The Federal Funding Accountability and Transparency Act: Background, Overview, and Implementation Issues

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

On September 26, 2006, President Bush signed S. 2590, the Federal Funding Accountability and
Transparency Act, into law (P.L. 109-282). In an attempt to expand oversight of federal spending,
including earmarks, the new law required the Office of Management and Budget (OMB) to
establish a publicly available online database containing information about entities that are
awarded federal grants, loans, contracts, and other forms of assistance. Federal agencies award
over $880 billion dollars annually in three of the primary categories of financial assistance to be
included in the database—$470 billion in grants, $381 billion in contracts, and $29 billion in
direct loans. The FFATA was endorsed by leaders of both parties and an array of business, union,
and watchdog organizations.
OMB launched the new database, USAspending.gov, on December 13, 2007. While the database
has been praised as a step toward a worthy objective—enhancing the transparency of government
expenditures—government officials and members of the public have expressed concern that
issues surrounding its implementation have not been adequately addressed. In particular, many
observers question the reliability of information taken from the Federal Assistance Award Data
System (FAADS) and the Federal Procurement Data System - Next Generation (FPDS-NG),
which are important sources of information for USAspending.gov. They note that information in
FAADS and FPDS is often incomplete and inaccurate, and therefore might limit transparency.
Some observers also believe that the cost of establishing and maintaining the new database might
grow as agencies seek to improve data quality and collect new information on subawards.
This report initially discusses the background of S. 2590, noting in particular how it compared to
similar legislation in the House of Representatives. It then discusses the Federal Funding
Accountability and Transparency Act’s provisions, noting what types of assistance are to be part
of the new database, the primary sources of the data, and deadlines for implementation. Finally,
the report identifies and discusses issues that have been raised regarding the act that might affect
its implementation, and that therefore might prove to be areas for future congressional oversight.
This report will be updated as events warrant.

Backgr ound ..................................................................................................................................... 2
Comparison with H.R. 5060......................................................................................................3
Overview of the Act........................................................................................................................4
Implementation Issues.....................................................................................................................6
Reliability of Underlying Data..................................................................................................7
Implementation Costs................................................................................................................8
Overall Implementation Costs............................................................................................9
Subaward Information Costs...............................................................................................9
Identification of “Earmarks”...................................................................................................10
Concluding Observations..............................................................................................................10
Table 1. Comparison of Selected Features in S. 2590 and H.R. 5060.............................................3
Author Contact Information...........................................................................................................11

n September 26, 2006, President Bush signed into law S. 2590, the Federal Funding ¹
Accountability and Transparency Act (P.L. 109-282). According to supporters of the new
law, P.L. 109-282 was an attempt to reduce “wasteful and unnecessary spending” by the ²O

federal government, including spending on funds earmarked for special projects. To that end, the
legislation required the Office of Management and Budget (OMB) to establish a publicly
available, online database containing information about entities that are awarded federal grants,
loans, contracts, and other forms of assistance. Using the database, supporters asserted, a citizen
or watchdog group would be able to easily determine how much money was given to which ³
organizations, and for what purposes. The premise of the new law was that by making the details
of federal spending available to the public, government officials would be less likely to fund
projects that might be perceived as wasteful. Supporters of the legislation also suggested that the
new database would give citizens the opportunity to better understand how the government
distributes funds and enable the public to become more involved in the discussion of federal ⁴
spending priorities.
Three of the primary categories of federal expenditures and obligations to be included in the
database—federal grants, loans, and contracts—represent a significant element of federal
spending. According to the most recently published Consolidated Federal Funds Report (CFFR),
federal agencies award over $880 billion in those three categories of financial assistance alone: ⁵
$470 billion in grants, $381 billion in contracts, and $29 billion in direct loans. OMB launched
the database, USAspending.gov, on December 13, 2007. While the new database has been praised
as a step toward a worthy objective—enhancing the transparency of government expenditures—
government officials and members of the public have expressed concern about the quality of the
data it provides, and about the cost of enhancing and expanding data collection efforts.
This report⁶ initially discusses the background of S. 2590, noting in particular how it compared to
similar legislation in the House of Representatives. It then discusses the Federal Funding
Accountability and Transparency Act’s provisions, noting what types of assistance are to be part
of the new database, the primary sources of the data, and deadlines for implementation. Finally,
the report identifies and discusses issues that might affect the act’s implementation, and that
therefore might prove to be areas for future congressional oversight.

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Senator Tom Coburn, along with three cosponsors, introduced S. 2590 on April 6, 2006.⁷ On
August 2, 2006, the Senate Committee on Homeland Security and Governmental Affairs ⁸
unanimously reported S. 2590, with an amendment in the nature of a substitute. That same day,
the committee’s chair, Senator Susan Collins, and its ranking member, Senator Joseph Lieberman,
requested that the bill be brought to the floor for a unanimous consent vote before the August
recess commenced. This motion was blocked by an unnamed Senator, which delayed action on ⁹
the bill until after the recess. On September 7, all holds were lifted and the Senate passed S. 2590 ¹⁰
by unanimous consent. The House approved S. 2590, as passed by the Senate, by voice vote on ¹¹
September 13. Later that same day both chambers agreed to S.Con.Res. 114, making enrollment ¹²
corrections to S. 2590. As noted previously, the President signed the bill into law on September

26, 2006.

