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THE NATIONAL ACADEMIES

Advisers to the Nation on Science, Engineering, and Medicine

Committee on National Statistics

500 Fifth Street, NW, Room 1059 Washington, DC 20001 Phone: 202–334–3096 Fax: 202–334–3751 Email: cnstat@nas.edu www.nationalacademies.org/cnstat

January 9, 2003

Mitchell E.Daniels, Jr.

Director

U.S. Office of Management and Budget

725 17th St., NW Washington, DC 20503

Dear Mr. Daniels:

I am writing to you on behalf of the Committee on National Statistics (CNSTAT), a standing committee of The National Academies’ National Research Council, to call your attention to the enclosed report, Principles and Practices for a Federal Statistical Agency (hereafter, P&P). This report is relevant to the “E-Government Strategy” that is being implemented across the federal government under the direction of your office.

The E-Government Strategy has laudable goals, including that of “simplifying agencies’ business processes and reducing costs through integrating and eliminating redundant systems” (http://www.whitehouse.gov/omb/inforeg/egovstrategy.pdf, p. 4). To implement this goal, at least two agencies are considering consolidation of the information technology (IT) functions and resources of their constituent agencies, including statistical agencies: the Department of Energy for the Energy Information Administration and the Internal Revenue Service for the Statistics of Income Division.

We believe it is critical that programs to consolidate IT functions (or to mandate uniform IT solutions across agencies) be implemented in a manner that enables federal statistical agencies to be effective in their mission, which is to produce objective, credible information for public and policy use. As discussed in the enclosed report, statistical agency effectiveness requires credibility among data users and trust among data providers, which, in turn, requires a strong position of independence.

Credibility with Users

It is essential that a statistical agency strive to maintain credibility for itself and for its data. Few data users are in a position to verify the completeness and accuracy of statistical information; they must rely on an agency’s reputation as a credible source of accurate and useful statistics.

To have credibility, an agency must be and must be perceived to be free of political interference and policy advocacy…(P&P, p. 4)



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THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine Committee on National Statistics 500 Fifth Street, NW, Room 1059 Washington, DC 20001 Phone: 202–334–3096 Fax: 202–334–3751 Email: cnstat@nas.edu www.nationalacademies.org/cnstat January 9, 2003 Mitchell E.Daniels, Jr. Director U.S. Office of Management and Budget 725 17th St., NW Washington, DC 20503 Dear Mr. Daniels: I am writing to you on behalf of the Committee on National Statistics (CNSTAT), a standing committee of The National Academies’ National Research Council, to call your attention to the enclosed report, Principles and Practices for a Federal Statistical Agency (hereafter, P&P). This report is relevant to the “E-Government Strategy” that is being implemented across the federal government under the direction of your office. The E-Government Strategy has laudable goals, including that of “simplifying agencies’ business processes and reducing costs through integrating and eliminating redundant systems” (http://www.whitehouse.gov/omb/inforeg/egovstrategy.pdf, p. 4). To implement this goal, at least two agencies are considering consolidation of the information technology (IT) functions and resources of their constituent agencies, including statistical agencies: the Department of Energy for the Energy Information Administration and the Internal Revenue Service for the Statistics of Income Division. We believe it is critical that programs to consolidate IT functions (or to mandate uniform IT solutions across agencies) be implemented in a manner that enables federal statistical agencies to be effective in their mission, which is to produce objective, credible information for public and policy use. As discussed in the enclosed report, statistical agency effectiveness requires credibility among data users and trust among data providers, which, in turn, requires a strong position of independence. Credibility with Users It is essential that a statistical agency strive to maintain credibility for itself and for its data. Few data users are in a position to verify the completeness and accuracy of statistical information; they must rely on an agency’s reputation as a credible source of accurate and useful statistics. To have credibility, an agency must be and must be perceived to be free of political interference and policy advocacy…(P&P, p. 4)

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Consolidation of IT systems, if not carefully planned and managed, could impair credibility if, for example, a statistical agency’s data systems are—or are even thought to be—combined with those of a regulatory or program agency. Credibility could also be affected if statistical agencies are not able to control data processing resources sufficiently to meet announced schedules for release of key economic and social indicators, such as the monthly unemployment rate or Consumer Price Index. As P&P notes (p. 9), “Adherence to predetermined release schedules for important economic or other indicator data serves to prevent even the appearance of manipulation of release dates for political purposes.” Trust of Providers Data providers must be able to rely on the word of a statistical agency. An agency achieves credibility with its providers by ensuring appropriate confidentiality of responses. Maintaining confidentiality, in particular, precludes the use of individually identifiable information for any administrative, regulatory, or enforcement purpose. (P&P, p. 5) The E-Government Strategy (p. 11) proposes “building strong privacy protections into the E-Government initiatives.” However, if not carefully implemented, consolidation of IT systems across agencies within a department could inadvertently make it possible for administrative or enforcement agencies to gain access to confidential information provided by individual respondents solely for statistical purposes. Trust could also be impaired if survey respondents or other providers believe that their data are readily available to program or regulatory agencies. Independence A large and widely acknowledged position of independence is necessary for a statistical agency to have credibility and to carry out its function to provide an unhindered flow of useful, high-quality information for the public and policy makers. Without the credibility that comes from a strong degree of independence, users may lose trust in the accuracy and objectivity of the agency’s data, and data providers may become less willing to cooperate with agency requests. In essence, a statistical agency must be distinct from those parts of the department that carry out enforcement and policy-making activities. To be credible, a statistical agency must be impartial and avoid even the appearance that its collection, analysis, and reporting processes might be manipulated for political purposes or that individually identifiable data might be turned over for administrative, regulatory, or enforcement purposes. …Characteristics related to independence are that the statistical agency have: authority for professional decisions over the scope, content, and frequency of data compiled, analyzed, or published…; authority for selection and promotion of professional, technical, and operational staff;…[and] dissemination policies that foster regular, frequent release of major findings from an agency’s statistical programs to the public via the media, the Internet, and other means. (P&P, p. 6) In the spirit of P&P’s comments on independence, we believe that careful consideration must be given to the costs, as well as the benefits, of any plan to integrate federal statistical agency IT systems with those of other agencies in a department. Offsetting the possible benefits to a department from budgetary savings and simplification of such processes as IT systems acquisition and maintenance are the possibly serious consequences for the ability of statistical agencies to perform their mission. Integration plans need to be carefully formulated so as not to

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undermine the credibility of statistical agency reports or the willingness of households and businesses to respond to agency requests for data that are needed to inform both policy makers and the public. We would be pleased to meet with you or your staff to discuss these issues as they relate to our prior and ongoing work. Sincerely yours, John E. Rolph, Chair Committee on National Statistics cc: Katherine K.Wallman, Chief Statistician, Office of Management and Budget