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[House Report 114-824]
[From the U.S. Government Publishing Office]

114th Congress    }                                    {        Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                    {       114-824

======================================================================

 
                  BONUSES FOR COST-CUTTERS ACT OF 2016

                                _______
                                

 November 14, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Chaffetz, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2532]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 2532) to amend title 5, United 
States Code, to enhance the authority under which Federal 
agencies may pay cash awards to employees for making cost 
saving disclosures, and for other purposes, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     3
Section-by-Section...............................................     5
Explanation of Amendments........................................     6
Committee Consideration..........................................     6
Roll Call Votes..................................................     6
Application of Law to the Legislative Branch.....................     6
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     7
Statement of General Performance Goals and Objectives............     7
Duplication of Federal Programs..................................     7
Disclosure of Directed Rule Makings..............................     7
Federal Advisory Committee Act...................................     7
Unfunded Mandate Statement.......................................     7
Earmark Identification...........................................     7
Committee Estimate...............................................     8
Budget Authority and Congressional Budget Office Cost Estimate...     8
Changes in Existing Law Made by the Bill, as Reported............     9
Minority Views...................................................    13
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Bonuses for Cost-Cutters Act of 
2016''.

SEC. 2. COST SAVINGS ENHANCEMENTS.

  (a) In General.--
          (1) Definitions.--Section 4511 of title 5, United States 
        Code, is amended--
                  (A) in the section heading, by striking 
                ``Definition'' and inserting ``Definitions''; and
                  (B) in subsection (a)--
                          (i) by striking the period at the end and 
                        inserting ``; and''; and
                          (ii) by striking ``this subchapter, the 
                        term'' and inserting the following: ``this 
                        subchapter--
          ``(1) the term'';
                          (iii) by adding at the end the following:
          ``(2) the term `surplus salaries and expenses funds' means 
        amounts made available for the salaries and expenses account, 
        or equivalent account, of an agency--
                  ``(A) that are identified by an employee of the 
                agency under section 4512(a) as unnecessary;
                  ``(B) that the Inspector General of the agency or 
                other agency employee designated under section 4512(b) 
                determines are not required for the purpose for which 
                the amounts were made available;
                  ``(C) that the Chief Financial Officer of the agency 
                determines are not required for the purpose for which 
                the amounts were made available; and
                  ``(D) the rescission of which would not be 
                detrimental to the full execution of the purposes for 
                which the amounts were made available.''.
          (2) Authority.--Section 4512 of title 5, United States Code, 
        is amended--
                  (A) in subsection (a)--
                          (i) in the matter preceding paragraph (1), by 
                        inserting ``or identification of surplus 
                        salaries and expenses funds'' after 
                        ``mismanagement'';
                          (ii) in paragraph (2), by inserting ``or 
                        identification'' after ``disclosure''; and
                          (iii) in the matter following paragraph (2), 
                        by inserting ``or identification'' after 
                        ``disclosure''; and
                  (B) by adding at the end the following:
  ``(c)(1) The Inspector General of an agency or other agency employee 
designated under subsection (b) shall refer to the Chief Financial 
Officer of the agency any potential surplus salaries and expenses funds 
identified by an employee that the Inspector General or other agency 
employee determines meets the requirements under subparagraphs (B) and 
(D) of section 4511(a)(2), along with any recommendations of the 
Inspector General or other agency employee.
  ``(2)(A) If the Chief Financial Officer of the agency determines that 
potential surplus salaries and expenses funds referred under paragraph 
(1) meet the requirements under section 4511(a)(2), except as provided 
in subsection (d), the head of the agency shall transfer the amount of 
the surplus funds or unnecessary budget authority from the applicable 
appropriations account to the general fund of the Treasury.
  ``(B) Any amounts transferred under subparagraph (A) shall be 
deposited in the Treasury and used for deficit reduction, except that 
in the case of a fiscal year for which there is no Federal budget 
deficit, such amounts shall be used to reduce the Federal debt (in such 
manner as the Secretary of the Treasury considers appropriate).
  ``(3) The Inspector General or other agency employee designated under 
subsection (b) for each agency and the Chief Financial Officer for each 
agency shall issues standards and definitions for purposes of making 
determinations relating to potential surplus salaries and expenses 
funds identified by an employee under this subsection.
  ``(d)(1) The head of an agency may retain not more than 10 percent of 
amounts to be transferred to the general fund of the Treasury under 
subsection (c)(2).
  ``(2) Amounts retained by the head of an agency under paragraph (1) 
may be--
          ``(A) used for the purpose of paying a cash award under 
        subsection (a) to 1 or more employees who identified the 
        surplus salaries and expenses funds; and
          ``(B) to the extent amounts remain after paying cash awards 
        under subsection (a), transferred or reprogrammed for use by 
        the agency, in accordance with any limitation on such a 
        transfer or reprogramming under any other provision of law.
  ``(e)(1) Not later than October 1 of each fiscal year, the head of 
each agency shall submit to the Secretary of the Treasury a report 
identifying the total savings achieved during the previous fiscal year 
through disclosures of possible fraud, waste, or mismanagement and 
identifications of surplus salaries and expenses funds by an employee.
  ``(2) Not later than September 30 of each fiscal year, the head of 
each agency shall submit to the Secretary of the Treasury a report 
that, for the previous fiscal year--
          ``(A) describes each disclosure of possible fraud, waste, or 
        mismanagement or identification of potentially surplus salaries 
        and expenses funds by an employee of the agency determined by 
        the agency to have merit; and
          ``(B) provides the number and amount of cash awards by the 
        agency under subsection (a).
  ``(3) The head of each agency shall include the information described 
in paragraphs (1) and (2) in each budget request of the agency 
submitted to the Office of Management and Budget as part of the 
preparation of the budget of the President submitted to Congress under 
section 1105(a) of title 31.
  ``(4) The Secretary of the Treasury shall submit to the Committee on 
Appropriations of the Senate, the Committee on Appropriations of the 
House of Representatives, and the Government Accountability Office an 
annual report on Federal cost saving and awards based on the reports 
submitted under paragraphs (1) and (2).
  ``(f) The Director of the Office of Personnel Management shall--
          ``(1) ensure that the cash award program of each agency 
        complies with this section; and
          ``(2) submit to Congress an annual certification indicating 
        whether the cash award program of each agency complies with 
        this section.
  ``(g) Not later than 3 years after the date of enactment of the 
Bonuses for Cost-Cutters Act of 2016, and every 3 years thereafter, the 
Comptroller General of the United States shall submit to Congress a 
report on the operation of the cost savings and awards program under 
this section, including any recommendations for legislative changes.''.
          (3) Technical and conforming amendment.--The table of 
        sections for subchapter II of chapter 45 of title 5, United 
        States Code, is amended by striking the item relating to 
        section 4511 and inserting the following:

``4511. Definitions and general provisions.''.

  (b) Officers Eligible for Cash Awards.--
          (1) In general.--Section 4509 of title 5, United States Code, 
        is amended to read as follows:

``Sec. 4509. Prohibition of cash award to certain officers

  ``(a) Definitions.--In this section, the term `agency'--
          ``(1) has the meaning given that term under section 551(1); 
        but
          ``(2) includes an entity described in subparagraphs (A) 
        through (G) of section 4501(1).
  ``(b) Prohibition.--An officer may not receive a cash award under 
this subchapter if the officer--
          ``(1) serves in a position at level I of the Executive 
        Schedule;
          ``(2) is the head of an agency; or
          ``(3) is a commissioner, board member, or other voting member 
        of an independent establishment.''.
          (2) Technical and conforming amendment.--The table of 
        sections for chapter 45 of title 5, United States Code, is 
        amended by striking the item relating to section 4509 and 
        inserting the following:

``4509. Prohibition of cash award to certain officers.''.

                     Committee Statement and Views

                          PURPOSE AND SUMMARY

    H.R. 2532, the Bonuses for Cost-Cutters Act of 2016, 
expands the award program for disclosures by federal employees 
of fraud, waste, or mismanagement that result in cost savings 
to the employee's agency to include identification of surplus 
salaries and expenses funds. H.R. 2532 also directs any savings 
resulting from the identification of such funds or budget 
authority to be deposited in the U.S. Treasury and used to 
reduce a budget deficit or the federal debt.

