Federal agencies made $98 billion worth of improper payments in 2009, up from $72 billion in 2008.

Office of Management and Budget Director Peter Orszag attributes the 36 percent increase to improved detection of errors, new rules that expand what agencies must report as errors, and the increase in payments made in the economic downturn.

The improper payments represent 5 percent of the $2 trillion worth of programs measured last fiscal year. Orszag said it's not clear what percentage of the improper payments were a result of fraud. In some cases, new reporting requirements mean something as innocent as a doctor's illegible signature will be chalked up as an erroneous payment, he said.

Even though the increase can be attributed to better measurements and increased spending, "even in 2008, the number was substantially too high," Orszag said in Tuesday's announcement. "We need to protect taxpayer dollars because every dollar that goes to the wrong recipient, or is the wrong amount, is a dollar that is not available to help an unemployed worker or to invest in education or the other key priorities the administration has."

To combat the waste, the White House will issue an executive order in the next week demanding agencies:

• Establish a Web site to disclose and track the total amount of improper payments on a program. The Web site will include error rates by agency and program, and an e-mail address for the public to report suspected waste, fraud and abuse.

• Report on errors more frequently. For example, rather than annual reporting of how many improper payments were made and by how much they are reduced, agencies might choose to report twice a year or quarterly.

• Designate a Senate-confirmed official to be accountable for meeting improper payment reduction targets. If the agency misses targets two years in a row, the agency's head, chief financial officer and inspector general must give OMB a plan describing why the agency failed to meet its goals and what it will do to meet targets going forward.

• Employ new management techniques, such as forensic auditing, to detect and prevent improper payments.

• Share data with other agencies about entities or individuals that received improper payments because they weren't eligible for the benefits. This will prevent that entity or person from receiving improper payments from other programs.

• Establish plans to reduce program errors that do not interfere with payments to legitimate beneficiaries.

• Create incentives for states, agencies and recipients to report payment errors. For example, contractors who fail to report and return overpayments will face suspension, debarment or financial penalties.

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