the data act: a revolution in federal government transparency

The DATA Act: A Revolution in Federal Government Transparency

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On May 9, 2014, the Digital Accountability and Transparency Act (DATA Act), was signed into law. The Act, drawing some lessons from both the Federal Funding Accountability and Transparency Act of 2006 (FFATA) and the American Recovery and Reinvestment Act of 2009 (ARRA), is the nation’s first legislative mandate for data transparency. It requires the Department of the Treasury (Treasury) and the White House Office of Management and Budget (OMB) to transform U.S. federal spending from disconnected documents into open, standardized data, and to publish that data online.

1 PwC The DATA Act: A Revolution in Federal Government Transparency

What will the DATA Act do?The DATA Act amends and augments FFATA in order to increase accountability, transparency, accessibility, quality, and standardization in federal spending data. Under the law, each federal agency will report financial and payment information in accordance with government-wide financial data standards, developed and issued by Treasury and OMB. The wide array of reports and data compilations related to spending that currently exist – financial management, payments, budget actions, procurements, grants, and assistance – can be standardized and streamlined.

The objectives of the DATA Act are multifold. The Act aims to:

• Track direct federal agency expenditures and link federal contract, loan, and grant spending information to programs of federal agencies

• Establish government-wide data standards for financial data and provide searchable government-wide spending data that is accessible and reusable

• Apply data analytics to standardized federal spending data to better illuminate potential waste and fraud

• Simplify reporting for recipients of federal awards by consolidating reporting requirements, eliminating duplicative reporting, and improving transparency and process effectiveness

The DATA Act stipulates a general timeline for Treasury and OMB to implement the new requirements, shown in the figure on the next page.

A few items in the timeline deserve further discussion. First, upon enactment of the law, the Secretary of the Treasury has the option to establish a data analysis center to examine federal spending data to prevent and reduce improper payments and improve efficiency. If such a center is established, the Recovery Accountability and Transparency Board (RATB) could become its core.

Second, one year following the enactment of the DATA Act, OMB (or another agency it designates) will establish a pilot program to inform recommendations surrounding government-wide data standards, the elimination of duplicative financial reporting, and the reduction of compliance costs for federal award recipients. The program, which will run for two years, will include recipients of federal contracts, grants, and sub-awards across multiple programs and agencies.

Third, Treasury and OMB will issue guidance on government-wide data standards for federal spending within one year of enactment. Two years after the release of this guidance, each agency reports financial and payment information in accordance with the government-wide standards. The following year, all information published on USASpending.gov is consistent with government-wide data standards.

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The DATA Act: A Revolution in Federal Government Transparency PwC 2

What are the potential implications for Federal organizations? Simply put, the DATA Act is a government-wide requirement. As such, by 2017, organizations will report their financial and payment information in government-wide data standards determined by Treasury and OMB along with other act requirements. For example, for all federal spending, posted information must include appropriations, obligations, unobligated balances, and outlays (i.e. disbursements). Currently, details on appropriations normally are not published aside from legislative text and appropriation justification books. Treasury will publish a breakdown of each appropriation as well as detail for each account, showing the amounts received, obligated, and spent, as well as a further breakdown by program activity and object class. This means the flow of federal funds from appropriation to account to expenditure can be publicly available and accessible in standardized structured data formats.

The comprehensive nature of DATA Act reporting will require federal organizations to coordinate across stakeholders, systems, and sources of financial information. Chief Financial Officer (CFO) organizations, given their responsibility with setting standards for financial management data and developing and managing financial policies, will be best positioned in a majority of departments and agencies to take the lead for this coordination in the initial efforts for the DATA Act.

Although guidance on the federal spending data standards is not expected to be issued by Treasury and OMB until May 2015, and meeting those standards is an additional two years away, organizations can begin preparing now in a proactive manner. Rather than waiting to react to the data standards once they are issued, CFOs can begin to understand and plan for how the DATA Act may affect current responsibilities, stakeholders, and systems. Furthermore, by engaging in the effort early, they potentially could help shape the standards.

Figure 1: DATA Act Implementation Timeline


A “Data Centric” ApproachMany have speculated that DATA Act adherence will require updates or upgrades to existing systems or possibly the development and fielding of new systems to facilitate compliant data reporting – what could be called a “software centric” approach. While some software will be necessary to facilitate mapping from existing systems to the agreed standard, the focus instead would be a “data centric” approach rather than on software.

First, unique identifiers for, and entities receiving, federal awards must be among the common data elements developed. These unique identifiers should be consistently applied government-wide. Ultimately, common data elements, like unique identifiers, can allow information from different reports to be united. A common data standard that is widely accepted, non-proprietary, searchable, platform-independent, and computer-readable can be used. This will facilitate automation of the federal government’s many separate spending reports; allow them to be checked for quality and analyzed for waste, fraud, and abuse; facilitate reusable access; and allow for aggregation without double counting.

Second, agencies and departments could begin mapping all required DATA Act elements to the transaction level in the appropriate systems of record. Transactional data facilitates real-time searches and queries to the “checkbook level” in accordance with the stated Treasury goal. A key point here is that there is no limit to the number or types of systems that can be involved. An organization should not worry that it has “too many” systems from which data need to be drawn. As long as they are source systems of record, they can be included regardless of type or age or platform. (Possible exceptions include the use of an existing reporting or data warehouse system for some or all required data, the exclusion of a source system that is classified or sensitive, or a system that is unable to accommodate a real-time interface; this latter point will be discussed in greater detail on the next page.)


