Billions of dollars owed the government by grantees and contractors are going uncollected because key federal officials are either indifferent, or claim to be too busy to recover the overpayments for the taxpayers.
The money owed the government ranges from grants given small, minority-run businesses to provide special community service for the poor to multimillion dollars in education funds that have been misapplied by state and local governments.
A spot check by the General Accounting Office of six major U.S. departments has turned up a backlog of $4.2 billion in unresolved auditing findings. That represents overpayments from the government to groups and individuals for worked either not performed or improperly done.
The GAO study, which congressional sources say represents "just the tip of the iceberg" in government overpayments, also showed instances where grantees spent money for personal items, or costly or useless office furniture instead of applying grants to help persons needing special services or low-cost housing.
In many instances, GAO says that both the grantees and the government have agreed on the amount of the overpayments. But too often - involving at least $4.2 billion worth of known unresolved audits - the money is not collected by government officials.
GAO's study, certain to spark a conshowed some officials admitted they did not try to collect the overpayments because they "felt sorry" for firms who had received them. Other top government managers, many of them political appointees, said they were too busy processing other outgoing money grants to collect overpayments.
GAO, the congressional watchdog agency, said auditors in federal agencies have been doing a good jobs of tracking funds and seeing if the billions Uncle Sam hands out on a regular basis is being properly spent or applied. The problem, GAO says, is that federal officials often refuse to act when handed evidence of overpayments or financial misuse.
Agencies and departments cited in the GAO study for Congress included Defense, HEW, Commerce, Labor and Housing and Urban Development and the Environmental Protection Agency. GAO gave the departments time to comment on its findings, but none of them had done so by the time the GAO completed its report that went to Congress last week.
The congressional watchdog agency said that $4.2 billion in unresolved audits had been identified in its spot check. GAO said this represents a minimum loss of "hundreds" of millions of dollars" to the government.
Sources who have studied the report, and know the problem, say that as much as 80 cents on the dollar - a figure in this instance that would amount to nearly $4 billion - could and should be collected just in the agencies studied.
Congressional sources said that agency officials often don't collect overpayments because they do not know how to recover money, or because they are more concerned for political reasons with "shoveling it out" than getting it back.
Examples from the GAO report show:
An official of HEW's Social and Rehabilition Service failed to collect an auditor-identified overpayment of $155,000 to the California Department of Health. GAO said the official said he and his staff "did not have time" to get the money back.
An auditor-identified overpyament of $4.4 million to a grantee was not recovered by HEW because the GAO said, HEW feared "potential legal problems."
HEW also bypassed an auditor's recommendation that they collect $4 million in allaged overpayments to the Louisiana Department of Education. In that case, GAO said, HEW officials "did not provide an adequate explanation" for failing to go after the money.
GAO said that Commerce, EPA, Labor and HEW often forgave overpayments to minority contractors based on a contractor's "good faith" when he accepted and spent the money.
A Commerce Department official said he failed to collect a $45,000 overpayment to one contractor and $40,000 to another because of his "heavy workload." The individual was not identified by GAO.
A Defense Logistics Agency contracting officer cited "higher priority work" as the reason for ignoring a $396,000 overpayment to a contractor.
Labor Department officials said $3 million owed them by a contractor had been ignored because they did not have time to collect it. GAO cited similar reasons for non-action in an overpayment of $2.1 million to a grantee by HEW.
A HUD official took no action to recover $185,000 owed it by an overpaid grantee running a New Mexico housing project. He said he felt sorry for the company and was more "concerned about the project's ability to pay its morgage . . ."