[Senate Hearing 112-583]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-583

 
   SHOW ME THE MONEY: IMPROVING THE TRANSPARENCY OF FEDERAL SPENDING

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS


                             SECOND SESSION

                               __________

                             JULY 18, 2012

                               __________

        Available via the World Wide Web: http://www.fdsys.gov/

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs




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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
                     Troy H. Cribb, Senior Counsel
                      Jonathan M. Kraden, Counsel
               Kristine V. Lam, Professional Staff Member
               Nicholas A. Rossi, Minority Staff Director
           J. Kathryn French, Minority Deputy Staff Director
                   Jennifer L. Tarr, Minority Counsel
                  Trina Driessnack Tyrer, Chief Clerk
                 Patricia R. Hogan, Publications Clerk
                    Laura W. Kilbride, Hearing Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Coburn...............................................     3
    Senator Johnson..............................................    17
    Senator Portman..............................................    23
    Senator Carper...............................................    27
Prepared statements:
    Senator Lieberman............................................    39

                               WITNESSES
                        Wednesday, July 18, 2012

Hon. Mark R. Warner, a U.S. Senator from the State of Virginia...     4
Hon. Eugene L. Dodaro, Comptroller General of the United States, 
  U.S. Government Accountability Office..........................     8
Hon. Daniel I. Werfel, Controller, Office of Federal Financial 
  Management, Office of Management and Budget....................    11
Richard L. Gregg, Fiscal Assistant Secretary, U.S. Department of 
  the Treasury...................................................    12

                     Alphabetical List of Witnesses

Dodaro, Hon. Eugene L.:
    Testimony....................................................     8
    Prepared statement...........................................    44
Gregg, Richard L.:
    Testimony....................................................    12
    Prepared statement...........................................    67
Warner, Hon. Mark R.:
    Testimony....................................................     4
    Prepared statement...........................................    41
Werfel, Hon. Daniel I.:
    Testimony....................................................    11
    Prepared statement...........................................    59

                                APPENDIX

On Behalf of the National Conference of State Legislatures 
  (NCSL), International City/County Management Association 
  (ICMA), National Association of State Chief Information 
  Officers (NASCIO), National Association of State Auditors, 
  Comptrollers and Treasurers (NASACT), and National Association 
  of State Budget Officers (NASBO), prepared statement...........    70
Craig Jennings, Director of Federal Fiscal Policy, OMB Watch, 
  prepared statement.............................................    76
Response to post-hearing questions for the Record:
    Mr. Dodaro...................................................    80
    Mr. Werfel...................................................    84
    Mr. Gregg....................................................    95


   SHOW ME THE MONEY: IMPROVING THE TRANSPARENCY OF FEDERAL SPENDING

                              ----------                              


                        WEDNESDAY, JULY 18, 2012

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:31 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Carper, Coburn, Johnson, and 
Portman.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. Good morning, and welcome to this 
morning's hearing on improving transparency into how the 
Federal Government spends taxpayers' money.
    Senator Warner, who is the first witness, is reported to be 
on his way according to his office.
    Senator Coburn. Government Accountability Office (GAO) 
reports it.
    Chairman Lieberman. GAO are watching us all the time. So we 
will proceed with our opening statements. I want to welcome 
Senator Coburn, who is sitting in for Senator Collins as 
Ranking Member, but takes on this role because of his long-time 
active interest in the subject that we are here to talk about, 
which is transparency in how the Federal Government spends 
taxpayers' money--a issue which is definitely as old as our 
great Republic. And to validate that statement, I will read now 
from a letter that President Thomas Jefferson wrote to his 
Treasury Secretary in 1802. ``We might hope to 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 should be able to comprehend them, to investigate 
abuses, and consequently to control them.'' A statement that 
has a timeless essence to it.
    Of course, Federal spending in 1802 added up to about $11 
million, and the national debt was about $80 million. For 
fiscal year 2012, we are going to spend more than $3 trillion, 
with a national debt closing in on an astounding $16 trillion.
    Now, those numbers really do seem incomprehensible, but, of 
course, that makes it all the more important that Federal 
spending be publicly transparent so that, as Jefferson said, 
any citizen should be able to see where taxpayer dollars are 
being spent and help root out waste in the budget and alert not 
just elected officials but friends, family, and the traditional 
media--even using new social media tools, like Facebook and 
Twitter--to spread the message. I mean, the government has 
become vastly larger, of course, but our technological 
capability has also become vastly better, and, therefore, the 
goal of transparency remains, in my opinion, attainable.
    So this is the subject of today's hearing: ``Show Me the 
Money: Improving the Transparency of Federal Spending.'' We are 
going to examine current efforts to make this kind of 
information available electronically.
    In 2006, Senator Coburn and then-Senator Barack Obama--what 
ever happened to him? He is now President, of course. The two 
of them co-sponsored, and the Committee reported out the 
Federal Funding Accountability and Transparency Act (FFATA), 
and it became law.
    This bill was a very important first step in improving the 
public's ability to learn more about what the Federal 
Government was spending and a Web site called USASpending.gov 
whereby was created that could be used to track the trillion 
dollars the Federal Government awards annually in grants, 
contracts, and loans.
    However, 6 years after passage of this Act, which became 
known as FFATA, the USASpending.gov Web site has not achieved 
Congress' goals for it--and let me explain. The site itself has 
been found to be not as user friendly as it should be. The data 
is not stored in a consistent fashion, making it hard to draw 
comparisons between different data sets. And contractors are 
often listed under multiple names, making searches unreliable. 
But those problems do not diminish the validity and importance 
of the goal and purpose of USASpending.gov. And, therefore, we 
have asked our witnesses to provide an update on the current 
state of it and what improvements are either in the works or 
should be in the works.
    Times have changed since the passage of that legislation, 
and we now have the opportunity to take advantage of another 
attempt to make government transparent through advanced 
technology, and that is with regard to the American Recovery 
and Reinvestment Act of 2009, which aimed to track the nearly 
half a trillion dollars spent on economic stimulus.
    The Act created the Recovery Accountability and 
Transparency Board, an independent body to conduct oversight 
and audits of Recovery Act funds, which in turn created a 
public Web site of its own--Recovery.gov--which detailed who 
got the money and what they were doing with it.
    Whatever one thinks of the Recovery Act, the Recovery.gov 
Web site has generally received high marks for its reliability, 
accessibility, and in some sense its simplicity, and obviously 
that gives us something more to build on as we go forward.
    Then last April, the House of Representatives passed the 
Digital Accountability and Transparency Act (DATA Act), which 
would create a new five-member Commission, modeled after the 
Recovery Act's Board, to act as the hub to collect spending 
data, set data standards, and analyze the information.
    The goals of the bill, which include transparency of 
Federal spending and consistent data standards, are admirable, 
and I certainly support them. We have, perhaps not 
surprisingly, heard concerns from some State and local 
officials about the cost of complying with the DATA Act and 
more generally a concern about the creation of another Federal 
entity.
    Senator Warner has introduced a Senate version of the DATA 
Act, and it is the subject of this hearing, although we expect 
to hear testimony on the other matters I talked about earlier.
    Given the difficult, to put it mildly, budget climate that 
we are going to face in the upcoming years, it is more 
important than ever that we keep Jefferson's words from 1802 as 
our ideal and that we take advantage of modern technological 
means to improve transparency and accountability of Federal 
spending.
    We have a really excellent group of witnesses here to help 
educate us. I look forward to their testimony, and now I am 
pleased to call on the Acting Ranking Member, Senator Coburn of 
Oklahoma.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Thank you, Mr. Chairman, and I welcome our 
witnesses and their testimony today.
    The urgency of the problems before us cannot be overstated. 
I checked today--we are at $15.875 trillion in debt. The size 
of the Federal Government is twice the size it was 11 years 
ago. As a matter of fact, the deficit we will run this year is 
greater than our total budget was 16 years ago. And part of the 
problem is that there is only one agency in the Federal 
Government that actually knows all their programs, and that is 
the Department of Education.
    When you ask the Congressional Research Service (CRS) or 
GAO how many programs there are, they cannot tell you. We did 
put in one of the debt limit bills a requirement for GAO to 
review all the government programs, and that is an ongoing 
process for which I appreciate immensely. But what it has shown 
us that we have hundreds of billions of dollars in duplication 
every year with no change in outcomes.
    The great challenge before us today is to move politics out 
of the realm and put policy back supreme, not because it is 
good government and not because it makes sense, but because the 
greatest risk facing our Nation right now is our debt. It is 
greater than any military threat we face. It is greater than 
any other problem we face. And the fact is that the children 
born today will owe $53,000 each of money we have spent that 
they are going to have to pay back. And by the time they are 
25, if we stay on the projected course we are now, it will be 
in excess of $1 million. And at historical interest rates, that 
means the first $55,000 they earn will go towards paying 
interest on the debt before they ever pay taxes, before they 
ever do anything. So the problem before us is great.
    I must say two of my heroes are the GAO and CRS. They do 
immense service for our country. I agree with the Chairman that 
Recovery.gov was better than USASpending.gov. But what we were 
promised is when they set up Recovery.gov that they would take 
the lessons from Recovery.gov and utilize them to improve 
USASpending.gov. That has not happened. As a matter of fact, 
even the directions that have gone out from the Office of 
Management and Budget (OMB) to the agencies have not been 
enforced in terms of compliance with that.
    The last thing we should do is create a third one, so the 
idea behind the DATA Act should be to make everything we are 
doing now consolidated, put together, responsive, available, 
and easy for the American people to know. The American people 
know what kind of trouble we are in. It is only Washington that 
does not know what kind of trouble we are in. And that is 
proven by the fact that we have spent an entire year not 
addressing the real problems in front of the country. We have 
spent an entire year playing politics for the next election, 
which is the problem. The politicians are more interested in 
their political careers than they are the best interests of 
this country, and it is proven by the fact of our performance 
this year.
    So I look forward to our witnesses. This is something we 
can do. This is something that will make us better. It is 
something that will give us discipline, and it is something 
that we should not wait to do. And then we should put the whole 
resources of the Office of Management and Budget behind getting 
it done so that we can truly have transparency, so that when we 
steal from the American people dollars that are wasted, they 
can actually see it and change Washington on the basis of that.
    I look forward to hearing from Senator Warner. He is a 
great friend. He is a great champion for addressing the real 
problems in front of our country. He understands this is part 
of the problem. And I look forward to hearing from our other 
witnesses, and I thank you, Mr. Chairman.
    Chairman Lieberman. Thank you, Senator Coburn. I could not 
have offered a better introduction of Senator Mark Warner of 
Virginia, our friend and colleague, sponsor of the DATA Act, 
and a really principled and persistent advocate of transparency 
in spending.
    Senator Coburn. May I also add, I am participating in a 
Finance Committee markup, so I will be in and out, and I 
apologize to our witnesses for that.
    Chairman Lieberman. Not at all. Understood. Senators do 
have the unique capacity to be in two places at once.
    Senator Warner, good morning.

