OMB ups the ante on improper contractor payments

Federal agencies will have to start thinking about how to use a new online portal that aims to prevent billions of dollars from being wasted on improper payments.

An April 12 memo from the Office of Management and Budget directs all agencies to create framework for using the “Do Not Pay” list for pre-payment eligibility reviews. The list brings together several databases into one “check point” and uses analytics to identify and stop wasteful errors before they occur. The tool is already in use at the Treasury Department, the Government Printing Office, and the National Archives Records Administration.

Agencies are required to submit their proposals to OMB by June 30, 2012. Final plans are due to OMB by Aug. 31, 2012, and will consist of two parts: The first outlines the agency’s commitment to enroll with the Do Not Pay list to reduce improper payments, and the second portion addresses how an agency integrates the list into current business practices.

The departments of Labor, Agriculture and Veterans Affairs and the Small Business Administration are expected to start using the tool in the upcoming months. By spring 2013, all major federal agencies will use Do Not Pay to reduce waste.

Although the White House said the number of improper payments decreased in fiscal 2011 compared to 2010, several inspector general reports show that many agencies, including the Internal Revenue Service, Social Security Administration and Homeland Security Department, continue to struggle with recovering and reporting erroneous payments.

With the release of the OMB memo, the White House also announced agencies have exceeded President Barack Obama’s 2010 goal to recover $2 billion in overpayments to contractors by the end of this fiscal year. The administration surpassed that milestone nearly six months ahead of schedule, mostly due to recovering hundreds of millions of dollars from the Medicare Fee-for-Service Recovery Audit Contractor program.