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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Highlights

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.

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Recommendations

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.

Matter for Congressional Consideration

Matter Status Comments
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.
Closed – Implemented
In December 2020, Congress passed and the President signed into law the Consolidated Appropriations Act, 2021, which requires the Social Security Administration (SSA), to the extent feasible, to share its full death data with the Department of Treasury's (Treasury) Do Not Pay working system for a 3-year period, effective on the date that is 3 years from enactment of this Act. We believe sharing this data will allow agencies to enhance their efforts to identify and prevent improper payments to deceased individuals. We also believe it will be important for SSA and Treasury to work together to implement this legislation. Based on the actions taken by Congress to address our Matter for Congressional Consideration, we consider this Matter closed-implemented.

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget 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.
Closed – Implemented
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.
Office of Management and Budget
Priority Rec.
This is a priority 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.
Closed – Implemented
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.
Office of Management and Budget
Priority Rec.
This is a priority 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.
Closed – Implemented
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.
Office of Management and Budget
Priority Rec.
This is a priority 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.
Closed – Implemented
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.
Office of Management and Budget
Priority Rec.
This is a priority 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.
Open
The Office of Management and Budget (OMB) agreed with the concept of monitoring mechanisms and said it will continue to work with agencies to address this recommendation. OMB previously informed us that the Department of the Treasury (Treasury) conducts this monitoring and reports quarterly updates to OMB. Treasury provided us examples of reports that it provides to OMB. However, OMB still needs to provide more information on how it uses these reports, as well as documentation related to this monitoring and reporting. OMB also informed us that it will be using the information collected on paymentaccuracy.gov to meet the requirements under 31 U.S.C. ? 3354(b)(5), which requires OMB to submit an annual report to Congress on the operation of Do Not Pay (DNP). In March 2022, OMB informed us that due to policy priorities and limited resources, it is not able to completely implement this recommendation. OMB stated that DNP currently works closely with agencies on usage and will report to OMB as appropriate for assistance if needed. OMB needs to provide more information on monitoring and reporting of agencies' use of DNP, as well as how it plans to meet the requirements under 31 U.S.C. ? 3354(b)(5), as applicable. Without monitoring mechanisms and reliable and complete data, OMB will not be able to effectively evaluate agencies' use of the DNP working system or remediate any issues identified. We will continue to monitor OMB's actions to address this recommendation.
Office of Management and Budget 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.
Open
The Office of Management and Budget (OMB) agreed with the concept of ensuring that data are reliable and indicated that it 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 (dated 7/27/22) which shows that OMB disagrees that it is OMB's role to check the accuracy of agencies' reporting and believe Inspector Generals are better suited for this role. We continue to believe this recommendation is valid and will continue to monitor the agency's actions to address this recommendation.
Office of Management and Budget 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.
Open
The Office of Management and Budget (OMB) agreed with ensuring the completeness of data and indicated that it 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. At our meeting with OMB on 7/21/22, OMB indicated that it has now addressed this recommendation and will provide us the documentation that would support closing this recommendation as implemented. We are keeping this recommendation open pending receipt of additional documentation.
Department of the Treasury 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.
Closed – Implemented
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.
Department of the Treasury The Secretary of the Treasury should modify the DNP working system to track adjudication of matches obtained through all functionalities.
Closed – Implemented
Treasury agreed with this recommendation. Prior to issuing the GAO report, the Department of Treasury's (Treasury) Do Not Pay (DNP) working system only allowed users to record adjudication information (i.e., documenting verification of whether a payment was improper) for its payment integration functionality, which is only one of four DNP functionalities. For the remaining three functionalities (which include online single search, batch matching, and continuous monitoring), users could perform searches of databases at various times during the award or payment process and receive matches through the DNP working system. However, users could not record adjudication results for these matches in the DNP working system for these three functionalities. In fiscal year 2020, Treasury provided us documentation which demonstrates that Treasury has taken corrective actions by making enhancements to its DNP working system in fiscal years 2019 and 2020 which now allow users to record adjudication information within the DNP online portal for all four functionalities. In addition, we verified that Treasury has posted announcements of these enhancements on its DNP website and has provided users training on these new enhancements, including training manuals and training webinars which can be played back anytime on the DNP website. We believe Treasury has met the intent of the recommendation.

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