IB 

Union Calendar No. 509 

112TH CONGRESS 

2D SESSION H. R. 4053 

[Report No. 112–698] 

To intensify efforts to identify, prevent, and recover payment error, waste, 

fraud, and abuse within Federal spending. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 16, 2012 

Mr. TOWNS (for himself, Mr. PLATTS, Mr. SCHRADER, Mr. CONNOLLY of Virginia, Mr. ALTMIRE, Mr. BARROW, Mr. BISHOP of Georgia, Mr. BOREN, 

Mr. BOSWELL, Mr. CARDOZA, Mr. COOPER, Mr. DONNELLY of Indiana, 

Mr. HOLDEN, Mr. MATHESON, Mr. MCINTYRE, Mr. MICHAUD, Mr. 

PETERSON, Mr. ROSS of Arkansas, Mr. DAVID SCOTT of Georgia, Mr. 

SHULER, and Mr. THOMPSON of California) introduced the following bill; 

which was referred to the Committee on Oversight and Government Reform 

NOVEMBER 30, 2012 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on February 16, 2012] 

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A BILL 

To intensify efforts to identify, prevent, and recover payment 

error, waste, fraud, and abuse within Federal spending. 

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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Improper Payments 

5 Elimination and Recovery Improvement Act of 2012’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act— 

8 (1) the term ‘‘agency’’ means an executive agen9 cy as that term is defined under section 102 of title 

10 31, United States Code; 

11 (2) the term ‘‘improper payment’’ has the mean12 ing given that term in section 2(g) of the Improper 

13 Payments Information Act of 2002 (31 U.S.C. 3321 

14 note), as redesignated by section 3(a)(1) of this Act; 

15 and 

16 (3) the term ‘‘State’’ means each State of the 

17 United States, the District of Columbia, each terri18 tory or possession of the United States, and each fed19 erally recognized Indian tribe. 

20 SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER 

21 PAYMENTS BY FEDERAL AGENCIES. 

22 (a) IN GENERAL.—Section 2 of the Improper Pay23 ments Information Act of 2002 (31 U.S.C. 3321 note) is 

24 amended— 

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1 (1) by redesignating subsections (b) through (g) 

2 as subsections (c) through (h), respectively; 

3 (2) by inserting after subsection (a) the fol4 lowing: 

5 ‘‘(b) IMPROVING THE DETERMINATION OF IMPROPER

6 PAYMENTS.— 

7 ‘‘(1) IN GENERAL.—The Director of the Office of 

8 Management and Budget shall on an annual basis— 

9 ‘‘(A) identify a list of high-priority Federal 

10 programs for greater levels of oversight and re11 view— 

12 ‘‘(i) in which the highest dollar value 

13 or highest rate of improper payments occur; 

14 or 

15 ‘‘(ii) for which there is a higher risk of 

16 improper payments; and 

17 ‘‘(B) in coordination with the agency re18 sponsible for administering the high-priority 

19 program, establish annual targets and semi-an20 nual or quarterly actions for reducing improper 

21 payments associated with each high-priority pro22 gram. 

23 ‘‘(2) REPORT ON HIGH-PRIORITY IMPROPER PAY24 MENTS.— 

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1 ‘‘(A) IN GENERAL.—Subject to Federal pri2 vacy policies and to the extent permitted by law, 

3 each agency with a program identified under 

4 paragraph (1)(A) on an annual basis shall sub5 mit to the Inspector General of that agency, and 

6 make available to the public (including avail7 ability through the Internet), a report on that 

8 program. 

9 ‘‘(B) CONTENTS.—Each report under this 

10 paragraph— 

11 ‘‘(i) shall describe— 

12 ‘‘(I) any action the agency— 

13 ‘‘(aa) has taken or plans to 

14 take to recover improper pay15 ments; and 

16 ‘‘(bb) intends to take to pre17 vent future improper payments; 

18 and 

19 ‘‘(ii) shall not include any referrals the 

20 agency made or anticipates making to the 

21 Department of Justice, or any information 

22 provided in connection with such referrals. 

23 ‘‘(C) PUBLIC AVAILABILITY ON CENTRAL

24 WEBSITE.—The Office of Management and Budgmstockstill on DSK4VPTVN1PROD with 

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1 et shall make each report submitted under this 

2 paragraph available on a central website. 

3 ‘‘(D) AVAILABILITY OF INFORMATION TO IN4 SPECTOR GENERAL.—Subparagraph (B)(ii) shall 

5 not prohibit any referral or information being 

6 made available to an Inspector General as other7 wise provided by law. 

