How Treasury and OMB can add value to the DATA Act

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This is the second in a three-part series of articles on realizing the value of the DATA Act.

There is a common assumption that general accounting practices familiar to anyone who has run a business ought to be pretty similar to managing the finances of a government agency. Surprising to many, the federal government can’t currently do some things that are fairly easy in the private sector – several of which are critical to effective management.

For instance, government cannot:

  • Compare actual spending to budget amounts for a mission purpose;
  • Find all programs, across every agency, that focus on the same mission purpose;
  • Identify what we get (performance) for money we spend on a mission purpose;
  • Figure out which organization is best at performing a particular activity, and why.

Those are some of the challenges that led to the passage of the Digital Accountability and Transparency (DATA) Act, enacted May 9, 2014. Among other provisions, the DATA Act tasked the U.S. Treasury Department and the Office of Management and Budget to establish standards for data commonly used in financial reporting that all agencies must follow. It also pushes the government to make its financial reports more accessible to the public.

Now that those standards have been released, federal agencies can get started realigning their ledger sheets. It’s a huge undertaking. But as I noted in my previous article, more must be done if federal government is to begin making better-informed decisions. If taken further, the DATA Act eventually promises to let officials:

Compare actual spending to budget. Right now, many agencies ask for money according to their missions (e.g., the Department of Homeland Security asks for a budget to prepare for disaster response, protect the border or strengthen cybersecurity. These are mission purposes). But agencies record their spending by organization unit.

If Congress asks DHS, “How much of the money we gave you for cybersecurity last quarter did you spend?” DHS has a hard time answering, because some was spent by the Secret Service, some by the National Plans and Preparedness Directorate, and some by the Science & Technology Directorate. And, within the Secret Service, DHS tracks spending on salaries, equipment, travel, etc. — but can’t easily identify spending on cybersecurity, which typically uses all of those resources. DHS is in the process of addressing this, but many other agencies face this same problem and have not taken steps to address it.

Recommendation: As OMB and Treasury set standards for financial data reporting, they should set a standard requiring that agencies record the mission purpose for which money is spent.

Find and compare all the programs with a similar purpose. Right now, there is no sure way to find all programs focused on a similar purpose — e.g., water quality. Of course EPA regulates water quality. But the National Science Foundation funds related research, and the Department of Agriculture helps farmers reduce farm runoff that impacts water quality. Each agency tends to define and describe their programs in different ways. Thus each appears unique.

The Common Government-wide Accounting Code (CGAC) includes fields for program and project identifiers. But, those standards mostly allow each agency to define its own list of programs. Thus we lose the chance to find programs with a similar purpose across agencies.

Recommendation: OMB and Treasury should not allow each agency to independently choose its own list of programs and mission purposes for DATA Act reporting — they should avoid potential duplication by moving toward a single, government-wide program list.

Figure out which agency does a particular activity best, and share best practices. Right now, it is difficult to identify all agencies that perform an activity — for example criminal investigation, accounting or telephone customer service.

Recommendation: OMB and Treasury should set standards for financial data that require agencies to record the activity as they budget, obligate and spend. Once put into effect, a standard list of activities would allow analysts to identify agencies and offices performing the activity, evaluate what performance measures are used, and what performance outcomes are achieved, so that the methods, tools etc. of the most effective performers can be shared.

See what we get for what the government spends. Right now there are few examples where government expenditure (on a full-cost basis) are associated with a specific mission purpose, program or activity, thus allowing performance to be compared to expenditure. Only when spending data are recorded pertaining to mission purpose (Why), program (What) and activity (How) will it be possible to match spending to performance data consistently in the context of a single mission purpose, program or activity.

Here are two examples:

Meta-tagging illustrations (Source: Jeff Myers)

Framing these elements of “metadata” as Why, What and How may lead the reader to ask: Shouldn’t the questions of Who, Where and When also be included? The answer is yes. (In most instances, these elements are already part of most Federal financial systems.) Standards will be helpful here, too.

Hurdles must be overcome

OMB and Treasury have sought to carry out the DATA Act while minimizing the disruption and cost of change. But, it is important to confront the need for change consciously, including:

  • IT systems will need to capture additional data (i.e., mission purpose, program and activity) surrounding budget, obligation, purchases, contracts, salaries, grants and payments. In some instances, existing data fields have extra unused digits available, so the software may not need to be changed — but there may be a need to change how account codes are used.
  • Staff will need to be trained to record the additional metadata elements for each financial transaction, consistent with adopted standards. This includes staff responsible for budget, accounting, purchasing, payroll, etc.

Benefits will be substantial

Only if OMB and Treasury adopt standards for metadata will it be possible to:

  • Identify and address program duplication (and make it possible to identify and coordinate multiple programs that touch the same citizen);
  • Identify which different programs/approaches most efficiently achieve a mission purpose;
  • Identify, evaluate and help improve inefficient/poorly performed activities;
  • Strengthen public confidence in the value received for government spending;
  • Inform agencies and stakeholders of the efficiency of government activities — even systematically comparing the best in government to similar private sector activities;
  • Provide well-founded input to analyze organizational and executive-level performance;
  • Track the full life cycle of funding — from budget requested to appropriation received to funds obligated to expenditure disbursed. This will help the public determine if Congress under-funded a priority, if an agency underspent, or if the agency under-performed.

The bi-partisan book Moneyball for Government recently suggested aggressively comparing programs, using evidence (random, controlled trials) to find what works, and phasing out what doesn’t work. It will be challenging to find the programs to compare, unless OMB and Treasury help us follow the money to systematically find all of the programs in government focused on the same mission purpose.

Jeff Myers is a principal at REI Systems.

Read Myers’ previous columns on the DATA Act and open data:

Obtaining value from DATA Act: Follow the Money – The legislation will make it possible for the first time to follow government spending. But it doesn’t go far enough.

3 actions that could improve federal open data programs – Despite White House initiatives, agencies supplying open data still make all the decisions about what data to provide. Here are three ideas to change that.


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Agencies, Commentary, DATA Act, Departments, Government IT News, Guest Columns, Management & Budget, Office of Management and Budget (OMB), Treasury Department
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