The DNP Working System Offers Either Partial or No Access to Three of the Six Databases Required by Law

The DNP working system offers full access to three of the databases  required by IPERIA: the System for Award Management exclusion  records, the Debt Check database, and the List of Excluded Individuals  and Entities (LEIE). However, it offers either partial or no access to the  remaining three: the Credit Alert Interactive Voice Response System,  SSA’s prisoner data, and SSA’s death records. SSA shares two sets of death data: its full  death file and DMF. These  officials stated that the Social Security Act would need to be amended to  allow the agency to share its full death file with Treasury for the DNP  working system. While there is a continued need for SSA to address the risk of errors in its  death data, sharing the full death file through the DNP working system  would provide agencies with additional information and enhance efforts to  identify and prevent improper payments to deceased individuals. Selected Agencies Have Used the DNP Working System in Limited Ways in Part Because of a Lack of Clear Strategy and Guidance

Nine of the 10 agencies we reviewed used the DNP working system’s  payment integration functionality, despite limitations in its effectiveness  and the lack of OMB and Treasury guidance for key aspects of the  payment integration process. Aside from the payment  integration process, 6 of the 10 agencies we reviewed used the DNP  working system in limited ways, and 9 of the 10 agencies accessed the  databases through means other than the DNP working system. Moreover, certain limitations are not fully communicated  through existing guidance. While matching is conducted at the time of  payment, agencies generally receive the results after payments have  been made. The payment integration process  matches against only two databases, DMF and SAM exclusion  records. Payments reviewed. Examples of these  types of payments include Department of Defense payments  disbursed through the Defense Finance and Accounting Service  ($477 billion in fiscal year 2015) and Medicare Fee-for-Service  payments ($351 billion in calendar year 2014). OMB has not  developed or documented a strategy for how it expects agencies to use  the DNP working system. OMB has not established specific goals  or performance measures by which to evaluate agency use of the DNP  working system, in part because it has not developed a strategy for how  agencies should use the system. In its first annual report to Congress on  the overall DNP Initiative, OMB reported that the DNP Initiative prevented  $2 billion in improper payments in fiscal year 2014. While the report  highlighted the DNP working system and four other agency-specific  efforts, all of the reported $2 billion in prevented improper payments  resulted from use of the agency-specific efforts, not the DNP working  system. The 24 Chief Financial Officers Act  agencies collectively reported in their AFRs about $680,000 in improper  payments prevented through use of the DNP working system in fiscal  year 2015. Without monitoring mechanisms, OMB  may not effectively evaluate the DNP working system or identify  performance issues. Conclusions

Improper payments are a significant problem in the federal government,  and the DNP working system is one tool that agencies can use to help  reduce them. While the most common use of the DNP working system is its payment  integration process, OMB guidance is unclear as to whether use of the  process is required, and Treasury’s Do Not Pay Agency Implementation  Guide does not clearly describe the limitations of the process, including  the data sources used and the timing of matching. To reasonably assure that agencies use the DNP working system  effectively, the Director of OMB should develop a strategy—and  communicate its strategy through guidance—for how agencies should  use the DNP working system to complement existing data matching  processes and whether and how agencies should consider using the  DNP working system to streamline existing data matching. OMB  stated that it agreed or generally agreed with the concepts behind the  remaining five recommendations, as discussed below, but did not state  whether it agreed with the recommendations themselves or planned to  implement them. GAO staff who made major  contributions to this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

This review examines the extent to which (1) the Office of Management  and Budget (OMB) and the Department of the Treasury (Treasury)  developed the Do Not Pay (DNP) working system and obtained access to  relevant databases, (2) selected agencies used the DNP working system  to help review eligibility, and (3) OMB monitored the use of the DNP  working system. We used this information to  identify large components and those with high reported improper payment  estimates. To address our third objective, we analyzed agency reporting on the use  of the DNP working system in the 10 selected agencies’ fiscal year 2015  agency financial reports and OMB’s first annual report on the DNP  Initiative; obtained relevant documentation regarding OMB’s monitoring of  the DNP working system; and compared this information to relevant laws,  guidance, and federal internal control standards.
Why GAO Did This Study

