What’s Your Return on Complying with the DATA Act?

Bryce Pippert is a leader in open data and legislative change at Booz Allen Hamilton. Hudson Hollister is the founder and executive director of the Data Transparency Coalition, which advocates on behalf of the private sector and the public interest for the publication of standardized, machine-readable government information.

The scale of U.S. federal government spending is immense, overwhelming and abstract. At 20 percent of American Gross Domestic Product, our $3.8 trillion in annual federal spending is larger than the entire economies of all but two countries. This large budget spanning hundreds of agencies and departments presents a considerable challenge to open review of public spending.

It wasn’t meant to be this way. Wise and transparent spending has been a fundamental principle of our democracy since its founding. In an 1802 letter to Treasury Secretary Albert Gallatin, Thomas Jefferson hopefully foresaw a future where Americans would “… see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress and every man of any mind in the Union shall be able to comprehend them, to investigate abuses, and, consequently, to control them.”

Indeed, the United States has built the strongest economy in the world by implementing leading management practices, upholding the rule of law, and supporting government transparency.

The increasing complexity and scale of our federal spending, its interconnectedness with the broader American economy, and its role in shaping global markets merit a paradigm shift in reporting. This shift is happening. In 2014, President Obama signed the Digital Accountability and Transparency Act, directing the executive branch to report its spending using searchable data, replacing outdated document-based forms.

Under the DATA Act, a standardized data format will track federal expenditures across the spending lifecycle – congressional appropriations, administration budgets, agency obligations and program outlays. Once that format is in place, the whole corpus will be published online, allowing government planners, industry and citizens to connect the dots between budget allocations and payment recipients.

Government executives should not see DATA Act reporting as simply another one-time compliance requirement to be fulfilled and then ignored: The act presents agencies with tremendous opportunities.

For example, standardized procurement data will make the annual budgeting process much easier and more accurate. Agency chief financial officers will be able to compare spending internally and across similar agencies from their desktops, without excessive information requests across the organization. Reporting to the agency leadership, the White House, Congress and citizens will be simplified and faster. And it will be much easier to track performance on administrative priorities, such as an increased focus on procurements from small or disadvantaged businesses.

Today, many federal organizations operate as if appropriations, budgets, obligation, payment and performance monitoring activities were sequential or, worse, disconnected processes. The DATA Act’s two basic steps -- first, standardize; second, publish -- challenge that mindset.

By May 2018, federal spending information throughout the life cycle will be published for public consumption with a high degree of granularity – from appropriations through outlays. It is unlikely that the current disconnected operating models will survive in the long run, as Congress and the public will have current data readily available to analyze the spending life cycle and call administrators to account.

When this happens, people inside and outside of government will be able to ask nuanced questions about the allocation, trends and impact of federal spending. This will undoubtedly raise many questions about today’s financial management practices and spur the next wave of transformation across CFO organizations.

Over the next 18 months, agency executives will have the chance to get ahead of DATA Act requirements and enhance their management practices by taking stock of their existing spending data and mapping it to the new format. They should also prepare for a considerable increase in scrutiny that will come from exposing audiences, both inside and outside government, to more robust data and new analytical tools to mine it.

This week, at the Data Transparency 2015 conference, the public will get its first live view of tools to standardize spending data and its use to find insights and solve problems.

The mandate to change is in place. Its implementation ought to be transformational to government financial operations. Achieving the DATA Act transformation will simply take hard work, good management and transparency: values of our democracy from the Jefferson administration to the Obama administration.

(Image via wavebreakmedia/ Shutterstock.com)