DATA Act: Progress Made in Initial Implementation but Challenges Must be Addressed as Efforts Proceed
Published: 2015-07-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The DATA Act directs OMB and Treasury to establish government-wide data standards by May 2015. The act also requires agencies to begin reporting financial spending data using these standards by May 2017 and to post spending data in machine- readable formats by May 2018. This statement is part of a series of products that GAO will provide the Congress as the DATA Act is implemented.
This statement discusses four DATA Act implementation areas to date: (1) establishment of government-wide data standards; (2) OMB and Treasury's effort to establish a governance structure and obtain stakeholder input; (3) the status of the potential transfer of the ROC's assets to Treasury; and (4) the pilot program to reduce reporting burden. GAO reviewed the first 15 data elements finalized under the act; analyzed key documents, technical specifications and applicable guidance; interviewed OMB, Treasury, HHS, and other staff as well as officials from organizations representing non-federal stakeholders; and reviewed literature.
section_title: What GAO Found
paragraphs: Since the Digital Accountability and Transparency Act (DATA Act) became law in May 2014, the Office of Management and Budget (OMB) and the Department of the Treasury (Treasury) have taken significant steps towards implementing key provisions. These steps include the release of 27 data standards, draft technical documentation, and implementation guidance to help federal agencies meet their responsibilities under the act. However, given the complexity and government-wide scale of activities required by the DATA Act, much more remains to be done.
Data standards. OMB and Treasury have proposed standardizing 57 data elements for reporting under the act. They released 15 elements on May 8, 2015, a year after the passage of the act, and have since released 12 more. Eight of the first 15 were new elements required under the DATA Act; the balance were required under the Federal Funding Accountability and Transparency Act of 2006. GAO identified several issues that may impact the quality and ability to aggregate federal spending data. For example, GAO found: (1) the data standards may not provide a complete picture of spending by program unless OMB accelerates its efforts to produce an inventory of federal programs as required under the GPRA Modernization Act of 2010 (GPRAMA); (2) the data standards and elements may not yet represent all that are necessary to fully capture and reliably report on federal spending; and (3) the draft technical specifications GAO reviewed may result in the reporting of inconsistent information. GAO shared its observations with officials who are considering revisions and updating their technical documentation.
Governance and stakeholder engagement. OMB and Treasury have made progress in initial implementation activities by developing structures for project management and data governance as well as for obtaining stakeholder input. However, GAO found that additional effort to address the whole lifecycle of standards development will be needed to ensure that the integrity of data standards is maintained over time. Establishing these policies and procedures now could provide an opportunity for OMB and Treasury to build on existing efforts to reach out to stakeholders by taking steps to foster effective two-way communication to help ensure that the concerns of interested parties are responded to and addressed as appropriate on an ongoing and timely basis.
Recovery Operations Center (ROC). GAO's review of the potential transfer of the ROC's assets found that Treasury does not plan to assume these assets because of a number of impediments. Instead, Treasury has focused on facilitating information sharing between the ROC and Treasury's Do Not Pay initiative, which assists agencies in preventing improper payments. GAO has ongoing work on this issue and plans to issue a report later this year.
Reporting burden pilot. The DATA Act requires OMB to establish a 2-year pilot program to develop recommendations for reducing reporting burden for recipients of federal awards. The pilot was launched this May with the initiation of a national dialogue on reducing reporting burden, building of an online repository of common grants-related data elements, and addition of grants-related resources on Grants.gov. GAO also has ongoing work focusing on this pilot.
section_title: What GAO Recommends
paragraphs: GAO recommends that OMB accelerate efforts to merge DATA Act purposes with the production of a federal program inventory under GPRAMA, and that OMB and Treasury (1) establish policies and processes for a governance structure to maintain the integrity of data standards over time and (2) enhance policies and procedures to provide for ongoing and effective two-way dialogue with stakeholders. OMB staff, Treasury officials, and others provided technical comments which GAO incorporated as appropriate.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss the status of implementation of  the Digital Accountability and Transparency Act of 2014 (DATA Act) and  to share our observations regarding the progress that has been made to  date and key challenges going forward. I would like to begin by  commending you, along with the full Committee, for your sustained  leadership on data transparency and accountability issues. Given the  scope and complexity of the changes required by the DATA Act across  the federal government, regular oversight from the Congress is key,  particularly early on in the act’s multi-year implementation phase. As I  testified before the full Committee last December, early planning  accompanied by careful oversight can help build a solid foundation so  that key provisions of the DATA Act are effectively implemented in a  timely manner.
The DATA Act directs the Office of Management and Budget (OMB) and  the Department of the Treasury (Treasury) to establish government-wide  data standards by May 2015. The act also requires agencies to begin  reporting financial spending data using these standards by May 2017 and  to post spending data on USASpending.gov or an alternate system by  May 2018. OMB and Treasury have taken several significant steps towards meeting these requirements including the release of 27 discrete  data standards, draft technical specifications, and implementation  guidance intended to help federal agencies meet their responsibilities  under the act. However, given the government-wide scope of the  technical and cultural reforms required by the DATA Act, much more  remains to be done.
Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
7 percent—contained information that was fully consistent with  agency records for all 21 data elements we examined.
In that regard, I would like to underscore the vital importance of building  the necessary agency capacities to implement such standards. The best  standards in the world will be of little value if agencies are not prepared to  collect and report quality data in conformance with those standards.
As you know, the DATA Act requires GAO to issue reports in 2017, 2019,  and 2021 assessing and comparing the quality of data submitted under  the DATA Act as well as agency implementation and use of data  standards. Consistent with these requirements, we are committed to  assisting congressional oversight by being a continuing presence to  monitor OMB, Treasury, and federal agencies’ actions as data standards  are developed and implemented, and to work with inspectors general to  ensure an efficient and effective audit process is in place to help ensure  data quality. Toward that end, we plan to provide congressional and  executive branch decision makers with information and  recommendations, as appropriate, throughout the DATA Act  implementation process.
Our overall oversight approach is structured around two high-level  themes: the first focuses on issues and challenges related to the design  and implementation of the act’s provisions, and the second concerns  opportunities and challenges related to the different uses of the  information collected under the act. These themes are drawn from a  variety of sources including the DATA Act’s stated purposes, our prior  work on federal data transparency and the implementation of the  Recovery Act, and key oversight and management challenges. We have  three evaluations already underway examining different aspects of DATA   We have also been coordinating closely with federal  Act implementation.inspectors general to leverage information and reduce duplication of effort  as they conduct reviews and develop common audit guidance and  practices. As part of this effort, we will work with our inspectors general  colleagues to ensure sufficient attention is being devoted to agencies’  capacity to meet their responsibilities under the act.
My testimony today will address four topics related to implementation of  the DATA Act to date: (1) issues regarding the establishment of  government-wide data standards; (2) observations regarding key  components underlying successful implementation of the act including  establishing structures for project management and data governance and  obtaining and incorporating stakeholder input; (3) the status of the  potential transfer of the Recovery Operations Center’s (ROC) assets to  Treasury; and (4) actions taken related to the required pilot program on  reducing recipient reporting burden.
For this statement, we analyzed the definitions of the first 15 finalized  data elements released on May 8, 2015, technical specifications, and  applicable guidance related to implementation of the DATA Act; reviewed  relevant literature including our previous reports in the areas of the  federal budget, federal financial reporting, change management, and  collaborative practices; interviewed OMB, Treasury, and U.S. Department  of Health and Human Services (HHS) officials responsible for  implementing key provisions of the act; and interviewed Recovery Board  officials as well as officials from organizations representing key non- federal stakeholders including state and local governments and other  federal fund recipients. We conducted this performance audit from May  2015 to July 2015 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Continued Attention Is Needed To Ensure Consistency, Comparability, and Completeness of Data Standards
paragraphs: The DATA Act requires OMB and Treasury to establish government-wide  financial data standards for the specific items to be reported under the  act. These specific items are generally referred to as “data elements.”  The standards for these data elements consist of two distinct but related  components as described in the text box:
Definitions which describe what is included in the element with the  aim of ensuring that information will be consistent and comparable.
Technical specifications on the format, structure, tagging, and  transmission of each data element. OMB and Treasury have  developed a data exchange, also known as a technical schema,  which is intended to provide a comprehensive view of the data  definitions and their relationships to one another.
OMB and Treasury have proposed standardizing 57 data elements for  reporting under the act. They released 15 elements in May 2015, a year  after the passage of the act, and have since released 12 more. Eight of  these were new elements required under the DATA Act; the balance of  the first 15 data elements were required under the Federal Funding  Accountability and Transparency Act of 2006 (FFATA). Figure 1 provides  a list of these data elements and their roll-out schedule. Officials told us  that they expect to complete the process by the end of the summer.
subsections: section_title: Further Guidance Will Be Needed to Ensure Consistency and Comparability of Program-Related Data
paragraphs: The DATA Act requires the establishment of standards that produce  consistent and comparable data across programs, agencies, and time.  We reviewed the first set of 15 data standards finalized by OMB and  Treasury in May 2015. We found that most of the elements adhere to the  definitions used in widely accepted government standards such as OMB  Circular A-11 and the Census Bureau’s North American Industry  Classification System. For example, as required by the DATA Act, OMB  and Treasury provided a standard for “program activity” and finalized the  definition as “a specific activity or project listed in the program and  financing schedules of the annual budget of the United States  Government.”
Program activities are a long-standing reporting structure in the federal  budget and are intended to provide a meaningful representation of the  operations funded by a specific budget account. Therefore, program  activities can be mission or program focused. For example, the Federal  Emergency Management Agency’s program activities include  “Response,” “Recovery,” and “Mitigation,” and the Environmental  Protection Agency’s program activities include “Clean and Safe Water”  and “Healthy Communities and Ecosystems.”
