OMB Rejects Watchdog Criticisms of Anti-Fraud Guidance for Agencies

The governmentwide effort to minimize program fraud could use sharper guidance from the Office of Management and Budget, a congressional watchdog concluded in a report that did not please the Trump White House.

The Government Accountability Office, after interviews and a survey of 72 agencies on compliance with the 2015 Fraud Reduction and Data Analytics Act, said in a report released on Tuesday that agencies “had mixed perspectives on the usefulness of OMB’s guidelines for implementing” the law’s mandatory controls.

Respondents “identified the lack of clear requirements and guidance as top challenges in GAO’s roundtable discussion with 14 selected agencies,” with four out of 10 finding the guidance lacking. And GAO’s own evaluation of OMB’s updated annual financial report guidelines found that they “did not contain enough information to aid agencies in producing complete and detailed progress reports in 2017, the first year of reporting.”

In addition, OMB appears to have not followed procedure in establishing the interagency working group required under the act when it comes to member composition (such as including chief financial officers) and meeting frequency that should be four times a year. “As a result of these and other working-group limitations, agencies identified a lack of involvement in and limited information sharing from the working [group] as two of the top challenges to implementing the act,” wrote GAO, whose staff examined 24 agency financial reports. “The working group also did not effectively facilitate the sharing of controls, best practices, and data-analytics techniques.”

The 2015 law was intended to harmonize agency approaches to exploiting data analytics to catch fraud in programs as varied as the Federal Communications Commission’s Lifeline program, the Energy Department’s contractors, the Centers for Medicare & Medicaid Services’ oversight of Medicare Part D, and the Bureau of Alcohol, Tobacco, Firearms and Explosives’ firearm applications. Fraud in 2017 was estimated by agencies at $8.8 billion.

“Fraud poses a significant risk to the integrity of federal programs and erodes public trust in government,” the report observed. “Implementing effective fraud risk management processes can help ensure that federal programs fulfill their intended purpose, spend their funding effectively and safeguard assets.”

About 85 percent of the agencies indicated they have started planning how they will meet the anti-fraud law’s requirements, and about 78 percent said they have also taken steps to implement the requirements.

GAO recommended that OMB enhance its guidelines for establishing controls and for reporting on progress as well as fully implementing the working group. Congress, it added, should consider extending the agency reporting requirements beyond the current 2019.

In an unusual move, OMB officials rejected all recommendations and declined to respond in writing to a draft of the report. Orally, the White House staffers asserted that their updates of general guidance in Circulars A-123 and 136 are sufficient for spurring agencies toward full compliance. “Agencies are in the best position to make decisions about how they implement the act,” OMB staff said in comments summarized by GAO. “Further, OMB staff stated that they did not believe that our survey of the 72 agencies and the roundtable with the 14 agencies provided sufficient evidence that a change in their guidance is needed because these responses are based on agencies’ opinions.”

That rejection drew rebukes on Tuesday from three Democratic senators: Tom Carper of Delaware, Heidi Heitkamp of North Dakota and Gary Peters of Michigan.

“While the Trump administration continues trying to slash or even eliminate critical programs that grow our economy and help hardworking middle-class families, federal agencies are struggling to address billions of dollars wasted every year in confirmed fraud,” said Peters, ranking member of the Homeland Security and Governmental Affairs Subcommittee on Federal Spending Oversight and Emergency Management. “We must ensure taxpayer dollars are being used effectively, and the first place OMB Director [Mick] Mulvaney should look to cut fraudulent spending is in his own backyard.”

Added Carper, “It is disappointing and frustrating to learn that OMB—an office that is specifically tasked with overseeing how our government agencies perform and manage resources—is dismissing the thoughtful, nonpartisan recommendations made by GAO that would help put our limited funds to better use for the American people. Regardless of which branch we may serve in, all government officials, working on behalf of the American public, have a responsibility to be good stewards of taxpayer dollars.” He urged Mulvaney to “change course immediately.”