Increased Infrastructure Oversight Falls Short

President Biden announced new oversight standards for infrastructure spending under the $1.2 trillion bipartisan infrastructure bill that was signed into law on November 15, 2021. The White House announcement was accompanied by guidance from the Office of Management and Budget to agencies, providing more details about how the improved oversight will be implemented. While increased oversight is a welcome development, this guidance falls short of the transparency and accountability improvements needed to truly ensure taxpayer money is well spent.

Guidance for Greater Oversight

There are several positive steps for which the administration deserves credit. The new oversight standards require that agencies designate a senior accountable officer to oversee infrastructure spending at the agency, which is a strong move for accountability. A single oversight official with clear authority helps avoid accountability issues falling through the cracks. And this official will enable lessons learned while implementing one program to be more quickly adopted by other programs run by that agency.

The guidance also wisely instructs agencies to involve inspectors general (IGs) during the design of new programs. The IGs would ensure better protections are built into these programs based on the types of waste and fraud they had recently seen. Agencies should not be making the same mistakes over and over again. Involving IGs in program design may be the best way to make sure new programs and spending are structured to avoid repeating mistakes.

The administration included recommendations that agencies take steps to improve the quality of data being reported for federal awards — an issue that POGO has raised repeatedly over the years, most recently regarding infrastructure spending specifically. The guidance particularly focuses on award descriptions and sub-award reporting, both of which need serious improvements.

This is where the administration’s plans start to fall short. Agencies have known about these problems for years and there have not been significant improvements. Yet the guidance memo does not establish specific actions agencies must take, develop new standards on reporting, or authorize any agency or official to implement a plan to finally fix these problems across the federal agencies. It is unclear how simply reminding agencies of the problem will change the poor data we have been getting for years now.

The memo does extend data quality audits that were occurring under the Digital Accountability and Transparency Act (DATA Act) and instructs that they should be expanded to include sub-awards. However, three rounds of bi-annual DATA Act audits have only resulted in modest improvements to data quality. Including sub-awards in the audits, which is long overdue, may provide a more accurate assessment of the data quality problems, but seems unlikely to result in a government-wide solution.

A Lack of True Accountability

Even if the general guidance on award descriptions and sub-award reporting would result in concrete improvements, this approach would still lack what is needed to provide true transparency and accountability for infrastructure spending. Sub-award reporting on federal awards is limited to a single layer: anyone the prime recipient of the federal award provided funds to through contracts, grants, and direct payments. But many infrastructure programs make large infrastructure awards to state agencies, which in turn break the money down and award it in large pieces to counties, cities, school boards, and so on. While it would be helpful to reliably see the state distribution of these federal infrastructure funds, understanding where the funds went and what they were used for requires following the money further than one level of sub-awards.

Equity, which has been a major issue for the Biden administration for both the COVID-19 assistance programs and the coming infrastructure programs, can only be properly assessed if federal funds are reported until they reach local communities. Unless the administration tackles the challenging task of fully tracking these funds, the picture of where money went will remain incomplete.

The guidance is also missing any effort to expand data collected on federal awards. POGO has previously noted that serious gaps in data reported for federal awards limits accountability. Federal agencies consistently collect data on the demographic characteristics of business owners getting federal contracts. However, none of that data is collected for businesses receiving assistance awards such as grants, federal loans, or direct payments. Without this data, federal agencies cannot reliably say how equitably they are distributing assistance to companies.

The guidance does raise the additional matter of “post-award data” as a potential means of gathering information to increase accountability and advance equity priorities. It could be possible to collect additional data on recipients, and even sub-recipients, to fill important gaps in our knowledge and enable better evaluation of spending. To really be useful for oversight, any post-award reporting would have to be consistent across agencies and detailed enough to provide important context on who received federal funds and what was accomplished. However, the guidance doesn’t specify what would be included in “post-award data,” leaving it up to each agency. It also seems to discourage collecting any new data in favor of using existing methods of data collection and cross-agency data sharing.

This reluctance to collect new data seems reminiscent of Office of Management and Budget guidance during the Trump administration, which instructed agencies that no new data collection was necessary to fulfill reporting requirements of the Coronavirus Aid, Relief, And Economic Security (CARES) Act. This guidance contradicted the legislation’s specific requirements that recipients of more than $150,000 file quarterly reports with the government regarding the use of those funds. Without that reporting, agencies and the public were left without an important oversight tool.

The Biden administration deserves credit for applying lessons learned from problematic COVID-19 assistance programs to the forthcoming infrastructure spending. However, the latest guidance ignores several well-known award reporting problems, which hamper effective accountability for federal spending. This makes it clear that congressional action will be necessary to pursue more aggressive reforms to federal award reporting. These reforms would enable more robust review not only of infrastructure programs authorized by the recent law, but of all federal spending for years to come.