes and systems. 
Specifically, without full documentation of the data sources, 
assumptions, and calculation methods the Bureau uses, the 2010 life 
cycle cost estimate cannot be validated, nor can the Bureau understand 
and explain differences between estimated and actual costs--an 
important step in improving future cost estimates. Also, without 
updating assumptions for the 2010 life cycle cost estimate and making 
clear what the underlying assumptions are, the Bureau cannot ensure 
that it is providing the most up-to-date and accurate cost estimates to 
OMB and Congress. Further, without conducting sensitivity and 
uncertainty analyses on the 2010 life cycle cost estimate, the Bureau 
is unable to identify and focus on major cost drivers, understand the 
potential for cost growth, and quantify the risk and uncertainty 
associated with the cost estimate. Finally, without established 
policies and procedures and qualified staff, the Bureau's ability to 
produce high-quality cost estimates for the 2010 Census and future 
censuses will be limited. 

Along with the new cost estimate, the Secretary of Commerce outlined 
major changes to the 2010 Census design. Changes this late in the 
decade significantly increase the risk to the success of the 2010 
Census. These changes, during an era of serious national budget 
challenges, make it important for Bureau managers to efficiently manage 
the new design in order to contain costs. Furthermore, careful 
monitoring and oversight by Commerce, Congress, and other key 
stakeholders are more critical than ever. 

Recommendations for Executive Action: 

To improve the Bureau's life cycle cost estimates for the decennial 
census, we recommend that the Secretary of Commerce direct the U.S. 
Census Bureau to take the following five actions: 

1. To improve the quality and transparency of the Bureau's 2010 Census 
life cycle cost estimate, assist the Bureau in managing costs during 
design revisions resulting from problems with the HHCs, and help 
establish a sound basis for the 2020 Census cost estimate, the Bureau 
should thoroughly document the 2010 Census life cycle cost estimate. 
Specifically, documentation should be maintained in a centralized 
standard format and specify all data sources, assumptions, calculation 
methods, and cost elements used to prepare the 2010 cost estimate. 

2. To ensure that the life cycle cost estimate reflects current 
information, the Bureau should update assumptions as appropriate, 
including updating productivity assumptions to reflect results from the 
address canvassing dress rehearsal. The Bureau should also document the 
basis for prior and future changes made to assumptions used in the life 
cycle cost estimate. 

3. To keep the life cycle cost estimate current and to document lessons 
learned for cost elements whose actual costs differ from the estimate, 
the Bureau should update the estimate to reflect actual costs. 

4. To improve the quality of and provide a confidence level for the 
2010 Census life cycle cost estimate, the Bureau should perform 
sensitivity and uncertainty analyses on the estimate. 

5. To help ensure that the Bureau produces a reliable, high-quality 
life cycle cost estimate for the 2020 decennial census, the Bureau 
should establish guidance, policies, and procedures for conducting cost 
estimation that would meet best practices criteria and ensure that it 
has staff resources qualified in cost estimation. 

Agency Comments and Our Evaluation: 

The Secretary of Commerce provided written comments on a draft of this 
report on May 23, 2008. The comments are reprinted in appendix II. 
Although Commerce raised concerns about how GAO characterizes the 
accuracy of the estimate, Commerce stated that it agrees with many of 
our findings, and that the Bureau will prepare a formal action plan to 
document specific steps (with estimated completion dates) it will take 
in response to the recommendations. Commerce stated that the Bureau 
will determine if it will be possible to make improvements in the short 
term to its cost estimates and methods. Further, Commerce made some 
suggestions where additional context or clarification was needed and 
where appropriate we made those changes. 

Commerce commented that our report, in its discussion of increasing 
census costs, does not mention other significant factors that have 
contributed to substantial cost increases over the last 40 years. We 
agree and have clarified in our report that other factors have 
contributed to increased costs, such as accommodating more complex 
households, busier lifestyles, more languages and greater cultural 
diversity, and increased privacy concerns. 

