White House tells agencies to use data analysis to reduce improper payments

Friday - 6/18/2010, 5:19pm EDT

Vice President Joe Biden & OMB Director Peter Orszag

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WFED's Max Cacas

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By Jason Miller
Executive Editor
Federal News Radio

The Obama administration is attacking the $100 billion improper payments problem on yet another front.

Along with expanding the use of recovery audits by vendors, the White House now is focusing more attention on the agency processes.

President Barack Obama Friday signed a memo requiring agencies "to review current pre-payment and pre-award procedures and ensure that a thorough review of available databases with relevant information on eligibility occurs before the release of any federal funds."

"At a minimum, agencies shall, before payment and award, check the following existing databases (where applicable and permitted by law) to verify eligibility: the Social Security Administration's Death Master File, the General Services Administration's Excluded Parties List System, the Department of the Treasury's Debt Check Database, the Department of Housing and Urban Development's Credit Alert System or Credit Alert Interactive Voice Response System, and the Department of Health and Human Services' Office of Inspector General's List of Excluded Individuals/Entities," the President writes in the memo.

These databases now are known as the "Do Not Pay List." The Office of Management and Budget must provide the White House a plan for further integration of these disparate databases by mid-October.

"Each year the federal government wastes millions of taxpayers' dollars by either improperly sending payments to individuals, to organizations or to contractors," says Vice President Joseph Biden during a press conference announcing the memo. "There are payments made to the wrong amount, to the wrong person or made for the wrong reason."

Biden says the $110 billion in improper payments in 2009 is unacceptable.

This memo follows the November executive order calling the expansion of recovery audits at the state level.

By mid-August, agencies must submit how they do pre-and post-award checks now and what databases they look at to OMB.

OMB, 90 days later, will issue guidance to improve the oversight of federal funds.

"This guidance shall clarify that the head of each agency is responsible for ensuring an efficient and accurate process for determining whether the information provided on the "Do Not Pay List" is sufficient to stop a payment, consistent with applicable laws and regulations, and, if so, whether a payment should be stopped under the circumstances," the President writes. "In addition, this guidance shall identify best practices and databases that agencies should utilize to conduct pre-payment checks to ensure that only eligible recipients receive government benefits or payments."

At a press conference, OMB director Peter Orszag demonstrated a new tool that's currently being used at the Recovery Accountability and Transparency Board.

"Traditionally, if we were going to look at a potential contractor to obtain a contract with the federal government, the kinds of things that would be examined are whether the contractor had a valid street address, whether there was any outstanding federal debt and what have you. . . . What the new tools allow us to do is to build in a much richer set of relationships that can be correlated with potential fraudulent activity," he says.

Biden also cited the success the Recovery Board is having in tracking how recipients are spending funds.

"Checks have been sent to over 170,000 contractors, prime contractors and subcontractors…that have been engaged in Recovery Act projects," says Biden. "Currently there are 317 open investigations. That's 0.2 percent allegation of fraud and that doesn't mean we didn't miss something somewhere along the way."

Overall, he says the RAT Board's inspector general has received 3,059 complaints alleging something wrong about the project.

Orszag says the tool goes into much greater detail about the relationship between sub-contractors and prime contractors, for example, and can also reveal more information about management officials.

He also says that the tool gathers data in real time, which allows the government to trace where each dollar is headed at any given moment.

Federal News Radio's Dorothy Ramienski and Max Cacas contributed to this story.

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