Stimulus oversight board takes waste and fraud prevention steps

The board overseeing the $787 billion economic stimulus effort recently released a checklist designed to help agencies prevent waste, fraud and abuse when making Recovery Act contract awards.

According to Recovery Accountability and Transparency Board spokesman Ed Pound, panel chairman Earl Devaney created an outreach program to engage with agencies receiving stimulus funds on potential procurement issues. Representatives of the board met with senior procurement compliance officials to ensure open communication and discuss trends in procurement waste and fraud, Pound said.

As part of this outreach, the board developed a pre-award and award procurement guide for agencies. The contract checklist, Pound said, will ensure agencies follow best practices as well as the priorities -- such as a preference for fixed price contracting -- laid out by the president.

The checklist includes stimulus-specific points such as ensuring that interagency acquisitions include agreements for who is responsible for reporting Recovery.gov data, as well as more general questions such as: "Were all authorized small business contracting programs considered?"

Many of the questions focus on ensuring that stimulus solicitations are posted in a way that attracts the greatest number of qualified bidders and that identifies the award as being under the Recovery Act. The list also addresses President Obama's desire that stimulus contracting actions be transparent to the public by asking if the description of the supplies or services to be procured was "clear and unambiguous to the general public."

In addition to creating the checklist, the board is conducting its own risk analyses and working closely with the inspector general community to prevent fraud, according to Pound. These steps are part of efforts to head off fraud or abuse before it occurs. Lawmakers and the media have repeatedly cited estimates that government entities lose an average of 7 percent of revenue to fraud and abuse annually. Applied to the stimulus, that would amount to $55 billion in lost funds.

Devaney has called that number "unacceptable" and Pound said the board is optimistic it will keep fraud and waste down.

"We don't think there's going to be anywhere near the 7 percent fraud problem in [the stimulus], and if there is, there's been a failure," Pound said. "It's all tagged as Recovery dollars, so if you steal this money, you've got to have a lot of guts."

Despite the anti-waste and fraud measures built into the Recovery Act and mandated by the Obama administration, Pound said the board understands there still is a level of risk.

"Any time you spend billions of dollars there are going to be concerns about fraud, waste and mismanagement, given the nature of humans," he said.