Commerce also stated that it would have been premature to include the 
cost of fingerprinting temporary workers in the 2010 Census life cycle 
cost estimate. However, best practices state that having a realistic 
estimate of projected costs makes for effective resource allocation and 
increases the probability of a program's success. To be prudent and 
conservative, an agency should include possible program costs that may 
have an impact on the overall life cycle cost estimate. We 
appropriately characterize the cost for fingerprinting temporary 
workers for the 2010 Census by stating that it is a "potential" cost. 
Also, understanding that the life cycle cost estimate is, in fact, an 
estimate, the draft report states that "there is risk that the life 
cycle cost estimate has been substantially understated." We therefore 
made no change to the report. 

In commenting on our description of how the Bureau updates the estimate 
to reflect costs, Commerce stated that it believes that for budget 
purposes, using enacted appropriations is the best way to adjust the 
life cycle cost estimate. However, best practices require that an 
estimate be updated to reflect actual costs when a difference occurs. 
This enables an agency to determine the precise reasons why actual 
costs differ for the estimate and document lessons learned. Because the 
draft report already reflected the Bureau's practice of using enacted 
appropriations, we made no changes. 

Commerce did not agree with our statement that the 2010 life cycle cost 
estimate is not accurate as it relates to assumed productivity rates 
for the fiscal year 2009 address canvassing operation. Commerce stated 
that at the time of GAO's review of the life cycle cost estimate, the 
Bureau had not completed its analysis of the dress rehearsal 
productivity data. However, productivity data from the address 
canvassing dress rehearsal were provided to us in December 2007. These 
productivity data were significantly different from the assumptions 
used in the life cycle cost model. The updated productivity assumptions 
should have been included in the estimate that was included in the 
fiscal year 2009 President's Budget request, which was issued in 
February 2008. 

In addressing our recommendations, Commerce generally agreed with our 
five recommendations, and indicated that the Bureau will prepare 
specific steps in response to the recommendations. Commerce stated that 
as part of the Bureau's action plan it would examine GAO's Cost 
Assessment Guide to determine if it would be possible to make 
improvements in the short term to its cost estimate and methods. 
Commerce further noted that the Bureau already has efforts under way to 
improve future cost estimation methods and systems through the 
development of DBiT. In addition, Commerce acknowledged that at the 
lower level of detail estimates in the model, the Bureau will need to 
develop both a way to input costs in the model (or the DBiT system) in 
time to inform estimates for the 2020 cycle, and a way to update this 
information regularly over the coming decade. Further, Commerce noted 
that the Bureau was updating the life cycle cost estimate to reflect 
revised assumptions for the address canvassing operation. 

In response to our recommendation to perform sensitivity and 
uncertainty analyses on the estimate, Commerce said that the Bureau 
would use the Cost Assessment Guide and seek detailed information on 
the experiences of other agencies that have used sensitivity analysis. 
Commerce further commented that while it does not disagree that 
conducting sensitivity analysis and providing a possible range of costs 
would be useful to external audiences, the Bureau must submit budget 
requests and out-year estimates as fixed amounts rather than ranges. We 
understand that fixed amounts rather than ranges are submitted for 
budget requests. However, conducting sensitivity analysis on the cost 
estimate would be beneficial to the Bureau in its management of costs 
associated with the census, not just to external audiences. Sensitivity 
analysis provides valuable information to an agency about which 
assumptions or factors have the biggest effects on cost. Further, the 
Bureau should also conduct uncertainty analysis to quantify the overall 
uncertainty of the cost estimate and provide a level of confidence 
associated with the point estimate. Providing a range of costs around a 
point estimate is useful to decision makers because it conveys the 
level of confidence in achieving the most likely cost, and uncertainty 
analysis can also help managers identify a defensible level of 
contingency funding needed to reach a desired confidence level. The 
Bureau should ensure that it conforms to best practices by making 
sensitivity and uncertainty analyses part of required processes for 
cost estimation. 

