Washington, D.C.– President Obama today signed the Improper Payments Elimination and Reduction Act, which is designed to reduce waste and fraud resulting from a lack of federal agency spending oversight. The White House Office of Management and Budget (OMB) has reported that federal agencies made an estimated $98 billion in improper payments in fiscal year 2009, more than double the budget for the Department of Homeland Security.
In another move to reduce waste and save federal money, the House of Representatives on Wednesday approved the Surface Transportation Savings Act, which rescinds $106.8 million in unspent transportation funds from the National Highway Traffic Safety Administration and the Federal Transit Administration. The money will be used to reduce the national deficit.
Rep. Raúl M. Grijalva voted in favor of both measures and applauded their progress, calling them “two more steps on the way to a clean balance sheet.”
Previously, agencies were only required to recover overpayments they make if they disburse more than $500 million to contractors each year. The new law requires that all agencies with outlays of more than $1 million perform recovery audits on their programs and activities. The law also requires agencies to develop action plans to avoid future waste and mandates a yearly OMB report on the government-wide state of improper payments and the actions taken by each agency to recover them. Other features include:
– The head of each agency can now conduct audits directly by utilizing other departments and agencies or by awarding contracts to private sector auditors.
– Each agency head is now required to publish an annual report on improper payment estimates for all applicable programs, as well as reduction targets for those improper payments.
– The Inspector General of each agency is required to determine whether or not the agency is in compliance with the law, and agencies face an escalating series of consequences for failure to comply.
Of the money recaptured through these and other provisions in the law, 25 percent goes back to the agency to prevent future improper payments, 25 percent is credited to the appropriation or fund that the improper payment originally came from, 5 percent goes to the Inspector General of the agency to fund operations related to carrying out the law, and the remaining 45 percent goes back to the Treasury.
“These are two bricks in the foundation,” Grijalva said of ongoing efforts to reduce waste and more effectively allocate federal money. “It’s important that we keep up this good work, and I’m proud to have supported both of these important measures.”
Congress has passed several major laws to combat federal waste and overspending, including:
– Statutory “PAYGO” rules mandating that the cost of legislation is offset by new revenue at the end of each fiscal year. Then-President George W. Bush and the Republican-led Congress allowed PAYGO to expire in 2002.
– Provisions cracking down on waste, fraud, and abuse in Medicare and Medicaid in the Affordable Care Act.
– Recently enacted Wall Street reforms designed to eliminate the need for future government bailouts.
In addition, the House has passed several measures not yet signed into law:
– The House FY 2011 budget sets a limit on discretionary spending $7 billion below the President’s budget and $3 billion below the related Senate resolution.
– The House has passed the IMPROVE Acquisition Act, saving taxpayers an estimated $27 billion a year by cleaning up defense acquisition spending.
– The House has passed the Government Efficiency, Effectiveness and Performance Improvement Act that will cut government waste by shining light on ineffective programs.
“This Congress has been actively fighting against waste, fraud and abuse in a number of ways, and it’s important that everyone look at the record to see just how much has been done on this front,” Grijalva said. “These are the kinds of measures that don’t get nearly the attention they deserve. I hope today’s signing brings our efforts into sharper focus, and I look forward to continuing to support these kinds of measures in the future.”