Senators Celebrate Senate Passage of Bill to Combat Wasteful Spending

Bill Builds on Landmark Improper Payments Law Signed Into Law July 2010; Mandates Government-wide "Do Not Pay List;" Prevents "Death Fraud"

WASHINGTON – Today, Sens. Tom Carper (D-Del.), Susan Collins (R-Maine) and Scott Brown (R-Mass) celebrated the Senate’s unanimous approval of their bipartisan legislation to combat wasteful spending throughout the federal government. The 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 July 2010 by President Obama, by taking additional steps to curb improper payments by federal agencies

The Improper Payments Elimination and Recovery Improvement Act of 2012 goes beyond IPERA’s goals for curbing agencies’ improper payments including provisions that: strengthen estimates of federal agencies’ improper payments; mandate the establishment of a government-wide “Do Not Pay List”; and prevent improper payments to deceased individuals. According to an Office of Management and Budget (OMB) estimate, federal agencies made nearly $115 billion in improper payments in 2011.

“Although we have made great strides in curbing wasteful spending in recent years, we are still lagging in our efforts 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 sharpen their pencils and stop making the kind of expensive, avoidable mistakes that led to $115 billion in federal improper payments last year. Fortunately, there are several very real and effective tools available that would help all federal agencies prevent, detect and recover improper payments. This bipartisan measure builds upon the 2010 improper payments law and makes it stronger and more robust in order to better ensure that agency budgets are being spent properly and effectively. By working together on this latest in a series of common-sense initiatives, we 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 colleagues in the Senate 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 enacted and 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.”

“Washington is broken,” said Sen. Brown, Ranking Member of the Subcommittee on Federal Financial Management. “The fact that the government is making improper payments with your tax dollars is inexcusable. We are in a fiscal emergency and cannot afford to make wasteful payments to the deceased. This bipartisan bill will help save those dollars and strengthen programs for those that need it.”

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, 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 accurate and complete 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 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. The legislation 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 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 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.