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[House Report 106-506]
[From the U.S. Government Publishing Office]

106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-506

======================================================================

 
    PROVIDING FOR THE CONSIDERATION OF H.R. 1827, GOVERNMENT WASTE 
                          CORRECTIONS ACT 1999

                                _______
                                

 February 29, 2000.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

   Mr. Sessions, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 426]

    The Committee on Rules, having had under consideration 
House Resolution 426, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                summary of provisions of the resolution

    The resolution provides for the consideration of H.R. 1827, 
the Government Waste Corrections Act of 1999, under an open 
rule. The rule provides one hour of general debate divided 
equally between the chairman and ranking minority member of the 
Committee on Government Reform.
    The rule provides that, in lieu of the amendment 
recommended by the Committee on Government Reform and printed 
in the bill, the amendment in the nature of the substitute 
printed in this report be considered as original text for the 
purpose of amendment. The rule also waives clause 4 of rule XXI 
(prohibiting appropriations in a legislative bill) against 
provisions included in the amendment in the nature of the 
substitute. The rule further provides that the amendment in the 
nature of a substitute shall be open for amendment at any 
point.
    Members who have pre-printed their amendments in the 
Congressional Record prior to their consideration will be given 
priority in recognition to offer their amendments if otherwise 
consistent with House rules. The rule allows the Chairman of 
the Committee of the Whole to postpone votes during 
consideration of the bill, and to reduce voting time to five 
minutes on a postponed question if the vote follows a fifteen 
minute vote. Finally, the rule provides for one motion to 
recommit, with or without instructions.
    The waiver of clause 4 of rule XXI (prohibiting 
appropriations in a legislative bill) against provisions 
included in the amendment in the nature of the substitute is 
necessary because the amendment in the nature of a substitute 
contains a provision relating to the disposition of funds. This 
provision constitutes an appropriation of funds.

  summary of amendment in the nature of a substitute made in order as 
               original text for the purpose of amendment

    (1) Recovery audit requirement:
          Mandates recovery audits for agencies that spend 
        $500,000,000 or more per year on the purchase of goods 
        and services for the direct use of the agency (bill 
        would not apply to payment activities of Medicare, 
        Education, or other entitlement programs or grants);
          Requirement wouldn't apply to DOD major weapons 
        systems contracts until those contracts are closed;
          Allows agency head to request an exemption from OMB 
        if requirement would impede agency's mission or not be 
        cost-effective;
          Agency would have to consult first with IG and CFO to 
        avoid duplication of effort;
          Agency could perform audit in-house or by contract, 
        as long as OMB standards for recovery audit (to be 
        produced in accordance with this bill) are met;
          If contracted out, the recovery audit contractor 
        could be paid on a contingency fee basis;
          The authority of any person under the Contract 
        Disputes Act, or any other applicable laws would not be 
        affected;
          The recovery audit contractor would only be able to 
        audit agency records;
          The recovery audit contractor would not be able to 
        physically establish presence for purposes of carrying 
        out the recovery audit for the agency;
          The recovery audit contractor would have to protect 
        from improper use or disclosure otherwise confidential 
        information;
          The recovery audit contractor would have to report 
        and give recommendations to the agency on the 
        conditions giving rise to the overpayments;
          The recovery audit contractor would have to notify 
        agency head of overpayments or other problems beyond 
        the scope of the recovery audit;
          The agency would have to undergo a cost-comparison 
        analysis before determining whether to contract for 
        recovery auditing;
          There is a limitation on the disclosure of 
        individually-identifiable information.
    (15) Disposition of amounts collected:
          Amounts collected back may be used for the recovery 
        audit costs;
          No more than 25% may be used by the agency for 
        management improvements directed at the overpayment 
        problems in the agency;
          At least 50% must be returned to the General 
        Treasury;
          These requirements would not apply with regard to 
        NAFI's, revolving funds, working capital funds, trust 
        funds;
          Requirements to spend collected money on management 
        improvement program or return money back to the 
        Treasury wouldn't apply to open appropriation.
    (21) Management Improvement Program:
          Head of the agency must prioritize problems that 
        contribute to overpayments;
          Can do other things to reduce error and waste;
          Can work this program with other agencies;
          Must account for spending and activities in the 
        Program.
    (26) Responsibilities of OMB and GAO:
          Director of OMB will coordinate and oversee 
        implementation;
          OMB to issue guidance 180 days after enactment;
          OMB to issue recovery audit standards as part if 
        guidance;
          OMB may limit recovery audit contingency fees;
          OMB may make exemptions if requirements go against 
        agency mission or aren't cost-effective;
          DOD's major weapons systems contracts are exempted 
        until they are closed;
          OMB must report to Congress on exemptions;
          OMB must report to President and Congress on 
        implementation;
          GAO will report on implementation.

