New GAO Report Shows the Benefits of Spending Transparency

Often, when talking about why Recovery Act transparency provisions are important, we have to talk vaguely about the unseen. With more than one level of recipient reporting (prime recipients, and their sub-recipients and vendors), which is true under the Recovery Act, we can see who is lurking behind the initial recipients of federal contracts and grants. For instance, maybe the mayor’s brother is getting all of the road-building contracts in some theoretical small town, which we wouldn’t otherwise know because he isn’t directly contracting with the federal Department of Transportation. But there were few actual instances we could use.

Now, thanks to a new Government Accountability Office (GAO) report, we have a more concrete example. According to the report, $24 billion in Recovery Act contract and grant spending went to about 3,700 recipients who owed some $750 million in taxes to the US government. Clearly, this isn’t good. Government contracts shouldn’t be benefiting organizations that don’t play by the rules. But the important point is that we only know this because of the recipient reporting feature built into the Recovery Act. (You can read our past coverage of the Recovery Act here.) Indeed, about half of the tax-delinquent recipients were sub-recipients, meaning without the sub-recipient reporting in the Recovery Act, it wouldn’t be immediately apparent that they were receiving federal funds.

This new information in the GAO report is a clear indication that more levels of reporting are better. Without the Recovery Act sub-recipient reporting, it would have taken the GAO years to do the same kind of research, assuming the GAO would even bother to spend all that time on it.

Reports like this are why we’re ecstatic that sub-award reporting has finally come to, the government’s website for all federal contracts, grants and loan information. In the coming months, as more the site collects more sub-award data, it’ll be easy to do the same tax analysis with all federal spending, not just Recovery Act data.

But why stop there? Why not compare the sub-award data with, say, Project on Government Oversight’s Federal Contractor Misconduct Database? Or workplace safety citations? Or the list of companies forbidden from receiving federal contracts? The possibilities are endless.

Of course, the next step is to enact full, multi-tier reporting, in which any organization that receives more than $25,000 of federal funds must report on the use of the funds, regardless of how far down the contract or grant chain they are. Hopefully reports like the GAO's will help convince lawmakers on the importance of full spending transparency.

Image by Flickr user Forest Service - Northern Region used under a Creative Commons license.

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