Normally we don’t have a lot to say about pending legislation. Pending acquisition regulations: yes. Pending public laws: not as much. As far as we can remember, our last (and only) foray into pending legislation was this bit on “The Subcontractor Fairness Act” wherein we opined that, “This is bad legislation and, if signed into law as written, will do much more harm than good. “

The reason we so rarely get worked up about pending legislation is that such legislation so rarely survives as written. There are Committee hearings and votes, and amendments and CBO input and more amendments … it’s difficult to get too upset about something until it seems likely to become law; at which point it’s time to call your Congressman and/or Senator and remind them that, when in doubt, the best rule is, “primum non nocere.” (“First, do no harm.”)

But sometimes we are called to point out that a piece of pending legislation is so full of potential pitfalls that we recommend calling one’s Congressperson and/or Senator right now, so as to make sure the legislation doesn’t survive as drafted, and so as to ensure that any pending idiocies are amended into oblivion.

This is one of those times.

It’s called “The DATA Act” (H.R. 2146) and it’s chock-full of things that are going to be problematic for government contractors. Introduced by Representative Darrell Issa (R-CA 49), it has the ostensible purpose of promoting “accountability and transparency in federal spending.” Let’s summarize its requirements:

• Any recipient of more than $100,000 in federal funds—whether such funds be grants or loans, contracts or cooperative agreements, subcontracts, purchase orders, task orders, delivery orders or even blanket purchase agreements—would be required to report exactly how those federal funds were spent to a brand-new oversight board called, “Federal Accountability and Spending Transparency Board” (or “FAST Board” if you like catchy acronyms).

• The information to be reported to the FAST Board includes: “the amount of Federal funds that were expended or obligated to projects or activities; a detailed list of all projects or activities for which Federal funds were expended or obligated; and such additional information reasonably related to the receipt and use of Federal funds as the Board shall require.”

• The draft legislation mandates reporting by recipients not less often than once per quarter. However, the legislation also states that, “To the extent practicable, the Board shall require continuous or automatic reporting for compliance ….”

• The information provided by recipients (as well as the information reported by awarding agencies) will be published online by the FAST Board.

• The information provided by recipients will be combined with “other compilations of information, such as Government databases and other proprietary and nonproprietary databases” so that the eligibility of recipients to receive Federal funds can be verified, and so that “Executive agencies, Inspectors General, and law enforcement agencies” can “track Federal awards to find waste, fraud, and abuse.”

• Penalties may be imposed on those recipients that fail to accurately report required information.

In case we weren’t clear, we have grave concerns about this piece of legislation. First of all, the data and uses for that data seem somewhat duplicative. Doesn’t the Federal government already track how it awards its funds? (Note: that was a rhetorical question. The answer is yes. Yes it does. It’s called USAspending.gov.)

And doesn’t the Federal government already have a means to verify the eligibility of contractors to receive Federal funds? (Hint: that was another rhetorical question right there. It was called the Excluded Parties List System (EPLS) but is soon to be called the System for Award Management or SAM.) It’s right over here.

More importantly, do you as a recipient of Federal funds want yet another financial report to submit? Many of you already submit monthly Cost Performance Reports pursuant to your contracts’ EVMS clauses. Some of you submit periodic Contract Funds Status Reports (CFSRs) and/or Quarterly Limitation of Payments (QLOP) reports. Chances are, you already track expenditures in great detail and report that information in several different formats. These FAST Board reports will simply be another report of the same financial data, in a different format, that will need to be proofed and reconciled, and which will be audited and questioned and supported by your staff—whom you will need to hire more of in order to execute the foregoing tasks, in a time of declining budgets and competitive pressure to cut your indirect costs.

But that’s not even the part that really worries us. Go back and review the third bullet point in the list above, the part dealing with reporting frequency. Take a look at the directive to have the FAST Board require “continuous or automatic reporting.” See that part? To us, it means that the Federal government wants to link to your accounting system, so that it can pull financial expenditure information right from your books and records.

How does that sound to you?

You know, though, we’re not the only ones who have serious issues with The DATA Act. Over at OMBWatch, they call the pending legislation “troublesome” and “dangerous” and “fatally flawed”. But not for the same reasons we did. Their concerns include: it would repeal FFATA (“The Federal Funding Accountability and Transparency Act”), a law passed in 2006 that (among other things) created USASpending.gov. FFATA was signed into law with the same purpose as espoused by The DATA Act … and we’re not at all sure why The DATA Act needs to replace FFATA (nor apparently is OMBWatch). Moreover, OMBWatch notes that The DATA Act’s requirements “sunset” in seven years, which means that in seven years either the bill gets extended or transparency ends. In their words—

… by repealing FFATA, the bill would actually take spending transparency a few steps back, because FFATA contains a number of data elements that are required to be reported that the DATA Act does not. And unless Congress acts to reauthorize the bill in 2018, the spending information that appears on USAspending.gov and all the other spending transparency created by the DATA Act will disappear. We shouldn't have to be reconsidering whether spending transparency is necessary every seven years or worried that a polarized Congress finding itself in a legislative stalemate will fail to agree on approving time-sensitive legislation.

And to cap off this little tirade, we note with sadness and alarm that, on June 22, 2011, the House Committee on Oversight and Government Reform unanimously approved The DATA Act and sent it to the House floor for consideration.

It may already be too late. But don’t let that stop you from trying to stop this bill.