	Background

A high-quality, reliable cost estimate is a key tool for budgeting, planning,  and managing the 2020 Census. Without this capability, agencies are at risk of  experiencing program cost overruns, missed deadlines, and performance  shortfalls. During this review we found  that the Bureau took steps to address this recommendation, which is  discussed later in this report. We recommended that the Bureau take specific steps to ensure  its cost estimate meets the characteristics of a high-quality estimate. In October 2017, Commerce announced that it had updated the October  2015 life-cycle cost estimate, projecting the life-cycle cost of the 2020  Census to be $15.6 billion, an increase of over $3 billion (27 percent) over  its 2015 estimate. Census Bureau Has Made Progress but Has Not Taken All the Steps Needed to Ensure the Reliability of 2020 Cost Estimate

Since our June 2016 report, in which we reviewed the Bureau’s 2015  version of the cost estimate, the Bureau has made significant progress. However, the  Bureau’s October 2017 cost estimate for the 2020 Census does not fully  reflect characteristics of a high-quality estimate as described in our Cost  Estimating and Assessment Guide and cannot be considered reliable. (See  figure 3 below.) First, we found that  source data did not always support the information described in the basis  of estimate document or could not be found in the files provided for two of  the Bureau’s largest field operations: Address Canvassing and Non- Response Follow-Up (NRFU). Although the Bureau’s updated life-cycle cost estimate reflects three of  the four characteristics of a reliable cost estimate, we are not making any  new recommendations to the Bureau in this report. A well- developed cost estimate serves as a tool for program development and  oversight, supporting management to make informed decisions. According to the Bureau, the 2020 Census cost estimate is used as a  management tool to guide decision making. The Bureau agreed with the theme of  the report but did not specifically agree with the recommendation. More generally, factors that contributed to cost fluctuations between the  2015 and 2017 cost estimates include:  changes in assumptions for census operations,  improved ability to anticipate and quantify risk, an overall increase in IT costs, and more defined contract requirements. Changes in assumptions for expected self- response rates contributed to increases in the response category, as  the assumed rate decreased from 63.5 percent in 2015 to 60.5  percent in 2017, thereby increasing the anticipated percentage and  associated cost of nonresponse follow-up. Anticipation of Risk

In general, contingency allocations increased overall from $1.35 billion in  2015 to $2.6 billion in 2017. Increased IT Costs

Increases in IT costs, totaling $1.59 billion, represented almost 50 percent  of the total cost increase from 2015 to 2017. The  Department of Commerce generally agreed with our findings regarding  the improvements the Census Bureau has made in its cost estimates. We reviewed (1) the extent to which the Bureau’s  life-cycle cost estimate and associated guidance met our best practices  for cost estimation using documentation and information obtained in  discussions with the Bureau related to the 2020 life-cycle cost estimate  and (2) compared the 2015 and 2017 life-cycle cost estimates to describe  key drivers of cost growth.
Why GAO Did This Study

In October 2017, the Department of Commerce (Commerce) announced that the projected life-cycle cost of the 2020 Census had climbed to $15.6 billion, a more than $3 billion (27 percent) increase over its 2015 estimate. A high-quality, reliable cost estimate is a key tool for budgeting, planning, and managing the 2020 Census. Without this capability, the Bureau is at risk of experiencing program cost overruns, missed deadlines, and performance shortfalls.
GAO was asked to evaluate the reliability of the Bureau's life-cycle cost estimate. This report evaluates the reliability of the Bureau's revised life-cycle cost estimate for the 2020 Census and the extent to which the Bureau is using it as a management tool, and compares the 2015 and 2017 cost estimates to describe key drivers of cost growth. GAO reviewed documentary and testimonial evidence from Bureau officials responsible for developing the 2020 Census cost estimate and used its cost assessment guide ( GAO-09-3SP ) as criteria.

What GAO Found

Since 2015, the Census Bureau (Bureau) has made significant progress in improving its ability to develop a reliable cost estimate. While improvements have been made, the Bureau's October 2017 cost estimate for the 2020 Census does not fully reflect all the characteristics of a reliable estimate. (See figure.) Specifically, for the characteristic of being well-documented, GAO found that some of the source data either did not support the information described in the cost estimate or was not in the files provided for two of its largest field operations. In GAO's assessment of the 2015 version of the 2020 Census cost estimate, GAO recommended that the Bureau take steps to ensure that each of the characteristics of a reliable cost estimate is met. The Bureau agreed and has taken steps, but has not fully implemented this recommendation.
A reliable cost estimate serves as a tool for program development and oversight, helping management make informed decisions. During this review, GAO found the Bureau used the cost estimate to inform decision making.
Factors that contributed to cost fluctuations between the 2015 and 2017 cost estimates include:
Changes in assumptions. Among other changes, a decrease in the assumed rate for self-response from 63.5 percent in 2015 to 60.5 percent in 2017 increased the cost of collecting responses from nonresponding housing units.
Improved ability to anticipate and quantify risk. In general, contingency allocations designed to address the effects of potential risks increased overall from $1.3 billion in 2015 to $2.6 billion in 2017.
An overall increase in information technology (IT) costs. IT cost increases, totaling $1.59 billion, represented almost 50 percent of the total cost increase from 2015 to 2017.

What GAO Recommends

GAO is not making any new recommendations but maintains its earlier recommendation—that the Secretary of Commerce direct the Bureau to take specific steps to ensure its cost estimate meets the characteristics of a high-quality estimate. In its response to this report, Commerce generally agreed with the findings related to cost estimation improvements, but disagreed that the cost estimate was not reliable. However, until GAO's recommendation is fully implemented the cost estimate cannot be considered reliable.