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Monday, November 23, 2009

Government errors could mean big problems for contractors

Government errors could mean big problems for contractors

Contractors could face suspension, debarment or financial penalties if they fail to return and report an improper payment made by the government…even if the improper payment is the government’s fault.

That’s what an executive order meant to curb the government’s rate of erroneous payments will say, Peter Orszag, Office of Management and Budget director, told reporters during a Nov. 17 briefing on the value of improper payments made by the government in 2009.

In addition to penalizing contractors that fail to return improper payments, the pending executive order will curb improper payments by demanding agencies:
  • Establish a Web site to disclose and track the total amount of improper payments on a program. The Web site will include error rates by agency and program, and an email address for the public to report suspected waste, fraud and abuse.
  • Report on errors more than once a year (the current practice).
    Designate a Senate-confirmed official to be accountable for meeting improper payment reduction targets. If the agency misses targets two years in a row, the agency’s head, chief financial officer and inspector general must give OMB a plan describing why the agency failed to meet its goals and what it will do to meet targets going forward.
  • Employ new management techniques, such as forensic auditing, to detect and prevent improper payments.
  • Share data with other agencies about entities or individuals that received improper payments because they weren’t eligible for the benefits. This will prevent that entity or person from receiving improper payments from other programs.
  • Establish plans to reduce program errors that do not interfere with payments to legitimate beneficiaries.
  • Create incentives for states, agencies, and recipients to report payment errors.

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