Food Stamp Program: Focus Group Research and Procurement Problems
(Testimony, 05/08/96, GAO/T-RCED-96-157).

GAO discussed contracting problems involving a Department of Agriculture
(USDA) subcontract for surveying the general public's and food stamp
recipients' views of food stamp reform initiatives. GAO noted that: (1)
USDA did not use normal contracting practices in procuring the
subcontracted services; (2) USDA conducted price and scope of work
negotiations prior to official contract negotiations and bypassed the
appropriate contracting office; (3) USDA should have conducted a
separate competitive procurement for the services, since the work done
by the subcontractor was outside the scope of work of the original
contract; (4) USDA failed to obtain required approval from the Office of
Management and Budget before conducting its survey; (5) the approach and
methodology used in conducting the survey were inconsistent with
achieving the desired purpose of the work; and (6) the subcontractor
appeared to target areas and groups of political significance and asked
leading questions to produce biased results.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-96-157
     TITLE:  Food Stamp Program: Focus Group Research and Procurement 
             Problems
      DATE:  05/08/96
   SUBJECT:  Sole source contracts
             Public opinion polls
             Subcontracts
             Subcontractors
             Irregular procurement practices
             Surveys
             Political activities
             Public relations
IDENTIFIER:  USDA Team Nutrition Initiative
             Food Stamp Program
             WIC
             Special Supplemental Food Program for Women, Infants, and 
             Children
             
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Cover
================================================================ COVER


Before the Committee on Agriculture, House of Representatives

For Release
on Delivery
Expected at
9:30 a.m.  EDT
Wednesday
May 8, 1996

FOOD STAMP PROGRAM - FOCUS GROUP
RESEARCH AND PROCUREMENT PROBLEMS

Statement of Keith O.  Fultz,
Assistant Comptroller General,
Resources, Community, and Economic
Development Division

GAO/T-RCED-96-157

GAO/RCED-96-157T


(150256)


Abbreviations
=============================================================== ABBREV

  USDA -
  FCS -
  GAO -
  OAE -
  OMB -

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

We are pleased to be here today to discuss the first stage of our
review of the U.S.  Department of Agriculture's (USDA) Team Nutrition
Initiative.  We began this work in response to a request from the
Chairman of the House Committee on Agriculture's Subcommittee on
Department Operations, Nutrition and Foreign Agriculture.  The
Chairman asked us to review the contracting practices associated with
USDA's initiative.  As part of our review, we are examining all
related contracts issued by USDA's Food and Consumer Services (FCS). 
During the course of our review of FCS' contract with Global
Exchange, Inc., we identified a task performed as a subcontract that
seemed unrelated to the purpose of the contract.  We reviewed that
subcontract in detail, and our comments today are limited to our
findings concerning that particular subcontract. 

Under the terms of its contract, Global Exchange is to provide
support services to assist USDA in conducting a national nutrition
education and information distribution campaign.  Since the award of
this contract in September 1994, Global Exchange has performed a
number of tasks for USDA, several of which have involved the use of
subcontracts.  The subcontract we will discuss today was with Lake
Research, Inc. 

According to the terms of the work, the purpose of the subcontract
was to conduct four focus groups aimed at obtaining the general
public's and food stamp recipients' perceptions of USDA's food stamp
reform initiatives.  This effort was funded with appropriations from
the Food Stamp Program's research and evaluation account. 

In summary, Mr.  Chairman, we found that USDA did not comply with the
Federal Acquisition Regulation and the Paperwork Reduction Act, and
in addition used a methodology inconsistent with achieving the stated
purpose of the contract. 

Let me briefly describe for you the circumstances surrounding how the
subcontract was awarded and carried out. 


   CHRONOLOGY OF EVENTS
---------------------------------------------------------- Chapter 0:1

On the basis of interviews with individuals involved with the Lake
Research subcontract and reviews of available files at FCS, Global
Exchange, and Lake Research, we have put together the following
chronology. 

  -- In mid-February 1995, the Under Secretary for Food, Nutrition
     and Consumer Services presented the idea for this work during a
     private dinner meeting with the president of Lake Research, Inc. 
     As stated in the firm's promotional information, the president
     of Lake Research is one of the Democratic party's leading
     strategists and pollsters.  According to the president of Lake
     Research, she and the Under Secretary discussed conducting focus
     group research on food stamp reform for a price of $25,000.  The
     following day, the president of Lake Research spoke with the
     Under Secretary's Executive Assistant to further discuss the
     specifics of the work.  According to the Executive Assistant's
     notes from that discussion, she talked with Lake Research about
     holding four focus groups, each one costing $5,000, three of
     which would be with "swing voters." Two of these focus groups
     were to be held in Topeka, Kansas.  The location for the other
     two focus groups was to be determined later.  The president of
     Lake Research confirmed this characterization of the discussion
     and said that, with $5,000 in travel expenses, the total cost of
     the work would be $25,000. 