S. 2590 received extensive bipartisan support at each stage of the legislative process. In the
Senate, the bill was introduced with bipartisan sponsors, voted unanimously out of committee,
and passed by unanimous consent. The legislation was ultimately cosponsored by 47 Senators,
including Majority Leader Bill Frist and Minority Leader Harry Reid. In the House, S. 2590 was
passed by voice vote under suspension of the rules, with members of both parties speaking in ¹³
support of the Senate bill and none speaking against it. The White House did not issue a
Statement of Administrative Policy on S. 2590, but President Bush did express his support in a
press release distributed the same day the bill was enrolled, making it apparent he would sign the ¹⁴
measure once he received it.
According to Senator Coburn, S. 2590 was endorsed by over 150 organizations with a wide range ¹⁵
of political leanings. The Senator’s list of supporters included representatives of private
enterprise, such as the U.S. Chamber of Commerce; unions, like the American Federation of
State, County, and Municipal Employees; media groups, such as the American Society of
Newspaper Editors; and government watchdog organizations, like OMB Watch. As evidence of

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the unusual alliance in support of S. 2590, the list indicated that both People for the Ethical
Treatment of Animals (PETA) and Gun Owners of America supported the bill, as did both the
National Gay and Lesbian Task Force and the Traditional Values Coalition.
S. 2590 was a companion bill to H.R. 5060, which Representative Roy Blunt introduced on
March 30, 2006, as an amendment to the Federal Financial Assistance Management Improvement ¹⁶
Act of 1999. On June 21, 2006, the House passed H.R. 5060, as amended, by voice vote.
According to Representative Blunt, the bill was intended to “increase accountability and
transparency in the federal awards process” by establishing a public database with information on ¹⁷
award recipients. While both S. 2590 and H.R. 5060 had similar objectives, the bills differed in
important ways. Table 1 highlights three of the most important differences between the engrossed
bills.
Table 1. Comparison of Selected Features in S. 2590 and H.R. 5060
^Feature^{S. 25}⁹⁰^{H.R. 5}⁰⁶⁰
^{Contents of public database}^{Grants, loans, and cont}^{racts all included}^Grants^{and loans included,}
^{but cont}^{racts e}^xcluded
^{Reimbursement for co}^sts^of^{Recipients and su}^breci^{pients of fe}^{deral assistance}^{No reimbu}^rseme^{nt p}^rovided
^{new reporting requi}^rements^{allowed t}^o^{recover costs associated with collecting}^{to recipients and}
^{and reporting data on}^su^brecipie^nts^subr^ecipients
^Subawa^{rd pilot program}^18-mont^{h pilot program a}^{uthorized to evaluate}^{No pilot program aut}^horized
^{options for governme}^{nt-wide sub}^{award reporting}
^policy
Most notably, contracts were exempt from the public database under the House bill, but were
covered in S. 2590. Since contracts are one of the largest categories of federal domestic
assistance, their exclusion would have significantly reduced the comprehensiveness of the
database. When H.R. 5060 was first brought to the House floor in June, critics argued that a
database without information on federal contracts was “missing a key component that is essential ¹⁸
to public oversight.” Even some Members who ultimately voted to pass the bill expressed ¹⁹
concern that it did not include contracts. Supporters of H.R. 5060 maintained that a database
primarily covering grants would still be a valuable tool, and the bill’s sponsors reportedly pledged ²⁰
to develop separate legislation enhancing public access to federal contract information. After S.
2590 passed the Senate, some House members expressed a clear preference for the Senate

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¹⁹^R^e^{p. H}^e^nr^y^W^a^xm^aⁿ^{, ibid.}
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version, which they argued was “stronger and more comprehensive” because it included ²¹
contracts.
Both S. 2590 and H.R. 5060 required the public database to include information on subrecipients,
but only the Senate bill provided funding to cover the costs associated with collecting and
reporting that information. Currently, data on subgrantees and subcontractors are not gathered
uniformly across the government. Some experts believe that recipients of federal financial
assistance—particularly states and local governments—will incur substantial costs as they begin ²²
to collect and report information on their subrecipients. Under S. 2590, recipients and
subrecipients of federal assistance might recover the costs associated with new reporting
requirements by incorporating those costs into their indirect cost rates; H.R. 5060 had no similar
feature, leaving it open to the charge of being an unfunded mandate imposed on award recipients ²³
by the federal government.
Because no uniform method of collecting detailed information on subcontractors and subgrantees
existed, S. 2590 directed OMB to conduct a pilot program to determine the most cost-effective
and least administratively burdensome approach to implementing a government-wide subaward
reporting process. The pilot program was not included in the Senate bill when it was first
introduced by Senator Coburn. It was added after concerns were raised about the potential
administrative and financial burden new reporting requirements would place on grant award ²⁴
recipients. H.R. 5060 did not contain provisions for a pilot program, and was criticized in ²⁵
congressional hearings as being “an attack” on federally funded grantees.

The database required in the act was to be implemented in two phases. By January 1, 2008, the
new database was required to provide information on entities that were awarded funds directly
from the federal government. Entities covered in the first phase of the database include
corporations, associations, partnerships, sole proprietorships, limited liability companies, limited
liability partnerships, states, and localities. By January 1, 2009, the database must include
information on subgrantees and subcontractors that receive federal funds through a primary award

