White House’s DATA Act report: Standardized Data is Needed to Modernize Federal Grant Reporting – But Not Contract Reporting
According to the White House, standardized data will define the future of U.S. federal grantmaking.
But this commitment does not seem to apply to our equally-outdated federal procurement system.
Last Thursday, the White House Office of Management and Budget (OMB) issued its long-awaited report on reducing compliance burdens for recipients of federal grants and contracts.
Its main recommendation is simple yet powerful: the federal government needs to adopt a standardized data structure for all the information that grantees must submit.
This recommendation echoes the Data Coalition’s policy agenda. From the start, our Coalition has been calling for data standards throughout government reporting. Data standards allow software to automate compliance tasks. Data standards allow managers to use analytics. Without data standards, we might as well be using paper.
For instance, when Australia’s regulatory agencies adopted a standardized data structure for the information that they collect from the private sector, Australian companies were able to start using software to automatically report their tax, retirement, and registration information – saving over $1 billion annually.
The same transformation from disconnected documents to standardized data needs to happen in federal grant and contract reporting.
Judging from last week’s new report, OMB agrees, at least for grants (and other forms of federal assistance).
OMB’s new report is the result of the DATA Act of 2014, the nation’s first open data law, which our Coalition worked to pass and implement. The DATA Act required the federal government to adopt a standardized data structure for all spending information reported by agencies. That data structure, known as the DATA Act Information Model Schema, or DAIMS, is now in place. Last May, every federal agency began reporting its spending information using the DAIMS. Thanks to the DATA Act and the DAIMS, agency-reported spending information is now available as a single, searchable data set.
The DATA Act directed the Treasury Department and OMB to create the DAIMS, and it forced every federal agency to report its spending information using with that structure. And the law envisioned a similar future – a standardized one! – for the information that grantees and contractors report.
But the DATA Act did not directly mandate standardized reporting for grantees and contractors, the way it did for agencies. Instead, Section 5 of the law requires OMB to run a pilot program to test whether data standardization is a good idea.
The answer came last week, on August 10th: a resounding YES for grant reporting – and, for contract reporting, a bit of a muddle, but probably not.
Grantee and Contractor Reporting Requirements are Decentralized, Opaque, and Manual.
Currently, grantees and contractors must fill out hundreds of different types of document-based forms and submit them to agencies. Some of these forms are PDF documents; others are submitted through electronic systems. Some are collected by the program offices that award grants and sign contracts – over 2,300 separate offices for grants and 3,200 (page 17) for contracts). Others are collected by government-wide entities, like the Federal Audit Clearinghouse for grants and the Integrated Acquisition Environment for contracts.
Many grant forms are “highly duplicative” of one another – with over half of their data elements matching the data elements of some other form. In fact, “15 forms contain the exact same set of data elements as at least one other form” (page 43).
Contractors, too, face a disjointed, often-duplicative compliance challenge. “A 2014 review of [contract] reporting requirements identified over 100 … reporting requirements with approximately 40% of which [sic] are still decentralized and provided to multiple contracting officers across the Federal government, in multiple formats, and to multiple agencies” (page 16).
Without a standardized data structure, there is no way for grantees or contractors to use software to automatically submit the required information; they must do it manually, piece by piece. Without a standardized data structure, there is no way to collect all this recipient-reported information and analyze it as one data set, the way agency-reported information now can be.
Here’s what OMB reported last Thursday, what made sense, what didn’t, and what’s next.
For Grantees: Data Standardization Can Relieve Reporting Burdens.
Faced with the DATA Act’s mandate to run a pilot program evaluating the benefits of data standardization for all reports by recipients of all kinds of federal awards, OMB decided to conduct two separate programs: one for reports by grantees (and recipients of other kinds of assistance, like loans and loan guarantees), and another for reports by contractors. OMB appointed the Department of Health and Human Services (HHS) to conduct the grant reporting pilot program.
