Improper Payments:

Strategy and Additional Actions Needed to Help Ensure Agencies Use the Do Not Pay Working System as Intended

GAO-17-15: Published: Oct 14, 2016. Publicly Released: Nov 14, 2016.

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What GAO Found

The Office of Management and Budget (OMB), in coordination with the Department of the Treasury (Treasury), developed the Do Not Pay (DNP) working system as a data matching service for agencies to use in preventing improper payments, but GAO found that the DNP working system offers either partial or no access to three of the six databases required by the Improper Payments Elimination and Recovery Improvement Act of 2012, as amended. Specifically, the DNP working system offers no access to the Social Security Administration's (SSA) prisoner records and partial access to the Credit Alert Interactive Voice Response System and SSA's death records. The death records offered through the DNP working system do not include state-reported death data. SSA officials stated that sharing its full death file—which includes state-reported death data—would require an amendment to the Social Security Act. Sharing the full death file through the DNP working system would enhance efforts to identify and prevent improper payments.

The 10 agencies GAO reviewed have used the DNP working system in limited ways, in part because of a lack of clear OMB strategy and guidance. The most common way these agencies used the DNP working system is through its payment integration process, whereby Treasury compares disbursements it makes with DNP databases. However, Treasury matches against only two databases, and because the matching is performed simultaneously with disbursement, agencies generally do not receive the results in time to prevent improper payments. Further, because the payment integration process is built into Treasury's payment process, it does not compare payments disbursed through other means, such as payments made by the Defense Finance and Accounting Service ($477 billion in fiscal year 2015). OMB and Treasury guidance do not fully address the limitations of the payment integration process or whether its use is required. Aside from payment integration, 6 of the 10 agencies GAO reviewed used the DNP working system in limited ways, and 9 of the 10 agencies used some of the databases outside the DNP working system. OMB has not developed a strategy or communicated through guidance how it expects agencies to use the DNP working system. As a result, agencies may not effectively and efficiently use the system to help reduce improper payments.

Although OMB collects certain information about the use of the DNP working system, it has not developed monitoring mechanisms, such as goals or performance measures. Reported savings from use of the DNP working system have been minimal. OMB reported that the overall DNP Initiative (which encompasses the DNP working system and other agency-specific efforts) prevented over $2 billion in improper payments in fiscal year 2014, but none of these savings resulted from use of the DNP working system. Further, while OMB has not reported on fiscal year 2015 results, the 24 Chief Financial Officers Act agencies reported about $680,000 in improper payments prevented through use of the system in fiscal year 2015. However, GAO identified instances in which such agency-reported information was not consistent with reports generated by the system. Without monitoring mechanisms and reliable data, OMB cannot effectively evaluate the DNP working system or identify and address performance issues.

Why GAO Did This Study

Improper payments are a long-standing, significant problem in the federal government, estimated at nearly $137 billion in fiscal year 2015. GAO previously reported that one strategy to help prevent improper payments is up-front verification of eligibility through data sharing and matching. Established by OMB in 2011 and hosted by Treasury, the DNP working system is a web-based, centralized data matching service.

GAO was asked to review the DNP working system. This report examines the extent to which (1) OMB and Treasury developed the DNP working system and obtained access to relevant databases, (2) selected agencies used the DNP working system to help review eligibility, and (3) OMB monitored the use of the system. GAO reviewed relevant laws and guidance; interviewed officials at OMB, Treasury, and 10 user agencies selected in part based on size and reported improper payment estimates, including those with the largest reported estimates; and analyzed DNP working system documentation.

What GAO Recommends

Congress should consider amending the Social Security Act to allow SSA to share its full death file through the DNP working system. GAO is making two recommendations to Treasury and seven to OMB, including for OMB to develop and communicate a strategy and guidance and develop monitoring mechanisms. Treasury agreed. OMB agreed with two and agreed or generally agreed with the concepts behind the remaining five. GAO believes that it is important to fully implement all of the recommendations.

For more information, contact Beryl H. Davis at (202) 512-2623 or davisbh@gao.gov.

Matter for Congressional Consideration

  1. Status: Open

    Comments: In fiscal year 2018, the 115th Congress' House and Senate introduced H.R.4929 and S.2374, respectively, which included language to address the recommendation. In the context of the Do Not Pay working system, the bills, if enacted, would have authorized comparison of the Social Security Administration's full death file with personally identifiable information reviewed through the working system and would have authorized redisclosure of such comparison of information to any federal or state agency authorized to use the working system. As of January 2019, no relevant legislation had been enacted. We will continue to monitor congressional legislation to address this recommendation.

