In a speech Wednesday, OMB controller Danny Werfel reportedly declared that improving the completeness and reliability of data on the federal spending transparency website USASpending is a "priority" of OMB. He reportedly indicated that OMB will issue guidance to prompt agency internal review about the reliability of their reporting.

If this news account is accurate -- and I could not reach anyone at the White House or OMB to confirm -- Mr. Werfel's remarks are welcome if they express a genuine administration commitment to address the government's systematic failure to accurately publicly report how the federal government spends money. The failure to report is of an enormous magnitude. Our recently released third annual ClearSpending analysis found more than $1.55 trillion in misreported federal spending for FY 2011... just in grants alone. (The prior two years didn't look too good, either.)

These accuracy problems shouldn't be a surprise to the administration. Sunlight testified twice before the House Committee on Oversight and Government Reform on this topic (on March 11 and June 14, 2011) -- Mr. Werfel testified at the same March hearing (watch it here). We've also communicated our findings directly to the administration. (And others, like the Recovery Accountability and Transparency Board, have made similar points.)

Now, in 2013, momentum is again building behind a comprehensive approach to address the federal government's spending report problems -- embodied in the proposed federal spending transparency reform bill known as the DATA Act. This bipartisan legislation, which passed the House and was introduced in the Senate in the last Congress, addresses the longstanding issues that Mr. Werfel alluded to.

In 2012, Mr. Werfel expressed concerns about the DATA Act. However, to many observers, the criticisms looked more like an attempt to protect OMB's turf than an effort to address the reporting problems. The substance of his critiques were addressed in a blogpost by the Data Transparency Coalition, which wryly noted that "in the six years since FFATA's enactment, OMB has not tried to standardize federal spending data." Touché.

It could be that this new OMB guidance -- that no one outside government has seen or heard of until Wednesday -- is OMB's attempt to grapple with the difficult federal spending transparency issues that it has failed to comprehensively address over the last four years. But a more cynical assessment could be that the administration sees that its failure to address these issues has prompted a systematic, bipartisan transparency reform effort -- an effort that could weaken OMB's control over access to spending information -- and it will pay lip service to delay or blunt any such effort.

We hope that this recently-articulated administration desire to act on federal spending transparency has come from the realization that this is an issue where we cannot afford to wait. But it's fair to say that politics may more pressing upon OMB than policy in this matter. And if that's the case, then we should express our thanks for the assurances and move swiftly to enacting the DATA Act, because that's the driver of real reform.

Improved federal spending transparency was the topic of today's Senate Homeland Security and Government Affairs Committee hearing, which focused on the DATA Act. Senator Warner, who plans to reintroduce an updated version of the bill, explained during his turn at the witness table [PDF] that "the public deserves to know in detail how each federal dollar is spent and it’s our job to ensure that these funds are used effectively and efficiently."

The version of the DATA Act that passed the House of Representatives in April would tackle two unsexy but important issues -- data standardization and broader reporting requirements. It creates a 5 member commission to collect data on all federal spending, analyze it, and publish it online. Spending data streams will be put into a standard format and validated against each other. These two simple sounding steps could help eliminate much government waste, fraud, and abuse, and make spending oversight much easier. Senator Warner's reboot of the DATA Act likely will address many of the same issues.

The second round of witnesses brought mixed perspectives on the DATA Act and on implementing federal spending transparency. Gene Dodaro, the Comptroller General, testified about a newly-issued GAO report on federal spending transparency, which alternatively praised and criticized OMB's efforts to comply with legislation to improve information availability. During the Q&A, Dodaro explained that it may be helpful for Congress to enact legislation declaring what spending information it wants to have available to the public, as a way of establishing priorities and direction.

OMB Controller Daniel Werfel's testimony [PDF] focused on OMB's efforts to improve the accuracy and availability of spending information, largely defending the administration's record. During the Q&A, Werfel emphasized that new legislation is not necessary to implement spending transparency as the administration already has the necessary authority. While his testimony highlighted the administration's claims of what it has accomplished, it did not engage the concerns that OMB has dragged its feet over the last 4 years, or that OMB -- as an arm of the president -- may have mixed incentives about releasing potentially politically damaging information. He did explain that OMB has not released a statement of administration policy on the DATA Act, but that OMB (unsurprisingly) is less than enthusiastic about shifting responsibility over standard-setting and implementation to an independent body.

