Combating Waste and Fraud in Federal Programs

Congressman Platts presents testimony to the U.S. Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, & International Security

As Chairman of the U.S. House Oversight and Government Reform Subcommittee on Government Organization, Efficiency, and Financial Management, Congressman Platts was asked to give testimony on his committee's efforts to improve the management and accountability of federal programs.

Chairman Carper, Ranking Member Brown, and Members of the Subcommittee, thank you for holding this hearing on the important issue of waste and fraud in federal programs.  Thank you also for providing me, along with my good friend and Subcommittee Ranking Member, Congressman Ed Towns, the opportunity to testify before you today. As Chairman of the House Committee on Oversight and Government Reform Subcommittee on Government Organization, Efficiency, and Financial Management, I share your commitment to improving federal financial management in general and to reducing improper payments by federal government departments and agencies in specific.

Improper payments are the most observable result of poor financial management, and the costs of improper payments are clear and translatable to any taxpayer. In Fiscal Year 2011, federal agencies identified $115 billion in improper payments. While this estimate gives us a general idea of the amount of improper payments made each year, it does not take into account many more improper payments that may go undetected. In fact, many departments and agencies, including the Department of Defense, are not able to accurately calculate improper payment estimates.

 The Department of Defense cannot pass an audit or verify that its payments are accurate.  We therefore do not know the amount of improper payments it makes each year. However, both the Government Accountability Office and the department's Inspector General have said that the Department of Defense is at a high risk for making improper payments. Thus far in the 112th Congress, my Ranking Member, Congressman Ed Towns, and I have led several subcommittee hearings focused on improving financial management at the Department of Defense.  We are especially focusing our oversight on the Department’s statutory mandate to be audit ready by Fiscal Year 2017.

 My subcommittee has also focused on improper payments within the Medicare and Medicaid programs. In Fiscal Year 2011, these two programs identified $64.8 billion in improper payments. This accounts for over 56 percent of all improper payments identified in Fiscal Year 2011. While the Centers for Medicare and Medicaid Services have made steps to prevent and recover improper payments, there remains far more work to be done to ensure that taxpayer money is properly spent and that these important social programs are implemented more efficiently and cost effectively.
Mr. Chairman, during the 111th Session of Congress, I was pleased to support passage of your legislation, the Improper Payments Elimination and Recovery Act of 2010 (IPERA), Senate Bill 1508. This Act is an important effort to strengthen agency financial management and incorporating more stringent risk and performance management. It also focused on recovering improper payments through business analytics and recovery audit contractors.

I am encouraged that, during the current Session of Congress, House and Senate Members are again working together to enact legislation seeking to strengthen financial management and prevent improper payments. The Improper Payments Elimination and Recovery Improvement Act of 2011, which you, Chairman Carper and Ranking Member Brown, along with my home state Senator, Bob Casey, have introduced, is another important step forward for improved federal financial management. I am pleased to be the lead Republican cosponsor of the House companion to this legislation, which Ranking Member Towns introduced earlier this year.  This legislation, Senate Bill 1409 and House Bill 4053 respectively, seeks to focus on high-priority programs and high-dollar overpayments.  Additionally, for the first time, agencies would have to identify the recipients of improper payments. These provisions could be very effective in helping the government to recover improper payments.

Perhaps most importantly, the Improper Payments Elimination and Recovery Improvement Act proposes to strengthen improper payment prevention efforts by creating a Do Not Pay initiative.  Under the proposed legislation, agencies would be responsible for checking federal databases, such as the Social Security Administration Death Master File, the General Services Administration’s Excluded Parties Lists Systems, and the Department of Health and Human Services Office of Inspector General’s List of  Excluded Individuals and Entities, prior to making payments. This Do Not Pay initiative would make it easier for agencies to identify fraudulent recipients and prevent payments to deceased individuals, thereby stopping improper payments before they occur. Prevention of improper payments is far more effective than a pay-and-chase approach, and promotes greater accountability in federal spending.

The American people deserve a government that is responsible and accountable. However, our nation's citizens all too often see a trend of waste and mismanagement. Over the past decade, the Bush Administration and the Obama Administration have made reducing improper payments a government-wide priority.  And, as evidenced by today's hearing, this is a priority shared by Democrats and Republicans, Senators and Representatives, here in Congress.

 Mr. Chairman, Ranking Member Brown, I look forward to continuing to work with you, along with Congressman Towns, to bring heightened attention and solutions to the issue of waste and fraud in federal programs.  It is clear that we need better solutions to protect taxpayer dollars and to ensure greater accountability regarding federal spending.  Hearings such as this one and legislation such as the Improper Payments Elimination and Recovery Improvement Act are important parts of this effort.  Thank you again for the invitation to testify here today.  I look forward to continued cooperation between our subcommittees on this important matter.