July 26, 2011A year after President Obama signed the Improper Payments Elimination and Recovery Act, four senators have written legislation intended to bolster the government's capacity to reclaim funds that agencies erroneously paid to contractors or program beneficiaries, a figure that in 2010 reached $125 billion, according to the Office of Management and Budget.
"Although we have made great strides in curbing improper payments in the past year, we still have a ways to go to improve transparency and make agencies and agency leadership more accountable -- while better protecting our scarce taxpayer dollars," said chief sponsor Sen. Tom Carper, D-Del., chairman of the Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security. "This bill brings the Improper Payments Elimination and Recovery Act to the next level and makes it stronger, more robust and more effective at preventing and recovering improper payments."
Co-sponsoring the 2011 Improper Payments Elimination and Recovery Improvement Act (S. 1409), introduced on July 22, are Sens. Joe Lieberman, I-Conn.; Susan Collins, R-Maine; and Scott Brown, R-Mass. They cited the budget crisis as an added reason for agencies to crack down on payment errors.
The bill "goes beyond [the 2010 law's] goals for curbing agencies' improper payments with three main concepts," Carper said in a statement. These include expanding requirements and strengthening estimates for agencies' improper payments; mandating the establishment of a governmentwide Do Not Pay List, a network of databases through which agencies can check the status of a contractor or individual to prevent mistakes; and requiring recovery audit contractor pilot programs across federal agencies.
In striving to improve on existing law, the bill would, for example, prevent agencies from "relying only on voluntary disclosure of improper payments by contractors, as well as require agencies to produce documentation to prove a payment was correct," Carper said.
The bill Obama signed in July 2010 enhanced the use of payment recapture audits and intensified the scrutiny on agencies that fail to reduce errors. Obama also called for expanded use of the audits in a March presidential memorandum. OMB weighed in with guidance in November directing agencies to begin implementing the new authority to expand the types of payments that can be reviewed and to lower the threshold of annual outlays that triggers payment recapture audits.
Agencies now must review their programs and activities to identify new areas where the audits can be initiated. They also must estimate the value of funds that potentially can be recovered during the next two to four years, the guidance said. In addition, agencies should develop an audit plan that describes their total recovery efforts. If not, they must submit a timetable for doing so.
The Carper bill would not only codify the administration's Do Not Pay List; it also would clarify the need for such additions as "multilateral data sharing agreements, broader access to the new hire database, and development of a database of incarcerated persons," his statement said.
The legislation would expand requirements for agencies to better estimate improper payments -- Carper's statement singled out the Defense Department, where improper payments were gauged at $1 billion in 2010, for possibly "very poor and superficial estimates."
And it would require Recovery Audit Contractor pilot programs at federal agencies. Currently only the Centers for Medicare and Medicaid Services uses such pilots, Carper said.
Roger Jordan, vice president for government relations at the Professional Services Council, a contractor trade group, said his group supports efforts to recover improper payments but believes the legislation needs clarifying. For example, he said, some contractors that end up on the Do Not Pay List may be on the publicly available Excluded Parties List System, which is run by the General Services Administration to identify parties that are not permitted to receive new federal contracts and benefits.
"In some cases, the contractor can continue to complete work on an existing contract and receive payments because it is not in the government's interest for an agency to terminate a contract in which they're invested," Jordan said. "It is important that agencies and outside groups understand how to interpret these continuing payments."
The possibility that agencies might continue to pay contractors for ongoing work even though they're on the Do Not Pay List was anticipated in Obama's June 2010 presidential memorandum. In it he said, "This memorandum requires agencies to review these databases with the recognition that there may be circumstances when the law nevertheless requires a payment or award to be made to a recipient listed in them."
OMB spokeswoman Moira Mack said the administration is "closely evaluating the bill recently introduced by Sen. Carper and looks forward to our continued partnership with the Senate on this issue." She said the Obama team is "committed to eliminating improper payments and exploring all avenues for doing so" and that "there is more work to be done on the legislative front….The president's budget includes numerous proposals related to program integrity and improper payments that if enacted would save taxpayers $160 billion over 10 years."
July 26, 2011