Order Code RL33680
CRS Report for Congress
Received through the CRS Web
The Federal Funding Accountability and
Transparency Act: Background, Overview, and
Implementation Issues
October 6, 2006
Garrett Leigh Hatch
Analyst in Government Organization and Management
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

The Federal Funding Accountability and Transparency
Act: Background, Overview, and Implementation Issues
Summary
On September 26, 2006, President Bush signed S. 2590, the Federal Funding
Accountability and Transparency Act, into law (P.L. 109-282). In an attempt to
expand oversight of federal spending, including earmarks, the new law requires the
Office of Management and Budget (OMB) to establish a publicly available online
database containing information about entities that are awarded federal grants, loans,
and contracts. Federal agencies award over one trillion dollars annually in those
three categories of financial assistance — $460 billion in grants, $360 billion in
contracts, and $260 billion in direct and guaranteed loans — accounting for nearly
one-third of the federal government’s total expenditures and obligations.
According to the sponsors of the legislation, the new database will deter
“wasteful and unnecessary” spending, since government officials will be less likely
to earmark funds for special projects if they know the public could identify how
much money was awarded to which organizations, and for what purposes. S. 2590
was a companion bill to H.R. 5060, which also called for the creation of a federal
awards database. The bills differed in several respects, however, most notably in that
S. 2590 required information on federal contracts to be made available to the public,
but H.R. 5060 did not. Because contracts represent over $340 billion in federal
awards, the scope of the Senate version was significantly broader.
While the intent of the legislation is widely lauded — it was endorsed by leaders
of both parties and an array of business, union, and watchdog organizations —
concern has been expressed by government officials and members of the public that
issues surrounding implementation of the proposed database have not been
adequately addressed. In particular, many observers question the reliability of
information taken from the Federal Assistance Award Data System (FAADS) and the
Federal Procurement Data System (FPDS), which are to be the primary sources of
information for the public database. They note that information in FAADS and
FPDS is often incomplete and inaccurate, and therefore may be of limited utility in
identifying earmarks. Some observers also believe that the cost of establishing and
maintaining the new database may exceed the Congressional Budget Office (CBO)
estimate.
This report summarizes the legislative history and key provisions of P.L. 109-
282 (S. 2590), compares it to H.R. 5060, and discusses challenges that are associated
with implementing the new law’s proposed database and that may prove to be areas
for future congressional oversight. This report will be updated as events warrant.

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Comparison to H.R. 5060 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Implementation Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reliability of Underlying Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Implementation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Identification of Earmarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Concluding Observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
List of Tables
Table 1. Comparison of Selected Features in S. 2590 and H.R. 5060 . . . . . . . . . . 4

The Federal Funding Accountability and
Transparency Act: Background, Overview,
and Implementation Issues1
On September 26, 2006, President Bush signed into law S. 2590, the Federal
Funding Accountability and Transparency Act (P.L. 109-282).2 According to
supporters of the new law, P.L. 109-282 is an attempt to reduce “wasteful and
unnecessary spending” by the federal government, including spending on funds
earmarked for special projects.3 To that end, the legislation requires the Office of
Management and Budget (OMB) to establish a publicly available, online database
containing information about entities that are awarded federal grants, loans, and
contracts. Using the database, supporters assert, a citizen or watchdog group will be
able to easily determine how much money was given to which organizations, and for
what purposes.4 The premise of the new law is that by making the details of federal
spending available to the public, government officials will be less likely to fund
projects that might be perceived as wasteful. Supporters of the legislation also
suggest that the new database will give citizens the opportunity to better understand
how the government distributes funds and enable the public to become more involved
in the discussion of federal spending priorities.5
Federal grants, loans, and contracts represent a significant element of federal
spending. According to the most recent data available, federal agencies award over
$1 trillion annually in those three categories of financial assistance — $460 billion
1 CRS Information Specialist Merete Gerli collaborated in the preparation of this report.
2 The White House, Office of the Press Secretary, “President Bush Signs Federal Funding
Accountability and Transparency Act,” press release, Sept. 26, 2006.
3 Testimony of Sen. John McCain, in U.S. Congress, Senate Subcommittee on Federal
Financial Management, Government Information, and International Security, Federal
Funding Accountability and Transparency Act
, hearing on S. 2590, 109th Cong., 2nd sess.,
July 18, 2006, at [http://hsgac.senate.gov/_files/071806McCain.pdf]. For information on
other recent earmark reform proposals, see CRS Report RL33397, Earmark Reform
Proposals: Analysis of Latest Versions of S. 2349 and H.R. 4975
, by Sandy Streeter.
4 Testimony of Sen. Tom Coburn, ibid.
5 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs,
Federal Financial Accountability and Transparency Act of 2006, report to accompany S.
2590, 109th Congress, 2nd session, S.Rept. 109-329, at [http://www.congress.gov/cgi-lis/
cpquery/R?cp109:FLD010:@1(sr329)].