Program activities can also be organized by type of personnel such as  Officers, Enlisted, and Cadets, in the Army’s Military Personnel Account,  or by organizational unit such as the National Cancer Institute, and  National Heart, Lung, and Blood Institute in the National Institutes of  Health. As the examples illustrate, OMB and Treasury will need to build  on the program activity structure and provide agencies with guidance if  they are to meet the stated purpose of the DATA Act to “link federal  contract, loan, and grant spending information to federal programs to  enable taxpayers and policy makers to track federal spending more  effectively.” To underscore the differences between program activities  and programs, our September 2005 Glossary of Terms Used in the  Federal Budget Process defines a program as “an organized set of  activities directed toward a common purpose or goal that an agency  undertakes or proposes to carry out its responsibilities.”
The GPRA Modernization Act of 2010 (GPRAMA), among other things,  requires OMB to make publicly available, on a central government-wide  website, a list of all federal programs identified by agencies. For each  program, the agency is to provide to OMB for publication an identification  of how the agency defines the term “program,” consistent with OMB  guidance, including program activities that were aggregated,  disaggregated, or consolidated to be considered a program by the  agency; a description of the purposes of the program and how the  program contributes to the agency’s mission and goals; and an  identification of funding for the current fiscal year and the previous 2 fiscal  years.
Effective implementation of both the DATA Act and GPRAMA’s program  inventory provisions, especially the ability to crosswalk spending data to  individual programs, could provide vital information to assist federal  decision makers in addressing significant challenges the government  faces. As our annual reports on fragmentation, overlap, and duplication  have highlighted, creating a comprehensive list of federal programs along  with related funding and performance information is critical for identifying  potential fragmentation, overlap, or duplication among federal programs  or activities. The lack of such a list makes it difficult to determine the scope of the federal government’s involvement in particular areas and the  results it is achieving, and therefore, where action is needed to eliminate,  reduce, or better manage fragmentation, overlap, or duplication. Until  these steps are taken and linked to the appropriate program activity data  element, OMB and Treasury will be unable to provide a complete picture  of spending by federal programs as required under the act.
Our recent work reviewing implementation of GPRAMA identified a  number of challenges related to executive branch efforts to identify and  define federal programs. OMB staff explained that a one-size-fits-all  approach does not work well; agencies and their stakeholders use the  term “program” in different ways because agencies achieve their missions  through different programmatic approaches. Therefore, OMB issued  guidance allowing agencies flexibility to define their programs using  different approaches, but within a broad definition of what constitutes a  program—a set of related activities directed toward a common purpose or  goal. Not surprisingly, our October 2014 report reviewing implementation  of GPRAMA’s program inventory requirements showed that agencies did  indeed use different approaches to define their programs. We reported  that these differences limited the comparability of programs within and  across agencies.
We made related recommendations in our October 2014 report aimed at  improving the completeness and comparability of the program inventory.  In commenting on that report, OMB staff generally agreed with those  recommendations. According to OMB staff, as of June 2015 they have  not taken any actions to address these recommendations, because  implementation of the program inventory requirements remains on hold  as OMB determines how best to merge that effort with implementation of  the DATA Act. One approach could be for OMB to explore ways to  improve the comparability of program data by using tagging or similar  approaches that allow users to search by key words or terms and  combine elements based on the user’s interests and needs. This merging  could help ensure consistency in the reporting of related program-level  spending information. As a result, we recommend the following:   To ensure that federal program spending data are provided to the  public in a transparent, useful, and timely manner, we recommend  that the Director of OMB accelerate efforts to determine how best to  merge DATA Act purposes and requirements with the GPRAMA  requirement to produce a federal program inventory.
section_title: Data Standards and Elements Proposed by OMB and Treasury May Not Yet Represent All That Are Necessary to Fully Capture and Reliably Report on Federal Spending
paragraphs: The DATA Act requires Treasury, in consultation with OMB, to publish a  report of funds made available to, or expended by, federal agencies and  their components on USAspending.gov or an alternative system. Given  that OMB has not yet provided an example of the form and content of the  envisioned financial reporting under the DATA Act, it is difficult to  determine at this point whether additional data standards and elements  are needed. As Treasury and OMB continue establishing the DATA Act  data standards and elements, linking them to established financial  accounting and reporting processes will be important in helping ensure  consistency and comparability of the information reported and could  provide a means for determining data quality between new financial  information reported under the DATA Act and information in audited  agency financial statements. For example, certain data standards and  elements used by agencies in reporting financial data in their audited  Statement of Budgetary Resources may also be used to report certain  agency budgetary data under the DATA Act. In addition, the DATA Act  requires Treasury to include certain financial information similar to that  reported in the Schedule of Spending, which is included in agency annual  financial reports, as required by OMB Circular No. A-136, Financial  Reporting Requirements. Therefore, established data standards and  elements used by agencies in preparing this unaudited schedule could be  used to report certain information under the DATA Act. Further,  leveraging existing and establishing new controls over the data standards  and elements—financial and non-financial—used in reporting under the  DATA Act could help ensure data reliability.
