The new directions will clarify that agencies must collect information on subcontracts awarded from the prime contractor and sub-awards from primary grant recipients, OMB Deputy Director Robert Nabors II told the Senate Homeland Security and Governmental Affairs Committee.
"The administration believes this level of reporting strikes the appropriate balance between transparency for Recovery Act spending and the burden that reporting imposes on recipients," Nabors told the panel.
Critics had argued that the language in OMB's initial stimulus spending directions, released on Feb. 18, essentially allowed local contractors and subcontractors on the city level or below to avoid public disclosure of grants and contracts.
In addition to data collection, Friday's guidance will cover program planning and oversight, Nabors said.
Despite more tracking and monitoring requirements, committee members expressed concern that a significant percentage of Recovery Act funds will be wasted or abused.
"If Americans start hearing stories about how their money is being wasted on pet projects or funneled to favorite contractors or flat out lost to fraud or theft, faith in government at all levels and support for the overall program will erode -- no matter that other parts of the program are successful," said Sen. Joseph Lieberman, I-Conn., chairman of the committee.
Earl Devaney, who is leading oversight of stimulus spending as chairman of the Recovery Accountability and Transparency Board, encouraged senators to keep their expectations realistic.
"I am concerned there may be a naïve impression that, given the amount of transparency and accountability called for by this act, little to no fraud or waste will occur," Devaney told lawmakers. "I am afraid that my 38 years of federal enforcement experience informs me that some level of waste or fraud is, regrettably, inevitable. Obviously, the challenge for those of us charged with oversight will be to significantly minimize any such loss."
Devaney said data has shown that about 7 percent of all government funds are lost to fraud and abuse. If that holds up for the $787 billion Recovery Act, more than $55 billion would be wasted.
"We just can't allow that to happen," said Sen. Susan Collins, R-Maine, the committee's ranking member. "That's just an unacceptable percentage."
Strict oversight of stimulus spending already has begun, Devaney said. Nine contracts identified in news reports last month as noncompetitive or marked by administrative errors have been referred to agency inspectors general for review, he said. Government Executive published a story on March 18 examining some of the early stimulus contracts discussed during the hearing.
During its first meeting last Friday, the Recovery Accountability and Transparency Board established a Recovery Funds Working Group to coordinate interagency efforts on preventing fraud, waste and abuse before it occurs. The board also plans to improve recovery.gov, the government's official stimulus-tracking Web site, Devaney said.
In the nearly seven weeks since President Obama signed the stimulus bill into law, at least $51 billion in Recovery Act grants, contracts and loans have been obligated by 15 federal agencies, Nabors said.
For example, the Transportation Department has obligated nearly $4 billion for improvements to highways, transit systems and railroads while the Housing and Urban Development Department has spent more than $4 billion for programs to improve public housing and rental assistance.
Nearly 500 Recovery Act contracting opportunities, requests for information and pre-solicitation notices have been posted on the Federal Business Opportunities Web site.
Significant funding also is reaching states in the forms of grants, Nabors said. Agencies have announced nearly $151 billion in formula and block grants for states and another $8.6 billion Medicaid grant awards. Thus far, 67 Recovery Act grant opportunities have been posted on grants.gov, up from 10 last month.
To help agencies manage the billions in new spending, OMB is reviewing the possibility of establishing a short-term governmentwide contingency contracting corps and is encouraging agencies to use direct hire authority or undertake coordinated interagency recruitment efforts.
The administration also is reviewing a bill Collins introduced in March that would authorize agencies to reemploy retired federal employees on a limited basis without offsetting their annuity from salary.
"The administration generally agrees that employing retirees could be a promising means of building capacity within agencies for Recovery Act implementation," Nabors said. Devaney said he also supports the bill.