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As federal employees are furloughed, programs and contractors are cut, and agreement on future federal budgets appears remote, efficient management of the trillions of dollars it takes to operate the government is more important than ever. In Federal News Radio's on-air and online series, "Rise of the Money People: Financial management moves front and center as agencies make the final assault on wasted billions," we shine the light on chief financial officers and their soldiers in the financial wars, their strategies and tactics for waging the fight, the current and emerging weapons in their arsenal, and how their future battles will unfold.
Recovery Board opens next frontier in financial accountability
Wednesday - 4/10/2013, 2:25pm EDT
A funny thing happened when Congress approved the American Recovery and Reinvestment Act in February 2009.
While politicians debated whether in was wise to invest more than $804 billion in an effort to stimulate the economy, lawmakers added a provision to the bill giving the Recovery Accountability and Transparency Board, an independent, non-partisan, non-political agency, oversight of the funds.
The "RAT Board" had two goals. One was to provide transparency over the Recovery money, and the other was to root out fraud, waste and mismanagement in the spending of those funds.
Four years later, debate may continue about the success or failure of the Recovery Act. But many consider the RAT Board to be a pioneer in government accountability and transparency.
Federal News Radio's week-long, on-air and online series, "Rise of the Money People: Financial management moves front and center as agencies make the final assault on wasted billions ," focuses on the methods and tools agencies employ in rooting out waste, fraud and abuse in government spending.
Leveraging technology to facilitate accountability
From its conception, the RAT Board was a model of how the government could leverage new technology to track data and promote transparency in the way its spends money.
Earl Devaney, former RAT Board chairman
"Quite frankly, I was very skeptical when I first took the job about how we would, not only protect [approximately $804 billion], but the notion that we could make that transparent to the American public was also a major challenge," said Earl Devaney, former chairman of the RAT Board.
For Devaney, who served 10 years as inspector general at the Interior Department, the Recovery Act signaled a major change in attitude for the IGs who made up the RAT Board. Rather than meerly detecting fraud and waste after the fact, they were using software previously employed by the intelligence and law enforcement community to track government spending and prevent fraud and waste from occuring.
"We applied those tools to government spending with the notion that if they worked in those other fields, they would work in government spending and sure enough they did," he said. "We were in a position to be able to tell procurement officers, for instance, that you've got four chunks of money going out. You've already sent one chunk to the wrong place. Don't send the other three to the wrong place. That differed significantly from the old way of doing business where IGs and other enforcement types typically came along a couple of years later and realized that all the money had gone to the wrong place."
The Recovery Act Operation Center used advanced analytics to "look at open source data that hadn't been available previously with with emergence of the Internet and things like that," said Michael Wood, Recovery Board executive director. "And the ability to go through large volumes of data and ferret out either trends or potential problem areas. We worked pretty carefully with the IGs and agencies to try and identify programs that might be high risk and then use some advanced software. We were using Palantir. There were a few others that we use now to look at both the structured and unstructured data to see if we could identify issues and problems."
Transparency is a 'force multiplier for accountability'
The RAT Board's greater legacy, though, might be in the area of transparency.
"It brought an unprecedented level of transparency to government spending," Devaney said. "I don't think the American public had ever had the opportunity to see how the government actually spent their money except in sort of an abstract way."
The transparency largely came out of the website the RAT Board created that provided citizens with a way to keep track of Recovery money.
"Recovery.gov had a particular feature that the public loved, which was being able to put your ZIP code into the site and drill down into your own neighborhood and see where the money was being spent around you," Devaney said. "From the public's perspective, it was an opportunity for people to see who was actually spending the money in our neighborhoods."
The RAT Board also oversees FederalTransparency.gov, which provides data reported by federal award recipients, and EducationJobsFund.gov, which tracks grant awards presented through the Education Jobs Fund.
The RAT Board's successful combination of accountability and transparency helped it protect the $804 billion in Recovery funds better than many people had expected or hoped.
Kathleen Tighe, chairwoman, RAT Board
"That kind of money attacts all kinds of thieves and people who would like to plunder that money," Devaney said. "So, when we first started the endeavor, I had imagined that it would be a far greater fraud and waste than we actually found. It turned out ... to be less than half a percent, when most pundits predicted it would be 5 or 6 percent of the money. I think a combination of the technology we used and the fact that this money was so transparent provided an opportunity for enforcement types like myself to see fraud prevented."
As important as the technology was to preventing fraud, waste and abuse, Devaney called transparency a "force multiplier for accountability."
"I'll go to my grave believing that the transparency of this money prevented the thieves from coming around and trying to get it," he said. "There's so much sunlight on this money that sort of like a burglar going into a neighborhood and seeing a house a lit up with a barbed wired fence and a sign that said 'Maneating dog inside.' They're going to go down the street and rob the house that's dark."
White House, Congress recognize a good thing
People in the White House and on Capitol Hill began to take notice of the RAT Board's ability to cut down on fraud and wast.
"Since we started this thing two years ago, we have more than 75,000 projects, more than 260,000 awards and that's a lot of transactions," said Vice President Joe Biden, who would oversee the implementation of a new initiative. "So we asked the Recovery Board to tell us how many dollars are involved in cases where there have been convictions. … It was less than $3 million, not billion, $3 million out of $480 billion in contracts grants, loans and entitlements that were obligated. No matter which way you cut it, the fraud so far has been remarkably low, less than a fraction of a percent."
