FEBRUARY 2011

A New Way of Doing Business:

HOW THE RECOVERY ACT

IS LEADING THE WAY TO

21st CENTURY GOVERNMENT

Dear Mr. President,

Nearly two years ago, the nation faced the most severe economic downturn since the Great 

Depression. With your leadership, Congress passed the American Recovery and Reinvestment 

Act (Recovery Act) less than a month after you took office. While rescuing the nation’s 

economy and building a foundation for future economic growth, we have learned a great deal 

about how government can work better. 

When you asked me to lead this effort, we agreed that it could not be done in traditional ways. 

We needed to move fast, immediately engage the Cabinet and every level of government, be 

more transparent in our execution than ever before, and deliver jobs and real results for the 

American people where they work, live, and raise their kids. I am proud of what our 

Administration has done to meet that high standard. 

To speed economic recovery, we met every major spending deadline—whether in the law or 

imposed by us—on time or ahead of schedule. Many agencies put funds into the hands of 

business, governments, and citizens faster than they typically had been able to. We kept 

programs free of politics, and to date, we have seen low levels of fraud, waste, and abuse. We 

have worked to make Federal dollars go further by enlisting the private sector and others to 

invest with us in these efforts. To do this we broke through traditional barriers in government 

to speed economic recovery and deliver results for the American people. 

As we achieved these results, we learned valuable lessons about how to improve government 

to make it leaner, more transparent, and ready for the 21st century. We learned that 

unprecedented transparency of government spending increases accountability and is one of the 

best deterrents of fraud, waste and abuse. We learned that cutting red tape to encourage 

collaboration across agencies can not only save taxpayer dollars, but lead to better results for 

the American people. And we learned that competition-based programs like “Race to the Top” 

can provide some of the biggest bang for the buck when it comes to spurring innovation and 

reform.

Today, as we concentrate our focus on winning the future by out-innovating, out-educating and 

out-building the rest of the world, we are already beginning to see the impact of these lessons 

learned under the Recovery Act. For example, the “Race to the Top” model, which is already 

yielding big results through just a fraction of education spending, is now being applied to new 
competition-based initiatives in not only education, but also infrastructure, energy and others 

that reward innovation and reform.

There is no doubt that the economy is better today than it was two years ago because of the 

Recovery Act – but, as you and I know, there is still more work to do. This report details the 

central lessons we learned with the swift, responsible, and effective implementation of the 

Recovery Act and how we can use them to build a 21st century government that can help 

America win the future.

Cordially, 
TABLE OF CONTENTS

Foreword: How the Recovery Act Has Helped Turn the Economy Around 2

Introduction 4

Lesson #1: Constant Vigilance Makes a Difference 7

Lesson #2: Transparency Drives Accountability 9

Lesson #3: Collaboration Breaks Through Bureaucratic Barriers 12

Lesson #4: Competition Brings Results 18

Putting These Lessons to Work 21
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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Foreword: How the Recovery Act Has Helped Turn the Economy Around

Enacted February 17, 2009, the Recovery Act was designed to put Americans back to work and 

combat the largest downturn in the economy since the Great Depression. When the Recovery 

Act passed, the economy was in freefall. In the fourth quarter of 2008, real gross domestic 

product plummeted by an annual rate of 6.8 percent. In the first quarter of 2009, the economy 

lost more than 2 million jobs. The ranks of the unemployed were increasing and the speed of 

job loss was accelerating.

Since the passage of the Recovery Act, this trend has turned around. Figure 1 shows monthly 

private-sector job gains or losses since the start of the recession. Two years ago, the country 

was losing 780,000 jobs per month; now, the private sector has added jobs for 11 straight 

months, for a total of more than a million new jobs in 2010. 

The trend in GDP growth shows a similar reversal after the passage of the Recovery Act. Figure 

2 shows the real quarterly growth of GDP at an annual rate since the beginning of 2008. GDP 

was contracting at a rapid pace in late 2008—its fastest rate in decades—but it experienced a 

sharp turnaround following the passage of Recovery Act, leading to six quarters of growth. 

-900

-700

-500

-300

-100

100

300

Monthly change in private payroll 

employment (thousands)

Figure 1. Monthly Private-Sector Job Gains and Losses

(Bureau of Labor Statistics)

Recovery Act in effect

-0.7%

0.6%

-4.0%

-6.8%

-4.9%

-0.7%

1.6%

5.0%

3.7%

1.7%

2.6% 3.2%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2008 

Q1

2008 

Q2

2008 

Q3

2008 

Q4

2009 

Q1

2009 

Q2

2009 

Q3

2009 

Q4

2010 

Q1

2010 

Q2

2010 

Q3

2010 

Q4

Real GDP growth, seasonally 

adjusted at an annual rate

Figure 2. Real Growth of Gross Domestic Product 

(Bureau of Economic Analysis)

Recovery Act in effect
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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Non-partisan economic analysis confirms the crucial role of the Recovery Act. Figure 3 shows 

the Congressional Budget Office’s estimates of the Recovery Act’s impact on employment since 

the start of the recession. As the figure shows, the Act has played an increasingly important 

role in bolstering employment since its passage nearly two years ago. In the most recent 

quarter, CBO estimates the Recovery Act raised payroll employment by as many as 3.5 million 

jobs.1 

The assessment that the Recovery Act has played a key role in supporting employment and 

output has also received support from the President’s Council of Economic Advisers and from 

prominent private-sector macroeconomists.2

 

1

http://cbo.gov/ftpdocs/119xx/doc11975/11-24-ARRA.pdf

2

For example, the Council of Economic Advisers’ most recent quarterly report on the Recovery Act concludes that the Recovery Act raised 

employment by as many as 3.7 million jobs and increased GDP by 2.7 percent. Similarly, an analysis performed by Mark Zandi, Chief Economist 

for Moody’s Analytics, and Alan Blinder, former Vice Chairman of the Federal Reserve, found that as of July 2010 the Recovery Act had raised 

employment by 2.9 million jobs and raised GDP by 3.6 percent.

