The Federal government reported nearly $600,000,000,000.00 in improper payments in the past five years (GAO report June 2016). Many speculate this figure is significantly under-reported. The Improper Payment Elimination And Recovery Act of 2006 (IPERA, PL 111-204) and Improper Payments Elimination And Recovery Improvement Act (IPERIA, PL 112-248) effectively address this substantial fiscal leakage, however too many waivers from the Office of Management & Budget (OMB) and too few valid payment sample sizes have weakened this law to utter ineffectiveness.

On February 27, 2017 President Trump announced a target 10% decrease in FY’18 budget for Civilian agencies. Agencies will be forced to prioritize key expenditures on programs, projects, and personnel and the bottom 10% won’t be funded. Agency leadership and mid-level personnel will cry out for more budget to continue their treasured projects, but Congress and the President have taken a hard line, fiscally responsible step toward downsizing government.

But what if OMB led the way to a net increase in agency budgets without raising taxes, new legislation, or contentious budget debates? If all $600B were recoverable by experienced Recovery Audit Contractors (RACs), by IPERA law recovered funds can be allocated in this fashion:

By law, recovery audits must be performed by agencies each year in order to recover improper, over, under and duplicate payments, as well as to improve efficiencies, discover problematic programs, and implement improvement programs. But, only if the specific agency proactively discovers a greater than ten percent (10%) improper payment rate. Thus, agencies have become masters of systematically sampling less risky sub-agency data vice their entire Accounts Payable portfolio, investigating those programs that won’t trigger more work and waste-revealing audits.

Advanced COTS software is used regularly by Fortune 500 companies to significantly stem inaccurate payments before they are made to vendors. Often the same software used for recovery audits can be seamlessly laid on top of Enterprise Resource Planning (ERP) systems, like SAP and Oracle, in order to prevent future improper payments. The federal model is “Pay & Chase” now, but this begs reform in the direction of “Trust but Verify”.

A coalition of expert commercial software vendors with specific recovery audit proficiency is being assembled by the McKeon Group government consulting division. Federal vendors with the Financial & Business Systems (FABS) contracting vehicle, or former Centers for Medicare & Medicaid Services Recovery Audit Contractors (CMS RAC), and companies with commercial off-the-shelf software demonstrated to curb fraud, waste and abuse are encouraged to contact Elvis Oxley at 571-447-5000 or Elvis@McKeonOxley.com to expeditiously engage in a game changing conversation with new OMB Director, Mick Mulvaney.

For more information about federal improper payments, please visit http://www.paymentaccuracy.gov and https://oversight.house.gov/wp-content/uploads/2016/10/IPERA-Report.pdf