Treasury Department Assistant Fiscal Secretary Richard Gregg testified [PDF] about ongoing internal efforts at Treasury to improve data quality and projects that will yield results in the future. During the Q&A, Gregg explained that legislation isn't needed for financial transparency, leadership in the executive branch would be sufficient. This raises the question of whether sufficient leadership is being exercised.

Several additional interesting points were made during the Q&A. Controller Werfel responded to a question from Senator Coburn in which he explained that while OMB could track Treasury account symbols, it still has not compiled a list of all federal programs and probably wouldn't be able to do so until the fall. Comptroller Dodaro praised recovery.gov as superior to usaspending.gov in terms of accuracy and searchability. And Senator Johnson argued it wouldn't be helpful to release all the underlying data as a "data dump" to the public, a point with which we don't agree.

The future of federal spending transparency in this Congress will likely hinge on Senator Warner's efforts to rewrite the DATA Act in a way that balances the importance of transparency with the pushback from the administration on turf and from entities on enhanced reporting requirements. But with the sequestration looming and unending fights over spending, fixing our ability to track spending will continue to be an important issue that draws bipartisan attention.

Update: Darrell Issa, who sponsored the legislation in the House of Representatives, released the following statement:

Federal spending data, especially the data most readily available to the American people, is not accurate, not timely, not complete, and not useful. The most important lesson we can learn from the Recovery Accountability and Transparency Board is that legislation with hard deadlines and tough penalties is the only way to get a petrified federal bureaucracy to end the patchwork of duplicative IT investments and make meaningful changes to deliver meaningful data.

Last week, OMB Controller Danny Werfel appeared on a panel discussion on potential Recovery Act applications for 2012. In the course of the discussion, Werfel also expressed concerns about the DATA act (which Sunlight supports), and that the White House was unwilling to embrace it. He specifically stated:

DATA Act takes guidance writing away from OMB and gives it to a newly stood-up entity, the commission, which creates a new layer of regulation, two sets of rules and additional regulatory complexity.

You can get a good rundown of Werfel’s criticisms of the DATA Act and a rebuttal of them over at the Data Transparency Coalition blog, but in my opinion, taking the responsibility for data quality away from OMB is one of the best things about the DATA act. They have proven time and again that their commitment to quality spending data is superficial at best. Here are some examples.

Item 1: The Missing Data Quality Dashboard

In an OMB memo dated April 6th, 2010, Jeff Zientz outlined the plan for a publicly available data quality dashboard that measured each agency’s progress towards improving their spending data quality. Designed to be a contribution to the Open Government Directive plans, the memo required incremental improvement in the data from each agency, culminating in 100% of awards being reported on time, completely and accurately by the fourth quarter of FY 2011. Additionally, the memo announced the creation of a USASpending.gov Change Control Board, which was to oversee the collection and presentation of the data on USASpending.gov. In fact, it seems it would have many of the same responsibilities as the FAST board in the DATA Act.

To date, we have found some submissions from agencies that outline their broad plans to improve the quality of their data, but have not seen any evidence of the dashboard, nor any public reference to the Change Control Board. And the data certainly hasn’t improved much in the last two years, much less achieved 100% accuracy, timeliness and completeness. OMB seems to be upset that Congress has adopted their idea, but has chosen to implement it themselves since OMB never did.

Item 2: (Not) Using the Financial Audit Process to Reconcile USASpending Data

During a hearing of the House Committee on Oversight and Government Reform in March 2011, Werfel stated that part of the problem with the quality of the data is that the public spending information is not tied in to the financial statements that undergo audits. We agree that having two divergent reporting streams is another driver of the data quality problem. Because this data is not audited, there is very little incentive to ensure that it is correct.

At the Recovery Act panel, Werfel contended that legislation was not necessary for OMB to move the ball forward with agencies in regards to the quality of their spending data. Earl Devaney, former chairman of the Recovery and Accountability and Transparency Board, also present at the panel, disagreed with him, saying, “The government moves fastest when Congress acts and there are concrete data sets. If we leave it up to the agencies, it will never get done."

