Mr. Chairman, Mrs. Maloney, and Members of the Subcommittee:

Thank you for this opportunity to appear before you today to discuss issues related to the paid advertising campaign for Census 2000. Since I last testified before this Subcommittee on June 9, census operations have kicked into full gear and they are progressing very well and on schedule. Over 180 million questionnaires have already been printed, representing over half of the total volume; 130 local offices are open, space has been leased for an additional 380, and the remaining 10 will be leased during the summer; by the end of this week, we will begin processing and formatting the address tape for use in labeling questionnaires; we have issued 32 Dress Rehearsal evaluations; approximately 22,000 partnerships have been developed; and our advertising campaign creative materials are now in production.

In your invitation letter, you asked that I address: 1) the process by which we awarded the advertising contract to Young & Rubicam (Y&R), 2) coordination between the partnership groups and the advertising campaign, and 3) the advertising budget breakdown. I will address these three topics in that order.

Census 2000 is the first census for which the Census Bureau has used paid advertising. From 1950-1990, the Census Bureau retained the services of the Advertising Council of America to design and disseminate public service announcements (PSA's). Unfortunately, based on evaluations of the 1990 census advertising, PSA's did not reach targeted hard-to-count populations in a strategic or effective manner. Furthermore, ads often ran at off-peak hours because decisions about when to air PSA's rested with local television and radio stations. Based on the evaluation of the 1990 advertising effort, the Census Bureau concluded that in order to reach the right people with the right message at the right time it would have to contract for a paid advertising campaign that was originally estimated at approximately $100 million. To help us reach a final decision and provide guidance on how to write the contract requirements, the Bureau contracted with Gilbreath Communications, Inc. Gilbreath recommended a very extensive multi-media advertising campaign extending over a multi-month period.

Once the decision was made to contract out the advertising campaign, the Bureau studied the advertising contracts issued by various other federal agencies, including branches of the Armed Forces, the U.S. Postal Service, and the Treasury Department. In addition, the Bureau consulted with the American Association of Advertising Agencies and the Advertising Research Foundation. The Bureau put together an advertising team consisting of Census Bureau staff with experience in marketing, decennial censuses, field operations, and contracting; the team also included a Commerce Department procurement lawyer and, in a consultative role, experts from the U.S. Armed Forces Joint Recruitment Advertising Program and the advertising firm of J. Walter Thompson.

The Census Bureau used formal Source Selection Procedures, including the designation of a Source Selection Official, who was the Bureau's Principal Associate Director for Programs, and the establishment of a Source Evaluation Board. Between November 1996 and June 1997, the Bureau went through numerous steps to ensure a fair and open competition. Many of these steps went beyond the normal federal contract requirements. These included publishing the draft statement of work and holding a presolicitation conference. We issued the request for proposals (RFP) using input from industry in response to our draft Statement of Work. Proposals were due in late June 1997; eleven proposals were received and the award was made on October 10, 1997.

Here's a detailed chronology of events in this first period:

Nov. 1996 Draft Statement of Work (SOW) published in Commerce Business Daily (CBD)

Dec. 1996 Draft SOW mailed to 500 firms, including 200 minority firms identified by our Public Information Office

Feb. 28, 1997 Pre-solicitation conference held at the Census Bureau attended by approximately 250 people representing about 160 firms

March 20, 1997 Announcement of forthcoming Request for Proposals (RFP) published in the CBD

May 13, 1997 RFP issued via Internet and mailed to more than 800 firms

To ensure that the best proposal was selected, the Bureau consulted with the Census Racial and Ethnic Advisory Committees and others to identify a diverse group of eleven advisors with expertise in government contracting, advertising, and outreach to minority audiences. The advisors attended all oral presentations, which I will describe later, and briefed the Technical Evaluation Team, which consisted of an expert in government advertising contracts and the two top officials in the Census Bureau's Census 2000 Publicity Office. Separate teams were established to evaluate past performance and cost issues. The technical evaluation was conducted from late June to late July 1997.

After considering cost and past performance, the Technical Evaluation Team recommended that four companies, including Y&R, be chosen to participate in the competitive oral presentations.

Oral presentations were conducted in late August 1997. Bidders were allowed two hours to present their ideas for conducting the national advertising campaign to achieve the goal of increasing mail response rates, explain their creative and media plans, address the tasks to be performed during the campaign, present evaluation plans, and discuss measures to contain costs. The Bureau also asked bidders to present their approach for campaigns aimed at two target groups--young, single African-American males and young, single Hispanic males born in the United States.

At the conclusion of the oral presentations, the advisors were asked to describe the strengths, weaknesses, and risks of each of the proposed offers. The Technical Evaluation Team evaluated and scored the presentations based on the criteria in the RFP and the technical evaluation plan. Y&R received the highest technical score, which was significantly above the other competitors.