In response to our recommendation to establish guidance, policies, and 
procedures for conducting cost estimation and ensure that it has staff 
resources qualified in cost estimation, Commerce stated that the Bureau 
has efforts under way to improve future cost estimation methods and 
systems through the development of DBiT. However, these efforts will 
not be completed in time to be used in preparing the 2010 budget 
request--an effort already underway. Commerce further stated that the 
Bureau would examine the Cost Assessment Guide to determine if it will 
be possible to make improvements in the short term to the estimate and 
methods, including possibly hiring additional skilled cost estimators. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to other interested congressional committees, the Secretary of 
Commerce, the Director of the U.S. Census Bureau, and the Director of 
the Office of Management and Budget. Copies will be made available to 
others upon request. This report will also be available at no charge on 
GAO's Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions concerning this report, please 
contact me at (202) 512-6806 or [email protected]. Key contributors to 
this report were Vidhya Ananthakrishnan, Thomas Beall, Jennifer Echard, 
Richard Hung, Anne Inserra, Jason Lee, Andrea Levine, Donna Miller, 
Lisa Pearson, Michelle Petre, Sonya Phillips, Karen Richey, John 
Sperry, Niti Tandon, Shannon VanCleave, and Michael Volpe. Contact 
points for our Office of Congressional Relations and Public Affairs may 
be found on the last page of this report. 

Siged by: 

Mathew J. Scirï¿½: 

Director, Strategic Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of this report were to (1) assess the extent to which 
the U.S. Census Bureau's (Bureau) 2010 Census life cycle cost estimate 
adheres to characteristics defined for high-quality cost estimation, 
(2) report on the relationship between the life cycle cost estimate and 
the Bureau's budget, and (3) assess whether the Bureau's existing 
policies and resources are sufficient to conduct high-quality cost 
estimation. 

To address our first objective, we evaluated the Bureau's 2010 Census 
life cycle cost estimate to determine whether it met key 
characteristics identified in the exposure draft of our Cost Assessment 
Guide. Our guide, which is based on extensive research of best 
practices for estimating program schedules and costs, states that a 
high-quality, valid, and reliable cost estimate should be well 
documented, comprehensive, accurate, and credible. We obtained and 
analyzed the version of the 2010 Census short form cost model that was 
given to us in November 2006. (The Bureau provided a cost model 
containing data for fiscal years 2009 through 2013, and separate models 
for fiscal years 2007 and 2008. The models, which were in Excel, did 
not include costs for fiscal years 2001 through 2006.) We also analyzed 
Bureau documents related to the 2010 Census life cycle cost estimate 
and cost estimates for previous censuses. We interviewed Bureau 
officials from the Decennial Management and Budget Divisions about the 
process used to prepare the life cycle cost estimates and the 
assumptions used to prepare the estimates. We shared the Cost 
Assessment Guide and the criteria against which we would be evaluating 
the Bureau's cost estimate with Bureau officials. 

To assess the adequacy of the Bureau's 2010 Census life cycle cost 
estimate, we compared the Bureau's methods and approaches for preparing 
the estimate with the guidance contained in our Cost Assessment Guide. 
We assessed whether the 2010 estimate met the four desired 
characteristics of being well documented, comprehensive, accurate, and 
credible. Given those criteria, the main purpose of this objective was 
to assess the reliability of the cost estimate. We assessed the extent 
to which the entire life cycle cost estimate was well documented, 
including the short form cost estimate, and the estimates for the 
American Community Survey (ACS) and the Master Address File/ 
Topologically Integrated Geographic Encoding and Referencing (MAF/ 
TIGER) system. Our analysis for the other three characteristics-- 
comprehensiveness, accuracy, and credibility--was limited to the short 
form cost estimate, due to lack of available documentation on the ACS 
and MAF/TIGER components of total life cycle costs. 

As part of our assessment of the credibility of the Bureau's 2010 
Census life cycle cost estimate, we conducted sensitivity analysis to 
identify significant cost drivers and limited uncertainty analysis on a 
portion of the 2006 version of the short form cost estimate that the 
Bureau provided. Portions of the total $11.3 billion life cycle cost 
estimate were excluded from the uncertainty analysis, as detailed below 
and shown in figure 5: 

* $1.7 billion of the total had already been spent from fiscal years 
2001 through 2007 (these sunk costs had to be excluded from the 
uncertainty analysis); 

* $1.2 billion of the total was allocated to costs for MAF/TIGER ($0.1 
billion) and ACS ($1.1 billion) for fiscal years 2008 through 2013 
(since these costs were estimated separately and not included in the 
short form cost model, they were excluded from the uncertainty 
analysis); 

* $0.6 billion of the total represented estimated fiscal year 2008 
costs for the short form Census, and the Bureau gave us estimated 
fiscal year 2008 costs in a separate model; and: 

* $2.3 billion of the total consisted of costs that the Bureau did not 
model but instead just provided as "throughput" or fixed 
costs.[Footnote 20] 

Subtracting the above components from the total left $5.4 billion to be 
analyzed. We determined that the results of uncertainty analysis 
performed on this limited portion of the total costs would not be 
meaningful. 