Comparison between bill as reported and amendment

    Efforts have been made to clarify the bill's original 
intent by adding three definitions and making technical 
clarifications in other parts of the bill.
    The bill originally contained a provision allowing OMB to 
make exemptions for payment activities if it goes against the 
agency's mission or wouldn't be cost-effective. The manager's 
amendment expands on this to explicitly authorize agency heads 
to request exemptions based on these same criteria.
    The bill originally prohibited a recovery audit contractor 
from auditing anything but the agency's records. The manager's 
amendment expands on this issue by prohibiting a recovery 
auditor to establish a physical presence--to set up shop--at an 
entity that's the subject of the recovery audit. This addresses 
concerns by vendors that the recovery auditors can barge into 
the offices as part of the recovery audit.
    The manager's amendment also stipulates that recovery 
auditing will apply to DOD's major weapons systems programs 
only after these contracts have been closed. This change 
addresses concerns by Rep. Bateman and others, that recovery 
auditing on major defense weapons systems procured with a cost-
type contract would be problematic due to the ``moving target'' 
nature of progress payments and other complexities that might 
appear as overpayments one month, but then be reconciled in 
later months.
    (Amendment Summary Provided By Staff at the Committee on 
Government Reform)

   TEXT OF AMENDMENT IN THE NATURE OF A SUBSTITUTE MADE IN ORDER AS 
               ORIGINAL TEXT FOR THE PURPOSE OF AMENDMENT

  Strike all after the enacting clause and insert the 
following:

SECTION. 1. SHORT TITLE.

  This Act may be cited as the ``Government Waste Corrections 
Act of 2000''.

SEC. 2. FINDINGS AND PURPOSES.

  (a) Findings.--The Congress finds the following:
          (1) Overpayments are a serious problem for Federal 
        agencies, given the magnitude and complexity of Federal 
        operations and documented and widespread financial 
        management weaknesses. Federal agency overpayments 
        waste tax dollars and detract from the efficiency and 
        effectiveness of Federal operations by diverting 
        resources from their intended uses.
          (2) In private industry, overpayments to providers of 
        goods and services occur for a variety of reasons, 
        including duplicate payments, pricing errors, and 
        missed cash discounts, rebates, or other allowances. 
        The identification and recovery of such overpayments, 
        commonly referred to as ``recovery auditing and 
        activity'', is an established private sector business 
        practice with demonstrated large financial returns. On 
        average, recovery auditing and activity in the private 
        sector identify overpayment rates of 0.1 percent of 
        purchases audited and result in the recovery of 
        $1,000,000 for each $1,000,000,000 of purchases.
          (3) Recovery auditing and recovery activity already 
        have been employed successfully in limited areas of 
        Federal activity. They have great potential for 
        expansion to many other Federal agencies and 
        activities, thereby resulting in the recovery of 
        substantial amounts of overpayments annually. Limited 
        recovery audits conducted by private contractors to 
        date within the Department of Defense have identified 
        errors averaging 0.4 percent of Federal payments 
        audited, or $4,000,000 for every $1,000,000,000 of 
        payments. If fully implemented within the Federal 
        Government, recovery auditing and recovery activity 
        have the potential to recover billions of dollars in 
        Federal overpayments annually.
  (b) Purposes.--The purposes of this Act are the following:
          (1) To ensure that overpayments made by the Federal 
        Government that would otherwise remain undetected are 
        identified and recovered.
          (2) To require the use of recovery audit and recovery 
        activity by Federal agencies.
          (3) To provide incentives and resources to improve 
        Federal management practices with the goal of 
        significantly reducing Federal overpayment rates and 
        other waste and error in Federal programs.

