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"Research - Awareness - Accountability"

 

 

Inside Gallup's U.S. Mint fraud: Freedom of Information Act Files

The Gallup Organization was criminally charged in 2012 under the False Claims and Procurement Integrity Acts. The False Claims Act is the primary tool the U.S. government uses, leveraging insider whistle-blowers, to combat contracting fraud against the government. An uncontested 57-page complaint (PDF) reveals that Gallup intentionally delivered deceptive data to the U.S. Mint, the U.S. Department of State, and DHS (FEMA) to maximize profits on a series of no-bid contracts. Among other acts alleged in the complaint were keeping two sets of books and making job offers to federal employees in positions to renew Gallup’s lucrative government contracts.

Gallup's history and a review of Gallup’s actual U.S. Mint work product—obtained from the U.S. Treasury under the Freedom of Information Act and made available here for the first time online—reveals Gallup’s willingness to secretly engage in fraud to protect lucrative serialized polling contracts. This company culture should raise questions about Gallup polls in categories where there is no similar polling for verification purposes or where Gallup results are inexplicably wildly at odds—over long time periods—with other pollsters.

In 1988 the Lincoln, Nebraska-based Selection Research Inc, a family owned private business, acquired Gallup and installed Jim Clifton as CEO where he remains to this day. In 1996 Gallup created a government division to land more contracts focused on tracking studies, polling, in-depth interviewing, qualitative research, and demographic analyses. In March of 2007, Gallup landed an indefinite delivery, indefinite contract with the United States Mint. CEO Clifton by 2008 was pressuring Gallup’s government division management to improve revenue and profit under its government contracts. Sameer Abraham, Vice President and Managing Research Director of Gallup’s government division hired in 1996, quickly got to work expanding the value of work under the no-bid contract from $3.5 million in 2008 to $7.5 million in 2009. Abraham did it by overbilling the U.S. Mint for more than twice as many work hours as Gallup performed (51,525 hours billed versus 21,627 actually performed according to the criminal complaint).

Gallup simultaneously dangled offers to hire FEMA’s Timothy Cannon, who renewed and extended ever larger FEMA contracts for Gallup. On December 19, 2008 CEO Clifton and Cannon had lunch together. At the time, it was consensus among Gallup’s management that “We’ve got to give him an award or something. He is Gallup’s MVP outside of Gallup.” After winning another round of contracts, on February 5, 2009 Gallup formally extended an offer of employment to Cannon to work in the Gallop government division starting at $175,000 per year. Both Cannon and Gallup subsequently reissued employment offer and acceptance letters to falsely certify that Cannon had no prior agreement for employment outside the federal government before he retired, to skirt rules against such hires.

Gallup’s overbilled polling work at the Mint proceeded smoothly. In 2005 Congress passed a law that authorized the production of $1 coins to address what it hoped would be high demand among public transportation, parking meter, vending machine and low denomination transaction currency users, citing earlier, hopeful coin studies containing Gallup data from the U.S. and Canada.

The US began issuing $1 coins bearing the images of Presidents Washington, Adams, Jefferson and Madison in 2007. Gallup had won the U.S. Mint contract on the basis of a November 21, 2006 Gallup report titled "Americans Support Dollar Coins Featuring Past Presidents" (PDF) claiming Americans were at long last ready to begin using $1 denominated coins, rather than collecting or returning them to the bank as they had done in the past. Earlier efforts to launch dollar coins featuring suffragist Susan B. Anthony (1979-1981, 1999) and Lewis and Clark expedition guide Sacagewea (2000) were costly failures. But Gallup claimed in unverified polling that a new presidential $1 coin series would achieve success with a "95 percent confidence” at “maximum margins of sampling error” of “+/- 5%."

It simply wasn’t true. Over the 2007-2009 period Gallup conducted its contract work for the U.S. Mint $1 presidential coins soon either disappeared (as collectors kept them) or were unceremoniously dumped by merchants back at banks. Gallup had to admit that Americans found the coins too heavy, did not value claims that they saved money by lasting longer than paper currency, and that the coins would “save our country $5 billion.”

