September 24, 2012

Digging into the Senate's new DATA Act: Same name, different content, same goals

In July, when the Senate Homeland Security and Governmental Affairs Committee examined the need for better transparency in federal spending, Sen. Mark Warner (D-VA) told the committee he would introduce a new version of the DATA Act. Last Friday, with Sen. Rob Portman (R-OH) on board as a cosponsor, he kept his promise. The new bill has the same name as the measure that the House of Representatives passed unanimously in April. More important, its goals are the same: all federal spending should be published online, and the data should be standardized so that it becomes electronically searchable.

In other words, our video applies to the new Senate version every bit as much as it applies to the House version.

Federal spending data, once it is published and standardized, will transform government. Common identifiers and markup languages for spending data will reveal and prevent waste, fraud, and abuse. Standardization will allow the government to better manage itself, provide transaction-level accountability to citizens and inspectors general, and generate a wave of innovation in the tech industry. Our Coalition's members gave the public and the media a first taste of that innovation at July's DATA Demo Day.

The new Senate DATA Act (online here) pursues these goals quite differently from the House version (online here). Let's break down the main differences between House and Senate.
  •  No recipient reporting. The House version establishes a requirement for all federal grantees, contractors, and loan recipients to report to a central database on their receipt and use of federal funds. This requirement is based on the American Recovery and Reinvestment Act (ARRA), which requires recipients of stimulus money to report to Recovery.gov. ARRA demonstrated that reports by grantees, contractors, and loan recipients who get federal funds are often more reliable - and more useful for oversight - than data compiled by the agencies disbursing them. But states and universities were concerned that a universal recipient reporting requirement would raise their compliance costs. Responding to these concerns, the new Senate version eliminates the recipient reporting requirement. The new bill does require the Office of Management and Budget (OMB) to review existing agency-specific recipient reporting requirements and propose a way to streamline them. A single, universal reporting requirement and the elimination of agency-specific ones will be one of the options facing OMB, but not the only option.
  • Building on existing infrastructure. The House version combines four existing federal spending transparency websites - Recovery.gov, USASpending.gov, the Catalog of Federal Domestic Assistance, and the Consolidated Federal Funds Report - into one new portal. The new portal would publish recipient reports from grantees, contractors, and loan recipients (see above), plus data submitted by agencies on those same grants, contracts, and loans - to allow recipients' data and agencies' data to be checked against one another. The House version also requires agencies and the Department of the Treasury to report all obligations, expenditures, and disbursements of federal funds to that same portal. The new Senate version is less ambitious. Rather than create a new transparency portal with new infrastructure, it adds new data to an existing one, USASpending.gov.
  • Internal expenditures on USASpending.gov. Although the new Senate version sticks with an existing federal transparency website, it dramatically expands the data offerings of that website. USASpending.gov currently reports each federal grant, contract, and loan. It does not reflect the government's internal expenditures or budget actions. The new Senate version requires USASpending.gov to report - for each agency, each agency component, each program, and each object class - the dollar amounts available, obligated, spent, and transferred. The requirement falls short of transaction-by-transaction detail. But it achieves complete coverage of the whole executive branch. Like the House version, the new bill requires Treasury to submit its financial and payments data alongside data that comes directly from agencies. It also improves on the House version by explicitly requiring USASpending.gov to identify spending by program activity and object class.
  • Data standards by Treasury. The House version requires the new Federal Accountability and Spending Transparency Commission (FAST Commission) to designate common data elements and markup languages for federal spending information. The new Senate version retains the requirement for data standards, but it puts Treasury, not the FAST Commission, in charge. Treasury is directed to consult with OMB, the GSA, and the heads of federal agencies before it establishes standards. Like the House version, the new bill imposes a powerful, government-wide standardization mandate; under both DATA Acts, agencies must adopt the standards not only for information they report to the public portal but also for information reported to them by grantees, contractors, and loan recipients. One major difference, however, is that the House version directs the FAST Commission to designate the standards "by rule" - which means public notice and comment under the Administrative Procedure Act. The new Senate version does not include a comparable mechanism for public input on federal spending data standards.
  • FAST Commission scaled down to FAST Board. In the House version, the FAST Commission is pivotal. It collects data from recipients, agencies, and Treasury. It publishes the data for all to see and maintains the federal spending transparency portal. It designates common data elements and markup languages that recipients, agencies, and Treasury must follow. And it runs an accountability portal to assist inspectors general and other enforcement authorities in finding waste, fraud, and abuse. The new Senate version includes a Federal Accountability and Spending Transparency Board (FAST Board), but this body's composition, powers, and responsibilities are much less than those of the House's FAST Commission. In the House version, the FAST Commission is an independent federal agency. In the new bill, the FAST Board is an advisory body made up of inspectors general and agency officials. Its role is to provide strategic direction on federal spending transparency, monitor the publication and standardization of federal spending information, and solicit input from recipients to improve the reporting process. Its only specific responsibility is to submit regular reports to Congress. Moreover, the House version includes an advisory committee of recipients and transparency advocates to advise the FAST Commission. The new Senate version does not include a venue for public input to the FAST Board.
Does the new Senate version move as far or as fast as the House version? No. Does it deserve the full support of transparency advocates and the tech sector? Absolutely. Warner's reboot is true to the transformative goals of the House version, even improves on it in some areas, and provides a clear path forward to committee consideration, agreement with House negotiators, and final passage.