CRS-2
in grants, $360 billion in contracts, and $260 billion in loans — accounting for for
nearly one-third of the federal government’s total expenditures.6
This report initially discusses the background of S. 2590, noting in particular
how it compared to similar legislation in the House of Representatives. It then
discusses the Federal Funding Accountability and Transparency Act’s provisions,
noting what types of assistance are to be part of the new database, the primary
sources of the data, and deadlines for implementation. Finally, the report identifies
and discusses several issues that have been raised regarding the act that may affect
its implementation, and that therefore may prove to be areas for future congressional
oversight.
Background
Senator Tom Coburn, along with three cosponsors, introduced S. 2590 on
April 6, 2006.7 On August 2, 2006, the Senate Committee on Homeland Security and
Governmental Affairs unanimously reported S. 2590, with an amendment in the
nature of a substitute.8 That same day, the committee’s chair, Senator Susan Collins,
and its ranking member, Senator Joseph Lieberman, requested that the bill be brought
to the floor for a unanimous consent vote before the August recess commenced. This
motion was blocked by an unnamed Senator, which delayed action on the bill until
after the recess.9 On September 7, all holds were lifted and the Senate passed S. 2590
by unanimous consent.10 The House approved S. 2590, as passed by the Senate, by
voice vote on September 13.11 Later that same day both chambers agreed to
S.Con.Res. 114, making enrollment corrections to S. 2590.12 As noted previously,
the President signed the bill into law on September 26, 2006.
6 U.S. Census Bureau, Consolidated Federal Funds Report for Fiscal Year 2004, Dec. 2005,
p. v.
7 The other original cosponsors were Senators Tom Carper, John McCain, and Barack
Obama.
8 There was no written report released on August 2, but the Senate Committee on Homeland
Security and Governmental Affairs filed S.Rept. 109-329, to accompany S. 2590, on Sept.
8, 2006.
9 According to Congressional Quarterly, Senators Byrd and Stevens had both placed holds
on the bill at different times. See Martin Kady II, “Frist Mobilizes Blogs to Muscle Two of
Senate’s Old Bulls on Database Bill,” CQ Today, Sept. 6, 2006, at [http://www.cq.com/
display.do?fL=3&docid=2365650&productId=4].
10 Congressional Record, vol. 151 (Sept. 8, 2006), pp. S9209-S9211.
11 Congressional Record, vol. 152 (Sept. 13, 2006), pp. H6498-H6501.
12 Ibid, pp. S.9563-S.9564. Ibid, pp. H.6501-H6502. This was an unusual step, as
substantive differences between House and Senate versions of the same bill are typically
worked out in conferences. In this case, the concurrent resolution was used to ensure the
bill was passed prior to the approaching October recess.

