Follow the Money

Plus, an important note on The Bridge.

The Bridge logo surrounded by a collage of crowds of people and the U.S. Capitol building

Before we dive in, I have some bittersweet news: After a three-year run, The Bridge will sunset at the end of this month. Our last edition will be delivered to your inbox on May 30, 2024.

I learned so much writing The Bridge, and I hope you learned from reading it. The incredible breadth and depth of POGO’s work meant there was always a new topic for us to work through together. It is important to us that the more in-the-weeds aspects of our work remain accessible to those curious to delve into them. Even after The Bridge’s last lap, there will still be avenues for you to receive in-depth insights into our work, which we’ll share with you in the coming weeks.

Hi there. Today’s edition of The Bridge will examine the breakdowns in the government’s spending tracking system and how those issues keep us from knowing where exactly our taxpayer dollars are going.

Follow the money

So far this fiscal year, the federal government has spent about $3.82 trillion. But if you were to ask where exactly all that money went, you wouldn’t get a straight answer.

Why? Because key components to tracking government spending down to the local level on are as good as broken. As my colleague, Senior Policy Analyst Sean Moulton, has written in the past, the data the government collects about its spending has major quality issues and quantity issues. The data is often riddled with errors and omissions. And due to a failure to collect all the useful data possible, even rudimentary insights are left on the table.

In a previous edition of The Bridge, we talked about the chain of custody of government spending: how money actually moves from Congress all the way down to local communities. Today, we’re going to discuss why we don’t really know what happens to taxpayer dollars when they reach the subaward level — and why that’s a serious equity issue.

If you’re subscribed to our update emails, you know that POGO’s Effective and Accountable Government team has been meeting with the Biden administration and members of Congress to put the spotlight on the pressing issue of opaqueness in federal spending. Just recently, the team published a fact sheet on the need to improve the subaward reporting system, which is currently a key obstacle to transparency.

The pipeline To follow the money, we have to start at the top. Federal spending is first allocated by Congress through the appropriations process. The appropriated money then goes to federal agencies, who then parcel out awards to different entities, including contractors and state agencies. These checks written from federal agencies to non-federal recipients are known as prime awards.

Subawards refer to distributions of that federal money from prime award recipients. Federal funds easily pass through several stages of distribution before the money is used as intended. For example, a state agency might distribute money to a local government that would then hire a contractor (who could then hire a subcontractor) for a given project. But currently, only the first stage of distribution — the subaward from the state agency to the local government, in this example — would have to be reported through The rest of the subawards simply fall off the radar. Even worse, what subaward information is reported is often substandard. Errors in subaward reporting have resulted in data where the subaward totals actually exceed the prime award totals.

A matter of equity Subawards offer the most insight into how federal spending is actually used once it’s out of the hands of federal agencies. But the dire state of subaward data means that we have no real way of knowing whether federal money is being spent as intended or delivering impact to the communities that need it most.

POGO has long been advocating for an overhaul of the subaward reporting system, and thankfully we’re starting to get some traction. We’ve worked with a bipartisan group of legislators to introduce the Federal Subaward Reporting System Modernization and Expansion Act of 2024 in Congress, and we’re hopeful the bill could bring about the changes needed for transparency in federal spending.

You can read more about the bill in our latest fact sheet.