Following up on a memorandum he signed last March, yesterday President Obama signed into law the Improper Payments Elimination and Recovery Act of 2010, a law that we hope will go a long way toward recovering the billions of taxpayer dollars lost through erroneous or fraudulent payments to federal contractors, grantees and Medicaid and Medicare participants.
In his memorandum, President Obama directed agencies to perform more payment recapture audits, in which highly specialized accounting and fraud specialists would search for improper payments in government billing records and work to get that money back. “Improper payments” include overpayments, payments for services not actually rendered, payments to the wrong individual or group, and even payments to vendors that do not exist.
The bill the President signed yesterday continues this important oversight effort by requiring the head of each federal agency to conduct audits of its programs and activities that might be susceptible to improper payments, report on its findings, and take steps to recover the money.
POGO is optimistic about this law as the next step in Obama’s stated plan to save taxpayer dollars. Back in 2009, we blogged on Office of Management and Budget reports which found that improper contract payments had been recovered at a rate of 76.4% ($132.4 million recovered on $173.3 million spent) for 2008. This law will hopefully lead to even bigger recoveries; according to President Obama, the law will lead to the recovery of $2 billion over the next three years.
This law is a victory for government oversight, but there are still reasons to be cautious. While the law requires audits in order to identify improper payments, it allows these audits to be conducted by private contractors. Government payment audits could be considered an inherently governmental function; hiring contractors to do the work involves the government spending extra money when it should have its own employees perform the audits. It also could lead to more wasted money; after all, who will be auditing the payments to these contractors whose job it is to audit other payments?
All in all, the Improper Payments Elimination and Recovery Act is a clear victory for good government, but as with every government program, it will require strong oversight to ensure that the improper payments are effectively discovered and eliminated.
Photo: Rick D'Amato