EXECUTIVE OFFICE OF THE PRESIDENT 


OFFICE OF MANAGEMENT AND BUDGET 


WASH I NGTON, D. C. 20503 


April 12, 2012 

M-12-11 

MEMORANDUM FOR THE HEAD~ O~VEDEPARTMENTS AND AGENCIES 

FROM: 	 Jeffrey D. Zi~ V 

Acting DirL)'\1 

SUBJECT: 	 Reducing Improper Payments through the "Do Not Pay List" 

In November 2009, in Executive Order 13520 on Reducing Improper Payments,l the 

President emphasized that "[w]hen the Federal Government makes payments to individuals and 

businesses as program beneficiaries, grantees, or contractors, or on behalf of program 

beneficiaries, it must make every effort to confirm that the right recipient is receiving the right .J 

payment for the right reason at the right time." Accordingly, the President directed Federal 

agencies to identify "ways in which information sharing may improve eligibility verification and 

prepayment scrutiny." The President further reinforced the importance of reducing payment 

errors, and recovering improperly paid amounts, in his Memorandum of March 2010 on Finding 

and Recapturing Improper Payments. 2 

Building on these initiatives, the President in June 2010 issued the Memorandum on 

Enhancing Payment Accuracy Through a "Do Not Pay List, ,,3 in which he underscored that: 

"While identifying and recapturing improper payments is important, prevention of 

payment enol'S before they occur should be the first priority in protecting taxpayer 

resources from waste, fraud, and abuse. In those cases where data available to agencies 

clearly shows that a potential recipient of a Federal payment is ineligible for it, 

subsequent payment to that recipient is unacceptable. We must ensure that such payments 

are not made." 

To that end, the President directed agencies to "review current pre-payment and pre-award 

procedures and ensure that a thorough review of available databases with relevant information on 

eligibility occurs before the release of any Federal funds." So as "to ensure that only eligible 

recipients receive Government benefits or payments," the President directed the establishment of 

a "single point of entry" through which agencies would access relevant data - in a network of 

databases to be collectively known as the "Do Not Pay List"- before determining eligibility for a 

benefit, grant or contract award, or other federal funding. 

1 Executive Order 13520 ofNovember 20,2009 (74 Fed. Reg. 62201; November 25,2009). 


2 Memorandum of March 10,2010 (75 Fed. Reg. 12119; March 15,2010). 


3 Memorandum of June 18,2010 (75 Fed. Reg. 35953; June 23, 2010). 

This memorandum directs each agency to develop the agency's plan for using the Do Not 

Pay solution for pre-payment eligibility reviews. As outlined below, each agency shall submit a 

draft of its plan to the Office of Management and Budget (OM B) by no later than June 30, 

2012. 

In response to the President's June 2010 directive, the Federal Government has worked 

aggressively to develop tools that will enable the centralized, detailed review of relevant 

databases envisioned as part ofthe "Do Not Pay List. 1I As a first step, agencies reviewed internal 

controls and processes sUlTounding its existing pre-payment and pre-award procedures and 

databases monitored pursuant to those procedures. Building on these reviews, OMB and the 

Depaliment ofthe Treasury (Treasury) have established the Do Not Pay solution, available for 

use by all agencies. The Do Not Pay solution is comprised oftwo components geared towal'd 

reducing improper payments: 

• 	 A web-based, single-entry access pOlial that enables agencies to access the data sources 

identified in the June 2010 Memorandum (including the Death Master File, the Excluded 

Parties List System, Treasury's Debt Check Database, and the List of Excluded 

Individuals and Entities). In addition, Treasury will continue to add other high-value data 

sources to the pOlial. 

• 	 Data Analytics Services that utilize additional data sources which al'e not available 

through the POlial. These include Treasury's Office ofForeign Assets Control List, zip 

code data, prison information, and several privately available sources. The sources are 

augmented by advanced data analytic activities for identifying trends, risks, and patterns 

of behavior that may warrant fUlther review by the agency. 

In addition, the Recovety Accountability and Transparency Board (RA TB) established 

the Recovery Operations Center to leverage cutting-edge forensic technology to prevent fraud 

and waste in Recovery Act programs. The RATB is cU11'ently conducting pilot programs with 

Federal agencies to expand this platform into a system called "Fast Alert" that would be a central 

pOlial for agencies to perfmID eligibility checks on Federal awards and prevent improper 

payments. Moreover, in its recent repOli to the President, the Government Accountability and 

Transparency Board (GATB) recommended the Federal Government develop a centralized fraud 

framework to track and oversee Federal spending. 

These initiatives represent critical progress in implementing the President's June 2010 

Memorandum that called for the establishment of a liDo Not Pay List,1I as well as the President's 

directive under Executive Order 13576 on Delivering an Efficient, Effective, and Accountable 

Government to "advance effOlis to detect and remediate fraud, waste, and abuse in Federal 

programs." The next step must be for the Federal Government to integrate these solutions into a 

cohesive "single point of entry" that all agencies can use. To advance this integration process, 

Federal agencies must take immediate steps to use the centralized solutions that are ah'eady in 

place for pre-payment eligibility reviews. 

Therefore, by no later than June 30, 2012, the Chief Financial Officer (CFO) of each 

Federal agency (or the accountable official for improper payments and program integrity, under 

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Executive Order 13520) shall submit to OMB the draft ofthe agency's plan for using these 

centralized solutions. OMB will work closely with agencies in reviewing the draft plans and will 

provide comments by no later than July 31, 2012. The agency shall then fmalize its plan, and 

submit a copy of it to OMB, by no later August 31, 2012. 