 TESTIMONY OF HON. MARK R. WARNER,\1\ A U.S. SENATOR FROM THE 
                       STATE OF VIRGINIA

    Senator Warner. Good morning. Thank you, Mr. Chairman, 
Senator Coburn, and Senator Johnson. I would ask that my full 
statement be submitted for the record.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Warner appears in the 
Appendix on page 41.
---------------------------------------------------------------------------
    Chairman Lieberman. Without objection.
    Senator Warner. I also want to apologize to the Committee. 
You have all had to endure at times stories from me of my glory 
days as governor. One of the things I was not able to put on my 
completed checklist was solving Northern Virginia's traffic, so 
I apologize for being a bit late.
    Chairman Lieberman. You also lost those State troopers you 
used to have.
    Senator Warner. Amen.
    I think building on what Senator Coburn said, the title of 
today's hearing could not be more perfect: ``Show Me the 
Money.'' It is a simple message that captures, I think, this 
important goal if we are going to get to the questions about 
debt and deficit, and all the Members of this Committee have 
been actively involved in this issue. You have to be able to 
follow the money.
    As has been mentioned, as I think the Committee knows, I 
introduced the Digital Accountability Transparency Act last 
year, and that legislation passed the House in April. The 
primary goal of the DATA bill is to show us--both the taxpayers 
and the policymakers--the money.
    Now, I have had some evolution in my thinking on the DATA 
bill over the last year, and I want to get to that in a moment. 
The legislation will, as Senator Coburn said, expand the 
financial information available online to include agency 
expenditures. It will identify better, I think, contracts and 
grants within the context of the programs and activities they 
support. Ultimately, I hope DATA, or whatever form it takes, 
can show us the full cycle of Federal spending.
    Now, I may take exception with Senator Coburn. I think 
there have been areas where there have been some improvement, 
and this effort ought to not be trying to re-create the wheel 
but build upon what is working and what is not working within 
the Federal Government. A lot of this originated back with 
Senator Coburn and then-Senator Obama's legislation in 2006, 
the Federal Funding Accountability and Transparency Act, as we 
mentioned. Then there was Recovery.gov that I think built upon 
that. And you are right, I do not think we have taken all the 
lessons of Recovery.gov. There were some areas where in terms 
of down the line contracts, some actual duplication of 
reporting, which we need to avoid as well. And, again, last 
year, President Obama established the Government Accountability 
and Transparency Board that I think is also a step in the right 
direction.
    I think you are going to hear, particularly in the second 
panel, some folks from the Treasury Department where I do think 
there has been some good progress made.
    With the enormous debt and deficit and the challenges that 
we have as we try to wrestle with this, those of us who want to 
try to put the long-term fiscal health of the country ahead of 
politics, our abilities are a bit undermined if you do not have 
transparency. If you do not have transparency, it feeds into 
the public's distrust and cynicism of everything we do. It 
raises concerns about waste, fraud, and abuse in Federal 
spending. The public deserves to know how each Federal dollar 
is spent, and we have to try to make sure we use that 
information to make sure those dollars are spent more 
efficiently and effectively.
    Now, I came to this issue with prior experience as a 
business guy and governor, and then on the Budget Task Force 
they gave me a little subcommittee to try to work on these 
issues. And it is why I am hoping that this Committee will act 
upon the legislation that I hope to reintroduce shortly.
    This also will go to a question that I know the Chairman, 
Senator Coburn, and Senator Johnson all have concerns about: 
Program duplication. If you do not know how the money is being 
spent, you are not going to be able to identify, with the 
exception of the good work that GAO has done, the amount of 
program duplication that, I agree, runs rampant throughout our 
whole Federal Government.
    I also have done business and looked at business 
accounting. I have learned State government accounting. Trying 
to learn Federal Government accounting is an arcane art in 
itself, and trying to figure out how much any government 
program costs and the breakdown of expenses and trying to 
follow those expenses requires skill, and that should not be 
the case when we are having the kind of debt and deficit 
numbers that confront us.
    For example, how can you really tell if we are getting good 
value for a program if we do not have a detailed explanation of 
the costs and the spend that goes about from that?
    Now, the primary goal of the DATA legislation is to build 
upon the existing law to require that the full cycle of Federal 
spending be publicly disclosed in greater detail. And, again, I 
think this is a bipartisan goal that we can all embrace. How we 
accomplish this goal is to broaden debate.
    I will admit that a year ago I believed we might need a new 
government entity to oversee transparency. My thinking has 
evolved on that issue. I do not think we need to simply create 
one more entity out there when we have already got existing 
entities that are supposed to work on that goal, and I think we 
have worked with your staff, Mr. Chairman, and others to try to 
refine the legislation to get this in a better spot. Let me go 
through three or four quick points and then allow you to move 
to the next panel.
    First, I think we need to use existing technology to 
collect data. As I mentioned earlier, I think I have been 
impressed with technology being implemented at the Department 
of Treasury. The Treasury's new Payment Information Repository 
could be expanded to consistently collect budget and accounting 
information that we are looking for. Connecting the 
transparency to the actual funds spent, essentially creating an 
online Quicken for the Federal Government checkbook, makes a 
lot of sense to me. It is the most accurate way, I think, to 
show us the money, and it does not require a whole new 
technology or whole new entity.
    Second, we need to develop consistent data standards for 
this online checkbook so that the data can be compared across 
agencies. We have to be able to compare apples to apples, and 
this data standards issue, while fairly arcane, is one that we 
really need to dig into with the host of different financial 
accounting systems across our whole Federal Government. If you 
do not have some kind of standardized data accounting systems, 
you are never going to have that kind of comparison. If these 
standards are integrated into Treasury's new data collection 
technology, we could get this data we need at a lower cost and 
building an entirely new approach.
    Third, we must ensure that this data is accurate and easy 
to understand. Currently we see so many errors, as Senator 
Coburn mentioned, on USASpending.gov, and that is because there 
is no system in place to monitor the completeness and quality 
of this data. The inspectors general (IGs) and the GAO need to 
regularly review this data every couple of years and maintain a 
scorecard for the quality and completeness of the data 
provided.
    Fourth, even as we are designing financial data standards, 
we must also stop unnecessary or duplicative financial 
reporting. I have heard a number of concerns, as we had the 
first version of this legislation, that maybe it went a little 
too far. But when I heard from lots of State and local 
governments and universities about the burden of financial 
reporting that is already required, if we simply make 
information that is already reported, and broke down three or 
four different ways, that does not bring about any greater 
efficiency. It just adds unnecessary marginal costs to all of 
these transactions. So we must, again, make sure that this is 
focused and comes to ultimately a single source, but if part of 
the Federal Government has got that information, it should not 
need to be reported another way.
    And the final point I will raise today is that we have to 
make sure this data is used. At times we get overwhelmed with 
the mass of information. We keep being additive to our 
reporting requirements. We never go back and subtract 
requirements that may have outlived their usefulness. And I 
think in this legislation we start down a framework to go about 
elimination as well as trying to consolidate.
    The Executive Branch could use this data to proactively 
prevent waste, fraud, and abuse because it would allow more 
transparency and analysis before payments are made. Again, I 
think the Administration has taken a good step, and President 
Obama has set up a system with great potential in the ``Do Not 
Pay List.'' That is something that should be expanded. The 
taxpayers could use this information to better understand how 
Federal funds are distributed in their local communities.
    Again, we have moved a great way in the year I have been 
digging into this and since we first introduced this 
legislation. I commend the House for their work. I think there 
may be a better product that we could introduce in the Senate. 
I look forward to reintroducing this legislation shortly. I 
would love to work with all the Members of this Committee on 
further ways that we might improve it. And echoing what the 
Chairman and the Ranking Member said, this ought to be 
something that even in the political ``silly season'' that we 
can get done. This will be enormous value to whoever takes the 
oath of office next year, and we ought to give the next 
President that tool, and we ought to make sure that we in 
Congress do our responsibility to make sure we are more able to 
monitor and eliminate the kind of duplication that we see that 
ends up costing us a great deal of trust with the public at 
large.
    With that, Mr. Chairman, again, I thank you for the 
courtesy of allowing me to testify, and my apologies for being 
a little bit late.
    Chairman Lieberman. Not at all. Thanks for your thoughtful 
testimony, and we do look forward to working with you on this 
legislation.
    Senator Coburn and Senator Johnson, any questions for 
Senator Warner?
    Senator Coburn. I just would again like to thank Senator 
Warner. We are keenly interested in this, but we are also 
keenly interested in making sure it does not cost a whole lot 
more, and it should not.
    Chairman Lieberman. Right.
    Senator Coburn. And from cybersecurity all the way down to 
data centers in the Federal Government, there is a lot of money 
to be saved if we do things right and smart by doing the right 
thing, not just trying to pound our chest and say we are right. 
So I congratulate you on this and look forward to working with 
you in detail to get this corrected.
    Senator Warner. Thank you, Senator. And I would just add 
two quick responses. One is I do think one area that we ought 
to continue to promote is having the Federal Government--and 
there are clearly security concerns--move more quickly into the 
cloud, which can dramatically cut back in terms of data 
centers. And I think you will find that this new version of the 
legislation is significantly--and I underline 
``significantly''--a lower cost burden than what was passed in 
the House. Again, part of that is because we do not need to re-
create the wheel. If there are parts that are working and we 
build upon the good work that you and then-Senator Obama did, 
take some of the best practices from Recovery.gov, and----
    Senator Coburn. And Treasury.
    Senator Warner. I think we can get it done.
    Senator Coburn. Thank you.
    Senator Warner. Thank you.
    Chairman Lieberman. Thank you very much, Senator Warner. 
Have a good day.
    We will call the second panel: Gene Dodaro, Comptroller 
General of the United States, and head of the U.S. Government 
Accountability Office; Daniel Werfel, Controller, Office of 
Federal Financial Management at OMB; and Richard Gregg, Fiscal 
Assistant Secretary at the U.S. Department of the Treasury.
    Mr. Dodaro, welcome. You are, as Senator Coburn said, 
regarded very highly by this Committee, and I would say by most 
Members of Congress. Good morning.

 TESTIMONY OF HON. EUGENE L. DODARO,\1\ COMPTROLLER GENERAL OF 
    THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Dodaro. Good morning, Mr. Chairman, Senator Coburn, and 
Senator Johnson. It is a pleasure to be here this morning.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Dodaro appears in the Appendix on 
page 44.
---------------------------------------------------------------------------
    Before I start about the subject of today, though, given 
your impending retirement from the Senate, Senator Lieberman, I 
wanted to just take a minute on behalf of myself and all my 
colleagues at GAO to thank you for your years of dedicated 
service to our country. It has been a privilege to work with 
you on many initiatives to improve government. Please know that 
when you leave, you leave with the best wishes from myself and 
our organization. So thank you very much.
    Chairman Lieberman. Thanks very much. That was very kind of 
you, and it has been a pleasure to work with you. And based on 
that opening remark, I am probably going to try to arrange for 
you to appear before the Committee at least three or four times 
more before the end of the year. [Laughter.]
    Mr. Dodaro. Well, since I thought this might be my last 
appearance, I cannot guarantee it at every session. But with 
regard to today's subject, it is a very important topic. We 
have been reviewing both USASpending.gov and Recovery.gov. We 
have statutory responsibilities to do that. And I think the 
USASpending.gov, as has been mentioned, including Senator 
Coburn's sponsorship, was pioneering legislation. We took a 
good look at it and issued a report in 2010. We found OMB had 
stood up the Web site, and it was searchable, but there were a 
lot of quality, accuracy, and completeness issues. We took a 
sample of 100 awards back then and found a data problem with 
each of the 100, and in 70 percent of the cases, multiple data 
quality issues.
    Also, some agencies at that point in time were not 
reporting, and OMB had missed a deadline for including sub-
award data, which was set for January 2009.
    Now, we made a number of recommendations. OMB has acted on 
some of the recommendations. Sub-award data is now available on 
the site. They have designated accountable officials at each of 
the departments and agencies, and they are to have a quality 
assurance framework in place. But we still think there ought to 
be more reporting by OMB on the usage of the site. The Act 
required an annual report, and only once has OMB issued that 
report to the Congress.
    So we think there is more to do. The Committee has recently 
asked us to look again at the quality of the information on 
USASpending.gov, so we will be launching another review to do 
that carefully, and we will report back to the Committee.
    Now, the Recovery Act introduced novel concepts in addition 
to those introduced by USASpending.gov in that it had the 
recipients of the information reporting the data; whereas 
USASpending.gov had the Federal agencies reporting the award 
data. And I must say the efforts were very impressive to stand 
that up within the 30-day period of time on a national scale 
with thousands of recipients receiving the money.
    Not surprisingly, we did find, though, at early stages of 
it, data quality problems, and made a number of 
recommendations. OMB and the Recovery Board were quick to 
implement our recommendations. We had a very good working 
relationship with them. And the information began to improve. 
But there were some critical lessons learned out of that 
process that I think are really important.
    There was two-way communication with the Federal Government 
and the State and local government community. Shortly after the 
Act was passed, actually a number of State officials sent a 
letter to myself and the Director of OMB at the time, Peter 
Orszag, about trying to have a working arrangement on the 
reporting requirements. So I talked to him. We set up weekly 
meetings with OMB, Treasury, and other stakeholders so that 
these issues could be discussed.
    There was training provided to the recipients so they knew 
how to report, particularly those that had not reported 
previously to the Federal Government. And there was also, after 
a period of time, a need for the Federal agencies to review the 
quality of the information being reported. In some cases early 
on recipients information conflicted with the Federal agencies' 
information, and once Federal agencies started reviewing the 
quality of the data and there was ability to make changes to 
the data, the quality improved after that period of time. And, 
also, there were other lessons learned where the Federal 
agencies could actually pre-populate some of the information to 
reduce the burden on the recipients going forward.
    So I think there are a lot of opportunities here to build 
upon the lessons learned from the Recovery Act and 
USASpending.gov to broaden the amount of information that is 
made available and the transparency of that information to the 
American public, to build upon both of those efforts, to learn 
from them, and to expand that so that there is more information 
made available in better formats that could be accessible to 
the American people and that a premium be placed on the quality 
and the reliability of the information. That is pivotal. We 
could make a lot of information available, but if it is not 
reliable and accurate, it does not really serve the American 
people well and it does not serve policymakers and other 
decisionmakers well. So we are going to be continuing to focus 
on the efforts to ensure the quality of the information.
    I would say that legislation is absolutely essential here 
going forward, and I commend the House as well for starting the 
legislative ball rolling on this process. I say that for 
several reasons. I think it is really important to get 
consensus on what information is required to be reported. I 
think legislation is needed to ensure continuity over time; and 
that there are data standards that are set in place in order to 
make sure that the information is comparable and can be 
consistent over time; and that there is proper stakeholder 
involvement. I think there are legitimate issues on reporting 
burden that could be worked through appropriately so that this 
could be done in an efficient manner and that we could take 
advantage of the latest technology in order to not only be more 
efficient but also to allow for more searchability. I think 
some of the features of the Recovery.gov, particularly the 
geographic distribution of the information, were very helpful, 
and there are a lot of lessons that could be learned there.
    So with the legislation that has moved through the House 
and new legislative initiatives in the Senate, hopefully 
something can be done here to provide a proper foundation for 
this going forward so it can be successful, done well, and be 
enduring over a period of time.
    Thank you very much for your time and attention this 
morning. I would be happy to answer questions at the 
appropriate time.
    Chairman Lieberman. Thank you, Mr. Dodaro. That is a good 
beginning.
    Next we have Daniel Werfel, also known as ``Danny.''
    Mr. Werfel. That is right.
    Chairman Lieberman. He is the Controller at the Office of 
Federal Financial Management at the OMB. Good morning and 
welcome, Mr. Werfel.