The DATA Act also requires OMB and Treasury to incorporate widely  accepted common data standards and elements, to the extent reasonable  and practicable, such as those developed and maintained by international  standards-setting bodies and accounting standards organizations, in a  machine-readable format. As OMB and Treasury move forward with  establishing data standards, given their limited time and resources, they  could benefit from leveraging existing international standards for digital  reporting of financial, performance, risk, or compliance information. For  example, the International Organization for Standardization (ISO) has  developed data standards such as one that describes an internationally  accepted way to represent dates and times which may help address the  DATA Act requirement to establish a standard method of conveying a  reporting period. The ISO also has a standard for a digital object  identification system which may help address the DATA Act requirements  to have a unique identifier and use a widely accepted, nonproprietary,  searchable, platform-independent, machine-readable format. The use of  such standards helps reduce uncertainty and confusion with  organizations interpreting standards and reporting differently which could  lead to inconsistent results and unreliable data.
section_title: Treasury Is Aware of Issues with Its Technical Schema and Intends to Address Concerns
paragraphs: Treasury’s draft technical schema is intended to standardize the way  financial assistance, contract, and loan award data, as well as other  financial data, will be collected and reported under the DATA Act. Toward  that end, the technical schema describes, among other things, the  standard format for data elements including their description, type, and  length. We reviewed version 0.2 of the technical schema that was publicly   Treasury officials said that they are testing this  released in May 2015.schema and are continually revising it based on considerations of these  tests as well as feedback they receive from stakeholders. In light of this,  we shared the following potential issues with Treasury.
Treasury developed a subset of the schema based on the U.S. Standard  General Ledger, which provides a uniform chart of accounts and technical  guidance for standardizing federal agency accounting of financial activity.  We found that some of the data elements, as defined in the most recent  draft version available for us to review, could allow for inconsistent  information to be entered. For example, alphabetic characters could be  entered into a data field that should only accept numeric data. This could,  in turn, affect the proper reporting, reliability, and comparability of  submitted data. Further, OMB and Treasury intended to fulfill a portion of  their requirements by leveraging existing agency reporting. Going  forward, the technical schema will need to describe enhancements or  changes to current financial reporting.
We also noted that the schema does not currently identify the computer  markup language (i.e., standards for annotating or tagging information so  that it can be transmitted over the Internet and readily interpreted by  disparate computer systems) that agencies can use for communicating  financial data standards. Treasury officials said they plan to address this  issue in a forthcoming version of the schema, which they estimated would  be publicly released by the end of the summer. We will continue to review  additional versions of the schema and will share our views with Treasury  and you.
section_title: OMB and Treasury Established a Framework for Developing Data Standards, but Action Is Needed to Ensure the Integrity of the Standards Is Maintained over Time
subsections: section_title: OMB and Treasury Established a Governance Structure for Overall Implementation of the DATA Act
paragraphs: The DATA Act designates OMB and Treasury to lead government-wide  implementation efforts. Toward that end, OMB and Treasury have  established a governance framework that includes structures for both  project management and data governance. At the top of this framework is  an executive steering committee, which is responsible for setting  overarching policy guidance and making key policy decisions affecting  government-wide implementation of the act. The executive steering  committee consists of two senior administration individuals: OMB’s  Controller and Treasury’s Fiscal Assistant Secretary. The executive  steering committee is supported by the Interagency Advisory Committee  (IAC), which is responsible for providing recommendations to the steering  committee related to DATA Act implementation. The IAC includes the  chairs of various federal government-wide councils as well as other  agency officials. In addition, the IAC members are responsible for  updating their respective agencies and for providing leadership in  implementing DATA Act requirements. As part of their plans for agency  implementation, OMB and Treasury have asked federal agencies to  identify a Senior Accountable Official and organize an agency-wide team  to coordinate agency-level implementation activities.
OMB and Treasury have made progress in developing a governance  structure for government-wide implementation. However, a recent  Treasury Office of the Inspector General (OIG) report raised a number of  concerns with Treasury’s project management practices that the OIG  believes could hinder the effective implementation of the act if not  addressed.management documents designed to track the implementation of  significant DATA Act workstreams lacked several key attributes—such as  project planning tools, progress metrics, and collaboration  documentation—called for by project management best practices. Due to  the complexities involved, OMB and Treasury are using a mix of both  agile and traditional project management approaches to implement the  DATA Act.
