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Faulty Treasury software cost Labor Department $92 million in owed debts

The program, which was installed in late 2017, has not functioned properly since at least January 2018.

Published: July 17, 2020 2:35pm

Updated: July 19, 2020 7:01am

The Golden Horseshoe is a weekly designation from Just the News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s.

This week, our award is going to the U.S. Department of Treasury for employing faulty software that led to $92 million in uncollected debts owed to the Department of Labor, as well as an undetermined amount owed to 12 other federal agencies.

The debts owed to the Labor Department are comprised of close to 11,000 delinquent fines for workplace safety violations owed to the Occupational Safety and Health Administration (OSHA) by employers.

The software issue was initially reported to the Office of Special Counsel by an anonymous whistleblower who alleged that neither Treasury nor OSHA officials took action to correct the problem in a timely manner.

In a letter dated early June of this year, Special Counsel Henry Kerner alerted the president to the reports on the faulty software sent to the OSC by the Departments of Treasury and Labor.

OSHA may issue fines against employers in violation of the agency's safety regulations. If those fines are unpaid after 180 days, OSHA transfers them to the Fiscal Service, a division of the Treasury Department that assists their collection efforts.

In October 2017, the Fiscal Service launched a new collection-servicing system, called Cross-Servicing Next Generation (CS-NG). When OSHA transferred its debts to the Fiscal Service, contact addresses for the agency's debtors did not properly load into the new program. "This prevented CS-NG from automatically generating demand letters, which are required by federal policy to be mailed before the Fiscal Service can take action to a collect a debt," according to Kerner’s letter. "Without a demand letter, no action was taken to collect OSHA's transferred debts."

"I am particularly encouraged by Treasury's quick action to begin collecting nearly $85 million of uncollected OSHA debts and to assess the outstanding uncollected debts of 12 additional agencies," wrote Kerner. "I also commend the whistleblower for bringing these allegations forward, not only for the benefit of Treasury and Labor, but for the other agencies affected by mismanagement within these programs.”

Kerner's letter reported that the Treasury Department was aware of some deficiencies in the CS-NG program as far back as January 2018, though the program director was not aware of this particular issue until September 2019. "Treasury," according to Kerner, "found that following the launch of CS-NH, the Fiscal Service did not implement a system to track, monitor, prioritize and resolve service request tickets, and that although the Fiscal Service is working with its software developer to resolve its deficiencies with CS-NG, it did not provide or establish a timeline for resolution."

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