DATA Act oversight highlights growing pains

The first round of oversight reports on financial reporting under the Data Act shows that most agencies are experiencing growing pains when it comes to implementing the recent law.

Those growing pains ranged from reporting deficiencies and late reporting to noncompliance to billions of dollars in spending gaps, according to agency watchdogs.

Does that mean the open government law aimed at tracking where exactly the nearly $4 trillion spent by the government each year goes is not working? Or does it mean the submissions are exposing the ugliness of how agencies have historically tracked their spending?

For transparency advocates, the answer is firmly the latter.

"It's shining a light on all of the flaws that exist when you bring in disparate data from disparate systems," former Office of Management and Budget Controller Dave Mader said.

Hudson Hollister, founder and executive director of the Data Coalition, insisted the inconsistencies in first batch of oversight reports is "part of the process."

"We don't think the problems being uncovered means the Data Act is being headed off the rails," he said. "Quite the opposite -- it means we're discovering these problems."

Hollister, who helped draft the Data Act as an aide to Rep. Darrell Issa (R-Calif.), was quick to point out that growing pains were to be expected, considering the reach of the law. This is "the first time agencies ever tried to do this," he pointed out. "This is the most ambitious governmentwide transformation since at least the CFO Act of 1990."

A "clear problem child," in Hollister's words, among the first round of oversight reports was the Department of Housing and Urban Development.

HUD, according to its inspector general, did not comply with the transparency law, having underreported $17.9 billion in incurred obligations, $16.9 billion in outlays and $4.2 billion in apportionments.

"This means HUD hasn't ever been tracking these programs at all," Hollister said. "These problems are only now being revealed because the Data Act requires a governmentwide reporting regime."

Other agencies whose IGs reported compliance deficiencies included the Departments of State, whose senior accountable official did not certify transactions originating overseas, and Defense, whose SAO "did not certify and submit complete award data, timely award data, accurate financial and award data, and quality financial and award data for publication."

Across the board, the most challenging area for agency reporting was the financial award information, such as grants, contracts and loans.

For budgetary data, the Government Accountability Office estimated with 95 percent confidence between 56 and 75 percent of Data Act submissions were fully consistent with source information.

By contrast, GAO estimated that less than 1 percent of award records were fully consistent. The first round of submissions represents a drop from GAO's 2014 estimate that between 2 and 7 percent of award records were fully consistent.

Specifically, auditors reported "awards for 160 financial assistance programs with estimated annual spending of $80.8 billion were omitted from the data."

GAO also discovered that 13 covered agencies, including the Departments of Defense and Agriculture, submitted the file intended to link budgetary and award information, but failed to provide any data.

However, Hollister noted the less-than-perfect data "can still be useful even if it's missing a data field."

"It would be wrong to say less than 1 percent are useful," he added. "Many, many more than that are useful."

Despite the discrepancies in the award data, Hollister said relying on legacy award systems, such as the Federal Procurement Data System and the System for Award Management, for spending information "is a clear weakness in the reliability of federal spending information."

Looking ahead, Mader said the series of watchdog reports give Treasury and OMB a roadmap for oversight priorities for the next year, as well as a baseline for the development of a detailed action plan for agencies to institute corrective actions.

Mader added that with agencies' "tightening budgets and an inability to hire," the reports could provide a justification for a greater adoption of automation, blockchain and shared services, the latter a management priority of the Trump administration.

"If I were still in government, I'd be saying, one of the first projects I'd be bringing to [the MGT Act] is moving to software as a service for enterprise grant systems," he said.