Specifically, the Treasury OIG found that project  However, the Treasury OIG found that project planning documents did  not describe the different approaches being used for each workstream.  The Treasury OIG recommended that Treasury’s Fiscal Assistant  Secretary strengthen project management over the DATA Act’s  implementation by defining the project management methodology being  used for each significant workstream and ensuring that project  management artifacts appropriate to those methodologies are adopted  and maintained. Treasury agreed with the OIG findings and stated that it  was taking corrective action in response, including a commitment to  implementing a recognized agile development approach in an appropriate  and disciplined manner for each workstream and improving  documentation to identify when the agile approach is being used.  Treasury OIG officials told us that they are continuing to monitor OMB  and Treasury project management efforts and will report their audit  findings on an ongoing basis. In coordination with the Treasury OIG, we  will be monitoring OMB and Treasury’s governance process as part of our  ongoing work as well.
section_title: Additional Action Is Needed to Help Ensure the Integrity of Data Standards Is Maintained In Coming Years
paragraphs: OMB and Treasury have taken steps to establish a governance process  for developing data standards. However, more effort is needed to build a  data governance structure that not only addresses the initial development  of the data standards but also provides a framework for adjudicating  revisions, enforcing the standards, and maintaining the integrity of  standards over time. One of the key responsibilities of the IAC is to  provide support for the development of data standards. In this capacity,  the IAC is responsible for developing white paper proposals and building  consensus within members’ respective communities for new standardized  data elements that align with existing business practices across multiple  reporting communities (e.g., grants, procurement, and financial reporting)  that will be using the standards. OMB and Treasury officials told us that  while they have established a process to develop data standards through  the IAC, they have not yet instituted procedures for maintaining the  integrity of the standards over time. According to these officials, they are  taking an iterative approach to developing additional procedures for data  governance, similar to their overall approach for managing the  implementation of the act.
Industry and technology councils, and domestic and international  standards-setting organizations, endorse the establishment and use of  governance structures to oversee the development and implementation of  standards. While there are a number of governance models, many of  them promote a set of common principles that includes clear policies and  procedures for broad-based participation from a cross-section of  stakeholders for managing the standard-setting process and for  controlling the integrity of established standards. Standards-setting  organizations, such as the Software Engineering Institute (SEI), define  data governance as a set of institutionalized policies and processes that  can help ensure the integrity of data standards over time.
According to these entities, a data governance structure should have a  defined focus, such as monitoring policies and standards, monitoring and  reporting on data quality, and ensuring the consistency of the standards  across potentially different data definitions. These organizations also  suggest that for a data governance structure to be successful, an  organization needs clear processes and methods to govern the data that  can be standardized, documented, and repeatable. Ideally, this structure  could include processes for evaluating, coordinating, approving, and implementing changes in  standards from the initial concept through design, implementation,  testing, and release; maintaining established standards; and gaining a reasonable degree of agreement from stakeholders.
Going forward, in the absence of a clear set of institutionalized policies  and processes for developing standards and for adjudicating necessary  changes, the ability to sustain progress and maintain the integrity of  established data standards may be jeopardized as priorities and data  standards shift over time. As a result, we are recommending the following  action:  To ensure that the integrity of data standards is maintained over time,  we recommend that the Director of OMB, in collaboration with the  Secretary of the Treasury, establish a set of clear policies and  processes for developing and maintaining data standards that are  consistent with leading practices for data governance.
section_title: OMB and Treasury Have Obtained Input from Stakeholders; As Implementation Progresses Communication Will Become Even More Important
paragraphs: One component of good data governance involves establishing a process  for consulting with and obtaining agreement from stakeholders. In fact,  the DATA Act requires OMB and Treasury to consult with public and  private stakeholders when establishing data standards. Recognizing the  importance of engaging on data standards, OMB and Treasury have  taken the following steps:  convened a town hall meeting on data transparency in late September  2014 to, in part, allow stakeholders to share their views and  recommendations; published a Federal Register notice seeking public comment on the establishment of financial data standards by November 25, 2014; presented periodic updates on the status of DATA Act implementation  to federal and non-federal stakeholders at meetings and conferences;  solicited public comment on data standards using GitHub, an online  collaboration space, including the posing of general questions in  December 2014 and subsequently seeking public comment on  proposed data standards beginning in March 2015; and  collaborated with federal agencies on the development of data  standards and the technical schema through MAX.gov, an OMB- supported website.
Such efforts by OMB and Treasury have provided valuable opportunities  for non-federal stakeholders to provide input into the development of data  standards. However, more can be done to engage in meaningful two-way  dialogue with these stakeholders. Creating such a dialogue and an “open  exchange of ideas between federal and non-federal stakeholders” is  identified as an explicit goal of the Federal Spending Transparency  GitHub site established by OMB and Treasury. Moreover, the site’s  landing page links such interactive communication with the successful  development of data standards.
However, we found only a few examples that OMB and Treasury have  engaged in such a dialogue or have otherwise substantively responded to  stakeholder comments on the site. When we asked OMB and Treasury  officials how public comments from GitHub were considered when  finalizing the first 15 data standards issued in May 2015, they said that  none of the comments warranted incorporation and confirmed that  substantive replies to stakeholder comments were not posted.
