```

[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4053 Reported in House (RH)]

                                                 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]

_______________________________________________________________________

                                 A BILL

 
 To intensify efforts to identify, prevent, and recover payment error, 
            waste, fraud, and abuse within Federal spending.

 

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

SECTION 1. SHORT TITLE.

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

SEC. 2. DEFINITIONS.

    In this Act--
            (1) the term ``agency'' means an executive agency as that 
        term is defined under section 102 of title 31, United States 
        Code;
            (2) the term ``improper payment'' has the meaning given 
        that term in section 2(g) of the Improper Payments Information 
        Act of 2002 (31 U.S.C. 3321 note), as redesignated by section 
        3(a)(1) of this Act; and
            (3) the term ``State'' means each State of the United 
        States, the District of Columbia, each territory or possession 
        of the United States, and each federally recognized Indian 
        tribe.

SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS BY FEDERAL 
              AGENCIES.

    (a) In General.--Section 2 of the Improper Payments Information Act 
of 2002 (31 U.S.C. 3321 note) is amended--
            (1) by redesignating subsections (b) through (g) as 
        subsections (c) through (h), respectively;
            (2) by inserting after subsection (a) the following:
    ``(b) Improving the Determination of Improper Payments.--
            ``(1) In general.--The Director of the Office of Management 
        and Budget shall on an annual basis--
                    ``(A) identify a list of high-priority Federal 
                programs for greater levels of oversight and review--
                            ``(i) in which the highest dollar value or 
                        highest rate of improper payments occur; or
                            ``(ii) for which there is a higher risk of 
                        improper payments; and
                    ``(B) in coordination with the agency responsible 
                for administering the high-priority program, establish 
                annual targets and semi-annual or quarterly actions for 
                reducing improper payments associated with each high-
                priority program.
            ``(2) Report on high-priority improper payments.--
                    ``(A) In general.--Subject to Federal privacy 
                policies and to the extent permitted by law, each 
                agency with a program identified under paragraph (1)(A) 
                on an annual basis shall submit to the Inspector 
                General of that agency, and make available to the 
                public (including availability through the Internet), a 
                report on that program.
                    ``(B) Contents.--Each report under this paragraph--
                            ``(i) shall describe--
                                    ``(I) any action the agency--
                                            ``(aa) has taken or plans 
                                        to take to recover improper 
                                        payments; and
                                            ``(bb) intends to take to 
                                        prevent future improper 
                                        payments; and
                            ``(ii) 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.
                    ``(C) Public availability on central website.--The 
                Office of Management and Budget shall make each report 
                submitted under this paragraph available on a central 
                website.
                    ``(D) Availability of information to inspector 
                general.--Subparagraph (B)(ii) shall not prohibit any 
                referral or information being made available to an 
                Inspector General as otherwise provided by law.
                    ``(E) Assessment and recommendations.--The 
                Inspector General of each agency that submits a report 
                under this paragraph shall, for each program of the 
                agency that is identified under paragraph (1)(A)--
                            ``(i) review--
                                    ``(I) the assessment of the level 
                                of risk associated with the program, 
                                and the quality of the improper payment 
                                estimates and methodology of the agency 
                                relating to the program; and
                                    ``(II) the oversight or financial 
                                controls to identify and prevent 
                                improper payments under the program; 
                                and
                            ``(ii) submit to Congress recommendations, 
                        which may be included in another report 
                        submitted by the Inspector General to Congress, 
                        for modifying any plans of the agency relating 
                        to the program, including improvements for 
                        improper payments determination and estimation 
                        methodology.'';
            (3) in subsection (d) (as redesignated by paragraph (1) of 
        this subsection), by striking ``subsection (b)'' each place 
        that term appears and inserting ``subsection (c)'';
            (4) in subsection (e) (as redesignated by paragraph (1) of 
        this subsection), by striking ``subsection (b)'' and inserting 
        ``subsection (c)''; and
            (5) in subsection (g)(3) (as redesignated by paragraph (1) 
        of this subsection), by inserting ``or a Federal employee'' 
        after ``non-Federal person or entity''.
    (b) 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 setting standards for agencies to follow in 
                determining the underlying validity of sampled payments 
                to ensure amounts being billed, paid, or obligated for 
                payment are proper;
                    (B) instruct agencies to give the persons or 
                entities performing improper payments estimates access 
                to all necessary payment data, including access to 
                relevant documentation;
                    (C) explicitly bar agencies from relying on self-
                reporting by the recipients of agency payments as the 
                sole source basis for improper payments estimates;
                    (D) require agencies to include all identified 
                improper payments in the reported estimate, regardless 
                of whether the improper payment in question has been or 
                is being recovered;
                    (E) include payments to employees, including 
                salary, locality pay, travel pay, purchase card use, 
                and other employee payments, as subject to risk 
                assessment and, where appropriate, improper payment 
                estimation; and
                    (F) require agencies to tailor their corrective 
                actions for the high-priority programs identified under 
                section 2(b)(1)(A) of the Improper Payments Information 
                Act of 2002 (31 U.S.C. 3321 note) to better reflect the 
                unique processes, procedures, and risks involved in 
                each specific program.
