05/09/2009 05:12 am ET Updated Dec 06, 2017

In Order to Form a More Perfect Union: Recovery Act Transparency

As soon as I heard President Obama vow to track every dime of the stimulus spending I knew that he had committed the Federal government to a huge undertaking, one that would likely prove impossible given the very compressed timeframe in which the administration must move these funds into our communities. And when I heard the very capable Earl Devaney, chairman of the Recovery Accountability and Transparency Board, testify before the House oversight committee that "the Federal government's systems have never been fully successful at producing timely and reliable data," I felt his pain.

The government has made efforts in recent years to open some of its data coffers, some successfully and some unsuccessfully. While there has been significant progress at the Federal level as a result of the Coburn-Obama Act and for tracking and reporting, obtaining quick, accurate information about Federal spending remains difficult at best. The most interesting information, however, is not in the coffers of the Federal government but in the highly fragmented state, local and educational marketplace - data about the communities in which we all live. Attempting to add state and local data to the mix only serves to magnify current visibility gaps; there are more than 89,000 state, local and educational entities in the United States, each with its own set of data rules and regulations, its own access, publishing and persistence paradigms, and its own pace.

To further complicate requirements for timely and standardized data collection from state and local entities, many of these agencies perform a combination of essential services ranging from public safety to maintenance of physical infrastructure. Unlike the Federal government's established taxonomies for tracking spending on goods and services, there is no similar standard across these highly fragmented state and local governments. What initially appears to be a relatively simple set of functional spending categories is not easily mapped to a common state-by-state, municipality-by-municipality view.

Right now your eyes may be glazing over and you may be asking, "Uh, who really cares about data and procurement?" I'm glad you asked.

When viewed vertically the government sector dwarfs all other industries in terms of spend, with significantly more capital flowing at the state and local level than at the Federal level. This transparency barrier between the Federal government and state and local government has been highlighted with the passage of the American Recovery and Reinvestment Act and with the speed at which these unprecedented funds have been appropriated. Consider the example below of a typical capital flow from Congress to local subcontractors in the Recovery Act:


Congress, the administration, the states, the municipalities, and the American people are all attempting to track where capital is being obligated and spent at the local level. The transparency barrier prevents that. If this seemingly intractable problem is solved, however, tracking Recovery Act spending has the potential to establish a foundation on which the American public can begin to make decisions that fundamentally transform government for the people.

Perhaps better than anyone we appreciate the scope of the challenge in trying to track Recovery Act spending. It has taken our company over a decade and tens of millions of dollars to develop the taxonomy, technology and expertise to monitor the expenditures of state and local governments in all fifty states. With the expected beneficiaries of these funds being a diverse group of mostly small and medium businesses, economists agree that the "flywheel effect" of job creation from these stimulus dollars will happen principally at this level, in local communities. Many of these beneficiaries are sub-contractors to prime contractors who have been awarded a contract by a state or local agency.

Moreover, at a time when businesses are struggling, providing details of recovery-funded projects accelerates capital absorption in local communities, creating and preserving jobs. Additionally government agencies will get more qualified contractors bidding on contracts and as a result taxpayers will get more value for their dollar - a transparent system that is more efficient. All the ingredients are there to achieve the laudable intent of Congress and the administration.

The primary goal of the Recovery Act was economic stability and job creation in these times of crisis. If executed well, the Recovery Act will not only have these expected direct impacts on the economy by infusing capital but, by exposing more actionable data, will have the ancillary benefit of creating new businesses and redirecting capital flows to more efficient channels.

Consider the mashup possibilities with census data, campaign contribution results, crime statistics, or tax information to name a few. This is an historic but precarious era for our nation, and in these troubled times we have an opportunity to set a new standard for citizen-to-government and business-to-government engagement. We should make every effort to seize this unique opportunity and see that a maximum amount of transparency is baked into the Recovery Act.