White House orders agencies to plan oversight of stimulus spending

White House Chief of Staff Rahm Emanuel (left) and OMB Director Peter Orszag issued the order on behalf of President Obama. White House Chief of Staff Rahm Emanuel (left) and OMB Director Peter Orszag issued the order on behalf of President Obama. Gerald Herbert/AP
The White House has instructed agencies who will be receiving funds from the economic stimulus package being debated on Capitol Hill to develop plans immediately for allocating workforce resources to ensure the money is spent properly and in a transparent manner, according to a Feb. 9 memo obtained by Government Executive.

Meeting the stipulations of the economic recovery plan "will require sustained focus by managers throughout the federal government, particularly in planning, awarding, managing and overseeing contracts and grants," stated the memo, which was sent governmentwide by White House Chief of Staff Rahm Emanuel and Office of Management and Budget Director Peter Orszag.

Under the directive, agencies that are on track to receive significant funds from the recovery package are expected to appoint by Feb. 13 a senior-level official responsible for coordinating their stimulus-related efforts, said the directive. When President Obama signs the legislation, OMB will issue initial guidance to agencies on how to manage and oversee the funds. The administration will issue more detailed guidance one to two months after the bill's enactment, according to the memo.

"We cannot overstate the importance of this effort," wrote Emanuel and Orszag. "We are asking the American people to trust their government with an unprecedented level of funding to address the economic emergency. In return, we must prove to them that their dollars are being invested in initiatives and strategies that make a difference in their communities and across the country. Following through on our commitments for accountability and openness will create a foundation upon which we can build as we continue to tackle the economic crisis and the many other challenges facing our nation."

Agencies also will be asked to establish "rigorous internal controls, oversight mechanisms and other approaches to meet the accountability objectives of the bill" and to expedite, if necessary, the process for awarding and overseeing the funds. Agencies should inform OMB of potential challenges in implementing the recovery funds and identify any specific items that should be considered for the upcoming governmentwide guidance, Emanuel and Orszag wrote.

The memo, which has not been made public, is not available on any federal Web site, including Recovery.gov, the site created to track how the government spends the stimulus funds.

The directive appears to be a preemptive strike against potential waste and mismanagement of the stimulus funds, said one former Bush administration official familiar with the document. OMB tried to implement similar internal controls in 2005 after Hurricane Katrina, the official said, but they were ultimately unsuccessful because the government needed to spend the money so quickly.

"Here, you've got the added complexity of additional, new, extremely taxing reporting requirements that, if not required of grantees and recipients on the front end, will have to be required after the fact and, thus, create lots of unhappy campers out there," the official said.

The source said OMB needs to decide quickly if, and how, it will track certain data points, such as the number of jobs created as a result of the funding, or the amount of spending going to subcontractors and subgrantees. If the agency waits 30 to 60 days to issue such detailed guidance, billions of dollars already will have been spent and could be more difficult to track.

"That's too long," the former official said. "And it's old government, not new government. … They need to employ basic internal controls to ensure that the people who are getting the money are using it for its intended purposes. It's not rocket science."

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