Feds to tap commercial databases for Do Not Pay initiative

The government has plans to use commercial data to sniff out improper payments.

On Aug. 16, Sylvia Burwell, director of the Office of Management and Budget, issued a memo instructing agency heads on how to comply with the Improper Payments Elimination and Recovery Improvement Act, signed into law in January. The law is designed to reduce improper payments to deceased annuitants, contractors on an "excluded parties" list, and individuals and businesses on persona non grata lists maintained by various government departments.

It alters the application of the Privacy Act of 1974 by changing the standards that apply to government agencies when using computer database matching programs to carry out the Do Not Pay initiative launched by executive order in 2009.

The legislation mandates that payments to federal payees be checked against five databases: the Social Security Administration’s Death Master File, the General Services Administration's System for Award Management (the new name for their Excluded Parties List), the Debt Check database at Treasury, and databases kept by the departments of Housing and Urban Development and the Health and Human Services.

The law also permits OMB to tap commercial databases, potentially including credit reporting agencies, payroll processors, and consumer data services, as a potential check against fraud or improper payments.

The memorandum notes that using such sources "may also present new or increased privacy risks, such as databases with outdated information." The OMB memo lays out a few safeguards for the use of commercial data. In addition to requiring that data from commercial sources be up to date and relevant, OMB instructs agencies that "information in commercial databases must not contain information that describes how any individual exercises rights guaranteed by the First Amendment, unless use of the data is specifically authorized by statute."

The Treasury is required to assess the relevance and accuracy of consumer databases, and to devise systems to safeguard the confidentiality of consumer data under its control. The use of commercial data will first take place in pilot programs run by the Treasury, but those pilots will last for a maximum of six months and will not lead to agencies terminating payments.