OMB Watch’s Six Principles of Federal Spending Transparency

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Last Friday, OMB Watch’s Sam Rosen-Amy wrote about their six principles of federal spending transparency, in response to the oversight hearing two weeks ago on USASpending.gov and the Open Government Directive. They are, in short:

  • Treasury data: Use spending information directly from the nation’s checkbook, which would improve data quality
  • Tax expenditure data: Shed light on the more than $1 trillion in tax expenditures
  • Multi-tier sub-recipient reporting: Everyone who gets federal funds must report in, as opposed to the current two-tier system
  • Unique entity identification: Create a new system to link recipients to lobbying data, contractor performance information, etc.
  • Full text of contracts: Show detailed information on government projects, not just short summaries
  • Performance information: Provide meaningful data on which programs are effective

It’s great to see that the focus on federal spending transparency is intensifying both inside and outside the government. While we disagree with some of these points, the more ideas and discussion the community can have around this topic, the better. Our take on Treasury data and sub-recipient reporting is different, but we definitely agree with the need for greater tax expenditure transparency, more reliable entity identification and more robust contract descriptions.

In theory, the Treasury data would be the perfect data check for federal spending reported in USASpending.gov. However, there are funding mechanisms that cause these two datasets to not line up properly. For instance, the Treasury accounts used to fund these transactions do not map directly to a spending program, and many programs pull funds from overlapping accounts. It would be near impossible to determine the relationship between a Treasury outlay record and a grant or contract in USASpending.gov. During his testimony at the hearing, OMB Controller Danny Werfel described a process by which a USASpending.gov data quality check would be part of the agency auditing process. I think this is the direction this oversight should be heading in. The government should be doing its own rigorous data quality assessments and publishing them, rather than leaving the work to watchdog groups like us.

In general, we believe that the emphasis on sub-recipient (and sub-sub-sub-recipient) reporting is putting the cart before the horse. If USASpending.gov is having trouble with the top level reporting, it’s highly likely that the sub-recipient reporting will be plagued by the same problems. Years of layering well-intentioned reporting systems over each other is the reason why it’s such a mess right now.

However, OMB Watch touches on some excellent points that are near and dear to my heart. Tax expenditure transparency is severely lacking when compared to grants and contracts transparency. The two major bodies that publish estimates for tax expenditures (The Department of Treasury and the Joint Committee on Taxation) provide just that: estimates. Previous estimates are never verified with actual data from the IRS. Moreover, the estimates between these two bodies are usually quite different. They also use different naming conventions, descriptions and budget function classifications, making it difficult to compare estimates on a one to one basis. You literally have to be a tax expert to know if you’re comparing apples to apples.

Unique entity identification is another big problem that is convoluted and complicated to solve. Currently, the government pays a private company called Dun & Bradstreet to manage a contractor identifier system for them. Because the hierarchical relationships between companies in this system is considered the intellectual property of Dun & Bradstreet, they are not available to the public. This means that you can’t find out if a parent company and a subsidiary are both bidding on the same contract to make it appear competed, when it’s really not.

Similarly, the contract descriptions in USASpending.gov are often incomprehensible. This only makes it more important for the public to have access to the actual contracts. Unfortunately, last month the Obama administration withdrew a proposal (PDF) to do just that, because they received complaints from contractors. OMB Watch has been doing great work in this space for a while and the administration seems to finally be feeling the pressure. The watchdog community is going to have to complain just as loudly as the contractors to keep this moving forward.

Federal spending transparency is complicated and tough to get right. There have been great strides made in the past five years, but maintaining the momentum around these issues is going to be key in having a truly open government. There’s no way that we could have identified problems with USASpending.gov if it didn’t exist, but now we have to take the logical next steps and fix those problems. And the next logical steps certainly don’t include decimating the funding for E-Gov projects.

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