Senators Celebrate Key Committee Passage of Bill to Combat Wasteful Spending

Bill Builds on Landmark Improper Payments Law Signed Into Law Last Year; Mandates Government-wide "Do Not Pay List;" Prevents "Death Fraud"

WASHINGTON – Today, Sens. Tom Carper (D-Del.), Joe Lieberman (ID-Conn.), Susan Collins (R-Maine), and Scott Brown (R-Mass), celebrated the Homeland Security and Governmental Affairs Committee’s approval of their bipartisan legislation to combat wasteful spending throughout the federal government. The bill, the Improper Payments Elimination and Recovery Improvement Act of 2011, builds on the Improper Payments Elimination and Recovery Act of 2010 (IPERA), which was signed into law last year by President Obama, by taking additional steps to identify, prevent and recover improper payments by federal agencies

The Improper Payments Elimination and Recovery Improvement Act of 2011 goes beyond IPERA’s goals for curbing agencies’ improper payments with three main concepts, including provisions that: expand requirements and strengthen estimates for agencies’ improper payments; mandate the establishment of a government-wide “Do Not Pay List”; prevent payments to deceased individuals; and require Recovery Audit Contractor (RAC) pilot programs across federal agencies. According to an Office of Management and Budget (OMB) estimate, federal agencies made nearly $125 billion in improper payments in 2010.

“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 for better protecting the scarce taxpayer dollars we entrust them with,” said Sen. Carper, Chairman of the Subcommittee on Federal Financial Management. “At a time of record deficits, we need to be getting the most out of every tax dollar. We simply can no longer afford to waste almost $125 billion annually. This bill builds on the important work started by the Improper Payments Elimination and Recovery Act and makes the provisions in that Act stronger, more robust, and more effective in order to better ensure that agency budgets are being spent properly and effectively. I thank my colleagues on the Committee for recognizing the importance of this legislation. I will continue to work with them and the Administration to see that these measures are enacted and properly and efficiently implemented.”

“With Congress working to cut the federal budget and reduce soaring deficits, recovering federal dollars that were paid out improperly is the first place we should look for savings,” said Sen. Lieberman, Chairman of the Committee on Homeland Security and Governmental Affairs. “Records show improper payments totaled $125 billion last year, and that figure is simply unacceptable. This bill would add muscle to agencies’ ongoing efforts to recover improper payments and ensure that taxpayer dollars are spent for legitimate purposes.”

“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 we all should be embarrassed to admit still exists: 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.”

“With American families and businesses struggling in today’s difficult economy, we cannot afford to squander any additional taxpayer dollars simply by error or fraud. Americans are looking for responsible stewardship of their hard-earned tax dollars and $125 billion dollars in annual improper payments is deplorable,” said Sen. Brown, Ranking Member of the Subcommittee on Federal Financial Management. “Despite some progress by federal agencies to reduce improper payments in recent years, it is clear that more can be done. This bill will help curb improper payments and I am proud to co-sponsor this bill with my Committee colleagues as we continue to address needless fraud, waste, and abuse of taxpayer money.”

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, especially 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, base on recommendations of 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. By contrast, the Medicare improper payments program already adopted these standards and has a much higher estimate of improper payments.
  • Mandate the establishment of a government wide “Do Not Pay List.” Too often, federal agencies make improper payment to individuals that could easily be identified as ineligible if payments were more routinely screened against federal databases. Unfortunately, federal agencies are not doing this basic eligibility screening before payments are made. The Administration has plans to establish 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 proceed. The legislation establishes the Do Not Pay Initiative in law throughout the federal government under a specific timetable. Under the initiative, before an agency could award a contract to a company, the agency would have to cross check against the “Do Not Pay” database, which will include a central comprehensive database of companies and entities 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 week 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.
  • Require Recovery Audit Contractor pilot programs at federal agencies. Recovery Audit Contracting engages private companies to help agencies identify improper payments, and has proven successful with the Medicare program having led to more than a billion dollars in recoveries. The legislation would require a number of pilot programs as a starting point for agencies to adopt RAC programs.