Setting Priorities at OMB
by Craig Jennings, 9/16/2010
When Jack Lew responds to the Senate committees that share jurisdiction over his hearing, there's a possibility that he'll be asked about the federal budget, but we hope he'll get a chance to talk about government openness as well.
OMB should continue to push the envelope on federal spending transparency. Under Orszag, OMB has implemented a number of policies that have significantly improved public access to federal spending information, including implementing Recovery Act recipient reporting and putting subrecipient reporting data on USAspending.gov. Lew should help make Obama's vision of an era of unprecedented federal transparency a reality.
We are, however, asking that when Lew takes over at OMB he'll make the following his priorities:
- Increase federal spending
- Implement a system of recipient reporting that shows the entire federal spending chain
- Improve federal data quality
- Replace the DUNS number system with a more open, publically available system
- Post Treasury account information online to help check federal spending information
- Require the posting of full federal contracts and grants online
- Make USASpending.gov the hub of all public spending and contracting information
With the federal budget deficit now well over $1 trillion annually, and a national debt above $13 trillion, many are calling for reduced federal spending in an effort to balance the federal budget. Recently, Republicans in the House of Representatives have proposed returning to 2008 spending levels, excepting security spending, which would mean cutting approximately 22 percent from all other spending categories. Drastic cuts such as these not only are misguided, since they do little to balance the budget, but they are dangerous, because they gut important federal programs at a time when our nation needs them most.
While rolling back federal discretionary spending levels (excepting security spending) to what they were three years ago sounds good in theory, in reality, it does very little to reduce deficit levels. Cutting approximately $100 billion from the budget would reduce the upcoming fiscal year's deficit by less than ten percent. One could have far greater impact by cutting the Bush tax cuts or reducing spending on the wars in Iraq and Afghanistan.
At the same time, cutting $100 billion from the budget would have a tremendous impact on the services provided by the federal government. It would require cutting billions out of programs such as education support and job training programs, while exempting costly new weapons programs. With unemployment hovering near 10 percent, these are not the cuts our nation needs. If anything, the nation's economy needs spending increases, in the form of a second stimulus.
Since its creation in 2007, the public has been able to view online recipients of all federal contracts, grants, loans, and other forms of spending on USAspending.gov. This view was limited because billions of dollars of federal spending pass from the initial recipient of the funds (known as prime recipients) to other parties.
On Oct. 1 of this year, the public will have a better picture of federal spending when USAspending.gov begins presenting data on these subrecipients. However, limiting disclosure to only the first tier of subrecipients still excludes access to information on billions in federal spending as recipients beyond the first tier of subawards remain out of view.
Lew will have the statutory authority under the Federal Funding Accountability and Transparency Act of 2006 - a bill co-sponsored by then-Senator Barack Obama - to implement a system of multi-tier recipient reporting, and he should do so to ensure that the federal government and the public track the hundreds of billions of dollars spent each year by the federal government.
While the federal government publishes a great deal of useful federal spending information, such as the data on USAspending.gov and the recipient reports on Recovery.gov, by and large the data quality is significantly lacking. The Recovery Act in particular has shown that spending data can contain significant errors, such as bad job creation numbers or non-existent ZIP codes, but as a recent report by the Sunlight Foundation shows (Clearspending.org), this problem is not contained to just the Recovery Act. Flawed data not only erodes trust in the federal government, it also can mean that lawmakers, agency officials, and public citizens are making decisions based on faulty information.
Lew should place a strong emphasis on data quality, for both agency and recipient reported data. The processes in place for Recovery Act data are a good beginning, including specific steps requiring agency and recipient review of data, and those processes should be expanded to include the rest of federal spending. OMB should work to hold agencies accountable for their data by first creating a way to measure current data quality levels, and then setting goals to improve future data quality.
Throughout government, entities doing business with the federal government are identified with a unique number, called a DUNS number. This number helps track companies across different contracts and between different agencies. Theoretically, with an entity's DUNS number, one could trace its entire federal grant and contract history.
However, this system is owned and maintained by a private company, Dun and Bradstreet. Because it is privately owned, the system is not subject to the usual transparency requirements, access to it is expensive, and the it is enclosed in a "black box," out of public sight, leading to question of accuracy and comprehensiveness. In particular, tracking parent-child company relationships is extremely difficult and ineffective.
Lew should seek to create a new entity identification system, one which is within the public domain. We believe such a system would not only be more accurate, accessible and transparent, but it would also be cost effective in the long run.
Federal spending is disbursed through the Treasury Department from accounts established for each federal program, project, or agency (depending on the authorizing statute). All federal spending (federal award, administrative costs, etc.) comes from these accounts, and every federal program has at least one account associated with it. Essentially, these accounts are where federal checks come from.
Because these accounts are the source for all federal spending, they are the authoritative source on what the federal government spends; this is the national checkbook. Lew should make their transactions available online in an easily accessible format.
It would show exactly to who federal funds went and for what purpose. This information can then be used as a data quality check for the spending obligation data (as reported by the federal agencies) on USAspending.gov. Making the Treasury account information publically available online would then be an incredibly powerful tool for making federal spending transparent and accountable.
The Civilian Agency Acquisition and Defense Acquisition Regulations councils began moving in the right direction when they published a notice in the Federal Register in June seeking comment on how best to amend the Federal Acquisition Regulation (FAR) to enable the public posting of federal contracts on-line should that become a requirement in the future.
The councils were right to anticipate a future requirement to post contracts and task and delivery orders on-line, as it would indeed fall in line with the Obama administration's efforts in open government and transparency.
The current contract information available on government spending websites is inadequate and does not provide a full picture of contract spending. Lew should utilize the groundwork laid by the councils and create the expected requirement to post all federal contracts. He should also go further and require the public posting on-line of all grants as well.
With many efforts going on within the Obama administration to make more government contracting and spending information available to the public on-line, Lew should push for USASpending.gov to become the hub for all of that information.
The opening up of the Federal Awardee Performance and Integrity Information System (FAPIIS) is a perfect example of why the government must create a one-stop-shop for the public to obtain this important information. As the number of websites available for spending and contracting information increases, the public could become overwhelmed and there is a chance much of the information would get lost.
USASpending.gov is already well known and further information feeds will only make the website that much stronger for public enlightenment of government spending.
Image by Flickr user afagen used under a Creative Commons license.