Hold Prelaunch Test Rollout of DTV Coupons and Boxes, Vendor Urges NTIA

The vendor, Garden City Group, of Weston, Fla., proposed the test in comments it filed in NTIA’s request for information (RFI), which closed Sept. 15. In the RFI, NTIA asked those experienced with similar projects to say how they would run the coupon program efficiently and with minimal waste, fraud and abuse. Fifteen vendors submitted comments, and copies were released to our affiliate Consumer Electronics Daily as a result of a Freedom of Information Act (FOIA) request filed at NTIA Sept. 20. Confidential portions of the documents -- most commonly, the information on cost estimates -- were withheld or blacked out, as is allowed under the FOIA.

In the RFI, NTIA sought vendors’ advice on the feasibility of its “proposed project objectives and time frames” for doing the job Congress handed it. Vendors were told in the RFI to strut their qualifications by listing their “corporate capability and approach, proposed products, services and solutions, experience and rough order of magnitude cost estimates.” NTIA won’t formally seek contract bids until a request for proposals that’s expected Q1. It plans to award the contract by June 2007.

Most of the vendors said they were well versed in handling projects similar in scope and complexity to the DTV coupon giveaway. But none claimed to have done a project just like it, and most had no direct experience working with CE retailers.

Most who stated a preference in NTIA’s separate rulemaking said electronic coupon cards were the way to go instead of paper because they were less prone to fraud. But vendors in the RFI said they could go either route. For example, JPMorgan Chase recommended a paper coupon “with image components to enable greater efficiencies.” It said it also could give an “alternative rebate offering” based on a debit card.

Several vendors told NTIA the schedule was very tight, though doable but urged the agency to move up the contract award date from June 2007. Doing so would give the winning contractor more time to prepare before consumers begin requesting the coupons Jan. 2008 -- the date Congress mandated. “With thousands of redemption locations, millions of applications, and hundreds of millions of dollars of disbursements, this program is large, technically complex and highly visible,” said Booz Allen Hamilton.

The schedule allows only 6-8 months “to have a fully operational system ready to support customer coupon requests” beginning Jan. 2008, said Deloitte Financial Advisory Services. The CE Retailers Coalition (CERC) told NTIA in its rulemaking comments that there’s even less flexibility in the schedule than that. It called on NTIA to require that vendors have their operational systems in place by Sept. 2007 so as not to be burdened with MIS headaches at the height of the crucial 2007 holiday selling season.

The tight schedule is one of the coupon program’s “more obvious risks,” Deloitte said. “Implementing an iterative development requiring incremental build and verification cycles would make it extremely challenging to field an operational system in this timeframe.” It proposed a 3- bullet solution that’s blacked out in our copy.

Deloitte warned of an “additional risk that is hard to predict and results from human behavior.” If consumers “procrastinate” or believe there will be a cost savings by waiting until late in the program, “a last-minute surge in coupon orders and processing could result,” Deloitte said. It suggested the program include “techniques to help drive these consumer behaviors,” including incentives for “early participation.” Public service announcements warning of limited funding and supply might be another remedy, it said: “Retailers are likely to discount boxes toward the end of the program schedule to help move inventory.”