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Purchase Card Big Data

DATA Demo Day a Success, Boosts Confidence that Fight Can Be Won

on May 17, 2013

Participating in DATA Demo Day yesterday reminded me why the fight to eliminate fraud, waste, and abuse in federal government is a fight that can be won.  There is genuine interest and passion from Chairman Darrell Issa of the House Committee on Oversight and Government Reform and Senator Mark Warner to provide significant ammunition to the fight through the Digital Accountability and Transparency Act (DATA Act).  The DATA Act would require the federal government to adopt common electronic identifiers for grantees and contractors receiving federal funds, allowing government-wide waste and fraud detection in federal assistance and procurement.

Preventing fraud, waste, and abuse is an objective that all government officials support. President Obama has made eliminating fraud, waste, and abuse a focus for the Office of Management and Budget (OMB) and has issued at least three executive orders directing OMB to work with departments and agencies on specific initiatives designed to begin the process of elimination.

Gene Dodaro, Comptroller General of the Government Accountability Office (GAO), speaks often of the battle against fraud, waste, and abuse.  In February, speaking before the Association of Government Accountants (AGA) National Leadership Conference (NLC) in Washington, Dodaro mentioned "detect and prevent improper payments' at the top of his list of how the accountability community can help to address fiscal and performance challenges facing federal government.  With federal government budgets already tighter and facing further belt-tightening and scrutiny with sequestration, Mr. Dodaro emphasized that the ultimate goal is to prevent improper payments from occurring in the first place.  He also mentioned that in 2012 four programs didn't even provide data on improper payments and six others who did had their estimates and the accompanying data rejected because their estimates did not meet OMB guidelines for providing the estimates.

Great work is being done in a number of departments and agencies to achieve this objective, including some of Oversight’s most successful government implementations at the US Department of Defense (DOD) Defense Finance and Accounting Service (DFAS), the US Department of Education (ED), and the Bureau of the Census.  DFAS, ED, and Census along with other departments and agencies leverage continuous monitoring and analysis along with the automated insights this produces to predict improper payments that are going to take place so that steps can be taken to prevent the payments from occurring.  They also leverage these systems to address process or systemic issues to prevent the same thing from recurring.  Taking into account the cost of hardware, software, IT operations, and financial management operations, Oversight Systems has seen cost to prevention ratios ranging from $3 to $30 of improper payments prevented for every $1 in monitoring and automated insights costs.

Even at the low end of this prevention to cost ratio, Federal Government experience indicates that automated monitoring should be in place in every department and agency, and particularly those like the Centers for Medicare and Medicaid Services (CMS), the Internal Revenue Service (IRS) Earned Income Tax Credit (EITC), and Department of Labor Unemployment Insurance (UI) programs that are at the top of the GAO's "high priority programs" list.  Further, achieving President Obama’s objective of attacking fraud, waste, and abuse in government spending means applying automated monitoring to all payments including vendor payments, grants, purchase cards, fleet cards, and travel cards.

The greatest challenges to monitoring federal assistance and procurement programs today are the access to, quality, and format of data from recipients.  Consistent data standards for spending will allow for greatly enhanced benchmarking and information sharing between agencies to achieve greater insights into problematic vendors, evidence of fraud schemes before they hit multiple agencies, and greater visibility for spending experiences across agencies to help all agencies make better decisions.  By mandating consistent data identifiers and formats for filings by federal grantees and contractors, the DATA Act will allow both agencies and their inspectors general to gain better insight into the most problematic areas of federal improper payments, including federal grants and entitlement programs.  When the DATA Act is implemented, Oversight Systems will be able to augment its existing solutions, and design new ones, by seamlessly incorporating interoperable recipient data sourced from different agencies or from USASpending.gov.

Preventing fraud, waste, and abuse in government spending is both good politics and good business.  In both tough times and prosperous times it seems like common sense to ensure that improper payments are prevented before they occur.  Taking the steps to ensure that government is doing everything it can to make the task of addressing both every day business requirements and making it easier to monitor expenditures to identify and prevent improper payments is the next step in moving in the right direction.  And when the worst case return on investment is 3:1, automated monitoring seems like a solution with which both sides of the aisle can agree.