 TESTIMONY OF HON. DANIEL I. WERFEL,\1\ CONTROLLER, OFFICE OF 
 FEDERAL FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Werfel. Good morning, Chairman Lieberman, Senators 
Coburn, Johnson, and Carper. Thank you for the invitation to 
discuss Federal spending transparency and how the Federal 
Government can best provide important information to the public 
about how Federal dollars are spent.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Werfel appears in the Appendix on 
page 59.
---------------------------------------------------------------------------
    In response to the President's call for a 21st Century 
government that is both open and competent, this Administration 
has initiated substantial reforms and improvements in the three 
areas most critical to meeting this objective: Government 
accountability, performance, and transparency. In each of these 
areas, the partnership between the Administration and 
Congress--and this Committee in particular--has been critical 
to our success.
    Improvements to performance achieved under the Government 
Performance and Results Act (GPRA) Modernization Act and to 
accountability under the Improper Payments Elimination and 
Recovery Act are inexorably linked to our focus today: 
Improving transparency in how Federal dollars are spent. By 
holding ourselves to a high standard in each of these areas, we 
allow program managers to focus on better outcomes and help 
overseers and the public hold agencies accountable for the 
government's stewardship of Federal dollars.
    The landmark Federal Funding Accountability and 
Transparency Act of 2006, sponsored by then-Senator Obama and 
Senator Coburn, dramatically changed the way we approach 
Federal spending transparency. Through the implementation of 
FFATA, as well as the bold transparency and accountability 
requirements included the Recovery Act, we have made marked 
progress in making Federal spending information publicly 
available by initiating web-enabled and user-friendly tools for 
tracking who receives awards and how they are used.
    Our challenge now is to leverage these achievements in 
order to realize the President's vision for a 21st Century that 
is open, high-performing, and accountable. And that means not 
just collecting and displaying more information, but focusing 
on better quality and more reliable information. Reliable, 
understandable, and consistent data is essential to creating a 
transparent government, and that is the primary focus of our 
efforts going forward.
    We see two key ways to enhance the quality and reliability 
of our Federal spending data. The first is through better 
integration and reconciliation of data. To drive this effort, 
we are working closely with agencies and the audit community to 
integrate the quality assurance framework that is in place 
today for audited financial statements with Federal spending 
data and reporting.
    For instance, OMB has developed a new Schedule of Spending 
that will include information in agencies' annual audited 
financial statements about how dollars are spent. In addition, 
agencies and OMB are working together to shore up internal 
controls to create data that is internally consistent and 
externally understandable. We are providing enhanced validation 
tools for the data, providing data quality reports, and working 
to share best practices among the Federal community. And as Mr. 
Gregg will be discussing today, the Department of Treasury has 
developed a Payment Information Repository to improve the way 
that information on payments remitted by the government is 
compiled, rationalized, and displayed to the public.
    The second path to enhanced quality and reliability of our 
Federal spending information is through improved data 
standardization. As the President's Government Accountability 
and Transparency Board has noted, standardization provides the 
key to unlocking transparency and accountability.
    Accordingly, we are working across the government to build 
the common linkages between data. Along with Treasury, we are 
developing strategies to link specific awards and payments to 
other pertinent financial information. As required by the GPRA 
Modernization Act, we are developing a Federal Program 
Inventory, a single list of all government programs that can 
and will be linked with our financial data. We are developing 
governmentwide solutions for system consolidation and 
rationalization to link systems and eliminate duplication, 
redundancies, and inefficiencies that have built up over time. 
And we are developing a common uniform award framework to tie 
all of these efforts together to build standardized, 
consistent, and comprehensive tracking of Federal dollars.
    As I said, the common thread across all these efforts is 
making our data on Federal spending reliable, high quality, and 
consistent, and in doing so, our goal is to maximize 
transparency and accountability in a targeted and cost-
effective manner.
    The Federal Government possesses the ability and the 
authority to execute these strategies today through existing 
legislative vehicles and instrumentalities of government. Our 
challenge now is delivering results, and that is where we need 
the help of Congress to ensure that we achieve a 21st Century 
government that is even more open, higher performing, and more 
accountable.
    Thank you, and I look forward to your questions.
    Chairman Lieberman. Thanks very much, Mr. Werfel. We 
appreciate the testimony. Now we will hear from Richard Gregg 
from the Department of the Treasury.

