I 

112TH CONGRESS 

2D SESSION H. R. 4053 

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 

A BILL 

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, 

3 SECTION 1. SHORT TITLE. 

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

5 Elimination and Recovery Improvement Act of 2012’’. 


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1 SEC. 2. DEFINITION. 

2 In this Act, the term ‘‘agency’’ means an executive 

3 agency as that term is defined under section 102 of title 

4 31, United States Code. 

5 SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER 

6 PAYMENTS BY FEDERAL AGENCIES. 

7 (a) IN GENERAL.—Section 2 of the Improper Pay8 ments Information Act of 2002 (31 U.S.C. 3321 note) is 

9 amended— 

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

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

12 (2) by inserting after subsection (a) the fol13 lowing: 

14 ‘‘(b) IMPROVING THE DETERMINATION OF IMPROPER

15 PAYMENTS.— 

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

17 of Management and Budget shall on an annual 

18 basis— 

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

20 programs for greater levels of oversight and re21 view— 

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

23 or highest frequency of improper payments 

24 occur; or 

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

26 of improper payments; and 


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1 ‘‘(B) in coordination with the agency re2 sponsible for administering the high-priority 

3 program, establish annual targets and semi-an4 nual or quarterly actions for reducing improper 

5 payments associated with each high-priority 

6 program. 

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

8 PAYMENTS.— 

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

10 privacy policies and to the extent permitted by 

11 law, each agency with a program identified 

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

13 shall submit to the Inspector General of that 

14 agency, and make available to the public (in15 cluding availability through the Internet), a re16 port on that program. 

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

18 paragraph— 

19 ‘‘(i) shall describe— 

20 ‘‘(I) any action the agency— 

21 ‘‘(aa) has taken or plans to 

22 take to recover improper pay23 ments; and 


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1 ‘‘(bb) intends to take to pre2 vent future improper payments; 

3 and 

4 ‘‘(ii) shall not include any referrals 

5 the agency made or anticipates making to 

6 the Department of Justice, or any informa7 tion provided in connection with such re8 ferrals. 

9 ‘‘(C) PUBLIC AVAILABILITY ON CENTRAL

10 WEBSITE.—The Office of Management and 

11 Budget shall make each report submitted under 

12 this paragraph available on a central website. 

13 ‘‘(D) AVAILABILITY OF INFORMATION TO

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

15 shall not prohibit any referral or information 

16 being made available to an Inspector General as 

17 otherwise provided by law. 

18 ‘‘(E) ASSESSMENT AND RECOMMENDA19 TIONS.—The Inspector General of each agency 

20 that submits a report under this paragraph 

21 shall— 

22 ‘‘(i) review— 

23 ‘‘(I) the assessment of the level 

24 of risk associated with the applicable 

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1 proper payment estimates and meth2 odology of the agency; and 

3 ‘‘(II) the oversight or financial 

4 controls to identify and prevent im5 proper payments; and 

6 ‘‘(ii) provide recommendations, for 

7 modifying any plans of the agency, includ8 ing improvements for improper payments 

9 determination and estimation method10 ology.’’; 

11 (3) in subsection (d) (as redesignated by para12 graph (1) of this subsection), by striking ‘‘subsection 

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

14 ‘‘subsection (c)’’; and 

15 (4) in subsection (e) (as redesignated by para16 graph (1) of this subsection), by striking ‘‘subsection 

17 (b)’’ and inserting ‘‘subsection (c)’’. 

18 (b) IMPROVED ESTIMATES.— 

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

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

21 of the Office of Management and Budget shall pro22 vide guidance to agencies for improving the esti23 mates of improper payments under the Improper 

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

25 note). 


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1 (2) GUIDANCE.—Guidance under this sub2 section shall— 

3 (A) strengthen the estimation process of 

4 agencies by setting standards for agencies to 

5 follow in determining the underlying validity of 

6 sampled payments to ensure amounts being 

7 billed are proper; and 

8 (B) instruct agencies to give the persons or 

9 entities performing improper payments esti10 mates access to all necessary payment data, in11 cluding access to relevant documentation; 

12 (C) explicitly bar agencies from relying on 

13 self-reporting by the recipients of agency pay14 ments as the sole source basis for improper 

15 payments estimates; 

16 (D) require agencies to include all identi17 fied improper payments in the reported esti18 mate, regardless of whether the improper pay19 ment in question has been or is being recovered; 

20 (E) include payments to employees, includ21 ing salary, locality pay, travel pay, purchase 

22 card use, and other employee payments, as sub23 ject to risk assessment and, where appropriate, 

24 improper payment estimation; and 


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1 (F) require agencies to tailor their correc2 tive actions for the high-priority programs iden3 tified under section 2(b)(1)(A) of the Improper 

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

5 3321 note) to better reflect the unique proc6 esses, procedures, and risks involved in each 

7 specific program. 

