Government Doesn’t Know How To Stop Wasting $137 Billion On Improper Payments

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Thomas Phippen Acting Editor-In-Chief
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The government’s plan to stop wasting hundreds of billions of dollars each year on improper payments isn’t working as designed.

Federal agencies wasted $137 billion on improper payments in 2015, despite a government-wide database system designed to prevent payouts to ineligible individuals or parties, according to a Government Accountability Office report released Monday.

The Do Not Pay (DNP) system, created by the Office of Management and Budget and the U.S. Department of the Treasury, combines several federal databases that agencies can use as a tool to check whether the recipient of a contract, grant, loan or other government payment was truly eligible to receive the money.

Without the DNP system working properly, the government is trapped in an expensive “pay and chase” process, where agencies have to catch overpayments or wrongful payments and recover the funds later. Ideally, agencies would reduce improper payments by checking contract and grant recipients in the database, but for a variety of reasons, agencies rarely, if ever, use the system.

Failure to address the improper payments would continue “an unsustainable long-term fiscal path,” as the GAO said in its report on improper payments last year.

An agency would ideally use the DNP system to see whether an individual or an entity receiving a federal grant or loan by checking the on the recipient’s credit and debt status, and making sure that the awardee was not ineligible for receiving federal contracts for other reasons.

The system was supposed to include information about whether a recipient was dead or a convicted felon, but the GAO found that the system “offers no access to the Social Security Administration’s (SSA) prisoner records” or even “SSA’s death records.”

Since the database is not complete, agencies don’t always use the DNP system, the GAO said. In fact, three of the six databases required by the Improper Payments Elimination and Recovery Improvement Act of 2012 are only partially available, or are completely missing from the DNP, the GAO found.

The GAO said that the 10 agencies they audited were able to prevent around $2 billion in improper payments last year, but very little of that was saved by using the DNP. Most agencies have their own systems for avoiding giving contracts and grants to ineligible recipients.

The DNP database itself was only responsible for $680,000 saved in 2015, the GAO notes.

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