S. HRG. 100-789

REVIEW OF 1990 CENSUS PLANNING

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HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL

POST OFFICE, AND CIVIL SER

OF THE

COMMITTEE ON

GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

ONE HUNDREDTH CONGRESS

SECOND SESSION

JUNE 17, 1988

Printed for the use of the Committee on Governmental Affairs

U.S. GOVERNMENT PRINTING OFFICE

M

WASHINGTON : 1988

For sale by the Superintendent of Documents, Congressional Sales Office

US. Government Printing Office. Washington. DC 20402
COMMITTEE ON GOVERNMENTAL AFFAIRS

JOHN GLENN,

LAWTON CHILES, Florida

SAM NUNN, Georgia

CARL LEVIN, Michigan

JIM SASSER, Tennessee

DAVID PRYOR, Arkansas

GEORGE J. MITCHELL, Maine

JEFF BINGAMAN, New Mexico

Ohio, Chairman

WILLIAM V. ROTH, JR., Delaware

TED STEVENS, Alaska

WILLIAM S. COHEN, Maine

WARREN B. RUDMAN, New Hampshire

JOHN HEINZ, Pennsylvania

PAUL S. TRIBLE, JR., Virginia

LEONARD WEISS, Staff Director

Jo ANNE BARNHART, Minority Staff Director

MICHAL SUE PROSSER, Chief Clerk

SUBCOMMITTEE ON FEDERAL SERVICES, POST OFFICE, AND CIVIL SERVICE

DAVID PRYOR, Arkansas, Chairman

JIM SASSER, Tennessee TED STEVENS, Alaska

JEFF BINGAMAN, New Mexico PAUL S. TRIBLE, JR., Virginia

EDWARD J. GLEIMAN, Staff Director

JEFFREY D. LANDRY, Minority Staff Director

DOROTHY DOUGLAS, Chief Clerk .

<n>
CONTENTS

Opening statements: Page

Senator Pryor 1

Senator Heinz 18

Senator Sasser 19

WITNESSES

FRIDAY, JUNE 17, 1988

Richard L. Fogel, Assistant Comptroller General, General Government Division, General Accounting Office, accompanied by William M. Hunt, Group

Director, Jacob Kaufman, Assignment Manager, and Seymour Efros, Associate General Counsel for Procurement 3

John G. Keane, Ph.D., Director, Bureau of the Census, Department of Commerce, accompanied by Charles Jones, Associate Director for Decennial

Census, and Bryant Benton, Associate Director for Management Services 11

ALPHABETICAL LIST OF WITNESSES

Benton, Bryant: Testimony 11

Efros, Seymour: Testimony 3

Fogel, Richard L.:

Testimony 3

Prepared statement 21

Responses to written questions submitted by Senator Pryor 34

Hunt, William M.: Testimony 3

Jones, Charles: Testimony 11

Kaufman, Jacob: Testimony 3

Keane, John G., Ph.D.:

Testimony 11

Prepared statement 39

Responses to written questions submitted by:

Senator Pryor 62

Senator Sasser 69

APPENDLX

Prepared statements of witnesses in order of appearance 21

"Decennial Census•Minicomputer Procurement Delays and Bid Protests: Effects on the 1990 Census," report by the General Accounting Office, June

1988 72

REVIEW OF 1990 CENSUS PLANNING

FRIDAY, JUNE 17, 1988

U.S. SENATE,

SUBCOMMITTEE ON FEDERAL SERVICES,

POST OFFICE, AND CIVIL SERVICE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, DC.

The Subcommittee met, pursuant to notice, at 11:35 a.m., in room

SD-342, Dirksen Senate Office Building, Hon. David Pryor, Chairman of the Subcommittee, presiding.

Present: Senator Pryor.

OPENING STATEMENT OF SENATOR PRYOR

Senator PRYOR. Ladies and gentlemen, the Subcommittee will

come to order.

I would first like to make my apologies. This morning we had a

task force meeting with Secretary Lyng and a 16-member task

force from the House of Representatives and the Senate on the

drought conditions around the country. I'm a member of that task

force and at 11 o'clock we had two back-to-back votes that were

called, so I do apologize for being late.

I will hurriedly run through my statement and then I will immediately call upon our witnesses.

Today the Subcommittee on Federal Services, Post Office, and

Civil Service will conduct a hearing to review the status of plans

for the 1990 Decennial Census of Population and Housing. In particular, we will focus on the operational issues instrumental in conducting a high-quality census.

It has been said that the census provides a snap shot of the

American population in this country and tells us basically who we

are and what we are all about. Reapportionment of the seats in the

House of Representatives, formulation of Congressional and State

legislative redistricting plans, and distribution of billions of Federal

and State dollars ride on the population counts the Bureau provides. Public and private planners rely on census information to

locate roads, schools, hospital, parks, and private corporations often

use this data for marketing purposes.

The Census Bureau has pledged to make the 1990 census the best

one yet. One of the keys to achieving that goal is to speed up collection and tabulation of data from census forms through the use of

minicomputers. In 1986, the Bureau decided to procure up to $80

million in minicomputers and software to meet the goal, but the

procurement has experienced a range of problems from delays to

bid protests, resulting in little or no time to test the equipment.

(1)
From my experience as a member of the Finance Committee, I

am well aware, as are almost all taxpayers, what can happen when

an agency fails to adequately test computer hardware and software

in an operational setting.

Last year, I became concerned that a problem-plagued procurement effort might cause the snapshot of the American people to

turn out blurry and maybe even out of focus. So, I asked the General Accounting Office to look into the minicomputer issue.

Today the General Accounting Office [GAO] will discuss its

report, entitled, "Decennial Census•Minicomputer Procurement

Delays and Bid Protests: Effects on the 1990 Census." 1In that

report, GAO points out to us that the Bureau did not, in fact, identify its automatic data processing equipment needs early enough in

the decennial planning process to ensure timely procurement.

Coupled with a 6-month delay in procuring the family of minicomputers, the Bureau was unable to test and validate all the software programs during the 1988 dress rehearsal. Consequently, the

software program, critical to supporting the census, will be untested in a census-like environment prior to the 1990 census. GAO

warns that this situation in the census is strikingly reminiscent of

the problems the IRS encountered in 1985, 3 years ago, when they

replaced the Service center's computers.

The IRS ended up with two black eyes when the taxpayers

became increasingly frustrated as their refunds were delayed and

the Government was forced to make substantially more interest

payments on late refunds.

If there are any bugs in the software programs to be used to

process census data and manage operations, I hope that we can

find out now before it is too late.

There is one aspect that I do find very, very troublesome, and I

think other members of the Committee join me in this concern. In

the interest of time, the Department of Commerce and Census officials basically agreed to pay three bid protesters $1.1 million without regard to the merits of the case.

It appears to me that the procurement process is seriously flawed

when the Government is able to make a cash settlement without a

thoughtful and thorough review of the merits of a protest and without a thorough assessment of the justification for those particular

claims. GAO reports that the Census Bureau just basically wrote a

check for $1.1 million without knowing whether that amount was

justified or not.

The Bureau estimates that the census is going to cost $2.6 billion.

At that price, the Nation, as well as the taxpayer, deserves the

most accurate and clear picture of the United States of America.

Given the problems GAO has identified•delays in procuring equipment and failure to meet essential milestones in the planning process•I do have great concerns that the Bureau may not be able to

control those costs and provide us with an accurate count. This is

what the hearing is about today.

1 See p. 72 for the report.
3

I, for one, will be monitoring this situation. I look forward to exploring with our witnesses how prepared we are to conduct the

1990 census, which is only 24 months away.

Our first witness today is from the General Accounting Office,

Mr. Richard Fogel, the Assistant Comptroller General of the General Government Division. We look forward, Mr. Fogel, to your testimony and thank you for appearing.

Mr. Fogel, I do not have the identification of your colleagues, if

you would introduce them, please.

TESTIMONY OF RICHARD L. FOGEL, ASSISTANT COMPTROLLER

GENERAL, GENERAL GOVERNMENT DIVISION, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY WILLIAM M. HUNT,

GROUP DIRECTOR, JACOB KAUFMAN, ASSIGNMENT MANAGER,

AND SEYMOUR EFROS, ASSOCIATE GENERAL COUNSEL FOR

PROCUREMENT

Mr. FOGEL. Thank you, Mr. Chairman. On my right is Bill Hunt,

Group Director, who deals in the census area and on my left is

Jack Kaufman, our Project Director, who is really following the

census very closely and has for years.

What I would like to do is summarize my statement and let the

full statement appear in the record 2if that is acceptable.

We are pleased to be here to discuss our observations on the

census preparations for the 1990 census. Conducting the census is a

mammoth and costly task, involving over 300,000 temporary staff

and about 450 temporary offices, and as you said, it will cost about

$2.6 billion to conduct.

Early in the 1980s the Bureau analyzed the problems experienced in the 1980 census. These problems included delays in data

dissemination, the use of slow, error-prone clerical operations, difficulties in providing timely and high-quality maps, and cost escalation.

This analysis was designed to identify opportunities for improving the census operations, particularly increasing the use of automation. However, we have found late decision-making and procurement delays have diminished the potential effectiveness of the Bureau's automation initiatives.

For example, as we detailed in our June 14 report, which you

mentioned, a key component of the Bureau's plans for the 1990

census involved the increased use of automation to improve the accuracy and timeliness of census activities. To help accomplish this,

in January of 1986 the Bureau decided to procure about 550 minicomputers at the cost of about $80 million. The vast majority were

to be used in the 1990 census for such purposes as checking in

questionnaires, keying address and questionnaire data, preparing

management information reports, and generating and updating

automated maps.

But before the minicomputer contract was awarded, a bid protest

was filed with GSA's Board of Contract Appeals by three offerors.

They contested the Bureau's determination that their proposals did

not adequately respond to technical provisions of the Request for

2

See p. 21.
4

Proposals. After the hearing, the GSA Board temporarily suspended Commerce's procurement authority.

Rather than contesting the protest, Commerce and the Bureau

decided to settle it by making a cash settlement and payment to

the three offerors. Commerce and the Bureau felt that they could

not afford the additional time required for the Board to decide the

protest, regardless of its merits.

Commerce also discovered what they believed to be a procedural

flaw in the procurement process that possibly could jeopardize the

Government's case.

The settlement provided that each of the three offerors could receive up to $400,000 for proposal and preparation and protest costs

after submitting appropriate supporting documentation. After

making a cursory review of the documentation submitted, the

Bureau paid a total of $1.1 million to the three offerors.

When we looked at this we had to agree that although the concern for time was not without merit, the cash settlement could

have been avoided if the Bureau had not initially created its own

management dilemma by failing to plan properly for and manage

the minicomputer procurement in the first place.

Indeed, we issued a report in 1983 which talked about the need

for the Bureau to start planning early for the 1990 census, so part

of the problem was just that management did not start thinking

about this early enough.

And, indeed, incomplete and untimely planning for the census

organization and procedures prevented the Bureau from fully identifying, documenting and planning for all its automatic data processing needs. This resulted in a late decision to procure the computers and thus contributed to an additional 6-months delay in the

procurement process.

A principal objective of the dress rehearsal was to conduct a fullscale test of the minicomputers, under census-like conditions,

which everyone agrees is critical to have a smooth functioning

census. But the contract was not awarded until May of 1987, which

was several months after the start of the dress rehearsal. As a

result, the equipment was not available for use in the initial dress

rehearsal operations, such as keying addresses and updating automated maps.

While the new minicomputer system became available for later

phases of the dress rehearsal, it could be not be effectively used because of insufficient time to develop and fully test software. Although our review to date of the dress rehearsal has found that

Bureau officials have identified and corrected many software

errors, they have not systematically validated, verified and tested

the software in accordance with recommended Federal standards.

What I would like to do now is briefly discuss some of the problems the Bureau experienced using its newly automated management information system in the dress rehearsal. District census officials experienced problems with the automated applicant file

which was supposed to identify the status of all job applicants and

their availability for work. This becomes very important if you are

hiring 300,000 temporary employees, that you keep track of them

well.
The supervisors lost confidence in the system and did not use it

in the dress rehearsal for making hiring decisions. Automated staff

performance reports used to manage follow-up activities and calculate enumerator bonuses were limited because of missing data and

inaccuracies. Consequently, to avoid improper payments, the district personnel had to partially rely on manual records to calculate

the bonuses.

Reports used to assess training needs and performance of clerks

editing questionnaires were not used as a basis for taking personnel actions because, again, the supervisors were not confident of

the information provided.

As you noted, using software before it is fully tested is very risky

and can result in systems not functioning as intended. In the 1986

pretests for the 1990 census, the Bureau did not allow sufficient

lead time to adequately test software programs for its previous

computer systems. As a result, many software programs initially

did not work for some operations and had to be modified.

Now, the Bureau was able to deal with these problems by having

technical staff from headquarters talk to people in the field and

correct them. Our concern though is how would that get done in

the full census. You cannot have those types of things going on

once we go out of the dress rehearsal into the actual census operations. Because, as you said, in the much-publicized IRS case, they

did not establish adequate quality assurance programs, they did

not test, they went on-line, and they had tremendous problems.

We do not see that the Census Bureau is in that state right now

but we are very concerned if they do not adequately test the software there is a risk data will be delayed, information will not be as

accurate as it should be and it is going to cost us more than it

should to conduct the census.

That is why we recommended in our June 14 report that the

Census Bureau prepare a formal contingency plan in the event

that the minicomputer system does not operate properly. This plan

should include provisions to use available mainframe capacity and,

if necessary, do some operations manually.

I would now like to discuss some concerns we have about changes

and delays in the Bureau's development of address lists for suburban and rural areas. These lists are important because they are

used to deliver the questionnaires and serve as a control list for

non-respondents for follow-up activities. Originally, the Bureau

planned to canvas suburban and rural areas, called prelisting, to

develop address lists for an estimated 45 million households starting in February 1988.

The planned starting date for the 1990 prelist was a year earlier

than in the 1980 census. The Bureau did this because they recognized they needed this time to plan ahead. But primarily because

of late map production and concerns about the availability of good

mailing addresses, the Bureau changed its prelist plans. Automated

files needed to develop the maps are being generated by the Bureau's automated geographic support system, which the Bureau estimates will cost about $371 million for the 1990 census.

The Bureau significantly underestimated the computer capacity

requirements and the time needed to prepare software for these

automated files. These problems were compounded by the late ac-
6

quisition of the minicomputers. So they had to change their prelisting in several ways, basically cutting down the number of prelist

units and deferring some pretesting because of these problems.

I would like to summarize by saying that overall we believe the

Bureau will be able to conduct the 1990 census and provide the

counts to the President by the statutory deadline. But what we are

concerned about is the lack of time to develop and test the software

for the census, particularly under census-like conditions in the

dress rehearsal, because this could adversely affect the accuracy

and increase the cost of the census.

We have done a lot of work, Mr. Chairman, over the last couple

of years looking at agencies that have installed computer systems

and if there is one thing we have learned, it is the more automated

something becomes, the more rigorous your planning and testing

needs to be of the software and systems to make sure they work

before you go live.

We are not saying the census is not going to be able to do it, and

we know they are working hard to try to do it, but we are not totally confident that given the time they have got, that they can do

it as effectively as they might.

Senator PRYOR. Thank you for your statement. Do your colleagues have anything to add to this?

I would like to first say that last year, in 1987, if my memory

serves me correctly, we had two oversight hearings on the census.

That was 3 years out, 3 years before 1990. I felt a little bit concerned at that point. We had a lot of questions. Here we are 2

years out and that concern is now becomming a queasy feeling. I

am getting very troubled about it.

I think that there still are a lot of questions. I am concerned

about the process by which the computers were purchased. I am

also very, very concerned about the qualitative aspects of the 1990

census, and I am certainly concerned about the costs.

Now, what actions do you think the Bureau has taken to assure

sufficient controls are in place in these next months ahead to get

everything ready to start the 1990 census?

Mr. FOGEL. Well, I would like to let Mr. Kaufman get into detail

on that. We are very aware that as a result of the dress rehearsal,

they have identified certain problems and issues and they are

trying to identify solutions to address them.

I think one of the questions we have got is are they aware of all

the problems that are coming up? Are those filtered through? And

are they able to make decisions as rapidly as they need to in some

cases?

Mr. KAUFMAN. What we are finding is that they are trying to

solve individual problems as they occur on an ad hoc basis. They

should be using a systematic approach, with a quality assurance

program, which I think the Bureau has just started recently,

rather than some time much earlier.

I think if they had started a quality assurance program on the

software program earlier, they would have been in a better position

for the dress rehearsal and as they start the actual census, which

in fact starts this month with the prelist activity.

Mr. FOGEL. SO they do have systems in place, for example, where

they are trying to correct problems, validate the software, stand-
ardize procedures when they come up. We are now in the middle of

doing some work looking at how the whole dress rehearsal is going,

so we do not feel that they are not trying to address the issues.

I think you need to probably get from the census officials a more

specific accounting of the timeframe on when they think they are

going to be able to solve some of these.

Senator PRYOR. Mr. Fogel, or maybe your colleagues can answer

this; how much have we spent to date on computers for the census?

Mr. FOGEL. Well, for these computers Census spent about $25

million to date and they have, our figures show, around 62, so

somewhere probably between 60 and 65 computers.

Senator PRYOR. And, we have spent about $25 million?

Mr. FOGEL. That is on the minicomputers. That is out of the $80

million.

Senator PRYOR. NOW, how much more are we going to have to

spend for computers?

Mr. FOGEL. Mr. Hunt said it is about $22 million. How much

more?

Senator PRYOR. Yes. Do we have to buy a lot more minicomputers?

Mr. FOGEL. It can be up to $80 million. A lot of the computers

that they still need to buy are those that would go in the district

offices that they have to set up around the country, about 450 offices, to do a lot of the management operations.

It is our understanding the ones they bought to date are primarily ones that are more powerful and are being used in the processing offices.

Senator PRYOR. What is going to happen, by the way, to those

computers when the 1990 census is completed and they close up

shop? What happens?

Mr. FOGEL. I thought maybe they would give them to GAO, because we need more.

Senator PRYOR. That is a good point. Does GAO want those computers?

Mr. FOGEL. I do not know that we would. We are not aware yet

of what their plans are for disposal, but I am sure Census would

have some views.

Senator PRYOR. I guess they would declare a surplus. I do not

know what they would do. Perhaps we will look into that.

Now, how can the Bureau better utilize the remaining time•

they have very little available time left•to effectively conduct the

1990 census? What should they be doing with their time and how

could they better use it?

Mr. FOGEL. It seems to me, picking up on what Mr. Kaufman

said, that you have to begin to categorize some of the problems that

exist that they are finding out in the dress rehearsal, such as in

the functional areas, and dealing with the questionnaires, such as

the problems with delivery, their receipt, and their processing.

If I were over there, I would really want to make sure, number

one, that I had a senior official accountable for each one of these

functional areas and make sure that he or she had good communication with my people out in the field offices and the district offices; identify fairly quickly the problems; have a very tight time

schedule that would indicate when you have to get decisions made
8

to resolve outstanding issues, knowing that I am going to be bringing on board within the next couple of years 300,000 people.

In short, I would want to make sure that I had the problems

identified, that I had a fairly tight timeframe that said how long it

is going to take me to address them, sort through the process of

working with a team to get a solution, and then make a decision.

So I think that is one thing that we would really like to see.

Something you said might also be appropriate; that is for the

Subcommittee to consider holding census accountable to make sure

that they address the problems. But like I said, we do not have any

doubt they will be able to do the census.

Senator PRYOR. It is difficult to hold the census accountable because it is a one-shot deal every 10 years and then the issue sort of

evaporates. I say that in all due respect, even though the service

they perform is complex and meaningful to all the Federal and

state programs and to our way of life.

Now, you have really only made one recommendation about

whether these computers have or have not been, let's say, battletested before the census begins and that is a formal contingency

plan needs to be adopted.

Mr. FOGEL. Yes.

Senator PRYOR. IS that the only recommendation that you make?

What is going to happen if these computers do not work? If the

system breaks down, what happens?

Mr. FOGEL. Well, what happens is they will have to do it manuallySenator PRYOR. What do you mean, manually?

