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Concerns Emerge on Prevention of Stimulus Fraud

“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.”

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