Timeline: The Evolution of Financial Management in the Federal Government

(This interactive timeline is part of Federal News Radio's special report, Rise of the Money People.)

The roots of today's federal financial systems oversight can be traced back to the Accounting and Auditing Act of 1950, which authorized the head of each federal agency to establish internal controls over its assets.

The act also tasked the Government Accountability Office with drawing up accounting standards for agencies and, through audits, ensuring that agency internal controls met those standards.

Over the last three decades, Congress has expanded the scope of financial oversight at agencies, and, with the help of new technology, provided for greater transparency in agencies' fiscal reporting.

This timeline provides an overview of the initiatives introduced by the White House and legislation enacted by Congress to establish greater oversight of government spending.

-Michael O'Connell, FederalNewsRadio.com
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Obama administration begins publishing names of federal subcontractors on Web

The U.S. government is giving the public new details about how it is spending taxpayer money on government business.

Starting Wednesday, the Obama administration began publicizing the names of subcontractors - the companies that get the majority of federal contracts - along with the dollar amounts they receive.

For years, the government reported only the companies that won major, or prime, government contracts - even if those companies then hired subcontractors to do most of the job. Now taxpayers can follow more accurately where their dollars are going, tracing public money to the specific companies and communities that share in multimillion- and billion-dollar federal work.

The previous dearth of information about government subcontracts led to incomplete and sometimes misleading conclusions about Uncle Sam's impact on communities.

The new subcontractor details are available on the Office of Management and Budget's Web site, USASpending.gov. Recipients of all federal contracts and grants larger than $25,000 will be required to report the names of companies they hire.


The subcontractors' names are being made public as required by the Federal Funding Accountability and Transparency Act, which became law in 2006 under President George W. Bush. The informations' release is two years behind schedule. A smaller portion of subcontractor information - for contracts larger than $20 million - was made public in October.

-Carrol Leonning, WashingtonPost.com
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Agencies get glimpse of the future of grants management

Agencies have been trying to streamline and improve the grants process for decades. There have been laws, administration initiatives and even grassroots efforts, but progress has been slow.

But now Tom Cooley, chairman of the Chief Financial Officer's Council's Grants Policy Committee, says there is more hope than ever that significant changes are coming to the processes that hand out more than $500 billion a year federal grants.

The policy committee developed a strategic plan in late fiscal 2008 and came out with an implementation plan a few months later.

Cooley, who also is the National Science Foundation's chief financial officer, says these two plans are setting the agenda of where agencies are going in the short, medium and long terms.

"The implementation plan is where the rubber meets road," he says. "We have products we are working on and we have a timetable to get to them. We will get many of the short-term ones done and out the door in the next year or two."

The implementation plan focuses on two main areas: streamlining the pre-award, post-award and audit processes, and improving overall grant stewardship.

Some of the short-term goals include establishing governmentwide guidance for grants payment standards, and developing uniform format for reporting performance on federally funded research projects.

The committee's mid-term goals include establishing governmentwide standards for format and content of grant and cooperative agreements as well as standards for audits of state and local governments and non-profits.

Long-term goals include developing a governmentwide grants management certification program, and a grants management workforce database, which captures and tracks employees performance and training.

Cooley says mid-term goals are 3-to-5 years out and long-term goals will take more than five years.

-Jason Miller, FederalNewsRadio.com
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Obama to include accountability in economic plan

WASHINGTON (AP) — President-elect Barack Obama vowed Tuesday to bar lawmakers' pet projects from his massive economic stimulus plan and to bring unprecedented accountability to federal spending.

Even as he promised to fight waste and to make tough budgetary decisions, however, Obama warned that the nation could face trillion-dollar deficits for years go come. Eight years ago the federal budget ran a surplus, and the deficit on Sept. 30 was about $455 billion.

Two weeks before taking office, Obama said Americans will accept his proposed stimulus plan — expected to cost about $775 billion — only if they believe the money is being used wisely to boost the troubled economy and to make smart long-term investments in public projects.

He told reporters at his transition office that his package will set a "new higher standard of accountability, transparency and oversight. We are going to ban all earmarks, the process by which individual members insert projects without review."

Details of the plan, which has yet to be drafted as a bill, will be available online, Obama said, "so the American people will know where their precious tax dollars are going and whether we are hitting our marks." He promised to make difficult choices and to "eliminate outmoded programs and make the ones we do need work better." He did not specify which programs might be trimmed or eliminated.

