Contract overpayments not a problem at NASA, audit finds

NASA is doing a good job of preventing overpayments to its contractors, according to a new audit by the General Accounting Office.

In a survey of 110 NASA contracts and purchase orders, GAO found only one case where the agency overpaid a contractor. An automated system and multiple reviews by NASA and the Defense Contract Audit Agency help catch any payment errors, according to the report.

Rep. Dan Burton, R-Ind., requested the GAO review (02-642R).

Despite NASA's system for catching payment errors, improper payments can still occur through human error and weaknesses in contractors' accounting systems. In one case not included in GAO's formal review, a contractor overcharged NASA by $47 million on a monthly invoice. The contractor notified NASA of its mistake when it received the inflated bill and adjusted later invoices to reflect the overpayment.

Improper payments have been a longstanding problem for many federal agencies. In 1999, GAO found that twelve agencies had overpaid their contractors by more than $20 billion, a finding that prompted Sen. Fred Thompson, R-Tenn., to introduce legislation requiring agencies to use recovery auditing methods to identify misspent funds. A related provision became law in the fiscal 2002 Defense Authorization Act.

Recovery auditing, used widely in the private sector, uses computer software programs to analyze agency contract and payment information to root out discrepancies in data, such as duplicate payments, uncollected rebates and unauthorized expenditures. Agencies are also forming data-sharing arrangements with vendors, states and other federal agencies to identify improper payments that have already been made.