Incentives grow for agencies to prevent and recover overpayments

A fledgling law is aimed at holding the government more accountable for waste, fraud and abuse.

The amount of federal improper payments on record has risen steadily during the past decade, in part, because agencies have improved how they track and recover billions of dollars in wasted taxpayer funds.

New reports from department inspectors general and the Government Accountability Office assert that improper payments continue to be a big problem for Uncle Sam. From 2000 to 2010, improper payments ballooned from $20 billion to $125 billion, according to a March GAO report. But an eight-month-old law and an effort by the Obama administration to provide agencies with better incentives and more accountability for noncompliance are helping uncover the amount of actual debt and recapture it, said government officials last week during a conference and in subsequent interviews.

There are some attractive "carrots" for agencies included in the 2010 Improper Payments Elimination and Recovery Act, said Kay Daly, director of financial management and assurance at GAO. For example, agencies can use up to 25 percent of recovered funds for improving financial management; up to 25 percent for the program or fund linked to the overpayment; and up to 5 percent for inspector general activities. So, agencies can keep as much as 55 percent of the recaptured money, and the rest is returned to the general treasury.

But what about provisions to hold agencies' accountable for noncompliance, or a lack of progress?

Some specialists raised questions during a recent conference hosted by Federal Computer Week and LexisNexis about whether agencies faced any real repercussions for failing to recover improper payments. The 2010 law directs agencies deemed noncompliant by their inspectors general to submit a plan to Congress for getting back on track, including the names of designated accountable senior officials and consequences for lack of progress. The Office of Management and Budget must submit an annual report to Congress on agencies' progress related to recapturing improper payments. If an IG finds an agency in noncompliance with IPERA for more than three consecutive fiscal years for the same program or activity, then the head of the agency must provide Congress with reauthorization proposals for the program in question and any potential statutory changes needed to bring it back into compliance. The government website publishes the names of the officials responsible for preventing and reducing improper payments within individual agency programs.

"As with every government program, it will require strong oversight to ensure that the improper payments are effectively discovered and eliminated," wrote Scott Amey, general counsel at the Project on Government Oversight, in an email to Government Executive. Amey, who said IPERA was a step in the right direction, added he didn't know "how many programs and activities have been deemed as susceptible to significant improper payments and reviewed, so the government might have a ways to go before the public receives any real benefit."

GAO agreed with that assessment in its March report, in which the watchdog said governmentwide efforts to recover improper payments could produce significant savings, particularly when deficit reduction is front and center. But GAO also stressed the importance of oversight in making the law effective. "Congressional efforts to monitor agencies will be essential to ensure they are taking action to fully implement these legislative requirements to improve accountability, achieve targeted goals and reduce overall improper payments," the report said.

The 2002 Improper Payments Information Act did not include any provisions on the consequences of noncompliance.