OMB Update

Mark Reger, Deputy Controller Gilbert Tran, Policy Analyst March 11, 2015

Topics

• • • Improper Payments Transparency – Data Act Implementation Uniform Guidance for Grants 2

Improper Payments - Brief History • • • • November 2002 – Improper Payments Information Act (IPIA) − Created basic framework for identifying and reporting improper payments November 2009 – Executive Order 13520 − Improved agency accountability − Increased transparency July 2010 – Improper Payments Elimination and Recovery Act (IPERA) − Put into law specific thresholds for identifying high-risk programs − − − Strengthened corrective action plans Expanded payment recapture audits Established annual OIG compliance reviews January 2013 – Improper Payments Elimination & Recovery

Improvement

Act (IPERIA) − Codified EO 13520 requirements − − Improved agency estimation and recovery of improper payments Reinforced and accelerated the Administration’s “Do Not Pay” efforts 3

A-123 Appendix C Update • Vision: transform improper payment compliance framework to create a more unified, comprehensive, and less burdensome set of requirements for agencies and OIGs • IPERIA required OMB to issue new guidance —we approached it as an opportunity to overhaul Appendix C of OMB Circular A-123 • new Appendix C, we had to consider the following: – The three statutes and the Executive Order – Previous Appendix C version (M-11-16) – Input from agencies, OIGs, GAO, and OMB 4

New Appendix C Highlights • The updated guidance reconciles IPERIA requirements that are identical to requirements from EO 13520 • Consolidates and streamlines reporting requirements for agencies and OIGs – – Agencies can incorporate most of their reporting into AFR or PAR OIGs for agencies with high-priority programs are no longer required to issue separate reports under EO 13520 and IPERA —one report will suffice • Provides a more detailed categorization of improper payments • Adds an internal control framework for addressing improper payments • Provides guidance to agencies —as required by IPERIA—to strengthen the statistical validity of estimates and include payments to Federal employees in the definition of improper payments, among other things 5

New Improper Payment Categories • • • Previously only three categories; not very useful New guidance establishes new categories for reporting improper payments Provides more granularity on estimates, leading to: – More effective corrective actions at the program level – More focused strategies for reducing improper payments at the government-wide level – Better communication about the nature of improper payments

Reason for Improper Payment Program Design or Structural Issue Inability to Authenticate Eligibility Death Data Financial Data Failure to Verify: Excluded Party Data Prisoner Data Other Eligibility Data

(explain)

Federal Agency Administrative or Process Error Made by: State or Local Agency Other Party

(e.g., participating lender, health care provider, or any other organization administering Federal dollars)

Medical Necessity Insufficient Documentation to Determine Other Reason

(explain)

Type of Improper Payment Overpayments Underpayments A B 10 1 2 3 4 5 6 7 8 9 11 12 13

6

7

Corrective Actions • • We are conducting an analysis to identify program-specific corrective actions with the highest return-on-investment or potential for substantially reducing improper payments Questions we are interested in: – Which current corrective actions are the most effective in reducing improper payments in your programs?

– Could you list one or two things that your programs are not already doing (but could realistically do) that would lead to a significant decrease in improper payments?

– What, if any, are the barriers preventing your agency from taking these actions, and what would it take to overcome those barriers?

– If you implemented these actions, by how much could the improper payment rate go down for your programs?

– How has your agency advanced data analytics and improved technology to prevent and reduce improper payments ?

8

DATA Act Implementation Update

9

DATA Act Goals

• Expand the Federal Funding Accountability and Transparency Act of 2006 by disclosing direct federal agency expenditures and linking federal contract, loan, and grant spending information to programs of federal agencies to enable taxpayers and policy makers to track federal spending more effectively. • Provide consistent, reliable, and searchable government-wide spending data that is displayed accurately for taxpayers and policy makers on the USASpending.gov website. • Analyze federal spending data to proactively prevent waste, fraud, abuse, and improper payments. • Simplify reporting for entities receiving federal funds by streamlining reporting requirements and reducing compliance costs while improving transparency. • Improve the quality of data submitted to USASpending.gov by holding federal agencies accountable for the completeness and accuracy of the data submitted.

10

DATA Act in Context of Spending Life Cycle

Receipts/ Financing Appropriation Payment Apportionment Obligation Award Commitment Allotment (Allocation)

360 Spending Life Cycle DATA Act FFATA (USAspending.gov)

Governance and Implementation Structure

Executive Steering Committee – OMB and Treasury

Inter-Agency Advisory Committee – OMB, Treasury, and Representatives from: CFOC, BOAC, ACE, COFAR, CAOC, CIOC, PIC, OSTP, GSA, CIGIE Lead Design and Implement Support Consult

Treasury

(Data Transparency PMO)

OMB OMB

Data Definition Standards

Treasury

Blueprint/roadmap between data elements

Treasury

Data Exchange Standards

OMB

Pilot to Reduce Admin Burden

Treasury

Data Analytics Senior Accountable Officials from each of the 24 CFO Act agencies Industry Non-Federal stakeholders Federal Lines of Business 12 12

DATA Act Requirements

FFATA Sec. 3 “Full disclosure of federal funds”

13

DATA Act Implementation Approach

Data-centric

• Avoid massive system changes, rather focus on managing data

Incremental

• Release data as it becomes available

Reuse

• Maximize and leverage use of existing processes and investments

Collaborative

• Feedback drives improvements

Iterative/Agile

• Conduct many small scale pilots 14

DATA Act Milestones

DATA Act Requirements • DATA Act Enacted (May) • Issue guidance to agencies on data standards and conduct pilot (May) Establish pilot to standardize financial reporting (May) First IG report (Nov.) • • Agencies report information in accordance with the standards. Information published on public website (May) Report on results of reporting pilot (August) OMB Guidance to agencies to reduce reporting burden (August)

2017 2018 2014

• • Agencies implement June 2013 OMB memo on data quality (Q1) USAspending transitioned to Treasury (Feb.)