CRS-3
S. 2590 received extensive bipartisan support at each stage of the legislative
process. In the Senate, the bill was introduced with bipartisan sponsors, voted
unanimously out of committee, and passed by unanimous consent. The legislation
was ultimately cosponsored by 47 Senators, including Majority Leader Bill Frist and
Minority Leader Harry Reid. In the House, S. 2590 was passed by voice vote under
suspension of the rules, with members of both parties speaking in support of the
Senate bill and none speaking against it.13 The White House did not issue a
Statement of Administrative Policy on S. 2590, but President Bush did express his
support in a press release distributed the same day the bill was enrolled, making it
apparent he would sign the measure once he received it.14
According to Senator Coburn, S. 2590 was endorsed by over 150 organizations
with a wide range of political leanings.15 The Senator’s list of supporters included
representatives of private enterprise, such as the U.S. Chamber of Commerce; unions,
like the American Federation of State, County, and Municipal Employees; media
groups, such as the American Society of Newspaper Editors; and government
watchdog organizations, like OMB Watch. As evidence of the unusual alliance in
support of S. 2590, the list indicated that both People for the Ethical Treatment of
Animals (PETA) and Gun Owners of America supported the bill, as did both the
National Gay and Lesbian Task Force and the Traditional Values Coalition.
Comparison to H.R. 5060
S. 2590 was a companion bill to H.R. 5060, which Representative Roy Blunt
introduced on March 30, 2006, as an amendment to the Federal Financial Assistance
Management Improvement Act of 1999. On June 21, 2006, the House passed H.R.
5060, as amended, by voice vote.16 According to Representative Blunt, the bill was
intended to “increase accountability and transparency in the federal awards process”
by establishing a public database with information on award recipients.17 While both
S. 2590 and H.R. 5060 had similar objectives, the bills differed in important ways.
Table 1 highlights three of the most important differences between the engrossed
bills.
13 Congressional Record, daily edition, vol. 151, (September 13, 2006), H6498-H6501
14 The White House, Office of the Press Secretary, “President Bush Applauds House Passage
of S. 2590, the Federal Funding Accountability and Transparency Act of 2006,” press
release, Sept.13, 2006, at [http://www.whitehouse.gov/news/releases/2006/09/print/
20060913-4.html].
15 Senator Coburn’s office provided CRS with the list of supporters. Over 80 leaders of
supporting groups signed “An Open Letter to Majority Leader Frist: Bring S. 2590 to the
Floor for a Vote!”, dated Sept. 6, 2006. See [http://www.cq.com/flatfiles/editorialFiles/
budgetTracker/reference/docs/20060706database-ltr.pdf].
16 Congressional Record, vol. 151 (June 21, 2006), pp. H4335-H4338.
17 Rep. Roy Blunt, “Blunt-Davis Bill to Reform Federal Grants Process Passes House,”
press release, June 21, 2006, at [http://www.blunt.house.gov/Read.aspx/ID=653].

CRS-4
Table 1. Comparison of Selected Features in
S. 2590 and H.R. 5060
Feature
S. 2590
H.R. 5060
Contents of public
Grants, loans, and
Grants and loans included,
database
contracts all included
but contracts excluded
Reimbursement for costs
Recipients and
No reimbursement
of new reporting
subrecipients of federal
provided to recipients and
requirements
assistance allowed to
subrecipients
recover costs associated
with collecting and
reporting data on
subrecipients
Subaward pilot program
18-month pilot program
No pilot program
authorized to evaluate
authorized
options for government-
wide subaward reporting
policy
Most notably, contracts were exempt from the public database under the House
bill, but were covered in S. 2590. Since contracts are the second-largest category of
federal domestic assistance, their exclusion would have significantly reduced the
comprehensiveness of the database. When H.R. 5060 was first brought to the House
floor in June, critics argued that a database without information on federal contracts
was “missing a key component that is essential to public oversight.”18 Even some
members who ultimately voted to pass the bill expressed concern that it did not
include contracts.19 Supporters of H.R. 5060 maintained that a database primarily
covering grants would still be a valuable tool, and the bill’s sponsors reportedly
pledged to develop separate legislation enhancing public access to federal contract
information.20 After S. 2590 passed the Senate, some House members expressed a
clear preference for the Senate version, which they argued was “stronger and more
comprehensive” because it included contracts.21
Both S. 2590 and H.R. 5060 required the public database to include information
on subrecipients, but only the Senate bill provided funding to cover the costs
associated with collecting and reporting that information. Currently, data on
18 Rep. Danny Davis, “Amending Federal Financial Assistance Management Improvement
Act of 1999,” remarks in the House, Congressional Record, daily edition, vol. 151 (June 21,
2006), pp. H4335-H4338.
19 Rep. Henry Waxman, ibid.
20 Aimee Curl, “Transparency bill subjected to secrecy,” Federal Times, Aug. 14, 2006, p.
4. Rep. Danny Davis, Congressional Record, vol. 151 (June 21, 2006), p. H4336.
21 Six representatives spoke in support S. 2590 on the floor of the House, including Danny
Davis and Henry Waxman. “Federal Funding Accountability and Transparency Act of 2006”
remarks in the House, Congressional Record, daily edition, vol. 151, (September 13, 2006),
H6498-H6501.