SEC. 3. ESTABLISHMENT OF RECOVERY AUDIT REQUIREMENT.

  (a) Establishment of Requirement.--Chapter 35 of title 31, 
United States Code, is amended by adding at the end the 
following:

                    ``SUBCHAPTER VI--RECOVERY AUDITS

``Sec. 3561. Definitions

  ``In this subchapter, the following definitions apply:
          ``(1) Amounts collected.--The term `amounts 
        collected' means monies actually received by the United 
        States Government.
          ``(2) Chief financial officer.--The term `Chief 
        Financial Officer' means the official established by 
        section 901 of this title, or the functional equivalent 
        of such official in the case of any agency that does 
        not have a Chief Financial Officer under that section.
          ``(3) Director.--The term `Director' means the 
        Director of the Office of Management and Budget.
          ``(4) Disclose.--The term `disclose' means to 
        release, publish, transfer, provide access to, or 
        otherwise divulge individually identifiable information 
        to any person other than the individual who is the 
        subject of the information.
          ``(5) Facial-discrepancy payment error.--The term 
        `facial-discrepancy payment error'--
                  ``(A) except as provided in subparagraph (B), 
                means any payment error that results from, is 
                substantiated by, or is identified as a result 
                of information contained on any invoice, 
                delivery order, bill of lading, statement of 
                account, or other document submitted to the 
                Government by a supplier of goods or services 
                in the usual and customary conduct of business, 
                or as required by law or contract to 
                substantiate payment for such goods or 
                services, including any such document submitted 
                electronically; and
                  ``(B) does not include payment errors 
                identified, resulting, or supported from 
                documents that are--
                          ``(i) records of a proprietary 
                        nature, maintained solely by the 
                        supplier of goods or services;
                          ``(ii) not specifically required to 
                        be provided to the Government by 
                        contract, law, regulation, or to 
                        substantiate payment;
                          ``(iii) submitted to the Government 
                        for evaluative purposes prior to the 
                        award of a contract, as part of the 
                        evaluation and award process.
        Records, documents, price lists, or other vendor 
        material published and available in the public domain 
        shall not be considered sources of facial-discrepancy 
        payment errors, but may be used to substantiate, 
        clarify, or validate facial-discrepancy payment errors 
        otherwise identified.
          ``(6) Individually identifiable information.--The 
        term `individually identifiable information' means any 
        information, whether oral or recorded in any form or 
        medium, that identifies the individual or with respect 
        to which there is a reasonable basis to believe that 
        the information can be used to identify the individual.
          ``(7) Oversight.--The term `oversight' means 
        activities by a Federal, State, or local governmental 
        entity, or by another entity acting on behalf of such a 
        governmental entity, to enforce laws relating to, 
        investigate, or regulate payment activities, recovery 
        activities, and recovery audit activities.
          ``(8) Payment activity.--The term `payment activity' 
        means an executive agency activity that entails making 
        payments to vendors or other nongovernmental entities 
        that provide property or services for the direct 
        benefit and use of an executive agency.
          ``(9) Recovery audit.--The term `recovery audit' 
        means a financial management technique applied 
        internally by Government employees, or by private 
        sector contractors, and used by executive agencies to 
        audit their internal records to identify facial-
        discrepancy payment errors made by those executive 
        agencies to vendors and other entities in connection 
        with a payment activity, including facial-discrepancy 
        payment errors that result from any of the following:
                  ``(A) Duplicate payments.
                  ``(B) Invoice errors.
                  ``(C) Failure to provide applicable 
                discounts, rebates, or other allowances.
                  ``(D) Any other facial-discrepancy errors 
                resulting in inaccurate payments.
          ``(10) Recovery activity.--The term `recovery 
        activity' means executive agency activity otherwise 
        authorized by law, including chapter 37 of this title, 
        to attempt to collect an identified overpayment.
          ``(11) Recovery audit contractor.--The term `recovery 
        audit contractor' means any person who has been hired 
        by an executive agency to perform a recovery audit 
        pursuant to a recovery audit contract.

