Senators Introduce Bill to Bolster Anti-Wasteful Spending Law

Bill Builds on Landmark Improper Payments Law Signed Into Law One Year Ago Today

WASHINGTON – On the first anniversary of the landmark Improper Payments Elimination and Recovery Act of 2010 (IPERA), Sen. Tom Carper (D-Del.), Chairman of the Subcommittee on Federal Financial Management, introduced legislation today that builds on IPERA’s initiatives and takes additional steps to identify, prevent and recover improper payments by federal agencies. Sens. Joe Lieberman (I-Conn.), Susan Collins (R-Maine), and Scott Brown (R-Mass.) join Sen. Carper as cosponsors.

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”; 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 – while better protecting our scarce taxpayer dollars,” said Sen. Carper. “This bill brings the Improper Payments Elimination and Recovery Act to the next level and makes it stronger, more robust and more effective at preventing and recovering improper payments. I will continue to work with my Congressional colleagues and the Administration, as I have done for the past seven years, to see that these measures are properly and efficiently implemented.”

“The nation’s weak economy demands that the federal government find more and better ways to avoid wasting $125 billion a year in taxpayer funds because of improper payments – whether to contractors who have been barred from working with the government or to deceased Social Security recipients,” said Sen. Lieberman. “Now, more than ever, the federal government must be an effective steward of taxpayers’ money.”

“Improper payments remain a serious problem across the government and cost taxpayers billions of dollars each year,” said Sen. Collins. “I am working to root out these errors which topped $125 billion in fiscal year 2010, not including major programs that aren’t even reporting their payment errors yet, such as the Medicare prescription drug program and about half the Pentagon’s payments. This bill continues our efforts, which included last year’s landmark law requiring all federal agencies to identify programs that could be susceptible to fraudulent claims and to take immediate action to recover any improper payments. The approach we introduce today will help expose potential improper payments earlier and require agencies to check data bases so they are not paying dead people or those who are in jail. It is unbelievable that we would need to legislate such a requirement, but it is clearly necessary.”

“We can no longer afford to let tens of billions of dollars in taxpayer money go to waste every year because of improper payments,” said Sen. Brown. “Although some progress has been made a year after the Improper Payments and Eliminations Act was passed, it is clear that federal agencies have a long way to go towards solving this problem. Better oversight, more effective management practices, and improved technology will be required across government to ensure that progress continues to be made. This bill will serve to enhance existing law in all three of these areas and shows that Congress will continue to hold agencies feet to the fire to improve their financial management.”

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 DOD inspector general noted that the relative low improper payments number – DOD reported around $1 billion in improper payments in 2010 – was likely due to very poor and superficial estimates. 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 adopts these standards, and has a much higher estimate of improper payments.
  • Mandate the establishment of a government wide “Do Not Pay List.” Currently, OMB is moving forward with 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 much ambiguity in the OMB plan, and there is no legislative mandate to proceed. The IPERA Improvement Act would change that. The legislation would also address some of the challenges of the “Do Not Pay List,” such as the need for multilateral data sharing agreements, broader access to the New Hire Database, and development of a database of incarcerated persons.
  • Require Recovery Audit Contractor pilot programs at federal agencies. Despite the provisions of IPERA written to encourage RAC programs, there is little or no evidence that agencies outside of the Centers for Medicare and Medicaid Services have embraced this process to identify and recover improper payments. Legislation would require a number of pilot programs as a starting point for agencies to adopt RAC programs.