Nine Ways Congress Can Combat Fraud in the Federal Government

Millions of Americans receive payments from the federal government—including through Social Security and Medicare, as well as social safety net and disaster assistance programs. 

But these payments and programs are susceptible to fraud from people or businesses either pretending to be someone they are not or applying for benefits they don’t qualify for. How can we stop them? We think there are four actions that Congress should take to help prevent fraudulent and erroneous payments.  

1. Eliminate use of self-attestation to determine identity and eligibility for federal programs. Some federal programs allow applicants to self-attest or self-certify their identity and eligibility for benefits. This has helped agencies get money to those who need it as quickly as possible, because they aren’t spending time verifying information.  

   Self-attestation was used often during the COVID-19 pandemic—but the result was hundreds of billions of dollars lost to fraud. Much of this fraud could have been prevented or more quickly detected if Congress had required agencies to verify identities and information before making payments. 

2. Expand use of Treasury’s “Do Not Pay” program. The Department of the Treasury manages the “Do Not Pay” program. This is a key resource for checking eligibility. It allows agencies to verify recipients against a variety of databases before making payments. But we recently found that only 4% of all federal programs fully use it. Others cite resource constraints and concerns about privacy and data protections as reasons why they don’t.   

   Additionally, state-administered programs that use federal funding (such as SNAP or TANF) also would benefit from using Do Not Pay. They can access it for free—but aren’t required to do so.   

   Congressional action could help agencies and states overcome the barriers to using this valuable data source for fraud prevention, while also protecting privacy. Congressional action could also grant the Do Not Pay program access to more data sources, making it an even more powerful resource to combat fraud. 

3. Authorize greater access to the National Directory of New Hires to verify eligibility for federal programs. The National Directory of New Hires contains employment and wage data on nearly every working American, as well as people who receive unemployment benefits. This is an important resource for verifying program eligibility and determining benefit amounts. But very few programs and agencies are legally allowed to access it.  

   Increasing access to this database, with the appropriate privacy and data protections, wouldn’t only help fight fraud. It would also improve government-wide efforts to identify, prevent, and recover payments made in error (also known as improper payments).  

4. Provide the Department of Health and Human Services (HHS) with authority to obtain information from states to estimate and report improper payments in Temporary Assistance for Needy Families (TANF). So far, we’ve discussed government-wide actions to combat fraud. But our work has also looked closely at specific programs. Among them is TANF, a $17 billion program annually. This program is an important resource for families that need help. But more should be done to protect funding from fraud and errors. 

   HHS oversees this program, which is administered by states. HHS says it lacks legal authority to require states to give it the information needed to estimate how much is loses to improper payments each year. Providing HHS with that authority would increase accountability over TANF payments and allow HHS to collect the information it needs to implement corrective actions and assess their effectiveness in reducing fraudulent and other improper payments.  

Earlier this year, GAO experts testified before Congress about the importance of improving TANF oversight. Hear from them in the video below. 

Two actions to prevent fraud in government contracting and grants 

The U.S. government often hires contractors for services. Last fiscal year alone, more than $792 billion was spent on government contracts. The government also provided over a trillion dollars in grants and transfers to states and other entities for health care, education, development and other services. We think two actions by Congress can help address fraud in contracting and grants.  

5. Ensure complete and accurate subaward data. Sometimes, contractors subcontract with other companies. Likewise, grant recipients often pass along federal funds to subrecipients. These subawards can lead to gaps in oversight of spending, which limits the ability to use data analytics and AI to prevent and detect fraud. Having comprehensive, high-quality data is critical to combating fraud among subcontractors and other subrecipients of grants. 

   But contractors and grantees aren’t always made to provide this information or held accountable when they don’t. We recommend that Congress take action to improve the quality of subaward information, which lives on USAspending.gov.   

6. Improve federal agencies' use of systems to protect the U.S. from repeated fraudulent actors or poor performers. Federal agencies too often fail to document and share information on bad behavior by contractors. This includes contract violations, such as fraud, waste, abuse, and human trafficking. By failing to do so, there is an increased risk of rehiring bad contractors and jeopardizing taxpayer dollars.  

Three actions to hold agencies accountable for combating fraud 

Agencies can and should be doing more to prevent fraud and be held accountable when they don’t. We think these three actions by Congress would bolster agencies’ anti-fraud efforts and hold them accountable. 

7. Require the use of GAO’s Fraud Risk Management Framework, especially designating an entity responsible for countering fraud and conducting regular fraud risk assessments. Agencies continue to lag in implementing leading practices for preventing fraud, even though legislative and policy guidance has been in place for a decade.  

   Our Fraud Risk Management Framework is a one-stop-shop for federal agencies and program managers to find a comprehensive set of leading practices they can implement now to reduce fraud. We also have also developed a guide that can help agencies assess and improve their efforts to combat fraud.  

8. Reinstate fraud risk reporting requirements focusing on prevention efforts. Congress once required federal agencies to report on their efforts to fight fraud. Reinstating this requirement would help Congress better understand fraud in government, as well as focus agency attention on the issue.

9. Establish annual federal fraud congressional scorecards. Agencies should also be held accountable for ensuring their efforts are effective. A scorecard could help Congress do that, while also tracking agencies’ progress in efforts to reduce, prevent, and detect fraud and improper payments.  

   ---