    Matter: To provide agencies access to SSA's more complete set of death data, Congress should consider amending the Social Security Act to explicitly allow SSA to share its full death file with Treasury for use through the DNP working system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Office of Management and Budget (OMB) agreed with our recommendation. We verified that, In fiscal year 2018, OMB revised its Circular A-123, Appendix C (dated June 26, 2018) to include a section that explains the process for agencies to propose additional databases for designation in the Department of the Treasury's Do Not Pay (DNP) working system. According to the circular, agencies that wish to suggest additional databases (either commercial databases or government databases) for use in Treasury's DNP working system should identify them to Treasury. Treasury will work with the requesting agency and the original source agency to provide feedback and evaluate the database for inclusion in the working system prior to making a recommendation to OMB. We believe that OMB has addressed our recommendation.

    Recommendation: To reasonably assure that additional relevant databases are identified and evaluated for inclusion in the DNP working system, the Director of OMB should develop, document, and communicate a formal process that user agencies can use to identify, suggest, and receive feedback on additional databases to be evaluated for inclusion in the DNP working system.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Implemented

    Priority recommendation

    Comments: We provided a draft of this report to the Office of Management and Budget (OMB) and Treasury and other agencies we reviewed for comment. In its written comments, OMB agreed with this recommendation and cited plans to implement it. On June 26, 2018, OMB issued its revised Circular A-123 Appendix C. The revised circular states that federal agencies are required to use the payment integration function unless they receive a waiver from OMB. Further, the circular states that to obtain a waiver, agencies should submit a memorandum to OMB with evidence that payment integration is either burdensome (e.g., large amount of false positives) or duplicative of current agency functionality. We believe OMB's revised Circular A-123 Appendix C addresses our recommendation.

    Recommendation: To reasonably assure that the DNP working system is used effectively and consistently, the Director of OMB should develop guidance that clarifies whether the use of DNP's payment integration functionality is required and--if required--the circumstances and process in which agencies may obtain an exemption from this requirement.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Priority recommendation

    Comments: We provided a draft of this report to the Office of Management and Budget (OMB) and Treasury and other agencies we reviewed for comment. In its written comments, OMB stated that it generally agreed with the concept of developing a strategy for how agencies should use the Do Not Pay (DNP) working system to complement existing data matching processes and would explore the concept further. On June 26, 2018, OMB issued its revised Circular A-123 Appendix C. The revised circular discusses in detail how agencies should effectively use the Treasury Working System, which includes a section on streamlining exiting data matching processes; screening payees before a payment is made; data quality assessments; tailoring the results of matching to program requirements; and using analytics services to develop solutions for program-specific improper payment challenges. We believe OMB's revised Circular A-123 Appendix C addresses our recommendation.

    Recommendation: To reasonably assure that agencies use the DNP working system effectively, the Director of OMB should develop a strategy--and communicate its strategy through guidance--for how agencies should use the DNP working system to complement existing data matching processes and whether and how agencies should consider using the DNP working system to streamline existing data matching. Such guidance may cover how agencies should demonstrate that their data matching processes meet the requirements in the Improper Payments Elimination and Recovery Improvement Act of 2012, whether agencies can decide on their own which specific databases to use, and how agencies should use the functionalities available through the DNP working system.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  4. Status: Closed - Implemented

    Priority recommendation

    Comments: The Office of Management and Budget (OMB) agreed with the concept of consistent policies and procedures and indicated it would work with agencies so that their policies and procedures for verifying Do Not Pay matches are developed consistently. We verified that, in fiscal year 2018, OMB revised its Circular A-123, Appendix C (dated June 26, 2018) to include a section that explains how agencies should effectively use the Treasury working system. According to the circular, agencies should have documented policies and procedures for determining whether a data match including those produced from Treasury's working system represented an improper payment. This includes verifying a match against a secondary data source, and providing individuals an opportunity to contest the matching results prior to taking adverse action. Further, OMB's circular cites that the Improper Payments Elimination and Recovery Act of 2010 requires payments and awards be reviewed, before their issuance, against specific data sources if those sources are applicable to verify eligibility of the payment and award. We believe that OMB has addressed our recommendation.

    Recommendation: To reasonably assure that agencies develop consistent policies and procedures to verify DNP matches, the Director of OMB should provide additional guidance that outlines when and how agencies should verify DNP matches against a secondary source and provide individuals an opportunity to contest before taking adverse actions as a result of DNP matches.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  5. Status: Open

    Priority recommendation

    Comments: OMB agreed with the concept of monitoring mechanisms and will continue to work with agencies to reduce improper payments and encourage agencies to establish goals to improve payment accuracy that will be monitored and evaluated by OMB. In fiscal year 2019, OMB provided us a status update on July 31, 2019, stating that Treasury does this monitoring and reports updates to OMB on a quarterly basis and that monitoring will occur in conjunction with the President's Management Agenda. We are working with OMB currently to obtain the reports that OMB receives from Treasury for our review. We will continue to monitor the status of this recommendation.