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^te^c^hup^da^te^s^/^dow^nloa^ds^/^CRC/L^O^C/07^_0^6-N^A^S^A^CT^_c^oburn.^pdf^.
²³^Aⁿ^indir^e^c^t^c^o^s^t^r^a^te^is^a^pe^r^c^eⁿ^ta^g^e^{, ne}^g^o^tia^te^{d be}^tw^e^eⁿ^a^r^e^cⁱ^pieⁿ^{t of}^f^e^de^r^a^l^f^unds⁽^a^g^r^aⁿ^te^e^or^a^c^ontr^a^c^t^or⁾^a^{nd a}
^f^e^de^r^a^{l ag}^eⁿ^cy^,^w^h^ic^{h is}^us^e^d^t^o^c^a^lc^ula^t^e^the^a^m^{ount t}^h^e^r^e^cⁱ^pieⁿ^t^mⁱ^g^h^{t be}^r^e^im^bur^s^e^{d f}^o^r^theⁱ^ndir^e^c^t^c^o^s^t^s^a^s^s^o^cⁱ^a^t^e^d
^wⁱ^t^h^ad^mⁱⁿⁱ^st^eriⁿ^{g t}^h^{e f}^e^d^e^ral^a^w^ard^.^F^o^{r exa}^m^p^l^e,ⁱ^f^{a gran}^t^{ee e}^x^p^eⁿ^d^e^d^$¹⁰⁰^,⁰⁰⁰ⁱⁿ^dⁱ^rect^co^st^{s adm}ⁱⁿⁱ^st^eriⁿ^{g a}
^f^e^de^r^a^{l g}^r^aⁿ^{t pr}^og^r^a^m^,^a^{nd it}^ha^d^aⁿⁱⁿ^dir^e^c^t^c^o^s^t^r^a^te^of¹⁰^%^,^theⁿ^the^g^r^aⁿ^te^e^c^oul^{d r}^e^q^u^e^s^{t r}^e^im^bur^s^e^m^e^{nt f}^r^o^m^the
^f^e^de^r^a^{l aw}^a^r^ding^a^g^eⁿ^cy^f^o^r^$11⁰^,⁰⁰^{0 (}^t^he^tota^l^dir^e^c^t^c^o^s^t^s^plus^aⁿ^a^dditi^ona^l¹⁰^%⁾^.
²⁴^L^e^tte^r^f^r^om^{R. T}^h^o^m^a^s^W^a^gⁿ^e^r^{, P}^r^e^s^ideⁿ^t^of^Na^tiona^{l A}^ssocⁱ^a^tion^of^Sta^t^e^A^{uditors, C}^o^m^p^trolle^{rs a}^{nd T}^r^e^a^s^ure^r^{s, to}
^Se^{n. T}^o^m^C^obur^{n, J}^u^ly^{5, 20}⁰⁶^.
²⁵^T^e^s^tⁱ^m^on^y^of^G^a^r^y^B^a^s^s^,^P^r^e^s^ideⁿ^{t of}^O^M^B^W^a^tc^h,^Fe^de^ral^Fu^ndi^{ng Ac}^c^o^unt^ab^ility^an^{d Tra}ⁿ^sp^areⁿ^c^y^Ac^t^,^h^eariⁿ^g
^{on S. 25}^90,¹⁰⁹^th^Cong^.,²^nd^s^e^s^s^{., J}^u^ly^{18, 2}⁰⁰⁶^.

recipient. The act excluded individual recipients of federal assistance, and organizations with less ²⁶
than $300,000 in total income were not required to report on subawards.
Consistent with the objective of providing to the public comprehensive information on federal
financial assistance, virtually all categories of awards will ultimately be covered by the database,
including grants, contracts, subgrants, subcontracts, loans, cooperative agreements, delivery
orders, task orders, and purchase orders. Two special provisions addressed particular types of
transactions: individual transactions of less than $25,000 are exempt, and credit card transactions
will not be included until October 1, 2008.
To achieve greater transparency, the act required the database to provide the following
information about each federal award:
• Name of entity receiving award
• Amount of award
• Type of award (e.g., grant, loan, contract)
• Agency funding award
• A North American Industry Classification System (NAICS) code for contracts or ²⁷
a Catalog of Federal Domestic Assistance (CFDA) number for grants and loans
• Program source
• Award title that describes the purpose of the funding
• Location of recipient
• City, state, congressional district, and country in which award performance
primarily takes place
• Unique identifier for entity receiving award and of the parent entity of recipient,
if one exists
• Any other information specified by OMB
S. 2590’s sponsors, mindful of the criticism that government databases are often difficult for non-
experts to use, included language that required OMB to ensure the database is accessible through ²⁸
a “searchable website.” The act thus required that the website permit users to (1) conduct a
search of federal funding by any of the data elements listed above, and (2) determine the total
amount of federal funding awarded to an entity by fiscal year. In addition, the act stipulated that
the website must provide information in a downloadable format, and that agencies must post new

