Bill to Combat Wasteful Federal Spending to Become Law

Bipartisan Legislation Builds on Landmark Improper Payments Law of 2010; Mandates Government-wide 'Do Not Pay List;' Prevents 'Death Fraud'

WASHINGTON – Last night, Sens. Tom Carper (D-Del.), Susan Collins (R-Maine), and Scott Brown (R-Mass.) celebrated the Senate’s unanimous approval of their bill that strengthens federal agencies’ efforts to identify and prevent wasteful and fraudulent payments. Their bill, the Improper Payments Elimination and Recovery Improvement Act of 2012 builds on the Improper Payments Elimination and Recovery Act of 2010 (IPERA), which was signed into law in July 2010, by taking additional steps to identify and prevent improper payments made by federal agencies. The House bill, HR 4053, passed earlier this month, was introduced by Reps. Edolphus Towns (D-N.Y.), Todd R. Platts (R-Pa.), Kurt Schrader (D-Ore.) and Gerry Connolly (D-Va.), and approved by the House Oversight Committee, led by Chairman Darrell Issa (R-Calif.) and Ranking Member Elijah Cummings (D-Md.). The legislation now goes to the President’s desk for his signature.

“Although we have made great strides in curbing wasteful spending in recent years, there is still more we can do to ensure that the scarce resources we put into federal programs are not wasted or misappropriated,” said Sen. Carper, Chairman of the Subcommittee on Federal Financial Management. “Across the federal government, agency leaders and program managers need to take additional steps so we can stop making the kinds of expensive, avoidable mistakes that led to $108 billion in federal improper payments last year. Fortunately, there are several very real and effective tools available in this legislation that will help all federal agencies detect and prevent improper payments. By working together on this latest in a series of common-sense initiatives, Congress and the Administration can make important progress in curbing improper payments and, in the process, reduce our budget deficit and begin whittling down our debt. I thank my congressional colleagues for recognizing the importance of this common-sense legislation. I will continue to work with them and the Administration to see that these measures are properly implemented.”

“More than a nickel of every taxpayer dollar was spent in error or as a result of fraud. America could use that money back – badly. This is a serious and inexcusable problem,” said Sen. Collins, Ranking Member of the Committee on Homeland Security and Governmental Affairs. “Last year, the government paid out at least $125 billion in erroneous payments and that isn’t a complete count. Half of all Pentagon spending is not even included in that figure. Among other things, the bill also targets a problem that should never have existed: checks sent to deceased Americans and others who obviously should not receive payments. The bill establishes a ‘do-not-pay initiative’ to cross-check across different databases across the government, to identify people and organizations we should not pay.”

“I’m pleased that this much needed bill is on its way to becoming law. During my time in the Senate it has become apparent just how much waste still exists in our federal spending,” said Sen. Brown, Ranking Member of the Subcommittee on Federal Financial Management. “It’s only right that the American people know the government is a good steward of taxpayer money and this law will give us the tools we need to ensure that promise is being kept.”

Federal agencies made an estimated $108 billion in improper payments in FY 2012, a roughly $7 billion reduction from the previous year. The Senators’ bill, like the House bill, would create a do-not-pay initiative and help prevent improper payments to deceased individuals. Improper payments are payments made in error, such as payments made to the wrong person or in the wrong amount and result in billions of lost taxpayer dollars every year. Specifically, the legislation would:

Expand requirements for agencies, including the Department of Defense (DOD), to strengthen the estimation of improper payments. The legislation requires improved and more consistent reporting of improper payment estimates by federal agencies, based on recommendations from the DOD inspector general and the Government Accountability Office (GAO). The legislation, for example, would 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.

Mandate the establishment of a government wide “Do Not Pay List.” Too often, federal agencies make improper payments to individuals who could easily be identified as ineligible if payments were more routinely screened against federal databases. Unfortunately, federal agencies are not consistently performing basic eligibility screening before payments are made. The Administration is establishing a “Do Not Pay List” based on the White House executive memorandum, Memorandum on Enhancing Payment Accuracy Through a “Do Not Pay List.” However, there is no legislative mandate to make the system permanent. This bill establishes the Do Not Pay Initiative in law throughout the federal government under a specific timetable. Through the initiative, before an agency could award a contract or grant, the agency would have to cross check against the “Do Not Pay” database, which will include a central comprehensive database of individuals, contractors, and others who may be ineligible to receive federal funds, such as companies that are no longer allowed to do work with the Federal government because of a fraud conviction or similar reason.

Prevent death fraud and improper payments to deceased individuals. Improper payments include those made to individuals who are deceased, and should therefore no longer be eligible under program rules, yet still receive payments. For example, the Office of Personnel Management Inspector General reported that $601 million in improper payments were made to federal retirees found to have already died. However, such payments to dead people were not unique to this one program. For example, last year The News Journal reported that 28 years after 75 year-old Dorothy Hendricks died her relative was still collecting and cashing her Social Security Checks. Improving the collection and use by federal agencies of data on deceased beneficiaries will help curb hundreds of millions, if not billions of dollars, in improper payments. The IPERA Improvement Act requires that OMB, in consultation with other agencies and stakeholders, determine a plan for curbing improper payments to deceased individuals within 120 days of passage.