A bill to amend the Higher Education Act of 1965 to extend the reduced interest rate for Federal Direct Stafford Loans, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Subsidized Stafford Loan Reduced 
Interest Rate Extension Act of 2012''.

              TITLE I--EXTENSION OF REDUCED INTEREST RATE

SEC. 101. INTEREST RATE EXTENSION.

    Section 455(b)(7)(D) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(b)(7)(D)) is amended--
            (1) in the matter preceding clause (i), by striking ``and 
        before July 1, 2012,'' and inserting ``and before July 1, 
        2013,''; and
            (2) in clause (v), by striking ``and before July 1, 2012,'' 
        and inserting ``and before July 1, 2013,''.

    TITLE II--IMPROPER PAYMENTS ELIMINATION AND RECOVERY IMPROVEMENT

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Improper Payments Elimination and 
Recovery Improvement Act of 2012''.

SEC. 202. DEFINITION.

    In this title, the term ``agency'' means an executive agency 
defined under section 105 of title 5, United States Code.

SEC. 203. IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS BY FEDERAL 
              AGENCIES.

    (a) In General.--The Director of the Office of Management and 
Budget shall on an annual basis--
            (1) identify a list of high-priority Federal programs for 
        greater levels of oversight and review--
                    (A) in which the highest dollar value or majority 
                of governmentwide improper payments occur; or
                    (B) for which there is a higher risk of improper 
                payments;
            (2) in coordination with the agency responsible for 
        administering the high-priority program--
                    (A) establish semi-annual or quarterly targets and 
                actions for reducing improper payments associated with 
                each high-priority program; or
                    (B) if such targets are in effect on the date of 
                enactment of this Act, establish supplemental targets; 
                and
            (3) determine the entities that have received the greatest 
        amount of improper payments (or, if improper payments are 
        identified solely on the basis of a sample, the entities that 
        have received the greatest amount of improper payments in the 
        applicable sample).
    (b) Report on High-Dollar Improper Payments.--
            (1) In general.--Subject to Federal privacy policies and to 
        the extent permitted by law, each agency on a quarterly basis 
        shall submit to the Inspector General of that agency, and make 
        available to the public (including availability through the 
        Internet), a report on any high-dollar improper payments 
        identified by the agency.
            (2) Contents.--Each report under this subsection--
                    (A) shall describe--
                            (i) any action the agency--
                                    (I) has taken or plans to take to 
                                recover improper payments; and
                                    (II) intends to take to prevent 
                                future improper payments; and
                    (B) shall not include any referrals the agency made 
                or anticipates making to the Department of Justice, or 
                any information provided in connection with such 
                referrals.
            (3) Availability of information to inspector general.--
        Paragraph (2)(B) shall not prohibit any referral or information 
        being made available to an Inspector General as otherwise 
        provided by law.
            (4) Assessment.--After the review of each report under this 
        subsection, the Inspector General shall--
                    (A) assess the level of risk associated with the 
                applicable program and the quality of the improper 
                payment estimates and methodology of the agency;
                    (B) determine the extent of additional oversight or 
                financial controls warranted to identify and prevent 
                improper payments; and
                    (C) provide the head of the agency with any 
                recommendations, for modifying any plans of the agency, 
                including improvements for improper payments 
                determination and estimation methodology.
    (c) Improved Estimates.--
            (1) In general.--Not later than 180 days after the date of 
        enactment of this Act, the Director of the Office of Management 
        and Budget shall provide guidance to agencies for improving the 
        estimates of improper payments under the Improper Payments 
        Information Act of 2002 (31 U.S.C. 3321 note).
            (2) Guidance.--Guidance under this subsection shall--
                    (A) strengthen the estimation process of agencies 
                by reviewing the underlying validity of payments to 
                ensure amounts being billed are proper; and
                    (B) include--
                            (i) access to more complete data as part of 
                        reviews;
                            (ii) ending reliance on self-reporting of 
                        improper payments as a replacement for 
                        estimates, and relying on the development of a 
                        robust process to estimate and identify 
                        improper payments across the agency;
                            (iii) all overpayments in the improper 
                        payments estimate, regardless of whether 
                        improperly paid funds have been or are being 
                        recovered;
                            (iv) ensuring that--
                                    (I) the review of payments to 
                                employees shall include analysis of 
                                employee data, including pay grade 
                                data, locality pay, and other factors 
                                that affect pay; and
                                    (II) reviews address high-risk or 
                                high-dollar personnel payments, 
                                including travel, pay, and purchase 
                                cards;
                            (v) reassessing high-risk programs to 
                        better reflect the unique processes, 
                        procedures, and risks of improper payments, 
                        including assessments for each program to 
                        reflect different risk components and better 
                        direct corrective actions; and
                            (vi) confirming that inter-agency transfers 
                        are proper using a methodology comparable to 
                        that used to assess program level improper 
                        payments.