In coming weeks, our Coalition and other supporters will be engaging with the Senate sponsors to provide comments on this new bill. We will suggest some improvements, to be sure - but the first comment should be bravo. Sens. Warner and Portman have taken a giant step forward for data transparency.



September 6, 2012

Which party platform promises data transparency? Neither.

The presidential campaign is in full swing, and each major party has released its platform. The candidates get far more attention. But the platforms, hammered out laboriously by each party's establishment and activists, are the most detailed previews of what the candidates and their parties would try to do if elected.

Does either platform embrace data transparency? The short answer is no. Here's the long answer:

First, take a look at the Democratic platform. The Democratic platform touts President Obama's Open Government Initiative (page 45):
We are committed to the most open, efficient, and accountable government in history, and we believe that government is more accountable when it is transparent. The administration was the first to make public the list of visitors to the White House and create a centralized ethics and lobbying database available to the public online ... President Obama launched the Open Government Initiative to empower the public - through greater openness and new technologies - to influence the decisions that affect their lives. We are committed to using government as a platform to spur innovation and collaboration. Forums such as Data.gov release more information to the public so that the private sector can pioneer innovative new services.
(On page 68, the Democratic platform also mentions the U.S.' leadership of the Open Government Partnership with governments worldwide.)

The Democrats are absolutely right to recognize that government should become a "platform" that allows everyone access to its valuable data. Once the government begins standardizing and publishing its fundamental data compilations, citizens will use them to hold their representatives accountable. Developers will use them to build new high-tech products and services. And the goals of the President's Open Government Initiative are the right ones. The administration is right to establish Data.gov, reach out to developers, and promote smart disclosure.

The trouble is this: the data compilations that are most crucial to true data transparency, especially spending and regulatory, are not being standardized or published. And neither the Open Government Initiative nor the Democratic platform, which cites it, promises to change that.

Spending data. The most valuable information the government generates is its spending data. Standardized, transaction-level financial data would allow citizens to understand exactly what the government is doing and would generate untold business opportunities for software developers.

But federal spending data is opaque. Federal agencies report their spending to at least six different places, and each set of reports is formatted differently. Without standardized identifiers and formats, there is no way to isolate all spending by a particular agency or program, compare different contractors to one another, or compare data reported by agencies with data reported by grantees or contractors. The government does publish some grant and contract spending information on USASpending.gov, but its accuracy is laughably bad, due mostly to the lack of standardization. Internal spending information - salaries, facilities, supplies, travel, conferences, intergovernmental transactions - isn't published at all.

The DATA Act, which Democrats and Republicans in the House passed unanimously last April, and which is sponsored by a Democrat in the Senate, would require the government to standardize and publish all its spending information. But Obama administration opposes the DATA Act. In fact, the administration has refused to provide formal comments to Congress or work toward agreement on any spending data transparency legislation (video - 1:06:20), even though the Government Accountability Office says legislation is necessary (video - 56:00). Twenty-four good-government groups say so too.

