Washington

The Bush Administration's Office of Management and Budget in May clarified its policy about state recoveries of erroneous government payments, explaining that states may use a portion of the money they collect to pay for audits of government contractors.

A glitch in federal guidelines, which appeared in the Improper Payments Information Act of 2002, caused some states to drop recovery efforts, fearing that costly audits would burden lagging budgets.

To clarify the misunderstanding, OMB Controller Linda Springer issued a memo to states, explaining that collection firms may receive reasonable fees based on the amount of federal money they recover — and that states may pay these fees using some of the recovered funds.

“We've analyzed a portion of the programs and already know that erroneous payments exceed $35 billion a year,” said Clay Johnson, OMB Director for Management. “With this new law, we can approach this effort in a business-like fashion, assessing the scope of the problem and defining how to solve it.”

More information about this clarification is available at www.whitehouse.gov/omb/, in the “News Releases” section.

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