SEC. 204. IMPROPER PAYMENTS INFORMATION.

    Section 2(a)(3)(A)(ii) of the Improper Payments Information Act of 
2002 (31 U.S.C. 3321 note) is amended by striking ``with respect to 
fiscal years following September 30th of a fiscal year beginning before 
fiscal year 2013 as determined by the Office of Management and Budget'' 
and inserting ``with respect to fiscal year 2014 and each fiscal year 
thereafter''.

SEC. 205. DO NOT PAY INITIATIVE.

    (a) Prepayment and Preaward Procedures.--
            (1) In general.--Each agency shall review prepayment and 
        preaward procedures and ensure that a thorough review of 
        available databases with relevant information on eligibility 
        occurs to determine program or award eligibility and prevent 
        improper payments before the release of any Federal funds, to 
        the extent permitted by law.
            (2) Databases.--At a minimum, each agency shall, before 
        payment and award, check the following databases (if applicable 
        and permitted by law) to verify eligibility:
                    (A) The Death Master File of the Social Security 
                Administration.
                    (B) The General Services Administration's Excluded 
                Parties List System.
                    (C) The Debt Check Database of the Department of 
                the Treasury.
                    (D) The Credit Alert System or Credit Alert 
                Interactive Voice Response System of the Department of 
                Housing and Urban Development.
                    (E) The List of Excluded Individuals/Entities of 
                the Office of Inspector General of the Department of 
                Health and Human Services.
    (b) Do Not Pay List.--
            (1) Establishment.--There is established the Do Not Pay 
        List which shall consist of--
                    (A) the databases described under subsection 
                (a)(2); and
                    (B) any other database designated by the Director 
                of the Office of Management and Budget in consultation 
                with agencies.
            (2) Other databases.--In making designations of other 
        databases under paragraph (1)(B), the Director of the Office of 
        Management and Budget shall consider--
                    (A) any database that assists in preventing 
                improper payments; and
                    (B) the database of incarcerated individuals 
                established under subsection (f).
            (3) Access and review by agencies.--For purposes of 
        identifying and preventing improper payment, each agency shall 
        have access to, and use of, the Do Not Pay List to determine 
        payment or award eligibility when the Director of the Office of 
        Management and Budget determines the Do Not Pay List is 
        appropriately established for the agency.
            (4) Payment otherwise required.--When using the Do Not Pay 
        List, an agency shall recognize that there may be circumstances 
        under which the law requires a payment or award to be made to a 
        recipient, regardless of whether that recipient is on the Do 
        Not Pay List.
    (c) Database Integration Plan.--Not later than 60 days after the 
date of enactment of this Act, the Director of the Office of Management 
and Budget shall provide to the Congress a plan for--
            (1) inclusion of other databases on the Do Not Pay List;
            (2) to the extent permitted by law, agency access to the Do 
        Not Pay List; and
            (3) the multilateral data use agreements described under 
        subsection (e).
    (d) Initial Working System.--
            (1) Establishment.--Not later than 90 days after the date 
        of enactment of this Act, the Director of the Office of 
        Management and Budget shall establish a working system for 
        prepayment and preaward review that includes the Do Not Pay 
        List as described under this section.
            (2) Initial system.--The working system established under 
        paragraph (1)--
                    (A) may be located within an appropriate agency;
                    (B) shall include not less than 3 agencies;
                    (C) shall include fraud and improper payments 
                detection through predictive modeling and other 
                analytic technologies and other techniques; and
                    (D) may provide for the use of commercial database 
                sources, commercial analysis, and other functionality 
                for payment or award reviews, as determined appropriate 
                by the Director of the Office of Management and Budget 
                for verifying Federal data.
            (3) Application to all agencies.--Not later than January 1, 
        2013, each agency shall review all payments and awards for all 
        programs of that agency through the system established under 
        this subsection.
    (e) Multilateral Data Use Agreements.--
            (1) In general.--Not later than 60 days after the date of 
        enactment of this Act, the Director of the Office of Management 
        and Budget shall develop a plan to establish a multilateral 
        data use agreement authority to carry out this section, 
        including access to databases such as the New Hire Database 
        under section 453(j) of the Social Security Act (42 U.S.C. 
        653(j)).
            (2) General protocols and security.--
                    (A) In general.--The multilateral data use 
                agreements shall be consistent with protocols to ensure 
                the secure transfer and storage of any data provided to 
                another entity or individual--
                            (i) under the provisions of, or amendments 
                        made by, this section; and
                            (ii) consistent with applicable 
                        information, privacy, security, and disclosure 
                        laws, including--
                                    (I) the regulations promulgated 
                                under the Health Insurance Portability 
                                and Accountability Act of 1996 and 
                                section 552a of title 5, United States 
                                Code; and
                                    (II) subject to any information 
                                systems security requirements under 
                                such laws or otherwise required by the 
                                Director of the Office of Management 
                                and Budget.
                    (B) Consultation.--The Director of the Office of 
                Management and Budget shall consult with--
                            (i) the Council of Inspectors General on 
                        Integrity and Efficiency before implementing 
                        this paragraph; and
                            (ii) the Secretary of Health and Human 
                        Services, the Social Security Administrator, 
                        and the head of any other agency, as 
                        appropriate.
    (f) Development and Access to a Database of Incarcerated 
Individuals.--
            (1) In general.--The Attorney General shall develop and 
        maintain a database of individuals incarcerated at Federal and 
        State facilities.
            (2) Availability and update.--The database developed under 
        this subsection shall be--
                    (A) available to agencies to carry out this section 
                and prevent waste, fraud, and abuse; and
                    (B) updated no less frequently than on a weekly 
                basis.
    (g) Plan To Improve the Social Security Administration Death Master 
File.--
            (1) Establishment.--In conjunction with the Commissioner of 
        Social Security and in consultation with stakeholders and the 
        States, the Director of the Office of Management and Budget, 
        shall establish a plan for improving the quality and timeliness 
        of death data maintained by the Social Security Administration, 
        including death information reported to the Commissioner under 
        section 205(r) of the Social Security Act (42 U.5.C. 405(r)).
            (2) Actions under plan.--The plan established under this 
        subsection shall include actions agencies are required to take 
        to--
                    (A) increase the quality and frequency of access;
                    (B) achieve a goal of at least daily access as 
                appropriate; and
                    (C) provide for all States to use modern, 
                electronic means for providing data.
            (3) Report.--Not later than 120 days after the date of 
        enactment of this Act, the Director of the Office of Management 
        and Budget shall submit a report to Congress on the plan 
        established under this subsection, including recommended 
        legislation.