124

126

128

130

132

134

136

138

2008 Q12008 Q22008 Q32008 Q42009 Q12009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q4

Payroll Employment (Millions)

Figure 3. According to CBO the Recovery Act Has Created or 

Saved as Many as 3.5 Million Jobs

(Chart calculated using data from CBO and Bureau of Labor Statistics)

Actual Payroll Employment

Employment Without the Recovery Act

3.5 million jobs
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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Introduction

The Challenge

From the moment President Obama took office, the Administration understood that the Great 

Recession had cut deep into the economy and that people needed help. Through the Recovery 

Act, the President helped deliver that boost in three ways. The single largest part of the Act —

more than one-third of it — was tax cuts. Ninety-five percent of working Americans have seen 

their taxes go down as a result of the Act. The second-largest part — just under a third — was 

direct relief to state governments and individuals. This funding helped state governments avoid 

laying off teachers, firefighters and police officers and prevented states’ budget gaps from 

growing wider. On an individual level, the Act ensured those hardest hit by the recession got 

extended unemployment insurance, health coverage, and food assistance. 

The remaining third of the Recovery Act financed the largest investment in roads since the 

creation of the Interstate Highway system; construction projects at military bases, ports, 

bridges and tunnels; long overdue Superfund cleanups; clean energy projects; improvements in 

outdated rural water systems; upgrades to overburdened mass transit and rail systems; and 

much more. 

To implement the Recovery Act, the federal government had to expand existing programs and

start up new ones. Beyond this challenge, agencies also had to carry out the Recovery Act with 

unprecedented transparency and accountability. Within seven months of enactment, the 

federal government had to create one of the largest, fastest public data reporting systems in 

the world, and publish what it collected on an entirely new website so the American people 

could see what was being done with their money.

The Administration met this challenge, getting money flowing into the economy at faster rates

than normal and meeting deadlines on-time or ahead of schedule. At the same time, despite 

this increased pace, the Recovery Act has been responsibly implemented with so far low levels 

of fraud, waste, and abuse. In the process, the government learned important new ways of 

doing business that will allow it to better serve the American people in the years to come.

Swift Implementation

To speed economic recovery and create jobs, every major target of the Recovery Act imposed 

by Congress and the President was reached on time or ahead of schedule. The President’s goal 

of paying out 70 percent of all Recovery Act funds by September 30, 2010 was a particularly 

important milestone. In reaching this goal, the Recovery Act put $551 billion into people’s 

hands and injected much needed funds into the economy in less than two years.

Along the way, individual agencies and programs sharply accelerated the pace of their work to 

start up new or expanded programs. For example, the Recovery Act expanded the Small 

Business Administration’s (SBA) existing programs for small businesses facing decreased

availability of funding from weakened banks. While it has previously taken 6 to 8 months to 

change SBA’s loan programs, SBA carried out changes to its largest loan programs within one 

month of the signing of the Recovery Act in order to quickly promote economic growth. 
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

5

Through the Recovery Act, SBA supported more than $30.4 billion in lending to more than 

63,000 small businesses.

To spur economic growth, the Federal Government started up new programs rapidly. For 

example, the Department of Labor put in place a new COBRA subsidy review process for people 

who were denied benefits. Through the Recovery Act, people who lost their jobs were eligible 

to receive a 65 percent subsidy for COBRA health insurance premiums.3 Within three months 

of enactment, DOL instituted a new process to resolve employers' denials of the Recovery Act's 

COBRA subsidy program, processing more than 23,000 appeals, with over 99 percent of 

decisions provided within 15 days.

4

Responsible Implementation

The Administration also had to ensure 

funding was spent responsibly. Despite the 

speed with which such a large amount of 

additional funding was put to work across 250 expanded and new programs, the Administration 

has implemented the Recovery Act with low levels of fraud, waste and abuse.

Through 2010 there were 987 potential cases of Recovery Act fraud under investigation—less 

than 0.4 percent of the awards.

5

 In the same time period, the Department of Justice has filed 

charges related to less than $3 million in Recovery Act funding that is not related to taxes. This 

demonstrates far better performance than some expected. The Association of Certified Fraud 

Examiners in their 2008 annual report stated that, “U.S. organizations lose 7 percent of their 

annual revenues to fraud.”

6 While we remain vigilant to prevent fraud, the less than $3 million 

in question represents 0.001 percent of the Recovery Act.7

Effective Implementation

Effective implementation of the Recovery Act depended on working to fund the projects that

would put every dollar to good use. The Recovery Act did not include earmarks. Instead of 

letting politics dictate which projects were picked, the Recovery Act often used a competitive,

merit-based approach that rewarded innovation and effectiveness. 

For example, through the Recovery Act, the Department of Education’s Race to the Top

program created a new way of rewarding the best projects to improve the way we educate our 

children. Supported by thousands of independent expert merit reviews, the Energy 

Department pursued innovation through private sector competition and funded different types 

of potentially revolutionary technologies that that promise to benefit America’s energy 

independence and economic strength.

In addition, many Recovery Act programs attracted additional funding from outside the federal 

government in order to promote economic growth. Overall, about $100 billion in Recovery Act 

 

3

The Recovery Act provided the subsidy for 9 months, and subsequent legislation extended the time period to 15 months.

4

As of 2/1/2011

5

“Awards” refers 253,608 total awards subject to section 1512 of the Recovery Act (Prime Recipient awards = 101,136, Sub Recipient awards = 

152,472)

6

http://www.acfe.com/documents/2008-rttn.pdf

7

Does not include Recovery Act tax provisions

Through 2010 the less than $3 million 

in question represents 0.001 percent 

of the Recovery Act
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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funding will ultimately be matched by more than $280 billion in additional investment from 

outside the federal government, much of it from the private sector.8 This provided desperately 

needed money to projects and businesses that otherwise might not have been funded.