                  BACKGROUND AND NEED FOR LEGISLATION

    ``Use it or lose it'' spending is a phenomenon where 
government agencies race to spend unused budget authority 
before it expires at the end of a federal fiscal year. Recent 
academic studies using government contracting data have 
confirmed that end of fiscal year spending surges at many 
agencies.\1\ One study published by the National Bureau of 
Economic Research (NBER) found that as end-of-year spending 
ramps up, the quality of purchases goes down.\2\ According to 
that report, ``spending in the last week of the year is 4.9 
times higher than the rest-of-the-year weekly average . . . 
[and] quality scores for year-end projects are 2.2 to 5.6 times 
more likely to be below the central value [lower quality].''\3\ 
The same NBER study found that as the fiscal year expires, 
money shifts from government offices in the Eastern Time Zone 
to the Pacific Time Zone to gain three extra hours for last 
minute spending.\4\
---------------------------------------------------------------------------
    \1\For example, see: Curbing the Surge in Year-End Federal 
Government Spending: Reforming ``Use It or Lose It'' Rules; Fichtner, 
Jason J. and Greene, Robert; Mercatus Center at George Mason 
University; September 2014; and Do Expiring Budgets Lead to Wasteful 
Year-End Spending? Evidence from Federal Procurement; Liebman, Jeffrey, 
& Mahoney, Neale; National Bureau of Economic Research; September 2013.
    \2\Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidene 
from Federal Procurement; Liebman, Jeffrey, & Mahoney, Neale; National 
Bureau of Economic Research; September 2013.
    \3\Id.
    \4\Id.
---------------------------------------------------------------------------
    H.R. 2532 addresses wasteful year-end spending by providing 
a financial incentive for federal employees to report instances 
of potentially unnecessary salaries and expense account funds. 
H.R. 2532 includes safeguards to ensure agency operations are 
not compromised when they consider eliminating salaries and 
expense account funds identified as unnecessary. Both the 
agency inspector general and chief financial officer must 
determine that such funds are not required for the purpose for 
which the amounts were made available.
    H.R. 2532 directs any savings resulting from the 
identification of such funds or budget authority to be 
deposited in the Treasury and used for deficit reduction or, in 
the case of a fiscal year when there is no federal budget 
deficit, be used to reduce the federal debt. The bill permits 
the head of an agency to retain up to 10 percent of such 
savings for the purpose of paying cash awards to employees who 
identify surplus salaries and expenses funds. Amounts remaining 
after paying cash awards may be transferred or reprogrammed by 
the agency. The bill prohibits the payment of awards to: (1) 
the head of an agency; (2) federal officers who serve in a 
position at level I of the Executive Schedule; or (3) a voting 
member of an independent establishment.

                          LEGISLATIVE HISTORY

    H.R. 2532, the Employees of America Streamlining for Your 
(EASY) Savings Act of 2015, was introduced by Representative 
Charles Fleischmann (R-TN) on May 21, 2015 and referred to the 
Committee on Oversight and Government Reform. On September 15, 
2016, the Committee held a business meeting to consider the 
bill. Chairman Jason Chaffetz (R-UT) offered an amendment in 
the nature of a substitute, which was adopted by voice vote. 
The bill, as amended, was ordered favorably reported to the 
House by voice vote.
    Similar legislation, S. 1378, was introduced in the Senate 
by Senator Rand Paul (R-KY) and was ordered favorably reported 
by the Senate Committee on Homeland Security and Governmental 
Affairs on May 25, 2016 by a record vote of 11 to 5.

                           Section-by-Section

Section 1. Short title

    Designates the short title of the bill as the ``Bonuses for 
Cost-Cutters Act of 2016''.

