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34–416 PDF 2008

S. Hrg. 110–319

ELIMINATING AND RECOVERING IMPROPER

PAYMENTS

HEARING

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 29, 2007

Available via http://www.access.gpo.gov/congress/senate

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 

FEDERAL SERVICES, AND INTERNATIONAL SECURITY SUBCOMMITTEE 

THOMAS CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

TOM COBURN, Oklahoma 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

PETE V. DOMENICI, New Mexico 

JOHN E. SUNUNU, New Hampshire

JOHN KILVINGTON, Staff Director 

KATY FRENCH, Minority Staff Director 

LIZ SCRANTON, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1

Senator Coburn ................................................................................................. 3

Senator McCaskill ............................................................................................ 7

WITNESSES 

THURSDAY, MARCH 29, 2007

Hon. Linda Combs, Comptroller, Office of Federal Financial Management, 

Office of Management and Budget ..................................................................... 7

McCoy Williams, Director, Financial Management and Assurance, U.S. Government Accountability Office ............................................................................. 8

John W. Cox, Chief Financial Officer, U.S. Department of Housing and Urban 

Development ......................................................................................................... 20

David M. Norquist, Chief Financial Officer, U.S. Department of Homeland 

Security ................................................................................................................. 23

Timothy B. Hill, Chief Financial Officer, Centers for Medicare and Medicaid 

Services, U.S. Department of Health and Human Services ............................. 25

Terry Bowie, Deputy Chief Financial Officer, U.S. National Aeronautics and 

Space Adminstration ............................................................................................ 27

Lee White, Executive Vice President for U.S. Operations, PRG-Schultz International, Inc. ......................................................................................................... 40

ALPHABETICAL LIST OF WITNESSES

Bowie, Terry: 

Testimony .......................................................................................................... 27

Prepared statement .......................................................................................... 106

Combs, Hon. Linda: 

Testimony .......................................................................................................... 7

Prepared statement .......................................................................................... 47

Cox, John W.: 

Testimony .......................................................................................................... 20

Prepared statement .......................................................................................... 84

Hill, Timothy B.: 

Testimony .......................................................................................................... 25

Prepared statement .......................................................................................... 92

Norquist, David M.: 

Testimony .......................................................................................................... 23

Prepared statement .......................................................................................... 88

White, Lee: 

Testimony .......................................................................................................... 40

Prepared statement .......................................................................................... 109

Williams, McCoy: 

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 51

APPENDIX 

Questions and responses for the Record from: 

Ms. Combs ......................................................................................................... 122

Mr. Williams ..................................................................................................... 138

Mr. Cox .............................................................................................................. 147

Mr. Norquist ..................................................................................................... 153

Mr. Hill .............................................................................................................. 158

Page

IV

Questions and responses for the Record from—Continued

Mr. Bowie .......................................................................................................... 161

Public Law 107–300 ................................................................................................ 163

(1)

ELIMINATING AND RECOVERING IMPROPER 

PAYMENTS 

THURSDAY, MARCH 29, 2007

U.S. SENATE, SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:48 a.m., in 

room 342, Dirksen Senate Office Building, Hon. Thomas R. Carper, 

Chairman of the Subcommittee, presiding. 

Present: Senators Carper, Coburn, and McCaskill. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. The hearing will come to order. I just want to 

start off by apologizing for Senator Coburn, myself, and our colleagues for starting about 45 minutes late. The Senate has been 

voting on the supplemental appropriation to provide largely for additional money for our forces in Iraq and Afghanistan and we have 

just finished the bill a few minutes ago, so now we are here starting late, but we are grateful to each of you for your patience and 

for those of you who have come to testify and to respond to our 

questions. 

When I first arrived in the Senate about 6 years ago, we were 

debating just what to do with a very large budget surplus. Just a 

few short years later, we find ourselves wrestling with record budget deficits and wondering how we were ever going to get our heads 

above water again. 

I think we took an important step toward addressing our serious 

fiscal problems last week with the passage of what I thought was 

a sound budget resolution. Going forward, however, we are going 

to need to do a lot more difficult work to close the budget deficit 

and put ourselves on stronger footing in preparation for the difficult fiscal period ahead when the baby boomer generation—that 

is my generation—begins to retire. 

We are going to need to find a way to collect some of the hundreds of billions of dollars in taxes that are owed to the Treasury 

that are uncollected each year, and we actually began to address 

that a bit in the budget resolution itself. We are going to need to 

control spending in some areas and in others to cut or maybe eliminate it altogether. And I am certain we will have a healthy debate 

about how best to do all of this, but I am equally certain that we 

2

can get just about everyone to rally around an effort to reduce 

what we call improper payments. 

When my staff and I first began our work on this Subcommittee 

more than 2 years ago, working with Senator Coburn and his staff, 

we held meetings with, among others, OMB, GAO, and various 

agencies to learn about some of the financial management challenges that the Federal Government faces and what was being 

done about them. We were shocked—outraged, even—to learn that 

at such a difficult time in our Nation fiscally, some Federal agencies were making literally tens of billions of dollars in avoidable 

improper payments year in and year out. In fiscal year 2006, agencies made some $42 billion in improper 

payments, according to OMB’s estimates. Most of these improper 

payments were overpayments. Similar amounts of money were 

wasted in fiscal year 2004 and fiscal year 2005, the first 2 fiscal 

years that agencies were required to report on the improper payments that they make. 

What Senator Coburn and I have learned through our oversight 

work is that, unfortunately, these estimates aren’t always very 

meaningful. In fact, to a large extent, they are only the tip of what 

could be a pretty large iceberg. The true cost of a number of agencies’ inability to implement the kind of sound financial management practices that could prevent improper payments, is likely billions of dollars higher than OMB’s estimates. 

The official improper payments estimates that OMB releases 

each year do not include any estimates for Medicaid. They don’t include estimates for the Medicare Advantage Program, the Medicare 

Prescription Drug Benefit, Temporary Assistance for Needy Families, or the school lunch program. They don’t include estimates for 

a number of programs in the Department of Homeland Security, 

Department of Justice, NASA, and elsewhere that have not even 

been examined to determine their susceptibility to improper payments. 

While we clearly have our work cut out for us, I applaud the 

focus that OMB and the Administration have placed on the improper payments problem. Eliminating improper payments is now 

a major initiative under the President’s Management Initiative and 

progress is clearly being made as a result of that emphasis. More 

programs are reporting improper payments each year, and some 

programs have seen a sustained reduction in their annual improper 

payments estimates. 

That said, we need to step up our efforts, and by ‘‘we,’’ I mean 

this Subcommittee, OMB, and more importantly, those agencies out 

there that still don’t appear to take their responsibility under the 

law seriously when it comes to eliminating improper payments. 

About 2 weeks from now, taxpayers in Delaware, Oklahoma, and 

across this country will be rushing to post offices to submit their 

tax returns just as the filing deadline arrives. I suspect a good portion of them will be none too pleased. They would be even less 

pleased if they knew that the Federal agencies entrusted with their 

hard-earned dollars, including some who are represented here 

today and many who are not, have proven incapable of complying, 

at least to this point, with even the most basic elements of the Improper Payments Information Act—the main tool that we use to adVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
3

dress the improper payments problem. Taxpayers also would not be 

pleased to learn that agencies, including some that report significant amounts of improper payments each year, may not be doing 

all that they can to recover overpayments that they have made. 

A number of agencies are required under the Recovery Auditing 

Act to review their books each year, identify overpayments, and attempt to collect those overpayments. According to data compiled by 

GAO, however, less than a third of the overpayments identified by 

auditors each year are actually recovered. On top of that, the only 

overpayments made subject to collections under current law are 

those made to contractors. 

It should be clear, then, there is a lot more work to be done. I 

think we have the leadership now from the Administration. Senator Coburn and I have been working hard, along with our staffs, 

to provide constructive oversight. We have been joined by Members 

of our Subcommittee, most especially Senator McCaskill, former 

Auditor of the State of Missouri. 

But what we need to do now is to get agencies to be more transparent about the mistakes they are making, start cleaning up the 

management and internal controls problems that lead to improper 

payments, and to work aggressively to recover those improper payments that can be recovered. 

I think I speak for all of my colleagues, and I don’t need to speak 

for Dr. Coburn, but I will try to for a moment, when I say that this 

Subcommittee stands ready to help in the effort to eliminate improper payments in any way that we can. I know that the Administration has already submitted some suggested legislative fixes that 

we are going to be considering. Senator Coburn and I have already 

been working together to get two amendments, including this last 

week in the Senate-passed fiscal year 2008 budget, that would 

allow us to dedicate the revenues generated from reducing improper payments and increasing recovery auditing to deficit reduction. 

My thanks again to our witnesses for taking the time to participate in our hearing this morning to help us find a way to bring 

agencies into compliance with the Improper Payments Information 

Act and to reduce as much as we can the amount of money that 

we waste each year through improper payments. 

Senator Coburn. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Senator Carper, thank you so much for having 

this hearing. Before we start, I want to commend Linda Combs and 

OMB. They have been highly cooperative. I think from her efforts, 

we have seen a lot of progress on improper payments. I have some 

real disagreements with some of the decisions associated with that, 

but nevertheless, the cooperative nature and the way in which we 

have been able to work together is very much appreciated. 

I also want to thank GAO, and particularly Comptroller General 

David Walker and McCoy Williams, for their outstanding, fantastic 

work for the Congress. We would be imminently less effective without both these agencies’ help. I think it points to the fact that the 

Executive and the Administrative Branch, in conjunction with 

GAO, can have an impact. 

4

I would just like to make a couple of comments. This is our fifth 

hearing on improper payments and I think we ought to assess what 

we are seeing. I disagree with Senator Carper. If you do real accounting, one time in the last 50 years, we have had a surplus, 

other than $3 billion one year in the 1990s, if you do real accounting. The rest of the time, we have never had a surplus and it is 

the game. It is just like this year we reported a $175 billion deficit. 

If you use that same accounting technique, we have never had a 

surplus, if you use the same combined accounting technique. 

So the national debt now stands at almost $8.9 trillion. We 

added $400 billion to it last year. Medicare and Social Security are 

likely bankrupt for our children and certainly for our grandchildren. Congressional restraint has not improved. As a matter of 

fact, you don’t even have to worry about improper payments. We 

tried to put some teeth in it with an amendment on the 9/11 bill 

and the Senate won’t enforce it. So consequently, even though we 

were going to have this hearing, there is not a will in the Senate 

yet to make sure that there are teeth associated with enforcing the 

law, not a desire, not a rule, but a Federal law that says the agencies have to comply. 

We also see that there is a lack of Congressional restraint. We 

have an emergency bill that just passed. Although it is controversial, we added $20 billion outside of the budget that will go straight 

to the deficit with a bill that we just passed that is getting ready 

to be conferenced with the House. 

Mr. Chairman, I have a rather lengthy statement and I think 

what I would like to do is submit that for the record, since we are 

late. I would say, and I will get into the area, there are rulings by 

OMB that go directly against what the law states. The law states 

that a risk assessment will be formed every year, not every 3 years, 

but every year. That is what the law states. And I don’t believe 

that, although the spirit of cooperation is great, I think we have 

a real problem there. I am especially concerned with NASA. 

I also would make one final point, as I ask for this to be placed 

into the record. 

Senator CARPER. Without objection. 

Senator COBURN. The three testimonies we received, two late 

yesterday afternoon, one last night—I asked the Chairman that 

those people not be able to actually give their testimony and just 

be here, as we do in several other committees within Congress. I 

think it is highly important—and there is no excuse, this hearing 

has been on the docket for a long time—for us not to have had that 

testimony. Whether that is OMB holding it up or who, it doesn’t 

matter to me. The fact is, it is inappropriate for Congress to get 

testimony the night before a hearing and expect for us to stay up 

and prepare all night because the Administration doesn’t want to 

get its job done in a timely fashion. 

So I would suggest if that happens in the future, I would kindly 

ask the Chairman that those who are late with their testimony are 

not allowed to give their testimony and just have to respond to 

questions. 

Senator CARPER. Thank you, Dr. Coburn. 

[The prepared statement of Senator Coburn follows:]

5

OPENING STATEMENT OF SENATOR COBURN 

INTRODUCTION

I want to commend OMB and Linda Combs in particular for their efforts to tackle 

the problem of payment errors. Ms. Combs, your efforts have been Herculean and 

I appreciate your work. We may not always agree on everything, but I can’t thank 

you enough for how well your office has worked with this subcommittee. It has been 

a model for how the legislative and executive branches ought to work together to 

do the very best for the American people. 

I also want to thank GAO, particularly Comptroller General David Walker and 

Mr. Williams, who is with us today. As new Members and their staffs come into the 

Congress, we would be infinitely less effective on technical issues such as today’s 

topic without the hand-holding and painstaking analysis you all provide us. 

CONTEXT

As we embark on our fifth hearing on improper payments in the past two years, 

let’s review the nation’s fiscal outlook.

• The national debt stands at $8.8 trillion. 

• Medicare and Social Security are likely to bankrupt for our children and certainly for our grandchildren. 

• Congressional restraint has not improved since the elections—‘‘exhibit A’’ is 

that the House recently passed an emergency war spending bill, but not before saddling this $100 billion spending with $20 billion more of pork and 

carve-outs for special interests such as spinach and peanut storage.

PROGRESS ON PAYMENT ERRORS

That’s the big picture. Let’s look at today’s part of that picture—payment errors. 

The Improper Payments Information Act of 2002 requires the following:

• Perform a risk assessment to determine whether or not programs and activities are susceptible to making ‘‘significant improper payments,’’ (defined by 

OMB as program where at least 2.5% of all payments are improper AND the 

absolute dollar figure associated with that 2.5% or more totals at least $10M.) 

• Develop a statistically valid estimate of improper payments for all programs 

and activities identified as susceptible to significant improper payments in 

the risk assessment. 

• Develop a corrective action plan for all programs where the statistical estimate exceeds $10 million in annual improper payments, The remediation plan 

must contain annual targets for reducing improper payment levels. 

• Report the results of IPIA activities on an annual basis to Congress, and in 

the DHS Performance and Accountability Report.

So that’s what the law requires. Where are we?

• In the third year of IPIA reporting, only 18 of the 36 agencies have reported 

even reviewing all programs and activities as part of the risk assessment 

process. 

• In other words, only half of all Federal agencies have completed their required risk assessment. 

• Twelve agencies provided enough details that indicated some level of review. 

• Another six agencies have yet to report ANY information on their risk assessment. 

• We have also made little progress in finding a proven, reliable methodology 

to determine accurate risk assessment data. 

• Some agencies still use non-statistical sampling, while others use single audits to identify risk assessments. Others, including witnesses today, are incorrectly claiming that their recovery audits are valid proxies for the statutorily required statistically valid risk assessment. 

• Both methods lack the depth and detail required to determine adequate 

risk assessments.

So how does this status translate into dollars? 

This year, the government-wide improper payment estimate totaled $42 billion, 

up from $38 billion last year. Yet, given that only HALF of the agencies have provided complete risk assessments and that there is a lack of consensus on the methodology used to determine improper payment estimates, we’re still in the dark when 

it comes to understanding the total magnitude of the problem.