Mr. FOGEL. They will have to hire more people and they will

have to use more clerks to check material. It will be more labor

intensive. For example, in the dress rehearsal when the managers

in the district offices could not use the computers to get the information they needed to decide how much of a bonus they ought to

pay the enumerators based on their performance, they did it manually.

It takes more time and it is more intensive, so it is going to end

up costing us more money. I think what we are saying is that the

primary goal is get the census completed on time and do it as accurately as possible. So part of the contingency plan has to be to do

that.

Another part of the plan would be to look at their mainframe capacity and to see whether the minis do not work, they can use

some of their bigger computers.

Senator PRYOR. Sometime in 1990 or 1991 we are going to be

holding a hearing, I am sure, regardless of who is on this Subcommittee, or whoever is around here, looking back on how successful

the census was, or unsuccessful. And I think this hearing is going

to be one that we will want to look at, especially as to your recommendations and to this Subcommittee's concerns.

A couple more questions. Is the census going to cost us more

than $2.6 billion dollars?

Mr. FOGEL. I think you would have to ask Census for a specific

answer to that. Our work indicates that it is probably within that

ball park range.

Senator PRYOR. HOW much did the last one cost us?
Mr. FOGEL. The last census cost $1.1 billion in 1980. I guess you

could say there are more people today and we have some inflation.

Senator PRYOR. The final series of questions relates to the contracting for the computers and the three computer firms which

were not successful and protested because they were not able to

sell their computers to the Census Bureau.

It seems to me that one morning the Bureau woke up and said,

"Look, we have three protesters out here who did not get to sell

computers to us, so let's get them off our back."

As lawyers or insurance companies do so often in negotiating settlements, the Bureau adopted a figure that everyone would accept

and wrote a check for $1.1 million to the protesters.

This concerns me, the methodology used in doing this. I am wondering if there is a precedent of writing a check like this to three

unsuccessful bidders, in my mind, without justification?

Mr. FOGEL. We are not aware of a lot of specific instances where

this has come up in the past because to find this out you have to do

as we did at your request, look in detail at a situation. Our lawyers

have looked at it. It certainly is not illegal, what they did. The

agreement they reached did require the three firms to provide

some information to Commerce and Census. But Census and Commerce gave it only a very cursory look.

We, too, are uncomfortable with the fact that it was done this

way. And, you know, we had said before that the primary reason it

happened was they did not make the decision soon enough. They

then made a judgment that time was of the essence.

Now, one could argue, if they were that concerned about time,

whether they could have perhaps made a more effective argument?

Could the Commerce and Census lawyers have made a more effective argument to the GSA board that time was really of the essence? And our reading of the file indicates they could not convince

the board that the time was of the essence.

Senator PRYOR. HOW many people were in on this decision to

write a check for $1.1 million to the unsuccessful bidders or protesters?

Mr. FOGEL. I do not know.

Mr. KAUFMAN. Mr. Chairman, do you mean who was involved in

making the decision?

Senator PRYOR. Yes.

Mr. KAUFMAN. There were a number of key people in the Bureau

of the Census and the Department of Commerce who entered into

the deliberations on this decision, including their legal department

and the Deputy Secretary.

Senator PRYOR. You know everyone is looking at the Department

of Defense right now. It's on page one. The only surprise I have

today about the revelations coming out concerning this whole area

of consulting and contracting procurement area•the only surprise

I have•is that anyone is surprised.

I am amazed that anyone is aghast or shocked or surprised about

this because it has been coming, and with that open money sack,

this is going to happen.

I am worried about the precedent set by the handling of this

matter. Let's say McDonnell Douglas or Boeing bids on a new

plane. They are competing and one of them does not get it. DOD
10

says, well, McDonnell Douglas did not get this bid, so we will just

write them a check for a million bucks, kind of keep them in business, or get them out of the way.

I am worried about the precedent, and I think that you gentlemen may be, too.

Mr. FOGEL. Well, I think we are. We did not find anything in this

particular contract or this settlement that led us to think there

were any improprieties involved. There certainly was not, from our

view, good management back on the front end again. I think you

are always in a difficult position if you are the operating official

and you want to get it done.

But we, too, Senator, are very concerned that this type of settlement does not set a precedent for doing this type of thing. That

does not mean that the whole procurement process is not difficult.

But there are procedures in place if you have got a real need to get

something done to make a forceful case and get it done.

You know, we are not totally uncomfortable with the procedures

that exist if the agencies aggressively want to try to follow them

and make their case. So this does bother us.

Senator PRYOR. Yes. Mr. Fogel, let me read, if I may, a few lines

from page 25 of the GAO report dated June 1988. I will ultimately

put the full report in the record. This is relative to paying off the

protesters.

One, GAO found "* * * insufficient or no support for a large portion of claimed cost; two, cost claims were worked before the issuance date of the RFP; three, incorrect computation of some claimed

costs." And, finally, I quote the General Accounting Office, "We also

found that the Bureau made a cursory review and did not question

the offerors claimed costs."

That is troubling.

Mr. FOGEL. It is troubling. Yes, it is.

Senator PRYOR. IS there any way we can get that money back?

Mr. FOGEL. I do not think so. I could ask our lawyers. But I think

the settlement has been made. I do not know whether we could go

in and audit the settlement. Let me ask Seymour Efros, who is our

Associate General Counsel for Procurement in the GAO, if he

would like to come up and say something about that.

Mr. EFROS. Our general feeling is that once the Government or

any party shakes hands and signs off on a deal it is pretty binding

unless bad faith or mutual mistake can be proven. While the

Bureau should not have entered into a cost settlement on a protest

it felt had no merit, once it did, it was pretty difficult to get the

money back.

Senator PRYOR. Well, you have been with the General Accounting Office now a number of years, is this correct? Have you ever

seen a practice like this occur in any of your dealings or matters

that you have been involved with in the Federal system?

Mr. EFROS. We do not have the background information to know

on what basis agencies have been settling protests. I guess the authority for cost settlements of protests basically came in 1985 with

the Competition in Contracting Act. Prior to that the standards for

such settlements were pretty limited. What has happened since

then is essentially new.
11

Senator PRYOR. Well, would you like to amend your statement by

saying the standards were pretty loose? You use limited.

Mr. EFROS. No. I do not mean the standards have become loose;

before enactment of this Act, there were very narrow standards for

cost settlements.

Senator PRYOR. Well, I think they were loose, so I will use my

own words.

Well, once again, I want to thank the General Accounting Office.

This is a splendid report. It is illuminating. Maybe it will save us

from making some mistakes, not only in procurement in the future

but also it will certainly, I think, put the Census Bureau on notice

that we are going to continue our monitoring of this census that is

so critical to this Nation.

As I made a statement yesterday in private, I will make it again

in public. We might be able in this country to do without the Legislative Branch of Government, without the House or Senate, but if

we ever do away with the General Accounting Office, we are in

trouble.

Thank all of you very much.

Mr. FOGEL. Thank you, Mr. Chairman.

Senator PRYOR. NOW, our next witness is Dr. John G. Keane, the

Director, Bureau of the Census, Department of Commerce. Dr.

Keane, I believe that you are accompanied by Mr. Charles Jones,

Associate Director for the Decennial Census, and Mr. Bryant

Benton, Associate Director for Administration.

We look forward to your statement.

TESTIMONY OF JOHN G. KEANE, PH.D., DIRECTOR, BUREAU OF

THE CENSUS, DEPARTMENT OF COMMERCE,3 ACCOMPANIED

BY CHARLES JONES, ASSOCIATE DIRECTOR FOR DECENNIAL

CENSUS, AND BRYANT BENTON, ASSOCIATE DIRECTOR FOR

MANAGEMENT SERVICES

Dr. KEANE. Thank you, Mr. Chairman. Mr. Jones is on my right

and Mr. Benton is on my left.

We appreciate your interest in our plans, Mr. Chairman. Congressional review is a vital part of our planning process, and that

review includes the activities of the General Accounting Office. We

welcome their knowledgeable comments and advice, and that is a

sincere sentiment.

I will discuss six topics, and I am going to shorten it from what I

planned as an oral statement, but cover something about the following six. First, the status of planning for the census; the preparatory operations that have begun or will begin soon is the next one;

followed by the census questionnaire content and sample design;

four, plans for increased automation in the census; five, plans for

promoting the census and building public support; and the adjustment issue of the 1990 census.

On to planning: The dress rehearsal has proceeded fairly smoothly. There have been no major problems to date that would cause us

to change our plans for 1990. We have, as expected, identified vari1 See p. 39 for Dr. Keane's prepared statement.
12

ous refinements to operations and systems, but this is why we conduct tests and why we have dress rehearsals.

The second area is preparatory operations. Major preparatory operations for the 1990 census have already begun and will accelerate

this year and next. These include address listing, the creation of an

automatic geographic support system, the printing of census questionnaires, and the acquisition of space for data collection and data

processing.

I will talk about the first of these, the address list. One of the

major preparatory activities is the compilation of an address list

that we will use to control the delivery and the return of questionnaires for most housing units in 1990. For the more urban areas of

the country we purchased about 56 million addresses from commercial vendors under contracts awarded in February of this year. We

currently are assigning geographic codes to those addresses by computer.

We have begun listing addresses for the more suburban and

rural parts of the country where lists either cannot be purchased

or cannot be assigned geographic codes by computer. This operation, which we call "prelist" will be conducted in two phases and

in all, we will list about 43 million addresses. Our experience shows

that several updates of the original address list by postal workers

and census enumerators are required to produce a complete address list for the census. These updates will begin later this year.

On to questionnaire content and sample design. As in recent censuses we will have two primary questionnaires, a short form and a

long form. The short form will contain the basic population and

housing subjects we ask of all persons in housing units. The long

form will contain these same basic subjects plus additional population and housing items asked of only a sample of persons and housing units.

As required by Title 13, U.S. Code, I reported to you on March 31

of this year on the content of the questionnaires for the 1990

census. For the 1990 census we are proposing a sample size of

about 17.7 million housing units. This means that about 1.6 million

fewer housing units will be required to complete the long form

than if we used the 1980 sample design. We are determining the

final criteria to be used to allocate this sample in the various

areas.

The next area is automation. The 1990 census will be far more

automated than the 1980 census, or any previous decennial census.

Traditionally, census data collection, and much of the census data

processing have been paper and people intensive tasks. The use of

automated equipment can help us deal with the mountains of

paper and the thousands of clerical tasks. And it can lead to a

more accurate and timely data, and greater control over the whole

census process. I discussed the various systems of operations we are

automating in the submitted written statement.

On to the family of minicomputers still under automation. To

conduct an automated census requires a good deal of computer

equipment. There are dramatic changes involved in moving from a

census with large-scale clerical operations to one using significantly increased automation. We have had to balance the need for ade-
13

quate time to plan and test these new departures with the need for

adequate procurement lead times.

Our procurement activities are now progressing as planned and

we foresee no major problems. In June 1987, we completed the

award of a contract to the Digital Equipment Corporation for the

so-called "family" of minicomputers. The first computers have been

delivered to support our census operations, including the 1987 economic and agricultural censuses, the automated geographic support

system, and the 1988 Decennial Census dress rehearsal and prelist

operation.

We disqualified several companies from the family of minicomputers procurement because their proposals did not meet the requirements for data access software. The companies contended that

their software products did meet the requirements and filed a protest to the Board of Contract Appeals at the General Services Administration. The Board then suspended the procurement for 45

working days, which translates into about 9 weeks.

The suspension was not made based on the merits of the protests.

The Board determined that the interests of the United States in

proceeding with the procurement were not so urgent and compelling that they could not await its decision. We settled the protests

out of court because a delay of 9 weeks would have precluded our

using the minicomputers for the economic and agricultural censuses or in the dress rehearsal census, two key needs and opportunities.

We believe that the benefits of proceeding with the procurement

far outweighed the cost of the settlement. We did lose some time

because of the delay in procuring the minicomputers, but we have

been working hard to get back on schedule. We lost approximately

6 months. We have gained most of that 6 months back.

For example, after delivery of the first minicomputers we undertook accelerated development of software programs for the dress

rehearsal and we established a special systems support group to install and test the hardware. This was done successfully. We are

now in a favorable position for timely development of reliable 1990

systems. I wish to emphasize that we are testing software now and

all software will be tested before the 1990 census. In fact, I invite

you to visit our national support center in Baltimore, if you could

find the time, to observe this software testing.

Promotion, the fifth topic. Public cooperation is the cornerstone

of a successful census. Without public cooperation we could not

have a complete count and be able to produce accurate data in a

timely manner. A creative and ambitious promotion campaign is

essential if we are to maintain, and we hope, increase, public cooperation.

For the 1990 census we plan an extensive, multifaceted promotion campaign. In my written testimony I outline the promotion efforts through national and community organizations, Federal agencies, State and local governments, the private sector, how we plan

to use religious organizations and schools and so forth. I also

review our advertising efforts. In this regard, I will mention one

thing and that is, for the first time we will have minority advertising firms to tailor our messages to those minority populations.

87-468 0-88-2
14

Finally, adjustment issue for the 1990 census. Mr. Chairman, the

Commerce Department announced in October 1987, that it will not

adjust the 1990 census counts for coverage errors. I discuss in some

detail in my written testimony why the Commerce Department

made the decision not to adjust.

We have made considerable progress in developing under-count

measurement techniques for the 1990 census, but there are still serious doubts among statisticians•I am talking now inside and outside the Census Bureau•about our ability to make census counts

more accurate through the adjustment process. There was mixed

opinion among Census Bureau staff on our capability to correct the

census for estimated under-counts, and over-counts, for that

matter.

So by way of a wrap-up statement, Mr. Chairman, we have taken

a number of steps to improve the efficiency and the accuracy of the

1990 census. We want to focus our energy, attention and resources

on these efforts to make the census better. We expect these steps

will continue the trend of reducing the under-count, which I might

remind you has gone down from approximately 4 percent in the

1950 census to 1 to 2 percent in the 1980 census. So there is improvement on the under-count measurement.

Thank you, and my colleagues and I•and I should say that

Charlie Jones here is the Associate Director for the Decennial

Census, so that that is all he focuses on all the time, and Mr.

Benton has procurement among the many responsibilities which

comprise our Management Services Director.

Senator PRYOR. Dr. Keane, I thank you, and I thank your colleagues for appearing this morning before the Subcommittee.

Now, the General Accounting Office is stating, I think, reading

their report to the Congress, that on your file date•I guess that

was the dress rehearsal, March 20, 1988•that there were two

things different from what will be done in 1990. One, that the questionnaire is going to be somewhat different.

My interpretation of the GAO report is that they maintain that

all the software will not have been tested in March 1988, in the

dress rehearsal before the actual work of the census begins in 1990.

You just stated that all the software has been tested.

Dr. KEANE. Or will be.

Senator PRYOR. Was that done on March 20? I am confused about

this.

Mr. JONES. Or will be tested before the 1990 census begins. All

the software that we will use in the 1990 census will be tested prior

to its use in the census.

Senator PRYOR. Prior to the census?

Mr. JONES. Right.

Senator PRYOR. NOW, we used a different questionnaire on March

20, 1988, in the dress rehearsal than we are going to be using in

1990. Doesn't this confuse the issue?

Mr. JONES. Not that much. The changes were not as dramatic as

they might at first sound. What is going to happen for 1990 is a

number of questions are going to be put back on the questionnaire

that had been dropped off for the dress rehearsals, and we had

tested those questions before, so there are no new questions being

introduced.
15

Senator PRYOR. NOW, are we going to have more questions in

1990 than we had March 20, 1988, or fewer questions?

Mr. JONES. Yes, sir. We will have more questions.

Senator PRYOR. About how many more questions?

Mr. JONES. It is a very small number. I could present that for the

record.

Senator PRYOR. Any particular area that we are trying to find

out more about when we take this snapshot of America?

Mr. JONES. I think some of the changes were moving questions

from the long form to the short form. The long form only goes to

about one in six households whereas the short form goes to every

household. Some of major changes were moving them from one

questionnaire to another. And I think those were primarily the

questions on housing.

Senator PRYOR. On housing?

Mr. JONES. Yes, sir. Such things as how many rooms are in the

house.

Senator PRYOR. Did you ever work with the census in the old

days when they just walked around door-to-door.

Mr. JONES. Yes, sir, I did, unfortunately.

Senator PRYOR. You did that?

Mr. JONES. Yes, sir. We still do a lot of that.

Senator PRYOR. Just as a personal note, I can remember one

afternoon when I was very small, my mother was getting ready to

have her fourth child, my younger sister, and the census people

came in and we were all gathered around in the living room enjoying this very much.

My mother was known to be absent minded and the census

people said, "Mrs. Pryor, tell me the names of your three children.

Their first, middle, and last names."

She could not think of my middle name. She decided a few

months later when my sister was born not to give her a middle

name because it was too embarrassing to forget the names of her

children.

So my sister has gone through life with no middle name. I remember that day. It is a historic landmark. I imagine you ran

across some funny experiences that

Mr. JONES. Yes, sir.

Senator PRYOR. NOW, I am real worried about this. We talked to

the General Accounting Office about the $1.1 million paid to the

three unsuccessful firms. And this, to me, is troublesome. I am

afraid we are going to establish a precedent. So once again, take

me through this a little bit more slowly than you did in your opening statement, Dr. Keane.

Dr. KEANE. We had a very critical procurement on the line here.

We are talking about the so-called family of minicomputers. As

awarded, it was the largest contract ever let by the Census Bureau.

Senator PRYOR. All right. Now, how much was that contract?

Dr. KEANE. Up to $80 million. So call it an $80 million contract.

Senator PRYOR. All right.

Dr. KEANE. It was also the largest contract at that point that had

been won by the winner, Digital Equipment Corporation, an $8 billion operation. I say that to put this into some context of how important this was.
16

As the procurement process unfolded, we got a protest. The protest was

Senator PRYOR. Wait, excuse me. As the process was unfolding

Dr. KEANE. In other words, taking its course, we got a protest on

data access software, a technical term, but that is what it amounted to. And we got three firms in the protest process.

And now we are down to critical time here because we really desperately need these. We needed them for our agricultural and economic census' processing. We needed them for this•it is somewhere around $300 to $400 million investment in our automated

geographic support system. These are important to that. We

needed them for our dress rehearsal and we needed them for the

prelisting operation. Any one of these is a vital need. Collectively

they are just extraordinarily important to us. So these are contextual things but they are worth mentioning.

As that process continued, we found that it could go, likely would

go to around 45 working days, or over a 2-month period of time.

Because of our desperate need for those•and bear in mind, we are

talking about a $2.6 billion investment here at risk•we, with our

attorneys and the Commerce Department's legal counsel, decided

that for that amount of risk taking, that it was prudent to settle.

And so we settled on the basis of up to $400,000 for each one of

the three and we settled for less than that. So in other words, we

could negotiate up to $1.2 million. We settled for $1.1 million.

Senator PRYOR. In the protest process•and I have very little understanding of it•these three firms who were disgruntled and protesting, could they have slowed you down for 45 days? How does

that process work?

Dr. KEANE. The Board of Contract Appeals can suspend either on

a limited or on a total basis. And we were being suspended, the

process, on a total basis. That means freeze, nothing. So you see

what was at risk here.

As part of the settlement, we had only 30 days to have the protestors submit their claims and for us to review them. Under

normal circumstances, we would have had the Defense Contract

Audit Agency review the protestors claims but they, the Defense

Contract Audit Agency, usually takes about 120 days to do their

work. So what would perhaps be a normal procedure and expectation was not really an open option as we saw it.

Senator PRYOR. YOU found yourself, Dr. Keane, it appears to me,

in a time crunch. Wasn't the time crunch caused by•I do not want

to say a dereliction of duties or negligence•by postponing the minicomputers purchases? Wasn't this time crunch basically caused by

the Bureau?

Dr. KEANE. Well, it partially was within the Bureau, but it

merits explanation. You try to wait as long as you prudently can

before committing yourself on what kind of hardware you are

going to get. We all know the speed of innovation. So there might

be better equipment for us available. You also have to know how

the configuration of somewhere between 450 and 500 offices,

whether they be district offices or processing centers, where they

are going to be and what the ratio would be from a district office to

a processing center.
17

In other words, you want to know your field and processing configuration, as much as you can about that, before committing yourself to such a very large hardware procurement. So that is one consideration.