²⁶^Entit^ie^{s w}^{ith le}^{ss tha}ⁿ^$3^00,⁰⁰⁰^mⁱ^g^h^{t be}^re^qu^ire^d^t^o^re^p^o^rt^{on s}^u^ba^w^a^{rds in the}^f^u^ture^if^the^Dire^c^t^{or of}^OMB
^de^te^r^m^ine^s^this^r^e^quir^e^m^e^{nt is}^not^un^duly^bur^de^ns^om^e^{to th}^os^e^eⁿ^tit^ie^s^.
²⁷^T^h^{e Cen}^s^u^s^Bu^reau^assi^gn^{s an}^N^A^I^CS^co^d^e^t^o^each^bu^siⁿ^e^{ss est}^a^blⁱ^s^h^m^en^t^f^o^{r t}^h^{e p}^u^r^p^o^s^{es o}^f^co^l^l^e^ctⁱⁿ^{g an}^d
^an^al^yziⁿ^{g st}^atⁱ^s^tⁱ^cal^d^a^t^a^oⁿ^t^h^{e U}^.^S^.^eco^no^my^.^N^A^ICS^co^d^e^{s are t}^w^o^t^o^si^{x d}ⁱ^gi^t^s^l^oⁿ^g^,^wⁱ^t^h^each^dⁱ^gi^t^rep^r^esen^tⁱⁿ^g
^inf^o^r^m^a^{tion a}^bout^the^e^c^o^nom^ic^s^e^c^t^or^{in w}^h^ic^{h t}^h^e^e^s^ta^blis^hm^eⁿ^{t c}^ond^uc^ts^t^h^e^la^r^g^e^s^{t por}^ti^on^of^its^bus^ine^s^s^.^C^F^D^A
^num^be^r^s^a^r^e^a^s^sⁱ^gⁿ^e^d^by^the^G^eⁿ^e^r^a^{l Se}^r^v^ic^e^s^A^d^mⁱ^nis^t^r^a^{tion (}^G^SA⁾^{to a}^{ll f}^e^de^r^a^{l dom}^e^s^tic^as^sⁱ^s^t^aⁿ^c^e^pr^og^r^a^m^s^,
^inc^l^u^d^ing^g^r^aⁿ^ts^aⁿ^{d loa}ⁿ^s^.^A^C^F^D^A^num^be^r^us^ua^ll^y^ha^s^fⁱ^ve^dig^{its, w}^h^e^r^e^the^fⁱ^{rst t}^w^{o dig}^{its re}^pre^s^eⁿ^{t the}^f^e^de^ra^l
^agen^c^y^an^d^t^h^{e l}^a^st^t^h^{ree di}^gi^t^sⁱⁿ^dⁱ^cat^{e t}^h^{e sp}^eci^fⁱ^{c p}^r^o^g^ram^f^o^{r wh}ⁱ^c^h^t^h^{e agen}^c^yⁱ^s^p^r^o^vⁱ^dⁱⁿ^{g f}^uⁿ^dⁱⁿ^g.
²⁸^{U.S. C}^ong^re^{ss, Se}^na^te^Com^m^itte^e^{on H}^o^m^e^la^{nd Se}^c^u^rity^a^{nd G}^ove^rnm^e^nta^l^Aff^a^irs,^Fe^de^{ral Fin}^aⁿ^c^ial
^Ac^c^ount^abi^lity^aⁿ^d^Tr^aⁿ^s^par^eⁿ^c^y^Ac^{t of}²⁰⁰⁶^,^S.R^e^p^t^.¹⁰^9-³^29.

information to the website within 30 days of making an award. The legislation also required the
new website to allow the public the opportunity to provide input on the site and recommend
improvements.
Three major financial assistance databases were identified in the act as likely sources of
information for the new website—the Federal Procurement Data System-Next Generation (FPDS-²⁹
NG), the Federal Assistance Award Data System (FAADS), and Grants.gov. According to the
provisions in S. 2590 as initially passed by the House and Senate, a user must be able to access
information from all three databases in a single search. The bill was explicit on this point; it was
not acceptable merely to provide links to these or other databases, because that would force users
to search for information at different websites. The “single search” provision of S. 2590 was
modified by S. Con Res. 114, allowing grants and contracts to be searched separately on the new
public website. S.Con.Res. 114 also added another reporting requirement: the Government
Accountability Office is to provide Congress with a compliance report on P.L. 109-282 no later
than 2010.
As previously noted, the act did not require information on subcontractors and subgrantees to be
included in the database until January 1, 2009. The delay reflected the fact that information on
subrecipients was not collected consistently across federal agencies and programs. To address
existing gaps in the data on subawards, the act required OMB to implement a pilot program that
tested the feasibility of having primary recipients provide information on their subgrantees and
subcontractors. There was a provision in the legislation that allowed federal award recipients and
subrecipients to be reimbursed for the costs associated with collecting and reporting data on
subrecipients. The act also specified that any requirements for collecting data on subawards made
by state and local governments under block and formula grants be cost-effective. According to
CBO, no unfunded mandate would be placed on recipients or subrecipients for complying with ³⁰
the act.
The act also required OMB to submit an annual report to the Senate Committee on Homeland
Security and Governmental Affairs and the House Committee on Government Reform. The report
must include data on public usage of the website, an assessment of the reporting burden on
federal award and subaward recipients, and an explanation of any extension of the subaward
reporting deadline. The act also required OMB to post a copy of the report on the Web.

On December 13, 2007, OMB launched the FFATA-mandated website, USAspending.gov. The
website, as required by the FFATA, allows users to search for detailed information on grants,
contracts, loans, and other forms of assistance. The data, however, are not complete and some

²⁹^T^h^e^Fe^de^r^a^l^P^r^oc^ur^e^m^eⁿ^{t D}^a^ta^Sy^s^t^em^-^N^e^x^t^G^e^ne^r^a^{tion (}^F^P^D^S-^N^G⁾^is^a^da^ta^ba^s^e^of^f^e^de^r^a^{l c}^ontr^a^c^t^s^m^a^inta^ine^d^by
^G^S^A^,^an^d^t^h^{e F}^e^d^e^ral^A^ssi^st^an^ce^Award^Dat^a^S^y^st^e^mⁱ^s^{a d}^a^t^a^ba^se^of^fe^de^ra^{l g}^r^aⁿ^ts^m^a^inta^ine^d^by^th^e^Ce^{nsus Bure}^a^u^.
^G^r^aⁿ^ts.g^ov^{is pa}^{rt of}^the^E-G^o^v^e^rⁿ^m^e^{nt initia}^tiv^e^,^aⁿ^d^it^pe^rm^{its g}^r^aⁿ^{t se}^e^k^e^r^{s to f}ⁱ^{nd, a}^p^p^l^y^f^o^{r, a}^nd^m^a^na^g^e^f^e^de^ra^l
^g^r^aⁿ^{ts thro}^ug^{h a}^sing^le^W^e^{b p}^o^rta^l^{. A}^{ll e}ⁿ^titie^{s tha}^t^a^pply^f^o^{r f}^e^de^ra^{l a}^ssistaⁿ^c^e^throug^h^G^r^aⁿ^ts.g^ov^a^r^e^a^ssigⁿ^e^d^a
^uni^queⁱ^d^eⁿ^tif^ie^{r k}^now^{n a}^s^a^Da^ta^Univ^e^r^sa^{l Num}^b^e^r^ing^S^y^ste^m^(D^{UNS) num}^be^{r. Com}^p^le^x^eⁿ^titie^s,^suc^h^a^s^sta^t^e^or
^lo^{cal g}^o^v^e^rn^m^eⁿ^t^s,^mⁱ^g^h^{t h}^a^v^e^mu^ltip^{le DUNS n}^u^m^b^ers,^m^a^kⁱⁿ^g^it^dⁱ^f^fⁱ^cu^{lt, at tim}^{es, to}^lin^k^su^b^uⁿⁱ^t^s^to^t^h^{e p}^a^ren^t
^eⁿ^tity^.
³⁰^U^.^{S. C}^ong^r^e^s^sⁱ^ona^{l B}^udg^e^t^O^f^fⁱ^ce^,^{S. 25}^90:^Fe^de^r^a^l^F^uⁿ^dⁱ^{ng Ac}^c^ount^abil^ity^a^{nd Tr}^aⁿ^s^par^eⁿ^c^y^Ac^{t of}²⁰⁰⁶^{, A}^u^g^u^s^t
^{9, 2}⁰⁰⁶^{, a}^t^htt^p^://w^w^w^.c^bo.g^o^v^/^s^how^doc^.c^fm^?ⁱ^nde^x⁼^7483&^s^e^q^u^eⁿ^ce=0^.