RECENT DEVELOPMENTS

6

One of the more troubling discoveries this year is the fact that OMB revised IPIA 

implementing guidance in a way that is fundamentally at odds with the law and 

Congressional intent. 

Despite the overwhelming evidence that we’re not yet properly identifying risksusceptible programs, the revised guidance lightens the burden and allows for agencies to perform risk assessments every 3 years for those programs not deemed susceptible to significant improper payments. 

This is alarming for several reasons. First, the IPIA is still in its infancy. GAO 

reported that for fiscal years 2004 through 2006, ‘‘some agencies still had not instituted systemic methods of reviewing all programs and activities or had not identified all programs susceptible to significant improper payments.’’ GAO also reported 

further that ‘‘agencies employ different sampling methodologies to estimate improper payments and certain agencies risk assessments appear questionable.’’ These 

facts suggest that there’s not a consensus that we’ve got the risk assessment process 

well-in-hand enough to go easier on agencies in risk assessment.

For instance:

• In 2005, the Department of Agriculture’s Marketing Assistance Loan Program 

had an error rate of 0.7%. This year, it skyrocketed to 20.3%. 

• Another example is the Department of State’s International Information Program-US Speaker and Specialist Program. In 2005, the improper payment estimate totaled $1.9 million, with an error rate of 81.2%. In 2006, the error 

rate dropped to 23.8%, HOWEVER, the improper payment amount tripled to 

$6.7 million.

I don’t think we need to spend energy weakening the law and figuring out which 

programs should be exempt from annual risk assessments until a consistent, statistically valid method is established government-wide to identify payment errors. 

RECOVERY AUDITS 

I am encouraged by the potential that recovery audits can bring to the problem 

of payment errors. A provision in the National Defense Authorization Act for FY 

2002 requires that agencies that enter into contracts in total excess of $500 million 

in a fiscal year must carry out a cost-effective program for identifying and recovering amounts erroneously paid to contractors. Recovery audits are a win-win. First, 

they recapture lost payments. In Fiscal Year 2006, $256 million was recaptured. 

Unfortunately, that’s only about a third of the amount that was identified as 

needing to be recovered. But the amount we’re talking about here isn’t even a billion 

dollars. With payment mistakes totaling over $40 billion, we need to do more than 

just recover a billion, which is why the second benefit of recovery audits is so useful. 

These audits help us determine weaknesses in our financial systems responsible 

for the payment errors in the first place. Agencies should pay close attention to the 

recovery audit reports as they provide useful insights about where their 

vulnerabilities exist and what effective internal controls can be implemented for prevention. 

I do want to note however, that recovery audits are only required on contracts 

larger than $500 million. They are also generally retrospective beyond the most recently ended fiscal year. In other words, under no circumstances can they serve as 

legal ‘‘proxies’’ for the statutorily required statistically valid risk assessments for the 

sake of estimating likely rates of payment errors for agency estimates for previous 

fiscal years. I am dismayed that some agencies seem to be in error on this point. 

Ultimately, transparency and risk assessment data are only the beginning of accountability, not the end. We can conduct oversight hearings until we all turn blue 

in the face. Exposing the true scope of the problem has been hard enough, and we’re 

still not there with any sort of methodological rigor.

LACK OF POLITICAL WILL

However, even if we were, it grieves me that so far, this Congress has not had 

the political will to address the problems that have been exposed. I have offered numerous amendments to bills in the past 2 years to address payment errors and most 

of them have failed. 

Things are different here in Washington. If an employee at a private firm made 

a major payment error, he would probably face disciplinary action, and might even 

be fired or forced to pay for the lost funds. But if a government official makes a 

major payment error, or oversees a program which routinely makes payment errors, 

there is a strong possibility he would face few consequences, and that’s assuming 

that the mistake were even discovered. 

Much of our Federal spending is too incoherent to be audited, much less pass an 

audit. If Members of Congress had to vouch for the integrity of our financial stateVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
7

1The prepared statement of Ms. Combs appears in the Appendix on page 47. 

ments the way we require private firms to do under Sarbanes-Oxley requirements, 

we’d either have to admit we couldn’t do it, or else go to jail for deceiving the public. 

Although progress has been made by this President, and he inherited the accumulated mess of decades of out-of-control government growth, still, the status quo is 

shameful. I hope that this Congress will be the Congress that finally finds the courage to bring the painful, but necessary accountability to address this problem. 

I want to thank our witnesses for coming today.

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you. I do not have an opening statement. I do, however, have to leave and preside at noon. I am hoping that—I am anxious to talk to the second panel about their failure to provide risk assessments. I know you all have worked on 

this for years and I appreciate both of your work on it and I want 

to just add to your chorus on this that it is unacceptable that we 

do not have risk assessments from these departments. If I am not 

here to hear it, I know that you all will do a great job of asking 

the questions for me as to what in the world their excuse could be 

not to have risk assessments in those departments. 

Thank you, Mr. Chairman. 

Senator CARPER. I hope you will have that opportunity to ask the 

second panel. Thanks. 

Again, I am not going to introduce at any length Ms. Combs and 

Mr. Williams. We are delighted that you are here. Thank you for 

your good work that you do and for the spirit of cooperation that 

you bring to this effort. Ms. Combs. 

TESTIMONY OF HON. LINDA M. COMBS,1 CONTROLLER, OFFICE 

OF FEDERAL FINANCIAL MANAGEMENT, U.S. OFFICE OF 

MANAGEMENT AND BUDGET 

Ms. COMBS. Mr. Chairman and Members of the Subcommittee, I 

am very pleased to be here to speak with you today on the progress 

being made in implementing the Improper Payments Information 

Act and the Recovery Auditing Act. 

Today, I am glad we can discuss accomplishments in implementing the IPIA, the government progress we have made, and 

how Congress can assist us in achieving our shared objective of 

eliminating improper payments. The Federal Government is 

achieving measurable results in meeting the President’s goal to 

eliminate improper payments and fulfilling the requirements of 

IPIA. Since the first reporting under IPIA in fiscal year 2004, our 

efforts to eliminate improper payments have been centered on 

three primary requirements of IPIA: Identifying the risk-susceptible programs, eliminating the annual amount of improper payments in those risk-susceptible programs, identifying the root 

causes of those improper payments, and correcting the errors. 

In fiscal year 2006, agencies strengthened their methods for risk 

assessing their programs and activities for improper payments. As 

a result of these improvements, the amount of Federal outlays determined to be susceptible to improper payments increased from 

$1.4 trillion to $1.7 trillion. This increase reflects the continued 

commitment of Federal agencies to ensure that all potential 

sources of error are reported. 

8

1The prepared statement of Mr. Williams appears in the Appendix on page 51. 

Efforts are continuing to move the Executive Branch to full reporting under IPIA by 2008. Eighty-one percent of all risk-susceptible outlays are being measured for improper payments, and when 

the fiscal year 2008 results are reported, almost 100 percent of 

risk-susceptible dollars will report an error measurement. 

The amount of improper payments in programs originally reported in 2004 were reduced from a baseline of approximately 

$45.1 billion to $36.3 billion this year, a nearly $9 billion or 20 percent reduction. These original programs continue to represent a 

significant majority of the 2006 improper payments. The overall 

Federal 2006 improper payment rate was 2.9 percent and total improper payments equalled $40.5 billion. 

Let me take this opportunity to express my sincere appreciation 

to the Senate for providing over a billion dollars in adjustments to 

the discretionary caps for program integrity and tax compliance efforts in the Senate budget resolution, as reported out of the Budget 

Committee. We would, of course, encourage the House to include 

these cap adjustments in their budget resolution, as well, and we 

welcome your leadership, along with ours, in helping to make this 

happen. 

Additionally, we are most appreciative of the Senate’s interest in 

including language to newly authorized bills that stress the importance of program integrity. We also invite your leadership in assisting in the enactment of the other program-specific reforms that are 

included in the President’s fiscal year 2008 budget. Those are listed 

in my written testimony, which I submit for the record. 

This Administration will continue to hold agencies accountable 

under our tool of the President’s Management Agenda Eliminating 

Improper Payments Initiative, and further build upon recent results to address remaining challenges. We are optimistic that our 

current efforts, complemented by the enactment of the program integrity reforms proposed in OMB’s annual IPIA report, and full 

funding of the President’s request for program integrity efforts will 

continue to pave a path forward in achieving our shared objectives 

to eliminate improper payments. 

And I will add that the success that we have had to date and 

the success that we will have in the future would not have been 

possible without the cooperation of both the Legislative Branch, my 

colleagues at GAO, as well as our colleagues here on the Hill, and 

we look forward to continuing to work with you in ways that will, 

indeed, do the best for every taxpayer and that will focus our resources on the very best return for each dollar we put into this program. Thank you. 

Senator CARPER. Thank you, Ms. Combs. Mr. Williams. 

TESTIMONY OF McCOY WILLIAMS,1 DIRECTOR, FINANCIAL 

MANAGEMENT AND ASSURANCE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WILLIAMS. Thank you, Mr. Chairman, Members of the Subcommittee. I am pleased to be here today to discuss the government-wide problem of improper payments and agencies’ efforts to 

address key requirements of the Improper Payments Information 

9

Act and Recovery Auditing Act. Our work over the past several 

years has demonstrated that improper payments are a longstanding, wide-spread, and significant problem in the Federal Government. 

At the outset, let me commend this Subcommittee for continuing 

to hold oversight hearings on this important issue. Also, OMB has 

played a key leadership role in addressing this problem. For example, OMB continues its commitment to identify and eliminate all 

improper payments government-wide by working with the agencies 

to establish corrective action plans to address their root causes. 

OMB also annually reports on agencies’ efforts to address IPIA and 

Recovery Auditing Act requirements. 

Mr. Chairman, my testimony today will focus on three areas: 

Trends in agencies reporting under IPIA for fiscal years 2004 

through 2006, challenges in reporting improper payment information, and agencies’ reporting of Recovery Auditing efforts to recoup 

improper payments. 

First, since 2004, agencies have made some progress in reporting 

improper payment information. The total number of programs reporting improper payment estimates for fiscal year 2004 totaled 41, 

compared to 60 programs for fiscal year 2006. The total improper 

payment dollar estimates was $45 billion for fiscal year 2004, $38 

billion for fiscal year 2005, and about $42 billion for fiscal year 

2006. The increase in the estimate from 2005 to 2006 was primarily attributable to 15 newly reported programs totaling about 

$2.4 billion, and a $1.6 increase in USDA’s Marketing Assistance 

Loan Program estimate due to improvements in how it measures 

improper payments. In addition, several programs experienced increases in their improper payment estimates as a result of lax upfront eligibility controls related to benefit delivery to victims devastated by Hurricane Katrina. 

Now I would like to highlight some of the major challenges that 

remain in meeting the goals of the Act and ultimately improving 

the integrity of payments. First, some agencies have not yet reported for all risk-susceptible programs. For example, the fiscal 

year 2006 total improper payment estimate of about $42 billion did 

not include any amounts for 13 programs that had fiscal year 2006 

outlays totaling about $329 billion. 

Second, certain methodologies used to estimate improper payments did not result in accurate estimates. 

Finally, GAO noted that internal control weaknesses continued 

to plague programs susceptible to significant improper payments. 

For example, in the Department of Education’s fiscal year 2006 

PAR, the OIG reported that identifying and correcting improper 

payments remains a challenge for the agency due to ineffective 

oversight and monitoring of policies, programs, and participants. 

With regard to recovery auditing, Mr. Chairman, again, we have 

seen some progress. For fiscal year 2004, 12 agencies reported recovering about $53 million, compared to 18 agencies that reported 

recovering about $256 million for fiscal year 2006. Given the large 

volume and complexity of Federal payments and historically low recovery rates for certain programs, I would like to emphasize that 

it is much more efficient and effective to pay bills and provide benefits properly in the first place. 

10

In closing, Mr. Chairman, we recognize that measuring improper 

payments and designing and implementing actions to reduce them 

are not simple tasks and will not be easily accomplished given today’s budgetary pressures and the American public’s interest and 

increasing demand for accountability over taxpayer’s funds. Oversight hearings such as this one today help keep agencies focused 

on the goals of IPIA and being accountable for results. 

I look forward to continuing to work with this Subcommittee as 

well as Federal agencies and the Administration to address this 

problem. This concludes my statement. I will be pleased to respond 

to any questions you or Members of the Subcommittee may have. 

Thank you. 

Senator CARPER. Thank you very much. I think we are going to 

take 7 minutes for questions and I will try to keep us close to that. 

I will certainly stay close to that myself. 

Thank you very much for your testimony. Let me start, Ms. 

Combs, with a question for you, if I may. Speaking on behalf of 

OMB and the Administration, what do you feel is especially good 

that you all have been doing over the last 3 or 4 years since the 

law was passed in 2002? What do you feel especially good about 

and where is the heavy lifting that still remains to be done? 

Ms. COMBS. Thank you, Mr. Chairman. I think the thing I feel 

especially good about is that the trends that Mr. Williams just 

spoke about are continuing to go the right way. We obviously still 

have an awfully lot to do. It is clear when we look at the challenges 

with particularly State administered programs, that is where our 

challenges remain. 

We have some very good things to be proud of. They are included 

in my written testimony as well as GAO’s, so I won’t go over those. 

But probably it serves us all best to concentrate on where the challenges are. 

Senator CARPER. If you would, please. 

Ms. COMBS. I think that the federally-funded programs that are 

State administered pose the greatest challenge for our agencies and 

departments as well as for the work that we are all doing in a more 

collective way. 

Senator CARPER. Can you give me some examples of those? Medicaid and what else? 

Ms. COMBS. Well, there are several of those and let me just say 

where I think the critical challenges are. 

Senator CARPER. OK. 

Ms. COMBS. The critical challenges, I think, are to make sure 

that the roles and responsibilities for what is a State responsibility 

versus what is a Federal responsibility is very important. I think 

a lot of States have situations where they really need to understand how the money is distributed. They have their own requirements. I think what we have done with meeting with some of the 

State agencies and some of these State representatives, I personally have met with some of them to try to ferret out what we can 

do individually with States and collectively and I appreciate the 

partnerships that we have had with the Association of Government 

Accountants, for example. We have had additional meetings continue as we work with those groups of people. 

11

And I think that one of the things that we have talked with you 

and your staff about that we will continue to do and that continues 

to help all of us is that when statutes are enacted, making it very 

clear to have the authorization in there that lets the Federal components do what needs to be done in order to work with the agencies and put in program integrity roles and responsibilities, making 

sure those are clearly defined and that the program integrity funds 

are set aside so that we can, indeed, assure that we don’t have improper payments like we have now. 

Senator CARPER. Mr. Williams, it is clear to me, at least, that 

when you look at the major high-risk programs that have not yet 

reported improper payment estimates, that some of them have a lot 

in common. They all spend a lot of money. Many of them seem to 

involve grants or some shared administrative responsibilities with 

States, as Ms. Combs has just said. Why do you suppose programs 

like this have had so much trouble reporting improper payment estimates? What does OMB do to help them along and what can Congress do to help make that job easier? Do we need to make it clear 

to States or to grant recipients in some way that they have a responsibility to help agencies make sure the program funds are 

spent properly? 

And as sort of an adjunct to that, one of our later witnesses talks 

about incentivizing States. It is hard, as an old governor, to expect 

States to do a whole lot of extra work if they don’t get something 

out of it. If there is a shared responsibility to administrate in recovering these funds, I think as sort of an adjunct to that, common 

sense would be that they ought to share in some of the gain. 