``Sec. 3562. Recovery audit requirement

  ``(a) In General.--Except as exempted under section 3565(d) 
of this title, the head of each executive agency--
          ``(1) shall conduct for each fiscal year recovery 
        audits and recovery activity with respect to payment 
        activities of the agency if such payment activities for 
        the fiscal year total $500,000,000 or more (adjusted by 
        the Director annually for inflation);
          ``(2) may conduct for any fiscal year recovery audits 
        and recovery activity with respect to payment 
        activities of the agency if such payment activities for 
        the fiscal year total less than $500,000,000 (adjusted 
        by the Director annually for inflation); and
          ``(3) may request that the Director exempt a payment 
        activity, in whole or in part, from the requirement to 
        conduct recovery audits under paragraph (1) if the head 
        of the executive agency determines and can demonstrate 
        that compliance with such requirement--
                  ``(A) would impede the agency's mission; or
                  ``(B) would not, or would no longer be, cost-
                effective.
  ``(b) Procedures.--In conducting recovery audits and recovery 
activity under this section, the head of an executive agency--
          ``(1) shall consult and coordinate with the Chief 
        Financial Officer and the Inspector General of the 
        agency to avoid any duplication of effort;
          ``(2) shall implement this section in a manner 
        designed to ensure the greatest financial benefit to 
        the Government;
          ``(3) may conduct recovery audits and recovery 
        activity internally in accordance with the standards 
        issued by the Director under section 3565(b)(2) of this 
        title, or by procuring performance of recovery audits, 
        or by any combination thereof; and
          ``(4) shall ensure that such recovery audits and 
        recovery activity are carried out consistent with the 
        standards issued by the Director under section 
        3565(b)(2) of this subchapter.
  ``(c) Scope of Audits.--
          ``(1) In general.--Each recovery audit of a payment 
        activity under this section shall cover payments made 
        by the payment activity in the preceding fiscal year, 
        except that the first recovery audit of a payment 
        activity shall cover payments made during the 2 
        consecutive fiscal years preceding the date of the 
        enactment of the Government Waste Corrections Act of 
        2000.
          ``(2) Additional fiscal years.--The head of an 
        executive agency may conduct recovery audits of payment 
        activities for additional preceding fiscal years if 
        determined by the agency head to be practical and cost-
        effective subject to any statute of limitations 
        constraints regarding recordkeeping under applicable 
        law.
  ``(d) Recovery Audit Contracts.--
          ``(1) Authority to use contingency contracts.--
        Notwithstanding section 3302(b) of this title, as 
        consideration for performance of any recovery audit 
        procured by an executive agency, the executive agency 
        may pay the recovery audit contractor an amount equal 
        to a percentage of the total amount collected by the 
        United States as a result of overpayments identified by 
        the contractor in the audit.
          ``(2) Additional functions of recovery audit 
        contractor.--
                  ``(A) In general.--In addition to performance 
                of a recovery audit, a contract for such 
                performance may authorize the recovery audit 
                contractor (subject to subparagraph (B)) to--
                          ``(i) notify any person of possible 
                        overpayments made to the person and 
                        identified in the recovery audit under 
                        the contract; and
                          ``(ii) respond to questions 
                        concerning such overpayments.
                  ``(B) Limitation.--A contract for performance 
                of a recovery audit shall not affect--
                          ``(i) the authority of the head of an 
                        executive agency, or any other person, 
                        under the Contract Disputes Act of 1978 
                        and other applicable laws, including 
                        the authority to initiate litigation or 
                        referrals for litigation; or
                          ``(ii) the requirements of sections 
                        3711, 3716, 3718, and 3720 of this 
                        title that the head of an agency 
                        resolve disputes, compromise, or 
                        terminate overpayment claims, collect 