2015

Launch improved USAspending (March)

2016

USAspending short-term improvements 15 15

Federal Spending Transparency at the State Level

• • • States have been making great strides and launching robust transparency initiatives How do you use this data to manage?

How can we complement and support your work on transparency with our efforts?

We welcome continued feedback and partnership.

Check out our GitHub page: http://fedspendingtransparency.github.io/ 16

♫ Are You Ready for This ? The New Uniform Guidance 2 CFR 200

Nov. 2009:

Executive Order: Reduce Improper Payments Guidance Reform History Feb 2012: Advance Notice of Proposed Guidance (public comments)

† April 2013

Dec 2013: Final Uniform Guidance

Feb 2011:

Presidential Memo: Reduce Administrative Burden

Feb 2013:

Notice of Proposed Guidance (public comments) 18

December

2013: Uniform Guidance Published Guidance Reform History

June 2014:

Agencies Submit Draft Rules to OMB, Continued Outreach on Implementation

December 2014:

Final Guidance Effective, Baseline Metrics Collected, Case Studies of Best Practices Published

January-April

2014: Training Webcasts, Publish 2014 Single Audit Compliance Supplement Fall 2014: Metrics, Additional FAQs and Webcast 19

Eliminating Duplicative and Conflicting Guidance

Then:

Awards Received • A-102 & A-89 • A-87 • A-133 &A-50 INSERT YOUR STATE OR AGENCY HERE Subawards to universities • A-110 • A-21 Subawards to nonprofits • A-110 • A-122

Now: All OMB guidance streamlined in 2 CFR 200 .

20

21

22

2 CFR 200 -Basic Layout • • 6 Subparts A through F – – Subpart A, 200.XX – Acronyms & Definitions Subpart B, 200.1XX – General – Subpart C, 200.2XX – Pre Award -

Federal

– Subpart D, 200.3XX – Post Award –

Recipients

– Subpart E, 200.4XX – Cost Principles – Subpart F, 200.5XX – Audit 11 Appendices - I through XI 23

Top Ten Impact Changes • • • • • 200.1 through 99 Standard Definitions 200.205, Review of risk of applicants – Must have framework for evaluating risks – Should consider financial stability, performance history, audit reports 200.314, Supplies (computing devices) 200.320, Procurement Standards 200.407, Prior Written Approval (22 items) 24

Top Ten Impact Changes • • • • • 200.407, Prior Written Approval (22 items) 200.413, Direct Costs 200.414, Indirect Costs – Must accept approved negotiated rates (some exceptions) – 10% of MTDC de minimis IDC – One time four-year extension of current approved rate (final and pre-determined rates only) 200.430, Compensation – Personal Services 200.5XX, Single Audits – Higher Threshold (200.501) – Better Transparency (200.512) – More Focus on Risk (200.518) 25

“Should” and “Must”

Shall is Out – Yes, Shout it Out But Should is In May will be back So will April and June Orange is the new Black Must is the new Shall 26

Procurement “Claw” (Sections 200.317-326)

1 .

3.

Sealed 4.

Bids Competitive 2. Proposals Small Purchases 5.

Sole Source Micro Purchases General Standards: A. Documented Policies B. Necessary C. Full & Open Competition D. Conflict of Interest E. Documentation i. Cost & Price Analysis ii. Vendor Selection 27

Procurement “Claw” (Section 200.320)

3.

Sealed Bids 4.

Competitive Proposals 2.

Small 1.

Micro Purchases Purchases • > $150K • Construction -- -- -- projects • Price is a major factor • Up to $150K • Rate quotations • No cost or price - analysis • $ 3K • No quotations • Equitable distributions • > $150K • Fixed price or cost -- reimbursement • RFP with evaluation methods 5.

Sole Source • Unique • Public emergency • Authorized by agency (or PTE) • No competition 28

29

Agency Implementation

• Adopted by 28 Federal awarding agencies on December 19, 2014 • Agency implementation regulations available in 2 CFR • Effective for awards issued on or after December 26, 2014 30

Interim Final Rule Comments

• Joint interim final rule comments were due February 17, 2015 • OMB is in the process of reviewing comments in coordination with Federal awarding agencies 31

Metrics

• OMB Memorandum M-14-17 requests non Federal stakeholder feedback on the overall impact on burden and waste, fraud, and abuse • The Council on Financial Assistance Reform (COFAR) and OMB is currently accepting feedback on the COFAR website 32

Resources

• The COFAR website is available at: https://cfo.gov/cofar/ • Includes: – FAQs – Webcasts – Crosswalk to agency exceptions and additions 33