Senator Carper (Delaware) | Committee on Homeland Security and Governmental Affairs

S. 1508 implements a number of transparency and compliance rules related to improper payments that occur as a result of the federal agency paying too much for a product or service, pays an ineligible recipient, or when a payment is made for a good or service not received. 

Improper Payments Elimination and Recovery:

The bill requires each federal agency to review all programs and identify those that may be susceptible to improper payments.  Such reviews would be required during the year in which this measure is enacted, and every three years thereafter.

The bill defines significant improper payments as those activities that exceed $10 million, if those payments represent 2.5 percent of all outlays in a fiscal year, or improper payments of $100 million or more regardless of the percent of outlays for a given agency. 

The bill directs federal agencies to conduct reviews as to what risk factors may contribute to improper payments such as a new agency; complexity of a program; the volume of payments made through the program or activity reviewed; whether payment decisions are made outside the agency; recent major changes in the way the program is funded; and the level of training of personnel responsible for making payment determinations.

Compliance:

The bill directs each agency to produce an estimate of the improper payments made by each program or activity in the agency.  

S. 1508 would require agencies whose programs or activities have provided improper payments to report on actions taken to recover improper payments, including a discussion of the methods used, amounts recovered, and amount still outstanding or determined not to be collected.

The bill directs the Director of the Office of Management and Budget (OMB), no later than six months after the bills enactment, to issue guidance for agencies to implement the requirements of this bill. 

The bill directs the head of each agency to conduct recovery audits with respect to each program or activity that expends $1 million or more annually, if conducting such audits would be cost-effective. 

If the recovery audits are performed by a contractor, the agency could authorize the contractor to notify entities of overpayments, but the contractor could make the final determinations relating to whether an overpayment occurred.  The agency would be required to report to OMB and Congress no later than November 1 of each year on actions taken to mitigate conditions leading to overpayments.

S. 1508 would direct the amount recovered through recovery audits, not more than 25 percent would be used to carry out a financial management improvement program, another 25 percent would be used for the original purpose, and 5 percent would used for inspector general activities.  Any remaining amount would be deposited in the Treasury as miscellaneous receipts.

The bill directs the Chief Financial Officers Council, in consultation with the Council of Inspectors General on Integrity and Efficiency and recovery audit experts, to conduct a study on recovery auditing within two years of the bill’s enactment. 

The bill requires any agency determined not to be in compliance to submit a plan to Congress describing the actions it will take to become compliant.  If an agency is determine to be non-compliant for two consecutive fiscal years for the same program or activity and OMB determines additional funding would help, the agency would be required to spend additional funding on compliance.

The bill directs agencies that have been non-compliant for three or more consecutive fiscal years for the same program or activity, to submit reauthorization proposals to congress.

S. 1508 would permit OMB to establish one or more pilot programs to test potential accountability mechanisms tied to eliminating proper payments.

Source:S. 1508: Improper Payments Elimination and Recovery Act