Funnily enough, Werfel seemed to agree with Devney’s sentiments at the Oversight Committee hearing mentioned above. In response to Rep. Cummings’ question:

… Is it, from what you can see, problems stemming from folks who are just not doing what they are supposed to do? Is there a bigger hammer that needs to be hammered? …

Werfel responded:

... To answer your question, I think a bigger hammer is needed. I think what you have today is a dichotomy that was reported on the first panel that is accurate. We have what I would argue is a very robust financial statement audit process that exists today … We have 20 of the 24 major agencies in Government receiving a clean audit opinion. A lot of effort goes into scrutinizing, to the 10th decimal point, the numbers that go on our balance sheets and our other basic financial statements. And we have developed a very robust process in response that is moving forward and achieving important things in terms of financial reporting reliability. That robustness does not exist with respect to the information as reported on USAspending.gov. The spend information, as we call it, is not completely wired into the financial statement audit process. We think that we need to look at that audit process and that reporting model to potentially realign some of that audit scrutiny around spending information. I think you would see a difference in results if agencies felt the accountability of an auditor’s eye on these issues.

Werfel (and by extension OMB) seem very cognizant of steps that could be taken to raise the level of compliance from agencies. This makes it even worse that they have not been able to take these steps to accomplish improvement in the data in the last six years. And what’s more, they have actively obstructed our attempts to find out more about the quality of the data via the FOIA process.

Item 3: Obstructing Public Attempts to Learn About the Quality of USASpending Data

After examining the data quality of grants in USASpending.gov in our Clearspending project, we wanted to extend that analysis to contracting data. The only source of data we knew of were the “FPDS Data Quality reports”. These reports have been mandated by OMB for the last four years and require agencies to detail what amount of their contract spending was in USASpending.gov as well as various data quality metrics about each field in the database. OMB delayed responding to our FOIA for these reports for over a year, until they were questioned about it by the House Oversight Committee. Then they responded with an extremely truncated version of the data, and for only one year -- they refused to provide data for additional years. However, we were able to get this data by filing a FOIA with each individual agency, suggesting that there were no legitimate objections to the FOIA being fulfilled, just simple obstructionism by OMB.

The reforms posited by the DATA Act and the creation of a commission to implement them are right in line with what OMB has advocated for in the past. They appear to now oppose those changes because they are no longer slated to be the ones in charge of them. That's not a good enough reason to oppose a bill that contains not only useful reforms for spending data, but for government data in general.

This morning Federal News Radio reported on a new memo issued by the Office of Management and Budget regarding the data quality of federal contracting data in a publicly available database, the Federal Procurement Data System (FPDS). The memo is another in a long succession of memos since 2008, requiring each agency procurement official to certify the percentage of their agency's contracts that are available in the public contract spending database. That's a great idea! Let's hold procurement officials accountable if they have anything less than 100% of their contracts reported to the public! There's just one problem: these reports, intended to hold officials publicly accountable, are not public.

The Government Accountability Office (GAO), the Acquisition Advisory Panel, as well as OMB itself, have acknowledged the data quality problems with the contracting data in FPDS. Yet every year, their response is to issue a memo, requiring each agency to come up with a data quality plan and submit it privately to OMB and the General Services Administration (GSA). This year, agencies must also complete a statistical sampling portion of the report, to assess the accuracy of their data, but many of the other requirements are the same. Maybe the way to fix these reports is to make them public, instead of slightly updating them and reiterating your commitment to improved data quality in the press. We believe that OMB's knowledge of gaps or problems with the public contracting data should be ... well, public! We filed a FOIA in September of 2010, asking for the data quality reports detailed in the aforementioned OMB memos. Here we are, nine months later, and we still don't have a response to our FOIA.

Keeping these reports private is a lie of omission to citizens and watchdog groups who want to use this contracting data to make sure our government contracting process is free of fraud and abuse. Agencies already keep track of the original contracts privately, using a separate database (FPDS) to disclose only certain elements of them to the public. It's incredibly disappointing that parts of this secondary, already less than complete, contracting database are censored.

Last fall, we conducted a data quality analysis of the grants data present in USASpending.gov. We called the project Clearspending. Basically, we used another source of government data that provided annual spending estimates for each grant program and compared it with the grant totals for each program in USASpending.gov to see how close they were. We also looked to see if spending was reported completely, and on time (full methodology here). We found nearly $1.3 trillion worth of spending that either didn't match with the other government data, was late, or incompletely reported.

That's a lot of money.

