Federal Data Transparency: Opportunities Remain to Incorporate Recovery Act Lessons Learned
Published: 2013-09-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal government spends more than $3.7 trillion annually, with more than $1 trillion awarded through contracts, grants, and loans. Improving transparency of this spending is essential to improve accountability. Recent federal laws have required increased public information on federal awards and spending.
This testimony is based on GAO's recently issued report GAO-13-758 . It addresses (1) the status of transparency efforts under way and (2) the extent to which new initiatives address lessons learned from the Recovery Act. GAO reviewed relevant legislation, executive orders, OMB circulars and guidance, and previous GAO work, including work on Recovery Act reporting. GAO also interviewed officials from OMB, the GAT Board, and other federal entities; government reform advocates; associations representing fund recipients; and a variety of contract and grant recipients.
section_title: What GAO Found
paragraphs: Several federal entities, including the Government Accountability and Transparency Board (GAT Board), the Recovery Accountability and Transparency Board (Recovery Board), and the Office of Management and Budget (OMB), have initiatives under way to improve the accuracy and availability of federal spending data. The GAT Board, through its working groups, developed approaches to standardize key data elements to improve data integrity; link financial management systems with award systems to reconcile spending data with obligations; and leverage existing data to help identify and reduce fraud, waste, and abuse. With no dedicated funding, GAT Board plans are incremental and leverage ongoing agency initiatives and resources designed to improve existing business processes as well as improve data transparency. These initiatives are in an early stage, and some progress has been made to bring greater consistency to contract and grant award identifiers. The GAT Board's mandate is to provide strategic direction, not to implement changes. Further, while these early plans are being developed with input from a range of federal stakeholders, the GAT Board and OMB have not developed mechanisms for obtaining input from non-federal fund recipients.
Lessons from implementing the transparency objectives of the Recovery Act could help inform these new initiatives:
Standardize data to integrate systems and enhance accountability. Similar to the GAT Board's current focus on standardization, the Recovery Board recognized that standardized data would be more usable by the public and the Recovery Board for identifying potential misuse of federal funds. However, reporting requirements under the Recovery Act had to be met quickly. Because agencies did not collect spending data in a consistent manner, the most expedient approach was to collect data from fund recipients, even though similar data already existed in agency systems. Given the longer timeframes to develop current transparency initiatives, OMB and the GAT Board are working toward greater data consistency by focusing on data standards. Their plans, however, do not include long-term steps, such as working toward uniform award identifiers, that would improve award tracking with less burden on recipients.
Obtain stakeholder involvement as reporting requirements are developed. During the Recovery Act, federal officials listened to the concerns of recipients and made changes to guidance in response, which helped ensure they could meet those requirements. Without similar outreach under the current initiatives, reporting challenges may not be addressed, potentially impairing the data's accuracy and completeness, and increasing burden on those reporting.
Delineate clear requirements and lines of authority for implementing transparency initiatives. Unlike the present efforts to expand spending transparency, the Recovery Act provided OMB and the Recovery Board with clear authority and mandated reporting requirements. Given this clarity, transparency provisions were carried out successfully and on time. Going forward, without clear, legislated authority and requirements, the ability to sustain progress and institutionalize transparency initiatives may be jeopardized as priorities shift over time.
section_title: What GAO Recommends
paragraphs: In its report GAO recommended that the director of OMB, with the GAT Board, develop a long-term plan to implement comprehensive transparency reform, and increase efforts for obtaining stakeholder input to ensure reporting challenges are addressed. Further, Congress should consider legislating transparency requirements and establishing clear authority to implement these requirements to ensure that recommended approaches for improving transparency are carried out across the federal government. The GAT Board, OMB and other cognizant agencies generally concurred with GAO's recommendations.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss the findings from our recent  report on federal efforts to increase the transparency of information  detailing federal awards and expenditures. The federal government  awards more than $1 trillion annually through contracts, grants, and  loans. Transparency—shedding light on the amount of spending, what it  is spent on, who receives the funds, and what are the results of that  spending—is essential to improving government accountability and  fostering civic engagement. Within the last decade, Congress and the  administration have taken several steps to improve the transparency of  federal spending data, including passing two statutes intended to expand  public access to information on federal programs. The Federal Funding  Accountability and Transparency Act of 2006 (FFATA) and the American  Recovery and Reinvestment Act of 2009 (Recovery Act) have allowed  the public to access information on spending, recipients, and uses of  funds. Information on grant and contract awards is available on  www.USAspending.gov, and information on Recovery Act awards and  spending is available on www.Recovery.gov. The data’s availability has  also provided opportunities for increased oversight to prevent and detect  fraud, waste, and abuse of federal funds, and to improve the efficiency  and effectiveness of federal spending.