Section 2. Cost savings enhancements

    Subsection (a)(1) amends Section 4511 of title 5, United 
States Code, by adding a definition for the new term ``surplus 
salaries and expenses funds'' to mean: amounts made available 
for the salaries and expenses account of an agency that: (a) 
are identified by an employee as unnecessary; (b) the Inspector 
General determines are not required for the purpose for which 
the amounts were made available; (c) the Chief Financial 
Officer of the agency determines are not required for the 
purpose for which the amounts were made available; and (d) the 
rescission of which would not be detrimental to the full 
execution of the purposes for which the amounts were made 
available.
    Subsection (a)(2) amends Section 4512 of title 5 to add 
``identification of surplus salaries and expenses funds'' as an 
action for which an employee can be eligible for a cash award. 
The legislation directs the Inspector General (IG) of an agency 
to refer to the agency Chief Financial Officer (CFO) any 
potential surplus benefits and expenses funds identified by an 
employee that the IG determines meets the terms specified under 
the bill.
    If the CFO determines that potential surplus salaries and 
expenses funds meet the requirements, the head of the agency is 
to transfer the amount of the surplus funds or unnecessary 
budget authority from the applicable appropriations account to 
the general fund of the Treasury. Transferred amounts are to be 
used for deficit reduction, except in the case of a fiscal year 
when there is no federal budget deficit. In that case, 
transferred amounts will be used to reduce the federal debt in 
such a manner that the Secretary of the Treasury considers 
appropriate. The agency IG and CFO are responsible for issuing 
standards and definitions for the purposes of making 
determinations relating to surplus salaries and expenses 
identified by an employee.
    The head of an agency can retain up to 10 percent of 
amounts to be transferred to the Treasury. The head of the 
agency can use these amounts to pay cash to one or more 
employees who identified the surplus salaries and expenses 
funds. Remaining funds after paying cash awards may be 
transferred or reprogrammed for use by the agency.
    There are a number of reports associated with ensuring 
accountability for this program. The head of the agency is 
required to send two reports to the Secretary of the Treasury 
regarding identification of possible fraud, waste, or 
mismanagement and identification of surplus salaries and 
expenses funds by an employee. First, each year by October 1, 
they are to submit a report that identifies the total savings 
achieved during the previous fiscal year from such 
identification of waste, fraud, etc. Second, each year by 
September 30, they are to submit a report that describes each 
disclosure of waste, fraud, etc. and the number and amount of 
cash awards by the agency. The agency is also to include 
information from these two reports in each budget request the 
agency submits to the Office of Management and Budget as part 
of the preparation for the President's budget. The Secretary of 
the Treasury will submit an annual report on cost savings and 
awards based on the two reports mentioned above in this 
paragraph to both House and Senate Committees on Appropriations 
and the Government Accountability Office. The Office of 
Personnel Management is responsible for ensuring that the cash 
award program of each agency complies with the rules above and 
submits to Congress an annual certification of its assessment. 
Three years after enactment and every three years thereafter, 
the Comptroller General will submit a report to Congress on the 
operation of this program and any recommendations for 
legislative changes.
    The bill prohibits the payment of cash awards if the 
employee: (1) serves in a position at Level I of the Executive 
Schedule; (2) is the head of an agency; or (3) is a 
commissioner, board member, or other voting member of an 
independent establishment.

                       Explanation of Amendments

    During Full Committee consideration of the bill, Chairman 
Jason Chaffetz (R-UT) offered an amendment in the nature of a 
substitute to the bill. The amendment: adds ``identification of 
surplus salaries and expenses funds'' as an area for which an 
employee can be eligible for a cash award under Section 4511 of 
title 5; directs any savings resulting from the identification 
of such funds or budget authority be deposited in the U.S. 
Treasury and used to reduce a budget deficit or the federal 
debt, while allowing the agency to retain up to ten percent of 
the savings (after cash award amounts to the employee) to be 
transferred or reprogrammed for use by the agency; specifies 
oversight reporting; designates the short title of the bill as 
the ``Bonuses for Cost-Cutters Act of 2016''; eliminates a six-
year sunset clause in the original bill; and updates the 
definition of agency. The amendment in the nature of a 
substitute was adopted by voice vote.

                        Committee Consideration

    On September 15, 2016, the Committee met in open session 
and ordered reported favorably the bill, H.R. 2532, as amended, 
by voice vote, a quorum being present.

                            Roll Call Votes

    No roll call votes were requested or conducted during Full 
Committee consideration of H.R. 2532.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill enhances the authority under which Federal agencies 
may pay cash awards to employees for making cost saving 
disclosures. As such this bill does not relate to employment or 
access to public services and accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goal and objective of the bill is to enhance the authority 
under which Federal agencies may pay cash awards to employees 
for making cost saving disclosures.