Internal documents reveal the extremely questionable machinery of Gallup proprietary polling through the "Gallup panel of 48,000 households and 68,000 individual members." Recruits into the Gallup panel receive a welcome packet and demographic questionnaire to complete, and then agree to answer three surveys per month. As rewards the panel members receive token thank-you gifts and a magazine that subtly flatters poll respondents with compliments about their importance and value of their opinions. Despite the compensation, the response rate is only 50-70%. The pool inevitably becomes saturated with respondents who want to retain the compensation, and ostensibly provide answers they feel will achieve that purpose. Others, perhaps critical thinkers and skeptics, leave the pool, leading to a 3% attrition rate. Gallup is left with a pool of respondents that will provide consistent—and consistently unrepresentative—results while allowing Gallup to claim to clients and stakeholders they are somehow "statistically relevant." As a no-bid contractor, none of Gallup’s polling work for the Mint was ever verified.

But even such flawed polling machinery forced Gallup to admit in research findings and awareness studies what the U.S. Mint already knew—that new $1 presidential coins were once more a tremendous flop. Undaunted, Gallup simply submitted additional proposals for crafting messaging, launching new pilot ad campaigns, and conducting more overbilled polling results. Gallup clearly intended to keep milking the no-bid U.S. Mint contract for all it was worth.

Although the Government Accountability Office incorporated Gallup results into its own 2011 forecast (PDF) predicting that growing public acceptance of Presidential dollar coins would save the government $5.5 billion over three decades due to the coin’s durability, the gig was just about up. Treasury Secretary Timothy Geithner announced on December 11, 2011 circulation would be suspended due to budget constraints and increasing stockpiles of the unpopular Presidential dollar coins.

On November 27, 2012 with the aid of a whistle-blower inside Gallup, the Department of Justice filed a criminal complaint against Gallup for is overbilling the US Mint and False Claims Act violations. Gallup paid a $10.5 million fine. But in the end CEO Jim Clifton kept his job. Although he was barred from running Gallup’s government division, he soon installed his son Jon Clifton in that role. According to USASpending.gov, Gallup continues to engage in multi-million-dollar government contracts with various agencies.

 IRmep presents below the entire set of Gallup's work product in its original format as both presented and fraudulently overbilled to the U.S. Mint.

FOIA DOCUMENTS - US Mint presidential $1 coins

Document title, link and date Key Content File embed
James Madison Awareness Study Results

January 15, 2007


Gallup claims that among Americans aware of $1 coins in circulation, "only two in ten (22%)" can identify they bear images of presidents. Overall awareness that such coins exist is falling. Only 15% of U.S. population had any $1 coins in their possession. Gallup reports that 62% would be likely to use Presidential $1 coins. Reports 84% would accept Presidential $1 coins, but that 58% would save them, rather than circulate (42%). Reasons given are that they would rather collect, such coins are too heavy, and easily confused with quarters.  
Awareness Study of the American Public for the Presidential $1 Coin

June, 2007

Gallup assesses changes in public awareness of George Washington $1 coin between November 2006, February of 2007 and June, 2007.

Gallup Panels contacted through random phone contact, qualifying through a survey of Presidential approval. Panelists receive three surveys per month and are given "several token thank-you gifts" throughout the year. Those to fail to respond to six consequtive surveys are removed, though "significant efforts are taken to retain panelist [sic] for as long as possible." Initial recruits have a 27% response rate.

"A raking [sic] procedure was used to adjust the composition of the study to match the national composition on demographic factors including gender, age, education, race, and region. Large weights were trimmed to a reasonable size and the weights were normalized so that their sum was equivalent to the total number of cases. The final weights compensate for nonresponse and noncoverage to create unbiased, nationally representative estimates."

Gallup reports a "significant increase" in awareness between February (58%) and June 2007 (64%), but a "significant decline." in the number of peopo who thought the coin was "a very good idea." (February 48%, to June 44%.)
 
Study of the American Public's Knowledge of U.S. Presidents

July, 2007
Gallup survey of 1,000 adults finds that:

"Fewer than one-fourth of Americans can correctly identify the number of individuals who have served as U.S. president (22%)"

"Knowledge of the first four U.S. presidents is limited. Just 7% can name all four of them in their correct order. Nearly all can identify George Washington (94%), but far fewer can name #2 as John Adams (40%), #3 as Thomas Jefferson (30%), or #4 as James Madison (8%)."