Neither the Open Government Initiative nor the Democratic platform offers any plan to standardize and publish all spending data. For instance, the Open Government Initiative's most recent status report includes a section headed "Federal Spending Disclosure." That section highlights Recovery.gov, the successful stimulus transparency platform that serves as the model for the DATA Act. But Recovery.gov only covers stimulus spending and will disappear on September 30, 2013, unless the DATA Act is passed. That section also lauds the inadequate and inaccurate USASpending.gov and OMB's effort to publish spending on IT projects, which is worthwhile, but small-bore. The only other efforts mentioned are websites that publish aggregate totals and estimates. Data transparency requires bulk access to the details.

The Open Government Initiative has not opened spending data. Yet the Democratic platform holds up the Open Government Initiative as the comprehensive solution to the public's need for data transparency.

Regulatory data. The most valuable information the government receives is the huge array of forms and filings that regulated entities submit to dozens of federal regulatory agencies. If these forms and filings were submitted in interoperable formats, regardless of to which agency, and if they used common identifiers for regulated companies, individuals, financial instruments, and other common concepts, regulatory data would give markets their best possible chance of averting future financial crises. And standardization would be good for regulated entities, too. U.S. companies spend thousands of unnecessary worker-hours submitting the same data multiple times to different agencies. Australia and the Netherlands are solving this problem by introducing Standard Business Reporting (SBR), which uses standardization to allow companies to submit the same data just once.

Some agencies are making progress on regulatory data transparency. Financial agencies are adopting the Legal Entity Identifier (LEI), which will allow filings from a company with separate agencies to be searched together. The SEC and the FDIC have electronically standardized a few of their forms using the eXtensible Business Reporting Language (XBRL) format. The SEC's XBRL standard for financial statements lowers the cost of equity capital in the U.S. financial markets by reducing data processing costs. The FDIC, by adopting XBRL for banks' call reports, reduced preparation time from weeks to days, and errors from about thirty percent to about zero.

But, as Australia and the Netherlands show, government-wide regulatory data transparency requires leadership from the top. The White House should be requiring all regulators, not just financial ones, to use the LEI. The White House should be bringing all regulators together to work toward Standard Business Reporting. These things aren't happening, and neither the Open Government Initiative nor the Democratic platform promise to make them happen.

The Democratic platform does not promise leadership on data transparency. True data transparency will require the government to force agencies to change the way they report their finances or standardize the formats of regulatory filings. That's going to be hard work. It will be much harder than writing plans or setting up working groups.

Is the Republican platform any better? No. It's worse.

The Republicans' document never addresses data transparency - the idea that the federal government's information should be published online, using consistent and machine-readable formats - as a distinct concept. Nor does it recognize, as the Democrats do, that "government as a platform" for data can lead to accountability and innovation.

The Republicans do call for "transparency" in specific instances: the tax code (page 2), the budget process (page 4), the Federal Reserve (page 4), the mortgage finance system (page 5),  EPA rulemaking (page 18) and litigation (page 19), financial regulation (page 24), health care offerings (page 33), FDA enforcement (page 34), educational performance (page 35), and the UN (page 45). But nowhere do they acknowledge that the means of reaching government transparency is data transparency.

What should advocates of data transparency do? Neither the Democratic Party nor the Republican Party has incorporated real data transparency into its platform. Neither party has set specific goals or assigned specific responsibilities. Which federal data compilations should be standardized and published? Who should take charge of these tasks?

Neither party has answered these questions. Someone else should.

In the coming weeks, the Data Transparency Coalition will release its first-ever Data Transparency Agenda. Our agenda will explain the need for comprehensive data standardization and publication throughout the government's financial systems, performance tracking, regulatory filings, legislative actions, and judicial materials. It will name names, identifying the compilations and the agencies responsible and showing the reasons why opacity isn't acceptable.

And since neither party has set forth its own data transparency agenda, we'll ask both to pursue ours.

Stay tuned.




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