Figure 5: Breakdown of Census Life Cycle Costs and Portion of Total 
Costs Analyzed for Uncertainty: 

This figure is a flowchart of a breakdown of Census life cycle costs 
and portion of total costs analyzed for uncertainty. 

[See PDF for image] 

Source: GAO analysis of Census Bureau data. 

Notes: These figures do not reflect the Bureau's estimated increase in 
the 2010 Census life cycle cost estimate to a range from $13.7 billion 
to $14.5 billion, which the Bureau announced on April 3, 2008, with the 
replan of the Field Data Collection Automation (FDCA) program. Numbers 
may not add to totals because of rounding. 

[A] "Not modeled" means that these costs are not estimated by using 
relationships between input and output variables. The values for these 
costs are provided by Bureau headquarters as if they were fixed costs 
and contain outdated contract information. Because these costs could 
not be modified by manipulating variables in the cost model, we did not 
include them in the uncertainty analysis. 

[End of figure] 

Our analysis of the Bureau's 2010 life cycle cost estimate was 
conducted prior to the redesign of the census and the subsequent 
revision of the FDCA program. Detailed information on revised 
assumptions, cost data, methods of calculation, or the process used to 
revise the estimate was not available for the Bureau's proposed 
redesign in time to be analyzed as part of our scope. Because we did 
not analyze the Bureau's updated range for the total cost estimate of 
from $13.7 billion to $14.5 billion, we cannot verify whether the 
revised estimate is accurate, valid or reliable. 

To address the second objective, we reviewed policies and procedures 
for preparing annual budgets. We analyzed Bureau documents related to 
the budget preparation system and the process for preparing the 
decennial census life cycle cost estimate, including the Budget 
Formulation and Performance Planning Manual, and internal 
correspondence from the Budget Division to other Bureau offices 
concerning annual budget preparation. We also analyzed Bureau budget 
estimates as presented to Congress, life cycle cost estimate documents, 
and worksheets on life cycle costs prepared for budget formulation, and 
confirmed that appropriations figures for completed fiscal years did 
appear in subsequent life cycle cost estimate documents. Further, we 
interviewed officials from the Bureau's Budget and Decennial Management 
Divisions about the relationship between the cost estimate and the 
annual budget process. We did not independently verify budget 
information provided by the Bureau because that would have been outside 
the scope of our review. 

To address our third objective, we analyzed Bureau documents related to 
the life cycle cost estimate. We compiled information on the Bureau's 
process for developing its decennial cost estimate and the credentials 
of the Bureau's cost estimation staff. We requested the Bureau's 
policies and procedures for cost estimation, but determined that the 
Bureau does not have specific policies and procedures for cost 
estimating. We evaluated Bureau information against the best practices 
criteria presented in our Cost Assessment Guide for developing a high- 
quality cost estimate and designating an experienced, well-trained cost 
estimation team. We also interviewed Bureau officials. 

To determine what steps the Bureau is taking to improve its cost 
estimation practices, we attended a demonstration of the Decennial 
Budget Integration Tool, the new Bureau automated budget system 
currently being developed that should enable the Bureau to produce 
better cost estimates. We also interviewed Bureau officials. 

We conducted our work from October 2006 to June 2008 in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Commerce: 

The Secretary Of Commerce: 
Washington, D.C. 20230: 

May 23, 2008: 

Mr. Mathew J. Scire: 
Director: 
Strategic Issues: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Scire: 

The U.S. Department of Commerce appreciates the opportunity to comment 
on the United States Government Accountability Office's Draft Report 
Entitled 2010 Census. Census Bureau Should Take Action to Improve the 
Credibility and Accuracy of Its Cost Estimate for the Decennial Census, 
(GAO-08-554). I enclose the Department's comments on this report. 