"Knowledge of the second four U.S. presidents is even further limited. When asked to name them in any order, only 2% could correctly identify all four, regardless of the ordering. Overall, 16% could name at least one of them, with fully 84% unable to name any of the Presidents #5 through #8."

"While it is one of the most famous monuments in America, just 21% of Americans can correctly identify the four Presidents carved into the face of Mount Rushmore."

"Americans aged 65 and older are most likely to think that the history and major achievements of U.S. presidents is very important (59%), those aged 18 to 29 are the least likely to say this (40%)."

"When asked how many presidents there have been in the U.S., including current President George W. Bush, less than one-fourth of Americans (22%) knew the correct response (43 presidents)."
 
Market Research Plan Presidential Dollar Coin Program

August 6, 2007

Gallup clarifies the purpose of its research for the U.S. Mint:

"Gallup is pleased to provide the following research plan in support of the Presidential $1 Coin (PDC) Program with objectives to:

1. Reduce or remove barriers to acceptance and demand of Presidential $1 Coins

2. Increase and maintain awareness of Presidential $1 Coin Program

3. Improve distribution and remove or reduce barriers to use Presidential $1 Coins."

Gallup outlines the "changing nature of this program..." which includes measuring awareness, coin launch success, accuracy of public information on the coins and overcoming low awareness. Also includes perceptions of retail (general merchandise, food stores, automotive, restaurants and drugstores, and bank employees.
 
Awareness Study of the American Pubilc for the Presidential $1 Coin


September, 2007
Gallup reports that "one-half of the public believes that the Presidential $1 Coin is either a very good or good idea — a significant increase from June 2007 (from 44% to 49%)."

"A significant increase occurred since June in the number of people who would accept the Presidential $1 coins (73% to 78%). This represents a return to earlier levels of acceptance."

"When the public is asked unaided about any recently created or released coins or currency, no change is seen in the number who mention the Presidential $1 Coin. Very few respondents mention the specific presidents featured on the coins."

"FINDING: Public awareness of a new $1 coin has remained largely unchanged since June 2007."
 
Retail Industry Focus Group Report

October, 2007
"Most retailers knew little about Presidential $1 coins. Cashiers and retail managers have inherent biases against the Presidential $1 Coin. Retailers believe that their customers confuse the Presidential $1 Coin and the quarter. Retail managers say the Presidential $1 Coin slows down the sales transaction, which impacts customer service. Retail industry is closing the loop on the Presidential $1 Coin. Although cashiers readily accept the coin from their customers, retail managers instruct cashiers to set the coins aside so they can be returned to the bank as soon as possible."

"There has been no advanced physical preparation to accept and circulate the Presidential $1 Coin. According to focus group participants, for the most part, money ordering forms or electronic ordering processes have not yet been reconfigured to accommodate the new coin, cashiers drawers have no space allotted to them, coin dispensers have not been adapted, vending machines have not all been converted to accept the coin, and so forth..."

"An aggressive public education program about the Presidential $1 Coin is widely anticipated. Because 2007 is the first year of a ten-year program, there should be ample time for the public to be brought up to speed about the new coins. Cashiers and retail managers stated repeatedly that once customer demand for the coin exists, retailers will gladly comply. 'It’s going to do well,' one cashier predicted."
 
Financial Industry Focus Group Report

November, 2007
1.0 Executive Summary

More knowledge about the Presidential $1 Coin Program exists within the financial services industry than in the retail industry. Both bank managers and tellers are quite familiar with the Presidential $1 Coin, but very few are aware of the corresponding program with information and free promotional material available at the U.S. Mint Web site. Retail industry participants knew that $1 coins existed while financial industry participants not only knew about them, but could often times state that there were presidents on the coins.

The most common initial reaction among financial services industry members is that the Presidential $1 Coin is important for “collectors” rather than for transactional purposes. The term “collector” for bankers was used for everything from grandparents and children to numismatists, and were regarded as the primary audience for this coin.

