II 

112TH CONGRESS 

2D SESSION H. R. 4053 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 17, 2012 

Received 

AN ACT 

To intensify efforts to identify, prevent, and recover payment 

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

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


smartinez on DSK6TPTVN1PROD with 
2 

HR 4053 RDS

1 SECTION 1. SHORT TITLE. 

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

3 Elimination and Recovery Improvement Act of 2012’’. 

4 SEC. 2. DEFINITIONS. 

5 In this Act— 

6 (1) the term ‘‘agency’’ means an executive 

7 agency as that term is defined under section 102 of 

8 title 31, United States Code; 

9 (2) the term ‘‘improper payment’’ has the 

10 meaning given that term in section 2(g) of the Im11 proper Payments Information Act of 2002 (31 

12 U.S.C. 3321 note), as redesignated by section 

13 3(a)(1) of this Act; and 

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

15 United States, the District of Columbia, each terri16 tory or possession of the United States, and each 

17 federally recognized Indian tribe. 

18 SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER 

19 PAYMENTS BY FEDERAL AGENCIES. 

20 (a) IN GENERAL.—Section 2 of the Improper Pay21 ments Information Act of 2002 (31 U.S.C. 3321 note) is 

22 amended— 

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

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

25 (2) by inserting after subsection (a) the fol26 lowing: 


smartinez on DSK6TPTVN1PROD with 
3 

HR 4053 RDS

1 ‘‘(b) IMPROVING THE DETERMINATION OF IMPROPER

2 PAYMENTS.— 

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

4 of Management and Budget shall on an annual 

5 basis— 

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

7 programs for greater levels of oversight and re8 view— 

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

10 or highest rate of improper payments 

11 occur; or 

12 ‘‘(ii) for which there is a higher risk 

13 of improper payments; and 

14 ‘‘(B) in coordination with the agency re15 sponsible for administering the high-priority 

16 program, establish annual targets and semi-an17 nual or quarterly actions for reducing improper 

18 payments associated with each high-priority 

19 program. 

20 ‘‘(2) REPORT ON HIGH-PRIORITY IMPROPER

21 PAYMENTS.— 

22 ‘‘(A) IN GENERAL.—Subject to Federal 

23 privacy policies and to the extent permitted by 

24 law, each agency with a program identified 

25 under paragraph (1)(A) on an annual basis 


smartinez on DSK6TPTVN1PROD with 
4 

HR 4053 RDS

1 shall submit to the Inspector General of that 

2 agency, and make available to the public (in3 cluding availability through the Internet), a re4 port on that program. 

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

6 paragraph— 

7 ‘‘(i) shall describe— 

8 ‘‘(I) any action the agency— 

9 ‘‘(aa) has taken or plans to 

10 take to recover improper pay11 ments; and 

12 ‘‘(bb) intends to take to pre13 vent future improper payments; 

14 and 

15 ‘‘(ii) shall not include any referrals 

16 the agency made or anticipates making to 

17 the Department of Justice, or any informa18 tion provided in connection with such re19 ferrals. 

20 ‘‘(C) PUBLIC AVAILABILITY ON CENTRAL

21 WEBSITE.—The Office of Management and 

22 Budget shall make each report submitted under 

23 this paragraph available on a central website. 

24 ‘‘(D) AVAILABILITY OF INFORMATION TO

25 INSPECTOR GENERAL.—Subparagraph (B)(ii) 


smartinez on DSK6TPTVN1PROD with 
5 

HR 4053 RDS

1 shall not prohibit any referral or information 

2 being made available to an Inspector General as 

3 otherwise provided by law. 

