Bill to reduce improper payments reintroduced

A Delaware senator has reintroduced a bill that could help identify and recover billions of dollars in improper payments made by the government.

On Thursday, Democratic Sen. Tom Carper once again put forward the Improper Payments Elimination and Recovery Act. The bill would require greater oversight of improper payments and penalize agencies that consistently fail to fix accounting mistakes.

"For months now, people across the country have been tightening their belts and accounting for every dollar they spend," Carper said. "It is long past time that the federal government did the same. At a time when every dollar matters, we in Congress have got to make sure hard-earned tax dollars go where they are most needed."

As chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, Carper has held more than a half-dozen hearings on reducing improper payments.

The senator introduced a nearly identical bill last year, but the Congressional Budget Office found that some highly technical language in the legislation, since corrected, caused the price tag to rise considerably, according to a Democratic committee staffer.

Improper payments are defined as money going to the wrong recipient; an incorrect amount going to a recipient; funds used in an improper manner or missing documentation explaining why a payment was made.

Carper's bill stems from a report issued in April by the Government Accountability Office that found an estimated $72 billion in federal improper payments in fiscal year 2008 -- or roughly 4 percent of the $1.8 trillion of documented outlays for those related programs. The watchdog discovered that the figure should actually be higher, but some programs were not adequately tracked.

"In essence, agencies took $72 billion in taxpayer dollars last year and wasted them," Carper said. "Those federal funds could have been spent to promote energy independence or to improve education and health care. They could have even been given back to middle-class families and small businesses through tax cuts. Instead, we can't be certain that taxpayers got anything useful for that $72 billion."

Federal improper payments figures have risen steadily in recent years. According to data from the Office of Management and Budget, the government made $41 billion in improper payments in fiscal 2006 and $55 billion in fiscal 2007.

Specifically, Carper's bill, which is co-sponsored by Sens. Tom Coburn, R-Okla.; Susan Collins, R-Maine; John McCain, R-Ariz., and Claire McCaskill, D-Mo., would amend the 2002 Improper Payments Information Act by lowering the threshold for which agencies must report improper payments.

The act currently requires agencies to report annually to Congress when they issue at least $10 million in improper payments and when that figure accounts for 2.5 percent of that program's annual outlays. But that provision allows many extremely large programs with tens of millions in improper payments to avoid scrutiny, a committee staffer said.

Carper's bill would require any program with $100 million in improper payments -- no matter the percentage of the program's outlays -- to report those payments to Congress. By 2013, the act would be revised to lower the percentage threshold to 1.5 percent.

In addition, agency heads would be required to review all programs that could be susceptible to significant improper payments once every three years, and produce corrective action plans for preventing future waste. OMB and agency inspectors general would require additional oversight reports.

Agency leaders also would have to conduct recovery audits for any program that spends $1 million or more annually when "conducting such audits would be cost effective," the bill said.

As an incentive to rooting out erroneous payments, agencies would be allowed to retain 25 percent of recovered funds for a federal financial management program -- 25 percent for the program's original purpose and 5 percent for the IG's office -- while the remainder would be returned to the general treasury to lower the debt.

If an agency fails to curtail its improper payments for two consecutive years, OMB can authorize other agency funds be reprogrammed to improve the program's compliance. If a program is not in compliance for three consecutive years, the agency would have to submit to a congressional reauthorization process.