Assuming a common data standard and the mapping of required elements in existing systems, the next step will be for organizations to map from their existing data sources to the agreed-to standardized data definitions – the common language. There are a broad range of commercially available mapping applications to accomplish this, and the price points range from several hundred to several thousand dollars. The actual mapping effort will be a one-time exercise that should not be time consuming to implement and maintain (the exact methodology and solution used will depend on each type of system needing coverage). This will naturally work more

easily for enterprise resource planning (ERP) and other web and cloud-enabled systems that maintain data. However, older legacy mainframe or compiler-based systems, which are still in use in some agencies, can also be accommodated with additional effort. One method for doing this would be to “replicate” the mainframe data in a database that could then be “wrapped” for data access as discussed above. Solutions of this nature might be a bit more labor or cost intensive, but should still not rise to the level of a new system implementation or be of such a magnitude as to hinder DATA Act adherence.

Assuming an organization has identified and mapped its data in accordance with DATA Act standards, how might the “data centric” approach work? One possibility is that a semantic query using the common English definitions would pull data elements from the “mapped” systems of record into a consuming report, visualization template, or other analytical application. This arrangement could theoretically accommodate an unlimited number of systems, facilitating simultaneous queries to pull and assemble data from any number of departments and subordinate organizations, and render the requested data in a report or visual presentation. The graphic below shows how this might work.

Figure 2: Sample of an illustrative “data-centric” approach


Items for CFO considerationAs in any effort, it is important for organizational CFOs to begin their response to the DATA Act by strategizing. There are several questions that should be considered.

• What stakeholders should be involved? Each CFO and organization should consider who needs to be at the table in order to implement DATA Act requirements. For instance, based on the legislation, there is a strong chance that USASpending.gov will be the platform used to publish financial information under this law. Therefore, if an agency currently provides data to USASpending.gov, individuals or offices responsible might also be involved in DATA Act efforts as they oversee the quality of uploaded data. Additionally, standing policy and operations groups, such as an Accounting Policy Working Group along with representatives from the agency information architecture team, would also merit inclusion in DATA Act involvement and assistance activities.

• What resources will be needed? Early on, organizations and agencies should consider, to the best of their ability, what the level of effort will be over the next four years in order to complete successfully this initiative. Initially, key leaders and personnel would most likely absorb time spent in DATA Act preparation as part of their regular duties and workload. Agencies should assess if current resource levels can handle ongoing DATA Act responsibilities and duties, and if not begin activities to plan, forecast, and budget for additional government or contractor personnel support.

• What are the exact DATA Act requirements? Successful execution also hinges on having a clear understanding of the requirements. CFOs initially can focus on those guidelines provided in the DATA Act itself, and then on the guidance issued by Treasury and OMB. When collecting requirements, organizations can use them to identify any gaps that may exist in the selected data system(s) and determine if supplementary data will need to be gathered from other outside or non-system sources (given some of the considerations discussed before).

• Will governance be required? Finally, CFOs should consider the extensive coordination and collaboration across stakeholder groups that will be required for successful DATA Act implementation. Agencies might therefore look at leveraging program and change management tools to help establish a governance framework. For example, a project plan can be established to propose a baseline schedule along with a work breakdown structure and a timeline for each task. A communication plan could also be developed, including a stakeholder matrix that identifies primary project tasks and the stakeholders required to participate in those tasks. And, once the data has been mapped and automated querying established, organizations can examine how these new capabilities might be leveraged by internal stakeholders (to potentially improve operations, discussed in more detail below) and external stakeholders (which can analyse now transparent data to better address the impacts of current federal programs and proposed changes).

There is also a major DATA Act benefit that CFOs can consider, and that is in how internal programs and processes might be improved. Transparent and accessable data will give many federal organizations a tool to examine and reengineer internal programs and business processes. For example, auditors might be able to leverage newly accessable data to automate required transaction sampling, thereby replacing manual and time-consuming effort. Program analysts should be able to better analyze and benchmark funding and execution data across time and multiple organizations, allowing for much deeper levels of analytics than had previously been possible. More detailed and standardized “dashboarding” capabilities can be available to senior leaders across government, allowing for more transparent and timely analysis of key programs and organizations. These potential benefits are only the tip of the iceberg, as many more initiatives and improvements are certain to be identified as organizations and stakeholders take advantage of their data in increasingly creative ways.


Conclusion

The DATA Act represents a tremendous opportunity for the federal government to increase citizen and taxpayer transparency and lay the groundwork to improve its financial reporting and analysis capabilities. Federal CFOs at every level therefore should begin now to engage their organization’s vital stakeholders and start working towards full DATA Act implementation. Doing so will help achieve the success of this initiative while taking government spending data and analysis to new levels.

References:

• Digital Accountability and Transparency Act (DATA Act), Public Law No. 113-101

• DATA Act, Data Transparency Coalition website, available at http://datacoalition.com/issues/data-act.html.

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For more information, please contact:

Don McCroryPrincipal(703) 918-1351

[email protected]

Joe KullDirector(703) [email protected]

Chris BabcockDirector(703) [email protected]

Award-Winning ExcellencePwC’s Public Sector Practice was recently recognized with the Malcolm Baldrige National Quality Award, which was established by Congress for performance excellence through innovation, improvement and visionary leadership. With a singular focus on government agencies, and the employment of serious thought leaders and seasoned former government officials, including former high-level military leaders, PwC’s Public Sector Practice has an outstanding record of providing exemplary service to government agencies.

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© 2015 PwC. All rights reserved. “PwC” and “PwC US” refers to PricewaterhouseCoopers Public Sector LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. PSP-042c_WP Data Act Gov Exec 2015

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