The importance of customer satisfaction is at the forefront of the service provided by financial industry associates. Customer satisfaction was at the forefront of both tellers and bank managers’ minds. Therefore, any negative impression received from a customer would stay long term in the teller’s psyche. Most tellers, at some point, relayed negative reactions to the coins from their customers. These reactions have led tellers to assume that all customers will reject the coin and so most refrain from offering it. And in fact, many tellers gave “customer service” as a reason why they would not offer up the coin.

Bank managers were universally more negative than bank tellers about the coin. Perhaps it was prior experiences with other coins, perhaps its because of more stress and higher expectations being put on them — but overall bank managers had a decidedly more negative reaction to these coins than did bank tellers. Not only did they have a more negative reaction, it was a much firmer held belief among bank managers that customers did not want them and that bank tellers were uncomfortable using them.
Presidential $1 Coin User Survey

December, 2007
1.0 Methodology

1.1 Overview

The U.S. Mint contracted with Gallup to conduct a survey of those who had physically used the Presidential $1 Coin. The goal of the research was to identify attributes of these current $1 coin users that could be used to help target other like-minded adults as potential users, and to identify behaviors that could shed light on future grassroots efforts to increase usage and acceptance of the new coins.

To complete this evaluation, Gallup conducted a survey among a random, representative group of adults throughout the United States using a random digit dial (RDD) sample methodology. Both users and non-users were identified based on responses to the following series of questions:

1. Have you ever heard of a Presidential $1 Coin (including the George Washington, John Adams, and Thomas Jefferson coins)? [AWARENESS]

2. Have you ever had a Presidential $1 Coin in your possession? [POSSESSION]

4. Have you EVER USED a Presidential $1 Coin to pay for something or make a purchase? [USEAGE]

4. What have you done with any of the Presidential $1 Coins you have had in your possession?

A. Spent them to pay for something or make a purchase

B. Saved them as part of a collection

C. Given them as a gift
 
James Madison Awareness Study

December, 2007
3.0 Key Findings

* Two in ten (22%) of those aware that there are $1 coins in circulation are able to identify unaided that there are images of presidents (either specifying one of the four Presidents or saying a generic “President”) on the $1 coin (17% of U.S population).

* When combining unaided and aided awareness of the Presidential $1 Coin, about four in ten (43%) respondents; 33% of the U.S. population know about the coin.

* The latest revised measure of public awareness of the new Presidential $1 Coin is significantly lower (42%) than previously recorded awareness results (62%) but is more in line with combined aided and unaided awareness numbers.

* Of the 42% who have read, seen, or heard about the new $1 coin, about one in three respondents were able to recall that the $1 coin features a president (11% of the US Population).

* One-half (21% of the total U.S. population) of unique respondents who said they remembered hearing, reading, or seeing something about the coins were able to correctly state a distinctive characteristic of the $1 coin.

* The U.S. public continues to see, hear, and read about the Presidential $1 Coin Program through print and television media, but few increases in media awareness have occurred since June 2007.
 
User Study Results - Executive Presentation

December 20, 2007
One in nine (11%) U.S. adults have used a Presidential $1 coin
48% of those aware of the coins
23% have had one in their possession

Coin possession and usage differs among demographic groups

Ethnic minorities have high propensity to use
West coast adults are strong users, while east coast are not

Users most likely to use the coins for mass transit and toll booths
Cash use for tips offers huge opportunity for messaging
Appeal to early adopter focus of young, and single adults

Users believe coin is distinct from both the other dollar coins and quarters

Most users received the coin from a cashier or a financial institution
Problems often encountered with machine interactions, in-person interactions run smoothly
 
Messaging Study for the Presidential $1 Coin

January, 2008
3.0 Knowledge and Use of Presidential $1 Coins

When asked if they have heard of the Presidential $1 coins, 55% of respondents indicated that they have heard of the coins — a significantly smaller percentage compared to the percentage of respondents who indicate they have heard of the Susan B. Anthony coin (92%) and the Sacagawea coin (73%). Respondents were as likely to say they had heard of a fictitious “Golden Eagle Dollar” coin (54%) as they were the Presidential $1 coins.
 
