H. R. 4053 

One Hundred Twelfth Congress 

of the 

United States of America 

AT THE SECOND SESSION 

Begun and held at the City of Washington on Tuesday, 

the third day of January, two thousand and twelve 

An Act 

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.— 
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‘‘(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 
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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 selfreporting 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 
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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. 
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(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)— 
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(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 
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(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 
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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. 

Speaker of the House of Representatives. 

Vice President of the United States and

President of the Senate.