                    Duplication of Federal Programs

    No provision of this bill establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting this bill does not 
direct the completion of any specific rule makings within the 
meaning of 5 U.S.C. 551.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    This bill does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                           Committee Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
this bill. However, clause 3(d)(2)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for this bill from the Director of 
Congressional Budget Office:

                                                September 23, 2016.
Hon. Jason Chaffetz,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2532, the Bonuses 
for Cost-Cutters Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 2532--Bonuses for Cost-Cutters Act of 2016

    Under current law, Inspectors General (IG) can pay bonuses 
to federal employees who identify waste, fraud, or 
mismanagement of funds. H.R. 2532 would authorize agencies to 
pay bonuses to employees who identify unnecessary expenditures 
from amounts provided for agencies' salaries and expenses. 
Under the bill, if an agency's IG and its Chief Financial 
Officer agree that funds appropriated to the agency are no 
longer required then 90 percent of those surplus amounts would 
be transferred to the Treasury. The agency would retain 10 
percent of the surplus funds and could pay a bonus to the 
employee who identified those surplus amounts.
    To the extent that the process envisioned under H.R. 2532 
results in fewer unnecessary expenditures, implementing the 
bill could reduce federal spending; however, CBO has no basis 
for estimating any reductions in spending under the bill.
    Because salaries and expenses for some agencies are 
mandatory appropriations, enacting the bill could affect direct 
spending; therefore, pay-as-you-go procedures apply. Enacting 
H.R. 2532 would not affect revenues.
    CBO estimates that enacting H.R. 2532 would not increase 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    H.R. 2532 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    On July 29, 2016, CBO provided a cost estimate for S. 1378, 
Bonuses for Cost-Cutters Act of 2016, as ordered reported by 
the Senate Committee on Homeland Security and Governmental 
Affairs on May 25, 2016. The two pieces of legislation are 
similar and CBO's estimates of their budgetary effects are the 
same.
    The CBO staff contacts for this estimate are Megan Carroll 
and Matthew Pickford. The estimate was approved by H. Samuel 
Papenfuss, Deputy Assistant Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *

PART III--EMPLOYEES

           *       *       *       *       *       *       *

SUBPART C--EMPLOYEE PERFORMANCE

           *       *       *       *       *       *       *

CHAPTER 45--INCENTIVE AWARDS

           *       *       *       *       *       *       *

            SUBCHAPTER I--AWARDS FOR SUPERIOR ACCOMPLISHMENTS

Sec.
4501. Definitions.
     * * * * * * *
[4509. Prohibition of cash award to Executive Schedule officers.]
4509. Prohibition of cash award to certain officers.

           SUBCHAPTER II--AWARDS FOR COST SAVINGS DISCLOSURES

[4511. Definition and general provisions.]
4511. Definitions and general provisions.

SUBCHAPTER I--AWARDS FOR SUPERIOR ACCOMPLISHMENTS

           *       *       *       *       *       *       *

[Sec. 4509. Prohibition of cash award to Executive Schedule officer

   [No officer may receive a cash award under the provisions of 
this subchapter, if such officer--
          [(1) serves in--
                  [(A) an Executive Schedule position under 
                subchapter II of chapter 53; or
                  [(B) a position for which the compensation is 
                set in statute by reference to a section or 
                level under subchapter II of chapter 53; and
          [(2) was appointed to such position by the President, 
        by and with the advice and consent of the Senate.]

Sec. 4509. Prohibition of cash award to certain officers

  (a) Definitions.--In this section, the term ``agency''--
          (1) has the meaning given that term under section 
        551(1); but
          (2) includes an entity described in subparagraphs (A) 
        through (G) of section 4501(1).
  (b) Prohibition.--An officer may not receive a cash award 
under this subchapter if the officer--
          (1) serves in a position at level I of the Executive 
        Schedule;
          (2) is the head of an agency; or
          (3) is a commissioner, board member, or other voting 
        member of an independent establishment.

