What are good practices for cities in establishing data analytic oversight systems similar to the Pandemic Analytics Center of Excellence (PACE)?

To support its mission and that of its Office of Inspectors General (“OIG”) members, the Pandemic Response Accountability Committee (“PRAC”) established the Pandemic Analytics Center for Excellence (“PACE”) to provide a data analytics platform to oversee more than $5 trillion in pandemic-related emergency spending. PACE helps federal agencies take a proactive stance in preventing fraud schemes by finding the highest risk areas using data analytics tools.[1]

When distributing aid, grants, and loans, municipalities should also consider utilizing data analytics tools to support efforts to mitigate fraud, waste, and abuse. Municipalities can use the information published about PACE on PRAC’s website to gather good practices for the establishment and use of data analytics.

Know-Your-Customer (“KYC”) and Information Retention

Municipalities should regularly conduct KYC screenings for applicants and recipients of pandemic relief funds. This information should be stored in searchable databases so that data analysis can be performed to identify potential signs of fraud or misappropriation of funds. Information collected should include the following applicant and recipient information:

• Name
• Date of birth
• Address
• Social security number
• EIN number
• Phone number, and
• The dollar amount of the award or request for aid.

Data scientists can then cross-refence this information when screening applicants to confirm if multiple applications provided duplicate information or invalid information, such as fraudulent social security numbers.[2] Maintaining close coordination with local and federal law enforcement and oversight agencies will allow these red flags to be further scrutinized for fraud.

In addition to requiring self-disclosure of information, municipalities should regularly review publicly available databases that contain relevant information. For example, most states have public databases that indicate the date a business was incorporated, company address, and registered agent. As an example, New York State’s Department of State makes this information available at Public Inquiry (ny.gov). PRAC also provides access to public information through its  “Interactive Dashboards” that contain information about past awards of pandemic relief funds to individuals and companies that can assist in a municipality’s data analytics. For example, PRAC provides information on past Paycheck Protection Program (“PPP”) recipients, healthcare providers that have received funds, and restaurants and bars that have received pandemic relief money.[3]

Municipalities should consider monitoring public social media accounts of applicants. At PACE, data scientists have been able to identify suspicious activity through social network analysis^.[4] Information on a loan application can sometimes contradict content on social media profiles, raising red flags and facilitating the investigative process.

Fraud Identification Methods and Good Practices

For PACE, rules-based models have been essential in identifying fraud. These are computer programs that flag an application as suspicious if it exhibits a certain number of pre-set criteria.[5] For instance, if an address, social security number, email, or phone number is used more than a certain number of times on an application, the system would automatically flag it, allowing for additional analysis. Rules can be set based on the parameters of a specific grant program.

A main pillar of PACE’s operations includes data and information sharing among federal Office Inspector Generals (OIGs).[6] This has allowed them to combat “multi-dipping,” which is when recipients receive aid from multiple sources and use it for the same purpose. Additionally, it allows wider access to good practices. For example, in June 2021, PACE hosted a Data and Analytics Expo to highlight current OIG analytic tools, standards, and good practices.[7]

Municipalities can replicate this collaboration by setting up working groups that involve their city agencies receiving and disbursing pandemic relief funds, as well as meeting with neighbouring cities, counties, and states that have received aid. These meetings facilitate the sharing of key data including emerging fraud patterns, problematic individuals and/or companies, and good practices to detect and prevent fraudulent activity.

Like PACE, municipalities should assess their in-house data analytics capacity and seek the assistance of third parties where possible. For example, in August 2021, PACE announced it engaged the services of seven companies specializing in information technology and data management, analytics and visualization, and investigative support services with a focus on preventing waste and abuse.[8] These companies can assist building out  PACE’s data environment and technology infrastructure. While this action requires an appropriate budget, the infrastructure developed can be leveraged to ensure that sophisticated resources and talent are available in the long-term. Municipalities can likewise explore using pandemic relief funds to cover the costs of creating and/or enhancing their data analytics capacity.

PRAC, through PACE, also hosts a data science fellowship.[9] This opportunity offered to undergraduate students and recent graduates ensures more consolidation of talent and work opportunities for young people interested in data science. Cities can consider adopting similar programs individually or through a collaborative body that will create professional opportunities in communities, while at the same time attracting high-quality individuals to be part of the municipalities’ data analytics team.

Last Updated: January 31, 2023