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Thursday, June 16, 2011

OMB controller cites government's 'low learning curve' on analytics

The government is "low on the learning curve" and remains in the "embryonic stage" in the exploitation of digital data analytics to improve efficiency, Danny Werfel, controller in the Office of Management and Budget, told a corporate conference on Wednesday.

The most promising federal work in using technology to reduce fraud and improper payments is being done by the Recovery Accountability and Transparency Board, he said, which is deploying open-source technology, data mining and source triangulation to "set the government on new path."

Werfel spoke at the leadership summit held at the Newseum by business intelligence software firm SAS, which brought together federal financial managers and vendors to explore how private sector analytics tools can enhance government decision-making.

He recounted several "transformational moments" in his long career at OMB that opened his eyes to the notion that financial management systems -- under the rubric of transparency and accountability -- have now become central to the policy process and to public trust in government.

Noting Vice President Biden's announcement on Monday that the Recovery Board's leader and methods for cutting government waste are being applied governmentwide, Werfel said agencies are getting better at creating infrastructure to track spending. "It's a real labor and a push, which shows how far we still need to go" in responding to the "growing call for more transparency and accountability" in federal spending, he said.

The Recovery Board's fraud detection center, Werfel said, shows that the government can be smarter about, for example, avoiding making payments to contractors who are suspended or debarred. He pointed to triangulating tools of data mining that raise such potential red flags as multiple corporations at the same headquarters or contractors with felony records. "Sometimes it's the naming convention that's off," he explained, noting that data mining can uncover that fact that "John Smith" and "John L. Smith" are the same person. Agencies can welcome this because it identifies such issues upfront without spending a dime, he said.

Some agencies, Werfel added, are skeptical that OMB and the Recovery Board have many tools to add to their own kits. But he proved his point when he supervised a pilot project at the Health and Human Services Department, which houses the government's "big fish" that specialize in medical claims fraud. "HHS is good at finding fraud in medical claims" by looking at geographic patterns, he said, "but they're not so good at identify theft, as when doctors steal licenses from doctors in other states and set up false billing practices."

The Recovery Board's data tools "sprung out an entire fraud ring right under HHS' nose," Werfel said. "I'm not saying the Recovery Board is always better, just that many agencies are not effectively deploying the technology. My mission is to gain momentum and make this stuff go viral as we roll in more agencies."

-Charles S. Clark, GovExec.com

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