Another consideration is that we needed the delegation of procurement authority, and that took longer to get than we expected

and hoped for. Of course, then we had the protest itself. But before

that there were eight proposals•more than we thought we would

likely get•and naturally we wanted to do a thorough job of reviewing those proposals to determine if they complied with our

specifications.

In fact, it was the review of those proposals that caused the protest. It is somewhat of a paradox, perhaps, but it is the way that a

prudent agency ought to go about business. Now we have learned

from it, if I may add, and in case that is a question in anyone's

mind, are you doing anything as a result of this experience: we are.

We have increased our procurement staff from four to eight and

the four that we have had added are senior people. So that increases our capability and our know-how on this.

Senator PRYOR. Are you following all the government standards

to validate the various computer programs developed for the minicomputers?

Dr. KEANE. The procurement regulations, are you speaking of,

Mr. Chairman?

Senator PRYOR. The standards to test a computer system, which,

I understand, are government standards. Have you followed those

standards?

Dr. KEANE. In general, we have faithfully tried to do that. How

well have we done, Bryant, in your judgment?

Mr. BENTON. For the most part we have done very well. Unfortunately, some programs have not followed the standards to the

letter with the testing and validation, simply because of the time

constraints. And as the Director has said, we have made up a lot of

the time and have the vast majority of our programs available for

testing in the dress rehearsal. If everything were to work perfectly,

there would be no need for the dress rehearsal.

I would point out though, Mr. Chairman, that all of the processing for the 1990 census is not going to be accomplished on the

family of minicomputers. All of the tabulation and publication

processing, that is, the actual processing of the statistics that we

publish, will not be done on the family of minicomputers. That is

being done on the mainframes at headquarters.

So, when we talk about all of the computer processing for the

1990 census, and then we talk about the IRS experience of a couple

of years ago, as being analogous; they aren't. There could be some

analogy made with the minicomputer part of the processing but

not with the mainframe. We are testing the machine and its software.

Dr. KEANE. If I might add just a point to that for emphasis, the

whole focus of the GAO report, virtually the whole focus of the discussion you have ably conducted with the representatives there,

virtually all of this discussion that has gone on about the procurement focuses on the Digital Equipment contract and that portion of

our hardware and automation, which is in the neighborhood of 25
18

percent or perhaps less of the total automation in connection with

the 1990 census.

So we are not talking about 90 percent of this, or 75, or even

over half. We are talking about a relatively small portion of it,

which is not to minimize its importance. We do not do that. We

have learned from the experience and we welcome GAO's scrutiny.

But we ought to keep it in that kind of perspective. I know you

have voiced some concerns and your tones are worried and are we

setting a precedent, but perhaps that would help ease your concerns somewhat.

Senator PRYOR. Are you going to be able to test in an operational

setting all of the computers and all of the software before 1990?

Are we given that assurance this morning?

Mr. JONES. Our plans, we have already tested a lot of the software we developed for the dress rehearsal in the dress rehearsal.

Most of the operations involving the automated equipment took

place after March 20, not prior to March 20. We now are in what is

called our Beta Site over in Baltimore. We have a system set up to

test all the software and we also have plans for quality assurance

on that software before we deploy it out.

Senator PRYOR. Mr. Jones, or Dr. Keane, are we still in the mode

of establishing 11 processing centers throughout the United States

for the census? Is that right?

Dr. KEANE. We started out with a strong consideration of 11. We

plan currently, and it is under discussion and review with our colleagues in the Department of Commerce, but it is not absolutely

final.

Senator PRYOR. Have those been established?

Dr. KEANE. Yes. In fact, two of them are open, the one in Kansas

City and the one in Baltimore, as just noted. We have got the space

contract awarded for Jacksonville, Florida, and the contract for

San Diego, California, is imminent. We will use Jeffersonville, Indiana, which, of course, is a permanent site for the Census Bureau,

and we are in the early stages of finding space for Albany, New

York, and Austin, Texas.

Senator PRYOR. I am not going to keep you any longer. In fact, I

am going to adjourn in a moment and release you gentlemen so

you can go back to the Bureau and get what I hope to be better

organized, because I am getting very nervous about the census; I

think a lot of people are. It is not that we do not have faith in you

and your team. It is just that it is something like getting ready for

a big football game. You get nervous as the game approaches and

want to make sure that everybody knows the plays.

Senator Heinz has submitted a statement for the record, and I

will ask that it be inserted at this point.

[The statement of Senator Heinz follows:]

OPENING STATEMENT OF SENATOR JOHN HEINZ

Mr. Chairman, members of the subcommittee, I want to thank you for allowing

me this opportunity to address two extremely important questions regarding the

1990 census. Today's oversight hearing is quite timely, and I commend my colleagues for their efforts on behalf of the census.

Pending before the subcommittee are two measures which would help to ensure

that the 1990 census treats all Americans fairly, and would make certain that those
19

who are eligible to vote are properly represented in Congress. The bills I refer to are

S. 2013 and S. 2103.

At the outset, let me say that I believe these two measures, taken together, are

essential to preserve the fundamental democratic principle of "one man, one vote"

that our Constitution has reserved to our citizens.

Moreover, Mr. Chairman, we should be able to rely, absolutely, upon the findings

of the census. It should be based upon sound methodology, and its results should be

an accurate reflection of America's citizenry. Unfortunately, I fear that this will not

come to pass.

The results of the decennial tabulation of the Nation's population will almost certainly change the face of Congress; 13 States, at least, are likely to see their representation change. Thus, the question of who is counted•and who is not•has very

great significance.

Under its current policy, the census will not only include illegal aliens, but will

exclude all military personnel•and their dependents•serving the United States

overseas. Mr. Chairman, in my view this is a grave error. Not only will the citizens

of many States be disenfranchised, but the census bureau will actually, as a practical matter, give a greater standing to noncitizens and confer a lesser standing on

American citizens serving overseas. This is as unjust as it is illogical.

Unless Congress directs otherwise, the 1990 census will include 2 million illegal

aliens, and exclude hundreds of thousands of American citizens. An illegal alien will

be counted just as if he were a citizen. These individuals, who pay no taxes and

have no right to vote, will gain representation right here in Congress. At the same

time, those persons and their families who are U.S. citizens and are serving their

Nation overseas•at considerable sacrifice•will lose the representation they would

otherwise be entitled to. My home State of Pennsylvania, alone, has 23,000 military

personnel in service overseas.

They are each going to be ignored by the upcoming census. I do not believe that

there is any possible argument in favor of penalizing American servicemen and

women by denying them representation, while granting representation to those who

have entered this Nation illegally.

In an effort to correct this unfair situation, Senator Shelby and I introduced legislation, S. 2013, requiring the Census Bureau to determine the number of legal citizens residing in our Nation. Administering this requirement may be more work

than simply counting heads, but I do not believe that the question of representation

in Congress is so minor that we can afford to take the easy way out.

In addition, I have introduced S. 2103, to include overseas military personnel and

their'dependents in the census. It is my belief that their voices deserve to be heard.

Mr. Chairman, the reapportionment of congressional seats is a very serious

matter. Steps must be taken to assure that Members of the House represent an

equal number of citizens. To do less might violate the "one-man, one-vote" doctrine

adopted by the Supreme Court over 20 years ago.

In closing, I urge my colleagues' favorable attention to S. 2013 and S. 2103, and I

look forward to working with the subcommittee on these matters.

Thank you, Mr. Chairman.

Senator PRYOR. Senator Sasser of Tennessee desires to make a

statement for the record in addition to submitting questions to the

General Accounting Office and perhaps to the Bureau of the

Census.

[The statement of Senator Sasser follows:]

OPENING STATEMENT OF SENATOR SASSER

Mr. Chairman, as all of us here today can agree, conducting a decennial census is

huge and costly undertaking. It involves years of preparation, hiring of tens of thousands of employees, and now costs several billion dollars. Going back to the days

when George Washington was President, each decade American Households across

the Nation were surveyed so that the Federal Government could get a better understanding of the population trends that were characterizing and influencing the

Nation.

While the Constitution originally required that a decennial census be taken to

provide population counts as a basis for apportioning seats in the House of Representatives, today, the data provided by the census is used for a host of important

purposes. In fact, the data provided by the census is absolutely essential in formulating allocation amounts for a variety of Government programs.
20

In the last several years, the Federal Government has entered into an unprecedented era of fiscal conservatism. Programs in all areas of the budget are being

eliminated or pared back significantly. However, while less and less Government

funds are being made available, more and more eligible recipients are requesting

these funds. Therefore, of tantamount importance to the Federal Government is

that the data used to create program formulas is as accurate as possible.

This is where the Decennial census plays such an important role. The census'

compilation of key social, economic, and housing data plays an invaluable role in

the Federal Government's process of structuring direct aid, housing and economic

development programs.

With the census less than 2 years away, it is my sincere hope that the problems

that are being encountered now in the preparation for the census can be worked

out. We can not allow a situation to occur during the decennial census where untested or inefficient software could be allowed to cause potentially detrimental problems. It is imperative that the accuracy of the census data is not jeopardized because of administrative reasons or planning mistakes. Therefore, if it looks like contingency plans may be needed, then I believe the Census Bureau should start formulating some.

In conclusion, I would just like to reemphasize that it is my hope that the 1990

decennial census is able to be completed without any major problems. Only then,

with accurate census data, can the Government find out which citizens and communities need the most help.

Senator PRYOR. I have nothing further. We thank you for coming

this morning, and I do wish you the best.

Thank you.

Dr. KEANE. Thank you, Mr. Chairman.

Senator PRYOR. The hearing is adjourned subject to the call of

the Chair.

[Whereupon, at 12:40 p.m., the Subcommittee adjourned subject

to the call of the Chair.]
APPENDIX

United States General Accounting Office

GAO Testimony

For Release

on Delivery

Expected at

9:30 a.m. EDT

Friday

June 17, 1988

Status of the 1990 Decennial Census

Statement of

Richard L. Fogel, Assistant Comptroller General

General Government Programs

Before the

Subcommittee on Federal Services, Post Office

and Civil Service

Committee on Governmental Affairs

United States Senate

GAO/T-GGD-88-42

(21)
22

STATUS OF THE 1990 DECENNIAL CENSUS

SUMMARY OF STATEMENT BY

RICHARD L. FOGEL

ASSISTANT COMPTROLLER GENERAL

GENERAL GOVERNMENT PROGRAMS

Conducting a decennial census is a mammoth and costly task. For

the 1990 census, estimated to cost about $2.6 billion, the Census

Bureau will hire over 300,000 temporary employees to staff about

450 temporary offices. In planning for the 1990 census, the

Bureau analyzed problems experienced in past censuses to identify

the causes and work towards viable solutions. These problems

included: delays in data dissemination; slow, error-prone

clerical operations; difficulties in producing timely and highquality maps; and cost escalation. To help address these

problems in 1990, the Bureau decided to automate map production

and management information systems and process census data

concurrently with collection activities. A critical strategy in

the Bureau's attempts to automate was the purchase of several

hundred minicomputers.

While we were encouraged by the movement to automate, the Bureau

may not be making sufficient and timely progress and, as a

result, may not take full advantage of the opportunities that

automation offers. For example:

The delayed minicomputer procurement has reduced the

time needed to develop and test software for the 1990

census, posing a risk that automated procedures will

not function as intended. In addition, the failure to

plan properly for and manage the procurement resulted

in the Bureau paying $1.1 million to settle a bid

protest.

The Bureau has not systematically validated the

software for the minicomputers under census-like

conditions in the dress rehearsal. As a result, the

dress rehearsal's value has been diminished, and

changes will have to be made during actual census

operations.

The Bureau has experienced delays and difficulties in

completing its geographic support system, which delayed

map production and significantly increased costs.

Late map production has forced the Bureau to postpone

the development of address lists for suburban and rural

areas•a critical early census operation.

The Bureau will be able to conduct the 1990 census and provide

the counts to the President by the statutory deadline. But the

census will not be as cost efficient as it could have been.
Mr. Chairman and Members of the Subcommittee:

I am pleased to appear here to discuss our observations on the

Bureau of the Census' preparations for the 1990 Decennial

Census.

Conducting a decennial census is a mammoth and costly task,

involving over 3OO,0U0 temporary staff and about 450 temporary

offices. According to current Bureau estimates, the 1990 census

will cost $2.6 billion, as compared to $1.1 billion to complete

the 1980 census.

Early in the decade the Bureau analyzed the problems experienced

in the 1980 census. These problems included: delays in data

dissemination; the use of slow, error-prone clerical operations;

difficulties in providing timely and high-quality maps; and cost

escalation. This analysis identified opportunities for improving

census operations, particularly increasing the use of automation.

However, late decisionmaking and procurement delays have

diminished the potential effectiveness of the Bureau's automation

initiatives.

First, I would like to focus on problems the Bureau has

experienced in procuring and testing minicomputer systems to be

used to carry out critical census activities. As discussed in

our June 14, 1988, report, DECENNIAL CENSUS - Minicomputer
Procurement Delays and Bid Protests: Effects on the 1990 Census

(GAO/GGD-88-70), such problems resulted in the payment of Sl.l

million to settle a bid protest and, most importantly, have

reduced the time available to develop and test software to

process census data and manage operations. This also has

diminished the value of the dress rehearsal, which is the

Bureau's last major opportunity to assess and fine-tune the

systems and operations to be used in 1990.

Secondly, I will discuss our concerns about problems the Bureau

is experiencing with implementing the first 1990 Decennial Census

operations. Problems and delays occurring in such critical early

activities as developing address lists for suburban and rural

areas are reminiscent of problems that occurred in 1980. They

could ultimately have repercussions on later census operations

and adversely affect the quality and cost of the census.

MINICOMPUTER PROCUREMENT PROBLEMS

RESULT IN DELAYS AND INCREASED COSTS

Let roe first address the minicomputer issue. A key component of

the Bureau's plans for the 1990 Decennial Census involved the

increased use of automation to improve the accuracy and

timeliness of census activities. To help accomplish this, in

January 1986 the Bureau decided to procure about 550

minicomputers at a maximum potential cost of S80 million. The
25

vast majority of the minicomputers were expected to be used in

the 1990 Decennial Census for such purposes as checking in

questionnaires, keying address and questionnaire data, preparing

management information reports, and generating and updating

automated maps.

Before the minicomputer contract was awarded, a bid protest was

filed with the General Services Administration Board of Contract

Appeals by three offerors who contested the Bureau's

determination that their proposals did not adequately respond to

technical provisions of the request for proposals (RFP). After a

hearing, the Board temporarily suspended Commerce's procurement

authority.

Rather than contesting the protest. Commerce and the Bureau

decided to settle the bid protest by making a cash settlement to

the three offerors. Commerce and the Bureau felt they could not

afford the additional time required for the Board to decide the

protest, regardless of its merits. Commerce also discovered a

procedural flaw in the procurement process that it believed

would have jeopardized the government's case.

The settlement agreement reached on the minicomputer protest

provided that each of the three offerors would receive up to

$400,000 for proposal preparation and protest costs after

submitting appropriate supporting documentation. After making a
cursory review of the documentation submitted, the Bureau paid a

total of $1.1 million to the three offerors, which represented

all claims submitted by each offeror up to the $400,000 maximum.

Although the concern for time was not without merit, the cash

settlement could have been avoided if the Bureau had not

initially created its own management dilemma by failing to plan

properly for and manage the minicomputer procurement. Incomplete

and untimely planning for the 1990 Decennial Census' organization

and procedures prevented the Bureau from fully identifying,

documenting, and planning for its automatic data processing

needs. This resulted in a late decision to procure the

minicomputers and contributed to an additional 6-month delay in

the procurement process.

In addition to the cash payment, the problems in the minicomputer

procurement (1) overburdened the Bureau's understaffed

procurement office, contributing to delays in obtaining other

needed equipment for the census; and (2) contributed to the

Bureau's decision to lease additional computer capacity because

the minicomputers were not available when planned.

LACK OF QUALITY ASSURANCE PROGRAM FOR

COMPUTER SOFTWARE IN DRESS REHEARSAL

A principal objective of the dress rehearsal was to conduct a

full-scale system test of the minicomputers, under census-like

4
27

conditions. The minicomputer contract, however, was not awarded

until May 1987, which was several months after the start of the

dress rehearsal. As a result the equipment was not available for

use in initial dress rehearsal operations, such as keying

addresses and updating automated maps.

When the new minicomputer system became available for later

phases of the dress rehearsal, it could not be effectively

utilized because of insufficient time to develop and fully test

software. Although our review to date has found that Bureau

officials have identified and corrected many software errors,

they have not systematically validated, verified, and tested the

software in accordance with recommended federal standards.

I will now discuss some of the problems the Bureau has

experienced with its newly automated management information

system in the dress rehearsal.

District offices experienced problems with the

automated applicant file, which is supposed to identify

the status of all job applicants and their availability

for work. Because the reports failed to accurately

reflect applicant status on a timely basis, supervisors

lost confidence in the system and did not use it for

making hiring decisions. This file also serves as the

master file for employees and is used to generate
28

production reports. The problems with the file

precluded district office officials from getting

accurate information on employee production and

turnover they needed to efficiently manage operations.

Automated staff performance reports used to manage

follow-up activities and calculate enumerator bonuses

were limited because of missing data and inaccuracies. •

Consequently, to avoid improper payment, district

office personnel had to partially rely on manual

records to calculate bonuses.

Reports used to assess training needs and performance

of clerks editing questionnaires were not used as a

basis for taking personnel actions because supervisors

were not confident that the information provided was

accurate.

Using software before it is fully tested is risky and can result

in the systems not functioning as intended. In the 1986 pretests

for the 1990 census, the Bureau did not allow sufficient lead

time to adequately test software programs for its previous

computer system. As a result, many software programs initially

did not work for some operations and had to be modified. To

resolve these problems, headquarters staff provided technical

assistance to the pretest sites. If similar problems occur
29

during the decennial census, however, sufficient staff to

provide assistance may not be available to support several

hundred locations across the country.

Similar problems contributed to the Internal Revenue Service's

(IRS) much-publicized difficulties in converting to new automated

equipment in 1985. IRS did not establish an adequate quality

assurance proqram, and some programs ran inefficiently whi1s

other programs failed to meet users' needs. This contributed to

inaccurate notices to taxpayers, untimely responses to inquiries,

and increased interest paid by the government on delayed refunds.

Without sufficient time to adequately test the software, problems

will have to be resolved during early census activities, which

could jeopardize the quality of census data and lead to

increased costs. Because of such risks we recommended in our

minicomputer report that the Census Bureau prepare a formal

contingency plan in the event the minicomputer system does not

operate properly. This plan should include provisions to use

available mainframe capacity and, if necessary, do some

operations manually.

DELAYS AND CHANGES IN PRELISTING

Next let me discuss some concerns we have about changes and

delays in the Bureau's development of address lists for suburban

87-468 0-88-3
30

and rural areas. Address lists are important because they are

used to deliver census questionnaires and serve as a control list

of nonrespondents for follow-up activities. Originally, the

Bureau planned to canvass suburban and rural areas, called

prelisting, to develop address lists for an estimated 45 million

households starting in February 1988.

The planned starting date for the 1990 prelist operation was a

year earlier than in the 1980 census. This additional time was

provided as a contingency because of the delays experienced in

completing the prelist for the 1980 census. In that census the

Bureau cancelled a planned independent Postal Service check of

rural and suburban addresses and compensated by initiating an

expensive recanvassing procedure.

Primarily because of late map production and concerns about the

ability to develop good mailing addresses, the Bureau changed its

prelist plans. Automated files needed to develop the maps are

being generated by the Bureau's automated geographic support

system, which the Bureau estimates will cost about $371 million

for the 1990 census, or about twice its 1982 estimate. The

Bureau significantly underestimated the computer capacity

requirements and the time needed to prepare software for these

automated files. These problems were compounded by the late

acquisition of the minicomputers, which were to be used to

prepare computer tapes needed to print the maps.
31

The Bureau changed its plans for prelisting in the following

three ways:

First, the Bureau decided not to prelist 2 million

housing units. Instead, the Bureau will enumerate

these units using its traditional door-to-door canvass

enumeration procedure, without the aid of a control

list. This could result in a less accurate census

count.