So if you could sort of reflect on those series of questions, I would 

be grateful. Thank you. 

Mr. WILLIAMS. Mr. Chairman, we issued a report last year, I believe it was in the spring—I don’t remember the exact month—but 

it looked at those particular programs and we basically reported 

that there is about $400 billion in grants that the Federal Government issues each year. I think our bottom line message was that 

this is going to take a coordinated effort between the Federal Government and the States to address this improper payment issue. 

Everyone has a responsibility to make sure that the funds make it 

to the intended recipient. 

So I think that needs to be taken into consideration, and I think 

that one of the other components of your question related to why 

this is such a difficult area to get a handle on. I think OMB has 

basically stated in its reports, and we would agree, that if you look 

at the Medicaid program, for example, within the Federal Government framework, each State has its own rules and regulations as 

to how it operates, so you have to work with these individual 

States and see if you can come up with the method where you can 

actually identify a methodology that you can come up with a number that is reasonable and that will give you that baseline that you 

need to begin identifying and reporting so that the ultimate job of 

reducing the improper payments can get underway in these particular grant programs. 

Senator CARPER. Ms. Combs, you stated that certain methodologies used to estimate improper payments that did not result in accurate estimates. Could you just take a moment and explain to us 

12

1Public Law 107–300 appears in the Appendix on page 163. 

what that means and what needs to be done to help ensure that 

amounts reported by agencies are, indeed, accurate? 

Ms. COMBS. The rationale is that any of our guidance documents, 

we try to ensure that the cost of requirements that we impose on 

agencies are justified by the benefits that are realized. I think that 

one of the things that we have an opportunity to do here is, as we 

mentioned earlier, to do what is best for the taxpayer and to focus 

our resources on what is the best return possible. 

Senator CARPER. We may come back to that one after we go one 

time through. Dr. Coburn. 

Senator COBURN. Thank you, Mr. Chairman. 

Do you want to reflect back now and answer the Chairman? 

Ms. COMBS. OK. 

Senator COBURN. I will give you some of my time. 

Ms. COMBS. I was going to mention the 13 programs. They have 

been mentioned here earlier. And all I wanted to say was that we 

have all 13 of those programs scheduled to report an error measurement and they all have a timeline for reporting. You have mentioned TANF. That has a component rate coming in this year. One 

of the components is going to report in 2007, and then the full rate 

will be in 2008. And CCDF will report a component rate in 2008. 

Medicare Advantage, Medicare Prescription Drug Benefit are all 

going to report component rates in 2008. I just wanted to get that 

on the record. 

Senator COBURN. Thank you. Mr. Chairman, I have several questions I would like for us to be able to submit in writing to the witnesses, if we can——

Senator CARPER. Without objection. 

Senator COBURN [continuing]. And have a prompt response. 

I also want to enter into the record, Public Law 107–300, and 

here is what it says in Section 2.1 The head of each agency shall, 

in accordance and with guidance prescribed by the Director of 

OMB, annually review all programs and activities that it administers and identify all such programs and activities that may be 

susceptible to significant improper payments. Estimation: With respect to each program and activity identified, the head of the agency shall estimate the annual amount and submit those estimates 

to the Congress. It couldn’t be more clear. 

Ms. COMBS. A proven track record of low rate of improper payments. 

Senator COBURN. Like what? 

Ms. COMBS. National Science Foundation, education and research 

programs. They reported in 2004 and 2005 and they have a 0.02 

error rate. 

Senator COBURN. OK. 

Ms. COMBS. VA insurance programs reported in 2004 and 2005 

a 0.02 percent error rate. EPA Clean Drinking Water and State Revolving Fund Programs reported in 2004 through 2006, 0.18 percent. 

Senator COBURN. OK. I just wanted one. 

Ms. COMBS. OK. 

Senator COBURN. That’s fine. 

13

Ms. COMBS. I realize that there has been some contention over 

this and we are certainly—we have an open book, as you know. 

Senator COBURN. I know you do. 

Ms. COMBS. We have offered many times that if there are specific 

programs that we need to scrutinize more closely, we will do so. 

Senator COBURN. Here is the point I am going to. IPIA has only 

been reporting 3 years, so how do you have a proven track record 

if we have only been doing this for 3 years. 

Senator Carper and I were successful, along with several other 

Senators, in passing the Transparency and Accountability Act. In 

2009, all this stuff is going to be on computer. All this stuff is going 

to be on a website. There isn’t going to be a reason why something 

can’t be reported or followed. 

Is all these contracts and all these State-run programs that we 

supposedly have problems with, like TANF, Medicaid, CDBG, Child 

Care Block Grant, Food Stamps, and everything else, has to come 

online at the same time? Otherwise, we are going to be out of compliance with that law like we are this one. So what assurance can 

you give me that we are on track on the others and staying on 

track as far as the payment error problem? 

Ms. COMBS. Well, I just want to say, Dr. Coburn, I certainly commend the Senate and your efforts, and the Chairman’s efforts, in 

making these things possible because it is through our collective efforts that all of us have been able to work together to give the 

kinds of pushes that we have needed to make these things happen. 

I think all of these new technologies that are coming into play 

will do nothing but accelerate our efforts. All I am appealing to you 

today to let happen is let us get the very best dollars we possibly 

can for the American taxpayer by using the resources we have to 

make sure that there aren’t any huge holes in there like we saw 

in 2004. I am convinced of that and I do believe that the statistics 

that we have and that we have worked through play out to that 

effect, not that we are where we need to be. We can all do more. 

Senator COBURN. Right. I understand. We are shooting at a moving target, but we are getting better, and——

Ms. COMBS. Yes, we are. 

Senator COBURN [continuing]. I have no complaints with OMB 

other than on some of the decisions they have made with what is 

in compliance and what is not. 

Explain to me, Mr. Williams, if you will, how you all can find 

NASA out of compliance and OMB can find them in compliance. 

How does that happen? I mean, we have 2004 from you all saying 

they are not in compliance and OMB is saying on the basis of the 

look-back 10 years ago on a recovery audit that they are in compliance. How does that fit with the law? 

Mr. WILLIAMS. Let me just speak for GAO. We took the basic requirements of the law, which basically states that you are supposed 

to do your risk assessment and then develop your statistically valid 

estimates, come up with some corrective action plans, and report. 

We are basically saying that they are not in compliance because 

the review that was done by the auditors, it questioned the risk assessment. So in our opinion, if you did not do all four of those requirements, then you are not in compliance. So that is how we 

came up with the non-compliance. 

14

Senator COBURN. So the auditors had a question about the risk 

assessment that was made——

Mr. WILLIAMS. Yes. On a lot of these agencies that we are talking 

about, we basically refer to the work that the auditors performed 

in the area of IPIA while they were performing their financial 

statement audit. As you know, the law itself basically does not require the IG or an IPA to do an independent review to see as far 

as the quality is concerned. As you probably noticed in my testimony, we kind of referred to that, that might be a good idea to 

have that independent set of eyes, because we view the risk assessment as the basic foundation for making sure that you are actually 

carrying out the steps——

Senator COBURN. So if you have a questionable risk assessment, 

then, what that means is you can’t comment on whether or not you 

are in compliance or not. 

Mr. WILLIAMS. I guess an analogy is kind of like if you miss out 

on the introduction to accounting, you are probably lost the rest of 

the way through accounting. 

Senator COBURN. I have got you. Thank you. My time is expired. 

Senator CARPER. Thank you, Dr. Coburn. Senator McCaskill. 

Senator MCCASKILL. Thank you. The estimates that we are using 

for improper payments, I am uncomfortable with those estimates. 

I know that there is appropriate back-padding going on as it relates to progress, but if we are using estimates that we know are 

too low, I don’t know that we are really doing anyone a service on 

this. I want to make sure I understand correctly, Mr. Williams, I 

think that your testimony is what touches on this because GAO is 

the one who has done this work—that there are 13 risk-susceptible 

programs that have outlays of $329 billion in fiscal year 2006 that 

are not even included in these estimates. Is that correct? 

Mr. WILLIAMS. That is correct. That number is approximately 

$329 billion, and what we are basically saying is that—and I guess 

our overall message is that, yes, progress has been made, but we 

are not at the point where we have our hands around the entire 

picture and these 13 programs are the ones that we are talking 

about that over the next couple of years, it appears that they will 

have these risk assessments in place. But until then, we are not 

for sure what the total number is. 

We are using some baseline data based on those agencies that reported in those years, but at no point in time up to now do we have 

a number that represents the entire Federal Government. 

Senator MCCASKILL. And how confident are you of the baseline 

data? Are you confident of the baseline data? It makes me nervous. 

Mr. WILLIAMS. The baseline data is a first step. We have identified problems over the last 2 years with some of the risk assessments, some of the sampling, and we have reported on situations 

in which agencies have basically said one thing and the independent auditors have gone in and contradicted that statement. 

So I think that while there has been progress, there is still a lot 

of room for improvement. There are a lot of things to be done before I am comfortable with saying that I think we know what we 

are dealing with. I think we still have work to do in identifying 

what is our universe of improper payments? 

15

Senator MCCASKILL. Ms. Combs, the significant designation guidance from OMB, the significant improper payment, that you all 

have indicated that to be significant, it has to exceed $10 million 

and 2.5 percent of outlays. The ‘‘and’’ in that phrase—I am curious 

why we need the ‘‘and,’’ because we are talking about potentially 

hundreds of millions of dollars that could not be significant if you 

are dealing with some of these programs, and frankly, some of the 

programs that right now are not even part—I mean, we are talking 

about $329 billion that we haven’t even gotten any kind of indication yet. 

Ms. COMBS. Well, if we start from the universe of the $2.7 trillion 

of outlays and we know now that we have a high-risk outlay of $1.7 

trillion of that $2.7 trillion, and we look at where are the best 

places to put our resources in taking care of that $1.7 trillion in 

high-risk that is currently being tracked today, we decided that the 

basis for the $2.5 trillion was to make sure that Federal agencies 

indeed focused on the resources for the programs that would provide the most return on investment for the taxpayer. If you look 

at the first seven programs we came out with in 2004, those seven 

programs are still the most significant programs in our 2006 reporting where we have the most improper payments. 

So in order to help you with your confidence level a little bit, 

hopefully, if you look at those and realize that is 95 percent of that 

$1.7 trillion, then most of that is encapsulated in that. So that is 

some confidence. Granted, there is still a lot out there, as Mr. Williams just talked about. There are still some things that we don’t 

know. But we do have risk assessments. We have 81 percent of 

these high-risk programs have measurements today, and by 2008, 

100 percent of them will have. 

So those are the kinds of things that we know we are making 

progress on. We are not there yet and we welcome the opportunity 

to work with you and the Subcommittee to work on specific programs. If you know of some that are out there, we have an open 

invitation that we will be glad to monitor and follow those——

Senator MCCASKILL. That is a dangerous invitation to extend to 

me. Very dangerous. [Laughter.] Calling something that might be more than $10 million insignificant just kind of sticks in my craw and I think that is problematic. 

Let me ask both of you about the recovery audits, my experience 

has been that there are all kinds of companies out there that are 

willing to do this and absorb the costs in return for a cut of the 

money. I assume that is the case in the Federal Government, that 

these contractors that are being used on these recovery audits are 

being paid a percentage of what they recover? 

Ms. COMBS. Yes, that is correct. 

Senator MCCASKILL. Well, then why is it not cost effective for everybody to do it? 

Ms. COMBS. Cost effective for every agency to do it? 

Senator MCCASKILL. And every program. I mean, if the recovery 

audits are all being done on contingency, in other words, if we don’t 

have to put any money out of our pocket and we hire people and 

they are the ones that are taking the risk and they are the ones 

that have to have the overhead, and if they recover money, we get 

what they recover and they take a piece of it, then why in the 

16

world are we waiting until 2010 in CMS and other places to make 

it system-wide? Why do we want to do pilot programs? Why don’t 

we say, come one, come all. If you are in the private sector and you 

think you can recover money for us, sign up, and if you do, we will 

give you part of it and the taxpayers are the winner there. 

Ms. COMBS. Well, I think that those are some things that we 

could sit down and talk about. There are, as I mentioned earlier, 

some very complicated issues when it comes to trying to address 

a one-size-fits-all. It does not one-size-fit-all, so we welcome your 

suggestions and look forward to meeting with your staff and talking about that. 

Senator MCCASKILL. If I could tell one story—when there was a 

flood in Kansas City and I was a prosecutor, I saw people lined up 

to get Food Stamps in an area of town where water had not come 

near. I sent my investigator down to interview people in the line—

the line stretched around the block—and started asking people in 

line if they had flood damage. People readily admitted, no, they 

just told you to come and sign up and you got Food Stamps. 

So I held a press conference the next day and said, if you got 

Food Stamps and you didn’t deserve them, if you turn them in in 

the next 2 days, we won’t prosecute you. It was kind of a recovery 

program. And we had hundreds of thousands of dollars of Food 

Stamps that were turned in voluntarily. Now, someone from the 

Federal Government called me and asked me what the heck I 

thought I was doing. They wanted to make it complicated. They 

wanted to know where I asked the people to turn them in and what 

kind of authority I had to ask them. Well, I just asked people if 

they got them and they didn’t deserve them and they thought they 

had done it illegally, they should turn them in. I just worry sometimes that we make this more complicated than it needs to be, and 

that gets in the way of just going after it. Thank you, Mr. Chairman. 

Senator CARPER. Thank you very much. I think maybe we will 

take a couple of minutes apiece for follow-up and then we will turn 

to our second panel. 

A number of high-risk programs have had trouble reporting estimates on the Improper Payments Act. Thus far, they have goals in 

place to begin reporting, I believe in 2007 and 2008. There are, I 

think, at least four major programs—we have talked about them 

already—the Child Care Development Fund, Medicare Advantage, 

Medicare Prescription Drug Program, and the Temporary Assistance for Needy Families Program—that are not reporting and, as 

I understand it, don’t yet have a timeline in place for coming into 

compliance with the Act. 

This is probably more for Ms. Combs than not—what progress, 

if any, has been made in bringing those four specific programs into 

compliance and when you think that we can expect estimated improper payments from them? 

Ms. COMBS. TANF will report a component rate by 2007 and a 

full rate by 2008. CCDF will report a component rate in fiscal year 

2008. Medicare Advantage——

Senator CARPER. Say that again. 

Ms. COMBS. Fiscal year 2008. 

Senator CARPER. For what? 

17

Ms. COMBS. CCDF, Child Care——

Senator CARPER. Yes, but what will they do by 2008? 

Ms. COMBS. Child care. 

Senator CARPER. What will they do—what will be accomplished 

by 2008? 

Ms. COMBS. They will report a component rate. One of their divisions will report, so they will be reporting what we would call a 

partial rate. 

Senator CARPER. Alright. 

Ms. COMBS. Medicare Advantage and Medicare Prescription Drug 

Benefits will both report component measurements in fiscal year 

2008. 

Senator CARPER. Mr. Williams, should we take some comfort 

from that, what Ms. Combs has just responded? 