4 ‘‘(E) ASSESSMENT AND RECOMMENDA5 TIONS.—The Inspector General of each agency 

6 that submits a report under this paragraph 

7 shall, for each program of the agency that is 

8 identified under paragraph (1)(A)— 

9 ‘‘(i) review— 

10 ‘‘(I) the assessment of the level 

11 of risk associated with the program, 

12 and the quality of the improper pay13 ment estimates and methodology of 

14 the agency relating to the program; 

15 and 

16 ‘‘(II) the oversight or financial 

17 controls to identify and prevent im18 proper payments under the program; 

19 and 

20 ‘‘(ii) submit to Congress recommenda21 tions, which may be included in another re22 port submitted by the Inspector General to 

23 Congress, for modifying any plans of the 

24 agency relating to the program, including 


smartinez on DSK6TPTVN1PROD with 
6 

HR 4053 RDS

1 improvements for improper payments de2 termination and estimation methodology.’’; 

3 (3) in subsection (d) (as redesignated by para4 graph (1) of this subsection), by striking ‘‘subsection 

5 (b)’’ each place that term appears and inserting 

6 ‘‘subsection (c)’’; 

7 (4) in subsection (e) (as redesignated by para8 graph (1) of this subsection), by striking ‘‘subsection 

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

10 (5) in subsection (g)(3) (as redesignated by 

11 paragraph (1) of this subsection), by inserting ‘‘or 

12 a Federal employee’’ after ‘‘non-Federal person or 

13 entity’’. 

14 (b) IMPROVED ESTIMATES.— 

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

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

17 of the Office of Management and Budget shall pro18 vide guidance to agencies for improving the esti19 mates of improper payments under the Improper 

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

21 note). 

22 (2) GUIDANCE.—Guidance under this sub23 section shall— 

24 (A) strengthen the estimation process of 

25 agencies by setting standards for agencies to 


smartinez on DSK6TPTVN1PROD with 
7 

HR 4053 RDS

1 follow in determining the underlying validity of 

2 sampled payments to ensure amounts being 

3 billed, paid, or obligated for payment are prop4 er; 

5 (B) instruct agencies to give the persons or 

6 entities performing improper payments esti7 mates access to all necessary payment data, in8 cluding access to relevant documentation; 

9 (C) explicitly bar agencies from relying on 

10 self-reporting by the recipients of agency pay11 ments as the sole source basis for improper 

12 payments estimates; 

13 (D) require agencies to include all identi14 fied improper payments in the reported esti15 mate, regardless of whether the improper pay16 ment in question has been or is being recovered; 

17 (E) include payments to employees, includ18 ing salary, locality pay, travel pay, purchase 

19 card use, and other employee payments, as sub20 ject to risk assessment and, where appropriate, 

21 improper payment estimation; and 

22 (F) require agencies to tailor their correc23 tive actions for the high-priority programs iden24 tified under section 2(b)(1)(A) of the Improper 

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


smartinez on DSK6TPTVN1PROD with 
8 

HR 4053 RDS

1 3321 note) to better reflect the unique proc2 esses, procedures, and risks involved in each 

3 specific program. 

4 (c) TECHNICAL AND CONFORMING AMENDMENTS.— 

5 The Improper Payments Elimination and Recovery Act of 

6 2010 (Public Law 111–204; 31 U.S.C. 3321 note.) is 

7 amended— 

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

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

10 the Improper Payments Information Act of 2002 

11 (31 U.S.C. 3321 note).’’; and 

12 (2) in section 3(a)— 

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

14 2(f)’’ and all that follows and inserting ‘‘section 

15 2(g) of the Improper Payments Information Act 

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

17 (B) in paragraph (3)— 

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

19 place it appears and inserting ‘‘section 

20 2(c)’’; and 

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

22 place it appears and inserting ‘‘section 

23 2(d)’’. 


smartinez on DSK6TPTVN1PROD with 
9 

HR 4053 RDS

1 SEC. 4. IMPROPER PAYMENTS INFORMATION. 

2 Section 2(a)(3)(A)(ii) of the Improper Payments In3 formation Act of 2002 (31 U.S.C. 3321 note) is amended 

4 by striking ‘‘with respect to fiscal years following Sep5 tember 30th of a fiscal year beginning before fiscal year 

6 2013 as determined by the Office of Management and 

7 Budget’’ and inserting ‘‘with respect to fiscal year 2014 

8 and each fiscal year thereafter’’. 

9 SEC. 5. DO NOT PAY INITIATIVE. 

10 (a) PREPAYMENT AND PREAWARD PROCEDURES.— 

11 (1) IN GENERAL.—Each agency shall review 

12 prepayment and preaward procedures and ensure 

13 that a thorough review of available databases with 

14 relevant information on eligibility occurs to deter15 mine program or award eligibility and prevent im16 proper payments before the release of any Federal 

17 funds. 