While the transparency of federal spending data has increased, both the  administration and Members of Congress have suggested the need for  more transparency. For example, USAspending.gov only provides data  on funds awarded and does not include information on disbursements. In  terms of data collection, federal agencies and recipients report to various  systems, sometimes with the same information and, as a result, direct  unnecessary time and resources to administrative activities. In addition,  the lack of consistent data structures prevents easy aggregation of data  at the government-wide level, hampering the ability to link existing  financial, award, and procurements systems. It also increases the cost of  government transactions and the burden on federal fund recipients. And,  as we have reported previously, the accuracy and reliability of the data  needs to be improved. Emerging transparency efforts include specific  changes in data collection under consideration by the Office of  Management and Budget (OMB) and the Government Accountability and  Transparency Board (GAT Board), newly-created under a June 2011  Executive Order.
My testimony today is drawn from our recent report to you on efforts to  improve federal data transparency. It will address (1) federal initiatives  under way to improve the accuracy and availability of federal spending  data and (2) the extent to which lessons identified by us and federal fund  recipients from the operation of Recovery.gov and USAspending.gov are  being addressed by these new transparency initiatives.
To conduct our work on federal data transparency efforts, we examined  data collection and reporting requirements under FFATA and the  Recovery Act; the June 2011 Executive Order related to transparency;  relevant OMB guidance; and action plans created by the GAT Board, the  Recovery Accountability and Transparency Board (Recovery Board), and  other federal entities with responsibility for developing approaches to  improve federal data transparency. We interviewed officials at OMB, the  GAT Board, and the Recovery Board who are examining new data  transparency initiatives. We also interviewed officials at three agencies  who are developing new transparency prototypes within their agencies:  the Department of Defense (DOD), Department of Health and Human  Services (HHS), and Department of the Treasury (Treasury), and also  interviewed officials at the General Services Administration (GSA), the  agency that manages USAspending.gov. To get their perspectives on  lessons learned from both the operation of existing transparency systems  and federal efforts under way to improve data transparency, we spoke  with officials from organizations representing federal fund recipients and  government reform organizations. We also conducted seven focus groups  with federal fund recipients representing state and local governments,  nonprofit organizations, higher education research institutions, and  private businesses who receive grants from, or contracted with, the  federal government. Finally, we reviewed our previous work on the  reporting successes and challenges experienced by both agencies and  federal fund recipients. This step allowed us to identify lessons learned  from those experiences that should be considered as new approaches to  data transparency are developed. Our work was performed in accordance  with generally accepted government auditing standards. More detailed  information on our scope and methodology can be found in our report.
subsections: section_title: Transparency Efforts Under Way Focus on Standardizing Data to Integrate Systems and Enhance Spending Oversight
paragraphs: The GAT Board, the Recovery Board, and OMB, have initiatives under  way to improve the accuracy and availability of federal spending data.  The GAT Board, with a mandate of providing strategic direction, has four  working groups charged with developing approaches for improving the  quality of data in federal contract, grants, and financial management  systems, and for expanding the availability of these data to improve  oversight of federal funds. The working groups represent the federal  procurement, grants, financial management, and oversight communities  and include interagency forums such as the Chief Acquisition Officers  Council and the Council for Inspectors General for Integrity and  Efficiency. (See appendix I for more information on the GAT Board  working groups.) For example, the GAT Board established the  Procurement Data Standardization and Integrity Working Group to  develop approaches that ensure that contracting data are accurate and  contract transactions can be tracked from purchase order through vendor  payments. The GAT Board selected DOD to lead this effort in order to  leverage its long-standing efforts to increase the accuracy of contract  data submitted to the Federal Procurement Data System-Next Generation  (FPDS-NG).
