How Can Government Strengthen Spending and Tracking of Funds to Address Emergencies?

When the government distributes supplemental funding to address various national emergencies such as the global pandemic, time is of the essence. Putting money quickly in the hands of Americans in need benefits vulnerable segments of the American population and stabilizes the nation in a time of crisis. At the same time, transparency and accountability mechanisms are essential to safeguard these taxpayer dollars and maintain public trust.

Rapid program delivery and program integrity are not mutually exclusive, but it can be difficult to establish the appropriate controls, checks, and balances and produce the desired outcome in a fast-moving crisis. With a combination of new programs, additional funding, and broader program eligibility, the risk of waste, fraud, and improper payments increases significantly.

The recent COVID-19 pandemic experienced across the world provides one of the most visible examples. In response to the national pandemic emergency, the U.S. Congress appropriated $5 trillion through six pieces of legislation. Taxpayer dollars were intended to be distributed through government agencies to the American people, schools, businesses, and State/local/tribal and territorial governments, but these funds did not always end up in the right hands. It is estimated that hundreds of billions of pandemic relief funds have been lost to fraud.

For government to address these challenges, the IBM Center for The Business of Government – in collaboration with the National Academy of Public Administration (NAPA) – has released a new report, A Prepared Federal Government: Preventing Fraud and Improper Payments in Emergency Funding, by Steve Goodrich of the Center for Organizational Excellence, Inc. and Bob Westbrooks of NAPA. 

This report began with a December 2023 roundtable discussion hosted by the IBM Center and NAPA, which included experts from the budget, financial management, data, and oversight communities, as well as those with experience in implementing an efficient, effective, and legal way to track and safeguard taxpayer dollars.  These leaders generated insights on how the government can ensure integrity while meeting policy and programmatic goals in increasingly frequent emergency situations.

Framing the roundtable discussion was the recent experience of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which established the Pandemic Recovery Accountability Committee (PRAC) to promote transparency and provide independent oversight of pandemic relief funds. In the early months of the pandemic, federal watchdogs lacked an available centralized data analytics function to quickly spot anomalies, patterns, and hidden links across government programs. While such a unit had been built following the 2009 economic crisis housed in the Recovery Accountability Center (RAC), the RAC ceased operations with an improved economy.

The PRAC made significant progress in establishing analytic capacities and supporting oversight. This includes multiple collaborative processes with CFOs, IGs, OMB, and State and local governments; it also includes the establishment of the Pandemic Analytics Center of Excellence (PACE) to develop data-driven tools that promote payment integrity. Meanwhile, Congress has appropriated an additional $2 trillion in extraordinary funding through the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act, and the Inflation Reduction Act (IRA).

At the same time, both the Administration and the Congress (in both the Senate and the House) have introduced proposals and processes to strengthen payment integrity in future years, including proposals to continue the PRAC since its authorizing legislation sunsets in FY2025.  Should a future crisis occur, and a capability such as that built up by the PRAC were again allowed to lapse, valuable months would be lost rebuilding this critical counter-fraud capability.

This report draws on the pandemic and documents the challenges that governments experienced with fraud and improper payments, especially during a national emergency. It also profiles the many collaborative initiatives currently underway to create lasting solutions to reduce fraud and improper payments. In addition to these initiatives, this report recommends others to provide a holistic capacity for the next funding emergency. It includes 27 recommendations that Congress and federal agencies can use to ensure the integrity, efficacy, and protection of funds distributed in increasingly frequent emergency situations.

These recommendations are intended to help government ensure that transparency and accountability mechanisms are in place across government programs, and to apply the lessons learned from the pandemic emergency to be better prepared for the next national crisis. Readiness is key to effective oversight. The government needs to improve the infrastructure to support quick reaction oversight, but also to put proactive methods in place to prevent fraud, waste, and abuse -- ideally before they take place, and certainly in working efficiently to recover misspent funds.