Sen. Carper Addresses Billions Lost on Federal Improper Payments; Examines Administration’s Announcement of January “Do Not Pay” Program Launch to Stop Unnecessary Payment Errors

Improper Payments totaled $125 Billion in FY 2010

WASHINGTON – Today, Sen. Tom Carper (D-Del.), Chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, examined the Obama Administration’s efforts to reduce the amount of overpayments, fraudulent payments and other payment errors made by federal agencies each year. His hearing, “Assessing Efforts to Eliminate Improper Payments,” addressed the $125 billion made in improper payments in Fiscal Year 2010, including the Administration’s progress on its implementation of Sen. Carper’s Improper Payments Elimination and Recovery Act, and its initiative to establish a government “Do Not Pay” list by January 2012.  

In Sen. Carper’s hearing, the witnesses – officials from the Department of Defense (DOD), Office of Management and Budget (OMB), the Department of Treasury, the Recovery Accountability and Transparency Board and Social Security Administration –described what each of their agencies is doing to prevent improper payments. Improper payments occur when an agency pays a vendor for a service it didn’t receive, makes a duplicate payment or overpayment; when a recipient has died or is no longer eligible for payment; or when a vendor owes the government money and legally should not receive a payment.  

“At a time when we’re facing a massive federal deficit and contemplating deep cuts to federal spending, last year’s $125 billion in improper payments underscores the critical need for every federal agency to get serious about curbing waste and fraud,” said Sen. Carper. “We still have a long way to go in reducing the amount of improper payments made by federal agencies, but several agencies have already made important strides in preventing and recouping overpayments and that is encouraging. I am glad to hear that the bill I co-authored and helped get signed into law, the Improper Payment Elimination and Recovery Act, is working to shape how these agencies identify and recover overpayments, fraudulent payments and other payment errors. I will continue to monitor the progress of the law’s implementation and the ‘Do Not Pay List,’ as the Administration prepares its launch in January.”  

OMB Controller Danny Werfel also described a new initiative to prevent improper payments, based on cutting edge information technology. The “Do Not Pay” list, which was outlined in a memorandum from President Obama signed last year, will become a single database that all agencies will have to check against before payments are made. Currently, too many improper payments are the result of paying disbarred contractors, incarcerated beneficiaries, dead beneficiaries, or other preventable errors. According to OMB testimony, the government made nearly $240 million in improper payments to deceased or incarcerated people in FY 2010. The OMB announced that it plans to have a working “Do Not Pay” system for all agencies to screen payments in January of 2012.