The DATA Act and Transparency: 4 Ways that Industry Will Benefit

Late last week, the President signed into law the Digital Accountability and Transparency (DATA) Act.  As summarized by the Administration’s release statement, the DATA Act will

• make publicly available specific classes of Federal agency spending data, with more specificity and at a deeper level than is currently reported;
• require agencies to report this data on USASpending.gov;
• create Government-wide standards for financial data;
• apply to all agencies various accounting approaches developed by the Recovery Act's Recovery Accountability and Transparency Board; and
• streamline agency reporting requirements.

The DATA Act is the latest addition to a list of federal management statutes enacted over the past 50 years affecting information, transparency, and financial data – a list that includes:

• the Freedom of Information Act;
• the Chief Financial Officers’ Act;
• the E-Government Act;
• the Federal Funding Accountability and Transparency Act; and
• the Recovery Act. 

The DATA Act builds on this legislative track record, as well as policy initiatives to further the cause of open data and open government in this and prior Administrations.

Furthermore, the DATA Act is not just, or even predominantly, about actions being taken within the government.  Much of the Act’s impact will be how recipients of government funds leverage transparency to improve the government marketplace, and how entities with a stake in how those funds are used enhance accountability by focusing on how well the programs serve their intended beneficiaries. 

My IBM Center colleague, John Kamensky, observes in a separate blog post that there are a number of activities underway that show promise for successful implementation of this complex new law.  What follows is more detail on one of his points -- how industry can benefit from and contribute to successful implementation over time.

Prior to Presidential signing but the day after the Congress passed the bill, I participated in the “Data Transparency Summit”, joining a panel of industry stakeholders to discuss what the law would mean for industry.  For industry, this involves several roles:  partner, provider, reporter, and consumer.   Specifically:

• As a partner of government, industry can help agencies to develop the standards for financial transparency called for by the Act, bringing considerable experience in the development of open standards in other settings.  Open standards create a level playing field for all stakeholders, and work best if they are produced through a collaborative process, independent of any particular technology, easily implementable by developers who follow the standards, and global in nature so that firms and governments do not have to follow multiple regimes.
• As a provider of services for government, industry can leverage transparency to improve efficiency and effectiveness.  A government marketplace where successes are identifiable, funds are tracked throughout their lifecycle (from appropriation, to agency obligation, to contract or grant spending, to results) allows providers to capitalize on successes and spot areas needing improvement more quickly.
• As a reporter of information to government, the DATA Act’s call for a study of how to reduce burden and improve data quality in the system of financial disclosures will allow companies to spend more resources on improving service, and less on redundant compliance activities.  A similar effort in Australia, referred to as “Standard Business Reporting”, led to reported economic savings of $800m/year – in an economy much smaller than that of the U.S., suggesting that savings could be well in excess of that figure here.  Industry can play a key role here by participating in the study, identifying redundant reporting provisions that could be streamlined.
• As a consumer of government data, more transparency will allow companies to understand the needs and processes of government more quickly and accurately.  This will also help industry to focus on providing solutions that address real outcomes for agencies, as opposed to spending an overabundance of time just trying to figure out the “shape of the table”.

Ultimately the measure of success for implementation of the DATA Act and other spending transparency efforts rests in how well these efforts help to improve outcomes that agencies deliver, often working with industry partners.  By working collaboratively with government as the law moves down this road, industry can deliver real value throughout the process.