February 9, 2011
The government's top Recovery Act watchdog is asking the Obama administration for the authority to track more levels of stimulus spending currently outside public scrutiny.
Stimulus reporting guidance from the Office of Management and Budget in April 2009 requires prime recipients and first-tier subrecipients to report how they are using Recovery Act funds. But subsequent layers of subrecipients currently are exempt from the requirements.
Nearly two years later, Recovery Accountability and Transparency Board Chairman Earl Devaney says the time is right to expand the reporting mechanism to capture stimulus recipients at every level.
"More data, clearly presented, will give the public a better sense of what is going on in this massive government program," Devaney wrote in his Chairman's Corner column on Tuesday. "From an accountability standpoint, the Recovery Board and its federal, state and local oversight partners will have a better chance at catching those who steal or misuse tax dollars."
The lack of detailed, in-depth reporting from every recipient of Recovery Act funds could allow taxpayer dollars to be spent inappropriately, Devaney said. For example, let's assume a federal agency provides a Recovery grant to a state government, which sends those funds to a city council for a local road project. The city council then would direct a percentage of those funds to a private contractor. In this scenario, each of the recipients would be required to report their spending, but the trail would end there, Devaney said.
"If the contractor retains a subcontractor with ties to the mayor's brother, for instance, we have no way of knowing that unless we are tipped off," he wrote.
No one seems to know exactly how many recipients fall below the reporting threshold. Former Office of Management and Budget Deputy Director Robert Nabors testified in 2009 that approximately 95 percent of all Recovery Act dollars would be subject to the reporting requirements. Critics, however, have dismissed that number as nearly impossible to prove.
"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 Senate Homeland Security and Governmental Affairs Committee in April 2009.
Changing the reporting requirements would require new guidance from the administration. "OMB is aware of our position," said Ed Pound, a spokesman for the Board. An OMB spokeswoman did not respond to a request for comment.
It is not clear if OMB believes that revising the reporting rules would be worth the effort at this point.
Even if the office issued new guidance tomorrow, it still would take several months to inform recipients of the rules. Stimulus recipients, many of whom have created reporting structures to comply with the existing regulations, would then have to create a tracking mechanism -- a difficult challenge so late in the effort. According to the Recovery Board, of the $275 billion allocated for stimulus contracts, grants and loans, $177 billion already has been paid out.
But, Pound said the change could still make a difference. The Board is not statutorily terminated until September 2013, potentially allowing for at least nine more reporting cycles. "Not all of the funds have gone out the door," Pound said. "This would make a significant impact and give the public a lot more information."
Others see the proposed change in broader terms. Gary Bass, founder and executive director of the nonprofit group OMB Watch said if the board were able to establish a system to collect data from all Recovery recipients, then it eventually could be expanded for use governmentwide with all types of nonstimulus spending.
"This could be an important template for how the government would go about doing this," Bass said. "I have always viewed this [reporting structure] as a gigantic pilot program."
The Recovery Board does have a record, albeit brief, of charting the course for government transparency. The 2006 Federal Funding Accountability and Transparency Act, which created USASpending.gov, mandated that the government track spending through the subcontractor level. But, it was not until the Board established a system to track Recovery subrecipients that the Obama administration finally implemented the law. Bass is hopeful that history could repeat itself.
"If the Recovery Board takes this on," he said, "it should be done in a coordinated fashion so that it could eventually be used governmentwide."
Devaney appeared to endorse that approach in his column. "We want to provide more recipient information on this website, and we are constantly advocating that position inside the government," he wrote. "Indeed, some argue, this kind of detailed information should be available for all government spending programs in an electronic and timely fashion. We agree, and you will hear more from me on this issue in the coming months."
February 9, 2011