CRS-5
subgrantees and subcontractors is not gathered uniformly across the government.
Some experts believe that recipients of federal financial assistance — particularly
states and local governments — will incur substantial costs as they begin to collect
and report information on their subrecipients.22 Under S. 2590, recipients and
subrecipients of federal assistance could recover the costs associated with new
reporting requirements by incorporating those costs into their indirect cost rates; H.R.
5060 had no similar feature, leaving it open to the charge of being an unfunded
mandate imposed on award recipients by the federal government.23
Because no uniform method of collecting detailed information on subcontractors
and subgrantees presently exists, S. 2590 directed OMB to conduct a pilot program
to determine the most cost-effective and least administratively burdensome approach
to implementing a government-wide subaward reporting process. The pilot program
was not included in the Senate bill when it was first introduced by Senator Coburn.
It was added after concerns were raised about the potential administrative and
financial burden new reporting requirements would place on grant award recipients.24
H.R. 5060 did not contain provisions for a pilot program, and was criticized by
nonprofit advocates as being “an attack” on federally funded grantees.25
Overview of the Act
The database required in the act is to be implemented in two phases. By January
1, 2008, the new database is required to provide information on entities that are
awarded funds directly from the federal government. Entities covered in the first
phase of the database include corporations, associations, partnerships, sole
proprietorships, limited liability companies, limited liability partnerships, states, and
localities. By January 1, 2009, the database is required to include information on
subgrantees and subcontractors that receive federal funds through a primary award
recipient. The act excludes individual recipients of federal assistance, and
22 Telephone conversation between the author and Jerry Keffer, Chief of the Federal
Programs Branch at the U.S. Census Bureau, Aug. 17, 2006. Letter from R. Thomas
Wagner, Jr., President of National Association of State Auditors, Comptrollers, and
Treasurers (NASACT), to Sen. Tom Coburn, July 5, 2006, at [http://www.nasact.org/
techupdates/downloads/CRC/LOC/07_06-NASACT_coburn.pdf].
23 An indirect cost rate is a percentage, negotiated between a recipient of federal funds (a
grantee or a contractor) and a federal agency, which is used to calculate the amount the
recipient may be reimbursed for the indirect costs associated with administering the federal
award. For example, if a grantee expended $100,000 in direct costs administering a federal
grant program, and it had an indirect cost rate of 10%, then the grantee could request
reimbursement from the federal awarding agency for $110,000 (the total direct costs plus
an additional 10%).
24 Letter from R. Thomas Wagner, President of National Association of State Auditors,
Comptrollers and Treasurers, to Sen. Tom Coburn, July. 5, 2006.
25 Testimony of Gary Bass, President of OMB Watch, Federal Funding Accountability and
Transparency Act
, hearing on S. 2590, 109th Cong., 2nd sess., July 18, 2006.

CRS-6
organizations with less than $300,000 in total income are not required to report on
subawards.26
Consistent with the objective of providing to the public comprehensive
information on federal financial assistance, virtually all categories of awards will
ultimately be covered by the database, including grants, contracts, subgrants,
subcontracts, loans, cooperative agreements, delivery orders, task orders, and
purchase orders. Two special provisions address particular types of transactions:
individual transactions of less than $25,000 are exempt, and credit card transactions
will not be included until October 1, 2008.
To achieve greater transparency, the act requires the database to provide the
following information about each federal award:
! Name of entity receiving award
! Amount of award
! Type of award (e.g., grant, loan, contract)
! Agency funding award
! A North American Industry Classification System (NAICS) code of
the recipient or a Catalog of Federal Domestic Assistance (CFDA)
number (where applicable)27
! Program source
! Award title that describes the purpose of the funding
! Location of recipient
! City, state, congressional district, and country in which award
performance primarily takes place
! Unique identifier for entity receiving award and of the parent entity
of recipient, if one exists
! Any other information specified by OMB
S. 2590’s sponsors, mindful of the criticism that government databases are often
difficult for non-experts to use, included language that requires OMB to ensure the
database is accessible through a “searchable website.”28 The act thus requires that
the website permit users to (1) conduct a search of federal funding by any of the data
elements listed above, and (2) determine the total amount of federal funding awarded
26 Entities with less than $300,000 may be required to report on subawards in the future if
the Director of OMB determines this requirement is not unduly burdensome to those
entities.
27 The Census Bureau assigns an NAICS code to each business establishment for the
purposes of collecting and analyzing statistical data on the U.S. economy. NAICS codes are
two to six digits long, with each digit representing information about the economic sector
in which the establishment conducts the largest portion of its business. CFDA numbers are
assigned by the General Services Administration (GSA) to all federal domestic assistance
programs. A CFDA number usually has five digits, where the first two digits represent the
federal agency and the last three digits indicate the specific program for which the agency
is providing funding.
28 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs,
Federal Financial Accountability and Transparency Act of 2006, S.Rept. 109-329.