 TESTIMONY OF RICHARD L. GREGG,\1\ FISCAL ASSISTANT SECRETARY, 
                U.S. DEPARTMENT OF THE TREASURY

    Mr. Gregg. Chairman Lieberman, Ranking Member Coburn, and 
Members of the Committee, thank you for inviting me to discuss 
the Department of Treasury's initiatives to increase Federal 
financial transparency and accountability.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gregg appears in the Appendix on 
page 67.
---------------------------------------------------------------------------
    Each year, Treasury processes billions of financial 
transactions on behalf of Federal agencies, including payments, 
revenue and debt collections, and intra-governmental transfers. 
Over the past several years, Treasury has launched a number of 
initiatives to modernize its financial systems, improve 
transparency, and streamline its transaction execution and 
reporting processes.
    Treasury makes 1 billion payments every year, and 
historically, Treasury's goal has been to make sure that every 
payment was made accurately and on time, and that continues to 
be the goal. However, more recently, Treasury recognized that 
we need to make more payment information available to the 
public and have that information available quickly and 
presented in a way that is meaningful.
    To achieve greater transparency, Treasury is developing a 
robust business intelligence and data analytics system. This 
new system, called the Payment Information Repository (PIR) 
will allow information from payment systems to be viewed and 
analyzed in a single application that consolidates data from 
all Federal spending, including grants, contracts, loans, and 
agency expenses, thereby increasing Federal payment 
transparency. The PIR payment transaction data can be linked to 
other government databases, such as USASpending.gov, to enable 
the public to follow a payment through the complete spending 
cycle--from appropriations to the time the payment is 
disbursed.
    In support of this effort to streamline the payment 
process, we have already developed the Payment Automation 
Manager (PAM), which replaces over 30 mainframe-based software 
applications previously used by Treasury into a single, 
standardized application.
    A key component of PAM is that it requires agencies for the 
first time to submit data in a standard format. Beginning in 
August of this year, agencies will be able to submit payment 
data along with the related appropriation data in this standard 
format, and all agencies will be required to use this new 
format no later than October 2014.
    The flow of this information from PAM into the PIR will 
begin in the third quarter of 2013, and standard reports will 
be available to the public by July 2013, and more robust 
inquiries will be available by December. And we will keep 
building on this as we add more data elements.
    This information will allow taxpayers, agencies, and 
policymakers to more easily track Federal spending. Users will 
be able to chart which areas of the country the government is 
spending the most on contracts, grants, benefit payments, and 
administrative spending. And Personally Identifiable 
Information will be highly protected and not available to the 
public, such as Social Security numbers.
    Let me now turn quickly to accountability. Following the 
President's June 2010 memorandum directing agencies to improve 
payment accuracy by using a ``Do Not Pay List,'' Treasury, in 
collaboration with OMB, began developing the ``Do Not Pay'' 
Business Center. The Business Center is comprised of the Do Not 
Pay Portal and the Data Analytics Service.
    The portal is a one-stop shop for agencies to check several 
key databases to verify eligibility before making a payment or 
award. The Data Analytics Service provides customized analysis 
allowing agencies to compare program, payment, and vendor data 
with secondary sources to find patterns that might suggest 
fraud, waste, or abuse. In April 2012, the Do Not Pay Business 
Center developed a partnership with Treasury's Financial Crimes 
Enforcement Network, or FinCEN. This partnership will leverage 
FinCEN's investment in data analytics tools and their existing 
relationships with the law enforcement community. I should add 
we are also working closely with our Inspector General in this 
area.
    Treasury expects this financial accountability to increase 
even further with the release of OMB guidance that directs 
agencies to develop a plan for using a ``centralized solution'' 
to reduce improper payments. The Do Not Pay program is already 
assisting 27 programs in preventing improper payments, and this 
number continues to grow in response to OMB's directive.
    I would just like to say a word on data standards. Really, 
to achieve the transparency and accountability we all want, it 
is necessary to move forward on developing governmentwide 
standards. Data standardization or the consistent use of common 
formats and definitions for key data elements supports sound 
financial management and decisionmaking by improving the 
consistency and accuracy of the government's financial data.
    In addition to the payment modernization efforts I just 
mentioned, Treasury has in the past worked closely with OMB to 
implement a Common Government-wide Accounting Classification 
structure.
    Treasury, OMB, the General Services Administration (GSA), 
and other agencies are moving, I would say with vigor, to bring 
more data standardization to financial management.
    In conclusion, I would like to thank Senator Warner for his 
statement on the progress that there is making to increase data 
transparency. I also appreciate his statement on rethinking the 
DATA Act as a result of the progress we have made, and I would 
welcome any questions that the Committee might have on the DATA 
Act.
    I want to thank you, Mr. Chairman and Members of the 
Committee, for holding this hearing, and I look forward to 
answering any questions you might have.
    Chairman Lieberman. Thank you, Mr. Gregg. Thanks for the 
work that all of you are doing in this area.
    We are going to have 7-minute rounds of questions. I am 
going to yield to Senator Coburn to go first because he has got 
a conflicting hearing before the Finance Committee.
    Senator Coburn. I have to go right now.
    Chairman Lieberman. See, I had the best of all worlds. I 
yielded to you and you yield back to me. Thanks, Senator 
Coburn. Come back soon. [Laughter.]
    Senator Coburn has been a real leader in this regard, and I 
hope he is able to come back to ask some questions.
    This is a hearing that is not just about the DATA Act, but 
that is the legislation that is before the Committee, so I 
appreciate what the witnesses have had to say about 
USASpending.gov and about Recovery.gov. But let me now ask each 
of you to give us some of your thoughts about the DATA Act, and 
let me just fill that out by saying, as you heard, Senator 
Warner said that he is responding to some of the feedback he 
has received already. The DATA Act in its initial iteration 
creates a new commission to serve as the central hub to collect 
spending data, set standards, and analyze spending information. 
I would ask you whether you think it is necessary to have that. 
It is pretty clear to me that Senator Warner is moving back 
from that.
    We have also heard complaints from award recipients about 
the cost of complying, and, finally, I would say the other 
concern generally, which I also think Senator Warner in 
responding to, is the cost in the House bill to the Federal 
Government to set up the new procedures.
    Those are all topics on which I would welcome your input, 
and, Mr. Dodaro, we will begin with you.
    Mr. Dodaro. First, I would say that when you look back on 
USASpending.gov and Recovery.gov, without legislation neither 
of those initiatives would have been started.
    Chairman Lieberman. That is an important point.
    Mr. Dodaro. In fact, I would underscore the point that 
legislative initiative in this regard has really led to the 
improvements that have been in place, along with the 
implementation, obviously, of the legislation. And one of the 
reasons, in my opinion, that Recovery.gov was more successful 
with data quality issues than USASpending.gov is Congress 
dedicated a group of people full-time to implementing that 
site. I think, off the top of my head--and I may be wrong--
about $80 million was to go into developing that site. And the 
President selected a great person in Earl Devaney to lead that, 
and there were people dedicated on the Board, and they had 
staff, and so it was properly resourced. And with that 
dedication, they were able to achieve, I think, a better 
outcome.
    So from a standpoint of why you need legislation and some 
dedicated resources, as I mentioned in my opening statement, 
there was a lot of dialogue with the State and local 
communities and the people who were reporting so that the 
reporting could ultimately be as efficient as possible. That 
needs to be embedded in the new legislation as well.
    Now, the legislation that have been discussed this morning, 
the House bill, and the bill introduced in the Senate, have a 
lot of very good attributes. It expanded the information, 
because right now the award data on USASpending.gov just tells 
you how much was awarded. It does not really tell you how much 
has been spent, and what result was achieved out of that 
program. You have more of that type of information available on 
Recovery.gov.
    So trying to have a broader range of information available 
of not only what was spent but what was received by the Federal 
Government and the benefit as a result of that and what the 
status of it is, is very important. The DATA Act sets up an 
advisory committee to have stakeholders and recipients, who are 
involved, discuss those issues. It emphasizes data standards, 
the importance of that and common data elements. And it 
emphasizes the use of technologies that need to be put in place 
in order to effectively display the information and make it 
searchable and usable, more user friendly by the public.
    Now, how you achieve that and whether you need a new entity 
and whether you can use existing entities I think is a policy 
question appropriately resolved by the Congress. But I think at 
the end of the day there needs to be clear, dedicated resources 
to this project with clear milestones, and clear expectations 
that people can be held accountable for. If that does not 
happen and there is not a legislative framework for that, my 
belief is that everyone will be disappointed with the level of 
progress that would occur without that.
    Chairman Lieberman. That is very helpful. Thanks.
    Mr. Werfel, what do you think of DATA?
    Mr. Werfel. Senator, I think I am going to respectfully 
disagree with a few of the points made by my colleague, 
although I think all of his perspectives are valuable and 
valid.
    Let me start with the governance structure of this new 
commission in the House bill. Actually, before that, let me 
state that as a general matter--and I do not think it should be 
a surprise to anyone--that we fundamentally agree with the 
objective of greater transparency and the relentless pursuit of 
such transparency. The disagreements I am about to outline are 
in the strategy of how we get there.
    The governance model in the DATA Act that passed, the House 
bill, has significant concerns and problems that we think would 
actually potentially diminish transparency overall to the 
government, and it has to do with the manner in which the 
commission is set up. It is set up as an independent 
commission. There is not, apparently, a way to disagree with 
that commission. There is no built-in mechanism, for example, 
for the Executive Branch to object or veto the standards in any 
way. In fact, it is very clear in the bill that Treasury and 
OMB must adopt whatever standards are issued by this commission 
and move forward with them. It is not clear how we give 
feedback into the mechanism.
    It is also not clear in the bill how the public gives 
feedback. For example, it is not clear whether the decrees of 
this commission are rules under the Administrative Procedures 
Act or not, and, therefore, it is not clear whether these 
standards have to go out for public comment or not, or any kind 
of public vetting. If it was a Federal Advisory Committee Act 
(FACA) committee, for example, the meetings would be open to 
the public. It is not a FACA committee, so how the public gets 
engaged in the deliberations and the proposals is not clearly 
outlined.
    In fact, there is language in the House bill that 
specifically exempts the commission from the Paperwork 
Reduction Act, which, as you know, establishes a period of time 
for notice and comment for information collection. So we see 
everything with this governance model going in the wrong 
direction in terms of public input, at least a lack of clarity 
that we think is needed.
    We believe a critical lesson learned of the Recovery Act 
was that, when needed, OMB and Treasury rose to the occasion, 
initiated the types of data definitions, the types of 
regulations, and the types of input that was needed to be 
successful. And what the DATA Act essentially does is it 
positions OMB and Treasury to not be directly involved in those 
key decisions and brings a whole new entity, which is going to 
have to be completely staffed up with new sets of individuals. 
They are going to have their own lawyers, their own human 
resources department, all their own infrastructure, and we 
think that is missing a key lesson learned of the Recovery Act, 
is when given the opportunity, OMB, Treasury, and the Federal 
agencies can certainly deliver.
    Let me make a point about the legislation itself, getting 
away from the governance structure, which obviously we think 
should be fixed and addressed in any bill going forward.
    A concern that we have about new legislation in this area 
generally is we are currently executing on a series of 
different statutes. We are still executing on the Transparency 
Act that was enacted in 2006, and we are making progress. I 
mean, the world looks very different today than it did in 2005 
before that bill was ever penned in terms of what is available. 
And that is a really important foundation of progress, and in 
no way has it, in my opinion been a failure. It has been a 
success in terms of if you look at the world in 2005 versus the 
world today.
    We are not finished. We are still executing on that bill, 
and it has taken longer than we would have liked, but we are 
still executing. In the interim, other legislation has been 
enacted that is related and impacts our work, including the 
GPRA Modernization Act, which is a very recently enacted bill, 
and the Improper Payments Elimination and Recovery Act (IPERA), 
which also relates to more transparency on payments, this time 
on where our payments are improper. And the question that we 
have to ask is: How will new legislation impact these efforts? 
Does it enhance and reinforce what I think we all can agree are 
important objectives? Or does it move us in new directions that 
would require us to have some costs in terms of the investments 
and the training that we have already made? Are our systems 
that we have been building up over time to address the 
Transparency Act now going to have to be re-engineered once 
again for a new nuanced set of requirements and standards? And 
if so, we need to have a real compelling case for why these 
additional data elements or additional changes are important 
because they could necessitate a diversion of resources from 
where we are currently executing against a set of statutes.
    So from our bottom-line perspective, we prefer an approach 
where we are targeting a particular problem that has occurred. 
So if we look at the landscape of what is going on in terms of 
the Federal Government's execution of USASpending.gov, 
Recovery.gov, and Performance.gov through the GPRA 
Modernization Act, and PaymentAccuracy.gov through IPERA--as we 
are doing all those things, can we identify specific problems 
that are occurring and figuring out what the specific 
legislative solution that is needed versus a DATA Act approach, 
which is really wiping the slate clean and saying we are 
starting over with a whole new set of standards and 
requirements that are global throughout government, which 
architecturally, if you draw it up, might make sense, but it is 
very expensive, and I worry that we will lose a lot of time in 
tackling the specific challenges we have right now while we 
rebuild this building from the foundation.
    Chairman Lieberman. I apologize, Mr. Gregg, because I am 
way over my time, so I am going to yield to Senator Johnson, 
and then we will come back with a second round.
    Senator Johnson.