Our work examining the implementation of the Recovery Act underscored  the importance of obtaining stakeholder input as guidance is developed to  address potential reporting challenges. We found that during  implementation of the Recovery Act, OMB and other federal officials  listened to recipients’ concerns and changed guidance in response, which  helped recipients meet reporting requirements. Some stakeholders we  spoke with cited the process OMB followed in developing Recovery Act  guidance as an example of effective two-way communication; however,  these stakeholders indicated that they have not experienced this same  level of outreach and communication with OMB and Treasury thus far  with DATA Act implementation. Without similar outreach for OMB and  Treasury’s current initiatives there is the possibility that reporting  challenges may be neglected or not fully understood and therefore not  addressed, potentially impairing the data’s accuracy and completeness or  increasing reporting burden.
As DATA Act implementation progresses, establishing an effective two- way dialogue will likely become even more important. As they primarily  pertain to federal budget reporting activities, the first set of 15 data  elements finalized in May 2015 may not have been viewed as being  directly applicable to some non-federal stakeholders including state and  local governments. However, future data elements to be issued by OMB  and Treasury are directly related to federal grants and contracts. These  may be perceived as being more relevant to states, localities, businesses,  nonprofits, and other non-federal stakeholders, resulting in increased  questions and desire for input and involvement from these communities.
Additional policies and procedures that address the whole lifecycle of  standards development will be needed to ensure the integrity of  government-wide financial data standards is maintained over time. These  policies and procedures could also provide an opportunity for OMB and  Treasury to establish effective two-way communication with a broad  representation of federal fund recipients to ensure all interested parties’  concerns are addressed as this important work continues. As a result we  are making the following recommendation:  To ensure that interested parties’ concerns are addressed as  implementation efforts continue, we recommend that the Director of  OMB, in collaboration with the Secretary of the Treasury, build on  existing efforts and put in place policies and procedures to foster  ongoing and effective two-way dialogue with stakeholders including  timely and substantive responses to feedback received on the Federal  Spending Transparency GitHub website.
section_title: Treasury Does Not Plan To Transfer Recovery Operations Center Assets
paragraphs: The DATA Act authorizes Treasury to establish a data analysis center or  to expand an existing service, to provide data, analytic tools, and data  management techniques for preventing or reducing improper payments  and improving the efficiency and transparency in federal spending.  Should Treasury elect to establish a data analysis center or expand an  existing service, all assets of the Recovery Accountability and  Transparency Board (Recovery Board) that support the operations and  activities of the Recovery Operations Center (ROC)—a central data  analytics service to support fraud detection and prevention and assist the  oversight communities in their efforts to prevent fraud, waste, and  abuse—will be transferred to Treasury by September 30, 2015, the day  that the authority for the Recovery Board expires. Treasury officials have  told us that the department does not plan to transfer any of the ROC’s  assets, and, as discussed below, outlined the challenges that led to this  decision. As a consequence, some OIGs who were the primary users of  the ROC will either need to develop, replace, or lose the existing  capabilities for certain audit and investigative services.
subsections: section_title: Initially Created to Improve Accountability of Recovery Act Funds, the ROC’s Tools and Techniques Have Been Extended to Other Federal Spending
paragraphs: The Recovery Act created the Recovery Board, made up of inspectors  general to promote accountability by overseeing recovery-related funds  and transparency by providing the public with easily accessible  information. To accomplish this goal, the Recovery Board established  the ROC to provide predictive analysis capability to help oversight entities focus limited  government oversight resources based on risk indicators such as a  program previously identified as high-risk, high-dollar-value projects,  past criminal history of key parties involved in a project, and tips from  citizens; and  in-depth fraud analysis capability to identify non-obvious relations  between legal entities using public information about companies.
After its initial mandate to oversee Recovery Act funds, subsequent  legislation expanded the Recovery Board’s mandate to include oversight  of all federal spending as well as funds appropriated for purposes related  to the impact of Hurricane Sandy. In addition to expanding its authority,  the legislation also extended the termination date of the Recovery Board  from September 30, 2013 to September 30, 2015.
The ROC serves as an independent central repository of tools, methods,  and expertise for identifying and mitigating fraud, waste, and  mismanagement of federal funds. The Recovery Board’s assets  supporting the ROC include human capital, hardware, data sets, and  software. (See figure 2.)
The ROC developed specialized data analytic capabilities that members  of the federal oversight community could leverage by submitting a request  for analysis. For instance:
The Appalachian Regional Commission (ARC) OIG used the ROC’s  capabilities to analyze text from A-133 single audit data to search for  indications of risk and identify the highest risk grantees for review.  This approach allowed the ARC OIG to identify 30 to 40 grantees out  of approximately 400 grants per year based on risk rather than  selecting grantees randomly based on geography and grant type.
The Environmental Protection Agency (EPA) OIG used the ROC’s  data visualizations of a link analysis, which identifies relationships  among entities involved in activities such as a fraud ring or an effort to  commit collusion, to present to juries. An EPA OIG official said that  the visualization of these relationships made it easier for juries to  understand how entities had collaborated in wrongdoing.