           SUBCHAPTER II--AWARDS FOR COST SAVINGS DISCLOSURES

Sec. 4511. [Definition]  Definitions and general provisions

  (a) For purposes of [this subchapter, the term] this 
subchapter--
          (1) the term ``agency'' means any Executive 
        agency[.]; and
          (2) the term ``surplus salaries and expenses funds'' 
        means amounts made available for the salaries and 
        expenses account, or equivalent account, of an agency--
                  (A) that are identified by an employee of the 
                agency under section 4512(a) as unnecessary;
                  (B) that the Inspector General of the agency 
                or other agency employee designated under 
                section 4512(b) determines are not required for 
                the purpose for which the amounts were made 
                available;
                  (C) that the Chief Financial Officer of the 
                agency determines are not required for the 
                purpose for which the amounts were made 
                available; and
                  (D) the rescission of which would not be 
                detrimental to the full execution of the 
                purposes for which the amounts were made 
                available.
  (b) A cash award under this subchapter is in addition to the 
regular pay of the recipient. Acceptance of a cash award under 
this subchapter constitutes an agreement that the use by the 
Government of an idea, method, or device for which the award is 
made does not form the basis of a further claim of any nature 
against the Government by the employee, his heirs, or assigns.

Sec. 4512. Agency awards for cost savings disclosures

  (a) The Inspector General of an agency, or any other agency 
employee designated under subsection (b), may pay a cash award 
to any employee of such agency whose disclosure of fraud, 
waste, or mismanagement or identification of surplus salaries 
and expenses funds to the Inspector General of the agency, or 
to such other designated agency employee, has resulted in cost 
savings for the agency. The amount of an award under this 
section may not exceed the lesser of--
          (1) $10,000; or
          (2) an amount equal to 1 percent of the agency's cost 
        savings which the Inspector General, or other employee 
        designated under subsection (b), determines to be the 
        total savings attributable to the employee's disclosure 
        or identification .
For purposes of paragraph (2), the Inspector General or other 
designated employee may take into account agency cost savings 
projected for subsequent fiscal years which will be 
attributable to such disclosure or identification .
  (b) In the case of an agency for which there is no Inspector 
General, the head of the agency shall designate an agency 
employee who shall have the authority to make the 
determinations and grant the awards permitted under this 
section.
  (c)(1) The Inspector General of an agency or other agency 
employee designated under subsection (b) shall refer to the 
Chief Financial Officer of the agency any potential surplus 
salaries and expenses funds identified by an employee that the 
Inspector General or other agency employee determines meets the 
requirements under subparagraphs (B) and (D) of section 
4511(a)(2), along with any recommendations of the Inspector 
General or other agency employee.
  (2)(A) If the Chief Financial Officer of the agency 
determines that potential surplus salaries and expenses funds 
referred under paragraph (1) meet the requirements under 
section 4511(a)(2), except as provided in subsection (d), the 
head of the agency shall transfer the amount of the surplus 
funds or unnecessary budget authority from the applicable 
appropriations account to the general fund of the Treasury.
  (B) Any amounts transferred under subparagraph (A) shall be 
deposited in the Treasury and used for deficit reduction, 
except that in the case of a fiscal year for which there is no 
Federal budget deficit, such amounts shall be used to reduce 
the Federal debt (in such manner as the Secretary of the 
Treasury considers appropriate).
  (3) The Inspector General or other agency employee designated 
under subsection (b) for each agency and the Chief Financial 
Officer for each agency shall issues standards and definitions 
for purposes of making determinations relating to potential 
surplus salaries and expenses funds identified by an employee 
under this subsection.
  (d)(1) The head of an agency may retain not more than 10 
percent of amounts to be transferred to the general fund of the 
Treasury under subsection (c)(2).
  (2) Amounts retained by the head of an agency under paragraph 
(1) may be--
          (A) used for the purpose of paying a cash award under 
        subsection (a) to 1 or more employees who identified 
        the surplus salaries and expenses funds; and
          (B) to the extent amounts remain after paying cash 
        awards under subsection (a), transferred or 
        reprogrammed for use by the agency, in accordance with 
        any limitation on such a transfer or reprogramming 
        under any other provision of law.
  (e)(1) Not later than October 1 of each fiscal year, the head 
of each agency shall submit to the Secretary of the Treasury a 
report identifying the total savings achieved during the 
previous fiscal year through disclosures of possible fraud, 
waste, or mismanagement and identifications of surplus salaries 
and expenses funds by an employee.
  (2) Not later than September 30 of each fiscal year, the head 
of each agency shall submit to the Secretary of the Treasury a 
report that, for the previous fiscal year--
          (A) describes each disclosure of possible fraud, 
        waste, or mismanagement or identification of 
        potentially surplus salaries and expenses funds by an 
        employee of the agency determined by the agency to have 
        merit; and
          (B) provides the number and amount of cash awards by 
        the agency under subsection (a).
  (3) The head of each agency shall include the information 
described in paragraphs (1) and (2) in each budget request of 
the agency submitted to the Office of Management and Budget as 
part of the preparation of the budget of the President 
submitted to Congress under section 1105(a) of title 31.
  (4) The Secretary of the Treasury shall submit to the 
Committee on Appropriations of the Senate, the Committee on 
Appropriations of the House of Representatives, and the 
Government Accountability Office an annual report on Federal 
cost saving and awards based on the reports submitted under 
paragraphs (1) and (2).
  (f) The Director of the Office of Personnel Management 
shall--
          (1) ensure that the cash award program of each agency 
        complies with this section; and
          (2) submit to Congress an annual certification 
        indicating whether the cash award program of each 
        agency complies with this section.
  (g) Not later than 3 years after the date of enactment of the 
Bonuses for Cost-Cutters Act of 2016, and every 3 years 
thereafter, the Comptroller General of the United States shall 
submit to Congress a report on the operation of the cost 
savings and awards program under this section, including any 
recommendations for legislative changes.