Second, it deferred the prelist of 10.5 million housing

units to the fall of 1989, representing a minimum 1-

year delay. For these units the Bureau, rather than

the Postal Service, will deliver the questionnaires.

No independent Postal Service address check is planned

for these units. A Bureau study of its delivery of

questionnaires in the 1986 pretest did not reveal

positive results. The study commented that some

housing units did not receive a questionnaire and some

received two questionnaires. The study stated, "The

actions of the enumerators resulted in gaps in

coverage, misdirected mail, and increased nonresponse

workload."
The third change involved postponing for 4 months, from

February 1988 to June 1988, the start of prelist

operations for the remaining 32.5 million units. At

this point, it is too early to speculate what effect

this delay will have on prelist operations.

CHANGES IN SPACE REQUIREMENTS

Finally, I would like to make some brief comments on the Bureau's

space acquisition. In 1986, when the Bureau was proposing to use

10 to 15 processing offices, we were concerned that this

significantly higher number of offices, compared to the 3 used in

1980, would create management problems and would increase the

cost of the census. In 1987, the Bureau revised its estimate for

the number of processing offices to 11. The Bureau is currently

considering using seven offices, two of which have been opened.

The Bureau stated in a recent appropriations hearing that the

final number will be reflected in its fiscal year 1990 budget.

We are concerned that this decision has not been finalized at

this late stage of the census cycle. Changes in the number of

processing offices will affect census workflows, operations, and

the use of automation. This is but another example of untimely

decision-making that we have noted throughout the 1990 Decennial

Census planning process.

10
33

Overall, we believe that the Bureau will be able to conduct the

1990 census and provide counts to the President by the statutory

deadline. However, we are concerned that the lack of time to

develop and test software for the 1990 census, particularly under

census-like conditions in the dress rehearsal, could adversely

affect the accuracy and increase the cost of the 1990 census.

Because of this situation I want to reemphasize the importance of

our recommendation that the Bureau prepare a contingency plan in

case the minicomputers do not operate as intended.

This concludes my statement, and I would be happy to respond to

any questions.

11
34

QOESTIONS SOBMITTBD BY SENATOR PgfOR

The Department of Commerce and the Bureau of Census paid

S1.1M to 3 offerors because they could not afford the

additional time required to resolve the bid protest,

regardless of the merits of the protest. Should Commerce

and the Bureau have paid the amount they did? Given the

lack of clear definition regarding appropriate claims to the

government, what changes are needed, either legally or

administratively, to correct the problem?

A1. As mentioned in our report, we believe that the Bureau

could have avoided the cash settlement if it had not

created its own management dilemma by failing to plan

properly for the procurement, by starting the

procurement process late, and by not adhering to proper

procurement procedures. These management deficiencies

created serious time pressures that persuaded the

Bureau to opt for a cash settlement. The maximum

$400,000 ceiling for each offeror agreed to in the

settlement was determined by negotiation, we are

concerned about the amount of money paid in the

settlement, especially in light of the lack of an

adequate review of claimed costs by Commerce and the

Bureau. However, again, as stated in our report, in

the absence of clear definitions of what constitutes

allowable bid proposal and preparation costs and

protest costs, we are not in a position to assess the

appropriateness of the amount paid.

Regarding possible recommendations for legal or

administrative changes, I must first emphasize that our

work was limited to this single procurement. Because

we do not have sufficient information on the extent of

the problem across the government, our ability to

identify the need for or recommend possible remedies is

obviously limited. However, based on our review of

Census' minicomputer procurement, a number of ideas

come to mind that might be worthy of further

consideration. They include: establishing, in

regulation, a clear definition of what constitutes

allowable bid proposal and preparation costs and

protest costs; requiring offerors to certify that any

claimed costs are appropriate under this regulatory

definition; incorporating an audit clause in settlement

agreements permitting the recovery of amounts paid in

error or based on false or inaccurate certifications;

and, finally, establishing dollar limits on amounts

that agencies can pay in settling protests.
35

What Is your overall assessment of the way GSA, Commerce and

the Bureau handled this protest? As custodians of taxpayer

dollars, do you feel they exercised sound management

judgment in carrying out their responsibilities?

A2. He believe that the settlement could have been avoided

if the procurement had been properly planned for and

managed. Unquestionably, the Bureau helped create its

own predicament. Because of their concern for time,*

Commerce and Bureau officials made a management

decision to settle the protest and proceed with the

procurement rather than to pursue the protest on its

merits. As pointed out in our report. Commerce and the

Bureau agreed to the settlement even though officials

continued to believe that the three proposals were

unacceptable. This situation is obviously troublesome:

as a general rule agencies should not settle protests

based on the desire to proceed with a procurement

suspended by judgment of the GSA Board of Contract

Appeals. With respect to the GSA Board of Contract

Appeals' handling of this protest, we are not in a

position to question the Board's judgments which are

based upon evidence presented by the parties to that

body.

In your report you referred to the problems this nation

experienced in 1985 because the Internal Revenue Service did

not effectively manage the replacement of its service center

computers. The GAO report on the IRS situation noted that

because of the problems IRS encountered in introducing the

new service center computer system, IRS' operational costs

increased as productivity declined, the government's

interest payments to taxpayers increased as refunds were

delayed, and IRS' image waned as the public became

increasingly frustrated. Needless to say, the situation in

1985 was damaging and costly for the IRS and the taxpayer.

Based on the findings of your work at the Bureau, the nation

and the taxpayer have already had to pay far more than it

should have for gross mismanagement and, unfortunately, the

costs are continuing to increase. What will be the effect

of this mismanagement on the 1990 Decennial Census?

A3. Conducting a decennial census is a major undertaking,

involving hundreds of thousands of temporary employees

and hundreds of temporary offices. Good management is

essential for a cost efficient and effective census,

particularly in view of the importance of census

results in many aspects of the public and private

sectors. Given the complexity and scope of census
36

operations and procedures, there are clearly many areas

that are vulnerable to poor management practices.

Based upon our review of the Bureau's management of the

minicomputer procurement, the most immediate and

obvious effect is reduced cost efficiency. Management

deficiencies have already resulted in the Bureau

spending millions of dollars more than it should have

for ADP equipment. This includes both the cash payment

to settle the protest and an additional several million

dollars to lease time on mainframe computers. In

addition, ADP planning and procurement management

deficiencies have already prevented the Bureau from

developing and testing software under census-like

conditions. This could lead to the minicomputers not

functioning as intended and contribute to a further

reduction in the cost efficiency and effectiveness of

the census.

GAO and the Bureau appear to differ on the progress being

made in preparing for the 1990 Census. For example, you

cite that the minicomputers and software were not fully

tested during the dress rehearsal and would not be tested

before the final implementation of the census; critical map

production is seriously delayed; and the address list is

being developed without a quality assurance check. The

Bureau states otherwise. I am confused. Who is right and

why is there such a wide difference?

A4. We emphasized that the testing would not be conducted

under census-like conditions in the dress rehearsal.

We also maintain that some software will not be tested

before the prelist activity began which was in June

1988. We consider the prelist as part of the actual

census. The Bureau might be limiting its position to

the enumeration itself which starts April 1, 1990.

We maintain our position that map production is

significantly behind schedule. As a partial remedy to

this problem, the Bureau has delayed and deferred

portions of its address list development activity. For

that portion of the address list development that was

deferred, the Bureau will not employ the independent

postal address check prior to Census Day. For these

housing units the Bureau will deliver the

questionnaires, therefore it contends it will not need

the Postal Service address check. However, the

Bureau's experience in the 1986 test census, when it

did use the proposed self delivery of questionnaires,

was not successful. As we cited in our statement, a

Bureau study commented that "the actions of the

enumerators resulted in gaps in coverage, misdirected

mail, and increased nonresponse workload."
37

As of February 1988, the ADP needs for the 1990 Decennial

Census still had not been decided. For instance, one of the

principal reasons for obtaining the minicomputers was to

maintain the address control file. However, it sacked that

idea. Furthermore, the places where the computers were to

be located and, therefore, the basis for determining the

number of computers needed, has changed and apparently may

change again. What is your assessment of the quality of the

Bureau's planning of ADP needs for the 1990 Decennial Census

and what effect will any deficiencies in that planning have

on the overall quality of the 1990 Census?

A5. He have been very concerned for the past several years

about the Bureau's ADP planning for the 1990 census.

We have expressed these concerns in several reports

including our recent report on the procurement of the

minicomputers. Some excerpts from past reports will

demonstrate these concerns. In The Census Bureau Needs

to Plan Now for a More Automated 1990 Decennial Census

(GAO/GGD-83-10, January 11, 1983) we commented

"Although the Bureau has expressed interest in

increased automation, its initial planning efforts for

the 1990 census need better coordination and

development, and to provide for the time needed to

acquire and test new equipment. The Bureau needs to

properly organize its efforts and commit resources or

time will overtake the opportunity for increased

automation."

In Status of Plans to Computerize Questionnaire Data

(GAO/GGD-86-76BR, Hay 1986), in regard to the use of

optical mark reader (OMR) technology, we commented "We

are particularly concerned with the Bureau's planning

efforts for the possible use of OMR technology. We

believe the Bureau's decision to discontinue

consideration of OMR technology was influenced by its

late start in detailed planning, reluctance to revise

the questionnaire form, and a slow procurement process.

* * * Because of its actions, the Bureau may have

excluded a potentially useful option without fully

exploring it."

In Automation of the Geographic Support System

(GAO/GGD-87-7 5BR, May 1987) we made several comments

concerning the Bureau's management and procurement

actions. For example, the report commented that "The

delay in the procurement of the first computer work

stations, needed to begin building the automated

files, amounted to about 18 months from late June 1982

to December 1983. According to Bureau officials, the

delay occurred because inadequate documentation was
38

initially submitted to the Department of Commerce and

because the procurement process took longer than

expected."

These lapses in ADP planning and management will

reduce the overall cost efficiency of the 1990 census

and could eventually affect the quality of the census data.
39

UNITED STATES DEPARTMENT OF

WASHINGTON. DC. 20230

BUREAU OF

THE

CENSUS

THE STATUS OF PLANS FOR THE 1990 CENSUS

OF POPULATION AND HOUSING

OR. JOHN G. KEANE

DIRECTOR, BUREAU OF THE CENSUS

UNITED STATES SENATE

SUBCOMMITTEE ON FEDERAL SERVICES, POST OFFICE,

AND CIVIL SERVICE

JUNE 17. 1988

WASHINGTON, D.C.
40

INTRODUCTION

Mr. Chairman, I will report to you today on plans for the 1990 Census of

Population and Housing.

The 1990 census will be the 21st decennial census of the United States.

It also will be the Nation's Bicentennial census. The first census was

conducted in 1790 under the direction of the Secretary of State, Thomas

Jefferson. George Washington was President. This city that bears his

name had not yet been planned. And Arkansas, Mr. Chairman, was still

part of Spanish territory.

So the census is practically as old as the Nation itself. Article 1,

section 2 of the Constitution requires a decennial census to provide

population counts as a basis for apportioning seats in the House of

Representatives. Over time, census data have come to be used for many

other important purposes. These include drawing legislative districts,

allocating government funds, and planning at all levels of government and

in the private sector.

Census Day for the 1990 census is April 1, 1990--less than 2 years

from now. But as I will describe shortly, major plans are complete and

we have begun preparatory operations. Our current cost estimate for the

1990 census is $2.6 billion.

Today, I will discuss six topics: (1) the status of planning for the

census, (2) the preparatory operations that have begun or will begin soon,
41

2

(3) the census questionnaire content and sample design, (4) plans for

increased automation in the census, (5) plans for promoting the census and

building public support, and (6) the adjustment issue for the 1990 census.

PLANNING

One•planning.

We are now conducting our Oress Rehearsal censuses, which are the final

dry runs of planned census operations for 1990. We began formal planning

for the 1990 census in October 1983. We have conducted more major tests

than previously. The Dress Rehearsal is the capstone of our planning

efforts and was preceded by 5 years of consultations with data users and

formal tests of alternative procedures and questionnaire content.

We consulted with a wide range of data users, including minorities,

planners and academics, business leaders, representatives of private

organizations, state and local officials, and Federal agencies. We have

also kept members of Congress informed of 1990 census plans through more

than 30 hearings since 1984. We conducted seven major test censuses and

a number of smaller tests. Based on these consultative efforts and tests,

we designed a 1990 census plan that we are now implementing in the Dress

Rehearsal.

We are conducting the Dress Rehearsal censuses in three sites representative

of the kinds of enumeration conditions in which we will conduct the 1990 census.

St. Louis City, Missouri, 1s a large urban area with a high concentration of

minorities, low-income persons, multi-unit housing, and so on. Fourteen counties

in East Central Missouri contain one mid-size city (Columbia), a number of
42

3

smaller cities and towns, rural areas, colleges, a major military base,

and resort areas. Eight counties in eastern Uashington contain some small

cities and towns, but also remote, sparsely populated areas and two

American Indian reservations.

Census Day for the Dress Rehearsal was March 20. Most data collection

work has been completed, but some follow-up work and data processing

continue on schedule.

The Dress Rehearsal has proceeded fairly smoothly. There have been no

major problems to date that would cause us to change our plans for 1990.

We have, as expected, identified various refinements to operations and

systems, but this is why we conduct tests and dress rehearsals.

PREPARATORY OPERATIONS

Two•preparatory operations.

Major preparatory operations for the 1990 census have already begun and

will accelerate this year and next.

Addresses

One of the major preparatory activities is the compilation of an address

list that we will use to control the delivery and return of questionnaires

in 1990. We will enumerate about 95 percent of the housing units by

mail-back procedures. With these procedures, we compile an address list

in advance of the census, mall or deliver questionnaires to each address,

and follow up on those addresses for which questionnaires are not returned.

This way, we can complete most of the census by mail and concentrate our
43

4

resources on the hard-to-enumerate follow-up cases. The success of these

procedures depends in large part on an accurate address list.

For the more urban areas of the country, we purchased about 56 million

addresses from commercial vendors under contracts awarded in February 1988.

Ue currently are assigning geographic codes to these addresses by computer.

We have begun listing addresses for the more suburban and rural parts of

the country, where lists either cannot be purchased or cannot be assigned

geographic codes by computer. This operation, which we call "prelist,"

will be conducted in two phases. The first phase, to be completed by the

end of the year, will list about 32 million addresses. The second phase,

which we will conduct in the fall of 1989, will list another 11 million

addresses.

Our experience shows that updates by census enumerators and postal workers

are required to produce a complete address list for the census. Thus, we

contract with the U.S. Postal Service to conduct several checks of the

lists for completeness and accuracy and, in addition, have our staff

conduct checks. One of these checks is the "precanvass" operation, an

updating of the addresses in urban areas, which we will conduct in 1989.

We expect that when we are through with all of our address-compilation

operations that the list will contain an address for almost every housing

unit in the areas where we will conduct the census by mail.

Mail carriers will deliver the questionnaires to housing units not in

mail-back areas•primarily the remote, sparsely-populated areas. But we

will ask householders to complete their questionnaires and hold them

until an enumerator visits to pick them up.
44

Geography

A second major preparatory activity, which has been ongoing since 1984,

1s the creation of an automated geographic support system. We call this

system TIGER, which stands for Jopologically 2.nte9

r

ated Geographic Encoding

and Referencing.

i

The Key word in the TIGER acronym 1s "integrated." TIGER will integrate

into one file all the geographic information that was produced 1n separate

operations in 1980. This will allow us to produce the geographic products

and services for 1990 from one consistent data base, and will help us

avoid some of the delays and inaccuracies we experienced in 1980. Having

computer-driven plotting devices generate high-quality maps that match

the geographic areas in our tabulations will be a big improvement over

the clerical operations of the 1980 and earlier censuses.

TIGER has a large data base with a computer-readable or "digital" map as

its foundation. As a start to creating the TIGER file, we and the U.S.

Geological Survey entered into an Interagency cooperative agreement for

the creation of the initial cartographic data base. Then, we updated

this initial digital map base with Information about new streets and

current boundaries that was gathered from state, county, and local officials

to make the maps useful for Census Bureau activities. While we had some

delays earlier, the computer-driven map plotters we purchased earlier

this year are producing the maps our enumerators will use in the upcoming

prelist operation.
45

Questionnaires

A third major preparatory operation is the printing of census questionnaires.

Questionnaire printing is one of our most important activities for the

census. We cannot conduct the census without questionnaires. We will

require approximately 250,000,000 short and long forms, including Spanishlanguage and other special-purpose questionnaires. Quantity is not our

only concern. The printing must meet quality standards so that the

questionnaires, when filmed, can be read by our optical scanning devices.

About 100,000,000 questionnaires will be assembled, along with instruction

guides and return envelopes, into address-labeled mailing packages.

Questionnaire printing must begin in January 1989. Delays would push

back other related preparatory activities and could mean that we would

not be able to deliver census questionnaires to housing units as scheduled.

Obviously, that would seriously jeopardize our ability to meet the legal

mandate of delivering apportionment counts to the President by December

31, 1990.

To begin printing in January 1989, the Government Printing Office (GP0)

must begin the procurement process several months prior to that. We plan to

submit procurement documents to the GP0 in early September 1988. These

documents will contain detailed specifications for the design of the

questionnaires and will specify the required quantities of short- and

long-form questionnaires.

To meet this September date, we have devised a schedule for final review

of the content and sample design to be conducted this spring and summer.

The final questionnaires will be submitted to the Office of Management

and Budget (0MB) next month for clearance.

87-468 0-88
46

Space Acquisition

A fourth major preparatory activity is the acquisition of space for

temporary offices to manage census data collection and processing. In

all we will require about 6 million square feet of space for regional

census centers, for district offices that the regional census centers

will manage, and for processing offices. The regional census centers

and district offices are responsible primarily for collecting the data.

In the processing offices, the census questionnaires will ultimately be

converted to computer-readable format so that we can produce data products.

The regional census centers are located in the same cities where we have

our permanent regional offices, plus San Francisco. Eleven offices are

operating now. We have awarded space contracts for the New York and San

Francisco offices. New York is scheduled to open next month. San Francisco

is scheduled to open in October.

The district offices will open on a staggered basis. For example, 127 of

the 400+ offices will open in the winter/spring of 1989. We have begun

space procurement for the first offices.

Two of the processing offices are open now. We have awarded contracts

for space for two others.
47

QUESTIONNAIRE CONTENT AND SAMPLE DESIGN

Three•the content of the census questionnaires and the sample design.

As in recent censuses, we will have two primary questionnaires•a short

form and a long form. The short form will contain the basic population

and housing subjects we ask of all persons and housing units. The long

form will contain these same basic subjects plus additional population

and housing items asked of only a sample of persons and housing units.

We refer to the basic subjects that appear on both the short and long

forms as the 100-percent subjects. We refer to those that appear only on

the long form as the sample subjects.

Content

As required by Title 13, U.S. Code, I reported to you on March 31, 1988,

on the content of the questionnaires for the 1990 census.

The subjects included in that report differed somewhat from those provided

a year earlier. During the past year, we continued our analysis and also

held discussions with the 0MB. These discussions resulted from the OMB's

review of the 1988 Dress Rehearsal questionnaires based on its authority

and responsibilities under the Paperwork Reduction Act of 1980. The

discussions resulted in revising the housing portion of the short- and

long-form questonnaires and the sample design to: (1) meet the statistical

needs of the Nation, (2) comply with the goals established by the Paperwork

Reduction Act, and (3) increase the usefulness of data collected and

published by the Federal Government.
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9

The 1990 short form will contain the following population subjects:

name, household relationship, sex, age, marital status, race, and Hispanic

origin. And the following housing subjects: the number of units In the

building; whether the housing unit is owned or rented (tenure); number of

rooms in the housing unit; a screening question to determine if the value

of the unit 1s affected by Its being on 10 or more acres or containing a

business or office; value of the unit, if owned; and, if rented, amount of

rent paid and whether meals are Included in the rent. The short form also

will contain coverage questions designed to determine 1f the respondent

listed all appropriate persons on the questionnaire. In addition, it

will include several questions about vacant housing units that will be

answered primarily through observation by our enumerators.

The long form will contain the previous Items plus detailed social,

economic, and housing Inquiries.