8 SEC. 4. IMPROPER PAYMENTS INFORMATION. 

9 Section 2(a)(3)(A)(ii) of the Improper Payments In10 formation Act of 2002 (31 U.S.C. 3321 note) is amended 

11 by striking ‘‘with respect to fiscal years following Sep12 tember 30th of a fiscal year beginning before fiscal year 

13 2013 as determined by the Office of Management and 

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

15 and each fiscal year thereafter’’. 

16 SEC. 5. DO NOT PAY INITIATIVE. 

17 (a) PREPAYMENT AND PREAWARD PROCEDURES.— 

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

19 prepayment and preaward procedures and ensure 

20 that a thorough review of available databases with 

21 relevant information on eligibility occurs to deter22 mine program or award eligibility and prevent im23 proper payments before the release of any Federal 

24 funds. 


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

2 issuing any payment and award, each agency shall 

3 review as appropriate the following databases to 

4 verify eligibility of the payment and award: 

5 (A) The Death Master File of the Social 

6 Security Administration. 

7 (B) The General Services Administration’s 

8 Excluded Parties List System. 

9 (C) The Debt Check Database of the De10 partment of the Treasury. 

11 (D) The Credit Alert System or Credit 

12 Alert Interactive Voice Response System of the 

13 Department of Housing and Urban Develop14 ment. 

15 (E) The List of Excluded Individuals/Enti16 ties of the Office of Inspector General of the 

17 Department of Health and Human Services. 

18 (b) DO NOT PAY INITIATIVE.— 

19 (1) ESTABLISHMENT.—There is established the 

20 Do Not Pay Initiative which shall consist of— 

21 (A) the databases described under sub22 section (a)(2); and 

23 (B) any other database designated by the 

24 Director of the Office of Management and 

25 Budget in consultation with agencies. 


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1 (2) OTHER DATABASES.—In making designa2 tions of other databases under paragraph (1)(B), the 

3 Director of the Office of Management and Budget 

4 shall consider any database that assists in pre5 venting improper payments. 

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

7 purposes of identifying and preventing improper 

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

9 of, the Do Not Pay Initiative to determine payment 

10 or award eligibility when the Director of the Office 

11 of Management and Budget determines the Do Not 

12 Pay Initiative is appropriately established for the 

13 agency. 

14 (4) PAYMENT OTHERWISE REQUIRED.—When 

15 using the Do Not Pay Initiative, an agency shall rec16 ognize that there may be circumstances under which 

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

18 a recipient, regardless of whether that recipient is on 

19 the Do Not Pay Initiative. 

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

21 60 days after the date of enactment of this Act, the Direc22 tor of the Office of Management and Budget shall provide 

23 to the Congress a plan for— 

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

25 Pay Initiative; 


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1 (2) to the extent permitted by law, agency ac2 cess to the Do Not Pay Initiative; and 

3 (3) the multilateral data use agreements de4 scribed under subsection (e). 

5 (d) INITIAL WORKING SYSTEM.— 

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

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

8 of the Office of Management and Budget shall es9 tablish a working system for prepayment and 

10 preaward review that includes the Do Not Pay Ini11 tiative as described under this section. 

12 (2) WORKING SYSTEM.—The working system 

13 established under paragraph (1)— 

14 (A) may be located within an appropriate 

15 agency; 

16 (B) shall include not less than 3 agencies 

17 as users of the system; and 

18 (C) shall include investigation activities for 

19 fraud and systemic improper payments detec20 tion through analytic technologies and other 

21 techniques, which may include commercial data22 base use or access. 

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

24 than January 1, 2013, each agency shall review all 

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1 cy through the system established under this sub2 section. 

3 (e) MULTILATERAL DATA USE AGREEMENTS.— 

4 (1) IN GENERAL.—Not later than 60 days after 

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

6 the Office of Management and Budget shall develop 

7 a plan to establish a multilateral data use agreement 

8 authority to carry out this section, including access 

9 to databases such as the New Hire Database under 

10 section 453(i) of the Social Security Act (42 U.S.C. 

11 653(i)). 

12 (2) PRIVACY ACT MATCHING AGREEMENTS.— 

13 Section 552a(o)(1) of title 5, United States Code, is 

14 amended in the matter preceding subparagraph (A), 

15 by inserting ‘‘or an agreement governing multiple 

16 agencies’’ before ‘‘specifying’’. 