Through these working groups, the GAT Board has begun to develop  approaches to (1) standardize data elements across systems; (2) link  financial management systems with award systems so that spending data  can be reconciled with obligations; and (3) use the data to help identify  and reduce fraud, waste, and abuse. However, the GAT Board’s mandate  does not provide it with the authority to implement these reforms;  therefore, it must rely on its working groups’ lead agencies to implement  approaches that it has approved. Moreover, the GAT Board has no  dedicated funding, so its strategic plan is short-term and calls for an  incremental approach that builds upon ongoing agency initiatives.
We found that standardizing data and having a uniform convention for  indentifying contract and grant awards throughout their life cycle are the  first steps in ensuring data quality and tracking spending data. Without  this uniformity, reporting and tracking spending data is inefficient and  burdensome. Current efforts are focused on identifying approaches to  standardize contract and grant award data elements to improve data  accuracy, and to date some progress has been made, such as:
Based in part on work of the GAT Board for the Federal Acquisition  Regulatory Council, DOD proposed a regulation requiring federal  agencies to use a uniform procurement identifier—a number that  could be attached to a contract so it can be tracked across various  systems throughout the procurement process.
OMB, working with the GAT Board, issued new guidance that requires  all federal agencies to establish unique identification numbers for  financial assistance awards. While this guidance could help bring  greater consistency to grant award data, it only requires agencies to  assign award numbers unique within their agency and thus does not  provide the same level of uniformity as is required for contracts. OMB  has noted that standardizing an identifier format could cause  problems for agency systems because some agencies structure their  award identifiers to track particular characteristics of grants for their  internal use.
Through its work with the GAT Board, HHS examined more than  1,100 individual data elements used by different agencies and found  wide variation in terminology and associated definitions that impacted  how spending was captured, tracked, and reported.
The Recovery Board recently concluded its Grant Reporting  Information Project that tested the feasibility of using the website  FederalReporting.gov to collect data on non-Recovery Act grant  expenditures. The Recovery Board’s analysis of the project supported  using FederalReporting.gov for grant reporting and validated the  effectiveness of using a universal award identifier.
The GAT Board is also building on Treasury’s effort to integrate financial  management systems to track spending better. Its Financial Management  Working Group is developing recommendations for a work plan that will  seek to leverage Treasury’s on-going transparency and system  modernization efforts. For example, the board is building on Treasury’s  initiative to standardize payment transaction processes, which will  consolidate more than 30 agency payment systems into a single  application. This application will process agency payment requests using  a standardized payment request format, which all agencies that use  Treasury disbursing services will be directed to use by October 1, 2014.  The GAT Board also intends to leverage Treasury’s plans to develop a  centralized repository with detailed and summarized records of payment  transactions from all federal agencies including payments reported by the  federal agencies that disburse their own payments. The Payment  Information Repository will contain descriptive data on payments that can  be matched with other data to provide additional information regarding the  purpose, program, location, and commercial recipient of the payment.
A third area on which federal transparency efforts have focused is on  using existing data to enhance spending oversight. Data mining  applications are emerging as essential tools to inform management  decisions, develop government-wide best practices and common  solutions, and effectively detect and combat fraud in federal programs.  For example, predictive analytic technologies can identify fraud and errors  before payments are made, while data-mining and data-matching  techniques can identify fraud or improper payments that have already  been awarded. The Recovery Board’s Recovery Operations Center  (ROC) uses data analytics to monitor Recovery Act spending and has  provided several inspectors general with access to these tools. ROC staff  were able to notify agencies that they had awarded Recovery funds to  companies that were debarred. ROC analysts also found hidden assets  that resulted in a court ordering the payment of a fine, and indentified  several individuals employed by other entities while receiving worker’s  compensation benefits. The GAT Board’s Data Analytics Working Group  has set a goal of expanding on the ROC’s work to develop a shared  platform for improving fraud detection in federal spending programs. This  approach relies on the development of data standards. It will provide a set  of analytic tools for fraud detection to be shared across the federal  government. Although this work is just starting, working group members  have identified several challenges including reaching consensus among  federal agencies on a set of common data attributes to be used and  obtaining changes needed to existing privacy laws to allow access to  certain types of protected data and systems. A forum we co-hosted in  January 2013, along with the Council of the Inspectors General on  Integrity and Efficiency and the Recovery Board, explored these  challenges and identified next steps to address them. Forum participants  identified a range of challenges, including a lack of data standards and a  universal award identifier that limit data sharing across the federal  government and across federal, state, and local agencies. Working  groups or other structures have been formed to forward these issues. For  example, we are leading a community of practice for federal, state, and  local government officials to discuss challenges and opportunities related  to data sharing within and across government agencies.