Lessons Learned

Through the swift, responsible, and effective implementation of the Recovery Act, the federal 

government changed the way it did business, laying a foundation that will benefit the American 

people for years to come. This report outlines the key lessons learned along the way:

Constant Vigilance Makes a Difference 

Transparency Drives Accountability

Collaboration Breaks Through Bureaucratic Barriers 

Competition Brings Results

These lessons are already making their mark throughout the federal government and are 

central to building a 21st century government to help America win the future.

 

8

http://www.whitehouse.gov/the-press-office/vice-president-biden-cea-chair-romer-release-new-analysis-job-and-economic-impact-r
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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Lesson #1: Constant Vigilance Makes a Difference

Vigilant management played a critical role in the Recovery Act’s success. From the White 

House and members of the Cabinet to civil servants and the independent Recovery Board, the 

Administration’s attention to detail drove implementation of the Recovery Act.

The Recovery Cabinet and Senior Accountable Officials

The President and the Vice President set the tone early, making clear to the entire 

Administration that effective Recovery Act implementation was a high priority. To do this, the 

Administration held more than 15 Recovery Cabinet meetings where the Vice President held 

agency officials accountable to Recovery Act goals. As a result, Cabinet Secretaries became 

deeply involved in their agency’s Recovery Act implementation efforts. For example, Secretary 

of Veterans Affairs Eric Shinseki, while overseeing the Government’s second largest agency, 

personally reviewed every Recovery Act project his agency funded. 

Between Cabinet meetings, the Vice President’s Recovery Implementation Office held weekly 

conference calls9 with each agency’s designated Senior Accountable Official (SAO)—a 

designation that had never been used to drive a government-wide program of this scale. SAOs 

were essential to this effort as they worked across their Departments with a clear mandate 

from their Cabinet Secretary to make sure problems were solved and money got out to help the 

American people.

Recipients of Recovery Act Funding

A significant portion of Recovery Act funding was distributed through states, counties, and 

cities. By working closely with state and local elected officials across the country, the Vice 

President worked to ensure that they focused on successfully implementing the Recovery Act. 

The Vice President conducted 

57 implementation conference 

calls with state and local 

officials, talking to the governors 

of all 50 states, representatives 

from five U.S. territories, 119 

mayors, and 37 county 

executives. 

Moreover, the Vice President 

instituted a “24-Hour Rapid 

Response Rule” for his staff to 

follow up on any item. This 

simple step underscored the Administration’s commitment to helping solve problems and 

accelerate the economic recovery.

Throughout the implementation of the Recovery Act, the Administration was on the lookout to 

crack down on any questionable projects. In fact, over and above standard agency oversight 

 

The Vice President conducted 57 implementation 

conference calls with state and local officials, 

talking to the governors of all 50 states, 

representatives from five U.S. territories, 119 

mayors, and 37 county executives. He instituted 

a 24-Hour Rapid Response Rule for his staff to 

follow up on any item.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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efforts, over 170 projects were either halted or modified. In one example, a planned DOT road 

resurfacing project was halted when it was discovered that an EPA remediation project was 

planned for the same area. The EPA project would have meant multiple heavy trucks hauling 

waste across the new road, most likely damaging it in the process. The DOT project was 

rescheduled until after the EPA project’s completion. Other examples include stopping the 

development and renovation of basketball courts, swimming pools, and tennis courts.

Independent Recovery Accountability and Transparency Board

Vigilant management was central to combating fraud, waste, and abuse. The President chose 

Earl E. Devaney, Inspector General for the U.S. Department of the Interior, as Chairman of the 

Recovery Accountability and Transparency Board (Recovery Board). The Recovery Board was 

created by the Recovery Act and consists of Devaney and 12 other Federal Inspectors General. 

At the Department of Interior, Devaney had exposed major scandals, including corruption at 

the Minerals Management Service. Never before had a President appointed and so 

empowered a government-wide watchdog. With Devaney leading the Recovery Board, the 

Administration sent a clear signal that fraud, waste, and abuse would not be tolerated. 

Under Devaney’s leadership, the Recovery Board employed computer technology to detect 

fraud, waste, and abuse. Using the technologies of the Department of Defense, other 

intelligence agencies, and the private sector, the Recovery Board created the Recovery 

Operations Center. The Recovery Operations Center is designed to identify potential risk areas 

related to Recovery Act funds. The system uses advanced computer models and a diverse team 

of economists, engineers, mathematicians, and investigators to analyze data to help identify

potential high-risk recipients. To identify troubling trends, more than 15 data sources—some 

publicly available, others not—and risk factors are examined including: past suspension and 

debarment from Federal programs, criminal history, recent bankruptcies, and judgments and 

lawsuits.

Through their leadership, the independent Recovery Board changed the focus from merely 

detecting fraud and abuse to working to prevent it. Through the Recovery Operations Center, 

Inspectors General can make use of sophisticated tools to help prevent fraud and abuse from 

happening. 

Recovery Operations Center
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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Lesson #2: Transparency Drives Accountability

Unprecedented transparency was critical to the implementation of the Recovery Act. Leaders

throughout the government were able to monitor progress toward goals in ways not possible 

before the Recovery Act. As part of the President’s commitment to open government and the 

requirements of the Act, the Administration developed new ways to track Recovery Act 

funding. 

Weekly Financial Reporting Across the Government

Through the Recovery Act, for the first time ever, agencies had to provide detailed weekly 

spending updates that were then posted online. This data was used to hold agencies 

accountable to their goals. The data could also be compared against the goals and

commitments agencies had made public in their performance plans on Recovery.gov.

10

 Making 

sure agencies were held to account for their progress towards their goals in a public way helped 

ensure the swift action necessary to promote economic growth. 

Sophisticated Data Management Tools

Several agencies created new transparency and data management tools to help track Recovery 

Act funding. These tools tracked and 

disseminated more detailed 

information than had previously been 

possible, helping agencies swiftly and 

responsibly implement the Recovery 

Act.

The Department of Energy (DOE) had roughly twice as much funding as its normal annual 

budget11 spread across 144 separate programs. To ensure that the Department met its 

deadlines, DOE developed a new way to track its Recovery Act progress at a detailed level. 