Messaging Study Results

January 21, 2008
The messages about Practical/Convenience and Cost/Resource items are found most compelling by respondents

Practical/Convenience messages resonate more with men & those w/high school education

Cost/Resource messages resonate with Gen Y’rs

The Practical/ Convenience messages predict those who say they would use $1 coins as cash payment

Practical/Convenience messages predict those saying they will use the coin at toll booth

Cash Payment usage SWITCHERS (those who switched from saying they would not likely use coins to saying they would be likely to use coins) like to hear about saving money
 
James Madison Awareness Study Results

January 15, 2008
3 new questions to gauge “true” awareness on Presidential $1 coin

From what you know, are $1 coins currently in circulation by the U.S. Mint, or not?

2. Can you describe what image or images are featured on $1 coins?

Please tell me, from what you know, whether each of the following images are on $1 coins.
-- The American Flag
-- The Liberty Bell
-- The U.S. Capitol
-- The White House
-- U.S. States
-- U.S. Presidents

Field period: November 19th –December 12th 2007
 
James Monroe Awareness Study

March, 2008
3.0 Key Findings

* Exactly 2 in 10 (20%) respondents who are aware that $1 coins are in circulation are able to identify unaided that there are images of presidents on the $1 coin. This translates into 14% of the U.S. population who can name the image of a specific president or just a generic “president” on the dollar coin in an unaided manner. No significant difference was seen from December 2007.

* A significant increase in combined Presidential $1 Coin awareness (aided and unaided) was seen from 43% in December to 50% in March 2008. When extrapolated out to the entire U.S. Population, combined aided and unaided awareness is 36%.

* Public awareness of the new Presidential $1 Coin has decreased significantly to 32% from 42% in December 2007.
 
Message Testing Focus Groups

June, 2008
EXECUTIVE SUMMARY

I. Executive Summary

Focus groups to test potential marketing campaign messages for the Presidential $1 Coin were conducted March 24 through April 2, 2008. Twelve focus groups were conducted in six locations. Groups were selected to contain the following characteristics: low-income, African-Americans, women, Hispanics, members of Generation Y, members of Generation X, and baby boomers. Below are top-level findings of the groups. A detailed report with complete findings noting differences by demographic groups will follow.

AWARENESS OF PRESIDENTIAL COIN

* In general, awareness of the coin was low. Often, attendees that had received a coin in the past got it from a Post Office vending machine or a public transportation system.

* Many participants in the groups did not think that vending machines would accept the coin.

* Participants in some of the groups described the “awkward moment” that would occur in the exchange of the coin in a retail environment. They talked about slowing the cashier down as he would need to look at the coin to see what it was.

* A few groups contained restaurant and retail staff that had received the coin from customer
 
Pilot Pretest Awareness and Usage

August, 2008
3.0 Key Findings

 Seventy-six percent of respondents said “yes,” the U.S. Mint is currently circulating one-dollar coins. This represents an increase over March 2008 (72%) and a comparable measure to the finding (77%) observed in December 2007.

 There was a significant decrease in unaided awareness of Sacagawea coin (from 34% in March 2008 to 24% in June 2008).

 Fourteen percent of the U.S. population can name the image of a specific president or just generic “president” on the dollar coin in an unaided manner. No significant difference was seen from December 2007.

 There is a significant decrease from 83% (60% of total U.S. adult population) in March 2008 to 71% (54% of total U.S. adult population) in June 2008 in the awareness of the Sacagawea one-dollar Coin.

 Nearly 4 in 10 respondents (39%) reported that vending machines do not accept one-dollar coins.
 
Pilot Pretest Awareness and Usage Study Results

September, 2008
Overview: The U.S. Mint contracted with Gallup to conduct a second wave of measuring the public’s awareness of the one-dollar coins in the four pilot cities of Austin, Texas; Charlotte, North Carolina; Grand Rapids, Michigan; and Portland, Oregon. Similar to the pre-test conducted in June, for each pilot city, 1,000 completes were obtained from a random digit dial (RDD) sample population of the metropolitan statistical areas (MSA) for that city. All pilot site interviewing was from Nov. 19 to Dec.15, 2008. To ensure a true post-test analysis, the $1 Coin Program team surveyed respondents upon completion of their pilot initiative. To complete this evaluation, Gallup used the identical questionnaire used for the pretest conducted in June.