section_title: As Transparency Efforts Get Under Way, Opportunities Remain to Incorporate Lessons Learned from the Recovery Act
paragraphs: In many cases, the transparency initiatives of the GAT and Recovery  Boards, OMB, and key federal agencies build on lessons learned from the  operation of existing transparency systems. But as new transparency  initiatives get under way, we believe there are opportunities to give  additional consideration to these lessons to help ensure new  transparency programs and policies are implemented successfully.
First, we found that in implementing the Recovery Act, OMB directed  recipients of covered funds to use a series of standardize data elements  and report centrally into the Recovery Board’s reporting web site. The  transparency envisioned under the Recovery Act required the  development of a system that could quickly trace billions of dollars  disbursed to thousands of recipients, across a variety of programs.  Agencies had systems in place that captured such information as award  amounts, funds disbursed, and, to varying degrees, progress being made  by recipients. However, the lack of uniform federal data and reporting  standards made it difficult to obtain these data from federal agencies.  Because agencies did not collect spending data in a consistent manner,  the most expedient approach for Recovery Act reporting was to collect  data from fund recipients, which placed additional burden on them to  provide these data. Federal fund recipients we spoke to said that the lack  of consistent data standards and commonality in how data elements are  defined and reported places undue burden on them because it can result  in having to report the same information multiple times and requires  recipients to enter data manually, which can impact the accuracy of the  data. For example, a nonprofit group representative who participated in  one of our focus groups said that they had to report the same information  through 15 different reporting platforms, so having data standards and  single reporting platform would make the reporting process more efficient.  Given the longer time frames to develop current transparency initiatives,  OMB and the GAT Board are working toward greater data consistency by  focusing on data standards. Citing agency budgetary constraints and the  potential of emerging technologies for extracting nonstandard data  elements from disparate systems, the GAT Board and OMB are taking  incremental steps toward increasing data standardization. Their plans,  however, do not include long-term steps, such as working toward uniform  award identifiers that would improve award tracking with less burden on  recipients.
Second, we found that early in the development of both the Recovery Act  reporting system and its procedures, federal officials listened to the  concerns of recipients and made changes to guidance in response, which  helped ensure they could meet those requirements. Given the daunting  task of rapidly establishing a system to track billions of dollars in  Recovery Act funding, OMB and the Recovery Board implemented an  iterative process which allowed many stakeholders to provide insight into  the challenges that could impede their ability to report Recovery Act  expenditures. Federal fund recipients we spoke with stressed the  importance of having a formal mechanism to provide feedback to the  federal government as guidance is crafted and before new transparency  reporting requirements are established to ensure that the guidance is  clear and understandable. Such guidance will ensure that the data they  report are accurate, on time, and minimally burdensome. Although, the  GAT Board has implemented a structure that leverages the expertise of  federal officials with in-depth knowledge of federal procurement, grant- making, and financial management operations, the board does not have  any formal mechanisms, other than the federal rule-making process, to  obtain input from non-federal fund recipients. As we learned through our  work examining Recovery Act implementation, without similar outreach  under the current initiatives, reporting challenges may not be addressed,  potentially impairing the data’s accuracy and completeness, and  increasing burden on those doing the reporting.
