Federal government continues to lose billions to waste, fraud and abuse

March 10, 2013

Despite progress in reducing improper payments, federal agencies continue to lose billions annually to waste, fraud and abuse.

The federal government lost $261 billion, or 7 percent of total spending, to fraud and waste in 2012, said Rep. Darrell Issa (R-Calif.) during a February House committee hearing.

Though improper payments — a form of waste, fraud and abuse in which payments are made mistakenly or in an incorrect amount — declined 6 percent from the prior year, they still totaled $108 billion last year.

In 2009, President Obama signed an executive order that directed agencies to cut improper payments by $50 billion by the end of fiscal 2012. However, the federal government is still $3 billion short of this goal.

That means federal demand for technology that can combat waste, fraud and abuse will likely increase over the next few years. These products and services include pre-screening and identity authentication; data capture and processing; examination and detection; and investigation, prosecution and recovery.

In an effort to make improvements, some agencies are already using technology to root out waste, fraud and abuse and prevent erroneous payments:

To spot fraudulent claims, the Agriculture Department uses a system that compares farmers’ claims for crops ruined by floods and tornadoes with satellite information from the National Weather Service. The system has saved the agency more than $1 billion over the past 10 years.

The Office of Personnel Management’s Office of the Inspector General audits the more than 400 health insurance companies participating in the Federal Employees Health Benefits Program. Using a statistical analysis tool, the agency identifies bogus claims or administrative problems. As a result, officials estimate a 50 percent time savings on analyses.

Angie Petty is a senior principal analyst at Herndon-based Deltek, which conducts research on the government contracting market and can be found at www.deltek.com.

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