                        by setoff, and otherwise engage in 
                        recovery activity with respect to 
                        overpayments identified by the recovery 
                        audit.
          ``(3) Limitation on authority.--Nothing in this 
        subchapter shall be construed to authorize a recovery 
        audit contractor with an executive agency--
                  ``(A) to require the production of any record 
                or information by any person other than an 
                officer, employee, or agent of the executive 
                agency; and
                  ``(B) to establish, or otherwise have a 
                physical presence on the property or premises 
                of any private sector entity as part of its 
                contractual obligations to an executive agency.
          ``(4) Required contract terms and conditions.--The 
        head of an executive agency shall include in each 
        contract for procurement of performance of a recovery 
        audit requirements that the contractor shall--
                  ``(A) protect from improper use, and protect 
                from disclosure to any person who is internal 
                or external to the firm of the recovery audit 
                contractor and who is not directly involved in 
                the identification or recovery of overpayments, 
                otherwise confidential or proprietary business 
                information and financial information that may 
                be viewed or obtained in the course of carrying 
                out a recovery audit for an executive agency;
                  ``(B) provide to the head of the executive 
                agency and the Inspector General of the 
                executive agency periodic reports on conditions 
                giving rise to overpayments identified by the 
                recovery audit contractor and any 
                recommendations on how to mitigate such 
                conditions;
                  ``(C) notify the head of the executive agency 
                and the Inspector General of the executive 
                agency of any overpayments identified by the 
                contractor pertaining to the executive agency 
                or to another executive agency that are beyond 
                the scope of the contract; and
                  ``(D) promptly notify the head of the 
                executive agency and the Inspector General of 
                the executive agency of any indication of fraud 
                or other criminal activity discovered in the course 
                of the audit.
          ``(5) Executive agency action following 
        notification.--The head of an executive agency shall 
        take prompt and appropriate action in response to a 
        notification by a recovery audit contractor pursuant to 
        the requirements under paragraph (4), including 
        forwarding to other executive agencies any information 
        that applies to them.
          ``(6) Contracting requirements.--Prior to contracting 
        for any recovery audit, the head of an executive agency 
        shall conduct a public-private cost comparison process. 
        The outcome of the cost comparison process shall 
        determine whether the recovery audit is performed in-
        house or by a recovery audit contractor.
  ``(e) Inspectors General.--Nothing in this subchapter shall 
be construed as diminishing the authority of any Inspector 
General, including such authority under the Inspector General 
Act of 1978.
  ``(f) Privacy Protections.--
          ``(1) Limitation on disclosure of individually 
        identifiable information.--(A) Any nongovernmental 
        entity that obtains individually identifiable 
        information through performance of recovery auditing or 
        recovery activity under this chapter may disclose that 
        information only for the purpose of such auditing or 
        activity, respectively, and oversight of such auditing 
        or activity, unless otherwise authorized by the 
        individual that is the subject of the information.
          ``(B) Any person that violates subparagraph (A) shall 
        be liable for any damages (including nonpecuniary 
        damages, costs, and attorneys fees) caused by the 
        violation.
          ``(2) Destruction or return of information.--Upon the 
        conclusion of the matter or need for which individually 
        identifiable information was disclosed in the course of 
        recovery auditing or recovery activity under this 
        chapter performed by a nongovernmental entity, the 
        nongovernmental entity shall either destroy the 
        individually identifiable information or return it to 
        the person from whom it was obtained, unless another 
        applicable law requires retention of the information.