DOE’s leadership used this detailed data to identify programs and projects where spending was 

slow and solve for any challenges. Furthermore, as part of DOE’s effort to speed Recovery Act 

spending, it accelerated grant processes by refocusing resources and overcoming bureaucratic 

delays. Prior to the Recovery Act, DOE did not centrally track the process of grants contracting. 

This lack of accountability could have delayed contracts being signed and projects from getting 

underway. 

The Department of Housing and Urban Development (HUD) also piloted a new approach to 

data management and accountability called HUDStat. In much the same way as at DOE, HUD’s 

Recovery Act team pulled relevant data about the status of projects and progress towards 

financial goals. Armed with this information, HUD leaders could identify and neutralize 

spending delays across the agency’s 80 field and regional offices. In some cases, a senior HUD 

official would make a phone call to a mayor or a governor to stress the need to spend funds 

quickly. In other cases, staff would refocus on regions where progress was slow and would 

work with grantees to move more quickly to promote economic growth. As a result of this 

 

10 Agency performance plans can be found online, at http://www.recovery.gov/Transparency/agency/reporting/agency_reporting5.aspx

11 Not including the National Nuclear Security Administration, which was not involved with the Recovery Act

HUD leaders could identify and neutralize 

spending delays across the agency’s 80 

field and regional offices.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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focus on accountability, HUD Recovery Act programs got funds under contract12 faster than 

their non-Recovery equivalents, allowing projects to start sooner, and promoting economic 

growth. For example the Public Housing Capital Formula Fund was 4.8 times faster; Native 

American Housing Block Grants13 was 2.4 times faster; and Healthy Homes and Lead Hazard 

Control was 1.5 times faster.14

Cost Savings Led to More Projects

Declining costs for goods and labor amid the recession led to lower prices and cost savings on 

projects across the government. Because of detailed tracking of Recovery Act projects and a 

better understanding of overall expected cost savings, agencies were able to quickly identify 

other projects and rapidly start work with the saved funds. These additional projects put more 

people back to work and further contributed to economic growth. 

For example, the General Services Administration (GSA) developed a new project tracking 

system that had more up-to-date and detailed information than GSA managers previously could 

access. This proved especially beneficial in the spring and summer of 2009, when the first 

round of large GSA Recovery Act contracts were awarded at 8-10 percent below GSA estimates. 

The new project tracking system 

allowed GSA officials to quickly 

recognize they could fund

additional projects. GSA was able 

to use $376 million in cost savings 

to fund more than 100 projects. 

Overall across the Administration, Recovery Act contracts have come in anywhere from 6 to 20 

percent below expected costs. Through strong management, agencies were able to fund more 

than 3,000 additional projects.15

Fraud, Waste, and Abuse Prevention

Transparency not only helped meet ambitious spending goals and promote rapid economic 

growth, but also helped deter fraud, waste and abuse. The Recovery Act required the majority 

of people who received Recovery Act contract, grant, and loan dollars to submit quarterly 

reports with up to 99 pieces of information updating the federal government and the American 

people on a project’s status. This requirement has led to the filing of more than 1 million

recipient reports,

16 which has helped ensure that those receiving Recovery Act money are not 

wasting or stealing it. 

This reporting system is working: the vast majority of people and organizations who received 

Recovery Act funding are submitting reports. For the most recent reporting period, reports 

were submitted accounting for 99.94 percent of Recovery Act funds. Moreover, most of the 

 

12 Under contract here means obligated

13 Formula grants only

14 Was calculated by comparing agency provided obligations over time for Recovery and base funding for same or equivalent programs. Time to 

obligate nearly close to 100% was rounded to nearest month for base and Recovery comparison

15 Some agencies returned bid savings to the Treasury when statutory deadlines required.

16 This includes cumulative number of distinct prime and sub reports filed each quarter. One recipient reporting in 6 quarters would be 6 times 

as part of the 1,084,734.

By tracking progress and keeping costs 

down, agencies were able to fund more 

than 3,000 additional projects.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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people and organizations who have not reported have only failed to do so one time.

17

 There 

are only 61 cases of repeat offenders who together received only 0.004 percent of Recovery Act 

spending. Under the President’s direction, the Administration is pursing the strongest possible 

actions against these persistent non-compliers – including taking away their funds and barring 

them from receiving federal funds in the future. As stated earlier in the report, through 2010

there were 987 potential cases of Recovery Act fraud under investigation—less than 0.4 

percent of the awards18—and so far the Department of Justice has filed charges related to less 

than $3 million in Recovery Act funding that is not related to taxes. 

 

17 First time non-filers typically represent recipients with a lack of awareness on the process, not registered in the system in time, or experience 

technical difficulties.

18 “Awards” refers 253,608 total awards subject to section 1512 of the Recovery Act (Prime Recipient awards = 101,136, Sub Recipient awards = 

152,472)
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

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Lesson #3: Collaboration Breaks Through Bureaucratic Barriers

The Administration could not have implemented the Recovery Act without strong collaboration

that broke down the bureaucratic barriers that existed in government. To make the Recovery 

Act work, the Administration cut through red tape within and between agencies and compelled 

every level of government to cooperate more closely with the communities it was trying to 

help.

Working Together to Maximize Impact

Through the Recovery Act, the Administration made a comprehensive investment in preparing 

America to compete in the 21st century. These investments in infrastructure, economic 

opportunity, health, energy, and the environment will play a vital role in helping the country 

win the future. 

The Department of Agriculture (USDA) and the Department of Housing and Urban Development 

(HUD) will detail the impact of those investments in upcoming reports. The new ways in which 

HUD and USDA realized that impact—the new models of confronting challenges they both 

embraced—offer lessons for future efforts. 

The implementation of the Recovery Act illustrated that collaboration helps address problems 

in smarter and more effective ways. Federal agencies collaborated with each other while also 

collaborating with state and local partners. 

Many examples in rural America demonstrate how agencies worked with state and local 

partners to develop targeted, effective solutions to pressing rural needs. USDA, for example, 

recognized that local government, 

businesses, and non-profits know the 

unique needs of their communities. 