  -- On February 27, 1995, following discussions with the Under
     Secretary and her Executive Assistant, the Administrator of FCS
     held a meeting with several of his top managers to discuss the
     Under Secretary's desire to conduct focus group research and her
     desire to use Lake Research to do this work.  According to the
     Administrator, one of the purposes of this meeting was to
     discuss how this work could be legally accomplished.  The
     decision was made that conducting the work as a task order under
     the Global Exchange contract was the best vehicle for
     accomplishing the Under Secretary's objective.  This way, Lake
     Research could be used as a subcontractor and the work could be
     performed as expeditiously as possible, as desired by the Under
     Secretary.  FCS officials concluded that a separate procurement
     action would have taken too long.  Also, according to the
     president of Lake Research, this approach had the advantage to
     USDA of not drawing as much attention to the work because using
     Lake Research as a subcontractor to Global Exchange appeared to
     distance USDA from Lake Research. 

  -- On March 2, 1995, FCS' Acting Director of the Office of Analysis
     and Evaluation (OAE) signed a procurement request authorizing
     the use of food stamp research and evaluation money to fund this
     work.  That same day, FCS officials informed Global Exchange of
     its desire to have Lake Research perform this work and asked
     whether Global Exchange would agree to having Lake Research
     serve as a subcontractor.  Global Exchange agreed.  For its
     work, Global Exchange was authorized a fee of $8,000. 

  -- On March 7, 1995, USDA added the focus group work to its prime
     contract with Global Exchange, through an additional task order
     to its contract.  That same day, Lake Research signed a
     subcontract agreement with Global Exchange.  According to
     representatives of Global Exchange, they were not involved in
     the selection of Lake Research as a subcontractor and, prior to
     their discussions with FCS officials, had never heard of Lake
     Research.  According to representatives from Global Exchange,
     they were not invited to attend several key meetings between
     USDA and Lake Research. 

  -- On March 10, 1995, the Under Secretary met with Lake Research,
     Global Exchange, and FCS' top management to provide Lake
     Research with guidance on the specific direction of the work to
     be performed.  The contracting officer's representative--the FCS
     official responsible for providing technical oversight of the
     contract--said she went to the Under Secretary's office to
     attend the meeting but, upon arriving, was asked not to attend. 

  -- On March 28, 1995, the Under Secretary and her Executive
     Assistant, without participation by Global Exchange or FCS
     contracting officials, met with Lake Research to discuss the
     questions that would be used in the focus groups.  According to
     representatives of Lake Research, the Under Secretary and her
     Executive Assistant reviewed the questions in detail during this
     meeting and approved their use.  Over the next 2 days, Lake
     Research used the USDA-approved questions during its focus group
     sessions in Topeka, Kansas, and Indianapolis, Indiana. 

  -- On April 20, 1995, Lake Research presented its findings in a
     memorandum to the Under Secretary and in an accompanying
     presentation to the Under Secretary, her Executive Assistant,
     and FCS' top managers.  During this presentation, USDA officials
     told us that they did not raise questions about the methodology
     underlying the work by Lake Research or the way the results were
     presented, despite the fact that the memo used terms such as
     "voters," "our side," and "the opposition."

  -- On May 1, 1995, Lake Research delivered a draft report to USDA,
     detailing the findings of the focus groups.  During its review
     of the draft, USDA officials again did not question the
     methodology of the work underlying the report.  However, they
     did ask Lake Research to delete terms such as "voters," "our
     side," and "the opposition," which had also been included in the
     April 20, 1995, memo. 

  -- On May 23, 1995, Lake Research delivered five copies of its
     final report to FCS' Office of Analysis and Evaluation.  From
     there, the report had only limited distribution:  Two copies
     were sent to the Under Secretary, the remaining three copies
     were retained in FCS' OAE.  Although the purpose of the work--as
     set forth in the statement of work--was to support the mission
     of the food stamp program, and USDA used food stamp research and
     evaluation money to fund this work, no copies of Lake Research's
     report were provided to the Deputy Administrator of the Food
     Stamp Program. 