Inspired by the success of the RAT Board, President Obama created the Government accountability and Transparency Board in a June 2011 executive order as part of the administration's Campaign to Cut Waste initiatives. The board was designed to increase transparency surrounding federal spending, modeled on a similar effort to track spending disbursed by the 2009 Recovery Act.
According to the executive order, the GAT Board was charged with providing "strategic direction for enhancing the transparency of Federal spending and advance efforts to detect and remediate fraud, waste, and abuse in Federal programs." The 11 members, who were chosen by the president from agency inspectors general, CFOs and deputy secretaries plus a senior official from the Office of Management and Budget, were tasked with identifying ways to reduce spending by applying the lessons learned from the RAT Board.
"The Government accountability and Transparency Board was put together to work with the Recovery Board and OMB and the other agencies to say what went right, what went wrong with Recovery Act reporting, because we knew that we were transformational in Recovery Act reporting," said Danny Werfel, controller of the Office of Management and Budget and GAT Board member. "We knew that Recovery.gov was innovative and different. We knew that, for the first time, we were tracking information in quicker timeframes on a comprehensive basis and making information available on the Web on federal programs that had not been made available before. So, something new happened during the Recovery Act. There were many successes."
The president appointed Devaney the GAT Board's interim director until July 2011, when Richard Ginman, director of Defense Department procurement policy, was appointed to succeed him.The remaining members of the board are:
- David Williams - Vice Chair, and Inspector General, U.S. Postal Service
- Nani Coloretti, Deputy Assistant Secretary, Department of the Treasury
- Gregory Friedman, Inspector General, U.S. Department of Energy
- Scott Gould, Deputy Secretary, U.S. Department of Veterans Affairs
- Allison Lerner, Inspector General, National Science Foundation
- Daniel Levinson, Inspector General, U.S. Department of Health and Human Services
- Ellen Murray, Assistant Secretary for Financial Resources and Chief Financial Officer, U.S. Department of Health and Human Services
- Calvin Scovel III, Inspector General, U.S. Department of Transportation
- Kathleen Tighe, Inspector General, U.S. Department of Education
- Danny Werfel, Controller, Office of Management and Budget.
At the time of the GAT Board's formation, Devaney touted the three pillars of the new board's mission: clean data, transparency and accountability, all of which can be tracked back to the work of the RAT Board.
Danny Werfel, controller, Office of Management and Budget
Devaney said the platform the Recovery Board built was one that the rest of the government could use. The formation of the GAT Board showed a willingness by the executive branch to spread that type of oversight elsewhere.
A similar cultural shift has taken place on Capitol Hill.
"There are parts of Congress that watched the Recovery very closely and were very interested in what we were doing and what kind of technology we were using, and they saw the results," Devaney said.
Last year, the House passed The Digital Accountability and Transparency Act of 2012 (DATA Act), which established requirements for transparency and accountability in federal spending, as well as set up data standardization. It also included a provision to establish the Federal Accountability and Spending Transparency Commission to conduct investigations and reviews of federal spending to avoid duplication.
The Recovery Board, which was due to wrap up its duties on Sept. 30, was given a new lease on life in February when it was assigned oversight of the $60.2 billion in Hurricane Sandy assistance funding.
"Congress clearly wants to ensure that aid funds are not misspent or diverted improperly," Recovery Chairwoman Tighe said in a release. "The money is designed to help rebuild the lives of the victims of superstorm Sandy, which invaded the East Coast and left a path of devastation in late October. New Jersey and the New York City area were especially hard hit."
Hurdles remain for wider implementation of RAT Board lessons
Despite these bright spots, barriers to greater accountability and transparency still remain.
"One is that the government doesn't have any single alpha-numeric numbering system for contracts and grants," Devaney said. "In Recovery, there were 29 government agencies that had Recovery money with 29 different numbering systems, some of which went back to George Washington. So, every department really liked their numbering system because it made sense to them, but it doesn't make sense when you're trying to use technology to roll all those things into one system."
Werfel echoed Devaney's assessment.
"The fact that information in federal accounting, budget or financial management program, etc., lacked standardization, that's where most of the challenges came in terms of ensuring the information was reliable, ensuring that the information could be digestable by the public, could be linked up to answer key questions that the public had, it all came back to that foundation," he said. "What we're doing right now in this environment is figuring out exactly what the right roadmap is to provide more standardization."
Another hurdle to overcome is resistence from agencies to alter the way they do their jobs.
"They like the way they do business and would prefer not to, perhaps, change," Devaney said. "And change was what this was all about and it would require certain agencies to change not only their numbering systems but perhaps some ofheir IT configurations. So, the agencies don't like to be told what to do. OMB rarely likes to direct them to do something, so we've got some malaise in the executive branch, but I think Congress in particular saw what we did and thinks it's a good idea and I wouldn't be surprised if they embedded it in future bills."
Despite these hurdles, Tighe believes the lessons learned from RAT Board's efforts will bring greater transparency and accountability in government spending. As that happens, financial managers will have access to tools that will help them combat waste, fraud and abuse.
"I think it really started a whole new era," Tighe said. "I don't think anybody can turn the clock back now. I think everbody's looking for ways to make spending display more accurate and let's look at USASpending and see if we can enhance it. So, I think we've started the beginnings of a dialogue that will work to make the public more tuned in to federal spending."