The House of Representatives is planning to vote on the Digital Accountability and Transparency Act of 2013 (DATA Act; H.R. 2061) tonight. The DATA Act, which has bipartisan support, would direct the executive branch to improve federal spending transparency. It is widely expected to be approved by the chamber since a somewhat more expansive version of the bill last year won unanimous support in the House. Update 11/19/2013: The House passed the legislation, 388 to 1.
The Congressional Budget Office (CBO) estimated last week that the House legislation will cost $395 million over five years, or an average of $79 million a year. CBO did not estimate and factor in the potential cost savings from the legislation.
The legislation would direct the Treasury Department to improve federal spending transparency on USAspending.gov regarding grants, contracts, and loans (click here for info on spending not currently covered by USAspending). Classified information would remain protected.
Treasury also would need to create standards for reporting federal spending data and create unique identifiers for recipients so money could be tracked across different spending data systems, so, for instance, a contract signed with a company can be linked to the checks that Treasury sends to the company for its work on that contract.
This is the most expensive part of the legislation since it would require action at 26 federal agencies. Agencies would need to train staff, modify their computer and accounting systems, and communicate changes to recipients of federal funds. For each of the 26 agencies, CBO estimates that it would cost about $2-3 million a year to implement the changes. This would cost $285 million (of the total $395 million) over five years.
The Government Accountability Office, Inspectors General, the agencies, and the White House's Office of Management and Budget (OMB) would have to regularly review the work of agencies in reporting financial data and recommend improvements. CBO thinks this would cost $8 million over five years.
The Recovery Accountability and Transparency Board – the special oversight panel originally create to oversee spending authorized by the American Reinvestment and Recovery Act of 2009 – would continue to operate for another five years. It would train its energies on federal spending more generally to combat waste and fraud. This would cost an estimated $102 million over five years, according to CBO. There are substantial reasons to believe cost savings would result from the Board's work, perhaps enough to more than offset its cost. Oversight offices typically offer a substantial return-on-investment in rooting out and preventing waste, fraud, and abuse. However, CBO did not estimate any potential savings from the Board.
The Board would also develop and run a three-year pilot program on how to both improve transparency and reduce contractor and grantee reporting burdens. This pilot program would eventually apply government-wide. The Board's work on recipient reporting of Recovery Act funds has been heralded as a model for how to greatly improve transparency.
Earlier this month, the Senate Homeland Security and Governmental Affairs Committee marked up its version of the DATA Act (S. 994), which was introduced as virtually the same bill in the House. However, it was replaced by a substitute. There are several changes. Among the most notable is that the Senate version does not expand the Recovery Accountability and Transparency Board's work to spending overall. According to the Data Transparency Coalition:
Why was this provision removed? Senators wanted to make sure the DATA Act wouldn't cost too much. The Recovery Board's accountability platform already exists, but the Recovery Board is scheduled to stop operating in 2015. To continue the agency beyond 2015 would cost money. The Senate committee wasn't ready to commit to that. Now that this provision has been removed, this cost won't show up when the Congressional Budget Office prepares its official estimate of the Senate bill's overall cost.
But if the final version of the bill fails to expand the Recovery Board's existing accountability platform to cover all federal spending, taxpayers' interests will be hurt in two ways. First, waste and fraud that could have been illuminated, and eliminated, will go undetected. The Recovery Board's accountability platform helped inspectors general recover or prevent about $100 million in stimulus spending fraud, while costing much less than that.
Second–and perhaps more important–without any internal government effort to use the newly-standardized spending data for any purpose, there will be no internal pressure to improve the quality of data published on USASpending.gov.
The differences between the House and Senate versions will have to be hashed out if the legislation is to go to the White House. The Center for Effective Government hopes many of the stronger provisions in the House version prevail.
This legislation is important. While there are some executive branch initiatives to improve federal spending transparency, as the Government Accountability Office noted in a September report, “given the importance of clear requirements and consistent leadership for ensuring approaches are institutionalized and sustained over the long term, legislation will help ensure effective implementation of comprehensive transparency reform.”