CORRECTION: FedSpending.org was the original database Sunlight funded…which was built by OMBWatch, and then OMB essentially hired OMBWatch to build USASpending.gov based on what OMBWatch had already done.my mistake!
The story is told by the Washington Post here but the inside story is told by Micah Sifry who's involved with Sunlight:
Sunlight funded OMB Watch to build FedSpending.org (the first searchable database of all govt contracts and grants), for $325K.
They built it. Then the Obama-Coburn bill was passed (with help from a cross-partisan coalition of bloggers, who smoked out the Senator who had put a secret hold on the bill) mandating that the OMB build its own official database, for $15 million.
OMB Watch offered to help OMB get the job done…even though the watchdog group and the government agency are usually major adversaries.
As the attached story in the Washington Post explains, after some hesitation, OMB's director decided to work with OMB Watch, and they licensed the software from OMBWatch for $600K. The new site, USASpending.gov, launched today, two weeks ahead of schedule.
Disclosure: I'm involved with Sunlight, but can take no credit for anything.