              OPENING STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thank you, Mr. Chairman, and I want to 
thank the witnesses for your time and testimony.
    Senator Warner's testimony basically talked about the goal 
of his bill was to basically show the taxpayer the money. And I 
want to come at this from a slightly different perspective, 
from an agency head, a manager, the kind of position I am in 
here is now as a new Senator.
    How do you manage this $3.8 trillion a year beast? And so 
we are talking about information, and we are talking about how 
to utilize the information to manage things.
    As a new agency head, what would be the No. 1 complaint a 
new agency head would come into the agency with in terms of 
trying to get information to effectively manage their agency? I 
would like to start with Mr. Dodaro.
    Mr. Dodaro. I think, first of all, it is getting timely, 
accurate information. Years ago, before the passage of the 
Chief Financial Officers Act, there was not a reliable set of 
financial statements that somebody could look at. If you were a 
new head of an agency, you would want to know what the 
resources were----
    Senator Johnson. How long ago was that?
    Mr. Dodaro. That act effectively required in 1996--for the 
first time, after 200 years of operating our government--that 
there be financial statements prepared and independent audits 
made across the 24 largest departments and agencies, and then 
the governmentwide consolidated financial statements were 
required beginning in fiscal year 1997.
    Now, most of the individual agencies now have audited 
financial statements that receive unqualified opinions except 
for the Department of Defense and Homeland Security, and we 
have not yet been able to give an opinion on the government's 
consolidated statements.
    Senator Johnson. So up until 1996, agency heads did not 
have accurate or timely financial information, by and large?
    Mr. Dodaro. Not that was independently validated by anyone, 
and there is still difficulty getting timely information.
    Now, things are a lot better than they were before this 
started, so I do not want to imply that there has not been 
great progress made during that period of time. But that is 
still a challenge, particularly in some departments and 
agencies that are large departments and agencies like the 
Department of Defense and the Department of Homeland Security 
that have not passed that test yet.
    Senator Johnson. Would both of you agree with that, or do 
you have a different perspective on that?
    Mr. Werfel. I agree. I had the benefit of meeting and 
having first impressions from all the new Chief Financial 
Officers (CFOs) that came into government at the beginning of 
this Administration, and one of the reflections we learned in 
the first 100 days from those CFOs was a sense of how much data 
is available within their agency, just enormous quantities of 
data.
    Senator Johnson. But no information.
    Mr. Werfel. There is no way to basically pull that 
information in a cost-effective way into presentations and 
business intelligence that can allow them to make the decision. 
As Mr. Dodaro was describing, we have built a very robust 
framework for audited financial statements that is pulling a 
lot of this data into balance sheets and income statements. 
And, unfortunately, the way it is working out is those 
statements, while they are important in a corporate 
environment, are not necessarily driving to clear decisions. We 
do not have Deputy Secretaries reading balance sheets and 
saying, ``Aha, this is how I am going to make a smarter 
decision.''
    So the issue is how do we pull that information into more 
user-friendly financial reports and program reports. To me that 
is the No. 1 challenge. And there have been pockets of success 
across government, but it is not systemic across government, 
and that is what we really need to do.
    Senator Johnson. Mr. Gregg, what is your perspective?
    Mr. Gregg. I agree with my colleagues. The only thing I 
would add is that maybe not at the Secretary level but at the 
Deputy Secretary level, not having any real full cost 
accounting for programs. By and large, many programs do not 
know what the real cost, the full cost of the program is. We 
have lived so long in a budget world that being able to make 
judgments on whether to spend more money in one area or another 
and what the return on it is, is not something the Federal 
Government, I think, generally does very well.
    Senator Johnson. Coming from a business background, with 
the age of mini computers and micro--I mean, this is actually 
pretty easy stuff from a business standpoint. How many 
different accounting systems do we have in the Federal 
Government? Just a clue, off the top of your head, is it----
    Mr. Gregg. There are hundreds.
    Mr. Werfel. There are a lot, particularly at the Defense 
Department, hundreds of systems just within the Defense 
Department. This is part of our challenge, and over the last 
decade, we have worked to consolidate those financial systems 
into centers of excellence or shared service providers. But a 
lot more work is needed.
    Senator Johnson. You can have different modular systems at 
the lower level, and then as we bring the information up to 
summary level, do we have common templates? Do we have common 
systems from that standpoint? I would tell you, as a new 
Senator, it drives me nuts. I am an accountant. It drives me 
nuts that I cannot get information.
    Mr. Gregg. It depends. Mr. Werfel mentioned centers of 
excellence. There is an Administrative Resource Center that 
Public Debt, one of the Treasury offices, has that services for 
accounting and some other functions for 60 or 70 government 
agencies, and they have followed the credo of everyone has to 
come in and use the same format. They are not going to 
specially design a basic accounting system for agency X or Y. 
And so they have been able to keep their costs down. They are 
very effective at what they do. I think to me that is the model 
that we need to expand across government on how we do 
accounting and other basic services.
    Senator Johnson. Mr. Dodaro.
    Mr. Dodaro. Senator, we have a twin problem here that is 
very much impeding the ability to make effective decisions. On 
the one hand, you have this problem that Mr. Gregg and Mr. 
Werfel are outlining in terms of the accuracy and timely 
information on costs. Additionally, in the work we have been 
doing on overlap and duplication among Federal programs, what 
struck me is how few programs have effectiveness studies done. 
So you not only do not know the cost, but you also do not know 
the effectiveness of many of these programs' activities. And 
lacking those fundamental building blocks, it is difficult to 
make decisions, and to make things more effective. So both of 
those areas are in need of attention.
    Senator Johnson. Well, I was going to go exactly to that 
point in terms of basic metrics. When we start talking about 
duplicated programs, how do you evaluate those things so that 
you can actually manage? And then the next step would be: How 
do you, as Senator Warner was talking about--everything is 
additive in this town. Let us pass a new bill. What about 
subtracting? What is the process? Do we need legislation, do we 
need a specific process to start eliminating things that are 
obsolete, that are not effective?
    Mr. Dodaro. We have pointed out many areas that try to 
point the Congress in the direction of where there is a lot of 
overlap and fragmentation, which are real indicative indicators 
of duplication, and some areas where we found duplication. So 
we have provided a pretty effective road map to dig in, and 
then I think the burden should be on the agencies to 
demonstrate the value of those programs and why those programs 
are unique based upon looking at other programs and why they 
could not be consolidated. At a minimum, you could save a lot 
of administrative savings and in many cases use the program 
dollars more effectively.
    Senator Johnson. Thank you.
    Mr. Gregg. Senator, if I might just add one quick comment, 
I think my own view is that there are many opportunities to 
consolidate. In the office that I run, we are in the process of 
consolidating two bureaus--the Bureau of Public Debt and the 
Financial Management Service. And both of those are well-
performing organizations, but when we looked at it, we said 
there is a lot of overlap in accounting, there is overlap in 
administrative areas, and there is overlap in information 
technology (IT). And we are going to have, I think, tremendous 
benefits from the speed with which we can deliver services and 
cost reductions. So I think the opportunities are there.
    Senator Johnson. Thank you.
    Chairman Lieberman. Thanks.
    Senator Coburn, welcome back. It is all yours.
    Senator Coburn. Thank you, sir.
    First of all, let me congratulate the Treasury Department 
and Secretary Tim Geithner for what you all have done. It is 
phenomenal. I think you are making progress, probably better 
than anywhere else that we are in the Federal Government.
    To go back to some of what Senator Johnson was talking 
about, the GAO has given us tons of information on duplication, 
and they have written glaring reports that there is no 
measurement of what you are accomplishing. One of their first 
reports to come out 2 years ago showed we had 47 job training 
programs; all but three of them overlap. But we discovered 3 
weeks ago that there is another 45 job training programs for 
disabled. We spend $27 billion a year, and we have no metric on 
any program whatsoever.
    Now, I want to contrast that with you to the Division of 
Library Sciences and Museums, the most well run agency in the 
Federal Government. There is not a grant that they issue that 
does not have a metric on it. There is not a time they issue a 
grant that they do not go and check and audit the grant while 
it is in process. And if they are violating the deal of the 
grant, they withdraw the grant.
    Now, that is not hard. If every agency would follow what 
they are doing, we would save hundreds of billions of dollars.
    So the frustration is what we hear in Washington is why we 
cannot change this, and those reasons have us bankrupt. I mean, 
we are literally bankrupt. If you think about the generally 
accepted accounting principles in this country, if you were to 
use them, we have somewhere between $113 and $131 trillion 
worth of unfunded liabilities, plus $16 trillion worth of debt.
    Time is of the essence for us. And it does not matter which 
Administration. Whether it is Republican or Democrat, it does 
not matter who controls Congress. We have fallen down on the 
job of demanding accountability and transparency. And, Mr. 
Werfel, you have been a hero of mine in OMB all the time I have 
been here. You slave every day to try to fix these problems. 
But you need some help from Congress, and we have not given it 
to you.
    I once had a reporter tell me--I look at the press table 
over there, and it is essentially almost empty. I had a 
reporter tell me nobody in the country cares about waste, 
fraud, and abuse. I want to tell you, how many people do you 
think in America care about waste, fraud, and abuse right now? 
Tons. Of the 8.2 percent that are unemployed and the 15 percent 
that are unemployed and underemployed, they care about the 
waste, fraud, and abuse. And there is anywhere from $250 to 
$350 billion worth of stuff that is just junk. A good portion 
of it is in the Pentagon. We have all the Republicans saying 
you cannot cut the Pentagon, but everywhere you go and you ask 
somebody that works in the Pentagon, can you cut money, they 
say yes.
    So it does not compute, and nobody is any more frustrated 
than Senator Johnson, but I am a pretty close second.
    Mr. Werfel, I was really excited to hear what you said. 
Have you mandated that each agency will give you a list of the 
government programs? Because I could not get the Senate to vote 
for that. The Senate turned down a proposal to require an 
agency actually to know the programs that they have. They voted 
it down. Now, have you mandated that?
    Mr. Werfel. Yes, we are on track. We are going to be able 
to deliver that.
    Senator Coburn. When are we going to see that?
    Mr. Werfel. Well, probably some time in the fall. We work 
with the Department of Commerce and the Department of 
Education--the Department of Education, an agency that could do 
it; the Department of Commerce, an agency that could not--and 
try to figure out where the gaps are. And in the coming weeks, 
we are going to be issuing guidance based on that learning to 
the agencies to make sure that we hit this time frame where we 
can deliver this comprehensive program inventory.
    It is not only important to signal that we know where our 
money is going. One of the major lessons learned of where we 
are in transparency is that we do have a lack of 
standardization. We cannot give you a program list today, but, 
for example, we could give you a list of every dollar that goes 
out the government by Treasury account symbol, which is how our 
accounting is set up. The reason why we have 23 agencies with 
an audit opinion today is because we developed systems. So we 
can take these accounts and give them to you.
    The question is: Can we translate that into the program 
list? And that is the difference between starting over again 
and redoing all those Treasury accounts, which we think would 
be expensive, versus leveraging technology that exists today 
that is better than it has ever been and taking these different 
types of data lines, translating them, and structuring a 
framework around them. And that is where the ``can'' is. The 
``can'' is not going back and replowing the earth and changing 
every account that we have, because that is expensive. The 
``can'' is leveraging technology to pull together unstructured 
data in ways that we could not do 10 years ago, and that is the 
direction we are taking.
    Senator Coburn. I sure hope you plan on staying at OMB.
    The other thing that we have that Mr. Dodaro has put 
forward for us is the fact of duplications. I guess the third 
report will be coming this next February--finally, I think, 
whether the rest of the government does or not, the GAO will 
have a handle on where we are.
    I want to tell you a story. I am not going to tell you 
which committees, but in the past year, we have had bills 
offered in committees that are identical to laws that we are 
already doing. And I very quietly went to the Senator and said, 
``Has your staff checked out this?'' And, of course, they were 
spared embarrasment, they did not offer the bills, but the fact 
is the Senate also voted down a requirement for CRS to tell us 
if we are already doing something about which we are getting 
ready to vote on.
    So the problem is competency in Congress. It is competency 
in Congress. And we do not have one problem in front of us we 
cannot solve. You would not still be there if you did not think 
we could solve these problems. The question is: Where is the 
leadership to get it done? And I am talking Republican and 
Democrat alike. And we need to give you the tools, and we need 
to empower you to make the changes.
    The problem in the Pentagon right now is they are going to 
a lot of off-the-shelf programs, but then they are spending 
cost-plus contracts trying to make those off-the-shelf programs 
fit into old systems. And they are never going to make their 
2017 accounting deadline if they continue to do it the way they 
are doing it. So there is just no leadership in terms of 
accomplishing the things.
    Do you think that if you were to compare USASpending.gov 
and Recovery.gov, there is no question Recovery.gov is a better 
system, correct?
    Mr. Dodaro. I think in terms of what we have seen both from 
accuracy and searchability, I would say yes. But that does not 
mean that USASpending.gov should not be built upon as well.
    Senator Coburn. No.
    Mr. Dodaro. OK.
    Senator Coburn. The point I am wanting to make is you had 
real leadership to get the Recovery.gov up. Somebody took 
ownership of that, and somebody implemented it. Like you said, 
you were meeting once a week.
    Mr. Dodaro. Right.
    Senator Coburn. In other words, action was applied to the 
real problem, not the symptoms of the problem, and we actually 
got something done. And that is what the American people need 
to know.
    Mr. Dodaro. I agree with you, Senator. In fact, when you 
had to step away, I made that very point to Senator Lieberman, 
that that was one of the reasons why Recovery.gov was 
effective, is we set a leadership structure, we dedicated some 
resources to it, and we selected good people to go in there and 
implement it, and they did a good job.
    Senator Coburn. So here are some positive things that are 
happening in the government today you all are telling us 
about--Treasury, what Mr. Werfel is doing, and what you are 
doing at GAO--and we have no press covering this. So no wonder 
we look like buffoons to the American public. It is because we 
pick and choose what is important to the American public when, 
in fact, this is the core that is going to change the outcome 
for our kids and our grandkids, getting a handle on all of 
this.
    Enough with my statements, Mr. Chairman. I yield back.
    Chairman Lieberman. Thank you, Senator Coburn. I agree with 
your statements, and I hope we can continue to try to realize 
them in some ways.
    Senator Portman, welcome. You bring a lot of personal 
experience in these areas to this hearing, and I thank you for 
being here.

