Small businesses who rely on contracts with federal agencies for some of their revenue, will find themselves accountable to a new 11-member transparency board.
If you rely on the federal government for any contracts, brace yourself: You might soon have to deal with more red tape if you really want the business.
The idea behind what the Obama Administration proposed on Monday makes sense in the current political climate, which requires that every penny be counted. But the result is that small businesses will have to work harder to document what they are doing with the money they receive through federal contracts.
The executive order issued by President Barack Obama targets what he describes as wasteful spending. He believes he can find that waste by creating more transparency, which will come in the form of the Government Accountability and Transparency Board. This board is essentially a mirror of the one that helped dole out economic stimulus funding related to the American Recovery and Reinvestment Act. It will include 11 members selected from a cross-secction of federal agencies.
Notes President Obama in his Executive Order: "The American people must be able to trust that their Government is doing everything in its power to stop wasteful practices and earn a high return on every tax dollar that is spent. To strengthen their trust and deliver a smarter and learner Government, my Administration will reinforce the performance and management reform gains achieved thus far; systematically identify additional reforms necessary to eliminate wasteful, duplicative or otherwise inefficient programs; and publicize these reforms so that they may serve as as model across the Federal government."
Obama is giving his waste watchdogs, led by Vice President Joseph Biden, six months to come up with the technology to detect fraudulent or wasteful spending. Translation: The government plans to use the same systems that it used to monitor economic stimulus grants, which requires quarterly updates from the people who got the money on how it is/was being spent. But it will need to expand that system to accommodate this new task.
I'm sure no one reading this post disagrees with the Obama administration's cause: to make sure that taxpayer money is being spent the way that is supposed to be spent. But I'm sure that none of you really relishes the idea of submitting quarterly reports that describes how much money you received, the way it is being used, how many people were hired as a result. While the Obama administration hasn't said what it will screen in this new transparency process, those who wanted stimulus money were subject to flags if they had criminal convictions, lawsuits, tax liens, bankruptcies and more in their background.
An article from the Wall Street Journal about this topic notes that the system in question caused plenty of hiccups when it was switched on, mostly because people made mistakes in how to file. Which, I'd be willing to bet, came from a really poorly designed "user interface" that made it unnecessarily difficult to use.
The Journal quotes a spokesman for the National Federal of Independent Business, Kevan Chapman, who suggests that the new rule could make it more difficult for smaller companies to contract with the federal government. Chapman told the Journal: "For businesses that are legitimately interested in this kind of thing, there is already a high level of intimidation going on and adding this on will certainly not encourage small firms.
Don't you find it sort of ironic that in trying to cut government waste, the government is creating yet another piece of government to do so?
Heather Clancy is an award-winning business journalist with a passion for small businesses, green technology and corporate sustainability issues. Her articles have appeared in Entrepreneur, Fortune Small Business, The International Herald Tribune and The New York Times. Follow her on Twitter.