Third, we found that the under the Recovery Act, specific requirements  and responsibilities for transparency were clearly laid out in statute, which  provided unprecedented transparency and helped to ensure that the act’s  transparency requirements were implemented within tight time frames.  The Recovery Act specified the timing of reporting, including its frequency  and deadlines, and the items that needed to be included in the reporting.  The act also required the Recovery Board to conduct and coordinate  oversight of the funds and to deploy a data-collection system and a  public-facing website to provide spending data to the public. Unlike the  GAT Board, the Recovery Board had funding which was used to provide  staff and resources for developing and operating its data collection  system, website, and oversight activities. In contrast, authority for  implementing the current transparency initiatives is not as clearly defined  and authority for expanding transparency is centered in an executive  order rather than legislation. An official from an association representing  federal fund recipients told us that of clear reporting guidance was  essential for ensuring compliance with reporting requirements, especially  for recipients with limited resources. Moreover, unlike under the Recovery  Act, new transparency initiatives are being funded through existing  agency resources using agency personnel, as separate funding is  unavailable. As, we have previously reported, given the importance of  leadership to any collaborative effort, transitions and inconsistent  leadership, which can occur as administrations change, can weaken the  effectiveness of any collaborative efforts, and result in a lack of  continuity. We found that the GAT Board’s vision for comprehensive  transparency reform will take several years to implement, and therefore,  continuity of leadership becomes particularly important. Going forward,  without clear, legislated authority and requirements, the ability to sustain  progress and institutionalize transparency initiatives may be jeopardized  as priorities shift over time.
In our recently released report, we recommended that OMB and the GAT  Board develop a long-term strategy for implementing data standards  across the federal government and for obtaining input from federal fund  recipients. Specifically, we recommended that the Director of OMB, in  collaboration with the members of the GAT Board, take the following two  actions:
Develop a plan to implement comprehensive transparency reform,  including a long-term timeline and requirements for data standards,  such as establishing a uniform award identification system across the  federal government.  Increase efforts for obtaining input from stakeholders, including  entities receiving federal funds, to address reporting challenges, and  strike an appropriate balance that ensures the accuracy of the data  without unduly increasing the burden on those doing the reporting.
The GAT Board, OMB and other cognizant agencies generally agreed  with our recommendations and identified actions underway or planned,  which they believe will operationalize comprehensive transparency  reforms and help them obtain stakeholder input.
Our recently issued report also suggested that Congress could consider  legislating transparency requirements and establish clear lines of  authority to ensure that recommended approaches for improving  spending data transparency are implemented across the federal  government. Among other things, this will ensure effective decision  making and the efficient use of resources dedicated to enhancing the  transparency of federal spending data.
Chairman Warner, Ranking Member Ayotte, and Members of the Task  Force, this completes my prepared statement. I would be pleased to  respond to any questions that you may have at this time.
section_title: Contacts and Acknowledgements
paragraphs: If you or your staff have any questions about this testimony, please  contact me at (202) 512-6806 or czerwinskis@gao.gov. Contact points for  our Office of Congressional Relations and Public Affairs may be found on  the last page of this statement. GAO staff who made key contributions to  this testimony are Carol L. Patey, Assistant Director and  Kathleen M. Drennan, Ph.D., Analyst-in-Charge. Additional contributions  to our detailed report were made by Gerard S. Burke, Patricia Norris,  Cynthia M. Saunders, Ph.D., Robert Robinson, Jessica Nierenberg,  Judith Kordahl, and Keith O’Brien.
section_title: Appendix I: Government Accountability and Transparency Board and Work Group Agency Partners
paragraphs: The Government Accountability and Transparency Board (GAT Board) is  composed of the following 11 members designated by the President from  among agency inspectors general, agency chief financial officers or  deputy secretaries, and senior officials from OMB. The President  designates a chairman from among the members.
Director, Defense Procurement and Acquisition Policy, U.S.
Assistant Secretary, Department of the Treasury
Deputy Secretary, U.S. Department of Veterans Affairs
Assistant Secretary for Financial Resources and Chief Financial  Department of Defense  Inspector General, U.S. Postal Service  Inspector General, U.S. Department of Energy  Inspector General, National Science Foundation  Inspector General, U.S. Department of Health and Human Services
Deputy Controller, Office of Management and Budget  Officer, U.S. Department of Health and Human Services  Inspector General, U.S. Department of Transportation  Inspector General, U.S. Department of Education  The GAT Board established four working groups, as shown in table 1.