Obama said he will create an "economic recovery oversight board" and bring "a long overdue sense of responsibility and accountability to Washington."

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FederalNews Radio - Federal CFO Insights - Thomas Cooley (NSF)

Grants Management: Challenges and Solutions for Managing Grants Across the Federal Government

Thomas Cooley - Chief Financial Officer and Director, Office of Budget, Finance and Award Management (BFA)
National Science Foundation

How are grants being managed at the National Science Foundation and across the federal government?

The "landscape" of federal grants:

• How much money are we talking about?
• What types of grants are out there to meet that purpose?

Streamlining

• What does P.L. 106-107 (the Federal Financial Assistance Management Improvement Act) mean for the federal government and their customers in the grants community?
  

Unfunded mandates

• What does that mean?
• What impact can such activities have on the grants community?

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Senator questions progress on federal spending Web site

A Web site launched last fall to track federal spending has not followed the law to provide up-to-date information on government contracts and grants, while a new bill would increase the amount of information agencies would have to post online.

The site, USAspending.gov, was launched in 2007 to fulfill one of the requirements of the 2006 Federal Funding Accountability and Transparency Act, which requires the Office of Management and Budget to maintain a site listing organizations that receive more than $25,000 in federal funds.

Sens. Tom Coburn, R-Okla., and Barack Obama, D-Ill., co-sponsored the funding accountability act, and when the bill was introduced, Obama said the spending site would be "an important milestone on the path to greater government transparency."

The law requires agencies to submit every 30 days a report listing the groups issued grants and the amount of the grant. USASpending.gov's data quality page shows, however, that some agencies, including the Homeland Security, Labor, Transportation and Veterans Affairs departments have not updated grant information since last year.

"OMB did a good job of getting the USAspending.gov Web site up and running, but now agencies must step up and fulfill their duties as required by law," Coburn wrote in an e-mail statement. "The agencies that are not posting information on each grant and contract awarded are violating the law. The American public deserves to know how their tax dollars are being spent."

In July, Robert Shea, then OMB's associate director for administration and government performance, attributed the lapse to glitches in the data provided to OMB, rather than a reluctance by agencies to submit the information. "I'm satisfied agencies are doing the best they can," said Shea, who stepped down from his OMB position on Sept. 2. "Everybody is making every effort to comply with the law. I'm proud of agency efforts to comply, and disappointed that we haven't been able to reflect that on USASpending."

Posting the grant data has proved problematic, Shea said, because, unlike contract data, grant data must be collected from various sources. Agencies are supposed to submit all grant awards to OMB by the 20th of each month, but he said, the data rarely comes in a format suitable for posting online and must be reformatted, which takes time. By contrast, OMB can pull data on contract awards directly from the federal procurement system in a format suitable for immediate posting.

The delays are caused by OMB bypassing current data reporting systems so it can post the grant data quickly, said Adam Hughes, director of federal fiscal policy at OMB Watch. The group's site, FederalSpending.org, downloads grant data collected and published by the Census Bureau. OMB attempts to obtain the data directly from agencies rather than wait for it to be published by Census.

"There hasn't been a robust reporting system for noncontract awards data," Hughes said. "That's what [Shea] is trying to improve on."

Hughes added that his organization has not been critical of OMB because the agency has demonstrated consistent progress in overcoming the challenges the site faces.
OMB also faces a federal funding accountability act deadline to begin posting subgrant and subcontract data on the site by Jan. 1, 2009. That includes grants and contracts awarded by federal agencies to state and local agencies, which then award that money to other groups. Shea said the challenge to meet the deadline is "enormous."

"There's a provision in the law for an extension for some of those [requirements] for another 18 months," he said. "I expect we'll exercise that extension. ... We have to figure out how to get as much of that data as we can as soon as possible."

Hughes said the difficulty in meeting the deadline to post subgrant and subcontract data was no surprise. "We knew when the first law was passed that the subaward reporting would be very difficult. I think that's being realized currently," he said. "That doesn't mean you shouldn't do it, but I think the timelines are a little unrealistic."

The problems with posting data on the site may be compounded by another bill sponsored by Coburn, Obama and Sens. John McCain, R-Ariz., and Tom Carper, D-Del. The 2008 Strengthening Transparency and Accountability in Federal Spending Act, introduced on June 3, expands the requirements of the spending Web site.