Sample Design

Now, I will briefly discuss sample design. In 1980, the long form went

to one in six housing units, except 1n places with fewer than 2,500

people; there, one in two housing units were Included in the sample. Ue

designed the larger sampling rate for small places to produce more accurate

data, particularly income data, for small places. Using a similar design

for 1990 would have meant about 19.3 million housing units would have

been Included in the sample.

For the 1990 census, we are proposing a sample size of about 17.7 million

housing units. We are determining the final criteria to be used to allocate

this sample to various areas. We are studying the precision that will
49

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result for census data tabulated for many different geographic areas and

population groups. We want the 1990 sample to produce quality data for

population subgroups including the elderly, low income working persons,

Blacks, Hispanics, Asians and Pacific Islanders, and American Indians and

Alaska Natives.

AUTOMATION

Four•automation.

The 1990 census will be far more automated than the 1980 census or any

previous decennial census. A principal aim of planning for 1990 has been to

automate many of the time-consuming and labor-intensive clerical tasks of

the 1980 and previous censuses; and to begin converting data on the

questionnaires into computer-readable format several months earlier than

we did for 1980.

Traditionally, census data collection and much of the census data processing

have been paper- and people-intensive tasks. The use of automated

equipment can help us deal with the mountains of paper and the thousands

of clerical tasks in a much more accurate and controlled way.

Automated Operations

The TIGER System, which I described earlier, is an important element in

our automation plans. It is doing all the things we expected of 1t for

the 1990 census.
50

n

We also are automating our address list so that we can key updates to it

on our computers concurrent with the data collection operation. With an

automated address control file, we can print unique bar-codes on the

questionnaires and keep track of them using electronic equipment. In tnis

way, we can readily ascertain the enumeration status of a housing unit and

print out a list of addresses for which no questionnaire has been returned.

We will follow up on these housing units.

Since the automated address control file allows us to keep track of

individual questionnaires, we can process the questionnaires on a flow

basis. This means that questionnaire processing will start concurrently

with data collection, at least 4 months ahead of the 1980 schedule. In

1980, the conversion of data to machine-readable form did not begin until

the district offices completed all enumeration, edit, and followup activities

and shipped all their questionnaires at one time to a processing center.

The earlier start for 1990 census processing should make it possible to

release data products sooner.

We are automating several other important census operations. For some

areas of the country, we will use computer review to replace the clerical

check of questionnaires for accuracy and completeness. We are automating

the operation that assigns computer-readable codes to written answers on

the questionnaire. We are developing an automated management information

system that will help us meet critical deadlines in planning the census

and monitor the cost and progress of census operations. And, we will

have computers in the local temporary offices to report cost and progress,

to keep track of payroll, to organize job applicant information, and to

control the field follow-up work.
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Family of Minicomputers

To conduct an automated census under the scenario I have just described

requires a good deal of computer equipment. There are dramatic changes

involved in moving from a census with large-scale clerical operations to

one using significantly increased automation. We have had to balance

the need for adequate time to plan and test these new departures with

the need for adequate procurement lead times.

Our procurement activities are now progressing as planned and we foresee no

major problems. In June 1987, we completed award of a contract to the Digital

Equipment Corporation for a "family of minicomputers." The first computers

have been delivered to support our census operations, including the 1987 Economic

and Agriculture censuses, the automated geographic support system, and the

1988 decennial census Dress Rehearsal and prelist.

We disqualified several companies from the "family of minicomputers"

procurement because their proposals did not meet the requirements for

data access software. The companies contended that their software products

did meet the requirements and filed a protest to the Board of Contract

Appeals at the General Services Administration. The Board suspended the

procurement for 45 working days (9 weeks). The suspension was not made

based on the merits of the protest but on the Board's determination that

the interests of the United States in proceeding with the procurement were

not so urgent and compelling that they could not await the outcome of the

Board's decision within the 45-day time frame. We settled the protest

out of court because a delay of 9 weeks would have precluded our using

the minicomputers for the Economic and Agriculture censuses or in

the Dress Rehearsal censuses. We believe that the benefits of

proceeding with the procurement far outweighed the cost of the settlement.
52

13

We did lose some time because of the delay in procuring the minicomputers,

but we have been working hard to get back on schedule. For example, after

delivery of the first minicomputers, we undertook accelerated development

of software programs for the Dress Rehearsal and we established a special

Systems Support Group to install and test the hardware. This was done

successfully. Data keying, editing, address file maintenance and updating

were all performed on the family of minicomputers in the Dress Rehearsal.

We are now in a favorable position for timely development of reliable

1990 systems. All software will be tested before 1990. This testing

will involve quality assurance procedures at headquarters and further

testing by our Systems Support Group (housed at a National Support Center

in our Baltimore processing office.) The Systems Support Group will

distribute all 1990 software to our field and processing offices in a

standardized fashion.

PROMOTION

Five•census promotion.

Public cooperation is the cornerstone of a successful census. Without

public cooperation, we could not have a complete count and be able to

produce accurate data in a timely manner.

A creative and ambitious promotion campaign is essential if we are to

maintain, and hopefully increase, public cooperation. One of the important

goals of our promotion campaign will be to achieve a high mail-return rate.

The other important goal is to encourage everyone to include themselves in

the census so that it will be as complete and accurate as possible. Our

promotion campaign will be designed to emphasize the importance of being

in the census and to ease concerns about census confidentiality.
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For the 1990 census, we plan an extensive, multi-faceted promotion campaign.

Advertising

As for each census beginning with 1950, we have again signed a contract with

the Ad Council to pursue a public service advertising campaign. The Ad

Council regularly handles major mass-media advertising campaigns for

government and other nonprofit programs. Using the Ad Council and its

chosen advertising firm (Ogilvy and Mather, Inc.) led to a very successful

promotion campaign in 1980. The Ad Council has again chosen Ogilvy and

Mather, Inc. to develop the national promotional messages for television, radio,

newspaper advertisements, and sue i "out-of-home" media as billboards and

transit posters. For the first time, we have also asked the Ad Council

to choose minority advertising firms to tailor the national message or

develop new messages to reach minority populations. The Ad Council has

chosen the Mingo Group, which has experience in developing messages for

Blacks, and Castor Spanish International, which has experience developing

messages for Hispanics. The Ad Council is also seeking to recruit firms

that have experience 1n marketing to Asians, Pacific Islanders, American

Indians, and Alaska Natives.

Organizations

We will work through key national and community organizations to get the

active support of their members.

New for 1990, we are asking major national organizations to adopt a

pledge to actively support the census. We work with community organizations

through one-on-one contacts between our community awareness specialists
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15

and the leaders and membership of the community groups. We are increasing

the number of census awareness specialists and hiring staff earlier than

for the 1980 census.

Governments

Outreach to other Federal agencies, the Congress, state governments, and

local governments will be a key element of our promotional program. In

this regard, I want to mention the Mayors Cooperation Program. We are

holding a series of one-on-one meetings with the mayors of some 350 cities

to discuss mutual concerns about the 1990 census and possible joint

efforts for encouraging a city's population to be counted in 1990. To

assure ongoing contact between the cities and the Census Bureau staff, we

will ask the mayors to appoint high-level liaisons. We are committed to

working with the cities to prevent foreseeable problems in the 1990 census

and to be able to solve any unforeseen ones as they arise.

We will ask the highest elected official in every jurisdiction in the

country to set up a committee of local leaders or use existing city means

to generate local publicity about the census. We believe that this local

publicity is an essential complement to the other programs and projects

we are initiating because different themes or activities will be effective

in different areas.

Private Sector

The private sector can also play a key role in promoting the 1990 census.

We will seek the involvement of businesses and nonprofit organizations in

publicizing the census to their employees or on their products. In some
55

16

cases, we will seek funding from businesses to carry out selected

promotional projects.

Religious Organizations and Schools

Religious organizations will be asked to encourage their members to

participate in the census or, in some cases, to provide assistance in

filling out the questionnaire. We plan to involve all denominations and

national and local religious organizations in this project. We have

already held important meetings with the Bishops Committee on Hispanic

Affairs of the U.S. Conference of Catholic Bishops, with leaders of the

National Council of Black Churches, other Black denominations, and Black

fraternal orders.

We are developing a school project that will provide each elementary and

secondary school in the country with a set of reproducible lesson plans

for classroom instruction. These lesson plans are geared toward making

students aware of the history and importance of the census and how to use

census data. The ultimate goal is to have students take their knowledge

about the census home with them. In some cases, older students may be

the only ones in a household with the language skills to complete a

questionnaire.

ADJUSTMENT ISSUE FOR THE 1990 CENSUS

Six•the adjustment issue for the 1990 census.

Mr. Chairman, the Commerce Department announced in October 1987 that it

will not adjust the 1990 census counts for coverage errors. Under Secretary

Ortner and I testified at length on this issue at a hearing this March 3
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17

before the House Subcommittee on Census and Population. Today, I will

discuss the major points related to this issue, but first some background.

Coverage Measurement Since 1950

Beginning with the 1950 census, each census has included an evaluation

and research program to measure coverage error. The main purpose of

these studies has been to measure progress in reducing the errors and to

design programs to correct enumeration problems for the next census. In

other words, the Census Bureau evaluated the most recent past census in

order to improve the next census. We have introduced improvements in

each recent census, based, in part, on these evaluations.

The evaluations have shown a steady improvement in net census coverage

over four decades, from an estimated undercount of more than 4 percent

for the total population in 1950 to an estimated undercount in 1980 of

1 to 2 percent.

Some people have argued that if we can estimate the number of people

missed in a census, why not simply correct the census to account for

missed persons and make it more accurate. This, in simple terms, is what

we call "adjustment." But, as we often find in our society, it is not

always so easy to find solutions to our problems. Estimating the census

undercount with minimal error and, in turn, using that knowledge to

improve the counts are two highly complex and different tasks.

We could not use the results of the 1980 census coverage evaluation programs

to adjust the 1980 census counts. We considered the estimates of undercount

to be flawed. These flaws included missing data problems, matching error, and
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18

correlation bias in one coverage-measurement program (the Post-Enumeration

Survey) and a lack of information on undocumented immigrants in the other

coverage-measurement program (demographic analysis). The Census Bureau

did not adjust the counts because we were not confident that counts could

be produced through the adjustment process that were better than the

census counts. The coverage measurement methods in 1980 did not produce

acceptable estimates of population or undercount on a national, state-bystate, or small-area basis.

In December 1987, in a ruling handed down in a lawsuit filed against the

Census Bureau by the City and State of New York, the U.S. District Court

issued an opinion in favor of the Federal Government. The court found

that the Census Bureau had determined correctly that an adjustment was

not technically feasible or warranted and that no such adjustment should be

made. In addition, the court ruled that the plaintiffs had failed to

prove that the Census Bureau was arbitrary or capricious in declining to

adjust census results.

Diversity of Opinion and Major Uncertainties About Adjustment for 1990

While the Census Bureau has made considerable progress in developing

statistical techniques related to undercount measurement for the 1990

census, there are still serious doubts among statisticians and others both

inside and outside the Bureau about the Census Bureau's ability to make

census counts more accurate through adjustment. There was mixed opinion

among Census Bureau staff on our capability to correct the census for

estimated under and overcounts. Those with differing opinions include

Census Bureau professionals who have studied these issues and the underlying
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19

data for several years, considering whether it is possible to improve the

decennial census through adjustment.

Adjustment would be based primarily on an independent post-census sample

survey called the Post-Enumeration Survey (PES). The Census Bureau would

collect interview data from a sample of residents of housing units and

collect information that focuses on where the residents of those units

lived on April 1, 1990 as well as on other demographic characteristics.

The individual PES records would then be matched to individual census

records to estimate the number of people missed.

Matching between the PES and the census--two separate Independent data

collections•may be inconclusive for a number of reasons. People do not

always report the same data in exactly the same way in these two separate

operations. Responses are not always accurately recorded. Some people

refuse to be counted in each survey. Data processing errors can creep

into the two sets of data. Matching is often indecisive for a number of

cases. These problems lead to Incorrect matches and nonmatches and,

ultimately, to errors in estimating the net undercount. The critical

question that remains unresolved is whether the Census Bureau has the

capability to bring errors 1n the system under control enough to be

certain that the results are measures of undercount, not procedural

errors.

Even 1f there were agreement among the staff on the likelihood of producing

more accurate census results through adjustment, there remain serious

operational issues. By and large, those who are managers of the census

operations believe that we could not carry out an adjustment operation by

the legally mandated deadline of December 31, 1990 for apportionment purposes.
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20

To produce adjusted figures in time to meet this statutory deadline for

reapportionment data and April 1, 1991 for redistricting data, we would

have to make changes to the census enumeration process. We would have to

curtail some census field enumerations, followup activities, content

improvement activities, and coverage checks to integrate the coverage

measurement activities. These curtailed activities relate to census

quality. If the adjustment process were unsuccessful, it is uncertain

what the quality of the census count would be if we had only that to fall

back on. We are convinced that trying concurrently to accomplish both

successfully threatens the quality of each.

There also are likely to be timing problems in completing a adjust the

census count. The difficult-to-enumerate areas that will requ.re more

time to get the census done will be the same areas that will require more

time to complete the PES.

Serious, Unresolved Issues

These are some of the serious, unresolved issues that lead some professional

statisticians to doubt the technical or operational feasibility of

adjusting the census counts in a way that improves them. These worrisome

concerns weighed heavily In our deliberations on the adjustment issue. Despite

these uncertainties, however, there are some Census Bureau staff who recommend

that adjustment be pursued. The fact that there is disagreement•at times

sharp disagreement--among knowledgeable experienced staff members is, in

itself, a major cause of concern.
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FINAL THOUGHT

Mr. Chairman, we have taken a number of steps to improve the efficiency

and accuracy of the 1990 census. We want to concentrate our energy,

attention, and resources on these efforts to make the census better. We

expect these steps will continue the trend of reducing the undercount. I

mentioned already the planned improvements in the areas of broadening

outreach and increasing local participation in the census and in

implementing automation advances. I will briefly mention four other

improvements that we plan:

Efforts to Increase Mail-Return Rates

We are trying to increase questionnaire mail-return rates through the

use of colorful motivational inserts sent out with the questionnaires and

multi-language flyers that alert householders that their questionnaires

will be coming in the mail.

Local Review

We have improved our program for review of the census counts by local officials.

One way we have done this is to provide training to the local officials on

how to participate in this program. We have held one set of training workshops

and will conduct a second set next year.

Census Procedures

We have improved procedures for listing addresses, for counting the homeless,

and for enumerating public housing complexes in big cities. And we have
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refined questionnaire delivery techniques to make sure each housing unit

receives its questionnaire.

Personnel Issues

And we have revised our way of training, hiring, and paying our temporary

workforce so we can hire quality workers and reduce turnover. At the

peak of operations in April-Hay 1990, we will employ about 300,000

enumerators, clerks, keyers, and supervisors.

This is just a sampling of what we are doing to meet our commitment--

which we take very seriously•to have the most complete and accurate

count possible for all Americans.

Mr. Chairman, that concludes my testimony.
June 23, 1988 request from Senator Pryor

Question_l.

As reported by GAO. the procurement of ADP equipment needed

for the 1990 Decennial Census has been nlaaued with numerous

problems. It seems obvious to me, based on GAO's report,

that the Bureau has not provided sufficient oversight nor

implemented appropriate management controls to assure that

the equipment purchase is appropriate, timely or costefficient. What actions have you taken to assure sufficient

controls are in place for the remaining critical phases of

this project? How are you emphasizing quality during all

phases of the project or are you continuing to push the

meeting of deadlines at the expense of quality and sound

management judgment?

Answer

There were problems with this procurement. But I believe

that a knowledgeable third party looking at the total

computer acquisition and implementation would be compelled to

say "You did an outstanding job here." Prudent management

decisions all along the way coupled with a committed work

force made the critical difference.

We do not agree with the comment that we have pushed the

meeting of deadlines at the expense of quality and sound

management judgment. With the suspension of the Family of

Minicomputers procurement we were confronted with the

decision to either wait out the protest process thereby

sacrificing automation of the Economic/Agricultural and

Decennial Censuses or settle the protest and move on with our

automation plans. If we had sacrificed our automation plans

to defend against the protest, the quality of the censuses

would have been severely diminished. We believe that our

management decision has been proven to be sound due to the

high quality and low cost of the equipment and software that

we procured and also due to our successful implementation of

that equipment during the 1987 Economic/Agricultural Censuses

and the 1988 Dress Rehearsal for the Decennial Census.

To reduce the risk of again being confronted with such a

dilemma we have increased the staff of the Procurement Office

to a level adequate to handle the workload of the Decennial

Census. Also, we increased our lead time needed for major

procurements as mentioned in the GAO report. Additionally,

we have a tracking system that informs Census Bureau

management of the quality and timeliness of actions critical

to the census.
Question 2.

According to GAO, as of February of this year, you still had

not decided on the ADP needs for the 1990 Decennial Census.

Are these needs now firm?

The ADP needs for the 1990 Decennial Census have been

defined. The documentation of these ADP needs is under final

review within the Census Bureau and will then be submitted to

the Department of Commerce for approval.

Question 3.

Have you considered using the forms from the dress rehearsal

to test the programs for the minicomputers in a realistic

way, rather than using forms prepared by the highly trained

Current Population Survey interviewers?

Answer

We do intend to use actual 1988 Dress Rehearsal completed

questionnaires to test our systems for 1990. Let me expand

on this for your information.

The paper forms completed by respondents do not directly

interact with the mini-computers. The FACT-90 system is used

to convert the data on the paper into computer readable

format (magnetic tape). The magnetic tapes are then fed into

the minicomputers for further processing and communication to

Processing Office computers.

We successfully used FACT-90 technology in the 1988 Dress

Rehearsal. Also, we intend to use batches of the actual 1988

Dress Rehearsal forms to quality test the FACT-90 system in

each Processing Office as part of our start-up procedures.
64

Question 4.

The Department of Commerce and the Bureau paid SI.1M to 3

offerors because the Bureau could not afford the additional

time required to resolve their protest. GAO found that

little or no attention was given to the offerors' claims and

supporting documentation and, instead, the Bureau paid the

full amount available under the settlement. For example, GAO

found that, in one case, a claim was incorrectly computed and

that, in two cases, claims were made for costs specifically

not allowable under the settlement agreement. In all three

cases, the Bureau inappropriately paid for the claims.

Therefore, how did the Bureau determine the amount to be paid

to the protestors? As a custodian of federal funds, do you

believe you and your staff acted with sound judgment and in

the best interest of the taxpayer?

Answer

By court order we were required to pay the claims within 30

days of the order. The 30 day order, which was compelling,

did not provide time to properly audit those claims. Such

audits, following Federal Acquisitions Regulations (FAR) and

usually conducted by the Defense Contract Audit Agency,

typically require a minimum of 60 days lead time. Given

these constraints I believe our actions were prudent.

Question 5.

How much has been spent to date on the computer procurement?

How can the Congress reasonably expect that the remainder of

the procurement and the ultimate use of the computers for the

1990 Decennial Census will be handled well and in the best

interest of the country?

We have spent 521,000,000 to date on the computer

procurement. We share your concern that the remaining

computers ordered for the Decennial Census are appropriate

and cost-effective. We have extensively tested these

computers in the Kansas City Processing Office and in three

Collection Offices during the 1988 Dress Rehearsal. Based on

evaluation of these tests we are confident that the ADP needs

that we have identified for the remaining offices are correct

and will provide for a cost-effective, high quality census.
65

Question_6.

In your testimony, you indicate TIGER is on-track, but GAO's

report indicates otherwise. What is your evidence to support

your statement?

We did experience delays in the production of maps for the

1990 census field operation, prelist. We have adjusted the

schedule for this operation to accommodate our capacity to

produce the maps. Our delay in the production of the maps

was caused initially by delays in the development of the

software to build the TIGER File data base. Once we

completed this software, the reduced time available to

complete the maps and the computer processing this required

exceeded the capacity available on our UNISYS computers. To

overcome this obstacle, we signed an agreement with the

Department of Agriculture for additional UNISYS computer

capacity. Our current map production is meeting the revised

schedule for the 1988 prelist operation with the first of

four 'waves" actually in the field. We also are producing

the required products from the TIGER File for the assignment

of the geographic location codes to the address list the

Census Bureau purchased from the private sector. This

operation, called TAR geocoding, is on schedule. We

anticipate no further problems in being able to produce the

maps and other geographic products necessary to take the 1990

census on time.
66

Question 7.

