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.
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The DATA Act: A Revolution in Federal Government Transparency
1. 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.
2. 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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3. 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
4. 3 PwC The DATA Act: A Revolution in Federal Government Transparency
A “Data Centric” Approach
Many 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.)
5. The DATA Act: A Revolution in Federal Government Transparency PwC 4
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
6. 5 PwC The DATA Act: A Revolution in Federal Government Transparency
Items for CFO consideration
As 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.
7. The DATA Act: A Revolution in Federal Government Transparency PwC 6
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 McCrory
Principal
(703) 918-1351
donald.g.mccrory@us.pwc.com
Joe Kull
Director
(703) 918-1320
joseph.kull@us.pwc.com
Chris Babcock
Director
(703) 918-4588
christopher.babcock@us.pwc.com
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