              OPENING STATEMENT OF SENATOR PORTMAN

    Senator Portman. Thank you, Chairman Lieberman, and thanks 
for holding this hearing. And as my colleague just said, this 
may not be the most exciting topic, financial transparency, 
judging from some of the media coverage. But what could be more 
important, and particularly at a time when we have a $16 
trillion debt and, as Senator Coburn said, really tens of 
trillions of dollars in unfunded obligations beyond that?
    I wanted to come here in part to thank Senator Coburn and 
to thank Mr. Werfel, because when I was at OMB, Senator Coburn 
worked on some legislation that I was able to support and then 
help implement, and Mr. Werfel was the one I turned to to help 
put it in place, so Mr. Werfel, thank you for the hard work you 
did when I was working with you and what you continue to do. 
You were Deputy Controller at the time. And as you recall, we 
launched this effort which we called FederalSpending.gov, in 
January 2007, on a real shoestring budget. We did not have any 
money basically to do it. As I recall, we had to go into some 
existing accounts to try to put something together. We had an 
interagency group that helped us. We actually used an outside 
watchdog's platform for the Web site because we did not have 
the resources to do it internally. And that was the original 
database, and then after that the Web site platform became more 
sophisticated with USASpending.gov.
    But it is a critical accountability tool. I strongly 
support it. I have some concerns about some of the data, and 
that is what I want to focus on today, is how can we be sure 
that this data really is coming from the agencies in a way that 
is useful, that is accurate.
    GAO did a study in 2010, as you know, that said that out of 
a sample of 100 awards from the site--and, remember, this is 
putting all grants and contracts online for folks that do not 
follow this closely. But out of 100 awards they looked at, each 
one had at least one data error in the required field. And I 
know since then OMB has taken some steps to improve the data 
quality, though my understanding is there are still some 
serious concerns about standardization of data and just quality 
of the data.
    The memo that OMB put out in April 2010 requires 
incremental improvement from each agency, culminating in 100 
percent of awards being reported on time, completely and 
accurately by the fourth quarter of fiscal year 2011. So I 
would ask you, Mr. Werfel, have all the major agencies 
submitted a plan to improve the quality of their data? And can 
you comment on their progress in adhering to the data quality 
framework you laid out and, more broadly, the approach OMB is 
currently taking to track and evaluating that data, in other 
words, the auditing and the follow-through on the performance 
of each agency?
    Mr. Werfel. Absolutely, Senator Portman. Thank you. And let 
me just say it is an honor and a first for me to be able to 
testify before a former boss of mine, and I continue to be 
blessed by my experience in my career in the Federal Government 
and serving the Federal Government.
    We do have the data quality plans from the agencies, and 
they reveal a tremendous amount of difference that each agency 
has used to approach the problem. As an example, I think the 
Education Department is doing it right. They are looking to 
integrate the spend file that they are sending out to 
USASpending.gov back to their core accounting system, which is 
the audited and trusted source of their financial information. 
That is not an easy thing to do, as we have been discussing, 
because the information that is in our core accounting system 
is aligned by certain account structures that just does not 
translate to a program recipient, how much money went out for 
this award on December 1, 2010. We have trouble translating 
those two databases. But the Department of Education has 
figured it out, and we are going to try to figure it out across 
government.
    There are a couple of things we need to do--and they are in 
various stages of development--leading to increased reliability 
of the information. The first is we have to get a better handle 
on what our control totals are. So if you go to USASpending.gov 
right now and it tells you that the Department of Energy issued 
$1 million worth of awards in the month of April, how do we 
know that is a full and complete list? We have to be able to 
take and tie it back to the audited, trusted source that is our 
core accounting system.
    How do we do that? Well, there are some details in terms of 
linking data, but for us, the most important thing we can do is 
bring the power of the audit framework to bear in terms of that 
accountability. When you were Director, we were making progress 
and we have continued that progress in getting the number of 
agencies that have clean audit opinions for their traditional 
financial statements.
    Why has that been so successful? It is because you have the 
pressure of the independent audit looking over your shoulder 
and saying, ``Did you pass the test or not?'' We do not have 
that for the USASpending.gov file. There is no auditor, there 
is no moment of truth where the auditor says you pass, you 
fail.
    So how do we bring those two things together? OMB has 
developed something called the ``Statement of Spend.'' It is a 
new financial statement. It does not exist. We have five basic 
financial statements in the Federal Government. We think we 
need six. The Statement of Spend would need to be audited, the 
auditor would only pass it if the underlying information is 
trustworthy and reliable. And so what we are trying to do and 
what we think is one of the most important things we can do is 
integrate this very powerful and robust audited financial 
statement with the independent mechanism with the spend file 
delivery that is going to USASpending.gov which does not have 
that audit framework. I really think that could be a game 
changer, and that is why we have been piloting the Statement of 
Spend for the past few years. This year, for the first time, 
every agency will do a Statement of Spend, and so we are moving 
down a path where I think we are going to get more audit 
accountability and, therefore, more reliability.
    Senator Portman. Mr. Werfel, GAO seems to be saying that 
you all have backed off a little bit after 2010 on your 
analysis of the thoroughness of the data, accuracy of data, the 
auditing function. Is that because you are going down this 
Statement of Spend track instead? Has OMB backed off? Are they 
inaccurate about that? And then the final question I have--and 
I see my time is expiring--is about resources. As you know from 
working with me, I am one of those skinflints, and I am the 
last guy to talk about spending more Federal money. On the 
other hand, we have probably spent, since 2006, on this whole 
project $14 or $15 million. Compare that to what has been spent 
on the stimulus alone, the auditing there, I think it is about 
$84 million, if I am not mistaken. To me, this is a critical 
area because we are going to save a lot of money if we do this 
right.
    So those are my two questions. One, have you backed off on 
some of this auditing and evaluation of the thoroughness of the 
data? And have you done it because you are going down another 
track to set up essentially a new measurement, a new metric 
that you think will be more effective in holding people's feet 
to the fire? And are the Inspectors General involved in that as 
well? Because that is something that we always tried, to get 
the IGs more involved to provide some of that action forcing 
and accountability within the agencies. And then, finally if 
you could just comment on the resource front. Are we doing this 
on a shoestring because it does not fit well into any other 
area? And, in effect, are we, therefore, not taking advantage 
of some of the cost savings we could get if we did it in a more 
expedited and comprehensive way?
    Mr. Werfel. Senator I will start with your first question 
about whether we are backing off. We are certainly not backing 
off. I mentioned earlier that we see a lot of heterogeneity in 
what agencies are doing. Accordingly, we had to make a 
strategic judgment call in terms layering on top of that 
heterogeneity a data metrics framework that we anticipated 
would not provide good information to rely on, and we did not 
want to do it just to do it. We wanted to make sure that we 
were doing it right. So we took it in different segments. In 
particular, in the contracting realm, we saw a much bigger 
opportunity to apply a more robust set of metrics and 
requirements than we did in all other awards, and that is a 
credit to the Federal Acquisition Regulatory Council, the Chief 
Acquisition Council, and all the work that has been happening 
within acquisition to drive standardizations.
    So we are in a place right now where we have a robust set 
of tools in place to evaluate the reliability of the contract 
information on USASpending.gov. We actually recently just 
shared a report with GAO staff on some of the metrics, and 
GAO's staff reaction was, ``Why is this not public?'' And it is 
a really good point. So we committed to putting it online in 
the very near future.
    Senator Portman. That has been part of their concern.
    Mr. Werfel. Yes.
    Senator Portman. There has not been public data on the 
follow-through.
    Mr. Werfel. Yes, and it was a very good point. And so we 
are going to move that into the public sphere. But they also 
raise a good point that we do not have similar metrics in 
grants and other types of awards that show up on 
USASpending.gov. But for us, it is kind of like building 
towards success rather than doing everything at once.
    For example, Recovery.gov and the whole recovery framework 
had many successful elements to it that now we want to build 
into USASpending.gov. We have to try to figure out which are 
some of the first segments of that success to build in.
    On your question on resources, it is absolutely true, as I 
think one of the reasons I have survived at OMB so long is 
because I am one of the most frugal people I know, and I fit in 
there like a glove. I am proud, that for a long time in my 
office the lamp still said, ``Bureau of the Budget'' on it. 
That is how old it was--and I did not need a new lamp. And that 
frugality makes it hard for me to ever say that we need more 
money. But in this situation, in particular USASpending.gov is 
financed through the E-Government fund. I think we asked for 
$32 million for the E-Government fund. I think we received in 
the range of $2 to $4 million, which really hampers the ability 
to make enhancements to USASpending.gov to make it more user 
friendly, to use some of the geospatialing that would enable 
citizens to understand where the money is going in their 
neighborhoods more effectively, but also to put in the quality 
control mechanisms that Recovery.gov has to make sure that we 
are not making errors. For example, you cannot submit 
information if it bounces up against a mistake and we are not 
going to let you submit that information. We have not been able 
to initiate that in USASpending.gov in large measure because of 
budget issues. If it is a smaller amount of money that is 
necessary than the $32 million, let us sit down and roll up our 
sleeves and figure out what the right amount of money is. But 
we certainly need a resource boost in this area to make some 
progress.
    Senator Portman. Thank you. And, Mr. Chairman, sorry to 
take so much time. Again, just to say at the outset, I 
mentioned Senator Coburn. Sometimes things do get done around 
here, and when I was at OMB, Senator Coburn and I had some very 
honest conversations, and it ended up, thanks to his efforts 
and efforts of others, in putting together this database that 
our taxpayers can look at now and see where grants and 
contracts are going. So congratulations to Senator Coburn on 
that.
    Chairman Lieberman. Thanks, Senator Portman. I agree that 
one does not always have pleasant conversations with Senator 
Coburn, though almost all of mine have been. But they are 
always honest. That was the adjective you used.
    Senator Portman. Spirited.
    Chairman Lieberman. Spirited and honest. Senator Carper, 
welcome back.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks very much. I apologize for being in 
and out. We have a simultaneous markup in the Finance 
Committee, so I am trying to bounce back and forth between each 
of them.
    Speaking of honest, I am going to ask Mr. Werfel to be 
honest with me. Whenever Mr. Dodaro comes here to testify as 
our Comptroller General, I always like to note whether or not 
he is using notes when he speaks. And all the times I have ever 
heard him testify, I have never seen him use any notes. And I 
just want to know, while I was out of this hearing, did he use 
any notes?
    Mr. Werfel. He never uses notes. I am afraid I use notes.
    Senator Carper. How do you think he does it?
    Mr. Werfel. He is smarter than me. [Laughter.]
    Senator Carper. The only other person I have ever seen 
testify before a congressional committee for any length of time 
and never use any notes--this was a guy who testified I think 
for 3 days, and his name is John Roberts. He never used any 
notes either. Mr. Dodaro, I do not know if you are aiming to 
get on the Supreme Court or not. But I am impressed. 
[Laughter.]
    Let me ask a serious question, if I could, of the three of 
you. There has been some discussion about the 2006 law which 
Senator Coburn and former Senator Obama did great work on. I 
was happy to, as we say in NASCAR, ``draft'' on them. We worked 
with a number of people in this room on the Committee and also 
with Senator Warner on the GPRA Modernization Act, and there 
are efforts underway on Do Not Pay List. Senator Coburn and I 
have done a lot of work--and others as well--on improper 
payments, several versions of that legislation. Now we have the 
DATA Act proposed by Congressman Darrell Issa and Senator 
Warner among others.
    We have all these different pieces that are out there, how 
do we make them work cohesively and coherently? I am always 
reminded that one of the things we are trying to do in health 
care reform is to move from fee-for-service to a coordinated 
delivery of health care. We are actually coordinating the 
delivery of health care. We are not all a bunch of stovepipes 
where we just spend money on people when they get sick rather 
than spending money on people to try to make sure they stay 
healthy, and prevention and wellness in the first place. I want 
to make sure that we have a coherent, cohesive approach here 
using all these different tools.
    Let me just ask, and we will start with Mr. Dodaro: How do 
we make sure we get some synergy out of this and that we do not 
end up with just the opposite effect?
    Mr. Dodaro. I think there are a couple keys to that, and I 
mentioned this briefly in my opening comments. But one is there 
needs to be consensus on what needs to be reported. It is just 
like any system development effort. You need to know what your 
requirements are, what exactly people want to be reported, and 
to try to get consensus on that information. Right now 
USASpending.gov gives you award data but does not tell you what 
happened to the money after that. Recovery.gov follows the 
money a little bit more to conclusion. If people want the full 
picture in order to be able to see what was allocated and 
appropriated by the Congress, what was spent, what was received 
for that money, did we get value out of it, and how did the 
American people benefit? That can be done through consolidation 
of the systems.
    What do we want to display to the public and have 
transparency? We cannot just take all the data that is 
collected by the Federal Government and have a data dump to the 
American public. It will not be comprehensive, and it will not 
be helpful to them in that regard.