CRS-7
to an entity by fiscal year. In addition, the act stipulates that the website must
provide information in a downloadable format, and that agencies are required to post
new information to the website within 30 days of making an award. The legislation
also requires the new website to allow the public the opportunity to provide input on
the site and recommend improvements.
Three major financial assistance databases are identified in the act as likely
sources of information for the new website — the Federal Procurement Data System
(FPDS), the Federal Assistance Award Data System (FAADS), and Grants.gov.29
According to the provisions in S. 2590 as initially passed by the House and Senate,
a user must be able to access information from all three databases in a single search.
The bill was explicit on this point; it would not be acceptable merely to provide links
to these or other databases, because that would force users to search for information
at different websites. The “single search” provision of S. 2590 was modified by S.
Con Res. 114, allowing grants and contracts to be searched separately on the new
public website. S.Con.Res. 114 also added another reporting requirement: the
Government Accountability Office is to provide Congress with a compliance report
on P.L. 109-282 no later than 2010.
As previously noted, the act does not require information on subcontractors and
subgrantees to be included in the database until January 1, 2009. The delay reflects
the fact that data on subrecipients are not currently collected consistently across
federal agencies and programs. To address existing gaps in the data on subawards,
the act requires OMB to implement a pilot program that tests the feasibility of having
primary recipients provide information on their subgrantees and subcontractors.
There is a provision in the legislation that allows federal award recipients and
subrecipients to be reimbursed for the costs associated with collecting and reporting
data on subrecipients. The act also specifies that any requirements for collecting data
on subawards made by state and local governments under block and formula grants
be cost-effective. According to CBO, no unfunded mandate would be placed on
recipients or subrecipients for complying with the act.30
The act also requires OMB to submit an annual report to the Senate Committee
on Homeland Security and Governmental Affairs and the House Committee on
Government Reform. The report is to include data on public usage of the website,
an assessment of the reporting burden on federal award and subaward recipients, and
29 The Federal Procurement Data System is a database of federal contracts maintained by
GSA, and the Federal Assistance Award Data System is a database of federal grants
maintained by the Census Bureau. Grants.gov is part of the E-Government initiative, and
it permits grant seekers to find, apply for, and manage federal grants through a single Web
portal. All entities that apply for federal assistance through Grants.gov are assigned a
unique identifier known as a Data Universal Numbering System (DUNS) number. Complex
entities, such as state or local governments, may have multiple DUNS numbers, making it
difficult, at times, to link subunits to the parent entity.
30 U.S. Congressional Budget Office, S. 2590: Federal Funding Accountability and
Transparency Act of 2006
, Aug. 9, 2006, at [http://www.cbo.gov/
showdoc.cfm?index=7483&sequence=0].

