DATA Act: Implementation Progresses but Challenges Remain
Published: 2016-12-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The DATA Act requires OMB and Treasury to establish government-wide data standards and requires federal agencies to begin reporting financial and payment data in accordance with these standards by May 2017. The act also requires establishment of a pilot program to develop recommendations for simplifying federal award reporting for grants and contracts. Consistent with GAO’s mandate under the act, the report being released today is one in a series that GAO will provide to the Congress. This statement discusses steps taken by OMB, Treasury, and federal agencies to implement the act and highlights key findings and the recommendation from GAO’s report ( GAO-17-156 ). As part of this work, GAO reviewed DATA Act implementation plan updates and interviewed staff at OMB, Treasury, and other selected agencies.
section_title: What GAO Found
paragraphs: The Office of Management and Budget (OMB), the Department of the Treasury (Treasury), and federal agencies have taken steps to implement the Digital Accountability and Transparency Act of 2014 (DATA Act); however, more work is needed for effective implementation.
Data governance and the transition to a new administration . OMB and Treasury have established a new Data Standards Committee responsible for maintaining established standards and developing new data elements or data definitions. Although this represents progress, more remains to be done to establish a data governance structure that is consistent with leading practices to ensure the integrity of data standards over time. The transition to a new administration presents risks to implementing the DATA Act, including a potential shift in priorities. The lack of a robust and institutionalized data governance structure for managing efforts going forward also presents risks regarding the ability of agencies to meet the statutory deadlines in the event that priorities shift over time.
Implementation plan updates . According to the 24 Chief Financial Officers (CFO) Act agencies’ implementation plan updates, most of them continue to face challenges implementing the DATA Act. GAO identified four overarching categories of challenges reported by agencies that may impede their ability to effectively and efficiently implement the DATA Act: systems integration issues, lack of resources, evolving and complex reporting requirements, and inadequate guidance. To address these challenges, most agencies reported taking mitigating actions, such as making changes to internal policies and procedures, leveraging existing resources, and employing manual and temporary workarounds. However, the information reported by the CFO Act agencies in their implementation plan updates indicates that some agencies are at increased risk of not meeting the May 2017 reporting deadline because of these challenges. In addition, inspectors general for some agencies have issued readiness review reports indicating that their respective agencies are at risk of not meeting the reporting deadline.
Operationalizing data standards and technical specifications for data reporting . In November 2016, OMB issued additional guidance on how agencies should report financial information involving specific transactions, such as intragovernmental transfers, and how agency senior accountable officials should provide quality assurances for submitted data. Although OMB has made some progress with these efforts, other data definitions lack clarity which still needs to be addressed to ensure that agencies report consistent and comparable data. In September 2016, Treasury updated its version of the DATA Act broker, which it stated was fully capable of performing the key functions of extracting and validating agency data. Treasury officials stated that although they plan to continue to refine the broker to improve its functionality and overall user experience, they have no plans to alter key functions. Agencies have reported making progress creating their data submissions and testing them in the broker, but work remains before actual reporting can begin. Some agencies reported in their implementation plan updates that they developed plans for interim solutions, but some of these interim solutions rely on manual processing, which can be burdensome and increase the risk for errors.
Pilot to reduce recipient reporting burden . GAO's review of the revised design for both the grants and procurement portions of the pilot found that they partly met each of the leading practices for effective pilot design. Although this represented significant progress since April 2016, GAO identified an area where further improvement is still needed. Specifically, the plan for the procurement portion of the pilot does not clearly describe and document how findings related to centralized certified payroll reporting will be applicable to other types of required procurement reporting. Further, in November 2016, this portion of the pilot was delayed to ensure that security procedures were in place to protect personally identifiable information.
section_title: What GAO Recommends
paragraphs: In addition to prior recommendations that GAO has made, in its most recent report, GAO recommends that OMB take steps to help ensure that the procurement portion of the pilot better reflects leading practices for effective pilot design. OMB neither agreed nor disagreed with the recommendation.

