The Wheels that Squeak: Why Preventing Fraud is Not a Government Priority

The American government has a fundamental incentive problem when it comes to fraud, waste, and abuse. In this way, as in many others, government leaders share little in common with their private sector peers. CEOs have an obligation to their shareholders to minimize financial loss due to fraud, waste, and abuse. Protecting the bottom line is a business imperative. This is why banks and insurance companies have put in place the most cutting-edge tools to prevent fraud. While sometimes inconvenient, we all feel a little peace of mind when we go to make an unusual purchase and get an alert from our credit card company asking if it’s a legitimate transaction. Banks use machine learning and other advanced analytics techniques to proactively analyze our spending patterns and quickly flag anomalies—before the transaction occurs. Banks also use troves of data to verify your identity and the accuracy of the information you provided when you applied for a new account, a loan, or a credit card. 

Contrast that with the government, where few, if any, such tools are in use. In many—or even most—cases, the government simply takes your word for it when you provide information about your eligibility for a program. There are some anemic attempts to verify eligibility in government programs, but often these are ineffective. Peruse paymentaccuracy.gov  and you’ll see that most programs with sky-high improper payments figures note as the root cause some variation of “failure to verify information.” The causes of this failure vary. In some cases, the agency is statutorily barred from collecting the data required to verify accuracy. But in many cases, the issue is access to the necessary data—either another agency or a third-party data broker has the needed data, but the agency has not accessed it. 

Try to imagine a scenario where the CEO of a private sector company could save millions of dollars by obtaining the needed data to verify the accuracy of customer-provided information, but simply does not do so. It’s hard to fathom shareholders would accept that. So why is this the case in government?  

Because we are the shareholders. And we hold government accountable for little other than getting us the benefits we are entitled to or eligible for quickly. Think about the last time you were upset at a government agency. Chances are it had to do with the bureaucracy you encountered—the burdensome process required to apply for something or fix an issue you had. 

As the old saying goes, the squeaky wheel gets the grease. When we complain about wait times or complex application processes, agency leaders listen. In recent years, government agencies have prioritized “customer experience.” In fact, an entire industry focused on user experience (it even has an acronym, UX) is at work across government, making things easier for customers to navigate. And while this is a positive development, you simply do not see a similar focus on minimizing fraud, waste, and abuse. That wheel is just not squeaking enough. 

The reality is, agency leaders face no real consequences for enormous and growing improper payments rates or fraud. Some agency leaders refuse to even use the word “fraud” and hope that by pretending it doesn’t exist, they won’t have to answer for their lack of preventative controls and technologies.  

During the pandemic, the media and government watchdogs sounded the alarm about the amount of fraud in government programs. With all the pandemic response funding, and decades of ignoring the problem, fraudsters had a field day. The numbers were jaw-dropping and the realization that fraud prevention has never been prioritized began to sink in. 

Congress and the White House are now beginning to consider prioritizing funding aimed at the prevention of fraud, waste, and abuse. This is a welcome development. But this problem must be addressed at the root—agency leaders need more institutional incentives to manage fraud, waste, and abuse in their programs systemically. They must be held accountable for using data and tools to prevent fraud, waste, and abuse before it happens. 

The United States should establish a centralized program integrity function with mechanisms that hold agency leaders accountable for safeguarding the integrity of the funds they administer. Agency leaders should have prevention of fraud, waste, and abuse built into their performance metrics and those of their managers. They should be asked at hearings what their fraud and improper rates are and how they are working to prevent and detect fraud, waste, and abuse earlier. There should be consequences for neglecting the problem. 

Many argue that more bureaucracy is not helpful, but in this case, a centralized Program Integrity office with a cabinet-level leader would provide the needed structure and accountability to sustain senior-level attention on this long-overlooked problem. 

Linda Miller, CEO of Audient Group, is former deputy executive director of the Pandemic Response Accountability Committee and former associate director at the Government Accountability Office, where she led development of the Framework for Managing Fraud Risks in Federal Programs.