The Senate Homeland Security and Governmental Affairs Committee passed the DATA Act today by unanimous vote and reported it to the full U.S. Senate. The DATA Act aims to transform the federal government’s complex structure of disconnected spending documents into open data—structured, standardized, and available for anyone to use. The bill directs the U.S. Treasury Department to set government-wide data standards for federal financial, payment, grant, and contract reports, and then publish the whole corpus online.
What would this mean for government and society?Our members showed what it would mean at last May’s DATA Demo Day. Once federal spending is standardized and published, tech innovators will be poised to deliver transformative transparency to citizens and investors; support Big Data analytics to illuminate and eliminate waste and fraud; and automate compliance tasks for grantees and contractors.At this morning’s committee meeting, Chairman Tom Carper (D-DE) unveiled a new version of the bill, known as a substitute amendment. With the support of every Senator present, the committee replaced the previously-introduced bill with that substitute amendment and sent the new version to the full Senate.Here’s what you need to know about this new version–good and bad:
1. As the bill’s new cosponsor Sen. John McCain (R-AZ) once said, the fundamentals are strong.The substitute amendment retains the basic steps needed to transform the federal government’s spending from documents into open data: standardize it, then publish it. Like the introduced version, the substitute amendment directs the Treasury Department to establish government-wide financial data standards for federal funds, requires the whole executive branch to implement those standards throughout their data collection and reporting processes, and mandates the publication of a rich, comprehensive data set.2. It’s practically a joy to read.
The DATA Act has always been a turgid chunk of legislative jargon. Part of the DATA Act amends an existing law, the Federal Funding Accountability and Transparency Act of 2006 (FFATA), so the proposal is phrased as changes to underlying text. It’s hard to envision how the new text will fit into the old unless you’re familiar with both. Making matters worse, the DATA Act deals with complicated concepts; it requires the creation of data standards to reflect an obscure thicket of federal reports governed by diverse laws. Non-lawyers will be pleased to see that this new version is shorter, simpler, and clearer than existing ones. The Senators achieved this by performing less surgery on FFATA and revising the data standards provision.
3. But cutting the accountability platform is a step in the wrong direction.
The introduced version expanded the Recovery Accountability and Transparency Board’s accountability platform–an existing system that allows agencies’ inspectors general to hunt through spending data to find waste and fraud–from covering only stimulus grants and contracts to encompass the whole swamp of federal spending. The substitute amendment removes this provision, and also drops “prevent waste, fraud, abuse, and improper payments” from the bills’ list of goals. So, the bill now provides no mechanism for inspectors general to use the newly-standardized federal spending data.
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. For a great deal more on this issue, check out this op-ed.4. USASpending.gov now gets two masters–but which will be accountable?
As described above, the substitute amendment performs less surgery on FFATA than previous versions did. That choice has the happy consequence of creating a shorter, simpler bill. But it also creates a looming accountability problem.
The substitute amendment leaves existing Section 2 of FFATA untouched, rather than performing surgery. Section 2 directs the White House’s Office of Management and Budget (OMB) to set up USASpending.gov, the existing (and much-criticized!) federal spending transparency portal, and publish grant and contract summaries on it. The substitute amendment adds new section 3, adding bucket-loads of new information to USASpending.gov. The website will now include detailed data on internal agency spending, rather than just external grants and contracts. The new version of Section 3 directs Treasury, “in consultation with” OMB, to publish the new information.As a result of the Senators’ drafting choice, the substitute amendment puts OMB in charge of publishing grants and contracts on USASpending.gov and Treasury in charge of publishing comprehensive breakdowns on USASpending.gov, which means nobody has buck-stop responsibility for all the content on the website. Granted, existing Section 2 allows OMB to delegate its responsibilities to another agency, and OMB has already chosen Treasury. But unless Congress puts someone more clearly in charge–and better yet, requires them to gather input from citizens and watchdogs–USASpending.gov might be able to keep escaping criticism, as it has been doing for years.5. The pilot program to relieve grantees’ and contractors’ reporting burdens is weaker sauce.
One of the benefits of standardized data is that it makes TurboTax possible. With the right software, grantees and contractors will be able to report automatically, instead of manually, on how they spend taxpayer dollars. That’s good for everybody: accuracy improves, agencies can search the disclosures more quickly, and software costs less than lawyers.
