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Commentary: IT is critical to preventing fraud and waste in austere times

In the face of intense and growing budget pressures, taxpayers, legislators, and commentators of all political stripes want greater transparency and accountability in government spending. In the past, it was difficult to obtain insights on government spending from public documents. Even when data was available, it was often impossible to decipher. But advances in software and data-management technology have made it possible to give the public accurate, current, easy-to-understand details on government-funded projects. Moreover, the sunshine cast on the government’s books serves as a deterrent to fraud and waste.  

Exhibit A: The Recovery Board

The Recovery Accountability and Transparency Board, created by Congress in 2009, was charged with ensuring maximum transparency and accountability in federal stimulus spending under the 2009 American Recovery and Reinvestment Act. It was a good idea, but the Board faced many skeptics and enormous challenges, including:

  • How to manage huge quantities of evolving data about stimulus grants, loans and beneficiaries, and ensure its reliability; 
  • How to present this information to the public in a timely, understandable way, not just on paper, but online and searchable in real time, via any Internet-access device; and
  • How to accomplish its mission without spending millions of dollars and creating a new bureaucracy. 

To address these challenges, the Recovery Board turned to a number of companies, including SAP, to launch the website Recovery.gov, which uses software to take a flood of program data from many sources and make it accessible to the public via a user-friendly online dashboard.

Now lawmakers, government executives, journalists, and citizens can track government projects by award size, jobs created, status, location, and other variables. The information is updated in real time and the user can generate maps and charts with a few clicks. Newsweek called it “the clearest, richest interactive database ever produced by the American bureaucracy.”

The benefits of transparency go beyond new troves of data for policy wonks. Among more than 200,000 recipients of stimulus funds, there has been virtually 100 percent compliance with reporting requirements and 96 percent data accuracy; and less than 1 percent of stimulus contracts, grants and loans are under investigation for suspected fraud, waste, and abuse, highlighting the fact that the appropriate use of transparency tools prevents fraud.

Regardless of what you think about the stimulus effort, that level of transparency and accountability is something everyone can appreciate. With appropriate safeguards and exceptions, it ought to be in place for more government programs. 

Most recently, the Recovery Board deployed new technologies to begin evaluating the risk of each applicant seeking government funds. This solution, called FAST ALERT, enables federal agencies to cross-check enormous data sets in real-time to spot improper payments before they occur. This actually shifts the government’s approach from after-the-fact fraud detection to pro-active fraud prevention. It is also startling to realize how quickly and easily these technologies can be implemented today.

Recovery.gov was launched in just 11 weeks -- a timeframe that would have been unthinkable for a government IT solution in the past. We launched FAST ALERT in a similar timeframe. The effort demonstrated that large, complex IT deployments with ever-growing price tags need not be the norm any longer. We can address our national challenges faster, more affordably, and more effectively.  

Lessons in Transparency

What have we learned that can help guide future transparency initiatives? 

First, understand what data needs to be transparent. In most situations, the public can obtain information only on the prime recipients of funding, such as states, cities, and private institutions, and not the full chain of recipients. Clearly, sunshine in this area could be helpful as large federal projects are often contracted out to several layers of sub-contractors. 

At the same time, care needs to be taken to protect information that is sensitive to national security, or personal to an individual, or proprietary to a firm.  Sunshine is a tool, not an end unto itself.

Second, harness “big data” -- but make sure the information is reliable and accurate. Government agencies need tools to process growing volumes of data in real-time and present meaningful insights quickly and securely, on any device. In support of this, the government also needs to standardize more elements of spending data to enhance the outcome of analytics applied to it. 

For example, the federal government currently uses the Dun and Bradstreet Universal Numbering System (DUNS) to identify contractors. But this system loses information as parent companies spin off or reconstitute various subsidiaries. Ideally the government should implement a single system to improve unique identification of entities that receive federal contracting dollars across diverse data sets housed in many locations.

Third, government purchasing rules need to be modernized to address the reality of more agile information technology. Today, IT procurement often takes longer than the deployment, which makes no sense when innovations are coming increasingly faster and costs are declining. Officials need to encourage more incremental progress using commercial, off-the-shelf technology and make it clear that public-private collaboration is to be encouraged, not avoided.  

The bottom line is this:  Our nation can benefit immensely from new technologies that support higher standards of transparency and accountability, and the private sector has unprecedented abilities to deploy such solutions quickly and affordably. Whatever one’s political views may be, this is an agenda that everyone can support. 

Ramani Vaidyanathan is a senior director of SAP Public Services, Inc. He may be reached at ramani.vaidyanathan@sap.com.

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