HHS was “uniquely qualified” to do this, because it is the largest grant-issuing entity (by dollar value) in the federal government, and it already runs some government-wide grants services: Grants.gov, where opportunities for grants are published, and the Payment Management System, which runs the payments for “77 percent of all dollars in Federal civilian grant payments” (page 32).
HHS had already begun to create a comprehensive list of all the fields of all the forms that its own grantees must submit after they receive federal funds. This list of data fields is called the Common Data Element Repository Library, or CDER Library. It’s public – you can view all 11,842 data fields here. By creating the CDER Library, HHS isolated the data fields of grant reporting from the document-based forms that they’re embedded in.
The CDER Library became the centerpiece of the whole pilot program – and, perhaps, the key to what’s next for modernizing the federal grant reporting process.
(HHS did not expand the CDER Library to include all data elements reported by grantees to other agencies. But because HHS’ own grantmaking operation is so huge, and because most federal grantor agencies request similar information, the CDER Library is a fair approximation of what most grantees – whether they are funded by HHS or some other agency – must report.)
HHS recruited grantees – mostly state government agencies, local governments, universities, and nonprofits – willing to use the CDER Library’s data elements to report on their grants. This was a large group: the total value of all the federal grants that these participating grantees received was $122 billion (page 4).
HHS tested the benefits of data standardization in several ways:
Using standardized data elements as a reference. HHS invited its grantee volunteers to use the CDER Library’s data elements to complete some simulated grant forms. Grantees who had access to the CDER Library completed the forms more accurately than those who didn’t (page 41).
Report once, instead of multiple times. Data standardization allows software to automate the process of filling out forms. Even if a grantee is legally required provide the same information multiple times or on multiple forms, the grantee can enter it just once, the software can automatically provide it each time it’s required, and everyone involved can save time and money. (Automated reporting is the reason why Australia’s standardized data program saves over $1 billion per year in compliance costs.) HHS tested this idea in two different ways. First, HHS invited volunteer grantees to submit their main financial report data electronically, within its payment system, rather than separately as a PDF-based form (pages 45-46).
Second, HHS discovered that two of the main forms used for the annual audit that the federal government requires grantees receiving over $750,000 to complete, known as the Single Audit process, are duplicative (pages 46-47). HHS worked with other agencies to create an electronic environment in which grantees could report the information electronically, once, and fulfill the requirements of both forms (pages 46-47). (This environment worked much like the regulatory sandboxes that many financial regulators use to test new financial products and reports.)
Both tests revealed savings. HHS’ volunteers said that submitting their financial report electronically, rather than separately as a PDF, was faster, cheaper, more accurate, and better for business (page 46). The same was true for audit forms: “If grant recipients are able to eliminate duplicative input of [audit] information … they will have increased reporting accuracy and reduce the time it takes to [complete] their annual Single Audit” (page 48).
Prepopulating data fields each time they’re re-reported. Grant reporting forms frequently request information that the government already knows. If the government provided this information back to grantees in a standardized, electronic manner, the grantees’ software could automatically plug such information into future forms. HHS tested this by creating a standardized Notice of Award (NOA) and inviting volunteer grantees to use its data fields to complete other forms. The grantees reported that they were able to use the standardized data fields to complete other forms faster and more accurately – and if the NOA were officially standardized across government, they could “engage in more advanced or automated mechanisms for collecting grant award information” (page 50).
For Contractors: a Payroll Reporting Tool is Being Presented as the Pilot Program.
Despite the DATA Act’s requirement for the pilot to be completed no later than May 2017, OMB did not begin actually collecting data until March 2017, and will not be complete until February 2018 (page 5). OMB ascribes the delay to “changes in implementation partners and the need to appropriately secure the data collected” (page 12).
Not only is the contractor reporting pilot late, it is also strangely limited. OMB’s only plan is to build and test a “tool” that centralizes construction contractors’ payroll reports.