The introduced version went a step further. It set up a pilot program directing the Recovery Board to gather some guinea pig agencies, grantees, and contractors and have them report all their data to a centralized portal, instead of separately to different agencies. (The Recovery Board has already proved that this would work.) If the pilot program were successful, the introduced version allowed OMB to put the Recovery Board in charge of one-stop grant and contract reporting, throughout the federal government. This would cut costs for all grantees, contractors, and agencies, and sharpen oversight too.The substitute amendment keeps the pilot program, but no longer explains what should happen if the program succeeds. There is no suggestion of how one-stop reporting might happen; those provisions are gone. The substitute amendment even changes the program’s goal from “consolidation” to “simplification.” It’s weaker sauce.6. OMB should oversee–not execute.
Unlike the introduced version, the substitute amendment leaves OMB in charge of a good deal of execution. It directs OMB (replacing the Recovery Board) to run the pilot project. And, as mentioned above, the substitute amendment seems to make OMB and Treasury both responsible for USASpending.gov itself.
There is a conflict between managing the government and carrying out the president’s priorities–OMB’s real job–and executing specific laws. Moreover, OMB’s track record in federal spending transparency is poor: under OMB’s leadership, USASpending.gov is wrong two-thirds of the time; OMB has never bothered to enforce FFATA’s sub-award reporting requirement. We think Congress shouldn’t ask OMB to execute the DATA Act. Instead, Congress should assign all these responsibilities to the Recovery Board, Treasury, or a Recovery Board successor aligned with Treasury.7. There is no longer a clear path to checkbook-level disclosure.
The introduced version contemplates that USASpending.gov will publish federal spending in checkbook-level detail by directing the Treasury Department to use its Payment Automation Manager as one of the data sources for USASpending.gov. That level of granularity is valued by transparency advocates, who seek the ability to drill down from accounting line items all the way to the individual transactions they comprise. New York City and many state and foreign governments now publish checkbook-level transactions on their spending transparency portals.
Because the substitute amendment, unlike the introduced version, leaves Section 2 of FFATA unamended, there is no longer any expansion of the existing the list of data sources for USASpending.gov. Therefore, there is no longer any signal to the Treasury Department that Congress expects checkbook-level transparency.We hope that a future version, or perhaps committee report language, can clarify Congress expects full detail.8. Deadlines!
The substitute amendment has lengthened several of the deadlines. The most significant change is that the Treasury Department now has three full years after enactment to publish anything new on USASpending.gov. We believe Treasury could, and should, begin publishing at least some spending data beyond the scope of existing FFATA sooner. For instance, in July 2012, Fiscal Assistant Secretary Gregg testified before the same committee that Treasury was already planning to publish its Payment Information Repository.
9. Missed opportunities.
Our Coalition has long called for small changes to the DATA Act that could dramatically enhance the accuracy, detail, and usefulness of federal spending data. Congress has incorporated many suggestions from the Coalition and other transparency advocates. A few important ones remain orphans.
- All data identifiers Treasury adopts under the new law should be non-proprietary. Here’s why.
- The DATA Act should provide for geospatial detail for each grant and contract, so that the government can show the impact of spending on a map.
- Congress should direct OMB–or, better yet, someone else–to enforce FFATA’s forgotten sub-award reporting requirement.
- The DATA Act should cite President Obama’s Open Data Policy, since its goals are the same, to give federal agencies more guidance on how to implement the new law.
Since the House Oversight Committee passed the House version unanimously back in May, the DATA Act has now been approved by committee in each chamber. The next step is for the full House and full Senate to each pass their own version. The House has done this once already, in 2012, when a more-ambitious version sailed through the lower chamber without opposition.
Here’s the challenge: because of today’s amendment, the Senate version and the House version are now quite different from one another. If each chamber passes what’s been approved in committee, that difference will remain. Either House and Senate leaders will appoint a conference committee to hammer out a consensus version–a rare course of action for non-marquee bills like the DATA Act, but one we’d welcome!–or one chamber will have to swallow its pride and pass the other chamber’s version. We hope that the Senate will align its bill with the broad bipartisan consensus that has emerged around the House’s version of the bill.
So, Congress still has work to do. But we won’t wait for final passage to start helping the executive branch do what the DATA Act says: transform federal spending from disconnected documents into open data.
On December 5th, the Coalition will host its first Data Transparency Breakfast, presented by PwC, featuring the agencies that will be in charge of implementing the DATA Act. It’s open to all. You can register here.
We’re excited to welcome staffers serving Fiscal Service of the Treasury Department, which will be in charge of the new data standards, and the Recovery Accountability and Transparency Board, which (at least in the House version) will deliver spending data to inspectors general for Big Data oversight, to breakfast on December 5th. Join us!