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What the Improper Payments Act means to government contractors

Posted by Mike Anderson on Fri, Jul 30, 2010 @ 01:32 PM

Last week the President signed into law a bill known as the Improper Payments Act.  This law will have huge impacts on the government contracting community in the near and long term future.  This new law is designed to take a major bite out of the estimated $110 Billion in misspent and/or fraudulent payments from the Federal Government annually.  The President has stated that he expects to reduce this number by at least $50 Billion by 2012 with the help of this law.  The law is designed to put pressure on the government agencies to force them to make sure they are paying only legitimate contractors (previous investigations have showed payments to deceased people, to multiple organizations with addresses like the Alamo in Texas, etc).  There will be audits of the agencies to enforce the law.  This almost certainly will add overhead and layers of procedure to the procurement cycle.  This should serve to slow down the procurement cycle and possibly slow down the payment cycle if nothing else.  It also will put pressure on the contractors that are successful in bidding on and winning federal contracts.  They most certainly will be faced with additional regulations to comply with, and likely be forced to prove that they comply with these regulations.  The penalties of being found not compliant with the new law could end up putting contractors on a "no bid" list for future business and even have severe criminal penalties if actions were deemed fraudulent.  Now, more than ever, all government contractors need help with the compliance issues to make sure they can deal with the new laws. 

Topics: Ethics, Improper Payments Elimination & Recovery Act, Improper Payments Act, government contracting