The bill, which has been referred to the Homeland Security and Governmental Affairs Committee, would require agencies to submit requests for proposals and contract information for posting on USASpending.gov to the site, allowing citizens to compare what the government asked for to what it purchased. In addition the bill would require the site to publish performance data on the contract and disclose additional information on the entities that receive federal awards.

"We're hoping the reaction to the new bill won't be 'It's too hard, we shouldn't do it,' " Hughes said. "We're hoping for a dialogue on how we can get this to work. We think this information is valuable and important." OMB Watch helped write both bills.

The bill also would require the site to provide better search capability and to offer data in a machine readable format such as XML. In addition, the bill requires agencies to certify that the entities receiving awards do not owe taxes.

Shea said he hopes OMB publishes the data in a way that allows the public to better track spending and determine if agencies could have spent the money better. "The purpose of sunlight is to cure wrong, and I just don't think the information is being used for that purpose yet," he said.

Asked if the site's visitors could track if agencies were spending money wisely, he replied, "I don't see that happening."

-Gautham Nagesh, NextGov.com
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Are the Financial Management Winds Changing?

The AGA Blog's latest entry by OMB Deputy Comptroller, Danny Werfel addresses the question "Where is federal financial management heading in the next few years?" Below are some highlights of the posting.

...I believe the “data points” are telling us a surprisingly clear and compelling story about where financial management is inevitably headed. Federal financial management is transitioning from an emphasis on “what we own and owe” to an emphasis on “where the money is going.” I come to this conclusion by observing the increasing demand among key stakeholders (in particular, Congress) for information and accountability on where federal dollars are being spent.

The Chief Financial Officers (CFO) Act of 1990 started the federal financial management journey by establishing as a primary activity the production of traditional, accrual basis financial statements, such as the balance sheet. These statements are largely anchored around asset and liability reporting, answering the question of “what we own and owe.” Federal CFOs have spent the better part of 18 years initiating the necessary controls and systems to publish reliable financial statements. Results from FY 2007 demonstrate that these efforts are paying off, with 80 percent of CFO Act agencies achieving clean audit opinions.

While the disciplines necessary to produce traditional financial statements have led to meaningful internal management improvements, the public consumption and demand for the information contained in traditional financial statements never materialized. Instead, demand has centered around how federal funds are distributed and the extent to which federal payments are made correctly and for authorized purposes. And now this demand appears to have reached a fevered pitch, with immediate and long-term impacts on federal financial management.

The recent enactment of the Federal Funding Accountability and Transparency Act (“Transparency Act”) best exemplifies this. The Transparency Act requires the Executive Branch to provide, in a web-enabled and searchable environment, detailed and timely data on all federal grant, contract and loan payments that exceed $25,000. With the launch of USASPENDING.GOV in January of this year, the public has a powerful tool to search where federal dollars are going—to which parties, in what amount, in what geographic location, and for what purpose. By 2009, the Transparency Act requires federal agencies to report “sub-award” information (which means following federal funds beyond the initial recipient).

Significant work remains before all Transparency Act requirements are met. The challenge to produce this data and ensure it is timely and reliable rivals the challenge agencies faced in the 1990s when they began producing traditional financial statements. Yet, an important difference between CFO Act and Transparency Act reporting is the potential the latter has to change the way citizens use government information to drive accountability and inform the public dialogue on the federal budget.

Beyond the Transparency Act, other indicators point to growing congressional interest in “where the money is going.” Hearings and letters of inquiry in the financial management domain are increasingly focused on areas such as improper payments, charge card abuses and instances of excessive spending. Currently, there are a slew of introduced bills that would establish additional requirements for financial reporting and accountability on federal payments. The declining emphasis by congressional overseers on traditional financial statements is, in part, a testament to agency successes in this area. But it is also reflects that the connection between the citizen and government financial information goes well beyond traditional financial statements.

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Federal spending database defies doubters

The Office of Management and Budget initially doubted the need for or the possibility of developing a single, online, publicly accessible database with all contracts, grants, loans and other transactions. But after Sens. Tom Coburn (R-Okla.) and Barack Obama (D-Ill.) shepherded the Federal Funding Accountability and Transparency Act through Congress and it became law, administration officials rethought the possible.

And now 15 months later, that database is reality. OMB today officially launched the first version of USASpending.gov, more than two weeks before the congressionally mandated Jan. 1 deadline.

“This is an example of what can happen when Congress and the executive branch have a shared goal and Congress holds the executive branch accountable,” said Robert Shea, OMB’s associate director of administration and government performance and the lead in developing the FederalSpending.gov Web site, at the launch briefing in Washington. “We saw what could be done when OMBWatch launched their version and we partnered with them.”