    Recommendation: To better monitor agency use of the DNP working system once a strategy has been developed, the Director of OMB should develop and implement monitoring mechanisms--such as goals, benchmarks, and performance measures--to evaluate agency use of the DNP working system.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  6. Status: Open

    Comments: The Office of Management and Budget (OMB) agreed with the concept of ensuring that data are reliable and will consider the feasibility of a process to compare agency submissions to available sources to reasonably assure that agency-reported information on use of the Do Not Pay working system is reliable. OMB provided us a status update on July 1, 2019, stating that OMB will work with Treasury to determine feasibility of doing this review and establishing a process during fiscal year 2019. We will continue to monitor the agency's actions to address this recommendation.

    Recommendation: To reasonably assure that agency-reported information on use of the DNP working system is reliable, the Director of OMB should develop a process for comparing agency reporting on the use of the DNP working system to available sources, such as OMB guidance and DNP working system adjudication reports.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  7. Status: Open

    Comments: The Office of Management and Budget (OMB) agreed with ensuring the completeness of data and will continue to work with agencies and the Chief Financial Officer community to ensure that agency-reported information on the use of the Do Not Pay (DNP) working system is complete. In fiscal year 2019, OMB provided us a status update on July 1, 2019, stating that this recommendation was addressed in OMB's Circular A-136. Additionally, we met with OMB officials on July 31, 2019. During the meeting, OMB officials informed us that the OMB Circular A-136, Section II.4.5 (bullet 3) (dated June 28, 2019) states that "Agencies should provide a brief narrative of the reduction in improper payments that is attributable to the DNP Initiative, as applicable. See OMB Circular A-123, Appendix C, Part V for a thorough overview of the roles and responsibilities of agencies to use centralized data sources such as the Treasury Working System and other government databases to prevent improper payments." We have reviewed OMB Circular A-136 and confirmed that the circular does contain the statements above. However, we do not believe that the OMB Circular A-136 meets the intent of our recommendation. GAO issued its recommendation, in part, because GAO found that OMB guidance does not indicate whether agencies should report on all uses of the DNP working system, including those outside payment integration that the DNP working system does not track. For this reason, GAO report concluded that without complete and reliable data and clear guidance on what information agencies should report, OMB cannot effectively monitor and evaluate the use of the DNP working system. Therefore, we do not believe that the OMB Circular A-136 sufficiently clarifies whether agencies should report on their uses of all of the functionalities of the DNP working system in their agency financial reports. We will continue to monitor OMB's actions to address this recommendation.

    Recommendation: To reasonably assure that agency-reported information on use of the DNP working system is complete, the Director of OMB should revise its guidance to clarify whether agencies should report on their uses of all of the functionalities of the DNP working system in their agency financial reports.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  8. Status: Closed - Implemented

    Comments: The Department of Treasury (Treasury) has taken actions to update its Agency Implementation Guide. We have reviewed Treasury's Agency Implementation Guide dated April 2017 and verified that this guide now clearly describes the limitations of the payment integration process, including the data sources used and the timing of matching. We have also verified that the Agency Implementation Guide maintains a copy of this guide on its public website at https://www.donotpay.treas.gov/Resources.htm. We believe that Treasury has addressed our recommendation.

    Recommendation: The Secretary of the Treasury should revise Treasury's Do Not Pay Agency Implementation Guide to clearly describe the limitations of the payment integration process, including the data sources used and the timing of matching.

    Agency Affected: Department of the Treasury

  9. Status: Open

    Comments: In March 2019, Treasury provided us a memorandum dated September 4, 2018, which indicates that the Do Not Pay (DNP) will capture adjudication information in Online Search via an agency-facing Application Programming Interface (API). According to Treasury, the API will allow users to transmit the outcome of an Online Search match directly to DNP. In addition, the DNP Portal user interface is in the process of being re-architected and will incorporate the additional functionality in the new user interface to collect adjudication information in both Continuous Monitoring and Online Search. As of September 2018, Treasury indicated that the development plan for capturing adjudication information via the API has been completed for (1) API infrastructure and frameworks and (2) Online Search agency-facing API. Treasury indicated that the development plan for capturing adjudication information via API will not be completed for the new Portal user interface until the 4th quarter of calendar year 2019 related to Online Search and until the 2nd quarter of calendar year 2020 related to Continuous Monitoring. Since Treasury does not expect to fully implement these changes until 2020, we will continue to monitor the status of this recommendation and, once fully implemented, review the documentation of the upgrades Treasury makes to the DNP.

    Recommendation: The Secretary of the Treasury should modify the DNP working system to track adjudication of matches obtained through all functionalities.

    Agency Affected: Department of the Treasury

 

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