Mr. WILLIAMS. Well, anytime that you have an agency or component within an agency that is not reporting and there is a timeline, 

that is better than some that we have seen in the past in which 

there was no information at all, that we were not for sure when 

anything was going to be reported. So yes, there is some progress 

there, but as I have stated earlier, the sooner that you are able to 

get your hands around the entire universe, the better I think we 

will all be in looking at this particular issue of getting that good 

base of improper payments government-wide. 

Senator CARPER. Alright, thanks. And the only other question I 

have, I want to go back to how do we incentivize States. When we 

have these partnership programs, how do we incentivize the States 

to work with us so they can come out ahead, the Federal Treasury 

comes out ahead, the taxpayers come out ahead, both in the States 

and at the Federal level? 

Ms. COMBS. I think you are going to hear from the next panel 

one of the very good success stories of how we incentivize States 

to do that. Rather than stealing their thunder, maybe you should 

hear directly from them. But there are some very good ways. When 

we work collectively with States and hear their concerns, know 

what it takes for incentives for them to work through these situations, which are very complicated, in their own individual States 

with their State-administered programs, we really can have some 

good, positive lessons learned, and I think you will hear that in the 

next panel coming up from particularly one or two of these. 

Senator CARPER. Mr. Williams, I want to ask you the same question. How do we incentive States, more broadly? I appreciate the 

fact that we are going to hear from at least one witness in the next 

panel, but how do we do it more broadly, because there are a number of programs where there is this shared partnership, as you 

know. 

Mr. WILLIAMS. Yes. 

Senator CARPER. It is those programs where we have some of the 

biggest problems in recovering improper payments. 

Mr. WILLIAMS. Yes. I think we have to look at that particular 

process, and one of the things that I have seen in the past is that 

if you take these programs and if money is recovered, for example, 

and you are able to keep that rather than it going back to another 

fund or going to another operation, then if there is some incentive 

there that if I get this money back, I can use it to carry out this 

18

program further, and I think that type of an incentive is something 

that you really want to have in place. But if you have a program 

in which there is an improper payment, for example, and if the 

money is collected it goes back into a fund that cannot be used for 

the purpose of carrying out that particular program, then there is 

no incentive there. So you need that type of incentive. 

Just from an overall accountability standpoint, one thing that, if 

I could add to all of this, as far as not just the incentives are concerned, but as I stated in the testimony, the recovery component 

of it is your second choice. You really want to have systems, policies, and procedures in place——

Senator CARPER. You make that point in your testimony——

Mr. WILLIAMS [continuing]. To prevent this from happening in 

the first place. 

Senator CARPER. Good point. And I am going to come back and 

ask each of you to reply to that same question again in writing because I want you to think it through. How do we take these specific 

results that we are going to hear in the next panel and how do we 

broaden that application throughout this shared partnership. 

Thank you. 

Senator COBURN. Well, first of all, I want to say how pleased I 

am Senator McCaskill is on this panel. 

Senator CARPER. Me, too. 

Senator COBURN. It is refreshing and greatly needed to have the 

help and thank you for being here. 

The thing you will notice is that you did not get an answer to 

your question, and that is not a criticism of Ms. Combs. She doesn’t 

have the ability to agree with you because of the constraints that 

she operates under. But that is the question that ought to be answered for the American public. The Recovery Act limits it to $500 million or more, so the first 

question is how do we change that Act to where we move that 

down the scale, which is one of the things that needs to be done. 

But I agree with you, it needs to happen. 

I am going to ask almost a rhetorical question, because I think 

I know the answer, but I would like for both of you to respond. 

Other than two small programs in the Defense Department, right 

now, the Defense Department as a whole really isn’t reporting 

under the Improper Payments Act, is that correct? 

Mr. WILLIAMS. I will take it. Dr. Coburn, as you know, in last 

year’s legislation, there was a mandate for GAO to take a look at 

DOD’s compliance in the area of travel because of the various reports that we had been issuing about the travel issue. That work 

is currently underway and we are looking at it very closely from 

the standpoint of, again, using those basic four criteria that we 

have talked about here. And we will take those criteria and we will 

go through and we will look at each one to see what is DOD doing 

in that particular area. But in addition to that, we are also looking 

at the Recovery Auditing Act. We got a request from the Subcommittee or the full Committee—I am not sure right now which 

one—to take a look at the Recovery Auditing Act with DOD and 

look at other IPIA reporting. 

At first glance, you look at an agency that large and I think it 

would raise the point that was brought up earlier when you talk 

19

about whether this is in compliance or not. You have to take into 

consideration that there are probably some very large numbers, but 

when you throw in the 2.5 percent criteria, that might put some 

of those programs under the radar. So it is difficult for us to say 

at this particular point in time. 

Senator COBURN. So there is no question, I think Senator Carper 

and I have come to some agreement that we need to modify the 

IPIA Act to a little degree to address one of the areas that Senator 

McCaskill raised, and this is this 2.5 percent and $10 million. Congress didn’t set that. OMB set that, and there are some practical 

reasons for why they set it, but I am not convinced that is the 

threshold that we need to have and I think we need to address 

that. 

Senator CARPER. Thanks very much. Senator McCaskill. 

Senator MCCASKILL. I will yield to the Chairman and let these 

folks go and maybe get a chance to hear from the second panel before I have to leave, Senator Carper. Thank you. 

Senator CARPER. OK, fair enough. Alright. Ms. Combs, Mr. Williams, thank you for joining us today. Thank you for your testimony. Thank you for responding, and we will be providing some 

additional questions and would appreciate your prompt response. 

Mr. WILLIAMS. Thank you. 

Senator CARPER. Clearly, some progress is being made here. 

There is a good deal of work for us all to do, as you know. I always 

like to say, if it isn’t perfect, make it better, and this is not a perfect situation and we need to work hard to make it better and obviously we need to work together to make it better. But our job is 

to try to provide some oversight to hold someone’s feet to the fire 

and we will be endeavoring to do that. When people are doing a 

good job, agencies are doing a good job, we put a spotlight on them 

and applaud them. Those that aren’t, we will put a spotlight on 

them, as well, and let the lack of action or inaction speak for itself. 

Thank you both very much. 

Mr. WILLIAMS. Thank you. 

Ms. COMBS. Thank you. 

Senator CARPER. Mr. Williams, I am just going to ask you if you 

would take a seat in the front row, if you could. 

Mr. WILLIAMS. OK. That is fine. 

Senator CARPER. Just don’t go away too far. We may want to call 

you back to the table to respond to some further questions. Thank 

you. 

Mr. Williams, Lee White, who is Executive Vice President of U.S. 

Operations for PRG-Schultz, is going to testify on a third panel, so 

he is not going to be needing this seat right now, so we have an 

extra spot there and just feel free to take that one. We appreciate 

your flexibility here. 

We want to welcome each of our witnesses for our second panel 

today. I am not going to provide lengthy introductions, but I will 

say that John W. Cox, who is the Chief Financial Officer of the Department of Housing and Urban Development, we are grateful that 

you are here. We appreciate your presence and your work. 

David Norquist is the Chief Financial Officer of the Department 

of Homeland Security. Mr. Norquist, one of the things we are going 

to be asking you is why we didn’t get your testimony on time. I am 

20

1The prepared statement of Mr. Cox appears in the Appendix on page 84. 

sorry that Dr. Coburn is not here to hear that response, but I am 

sure his staff will convey the message. But when you speak, one 

of the first things I want you to do is to explain that. 

We want to welcome Timothy Hill, who is the Chief Financial Officer of CMS. Thank you for coming. 

And Terry Bowie, Deputy Chief Financial Officer at NASA. Mr. 

Bowie, thank you for coming, as well. 

I am just going to ask Mr. Cox, if you will, just to lead it off. You 

have about 5 minutes. Your entire statement will be made part of 

the record. We welcome your presence and your testimony. Thank 

you. 

TESTIMONY OF JOHN W. COX,1 CHIEF FINANCIAL OFFICER, 

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. COX. Thank you very much, Mr. Chairman and Senator 

Coburn, and distinguished Members of the Committee, my name is 

John Cox, the Chief Financial Officer for Housing and Urban Development. I want to thank you for inviting me here to appear before this Subcommittee today to speak about the results of HUD’s 

efforts to reduce improper payments. 

The Department has aggressively complied with the Improper 

Payments Information Act of 2002 and was the first agency to 

achieve green status on the President’s Management Agenda Initiative for Eliminating Improper Payments. I would like to go over 

a few of the Department’s accomplishments since my office last testified before this Subcommittee on this very topic in September 

2005. 

We are in the process of updating our Fourth Annual Improper 

Payment Risk Assessment. Our most recently completed risk assessment covered $58.8 billion in payments made by the Department in fiscal year 2005, and no new high-risk programs activities 

were identified. Over the past 3 years, the results of HUD’s annual 

risk assessments called for the measurement of improper payment 

levels in 11 major program areas with the risk potential to exceed 

the $10 million high-risk program threshold. Those 11 programs 

constitute about 65 percent of the Department’s annual budget and 

payment activity. Five of the 11 programs measured exceeded the 

$10 million threshold to require corrective action planning, annual 

reporting, measurement, and follow-up efforts to reduce improper 

payment levels. 

We completed and verified corrective actions to reduce improper 

payments to an acceptable level in two of the five programs originally determined to be at risk of significant improper payment levels, payments under the Single Family Acquired Asset Management System and the Public Housing Capital Fund. 

We exceeded our internal goals for reducing improper payment 

levels for HUD’s three remaining at-risk program areas, the Public 

Housing Tenant-Based Assistance and Project-Based Assistance 

Program, collectively referred to as HUD’s Rental Housing Assistance Programs. This reduction, and more importantly the underlying internal control components, was one of the key reasons 

21

HUD’s Rental Housing Assistance Program area was removed from 

the GAO high-risk list in January 2007. 

The reductions in housing subsidy determination errors resulted 

from HUD efforts to work with its public housing industry partners 

and multi-family housing projects through enhanced program guidance, training, oversight, and enforcement. The reduction of erroneous payments due to tenant under-reporting of income resulted 

from improved income verification efforts by housing program administrators, increased voluntary compliance by tenants due to promotion of the issue, HUD’s initiation of improved computer-matching processes for up-front verification of tenant income, and an improved methodology for reviewing income discrepancies identified 

through computer matching to better determine actual cases of 

under-reported income which impact subsidy levels. 

In fiscal year 2006, HUD implemented its new Enterprise Income 

Verification System for use by public housing agency program administrators in conducting improved verifications of tenant income 

during the annual recertification process. I want to thank our agency partners at the Department of Health and Human Services and 

the Social Security Administration for their assistance in this 

project. This new web-based secure verification system will be expanded to the multi-family housing project-based assistance programs during the current fiscal year. This computer matching 

capability has the potential to eliminate the majority of the remaining estimated improper rental housing assistance payments. 

This system is not only fast and more efficient, but just as importantly, it affords more privacy to tenants by eliminating the previous paper income verification letter that was formerly mailed to 

the assisted tenant’s employer. 

HUD’s long-range strategic goal is to reduce improper rental assistance payments to less than 2.5 percent of total payments by the 

end of fiscal year 2008. That would be quite an accomplishment 

given the high degree of complexity of the housing subsidy determinations and the decentralized nature of the program administration. 

In conclusion, Mr. Chairman, I want to thank Secretary Jackson, 

Deputy Secretary Bernardi for their leadership, the employees of 

HUD, our industry and agency partners for working together to 

tackle the tough issue of improper rental housing assistance payments. These efforts not only reduced improper payments, which 

allows more funds to be able to serve HUD’s mission, but we also 

proved that by working together, we could correct these longstanding issues. 

I am now pleased to answer any questions you may have. 

Senator CARPER. Mr. Cox, thanks very much. 

Senator McCaskill, I know you have to go preside at noon. Did 

you want to ask a question of this panel before you leave? That is 

a little bit out of order, but I want to afford you that opportunity 

if you would like. 

Senator MCCASKILL. Well, I would appreciate, Mr. Chairman—

thank you for this opportunity. Just quickly, I want to make sure 

that anybody who doesn’t have a risk assessment, I would like to 

know specifically for the record, and you don’t need to answer it 

now, but anyone who has not done a complete risk assessment, and 

22

I know there are several departments represented here who 

haven’t, I would like to know why, and if the law requires it, why 

it hasn’t been done. 

And second, specifically for CMS, why wait? If the three pilot 

programs have been successful, why wait until 2010? Why not just 

put them all open for contract now and say, go to it? 

Mr. HILL. That is what the RFI requires. The 2010 date is in 

statute, so we are sort of benchmarking ourselves against the statute——

Senator MCCASKILL. You are not supposed to do it until 2010 in 

the statute? 

Mr. HILL. The statute requires it by 2010, and so that——

Senator MCCASKILL. But is there any rule that says you can’t do 

it earlier? 

Mr. HILL. Nope, and we would like to get it done earlier if we 

can. 

Senator MCCASKILL. Well, wouldn’t that just mean like opening 

it up for contracts and saying, we want you to propose coming in 

and doing a contingency recovery audit, like now? 

Mr. HILL. The RFI for that contract is on the street as we speak. 

Senator MCCASKILL. For system-wide? 

Mr. HILL. Yes. 

Senator MCCASKILL. And when does it have to be responded to? 

Mr. HILL. I can get back to you for the record on that. I don’t 

have all the details with me——

[The information provided for the Record follows:]

INFORMATION PROVIDED FOR THE RECORD 

CMS released a Request for Information (RFI) on March 16, 2007. The RFI included a draft Statement of Work (SOW) and capability statements for small businesses. Responses to the RFI are due to CMS on April 9, 2007.

Senator MCCASKILL. The idea that we know that these are going 

to be successful and we know they are going to recover hundreds 

of millions of dollars, it seems to me that the minute you have a 

pilot program—frankly, I don’t even know why the pilot was done. 

Once you know you can do it and it is legal to do it, I don’t understand why every department isn’t signing up immediately for these 

recovery audits, because there is absolutely no cost, right? 

Mr. HILL. You will get no argument from me. We are very happy 

with the recovery audit process. The history here was some of the 

arcania in the Medicare statute not allowing us to do it before we 

had the demo, but we are very excited about it and we are ready 

to move forward. 

Senator MCCASKILL. Is there any other department that is represented here that does not see the light in terms of recovery audits and how important they are and that they don’t cost us anything to do, but they have the potential of recovering lots of money? 

Is there any other department that is represented here that wants 

to express some kind of reluctance or reticence to engage in those 

kinds of contracts? 

Mr. NORQUIST. We use those types of contracts and they are effective and they don’t cost the taxpayer, and to be clear, we use 

them even on low-risk programs. The answer is you use high-risk 

assessments, but even on programs that are low-risk, those organiVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00026 Fmt 6633 Sfmt 6601 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
23

1The prepared statement of Mr. Norquist appears in the Appendix on page 88. 

zations bring in teams to go through and look for cases even within 

a low-risk program where there is an opportunity to recover funds. 

Senator MCCASKILL. And, Mr. Cox, do you do it at HUD? 

Mr. COX. We do not, Senator. I am very familiar with that from 

the private sector. Our experience at HUD, we actually had an outside party look at the potential for that and the potential, if I recall 

from a couple years ago, was very low. It was a couple hundred 

thousand dollars. And the reason for HUD is most of our contracts 

are firm fixed-price contracts. We have a a government transaction 

specialist (GTS), on each one. So we actually did a study to look 

at the potential, and at least in our case, an outside party conducted that and found that there was very little evidence. In fact, 

of the $200,000, on further review, the actual number was reduced 

to zero. 

