On June 22, federal spending transparency legislation was unanimously approved by the House Committee on Oversight and Government Reform. Introduced by Rep. Issa on June 13, the Digital Accountability and Transparency Act (or DATA Act) of 2011 constitutes a major effort to improve government openness and transparency. (Senator Warner introduced companion legislation in the Senate.)

At its heart, the DATA Act does two things. First, it would create an independent board responsible for publishing and monitoring all federal spending, modeled after the Recovery Board. Second, it would create and require government agencies to adhere to consistent government-wide financial data reporting standards.

Like most complex legislation, the devil is in the details, and the DATA Act was substantially improved by an amendment offered by Rep. Issa (in the form of a chairman’s mark), and by votes during the committee’s business meeting. Our colleagues at the Project on Government Oversight have the details on the amendments adopted at the mark-up. We were particularly pleased to see the inclusion of notice-and-comment rulemaking and a study on how to include tax expenditures as part of the financial reporting.

The Sunlight Foundation, joined by a number of organizations, sent a letter to Rep. Issa prior to the mark-up that expressed “our support for efforts to improve federal financial transparency.” The DATA Act represents a significant investment of time and effort, and Rep. Issa and his colleagues deserve praise for taking this issue seriously.

In that letter, we also expressed serious concern about a legislative provision that would cause the reporting regime to sunset after seven years. While many improvements have been made to the bill, this is a serious problem. All the efforts to create federal spending transparency should not evaporate after seven years.

We would also caution that there should be continuity for already required data reporting requirements. For that reason, some of the reporting requirements under FFATA, which created USASpending.gov, should be retained. (Our colleagues at OMB Watch, while taking a dimmer view of the legislation, have forcefully made that point.)

We recommend that another look will be taken at the composition of the new board. We believe that additional members, including perhaps representatives from GAO and the general public, should sit on the Board to ensure that it meets the needs of the public and congressional overseers. We also believe there should be a public advisory committee that can help advise the Board on how it should proceed.

It’s worth noting suggestions for additional reporting items identified by Beth Noveck and Jim Hendler. They identify five items, which I’ve summarized:

1. Corporate persons be required to identify both the beneficial owner and any parent-subsidiary corporate relationships.
2. Entities be mandated to use consistent legal entity identifiers.
3. A process be mandated that would lead toward a single, universal, entity identifier for naming firms with the requirement that additional data fields be open and interoperable.
4. Data be machine-readable, automatically obtainable, and available through federated sites like data.gov.
5. Explicitly grant the power to create pilot projects and iterate.

Many of these ideas have been addressed in one way or another by the legislation. For example, the Board would have the power to require “such additional information reasonably related to the receipt and use of Federal funds,” which could encompass identification of beneficial ownership as well as parent-subsidiary relationships. It also has the power to “designate common data elements … for information required to be reported by recipients or agencies.” However, the legislation could be altered to make these points more explicit and concrete.

There is still a long path ahead before the DATA Act could become law. We hope that the concerns that we raised above are addressed so that we can support the legislation without reservation.