8 ‘‘(E) ASSESSMENT AND RECOMMENDA9 TIONS.—The Inspector General of each agency 

10 that submits a report under this paragraph 

11 shall, for each program of the agency that is 

12 identified under paragraph (1)(A)— 

13 ‘‘(i) review— 

14 ‘‘(I) the assessment of the level of 

15 risk associated with the program, and 

16 the quality of the improper payment 

17 estimates and methodology of the agen18 cy relating to the program; and 

19 ‘‘(II) the oversight or financial 

20 controls to identify and prevent im21 proper payments under the program; 

22 and 

23 ‘‘(ii) submit to Congress recommenda24 tions, which may be included in another re25 port submitted by the Inspector General to 

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1 Congress, for modifying any plans of the 

2 agency relating to the program, including 

3 improvements for improper payments deter4 mination and estimation methodology.’’; 

5 (3) in subsection (d) (as redesignated by para6 graph (1) of this subsection), by striking ‘‘subsection 

7 (b)’’ each place that term appears and inserting ‘‘sub8 section (c)’’; 

9 (4) in subsection (e) (as redesignated by para10 graph (1) of this subsection), by striking ‘‘subsection 

11 (b)’’ and inserting ‘‘subsection (c)’’; and 

12 (5) in subsection (g)(3) (as redesignated by para13 graph (1) of this subsection), by inserting ‘‘or a Fed14 eral employee’’ after ‘‘non-Federal person or entity’’. 

15 (b) IMPROVED ESTIMATES.— 

16 (1) IN GENERAL.—Not later than 180 days after 

17 the date of enactment of this Act, the Director of the 

18 Office of Management and Budget shall provide guid19 ance to agencies for improving the estimates of im20 proper payments under the Improper Payments In21 formation Act of 2002 (31 U.S.C. 3321 note). 

22 (2) GUIDANCE.—Guidance under this subsection 

23 shall— 

24 (A) strengthen the estimation process of 

25 agencies by setting standards for agencies to folmstockstill on DSK4VPTVN1PROD with 

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1 low in determining the underlying validity of 

2 sampled payments to ensure amounts being 

3 billed, paid, or obligated for payment are proper; 

4 (B) instruct agencies to give the persons or 

5 entities performing improper payments estimates 

6 access to all necessary payment data, including 

7 access to relevant documentation; 

8 (C) explicitly bar agencies from relying on 

9 self-reporting by the recipients of agency pay10 ments as the sole source basis for improper pay11 ments estimates; 

12 (D) require agencies to include all identified 

13 improper payments in the reported estimate, re14 gardless of whether the improper payment in 

15 question has been or is being recovered; 

16 (E) include payments to employees, includ17 ing salary, locality pay, travel pay, purchase 

18 card use, and other employee payments, as sub19 ject to risk assessment and, where appropriate, 

20 improper payment estimation; and 

21 (F) require agencies to tailor their correc22 tive actions for the high-priority programs iden23 tified under section 2(b)(1)(A) of the Improper 

24 Payments Information Act of 2002 (31 U.S.C. 

25 3321 note) to better reflect the unique processes, 

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1 procedures, and risks involved in each specific 

2 program. 

3 (c) TECHNICAL AND CONFORMING AMENDMENTS.—The 

4 Improper Payments Elimination and Recovery Act of 2010 

5 (Public Law 111–204; 31 U.S.C. 3321 note.) is amended— 

6 (1) in section 2(h)(1), by striking ‘‘section 2(f)’’ 

7 and all that follows and inserting ‘‘section 2(g) of the 

8 Improper Payments Information Act of 2002 (31 

9 U.S.C. 3321 note).’’; and 

10 (2) in section 3(a)— 

11 (A) in paragraph (1), by striking ‘‘section 

12 2(f)’’ and all that follows and inserting ‘‘section 

13 2(g) of the Improper Payments Information Act 

14 of 2002 (31 U.S.C. 3321 note).’’; and 

15 (B) in paragraph (3)— 

16 (i) by striking ‘‘section 2(b)’’ each 

17 place it appears and inserting ‘‘section 

18 2(c)’’; and 

19 (ii) by striking ‘‘section 2(c)’’ each 

20 place it appears and inserting ‘‘section 

21 2(d)’’. 