Since 2012, after its mandate was expanded to cover all federal funds,  over 50 federal OIGs and agencies have asked the ROC for help. Based  on requests for analysis compiled in the Recovery Board’s Annual  Reports, the ROC researched roughly 1.7 million entities associated with  $36.4 billion in federal funds during fiscal years 2013 and 2014. The  largest single user of ROC assistance over this time was the ARC OIG in  2012 and the Department of Homeland Security OIG in fiscal years 2013  and 2014.
section_title: Treasury Decided Not to Transfer the ROC’s Assets, Citing Cost and Other Challenges
paragraphs: To facilitate a potential transition, Recovery Board officials provided a  transition plan to Treasury in late spring of 2014. The plan provided an  overview of the ROC’s assets and presented possible scenarios for a  transition and steps needed including estimated time frames assuming a  transfer by September 30, 2015. In May 2015, Treasury officials told us  that the agency does not plan to transfer any of the ROC’s assets,  identifying the following challenges to assuming ROC’s assets:
Hardware. Although Treasury officials viewed hardware as being  feasible to transfer, in their assessment it was not cost effective to do  so because the ROC’s hardware is aging, lessening the value of  these assets.
Human capital. The agency would have to use the competitive hiring  process to hire key ROC employees, which can be time consuming. In  addition, because some ROC staff were term-limited hires or  contractors, a competitive hiring process would not guarantee that  ROC staff would ultimately be selected for employment.
Data sets. The ROC obtained access to federal datasets through  memoranda of understanding, which are not transferrable and  therefore would need to be negotiated. Commercially procured data  sets also are not transferrable but would instead have to go through a  procurement process.
Software contracts. Because the Recovery Board extended its  software contracts on a sole source basis when it was re-authorized  for 2 additional years, Treasury would need to use a competitive  procurement process to obtain these data analytic tools.
Because of these challenges, Treasury focused on facilitating information  sharing through meetings between the ROC and Treasury’s Do Not Pay  (DNP) initiative, which assists agencies in preventing improper payments.  Treasury officials stated that the expertise developed at the ROC was its  most valuable asset, so officials focused on meeting with the ROC staff to  discuss best practices and share knowledge with the DNP staff. In  addition, Treasury officials noted that they had hired the former Assistant  Director for Data and Performance Metrics at the Recovery Board as the  Director of Outreach and Business Process for DNP. Officials further  noted that the Director’s experience at the ROC included leveraging data  to identify high risk entities and conducting outreach to the ROC’s user  community—skills that Treasury officials said were complementary to  DNP’s activities. (See figure 3.)
In 2013, the Council of the Inspectors General on Integrity and Efficiency  (CIGIE) explored the viability of assuming some ROC assets to continue  providing analytic capabilities to the OIG community. CIGIE estimated  that it would cost $10.2 million per year to continue to run the ROC and  because CIGIE is primarily funded by membership dues, CIGIE  determined the additional cost to operate the ROC would be too  burdensome for the organization. A CIGIE official indicated they have  continued to look for opportunities to provide centralized data analytic  resources to OIGs. However, this official said given its financial  resources, any resources CIGIE might provide would be at a significantly  scaled back level compared to the ROC.
Some large OIGs that previously used the ROC intend to develop their  own analytic capabilities. However, according to some OIG officials, the  ROC’s closure may impact the audit and investigative capabilities of  some small and medium-sized OIGs who do not have the resources to  develop independent data analytics or pay fees for a similar service.  According to some OIG officials, the loss of the ROC’s analytical  capabilities could also result in auditors and investigators working more  staff hours to research the same types of linkages rather than verifying  the information that the ROC could provide in a shorter time. Treasury  officials stated that the Fiscal Service operations assist federal  agencies—including OIG and other law enforcement agencies—in  identifying, preventing, and recovering improper payments under existing  authorities. However, as noted earlier, our work on the potential impact of  the ROC’s sunset on the oversight community is on-going, and we have  not independently compared the services of Fiscal Service operations to  the ROC. We plan to issue a report on the ROC later this year.
section_title: OMB Has Launched a Pilot to Develop Recommendations for Reducing Recipient Reporting Burden
paragraphs: The DATA Act requires OMB to establish a 2-year pilot program to  develop recommendations for standardizing financial data elements,  eliminating unnecessary duplication, and reducing compliance costs for  recipients of federal awards. Toward this end, OMB has partnered with  the Department of Health and Human Services (HHS), the General  Services Administration (GSA), and the Chief Acquisition Officers Council  (CAOC). According to OMB staff, HHS is assisting OMB for grants- specific activities while GSA and the CAOC are doing so for contract- specific activities.
Our work to date has centered on the grants-related part of the pilot. The  pilot was launched this May with three activities: (1) a national dialogue  on reducing the reporting burden faced by recipients of federal funds; (2)  an online repository of common data elements; and (3) a new section on  Grants.gov with information about the grants lifecycle.
