Hearing of the Federal Financial Management, Government Information, Federal Services, & International Security Subcommittee of the Senate Homeland Security and Governmental Affairs Committee - Assessing Efforts to Combat Waste and Fraud in Federal Programs
Chairman Carper, Ranking Member Scott, members of the Committee, thank you for your invitation to testify on the issue improper payments. It is a subject that is critical to all of us charged with the oversight of federal financial management, especially in this time of economic uncertainty.
The federal government has been in a long struggle to cut out the wasteful spending that can occur when improper payments are made. In fiscal year 2009, the improper level stood at $125 billion. By fiscal year 2011, Federal agencies have reduced the improper payments level to $115 billion and the trend appears to continue downward. Reversing the trend is a very significant achievement. Still, the level of improper payments remains unacceptably high.
The Obama Administration has made the elimination of improper payments one of the cornerstones in the President's effort to eliminate waste in government. From the time he
took office, the President has introduced a series of initiatives which have now been responsible for not only the decrease in the rate of improper payments, but also in the recovery of improper overpayments.
On November 20, 2009, the President signed Executive Order 13520 on Reducing Improper Payments. The Order resulted in the establishment of "payment-accuracy-dot-gov", a website which keeps the American public up-to-date on how government agencies are reporting on and addressing improper payments. The Order also resulted in the identification of those government programs with a high dollar value of improper payments as "high-priority programs" so we could focus on broad-based solutions to the issueToday's hearing will highlight the successes of how the "high priority program" Medicare is finding workable solutions to the problem of improper payments.
In 2010, President Obama issued Memoranda on "Enhancing Payment Accuracy through the Do Not Pay List" and "Finding and Recapturing Improper Payments." As a result, the "verify-payment-dot-gov" website was created to prevent ineligible recipients from being paid repeatedly. Additionally, using payment recapture audits, the agencies have recovered nearly $1.9 billion in improper payments for the Treasury as called for in the President's memorandum. This puts the government well on track to achieve $2 billion in recovered improper payments by the end of this fiscal year.
In July 2010, President Obama signed one of the most important recent pieces of legislation into law, the Improper Payments Elimination and Recovery Act of 2010, authored by Senator Carper, a determined champion of good government. IPERA mandated that federal agencies produce statistically accurate assessments of their rates of improper payments and include those in their annual financial statements. The law also required the OMB to report on agencies' efforts to detail and recapture improper payments. This level of focus on improper payments has given agencies the impetus to forge new solutions for reducing and recovering improper payments. The results of IPERA are encouraging, but we need to go further.
That is why I have joined Senator Carper, and sponsored in the House chamber, the Improper Payments Elimination and Recovery Improvement Act of 2012. The legislation gives agencies tools to identify and report improper payments accurately. It also makes agencies more accountable to the public by including the requirement that high dollar improper payments be reported to the agency's Inspector General as well as on the payment-accuracy-dot-gov website. Another critical element of the legislation would be to require federal agencies to verify payee eligibility before making payments and screen potential vendors before awarding government contracts, by mandatory checking of the "Do Not Pay List."
Finally, the legislation would increase the number of payment recapture audit programs to more than ten, so that the government could maximize the recover of improperly made overpayments.
The financial future of the United States requires sustained attention from more than one source. I firmly believe that the President's focus on the elimination of improper payments, coupled with the tools that have been included in the proposed legislation will go a long way in reaching the goal of efficient financial management and a strong financial future for our country. Thank you again Mr. Chairman for the opportunity to work with this chamber on such an important endeavor for the future of our country.