Federal agencies would be required to use private sector auditing techniques to stop overpayments to contractors under a bill introduced Wednesday by Rep. Dan Burton, R-Ind. The "Erroneous Payments Recovery Act"(H.R. 2547), would require agencies to use a practice known as "recovery auditing" to weed out duplicate payments, uncollected rebates, unauthorized expenditures and a variety of other financial blunders. The technique, widely used in the private sector, is considered risk-free because auditors hired to conduct such examinations are only paid a percentage of the money they recover. Burton's bill would require agencies to pay recovery auditing firms through contingency fee arrangements, meaning that the firms would be paid only if they get the government's money back. Under the bill, any money recovered and returned to the agency would be used on management improvement programs. According to Burton, chairman of the House Government Reform Committee, the Defense Department overpays contractors by millions of dollars each year through errors, duplicate payments, and retroactive contract adjustments. "The government is wasting hundreds of millions of dollars every year through errors and mistaken payments," Burton said. "We aren't doing nearly enough to eliminate these mistakes and recover that money." Earlier this month Senate Governmental Affairs Committee Chairman Joe Lieberman, D-Conn., and ranking member Fred Thompson, R-Tenn., urged agency and department heads to use recommendations included in a General Accounting Office report that blamed weak internal controls for billions of dollars in improper federal payments. Burton introduced a similar bill in the 106th Congress that was approved by the House, but died on the Senate side after reaching the Governmental Affairs Committee.
Bill aims to curb improper payments through recovery auditing