The project got some attention both at the Gov 2.0 Summit later that year, a House Oversight Committee hearing several weeks ago and a House Energy and Commerce hearing last week. The obvious follow-up question that we get all the time is "Where is Clearspending for Contracting?". Well, what we're missing is another dataset to use for comparison with the contracts data in USASpending.gov. It's difficult to find annual estimates for each agency broken down by contract spending, that isn't from the Federal Procurement Data System (FPDS), which is the feeder system for USASpending.gov. However, in the course of our research, we did find that the Office of Management and Budget (OMB) has required agencies to submit to them something called an "FPDS Data Quality Report", since at least FY 2008. The requirement is detailed in this OMB memo and includes a template for the data quality report.

The template in the report requires the senior procurement executive from each agency to certify the total dollar amount spent on contracts for that fiscal year and what percentage of this dollar amount is present in FPDS. They also must describe their processes for measuring and improving data quality. Essentially, it's an internal (read private) document that describes the quality of a public contract spending database. We asked OMB politely for this information and were flatly denied. Our next step was to file a FOIA request for the data. We filed the request and it was received on September 29, 2010. Today is May 12th, 2011, and we still don't have it. It hasn't been denied, it just hasn't been fulfilled. This far exceeds the statutory requirement for fulfilling FOIA requests, and runs counter to the administration's pledge to increase transparency, specifically through bettering the FOIA process.

These reports provide a clear description of the usefulness and reliability of the contract data available in USASpending.gov, a website created entirely to disclose spending data to the public. Withholding these reports is violating the spirit of the law that created USASpending.gov, if not the letter.

The White House is characterizing their failure to replace Ethics Czar Norm Eisen as an upgrade. If they wanted to vigorously pursue the portfolio assembled under Eisen, though, they could have replaced him, and fit a new person into the empty slot.

Instead of filling an existing position, though, the White House is carving up Eisen's portfolio, and transferring those responsibilities to the White House Counsel, Bob Bauer, who already has a full plate of Presidential issues. This could bode poorly for some of the issues Sunlight cares about most. Here are some of the issues that will now apparently have to vie for the White House counsel's attention:

Earmark Transparency: In his 2010 State of the Union address, President Obama called for a single searchable database of all earmarks and earmark requests. In the months since then, we've seen bills introduced in the House and Senate, and a bill reported favorably out of the Senate Homeland Security and Government Affairs Committee. The time is ripe for earmark transparency to be solved through online disclosure, and yet the White House has remained silent since the SOTU address.

Open Government Directive: The Open Government Directive can either become a dated, rhetorical memo, or a transformative commitment to a new era of openness. Only if the White House holds agencies to their requirements and plans can the Directive have real force. OMB Director Orszag has left, and with Eisen leaving, enforcement faces more uncertainty. When the public compliance dashboard doesn't meaningfully differentiate between failure and progress toward meeting expectations (compare the yellow to the red in this chart), we can expect clarity in enforcement to continue to be a concern.

Citizens United: The White House is clearly committed to passing a legislative fix to the Supreme Court decision, but will the legislative fight get the attention it needs to succeed?

Whither Ethics.gov?: Ethics.gov was a campaign promise to build a single website with ethics and accountability information to transform government accountability. Does this have any hope of still happening?

Lobbying Disclosure Reform: President Obama also called for reform of lobbying regulations in his State of the Union. While the White House frequently rails against special interest lobbying and disproportional influence, will they have the bandwidth to push for real solutions to this real problem?

Executive Disclosure: The White House made some meaningful first steps in posting ethics filings online, requiring extensive stimulus lobbying disclosure, and posting the Visitor Logs records online for the first time. These aren't well established policies, though, and need a steady hand and a clear commitment to mature into permanent, reliable, effective policies. Will the White House Counsel's office take on these challenges?

Regulatory Failure: In the wake of the failed Minerals Management Service, the Executive continues to fight entrenched incompetence, conflicts of interest, and ineffective regulation. Will the administration respond sufficiently to the oil spill, and the myriad other regulatory failures it represents? Will the ethics and disclosure systems at the heart of our regulatory system get the thorough analysis and reform they desperately need?

These are just some of the issues Sunlight cares deeply about, and they are among the many others our broader community fights for, like whistleblower protection, records management, or regulatory reform.

As we look at the rearrangement in the White House, we're left wondering not just whether they can succeed without a dedicated Ethics Czar, but whether they could succeed if they had hired three of them.