For example, USDA provided Recovery 

dollars to help replace a hospital in Hillsboro, Kansas—a town of fewer than 3,000 people 

located an hour’s drive outside Wichita. The agency did not build the hospital alone. According 

to the head of the hospital, the city of Hillsboro, the community, and hospital administration 

“were essential for this construction project to move forward.” The top USDA rural 

development official in Kansas reported she was impressed by the “strong community support 

for the replacement facility. Local lenders, county and state government officials, school board 

members, businessmen, doctors, medical staff and economic development professionals all 

spoke regarding on how important ‘their’ hospital was to ‘their’ community.”19 When the 

community is a partner in an investment, the project becomes theirs.

Finally, this collaboration with non-federal governments, businesses, and non-profits also 

contributes to taxpayers getting the most value for their tax dollars. Many projects used 

federal money to attract private investments, leveraging limited federal resources and allowing 

the private sector to drive the work of the recovery. Many of USDA’s broadband projects to 

 

19 http://blogs.usda.gov/2010/12/17/a-kansas-community-replaces-an-outdated-hospital-with-help-from-usda-and-the-recovery-act/

When the community is a partner in an 

investment, the project becomes theirs.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

13

bring the Internet to rural individuals and businesses, 

for example, leveraged outside capital, stretching the 

impact of federal contributions farther.

An example in urban America shows how federal

agencies worked together to make more efficient and 

effective investments that confront long-standing 

problems and lay a foundation for growth. A HUDfunded pilot in 15 communities, the Green and Healthy 

Homes Initiative (GHHI), brings together programs from 

DOE, HUD, and HHS to tackle the related problems of 

home efficiency and family health. 

The initiative recognizes that homes with lead paint, 

allergens, and drafty walls and windows are often a 

cause of illness. Previously, programs attacked this 

problem in an uncoordinated way. One program would 

perform a home assessment for health; another would 

perform an entirely separate assessment for energy 

efficiency. As a result, solutions were inefficient: 

taxpayers would help cover health care costs for a child 

with asthma, but would not simultaneously help root 

out the cause of the asthma. 

Rather than solve these problems piecemeal, the GHHI

aims to confront them in a holistic way—at once 

creating more efficient, healthier homes, and lowering 

energy and medical bills alike. The pilot is working with 

local communities to pull together relevant funding 

from DOE, HUD, and HHS as well as partner with state 

and local government, philanthropy, and the private 

sector, to conduct a single home assessment of lowincome homes. As a result, the agencies can 

comprehensively solve problems: a house can undergo 

lead paint abatement, insulation, reduction in carbon 

monoxide, mold, and dust in just a few days of work.

This work cuts energy costs. So far, the program has 

improved more than 650 homes with an average 

energy savings of $900 per home. Equally impressive is 

its impact on health. Children living in GHHI homes 

have so far required far fewer trips to the hospital. As 

a result, these children miss fewer school days to illness 

and their parents lose fewer wages by having to staying 

How GHHI Can Help

Lekquan Young and her 8-year-old 

son DaWayne live in a Baltimore 

house that was moldy, had poor 

insulation, and leaked in the 

kitchen. Her son had asthma—a 

disease she says was made worse by 

the mold and aging carpet.

So Lekquan applied to the Baltimore 

GHHI coalition. After a full 

assessment of the home, workers 

took a few days to make 

comprehensive improvements. 

They installed a new hot water tank 

and furnace, added insulation, put 

in better ventilation, removed the 

carpet, and sealed the kitchen leaks. 

It’s making a difference: Lekquan 

expects that her energy bill will 

decrease by up to 40 percent. She 

says she feels like she has “a whole 

new house.” And most importantly, 

she reports that thanks to the work 

of GHHI, DaWayne is feeling 

healthier already and is an honor 

roll student. 

Lekquan Young with DaWayne Photo 

courtesy CECLP

To learn more, see: 

http://www.energyempowers.gov/post/Bal

timore-boys-asthma-improved-throughretrofit.aspx
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

14

home to take care of them. 

Integrating DOE, HUD and HHS programs has eliminated duplicative costs to taxpayers. The 

single inspection in 650 cases, for example, saves approximately 20 percent of costs; the 

decreased chance of illness can be expected to reduce public health care costs as well.

Other programs followed a similar model of interagency collaboration. Through the Recovery 

Act, HUD and DOE worked together to rapidly and efficiently weatherize low-income 

households. The Weatherization program was created by Congress in 1976 to reduce energy 

costs for low-income families through increased home energy efficiency. The program has 

served more than 6 million households, saving them $350 to $435 a year on energy costs.

One major hurdle to weatherizing a home is verifying that the owners meet the low-income 

standards. For years DOE did one set of verifications while HUD did its own. In an effort to get 

Recovery Act projects underway as quickly as possible, DOE and HUD worked together to 

eliminate the need for separate income verifications for people whose incomes have already 

been verified by HUD. This simple collaboration has helped projects move faster, saved the 

government the costs of duplicative verifications, and helped DOE weatherize more than 

300,000 homes under the Recovery Act so far.

HHS Recovery Act funds helped galvanize Federal agency collaboration around the use of 

technology to promote health and improve the quality, safety, and cost of healthcare in the 

nation. This collaboration can be seen in the implementation of the President’s directive to the 

Departments of Defense (DOD) and Veterans Affairs (VA) to create a Virtual Lifetime Electronic 

Record (VLER) for men and women who are serving or have served their country.

Historically, the separate DOD and VA healthcare systems have made it hard on the war fighter 

when he or she left the armed forces and transitioned to civilian life. Often, new veterans must 

have their entire medical condition reassessed by doctors at VA hospitals because medical 

record transfer from the military can be inefficient. Thus, even prior to this Administration, the 

VA and DOD have been working towards a better transfer of medical data between the two 

agencies.