SEC. 206. IMPROVING RECOVERY OF IMPROPER PAYMENTS.

    (a) In General.--The Director of the Office of Management and 
Budget shall determine--
            (1) current and historical rates and amounts of recovery of 
        improper payments (or, in cases in which improper payments are 
        identified solely on the basis of a sample, recovery rates and 
        amounts estimated on the basis of the applicable sample), 
        including specific information of amounts and payments 
        recovered by recovery audit contractors; and
            (2) targets for recovering improper payments, including 
        specific information on amounts and payments recovered by 
        recovery audit contractors.
    (b) Recovery Audit Contractor Programs.--
            (1) Establishment.--Not later than 90 days after the date 
        of enactment of this Act, the Director of the Office of 
        Management and Budget shall establish a plan for no less than 
        10 Recovery Audit Contracting programs for the purpose of 
        identifying and recovering overpayments and underpayments in 10 
        agencies.
            (2) Review of commercial payments.--Of the programs 
        established under this subsection, 5 programs shall review 
        commercial payments by an agency.
            (3) Duration.--Any program established under this 
        subsection shall terminate not more than 3 years after the date 
        on which the program is established.
            (4) Reports.--
                    (A) In general.--Not later than 3 months after the 
                completion of a program, the head of the agency 
                conducting the program shall submit a report on the 
                program to Congress.
                    (B) Contents.--Each report under this paragraph 
                shall include--
                            (i) a description of the impact of the 
                        program on savings and recoveries; and
                            (ii) such recommendations as the head of 
                        the agency considers appropriate on extending 
                        or expanding the program.

Summary: Subsidized Stafford Loan Reduced Interest Rate Extension Act of 2012 - Amends title IV of the Higher Education Act of 1965 to make the 3.4 interest rate on Direct Stafford loans first disbursed to undergraduate students between July 1, 2011, and July 1, 2012, applicable to Direct Stafford loans first disbursed to undergraduate students between July 1, 2011, and July 1, 2013. Improper Payments Elimination and Recovery Improvement Act of 2012 - Requires the Director of the Office of Management and Budget (OMB) to: (1) identify, on an annual basis, a list of high-priority federal programs for greater levels of oversight and review of improper payments. (2) coordinate with agencies responsible for administering high-priority programs to establish semi-annual or quarterly targets and actions for reducing improper payments. And (3) provide guidance to agencies for improving estimates of improper payments. Requires federal agencies to: (1) make quarterly reports to their Inspectors General on any high-dollar improper payments identified by such agencies, and (2) review prepayment and preaward procedures and available databases to determine program or award eligibility and prevent improper payments before releasing any federal funds. Establishes a Do Not Pay List based on information from databases maintained by the federal government, including the database of the Social Security Administration (SSA) reporting deaths of Social Security recipients. Requires the Director to: (1) determine the current and historical rates and amounts of recovery of improper payments and targets for recovering improper payments, and (2) establish a plan for at least 10 Recovery Audit Contracting programs to identify and recover overpayments and underpayments in 10 agencies.