I know you have decided not to adjust the census counts, but

we have been told by a number of statisticians that,

regardless of this decision, the post-enumeration survey is

an important coverage evaluation technique which is used to

measure census error. By selecting small blocks, the Bureau

is able to compare the number of people counted for the first

time in the census with the survey results and allows them to

determine who is missing and who has been counted twice. Why

have you scaled back the size of the post-enumeration survey?

Won't a smaller PES limit your ability to determine the

accuracy of the census count? Have you corrected the postenumeration survey to prevent the problems you encountered in

1980? Please provide to the subcommittee the documentation

associated with the Bureau's decision to downsize the PES.

Answer

We have not scaled back the size of the post-enumeration

survey. Our base program and all budget submissions we have

made included a sample size of 150,000 housing units for the

PES. We had considered increasing the sample size of the PES

to 300,000 housing units if we decided to try to adjust the

1990 census. Last October a decision was made not to try to

adjust 1990 census counts so we did not expand the sample

size for the PES.

We believe the sample size of 150,000 housing units is

sufficient to meet our needs for coverage evaluation of the

1990 census. With this sample size we will be able to make

person-by-person matches to the census, identify

duplications, and sort out other anomalies in the counts. We

will gain substantial experience on matching procedures and

other technical aspects of the methodology. We will obtain

coverage estimates for the U.S., for regions, for states, for

large cities, for urban and rural areas and for metropolitan

and nonmetropolitan areas as well as for demographic

subgroups.

The problems encountered in the 1980 PES were partially

addressed by the research we have undertaken during this

decade but significant problems remain to be resolved.

Questions still remain open on accuracy of matching,

accuracy of PES interviews, response errors in the PES. and

various other methodological issues. We plan to continue to

research these issues through the 1990 census.

The larger sample would do little to help reduce the above

mentioned problems in the PES and, in fact, may cause some of

their effects to be increased. By increasing sample size

some sampling error reduction would occur but biases in the

PES would not be reduced and may be increased. For example,

with the larger sample we would have to use less experienced

personnel on various activities such as matching. Thus,

nonsampling error in the PES might increase with the larger

sample size.
67

In the 1980 Census, you had a cost-containment policy to limit

possible increases in costs. In 1986 and in your statement

today, you state that the 1990 Decennial Census will cost the

government S2.6B; yet your estimate does not include the increase

in cost of the TIGER program (from S194M to S371H), the added

costs associated with the delayed minicomputer procurement ($1.1H

for the bid protest, $3H to lease mainframe computer time and

cost to convert software from the mainframe to the

minicomputers), the recent increase in postage and the planned

raise in the minimum wage. What will be the real cost of the

census and, in the interest of limited federal resources, what

are you doing to contain the costs?

Answer

Our estimated cost of $2.6 billion for the entire 10-year decennial

census cycle does include some or all of the costs for the activities

you mention. For example, use of the TIGER system and aspects of the

TIGER system development (specifically, those requirements unique to

the decennial census) are covered in the Decennial Census budget

activity, and equipment purchased for decennial census use is covered

by the Decennial Data Capture line item in the Data Processing Systems

budget activity. However, some of the costs you mention are for

equipment or developmental work to support Census Bureau activities

other than the decennial census. For example, a significant portion

of the TIGER system development is funded by the Geographic Support

budget activity since the capabilities of the completed system will

have applicability to many Census Bureau programs. Similarly, some of

the minicomputers and other equipment purchases to be used for other

Census Bureau activities are covered by other line items in the Data

Processing Systems budget.

Other changes (such as postal rate increases) that occurred since we

prepared the estimate of $2.6 billion in 1986, are taken into account

in formulating program and budget needs as we prepare our FY 1990

budget requests.

The Census Bureau has a constant concern for the cost effectiveness of

our programs, and this is a major criterion in selecting methods and

procedures for the 1990 census. The decennial census program must

meet many needs and requirements established by the various branches

of the Federal Government, state and local governments, and the many

users of census data. In addition, based on problems identified in

previous censuses, we set additional goals that result in new or

improved methods for 1990. Based on these goals and requirements, we

have spent over 5 years designing an effective and efficient program.

Compared to previous censuses, there also has been a significant

increase in the amount of review and attention, both internally and

externally, to the value and costs of the census we plan. In

addition, many of the changes we have made for 1990 are designed to

improve the cost effectiveness of census operations. For example, the

increased use of automation, particularly the Automated Control File

(ACF) and the automated Management Information System (HIS), should

provide much better operational and managerial control of costs and

progress.
68

Question 9.

GAO and the Bureau appear to differ on the progress being

made in preparing for the 1990 Census. For example, GAO

cites that the minicomputers and software were not fully

tested during the dress rehearsal and would not be tested

before the final implementation of the census; critical map

production is seriously delayed; and the address list is

being developed without a quality assurance check. You state

otherwise. I am confused. Who is right and why is there

such a wide difference?

The delay in the minicomputer procurement did impact the

Bureau's initiative to develop and fully test software

applications on Digital minicomputers during the dress

rehearsal. However, the most critical applications planned

for Digital implementation in 1990 were developed and run on

Digital computers in the dress rehearsal. These include data

keying, editing, applicant tracking, assignment control, cost

and progress, and aspects of address file maintenance. Some

of this software initially failed to perform as expected, and

overall system performance of some applications was less than

optimal.

For 1990, based on these dress rehearsal experiences, the

Bureau is refining software applications and adjusting the

configuration of field office computer systems. The latter

is based on results of a recent controlled load simulation

performed to Bureau specifications by Digital Equipment

Corporation. All software to be used in field offices for

the 1990 decennial census will be fully tested and released

through our Beta Test Site facility in Baltimore. In

addition, the Bureau retained dress rehearsal district office

space to use it for live tests of final software to be used

in 1990 in the district offices. This will permit 1990

simulation using software, operating procedures,

instructions, and training, with temporary office employees

like those we will use in 1990.

There have been delays in the production of maps. These

delays were caused by delays in the development of software

to build the TIGER File data base. This reduced the time

available to produce the maps needed for prelist. The USDA

computer support (mentioned in #6 above) helped us complete

the work needed for prelist activities. (We respond to the

quality issue in our response to your June 27 question #4).
June 27, 1988 request from Senator Pryor on behalf of Senator Sasser

Question_l.

While you describe the preparatory stages of the census as

proceeding fairly smoothly. Mr. Fogel's testimony cointed to

some serious concerns in the census preparation.

Would you please comment on GAO concerns over the testing of

the new software and the delays and changes in prelisting?

In August 1987 we undertook accelerated development of

software programs for the March 1988 Dress Rehearsal to test

1990 operations. We also established a Systems Support Group

to install and test the hardware. This was done

successfully. Data keying, editing, address file maintenance

and updating were all performed on the family of

minicomputers in 1988 to fulfill our goal of testing 1990

operations in 1988.

We are now in a favorable position for timely development of

reliable 1990 systems. Today formal testing procedures are

in place at our Baltimore National Support Center. Software

for 1988 prelist operation in August is being tested now at

the Baltimore Center by our Systems Support Group. The

Census Bureau has committed to test and distribute to the

field and processing offices all 1990 software through the

Baltimore center in a standardized fashion. We anticipate no

untested software for the 1990 census. (See also our

response to your June 23 question number 6.)
70

Question 3.

Do you think that there is a possibility that the final cost

of the 1990 census will be over the present $2.6 billion

dollar cost estimate?

Answer

In an undertaking as massive and complex as the decennial

census, there certainly is a possibility that the actual

costs will differ from our current estimates. Our budget

estimates are based on past experiences in censuses, tests,

and the dress rehearsal coupled with various assumptions

about workloads, staff productivity, and the like. To the

extent that our assumptions are incorrect, or due to

circumstances beyond our control, the final cost may differ

from the estimated costs. For example, if the mail response

rate is lower than our assumption, we will have substantial

additional costs to enumerate the additional nonresponse

households by personal visit. In anticipation of this type

of unanticipated cost, in FY89 we requested a contingency be

established so that funds could be made available quickly

during the height of census operations. There also have been

various changes to plans and assumptions since we prepared

the estimate of $2.6 billion in 1986. In preparing our

FY 1990 budget request, all such changes have been taken into

account in the formulation of our program and budget needs.

Question_2i

In the 1990 census, you say that 17.7 million housing units

will receive long forms. However, you noted that if a sample

design similar to the 1980 census were to be used 19.3

million housing units would have been included.

If, as you say in your testimony, the larger sampling rate in

1980 was used to produce more accurate data for small places,

are you inferring that the smaller sampling rate being used

in 1990 will be less accurate in collecting data for small

places?

Answer

While the sample design for the 1990 census specifies the

overall sample size, we still are in the process of

determining the final distribution and the associated levels

of precision for each area. Producing accurate data for

small places is a major goal in determining the distribution

of the sample.
71

Question__4.

All things considered, how much more or less accurate do you

think the 1990 census will be compared to the 1980 census?

Answer

He estimate that we counted 98.6% of all persons in the 1980

census, and we believe we can improve on this figure for

1990. We also estimate that there were differing levels of

coverage for different groups and areas, of course, and so we

are concentrating many of our efforts on preventing such

differentials in 1990. Our efforts include:

* Increased promotion, outreach, and publicity efforts aimed

at various minority groups and organizations

° More joint participation between Census Bureau and

localities to help achieve a good census

* Additional efforts to increase mail response

* Improved address list compilation activities

* Questionnaire delivery and enumeration methods tailored to

meet differing requirements in different areas

* Improvements to enumerator training, pay, and management

techniques

* Increased use of automation to improve timeliness,

consistency, quality and control of operations

* Improved maps and consistency of geographic tools and

products through use of the automated geographic support

system (TIGER)

* An earlier start to planning and an expanded testing

program

Maps now are in full production and we have a revised

schedule for the national prelist operation that still allows

us to meet our overall schedule and workflow requirements.

This schedule includes the Postal Service check of addresses,

like the one that was cancelled prior to the 1980 census.

Thus, regarding the point that no quality control would be

used in developing the address lists (see your June 23

question #9), we believe the GAO was referring to the 1980

census where the scheduled prelist was much closer to census

day than is planned for 1990. Delays in completing the 1980

field work required us to drop the planned postal check.

That is not the case for 1990.
72

United States General Accounting Office

("* AT) Report to the Chairman, Subcommittee on

unu Federal Services, Post Office, and Civil

Service, Committee on Governmental

Affairs, U.S. Senate

DECENNIAL CENSUS

Minicomputer

Procurement Delays

and Bid Protests:

Effects on the 1990

Census

GAO/GGI>88-70
73

GAD United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-222824

•June 14, 1988

The Honorable David Pryor

Chairman, Subcommittee on Federal h

Services, Post Office, and Civil Service

Committee on Governmental Affairs

United States Senate

Dear Mr. Chairman:

This report responds to your June 22, 1987, request that we review the Bureau of the

Census' procurement of minicomputers primarily for the 1990 Decennial Census. You asked

that we determine the cause and effects of the delays associated with the procurement. You

also requested that we determine the reasons for two bid protests and whether the

settlement of the first bid protest was warranted.

As arranged with the Subcommittee, unless you publicly announce its contents earlier, we

plan no further distribution of this report until 30 days after its issue date. At that time, we

will send copies to the House Subcommittee on Census and Population, other appropriate

congressional committees, the Secretary of Commerce and the Director of the Bureau of the

Census, the Director of the Office of Management and Budget, and the Administrator of the

General Services Administration. Copies will also be made available to other interested

parties upon request.

Sincerely yours,

rg^U/^Z^

Richard L. Fogel

Assistant Comptroller General
74

Executive Sununary

Purpose In January 1986, the Bureau of the Census (Bureau), part of the Department of Commerce (Commerce), decided to procure an estimated 555

minicomputers at a maximum potential cost of $80 million. The goal was

to improve the accuracy and timeliness of data collection activities, primarily for the 1990 Decennial Census. The Bureau awarded the minicomputer contract in May 1987, much later than planned. In addition,

two bid protests were filed, with one involving a settlement of $1.1

million.

The Chairman of the Subcommittee on Federal Services, Post Office, and

Civil Service, Senate Committee on Governmental Affairs, requested the

General Accounting Office (GAO) to determine the cause of the minicomputer procurement delays and the effects of the delays on the Bureau's

operations, particularly for the 1990 Decennial Census, and to determine

the reasons for the bid protests and whether the settlement of the first

bid protest was warranted.

Background In January 1986, the Bureau decided to procure about 555 minicomputers of various sizes as well as support equipment and services, The vast

majority (529) of the minicomputers were expected for use in the 1990

Decennial Census for such purposes as checking in questionnaires, keying questionnaire and address data, and preparing maps.

The Bureau issued a request for proposals (RFP) in September 1986 and

awarded a contract in May 1987 under which it could purchase up to

$80 million of equipment and services. Bid protests were filed with the

General Services Administration Board of Contract Appeals (GSBCA)

before and after the award. The first protest was settled and the second

was withdrawn by the protestors.

Results in Brief Incomplete plans for the 1990 Decennial Census* organization and procedures prevented the Bureau from fully identifying, documenting, and

planning for its automatic data processing (ADP) needs and initiating the

minicomputer procurement process in a timely manner. This late start

was compounded by a 6-month delay in the Bureau's planned minicomputer procurement schedule.

Commerce and the Bureau settled the first bid protest by paying a total

of $ 1.1 million to three offerers primarily because they felt they could

not afford the additional time required to resolve the protest, regardless

of the merits. Although the concern for time was not without merit, the

GAO/GGD48-70 DeconnUl
75

Executive Summary

cash settlement could have been avoided if the Bureau had not initially

created its own management dilemma by failing to plan properly for and

manage the minicomputer procurement.

The procurement delays and bid protests contributed to a decrease in

the time available to develop and test software for the 1990 census, a

delay in beginning a key operation in preparation for the 1990 Decennial

Census, increased costs, and delays in other procurements essential for

the census.

Principal Findings

Delayed Procurement

Process

Decisions on the organization and operating procedures for the 1990

Decennial Census, such as the number of processing offices and procedures for maintaining the address control file, were not finalized at the

time the Bureau made its minicomputer procurement decisions and some

are still not finalized. As a result, the Bureau was unable to fully justify

its requirements to Commerce and GSA.

One of the key requirements was that all of the minicomputers be fully

compatible. Both Commerce and GSA believed that this requirement

restricted competition and were not satisfied with the justification the

Bureau provided. This concern was the principal reason for delaying the

contract award by approximately 6 months. In spite of this concern,

Commerce and GSA approved the Bureau's request for procurement

authority.

The Bureau also did not provide adequate documentation to comply

with federal procurement requirements, including the preparation of a

contingency plan in case the computer system fails to properly function.

A contingency plan is particularly critical because the procurement

delays have reduced the time available for developing and testing software for the 1990 census and have prevented the testing of some software applications under census-like conditions, as planned for the 1988

Dress Rehearsal. A contingency plan is particularly important in light of

computer system failures the Bureau experienced in its 1986 tests of the

decennial census. (See pp. 12 to 16.)

GAO/fiClWi8-70 Dwennial Oiunis
76

Bid Protests The first bid protest (pre-contract award) was filed with the GSBCA by

three offerers who contested the Bureau's determination that their proposals did not adequately respond to technical provisions of the RFP.

After a hearing, the GSBCA temporarily suspended Commerce's procurement authority.

Commerce and the Bureau decided to settle the protest rather than

defend it on its merits. Because of a late start and delays in the procurement process and the suspension of the procurement authority, they

believed they could not afford additional time for the GSBCA to decide the

case. Commerce also discovered a procedural flaw in the procurement

process which it believed would have been discovered by the three

offerors and would have jeopardized the government's case before the

GSBCA. Commerce cited this procurement flaw as a contributing factor in

its decision to settle.

The settlement stipulated that each of the three offerers would receive

up to $400,000 for proposal preparation and protest costs after submitting appropriate supporting documentation. After making a cursory

review, the Bureau, without questioning the documentation submitted,

paid a total of $ 1.1 million to the three offerers, which represented all

claims submitted up to the $400,000 maximum for each offerer.

The second protest (post-contract award) involved two offerers. After

the GSBCA ordered a temporary suspension of the procurement, the offerors voluntarily withdrew their complaints.

The bid protests overtaxed the Bureau's procurement office, which at

that time employed three of the six authorized contract specialists and

was beset by high turnover in its leadership with five managers in 3 and

1/2 years. This delayed other decennial census procurements, including

equipment and supplies needed to print the maps used to collect and

tabulate population data by geographic areas. By July 1987, the Bureau

had filled most of the vacancies. (See pp. 21 to 29.)

Effects of Delayed

Procurement and Bid

Protests

The minicomputer procurement delays and bid protests (1) contributed

to delays in developing and testing software for the 1990 census and in

beginning the address list development for suburban and rural areas

(delays in this activity in the 1980 census led to a more expensive and

less accurate census), (2) resulted in the payment of $ 1.1 million to settle the first bid protest, (3) influenced the Bureau's decision to lease

computer time from another agency at an added cost of up to $3 million,

GAO/GGIWW-70 Dl I !••!•! Owns
77

and (4) contributed to the delay in other procurements needed for the

1990 census. fSee DD. 16 to 19.1

RprnmmpnrifltiOTm Because the late start and delayed contract award reduced the time

available for software development and testing, particularly under census-like conditions in the 1988 Dress Rehearsal, GAO recommends that

the Secretary of Commerce direct the Census Bureau to prepare a formal contingency plan in the event the minicomputer system does not

operate properly.

Al?Pnrv rnmmpnts GA0 ^

not 0Dtam official agency comments but did discuss the contents

O J of this report with Bureau officials. They provided technical clarification which GAO incorporated where appropriate.

GAO/GGD-88-70 Drcrnnial Onaus
78

Contents

Executive Summary 2

Chapter 1 8

Introduction Overview of Bureau Activities 8

Minicomputer Procurement History 9

Objectives, Scope, and Methodology 10

Chapter 2 12

Minicomputer Major Reasons for Delay in the Procurement Process 12

Procurement Delays Planning Requirements Not Followed

Effects of Delayed Procurement

IB

it;

Adversely Affect Conclusions IS

Bureau Operations Recommendation 20

Chapter 3 21

Bid Protests and Reason for First Bid Protest 21

Settlement: Causes, Commerce and the Bureau Settle First Bid Protest

Reasonableness of Amount Paid and Costs Claimed in

21

26

Costs, and Other First Bid Protest Settlement

Effects Reasons for Second Protest 27

Bid Protests Delay Other Procurements 27

Conclusions 29

Tables Table 1.1: Types of Minicomputer Systems 10

Table 3.1: Bid Preparation and Protest Costs 22

GAO/GGD4S-70 Drc«twUl O-nm
79

Abbreviations

ACF Address Control File

ADP Automatic Data Processing

OCF Collection Control File

DPA Delegation of Procurement Authority

FAR Federal Acquisition Regulation

FIRMR Federal Information Resources Management Regulation

G and A General and Administrative Costs

GAO General Accounting Office

GB Billions of Bytes

GSA General Services Administration

GSBCA General Services Administration Board of Contract Appeals

!G Department of Commerce Inspector General

IRS Internal Revenue Service

MB Millions of Bytes

WFS Millions of Instructions Per Second

OMB Office of Management and Budget

RAM Random Access Memory

RFI Request for Information

RFP Request for Proposals

P»* T GAO/GGD48-70 Decennial Cemna
Chapter 1

Introduction

80

On September 19, 1986, the Bureau of the Census (Bureau), which is

part of the Department of Commerce (Commerce), issued a request for

proposals (RFP) to acquire minicomputers and support equipment and

services, primarily to support the 1990 Decennial Census. While the

Bureau expected to award the contract by November 26, 1986, it

encountered several procurement problems, including two bid protests

(one pre-contract and one post-contract award). The pre-contract award

protest was settled by paying $1.1 million. As a result of the procurement problems and the first bid protest, the contract was not awarded

until May 15, 1987, a delay of about 6 months. This delay compounded

problems arising from the Bureau's late start in beginning its procurement activities. The combination of the procurement problems and

delayed contract award have disrupted the Bureau's operations, including several key activities vital to the success of the 1990 census.