However, most VA and DOD beneficiaries receive care in both the federal system and the 

private sector. To bring information from wherever it is and send it in an authorized way to 

wherever it is needed requires more than a point-to-point exchange between the 

Departments. It requires the use of a true information grid. In a sense, this is comparable to 

moving from communicating through two cans on a string to using a telephone system. To do 

this, the DOD and VA have collaborated with HHS initiatives that are supported by Recovery Act 

funds such as the Nationwide Health Information Network (NwHIN). This effort will allow the 

DOD and VA to exchange information not only with each other, but also with all the other 

hospitals that use the network.

Moreover, the Recovery Act is providing incentives for the private sector to connect through 

programs such as Meaningful Use and Beacon Communities. The first electronic record pilot 

using NwHIN began in January 2010 in San Diego. The VA, DOD, and a private sector provider, 

Kaiser-Permanente, actually started exchanging patient information and participating patients, 
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

15

the men and women who have served so valiantly in the military, can be expected to benefit 

from more coordinated care. As the use of electronic records continues to expand, so will the 

benefits to our nation’s heroes and all Americans thanks to the investments in health 

information made possible through HHS’ Recovery Act funds.

These examples show that when government collaborates—both internally and with outside 

partners—the whole impact can be greater than the sum of the parts. By working together as 

they did under the Recovery Act, programs can better confront challenges in America, solve 

previously intractable problems, and, achieve better results while saving taxpayer money. 

Collaboration Within Agencies

Collaboration within agencies began out of necessity after many realized their agency would be 

called upon to do more work with limited administrative resources. Recovery Act working 

groups emerged in nearly every department. These working groups included members from 

many offices across a department or agency to ensure that each element of the Recovery Act 

was carried out. They set out to ensure rapid implementation and overcome the bureaucratic 

hurdles that can slow a program down.

At the Department of Commerce (DOC), a group of managers from across the agency broke 

down bureaucratic barriers and ensured the department would work together. This effort 

proved especially helpful in implementing the Recovery Act Broadband program. The 

Broadband program was a new initiative to give individuals and businesses better access to the 

Internet so that America can stay competitive in the 21st Century. This new program strained 

the limited staff resources of the National Telecommunications and Information Administration 

(NTIA) in charge of implementing this program. However, with the direct involvement from 

senior management, DOC re-designed their internal processes to allow NTIA to award all its 

funds and meet deadlines on time, laying the groundwork for bringing broadband access to 

underserved communities. To do this, DOC routed NTIA grants through the processing offices 

of the National Institute of Standards and Technology (NIST) and the National Oceanographic 

and Atmospheric Administration (NOAA), which had never happened before in the agency at 

such a large scale.

Resources were similarly shared at the Department of Interior (DOI) to help bureaus that had 

received a large increase in funding through the Recovery Act. The Fish and Wildlife Service 

(FWS) took on additional work to help other bureaus by doing administrative work to complete 

contracts. In addition to $34 million in contracts for its own projects, Fish and Wildlife awarded 

nearly $117 million in contracts for four other bureaus, putting the resources to work more 

quickly than it could have done on its own. Across the federal government, these efforts to 

break down bureaucratic barriers succeeded in getting projects off the ground more quickly.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

16

Recipient Collaboration

Reporting requirements drove agencies

to work closely with people and 

organizations receiving Recovery Act 

funding. In turn, these recipients worked 

together within their organizations and 

with sub recipients to track where the 

funds went and how they were being spent and with what result. For example, states had to 

work closely with Local Education Agencies (LEA), in order to report how many teaching 

positions and other education jobs were being created. The very concept of reporting job 

numbers in such detail had never been done before by the federal government. The additional 

degree of data collection and performance measurement required by the Recovery Act has 

allowed taxpayers to hold states accountable for how tax dollars are being spent.

A report by the Government Accountability Office (GAO) stated that this interaction has been a 

critical component of Recovery Act operations:

According to many of the state officials we interviewed, the Recovery Act's 

reporting requirements also promoted more interaction between state and 

federal agencies, state agencies, and within departments of these state agencies. 

For example, Ohio officials stated that the governor's stimulus office had 

established contacts with OMB, administration officials, and other federal agency 

contacts through work on Recovery Act implementation and monitoring. Officials 

from Illinois noted that recipient reporting was one of the few efforts that 

brought their otherwise very independent state agencies together. Colorado state 

officials reported that the program and accounting staffs within each state agency 

are working together closely to help ensure the accuracy and quality of the 

Recovery Act data. ... Michigan officials reported that state agencies are working 

with each other in a way they have not before. They said the Recovery Act has 

facilitated collaboration, citing that the act removed some barriers to interaction 

between state agencies because the timeline for complying with Recovery Act 

requirements has been so short that agencies must work together to meet 

requirements, which has yielded many positive effects.20

A Strengthened Relationship with IGs 

While maintaining appropriate independence, collaboration between each agency and its Office 

of Inspector General (IG) helped the Administration implement the Recovery Act responsibly. 

The Office of Inspector General is an independent watchdog that tracks the progress of an 

agency’s programs and looks for fraud, waste, and abuse. Traditionally, IGs review data after 

funding is distributed and while they may find evidence of fraud that has already occurred, they

rarely have been able to prevent its occurrence. By breaking down the bureaucratic barriers 

between the IG and the rest of the agency—while maintaining the IG’s independence—the 

agencies were able to shift more focus on preventing fraud, waste and abuse. This shift has 

 

20 http://www.gao.gov/mobile/content?path=htext/d10999.html

The very concept of reporting job numbers 

in such detail had never been done before 

by the federal government.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

17

been critical to the low levels of fraud, waste, and abuse in the implementation of the Recovery 

Act. 

For example, HUD’s Homelessness Prevention and Rapid Re-Housing Program worked with the 

IG to have recipients sign an affidavit affirming their knowledge of Recovery Act program rules 

and the serious consequences, including prosecution that would result from program abuse. 

In addition, the IGs across the government have held more than 1,500 training sessions, 

educating more than 120,000 men and women from federal, state, and local government and 

the private sector on fraud prevention techniques. This had the dual effect of providing 

valuable training, while also putting project officers on notice that IGs will be looking at what 

programs are doing with Recovery Act funding.

