Lawmaker urges OMB to implement law on contract overpayments

A House lawmaker is urging the Office of Management and Budget to implement new legislation intended to eliminate improper payments to federal contractors. Under the fiscal 2002 Defense Authorization Act (S. 1438), which Congress approved in December, federal agencies are required to use recovery auditing methods to identify and track overpayments to contractors. Recovery auditing, used widely in the private sector, uses computer software programs to analyze agency contract and payment information to root out discrepancies in data, such as duplicate payments, uncollected rebates and unauthorized expenditures. Rep. Dan Burton, R-Ind., outlined the legislation's benefits in a letter sent Friday to OMB Director Mitch Daniels. Burton asked Daniels to submit a timetable for implementing the law to the House Government Reform Committee, along with an outline of OMB's planned guidance to agencies on the measure. Burton, who is chairman of the committee, introduced the original recovery auditing legislation, H.R. 2547, that was later folded into the Defense Authorization Act.

Sen. Fred Thompson, R-Tenn., who introduced similar legislation in the 106th congressional session, has said the Defense Department overpays contractors by millions of dollars each year through errors, duplicate payments, and retroactive contract adjustments.

The new law mandates the use of recovery auditing by federal agencies that spend more than $500 million annually buying services and goods. The law requires OMB to issue guidance on how to run recovery auditing programs, to identify the types of contracts subject to recovery auditing, and to report to Congress on the progress of agencies that use recovery auditing programs. It also authorizes agencies to:

• Return recovered money to the account it was incorrectly debited from or to the general treasury.
• Pay auditors to run a recovery auditing program.
• Conduct management improvement programs to address overpayment problems.