22 SEC. 4. IMPROPER PAYMENTS INFORMATION. 

23 Section 2(a)(3)(A)(ii) of the Improper Payments In24 formation Act of 2002 (31 U.S.C. 3321 note) is amended 

25 by striking ‘‘with respect to fiscal years following September 

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1 30th of a fiscal year beginning before fiscal year 2013 as 

2 determined by the Office of Management and Budget’’ and 

3 inserting ‘‘with respect to fiscal year 2014 and each fiscal 

4 year thereafter’’. 

5 SEC. 5. DO NOT PAY INITIATIVE. 

6 (a) PREPAYMENT AND PREAWARD PROCEDURES.— 

7 (1) IN GENERAL.—Each agency shall review pre8 payment and preaward procedures and ensure that a 

9 thorough review of available databases with relevant 

10 information on eligibility occurs to determine pro11 gram or award eligibility and prevent improper pay12 ments before the release of any Federal funds. 

13 (2) DATABASES.—At a minimum and before 

14 issuing any payment and award, each agency shall 

15 review as appropriate the following databases to 

16 verify eligibility of the payment and award: 

17 (A) The Death Master File of the Social Se18 curity Administration. 

19 (B) The General Services Administration’s 

20 Excluded Parties List System. 

21 (C) The Debt Check Database of the Depart22 ment of the Treasury. 

23 (D) The Credit Alert System or Credit Alert 

24 Interactive Voice Response System of the Depart25 ment of Housing and Urban Development. 

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1 (E) The List of Excluded Individuals/Enti2 ties of the Office of Inspector General of the De3 partment of Health and Human Services. 

4 (b) DO NOT PAY INITIATIVE.— 

5 (1) ESTABLISHMENT.—There is established the 

6 Do Not Pay Initiative which shall include— 

7 (A) use of the databases described under 

8 subsection (a)(2); and 

9 (B) use of other databases designated by the 

10 Director of the Office of Management and Budget 

11 in consultation with agencies and in accordance 

12 with paragraph (2). 

13 (2) OTHER DATABASES.—In making designa14 tions of other databases under paragraph (1)(B), the 

15 Director of the Office of Management and Budget 

16 shall— 

17 (A) consider any database that substan18 tially assists in preventing improper payments; 

19 and 

20 (B) provide public notice and an oppor21 tunity for comment before designating a data22 base under paragraph (1)(B). 

23 (3) ACCESS AND REVIEW BY AGENCIES.—For 

24 purposes of identifying and preventing improper pay25 ments, each agency shall have access to, and use of, 

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1 the Do Not Pay Initiative to verify payment or 

2 award eligibility in accordance with subsection (a) 

3 when the Director of the Office of Management and 

4 Budget determines the Do Not Pay Initiative is ap5 propriately established for the agency. 

6 (4) PAYMENT OTHERWISE REQUIRED.—When 

7 using the Do Not Pay Initiative, an agency shall rec8 ognize that there may be circumstances under which 

9 the law requires a payment or award to be made to 

10 a recipient, regardless of whether that recipient is 

11 identified as potentially ineligible under the Do Not 

12 Pay Initiative. 

13 (5) ANNUAL REPORT.—The Director of the Office 

14 of Management and Budget shall submit to Congress 

15 an annual report, which may be included as part of 

16 another report submitted to Congress by the Director, 

17 regarding the operation of the Do Not Pay Initiative, 

18 which shall— 

19 (A) include an evaluation of whether the Do 

20 Not Pay Initiative has reduced improper pay21 ments or improper awards; and 

22 (B) provide the frequency of corrections or 

23 identification of incorrect information. 

24 (c) DATABASE INTEGRATION PLAN.—Not later than 60 

25 days after the date of enactment of this Act, the Director 

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1 of the Office of Management and Budget shall provide to 

2 the Congress a plan for— 

3 (1) inclusion of other databases on the Do Not 

4 Pay Initiative; 

5 (2) to the extent permitted by law, agency access 

6 to the Do Not Pay Initiative; and 

7 (3) the data use agreements described under sub8 section (e)(2)(D). 

9 (d) INITIAL WORKING SYSTEM.— 

10 (1) ESTABLISHMENT.—Not later than 90 days 

11 after the date of enactment of this Act, the Director 

12 of the Office of Management and Budget shall estab13 lish a working system for prepayment and preaward 

14 review that includes the Do Not Pay Initiative as de15 scribed under this section. 

16 (2) WORKING SYSTEM.—The working system es17 tablished under paragraph (1)— 

18 (A) may be located within an appropriate 

19 agency; 

20 (B) shall include not less than 3 agencies as 

21 users of the system; and 

22 (C) shall include investigation activities for 

23 fraud and systemic improper payments detection 

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1 niques, which may include commercial database 

2 use or access. 