Empowering the Public

Through the Recovery Act, the Federal Government has been able to work hand in hand with 

the American public to detect fraud waste and abuse. The Recovery.gov site posts detailed 

information about every Recovery Act contract, grant, and loan. The site has unleashed 

thousands of “citizen 

IGs” in the form of 

ordinary Americans

who can now help 

oversee what the 

government does 

with their tax dollars in their neighborhood. The public can more easily monitor local projects, 

corroborating data reported online with progress on the ground. On every page of the 

Recovery.gov site, people can click a button and report suspected fraud, waste and abuse. 

Empowering these citizens further, the Recovery Board established a fraud hotline in 

September 2009 for the public to report concerns directly to the Board. The Recovery Board 

analyzes the information obtained through the hotline and refers potential cases of fraud,

waste, and abuse to the relevant IG or law enforcement agencies.

For example, in one case, a citizen reported a company was fraudulently failing HVAC systems 

upon weatherization inspection so that it could increase its profits. Recovery Board analysts

discovered the recipient had a history of bankruptcy, tax liens, and criminal convictions. The 

appropriate IG has opened an investigation which is ongoing.

The site unleashed thousands of “citizen IGs” in the form of 

ordinary Americans who can now help oversee what the 

government does with their tax dollars in their neighborhood.
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18

Lesson #4: Competition Brings Results

The Recovery Act did not include earmarks and instead utilized merit-based competitions for 

many Recovery Act grant programs. These competitions encouraged state and local 

governments, non-profits, and private companies to put forward new ideas that more 

effectively achieve a program’s goals. With such programs, the federal government outlined 

objectives and distributed funding to organizations that best met those objectives. 

Importantly, competitive programs also inspired even non-winners to adopt positive reforms 

and attracted matching private capital to maximize the impact of each federal dollar.

Race to the Top 

The Department of Education’s Race to the Top program outlined broad strokes for reform and 

allowed states to develop unique plans to improve education for students. The Department 

spelled out a set of strategic goals, including turning around the worst schools and developing 

ways to track and measure student and teacher performance. These principles guided 

applications but allowed each state 

to develop a plan that addressed 

its local problems and priorities. By 

supporting a variety of approaches, 

Race to the Top created 

laboratories across the country to 

test different solutions so that 

what works best to improve 

education would become evident.

Race to the Top also encouraged 

collaboration and cooperation among teachers, principals, unions, teacher associations, elected 

officials, parent organizations and others by factoring it into the scoring of applications. In 

Delaware, union leaders and state officials are collaborating to create a new teacher evaluation 

system that will incorporate student achievement for the first time. The president of the 

Delaware public education union praises the effort and says it “offers an opportunity to change 

the culture in its schools and classrooms. Linking student growth to evaluation is the lynchpin 

to this reform.”

Moreover, the collaboration encouraged by the Race to the Top competition has had impact 

beyond the -12 winners. Over the course of the competition, more than 40 states and the 

District of Columbia adopted various changes to their education policies that will improve 

education for students. For example, multiple states have enacted legislation or shifted policies 

to create or expand the number of charter schools; to remove the firewall between student 

achievement and teacher evaluations; and to turn around the persistently lowest achieving 

schools.

Through a competitive process, limited federal resources amounting to less than one percent of 

overall education spending were able to have an important impact by promoting change 

beyond the narrow set of applicants that actually win funds. 

The collaboration encouraged by the Race to the 

Top competition has had an impact beyond the 

12 winners. Over the course of the competition, 

more than 40 states and the District of Columbia 

adopted various changes to their education 

policies that will improve education for students.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

19

Funding the Most Promising Technologies 

With $35.2 billion in Recovery Act funding,

21 DOE supported more than $80 billion22 in projects, 

the largest investment in energy ever made by the U.S. government, designed to fundamentally 

transform the American energy sector and the American economy. 

To do this, Secretary of Energy Steven Chu sent a note to major colleges, universities and 

professional societies in the country seeking expert reviewers. All told, nearly 3,000 

independent expert reviewers completed over 25,000 reviews of DOE Recovery Act 

applications. Unlike earmarks, DOE 

projects were funded based on their 

merits.

Furthermore, DOE’s Recovery Act 

investments pursued innovation 

through private sector competition, 

funding multiple different technologies that will rely on the market to ultimately choose the 

winners. 

DOE did not invest in just one type of fuel-efficient technology for cars. Instead, the agency 

invested in a portfolio of different approaches: advanced-combustion engines, electrification, 

sustainable biofuels, natural gas, hydrogen fuel cells and vehicle “light-weighting.” Within each 

area, DOE is funding several of the most promising approaches. While some approaches will 

fail, those that succeed will deliver needed improvements in fuel economy and will also lead to 

new companies that will contribute to America’s economic growth.

The Department of Energy expects that the benefits of these investments will include: the 

doubling of U.S. renewable energy generation and dramatic increase domestic clean energy 

manufacturing by 2012; and the cost of a 100-mile range electric vehicle battery could drop 

from $33,000 to $10,000 by the end of 2015.

Attracting Private Investment

A key success of the Recovery Act was its ability to bring in outside funds from the private 

sector, non-profits, universities, and state and local governments. Non-federal investment 

yields two crucial benefits. First, it increases the overall sum of money pumped into the 

economy to promote economic growth. Second, when the recipients of federal funds have to 

put up significant funds of their own, they are more likely to use the federal funding effectively.