So the potential, and again, I am very familiar with it from the 

private sector, the potential at HUD, given the nature of our contracts and our funding, was very small. We will certainly look at 

it again, but it was very small at that time. 

Senator MCCASKILL. Well, to me, it would be something that you 

wouldn’t even need to study. I mean, if somebody is willing to do 

this work at no cost to the government and we get the money back, 

I don’t know what there is to study. Now, maybe if you put it out 

for proposal and nobody makes a proposal, it seems to me the market has told you——

Mr. COX. Right. That is right. 

Senator MCCASKILL [continuing]. That there is no chance for recovery. 

Mr. COX. Right. 

Senator MCCASKILL. It doesn’t seem to me we need to hire anybody or have an outside consultant because the market is going to 

look at what the program is. All of the privatization that has gone 

on in our Federal Government under the guise of more efficiencies, 

and it just is amazing to me that there is any kind of reluctance 

anywhere just to let the private sector have a whack at this. 

Thank you, Mr. Chairman, for giving me that opportunity. 

Senator CARPER. You bet, and thanks for being with us today. 

Good luck in the Chair. 

Senator MCCASKILL. Thank you. 

Senator CARPER. They will be pretty quiet over there. 

Senator MCCASKILL. They will be very quiet. 

Senator CARPER. Alright. Mr. Norquist, we have a policy here, as 

I think the other witnesses know, that testimony should be submitted 48 hours before our hearings begin. Not everyone complied 

with that. A number of our witnesses did. The most egregious offender was the Department of Homeland Security, and I would just 

ask why? 

TESTIMONY OF DAVID M. NORQUIST,1 CHIEF FINANCIAL 

OFFICER, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. NORQUIST. Sir, there is no acceptable answer. We know the 

timeline you gave us. We know that OMB needs to review it. It is 

our responsibility to get it to them enough in advance and we 

24

didn’t do that. That is my responsibility because the folks working 

on it worked for me and I apologize to you for that. We will not 

do that again. 

Senator CARPER. Thank you. You are recognized. Proceed with 

your testimony. 

Mr. NORQUIST. Thank you, sir. Thank you, Chairman Carper, 

Ranking Member Coburn, and Members of the Subcommittee for 

this opportunity to testify before you regarding the Department of 

Homeland Security’s efforts to reduce improper payments. Secretary Chertoff and I are committed to strengthening the processes 

needed to implement the Recovery Auditing Act of 2001 and the 

Improper Payments Information Act of 2002. 

I also want to thank you for S. Res. 94. Your statement of support and recognition for the DHS workforce is greatly appreciated. 

In 2005, the Department’s improper payment testing and reporting was limited. However, in 2006, we improved our process and 

executed statistically valid sample test plans. They identified two 

high-risk programs, FEMA’s Individuals and Households Program 

and their vendor payments. We also conducted sampling on 16 

other programs across the Department, totaling over $7.3 billion in 

payments, and determined that these programs were not high-risk. 

This year, we expand the scope and quality of our testing, and 

to ensure the long-term effectiveness of this program, our 2008 

budget requests some additional resources so my office can evaluate the components’ testing procedures. We are a new department. 

We will be doing these tests for a long time, and I want to make 

sure that as we do these tests that we are confident that they have 

done rigorous risk assessments and they have done quality testing. 

So while we have outside folks helping us, we are looking to be 

able to evaluate those and confirm the quality of them. 

I would like to now briefly touch on our two high-risk programs. 

In the wake of Hurricane Katrina, FEMA tested and identified two 

programs under the Disaster Relief Fund as being high-risk for improper payments, the Individuals and Households Program and 

vendor payments. This evaluation was designed to determine if improper payments occurred, assess the cost of improper payments, 

and develop corrective action plans to mitigate the risk of future 

occurrences. 

For the Individuals and Households Program, FEMA selected a 

statistical sample covering the period of September 2005 through 

March 2006, the days immediately following the hurricane, resulting in an estimate of 8.6 percent for improper payments. FEMA 

initiated corrective action plans to address the root causes, and this 

included preventing duplicate registration, confirming applicant 

identity, handling a high volume of transactions, and an enhancement to the post-payment reviews. Moving forward, FEMA has 

taken steps to strengthen compliance with IPIA and to implement 

OMB guidance, and so a second round of IPIA testing and risk assessment is currently underway for the payment period of March 

to November 2006. 

Regarding vendor payments, FEMA’s statistical sampling over 

the same period estimated 7.4 percent of total payments as improper and they have initiated corrective action plans to include 

enhanced training guidance for invoice processing, developing a 

25

1The prepared statement of Mr. Hill appears in the Appendix on page 92. 

vendor payment quality assurance program, and reviewing contract 

language for consistency of similar goods and services. 

In conclusion, DHS has made progress on IPIA and we are on 

track to make more progress this year. We will continue to work 

closely with Director Paulison and FEMA to strengthen their core 

capabilities and capacity to manage payments. We will also continue to work closely with the Office of Management and Budget 

to ensure continued progress in eliminating and recovering improper payments. 

I appreciate the support we have had from the Congress and this 

Subcommittee. Thank you for your leadership and your continued 

support of the Department of Homeland Security. I would be happy 

to answer any questions you may have. 

Senator CARPER. Thanks, Mr. Norquist. Mr. Hill. 

TESTIMONY OF TIMOTHY B. HILL,1 CHIEF FINANCIAL 

OFFICER, CENTERS FOR MEDICARE AND MEDICAID SERVICES 

Mr. HILL. Good morning, Chairman Carper, distinguished Members of the Subcommittee. I am honored to be here today to discuss 

with you CMS’s efforts to measure and reduce improper payments 

in Medicare, Medicaid, and the SCHIP program. 

When I last testified before this Subcommittee about 18 months 

ago, I discussed CMS’s aggressive targets for reducing improper 

payments in our programs and I am pleased to be here today to 

tell you that our efforts are showing substantial results. I want to 

use my remarks this morning to briefly discuss the status of our 

measurement programs for Medicare, Medicaid, and SCHIP, describe for you some of our corrective actions, and briefly touch on 

what I believe is our biggest challenge to continuing our efforts. 

On the measurement front, much has been accomplished over the 

last 18 months. For Medicare, last year, we reported an error rate 

of 4.4 percent, a significant decrease from the 5.2 percent reported 

in 2005 and a reduction of greater than 50 percent from the error 

rate we reported in 2004. This is a cumulative savings to Medicare 

and the taxpayers of over $10 billion. With continued monitoring 

and error reducing efforts, our goal is to achieve an error rate of 

4.3 in 2007 and 4.1 by 2009. I am happy to report that our preliminary data indicate that we are on track to meet our 2007 goals. 

In the coming year, we will be adding payments for Medicare 

Part D and C into this calculation to bring all of Medicare into full 

compliance with IPIA. We have completed preliminary risk assessments and are in the process of developing pilot areas to test payment risks across C, D, and the retiree drug subsidy program. We 

plan to use this information from the risk assessment and pilots to 

report component level error rates for these programs in the 2008 

PAR next November. 

In Medicaid and SCHIP, we have made much progress since I 

was last before the Subcommittee. Last August, we published final 

regulations creating the Payment Error Rate Measurement Program (PERM), which requires States to assist us in measuring and 

reducing improper payments in Medicaid and SCHIP. We began 

implementing this program in 17 States across the country this 

26

past year and will be reporting an error rate for Medicaid claims 

in the 2007 PAR, which will be issued this fall. Our efforts will continue through the coming fiscal year as we extend our error rate 

calculation to Medicaid Managed Care and to the SCHIP program, 

and we are on track to have a fully compliant report in the 2008 

PAR next November. 

Let me now turn to our remediation efforts. As you know, calculating the error rates is only one step in the process. Remediation 

is the key to IPIA compliance. The cornerstone of our remediation 

efforts in Medicare is our error rate reduction plan, which includes 

agency-level strategies to clarify CMS policies and implement new 

initiatives to reduce improper payments. It lays out how we use improper payment information to manage our contractors that process 

our claims and to target our activities in particularly error-prone 

benefit-type areas. 

We are also using new tools to recover improper payments. In 

2004, we implemented a recovery audit contract demonstration to 

identify improper payments. Based on early results, we see the 

RAC program is an indispensible tool in reducing and eliminating 

future improper payments. To date, the RACs have identified more 

than $400 million in improper payments and have collected $144 

million. We have an aggressive time table to meet the statutory requirements for implementing RACs nationwide. 

We expect our remediation efforts in Medicaid to be equally robust. To reduce Medicaid improper payments that are identified 

through the PERM program, we will require States to submit corrective action plans that describe the actions they will implement 

to address major areas of concern. We expect that the corrective actions taken by States as well as our active monitoring and oversight of States will lead to reductions in the reported Medicaid 

rates over time. 

Finally, let me turn to what I foresee is our biggest challenge as 

we continue our efforts in this area, and that is allocating scarce 

resources to fund our activities. Under the PMA, Federal agencies 

are mobilizing people, resources, and technology to identify improper payments. Consistent with these efforts, CMS is firmly committed to ensuring the highest measure of accountability. Unfortunately, since funding for our efforts has been capped since 2003, we 

have sustained a huge degradation of our purchasing power relative to inflation. Thus, to preserve our commitment to program integrity, the President’s 2008 budget requests an additional $183 

million in discretionary funds to build upon our programs so that 

we can continue our proven record for accountability. 

We are proud of our results. CMS is setting the standard in identifying, reducing, and recovering improper payments. But while we 

continue to make great strides, there is more room for improvement. We look forward to continuing to work cooperatively with 

this Subcommittee and to strive to protect the taxpayers we serve 

and ensure financial management of Medicare and Medicaid programs. 

I look forward to answering any questions you might have. 

Senator CARPER. Mr. Hill, thank you very much. Mr. Bowie, you 

are recognized. Thank you. 

27

1The prepared statement of Mr. Bowie appears in the Appendix on page 106. 

TESTIMONY OF TERRY BOWIE,1 DEPUTY CHIEF FINANCIAL 

OFFICER, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 

Mr. BOWIE. Chairman Carper, Senator Coburn, and Members of 

the Subcommittee, thank you for the opportunity to appear today 

to discuss NASA’s progress in identifying, eliminating, and recovering improper payments. In my testimony today, I will outline the 

steps NASA has taken to address improper payments, including 

complying with the Improper Payments Act. 

I would like to briefly explain the composition of NASA’s contracts and how that affects our payments. Contractors support the 

execution of many of NASA’s research and development programs. 

The variable and often unpredictable nature of this complex R&D 

work leaves NASA to use cost versus fixed-price contracts. While 

both contracts are used in various NASA programs, cost contracts 

represent approximately 88 percent of payments made and fixedprice contracts represent the remaining 12 percent. 

NASA has implemented a multi-pronged approach to oversee integrity of the payments for its R&D programs and associated contracts. Effective contract and financial process controls represent 

one element of our approach and are the cornerstone of NASA’s efforts to ensure proper payments. 

As an important second element to our approach, the Defense 

Contract Audit Agency (DCAA), reviews cost contracts and our contractors’ adherence to accounting controls and requirements. For 

cost contracts, the DCAA also conducts contract close-out audits 

that may identify questionable costs. Any questionable costs are 

then reviewed by the NASA contracting officer for resolution. 

As a third element complementary to our program integrity activities, the agency has established an Acquisition Integrity Program. This program was formally launched in December 2006 by 

NASA’s Deputy Assistant Administrator, Shana Dale, and this is 

a collaborative effort among the Office of the Inspector General, the 

Chief Financial Officer, General Counsel, and procurement. 

Finally, in accordance with the Improper Payments Act and consistent with OMB guidance, NASA, as well as other agencies, is required to complete an Improper Payments Risk Assessment. For its 

fiscal year 2006 risk assessment, NASA used the results of the 

prior year’s recovery audit. Through that process, NASA reviewed 

approximately $57 billion of cost and fixed-price contracts across all 

programs dating back to 1997. Based on the results of that assessment, NASA found the total value of improper payments that had 

not already been identified and reported in prior years to be 

$256,255. This formed the basis for the amount reported in our fiscal year 2006 Performance and Accountability Report. In that document, NASA reported that the agency’s risk assessment and 

actuals represented for the past 3 years had shown NASA’s improper payments to be less than a benchmark 2.5 percent of program payments and less than $10 million. 

There have been several observations regarding questioned questions and the relationship to improper payment figures reported in 

NASA’s PAR. Questioned costs are not analogous to improper payVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00031 Fmt 6633 Sfmt 6601 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
28

ments. Rather, they are costs that NASA’s Office of Inspector General recommends be reviewed by NASA to determine validity. 

There are more categories of possible questioned costs than exist 

for improper payments, and since these audited questioned costs 

are not always sustained, the IG report would have a higher figure 

for questioned costs than the amount that would be reported in 

terms of improper payments. 

For fiscal year 2007, NASA’s risk assessment approach incorporates all the lessons learned from the prior year’s audit, recovery 

activities, and incorporates OMB’s instructions in their memorandum dated August 10, 2006. This risk assessment addresses 

disbursement activities on programs based for both cost and fixedprice contracts. A statistically valid sample of payment transactions will be obtained and tested, after which NASA will report 

the results. 

We have taken steps to bring our program into compliance with 

OMB guidelines for implementing improper payments, the Improper Payment Act. We will continue to adopt lessons learned for 

future recovery audits to make sure that we are making the most 

of those efforts. 

In closing, NASA is fully committed to ensuring that the agency’s 

payments are properly made and that the agency fully complies 

with the Improper Payments Act. Mr. Chairman, I am pleased to 

respond to any questions you or other Members of the Subcommittee may have. 

Senator CARPER. Thanks, Mr. Bowie. 

We have at this table a number of agencies whose improper payments are measured annually not in the millions of dollars or the 

tens of millions of dollars, but literally hundreds of millions of dollars. We have heard of the efforts that have been launched particularly in HUD and CMS to go out there to identify those improper 

payments and to reduce them, to recover monies that have been 

improperly paid. 

When I read your testimony and listening to it again today, what 

I take away from it is that you have identified in your agency—

roughly what is your agency’s budget on an annual basis? 

Mr. BOWIE. Roughly $16 billion. 

Senator CARPER. How much? Sixteen billion? 

Mr. BOWIE. Sixteen billion, yes. 

Senator CARPER. What I took away from it was the belief that 

there is really not much, given the way that you award contracts 

and the work of your contracts, in the way of improper payments 

that are made, and I think I heard the figure $250,000. I don’t 

want to put words in your mouth, but it sounds like you have 

looked at your payments and you just don’t think, at least with respect to your agency, that it is a problem. 

Mr. BOWIE. I believe that we have to always be vigilant in terms 

of ensuring that taxpayer dollars are properly accounted for and we 

will look and judge every dollar based upon that. We would not 

automatically assume that there are no problems. There always 

could be an issue and we will always be vigilant to tackle those 

issues as they arise. 

Senator CARPER. But as you look back at 2004, 2005, 2006, what 

I take away from your testimony is that you don’t believe there are 

29

any really material problems with respect to mispayments, overpayments, or improper payments? 

