Improper payments have long been the target of Federal oversight officials. The Improper Payments Information Act of 2002 (P.L. 107-300, aka “IPIA”) required Federal agencies to identify vulnerable programs, estimate amounts of improper payments, and report back to Congress on progress being made to reduce such payments. The Improper Payments Elimination and Recovery Act of 2010 (P.L. 111-204) amended IPIA to require Federal agencies to review their programs and activities for improper payments at least once every three years, to produce a “statistically valid assessment” of improper payments being made, and to report on “causes of the improper payments, actions planned or taken to correct those causes, and the planned or actual completion date of those actions….”

The Office of Management and Budget (OMB) has a website dedicated to reducing improper payments. It says—

Federal agencies make more than $2 trillion in payments to individuals and a variety of other entities each year. An improper payment occurs when the funds go to the wrong recipient, the recipient receives the incorrect amount of funds, or the recipient uses the funds in an improper manner.

So you can see that the issue of “improper payments” is a big deal. While we don’t necessarily agree that the eye-catching estimate of $2 trillion in such payments is based on a rigorous statistical analysis, we do agree that everybody will benefit if improper payments are reduced or eliminated altogether.

President Obama obviously thinks the issue of improper payments is a big deal. In November, 2009, he issued Executive Order 13250 (“Reducing Improper Payments and Eliminating Waste in Federal Programs”) “to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government….” In March, 2010, he issued a Presidential Memorandum (“Finding and Recapturing Improper Payments”) to direct Federal agencies “to expand their use of Payment Recapture Audits, to the extent permitted by law and where cost-effective.”

In addition to the foregoing, in June, 2010, President Obama issued another Presidential Memorandum (“Enhancing Payment Accuracy Through a ‘Do Not Pay List’”) that focused on preventing improper payments by making sure that recipients of Federal funds were eligible for those payments. President Obama wrote—

… I hereby direct agencies to review current pre payment and pre-award procedures and ensure that a thorough review of available databases with relevant information on eligibility occurs before the release of any Federal funds, to the extent permitted by law.  At a minimum, agencies shall, before payment and award, check the following existing databases (where applicable and permitted by law) to verify eligibility: the Social Security Administration's Death Master File, the General Services Administration's Excluded Parties List System, the Department of the Treasury's Debt Check Database, the Department of Housing and Urban Development's Credit Alert System or Credit Alert Interactive Voice Response System, and the Department of Health and Human Services' Office of Inspector General's List of Excluded Individuals/Entities.  This network of databases, and additional databases so designated by the Director of the Office of Management and Budget (OMB) in consultation with agencies, shall be collectively known as the ‘Do Not Pay List.’ 

Now, nearly two years later, the OMB has issued its own Memorandum that discusses progress that has been made on the President’s direction, and tells Agencies that it’s time to get serious about using the “Do Not Pay List.” The OMB Memo notes that a “web-based, single-entry access portal” has been developed in order to permit Agencies to access the various databases that President Obama identified. In addition, “data analytics services” that “utilize additional data sources” are now part of the “Do Not Pay solution.” These additional data sources include—

… Treasury's Office of Foreign Assets Control List, zip code data, prison information, and several privately available sources. The sources are augmented by advanced data analytic activities for identifying trends, risks, and patterns of behavior that may warrant further review by the agency.

So that’s nice. But that’s not all. The OMB Memo states—

In addition, while the agency plans should be based on the existing legal framework of statutes and regulations (to enable the immediate implementation of the plans), agencies are encouraged to submit to OMB -for OMB and interagency consideration -suggestions for possible revisions to statutes or regulations that could have the potential to improve the Federal Government's ability to access data or develop and use central solutions for pre-payment eligibility reviews. As these suggestions will be considered on a separate, parallel track, an agency should submit them to OMB separately from the agency's submissions of its draft and final plans.

Well, that might give one pause. We wonder exactly what “revisions to statutes or regulations” we might see in the future. But that’s not all. The OMB Memo also states—

… contracting officers shall continue to use the Federal Awardee Performance and Integrity Information System (FAPIIS) to establish whether a contractor has the integrity and business ethics to receive a federal contract, in accordance with applicable statutes and regulations. To the extent that additional information provided by the Do Not Pay solution is helpful to contracting officers, in their efforts to ensure that the Federal Government does business with responsible parties, contracting officers are encouraged (but not required) to review the Do Not Pay solution for this purpose. The agency's Chief Acquisition Officer shall work with its CFO (or the other relevant official who is accountable for complying with the President's "Do Not Pay List" directive) to evaluate the extent to which the information provided by the Do Not Pay solution can assist contracting officers as a complement to F APIIS. Acquisition officials are encouraged to periodically review the Do Not Pay solution to determine if the information provided would be useful in the agency's acquisition process.

Let’s wrap this up.

• Reducing improper payments—good.

• Using existing government databases to identify ineligible recipients of Federal funds—good.

• Use of statistical analyses to identify “trends, risks, and patterns of behavior”—potentially scary.

• Identification of revisions to statutes and regulations—potentially scary.

• Augmentation of FAPIIS with the Do Not Pay List—good.

A mixed message, perhaps. But also not especially surprising. Or so it seems to us.