A New Way to Pay for IT Failures

The Census Bureau has had trouble managing the costs, time lines and, most important, the performance of a contract to develop a handheld computer to collect data during the 2010 census. The cost of the contract has increased from its original $600 million to $647 million, according to a General Accounting Office report released today. If all related costs due to the handheld contract's delay and mismanagement are taken into account, GAO estimates the increase in costs for the 2010 census could range between $600 million and $2 billion.

While those overrun costs are high, many government information technology projects (and private-sector IT projects) have suffered similar fates -- with little or no repercussions for the agencies. But Sen. Tom Coburn, R-Okla., and a member of the Committee on Homeland Security and Governmental Affairs, has suggested something new that could set a precedent for other agencies. In a committee hearing held today on the problems with the handheld contract, Coburn suggested that any cost overrun in the contract be covered by the Census Bureau cutting the budgets for programs in future budgets. This is what he said:

For years, the Census Bureau has estimated that the 2010 count will cost between $11.3 billion and $11.8 billion. I hope that the Secretary of Commerce will work to ensure that the cost does not increase beyond that, even with these trying circumstances. However, let me be perfectly clear -- if the costs go over that amount, taxpayers should not have to subsidize this mismanagement more than they already have. If more money is needed, I fully expect that the department and the bureau will work internally and with [the Office of Management and Budget] to find offsets out of programs that already exist.

The Census Bureau's total budget for fiscal 2008 is about $1.5 billion, with larger budgets coming at the end of decades to pay for conducting the decennial census. Using even the conservative estimate of a $600 million cost overrun in the hand held contract would present a financial challenge, to say the least.