10 Ways to Capitalize on Transparency's Potential

How DATA Act standards will help.

Since President Obama signed the Digital Accountability and Transparency Act in May 2014, federal agencies have been hard at work implementing data standards and establishing a framework for increasing financial transparency by May 2017. The Office of Management and Budget and the Treasury Department are leading the effort.

The DATA Act requires two things. First, agencies must standardize information they report about their finances, grants and contracts, using common fields and formats established by OMB and Treasury. Second, once all the spending data has been standardized, Treasury and OMB will publish it on a much-expanded version of the website. Meanwhile, a pilot program is under development to test whether the same standards should be applied to the information nonfederal grantees and contractors must report.

Throughout the process a chorus of federal stakeholders has been asking: What will be different? What will standardization and publication allow us to do? The answers to these forward-looking questions haven’t been fully fleshed out. One of the most common responses, even from the most technical people involved, resembles: You’ll see the great things that can happen once the data are gathered.

While this response is true, it can be dissatisfying for those who must work hard to implement the law’s requirements over the next 17 months and beyond. Here is a list of 10 real benefits government agencies can expect – if all goes well:

  1. Better data quality. For the most part, agencies already keep a large portion of the data required by the DATA Act in various systems. The problem is that the systems aren’t always linked and don’t communicate with each other. This means errors isolated to a particular system can’t be corrected easily and may perpetuate over time. By linking financial, procurement and grants systems, OMB and Treasury’s data standards will give agencies additional ways to validate their own data. They will be able to more easily determine the root causes of data issues and update record systems and processes accordingly. Cleaning data can be an annoying process, but the value of the data to decision-making improves exponentially when it passes additional tests of validity.
  2. Object class trends. Object class refers to the types of budget items and services for which the government obligates money. Agencies will have access on a more real-time basis to the trends in types of financial obligations. Anomalies and patterns in obligations can more easily be detected and used to inform strategy.
  3. Cross-agency comparisons. With every agency reporting similar information at multiple levels of analysis, each will have access to a plethora of useful comparative information. Strategic and planning-related questions like the following will be more easily answered: Which agencies have contracts with similar vendors for similar work? Are the amounts an agency obligates for particular items consistent with similar practices at other agencies?
  4. Within-agency comparisons. Agencies will also be able to make easier financial comparisons internally. Many federal departments have multiple financial systems dispersed in various offices. The DATA Act’s standards will allow these agencies, for the first time, to see a consolidated view of multiple levels of data for key data elements.
  5. Geographic insights. The DATA Act is not solely about financial information. It also covers key metadata points, such as contractor locations, associated with financial transactions. Agencies will gain key insights not only into what money is being spent, but where it is being spent. Such information can be extremely valuable in determining areas for targeting advertisements or identifying underserved populations.
  6. Informed watchdogs. With or without the DATA Act, oversight bodies will continue to observe and evaluate government spending actions. The DATA Act provides a level of information that will satisfy the immediate thirst of some watchdog organizations, and allow others to form more informed, valuable questions that will better serve their ultimate constituencies. Agencies, meanwhile, will be able to spend less time responding to mundane questions and more time responding to questions that help them think critically about their own data.
  7. More educated FOIA requests. While the DATA Act will likely curb routine Freedom of Information Act requests, some stakeholders have noted that increased information may lead to a desire for even more information. The DATA Act is not a cure-all for FOIA overload, but it is a way to prevent some repetitive, mundane questions about budget execution.
  8. Citizen engagement. When tax dollars are involved, citizens become more interested in the conversation. Citizens are often secondhand consumers of government data, either through journalists who examine the raw data for insights or research organizations compiling government reports to inform the public. With more quality information available, citizens will be able to make better-supported judgments, even when data is consumed through secondhand channels.
  9. Global competitiveness. Many local and national governments have already revamped their financial systems to achieve a level of transparency similar to what the DATA Act envisions. By implementing the law, the United States will ensure that it remains competitive and citizens will enjoy the benefits of a transparent government.
  10. Detailed predictive analytics. To paraphrase a famous quote: With great data comes great responsibility. New ways of storing and displaying complex, interconnected data sets will give agencies the fodder they need for upgrading their internal business analytics communities. The DATA Act will reduce the amount of staff time required for routine data calls – after all, the data will already be consolidated, standardized and validated. This will allow agencies to upgrade their skill sets through hiring and training. The financial business analyst of 2017 will have a great new tool in her belt. Agencies will have to make sure the analyst is prepared to use it well.

We began our list with a caveat – “if all goes well.” Several implementation shortcomings could prevent the government from achieving these benefits. First, there are still questions surrounding the availability and sourcing of the best procurement data from agency contracting systems and GSA’s Federal Procurement Data System.

Second, OMB and Treasury haven’t yet figured out how to move the government away from its reliance on the DUNS Number to identify grantees and contractors receiving federal spending. Since the DUNS Number is owned by a private contractor, information about assistance and procurement can’t be freely shared without purchasing a license from that contractor.

Third, progress on the pilot program to test standardized grantee and contractor reporting has been slower than anticipated. OMB’s partners for the pilot program just applied for Paperwork Reduction Act permission to reach out to grantees and contractors last month, 18 months after the DATA Act passed and six months after the program is supposed to start.

But we are optimistic. If agencies begin discovering the benefits of standardized data, there will be enough support to overcome even these shortcomings. And judging from recent presentations by the Small Business Administration and others, they are.

Paul Eder, Ph.D. and lead consultant at The Center for Organizational Excellence Inc. is a project management professional and a Lean Six Sigma Black Belt. Hudson Hollister is founder and executive director of the Data Transparency Coalition and former counsel to the House Committee on Oversight and Government Reform.