Contractors Will Be Required to Report Overpayments Contractors could face penalties, including debarment, if they do not disclose overpayments from the government. White House officials said President Obama plans to issue an executive order aimed at curbing improper payments on federal programs. Improper payments amounted to 5% of federal program outlays in fiscal 2009, for a total of $98 million, according to White House figures. In a Nov. 17 briefing for reporters, officials of the Office of Management and Budget said contractors would be held responsible for reporting improper payments even if the government was to blame. Currently contractors are required only to return any improper payment that is discovered by government auditors. “The way it works today is if we give a contractor money that they have not earned and they never report it to us, but we just so happen to find it through an audit, all they have to do is make us whole,” said OMB controller Danny Werfel. “There are no additional damages on top of that. And that’s what the executive order would pursue as a way of incentivizing contractors to immediately tell us where we made an error, so they’re part of the solution and not part of the problem.” A White House fact sheet shows that improper payments most often occur in federal grant and loan programs. The improper payment rate last year was nearly 25% in the Agriculture Department’s school breakfast program; it was 15% in Medicare Advantage (Part C) and 21% in SBA’s disaster loan program. Improper payments in 2009 rose 36% from the year before. Officials said the increase was partly due to tougher reporting rules and partly because of the big increase in federal payments as a result of the recession. In addition to new rules for contractors, the officials said the president’s executive order will establish stricter reporting requirements for agencies. It will create a public website listing improper payments rates for each program. The website will include an email address for the public to report cases of suspected waste, fraud and abuse.