There were additional impact, risk, legal, and administrative reviews after this point. One important review I will mention here was conducted by the Office of Small and Disadvantaged Business Utilization, which found that Y&R had the most aggressive plan for subcontracting to small, small and disadvantaged, and women-owned firms. We hope that the creative work, advertising space, or time supplied by these firms will improve mail response in communities with historically low mail response rates. Y&R's plan far exceeded the mandatory requirement for subcontracting set in the RFP. To date, they have exceeded their goals.

In late September 1997, the Source Selection Official selected Y&R and as I said earlier, the award was made on October 10, 1997. The award process was a great success; it employed innovative methods, was completed ahead of schedule, and there were no protests. Success can also be measured by the fact that Y&R and its partners--the Bravo Group, G&G Advertising, Kang & Lee, the Chisholm-Mingo Group, and Y&R Puerto Rico--have developed an excellent campaign.

Here's a detailed chronology of later events in the contract process:

June 26-July 28, 1997 Written proposals received and evaluated

August 26-29, 1997 Oral presentations after eliminating non-competitive bidders

After each oral presentation, the Technical Evaluation Team (TET) and advisors framed questions for the q&a period

After the q&a, the TET and advisors discussed strengths and weaknesses of proposals

TET re-scored bidders based on oral presentations

Sept. 15, 1997 Evaluation teams made final report to Source Evaluation Board (SEB)

Sept. 25, 1997 SEB submitted "best value" recommendation to Source Selection Official

Oct. 10, 1997 Award made to Young & Rubicam

Now, I will turn to the second issue I was asked to address--coordination between partnership groups and the advertising campaign. This is an important issue because paid advertising is just one piece of the Census Bureau's integrated marketing strategy for Census 2000. In addition to the paid advertising campaign, the other pieces of our integrated marketing strategy include partnerships, the direct mail package (advance letter, questionnaire, and thank/you reminder postcard), media services, and promotions and special events. Each piece has its own strengths and by working in concert will reach and motivate everyone to participate in Census 2000.

Partnership is the most important of these pieces. The Census Bureau is forming partnerships with other federal agencies, state, local and tribal governments, community-based organizations, religious organizations, and businesses to draw on the unique knowledge, experience, and expertise of these partners. Most of the partnerships are being coordinated out of Regional Offices. The Census Bureau has filled over 400 of the 642 partnership positions (including partnership specialists, partnership coordinators, and support staff) to manage these relationships and we plan to complete hiring by the end of the summer. We have already formed approximately 22,000 partnership agreements with state, local, and tribal governments, businesses, and national and community-based organizations.

We are taking several approaches to ensure coordination between our advertising and partnership programs.

Input from Regional Staff. First, we are obtaining input from regional office staff. Y&R has visited each of the 12 regions and met three times with the Regional Directors, and one of the Regional Directors has been part of the approval process for creative materials from the beginning.

Communications with Regional Staff. Second, we are keeping regional staff informed of goals, schedule, and content of the advertising campaign through briefings, newsletters, Internet, videos, and delivery of the advertising campaign materials.

Regional Office Role in Media Selection. Third, we have given the regional offices a role in identifying critical media by having them compile a list of all media outlets for hard-to-enumerate populations and by asking them to list in priority order specific outlets that should be purchased.

Promotional Materials for Partnership. Fourth, we will provide to the regions for use in the partnership program a tool kit of creative materials, many of which derive from the advertising program. These include logos, taglines, other graphics, drop-in articles, fact sheets, a CD-ROM containing pictures of persons from all walks of life and race and ethnic groups, handbills, posters, television and radio scripts, informational videos, and so on.

Added-Value Opportunities for Partnership Activities. Fifth, in negotiating media buys, Y&R will obtain "added value" opportunities, some of which can be used in grass roots promotion and partnerships. These may include promotional tie-ins with local events and festivals; local news coverage; television, radio, or print interviews with census representatives; local concert appearances; and remote disk jockey appearances. All such activities would be available to the regions and under their control for use in the partnership program.

Now, I will turn to the third topic you asked me to discuss--the advertising budget breakdown.

I will present the budget broken down in two ways--by fiscal year and by cost category.

The overall paid advertising budget under our current working plan is $166.6 million. Of this amount, $8.4 million was spent in FY1998, $47.2 million is budgeted for this fiscal year, and the President is requesting $111 million for FY2000.

Of the $166.6 million, we expect that about 64 percent, or over $106 million will be devoted to media buys, that is to pay for television, radio, and print slots. Four-fifths of the media buys will occur in FY2000. We must be in a position to begin making these buys on October 1. Major long-term advertisers will have already bought a significant portion of the fixed media inventory. Short-term advertisers can only begin buying the remaining inventory at the beginning of each month. We will be competing against many other purchasers. If we cannot begin buying on October 1 we will not be able to purchase the slots we need to get the right message to the right people at the right time. So, as you can see, any delay in FY2000 funding would have a serious negative impact on our advertising campaign.

I have said that about 64 percent of our advertising budget is media buys. The rest breaks down this way: labor 16.5 percent, production 14.6 percent, and research, creative, and miscellaneous operating expenses just under 5 percent.

Mr. Chairman, that concludes my testimony. I will answer any questions you may have.