Recovering improper contractor payments is hit or miss across the board

EPA recovered 100 percent but HHS only 4 percent

Federal agencies recovered 81 percent of their improper payments to contractors on average from fiscal 2004 to 2010, according to a federal dashboard cited at a congressional hearing today.

Daniel Werfel, controller at the Office of Management and Budget, and Kay Daly, director of financial management and assurance at the Government Accountability Office, gave an update on federal efforts to reduce and recover improper payments in testimony to the House Oversight and Government Reform Committee's Government Organization, Efficiency and Financial Management Subcommittee.

An improper payment is a federal payment made in error to a wrong or ineligible party, for the wrong amount, or for the wrong reasons or without proper documentation, which includes fraudulent payments.

The Health and Human Services Department had a 4 percent recovery rate of its improper payments to contractors from fiscal 2004 to 2010, which was the lowest among the 21 federal agencies listed as making such recaptures at HHS recovered $60,000 from a total of $1.6 million in estimated improper payments to contractors during the period.

The next lowest recovery rate was for the Education Department, which recovered 43 percent of its incorrect payments to contractors, recouping $130,000 out of $300,000.

The Transportation Department recovered 31 percent of its improper payments to contractors, for a total of $6 million.

Other agencies with relatively low recovery rates included the General Services Administration, 67 percent; Homeland Security Department, 68 percent; and Defense Department, 75 percent.

Agencies with a 100 percent recovery rate for improper contractor payments were the Commerce Department and the Environmental Protection Agency.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

Reader Comments

Thu, Apr 21, 2011

The only issue with this assessment is that the agencies are only talking about programs that have the ability to determine if an improper payment has occured. The only way to ensure complete prevention of improper payments is to use software that monitors 100% of the transaction data. There is software on the market from firms like Oversight Systems that is going this today for the US Government and apparently preventing billions of dollars from leaving agencies. The question should be asked is why other agencies are not using Continuous Monitoring Software instead of the pay and chase model.

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