Multi Tier Grant Payment

FIT’s mission is to be a catalyst for transformation in federal financial management. FIT works with both internal and external stakeholders to address common challenges and to explore technology to improve federal financial management. One of the current technologies we have been exploring is how blockchain could be utilized to improve financial management; how this technology may challenge current regulations, standards, and business processes; understand what it would take to implement; and return on investment.

Risks

By not proceeding with this work, risks include:

Loss of Fiscal Service reputation as well as have a negative impact on customer satisfaction.
Continue status quo of the current grants processes result in the following issues:
- Burdensome processes and reporting
- Lack of transparency in the end-to-end grant financial transactions
- Inaccurate and delayed reporting to systems such as USASpending and FSRS
- Less efficient oversight

Frustrating customer experience

Rationale

The goal of this project is to better understand the value proposition as well as address the legal/regulatory implications of using distributed ledger technology (DLT), also known as blockchain technology, to facilitate Federal grant payments. As a result of information collected during this project (user feedback, legal and regulatory research, etc.) the Bureau of the Fiscal Service (Fiscal Service) will make a “Go / No Go” recommendation for continuing to the logical next phase, which would likely entail transitioning the proof of concept to a pilot (small-scale test to create a blockchain token, transfer that token using a digital wallet, and redeem the token, triggering an ACH transaction that transfers funds into a bank account).

Researchers spend 44% of their research time performing mandated administrative tasks. (Reducing Administrative Burden in Federal Research Grants to Universities, IBM Center for the Business of Government, January 29th, 2020.)
Lack of financial transparency and inconsistent reporting
Streamlining processes to improve customer experience
Automate internal controls
Understanding emerging technology and how it can be used to improve Federal financial management

As-Is

Will include Drawing

To-Be

Test how a blockchain-based grant payment application will improve grant payments processes by:

Providing transparency into the end-to-end financial transactions
Reducing reporting burden
Providing accurate grant reporting to federal agencies and USASpending and FSRS
Making oversight more efficient
Improving customer experience.

During the next phase, we will have a four-pronged approach.

Business Plan Analysis

Develop a business plan laying out a path to production, that includes a concept of operations, pilot project scope, alternatives analysis, core questions to be answered and an ROI analysis. The plan will also include things such as funding (how would the common development, platform, O&M and future upgrades be funded) and change control would be done in decentralized system

Evaluation of Blockchain with NIST and JFMIP (Joint Financial Management Improvement Program)

Collaborate with NIST and JFMIP to evaluate multi-agency ATO requirements, node hosting and cross agency connectivity and required infrastructure for DLT solution.

Collaborate with NIST to evaluate multi-agency ATO requirements, node hosting, required infrastructure for DLT solution and exploring connectivity to nodes/financial system in the Fiscal Service sandbox (non-production environment)

Expand the blockchain EcoSystem

Expand the participation across stakeholder communities to provide input into the concept of operations, pressure test the blockchain application and address regulatory hurdles (i.e., sub-recipient payment issue)