On June 22, 1987, the Chairman of the Subcommittee on Federal Services, Post Office, and Civil Service, Senate Committee on Governmental

Affairs, requested that GAO assess the Bureau's procurement problems,

including the bid protests, and determine their cause and effects, particularly on the 1990 census.

Overview of Bureau

Activities

The Bureau is the primary source of statistics collected to assist federal,

state, and local governments as well as the private sector in the development and evaluation of social and economic programs.

The Bureau's largest and most complex undertaking is a complete count

of the nation's population and housing every 10 years (decennial census). The Constitution mandates the population count, which has been

done since 1790. Three major uses of the decennial census data are the

(1) determination of the number of seats each state is entitled to in the

House of Representatives, (2) formulation of congressional and state legislative redistricting plans, and (3) distribution of billions of dollars in

federal and state funds. The cost of taking the census has grown over

the years, and the Bureau estimates that the 1990 Decennial Census will

cost about $2.6 billion. By law, the census data will be collected as of

April 1, 1990 ("Census Day"), and the population counts must be provided to the President by December 31, 1990.'

Every 5 years, the Bureau takes three other major censuses:

'See 13 DSC. Section 141 (1982).

GAO/GGIW»70 DmnnUI
81

Chapter 1

Introduction

census of agriculture;

economic censuses, covering businesses, construction, manufacturing,

mining, and transportation; and

census of governments.

Between these periodic censuses, the Bureau, using statistical sampling

techniques, conducts surveys to update certain data. The Bureau also

collects other statistics which are used extensively as input into broad

indicators of economic activity, such as the Gross National Product,

Index of Industrial Production, and international trade statistics.

Minicomputer

Procurement History

Originally, the Bureau only planned to acquire 6 to 10 large, high speed

minicomputers for its annual data collection surveys, such as the

Annual Survey of Manufactures. This plan, however, was later changed

significantly. In November 1985, the Bureau submitted a request to

Commerce, which has oversight over the Bureau's procurements of

automatic data processing (ADP) equipment, to acquire these minicomputers. In January 1986, the Bureau decided to consolidate some of the

automation requirements for three other programs•1990 Decennial

Census, geographic update system, and the agricultural and economic

censuses•with its original request. The Bureau made this decision in

the hope that the procurement for the three programs would be

expedited.

Under the revised plan, the Bureau expected to procure an estimated

555 minicomputers and related hardware, software, training, and maintenance over an estimated 6-year system life spanning 1987 to 1992.

The Bureau planned to purchase the minicomputers through a contract

which did not require a specific quantity of equipment, materials, and

services but which did stipulate a ceiling value of $80 million.J About

500 of these minicomputers were exclusively for use in the 1990 Decennial Census. Twenty-nine were to be used for the geographic update system needed to support the decennial census.

In January 1986, the Bureau decided to procure five different types of

minicomputer systems instead of one, as originally planned. The systems vary greatly in speed, memory, size, and cost as shown in table 1.1.

Moreover, the Bureau required that all five minicomputer systems be

'For the procurement, the Bureau used an indefinite-quantity type contract which provided for a

range of equipment, supplies, and services with a stated minimum ($6 9 million) and a rr

amount (S80 million) to be provided over a fixed period of time (6 years).

GAO/GGD-8S70 De«nni»l
82

capable of using the same operating and applications software programs

(compatibility). This procurement is referred to by the Bureau as a family of compatible minicomputers.

Table 1.1: Types of Minicomputer

Systems

System Speed (MIPS)-

Random

access

memory (MB)6

On-line storage

<QBV

Estimated

coet"

A S 32 200 $700,000

B 4 24 15.0 400.000

C 1 16 50 150.000

D 05 4 20 75.000

E 0 25 2 0.5 50,000

"MIPS is a measure of how fast a computer operates and stands lor millions of instructions per second

thai a computer can perform

°Random access memory (RAM} resides inside the computer itself RAM is taster than the on-line storage memory MB stands for millions of bytes and <s a measure of a system's information storage

capacity

'"On-line storage is memory that resides on disk or tape outside the computer GB stands for billions of

Dytes and is a measure of a system's information storage capacity

^Average unit cost, estimated by the Bureau, including the cost o> peripheral equipment and software

license agreements

Objectives, Scope, and

Methodology

On the basis of the Subcommittee's June 22,1987, letter and subsequent

discussions, we agreed to determine the

actual and potential effects of the minicomputer procurement problems

on the Bureau's operations, particularly the decennial census;

reasons why the Bureau took longer than expected to obtain the needed

approvals from Commerce and the General Services Administration

(GSA);

reasons for the first bid protest, and whether the settlement was warranted and reasonable;

reasons for the second bid protest;

actions taken to improve the procurement function in order to avoid

future problems and delays; and

adequacy of the staffing levels in the procurement office.

In responding to these issues, we obtained and examined the transcripts

of the two protest hearings as well as documents submitted in connection with the hearings. We examined minicomputer procurement documents, including the Bureau's request for proposals (RFP), vendor

proposals, protestor claims and supporting documentation, and GSA'S

GAO/GGD48-70 Decennial (Vnsus
Chapter I

Introduction

minicomputer delegation of procurement authority (DPA) file. We

reviewed the Bureau's files on the procurement office's staffing. We

interviewed Commerce Department procurement and legal officials and

the Deputy Secretary; Bureau management, procurement, program, and

administrative staff; GSA procurement personnel; and protestor representatives. We also reviewed previous GAO and Department of Commerce

Inspector General (IG) reports on Bureau operations. Our review was

done in accordance with generally accepted government auditing standards. Our field work was done between July 1987 and February 1988,

At the subcommittee's request, we did not obtain official agency comments. We did, however, discuss the contents of the report with Bureau

officials. They provided technical clarifications which we incorporated

where appropriate.

GAO/GGD-8&70
84

Chapter 2

Minicomputer Procurement Delays Adversely

Affect Bureau Operations

The delays in procuring the minicomputers have adversely affected the

Bureau's operations, particularly the 1990 Decennial Census, and have

resulted in increased costs. The Bureau's late decision to procure minicomputers for the census was compounded by a 6-month delay in its

contract award. It started the procurement process late because of

incomplete plans for the 1990 Decennial Census and uncertain census

ADP requirements. In addition, the Bureau did not follow federal regulations covering ADP procurement and did not fully justify certain requirements included in its procurement request.

Major Reasons for

Delay in the

Procurement Process

The Bureau's late decision to procure minicomputers for the 1990

Decennial Census was compounded by a 6-month delay in the Bureau's

planned minicomputer procurement schedule. The major reasons for

these delays were that

the procurement process was delayed as a result of incomplete plans for

the 1990 Decennial Census;

needed delegation of procurement authority from GSA, through Commerce, took longer than planned; and

evaluation of vendor proposals and conducting negotiations took longer

than planned.

Late Start The Bureau did not decide to procure the family of minicomputers until

January 1986. At that time, the minicomputer contract was expected to

be awarded on November 26, 1986. Detailed draft specifications, however, were not completed until April 1986. This allowed the Bureau only

about 7 months or 210 days to perform all the required planning, obtain

approvals from Commerce and GSA, develop and issue the RFP, receive

and evaluate the proposals, conduct live test demonstration tests, and

award the contract.

This 210-day period is substantially less than current Bureau guidance.

In fact, the Director of the Bureau of the Census issued a memorandum,

dated June 22, 1987, which said that program offices should allow at

least 300 days to award competitive contracts for procurements totaling

$1 million or more. This memorandum further said that the 300 days

applied only after the detailed specifications and other requirements

had been completed and submitted to the Bureau Procurement Office.

GAO/GG&S8-70 Decennial Oiuua
85

Chapter 2

Minicomputer Procurement Dflavs Adversely

Affect Bureau Operation*

As discussed in a prior GAO report,1the Bureau and Commerce historically have taken 4 to 5 years to have automated equipment available for

use after its need was identified. This time period accommodates the

identification of the type of equipment, developing specifications,

requesting and evaluating proposals, contract award, equipment delivery and installation, testing equipment, and testing the computer programs designed for the equipment. For example, for the 1990 Decennial

Census, the Bureau planned to start preparing maps in October 1987. On

the basis of longstanding experience, the Bureau should have started

identifying and planning for its minicomputer requirements to support

its geographic needs by October 1983. However, the Bureau did not

decide to procure the minicomputers until January, 1986.

A major reason for the delayed start in the procurement was the uncertain and changing ADP needs for the 1990 Decennial Census. As of February 1988, these needs had still not been finalized. The Bureau has

decided that the address control file (ACF) will not be maintained on the

minicomputers, as originally planned. This was one of the principal reasons for obtaining the minicomputers. Instead, the Bureau will maintain

an abbreviated version of the ACF on the minicomputers, which is called

the collection control file (CCF). The ACF will be maintained on the

Bureau's mainframe computers.

While the Bureau plans to use minicomputers (systems B and C) at

processing offices, the number of offices has changed. The Bureau originally planned to have 49 processing offices. It later decided to reduce

the number to 11. At the conclusion of our audit work, the Bureau was

considering a further reduction.

Delegation of Procurement

Authority Process Took

Longer Than Expected

Agencies must obtain a delegation of procurement authority from GSA in

order to obtain major ADP procurements.- The Bureau allowed 30 calendar days to obtain the needed authority through Commerce from GSA.

but it actually took 4 and 1/2 months, 3 and 1/2 months longer than

expected. The Bureau's expectation of obtaining the DPA within 30 calendar days proved to be unrealistic because it did not provide adequate

justification for requirements contained in the procurement request

which Commerce and GSA believed would tend to limit competition.

-See 41) US C. 759 (1982). as amended

GAO GGD-88-70 Decennial Census
86

Chapter 2

Minicomputer Procurement Delays Adversely

Affect Bureau Operation*

With few exceptions, the Federal Information Resources Management

Regulations (FIRMR)3require GSA to review and approve agency ADP procurement requests within 20 working days of receipt, with an additional

5 days for mail transport.4Some of the exceptions include failure to adequately justify requirements, especially those that restrict competition,

and submitting incomplete documentation. On the basis of statistics GSA

provided, we found that GSA generally approves agency ADP procurement requests within the 20 working day requirement.

There were two reasons why the Bureau's minicomputer procurement

request approval was delayed. The first and primary reason was the

Bureau's requirement that all five minicomputer systems be capable of

using the same operating and application system software. Both Commerce and GSA believed that this compatibility requirement restricted

competition, as there were a limited number of manufacturers who

made the range of minicomputers that met both the performance characteristics the Bureau wanted and the compatibility requirement. Moreover, GSA believed that the Bureau had not adequately justified the

compatibility requirement.

The second reason was the Bureau's desire to use an indefinite-quantity

type contract. Commerce officials said they were concerned that an

indefinite quantity-type contract might allow the Bureau to acquire

more minicomputers than its current needsjustify.

Despite these concerns, both Commerce and GSA eventually approved the

Bureau's minicomputer procurement request and the contract awarded

did provide for the compatibility desired by the Bureau. However, Commerce did impose one major restriction•the Bureau had to have every

equipment order approved by Commerce before the Bureau could actually place the order.

Evaluating Proposals Took The Bureau took 1 and 2/3 months longer than expected to complete the

Longer Than Planned evaluation and negotiation process. The Bureau had allowed 3 and 1/3

months to complete this process, but actually took 5 months. The delay

occurred during the initial evaluation portion of the process because the

Bureau was unable to readily determine if some of the offerers' proposals complied with the technical RPP requirements. Consequently, the

^See 41 C.F.R. Chapter 201 (1986).

'See 41 C.F.R. section 20l-23.107(bMc)(19B6).

GAO/GGD-88-70
87

Chapter 2

Minicomputer Procurement Delay* Adversely

Affect B

Bureau had to request the offerers to supply additional information to

clarify their proposals, and then re-evaluate their proposals.

Planning

Requirements Not

Followed

When acquiring automated information systems, agencies are required

to adhere to the FIRMR and Office of Management and Budget Circular A130 as well as other federal procurement regulations, such as the Federal Acquisition Regulation (FAR).B Some of the most important requirements are

defining the agency's missions and goals,

determining the information needed to meet the agency's missions and

goals,

developing and examining alternative solutions for meeting the agency's

information needs,

selecting the best alternative based on a cost/benefit analysis,

developing contingency plans in the event that the selected solution fails

or encounters problems during development,

developing back-up plans in the event the selected solution fails once it

is operational, and

providing a list of key activities and the dates for accomplishing these

activities.

The purpose of these planning requirements is to ensure that agency

management has thoroughly examined its information needs, determined the most effective way to meet these needs, and assessed the

risks that the development of any information system involves.

The Bureau did not fully meet these requirements for any of the four

programs for which it is acquiring the minicomputers. The Bureau did

some of the required planning for the annual data collection surveys

program before initiating the contract award phase of the procurement

process. Our review of the Bureau's annual data collection surveys

requirements initiative, however, showed it lacked a

complete discussion of alternative solutions,

cost/benefit analysis,

contingency plan should the system fail during development or after

operation commences, and

list of key activities and dates for completing these activities.

"See 48 C.F.R Chapter 1 (1987).

(MO GGD-SS-70 Decenalal Onw
88

Chapter 2

Minicomputer Procurement Delays Adversely

Affect Bureau Operation*

The Bureau did not complete the requirements initiatives for the other

three programs before submitting its minicomputer procurement request

to Commerce for approval. None of the three requirements initiatives

were approved by Commerce before the request for proposals (RFP) was

issued. Commerce subsequently approved the requirements initiatives

for the agricultural and economic censuses programs, the geographic

system and portions of the 1990 census. However, our review of these

requirements initiatives revealed deficiencies similar to those we

observed for the annual data collection surveys initiative. Moreover, the

requirements initiative for the main part of the 1990 census had still not

been completed or approved as of the end of February 1988, even

though the bulk of the minicomputers was for this activity.

The Commerce IG noted similar problems in a September 1987 report on

the Bureau's minicomputer procurement planning process.1' The Bureau

concurred with all the IG'S findings and agreed where possible to do the

required planning after the fact, time permitting.

Effects of Delayed

Procurement

Two major effects of the delayed minicomputer procurement are 1)

delaying the development and testing of software for use in the 1990

Decennial Census and 2) slowing the start of address list development

for suburban and rural areas.

Software Development and Tne Bureau had planned to test the minicomputer software in the dress

Testing Delayed rehearsal, which began in 1987 and continues through 1988. This dress

rehearsal is intended to replicate, with only minor adjustments, the

actual census. However, the Bureau was unable to use the minicomputers for some dress rehearsal activities, including the keying of data used

to develop the ACF, the production of maps, and the updating of geo- .

graphic information. The Bureau expects to use the minicomputers for

some later 1988 dress rehearsal operations, including name keying, and

believes this could be a surrogate test of the equipment for ACF

applications.

The Chief of the Bureau's Decennial Operations Division said that the

minicomputer software quality assurance program would not be completed in time for the 1988 dress rehearsal. He said the reason the minicomputer software could not be fully tested was the delay in receiving

''Final Audit Report on Census Family of C'ompaiiblo MiiinTimputers, Kcpon Number AIS-7-12

GAO/GGD-88-70 Decennial
89

Chapter 2

Minicomputer Procurement Delays Adversely

Affect Bureau Operation*

the minicomputers. As a result, he believed the Bureau will be entering

the census without a test of some software under census-like conditions.

Using software before it is fully proven is risky and could result in the

minicomputer systems not functioning as intended. This happened in the

-1986 pretests for the 1990 census7 when the Bureau did not allow sufficient lead time to adequately test software programs that were developed for that test before usage. As a result, many software programs

initially did not work for some operations, such as checking-in questionnaires, and had to be modified. To resolve these problems, headquarters

staff provided technical assistance and support to the pretest sites. During the full-scale census, however, these resources would not be available to support several hundred regional, district, and processing offices

spread across the country. Problems, such as those encountered in 1986,

could adversely affect processing operations in 1990 due to the large

workloads and the time constraints.

Problems experienced by the Internal Revenue Service (IRS) during 1985

also underscore the risks inherent in not allowing adequate time for testing. In our earlier work on those problems, we noted that an adequate

quality assurance program was not applied and that software programs

were put into production before they were fully tested.* As a result,

some programs ran inefficiently while other programs failed to meet

users' needs. This contributed to inaccurate notices to taxpayers,

untimely responses to inquiries, and increased interest paid by the government on delayed refunds.

Using software that has not been fully tested and shown to function

properly is also contrary to the intent of Office of Management and

Budget Circular A-130, which requires that a system be fully tested

before being used. For example, to comply with the spirit of the circular,

the Bureau decided not to use the new minicomputer system for the Census of Manufactures, an important part of the 1987 Economic Censuses.

This decision was reached because the Bureau could not test the equipment and software programs planned to be used in the 1987 Census of

Manufactures in its prior Annual Survey of Manufactures.

'Decennial Census: Pretests Could be Used More Effectively in Census Planning (GAO/

GGr>87-24BR. Jan. 1587V

*Tax Administration. Replacement of Service Center Computers Provides Lessons for the Future

(GAO/OGWfMWJ, Sept 1OT).

GAO/GfiD-88-70 Decennial Cennia
90

Delayed Address List

Development

As of February 1988, the Bureau had postponed the scheduled beginning of the address list development for rural and suburban areas by 4

months to June 1988. This list development is a critical part of the

decennial census. Much of this postponement was caused by delays in

producing maps from the Bureau's automated geographic support system. The minicomputers were to be used to prepare computer tapes

needed to print the maps. According to the Bureau, its mainframe computers lacked sufficient processing capacity to produce all the needed

maps within the required time frames. In Decennial Census: Automation

of the Geographic Support System (GAO/GGD-«7-75BR, May 1987), we commented on the Bureau's underestimation of its computer requirements

for the automated geographic support system and delays the Bureau

was experiencing in developing computer files needed to generate maps.

Delays in developing address lists can lead to later problems. One of the

most important prerequisites for the decennial census is the development of an address list for rural and suburban residences. An address

list is crucial because it is used for mailing out questionnaires, controlling the list of nonrespondents for followup activities, and tabulation

purposes. The Bureau estimates that for the 1990 census there will be

about 40 million residences in the rural and suburban areas, and an

additional 60 million residences in urban areas.

In the 1980 census, late maps and a longer-than-expected period of field

canvassing resulted in the Bureau cancelling one of its key quality control procedures, a Postal Service check of the Bureau's suburban and

rural address list. This resulted in a less accurate census. To help compensate for the missed procedure, the Bureau instituted a last-minute

recanvassing of some of the rural portions of the country, which

included approximately 15 million households. The Bureau estimated

that about 105,000 housing units were added to the address list from

this procedure at a cost of $10.3 million. The housing unit cost for each

addition was about $98, making it one of the least cost-effective procedures in the 1980 census.

For the 1990 census, the Bureau expects to employ the Postal Service

check, which was omitted in the 1980 census, for most suburban and

rural residential households. In addition, the Bureau plans to use a procedure to reconcile differences between its self-developed address data

and data the Postal Service provides.

The delayed minicomputer procurement and the need to expedite map

production resulted in the Bureau leasing time on the Department of

GAO/GGDW70
91

Chapter 2

Minicomputer Procurement Delays Adversely

Affect Bureau OperatIons

Agriculture's mainframe computer in Fort Collins, Colorado, to generate

computer tapes needed to produce maps. The agreement is for 1 year,

from October 1987 through September 1988, at an annual cost of about

$3 million. However, the Bureau can cancel the agreement at the end of

any month.

The Bureau anticipates that it will be unable to use the minicomputers

for the early maps, but is planning to use them for updating the maps by

mid-1988. This means that the software developed for the mainframe

computer will have to be converted for use by the minicomputers.

According to the Bureau's Special Assistant to the Chief, Geography

Division, if the Bureau had received the minicomputers when planned, it

would not have had to lease time on another agency's mainframe computer. Also, the Bureau could have avoided the cost for software conversion because the programs could have been written specifically for

the minicomputer system.

