Hearings

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Transparency In Federal Funding - What You Don't Know Can Hurt You

July 18, 2006

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• Chairman's Statement (35.9 KBs)

Major Findings:

• As federal spending approaches $3 trillion this fiscal year, the public’s ability to track how it is spent remains a monumental task. There is currently no single source of accurate, complete and timely information on federal government spending.
• Grants, contracts and loans account for nearly $1 trillion in federal spending annually, yet both areas lack enough transparency to allow taxpayers to know where that money goes.
• The two primary sources for data on grants (Federal Assistance Awards Data System – FAADS) and contracts (Federal Procurement Data System – FPDS) are incompatible, hard to search, and lack basic information on what purpose tax money was spent to accomplish.
• Major “umbrella” contracts are often awarded to companies for large projects, requiring the primary recipient to subcontract out most of the work; many times, work is sub-contracted down multiple levels. This process of multiple subcontracts is not seen by the taxpayer, and therefore the public never knows it its money is being spent wisely or is wasted.
• Similarly, 91% of all federal grant money is given to States that then subgrant the money down multiple levels. The American public has almost no way of knowing where the money ultimately goes because subgrants are not currently tracked.
• The Executive Branch simply is not likely to solve this problem without Congressional action, such as S. 2590, the “Federal Funding Accountability and Transparency Act of 2006.”

Impact on Taxpayers:

• The federal government spends an average of more than $20,000 per household every year on its programs. Americans must have the information required to judge whether or not they believe that money should be returned to them or spent differently.
• Major waste is reported on a near daily basis, such as these examples of questionable spending from Hurricane Katrina:
• On June 27, the NY Times reported that waste, fraud and abuse from Hurricane Katrina has totaled nearly $2 billion.
• The Senate Homeland Security Committee uncovered four no-bid contracts that were awarded following Hurricane Katrina worth approximately $500 million each.
• Allegations of corruption related to Congressional influence in federal contracting are likewise reported frequently. Transparency would likely preempt bad behavior before and after the fact.

These Findings Demand a Response:

• The Senate should pass S. 2590, the “Federal Funding Accountability and Transparency Act of 2006,” which would require the Office of Management and Budget to create a website disclosing who has received federal money, as well as how much was given and for what purpose. The website will be free to use and easy to search. Provisions will need to be reconciled with a similar bill in the House of Representatives, H.R. 5060.
• Congressional overseers, Executive Branch managers, watchdog groups, the media and all interested citizens should use the website to clean up federal spending.