In FY 2009, the federal government spent $3.5 trillion dollars and made an estimated $110 billion of that in improper payments. According to PaymentAccuracy.gov the 2009 Payment Accuracy Rate was 95 percent.
While the Department of Defense is admittedly a “big player” Mark Easton, the Deputy Chief Financial Officer at DoD, told Federal News Radio “I think that improper payments in general is very much of a good news story because as a percentage we have very, very few improper payments.”
In fact, DoD is featured on PaymentAccuracy’s Agency Success Stories webpage for preventing “more than $700 million in improper payments to vendors over the past 2 years through the deployment of their Business Activity Monitoring (BAM) tool.”
“We have worked very hard to map our business processes to identify key controls and to ensure that those key controls are tested.” The testing is ideally performed in automated processes because “there’s less likelihood of errors when the computer is making the decisions for you.”
Then, Easton explained, “if we identify an improper payment, we aggressively work to recover those payments.”
Easton admits the improper payments Defense made last year may sound high at “a little bit over $800 million dollars,” but given the high dollar amounts they deal with, the percentages are actually quite low.
For example, pay made to retirees had an error rate of 0.12. “That’s about a tenth of one percent, and that goes up to into the 2 percent category for some of our reservist pay.”
The way the improper payments are handled, said Easton, are “part of an overall reform effort and reforming the way we do business. We had placed a priority on this and we’ll continue to place a priority on reducing improper payments.”
Defense, he said, has “tried to simplify the way we write contracts. To be honest a large portion a large portion of our commercial pay improper payments are in fact under payments, not over payments.”
While reducing the improper payments is a goal, Easton concedes they’ll never be completely eliminated, especially with the amount of money flowing through DoD. The important thing to remember, said Easton, is the people involved.