3 (3) APPLICATION TO ALL AGENCIES.—Not later 

4 than June 1, 2013, each agency shall review all pay5 ments and awards for all programs of that agency 

6 through the system established under this subsection. 

7 (e) FACILITATING DATA ACCESS BY FEDERAL AGEN8 CIES AND OFFICES OF INSPECTORS GENERAL FOR PUR9 POSES OF PROGRAM INTEGRITY.— 

10 (1) DEFINITION.—In this subsection, the term 

11 ‘‘Inspector General’’ means any Inspector General de12 scribed in subparagraph (A), (B), or (I) of section 

13 11(b)(1) of the Inspector General Act of 1978 (5 

14 U.S.C. App.) and any successor Inspector General. 

15 (2) COMPUTER MATCHING BY FEDERAL AGEN16 CIES FOR PURPOSES OF INVESTIGATION AND PREVEN17 TION OF IMPROPER PAYMENTS AND FRAUD.— 

18 (A) IN GENERAL.—Except as provided in 

19 this paragraph, in accordance with section 552a 

20 of title 5, United States Code (commonly known 

21 as the Privacy Act of 1974), each Inspector Gen22 eral and the head of each agency may enter into 

23 computer matching agreements with other in24 spectors general and agency heads that allow on25 going data matching (which shall include automstockstill on DSK4VPTVN1PROD with 

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1 mated data matching) in order to assist in the 

2 detection and prevention of improper payments. 

3 (B) REVIEW.—Not later than 60 days after 

4 a proposal for an agreement under subparagraph 

5 (A) has been presented to a Data Integrity 

6 Board established under section 552a(u) of title 

7 5, United States Code, for consideration, the 

8 Data Integrity Board shall respond to the pro9 posal. 

10 (C) TERMINATION DATE.—An agreement 

11 under subparagraph (A)— 

12 (i) shall have a termination date of 

13 less than 3 years; and 

14 (ii) during the 3-month period ending 

15 on the date on which the agreement is 

16 scheduled to terminate, may be renewed by 

17 the agencies entering the agreement for not 

18 more than 3 years. 

19 (D) MULTIPLE AGENCIES.—For purposes of 

20 this paragraph, section 552a(o)(1) of title 5, 

21 United States Code, shall be applied by sub22 stituting ‘‘between the source agency and the re23 cipient agency or non-Federal agency or an 

24 agreement governing multiple agencies’’ for ‘‘be25 tween the source agency and the recipient agency 

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1 or non-Federal agency’’ in the matter preceding 

2 subparagraph (A). 

3 (E) COST-BENEFIT ANALYSIS.—A justifica4 tion under section 552a(o)(1)(B) of title 5, 

5 United States Code, relating to an agreement 

6 under subparagraph (A) is not required to con7 tain a specific estimate of any savings under the 

8 computer matching agreement. 

9 (3) GUIDANCE BY THE OFFICE OF MANAGEMENT

10 AND BUDGET.—Not later than 6 months after the date 

11 of enactment of this Act, and in consultation with the 

12 Council of the Inspectors General on Integrity and 

13 Efficiency, the Secretary of Health and Human Serv14 ices, the Commissioner of Social Security, and the 

15 head of any other relevant agency, the Director of the 

16 Office of Management and Budget shall— 

17 (A) issue guidance for agencies regarding 

18 implementing this subsection, which shall in19 clude standards for— 

20 (i) reimbursement of costs, when nec21 essary, between agencies; 

22 (ii) retention and timely destruction of 

23 records in accordance with section 

24 552a(o)(1)(F) of title 5, United States Code; 

25 and 

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1 (iii) prohibiting duplication and re2 disclosure of records in accordance with sec3 tion 552a(o)(1)(H) of title 5, United States 

4 Code; 

5 (B) review the procedures of the Data Integ6 rity Boards established under section 552a(u) of 

7 title 5, United States Code, and develop new 

8 guidance for the Data Integrity Boards to— 

9 (i) improve the effectiveness and re10 sponsiveness of the Data Integrity Boards; 

11 (ii) ensure privacy protections in ac12 cordance with section 552a of title 5, 

13 United States Code (commonly known as 

14 the Privacy Act of 1974); and 

15 (iii) establish standard matching 

16 agreements for use when appropriate; and 

17 (C) establish and clarify rules regarding 

18 what constitutes making an agreement entered 

19 under paragraph (2)(A) available upon request 

20 to the public for purposes of section 

21 552a(o)(2)(A)(ii) of title 5, United States Code, 

22 which shall include requiring publication of the 

23 agreement on a public website. 