In fact, the administration bought OMBWatch’s software for about $600,000 and developed the entire database for less than $1 million. This doesn’t count the hundreds of hours agencies put toward collecting, formatting and uploading data on all these transactions. Agencies spent more than $400 billion on contracts in fiscal 2006 and $2.8 trillion across all categories.

USASpending.gov is similar to the recently updated version of the OMBWatch site. Users of the federal site can search by name, place of performance, agency, product or service category or the top 100 recipients governmentwide. The agency searches are limited to top 10 contracts, top five congressional districts, and products or services.

Shea said the first iteration of the federal spending database includes all transactions after there was some concern it would provide only contracts and grants.

Coburn said at the launch that the database was a “herculean task,” and does more than create transparency. He said it continues to ensure we have a free society.

“The only thing that enables us to have a free society is transparency,” he said. “It will make the government more efficient through its accounting and financial management.”

Coburn added that he was pleased OMB beat the deadline because so many times Congress passes legislation and the implementation never comes on time.

Rep. Tom Davis (R-Va.), one of the main House sponsors of the bill, said in a statement today that the launch of USASpending.gov was a watershed moment for government accountability.

“Today’s an important day for all of us who believe sunshine is the best disinfectant,” Davis said. “We included an ambitious time frame; we knew it would be difficult. I congratulate all of those who rose to the occasion and met this challenge” two weeks ahead of schedule.

-Jason Miller, FCW.com

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FederalNewsRadio - Ask the CFO - Chuck Christopherson (USDA)

United States Department of Agriculture (USDA)

Charles Christopherson - Chief Financial Officer

It's going to be a whole new way of looking at government finances. USDA CFO Charles Christopherson says it may be June, but that January's initial deadline for implementing the Federal Funding Transparency Act needs to be taken seriously. Not only will the act make it easier for members of the public to understand how agencies, like the USDA, are spending their dollars, Christopherson says it may also force agencies to look at their numbers in ways they never considered. Christopherson also talks about the new approach to the farm bill and the impact of funding proposals for avian influenza and biofuels.


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OMB seeks input on FederalSpending.gov

The Office of Management and Budget wants the public to help it work out kinks with FederalSpending.gov, a new Web site permitting scrutiny of how taxpayer funds are spent by federal agencies. A September law requires OMB to create by January 2008 a user-friendly site to allow the public to search through all federal contracts, grants, loans and other awards. OMB launched the site early so the public could help shape it.

“This site is about transparency. That’s why we’re posting our implementation plan and asking for feedback directly from the public about how they want to design this Web site that puts information about federal spending at their fingertips,” said Clay Johnson, OMB’s deputy director for management.

The site also provides links to information about federal spending, frequently asked questions about the law, and an ambitious schedule for how OMB plans to comply with the law by the end of this year.

By the end of the month, OMB plans to identify what financial information reporting requirements will need to be changed and what it will take to make that data searchable. Agencies will be informed of new information collection and reporting requirements in March. A Web site with search capabilities will be developed by April.

-M.Z. Hemingway, FederalTimes.com

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Watchdog group previews federal spending search tool

A watchdog group previewed a federal spending search tool Tuesday, providing a glimpse into a new system designed to provide user-friendly public access to federal contract and grant information.

The search tool gathers federal contract data from the Federal Procurement Data System and information on federal assistance such as grants, direct payments and loans from the Federal Assistance Award Data System. It resembles a system required under the Federal Funding Accountability and Transparency Act. That measure, which President Bush signed into law last week, drew bipartisan support fueled by the backing of an army of bloggers.

The system previewed Tuesday was developed by Washington, D.C.-based OMB Watch. It will be formally launched next Tuesday at www.FedSpending.org.

The system was developed over six months for less than $100,000, according to the group, and is intended to function as a benchmark for the newly mandated government system, as well as a public resource. The government system is slated to receive $9 million in its first two years and $2 million annually thereafter for maintenance, and is subject to requirements for how data must be presented that could make it harder to implement.

The FedSpending.org search tool provides separate tabs for queries on federal contracts and grants. In the contractor panel, users can choose among search options grouped into the broad categories of contractor, place of performance or contracting agency, with additional options for competition type and the item purchased. By clicking on the menu items, users can call up tables, generated in real time from the contracts database, of companies, states, districts or other data fields.