``Sec. 3563. Disposition of amounts collected

  ``(a) In General.--Notwithstanding section 3302(b) of this 
title, the amounts collected annually by the United States as a 
result of recovery audits by an executive agency under this 
subchapter shall be treated in accordance with this section.
  ``(b) Use for Recovery Audit Costs.--Amounts referred to in 
subsection (a) shall be available to the executive agency--
          ``(1) to pay amounts owed to any recovery audit 
        contractor for performance of the audit;
          ``(2) to reimburse any applicable appropriation for 
        other recovery audit costs incurred by the executive 
        agency with respect to the audit; and
          ``(3) to pay any fees authorized under chapter 37 of 
        this title.
  ``(c) Use for Management Improvement Program.--Of the amount 
referred to in subsection (a), a sum not to exceed 25 percent 
of such amount--
          ``(1) shall be available to the executive agency to 
        carry out the management improvement program of the 
        agency under section 3564 of this title;
          ``(2) may be credited for that purpose by the agency 
        head to any agency appropriations that are available 
        for obligation at the time of collection; and
          ``(3) shall remain available for the same period as 
        the appropriations to which credited.
  ``(d) Remainder to Treasury.--Of the amount referred to in 
subsection (a), there shall be deposited into the Treasury as 
miscellaneous receipts a sum equal to--
          ``(1) 50 percent of such amount; plus
          ``(2) such other amounts as remain after the 
        application of subsections (b) and (c).
  ``(e) Limitation on Application.--
          ``(1) In general.--This section shall not apply to 
        amounts collected through recovery audits and recovery 
        activity to the extent that such application would be 
        inconsistent with another provision of law that 
        authorizes crediting of the amounts to a 
        nonappropriated fund instrumentality, revolving fund, 
        working capital fund, trust fund, or other fund or 
        account.
          ``(2) Subsections (c) and (d).--Subsections (c) and 
        (d) shall not apply to amounts collected through 
        recovery audits and recovery activity, to the extent 
        that such amounts are derived from an appropriation or 
        fund that remains available for obligation, or that 
        remain available for recording, adjusting, and 
        liquidating obligations properly chargeable to that 
        appropriation or fund at the time the amounts are 
        collected.

``Sec. 3564. Management improvement program

  ``(a) Conduct of Program.--
          ``(1) Required programs.--The head of each executive 
        agency that is required to conduct recovery audits 
        under section 3562 of this title shall conduct a 
        management improvement program under this section, 
        consistent with guidelines prescribed by the Director.
          ``(2) Discretionary programs.--The head of any other 
        executive agency that conducts recovery audits under 
        section 3562 that meet the standards issued by the 
        Director under section 3565(b)(2) may conduct a 
        management improvement program under this section.
  ``(b) Program Features.--In conducting the program, the head 
of the executive agency--
          ``(1) shall, as the first priority of the program, 
        address problems that contribute directly to agency 
        overpayments; and
          ``(2) may seek to reduce errors and waste in other 
        programs and operations of that executive agency by 
        improving the executive agency's staff capacity, 
        information technology, and financial management.
  ``(c) Integration With Other Activities.--The head of an 
executive agency--
          ``(1) subject to paragraph (2), may integrate the 
        program under this section, in whole or in part, with 
        other management improvement programs and activities of 
        that agency or other executive agencies; and
          ``(2) must retain the ability to account specifically 
        for the use of amounts made available under section 
        3563 of this title.