CRS-8
an explanation of any extension of the subaward reporting deadline. The act also
requires OMB to post a copy of the report on the Web.
Implementation Issues
The legislation’s broad appeal is explained in part by its non-controversial
objective: to increase accountability and reduce wasteful spending by making
government operations more transparent. Yet, while support for the intent of S. 2590
is widespread, several issues regarding its implementation should be noted.
Reliability of Underlying Data
A database of the breadth and depth contemplated by the Federal Funding
Accountability and Transparency Act is only as useful as the quality of the
information that populates it. As noted previously, the act refers to three existing
databases as likely sources of information for the new public database: FAADS,
FPDS, and Grants.gov. The information in Grants.gov is not currently available to
the public, and the quality of the data it contains is unknown. A number of observers
have cautioned that a database of federal assistance relying on information from
FAADS and FPDS would be of limited value. Both government officials and
knowledgeable members of the public describe significant weaknesses in FAADS
and FPDS — such as incomplete and inaccurate information — that cannot be
quickly corrected. These observers suggest that substantial changes in the collection,
reporting, and verification of information relating to federal assistance awards would
likely be necessary before FAADS and FPDS could be considered reliable sources
of information.
In a 2005 report, GAO noted that FPDS users lacked confidence in the data
provided, largely because there was no rigorous system in place to ensure the data
were accurate and complete.31 This problem has not been resolved.32 A panel of
procurement experts recently attempted to use FPDS in their evaluation of federal
contracting operations, but reportedly found so many errors in the data that the
chairman declared that “FPDS is not a reliable database.”33 One reason the data are
inaccurate is human error; contract information may be incorrectly entered into FPDS
by inexperienced users who have received minimal training.34 FPDS data are also
notoriously incomplete. For example, the Department of Defense — which accounts
for 60% of all federal contract actions — is only beginning to feed information on its
31 U.S. Government Accountability Office, Improvements Needed to the Federal
Procurement Data System-Next Generation
, GAO-05-960R, Sept. 27, 2005, pp. 1-2.
32 In an e-mail between the author and Rod Lantier, Director of FDPS at GSA, August 22,
2006, Mr. Lantier wrote that there is no ongoing data verification, only an annual
“confirmation” from the 24 Chief Financial Officers Act agencies that they entered the data
as accurately as possible.
33 Chris Gosier, “Contracts database short on info, long on problems,” Federal Times, July
31, 2006, p. 5.
34 Ibid.

CRS-9
contracts into FPDS.35 Moreover, agencies vary in the degree to which they fill out
the fields in the database, resulting in data of uneven quality.36 In a recent example,
FPDS users reported that the database failed to consistently identify contracts related
to Hurricane Katrina recovery efforts that were awarded without competition.37
Finally, data on subcontracts is not contained in FPDS, but instead is reported in an
entirely separate database, the Electronic Subcontracting Reporting System (eSRS)
— a system that does not appear to capture all of the information on subrecipients
required by the act.38
Similar problems affect FAADS, the government’s primary source of grant
award information. In a recent review of 86 federally funded grant programs, GAO
determined that in the majority of cases, the administering agencies provided no data,
incomplete data, or inaccurate data to FAADS over a three-year period.39 The report
concluded that these problems occurred because (1) the Census Bureau lacked the
resources to ensure agencies were submitting accurate and timely data, (2) agency
program officials lacked knowledge of FAADS reporting requirements, and (3)
agencies had not implemented sufficient oversight to ensure they were submitting
accurate data. A Census Bureau official concurred with these findings, adding that
a number of data elements required by S. 2590 are not uniformly captured by federal
agencies or grant award recipients, such as information on subrecipients and the
congressional district in which federal funds are spent.40 The official also noted that
agencies are currently required to update their information in FAADS on a quarterly
basis, so it may take time for agencies to develop the capability to update FAADS
within 30 days of making an award, as S. 2590 requires. Given the amount of work
necessary to enhance the scope, quality, and timeliness of information reported to
FAADS, the official was skeptical that the database would meet the bill’s
requirements by the January 1, 2008, deadline.
Members of Congress have also expressed concerns about FPDS and FAADS.
During floor debate of the bill in the House, one supporter cautioned that S. 2590’s
potential to improve oversight of Federal funds, while substantial, would be largely
determined by the degree to which improvements in FPDS and FAADS were made
35 Ibid.
36 Testimony of Gary Bass, President of OMB Watch, Federal Funding Accountability and
Transparency Act
, hearing on S. 2590, 109th Cong., 2nd sess., July 18, 2006.
37 Chris Gosier, “Contracts database short on info, long on problems,” p. 5.
38 eSRS is managed by the Small Business Administration. According to the eSRS website,
the system replaces paper forms SF-294, Subcontracting Report for Individual Contracts,
and SF-295. Summary Subcontract Report. See [http://www.esrs.gov/].
39 U.S. Government Accountability Office, Rural Economic Development: More Assurance
Is Needed that Grant Funding Is Accurately Reporte
d, GAO-06-294, Feb. 24, 2006, pp. 23-
34.
40 Telephone conversation between the author and Jerry Keffer, Chief of the Federal
Programs Branch U.S. Census Bureau, Aug. 17, 2006.