Mr. BOWIE. In looking at the criteria as established by OMB for reporting, the 2.5 percent or over $10 million, that would be the 

conclusion. 

Senator CARPER. Mr. Williams, let me just ask you to reflect on 

that for a moment, if you would. 

Mr. WILLIAMS. Mr. Chairman, in listening to the testimony, as 

I was reflecting back to the 1980s when President Reagan and 

President Gorbachev used to get together and President Reagan 

used to always tell President Gorbachev to trust but verify, and I 

have this professional skepticism, I guess, that is just basically ingrained in the work I do. 

In reflecting back on the point that I made earlier, in listening 

to some of the statements and looking at what the auditors had reported, it makes me want to reiterate the other point that I made, 

that while not required, it would be a good idea at each one of 

these agencies that independent set of eyes would be required to 

take a look at this process, because I am looking at a couple of the 

agencies and I think the auditors basically stated that there was 

a potential non-compliance at NASA, I believe, because of the supporting documentation that they questioned. I think at Homeland 

Security, the auditors basically stated that the risk assessment was 

not performed for all of the programs and I also think that there 

were some questions raised about the sampling at that particular 

agency. 

And I think, in conclusion, we kind of get back to this issue that we talked about earlier, also, of this $10 million and 2.5 percent 

criteria. As I have stated in previous testimonies before this Subcommittee on that particular issue, I was involved, or I was asked 

to take a look at the original drafting of the legislation, and as I 

have stated, it originally started out at $1 million. It was any agency that had improper payments of $1 million would be required to 

go through the steps that are listed on the board up there. Looking 

at it from a cost-benefit standpoint, we did suggest, and our suggestion was taken into consideration, to raise it to $10 million. 

So I have a little bit of institutional knowledge of what the Congress was intending in this area and I think that not just members 

on this panel now, but if you look at some of the other agencies 

that have looked at this issue, I think when you throw in the 2.5 

percent criteria and the word ‘‘and,’’ it kind of takes some of these 

issues below the radar screen. 

Senator CARPER. Alright. Thank you. 

Mr. Cox, if I could come to you. In Ms. Combs’ testimony earlier 

today, I think she held out HUD as an example of an agency that 

has done a good job in trying to identify improper payments and 

eliminating them. I just want to ask you to briefly sketch for us 

some of the best practices and processes you think that you have 

adopted over the years to address improper payments, to try to reduce them, and is there something in that list that you all have 

done that maybe some other agencies, including some at the table, 

but a number who aren’t at the table, could emulate? 

Mr. COX. Thank you, Mr. Chairman. I think if you look at the 

large area for us of improper payments, it centers around our RentVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00033 Fmt 6633 Sfmt 6601 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
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al Housing Assistance Program, and there are really three areas 

that we look at to determine improper payments. The first is, is 

this subsidy itself calculated correctly? Second, is the tenant’s income reported correctly? And third, once we have determined one 

and two, have we been billed correctly for what was determined in 

step one and two? 

The biggest efforts—and I will set aside No. 3 for just a second, 

but the biggest efforts we have made is to, first of all, educate the 

public housing authorities and the multi-family owners on the complexity of those calculations. They are very complex. There are over 

40 income deductions and exclusions, so that is a very complex, not 

unlike the tax code. 

No. 2, probably our biggest success, and I would say, Mr. Chairman, where other agencies could use it, is our income verification 

system. Working with the Department of HHS and Social Security, 

we actually get secure data off-line but then put on-line on a public 

housing authority by public housing authority basis, and they are 

able to verify what the tenant has told them is their income, which 

is a key component of determining what the subsidy could be. 

Senator CARPER. Excuse me for interrupting. A long time ago 

when I was a member of the House of Representatives and served 

on the Banking Committee Housing Subcommittee, one of the 

things that I focused on was tenant income verification and we 

were trying to make sure that, given the fact that you had a lot 

of people in waiting lines to get into public housing, we wanted to 

make sure that the folks that were there were actually income-eligible. We tried to figure out, working with the State and local folks, 

how best to make that verification, do so in a way that was respectful of people’s privacy rights but also in a way that would enable 

us to quickly and regularly make an identification of who was appropriately there and eligible and who was not. 

My recollection is that we used Department of Labor data from 

folks who were employers that were paying, had people on their 

payrolls, and submitted on a regular basis employment data, and 

I don’t think you mentioned that. I think you said that you were 

doing it through a couple of other things. How do you do it today? 

Mr. COX. We used the National Registry of New Hired Data, 

which is now captured by HHS, and so we used to use Department 

of Labor data, but there were some delays in reporting on a quarterly basis and in some cases even on an annual basis. So the information that we have today, Mr. Chairman, is actually more current, or is the most current that we can get. 

Senator CARPER. Alright. Do you want to add anything? I interrupted you. Do you want to complete your thought from earlier? 

Mr. COX. I would just say, again, any program that is based on 

income—ours clearly is, the majority of ours, but I would say—you 

asked the specific question, what can other agencies look to, I 

would say this is a good example of both interagency cooperation 

as well as working with our industry partners and that is a big 

success story here to reduce improper payments by over $2 billion 

since 2001. 

Senator CARPER. Alright. That is a lot of money. 

Mr. COX. It is a lot of money. 

31

Senator CARPER. Thank you. Again, if I come over to Mr. Hill for 

a moment, if I could. We are going to hear, I think, on the next 

panel some testimony that CMS serves as an example of how a successful government audit recovery program can be run and should 

be run. I just want to ask you to provide us with your perspectives 

on why the recovery work underway in Medicare has been successful and describe your plans to expand this program. I know you 

spoke just a little bit in response to Senator McCaskill’s questions, 

but how do you plan to expand this program beyond the three 

States which are now underway? And also, do you have any sense 

for how much money could be saved once you are doing this nationally, not just in three significant States, but in all 50 States? 

Mr. HILL. Thank you. We plan on having our national RACs up 

and running. We are going to chunk the country up a bit. We are 

not going to have one contractor do the entire country. We will sort 

of set up some regions and describe in a general way who will be 

responsible for which area. 

There is a procurement, a request for comment on the street. It 

is a little special in terms of the work that has to be done. It is 

not like looking at a vendor payment or an invoice. We are looking 

at actual medical records and claims that are coming in from providers and beneficiaries and so we want to be sure the RACs have 

the appropriate medical skills on staff to be able to review those 

claims and to be able to do that work, and so there will be some 

review of the contracts as they come in. 

We expect to be able to have those contracts out and let and beginning to run in calendar 2008. That is our timeline. 

A significant issue for us as we roll this out nationally is educating and working with the providers and the beneficiaries we 

serve, because this is a new entity that is sort of going to interject 

themselves into the Medicare system, and physicians and hospitals 

are going to be getting letters from companies that they have never 

heard of before saying you owe the Federal Government some 

money, and so we want to be sure that we have done all the appropriate leg work there to be sure that there is no surprises. 

In terms of the money to be saved, I mean, we have identified 

just in the three States in the short time that we have been doing 

it, $400 million in overpayments, and I think a lot of that has——

Senator CARPER. Say that again? How many? 

Mr. HILL. Four-hundred million dollars. 

Senator CARPER. And was that for 1 year or several years? 

Mr. HILL. Since January 2005, so it is over several years. But 

again, it has taken a while for them to get up, get familiar with 

the data, get familiar with the areas that they are going to be 

working in, so we have seen that grow over time. Month to month, 

it gets higher and higher. I expect that the recoveries will, I am 

hoping, certainly get into the ‘‘b’’s, out of the millions and into the 

billions, over time. When that will start and how soon we can get 

there remains to be seen, but we are anxious of get started and we 

are anxious to continue the relationship we started with these contractors. 

Senator CARPER. Thank you. Talk with us again a little bit about 

improper payments with respect to Medicaid and the SCHIP program. What kind of timeline are you on there? 

32

Mr. HILL. Right now, we are out in the field collecting data and 

measuring rates in 17 States. We had some sort of fits and starts 

getting going with Medicaid. We finally got our final regulations 

out in the summer of 2006, sort of articulating exactly how we are 

going to implement the IPIA for the State programs, and the way 

we are doing it is in a phased, cyclical approach. So we will do 17 

States each year to get to all 50 over a 3-year cycle. We began the 

first 17 this past year. 

We will be reporting on those rates in this year’s PAR and that 

is for one component of Medicaid, the biggest component, the feefor-service component. For the Medicaid Managed Care piece, 

which in some States is big but nationally it is a smaller piece, and 

SCHIP will be done beginning in fiscal year 2008 for a report next 

year, in next year’s PAR. 

The challenge for us here has been, of course, as folks have identified already, is dealing with 50 different States and 50 different 

entities and setting up a process that ensures we get the data we 

need to do the appropriate calculations but sort of does it in a way 

that the State is sort of working cooperatively and has the incentive to be sure that they give us that data. Quite frankly, some of 

the comments that we got from some of the States on the regulations that we put out were less than favorable in terms of them 

viewing this as a State activity versus a Federal activity, so it has 

become quite a challenge to sort of convince them that, yes, this is, 

in fact, in their best interest to do this measurement and help us 

do the assessments. 

Senator CARPER. Alright. Dr. Coburn is back, so why don’t you 

just jump in and take as much time as you would like. 

Senator COBURN. Thank you. 

Senator CARPER. We have, I think, one more panel. 

Senator COBURN. Mr. Bowie, in your statement, you described 

that NASA conducted last year’s risk assessment—let me put the 

poster up here—for its 2006 risk assessment, NASA used the results of the prior year’s recovery audit. Through that process, 

NASA reviewed approximately $57 billion of cost and fixed-price 

contract payments across all programs dating back to 1997. Based 

on the results of that assessment, NASA found the total value of 

improper payments that had not already been identified and reported in prior years to be $256,000. This formed the basis for the 

amount reported in the fiscal year 2006 PAR document. You also 

reported in that document that the agency’s assessed risk and actual results for the past 3 years have shown NASA’s improper payments to be less than the benchmark of 2.5 percent of program 

payments and less than $10 million. 

I have some concerns with this risk assessment on several levels. 

First of all, I am kind of fuzzy on how you conducted this assessment. So what I would like for you to do is break that down for 

me sentence by sentence. First is, NASA used the result of the 

prior year’s recovery audit. First of all, how is that a valid risk assessment for present? We already had the GAO testify that recovery audits are the more expensive way to do that. The least expensive is have the program integrity there in the first place. It lacks 

the depth and detail necessary to carry out a thorough and comprehensive review of the entire agency because you are limiting 

33

that to programs of $500 million to begin with. That is what the 

recovery audit requirements are. 

So the IPIA mandates that the entire agency and all of its programs perform an improper payment risk assessment. Do you believe the results of an improper payment, this passes muster for a 

valid risk assessment? 

Mr. BOWIE. For 2007, we will be doing a very robust risk assessment. For 2006, since we did have the recovery audit that examined basically all contracts dating back to 1997 and there was no 

dollar threshold imposed on that, so it was open, that we felt that 

if we had, even in doing a risk assessment, we would have still projected similar results as the actual results of the audit themselves. 

Senator COBURN. What was found in the recovery audit? How 

much money was found in the recovery audit? 

Mr. BOWIE. For the recovery audit, it was approximately that 

$256,000. 

Senator COBURN. That is all that you found going back to 1997? 

In your recovery audit, you found $256,000 in payment errors? 

Mr. BOWIE. That had not already been resolved or corrected. 

Senator COBURN. I know, but that is my whole point. What was 

the amount that had already been resolved or collected? 

Mr. BOWIE. For 2004, it was $70,000. For 2005, it was $617,442. 

Senator COBURN. OK. So your testimony is that for NASA, your 

total payment errors, your estimate of your total payment errors is 

this $256,000 plus $70,000? 

Mr. BOWIE. And the $617,000. 

Senator COBURN. Six-hundred-and-seventeen thousand dollars. 

Mr. BOWIE. Those are for past years. 

Senator COBURN. OK, but your risk assessment by law has to be 

for every year. So you are using a recovery audit to state an assessment of 2006. Mr. Williams, what do you think about that? 

Mr. WILLIAMS. Dr. Coburn, as you know, this Subcommittee has 

requested GAO to take a look at NASA and the scope of that particular work is basically looking at how well did they go about 

doing their risk assessment. From looking at the numbers and 

what we have in our report, in 2004, there was no report, and the 

$70,000, I guess, is the number, while it wasn’t reported. 

But when you add these two numbers together—and as I stated 

earlier, we believe that the risk assessment is the foundation of 

this whole exercise that we are going through, and using recovery 

auditing, as I stated in my written testimony, even using the single 

audits, we don’t think that those are good bases for going about 

doing a thorough risk assessment that is needed in order to do the 

things that need to be done to properly identify those programs 

that are susceptible to significant risk. 

Senator COBURN. Don’t get me wrong. I love NASA, OK. I just 

hate waste. I have trouble believing that on a $56 billion program, 

that is the amount of waste that was there in terms of improper 

payments when I look across all the rest of the Federal Government and don’t find hardly anybody that can compare to that. And 

I know that NASA is good, but they are not that good. So I have 

real doubts about the accuracy of what you are reporting and also 

whether or not—and I would tell you, by law, a recovery audit does 

not pass muster with what the law states on the Improper PayVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00037 Fmt 6633 Sfmt 6601 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
34

ments Act. You can read that. I have introduced that into the 

record. You heard me do that. 

Is it possible that NASA could commit to fulfilling what GAO 

would like to see in terms of a recovery audit for next year? 

Mr. BOWIE. That is our intention. 

Senator COBURN. OK. So you are going to do a true risk assessment next year? 

Mr. BOWIE. Correct. 

Senator COBURN. Well, that is great to hear. 

Mr. BOWIE. That is already in place and we have already done 

the first phases of that risk assessment by program and we are 

moving to the test phase. 

Senator COBURN. That is great. Mr. Chairman, I have heard 

what I wanted to hear. 

I would like to submit the rest of my questions so that these people don’t have to wait such an extended period of time, and I apologize for my absence during your testimony. 

Senator CARPER. That is quite alright. 

I want just to follow up on what Dr. Coburn said. I hope the 

amount of improper payments are as low as you have suggested 

here, and if they are, maybe we will ask you to come back and we 

can figure out how the rest of the Federal agencies and States can 

learn from what you are doing. 

Mr. Williams, we look forward to the closer scrutiny that you all 

are going to take with respect to NASA and we will see what we 

can find. 

A couple of questions, if I could, for Mr. Norquist from Homeland 

Security. First of all, one of the issues that has been raised by 

GAO, and I think by your auditors, is that your Department has 

not yet performed risk assessments on all of its required programs 

to determine whether they are susceptible to improper payments. 

When do you expect that work is going to be completed? 

Mr. NORQUIST. Sure. That is a great question. Two years ago, 

they asked the components to look at the risk and basically everyone answered, we are not high risk. That was considered not an 

adequate answer, so last year, they simply used a dollar threshold. 

Whether you think you are high-risk or not, if you are spending in 

certain areas over a certain amount of money, do the sample testing, and there were 16 more programs where we did that. The 

numbers came in with error estimates of less than $1 million, but 

we felt it was worthwhile to do that test even where people weren’t 

asserting it. 

