Auditor and lawmakers are skeptical of stimulus data

A lead government auditor and House lawmakers are questioning the Obama administration's claim that recipients of Recovery Act funds have directly saved or created more than 640,000 jobs.

In its first report examining the quality of recipient data, the Government Accountability Office found a range of questionable and potentially erroneous entries that could cause the jobs figure to be skewed in either direction.

For example, the watchdog found almost 4,000 reports in which recipients said they had created jobs, but did not list themselves as spending any Recovery Act money. Those reports accounted for nearly 60,000 of the 640,000 total jobs saved or created. In a reverse scenario, GAO found more than 9,000 reports in which recipients said they spent money but did not save or create any jobs.

"This was a good first step, but there are a number of significant data quality and reporting issues that need to be addressed," GAO acting Comptroller General Gene Dodaro told members of the House Oversight and Government Reform Committee during a hearing on Thursday morning.

During a conference call following the hearing, G. Edward DeSeve, special adviser to the president for the Recovery Act, explained there could be legitimate reasons jobs were reported without funding and vice versa. In some cases, DeSeve said companies might be creating jobs in anticipation of pending funds. In other instances, recipients received funds at the end of the reporting period and might not have hired new employees yet.

DeSeve acknowledged errors have been discovered but said they represent about 5 percent of the overall recipient reports.

One of the problems, GAO discovered, is federal agencies failed to review about one-quarter of recipient reports after they were submitted and the prime recipient only examined 1 percent a second time. The watchdog also found recipients inconsistently interpreted Office of Management and Budget guidance on how to calculate a full-time employee.

The confusion was evident from the volume of traffic to a help desk, according to Recovery and Accountability Board Chairman Earl Devaney. At the height of its operations, the call center was open seven days a week with more than 60 employees, yet recipients still "had unacceptably long waiting times," Devaney said. The desk has handled more than 31,000 separate requests for assistance, he noted.

"The truth of the matter is that while recipient reports provided for an unprecedented level of transparency, we must be able to rely on the reported data," said Rep. Edolphus Towns, D-N.Y., chairman of the committee. "At this point it is clear that errors found by GAO and others should be corrected immediately, not months later, no matter how difficult."

In the weeks since the Recovery Board posted 130,000 recipient reports on the stimulus-tracking site Recovery.gov, journalists and lawmakers have scrutinized the data and discovered likely errors. Recent attention has centered on recipient reports that identified nonexistent congressional districts. Administration officials have said the mistakes did not change the jobs total. Nonetheless, the data has been fixed on Recovery.gov, Devaney said.

House Republicans, however, suggested the information on Recovery.gov remains unreliable.

"In truth, these numbers are biased and misleading, and are simply being used to promote a political cause and point of view," said Rep. Darrell Issa, R-Calif., ranking member of the committee. "The Oxford English Dictionary defines this as propaganda."

Devaney said the mistakes, while disappointing, were not surprising and ultimately could improve transparency and accountability.

"In the past, this data would have been scrubbed from top to bottom before its release, and the agencies would have never released this information until it was perfect," he said. "You -- and the American public -- are now seeing what agencies have seen, internally, in the past. And, what we are all seeing, at least following the first reporting period, is not particularly pretty."

In addition, the data is incomplete. The administration said this week that roughly 10 percent of recipients failed to file a report, further distorting the jobs figure. Devaney said he does not yet have a list of the noncompliant firms but plans to post one on Recovery.gov.

The Recovery Act does not impose specific penalties on recipients that fail to report, but DeSeve said the terms and conditions of certain funding streams could allow for punishments against firms that do not file. Devaney said if lawmakers proposed legislative language to prohibit new funding for nonfiling firms, then he would support it.

"Even if criminal penalties are not practical, the fact that some would willfully not file is distressing and must be addressed," he said. "Agencies will need to decide what actions they are willing to take to ensure that the transparency and accountability aims of the Recovery Act are not disregarded."

The Recovery Board's tip line has received more than 340 complaints, many of which have been forwarded to agency inspectors general for further investigation, Devaney said. IGs have opened 77 investigations and are conducting more than 390 audits, evaluations and reviews, he said. Separately, GAO has received 106 allegations of misuse of Recovery Act funds, including improper spending, conflicts of interest and identity fraud, according to Dodaro.