The Recovery Act had many programs that attracted outside investment—from health research 

and clean energy manufacturing to infrastructure investment and broadband. Overall, about 

$100 billion in Recovery Act funding will ultimately be matched by more than $280 billion in 

additional investment. For every dollar the federal government invested in these projects, 

other entities are investing about another $3, with the majority coming from the private 

sector.23

 

21 Approximately $7.9 billion was awarded in non-competitive contracts for cold war legacy nuclear clean up and U.S. national labs 

22 Includes cost share at varying levels.

23 http://www.whitehouse.gov/files/documents/cea_4th_arra_report.pdf

Nearly 3,000 independent expert reviewers 

completed over 25,000 reviews of DOE 

Recovery Act applications.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

20

Prizes

Another example of a competitive approach is the Automotive X Prize. The Automotive X Prize 

used DOE Recovery Act funding24 to award a cash prize to the developer of the best 100 milesper-gallon car. The contest attracted diverse applicants with new ideas: 111 teams competed 

for the prize, including established and start-up automakers, universities, and even a high 

school team. Three winners in different categories used different technologies—two 

developed all-electric vehicles, while the third developed a car powered by ethanol. Other 

contestants explored different technologies that have the potential to lead to other innovations 

in the future. The broad goal, without a mandated path of achieving that goal, encouraged and 

enabled creative, wide-ranging approaches to quickly address a difficult problem.

 

24 ARRA funding represented only 50 percent of the Automotive X Prize funding.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

21

Putting These Lessons to Work

The Administration is working to ensure the lessons learned through the implementation of the 

Recovery Act are applied to non-Recovery Act programs. Vigilance, transparency, collaboration, 

and competition are essential for a swift, responsible, and effective federal government in the 

21st century.

Perhaps the most important lesson of the Recovery Act is that leaders across the federal 

government can improve upon business as usual in order to achieve goals vital to America’s 

competitiveness in the 21st century. While prompting economic growth through the Recovery 

Act, the government learned new ways to work rapidly, responsibly and effectively.

Now President Obama has once again set a broad, ambitious goal: reforming government so 

that it is more effective, efficient, and open for the American people. As the President put it in 

his 2011 State of Union address, “We cannot win the future with a government of the past.” 

Already, through lessons learned from the Recovery Act the Administration has begun to make 

good on the President’s commitment.

The federal government must continue to embrace competition to fund the projects that 

achieve the best results for the American people. 

The President’s FY 2012 Budget includes several initiatives that use the Race to the Top model 

pioneered by the Recovery Act and the Department of Education. The competition that helped 

make big changes in education can have 

an impact for other national priorities. As 

such, the President’s budget includes new 

initiatives that apply this model for 

infrastructure and energy, as well as 

additional Race to the Top initiatives in 

education.

For education, the Administration aims to use Race to the Top models to equip American 

workers to compete and win in the global economy. The President’s budget would establish a 

Competitive Early Learning Challenge Fund to encourage states to take dramatic steps to 

improve the quality of their child care programs. It would also improve elementary and

secondary education by expanding Race to the Top to school districts, and creating new “pay 

for success” bonds that invest in proven innovative approaches to student learning. The 

President’s budget would launch the “First in the World” competition, a new $150 million 

initiative to increase college access and completion and improve educational productivity 

through an evidence-based grant program.

For energy, the President’s budget would promote electric vehicle infrastructure through a 

$200 million program – modeled after Race to the Top – that would provide an incentive for 

communities to invest in electric vehicle infrastructure and electric vehicle purchases. This and 

other programs would help us meet the President’s goal of having 1 million electric vehicles on 

the road by 2015—the first nation in the world to do so.

The President’s budget includes new 

competitive initiatives for infrastructure 

and energy, as well as additional Race to 

the Top initiatives in education.
A New Way of Doing Business: How the Recovery Act is Leading the Way to 21st Century Government

22

The budget would also provide for Transportation Leadership Awards to drive state

infrastructure reform. The Department of Transportation would work with States and localities 

to set ambitious goals in different areas – for example, passing measures to prevent distracted 

driving or modifying transportation plans to include public transportation, bike, and pedestrian 

options. The Administration’s six-year plan would dedicate nearly $32 billion for competitive 

grant programs designed to create incentives for State and local partners to adopt critical 

reforms that make transportation safer and more convenient. Federally-inspired safety 

reforms such as seat belt and drunk-driving laws have saved thousands of American lives and 

avoided billions in property losses and this initiative would seek to repeat the successes of the 

past.

In an effort to promote competition and innovation, Challenge.gov has created a home for 

prizes across the government. Challenge.gov is an online challenge platform that empowers 

people to bring the best ideas and top talent to bear on our nation’s most pressing challenges

at a lower cost with diverse input. Public engagement can range from simple suggestions 

(logos, videos, digital games and mobile applications, and other ideas) to proofs of concept, 

designs, or finished products that solve the challenges of the 21st century.

Launched prior to the Recovery Act, USASpending.gov collects information from federal grant 

and contract recipients. Using lessons learned from Recovery.gov, USASpending.gov was 

upgraded in October to collect the sub-award information across the federal government. As 

with Recovery.gov, the public can more accurately see how the money is flowing and who is 

doing the work. So far, USASpending.gov has phased in more than $2 billion in grants and more 

than $500 million in contracts at the prime and sub-recipient level. New grants and contracts 

will be phased in as they are awarded. Following the success of Recovery.gov, 

USAspending.gov has begun to display summary views – for example, the top recipients of 

federal financial assistance – to provide the public this information in an easily accessible, 

understandable way. 

Transparency, data, and technology will continue to help combat fraud, waste and abuse as the 

Recovery Board works with federal agencies to spread its technology. OMB and the Recovery 

Board have already worked with the Centers for Medicare and Medicaid Services to pilot the 

Recovery Operations Center’s innovative technology. The Centers for Medicare and Medicaid 

Services subsequently identified new patterns of fraud that had not previously been detected. 

Now OMB is working with the Recovery Board and the Department of Veterans Affairs to 

explore how to apply similar technologies to identify fraud or waste of government resources in 

existing VA awards. OMB also plans to engage in pilots with at least three more agencies by the 

end of the year. 

The Administration will keep working to knock down bureaucratic walls. After its pilot through 

the Recovery Act, HUD will continue to use HUDStat to share data and resources across the 

agency. The Green and Healthy Homes Initiative will expand its work to more communities 

across America. Both these efforts indicate for what other agencies will strive to deliver in the 

years to come. The swift, responsible, and effective implementation of the Recovery Act proves 

that government can get the job done for the American people.