If Federal agencies invest upfront in technologies to track fraud and improper payments, the government could end up saving enough money to pay back some of the national debt or stave off sequestration, according to Rep. Gerry Connolly, D-Va.
“We can do something in the management end that would have big payoff, and technology will help us. It will catch the duplication, it will catch the redundancy, it will catch a lot of the errors. So we need an upfront investment in technology, but we also need a mind-set that says [fraud is] not acceptable, and the goal ought to be to move it to zero,” Connolly said at the ACT-IAC Fraud and Abuse Forum on July 20. “Congress has to take it seriously and so does the administration. Technology is the tool, though. If we’re not willing to invest in the enterprise, frankly, we’re going to be talking about this forever.”
According to Connolly, cases of fraud and improper payments across the Federal government account for approximately $142 billion of waste each year.
“We’re all worried about sequestration. But if you look at improper payments over a 10-year period, $142 billion becomes $1.4 trillion. And that’s roughly sequestration,” said Connolly. “If we could in theory get it to zero, we don’t need to cut a thing in the context of sequestration, nor do we need to raise a dime of new taxes, we’re just being more efficient.”
Sequestration comes into effect when the Congressional Budget Office (CBO) determines that appropriations for the current fiscal year have exceeded the statutory caps on discretionary spending, at which point automatic spending cuts would come into effect. Though the CBO determined that sequestration would not be necessary for the 2017 fiscal year, the sequestration of 2013 proved that the process is quite possible under the current Federal budgetary system.
Dave Mader, chief strategy officer for the civilian sector at Deloitte consulting and former acting deputy commissioner of the IRS, explained that many agencies don’t even have the technologies available to put up red flags when cases of fraud occur.
“We don’t, in the case of the IRS, have the computer capacity […] to actually do the kind of upfront analysis that would allow you to look at a return coming in and say ‘oh, you know I actually saw that same IP address five different times the day before yesterday, and oh by the way, their electronic payment is actually going to the same bank and the same account,’ ” said Mader. “That would lend you to believe that there’s an element of fraud there. But, again, without the technology, without the investment, we’re not going to have the kinds of systems that the private sector and our financial institutions do.”
According to Connolly, Congress must take on the role of rewarding and encouraging innovative behavior in this space, while giving agencies the financial support upfront to modernize technological systems.
“We in Congress need to back Federal employees up when they take this seriously and decide to tackle it, and know that there will be a reward for that,” he said, explaining that Congress should avoid immediately taking away the funding that agencies manage to save through these investments. “We have to return to the idea that investments have returns on them. Every dollar you invest or spend is not necessarily a zero sum gain and a lost dollar.”
Connolly was highly critical of proposed cuts in President Donald Trump’s budget, which he said would “gut” agencies and prevent them from achieving savings through fraud detection.
However, he applauded legislation like the Modernizing Government Technology (MGT) Act, which passed the House in May and still awaits consideration by the Senate. The MGT Act would allow agencies to use the money saved by technological innovation for reinvestment in later modernization projects, which Connolly called a “breakthrough in mentality.”
“If you can get the Congress, the Senate, the House, bicameral, bipartisan, and the administration to come to the table with the agencies, with [the Government Accountability Office], with the IGs, I think you’d have a hope of coming up with some progress,” said Mader.