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

19 issuing any payment and award, each agency shall 

20 review as appropriate the following databases to 

21 verify eligibility of the payment and award: 

22 (A) The Death Master File of the Social 

23 Security Administration. 

24 (B) The General Services Administration’s 

25 Excluded Parties List System. 


smartinez on DSK6TPTVN1PROD with 
10 

HR 4053 RDS

1 (C) The Debt Check Database of the De2 partment of the Treasury. 

3 (D) The Credit Alert System or Credit 

4 Alert Interactive Voice Response System of the 

5 Department of Housing and Urban Develop6 ment. 

7 (E) The List of Excluded Individuals/Enti8 ties of the Office of Inspector General of the 

9 Department of Health and Human Services. 

10 (b) DO NOT PAY INITIATIVE.— 

11 (1) ESTABLISHMENT.—There is established the 

12 Do Not Pay Initiative which shall include— 

13 (A) use of the databases described under 

14 subsection (a)(2); and 

15 (B) use of other databases designated by 

16 the Director of the Office of Management and 

17 Budget in consultation with agencies and in ac18 cordance with paragraph (2). 

19 (2) OTHER DATABASES.—In making designa20 tions of other databases under paragraph (1)(B), the 

21 Director of the Office of Management and Budget 

22 shall— 

23 (A) consider any database that substan24 tially assists in preventing improper payments; 

25 and 


smartinez on DSK6TPTVN1PROD with 
11 

HR 4053 RDS

1 (B) provide public notice and an oppor2 tunity for comment before designating a data3 base under paragraph (1)(B). 

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

5 purposes of identifying and preventing improper 

6 payments, each agency shall have access to, and use 

7 of, the Do Not Pay Initiative to verify payment or 

8 award eligibility in accordance with subsection (a) 

9 when the Director of the Office of Management and 

10 Budget determines the Do Not Pay Initiative is ap11 propriately established for the agency. 

12 (4) PAYMENT OTHERWISE REQUIRED.—When 

13 using the Do Not Pay Initiative, an agency shall rec14 ognize that there may be circumstances under which 

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

16 a recipient, regardless of whether that recipient is 

17 identified as potentially ineligible under the Do Not 

18 Pay Initiative. 

19 (5) ANNUAL REPORT.—The Director of the Of20 fice of Management and Budget shall submit to 

21 Congress an annual report, which may be included 

22 as part of another report submitted to Congress by 

23 the Director, regarding the operation of the Do Not 

24 Pay Initiative, which shall— 


smartinez on DSK6TPTVN1PROD with 
12 

HR 4053 RDS

1 (A) include an evaluation of whether the 

2 Do Not Pay Initiative has reduced improper 

3 payments or improper awards; and 

4 (B) provide the frequency of corrections or 

5 identification of incorrect information. 

6 (c) DATABASE INTEGRATION PLAN.—Not later than 

7 60 days after the date of enactment of this Act, the Direc8 tor of the Office of Management and Budget shall provide 

9 to the Congress a plan for— 

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

11 Pay Initiative; 

12 (2) to the extent permitted by law, agency ac13 cess to the Do Not Pay Initiative; and 

14 (3) the data use agreements described under 

15 subsection (e)(2)(D). 

16 (d) INITIAL WORKING SYSTEM.— 

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

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

19 of the Office of Management and Budget shall es20 tablish a working system for prepayment and 

21 preaward review that includes the Do Not Pay Ini22 tiative as described under this section. 

23 (2) WORKING SYSTEM.—The working system 

24 established under paragraph (1)— 


smartinez on DSK6TPTVN1PROD with 
13 

HR 4053 RDS

1 (A) may be located within an appropriate 

2 agency; 

3 (B) shall include not less than 3 agencies 

4 as users of the system; and 

5 (C) shall include investigation activities for 

6 fraud and systemic improper payments detec7 tion through analytic technologies and other 

8 techniques, which may include commercial data9 base use or access. 

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

11 than June 1, 2013, each agency shall review all pay12 ments and awards for all programs of that agency 

13 through the system established under this sub14 section. 