17 (3) GENERAL PROTOCOLS AND SECURITY.— 

18 (A) IN GENERAL.—In developing the mul19 tilateral data use agreements, the Director of 

20 the Office of Management and Budget shall es21 tablish implementing regulations and guidelines 

22 that include streamlined interagency processes 

23 to ensure agency access to data, and provide for 

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1 ferred data, in a manner consistent with rel2 evant privacy, security, and disclosure laws. 

3 (B) CONSULTATION.—The Director of the 

4 Office of Management and Budget shall consult 

5 with— 

6 (i) the Council of Inspectors General 

7 on Integrity and Efficiency before imple8 menting this paragraph; and 

9 (ii) the Secretary of Health and 

10 Human Services, the Social Security Ad11 ministrator, and the head of any other 

12 agency, as appropriate. 

13 (f) DEVELOPMENT AND ACCESS TO A DATABASE OF

14 INCARCERATED INDIVIDUALS.—Not later than 1 year 

15 after the date of enactment of this Act, the Attorney Gen16 eral shall submit to Congress recommendations for in17 creasing the use of, access to, and the technical feasibility 

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

19 and incarceration status of individuals for purposes of 

20 identifying and preventing improper payments by Federal 

21 agencies and programs and fraud. 

22 (g) PLAN TO CURB FEDERAL IMPROPER PAYMENTS

23 TO DECEASED INDIVIDUALS BY IMPROVING THE QUALITY

24 AND USE BY FEDERAL AGENCIES OF THE SOCIAL SECU25 RITY ADMINISTRATION DEATH MASTER FILE.— 


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1 (1) ESTABLISHMENT.—In conjunction with the 

2 Commissioner of Social Security and in consultation 

3 with relevant stakeholders that have an interest in 

4 or responsibility for providing the data, and the 

5 States, the Director of the Office of Management 

6 and Budget shall establish a plan for improving the 

7 quality, accuracy, and timeliness of death data main8 tained by the Social Security Administration, includ9 ing death information reported to the Commissioner 

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

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

12 (2) ADDITIONAL ACTIONS UNDER PLAN.—The 

13 plan established under this subsection shall include 

14 recommended actions by agencies to— 

15 (A) increase the quality and frequency of 

16 access to the Death Master File and other 

17 death data; 

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

19 as appropriate; 

20 (C) provide for all States and other data 

21 providers to use improved and electronic means 

22 for providing data; 

23 (D) identify improved methods by agencies 

24 for determining ineligible payments due to the 


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1 death of a recipient through proactive verifica2 tion means; and 

3 (E) address improper payments made by 

4 agencies to deceased individuals as part of Fed5 eral retirement programs. 

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

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

8 the Office of Management and Budget shall submit 

9 a report to Congress on the plan established under 

10 this subsection, including recommended legislation. 

11 SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

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

13 audit’’ means a recovery audit described under section 

14 2(h) of the Improper Payments Elimination and Recovery 

15 Act of 2010. 

16 (b) IN GENERAL.—The Director of the Office of 

17 Management and Budget shall determine— 

18 (1) current and historical rates and amounts of 

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

20 improper payments are identified solely on the basis 

21 of a sample, recovery rates and amounts estimated 

22 on the basis of the applicable sample), including spe23 cific information of amounts and payments recovered 

24 by recovery audit contractors; and 


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1 (2) targets for recovering improper payments, 

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

4 (c) RECOVERY AUDIT CONTRACTOR PROGRAMS.— 

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

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

7 of the Office of Management and Budget shall es8 tablish a plan for no less than 10 Recovery Audit 

9 Contracting programs for the purpose of identifying 

10 and recovering overpayments and underpayments in 

11 10 agencies. 

12 (2) RANGE OF RECOVERY AUDIT CONTRACTING

13 TYPES.—Programs established under paragraph (1) 

14 shall be representative of different types of— 

15 (A) programs, including programs that dif16 fer in size, payment types, and recipient types 

17 (such as beneficiaries and vendors or contrac18 tors) across the Federal Government; and 

19 (B) recover audit contracting (including in20 dividual payments review and demographic 

21 analysis). 

22 (3) INITIAL OPERATION OF PROGRAMS.—Not 

23 later than 1 year after the plan under paragraph (1) 

24 is established, each applicable agency shall establish 


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1 the programs included in that plan which shall be 

2 conducted for not more than a 3-year period. 

3 (4) REPORTS.— 

4 (A) IN GENERAL.—Not later than 2 years 

5 after establishing a program under the plan es6 tablished under paragraph (1), the head of the 

7 agency conducting the program shall submit a 

8 report on the program to Congress. 

9 (B) CONTENTS.—Each report under this 

10 paragraph shall include— 

11 (i) a description of the impact of the 

12 program on savings and recoveries; and 

13 (ii) such recommendations as the head 

14 of the agency considers appropriate on ex15 tending or expanding the program. 

Æ 


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