The Seven Habits of Highly Effective Spending Transparency Systems
As leaders of both parties in Congress obsess over cutting spending, it's no surprise that spending transparency has become an issue. Most recently, the House passed the Digital Accountability and Transparency Act (DATA Act), a bill designed to increase the quantity, quality, and accessibility of federal spending information. The bill would be a leap forward in government openness, but it is only a beginning. A comprehensive system of federal spending transparency that enables citizens to hold government accountable must include a set of key elements, which we explore in this article.
The data in any spending transparency system needs to be complete. The data must show every layer of pass-through spending for people to understand who is benefiting from federal funds. USAspending.gov, the government's main spending portal, currently shows only two layers of the recipients of federal spending. Because of this, we can see only prime recipients (those who are awarded federal contracts and grants) and their immediate subcontractors. Large federal projects are likely to be subcontracted multiple times, meaning current reporting requirements cut off several tiers of subcontracting data.
Instead of limiting transparency to two levels of recipients, Congress should create a system of full multi-tier reporting in which any organization that receives more than some minimum amount in federal funds – say, $25,000 – must report on the use of those funds. The DATA Act mandates such a system.
The DATA Act also calls for a report on the feasibility of reporting tax expenditure data. Currently, USAspending.gov does not include this information, even though the government spends more than a trillion dollars a year on tax expenditure programs (for example, tax subsidies).
Every federal government database that contains information on private entities should be linked to every other federal database that contains information on private entities. Currently, firms receiving federal funds often have different identification numbers in different agencies' systems. For example, we need to be able to see that the Acme, Inc. that received a federal contract last year is the same Acme, Inc. that appears in EPA's Toxics Release Inventory. Furthermore, assessing the total amount of federal funds that an entity has ever received requires that systems be able to recognize that entity as such in every instance it is involved in the federal spending process. And because data are housed in many locations, the ability to link these datasets is essential to federal spending transparency.
This kind of comparison requires having one unique ID number for every recipient so we can trace firms across time and agencies and connect subsidiaries to their parent companies. The current system relies on proprietary information from Dun and Bradstreet, a for-profit company that assigns IDs to corporate entities. This database of companies is not public and does a poor job of linking together subsidiary companies owned by a large corporation. We need a single system to identify entities across all federal datasets, one that is non-proprietary and open to the public, and forces every agency to identify firms in the same, unique way. The DATA Act creates new data standards, including recipient IDs, allowing for easier comparison across datasets. By linking these disparate datasets, citizens and governmental actors could increase the accountability of contractors, Congress, and federal agencies.
Government spending data should be as accurate as possible. Agencies have made improvements in the quality of data they report to USAspending.gov; however, it's still far from perfect. Treasury Department data on the checks that are handed to recipients is the most accurate source of federal spending data and should be made public. Data on USAspending.gov is on contract and grant obligations, not actual payments to the firms or individuals doing work for the federal government. If you want to know how much money has been spent and to whom it has gone, there is no higher-quality data than what appears on the "Pay to the Order of" and "Amount" lines of Treasury payments. With appropriate identifiers on the payment data, which the DATA Act would make available for the first time, contract and grant data can be connected to the check to give further information on the details of the spending.
Transparency should be used to help hold decision makers accountable for the choices they make. This means being able to trace all spending from cradle to grave, from when the president recommends a program through to when Congress approves the spending, and to reporting on how the program performs. Currently, there is no easily accessible, public linkage between an appropriation and a federal program because there is no set definition of what a "program" is. Instead, one must laboriously comb through appropriations bills, legislative report language, the president's budget, agency reports, and USAspending.gov and manually piece the chain together, making it almost impossible to see how and why any given dollar of federal funds was spent. To fix this problem, Congress must change the way it writes appropriations bills and create a more robust way to identify programs across the federal government. Unfortunately, the DATA Act does nothing to change how appropriations bills are written.
5. Integration of Performance Data
The DATA Act is silent on performance data and would not create new sources of performance information. However, spending transparency should also be about helping policymakers make better decisions in the future. As part of their budget request process, federal agencies should have access to relevant, high-quality information on how their programs are working. Congress should also have access to the same data to help guide its funding deliberations. Outside stakeholders – those who are affected by program funding, involved in service delivery, and concerned as interested citizens – should also have access to the same information. This would dramatically increase accountability. In other words, performance data, which is essentially unconnected to budget data today, should play a greater role in budgetary decisions. Access to such data would allow us to answer the question: what kind of bang are we getting for the buck?
6. Full Contract Information
Data points such as award amount and place of performance (which are currently displayed in USAspending.gov) are helpful in making spending information more transparent, but more information is required if the public is to see whether the federal government is getting value for its contracting dollars. The full text of a contract or grant agreement between the federal government and private entity would allow Congress and the public to know what exactly the government is supposed to be getting for what it spends. Currently, only brief summaries of awards are available on USAspending.gov, and citizens must go through a time-consuming and obtuse Freedom of Information Act (FOIA) process to obtain the actual contract text, which can take years. Making this information automatically available to the public, alongside the already existing award information, would help bring true transparency to the nation's spending. Other information on the federal contracting process, such as the high and low bids received, scope of work of a contract, and the original request for proposal, should also be made publicly available. Unfortunately, no such language is in the current version of the DATA Act, limiting the bill’s scope.
Publicly available data is really only open if the public can find and use it. Any spending website, such as USAspending.gov, should show summary, big-picture information (such as the top 10 government contractors) and allow advanced users to perform detailed searches of the data (such as the top Defense contractor in Massachusetts's 3rd congressional district). It should also be jargon-free and comprehensible to lay users. It should provide raw, machine-readable data in flexible and open standards, with an option to download. USAspending.gov currently does an acceptable job on many of these fronts, and the DATA Act does not specifically change how the site would display or make spending data available. However, a key strength of the DATA Act is that it would require the government to create a standard format for federal spending data, which would enable far greater machine-to-machine communication and be easily transformed into public-facing websites and mobile device applications.
More on the DATA Act
If enacted and implemented well, the DATA Act could enhance federal spending transparency enormously by applying these seven principles to the sea of information currently within the government and turn on new streams of data. For example, the bill would create a recipient reporting system that would allow users to see further down the spending chain. It would also standardize data, enabling cross-dataset and cross-agency comparisons and mash-ups. However, the DATA Act does not call for linking performance data to spending decisions and does not fix the problem of comparing spending bills to the program information provided by the executive branch.
The DATA Act doesn’t get full marks on any of the seven effective habits, but it is a regimen that would significantly strengthen federal spending transparency. And the one thing we know about habits is this: they get stronger as you live them.