    (c) Technical and Conforming Amendments.--The Improper Payments 
Elimination and Recovery Act of 2010 (Public Law 111-204; 31 U.S.C. 
3321 note.) is amended--
            (1) in section 2(h)(1), by striking ``section 2(f)'' and 
        all that follows and inserting ``section 2(g) of the Improper 
        Payments Information Act of 2002 (31 U.S.C. 3321 note).''; and
            (2) in section 3(a)--
                    (A) in paragraph (1), by striking ``section 2(f)'' 
                and all that follows and inserting ``section 2(g) of 
                the Improper Payments Information Act of 2002 (31 
                U.S.C. 3321 note).''; and
                    (B) in paragraph (3)--
                            (i) by striking ``section 2(b)'' each place 
                        it appears and inserting ``section 2(c)''; and
                            (ii) by striking ``section 2(c)'' each 
                        place it appears and inserting ``section 
                        2(d)''.

SEC. 4. 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. 5. 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.
            (2) Databases.--At a minimum and before issuing any payment 
        and award, each agency shall review as appropriate the 
        following databases to verify eligibility of the payment and 
        award:
                    (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 Initiative.--
            (1) Establishment.--There is established the Do Not Pay 
        Initiative which shall include--
                    (A) use of the databases described under subsection 
                (a)(2); and
                    (B) use of other databases designated by the 
                Director of the Office of Management and Budget in 
                consultation with agencies and in accordance with 
                paragraph (2).
            (2) Other databases.--In making designations of other 
        databases under paragraph (1)(B), the Director of the Office of 
        Management and Budget shall--
                    (A) consider any database that substantially 
                assists in preventing improper payments; and
                    (B) provide public notice and an opportunity for 
                comment before designating a database under paragraph 
                (1)(B).
            (3) Access and review by agencies.--For purposes of 
        identifying and preventing improper payments, each agency shall 
        have access to, and use of, the Do Not Pay Initiative to verify 
        payment or award eligibility in accordance with subsection (a) 
        when the Director of the Office of Management and Budget 
        determines the Do Not Pay Initiative is appropriately 
        established for the agency.
            (4) Payment otherwise required.--When using the Do Not Pay 
        Initiative, 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 identified as potentially ineligible under the Do Not Pay 
        Initiative.
            (5) Annual report.--The Director of the Office of 
        Management and Budget shall submit to Congress an annual 
        report, which may be included as part of another report 
        submitted to Congress by the Director, regarding the operation 
        of the Do Not Pay Initiative, which shall--
                    (A) include an evaluation of whether the Do Not Pay 
                Initiative has reduced improper payments or improper 
                awards; and
                    (B) provide the frequency of corrections or 
                identification of incorrect information.
    (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 
        Initiative;
            (2) to the extent permitted by law, agency access to the Do 
        Not Pay Initiative; and
            (3) the data use agreements described under subsection 
        (e)(2)(D).
    (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 
        Initiative as described under this section.
            (2) Working system.--The working system established under 
        paragraph (1)--
                    (A) may be located within an appropriate agency;
                    (B) shall include not less than 3 agencies as users 
                of the system; and
                    (C) shall include investigation activities for 
                fraud and systemic improper payments detection through 
                analytic technologies and other techniques, which may 
                include commercial database use or access.
            (3) Application to all agencies.--Not later than June 1, 
        2013, each agency shall review all payments and awards for all 
        programs of that agency through the system established under 
        this subsection.
    (e) Facilitating Data Access by Federal Agencies and Offices of 
Inspectors General for Purposes of Program Integrity.--
            (1) Definition.--In this subsection, the term ``Inspector 
        General'' means any Inspector General described in subparagraph 
        (A), (B), or (I) of section 11(b)(1) of the Inspector General 
        Act of 1978 (5 U.S.C. App.) and any successor Inspector 
        General.
            (2) Computer matching by federal agencies for purposes of 
        investigation and prevention of improper payments and fraud.--
                    (A) In general.--Except as provided in this 
                paragraph, in accordance with section 552a of title 5, 
                United States Code (commonly known as the Privacy Act 
                of 1974), each Inspector General and the head of each 
                agency may enter into computer matching agreements with 
                other inspectors general and agency heads that allow 
                ongoing data matching (which shall include automated 
                data matching) in order to assist in the detection and 
                prevention of improper payments.
                    (B) Review.--Not later than 60 days after a 
                proposal for an agreement under subparagraph (A) has 
                been presented to a Data Integrity Board established 
                under section 552a(u) of title 5, United States Code, 
                for consideration, the Data Integrity Board shall 
                respond to the proposal.
                    (C) Termination date.--An agreement under 
                subparagraph (A)--
                            (i) shall have a termination date of less 
                        than 3 years; and
                            (ii) during the 3-month period ending on 
                        the date on which the agreement is scheduled to 
                        terminate, may be renewed by the agencies 
                        entering the agreement for not more than 3 
                        years.