Sincerely, 

Signed by: 

Carlos M. Gutierrez: 

Enclosure: 

U.S. Department of Commerce: 

Comments on the United States Government Accountability Office Draft 
Report Entitled 2010 CENSUS: Census Bureau Should Take Action to 
Improve the Credibility and Accuracy of Its Cost Estimate for the 
Decennial Census, (GAO-08-554) May 2008:  

The U.S. Department of Commerce and its U.S. Census Bureau appreciate 
the United States Government Accountability Office's (GAO) efforts to 
review our cost estimates for the 2010 Census and this opportunity to 
review GAO's draft report. 

We agree with many of the general findings in this report. Efforts to 
improve the quality and rigor of our cost estimates for the decennial 
census have been, and continue to be, an important objective for the 
program and for our stakeholders, including the Congress. As the report 
notes, the Census Bureau has been developing a new budget management 
tool called the Decennial Budget Integration Tool (DBiT), based on the 
Census Bureau's own identification of many of the same concerns and 
issues identified in this GAO report. Additional information about the 
DBiT effort is provided later in these comments. 

General Comments: 

On the "Highlights" page and elsewhere in the report, GAO states that 
the Census Bureau did not include the potential cost for fingerprinting 
temporary workers in its 2010 Census life cycle cost estimate. However, 
until very recently, no decision had been made whether to use a 
fingerprint- based background check for the 2010 Census, nor about what 
operational approach might be used. Now that a decision has been made, 
we are examining the costs and operational aspects of different 
approaches, and once those details are decided, we will update the life 
cycle cost estimate appropriately. At any point in time, the life cycle 
cost estimate for the 2010 Census is based on the program as planned at 
that time. It would have been premature to include in the program life 
cycle estimate a cost estimate for a program change not yet made. 

The "Highlights" page and later parts of the report also state that the 
Census Bureau's life cycle cost estimate is inaccurate because it does 
not reflect updated information about address canvassing productivity 
rates that were identified during the Dress Rehearsal operation. 
However, at the point in time GAO reviewed the life cycle estimate for 
the program, it accurately reflected our program plan and assumptions 
at that time. We had not completed our analysis of the Dress Rehearsal 
productivity data, so had not yet made any decision to revise the 
assumed rates for the Fiscal Year (FY) 2009 Address Canvassing 
operation. We subsequently completed that review and are in the process 
of updating the life cycle estimate to reflect revised assumptions. 

Throughout the report, including on the "Highlights" page, GAO notes 
that the Census Bureau did not conduct sensitivity analysis for its 
life cycle estimates, which would allow external audiences to assess 
the possible range of costs for the program. While we do not disagree 
with the potential usefulness to external audiences of such efforts, 
ultimately we must submit budget requests, including out-year 
estimates, for fixed amounts based on our best judgment of the amounts 
needed to accomplish our planned program. These are the figures we 
include in our formal budget requests, and which we then use as part of 
our life cycle cost estimate. If the program changes over time, or if 
we revise our estimates of a key parameter that affect costs, the 
results will be reflected both in our budget requests and in our life 
cycle cost estimate for the program. In reviewing GAO's July 2007 draft 
Cost Assessment Guide, we noted a number of case studies where GAO has 
determined that sensitivity analysis might have been useful if it had 
been employed. We intend to seek detailed information on the 
experiences of agencies that have used this tool. GAO's draft Cost 
Assessment Guide should provide useful information and tools to the 
Census Bureau and other agencies for improving future cost estimation 
capabilities and methods. We certainly expect that the best practices 
in this guide will be used to inform the 2020 Census life cycle 
estimating process. 

Specific Comments: 

On page 6, the discussion about the growth in decennial census costs 
reflects the increase in population and housing, and increases due to 
inflation, but does not mention other significant factors that have 
contributed to substantial cost increases over the last 40 years. Over 
that time, the interest in and demand for improved accuracy of 
decennial census counts has steadily grown. The task of completing the 
census has become increasingly difficult over this period due to more 
complex households, busier lifestyles, more languages and greater 
cultural diversity, increased privacy concerns, and numerous other 
factors. Though difficult to quantify individually, the combination of 
such factors has had a profound impact on the level of efforts the 
Census Bureau has had to make to ensure the census is completed 
accurately and in time to meet its legal deadlines for producing 
apportionment and redistricting data. 

