Nov. 7, 2019 —
Publicly released: November 12, 2019
The objective of this audit was to determine whether the DoD complied with Public Law 113-101, “Digital Accountability and Transparency Act of 2014” (DATA Act). We assessed the completeness, accuracy, timeliness, and quality of the DoD’s first quarter FY 2019 financial and award data submitted for publication on USAspending.gov, and the DoD’s implementation and use of the Government-wide financial data standards (data elements) established by the Office of Management and Budget (OMB) and the Department of the Treasury (the Treasury).
On May 9, 2014, the President signed the DATA Act into law, expanding the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA required the OMB to establish a single searchable public website that disclosed information on Federal contract and grant awards to enable the public to track how their tax dollars are spent. To meet the FFATA requirement, the OMB established the website USAspending.gov, and Federal agencies began reporting their data to the website in 2008. The DATA Act expands the FFATA by requiring Federal agencies to submit their spending data quarterly and to link that data to the contract and grant award data to enable taxpayers and policy makers to track Federal spending more effectively.
The OMB requires Federal agencies to designate a Senior Accountable Official, who is required to certify that the data in each DATA Act file submitted for display on U SAspending.gov are valid and reliable. The Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, designated the Deputy Chief Financial Officer as the DoD Senior Accountable Official.
The DATA Act also directed the OMB and the Treasury to develop joint Government-wide financial data standards to ensure consistent DATA Act reporting across the Federal agencies. To meet the DATA Act requirement, the OMB and the Treasury developed financial data standards that define the 57 data elements that agencies must report under the DATA Act. In addition, the OMB and the Treasury developed standard reporting formats and issued guidance to Federal agencies on how to meet the DATA Act reporting requirements.
Federal agencies submit their financial and award data to the Treasury’s DATA Act Broker application, which compiles agency data for publication on USAspending.gov. Agencies are required to use the DATA Act Broker to upload three files containing data from their internal financial systems and records.
File A – Appropriations Account. File A contains the FY cumulative appropriations account summary data.
File B – Object Class and Program Activity. File B contains the appropriation account data listed in File A but is further defined by object class code and program activity name.
File C – Award Financial or Financial Data for Procurement and Grant Awards. File C contains transaction-level financial data for all procurements and grants processed during the quarter.
The DATA Act Broker extracts spending data from Government-wide award reporting systems that contain data on Federal contracts, grants, and award recipients.
File D1 – Procurement. File D1 contains procurement award and awardee data extracted from the Federal Procurement Data System-Next Generation.
File D2 – Grants. File D2 contains grant award and awardee data extracted from the Financial Assistance Broker Submission system on grant and other financial assistance awards.
File E – Additional Awardee Data. File E includes information extracted from System for Award Management on the award recipients.
File F – Sub-award Data. File F contains information extracted from the FFATA Sub‑award Reporting System on awards made to sub‑recipients under a prime contract or grant award.
The DoD did not comply with all DATA Act requirements. Although the DoD implemented and used the required Government-wide data standards and the DoD DATA Act submission for the first quarter of FY 2019 was timely, the submission was not complete. The submission was not complete because File C (Financial Data for Procurement and Grant awards) did not contain all of the DoD’s financial award data. In addition, File B (Object Class and Program Activity) had a variance of $17 million in outlays and $462 million in obligations when compared to File A (Appropriations Account), and File B contained 2,188 object class codes and 1,236 program activity names that were inaccurate.
File D1 (procurement) data elements projected error rates for completeness, accuracy, and timeliness were 0.5 percent, 13.4 percent, and 21.0 percent, respectively. Finally, File D2 (grant) data elements projected error rates for completeness, accuracy, and timeliness were 17.9 percent, 33.9 percent, and 59.0 percent, respectively. Based on the highest projected error rates for each, the DoD procurement and grant award data elements quality was moderate and low, respectively when using the Inspectors General guide developed by the Council of the Inspectors General on Integrity and Efficiency.
The DoD did not comply with all DATA Act requirements because File C did not contain financial data from all of the DoD’s financial systems, and the DoD data quality plan did not contain processes for identifying, managing, and mitigating risk related to data quality.
The DoD DATA Act submission published on USAspending.gov cannot be relied upon. Specifically, the DoD data submitted for the first quarter of FY 2019 had moderate quality for procurement and low quality for grants. The moderate and low quality of the submission does not allow taxpayers and policy makers to track Federal spending more effectively and undermines the DATA Act objective of providing quality and transparent Federal spending data publication on USAspending.gov.
We recommend that the Senior Accountable Official identify required DATA Act source systems and include the data necessary for complete File C – Award Financial submission. In addition, we recommend that the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, revise and implement the data quality plan in accordance with OMB Memorandum M-18-16, “Appendix A to OMB Circular No. A-123, Management of Reporting and Data Integrity Risk.” The revised data quality plan should include, at a minimum:
a. assignment of roles and responsibilities for ensuring DATA Act data quality;
b. a risk assessment process;
c. definition of the control environment and control activities specific to the DATA Act submission;
d. a mitigation and monitoring plan for the data elements determined to be high risk; and
e. a testing plan for ensuring that financial and award data in Files A, B, C, D1, D2, E, and F are accurate before making DoD quarterly DATA Act submissions.
Management Comments and Our Response
The DoD Deputy Chief Financial Officer, responding for the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, generally agreed with our finding and recommendations. However, the Deputy Chief Financial Officer disagreed with our methodology for assigning errors for the primary place of performance data element, stating that there is no DoD requirement to include the primary place of performance in the contract or grant award documentation and that not having the data has no impact on the performance of the contract or grant. The Deputy Chief Financial Officer also disagreed with our statistical sampling methodology, stating that it resulted in the review of mostly Defense Logistics Agency procurement data, which does not reflect all of the DoD.
The methodology we used to assign errors for the primary place of performance was consistent with the OMB and the Treasury financial data standards. If the primary place of performance data element identified in Files D1 and D2 did not match the supporting documentation, or the supporting documentation did not specify a primary place of performance, we considered it an error. The statistical sampling methodology that we used was also consistent with the Inspectors General Guide to Compliance under the DATA Act, which was developed to ensure a common methodology and reporting approach to meeting the DATA Act requirements across the U.S. Government. We will engage with the Council of the Inspectors General on Integrity and Efficiency Federal Audit Executive Committee DATA Act working group before the next DATA Act audits are initiated and determine whether an alternative sampling method is appropriate.
The Deputy Chief Financial Officer addressed the specifics of five of the recommendations; therefore, those recommendations are resolved but will remain open. We will close the recommendations once the DoD provides a revised DATA Act quality plan that addresses the minimum requirements identified in the recommendations. However, the Deputy Chief Financial Officer did not address the specifics of the sixth recommendation to revise the data quality plan to include a testing plan for ensuring the financial and award data in Files A, B, C, D1, D2, E, and F are accurate before making the DoD quarterly DATA Act submissions. Therefore, the recommendation is unresolved, and the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, should provide additional comments in response to this report.
This report is the result of Proj. No. D2019-D000CS-0061.000