Comments on the Government Waste Corrections Act of 1999

Published by the Government Accountability Office on 1999-06-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States

GAO   General Accounting
                    D.C. 20548

      National Security and
      International Affairs Division


      June l&l999

      The Honorable Dan Burton
      Chairman, Committee on Government Reform
      House of Representatives

      Subject: Comments on the “Government Waste Corrections Act of 1999” (H.R. .1827)

      Dear Mr. Chairman:

      As you requested, we reviewed your proposed legislation entitled the “Government
      Waste Corrections Act of 1999” (H.R. 1827). The act would require the use of
      “recovery auditing”’ by Federal agencies and provide incentives to improve Federal
      management practices with the goal of reducing overpayments.          ,

      Recently, we issued two report& on (1) DOD’s demonstration program to evaluate the
      feasibility of using private contractors to identify overpayments made to vendors and
      (2) DOD’s steps to expand the use of recovery auditing. In the first report, we
      concluded that recovery auditing offers potential to identify overpayments. However,
      we noted problems with DOD’s implementation of the program and made
      recommendations to improve the program. In the second report, we pointed out that
      DOD was examinin g opportunities to further use recovery auditing.

      We believe that your proposed act would be a positive step in the government’s
      efforts to reduce overpayments and to obtain timely recovery of overpayments when
      they occur. The act also addresses recommendations we made in our recent report
      on DOD’s demonstration program. This includes giving the head of an executive
      agency the option to perform recovery auditing with internal staff, by contract or
      through a combination of both internal staff and contract. It is very important that
      heads of agencies perform a sound evaluation of the applicability of recovery auditing

      1Recovery auditing is a process to identify and recover overpayments. It began about
      30 years ago, and it is used in several commercial industries and to a limited extent
      within DOD.
      ’ Contract Management: Recover-vAuditing Offers Potential to Identifv Overnavments
      (GAO/NSIAD-99-12, Dec. 3,199s); Contract Management: DOD Is Examining
      Opnorttmities to Further Use Recoverv Auditing (GAOLNSIAD-99-78,Mar. 17,1999).

                             GAONSIAD-99-192R Government Waste Corrections Act of 1999
to their operations and the cost benefits of undertaking moderate internal recovery
auditing before asking an external group to do such auditing.

It is also important that those performing recovery auditing periodically report on the
factors causing overpayments and the steps that can be taken to reduce such
overpayments. One of our criticisms of DOD’s demonstration program was that DOD
did not implement the contractor’s recommendations to reduce overpayments. We
are pleased to see that the act requires the contractor to provide periodic reports with
recommendations on how to mitigate overpayment problems and that as a part of the
agency’s management improvement program, the agency is to give first priority to
addressing problems that contribute to overpayments.

Finally, to encourage agencies to participate in recovery auditing, it is useful to
provide means through which the agencies incurring expenses to support audit
recovery can recover their costs. A positive feature of the proposed act is to allow
applicable appropriations to be reimbursed for costs incurred by government
activities in supporting recovery audit efforts.

We appreciate the opportunity to‘comment on this important piece of prqposed
legislation. If we can be of further assistance, please contact me at (202) 5124300.
Major contributors to this report are Charles W. Thompson and Daniel JHauser.

Sincerely yours,

Henry L. Hinton, Jr.
Assistant Comptroller General


 Page 2              GAONXAD-99-192R Government Waste Corrections Act of 1999
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