observers question their accuracy. The possible cost to improve the data quality is unclear. Also
unclear is the possible cost to collect information that might not currently be available, such as
data on subcontractors and subgrantees, which must be available to the public through the website
by January 1, 2009. The ability of users to identify earmarks through USAspending.gov also
appears to be limited.
A database of the breadth and depth contemplated by the Federal Funding Accountability and
Transparency Act is only as useful as the quality of the information it contains. As noted
previously, the act referred to three existing databases as likely sources of information for the new
public database: FAADS, FPDS-NG, and Grants.gov. USAspending.org draws extensively from
FAADS and FPDS-NG, but it is unclear whether data from Grants.gov is also incorporated. A
number of observers have cautioned that a database of federal assistance relying on information
from FAADS and FPDS-NG would be of limited value. Both government officials and
knowledgeable members of the public describe significant weaknesses in FAADS and FPDS-
NG—such as incomplete and inaccurate information—that cannot be quickly corrected. These
observers suggest that substantial changes in the collection, reporting, and verification of
information relating to federal assistance awards would likely be necessary before FAADS and
FPDS-NG might be considered reliable sources of information.
In a 2005 report, GAO noted that FPDS-NG users lacked confidence in the data provided, largely ³¹
because there was no rigorous system in place to ensure the data were accurate and complete. A
panel of procurement experts recently attempted to use FPDS-NG in their evaluation of federal
contracting operations, but reportedly found so many errors in the data that the chairman declared ³²
that “FPDS-NG is not a reliable database.” One reason the data are inaccurate is human error;
contract information might be incorrectly entered into FPDS-NG by inexperienced users who ³³
have received minimal training. Moreover, agencies might vary in the degree to which they fill
out the fields in the database, resulting in data of uneven quality. In one instance, FPDS-NG users
reportedly complained that the database failed to consistently identify contracts related to ³⁴
Hurricane Katrina recovery efforts that were awarded without competition. The problem has not
been fixed, and gaps in FPDS-NG data are now evident in USAspending.gov. A recent editorial
stated that the new database might not provide information on whether $70 billion in FY2007 ³⁵
contracts was awarded with or without competition. By OMB’s own estimation, individual
agencies have submitted only 61% to 73% of the information on contracts required by the ³⁶
FFATA.
Similar problems affect FAADS, the government’s primary source of grant award information. In
a recent review of 86 federally funded grant programs, GAO determined that in the majority of
cases, the administering agencies provided no data, incomplete data, or inaccurate data to FAADS

³¹^U^.^{S. G}^o^v^e^rnm^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^Imp^r^o^vemen^t^s^Need^ed^t^o^t^h^{e F}^e^d^e^ra^l^P^r^o^c^u^r^emen^t^Dat^a^S^y^st^em-Next
^Ge^ne^ration^{, G}^A^O^-^05-⁹⁶^0R^,^Se^pt^em^be^r^27,²⁰⁰⁵^{, p}^p^.^1-²^.
³²^C^h^rⁱ^s^G^o^sⁱ^e^r^{, “}^C^ontr^a^c^t^s^da^ta^ba^s^e^s^hor^t^on^inf^o^{, l}^ong^on^pr^o^b^le^m^s^,^”^Fe^de^{ral Time}^s^{, J}^u^ly^{31, 2}⁰⁰⁶^,^p^.^5.
³³^Ibid^.
³⁴^C^h^rⁱ^s^G^o^sⁱ^e^r^{, “}^C^ontr^a^c^t^s^da^ta^ba^s^e^s^hor^t^on^inf^o^{, l}^ong^on^pr^o^b^le^m^s^,^”^{p. 5}^.
³⁵^“M^o^r^{e t}^r^an^sp^aren^cyⁿ^eed^edⁱⁿ^t^o^coⁿ^t^ractⁱⁿ^{g d}^a^t^a^,^”^Fe^de^{ral Time}^s⁽^S^pr^ing^f^ie^{ld, VA}⁾^,^J^a^n.¹⁴^{, 20}^08,^p.²²^.
³⁶^USA^s^p^eⁿ^dⁱⁿ^g^.g^o^v^{, at h}^t^tp^:/^/www.u^s^asp^eⁿ^dⁱⁿ^g^.g^o^v^/d^ata/^d^a^taq^u^a^lity^.p^h^p^?rep^ty^p^{e=a, v}ⁱ^sited^Jan^u^a^r^y²⁵^,²⁰⁰⁸^.

