From the Internal Revenue Service, which collects money, to the Defense
Department, which spends a lot of it, government agencies are turning to
an advanced form of computer analysis called data mining to uncover fraud,
keep better track of supplies and improve budget forecasting.
Adopting the same techniques that private-sector marketers have developed
to track consumer spending and predict what customers will buy, agencies
are using computers to sift through vast amounts of data to uncover hidden
patterns that might indicate where fraud or inefficiency is occurring.
Eventually, data mining experts say, the technique may be used for purposes
such as improving aircraft safety, producing better drugs and securing the
Internet.
Mining for Fraud
The Defense Finance and Accounting Service, which pays billions of dollars
worth of military bills each year, is a leader in the data mining field.
DFAS is testing data mining as a way to discover billing errors and fraud.
In a test that began in November and continues to July, DFAS' vendor
pay branch uses data mining to search through 2.5 million financial transactions
that may indicate inaccurate charges. Computers use data mining software
to screen each transaction for 80 different elements, from what was bought
and at what price to how it compares with previous purchases.
Although the test isn't completed, the effort so far has pointed out
several hundred bills that may warrant further investigation, said vendor
pay branch chief David Riney.
An earlier DFAS data mining test focused on government purchase cards,
which government employees use to buy airline tickets, rent cars, and pay
for hotel bills and meals. In some agencies, employees use the cards to
make 80 percent to 90 percent of office supply purchases that are less than
$2,500.
The problem is how to pick fraudulent transactions out of the millions
transactions that DOD processes each year. "In the past, we have relied
on tipsters" to point out fraud, Riney said.
Using SPSS Inc.'s Clementine software, the agency
searched 125,000 transactions made on 40,000 purchase card accounts. In
addition to examining the obvious — payment amount, the date and time the
purchase was made and the type of vendor — computers delve into cardholder
information, account transaction limits, billing cycles and purchase histories.
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