section_title: Letter
paragraphs: I am pleased to be here today to discuss steps that the Office of  Management and Budget (OMB), the Department of the Treasury  (Treasury), and federal agencies have taken to implement the Digital  Accountability and Transparency Act of 2014 (DATA Act). As you know,  the critical deadline of May 2017 is approaching, at which time agencies  will be required to report their financial and payment data in compliance  with established standards. We have previously reported that OMB and  Treasury have taken significant steps toward implementing the act’s  various requirements, including standardizing data element definitions,  issuing guidance to help agencies develop their implementation plans,  and designing a pilot for developing recommendations to reduce recipient  reporting burden. We have also reported that agencies have identified  challenges to the effective and timely implementation of the DATA Act,  including inadequate guidance, tight time frames, competing priorities, a  lack of funding, and system integration issues, and are taking actions to  mitigate these challenges.
Today, we are releasing another report in a series of interim reports that  GAO is providing to the Congress in fulfillment of our mandate to provide  oversight of DATA Act implementation. Our report examined (1) steps  taken by OMB and Treasury to establish a clear data governance  structure, which is particularly important for the transition to a new  administration; (2) challenges reported by major agencies in their  implementation plan updates; (3) the operationalization of government- wide data standards and technical specifications for data reporting; and  (4) updated designs for the pilot for reducing recipient reporting burden  and progress made in its implementation. My statement will highlight key  findings and the recommendation from our report and provide updates on  the status of some of GAO’s prior recommendations. As part of this  work, we analyzed OMB and Treasury documents and interviewed OMB  and Treasury staff and officials. We reviewed DATA Act implementation  plan updates from the Chief Financial Officers Act of 1990 (CFO Act)  agencies to determine challenges they continue to face. In addition, we  reviewed documentation from and interviewed officials from various  federal agencies to obtain information on (1) agencies’ use of technical  guidance and (2) design of the pilot for reducing recipient reporting  burden (Section 5 Pilot). The work upon which this statement is based  was performed in accordance with generally accepted government  auditing standards. More details on our scope and methodology can be  found in appendix I of the report.
In brief, OMB and Treasury have taken steps to establish a data  governance structure, issued additional guidance, and improved the  Section 5 Pilot design; however, more work is needed for effective  implementation of the DATA Act. In addition, agencies continue to face  challenges and are taking steps to mitigate those challenges. I will  highlight some of the actions taken and reported challenges that we  describe in our report.
subsections: section_title: Data Governance and the Transition to a New Administration
paragraphs: OMB and Treasury have established a new Data Standards Committee  that will be responsible for maintaining established standards and  developing new data elements or data definitions that could affect more  than one functional community (e.g., financial management, financial  assistance, and procurement). Although this represents progress in  responding to GAO’s prior recommendation, more remains to be done to  establish a data governance structure that is consistent with leading  practices to ensure the integrity of data standards over time.
Several data governance models exist that could inform OMB’s and  Treasury’s efforts. Many of these models promote a common set of key  practices that include establishing clear policies and procedures for  developing, managing, and enforcing data standards. A common set of  key practices endorsed by standard-setting organizations recommends  that data governance structures include the key practices shown in the  text box below. We have shared these key practices with OMB and  Treasury.
1.  Developing and approving data standards.  2.  Managing, controlling, monitoring, and enforcing consistent  application of data standards.  3.  Making decisions about changes to existing data standards and  resolving conflicts related to the application of data standards.  4.  Obtaining input from stakeholders and involving them in key  decisions, as appropriate.  5.  Delineating roles and responsibilities for decision-making and  accountability, including roles and responsibilities for stakeholder  input on key decisions.
