by Dennis Powell, e-Management

Politics aside, the goals of The American Recovery and Reinvestment Act (ARRA), or Stimulus Act, are hefty: (1) job creation and (2) economic growth during turbulent times.  

What would happen…

If the U.S. Department of Transportation (DOT) mismanages $8.4 billion stimulus money for highway projects and as a result falls short of creating over three-quarters of a million jobs? If the U.S. Department of Health and Human Services (HHS) squanders $10 billion intended for scientific research into such areas as alien flu? If the U.S. Department of Housing and Urban Development (HUD) wastes $1 billion allocated to improve public housing?

Well, the answers might be an “I told you so” from the minority party in Congress, which could lead to possible change in power on Capitol Hill. There could also be great embarrassment to the current administration. In the case of HHS, lack of appropriate management of stimulus funds could create a public health crisis.

Inefficient government?

Whether real or perceived, some government agencies have a reputation of being “inefficient” in the delivery of programs that work for the good of the public.  Stimulus funding failure due to broken processes within government could have devastating effects on new and existing programs, housing (see our Housing Crisis blog series), employment, the economy as well as overall consumer—all of which could lead our nation into a deeper recession. Clearly, there are great risks involved and failure is not an option.

Transparency and accountability

President Obama has said he wants greater transparency and accountability to the public surrounding all government initiatives including stimulus spending.   As a result of this heightened need for transparent government, a Recovery Accountability and Transparency Board was formed to help prevent abuse, fraud, and waste of funds, and hopefully inspire greater efficiencies within government. According to recovery.gov, part of the role of the Board is to recommend to agencies ways to avoid problems and pitfalls that may compromise ARRA activities.

Properly managing activities relating to ARRA is likely to be a daunting task for many federal agency decision makers and program managers, who in the past faced a variety of threats and risks associated with the successful performance of their agency missions. With billions of dollars being funneled to federal, state, and local government agencies, it comes as no surprise that risk management is a key component for successful implementation of stimulus initiatives.  

So, what does this mean for you and your agency’s plan to mitigate ARRA activity risks?

Simply put, a risk is a probability that an objective will not be met. Risk management is your agency’s methodology to identify, assess and weigh your risk levels. In order to avoid a public relations “gotcha movement” or worse, you must implement a plan to monitor, reduce, and control the probability of undesirable outcomes such as fraud, hiring of inadequate contractors, or accidents that result in the loss of life.

According to a recent Memorandum for the Heads of Departments and Agencies (, April 3, 2009) from Peter R. Orszag, Director, Office of Management and Budget (OMB), OMB strongly encourages agencies to draw from current Senior Management Councils—comprised of CFOs, CIOs, Chief Human Capital Officer, and Program Managers—to track the performance of ARRA activities and their associated risks. Commons risks across agencies may include delays in distribution of funds, fraud, abuse, inefficient procurements, use of improper contract pricing models, inability to report progress etc. 

What should you do or consider when assessing the risk of your ARRA programs or activities?

In order to meet objectives, OMB has instructed agencies and recipients of stimulus dollars to have a game plan for how they intend to track their success and be transparent and accountable.  OMB highly recommends government agencies “undertake efforts to identify, prioritize, and mitigate implementation risks” associated with ARRA activities. 

How can you mitigate your risk? 

Here is a sample of common risk mitigation actions as outlined by OMB for all federal agencies.

1)     Agencies should determine how best to award funding in a way that is quick and compliant.

2)     Agencies should implement performance evaluation and review processes with the ability to report the status of the ARRA programs, activities, and intended outcomes, consistent with Recovery Act requirements.

3)     Agencies should pay special attention to contracts that are not fixed-price and ensure the best personnel are in place to mitigate risk to government.

4)     Agencies should examine procurement practices in an effort to promote “competition to maximum extent practicable.”

5)     Agency acquisitions must have meaningful and measureable outcomes that promote the success of ARRA.

6)     Agencies should consider alternative ways to contract financing such as payments based on milestones.

7)     Agencies must review personnel needs in an effort to place credentialed contracting officers, COTRS, and program managers that can perform at the proper complexity level of ARRA activities.

Continuous risk management

The above is only a snapshot of risk management guidelines from OMB for ARRA activities.   In order to meet these guidelines, your agency needs a continuous risk management system that automates your reporting back to OMB and agency executives as well as provides a summary of your organizations risk posture.  Continuous risk management is your agency’s safeguard against potential for thousands of failed tasks and disaster incidents that can harm your organization’s credibility and the people it serves.

Questions for consideration…

Do you think the OMB guidelines for risk management around ARRA activities are enough to ensure success? What other things should government agencies do to reduce or eliminate negative outcomes surrounding stimulus spending? Can continuous risk management really help agencies that have had performance issues in the past successfully execute ARRA activities?

Everyone is invited to discuss this topic. Be sure to check earlier blog threads.