[Congressional Record Volume 146, Number 106 (Tuesday, September 12, 2000)]
[Senate]
[Pages S8415-S8416]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THOMPSON:
  S. 3030. A bill to amend title 31, United States Code, to provide for 
executive agencies to conduct annual recovery audits and recovery 
activities, and for other purposes; to the Committee on Governmental 
Affairs.


              A BILL TO PROVIDE FOR ANNUAL RECOVERY AUDITS

  Mr. THOMPSON. Mr. President, I rise today to introduce a bill which 
begins to address the issue of improper payments in Federal programs.
  Each year, the Federal government spends hundreds of billions of 
dollars for a variety of grants, transfer payments, and the procurement 
of goods and services. The Federal government must be accountable for 
how it spends these funds and for safeguarding against improper 
payments. Unfortunately, the problem of improper payments by Federal 
agencies and departments is immense. Today, I released a GAO report 
which I requested which identifies $20.7 billion in improper payments 
in just 20 major programs administered by 12 Federal agencies in Fiscal 
Year 1999 alone. And this represents an increase of more than $1.5 
billion from the previous year's estimate. In its report, GAO writes 
that its ``audits and those of agency inspectors general continue to 
demonstrate that

[[Page S8416]]

improper payments are much more widespread than agency financial 
statement reports have disclosed thus far.''
  Legislative efforts have focused on improving the Federal 
government's control processes. Recently-enacted laws, such as the 
Chief Financial Officers Act, the Government Management Reform Act, and 
the Government Performance and Results Act, have provided an impetus 
for agencies to systematically measure and reduce the extent of 
improper payments.
  However, the risk of improper payments and the government's ability 
to prevent them continue to be a significant problem. While we continue 
to work to improve the government's widespread financial management 
weaknesses, we also can attempt to recover the tens of billions of 
dollars in improper payments. And that's what the legislation I am 
introducing today will do.
  The legislation is modeled on H.R. 1827, a bill sponsored by House 
Committee on Government Reform Chairman Dan Burton, to require the use 
of a management technique called ``recovery auditing'' which would be 
applied to a Federal agency's records to identify improper payments or 
payment errors made by the agency.
  Recovery auditing is used extensively by private sector businesses, 
including a majority of Fortune 500 companies. These businesses 
typically contract with specialized recovery auditing firms that are 
paid a contingent fee based on the amounts recovered from overpayments 
they identify. Recovery auditing is not ``auditing'' in the usual 
sense. Recovery auditing firms do not examine the records of vendors 
doing business with their client companies or assess the vendors' 
performance. Instead, these firms develop and use computer software 
programs that are capable of analyzing their clients' own contract and 
payment records in order to identify discrepancies in those records 
between what was owed and what was paid. They focus on obvious but 
inadvertent errors, such as duplicate payments or failure to get credit 
for applicable discounts and allowances.
  The bill I am introducing today would require Federal agencies to 
perform recovery audits in order to identify discrepancies between what 
was actually paid by the agency and what should have been paid. This 
bill seeks to address concerns with H.R. 1827 which were raised after 
its passage by the House. For example, this bill would make clear that 
the relationship established by this bill is one between the agency and 
the recovery audit contractor, and all communications and interaction 
on the part of the recovery audit contractor is with the agency. 
Further, this bill includes exemptions for contracts which, under 
current law, already are subject to extensive audit scrutiny and 
oversight. Also, this bill includes Federal agency authority for 
recovery audit pilot programs for contracts, grants or other 
arrangements other than those covered by this bill.
  I appreciate all the work done by Chairman Burton on H.R. 1827. I 
believe my legislation appropriately addresses concerns raised with 
that bill and goes a long way in addressing the wasted taxpayer dollars 
and government inefficiencies resulting from Federal agency payment 
errors which are made each year.
                                 ______