A robust, institutionalized data governance structure is important to  provide consistent data management during times of change and  transition. The transition to a new administration presents risks to  implementing the DATA Act, including potential shifted priorities or loss of  momentum. The lack of a robust and institutionalized data governance  structure for managing efforts going forward presents additional risks  regarding the ability of agencies to meet their statutory deadlines in the  event that priorities shift over time.
section_title: Implementation Plan Updates
paragraphs: In June 2016, OMB directed the 24 CFO Act agencies to update the initial  DATA Act implementation plans that they submitted in response to OMB’s  May 2015 request. In reviewing the 24 CFO Act agencies’ August 2016  implementation plan updates, we found that 19 of the 24 CFO Act  agencies continue to face challenges implementing the DATA Act. We  identified four overarching categories of challenges reported by these  agencies that may impede their ability to effectively and efficiently  implement the DATA Act: systems integration issues, lack of resources,  evolving and complex reporting requirements, and inadequate guidance.  To address these challenges, most agencies reported taking mitigating  actions, such as making changes to internal policies and procedures,  leveraging existing resources, utilizing external resources, and employing  manual and temporary workarounds.
However, the information reported by the CFO Act agencies in their  implementation plan updates indicates that some agencies are at  increased risk of not meeting the May 2017 reporting deadline because of  these challenges. In addition, inspectors general for some agencies, such  as the Departments of Labor and Housing and Urban Development, have  issued readiness review reports indicating that their respective agencies  are at risk of not meeting the reporting deadline. As discussed further  below, the technical software requirements for agency reporting are still  evolving, so any changes to the technical requirements over the next few  months could also affect agencies’ ability to meet the reporting deadline.
In August 2016, in response to a prior GAO recommendation, OMB  established procedures for reviewing and using agency implementation  plan updates that include procedures for identifying ongoing challenges.  According to the procedures document, OMB will also be monitoring  progress toward the statutory deadline and setting up meetings with any  of the 24 CFO Act agencies that OMB identifies as being at risk of not  meeting the implementation deadline.
section_title: Operationalizing Data Standards and Technical Specifications for Data Reporting
paragraphs: In May 2016, in response to a prior GAO recommendation, OMB released  additional guidance on reporting financial and award information required  under the act to address potential clarity, consistency, and quality issues  with the definitions of standardized data elements. While OMB’s  additional guidance addresses some of the limitations we have previously  identified, it does not address all of the clarity issues. For example, we  found that this policy guidance does not address the underlying source  that can be used to verify the accuracy of non-financial procurement data  or any source for data on assistance awards. In addition, in their  implementation plan updates, 11 of the 24 CFO Act agencies reported  ongoing challenges related to the timely issuance of, and ongoing  changes to, OMB policy and Treasury guidance. Eight agencies reported  that if policy or technical guidance continues to evolve or be delayed, the  agencies’ ability to comply with the May 2017 reporting deadline could be  affected.
In August 2016, OMB released additional draft guidance on how agencies  should report financial information involving specific transactions, such as  intragovernmental transfers, and how agency senior accountable officials  should provide quality assurances for submitted data. OMB staff told us  that this most recent policy guidance was drafted in response to  questions and concerns reported by agencies in their implementation plan  updates and in meetings with senior OMB and Treasury officials intended  to assess agency implementation status. OMB staff told us that they  received feedback from 30 different agencies and reviewed over 200  comments on the draft guidance. The final guidance was issued on  November 4, 2016.
Although OMB has made some progress with these efforts, other data  definitions lack clarity which still needs to be addressed to ensure that  agencies report consistent and comparable data. These challenges, as  well as the challenges identified by agencies, underscore the need for  OMB and Treasury to fully address our prior recommendation to provide  agencies with additional guidance to address potential clarity issues.