Contractors must report on whether they pay construction laborers and mechanics the “prevailing wage,” as required by the Davis-Bacon Act (page 16). Contractors running construction projects must separately report payroll information verifying their compliance to every procurement office, across the government, from which they’ve been awarded a contract. Because these separate procurement offices impose “different formats and styles” (page 17), contractors often end up re-reporting the same basic information with slight variations, increasing their compliance costs.
OMB hired an IT company to build a tool that “could be used across government agencies and accessed by contractors around the globe for their respective reporting” on construction payrolls (page 16). The tool will allow contractors to enter this information once, rather than multiple times to each procurement office, and prepopulate their basic information from existing federal systems (page 23).
OMB intends to use observations from the use of this tool to develop the “fundamental building blocks necessary to scale any capability to address all [contractor] reports” in the future (page 21). OMB says its feedback so far supports expanding the tool to address other kinds of contractor reporting (page 57).
Payroll reporting seems like a worthy example of the need for data standardization – but it is much narrower than the scope of the pilot program that the DATA Act requires. The law requires that OMB work with “a diverse group of recipients of Federal awards” (DATA Act sec. 5(b)(2)(B)), and not just construction contractors. OMB certainly did not develop a contract-oriented version of HHS’ CDER Library, though it says it may conduct an “inventory” of the contract reporting forms in the future (page 57).
OMB’s Recommendations: Standardized Data For Grant Reporting; Few Promises for Contract Reporting.
The most important part of OMB’s new report is its first recommendation.
OMB says the federal government needs “a comprehensive taxonomy of standard definitions for core data elements” across all federal grant reporting (page 56). “This taxonomy could be made public in a machine-readable format, which could form the basis of shared software as a service for both Federal and state, local, tribal, university, and nonprofit parties.”
This “taxonomy” can be the standardized data structure that grantmaking agencies and grantees so badly need. And OMB is promising to try to create one.
The DATA Act directed OMB to include, in this report, “a discussion of any legislative action required” to standardize grant and contract reporting data (DATA Act sec. 5(b)(6)). But OMB did not do that. Except for being headlined “Report to Congress,” the report does not mention Congressional action.
Nevertheless, OMB’s decision to pursue a standardized data structure for grant reporting is bold, commendable, and challenging. In fact, OMB’s other two recommendations – to eliminate duplication in reporting and create new systems that centralize reporting – both flow from the first one, and are impossible without it.
And even without being stated, the implication for Congress is clear. Congress should specifically direct OMB – possibly in concert with HHS – to create the standardized data structure that OMB now recognizes is necessary. The CDER Library already developed by HHS provides a solid foundation. Congress should also require all grantmaking programs, across the whole executive branch, to follow that data structure.
OMB promises far less for contract reporting; most of its commitments do not seem to apply to the procurement sphere. For example, Recommendation 1’s headline says OMB will “[c]ontinue to standardize data elements,” but the text promises a “comprehensive taxonomy” only for grant reporting – not for contract reporting. Recommendation 2 says OMB will “eliminate unnecessary duplication,” but its text only discusses duplication in grant reporting, not contract reporting.
OMB does promise to make the new payroll reporting tool the official means of providing such information to the government, saving contractors the trouble of reporting that information to multiple contracting officers (page 57). And, in the future, “OMB can further conduct a refreshed inventory of [contract reporting] and [create] an action plan for streamlining all reporting and access” (page 57; emphasis added).
Congress could be forgiven for thinking that it had already asked OMB to conduct such an inventory and create such an action plan, seeing as that’s what Section 5 of the DATA Act already says.
I Skipped to the Bottom of This Long Blog Post. What Does It All Mean?
For grant reporting, the White House has set an ambitious goal that, if realized, will benefit grantees, grantmaking agencies, the constituencies they serve, and American taxpayers.
But contractors can’t expect relief from their compliance burdens, nor can taxpayers expect better transparency in contractor reports – because the White House hasn’t done, or promised, much of anything.