                    (D) Multiple agencies.--For purposes of this 
                paragraph, section 552a(o)(1) of title 5, United States 
                Code, shall be applied by substituting ``between the 
                source agency and the recipient agency or non-Federal 
                agency or an agreement governing multiple agencies'' 
                for ``between the source agency and the recipient 
                agency or non-Federal agency'' in the matter preceding 
                subparagraph (A).
                    (E) Cost-benefit analysis.--A justification under 
                section 552a(o)(1)(B) of title 5, United States Code, 
                relating to an agreement under subparagraph (A) is not 
                required to contain a specific estimate of any savings 
                under the computer matching agreement.
            (3) Guidance by the office of management and budget.--Not 
        later than 6 months after the date of enactment of this Act, 
        and in consultation with the Council of the Inspectors General 
        on Integrity and Efficiency, the Secretary of Health and Human 
        Services, the Commissioner of Social Security, and the head of 
        any other relevant agency, the Director of the Office of 
        Management and Budget shall--
                    (A) issue guidance for agencies regarding 
                implementing this subsection, which shall include 
                standards for--
                            (i) reimbursement of costs, when necessary, 
                        between agencies;
                            (ii) retention and timely destruction of 
                        records in accordance with section 
                        552a(o)(1)(F) of title 5, United States Code; 
                        and
                            (iii) prohibiting duplication and 
                        redisclosure of records in accordance with 
                        section 552a(o)(1)(H) of title 5, United States 
                        Code;
                    (B) review the procedures of the Data Integrity 
                Boards established under section 552a(u) of title 5, 
                United States Code, and develop new guidance for the 
                Data Integrity Boards to--
                            (i) improve the effectiveness and 
                        responsiveness of the Data Integrity Boards;
                            (ii) ensure privacy protections in 
                        accordance with section 552a of title 5, United 
                        States Code (commonly known as the Privacy Act 
                        of 1974); and
                            (iii) establish standard matching 
                        agreements for use when appropriate; and
                    (C) establish and clarify rules regarding what 
                constitutes making an agreement entered under paragraph 
                (2)(A) available upon request to the public for 
                purposes of section 552a(o)(2)(A)(ii) of title 5, 
                United States Code, which shall include requiring 
                publication of the agreement on a public website.
            (4) Corrections.--The Director of the Office of Management 
        and Budget shall establish procedures providing for the 
        correction of data in order to ensure--
                    (A) compliance with section 552a(p) of title 5, 
                United States Code; and
                    (B) that corrections are made in any Do Not Pay 
                Initiative database and in any relevant source 
                databases designated by the Director of the Office of 
                Management and Budget under subsection (b)(1).
            (5) Compliance.--The head of each agency, in consultation 
        with the Inspector General of the agency, shall ensure that any 
        information provided to an individual or entity under this 
        subsection is provided in accordance with protocols established 
        under this subsection.
            (6) Rule of construction.--Nothing in this subsection shall 
        be construed to affect the rights of an individual under 
        section 552a(p) of title 5, United States Code.
    (f) Development and Access to a Database of Incarcerated 
Individuals.--Not later than 1 year after the date of enactment of this 
Act, the Attorney General shall submit to Congress recommendations for 
increasing the use of, access to, and the technical feasibility of 
using data on the Federal, State, and local conviction and 
incarceration status of individuals for purposes of identifying and 
preventing improper payments by Federal agencies and programs and 
fraud.
    (g) Plan To Curb Federal Improper Payments to Deceased Individuals 
by Improving the Quality and Use by Federal Agencies of the Social 
Security Administration Death Master File.--
            (1) Establishment.--In conjunction with the Commissioner of 
        Social Security and in consultation with relevant stakeholders 
        that have an interest in or responsibility for providing the 
        data, and the States, the Director of the Office of Management 
        and Budget shall establish a plan for improving the quality, 
        accuracy, 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.S.C. 405(r)).
            (2) Additional actions under plan.--The plan established 
        under this subsection shall include recommended actions by 
        agencies to--
                    (A) increase the quality and frequency of access to 
                the Death Master File and other death data;
                    (B) achieve a goal of at least daily access as 
                appropriate;
                    (C) provide for all States and other data providers 
                to use improved and electronic means for providing 
                data;
                    (D) identify improved methods by agencies for 
                determining ineligible payments due to the death of a 
                recipient through proactive verification means; and
                    (E) address improper payments made by agencies to 
                deceased individuals as part of Federal retirement 
                programs.
            (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. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS.

    (a) Definition.--In this section, the term ``recovery audit'' means 
a recovery audit described under section 2(h) of the Improper Payments 
Elimination and Recovery Act of 2010 (31 U.S.C. 3301 note).
    (b) Review.--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 a list of agency recovery audit contract programs and 
        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.
                                                 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 payment error, 
            waste, fraud, and abuse within Federal spending.

_______________________________________________________________________

                           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
```