    So getting consensus on that is key--and the DATA Act goes 
somewhat toward that. But I think that concensus is what needs 
to be clarified in further discussions, and the need to 
consolidate and build on existing systems. And I think that is 
pivotal.
    So those two things are, in my opinion, really central to 
being able to answer your question.
    Senator Carper. Let me ask you, Mr. Werfel, for your 
reaction to that, but add to that your own ideas, please? 
Thanks.
    Mr. Werfel. It is a very difficult question, and there are 
a lot of tradeoffs involved. One concern is that if you are not 
thinking about synthesizing these things, you could create a 
longer timeline for when we are going to cross the finish line 
and be successful. So we have been working at USASpending.gov 
and FFATA for quite some time. We are just ramping up on the 
GPRA Modernization Act. We have been working at improper 
payments transparency for quite some time. And to me the 
synthesization comes from understanding where are the highest-
priority failures that are going on and how do we close those 
gaps. And some have reacted to these failures and said the 
whole underlying structure is broken. It was not designed to 
give us the transparency that the American people deserve. And 
they are not wrong about that. The issue is that if you try to 
clean all of that up, it is expensive and it takes a long time. 
But it might be the right way to do it if you were hiring an 
architect and saying design me the perfect system.
    My approach, I tend to take a more practical approach and 
say I am going to live with the deficiencies that are in that 
foundation and that infrastructure and just try to find some 
practical solutions in the short term.
    So just to give you one example, I sat in this chair about 
a year ago, I think it was Earl Devaney's last testimony, and 
he was asked the question: What is the number one thing that 
frustrated you most or the one thing that you would change from 
your experience? And he surprised everyone because he went to 
something very detailed. He said that we need a uniform award 
identification.
    Senator Carper. What did he say, we need a uniform?
    Mr. Werfel. A uniform award identification across 
government, and the reason why he picked that above all else is 
because he was continuously frustrated during the recovery that 
information was coming in from recipients and subrecipients 
into FederalReporting.gov, and we as a Federal Government could 
not effectively link that information straight across back to 
the accounting system. And one of the reasons was because we 
could not build those family trees of here is your award, here 
is your sub-award, it goes to there; that award goes to this 
payment; and this payment goes to this account. And his 
reflection--and he was mostly right about that--was that it was 
the fact that the information is not tagged effectively down to 
that last recipient to give you that audit trail.
    So he said, ``The one thing I would do is build that 
tagging system of a uniform award identification.'' I think 
that is the type of solution that can help you synchronize all 
these various efforts because we have the legislation out 
there, we are executing it, we are making progress--clearly in 
not all cases the progress we need to be making. I think a 
pragmatic way of looking at it or a practical way of looking at 
it is as we see these deficiencies emerge, what is the change 
that we can make in the short term that is going to have the 
highest return on investment? To me that is the approach that 
we are trying to take at OMB and really leveraging the Treasury 
Department, which is fantastic at execution, at helping us 
close some of these gaps.
    Senator Carper. All right. Thanks very much. Mr. Gregg, 
would you have something you would like to add on this?
    Mr. Gregg. I said in my opening statement that Treasury has 
traditionally just focused on making sure our payments are 
right and on time, and about 2 years ago, we recognized that we 
needed to do more in providing payment information. And so the 
repository that I talked about is going to have information for 
all the payments--85 percent that Treasury makes and all the 
payments that non-Treasury disbursing offices make, and then 
being able to get data into that data warehouse that links a 
contract or a grant, and then be able to verify with the 
USASpending.gov and other data sources. I think that is 
something that we have well underway. I think the information 
repository will be up and operational--well, actually it is 
now, as soon as we start getting data sources in from the 
agencies. So I think that is something that we had not done 
before, and we recognized we needed to do more in this area.
    The second thing I would say is that I do not think we need 
the DATA Act to do this. I think what Senator Coburn said, what 
we need is leadership, and I think the partnership that we have 
had with OMB and Treasury the last couple of years since Mr. 
Werfel and I have been working together has been a great 
partnership, and we need to move on these things. We need to 
show leadership, and we need to hold agencies accountable for 
compliance. And I think it is as hard and as simple as that.
    Senator Carper. Do you think of Mr. Werfel as an ``old-
timer''? He was talking earlier----
    Mr. Gregg. Yes. Very old.
    Senator Carper. Just checking. [Laughter.]
    I will just say in closing, colleagues, in terms of 
actually making some progress, Senator Coburn and I and a 
number of folks on this Committee have worked with the folks in 
the Executive Branch, OMB, and GAO on improper payments, and we 
thank GAO for bringing this to our attention. In the Navy, one 
of the things that is really hard to do, you always talk about 
changing the course of an aircraft carrier. If you stick with 
it, you can change the course. And in naval aviation, we would 
say if you are doing something really hard, you are trying to 
change an aircraft engine in flight. That was a hard thing to 
do. And one of the things we have been trying to do here is to 
begin reining in improper payments. And as GAO each year tracks 
them up, up, up, higher and higher and higher, I think we 
peaked about a year ago at about $119 billion. And my 
understanding is that we are down most recently I think by 
about $4 billion, and I think we are heading in the right 
direction. We have just got to keep turning that aircraft 
carrier, so thank you.
    Chairman Lieberman. Thanks very much, Senator Carper.
    We will each ask a question or two more as the Members want 
and your time allows.
    Mr. Gregg, I said I would come back to you on your reaction 
to the DATA Act. But based on what you just said and what Mr. 
Werfel said earlier, has the Administration taken a position 
against the DATA Act yet? Mr. Werfel.
    Mr. Werfel. I think OMB should probably speak to that. I 
will take Mr. Gregg off the hot seat on that one. We have not 
issued a formal statement of an Administration position, but I 
have articulated these concerns in hearings before Chairman 
Issa and in other venues that we do have very significant 
concerns with the structure of the DATA Act, in particular the 
governance elements that I described earlier. So in its current 
form, the strongest statement I can say is very serious 
concerns, but we have not yet formulated a formal statement.
    Chairman Lieberman. So you are not against any follow-on 
legislation here, but you are raising some serious concerns 
about the DATA Act as it was introduced in the House and the 
Senate?
    Mr. Werfel. I think the way I would word it is--I think Mr. 
Gregg just said it well. He said in terms of executing, we do 
not need legislation, and I think that is the attitude that we 
have and the approach we have right now, is that we have a 
foundation in a lot of different legislation, all of it 
bipartisan, some of it very recent, for example, the GPRA 
Modernization Act. And as the Chief Operating Officers of this 
large Federal Government, we are very busy executing on these 
various statutes. And the notion that another statute would 
come into play and change the nature of our work and the 
priorities of our work we have concerns with, but it would 
depend on the details, and we would want to roll up our 
sleeves.
    And I think Senator Carper's point was a good one, which is 
we have all this legislation, how do we synthesize it. To me, 
the devil would be in the details of what the legislation is 
and if it is going to advance our work or divert our work. And 
if it is going to advance, I think we would be supportive. If 
it is going to divert, I think we are going to raise concerns 
because we think the current legislative framework that we 
have, if we achieve it, it is going to be very transformational 
and very beneficial to taxpayers.
    Chairman Lieberman. Fair enough.
    So, Mr. Gregg, let me give you an opportunity to add 
anything you want to the DATA Act but also respond--and I will 
ask Mr. Werfel and Mr. Dodaro if they want to respond also--you 
will not be surprised to hear that, apart from the questions 
that you have raised on behalf of OMB about the DATA Act, the 
most significant opposition the Committee has heard is from 
State and local governments. And it is not just to the DATA 
Act, but to some extent, it is to the cost of having complied 
with FFATA and the Recovery.gov. And I wonder if you would 
respond to that. I must say some of it is just this is really 
costing us a lot of money, and some of it is that it is costing 
us more than it should because different agencies are asking us 
for different kinds of information; sometimes in the same 
Federal department, different components are asking us to fill 
out entirely different kinds of forms.
    So do you want to begin to respond to that?
    Mr. Gregg. Yes. There is no reason why we should require 
recipients to report back to the Federal Government of what has 
been sent out. It does not make any sense. If we have the right 
kind of controls and linkages across the Federal Government, we 
absolutely should know what is out there, when it got there, 
and how much it was. So there is no reason for it, in my view. 
It suggests that, we know within Treasury what the payments 
were because we make them, and we know how much they are. But 
being able to link that back to a contractor grant is the area 
that we need to do, and we should not be asking recipients to 
do our work for us, in my opinion.
    Not only do I think the DATA Act is unnecessary, I think it 
would set us back a long ways. The work that we are doing with 
OMB on moving ahead on data standardization and transparency 
is--we are a long ways down the road in Treasury, and we have 
the Payment Application Modernization done, which is a huge 
step forward, because agencies have to report to us in a 
specific format now, and they had not done that before. And 
unless you have standards, it is hard to track information from 
one system to another. And the repository is actually open for 
business as soon as agencies can start reporting.
    The issue on the cost is not only the $400 million that was 
identified in the DATA Act that it would cost over 8 years, but 
the additional cost that was not identified on agencies 
changing systems to comply with the DATA Act. And in the 
meantime, if they were doing that, they would not be providing 
Treasury the data that we need to enrich the payment 
repository, which is built. So I think in my view, again, what 
is needed here is not more legislation. What is needed in 
leadership from OMB and Treasury and agencies and the 
continuing holding of hearings by this Committee to hold us 
accountable.
    Chairman Lieberman. Thanks. That was a very clear 
statement.
    Mr. Dodaro, do you have a comment on the cost to 
recipients?
    Mr. Dodaro. Yes. First of all, if you want to have timely 
information--and that was critical in the Recovery Act. That 
was real-time information quarter by quarter from the time 
funds went out. The only way to do that is to involve the 
recipients. You cannot wait until they report back to the 
agencies and then have the agencies accumulate the information 
and report it out at the end. It just will not be timely. So if 
Congress is interested in timely information, recipients have 
to be involved.
    Now, how you involve them I think needs to be worked 
through appropriately so that you can reduce the burden. You 
can pre-populate the information that the Federal Government 
already has, so, as Mr. Gregg is saying, they do not have to 
report that information again. You only get the information 
from them that they are the only ones that have it in a timely 
manner, and it could be linked back appropriately to the 
systems. That is why the DATA Act has an advisory committee. I 
think there needs to be more regular ongoing dialogue between 
the Federal, State, and local communities. The Recovery Act 
prompted that because of the urgency and the amount of money 
and issues, but there are no regular forums underway for having 
this dialogue and working through solutions to the problems. 
And so I would encourage that.
    The reason I think legislation would be enormously helpful 
in this area is that you have to have a statement from the 
users of the data of what they want. It is like having the 
system built by the IT professionals without knowing what the 
users want at the end and there are clear statements about 
that. By passing legislation, Congress is acting on its behalf 
as policymakers and on behalf of the American public as 
representing the people about what information they want and 
need.
    So I think there has to be that dialogue and agreement. 
Otherwise, what you are going to see, I believe, is a 
proliferation of individual efforts that are going to continue, 
which is an extension of what Mr. Werfel and Mr. Gregg are 
talking about and why we have a situation now is that people 
were not satisfied, so they want this information and that 
information. I think there is an opportunity to rationalize 
that now, which would be enormously helpful.
    Chairman Lieberman. Thanks, Mr. Dodaro. Thanks to all of 
you.
    Senator Coburn, I am going to pass the gavel to you 
because, unfortunately, I have to leave now, and when you have 
to leave, I authorize you to pass it to Senator Johnson. He can 
keep asking questions until at least he is finished or the 
three of you have left. [Laughter.]
    So this has been very helpful testimony. The three of you 
really give public service a good and honorable name. Thank 
you.
    Senator Coburn.
    Senator Coburn [presiding]. Thank you, Mr. Chairman.
    Mr. Werfel, part of the requirements of FFATA was an annual 
report to Congress. I note that you are 2 years behind on that 
annual report. Is that an oversight, or is it not a priority or 
part of the synthesis? Or where do we stand?
    The other thing you used to have on the Web site was a link 
that could track the agencies' compliance. That link is now 
dead, so I cannot track agencies' compliance with it. What is 
the story there?
    Mr. Werfel. So I think on the first question of the annual 
report, I am actually not 100 percent sure what the issue is, 
and I need to go back and look.
    Senator Coburn. Fair enough.
    Mr. Werfel. If you need an annual report, we will certainly 
get you a report in quick order.
    The challenge, as I mentioned earlier, was the compliance 
metrics that were up there. We did not have a lot of confidence 
that they were providing valid information. You see a green. I 
only want to publish an agency a green if I have confidence 
that there is infrastructure there. So we pull things down 
sometimes if we do not have a sufficient confidence that it is 
reliable, and that is unfortunate that we have been at that 
place for some time. We need to fix the issue. We need to drive 
some homogeny across the agencies in terms of how they are 
establishing control totals so that these metrics are more 