over a three-year period.³⁷ The report concluded that these problems occurred because (1) the
Census Bureau lacked the resources to ensure agencies were submitting accurate and timely data,
(2) agency program officials lacked knowledge of FAADS reporting requirements, and (3)
agencies had not implemented sufficient oversight to ensure they were submitting accurate data.
A Census Bureau official concurred with these findings, adding that a number of data elements
required by S. 2590 are not uniformly captured by federal agencies or grant award recipients,
such as information on subrecipients and the congressional district in which federal funds are ³⁸
spent. The official also noted that agencies are currently required to update their information in
FAADS on a quarterly basis, so it might take time for agencies to develop the capability to update
FAADS within 30 days of making an award, as S. 2590 requires. OMB estimates that individual
agencies’ have submitted only 53% to 65% of the grants data required by the FFATA.
Members of Congress have also expressed concerns about FPDS-NG and FAADS. During floor
debate of the bill in the House, one supporter cautioned that S. 2590‘s potential to improve
oversight of Federal funds, while substantial, would be largely determined by the degree to which ³⁹
improvements in FPDS-NG and FAADS were made during implementation. Another supporter
expressed concern that the problems with FPDS-NG and FAADS were so significant, that “if the
Administration is not committed to making this legislation work, all we will get is another ⁴⁰
incomplete and hard-to-use database.”
OMB, acknowledging that data submitted and posted to FPDS-NG and FAADS in the past have
been “incomplete, untimely, and inaccurate,” has issued guidance on improving data quality so
that agency submissions meet the requirements of the FFATA. The guidance, issued November 9,

2007, required agencies to submit a plan to OMB by December 1, 2007, that identified gaps in ⁴¹

their data on grants, contracts, and loans, and outlined their plans to address any deficiencies. In
addition, agencies were required to implement internal controls to ensure the accuracy, integrity,
and timeliness of their submissions. The guidance also indicated that agency compliance with the
data reporting requirements of the FFATA would be formally and publicly evaluated through
inclusion in OMB’s scorecard initiative, beginning in January, 2008.
Concerns have been expressed regarding the cost of implementing USAspending.gov. Two types
of costs are at issue: the costs of implementing the act as a whole and the costs associated with
the development of information on subawards.

³⁷^U^.^{S. G}^o^v^e^rnm^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^R^u^ra^l^E^c^oⁿ^o^mⁱ^c^Devel^o^p^men^t^{: Mo}^{re A}^ssu^raⁿ^{ce Is Need}^ed^t^h^a^t^Graⁿ^t
^Fun^dⁱⁿ^{g Is Ac}^c^u^r^a^te^ly^Re^porte^d^,^GAO-0⁶^-²⁹⁴^,^F^e^b^r^u^a^ry²⁴^,²⁰⁰⁶^,^p^p^.²³^-34^.
³⁸^T^e^le^phone^c^o^nv^e^r^s^a^{tion be}^tw^e^eⁿ^the^a^u^t^hor^a^{nd J}^e^r^r^y^K^e^f^f^e^r^{, C}^h^ie^f^of^the^Fe^de^r^a^{l P}^r^og^r^a^m^s^B^r^aⁿ^c^h^{, U}^.^{S. C}^e^ns^us
^Bure^a^u^{, A}^u^g^u^s^t¹⁷^{, 2}⁰⁰⁶^.
³⁹^R^e^{p. D}^a^nny^D^a^vⁱ^s^,^“^F^e^d^e^r^a^l^Fun^d^ing^A^c^c^ounta^b^ili^ty^a^{nd T}^r^aⁿ^s^p^a^r^eⁿ^cy^A^c^{t of}^2006”^r^e^m^a^r^k^s^{in the}^H^ous^e^,
^C^ongr^e^s^sⁱ^o^nal^Re^c^o^r^d^,^da^ily^e^d^iti^{on, v}^o^l^.¹⁵^{1 (}^S^e^p^te^m^b^e^r^{13, 2}⁰⁰⁶⁾^{, p}^p^{. H}⁶⁴⁹^8-^H⁶⁵⁰^1.
⁴⁰^R^e^{p. H}^e^nr^y^W^a^xm^aⁿ^{, ibid.}
⁴¹^Me^m^o^r^a^ndum^f^r^o^m^R^obe^r^t^She^a^,^O^M^B^A^s^s^o^cⁱ^a^t^e^Dⁱ^r^e^c^t^or^{, to Ex}^e^c^u^tiv^e^D^e^pa^r^t^m^e^nts^a^{nd A}^g^eⁿ^cⁱ^e^s^,^G^u^id^anc^e^on
^Data^Su^bmission^u^nde^{r t}^h^e^Fe^de^r^a^{l F}^uⁿ^dⁱⁿ^{g Ac}^c^o^unt^abi^lity^aⁿ^d^Tr^ansp^a^re^nc^y^Ac^t^,^N^o^v^.^{9, 20}⁰⁷^.

