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Last Line of Defense

On the last Friday of March, nine men and two women met for more than two hours in an office at the Interior Department to map out what could be the largest oversight task in the history of the federal government.

The Recovery Act Accountability and Transparency Board, known in some circles as the RAT board, is a group of 11 agency inspectors general charged with ensuring that $787 billion in federal stimulus funding is not wasted on bloated contracts, or diverted into the hands of scheming con artists. To do that, board members will have to beat back the head winds of recent history and overcome the limitations of the federal bureaucracy.

Estimates have shown that roughly 7 percent of all federal funding is lost to fraud and abuse. On a $100,000 construction project, such a figure could be the acceptable price of doing business. With the largest economic recovery bill in modern history, such a proportional level of waste would amount to $55 billion-a figure larger than the annual budget of the Education or Homeland Security departments.

Administration officials say a proliferation of wasteful payments, as occurred in the last two major contingency contracting operations-in Iraq and in New Orleans after Hurricane Katrina-could jeopardize the bill's overall objective and shake the public's confidence in the economic recovery. Despite the incredibly high stakes, board members are quick to emphasize that some level of waste will be inevitable.

"Do we expect a miracle that not a single dollar will be misused or wasted? No. We are not that Pollyannaish," says J. Russell George, the Treasury Department's inspector general for tax administration, who will supervise stimulus spending at the Internal Revenue Service. "Our task is to minimize it to the greatest extent practicable."

Workforce and logistical restraints have largely relegated government watchdogs to rooting out waste, fraud and abuse through traditional audits or criminal investigations. While those techniques undoubtedly will still play a role in Recovery Act oversight, the board is placing an unprecedented focus on catching mistakes before they occur, through effective management, program planning and risk analysis.

"The approach is one of prevention as opposed to sitting down and waiting till the money is out the door, and then critiquing what went wrong and what went right," says Richard Skinner, the IG at Homeland Security, which is receiving $2.76 billion in recovery funding, a relatively small figure compared with other agencies, such as the Energy Department or the Environmental Protection Agency. "We would like to be involved early on."

The board has established a Recovery Funds Working Group to coordinate interagency efforts, but it will rarely conduct audits or investigations. That work will remain the purview of IGs and the Government Accountability Office. The board-which finally obtained office space in late April and will eventually have a staff of more than 30 employees-will be an oversight umbrella organization, meeting regularly to provide recommendations and best practices, detect fraud trends and issue preemptive reports on potential funding or management problems.

Most of the board's $84 million budget will be devoted to the maintenance and development of, the government's central Web site for stimulus information. The site is a clearinghouse of agency reports, news releases and archival documents. But administration officials envision the site growing into a revolutionary tool in which taxpayers can easily check how their money is being spent, for what purposes and with what results.

"Right now, it's a good enough site to show money leaving the government," board chairman and Interior IG Earl Devaney said in an interview.

"But it's not prepared right now to accept all the money that's been called for." Lawmakers have expressed disappointment with the relevance and interactive capabilities of the site, particularly compared with, the government's grants and contracting Web site. Devaney is hiring a contractor to conduct an independent review of the site, and beginning in late April and continuing for one week, the board will host an electronic town hall meeting to solicit recommendations from the public.

Devaney's panel expects to have a vendor in place to build a new by June 1. But the looming deadline for, according to Devaney, is October, when a hefty amount of data will come rushing into the government.

The Web site is just one of the many challenges that the board will have to overcome. For starters, the amount of money fl owing into agencies both large and small is extraordinary in size and intent. EPA, for example, will receive $7.2 billion in Recovery Act funds, including more than $6 billion to help communities with water quality and wastewater infrastructure needs. In comparison, the agency's entire fi scal 2009 budget appropriation was $7.14 billion.

While the Recovery Act provides funding for hiring, including $350 million for a host of IG offi ces, the resources might not be enough. The acquisition workforce, in particular, already overstretched from years of atrophy, soon could reach a breaking point, some observers say.

"With 55 state and territorial educational agencies and over 16,000 school districts potentially eligible to receive Recovery Act funding over a short period of time, the challenge is having enough experienced personnel to conduct the work necessary to ensure Recovery Act fund recipients are using the funds as intended," says Mary Mitchelson, Education's acting inspector general.

President Obama has risked his reputation, and a good degree of political capital, that the Recovery Act will stimulate the economy and prove that government still has the ability to operate as an efficient management organization.

After the stumbles of Iraq and Katrina, it's a calculated gamble. In the end, it could come down to 11 inspectors general to make sure the plan doesn't fail.

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