``Sec. 3565. Responsibilities of the Office of Management and Budget

  ``(a) In General.--The Director shall coordinate and oversee 
the implementation of this subchapter.
  ``(b) Guidance.--
          ``(1) In general.--The Director, in consultation with 
        the Chief Financial Officers Council and the 
        President's Council on Integrity and Efficiency, shall 
        issue guidance and provide support to agencies in 
        implementing the subchapter. The Director shall issue 
        initial guidance not later than 180 days after the date 
        of enactment of the Government Waste Corrections Act of 
        2000.
          ``(2) Recovery audit standards.--The Director shall 
        include in the initial guidance under this subsection 
        standards for the performance of recovery audits under 
        this subchapter, that are developed in consultation 
        with the Comptroller General of the United States and 
        private sector experts on recovery audits, including 
        such experts who currently use recovery auditing as 
        part of their financial management procedures.
  ``(c) Fee Limitations.--The Director may limit the percentage 
amounts that may be paid to contractors under section 
3562(d)(1) of this title.
  ``(d) Exemptions.--
          ``(1) In general.--The Director may exempt an 
        executive agency, in whole or in part, from the 
        requirement to conduct recovery audits under section 
        3562(a)(1) of this title if the Director determines 
        that compliance with such requirement--
                  ``(A) would impede the agency's mission; or
                  ``(B) would not, or would no longer be cost-
                effective.
          ``(2) Report to congress.--The Director shall 
        promptly report the basis of any determination and 
        exemption under paragraph (1) to the Committee on 
        Government Reform of the House of Representatives and 
        the Committee on Governmental Affairs of the Senate.
          ``(3) Exemption of major defense system acquisition 
        programs.--
                  ``(A) In general.--Unless determined 
                otherwise by the head of the agency authorized 
                to conduct a Department of Defense major system 
                acquisition program, the requirements of 
                section 3562(a) of this title shall not apply 
                to such a program procured with a cost-type 
                contract until the contract has become a closed 
                contract.
                  ``(B) Department of defense major system 
                acquisition program defined.--In this 
                paragraph, the term `Department of Defense 
                major system acquisition program' has the 
                meaning that term has in Office of Management 
                and Budget Circular A-109, as in effect on the 
                date of the enactment of the Government Waste 
                Corrections Act of 2000.
  ``(e) Reports.--
          ``(1) In general.--Not later than 1 year after the 
        date the Director issues initial guidance under 
        subsection (b), and annually for each of the 2 years 
        thereafter, the Director shall submit a report on 
        implementation of the subchapter to the President, the 
        Committee on Government Reform of the House of 
        Representatives, the Committee on Governmental Affairs 
        of the Senate, and the Committee on Appropriations of 
        the House of Representatives and of the Senate.
          ``(2) Contents.--Each report shall include--
                  ``(A) a general description and evaluation of 
                the steps taken by executive agencies to 
                conduct recovery audits, including an inventory 
                of the programs and activities of each 
                executive agency that are subject to recovery 
                audits;
                  ``(B) an assessment of the benefits of 
                recovery auditing and recovery activity, 
                including amounts identified and recovered 
                (including by administrative setoffs);
                  ``(C) an identification of best practices 
                that could be applied to future recovery audits 
                and recovery activity;
                  ``(D) an identification of any significant 
                problems or barriers to more effective recovery 
                audits and recovery activity;
                  ``(E) a description of executive agency 
                expenditures in the recovery audit process;
                  ``(F) a description of executive agency 
                management improvement programs under section 
                3564 of this title; and
                  ``(G) any recommendations for changes in 
                executive agency practices or law or other 
                improvements that the Director believes would 
                enhance the effectiveness of executive agency 
                recovery auditing.

``Sec. 3566. General Accounting Office reports

  ``Not later than 60 days after issuance of each report under 
section 3565(e) of this title the Comptroller General of the 
United States shall submit a report on the implementation of 
this subchapter to the Committee on Government Reform of the 
House of Representatives, the Committee on Governmental Affairs 
of the Senate, the Committee on Appropriations of the House of 
Representatives and of the Senate, and the Director.''.
  (b) Application to All Executive Agencies.--Section 3501 of 
title 31, United States Code, is amended by inserting ``and 
subchapter VI of this chapter'' after ``section 3513''.
  (c) Deadline for Initiation of Recovery Audits.--The head of 
each executive agency shall begin the first recovery audit 
under section 3562(a)(1) title 31, United States Code, as 
amended by this section, for each payment activity referred to 
in that section by not later than 18 months after the date of 
the enactment of this Act.
  (d) Clerical Amendment.--The analysis at the beginning of 
chapter 35 of title 31, United States Code, is amended by 
adding at the end the following:

                     ``SUBCHAPTER V--RECOVERY AUDITS

``Sec.
``3561. Definitions.
``3562. Recovery audit requirement.
``3563. Disposition of amounts collected.
``3564. Management improvement program.
``3565. Responsibilities of the Office of Management and Budget.
``3566. General Accounting Office reports.''.

  Amend the title so as to read: ``A bill to improve the 
economy and efficiency of Government operations by requiring 
the use of recovery audits and recovery activity by Federal 
agencies.''.

                                  
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