• President Issues Executive Order to Reduce Improper Payments Following GAO Report on CMS Contract Management Failures; Publication of Names of Entities Receiving Greatest Amount of Improper Payments Included
  • December 14, 2009 | Author: Adam Laughton
  • Law Firm: King & Spalding LLP - Houston Office
  • On November 23, 2009, the White House released Executive Order No. 13520, which is intended to reduce the amount and frequency of improper payments made by the government to contractors. The Executive Order was in response to a report (Report) issued by the Government Accountability Office (GAO) on October 23, 2009, detailing “pervasive deficiencies in CMS contract management,” which leads to an increased risk of improper payments or waste. The Report further described CMS’s “weak overall control environment as characterized primarily by inadequate strategic planning.” The GAO determined that the CMS contract management deficiencies resulted in “millions of dollars of questionable payments to contractors, primarily because CMS did not obtain adequate support for billed costs from certain contractors.”

    In the Executive Order, the President emphasized that all agencies of the federal government “must make every effort to confirm that the right recipient is receiving the right payment for the right reason at the right time” and intensify its efforts “to eliminate payment error, waste, fraud, and abuse” in government programs.

    Section 2(b) of the Executive Order requires the Secretary of the Treasury, along with the Attorney General and Director of the Office of Management and Budget, to publish information regarding improper payments to high-priority programs on the Internet within 180 days of the Executive Order. The published information should include: the names of accountable officials at each agency that administers a high-priority program, current and historical rates and amounts of improper payments and the recovery of improper payments, targets for reducing and recovering improper payments, and the names of entities that have received the greatest amount of improper payments. According to the Executive Order, the list of entities that have received the greatest amount of improper payments will not include matters that have been or are anticipated to be referred to the Department of Justice. In addition, section 4(a) of the Executive Order contemplates, among other recommendations for enhancing the accountability of contractors, the publication, through the Internet, of the identities of contractors who receive significant overpayments, but knowingly fail to disclose credible evidence of such overpayments to the Government. However, that publication would only occur where the publication would not interfere with ongoing criminal or civil investigations and consistent with federal privacy policies.

    The Executive Order set forth a number of other specific actions to be taken within the next six months. Those actions include:

    • Designation of the federal programs with the highest dollar value or number of improper payments;
    • Establishment of semi-annual targets for reducing improper payments within these high-priority programs;
    • Establishment of an Internet-based method to collect information from the public regarding suspected incidents of improper payments;
    • Implementation of reporting requirements for agencies operating high-priority programs; and
    • Consultation with the Office of Management and Budget Director and other agencies to develop further policy proposals “designed to reduce improper payments,” which would be included in the FY2011 federal budget.