   NONCOMPLIANCE WITH REGULATORY
   AND STATUTORY REQUIREMENTS
---------------------------------------------------------- Chapter 0:2

USDA's subcontract with Lake Research was handled outside normal
contracting practices.  According to the President of Lake Research
and the notes of the Executive Assistant to the Under Secretary, the
idea of using Lake Research to conduct this work, the nature of the
work to be performed, and the price to be paid were worked out
between the office of the Under Secretary and the president of Lake
Research prior to any official contract negotiations and without any
involvement of FCS' contracting office.  Likewise, the conduct of the
work, once contracted for, was managed in an unusual fashion. 

Federal statute and decisional law requires that when an agency
wishes to acquire, by contract, services that are outside the scope
of an existing contract, it should conduct a separate procurement
action.  FCS did not obtain this focus group work through a separate
procurement.  Instead, the agency issued a task order under an
existing support services contract with Global Exchange, which in
turn subcontracted the work to Lake Research.  As discussed earlier,
the arrangement with Global Exchange was made to ensure that the work
was done expeditiously and to distance USDA from Lake Research.  In
our opinion, however, the work performed by Lake Research was outside
the scope of the Global Exchange contract and therefore should have
been the subject of a separate procurement action. 

The Global Exchange contract was to provide support services to
assist FCS in conducting a national nutrition campaign, including the
planning and development of educational materials and communication
efforts.  Among the overall objectives to be served by the Global
Exchange contract were "marketing research, strategic planning, and
development of current and future nutrition education marketing
efforts."

By contrast, the statement of work for Lake Research's subcontract
was to conduct focus group research to assess the reactions of the
general public and food stamp recipients to USDA's proposals to
change the food stamp program.  Therefore, in our opinion, the work
conducted under Lake Research's subcontract was materially different
from the scope of work described in Global Exchange's contract and
therefore should have been the subject of a separate procurement
action.  This $25,000 procurement should have been competitively
conducted under the simplified procedures for small purchases
authorized by the Federal Property and Administrative Services Act of
1949, as amended, and set forth in the Federal Acquisition
Regulation.  For procurements of this size, these procedures
generally require federal agencies to promote competition to the
maximum extent practicable by soliciting quotations from at least
three sources.  Such a procedure would have enabled USDA to obtain
these services in an expeditious manner, as desired by the Under
Secretary. 

We also believe that USDA failed to comply with the federal
requirement governing the conduct of focus groups and other public
opinion surveys, as set forth in the Paperwork Reduction Act.  That
act requires agencies planning to collect information from 10 or more
persons to obtain the review and approval of the Office of Management
and Budget (OMB) before the effort is undertaken.  Under FCS' own
internal guidance, as well as OMB's regulation, one condition of this
approval is that the proposed information collection effort be
necessary for the performance of the agency's functions.  FCS did not
seek or obtain OMB's clearance.  Its failure to do so deprived USDA
and OMB clearance officials of the opportunity to independently
review the need for and the propriety of the focus group work. 


   PROBLEMS WITH METHODOLOGY
---------------------------------------------------------- Chapter 0:3

The approach and methodology used in conducting this focus group
research were inconsistent with achieving the desired purpose of the
work as set forth in the contract documents--obtaining the general
public's and food stamp recipients' perceptions of USDA's reform
initiatives for the Food Stamp Program. 

As is necessary in conducting any focus group research, USDA and Lake
Research (1) established where the focus groups would be held, (2)
identified who would be included in the discussions, (3) prepared the
questions that would be asked, and (4) determined how the results
would be reported.  In each of these areas, though, USDA and Lake
Research used methodological approaches that severely limited the
work's value in capturing the general public's and food stamp
recipients' perceptions of USDA's reform initiatives. 

With respect to the issue of site selection, the focus groups were
limited to two locations that were chosen for reasons unrelated to
the purpose of the subcontract.  Lake Research held four focus groups
in March 1995--two in Topeka, Kansas, and two in Indianapolis,
Indiana.  According to the President of Lake Research, these were not
sites that her firm had recommended or--at least in the case of
Topeka--had ever done work in.  She said that the sites were selected
by USDA--not for any methodological reasons--but because they were in
states with farm constituencies and were the home states of key
Members of the House and Senate Agriculture Committees. 

Likewise, in identifying participants to include in the focus groups,
USDA and Lake Research did not seek individuals who were typical of
the general public or food stamp recipients.  Instead, Lake Research
used a telephone screener questionnaire to select individuals with
very specific profiles.  Three of the four focus groups were with
individuals who were not food stamp recipients.  For these three
focus groups, Lake Research sought to select individuals who were (1)
white, (2) registered to vote and who had voted in the last
presidential election, (3) neither strong Democrats nor strong
Republicans, (4) without personal or familial connections to state or
local government, and (5) between the ages of 30 and 65.  According
to the notes of the Under Secretary's Executive Assistant, the
intention of this screener was to ensure that the participants
represented "swing voters." The fourth focus group was with food
stamp recipients.  These individuals were to be (1) white, (2)
between the ages of 30 and 65, (3) without personal or familial
connections to state and local government, (4) neither strong
Democrats nor strong Republicans, and (5) responsible for at least
some of their household food shopping.  In the implementation of the
telephone screener, as well as the focus group sessions themselves,
no mention was made that USDA was sponsoring this research. 

