Mashups of stimulus spending data leads to two fraud investigations

Agency inspectors general are pursuing criminal investigations based on the findings of mashup software, applications that combine data sets to find relationships and causes, that the board overseeing the $787 billion economic stimulus fund has used to identify possible contract fraud in the massive program.

"We have made referrals that have lead to criminal investigations," said Ed Pound, spokesman for the Recovery Accountability and Transparency Board, which oversees the economic stimulus spending.

Pound made the comment on Wednesday, following the release of a Nov. 30 letter that the Government Accountability Office wrote reporting on the board's activities. The letter was sent to Senate Minority Leader Mitch McConnell, R-Ky. GAO stated that by early November, a couple weeks after the board began using the software, two investigations into fraud were launched based on information the tool dug up.

The technology analyzes expansive amounts of data on the recipients of Recovery Act funds to filter out relationships between communities, programs and contractors that past events indicate could present a risk of wrongdoing. The software synthesizes data from court and criminal records, news articles, previous agency audits, confidential law enforcement data and other public sources to uncover nonobvious relationships between parties.

For example, the software might retrieve data about a 1995 government report that states a contractor was barred from work at the Education Department and, according to a 2009 newspaper article, the contractor's parent company is owned by a man charged with racketeering. Meanwhile, the contractor received stimulus funds to clean up Cold War nuclear sites.

Analysts pore over the data in the Recovery Operations Center, a computer lab in the board's headquarters on Pennsylvania Avenue in Washington.

"We believe the activities of the board, and in particular the predictive analysis effort, are a positive step in coordinating and marshaling the resources of the inspector general community to strengthen the oversight of federal spending," GAO said in the letter. "While the board initiatives are promising, much work remains to be done and the effectiveness of the initiatives is still to be determined."

GAO officials on Tuesday said the board has been able to identify possible high-risk cases and forward them to the appropriate agency inspector general. Pound declined to comment on the nature of the two investigations or to disclose the program areas that have been flagged as high-risk.

Until the government bought the software in October, federal inspectors did not have a central system capable of connecting the dots between repeat instances of project mismanagement. "This is a big advance for the IG community," said GAO Director John Needham. "It's a good start and we want to see how the actual implementation goes."

GAO intends to review within the next six months other irregularities that the mashup tool has uncovered.

Efforts to identify fraud and identifying questionable job creation numbers in the stimulus spending data are beneficial, said a Republican aide in the Senate. At the same time, general disappointment with the stimulus program has prompted many GOP members to suggest using the money for other purposes such as extending unemployment insurance and deploying troops in Afghanistan.

"Given the mounting debt that we have, I think a good place to look would be in unexpended stimulus funds." McConnell told reporters on Tuesday. "We know the stimulus failed. It was sold to the Congress and to the American people with the suggestion that it would hold unemployment below 8 percent. We know unemployment is over 10 percent. If we're looking for a way to fund several years of the war, I would suggest unexpended stimulus funds would be a good place to start."