Improper payments are a long-standing, significant problem in the federal government, estimated at nearly $137 billion in fiscal year 2015. GAO previously reported that one strategy to help prevent improper payments is up-front verification of eligibility through data sharing and matching. Established by OMB in 2011 and hosted by Treasury, the DNP working system is a web-based, centralized data matching service.
GAO was asked to review the DNP working system. This report examines the extent to which (1) OMB and Treasury developed the DNP working system and obtained access to relevant databases, (2) selected agencies used the DNP working system to help review eligibility, and (3) OMB monitored the use of the system. GAO reviewed relevant laws and guidance; interviewed officials at OMB, Treasury, and 10 user agencies selected in part based on size and reported improper payment estimates, including those with the largest reported estimates; and analyzed DNP working system documentation.

What GAO Found

The Office of Management and Budget (OMB), in coordination with the Department of the Treasury (Treasury), developed the Do Not Pay (DNP) working system as a data matching service for agencies to use in preventing improper payments, but GAO found that the DNP working system offers either partial or no access to three of the six databases required by the Improper Payments Elimination and Recovery Improvement Act of 2012, as amended. Specifically, the DNP working system offers no access to the Social Security Administration's (SSA) prisoner records and partial access to the Credit Alert Interactive Voice Response System and SSA's death records. The death records offered through the DNP working system do not include state-reported death data. SSA officials stated that sharing its full death file—which includes state-reported death data—would require an amendment to the Social Security Act. Sharing the full death file through the DNP working system would enhance efforts to identify and prevent improper payments.
The 10 agencies GAO reviewed have used the DNP working system in limited ways, in part because of a lack of clear OMB strategy and guidance. The most common way these agencies used the DNP working system is through its payment integration process, whereby Treasury compares disbursements it makes with DNP databases. However, Treasury matches against only two databases, and because the matching is performed simultaneously with disbursement, agencies generally do not receive the results in time to prevent improper payments. Further, because the payment integration process is built into Treasury's payment process, it does not compare payments disbursed through other means, such as payments made by the Defense Finance and Accounting Service ($477 billion in fiscal year 2015). OMB and Treasury guidance do not fully address the limitations of the payment integration process or whether its use is required. Aside from payment integration, 6 of the 10 agencies GAO reviewed used the DNP working system in limited ways, and 9 of the 10 agencies used some of the databases outside the DNP working system. OMB has not developed a strategy or communicated through guidance how it expects agencies to use the DNP working system. As a result, agencies may not effectively and efficiently use the system to help reduce improper payments.
Although OMB collects certain information about the use of the DNP working system, it has not developed monitoring mechanisms, such as goals or performance measures. Reported savings from use of the DNP working system have been minimal. OMB reported that the overall DNP Initiative (which encompasses the DNP working system and other agency-specific efforts) prevented over $2 billion in improper payments in fiscal year 2014, but none of these savings resulted from use of the DNP working system. Further, while OMB has not reported on fiscal year 2015 results, the 24 Chief Financial Officers Act agencies reported about $680,000 in improper payments prevented through use of the system in fiscal year 2015. However, GAO identified instances in which such agency-reported information was not consistent with reports generated by the system. Without monitoring mechanisms and reliable data, OMB cannot effectively evaluate the DNP working system or identify and address performance issues.

What GAO Recommends

Congress should consider amending the Social Security Act to allow SSA to share its full death file through the DNP working system. GAO is making two recommendations to Treasury and seven to OMB, including for OMB to develop and communicate a strategy and guidance and develop monitoring mechanisms. Treasury agreed. OMB agreed with two and agreed or generally agreed with the concepts behind the remaining five. GAO believes that it is important to fully implement all of the recommendations.