In its plan, each agency must address the process and timetable by which the agency will 

reach agreement with Treasury on its use of the Do Not Pay solution in order to continue 

progress in complying with the President's directive. The plan can also provide, as an interim 

step, for the agency's possible piloting of the Fast Alert solution. 

Attached to this memorandum are instructions and a sample template for agency plan 

submissions. Agencies should submit their draft and final plans via email to Mike Wetklow 

(mwetklow@omb.eop.gov), who is the Chief of the Accountability, Performance, and Reporting 

Branch within OMB's Office of Federal Financial Management (OFFM). Mr. Wetklow and 

OFFM staff can also respond to questions that your agency may have about this memorandum. 

In addition, while the agency plans should be based on the existing legal framework of 

statutes and regulations (to enable the immediate implementation of the plans), agencies are 

encouraged to submit to OMB - for OMB and interagency consideration - suggestions for 

possible revisions to statutes or regulations that could have the potential to improve the Federal 

Government's ability to access data or develop and use central solutions for pre-payment 

eligibility reviews. As these suggestions will be considered on a separate, parallel track, an 

agency should submit them to OMB separately from the agency's submissions of its draft and 

final plans. 

Finally, contracting officers shall continue to use the Federal Awardee Performance and 

Integrity Information System (F APIIS) to establish whether a contractor has the integrity and 

business ethics to receive a federal contract, in accordance with applicable statutes and 

regulations. To the extent that additional information provided by the Do Not Pay solution is 

helpful to contracting officers, in their efforts to ensure that the Federal Government does 

business with responsible parties, contracting officers are encouraged (but not required) to 

review the Do Not Pay solution for this purpose. The agency's Chief Acquisition Officer shall 

work with its CFO (or the other relevant official who is accountable for complying with the 

President's "Do Not Pay List" directive) to evaluate the extent to which the information provided 

by the Do Not Pay solution can assist contracting officers as a complement to F APIIS. 

Acquisition officials are encouraged to periodically review the Do Not Pay solution to determine 

if the information provided would be useful in the agency's acquisition process. 

We appreciate your assistance in this matter. 

Attachment 

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Attachment 
 

Agency Plan for Using the Do Not Pay Solution 
 

I. Instructions. 

In accordance with this memorandum, each agency shall submit to OMB, by June 30,2012, the 

agency's draft of its agency-specific plan for adopting a robust, centralized fraud-detection and 

prevention solution. 

OMB will review the draft and provide the agency with comments on it by July 31, 2012. 

The agency will then finalize its plan, and submit a copy of it to OMB, by August 31, 2012. 

The agency's plan will consist of two parts: 

• 	 Part One will outline the agency's commitment to emoll with the Do Not Pay solution to 

reduce improper payments. Alternately, agencies with investigative business needs can 

provide a justification for piloting Fast Alert as an interim solution. 

• 	 Part Two will address how the agency will use and incorporate these central solutions 

into the agency's existing business practices. 

The agency's plan (in both its draft and final forms) must be approved by the Chief Financial 

Officer -- or, when applicable, by the accountable official established under Executive Order 

13520 "Reducing Improper Payments and Eliminating Waste in Federal Programs." 

Agencies should submit their draft and final plans to OMB via email to Mike Wetklow 

(mwetklow@omb.eop.gov), who is the Chief of the Accountability, Performance, and Reporting 

Branch within OMB's Office of Federal Financial Management (OFFM). Mr. Wetklowand 

OFFM staff can also respond to questions that your agency may have about this memorandum. 

The next page is a Sample Template that agencies may use in preparing their plans. 

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II. Sample Template for Agency Plan. 

AGENCY NAME 

Part I Agreements 

Central Solution: [Describe the status ofDo Not Pay solution enrollment, including a time line on 

when the agency will enroll and which ofthe services the agency will use. Also, ifapplicable, 

provide ajustificationfor the agency participating in an interim pilot arrangement with Fast 

Alert.] 

Explanation ofNeed: [Outline the proposed use for the Do Not Payor FastAlert solutionsfor 

your various business processes. For example, will the agency be able to begin using the Do Not 

Pay portal immediately to reduce improper payments or is a phased approach required? Will 

the agency be considering changing business processes or policies to include the use ofthe Do 

Not Pay solution?] 

Expected Data Sources Required: [Which databases prOVided by Do Not Pay or Fast Alert does 

your agency need access to? The Do Not Pay solution currently cross-checks the following 

databases: General Services Administration's (GSA) Excluded Parties List System (EPLS); 

Social Security Administration's (SSA) Death Master File,' Department ofHealth and Human 

Services (HHS) IG's List ofExcluded Individuals/Entities; and the Do Not Pay solution also 

provides direct in-system access to Google to return publicly available information not found in 

these databases.] 

Part II - Utilization 

Incorporation in Existing Business Processes: [How will you incorporate the new functionality 

provided by Do Not Pay and/or Fast Alert into your existing business processes? Identify how 

online, continuous monitoring, or batch processing functionality will be used. Outline your 

change management strategy to ensure adoption ofnew process. What is the plan for ensuring 

the program workforce responsible for accessing and using the information is aware ofpoliCies, 

procedures, or record keeping requirements? Note.' Different existing business processes may 

need to identify separate adoptionpaths to accommodate their different existing processes. 

Where this is the case, agencies should address this section separately for each ofits programs 

or functionalities.] 

NAME OF CHIEF FINANCIAL OFFICER OR ACCOUNTABLE OFFICIAL (PRINTED) 

SIGNATURE DATE 

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