Continued slippage in the development of address lists, as the Bureau's

March 1988 progress reports suggest is occurring, could jeopardize completion of some of the Bureau's planned census operations. If planned

quality control procedures are eliminated as they were in 1980, the quality of the address list could be impaired, thereby reducing the accuracy

of the census count. Also, an elimination of the procedures might force

the Bureau to institute the costly recanvass operation used in the 1980

census.

Conclusions A major reason for the minicomputer procurement problems was the

Bureau's failure to develop and finalize in a timely manner the detailed

organizational structure and procedures to be used for the 1990 Decennial Census. The Bureau's planning for the minicomputers was started

late and remained incomplete. As of the completion of our audit work,

plans for the 1990 Decennial Census, which was only 2 years away, had

still not been finalized. This was evident in the Bureau's continued indecision regarding the number of processing offices.

The Bureau's minicomputer procurement problems have, directly and

indirectly, delayed and disrupted several key activities vital to the success of the 1990 Decennial Census. Because of the delayed minicomputer

procurement, the Bureau may be unable to fully develop and test some

minicomputer software needed to support the 1990 census. This could

GAO/GGD-SS-70 Decennial Cenaaa
92

Chapter 2

Minicomputer Procurement Delay* Adversely

Affect Bureau Operations

lead to the minicomputers not functioning as intended. Despite the problems in the minicomputer procurement and the requirements for a contingency plan, the Bureau has not developed one.11

At the completion of our field work in February 1988, the Bureau was 4

months behind schedule in producing maps needed to develop address

lists for suburban and rural residential households. This, in turn,

delayed the start of the address list development, a critical census process. The delay may cause the Bureau to reduce or eliminate some or all

of its planned quality control checks on the address lists.

Rpi^nmTTipnriatinn ^

e

rc00•

111600 && ^e

Secretary of Commerce direct the Bureau to

t _ ... i •. _ > fA,, _. develop a formal contingency plan that identifies options for employing

backup automated equipment and/or possible manual operations to

meet essential operational needs in the event that the minicomputer system, including the software, does not operate properly.

"See OMB Circular A-130 and Federal Information Processing Standards Publication 38.

GAO/GG&S8-70 Decennial Cenau*
93

Chapter 3

Bid Protests and Settlement: Causes, Costs, and

Other Effects

The Bureau's minicomputer procurement was the subject of two bid protests. The first was filed before contract award, and the second after the

contract was awarded. The Bureau settled the first bid protest by paying a total of $ 1.1 million to three offerers. Commerce and the Bureau

decided to settle the protest primarily because they believed they could

not afford the delay and disruption to the procurement process that

would accompany resolving the protest through the administrative process. The second bid protest was withdrawn by the offerers shortly

after it was filed.

Although the bid protests did not materially delay the award of the

minicomputer contract, the protests placed a heavy burden on the

Bureau's understaffed procurement office. As a result, other procurements vital to the decennial census were delayed. To help avoid future

problems and delays, Commerce and the Bureau have taken actions to

improve the Bureau's procurement function.

Reason for First Bid

Protest

The first bid protest, filed on February 26, 1987, with the G8A Board of

Contract Appeals (GSBCA), stemmed from the Bureau's decision that

three offerer proposals were technically unacceptable for failure to comply with two of the database management software requirements contained in the minicomputer RFP. The protest was initially filed by one of

the offerers and the other two offerersjoined as intervenors, each

objecting to the Bureau's decision on substantially the same grounds.

On March II, 1987, after holding a hearing on the matter, GSBCA granted

the protesting parties' request to suspend Commerce's minicomputer

procurement authority. This suspension was to have remained in effect

until the GSBCA rendered a decision on the merits of the protest, a period

of up to 45 working days from the filing of the protest unless it specifically determined that a longer period was required. The initial 45-day

period would have ended on April 30,1987.

Commerce and the

Bureau Settle First Bid

Protest

Commerce and the Bureau decided to settle the protest rather than to

defend it before GSBCA. On March 19,1987, the protestors and the

Department of Commerce filed a joint motion with the GSBCA to dismiss

the protest on the basis of a joint stipulation which included the following provisions:

• Commerce would withdraw its determination that the technical proposals submitted by the three offerers were not technically acceptable and

GAO/GGD4&70 Decennial Cenmu
94

Chapters

Bid Protest* and Settlement: Causes, Costs.

and Other Effect*

were not susceptible to being made acceptable, within 1 calendar day

after the date of the GSBCA'S order approving the joint motion.

• Commerce would amend the RFP to clarify its requirements for data

access software within 2 calendar days after the date of the GSBCA'S

order approving the joint motion.

• Commerce would permit the three offerors to submit revisions to their

proposals in response to the amendment to the RFP not later than 5 calendar days after receipt of the amendment.

• Commerce would evaluate any revised proposals submitted by the three

offerors and, upon determining the acceptability of them, arrange not

earlier than 20 calendar days after receipt of the RFP amendment a live

test demonstration.

• In lieu of submitting a revision to their proposals, each offerer had the

option of notifying Commerce of its intention to seek from Commerce

payments of its protest legal fees and related expenses as well as bid

and proposal preparation costs. Such notification was to be submitted

not later than 3 calendar days after receipt of the RFP amendment, but in

no event would the sum paid to any party exceed $400,000.

The GSBCA approved the joint motion on March 19, 1987, the same date it

was filed, dismissing the protest and rescinding the March 11, 1987, procurement suspension order. All three offerors decided to seek payment

of their protest legal fees and bid and proposal preparation costs rather

than to submit revisions to their proposals. The Bureau paid a total of

$1.1 million to the three offerors. Table 3.1 shows, by offerer, the

amount claimed by type of cost and the total amount the Bureau paid.

Table 3.1: Bid Preparation and Protest

Costa Figures in thousands of dollars

Type of cost Offerer On* Offerer Two

Offerer

Three Total

Direct labor $1561 $512 $105 7 $313.0

Overhead 280 0 1321 134.2 546.3

Other direct costs 44 1 39 2 91 2 174.5

General and administrative 90.6 666 32 8 190.0

Legal fees-' 44.0 299 303 104.2

Total amount claimed S614.8 $319.0 $394.2 $1,328.0

Amount paid $400.0» $3190 $3942 $1,113.2

'Legal lees (or bid protest

"The Bureau paid the protestor's costs up to the full amounl allowed by the settlement agreement

GAO/GGD4S-70 Decennial
95

Chapter 3

Bid Protests and Settlement: Causes, Costs,

and Other Effects

Reasons for Commerce's

and the Bureau's Decision

to Settle the Protest

According to Commerce and Bureau officials, they decided to settle the

protest primarily because of their concerns about time and cost and not

because they felt the rejection of the three offerers' proposals was erroneous, as was reflected in the settlement. Due to a late start and prior

delays, the Bureau was significantly behind schedule procuring the

minicomputers. They believed they could not afford to wait the additional time or incur the further disruption to the procurement process

that would be required for the GSBCA to decide the case. Before the protest was filed, the Bureau decided that if it could not award the minicomputer contract by June 1, 1987, it would eliminate the decennial

census minicomputer requirements from the procurement. Thus, the

Bureau would resort to doing the 1990 census much as it had done the

1980 census.

The former Deputy Secretary of Commerce, who made the decision to

settle the protest, said that regardless of whether Commerce and the

Bureau ultimately won or lost the protest, the amount of time that

would have been required to defend the protest would have precluded

the use of the minicomputers for the 1990 Decennial Census. According

to the then Deputy Secretary, this would have resulted in increased

operational costs and a decrease in the accuracy and timeliness of the

census. He said that the estimated expenses of about $1 million to settle

the protest was the least costly way to go, increasing the total procurement costs by about 1 and 1/2 percent.

Commerce was also concerned that it might lose the protest because of

the discovery of a procedural flaw in the procurement process. This

flaw was not the basis of the protest, as the three offerers were unaware

of it when they filed their complaint. The Bureau had approved an

extension of time requested by one offerer to permit it to change its proposed software package. According to Commerce and Bureau officials,

the other offerers did not ask to change their software packages or

request an extension of time. The Bureau, however, did not inform them

of the extension granted to the one offerer or offer them an opportunity

for a similar extension. The Commerce attorney responsible for handling

the protest believed the extension for the one offeror could have jeopardized the government's case before the GSBCA. According to the attorney, this error would have been discovered by the three offerers in the

course of litigation and could have resulted in the loss of the protest.

Analysis Of the Settlement Because of their concern about time, Commerce and the Bureau decided

that a cash settlement was the most expeditious method of disposing of

hra GAO/GGI>«S-70 Decennial Census
96

the protest and proceeding with the procurement. As part of the settlement, Commerce and the Bureau agreed to withdraw their determination that the offerers' proposals were unacceptable and they further

agreed to amend the RFP. By withdrawing their findings that the three

offerers' proposals were unacceptable, Commerce, in effect, conceded

that the offerers had been improperly excluded from the competition.

This satisfied the GSBCA requirement for a finding of a statutory violation necessary for awarding protest and bid and proposal preparation

costs. Under GSBCA rules, protest and bid and proposal preparation costs

may be paid if the GSBCA determines that a challenged agency action violates a statute or regulation or the conditions of any delegation of procurement authority.1

However, on the basis of evidence obtained through our review, it

appears that despite the provisions of the agreement. Commerce and

Bureau officials continued to believe that the three proposals were, in

fact, technically unacceptable. From interviews with senior officials at

both Commerce and the Bureau, we found general agreement that the

RFP was clear and that the offerers' proposals did not meet the requirements of the RFP. They believed that a strong case existed to pursue the

protest on those issues. A Bureau official involved with the procurement

said that the RFP amendment, which the settlement stipulated, was

unnecessary and added that at the time of the settlement the Bureau

was willing to do whatever was necessary to settle the protest.

Moreover, from our review of the record, we found that the three offerors' proposals did not fully comply with the BFP'S database management

software requirements. The proposals did not satisfy the RFP provision

of supporting up to 2,000 data fields per record without diminishing the

user friendly system objective. We believe that this provided a basis for

the Bureau's position that the proposals were unacceptable. Furthermore, on the basis of our independent review of the RFP and the amendment resulting from the settlement, we believe that the RFP was clear

and did not require the amendment for clarity.

Regarding the procurement flaw cited by Commerce as a contributing

factor in the decision to settle the protest, we are not certain to what

extent the flaw would have affected Commerce's and the Bureau's case

if it had gone to the merits.

'« US.C Sec, 76«hX6XBXCXSupp HI 1986).

GAO GGWW-70 Deccmtal CMMM
97

Ch«pt«r3

Bid Protests and Settlement: C

and Other Effects

If Commerce and the Bureau felt that it was necessary to cure the flaw,

the appropriate remedy would have been to allow each of the three

offerors a reasonable opportunity to submit a revised proposal. However, this would have required additional time which Commerce and the

Bureau said they did not have. Instead, Commerce and the Bureau

elected for a cash settlement of the protest. While the settlement agreement did allow the offerors the option of submitting revised proposals

under an amended RFP in lieu of a cash settlement, Commerce and

Bureau officials said they did not expect the offerors to accept this

option since the 5-day period provided little time to prepare revised

submissions.

Reasonableness of

Amount Paid and

Costs Claimed in First

Bid Protest Settlement

On the basis of our limited review of the offerors' claims and supporting

documentation, we have four concerns regarding the amounts paid to

settle the first bid protest. These concerns involve

insufficient or no support for a large portion of claimed costs;

costs claimed for work before the issuance date of the RFP;

bid preparation costs claimed for work after the Bureau notified the

offerors that their proposals were noncompliant and, therefore, no

longer eligible to compete for the minicomputer contract; and

incorrect computation of some claimed costs.

However, with the exception of the incorrectly computed claimed costs,

we were unable to conclude definitely that these other costs are

improper, and, therefore, should not have been paid, because what constitutes allowable bid and proposal preparation and protest costs is not

clearly defined. Due to the fact that we could not reach any definite

conclusions on these costs, we did not attempt to identify the total dollar

values involved.

We also found that the Bureau made a cursory review and did not question the offerors' claimed costs. The Bureau's current procurement chief

said that the reason for this was that the 30-day period allowed in the

settlement agreement to make this review was insufficient to arrange

and make an examination by audit personnel. He said at least 60 days

was needed.

Insufficient Support for

Some Claimed Costs

The settlement agreement required that the offerors submit "appropriate supporting documentation" with their claims. The three offerors did

not provide sufficient documentation for more than one-half of the costs

GAO/GGD-88-70 Decennial Cenau*
98

Chapter 3

Bid ProtraU *nd Settlement:

and Other Effect*

they claimed. Of the $ 1,327,700 claimed by the offerers, $736,300 or

55.4 percent was for overhead ($546,300) and general and administrative costs ($190,000). None of the offerers provided any support or

backup data for overhead costs claimed other than describing their

accounting procedures.

Only Offerer One provided a breakout of general and administrative

costs. However, it consisted only of summary figures and did not

describe the costs in detail. This summary raised questions for us

because it included items such as federal and state income taxes, funds

received from a litigation settlement, sales discounts, and asset sales, all

of which are usually not considered general and administrative costs.

Costs Incurred Before

Issuance of the RFP

The settlement agreement said that the offerers1claims would be limited

to costs incurred in preparing their proposals and pursuing the protest

action. However, we found that claims by Offerers One and Two

included costs incurred before the minicomputer RFP was issued on September 19, 1986.

Offerer Two claimed and the Bureau paid $3,455 for responding to the

Bureau's request for information (RFI) on its proposed minicomputer

acquisition. The RFI took place about 6 months before the RFP was issued.

Offerer One's claim included direct labor charges for four employees

before the minicomputer RFP was issued. Offerer Three did not submit

sufficient documentation for us to determine if it too had included costs

in its claim incurred before the minicomputer RFP was issued.

Claim of Proposal

Preparation Costs Incurred

After Notice of Proposal

Rejection Was Received

In a letter dated February 9, 1987, the Bureau notified all three offerers

that their proposals were noncompliant with the database software

requirements contained in the minicomputer RFP. This letter further said

that all three were no longer eligible to compete for the minicomputer

contract. All three offerers included in their claims the proposal preparation costs they incurred after the Bureau formally notified them that

they were no longer eligible to compete for the minicomputer contract.

For example, in examining the offerers' submissions to support the settlement payments, we found that Offerer Two included at least $32,922

of these costs in its claim. This represents about 10 percent of Offerer

Two's $319,000 claim.

GAO/GGD-88-70 Decennial Cento*
Chapter .1

Bid Protests and Settlement: Causes. Costs,

and Other Effects

Incorrect Computation of

Cost

Offerer Two's claim was overstated by $ 1,552 because it incorrectly

computed the amount of general and administrative costs applicable to

the minicomputer procurement. The offerer made a partial payment to

its lawyers and claimed this amount as a direct cost rather than as a

legal expense. As a result, the offerer applied its general and administrative (G and A) rate to the payment, which resulted in the overstatement. Had it been classified as a legal expense as the remainder of the

lawyers fees incurred were, the additional $ 1,552 in G and A costs would

not have added to the claim because the legal fees would not be subject

to the G and A rate.

Reasons for Second

Protest

The second bid protest was filed with the GSBCA on May 22, 1987, about

a week after the contract was awarded, and involved two other offerors

with different reasons for protesting. One offerer believed it should

have been awarded the minicomputer contract since it had a lower evaluated price than the winning offeror. The second offeror claimed it filed

a protest with the Bureau after being notified by the Bureau on February 13, 1987, that it had been eliminated from the competitive range.

This offeror asserted that the Bureau ignored its protest and awarded

the contract to another offeror in violation of FAR.

On May 29, 1987, the GSBCA held a hearing and temporarily suspended

the Bureau's authority for the minicomputer procurement. On June 11.

1987, both offerors withdrew their protests, but retained their right to

pursue the protests at a later date. Neither offeror gave a reason for

withdrawing its protest. On June 17, 1987, the GSBCA lifted the suspension order.

Bid Protests Delay

Other Procurements

The work required to address the bid protests placed a heavy burden on

the Bureau's understaffed procurement office. As a result, the procurements of equipment and supplies needed for generating maps and equipment for entering questionnaire information into computer files were

delayed.

Bureau Procurement Staff

Below Authorized Levels

In late 1983, Commerce delegated the responsibility for making larger

procurements to the Census Bureau. The Bureau was authorized a procurement chief and up to six contract specialists through fiscal year

1987. However, from its inception in early 1984 to mid-1987, the

Bureau's procurement office operated with a staff significantly below

its authorized level and experienced a high turnover in its leadership.

GAO/UGO-88-70 Perennial Census
100

ChapWrS

Bid ProlMU mid Settlement: <«u»

uid Other Effect*

For example, during the first bid protest in March 1987, the Bureau

employed an acting chief and three of the six authorized contract specialists. Moreover, in its first 3 and 1/2 years of operation, five different

persons served as either the permanent or acting chief of the office.

Commerce and the Bureau took actions after the bid protests to improve

the performance of the procurement office. First, the Bureau filled most

of the contract specialist vacancies by July 1987. Second, the new procurement chief said he has identified the training needs of the staff and

developed a strategy for fulfilling these needs. He also has established a

program of weekly seminars on procurement issues for his staff. Also,

the then Deputy Secretary of Commerce told us that he had verbally

told his subordinates to build in sufficient time in the procurement process to handle future bid protests.

Delayed Procurement of

Geographic Equipment

and Supplies

The contract award for monochromatic plotters, which the Bureau

planned to award by October 30, 1987, was made on January 26, 1988.

The plotters are used to draw the maps used in the census. According to

the Bureau's Special Assistant to the Chief. Geography Division, the

understaffed procurement office contributed to the delay. The other reasons he offered for the delay included the difficulty of designing the

specifications and the time needed to develop procurement justifications. To compensate for the delay in the receipt of the plotters, the

Bureau was considering at the time of our review a 40 percent increase

in the number of plotters to be purchased so that they could have additional capacity, if needed.

Furthermore, according to a Bureau official, the delay in the award of

the plotters caused a delay in the procurement of the paper needed for

the maps because different types of plotters require different types of

paper. Thus, the procurement of the paper could not be initiated until

the Bureau awarded the plotter contract.

Data Entry Equipment

Delayed

The Bureau's Chief, Technical Services Division, told us that procurement of equipment used to transfer information from census questionnaires to computer files was delayed by about 1 year because of the

understaffed procurement office. As a result, the equipment expected to

be used in the 1990 census to read the data will not be tested in the 1988

Dress Rehearsal. Instead, the Bureau plans to test the equipment in one

GAO '<XiD«t-7G DerettiUal CcHH
101

Chapters

Bid Proteata and Settlement: C

and Other Effect*

of its monthly data collection activities. However, the monthly data collection activities are not fully representative of a decennial census

because different types of questionnaires are used.

Conclusions Given the late start and earlier delays in the minicomputer procurement,

Commerce and the Bureau were motivated by management concerns to

reach an early settlement of the protest and proceed with the procurement. Because the procurement was suspended by the GSBCA pending a

decision on the protest, Commerce and the Bureau did not feel that they

could invest the additional time that would be required to defend the

protest and still be in a position to award a contract before the June 1,

1987, deadline. They believed that the early settlement was the best

way to avoid additional delays and other adverse effects for the 1990

Decennial Census.

Although Commerce's and the Bureau's concerns are not without merit,

aspects of this procurement and bid protest settlement are disturbing.

We believe that the Bureau could have avoided the cash settlement if it

had not created its own management dilemma by failing to plan properly for the procurement, by starting the procurement process late, and

by not adhering to proper procurement procedures. These management

deficiencies created serious time pressures that persuaded the Bureau to

opt for a cash settlement. In essence, the management deficiencies

placed the Bureau in a position which, in its opinion, did not permit the

necessary time to pursue the protest on the merits or cure the procurement flaw. As a result, the government paid a total of $ 1.1 million to

settle the protest and proceed with the procurement.

We are also concerned about the amount of money paid in the settlement. We have reservations about the reasonableness of some of the

claimed costs paid and believe that they were not adequately reviewed

before payment. However, in the absence of clear definitions of what

constitutes allowable bid and proposal preparation costs and protest

costs, and recognizing that the Bureau, under the settlement agreement,

had a 30-day period to review claimed costs and did not question any of

the claimed costs, we do not believe that questionable payments are

recoverable.

GAO/GGD-88-70 Decennial

o

87-^.68 (108)