trusting. And part of the problem is we talked about resources. 
I keep emphasizing this. Without an independent mechanism to 
validate, it becomes more difficult to keep our eyes on 
everything. And I know you know how small in size OMB is in 
terms of our ability to be into all these things, and that is 
why I keep on trying to lean on the audit framework. But that 
is the answer.
    So bottom line, let me go back and figure out what issues--
--
    Senator Coburn. I am not looking for a long report. As a 
matter of fact, you have actually reported today. But the point 
is here is another problem in our government. We put a statute 
down. It has a requirement, and 80 percent of the time, the 
agencies, as far as metrics for us, ignore it. And unless the 
Administration wants to comply, oftentimes we do not--I am not 
questioning your motives at all on this. Please do not take it 
that way.
    I have another question. You mentioned in our back-and-
forth--and I do not know whether it was the Do Not Pay List or 
what it was, but I have a great concern with the Social 
Security Master Death File. And I am wondering, on Treasury's 
number, where they are looking at where it is paid out, does 
that include Internal Revenue Service (IRS) payments as well, 
Mr. Gregg? And where are we on all this? We have paid out 
billions of dollars to dead farmers. We paid out $8 billion 
last year for kids, for the tax credit, that were not there 
from the IRS. Is the IRS part of that? Are you including that 
in terms of payments? And I am not talking identifiers, but are 
you including that?
    Mr. Gregg. Well, we do make all of the IRS tax refund 
payments. Right now, the tax payments are not part of the Do 
Not Pay List, and, in fact, my Deputy Secretary asked me the 
other day why that was not the case.
    As you know, the sensitivity with the 1603 Statute is one 
that we take very seriously.
    Senator Coburn. I understand.
    Mr. Gregg. But we are going to look at that, and I am not 
sure it is all within Treasury, so I am not sure why we could 
not include tax payments as part of the Do Not Pay group of 
payments that we have, but we have virtually everything else.
    Senator Coburn. And I also noted that our staff came up, I 
think, with the help of GAO or the CRS, we have done all these 
grants and contract payments to people that owe us tons of 
money, $16 billion they owe us, and yet they still received a 
government grant or they still received contracts, even though 
they did not have a settled agreement on how to pay their back 
taxes. So we have to figure that out to get some better 
compliance out of those people who owe us and who are not 
paying their fair share.
    Mr. Gregg. We have within the Do Not Pay database a number 
of databases including the Excluded Party List, the Death 
Master File, and a number of others. We would like to expand it 
somewhat. We got that up and running in a matter of 6 or 7 
months, and agencies are now complying with the OMB directive 
to make sure they come to the Do Not Pay List to check before 
payments go out.
    Senator Coburn. But if the Death Master List is missing 1.2 
million people, it is not of great value because that means 
there are 1.2 million Social Security numbers that can still be 
collecting money or Medicare payments through fraud or other 
illicit means when we do not have an accurate Death Master 
File.
    Mr. Gregg. Yes, we recognize that it is not complete, and 
we are looking at different ways to address that. In some 
cases, we might be able to get information directly from 
funeral homes. But we are looking at all avenues as to how to 
make sure that is a complete and up-to-date list all the time.
    Senator Coburn. One final question, and, Mr. Werfel, if you 
want to comment on that, that is fine, too. Who is doing great 
and who is not in terms of compliance with the intent of 
USASpending.gov? Can you tell us that? We do not have a link to 
know compliance. Who do you think is doing best and who is 
doing--I know who is doing worst. It is the Pentagon. But who 
is doing the best?
    Mr. Werfel. Well, I often point to the Departments of 
Health and Human Services (HHS), Agriculture (USDA), and 
Education as examples of agencies that are taking their 
responsibilities to produce reliable information most seriously 
in terms of developing best practices. So, for example, USDA 
does a reconciliation of their USASpending.gov information with 
their budgetary accounting and can tell us that 75 percent of 
their award data is 95 percent reconciled. And that is not a 
great score, it is not a perfect score, but the fact that they 
have that type of measurement in place is very useful to us. Of 
course, we are now investigating if that measurement can take 
place across the board at the right metric. And HHS has an 
internal tool to identify quality issues as well. So the 
agencies that are taking their efforts seriously to ensure 
reliability, even without the independent auditor breathing 
over their necks, are the ones that are most effective.
    You point to the Defense Department. The Defense Department 
is challenging in a lot of different realms with respect to 
financial management, but actually let me answer the question a 
little bit differently. As I mentioned earlier, procurement and 
contracts are ahead of the game; grants and loans are behind 
the game. And as you know, almost all of the Defense 
Department's outlays are contracts. So on this front, they are 
actually not that bad because of two reasons: Their involvement 
in the contract community, they put in standard elements and 
quality control frameworks that they are all utilizing, and 
then they feed this information into a system called Federal 
Procurement Data System (FPDS) that feeds USASpending.gov. And 
the contract community is doing global data quality reviews of 
FPDS, and, therefore, they are having residual effects on the 
Defense Department's accuracy and reliability. So they are 
benefiting from a robust contract community around this issue.
    On the grants side, that is not happening, and we need to 
start bringing the level of performance up so that they are 
matched.
    Senator Coburn. Would you agree that the more money a State 
matches with a grant, the more likely they are to be 
responsible with the grant money? For example, a 50-percent 
grant versus a 10-percent match, I guarantee you my State is 
going to watch that money a whole lot more because 50 percent 
of that money is Oklahoma taxpayer money.
    Mr. Werfel. I would say as a general matter, if you have 
more skin in the game, then you tend to be more accountable for 
everything, for program delivery, and for program integrity. 
So, for example, in the unemployment insurance program (UI), 
which is the one program where the error rate is actually 
increasing over the past few years. Medicare, Medicaid, public 
housing, food stamps, all of it, error rates are trending down, 
and we are really proud of that trend.
    The thing in UI that is interesting is that it is a shared 
responsibility. There are State funds and there are Federal 
funds that are driving this. And even with that shared 
responsibility--and, recently, the Department of Labor, in an 
effort to improve transparency, listed State by State every 
error rate, and there are some very high error rates for 
certain States. And even with that shared responsibility, we 
still do not see that error rate coming down.
    So I say as a general principle, yes, but, I see examples 
in my own review of data and that raises concerns where, even 
with that shared impact, we are not seeing the results we want 
to see. So it is more complicated than that, but I agree with 
your general premise.
    Senator Coburn. Well, I think GAO has just released a 
report on the Social Security Disability Insurance (SSDI), and 
the Permanent Subcommittee on Investigations has been 
investigating this for 2 years. We will have a report out very 
soon on the fraud, the malfeasance, and the violation of 
statutory guidelines through the administration of the Social 
Security Administration on that. America is going to be 
surprised at the fraud and incompetence and dollars that are 
going to people who are not truly disabled. And that is not to 
say we do not really want those dollars to go to people who 
truly are, but this is going to be a blockbuster when it is 
released in terms of certain administrative law judges going to 
jail for taking payments from lawyers. I mean, anything you can 
imagine is out there right now in that system, and that is 
because there has not been good management, there has not been 
good following, and there has not been a representative of the 
taxpayer in front of the decisionmaking.
    Senator Johnson.
    Senator Johnson. Thank you--I guess ``Mr. Chairman.'' That 
sounds kind of good. I have to be somewhere at 11:30, so this 
will be pretty quick.
    Senator Coburn. You can take the gavel.
    Senator Johnson [presiding]. Mr. Werfel, you were talking 
about synthesizing information I think at a micro level. As an 
accountant, I am always trying to tie things out on a macro 
level, trying to understand this $3.8 trillion a year entity 
here.
    When you take a look at the Congressional Budget Office 
(CBO) different baselines, when you take a look--and I actually 
used the budget documents from OMB because to me, with all the 
historical tables, that gives me the best information. I am 
trying to tie out between the appropriation accounts, to the 
budget accounts, budgetary authority versus outlays. Is there a 
key, or is there a trick? I am still trying to figure it out.
    Mr. Werfel. Well, I certainly think that one thing that we 
can offer is, one of technical assistance in understanding the 
budget tables that are in OMB's budget each year, understanding 
how they are derived. But you are zeroing in on the issue that 
we have been discussing, which is in some places that ticking 
and tying can be done and can be done very effectively, and in 
other cases, there are definitional challenges in linking 
things.
    So as an example, you take every line of every 
appropriation accounts, we convert that information into our 
accounting system, and for a variety of reasons--and we 
probably do not have time to go through them all there--it is 
not a one-for-one proposition. I cannot take an appropriations 
bill and show you exactly in perfect harmony how that aligns up 
into the central accounting system that Treasury runs. What I 
can do is produce information to you out of that central 
accounting system, and it is highly relevant. But it might 
answer nine out of 10 of your questions, but if one of your 
questions is I want to know exactly what the outlay rate is for 
this line item in the appropriations bill, we might have to do 
some work in terms of figuring out which accounts this money 
went into and then do some more work to figure out where the 
outlays are on that account. And so it comes back to there not 
being a one-to-one.
    But one thing I think that is important here and that has 
been my reflection--maybe nine out of ten is a little bit of an 
exaggeration. Maybe it is more like eight out of ten. Very 
often our systems, as heterogeneous as they are, can answer the 
question, sometimes instantly, sometimes with some work. There 
were moments during the Recovery Act where there were no 
answers to questions, and that was because the reconciliation 
was just too challenging. And that is where we really have to 
figure out what the key is to close the gap. But I do not think 
you are alone in being challenged by this framework. It is very 
complex, and, again, if there is a particular set of questions 
that you have, we probably have experts at OMB and Treasury 
that could at least offer some help there.
    Senator Johnson. Well, I appreciate that. We are working 
with CRS right now trying to--I am trying to get my head around 
the problem. But at least it is comforting to know that it is a 
problem not just with me, but it is just a problem.
    Mr. Werfel. Yes. It is not you.
    Senator Johnson. Senator Carper, did you want to grab the 
gavel? Because I have to be somewhere. I am turning it over to 
you. Thank you very much.
    Senator Carper [presiding]. You are good to do that.
    I just want to say, Senator Johnson, I do not always get to 
come to these hearings, but you are, as the Chairman has noted, 
a faithful attender and a faithful participant, and I certainly 
commend you for that.
    Senator Johnson. I have a lot to learn.
    Senator Carper. We all do. Thanks very much.
    Senator Collins has asked me to raise a question, and I am 
pleased to be able to do that. OMB Watch was one of the key 
partners in setting up USASpending.gov early in the process, as 
I think maybe you mentioned, Mr. Werfel. They are a major user 
of the site today and have a lot of feedback to offer, I am 
told. Would you agree to meet with them and our staff to work 
through a demo of some of their feedback? That is the question 
that I have been asked to ask of you, and if you can answer 
here today, that is fine. If you want to answer it for the 
record, that would be OK as well. If you want to answer now, go 
ahead.
    Mr. Werfel. I will give an answer now and an answer for the 
record later because I want to make sure that, with respect to 
a particular commitment for a particular meeting, that I run 
that through the various channels.
    But as a general matter, we have engagement over the period 
of time with OMB Watch. I never turn down a phone call from 
them and have had very good discussions with them. They have 
provided important input. They were, as you said, the parents 
of the first ever solution for USASpending.gov, which, as 
Senator Portman referenced, we purchased from them on a 
shoestring budget back in the latter part of the 2000s. And 
they are doing their job. It is never perfect, and they are 
driving us towards continuous improvement, and it is 
interesting to see where the improvements that can be made on 
our current budget versus where the improvements are going to 
require a greater budget.
    Senator Carper. I appreciate that. If Senator Collins would 
like for you to work with them, I am inclined certainly to 
agree with that. And if it is your inclination, let us just do 
it.
    Mr. Dodaro. Senator Carper, I might add, our staff has 
already met with the OMB Watch people on this subject, and we 
would be happy to give Senator Collins and your staff our views 
on it.
    Senator Carper. And you may want to share them with OMB, 
too. Thank you.
    They are asking me to come back to my other hearing, so I 
am going to leave--normally I like to ask you to give a closing 
word, but I do not have time to do that. If I do, I am going to 
miss this next vote.
    Let me just say thank you. I appreciate very much your 
preparation, your responses to our questions, and your work and 
the work of a lot of your colleagues on these issues. They are 
important issues. But these are not the kind of issues that get 
a lot of headlines, but these are issues that save a whole lot 
of money. And I like to say that one of the things we need to 
do is to look in every nook and cranny of the Federal 
Government and try to find ways to do everything we do, to ask 
the question, is there a way to get a better result for less 
money? And we also like to say transparency is the best 
disinfectant, and the idea of exposing as much of what we do, 
good and bad, will help us, I think for the most part, do a 
better job.
    The hearing record is going to remain open, I believe for 
15 days, for additional statements and questions for the 
record. Once you receive those questions, we would just ask 
that you respond to them in a prompt way. But, again, it is 
great to see you all. Thank you for your good work and for your 
leadership.
    With that, we are adjourned.
    [Whereupon, at 11:33 a.m., the Committee was adjourned.]


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