On page 23, the report states: When we asked why the Bureau does not 
update the 2010 life cycle cost estimate with actual cost data, a 
budget official told us that actual cost information can be incurred 
over multiple fiscal years, and it would be difficult to compare this 
information to the annual framework used for the cost estimate. For 
budget purposes, the Bureau updates the life cycle cost estimate every 
year based on appropriations figures instead of actual cost data, 
because appropriations data are attributed to single fiscal years and 
are easier to work with than actual cost data. 

Regarding these statements, we note that the information we provided 
was made in the context of an overall, high-level life cycle cost 
estimate table maintained in our Budget Division as a basis for setting 
budget allocations. That table is produced and maintained at a much 
higher level than the individual elements of our cost model. The 
context in which we provided this information to GAO was a discussion 
about that high-level table, rather than a discussion about the more 
detailed cost model we use for cost estimation.  

We also note that we stated we do not update the life cycle estimate 
for actual spending. For the sake of clarification we add that, if we 
did update the table for actual spending, we would use obligations, not 
"costs," which have a specific meaning. However, we use enacted 
appropriations rather than actual obligations. These can differ in 
several ways, but to provide two examples: 

There may be unobligated budget authority at the end of the year, which 
is carried over to subsequent years and obligated in those years. The 
Census Bureau has this authority in most years as its appropriations 
allow for funds to be retained until spent. 

There may be de-obligations of budget authority that can become 
available for re-obligation, subject to apportionment approval. 

As a result of these situations, at the level of detail maintained in 
our life cycle cost estimate tables, we believe enacted appropriations 
represent the best way to adjust for these sources of potential 
overstatement or understatement in the overall life cycle estimates. 

Comments on Recommendations (Pages 27-28):  

After the GAO issues its final version of this audit report, the Census 
Bureau will prepare a formal action plan to document specific steps 
(including estimated completion dates) it will take in response to 
these recommendations. 

We acknowledge that at the lower levels of detail estimated in the cost 
model, we need to develop a way to input costs in the model (or the 
DBiT system) in time to inform estimates for the 2020 Census cycle, as 
well as find a way to update this information regularly over the coming 
decade. 

We already have efforts underway to improve our future cost estimation 
methods and systems through the development of the DBiT tool. However, 
these efforts will not be completed in time to be used in preparing our 
FY 2010 budget request -- an effort already underway. As part of our 
action plan, however, the Census Bureau will examine GAO's July 2007 
draft Cost Estimation Guide to determine if it will be possible to make 
improvements in the short term to these cost estimates and methods, 
including the possibility of hiring additional skilled cost estimators. 

The DBiT is a commercial off-the-shelf (COTS) enterprise-wide budget 
management tool that will replace manual and labor intensive processes, 
provide enhanced traceability throughout the budget process, produce 
automated documentation of the budget process as it evolves, and 
incorporate best practices and institutional knowledge into the budget 
process. DBiT secures, standardizes, and consolidates budget 
information on all Decennial Directorate programs and improves budget 
data access, analysis, and tracking for program managers and 
participating divisions, Decennial Directorate budget offices, and 
senior management.

[End of section] 

Footnotes: 

[1] GAO, Cost Assessment Guide: Best Practices for Estimating and 
Managing Program Costs: Exposure Draft, GAO-07-1134SP (Washington, 
D.C.: July 2007). 

[2] The ACS is a monthly sample survey of 250,000 households that has 
replaced the census long form questionnaire. 

[3] The MAF/TIGER system is the Bureau's address file and geographic 
database. MAF is the address list, and TIGER is the associated 
geographic information system, or mapping system, that identifies all 
visible geographic features, such as type and location of streets, 
housing units, rivers, and railroads. To link TIGER to MAF, the Bureau 
assigns every housing unit in MAF to a specific location in TIGER, a 
process called geocoding. TIGER is a registered trademark of the U.S. 
Census Bureau. 

[4] In the previous two decennials, the Bureau obtained criminal 
history records for temporary decennial applicants using only a name 
check. 