This year, we have issued the guidance to do a proper risk assessment. We will be working with our organizations to make sure 

they do that. We understand the dollar threshold alone is not an 

adequate substitute for risk assessment. My predecessor thought it 

was better than accepting the answers he had been receiving previously about what was risk. But we are going to work with the 

components to ensure that the risk assessment is done consistent 

with the law. 

Senator CARPER. Alright. Thanks. I understand that as a secondary measure to help improve the Department’s improper payments, that recovery audits were being performed at three of the 

Department’s components. At the time of your improper payments 

35

reporting for the last fiscal year, fiscal year 2006, however, the recovery auditing work had progressed but was not yet at a point 

where it could yield any kind of conclusive results. Discuss with us 

for a minute or so, if you could, the current status of that work and 

the results that have been yielded. 

Mr. NORQUIST. I would be happy to, sir. At the end of last year, 

they had a challenge getting some of the recovery audit teams on 

board. There was a clearances issue. In most of those cases, they 

are on board and operating, and while we only have them in a few 

components, those components are service providers and do the finance and accounting for a number of other organizations in DHS, 

so it is a much broader group. 

Those efforts are ongoing at Coast Guard and ICE, and I will 

have to get the number for the record, but there are several hundred thousand, I believe, that was being reviewed at Coast Guard 

as potential candidates for recovery. Again, not enormous sums, 

but sums worth following. These are not high-risk programs, but 

as I mentioned to the Senator before, they are programs that are 

worth looking into because there is the opportunity to recover as 

long as you have the recovery audit teams working alongside you. 

We expect to have all those teams in place for this year, and 

again, they are going back over 2004 and 2005 payments, as well. 

Senator CARPER. Alright. A couple of people made the point in 

their testimony, I think Mr. Williams among them, that it is all 

well and good that we do risk assessments. It is good that we identify improper payments that were made. It is good that we go out 

and recover after the fact monies that have been misspent, inappropriately spent. But the best thing we could do is to make sure 

that we don’t make the mistake in the first place. Take a moment 

and talk to us about what Homeland Security is doing in that regard. 

Mr. NORQUIST. OK. Well, let me do a couple of things. The biggest area, the highest-risk area was in FEMA’s Individuals and 

Households payments. That was the program that last year’s sample fell right during the start of the response to Hurricane Katrina, 

and so you had a number of issues that contributed to that. 

First of all, given the immediacy of responding to people’s needs 

and the sheer volume of people they had to assist, they relaxed 

some of the controls to put an emphasis on helping people, in addition to which some of the controls one would like to have in place—

a person goes and visits the individual, visits the location—were 

not possible because of the extent of the damage. So that resulted, 

when we tested that, as clearly showing up on our high-risk list. 

FEMA has put in corrective action plans. We have published 

those in our PAR. They also include putting in—when you have 

this surge in applicants, people started coming in registering on the 

phone and on-line and not all of those had the appropriate controls 

to check, was it the right individual, were we getting duplicate registrations, and so FEMA has been putting in the controls in those 

places to both put the strong controls in up front, recognizing they 

are going to happen during a surge in activity, during a point of 

urgency, and still trying to strike that balance but yet——

36

We have a process underway to recoup those funds, but again, 

it is a long, slow process and it is much more effective to be able 

to have those controls in place on the front. 

Senator CARPER. Alright. Mr. Williams, any comment in response 

to what Mr. Norquist just said? 

Mr. WILLIAMS. Mr. Chairman, it seems like after each one of 

these, I make the same statement, but we do have a review underway also looking at improper payments at the Department of 

Homeland Security. That job is currently underway and we are 

looking at the basic steps that we have talked about up there. 

I would like to add that in talking about the last point that you 

made there, about it is better to prevent improper payments from 

occurring, I would also like to add to that statement that in our 

previous testimonies, we have always talked about that if you trace 

down the root cause of these improper payments, it goes back to 

a breakdown in internal controls. 

There is also another component to that and that is also you get 

improper payments when programs are poorly designed. So that is 

something that we also need to take a look at, and by that I mean 

that if you have got a program that is set up in such a way that 

you basically open yourself up to improper payments from occurring, we need to take a look at some of those designs, also. 

Senator CARPER. Alright. Thanks. 

Mr. NORQUIST. If I can join in, that is an excellent point. The entire control environment matters. One of the initiatives that we 

have started at Homeland Security in our financial field is everyone who is a new hire, regardless of whether they are hired by my 

office or one of the components, we brought them in last week for 

a week of training and we gave them, among other things, training 

on fiscal law and internal controls because they need to be aware 

of their responsibilities in that area, and if you can do up-front 

training of the employees, if you can have adequate controls in 

place, you dramatically reduce the amount of effort we have to put 

on the recoupment and recovery side, and I think that is a very 

good recommendation to respond to and that is one we have tried 

to tackle. 

One quick correction. I misquoted on the Coast Guard. It was 19 

cases and $134,000 that their recoupment team had identified so 

far. 

Senator CARPER. Alright. Thanks. The last question I will ask, 

and I will start it with Mr. Hill. Last week when we were debating 

the budget resolution in the Senate, Senator Coburn and I offered, 

and it was adopted, legislation that says that to the extent monies 

are recovered in the next several years from improper payments, 

those monies should be used for deficit reduction. It was unanimously accepted, without objection. 

When I think about our efforts to try to get States to be our partner in some of these programs, Medicaid, SCHIP, and others. I 

don’t want us to be saying that we have somehow tied your hands 

or the hands of the States or others that are administering these 

joint programs with States. I don’t want to feel that we have tied 

your hands by saying, none of the monies that have been recovered 

can be used to incentivize the States to be our partners. I just want 

37

to ask if that is a fear that may be misfounded or not, and Mr. Williams, I would ask you to respond, as well. 

Mr. WILLIAMS. I would like to start with it, and I would like to 

refer to the Food Stamp Program, in which there are bonuses and 

there are penalties in this particular area. States receive bonuses 

if they get that number down and there are also penalties that 

have been mandated by the Federal Government, that if your improper payment rate is above the national average, I believe it is. 

So the Congress has put some things in place that will, in my opinion, bring the States to the table to realize that we are in this together. 

Senator CARPER. As a former governor, I remember full well how 

those carrots and sticks work. [Laughter.] 

Mr. Hill, let me ask you to respond. 

Mr. HILL. As Mr. Williams said, I think the carrot and stick approach is one that we have to employ. Unfortunately, I think that 

to the extent that, say, for example, we have an improper payment 

recovery in Medicaid and now under the resolution it is going to 

deficit reduction. The State’s first reaction to me is going to be, 

well, it is not my deficit. It is a State dollar that is now going somewhere else. 

So I think the real trick for us is going to be, and it has been 

and will continue to be sort of being sure the States understand—

let us use Medicaid for a minute—a dollar saved on Medicaid or 

a dollar recovered in improper payments, on average, 50 percent of 

it is going back to the State and 50 percent of it is going back to 

us. The more we can sort of build that into the relationship and 

be sure that the States are seeing the incentive and the pay-back 

that they are going to get from investing in these kinds of activities, the more likely they are that they are going to invest in them. 

At the same time, I do think, ultimately, there will need to be 

a stop-gap, because you will get a State out there or somebody will 

say they don’t want to make the investment, or they may think 

that the recoveries that we are getting aren’t big enough to make 

the investment, and I think at some level, the Federal Government 

is going to need to be able to step in with the stick, if you will, and 

say, well, you need to. Whether it is a penalty or however we build 

that policy, there needs to be some of that sort of pain going back 

the other way if there is not the appropriate reaction, and unfortunately, that is not in the IPIA now. It is the sort of Federal—it is 

going to require some unique solutions by program to be sure we 

can be compliance by program. 

Senator CARPER. Alright. Thanks. Anybody else want to respond 

on this particular point? Mr. Cox. 

Mr. COX. Senator, I would just say that we have a similar issue, 

except instead of dealing with States we are dealing with 4,100 

public housing authorities and over 22,000 individual private property owners. So again, it is going to be challenging to incent them. 

Now, we do have, as others have mentioned, Mr. Hill mentioned, 

we do have some sticks. We believe, like Mr. Williams, the best 

way to do this is on the up-front and it is a process, an internal 

control issue, and we do have a couple of sticks there where we can 

actually monitor use of the Enterprise Income Verification, the new 

web-based system, and if you are not using it, actually, we can reVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00041 Fmt 6633 Sfmt 6601 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
38

duce some of their administrative fees that they receive. So there 

is a little bit of a stick there that we can use. 

But I would say, in general, your general question of can we assume that they will take some of that or not sit back while we take 

the rest for deficit reduction, as much as I support it, I think our 

industry partners and private owners are not going to sign up for 

that. 

Senator CARPER. Alright. My last question for this panel would 

be, and this is a question I ask of a lot of panels, we expect a lot 

of the agencies in terms of complying with the law. I think in terms 

of being able to comply with the law, it has to be a reasonably law, 

reasonably explained. We need enforcement and someone like GAO 

looking over the shoulders of the agencies to make sure that you 

are doing what you are supposed to under the law. There have to 

be some incentives for you to comply. You need strong leadership 

in order to comply and you need the kind of systems that will enable you to comply. 

And we have a role to play, too, in oversight, in putting a spotlight on those agencies that are doing a particularly good job and 

to ask of you, how can we learn from your good performance, and 

from those agencies that aren’t doing the kind of job that we want 

or, frankly, that they know they ought to do, to put them on really 

a little bit of a hot seat. 

The last question that I want answered is what further do we 

need to do, not just this Subcommittee, not just this Committee, 

but the Congress and the Legislative Branch? What do we need to 

do? Mr. Hill, I think you may have spoken to this a little bit in one 

of your comments, but let me just close by asking, what further do 

we need to do to better ensure that the Improper Payments Act is 

complied with, that the monies that are being inappropriately 

spent, misspent, that we will continue to reduce that, in some cases 

start reducing it in certain agencies? 

Mr. HILL. Right. Two things I think I would say. The first is, I 

think, your continued oversight is needed. I think it is very helpful. 

Anybody who sits in a CFO job will tell you that in many ways, 

our job is as much persuasion as anything else, getting folks in program components or States or others to pay attention to things 

that we believe they need to pay attention to, even if it is in the 

statute, and to the extent that the Congress is taking an active role 

in overseeing and ensuring we comply, that makes our jobs that 

much more easy to implement this law that needs to be implemented. 

The other piece I would mention and I mentioned in my testimony, this is not a cost-less exercise. It is an expensive exercise. 

The recovery audit contracts are a tool that are helpful when you 

are recovering overpayments, but they are not a tool that is helpful 

when you are trying to comply with the other pieces of the statute. 

The President’s budget, as Ms. Combs mentioned and I mentioned, 

includes some requests for additional funds to continue these activities over time. I know that in both the House and Senate budget resolutions, there has been room included for those activities and 

I would encourage you to encourage your colleagues to continue to 

look upon that favorably. 

39

Senator CARPER. Is there anybody at the table who agrees with 

that? [Laughter.] 

Mr. COX. I would just say, Mr. Chairman, we would not have 

been able to reduce improper payments 60 percent without the use 

of technology. It just simply would not have happened. And if you 

look at how we do risk assessments, we have to use technology. So 

I would echo Mr. Hill’s comments. For a relatively low investment, 

in our particular case in our working capital fund, we get a huge 

payback for that. So that is one thing that Congress can help us 

out with. 

Senator CARPER. What would be helpful here, and I don’t know 

who to direct this to, I will just direct it to you, what would be 

helpful in trying to make the point when we get into the back-andforth on the appropriations bills and how much to actually appropriate in accordance with the budget resolution that we have 

adopted would be to know what that payback is. For, what did you 

say, $160 million that the Administration was asking for, for every 

one of those dollars, what is the return to the Treasury? That 

would be very helpful. If you could help us with that, I would be 

grateful. 

Mr. COX. Alright. 

Mr. NORQUIST. Senator, on that theme, this is—those of us who 

work on this, this is why we do this for a living. We get to protect 

the homeland, in my position, and we also get to help protect the 

taxpayers’ dollars. It is sort of the passion we bring to this work. 

But the description of the initiatives does not come across as 

sexy. I mean, phrases like ‘‘acquisition workforce training’’ in a 

budget request will not grab attention, but it is the front end of the 

type of controls that GAO and others are talking about. And you 

will see them in accounts with unexciting names like ‘‘management,’’ and so as you are working through this, particularly things 

like appropriation and authorization bills, keep in mind that some 

of the initiatives that have these payoffs have relatively unexciting 

titles and to be able to help ensure that as they go through, that 

people recognize the payoff there. That would be greatly appreciated by everyone. 

Senator CARPER. My colleagues and I don’t always appreciate 

some of the terms that you may have just mentioned, but we do 

appreciate a $20 return for $1 invested, so that is the kind of thing 

that could be very helpful as we debate these issues going forward. 

This is a work in progress. As you know, we have been working 

on this for about, I guess this is about the fifth year since the law 

was adopted. In some respects, I am encouraged here today by the 

work, the good work that is being done that is represented by a 

number of your agencies. I think for some of you, you have got a 

whole lot of work ahead of you, but I am encouraged that you are 

beginning to take those responsibilities seriously, not seriously 

enough to help all those folks who are going to be mailing in their 

tax payments on April 15, but it is good to know that some help 

is not just on the way, but some help has actually turned up some 

dollars that we can use to reduce budget deficits and our tax burden. 

As I said at the beginning, everything I do, I know I can do better, and I think that is probably true for all of us. We appreciate 

40

1The prepared statement of Mr. White appears in the Appendix on page 51. 

the work that you are doing and we just urge you to continue it 

and to go from those three States with Medicare to another 47 and 

let us get started on Medicaid and SCHIP, and Homeland Security, 

you have got your work cut out for you. Mr. Bowie, I hope that 

NASA is as good as you guys think you are. We will find out in 

the times going forward. Mr. Cox, thank you for giving a trip down 

memory lane to recount an old war tale on tenant income 

verification. Thank you all. 

We are now pleased to welcome our very patient third witness, 

Mr. White. Thank you all. 

Lee White, you are a good man to come and to have been as patient as you have been and to share with us your testimony. The 

room has begun to empty out, but I think in reading the testimony, 

a lot of it was valuable for me, but I think maybe the most valuable and instructive testimony that I read in preparing for this 

hearing was your own testimony. While there may not be many 

people in the room right now, believe me, I very much look forward 

to what you are about to share with us and you are recognized for 

7 minutes. You are the Executive Vice President for U.S. Operations of PRG-Schultz, is that right? 

Mr. WHITE. Yes. 

Senator CARPER. First of all, tell us a little bit about that, about 

your firm and what you all do, and after that we will start the 

clock and you can present your testimony. But thank you for coming and thank you for your patience. 

TESTIMONY OF LEE WHITE,1 EXECUTIVE VICE PRESIDENT 

FOR U.S. OPERATIONS, PRG-SCHULTZ INTERNATIONAL, INC. 

Mr. WHITE. Thank you, Mr. Chairman and other distinguished 

Members of the Subcommittee. PRG-Schultz is the largest recovery 

audit firm in the United States. 

Senator CARPER. How long have you all been around? 

Mr. WHITE. Well over 20 years. 

Senator CARPER. OK. 

