OMB on hunt for programs with overpayment problems

Executive Order aims to reduce improper payments by making financial management a priority.

Office of Management and Budget officials are hunting for departments’ programs that waste the most money by making erroneous payments. President Barack Obama instructed OMB to go after those programs in Executive Order 13519 released Nov. 23.

The government “must make every effort to confirm that the right recipient is receiving the right payment for the right reasons at the right time,” Obama wrote in the order. The order aims to intensify attention on reducing those improper payments by making it a priority for officials in charge of major federal programs.

For instance, the Center for Medicare and Medicaid Services has had pervasive deficiencies for years in its contract management program, which have led to roughly $90 million in questionable payments from 2004 to 2006, as the Government Accountability Office reported in 2007. Last week GAO reported that those management issues still remain in CMS. In fiscal 2008, CMS officials failed to follow key Federal Acquisition Regulation (FAR) rules on 85 percent of its contracting actions, the report states.

“The high percentage of deficiencies indicates a serious failure of control procedures over FAR-based acquisitions, thereby creating a heightened risk of making improper payments or waste,” the new report states.

In the executive order, Obama admits that the order alone won’t completely solve the looming payment problem, but the order adopts comprehensive policies. The order directs officials to identify the programs wasting the most money because of improper payments and then use public scrutiny to correct the problems.

Early next year, OMB officials will have determined the programs that waste the most money through mistaken payments. OMB and agency officials then will set targets for reducing the amount of wasted money associated with those programs.

By next spring, the government will begin publishing on the Internet information about the improper payments under those programs. The officials in charge of the programs will have their names posted online, as well as information about the money the programs have lost through improper payments over the last few years. The government will post the target goals for reducing those payments, the order states.

If an agency fails to meet the target or to launch the corrective plan, the official accountable for fixing the problem must tell the agency head, the agency inspector general, and the agency chief financial officer why the agency failed, according to the order.

The order also tells officials to propose new federal acquisition rules that would financially penalize or possibly debar contractors for not telling the government about significant overpayments. The intent is to encourage their own accountability for improper payments. Obama asked for recommendations on publicizing contractors who don't notify the government about overpayments by posting their names on a public Web site for their wrongdoings, according to the order.

The president also wants ideas on auditing states and nonprofit organizations that spend federal money. He even wants recommendations on offering incentives and accountability measures for states and local government to report improper payments, according to the order.

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