CRS-10
during implementation.41 Another supporter expressed concern that the problems
with FPDS and FAADS were so significant, that “if the administration is not
committed to making this legislation work, all we will get is another incomplete and
hard-to-use database.”42
Another point of view suggests that FAADS and FPDS do not need to be error-
free in order to help accomplish the bill’s objectives. Even with gaps in the data, it
is argued that a publicly accessible database on federal financial assistance will
constrain funding for earmarks and arguably “wasteful” projects if members of the
executive and legislative branches are concerned those awards might be in the
database.
OMB Watch Database.
OMB Watch has announced its intention to launch
a website in October 2006 called “FedSpending.org” that will provide information
on federal grants and contracts in a manner very similar to the database mandated
under the act.43 By providing the public with immediate access to data on federal
awards through a free website, OMB Watch said it hopes FedSpending.org will
“serve as a baseline for OMB’s version” of the database — which is not required to
be online until 2008 — and that the government will “feel a sense of urgency to
improve the quality of its information on spending.”44 However, to the extent that
FedSpending.org relies on the FPDS and FAADS databases for information, the same
concerns regarding reliability and coverage will apply.
Implementation Costs
Concerns have also been expressed regarding the cost of implementing the
database contemplated by the Federal Funding Accountability and Transparency Act.
Two types of costs are of concern — the cost of implementing the act as a whole and
costs associated with the development of information on subgrantees.
Overall Implementation Costs. In response to concerns about the
reliability and completeness of the FPDS and FAADS databases, Clay Johnson, the
deputy director for management at OMB, said the new database will meet the
requirements of the act within the time frame established by the legislation.45
Johnson also said that implementing the new public database will “cost a little
money, not a lot” because “most of the data exists” already — a view that appears
41 Rep. Danny Davis, “Federal Funding Accountability and Transparency Act of 2006”
remarks in the House, Congressional Record, daily edition, vol. 151, (September 13, 2006),
H6498-H6501.
42 Rep. Henry Waxman, ibid.
43 Letter from Gary Bass, OMB Watch Executive Director, to OMB Watcher, Sept. 26,
2006, at [http://www.ombwatch.org/article/articleprint/3608/-1/82].
44 Ibid.
45 Johnathan Nicholson, “Lawmakers Pledge Oversight On New Spending Database Effort,”
Daily Report for Executives,” Sept. 15, 2006, at [http://pubs.bna.com/ip/BNA/DER.NSF/
9311bd429c19a79485256b5700ace13/a6458e8c2/9152006].

CRS-11
somewhat at odds with previously discussed evidence that there are significant gaps
in the data and that collecting this information could be costly.46
By asserting that the data required by the act is already available, OMB may
have affected the Congressional Budget Office (CBO) cost estimate for implementing
the law. According to CBO, it will cost $15 million to establish and maintain the
new database of federal assistance between 2007 and 2011.47 The CBO estimate,
however, was based on OMB’s assurance that “the government currently collects all
of the information needed to create a comprehensive database on federal spending.”48
The estimate may thus reflect the cost of simply combining existing systems without
fully accounting for the costs of improving the quality of the data in those systems.
One industry observer was quoted as saying that enhancing and integrating existing
data sources to meet the requirements of the act was a “complex” problem, and that
implementing the database would more likely cost “tens or hundreds of millions of
dollars,” not the $15 million projected by CBO.49 OMB said it would release an
implementation plan in January 2007, which may address issues surrounding the
timing and cost of improving existing data sources.50
Subgrantee Information Costs. In a letter to Senator Coburn, the National
Association of State Auditors, Comptrollers, and Treasurers (NASACT) expressed
strong reservations about the potential financial and administrative burden that the
bill’s reporting requirements would impose on state and local governments.51 In
particular, NASACT noted that collecting data on subgrantees would be “very, very
costly” for state and local governments, since federal grant funds are often passed
down multiple levels (e.g., a state receiving federal assistance gives a subgrant to
organization A, which in turn gives a subgrant to organization B). Additional costs
could be incurred under the bill, NASACT said, if state and local grant recipients
were required to modify their financial systems to collect and report any other new
information. After S. 2590 was amended to include the pilot program for collecting
information on subgrantees, NASACT said it supported the bill with the new
language, but also noted that it still believed “obtaining all the required information
will be a challenge.”52
46 Ibid.
47 U.S. Congressional Budget Office, S. 2590: Federal Funding Accountability and
Transparency Act of 2006
, Aug. 9, 2006, at [http://www.cbo.gov/
showdoc.cfm?index=7483&sequence=0].
48 Ibid.
49 Jenny Mandel, “OMB says new search tool will reflect accurate spending data,”
GovExec.Com, Sept. 14, 2006, at [http://www.govexec.com/dailyfed/0906/091406m1.htm].
50 Jonathan Nicholson, “Lawmakers Pledge Oversight On New Spending Database Effort.”
51 Letter from R. Thomas Wagner, Jr., President of NASACT, to Sen. Tom Coburn, July 5,
2 0 0 6 , a t [ h t t p : / / w w w . n a s a c t . o r g / t e c h u p d a t e s / d o w n l o a d s / C R C / L O C /
07_06-NASACT_coburn.pdf].
52 Letter from Jan I. Sylvis, President of NASACT, to Sen. Tom Coburn, Sept. 5, 2006.