[5] The Census Bureau's Decennial Budget Directorate Offices began 
developing DBiT in 2003 with assistance from BoozAllen Hamilton. DBiT 
is an enterprise-wide budget management tool for modeling, formulating, 
executing and reporting the Decennial Census budget that will also 
support the cost estimation process. DBiT is already supporting part of 
the 2010 Census budget and the Bureau plans to incrementally implement 
and verify it by running it in parallel with the existing budget system 
through 2008, at which time it will phase out the old system. 

[6] 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 MAF, the Bureau assigns 
every housing unit in MAF to a specific location in TIGER, a process 
called geocoding. TIGER is a registered trademark of the U.S. Census 
Bureau. 

[7] U.S. Census Bureau, Potential Life Cycle Savings for the 2010 
Census (Washington, D.C.: June 2001). 

[8] U.S. Census Bureau, Estimated Life Cycle Costs for the Reengineered 
2010 Census of Population and Housing (Washington, D.C.: June 2003); 
Estimated Life Cycle Costs for Reengineering the 2010 Decennial Census 
Program (Washington, D.C.: Revised Sept. 2005); Estimated Life Cycle 
Costs for Reengineering the 2010 Decennial Census Program (Washington, 
D.C.: Revised June 2006); and Estimated Life Cycle Costs for 
Reengineering the 2010 Decennial Census Program (Washington, D.C.: 
Revised Sept. 2007). 

[9] U.S. Census Bureau, Budget Estimates as Presented to Congress, 
Fiscal Year 2009 (Washington, D.C.: Feb. 2008). 

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

[11] U.S. Census Bureau, Potential Life Cycle Savings for the 2010 
Census (Washington, D.C.: June 2001). 

[12] The LUCA program is a local address review program that was 
required by Congress in 1994 to give local and tribal governments 
greater input into the Bureau's address list development process. The 
LUCA program gives local governments an opportunity to review the 
accuracy and completeness of the Bureau's address information for their 
respective jurisdictions and suggest corrections where warranted. 

[13] U.S. Census Bureau, United States Census 2010: Estimated Life 
Cycle Costs for the Reengineered 2010 Census of Population and Housing 
(Washington, D.C.: June 2003). 

[14] Advanced Resource Technologies, Inc., Census 2000 Cost Model 
Independent Verification and Validation Report, submitted to the U.S. 
Census Bureau (Alexandria, Va.: Apr. 1997). 

[15] At a June 11, 2008 hearing before the Committee on Oversight and 
Government Reform and the Subcommittee on Information Policy, Census, 
and National Archives, the Director of the Census Bureau said that it 
had included funding for fingerprinting in its amended fiscal year 2009 
budget request that was submitted on June 10, 2008. 

[16] A point estimate is the best guess or most likely value for the 
cost estimate, given the underlying data. The level of confidence for 
the point estimate is the probability that the point estimate will 
actually be met. For example, if the confidence level for a point 
estimate is 50 percent, there is a 50 percent chance that the point 
estimate will be met and a 50 percent chance that costs will exceed the 
point estimate. 

[17] Sensitivity analysis examines the effect of changing one 
assumption or cost driver at a time while holding all other variables 
constant. 

[18] The Budget Division sends a call memo to program offices that 
includes general guidance for preparing the budget submission and 
provides initial allocation levels by subactivity, which the program 
offices break down further and allocate to their participating 
divisions. According to a Bureau official, initial allocations are 
adjusted to reflect any policy guidance received from the Office of 
Management and Budget, such as any inflation or deflation factors. 
Program managers and budget staff then prepare the Bureau's budget 
request using this guidance. 

[19] During the spring, program offices and divisions prepare detailed 
budgets, and then the Budget Division develops the Bureau's overall 
budget proposal, known as the secretarial submission, which is 
submitted to Commerce in May/June. From June through August, Commerce 
staff review the budget requests and put together a departmental budget 
request. According to officials, Commerce then sends the budget 
submission to OMB for review by September, and briefings are held with 
OMB on program, budget, and management issues. In late fall, OMB 
informs the Bureau of its budget decisions (a passback). Bureau 
officials explained that the Budget Division then sends out to program 
managers a memo that outlines the changes resulting from OMB's passback 
decisions. 

[20] These costs were not estimated using relationships between input 
and output variables and could not be modified by manipulating 
variables in the model. Therefore, it was not possible to apply 
uncertainty bounds to these unsubstantiated costs. 

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