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DATA Act at Year 1: In Need of a Growth Hormone

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By Hudson Hollister and John Marshall May 8, 2015

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Hudson Hollister is founder and executive director of the Data Transparency Coalition and John Marshall is founder and CEO of the Shared Services Leadership Coalition.  

The Digital Accountability and Transparency Act -- enacted unanimously by Congress last year and signed into law by the president on May 9, 2014 -- is about to celebrate its first birthday.

Before we break out the champagne to toast this important anniversary, let’s take stock of the past year. The truth is, this baby was nearly stillborn, and despite heroic life-support and ongoing nurturing from congressional procreators and adoptive parents in the executive branch, it’s bound to experience growing pains. The vision of the legislation has a long way to go to reach the full bloom of maturity.  

On the positive side, important groundwork has been started. The Treasury Department and the Office of Management and Budget are set to announce the basic data structure that will bring together all federal spending information as a single, searchable whole. These standards -- a set of common elements and a schema connecting them -- will transform federal spending from disconnected documents into open data. The deadline for this announcement? It's tomorrow.

Up until the DATA Act, agencies' spending information -- siloed in financial reports, budget actions, and grant and contract databases -- has been reported and processed separately. For the first time, the DATA Act has made it someone's job to define, and later enforce, common standards that will allow users to match and search across financial, budget and award reports.

On the other hand, Treasury and OMB seem to have missed one key opportunity to liberate spending data. Their preliminary list of data elements -- ingeniously hosted on the GitHub collaboration platform -- suggests they'll retain the proprietary DUNS number as the sole means of identifying grantees and contractors.

As the DUNS number is itself owned by a private contractor, anyone seeking to use grant and contract information must pay for a license. Treasury and OMB have committed to seek alternatives over the long term, but won't repudiate the DUNS number as part of the new guidelines announced by OMB.

Over the next two years, agencies will be required to start reporting spending information using the consistent data elements and schema prescribed by OMB. Consistent data standards will make federal spending data fully searchable across all programs and agencies -- but only if the standards are actually put in place and enforced as the only accepted means of reporting.

The Securities and Exchange Commission provides a preview of the challenges facing the DATA Act. In 2009, SEC adopted a searchable data format, XBRL, for financial reporting from public companies; however, the agency didn't commit itself to full, exclusive use of that new format.  It phased in XBRL in parallel with continued use of the legacy, nonstandard version the companies and SEC bureaucrats were used to using -- effectively requiring companies to report the same information twice, once as a document and again in XBRL.

As one might expect when faced with duplication between an old and a new reporting requirement, the companies and SEC staff chose to ignore the new one and focus on the old one. The quality of the data versions of corporate financial statements -- though improving -- is so poor that Congress has proposed legislation to require SEC to stop using electronic data altogether, and regress most companies to reporting hard copy documents.

If that anti-data legislation passes, it will represent a shameful backsliding into SEC’s 20th-century comfort zone.  

The SEC experience shows that changing government reporting requires an “all-in” mindset and zero tolerance for laggards with weak excuses. OMB and Treasury must force the agencies to cross the chasm from nonstandard to standard -- and burn the bridge behind them.  

The SEC story also illustrates how easy it is for agencies and their constituencies to resist fundamental change. As long as agency-by-agency compliance is required, hundreds of points of delay or failure will remain scattered throughout the federal reporting environment -- a nearly impossible change management challenge.

A faster, cheaper and better way to realize the fully standardized future envisioned by Congress would be to accelerate the pace of herding reluctant agencies into shared services providers with fully modernized and compliant technology and reporting platforms. The cost of compliance for a handful of fully modernized platforms serving the entire government would be a fraction of the cost of “smarting up” hundreds of antiquated, nonstandard agency-specific ones.  

The Data Transparency Coalition and the Shared Services Leadership Coalition share a vision of a transformed future state in which government managers and stakeholders have real-time access to reliable information provided by state-of-the-art business platforms. Today’s federal structure, designed for 20th-century needs, is the biggest obstacle to realization of this vision. Acceleration of shared services can be a growth hormone for full DATA Act compliance, while producing significant cost savings and performance improvements across the government.

Want clues on whether this will happen? Check out the new guidelines here.

(Image via Genialbaron/ Shutterstock.com)

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