In response to concerns about the reliability and completeness of the FPDS-NG and FAADS
databases, Clay Johnson, the deputy director for management at OMB, reportedly said the new
database will meet the requirements of the act within the time frame established by the ⁴²
legislation. Johnson was also quoted as saying that implementing the new public database will
“cost a little money, not a lot” because “most of the data exists” already—a view that appears ⁴³
somewhat at odds with previously discussed evidence that there are significant gaps in the data.
Moreover, while the database was launched prior to the statutory deadline, the information is so ⁴⁴
incomplete that some have questioned whether it meets the objectives of the FFATA.
According to CBO, it will cost $15 million to establish and maintain the new database of federal ⁴⁵
assistance between 2007 and 2011. The CBO estimate, however, was based on OMB’s
assurance that “the government currently collects all of the information needed to create a ⁴⁶
comprehensive database on federal spending.” The estimate might thus reflect the cost of simply
combining existing systems without fully accounting for other costs associated with improving
the quality of the data in those systems. One expert familiar with FPDS-NG and FAADS said that
“an enormous amount of data cleanup” will be necessary to correct inaccurate information in ⁴⁷
those systems. Another industry observer was quoted as saying that enhancing and integrating
existing data sources to meet the requirements of the FFATA was a “complex” problem, and that ⁴⁸
implementing the database might exceed the $15 million projected by CBO.
In a letter to Senator Coburn, the National Association of State Auditors, Comptrollers, and
Treasurers (NASACT) expressed strong reservations about the potential financial and
administrative burden that the bill’s reporting requirements would impose on state and local ⁴⁹
governments. In particular, NASACT noted that collecting data on subgrantees would be “very,
very costly” for state and local governments, since federal grant funds are often passed down
multiple levels (e.g., a state receiving federal assistance gives a subgrant to organization A, which
in turn gives a subgrant to organization B). Additional costs might be incurred under the bill,
NASACT said, if state and local grant recipients were required to modify their financial systems
to collect and report any other new information. After S. 2590 was amended to include the pilot
program for collecting information on subgrantees, NASACT said it supported the bill with the

⁴²^J^o^hⁿ^a^t^ha^{n N}ⁱ^c^hols^on,^“^L^aw^m^a^k^e^r^s^Ple^d^g^e^O^v^e^r^sⁱ^g^h^{t O}ⁿ^N^e^w^Spendi^ng^D^a^ta^ba^s^e^Ef^f^o^r^t^,”^Daily^Re^{port f}^o^r
^E^xecu^tⁱ^ves^,”^Se^pte^m^be^r^{15, 2}⁰⁰⁶^,^a^t^htt^p^://^pu^bs^.b^na^.c^om^/N^W^S^S^T^ND^/I^P^/^B^N^A^/^D^E^R^.^N^SF/^Se^a^r^c^h^A^llVie^w^/
^A^6458E^8C^2E^0C⁷⁰³⁵⁸⁵²⁵⁷¹^EA^000D^D¹^30?^O^p^eⁿ^&^h^ig^hlig^ht=^S^PE^N^D^I^NG^,DA^T^A^B^A^S^E.
⁴³^Ibid^.
⁴⁴^“M^o^r^{e t}^r^an^sp^aren^cyⁿ^eed^edⁱⁿ^t^o^coⁿ^t^ractⁱⁿ^{g d}^a^t^a^,^”^edi^t^o^ri^alⁱⁿ^Fe^d^e^ral^Time^s^(Spriⁿ^g^f^ie^{ld, V}^A^{), J}^aⁿ^.¹⁴^{, 2}⁰⁰⁸^,^p.²²^.
⁴⁵^U^.^{S. C}^ong^r^e^s^sⁱ^ona^{l B}^udg^e^t^O^f^fⁱ^ce^,^{S. 25}^90:^Fe^de^r^a^l^F^uⁿ^dⁱ^{ng Ac}^c^ount^abil^ity^a^{nd Tr}^aⁿ^s^par^eⁿ^c^y^Ac^{t of}²⁰⁰⁶^{, A}^u^g^u^s^t
^{9, 2}⁰⁰⁶^{, a}^t^htt^p^://w^w^w^.c^bo.g^o^v^/^s^how^doc^.c^fm^?ⁱ^nde^x⁼^7483&^s^e^q^u^eⁿ^ce=0^.
⁴⁶^Ibid^.
⁴⁷^J^a^s^{on Mil}^l^e^r^{, “}^S^pe^ndi^ng^da^ta^ba^s^e^ta^k^e^s^s^h^a^p^e^:^Muc^h^w^o^r^k^to^be^d^oⁿ^e^{to c}^r^e^a^t^e^m^a^nda^tor^y^da^ta^ba^s^e^by^the²⁰⁰⁸
^d^ead^lⁱⁿ^e,^”^FCW^.^c^o^m^,^J^u^l.²³^,²⁰⁰⁷^{, a}^t^http^://w^w^w^.^f^cw^.c^o^m^/^p^ri^nt/^13_2^5/^ne^w^s^/¹⁰³²^93-^1.h^t^m^l^.
⁴⁸^Jenⁿ^y^M^aⁿ^d^e^{l, “OM}^B^say^sⁿ^e^w^s^earch^t^o^o^l^w^{ill ref}^l^{ect accu}^{rate sp}^en^dⁱⁿ^g^d^a^ta,”^Go^vE^xec.^Co^m^{, Se}^pt^em^be^r^14,²⁰⁰⁶^,
^a^t^http^://w^ww^.^g^ov^e^x^e^c^.^c^o^m^/^da^ily^f^e^d/⁰⁹⁰⁶^/⁰⁹¹⁴⁰^6m^1.htm^.
⁴⁹^L^e^tte^r^f^r^om^R^.^T^h^o^m^a^s^W^a^gⁿ^e^r^{, J}^r^.,^P^r^e^s^ideⁿ^t^of^N^A^S^A^C^T^{, to Se}ⁿ^.^T^o^m^C^obur^n,^J^u^ly^{5, 2}⁰⁰⁶^{, a}^t
^http:^//w^w^w^.na^s^a^c^t^.org^/te^c^hupda^te^s^/^dow^nloa^ds^/^CRC/L^O^C/⁰⁷^_0^6-N^A^S^A^C^T^_^c^oburn^.^p^d^f^.