Mr. WHITE. And recovery audit has become an accepted part of 

American business. Large corporations as well as mid-sized corporations have embraced the process and it has evolved over time. 

It used to be that people audited literally out of boxes, looking at 

invoices and contracts, but now it has become quite sophisticated 

and we literally evaluate billions of transactions that are very dataintensive and we use proprietary methods and approaches for how 

we do that. 

Each year, we audit many of the Fortune 100 and other companies and we review over $1 trillion of their spending transactions 

representing approximately 7 percent of GDP, and for them, we recover over $1 billion. So it is quite significant and it has evolved, 

as we discussed. Our corporate clients have really found that the 

effort that they expend to support this process is justified, and as 

my testimony indicated, they view that the juice is worth the 

squeeze. 

Senator CARPER. Now, when I read that, the juice is worth the 

squeeze, where did that come from? Is that yours, or is that——

41

Mr. WHITE. It has been going around our company and our industry for a while, and I think it has everything to do that if you 

squeeze an orange, you are really looking for the juice. 

Senator CARPER. Well, I am going to use that one. I guess I don’t 

have to attribute it to you, though, so——

Mr. WHITE. Absolutely not. You may feel free to use it any way 

that you see fit. 

Senator CARPER. Thank you. Alright. Thanks. 

Mr. WHITE. Recovery auditing in government, I think equally 

represents a great potential. I think the opportunity is to apply the 

same principles and practices that we have been applying in the 

commercial marketplace, along with state-of-the-art technology, to 

the incredible complexity and also volume of spend that is represented by the government agencies, both that previously testified 

here and then the rest that exist. 

We also recognize that recovery auditing is a tool and it is not 

a panacea. I think that the agencies as well as the GAO and OMB 

did a good job of describing the other efforts that they are expending. Even the IPIA obviously speaks to the risk assessment and 

other vehicles that need to be employed to truly get your arms 

around the totality of the issue. So we are only one tool and certainly should not be viewed as a panacea. 

With our successful corporate clients, we find that a number of 

different things have to be available to create a rich program. They 

include massive databases of their transaction history. They usually have large and complex spending environments and they do 

have central management of that spend. The same characteristics 

exist in government, and therefore, I think that they lend themselves to the same type of approach. 

We have entered into contracts with GSA, HHS, the Departments of Justice, Transportation, Defense, Interior, State, and Agriculture, so we do have quite a bit of experience in the government 

sector, and to date, we estimate that contingency recovery auditors 

government-wide have returned over $600 million to the taxpayer. 

However, we believe we could have done much better and we believe that the greatest success will come when agencies make recovery of overpayments a significant priority and where they are 

willing to provide us access to data and then the support we need 

to successfully do our jobs. Where that prioritization is not there 

and where the access to data has been lacking, we haven’t had 

good results. 

Our experience is that motivation is key and incentives are really 

an important part of that motivation. We find that with the profit 

motivation most of our corporate clients have, and their obligation 

is to serve their shareholders, they really look to get the money 

back and it is a very important part of it. So even if they are not 

trying to do anything else, just recovering the money is a sufficient 

motivation and causes the behavior that you would expect. If we 

want the agencies to have that same sort of motivation to use recovery audits as a tool, we believe they need to be incentivized as 

well. 

We did highlight in the written testimony that we believe that 

to be a very successful program, although it was a pilot program, 

it was exemplified by CMS. There, as Mr. Hill testified, they identiVerDate 0ct 09 2002 08:47 Mar 21, 2008 Jkt 034416 PO 00000 Frm 00045 Fmt 6633 Sfmt 6601 P:\DOCS\34416.TXT SAFFAIRS PsN: PAT
42

fied over $400 million in recoverable overpayments and they actually have recovered $144 million of that so far. That is only operating in three States, and as a participant in one of those States, 

there is a significant ramp-up period to get started and to create 

the relationships, analyze the data, actually identify potential overpayments, and do all the things associated with recovering it. We 

would be happy to tell you that we have not yet hit our stride, and 

therefore we don’t believe that we’re necessarily close to the total 

potential that exists. 

CMS officials have proven to be very motivated and willing partners and they have helped reduce the normal start-up kinds of 

things that you would expect as well as other impediments that 

might have kept us from being as successful as we would like to 

be. 

So incentives are a very important element, but they are not the 

only element, and we believe that access to data, recovering valid 

claims, and helping resolve any disputes are the rest. 

Because I am running short on time, I would really like to bridge 

to the recommendations we made. 

Senator CARPER. Let me say, my time is yours, so if you need a 

little extra time, you have got it. 

Mr. WHITE. Well, thank you very much. I will try to keep it brief. 

As part of the Improper Payments Information Act, we think it 

would be good for agencies to be required to report on their recovery audit efforts; where they have contracts in place, whether they 

are using internal or external resources, what their results are, 

what efforts they have made to remove impediments, and then finally, what instances have happened where overpayments were 

identified but, for one reason or another, they elected not to pursue 

them. We think that would add teeth and clarity to the Act and, 

therefore, provide more information for analysis. 

We suggest establishment of a joint industry and OMB task 

force, which would be comprised of key agency officials and recovery audit firms, like ourselves, so that we could establish the scale 

of collectable overpayments, overpayments that are conducive to recovery audits, to look at standardized protocols that could be applied, contracting vehicles, those types of things, and then ultimately to develop a road map for removing those impediments that 

might exist so that everybody could benefit from the experience 

that each group may be having individually. 

We also believe that the recovery audit process should be institutionalized as part of the traditional internal government erroneous 

payment identification techniques. We think it augments the other 

sampling and risk analysis techniques that exist and can provide 

collaboration and validation of the amounts that are being identified and may help address some of the questions that were raised 

about the NASA numbers to see if they could be independently 

verified as they use recovery audit to generate them in the first 

place. 

Along these lines, we think that a contract vehicle and a standard set of protocols could be developed which could lead to a government-wide disbursement audit of all centralized payment facilities. 

43

Picking up on the CMS theme, we did suggest that we believe 

the same approach being used in Medicare can be applied to Medicaid. We think the key thing there is to provide incentives to the 

States. Although in aggregate 50 percent of the dollars that may 

be recovered could accrue to the States or could accrue to the Federal Government, in practice, sometimes the amount recovered actually accrues directly to the Federal Government and the cost associated with us as well as any resources necessary to support the 

program accrue to the State. So they actually are hindered and not 

rewarded for their recovery efforts and we think there are ways to 

create incentives that would ameliorate that concern. 

To provide the incentives we think are so critical for motivation, 

we believe that agencies should be allowed to keep a portion of the 

funds that are recovered in order to be able to be reinvested in efforts to reduce erroneous payments. One mechanism would be to 

create a Government Efficiency Fund, where recovered money 

would be made available for government efficiency initiatives that 

would be reported. We would advocate they would be reported for 

Congressional oversight annually, but they would be earmarked for 

new programs either around process improvements, policy improvements, new technology, or whatever could be applied directly to reducing improper payments. 

We also recommend removal of the restrictions of the Paperwork 

Reduction Act. Some of those impede the issuance of appropriate 

documentation requests or payment demand letters. I think this is 

an area where one well-intended legislative action could be impeding another. 

Last but not least, we recommend examination of the Single 

Audit Act to facilitate recovery audits for programs such as grants 

to States by Federal agencies that currently are prohibited from a 

secondary audit under that Act. The provisions of the Act should 

be reviewed to see if programs where there is evidence of intolerable levels of erroneous payments should be subjected to a secondary audit. 

Thank you, Mr. Chairman. I am prepared to answer any questions you might have. 

Senator CARPER. Thank you for your excellent testimony. 

Let me return to a theme that was sounded a number of times 

in the course of this hearing, and that is incentives, and particularly with respect to Medicaid borne partly by the Federal taxpayers, borne partly by State taxpayers as we attempt to provide 

health care to low-income folks, in some cases nursing home assistance for our elderly. The comment I think you made was that as 

we look at efforts to recover improper payments or monies allocated 

inappropriately, States tend to bear the costs and the Federal Government tend to keep the dough. Is that a fair characterization of 

what you said? If it is, there is no wonder not a whole lot is being 

recovered and I certainly think I see a road map there for changing 

that. 

Mr. WHITE. Not trying to put too fine a point on it, what I said 

was that although the characterization was made that if there were 

overpayments, frequently, they were split 50–50. It is not quite always that simple, and in some instances, it is split 50–50. In some 

instances, it may be that the State recoups the entire amount, and 

44

in other instances, it may be that the Federal Government recoups 

the entire amount. So what we were advocating was setting up a 

system where if a State has a good productive recovery audit program, perhaps through some sort of a rate adjustment or something, they would get a better recoupment or keep a better portion 

of the split for those funds that are recovered. 

Senator CARPER. OK. Good. We might want to explore that with 

you a little bit more. 

Mr. WHITE. Sure. 

Senator CARPER. Thank you. You have given us a pretty good todo list for those of us here in Washington, in the Executive and 

Legislative Branchs, of things that we need to do differently. I am 

going to ask you to go back and just reiterate those again, if you 

would, please. 

Mr. WHITE. Sure. I really made a series of six recommendations. 

The first one had to do with the reporting in the IPIA itself, and 

what we were encouraging Congress to evaluate is whether you 

could augment that reporting by not only reporting the statistics of 

what had been identified and what steps have been taken to pursue it, but whether there was a recovery audit program at all. 

Whether there were impediments that had been identified, and 

then what steps have been taken to ameliorate them. One of the 

issues that we have seen is where overpayments are identified, but 

for one reason or another, they are not pursued and we would request and think it would be wise to get an explanation for why 

they were not pursued. 

The second recommendation was the joint task force with OMB, 

or OMB leading the task force between the agencies and the industry. The third was basically a standard contracting vehicle to make 

it easier for agencies to employ recovery audit firms as well as 

standard protocols and a government-wide disbursement audit. 

We talked about the CMS Medicaid extension of their current 

efforts, and then we talked about incentives quite a bit with the 

Government Efficiency Fund, the reduction of the Paperwork Reduction Act, and then last but not least, the Single Audit Act and 

its sometimes effect on not being able to audit grants. 

Senator CARPER. Dwell on that one for a little bit. If you had 

been here at our last hearing, I turned out to be, I think, the author in the House of Representatives when I was a Congressman 

for the Single Audit Act, encouraged by State auditors like former 

State Auditor McCaskill. What kind of changes do you think we 

ought to make in the Single Audit Act? 

Mr. WHITE. I think the one that we are recommending is to review particular grant types for high degrees of erroneous payments, and if those thresholds are exceeded, then waive the Single 

Audit Act and allow a secondary audit. 

Senator CARPER. OK. A couple more questions, if I could. You 

mentioned at a couple of points in your written testimony that you 

believe that private sector auditing firms can do a better job and 

be more efficient in recovery auditing than agencies’ internal auditors can be. 

Mr. WHITE. Yes. 

Senator CARPER. I just want to know why you think that is the 

case. 

45

Mr. WHITE. For a number of different reasons. First, it is all we 

do. Second, we are used to dealing with the size of the spend categories and the data. Third, we are independent and sometimes 

just a fresh point of view where you don’t have as much ingrained 

history can be refreshing. This is a standard practice also in the 

commercial world. I think it has become accepted because of the 

reasons that I just expressed. 

Senator CARPER. OK. Thank you. Senator McCaskill raised the 

question when we were talking with our earlier question from CMS 

and we were talking about the pilot work that is being done in 

three States with respect to recovery of Medicare improper payments. I think you indicated that your firm is involved in one of 

them. Which State are you all involved in? 

Mr. WHITE. We are involved in California. 

Senator CARPER. OK. Senator McCaskill asked, well, we are getting such good results in these three States, why don’t we just do 

the other 47? I remember the old, what was it, Nike ad——

Mr. WHITE. Just do it. 

Senator CARPER [continuing]. Let us just do it. Why don’t we just 

do it? 

Mr. WHITE. I agree with you. I think we should move as rapidly 

as possible. One of the points that Senator McCaskill made was 

that basically we bear all the cost and risk, and that is partially 

true. We do bear the majority of the cost and risk, but these programs are not cost-less nor risk-less for the States and/or for CMS, 

HHS, or any of the other agencies. They do have to invest resources to put the programs in place. They need to be supported. 

They have to provide data. They have to help us setting up regulations and protocols. They have to deal with the provider education 

and all the things that they described. It does take a little bit of 

time. 

Senator CARPER. I can see that. 

Mr. WHITE. I do think that CMS, by their approach to the legislation that was passed in December, is moving very aggressively. 

They do have the RFI already out. It is due April 9. The bid process would ensue apparently shortly thereafter. So I think they are 

moving very expeditiously and I think their intent is to be in all 

50 States ahead of the deadline. 

Senator CARPER. OK. Another question, I understand that some 

agencies that have employed maybe you or a competing firm and 

sometimes wall off entire portions of their budgets to keep the 

auditors away and maybe even decline to recover some overpayments that you have uncovered. Let me just ask, how often does 

that kind of thing happen? Why does it happen, and how can we 

push agencies to be more open and more aggressive in collecting 

what is owed to them? 

Mr. WHITE. Well, I think we have talked about the incentive side 

of it enough, so I probably should put that aside. 

Senator CARPER. OK. 

Mr. WHITE. Why they do it, I think that they perceive there are 

some areas and programs that are particularly sensitive, and 

therefore either for security reasons, privacy reasons, or other reasons, they have to be very judicious in who they allow to look at 

it, and I think is a viable and valid concern. 

46

I think they also, with the OMB interpretation of the legislation that exists, set thresholds, and then whether it is $10 million and 

2.5 percent, whether that is exactly the right threshold, I am not 

really here to comment on it one way or the other, but thresholds 

do make some sense because if the agency is incurring some effort 

and if we are incurring some effort, you have to have a reasonable 

amount of spend in order to make it worthwhile. You can’t go look 

at every dollar cost effectively. 

So I can understand why some of those things exist and they are 

very practical. On the other hand, I think that, frequently, people 

perceive either people from the outside as being a threat or they 

perceive any examination of erroneous or improper payments as 

being critical of their previous efforts and they are naturally protective of their previous efforts and therefore, they may take that 

to a bit of an extreme. 

Senator CARPER. OK. Well, there is an old saying about saving 

the best for last. I don’t know that this testimony and these responses are the best, but they are really good and very helpful. I 

want to say for myself, for our staff, for the Members that were 

here and those that had to leave, thank you for sticking around 

and for your patience today and——

Mr. WHITE. Thank you for all the work that you are doing. 

Senator CARPER. Oh, no, we get paid for this, and as it turns out, 

I guess you do, too. [Laughter.] 

But you gave us some really good insights, and as I said, a very 

helpful to-do list, as well. We thank you for coming and for being 

with us this morning and this afternoon. There is still plenty of 

work to do for all of us, but I think we are maybe better informed 

now as we approach those responsibilities. 

The hearing record is going to be open for 2 weeks for the submission of additional statements and questions. I would ask you 

and our other witnesses who have been kind enough to join us 

today for your cooperation in getting some prompt responses to any 

questions that we may submit for the record. 

Again, thank you very much for your input and for your patience, 

and for that of the witnesses that preceded you. 

With that, the hearing is adjourned. Thanks very much. 

[Whereupon, at 1:13 p.m., the Subcommittee was adjourned.] 

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