In conducting these focus groups, USDA and Lake Research prepared a
structured set of questions that, in some cases, had little to do
with reforming the Food Stamp Program.  For example, the focus group
moderator asked questions about "the way things are going in the
country these days" and whether "things are better or worse today
than they were 5 years ago."

Furthermore, some questions seemed inherently biased.  For example,
the moderator asked, "What if I told you that consumer watchdog
groups like Public Voice have endorsed these [USDA's] reforms which
they say ensure nutritious food for America's hungry families, but
cut down on fraud.  How does that make you feel?"

In addition, USDA and Lake Research sought reactions to the
Congress's proposed plans for reform.  A number of these questions
discussed the Republican leadership's proposals for food stamp
reform.  For example, one set of questions asked: 

  -- "What do you think would happen if all USDA food and nutrition
     assistance programs were turned over to the states to
     administer?  The Republican leadership in Congress calls this
     part of the Contract with America the Personal Responsibility
     Act.  How do you feel about that?  Do you think it will pass?"

Some of these questions also seemed to attempt to elicit a negative
response toward the proposals: 

  -- "What if I told you that if the Personal Responsibility Act
     passed, federal funding for food and nutrition assistance would
     fall by more than $3 billion in 1996 and by nearly $27 billion
     over 5 years?  What do you think?  Who would this affect?  Can
     that much be cut from administration and not hurt the
     participants of the program?"

  -- "What if I also told you that by reducing federal support for
     food assistance, the Personal Responsibility Act would lower
     retail food sales, reduce farm income and increase unemployment? 
     What do you think?  Do you believe it?"

  -- "What if I told you that if the programs were given to the
     states to run, then all food and nutrition assistance would be
     forced to compete for limited funds?  States' ability to deliver
     nutrition benefits would be subject to changing annual
     appropriation priorities.  What do you think?"

  -- "What if I told you that there is a proposal in Congress to put
     a ceiling or a cap on how many people can be on the program at
     once?  How do you feel about that?"

  -- "Now that you know a little more about the House plan, what do
     you think?  Would you support this plan?  What do you think life
     would be like for food stamp recipients if this passed?"

Lake Research presented its findings in a meeting on April 20, 1995,
to the Under Secretary, her Executive Assistant, and FCS' top
management.  A Lake Research memo addressed to the Under Secretary,
outlining the focus group findings, was also distributed during that
meeting.  This memo presented the focus group participants'
perceptions of USDA's suggested reforms and their views on proposed
name changes to the food stamp program.  The memo also provided
strategies on how USDA could promote its ideas to the public.  Among
other things, this memo contained the following statements: 

  -- "We need to translate the popularity of WIC [The Special
     Supplemental Food Program for Women, Infants, and Children] and
     school lunch to the food stamp program and make people associate
     children with food stamps."

  -- "Our side has a powerful message in protecting children from
     hunger.  Voters truly believe that no child in America should go
     hungry."

  -- "This is still a tough fight, particularly when the opposition
     combines food stamps with welfare.  Voters have a very developed
     critique of welfare and adamantly want it reformed."

This same language appeared in Lake Research's draft report, which
was delivered to USDA on May 1, 1995.  Following objections raised by
FCS managers, terms such as "voters" and several politically oriented
references were removed from the final report.  Lake Research
delivered its final report to USDA on May 23, 1995.  As of April 30,
1996, the Deputy Administrator of the Food Stamp Program had not
received a copy of this report.  Given her responsibilities for
administering the Food Stamp Program, we would have expected this
report to have been provided to her. 


-------------------------------------------------------- Chapter 0:3.1

In closing, Mr.  Chairman, we found that USDA did not comply with the
Federal Acquisition Regulation and the Paperwork Reduction Act and
used a flawed methodology that would not allow the contract's stated
purpose to be achieved.  On the basis of these problems, we believe
that USDA exercised questionable judgment in conducting virtually
every aspect of this work.  I would have concerns if--on the basis of
the results of this research--USDA made changes to a program that
affects millions of American citizens. 

Mr.  Chairman, this completes my prepared statement.  I would be
pleased to respond to any questions you or Members of the Committee
may have. 


*** End of document. ***