new language, but also noted that it still believed “obtaining all the required information will be a ⁵⁰
challenge.”
Some trade groups have made similar arguments regarding the collection of subcontractor
information. The Council of Defense and Space Industry Associations (CODSIA), for example,
has reportedly stated that prime contractors do not normally collect subcontractor information at
the level of detail required by the FFATA, and that doing so would become a significant ⁵¹
administrative burden on both contractors and subcontractors.
Although one of the stated purposes of the legislation was to enable the public to use the on-line
database to identify congressional “earmarks,” it is unclear how users of USAspending.gov might
actually do this, since neither FAADS nor FPDS-NG collect that information. Not all grants,
loans, or contracts are congressionally directed; some are at the discretion of the responsible
federal agency. Unless the congressionally-directed items in the new database are specifically
identified as such, the database will be of limited value for purposes of earmark identification.
Also, the manner in which a funding action is described under the “award title” field might lead
the public to draw different conclusions about the value of a given federally funded project. For
example, an earmarked project that some believe has merit might be described in a manner that
puts it in an unfavorable light. In this way, award descriptions might influence the public’s
perception of whether a funding action is “wasteful” or not.

As noted previously, the underlying logic of the Federal Funding Accountability and
Transparency Act is that, by providing citizens with information on federal assistance awards
through an online database, government officials will be less likely to fund earmarks and arguably
“wasteful” projects. To put this argument succinctly: greater transparency will yield greater
accountability. Most observers agree that in order for a public database of federal awards to
provide maximum transparency, it must encompass as broad a range of financial assistance
categories as possible. The FFATA database would presumably provide substantial transparency,
since it covers all forms of federal financial assistance, including contracts. Arguably, the
database would also provide transparency by phasing in information on subcontractors and
subgrantees, thus allowing the public to track the flow of federal funds down to the level of the
ultimate recipient.
Although the creation of the database might require more time or money than some estimates
suggest, President Bush, the deputy director of OMB, and Senator Coburn have all indicated they
will provide support and oversight during implementation. In remarks prior to signing the
legislation, President Bush said the act was an “important step” that “empowers the American

⁵⁰^L^e^tte^r^f^r^om^Ja^{n I}^.^Sy^lv^is^{, P}^r^e^s^ideⁿ^{t of}^N^A^S^A^C^T^{, to Se}^{n. T}^o^m^C^o^b^u^rⁿ^,^Se^pte^m^be^r^5,²⁰⁰^6.
⁵¹^“^C^ontr^a^c^t^or^G^r^ou^ps^O^p^pos^e^P^r^op^os^e^d^R^u^le^on^Su^bc^oⁿ^tr^a^c^t^R^e^por^tⁱⁿ^g^P^ilo^{t U}ⁿ^de^r^FFA^TA^,”^Daily^Re^{port f}^o^r
^E^xecu^tⁱ^ves^{, J}^une^7,²⁰⁰⁷^{, a}^t^htt^p^:/^/pu^b^s^.^bⁿ^a^.^c^o^m^/ip/^B^NA^/^D^ER^.N^SF^/93¹¹^b^d⁴²⁹^c^19a⁷⁹⁴⁸⁵²⁵⁶^b5⁷⁰⁰⁵^a^c^e^13/
^c^e⁸²⁹³^7a^da⁹⁶^f^25a⁸⁵²⁵⁷²^f³⁰⁰¹⁰¹⁰¹^5?^O^p^eⁿ^D^o^c^u^m^e^nt.

taxpayer” with information that can be used to “demand greater fiscal discipline” from both the ⁵²
executive and legislative branches of government. The President also linked the act to a broader
agenda of increasing accountability in federal spending, including earmark reform and the line-
item veto. President Bush’s comments suggest that the Administration is committed to the act and
might be prepared to provide the resources needed to implement the database with complete and
accurate information, even if the costs exceed OMB’s current expectations. The Administration’s
commitment might also be reflected in OMB’s guidance that required agencies to develop and
implement data quality improvement plans. The original sponsor of S. 2590, Senator Coburn, was
also quoted as saying that “there will be oversight to make sure we’re making progress” ⁵³
implementing the database in accordance with the legislation.
Finally, the new law might direct attention to increased transparency on the revenue side of
federal fiscal operations. In the Senate report accompanying S. 2590, the additional views of
Senators Coburn and Lautenburg included the statement that, “Transparency in government
decision-making should not be limited to simply spending; it should be extended ... to the tax
code.” This sentiment was echoed by Senator Obama, who said during floor debate on the bill
that “greater transparency of targeted tax benefits” was another step in improving government ⁵⁴
accountability and performance. Given this objective, legislation seeking to increase
transparency in the tax code might be supported by some of the same government officials and
advocacy groups that supported S. 2590.
^Gar^r^e^{tt Hatch}
^An^al^y^s^{t i}ⁿ^Am^erican^Natⁱ^on^al^Gov^e^rnm^e^nt
^g^h^a^t^c^h@^crs^.^l^o^c.g^o^v^,^7-⁷⁸²²

⁵²^T^h^e^W^h^ite^H^ous^e^,^O^f^fⁱ^c^e^of^the^P^r^e^s^s^Se^c^r^e^t^a^r^y^,^“^P^re^sⁱ^de^{nt Bus}^h^Sigⁿ^s^Fe^de^ra^{l F}^uⁿ^d^ing^A^c^c^ounta^b^ility^a^nd
^T^r^an^sp^aren^c^y^A^c^t^,^{” p}^r^{ess rel}^e^ase,^S^e^p^t^em^b^e^{r 2}⁶^,²⁰⁰⁶^.
⁵³^Ibid^.
⁵⁴^Co^ng^ressioⁿ^a^l^Reco^rd^{, v}^o^l.¹⁵^{2 (}^S^e^p^te^m^b^e^r^{7, 20}⁰⁶⁾^,^p^.^S⁹²¹¹^.