The U.S. Department of the Treasury sits at the center of the federal government’s financial operations, overseeing everything from revenue collection and debt management to trillions of dollars in annual payments made on behalf of federal agencies. Within Treasury, the Bureau of the Fiscal Service plays a critical operational role, managing federal payments, accounting, and financial reporting while serving as a backbone for government-wide financial integrity.

As fraud and improper payments continue to pose significant risks across federal programs, Treasury has elevated payment integrity as a top administrative priority. Central to this effort is the Do Not Pay (DNP) Program, a government-wide service designed to help agencies prevent fraud, waste, and abuse by screening payments and awards against authoritative data sources before funds are released.

In this first part of a three-part series, Justin Marsico, Assistant Commissioner for Fraud Prevention and Financial Integrity, U.S. Department of the Treasury, Bureau of the Fiscal Service, joins Carly Mitchell, Partner at Guidehouse, to discuss how Treasury is modernizing the DNP Program, reducing administrative barriers, and pushing agencies toward full adoption. The conversation explores the policy, legal, and data foundations behind Treasury’s push to move from fragmented usage to a truly government-wide approach to preventing improper payments.

Edited Excerpts

Q: Can you start by describing your current role and responsibilities?

At the Fiscal Service, we make payments on behalf of federal agencies, collect revenue that is due to the government, and maintain government-wide accounting information. Because we sit at the center of federal finance, we are also able to provide services that help agencies identify fraud and prevent improper payments.

My role is to lead the team that delivers those services to federal agencies, and in some cases to states, through the Do Not Pay Program (DNP). At the beginning of this calendar year, when the administration changed, there was a clear recognition that fighting fraud and improper payments would be a major priority. At the Fiscal Service, we wanted to get well situated to be able to make changes and to accelerate the progress that we’ve been making. I was assigned to lead this new portfolio.

For the last few months, I have also continued to serve as a caretaker for the Chief Data Officer organization.

Q: OMB’s memo M-25-32 focuses on preventing improper payments while protecting privacy through DNP. Can you explain how this memo came about and what it enables?

The M-25-32 memo was released a couple of months ago, and while it addresses many important technical details, its most significant impact is setting clear priority at the administration level for fighting fraud and improper payments.

It builds on the work that has already been done with DNP and makes a strong statement that we have not gone far enough. Agencies have not used the program to the extent they should have, and the memo makes it clear that this work needs to be prioritized immediately.

A few years ago, I helped lead a Tiger Team at Treasury focused on understanding what we were doing well in payment and financial integrity, and where changes were needed. Through pilots and analysis, we identified two core issues. First, Treasury already had services available to agencies, but they were not being used as fully as they should have been. Second, even if agencies fully used those services, we still lacked the right data sources and analytics to effectively address fraud and improper payments.

Those two findings have guided our work ever since. M-25-32 directly addresses the first challenge by telling agencies that now is the time to fully leverage DNP to the maximum extent legally possible. It also commits Treasury to rolling back traditional administrative burdens that have made the program difficult to use.

We assessed how federal programs are currently using DNP and found that only about 4% are leveraging all of the data sources they are legally able to access. The goal set by M-25-32 is to move to 100%, so that every program is using all available data to screen payments, awards, and benefit determinations through DNP.

Q: How are you working with agencies to address legal constraints and privacy concerns around data sharing?

Legal, compliance, and regulatory issues are always critical, especially when analysis involves people. In the federal government, the Privacy Act governs how we handle data on people.

As we work to re-engineer DNP and move to full adoption, we have encountered complex challenges across legal, technology, data, change management, and customer experience domains. On the legal and privacy side, M-25-32 allows us to rely on an authority that already existed under the Payment Integrity Information Act of 2019.

That authority allows Treasury to waive one of the most burdensome administrative requirements for using DNP, which is the need for agencies to create computer matching agreements. Previously, agencies had to go through extensive legal, privacy, and review processes just to access data sources that Treasury had already repeatedly vetted for validity and privacy protection.

M-25-32 begins the process of waiving that requirement. We are now developing a streamlined five-step process to give large federal agencies full access to DNP data sources and analytics while remaining legally compliant. We are actively engaging agencies, walking them through what they still need to do, and our goal is to have all large agencies fully onboarded within this fiscal year.

Q: What should agencies focus on now to help move DNP adoption from 4 percent to 100 percent?

There are two key areas agencies should focus on under M-25-32. The first is ensuring that their System of Records Notices, or SORNs, include up-to-date routine uses. Anytime a federal system contains information about individuals, agencies are legally required to publish a notice explaining how that data is used and shared.

If an agency wants to share data from a system, such as a procurement system that includes individual vendors or sole proprietors, there must be a clearly articulated routine use that allows that data to be shared with Treasury for DNP screening. Without that, the data cannot legally be shared.

The second focus area is understanding which programs are eligible for the computer matching agreement waiver described in M-25-32. The memo outlines specific conditions for which programs can use the accelerated path and which cannot.

When Treasury meets with agencies to begin onboarding discussions, it is extremely helpful if agencies already have some sense of what their programs are and whether they can move on this accelerated path.

CDO Magazine appreciates Justin Marsico for sharing his insights with our global community.