Conducting a national dialogue on reducing recipient reporting  burden. A national dialogue is being conducted for federal contractors  and grantees with a focus on sharing ideas for easing reporting burden,  eliminating duplication, and standardizing processes. According to OMB  and HHS officials, this online dialogue will be open on a public website  through May 2017 and comments will be actively reviewed, incorporated,  and addressed as appropriate.number of questions to federal award recipients in this dialogue, including  the following:   HHS, GSA, and CAOC have posed a  If you could change one thing that would ease your reporting burden  associated with your grants or sub-grants, what would it be (e.g., time,  cost, resource burden)?
If you have reporting requirements to the federal government, how are  those met?
If you could create a central reporting portal into which you could  submit all required reports, what capabilities/functions would you  include?
Online repository of common grants-related data elements. The HHS  DATA Act Program Management Office manages an online repository of  agreed-upon standardized data elements, called the Common Data  Element Repository (C-DER) Library, to be an authorized source for data  elements and definitions used by the federal government in agency  interactions with the public. The C-DER is designed to include data  standards that have been approved through the implementation of the  DATA Act. Specifically, as of July 16, 2015, the C-DER is populated  with 112 data elements from a variety of sources.finalized by OMB and Treasury under the DATA Act on May 8, 2015, are  included in the C-DER; however the remaining 12 that have been  finalized since then are not yet included. A number of the terms included  in the C-DER go beyond the data elements that are required to be  standardized under the DATA Act, such as definitions for audit finding,  auditee, auditor, and hospital.
According to HHS officials, the C-DER was developed through an  analysis of 1,000 data elements from 17 different sources. HHS officials  stated that key findings that led to the creation of the C-DER were (1)  lessons learned from the development of Uniform Grants Guidance that  different communities, such as grants, acquisitions, and procurement, use  terms and concepts differently; (2) that it is difficult for the public to  access common definitions across these different communities; and (3)  that data standards in and of themselves are not helpful unless they are  used. The purpose of the C-DER is to reconcile these three findings and  accommodate different data standards as they are developed under the  act.
Providing grants-related resources. The third component of the pilot is  the launch of a portal that provides the public with grants resources and  information on the grants lifecycle, known as the Grants Information  Gateway (GIG). Available on Grants.gov, the GIG is intended to serve as  a clearinghouse for information on the federal grants management  process and lifecycle. Further, HHS officials stated that they intend to  leverage Grants.gov and the GIG to improve the transparency of federal  spending by educating the public and potential applicants for federal  grants about federal grant-making.
As part of our ongoing work on this pilot, we are reviewing past  experiences and good practices on designing, implementing, and  evaluating pilots; assessing whether the pilot’s design is likely to meet  DATA Act requirements and objectives; and evaluating whether the pilot  is managed in a way that will likely result in useful recommendations. We  will report our findings to Congress next spring.
We provided a draft of this statement to Treasury, Health and Human  Services, Office of Management and Budget, the Chair of the Council of  the Inspectors General on Integrity and Efficiency, and the Chair of the  Recovery Accountability and Transparency Board. OMB staff and  Treasury officials did not have comments on the recommendations. OMB  staff, Treasury officials, HHS, the Recovery Board, and the CIGIE  provided technical comments on the draft, which we incorporated as  appropriate.
In conclusion, given the complexity and government-wide scale of the  activities required by the DATA Act, full and effective implementation will  not occur without sustained commitment by the executive branch and  continued oversight by Congress. We welcome the responsibility that the  Congress has placed on us to assist in the oversight of the DATA Act.  Toward that end, we look forward to continuing to monitor and assess the  efforts of OMB, Treasury, and other federal agencies while standing  ready to assist this and other committees in carrying out Congress’s key  oversight role in the months and years to come.
Chairman Hurd, Ranking Member Kelly, Chairman Meadows, Ranking  Member Connolly, and Members of the Subcommittees, this concludes  my prepared statement. I would be pleased to respond to any questions  you have.
section_title: GAO Contact and Staff Acknowledgements
paragraphs: Questions about this testimony can be directed to J. Christopher Mihm,  Managing Director, Strategic Issues at (202) 512-6806 or  mihmj@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  statement.
Key contributors to this statement are Shari Brewster; Mark Canter; Jenny  Chanley; Giny Cheong; Lon Chin; Peter Del Toro (Assistant Director);  Kathleen Drennan (Analyst-in-Charge); Gary Engel; Robert Gebhart;  Meafelia Gusukuma; Shirley Hwang (Analyst-in-Charge); Joah Iannotta;  Charles Jones; Lauren Kirkpatrick; Michael LaForge; Jason Lyuke; Donna  Miller; Laura Pacheco; Carl Ramirez; Paula Rascona; Brynn Rovito; Kiran  Sreepada; James Sweetman, Jr.; Andrew Stephens; Carroll Warfield, Jr.;  and David Watsula. Additional members of GAO’s DATA Act Working  Group also contributed to the development of this statement.
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