           *       *       *       *       *       *       *

                             MINORITY VIEWS

    Democratic Members of the Committee strongly support 
reducing waste across the federal government, but oppose H.R. 
2532 as currently drafted.
    The Bonuses for Cost-Cutters Act of 2016 provides for 
bonuses for employees who identify ``surplus salaries and 
expenses'' that the Inspector General (IG) and agency Chief 
Financial Officer (CFO) determine are not required for the 
purposes for which they were made available. Under this bill, 
90% of savings from identified ``surplus salaries and 
expenses'' must be returned to the Treasury and used for 
deficit reduction, and up to 10% may be used by the agency to 
provide a bonus to the employee who identified the savings. Any 
remaining amount of the 10% may be transferred or reprogrammed 
by the agency pursuant to current law.
    Providing incentives for employees who identify cost 
savings makes sense when it is done the right way. When 
government dollars are wasted, no one benefits. But this bill 
could have unintended consequences that have not been examined 
by this Committee. For example, the bill requires Inspectors 
General to determine whether funds are being used for the 
appropriate purpose. This could put IGs in the position of 
making judgments about program operations, potentially 
jeopardizing their independence and oversight role.
    This bill also raises Constitutional concerns about 
Congress's authority to direct spending to authorized programs. 
It is unclear whether an agency could use this bill to reduce 
funding for a program that it deems wasteful, even though 
Congress has appropriated funds for the program.
    The bill also could provide misaligned incentives to 
employees and agencies. It could create a conflict of interest 
for those employees who work on the budget process, who would 
stand to benefit from inflating projected salaries and expenses 
with the prospect of receiving an individual bonus by later 
identifying a surplus.
    Current law already permits bonuses to federal employees 
who identify waste, fraud, and abuse. 5 U.S.C. section 4512 
permits the IG of an agency or other designated agency employee 
to pay a cash award to any employee whose disclosure of fraud, 
waste, or mismanagement results in cost savings. The Majority 
has not identified any gaps in this authority that would 
prevent an employee from receiving a bonus for identifying 
waste related to an agency's salaries and expenses account.
    The Committee has not held a single hearing to explore 
concerns raised about the bill or how it would work in 
practice. The Committee should examine the impact of this bill 
before rushing to enact it.
    The American Federation of Government Employees (AFGE), 
which represents approximately 670,000 federal and District of 
Columbia employees, opposes this bill.
    Committee Democrats strongly support reducing wasteful 
government spending and are willing to work together towards 
developing language this is carefully crafted towards 
fulfilling that goal. This bill may be well-intentioned, but we 
need to resolve these concerns before enacting a law that could 
have negative unintended consequences.
                                   Elijah E. Cummings,
                                           Ranking Member.

                                  [all]
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