15 (e) FACILITATING DATA ACCESS BY FEDERAL AGEN16 CIES AND OFFICES OF INSPECTORS GENERAL FOR PUR17 POSES OF PROGRAM INTEGRITY.— 

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

19 ‘‘Inspector General’’ means any Inspector General 

20 described in subparagraph (A), (B), or (I) of section 

21 11(b)(1) of the Inspector General Act of 1978 (5 

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

23 (2) COMPUTER MATCHING BY FEDERAL AGEN24 CIES FOR PURPOSES OF INVESTIGATION AND PRE25 VENTION OF IMPROPER PAYMENTS AND FRAUD.— 


smartinez on DSK6TPTVN1PROD with 
14 

HR 4053 RDS

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

2 this paragraph, in accordance with section 552a 

3 of title 5, United States Code (commonly known 

4 as the Privacy Act of 1974), each Inspector 

5 General and the head of each agency may enter 

6 into computer matching agreements with other 

7 inspectors general and agency heads that allow 

8 ongoing data matching (which shall include 

9 automated data matching) in order to assist in 

10 the detection and prevention of improper pay11 ments. 

12 (B) REVIEW.—Not later than 60 days 

13 after a proposal for an agreement under sub14 paragraph (A) has been presented to a Data In15 tegrity Board established under section 552a(u) 

16 of title 5, United States Code, for consider17 ation, the Data Integrity Board shall respond 

18 to the proposal. 

19 (C) TERMINATION DATE.—An agreement 

20 under subparagraph (A)— 

21 (i) shall have a termination date of 

22 less than 3 years; and 

23 (ii) during the 3-month period ending 

24 on the date on which the agreement is 

25 scheduled to terminate, may be renewed by 


smartinez on DSK6TPTVN1PROD with 
15 

HR 4053 RDS

1 the agencies entering the agreement for 

2 not more than 3 years. 

3 (D) MULTIPLE AGENCIES.—For purposes 

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

5 United States Code, shall be applied by sub6 stituting ‘‘between the source agency and the 

7 recipient agency or non-Federal agency or an 

8 agreement governing multiple agencies’’ for 

9 ‘‘between the source agency and the recipient 

10 agency or non-Federal agency’’ in the matter 

11 preceding subparagraph (A). 

12 (E) COST-BENEFIT ANALYSIS.—A jus13 tification under section 552a(o)(1)(B) of title 5, 

14 United States Code, relating to an agreement 

15 under subparagraph (A) is not required to con16 tain a specific estimate of any savings under 

17 the computer matching agreement. 

18 (3) GUIDANCE BY THE OFFICE OF MANAGE19 MENT AND BUDGET.—Not later than 6 months after 

20 the date of enactment of this Act, and in consulta21 tion with the Council of the Inspectors General on 

22 Integrity and Efficiency, the Secretary of Health 

23 and Human Services, the Commissioner of Social 

24 Security, and the head of any other relevant agency, 


smartinez on DSK6TPTVN1PROD with 
16 

HR 4053 RDS

1 the Director of the Office of Management and Budg2 et shall— 

3 (A) issue guidance for agencies regarding 

4 implementing this subsection, which shall in5 clude standards for— 

6 (i) reimbursement of costs, when nec7 essary, between agencies; 

8 (ii) retention and timely destruction of 

9 records in accordance with section 

10 552a(o)(1)(F) of title 5, United States 

11 Code; and 

12 (iii) prohibiting duplication and re13 disclosure of records in accordance with 

14 section 552a(o)(1)(H) of title 5, United 

15 States Code; 

16 (B) review the procedures of the Data In17 tegrity Boards established under section 

18 552a(u) of title 5, United States Code, and de19 velop new guidance for the Data Integrity 

20 Boards to— 

21 (i) improve the effectiveness and re22 sponsiveness of the Data Integrity Boards; 

23 (ii) ensure privacy protections in ac24 cordance with section 552a of title 5, 


smartinez on DSK6TPTVN1PROD with 
17 

HR 4053 RDS

1 United States Code (commonly known as 

2 the Privacy Act of 1974); and 

3 (iii) establish standard matching 

4 agreements for use when appropriate; and 

5 (C) establish and clarify rules regarding 

6 what constitutes making an agreement entered 

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

8 to the public for purposes of section 

9 552a(o)(2)(A)(ii) of title 5, United States Code, 

10 which shall include requiring publication of the 

11 agreement on a public website. 