CRS-12
Identification of “Earmarks”
Although one of the stated purposes of the legislation is to enable the public to
use the on-line database to identify congressional “earmarks,” it is unclear how users
of the database created by the legislation would actually be able to do this, since
neither FAADS nor FPDS collects that information. Not all grants, loans, or
contracts are congressionally directed; some are at the discretion of the responsible
federal agency. Unless the congressionally-directed items in the new database are
specifically identified as such, the database will be of limited value for purposes of
earmark identification.
Also, the manner in which a funding action is described under the “award title”
field may lead the public to draw different conclusions about the value of a given
federally funded project. To use an egregious example, a $100 million grant may be
alternatively described as funding for, “planning and development of an
interconnected transportation system important to commerce and travel,” or, “a
highway to a virtually uninhabited village.” By the same token, an earmarked project
that some believe has merit may be described in a manner that puts it in an
unfavorable light. In this way, award descriptions may influence the public’s
perception of whether a funding action is “wasteful” or not.
Concluding Observations
As noted previously, the underlying logic of the Federal Funding Accountability
and Transparency Act is that, by providing citizens with information on federal
assistance awards through an online database, government officials will be less likely
to fund earmarks and arguably “wasteful” projects. To put this argument succinctly:
greater transparency will yield greater accountability. Most observers agree that in
order for a public database of federal awards to provide maximum transparency, it
must encompass as broad a range of financial assistance categories as possible. The
database to be established pursuant to the act would presumably provide substantial
transparency, since it covers all forms of federal financial assistance, including
contracts. Arguably, the database would also provide transparency by phasing in
information on subcontractors and subgrantees, thus allowing the public to track the
flow of federal funds down to the level of the ultimate recipient.
Although the creation of the database may require more time or money than
some estimates suggest, President Bush, the deputy director of OMB, and Senator
Coburn have all indicated they will provide support and oversight during
implementation. In remarks prior to signing the legislation, President Bush said the
act was an “important step” that “empowers the American taxpayer” with
information that can be used to “demand greater fiscal discipline” from both the
executive and legislative branches of government.53 The President also linked the act
to a broader agenda of increasing accountability in federal spending, including
earmark reform and the line-item veto. President Bush’s comments suggest that the
53 The White House, Office of the Press Secretary, “President Bush Signs Federal Funding
Accountability and Transparency Act,” press release, Sept. 26, 2006.

CRS-13
administration is committed to the act and may be prepared to provide the resources
needed to implement the database with complete and accurate information, even if
the costs exceed OMB’s current expectations. Clay Johnson, the deputy director for
management at OMB, was quoted as saying, “We will not be going public with
information that is not worthy of the public.”54 The original sponsor of S. 2590,
Senator Coburn, has also said that “there will be oversight to make sure we’re
making progress” implementing the database in accordance with the legislation.55
Finally, the new law may direct attention to increased transparency on the
revenue side of federal fiscal operations. In the Senate report accompanying S. 2590,
the additional views of Senators Coburn and Lautenburg included the statement that,
“Transparency in government decision-making should not be limited to simply
spending; it should be extended...to the tax code.” This sentiment was echoed by
Senator Obama, who said during floor debate on the bill that “greater transparency
of targeted tax benefits” was another step in improving government accountability
and performance.56 Given this objective, legislation seeking to increase transparency
in the tax code may be supported by some of the same government officials and
advocacy groups that supported S. 2590.
54 Jonathan Nicholson, “Lawmakers Pledge Oversight On New Spending Database Effort.”
55 Ibid.
56 Congressional Record, vol. 152, (Sept. 7, 2006), p. S9211.