5 Things You Should Know about the Data Act

The Data Act, or the Digital Accountability and Transparency Act, as of this writing have been sent to the White House for President Obama’s signature. According to Congress.gov, The Digital Accountability and Transparency Act of 2014 or the DATA Act – (Sec. 2) states the purpose of this act is to:

  • Expand the Federal Funding Accountability and Transparency Act of 2006 by disclosing direct federal agency expenditures and linking federal contract, loan, and grant spending information to federal programs to enable taxpayers and policy makers to track federal spending more effectively;
  • Establish government-wide data standards for financial data and provide consistent, reliable, and searchable government-wide spending data that is displayed accurately for taxpayers and policy makers on USASpending.gov;
  • Simplify reporting for entities receiving federal funds by streamlining reporting requirements and reducing compliance costs while improving transparency;
  • Improve the quality of data submitted to USASpending.gov by holding federal agencies accountable for the completeness and accuracy of the data submitted; and
  • Apply approaches developed by the Recovery Accountability and Transparency Board to spending across the federal government.

This is very good news for all who follow US Federal spending and hope to hold government officials accountable. The XBRL community is also very excited about this development. However, here are five things we should know about the bill.

  1. XBRL as the data standard to implement the Data Act is not a slam dunk.
    1. There are competing standards for the honor of tracking and reporting Federal spending. As reported by Charles Hoffman (Source: http://xbrl.squarespace.com/journal/2014/4/29/data-act-passed-by-both-senate-and-house.html): “While XBRL is in the running for the global standard format to use, there is competition. The Government Linked Data (GLD) Working Group got started a number of years ago.” While it should be noted that the GLD working group has created a data cube vocabulary, they do not have the built in advantage of financial reporting embedded in XBRL.
  2. Implementation Will Take Years
    1. The bill directs the Secretary and the Director of the Office of Management and Budget (OMB) to establish government-wide financial data standards for federal funds and entities receiving such funds.
    2. The bill directs the Secretary of the Treasury, not later than three years after the enactment of this Act and monthly, when practicable, but not less than quarterly thereafter, to ensure that information on funds made available to or expended by a federal agency is posted online, in a searchable, downloadable format.
    3. The bill also “Requires the Director to establish a two-year pilot program to develop recommendations for: (1) standardized reporting elements across the federal government, (2) the elimination of unnecessary duplication in financial reporting, and (3) the reduction of compliance costs for recipients of federal awards.
    4. This means that both the Secretary of the Treasury and The director of OMB need to agree on a standard and begin implementation almost immediately if the three year deadline is to be met.
  3. Joint responsibility for a complex government project is a recipe for?
    1. When major forces are employed at the speed of government, the results are seldom pretty. The Department of Health and Human Services had three years to roll out Obamacare and it is still facing implementation problems requiring hundred million dollar fixes. With the Data Act, two separate agencies have control and may have conflicting priorities. Will we see miracles happen or are we facing another long and painful implementation?
  4. Opportunities abound for Government Contractors Immediately
    1. The bill requires such pilot program to include: (1) a combination of federal contracts, grants, and sub-awards, with an aggregate value of not less than $1 billion and not more than $2 billion; (2) a diverse group of recipients of federal awards; (3) recipients who receive awards from multiple programs across multiple agencies; and (4) data collected during a 12-month reporting cycle. Who will not line up for a slice of $2 billion?
  5. The goal of the bill could prove to be elusive
    1. According to the bill’s co-sponsor Darrell Issa, “Addressing rampant waste and fraud in government starts with making publicly accessible, structured information available online for everyone — taxpayers and watchdogs alike,” Issa, who chairs the House Oversight and Government Reform Committee, said in a statement. (Source: http://www.informationweek.com/government/open-government/data-act-passes-house-awaits-obamas-signature/d/d-id/1234920)
    2. With a joint responsibility for implementation, a two-year pilot program and a three year implementation date from the date the bill is signed imposed within the bill, major obstacles need to be cleared before taxpayers and watchdogs get their data.

While it’s certainly an achievement to get both houses of Congress to agree to be more open and transparent about spending, we are still billions and years away from reaping the benefits of the good intentions of this bill. Hudson Hollister, executive director of the Data Transparency Coalition (DTC) and former counsel to the House committee on Oversight and Government Reform, has been active in helping to draft government transparency legislation and was active in lobbying both sides of Congress in his role with DTC. Keep the DTC and this blog on your radar for new developments as they occur.

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