24 (4) CORRECTIONS.—The Director of the Office of 

25 Management and Budget shall establish procedures 

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1 providing for the correction of data in order to en2 sure— 

3 (A) compliance with section 552a(p) of title 

4 5, United States Code; and 

5 (B) that corrections are made in any Do 

6 Not Pay Initiative database and in any relevant 

7 source databases designated by the Director of 

8 the Office of Management and Budget under sub9 section (b)(1). 

10 (5) COMPLIANCE.—The head of each agency, in 

11 consultation with the Inspector General of the agency, 

12 shall ensure that any information provided to an in13 dividual or entity under this subsection is provided 

14 in accordance with protocols established under this 

15 subsection. 

16 (6) RULE OF CONSTRUCTION.—Nothing in this 

17 subsection shall be construed to affect the rights of an 

18 individual under section 552a(p) of title 5, United 

19 States Code. 

20 (f) DEVELOPMENT AND ACCESS TO A DATABASE OF IN21 CARCERATED INDIVIDUALS.—Not later than 1 year after the 

22 date of enactment of this Act, the Attorney General shall 

23 submit to Congress recommendations for increasing the use 

24 of, access to, and the technical feasibility of using data on 

25 the Federal, State, and local conviction and incarceration 

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1 status of individuals for purposes of identifying and pre2 venting improper payments by Federal agencies and pro3 grams and fraud. 

4 (g) PLAN TO CURB FEDERAL IMPROPER PAYMENTS TO

5 DECEASED INDIVIDUALS BY IMPROVING THE QUALITY AND

6 USE BY FEDERAL AGENCIES OF THE SOCIAL SECURITY AD7 MINISTRATION DEATH MASTER FILE.— 

8 (1) ESTABLISHMENT.—In conjunction with the 

9 Commissioner of Social Security and in consultation 

10 with relevant stakeholders that have an interest in or 

11 responsibility for providing the data, and the States, 

12 the Director of the Office of Management and Budget 

13 shall establish a plan for improving the quality, accu14 racy, and timeliness of death data maintained by the 

15 Social Security Administration, including death in16 formation reported to the Commissioner under section 

17 205(r) of the Social Security Act (42 U.S.C. 405(r)). 

18 (2) ADDITIONAL ACTIONS UNDER PLAN.—The 

19 plan established under this subsection shall include 

20 recommended actions by agencies to— 

21 (A) increase the quality and frequency of 

22 access to the Death Master File and other death 

23 data; 

24 (B) achieve a goal of at least daily access 

25 as appropriate; 

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1 (C) provide for all States and other data 

2 providers to use improved and electronic means 

3 for providing data; 

4 (D) identify improved methods by agencies 

5 for determining ineligible payments due to the 

6 death of a recipient through proactive 

7 verification means; and 

8 (E) address improper payments made by 

9 agencies to deceased individuals as part of Fed10 eral retirement programs. 

11 (3) REPORT.—Not later than 120 days after the 

12 date of enactment of this Act, the Director of the Of13 fice of Management and Budget shall submit a report 

14 to Congress on the plan established under this sub15 section, including recommended legislation. 

16 SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

17 (a) DEFINITION.—In this section, the term ‘‘recovery 

18 audit’’ means a recovery audit described under section 2(h) 

19 of the Improper Payments Elimination and Recovery Act 

20 of 2010 (31 U.S.C. 3301 note). 

21 (b) REVIEW.—The Director of the Office of Manage22 ment and Budget shall determine— 

23 (1) current and historical rates and amounts of 

24 recovery of improper payments (or, in cases in which 

25 improper payments are identified solely on the basis 

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1 of a sample, recovery rates and amounts estimated on 

2 the basis of the applicable sample), including a list of 

3 agency recovery audit contract programs and specific 

4 information of amounts and payments recovered by 

5 recovery audit contractors; and 

6 (2) targets for recovering improper payments, 

7 including specific information on amounts and pay8 ments recovered by recovery audit contractors. 

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Union Calendar No. 509 

112TH CONGRESS 

2D SESSION H. R. 4053 

[Report No. 112–698] 

A BILL 

To intensify efforts to identify, prevent, and recover 

Federal spending. payment error, waste, fraud, and abuse within 

NOVEMBER 30, 2012 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 

mstockstill on DSK4VPTVN1PROD with