We also noted in our report being released today that the late release of  the schema version 1.0 may pose risks for implementation delays at  some agencies. The schema version 1.0, released by Treasury on April  29, 2016, is intended to standardize the way financial assistance awards,  contracts, and other financial data will be collected and reported under  the DATA Act. A key component of the reporting framework laid out in the  schema version 1.0 is the DATA Act Broker, a system to standardize data  formatting and assist reporting agencies in validating their data prior to  submitting them to Treasury. Treasury has been iteratively testing and  developing the broker using what Treasury describes as an agile  development process. On September 30, 2016, Treasury updated its  version of the broker, which it stated was fully capable of performing the  key functions of extracting and validating agency data. Treasury officials  told us that although they plan to continue to refine the broker to improve  its functionality and overall user experience, they have no plans to alter  these key functions.
Agencies have reported making progress creating their data submissions  and testing them in the broker, but work remains to be done before actual  reporting can begin. Some agencies reported in their implementation plan  updates that they developed plans for interim solutions to construct these  files until vendor-supplied software patches can be developed, tested,  and configured that will extract data to help their clients develop files that  comply with DATA Act requirements. However, some of these interim  solutions rely on manual processing, which can be burdensome and  increase the risk for errors.
section_title: Pilot to Reduce Recipient Reporting Burden
paragraphs: The Section 5 Pilot is designed to develop recommendations to reduce  the reporting burden for federal funds recipients. It has two primary focus  areas: federal grants and federal contracts (procurements). OMB  partnered with the Department of Health and Human Services to design  and implement the grants portion of the pilot and with the General  Services Administration to implement the procurement portion.
Our review of the revised design for both the grants and procurement  portions of the pilot found that they partly met each of the leading  practices for effective pilot design (shown in the text box below).
1.  Establish well-defined, appropriate, clear, and measurable  objectives.  2.  Clearly articulate an assessment methodology and data gathering  strategy that addresses all components of the pilot program and  includes key features of a sound plan.  3.  Identify criteria or standards for identifying lessons about the pilot to  inform decisions about scalability and whether, how, and when to  integrate pilot activities into overall efforts.  4.  Develop a detailed data-analysis plan to track the pilot program’s  implementation and performance and evaluate the final results of  the project and draw conclusions on whether, how, and when to  integrate pilot activities into overall efforts.  5.  Ensure appropriate two-way stakeholder communication and input  at all stages of the pilot project, including design, implementation,  data gathering, and assessment.
We also determined that the updated design for both portions of the  Section 5 Pilot meets the statutory requirements for the pilot established  under the DATA Act. Specifically, the DATA Act requires that the pilot  program include the following design features: (1) collection of data  during a 12-month reporting cycle; (2) a diverse group of federal award  recipients and, to the extent practicable, recipients that receive federal  awards from multiple programs across multiple agencies; and (3) a  combination of federal contracts, grants, and subawards with an  aggregate value between $1 billion and $2 billion.
Although this represented significant progress since April 2016, we  identified an area where further improvement is still needed. Specifically,  the plan for the procurement portion of the pilot does not clearly describe  and document how findings related to centralized certified payroll  reporting will be more broadly applicable to the many other types of  required procurement reporting. This is of particular concern given the  diversity of federal procurement reporting requirements.
Implementation of the grants portion of the pilot is currently under way,  but the procurement portion is not scheduled to begin until early 2017.  Department of Health and Human Services officials and OMB staff told us  that they are recruiting participants and have begun administering data  collection instruments for all components of the grants portion of the pilot.  However, in late November 2016, OMB staff and General Services  Administration officials informed us that they decided to delay further  implementation of the procurement portion of the pilot in order to ensure  that security procedures designed to protect personally identifiable  information were in place. As a result, General Service Administration  officials expect to be able to begin collecting data through the centralized  reporting portal sometime between late January 2017 and late February  2017. OMB staff stated that despite the delay, they still plan on collecting  12 months of data through the procurement pilot as required by the act.