Key findings in pilot cities: Significant increases in unaided awareness of the Presidential $1 Coins among adults in Grand Rapids (increased from 15% in June 2008 to 25% in December 2008) and Portland (increased from 12% in June 2008 to 26% in December 2008). In addition, there are significant decreases in unaided awareness of the Sacagawea coin among adults in Austin (from 30% in June 2008 to 20% in December 2008); Grand Rapids (from 26% in June 2008 to 18% in December 2008), and in Portland (from 35% in June 2008 to 26% in December 2008).

• There are significant increases in combined aided and unaided Presidential $1 Coin awareness in all four pilot cities. In addition, there are also significant decreases in combined aided and unaided awareness of the Sacagawea coin among adults living in the pilot cities.

• In comparison to the pre-test, possession of one-dollar coins has increased significantly among adults in Grand Rapids, and has decreased significantly among adults in Portland.

• There are significant increases in usage among adults living in Charlotte (increase from 22% in June 2008 to 29% in December 2008) and Grand Rapids (increase from 29% in June 2008 to 42% in December 2008).

• There is a significant increase in the number of one-dollar coin possessors in Charlotte reporting they spent the coin they had in their possession (increased from 45% in June 2008 to 54% in December 2008). In addition, there is a significant decrease in dollar coin gifting among one-dollar coin possessors in Grand Rapids (from 28% in June 2008 to 21% in December 2008).

• Overall, there are significant increases in all pilot cities in the number of adults reporting they are “very likely” to use one-dollar coins for purchases. After hearing a description of the Presidential $1 Coin Program, 61% (compared to 52% in June 2008) of the adult population in Portland; 54% (compared to 43% in June 2008) of the adult population in Austin; 53% (compared to 41% in June 2008) of the adult population in Grand Rapids; and 46% (compared to 39% in June 2008) of the adult population in Charlotte indicated they would “very likely” use the coin for purchases if they received them as change.

• Most adults in the pilot cities continue to believe one-dollar coins are not readily available. When compared with the other pilot cities, adults in Grand Rapids (23%) are more likely to believe that the coins are readily available almost anywhere.
 
Pilot Post-Test Awareness and Usage

December, 2008
The U.S. Mint contracted with Gallup to conduct a second wave of measuring the public’s awareness of the one-dollar coins in the four pilot cities of Austin, Texas; Charlotte, North Carolina; Grand Rapids, Michigan; and Portland, Oregon.  
Pilot Message Survey

January, 2009
Indication that over 90% of adults would accept $1 coins when offered. National: 91%, Austin: 92%, Charlotte, 97%, Grand Rapids, 94%, Portland 93%.

Gallup finds that "messages drive possession...but no direct relationships to usage."

Ads were more likely to lead adults to use $1 coins, though 32-44% indicated ads did not want to make them use them.
 
Final Metrics on Pilot Program

February, 2009
Pilot program goals to increase awareness and usage of $1 coins through targeted ads and outreach in four pilot cities.

Identify best messages and media channels for future rollout

Pilot program media included TV, outdoor, radio buses, point of sale signs, outreach to banks and retailers.

As national awareness declines, advertising in pilot cities drives up awareness.

Messaging included "Who knew the $1 coin could last so long?" "It's change for the better." "100% recyclable." "Do your part to save resources by using the $1 coin."

Gallup recommends U.S. Mint "look to a long-term program as it takes time to change people's actions."
 
Quarter 1 Awareness Study

April, 2009
Gallup program to "Increase awareness and usage of $1 coins through targeted advertising and outreach in four pilot cities."

It measures paid media (TV, outdoor, radio, buses), point of sale signage, messaging and outreach to local banks and retailers, and reports.

While national awareness of $1 coins is down, it goes up in cities where paid outreach occurs.

Measures awareness of supposed attributes of the coins, "last for decades", "real U.S. tender," "Better for the environment," "Save our country $5 billion."

Gallup recommends that more advertising pilots be conducted (generating more Gallup measurement).
     



 

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