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

13 of Management and Budget shall establish proce14 dures providing for the correction of data in order 

15 to ensure— 

16 (A) compliance with section 552a(p) of 

17 title 5, United States Code; and 

18 (B) that corrections are made in any Do 

19 Not Pay Initiative database and in any relevant 

20 source databases designated by the Director of 

21 the Office of Management and Budget under 

22 subsection (b)(1). 

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

24 consultation with the Inspector General of the agen25 cy, shall ensure that any information provided to an 


smartinez on DSK6TPTVN1PROD with 
18 

HR 4053 RDS

1 individual or entity under this subsection is provided 

2 in accordance with protocols established under this 

3 subsection. 

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

5 subsection shall be construed to affect the rights of 

6 an individual under section 552a(p) of title 5, 

7 United States Code. 

8 (f) DEVELOPMENT AND ACCESS TO A DATABASE OF

9 INCARCERATED INDIVIDUALS.—Not later than 1 year 

10 after the date of enactment of this Act, the Attorney Gen11 eral shall submit to Congress recommendations for in12 creasing the use of, access to, and the technical feasibility 

13 of using data on the Federal, State, and local conviction 

14 and incarceration status of individuals for purposes of 

15 identifying and preventing improper payments by Federal 

16 agencies and programs and fraud. 

17 (g) PLAN TO CURB FEDERAL IMPROPER PAYMENTS

18 TO DECEASED INDIVIDUALS BY IMPROVING THE QUALITY

19 AND USE BY FEDERAL AGENCIES OF THE SOCIAL SECU20 RITY ADMINISTRATION DEATH MASTER FILE.— 

21 (1) ESTABLISHMENT.—In conjunction with the 

22 Commissioner of Social Security and in consultation 

23 with relevant stakeholders that have an interest in 

24 or responsibility for providing the data, and the 

25 States, the Director of the Office of Management 


smartinez on DSK6TPTVN1PROD with 
19 

HR 4053 RDS

1 and Budget shall establish a plan for improving the 

2 quality, accuracy, and timeliness of death data main3 tained by the Social Security Administration, includ4 ing death information reported to the Commissioner 

5 under section 205(r) of the Social Security Act (42 

6 U.S.C. 405(r)). 

7 (2) ADDITIONAL ACTIONS UNDER PLAN.—The 

8 plan established under this subsection shall include 

9 recommended actions by agencies to— 

10 (A) increase the quality and frequency of 

11 access to the Death Master File and other 

12 death data; 

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

14 as appropriate; 

15 (C) provide for all States and other data 

16 providers to use improved and electronic means 

17 for providing data; 

18 (D) identify improved methods by agencies 

19 for determining ineligible payments due to the 

20 death of a recipient through proactive 

21 verification means; and 

22 (E) address improper payments made by 

23 agencies to deceased individuals as part of Fed24 eral retirement programs. 


smartinez on DSK6TPTVN1PROD with 
20 

HR 4053 RDS

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

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

3 the Office of Management and Budget shall submit 

4 a report to Congress on the plan established under 

5 this subsection, including recommended legislation. 

6 SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

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

8 audit’’ means a recovery audit described under section 

9 2(h) of the Improper Payments Elimination and Recovery 

10 Act of 2010 (31 U.S.C. 3301 note). 

11 (b) REVIEW.—The Director of the Office of Manage12 ment and Budget shall determine— 

13 (1) current and historical rates and amounts of 

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

15 improper payments are identified solely on the basis 

16 of a sample, recovery rates and amounts estimated 

17 on the basis of the applicable sample), including a 

18 list of agency recovery audit contract programs and 

19 specific information of amounts and payments recov20 ered by recovery audit contractors; and 


smartinez on DSK6TPTVN1PROD with 
21 

HR 4053 RDS

1 (2) targets for recovering improper payments, 

2 including specific information on amounts and pay3 ments recovered by recovery audit contractors. 

Passed the House of Representatives December 13, 

2012. 

Attest: KAREN L. HAAS, 

Clerk. 


smartinez on DSK6TPTVN1PROD with