In our report being released today, we made a new recommendation to  OMB that would help ensure that the procurement portion of the Section 5  Pilot better reflects leading practices for effective pilot design. In  commenting on the report being released today, OMB neither agreed nor  disagreed with the recommendation, but provided an overview of its  implementation efforts since passage of the DATA Act. These efforts  include issuing three memorandums providing implementation guidance  to federal agencies, finalizing 57 data standards for use on  USASpending.gov, establishing the Data Standards Committee to  develop and maintain standards for federal spending, and developing and  executing the Section 5 Pilot. OMB also noted that, along with Treasury, it  met with each of the 24 CFO Act agencies to discuss the agency’s  implementation timeline, unique risks, and risk mitigation strategy and  took action to address issues that may affect successful DATA Act  implementation. According to OMB, as a result of these one-on-one  meetings with agencies, OMB and Treasury learned that in spite of the  challenges faced by the agencies, 19 of the 24 CFO Act agencies expect  that they will fully meet the May 2017 deadline for DATA Act  implementation.
Treasury also provided comments on our report being released today. In  its comments, Treasury provided an overview of the steps it has taken to  implement the DATA Act’s requirements and assist agencies in meeting  the requirements under the act, including OMB’s and Treasury’s issuance  of uniform data standards, technical requirements, and implementation  guidance. Treasury’s response also noted that as a result of the  aggressive implementation timelines specified in the act and the  complexity associated with linking hundreds of disconnected data  elements across the federal government, it made the decision to use an  iterative approach to provide incremental technical guidance to agencies.  Treasury noted, among other things, that this iterative approach enabled  agencies and other key stakeholders to provide feedback and contribute  to improving the technical guidance and the public website.
Chairman Meadows, Ranking Member Connolly, and Members of the  Subcommittee, this concludes my prepared statement. I would be happy  to answer any questions that you may have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff have any questions about this testimony, please  contact Paula M. Rascona at (202) 512-9816 or rasconap@gao.gov.  Contact points for our Offices 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 Michael LaForge (Assistant  Director), Peter Del Toro (Assistant Director), Maria Belaval, Aaron  Colsher, Kathleen Drennan, Thomas Hackney, Diane Morris, Katherine  Morris, and Laura Pacheco.
section_title: Related GAO Products
paragraphs: DATA Act: OMB and Treasury Have Issued Additional Guidance and  Have Improved Pilot Design but Implementation Challenges Remain.  GAO-17-156. Washington, D.C.: December 8, 2016.
DATA Act: Initial Observations on Technical Implementation.  GAO-16-824R. Washington, D.C.: August 3, 2016.
DATA ACT: Improvements Needed in Reviewing Agency Implementation  Plans and Monitoring Progress. GAO-16-698. Washington, D.C.: July 29,  2016.
DATA Act: Section 5 Pilot Design Issues Need to Be Addressed to Meet  Goal of Reducing Recipient Reporting Burden. GAO-16-438. Washington,  D.C.: April 19, 2016.
DATA Act: Progress Made but Significant Challenges Must Be Addressed  to Ensure Full and Effective Implementation. GAO-16-556T. Washington,  D.C.: April 19, 2016.
DATA Act: Data Standards Established, but More Complete and Timely  Guidance Is Needed to Ensure Effective Implementation. GAO-16-261.  Washington, D.C.: January 29, 2016.
DATA Act: Progress Made in Initial Implementation but Challenges Must  be Addressed as Efforts Proceed. GAO-15-752T. Washington, D.C.: July  29, 2015.
Federal Data Transparency: Effective Implementation of the DATA Act  Would Help Address Government-wide Management Challenges and  Improve Oversight. GAO-15-241T. Washington, D.C.: December 3, 2014.
Data Transparency: Oversight Needed to Address Underreporting and  Inconsistencies on Federal Award Website. GAO-14-476. Washington,  D.C.: June 30, 2014.
Federal Data Transparency: Opportunities Remain to Incorporate  Lessons Learned as Availability of Spending Data Increases.  GAO-13-758. Washington, D.C.: September 12, 2013.
Government Transparency: Efforts to Improve Information on Federal  Spending. GAO-12-913T. Washington, D.C.: July 18, 2012.
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