TOPICS > Economy

Concerns Emerge on Prevention of Stimulus Fraud

BY Admin  March 19, 2009 at 3:30 PM EDT

U.S. Capitol; file photo

“Sunlight is the best disinfectant,” said Earl
Devaney, chairman of the Recovery Accountability and Transparency Board, which
polices stimulus spending, in his prepared remarks before the House Committee
Thursday. “I truly believe we have the opportunity to achieve a remarkable
level of transparency never before realized, coupled with unprecedented citizen
participation.”

Devaney also warned that federal agencies may have
difficulty hiring enough contract professionals to minimize the risks
associated with moving the money fast enough to accomplish the recovery act’s
goals, news agencies report.

The hearing comes on the heels of news that several of the
first contracts created under the stimulus bill have been awarded without
soliciting other bids. The Obama administration has called for increased
competition and oversight for all government contracts, including those under
the stimulus.

“As one guy said to me the other day, it’s like trying
to get a sip of water from a fire hose,” Kinney Poynter, executive
director of the National Association of State Auditors, Comptrollers and
Treasurers, says of the challenge to oversee such a large amount of money being
spent so quickly. “Speed and accuracy typically don’t go hand in hand.”

Recovery.gov, a Web site launched by the White House on the
day President Barack Obama signed the American Recovery and Reinvestment Act,
aims to track with “unprecedented levels of transparency and
accountability” how stimulus money is spent, following projects from
beginning to completion. “My vision here is that every reporter in America
will wake up and click on this site and be looking for problems,” Devaney
told more than 100 local officials at a stimulus conference in Washington on
Wednesday.

More than 40 states have also launched stimulus-tracking Web
sites, with pledges to report on the progress of infrastructure projects, the
number of jobs created, and efforts to prevent waste. In some cases, these
efforts extend down to the county level. Pennsylvania’s Web site, for instance,
includes an interactive map that allows residents to track the stimulus bill’s
effectiveness county by county.

Local officials are, in many cases, relying on tools already
in place to detect fraud and waste. “We have a pretty strong foundation to
do this work,” says Jerome Heer, director of audits for Milwaukee County
in Wisconsin. Fraud hotlines are already “posted on Web sites, distributed
on flyers, and posted in country offices,” he says. “But we expect an
uptick [in reports] because this is such a visible expenditure.”

Other watchdogs are more apprehensive about the logistics.
Kinney Poynter recently attended a day-long conference hosted by the White House
for recovery czars to air concerns about the tracking process. “There was
a pretty consistent concern [at the meeting] about funding oversight at the
state and local level,” he says. “There is no funding specifically
for state and local government oversight and accountability [written into the
stimulus bill].”

In some cases, budget pinches as a result of the economic
crisis in many states have left auditing offices short staffed. “There is
a concern about the lack of human capital,” Poynter says. “To have
that responsibility thrust upon us in a pretty quick manner when you have fewer
staff [is difficult].”

And while the attempts at transparency are indeed
unprecedented, they may be too ambitious. “[This bill] adds layers of
transparency we’ve never seen before,” says Poynter. “How far down
you can go is problematic. Congress would like to track the dollar from when it
leaves [Capitol] Hill to the time the blacktop is laid. But it will be tough.”
Electronic reporting will do much to speed the process of tracking money and
keep accounting costs low, he adds.

Citizen watchdogs are also being asked to rally their
efforts to keep the funds on track. StimulusWatch.org, launched by research
fellow Jerry Brito of George Mason University’s Mercatus Center, is designed to
allow “citizens around the country with local knowledge about the proposed
‘shovel-ready’ projects in your city, to find, discuss and rate those projects.”

In prepared remarks before the House Committee Thursday,
Brito said, “Dozens of inspectors general and official auditors around the
country will follow the stimulus money. They will do commendable work, but they
can’t possibly look at every payment and every transaction. … We can
supplement the very small number of professional auditors with a very large
number of small contributions from citizens.”

ProPublica,
an independent, non-profit organization of investigative journalists, has also
launched a blog devoted to following stimulus projects “from bill to
building.” But as stimulus money begins to be doled out, how effective the
measures in place are at tracking projects’ progress in real time remains to be
seen. “How we spend the money in this case is integral to the mission,”
says Milwaukee County’s Heer. “To the extent we can prevent fraud on the
front end rather on the back end is key.”