U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

89–010 

" ! SENATE 115TH CONGRESS

2d Session 

REPORT

2018

115–445 

Calendar No. 736 

PAYMENT INTEGRITY INFORMATION 

ACT OF 2018 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 2948 

TO IMPROVE EFFORTS TO IDENTIFY AND REDUCE 

GOVERNMENTWIDE IMPROPER PAYMENTS, AND FOR OTHER 

PURPOSES 

DECEMBER 19, 2018.—Ordered to be printed 


E:\Seals\Congress.#13
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

JOHN HOEVEN, North Dakota 

STEVE DAINES, Montana 

JON KYL, Arizona 

CLAIRE MCCASKILL, Missouri 

THOMAS R. CARPER, Delaware 

HEIDI HEITKAMP, North Dakota 

GARY C. PETERS, Michigan 

MAGGIE HASSAN, New Hampshire 

KAMALA D. HARRIS, California 

DOUG JONES, Alabama 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

DANIEL J. SPINO, Research Assistant 

MARGARET E. DAUM, Minority Staff Director 

CHARLES A. MOSKOWITZ, Minority Senior Legislative Counsel 

LAURA W. KILBRIDE, Chief Clerk 

Calendar No. 736 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–445 

PAYMENT INTEGRITY INFORMATION ACT OF 2018 

DECEMBER 19, 2018.—Ordered to be printed 

Mr. JOHNSON, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 2948] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 2948) to improve efforts to identify and reduce Governmentwide improper payments, and for other 

purposes, having considered the same, reports favorably thereon 

with amendments and recommends that the bill, as amended, do 

pass. 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and the Need for Legislation ................................................... 2 

III. Legislative History ......................................................................................... 3 

IV. Section-by-Section Analysis .......................................................................... 3 

V. Evaluation of Regulatory Impact .................................................................. 4 

VI. Congressional Budget Office Cost Estimates .............................................. 5 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 5 

I. PURPOSE AND SUMMARY

The purpose of S. 2948 is to improve efforts to identify and reduce Government-wide improper payments. S. 2948 moves previous 

improper payment laws to one place in statute and updates and 

improves them as necessary. Better uniformity and consistency in 

these laws will increase agency compliance. 

2 

1Pub. L. No. 111–204. 

2 U.S. Gov’t Accountability Office, GAO–18–377, Improper Payments: Actions and Guidance 

Could Help Address Issues and Inconsistencies in Estimation Processes 1 (2018), https:// 

www.gao.gov/assets/700/692207.pdf. 3Pub. L. No. 107–300. 

4 Id. 

5Pub. L. No. 107–107 at § 3561. 

6Garrett Hatch, Cong. Research Serv., R42878, Improper Payments and Recovery Audits: Legislation, Implementation, and Analysis (Oct. 18, 2013). 7 U.S. Gov’t Accountability Office, GAO–06–347, Improper Payments: Federal and State Coordination Needed to Report National Improper Payment Estimates on Federal Programs 

(2006), https://www.gao.gov/assets/250/249728.pdf. 8 U.S. Gov’t Accountability Office, GAO–12–573T, Improper Payments: Remaining Challenges 

and Strategies for Government-wide Reduction Efforts 11 (2012), https://www.gao.gov/assets/590/ 

589681.pdf. 9Pub. L. No. 112–248. 

10 Id. 11 Id. 12 Id. 

II. BACKGROUND AND THE NEED FOR LEGISLATION

Improper payments are ‘‘any payment that should not have been 

made or that was made in an incorrect amount.’’ 1 In fiscal year 

(FY) 2017, the Government Accountability Office (GAO) estimated 

that Federal improper payments totaled $141 billion dollars.2

Since 2002, Congress has passed piecemeal bills that, while incrementally improving statutory authorities, are not well coordinated. The foundation of improper payments legislation is the Improper Payments Information Act of 2002 (IPIA), which first required Federal agencies to identify, prevent, and report improper 

payments. IPIA requires Federal agencies to report on their actions 

to reduce improper payments on all programs or activities that exceed ten million dollars.3 IPIA also established definitions for ‘‘payment’’ and ‘‘improper payment.’’ 4 Later in 2002, Congress passed 

the Recovery Audit Act of 2002, which required agencies that enter 

into contracts exceeding five hundred million dollars to conduct 

proper oversight of contractor payments and employ recovery audits.5

As IPIA reporting requirements took effect, the number of agency 

programs that reported expanded, increasing the total amount of 

improper payments from $45 billion in FY2004 to $108 billion in 

FY2012.6 In 2006, GAO recommended that Congress revise and expand IPIA to reduce improper payments.7

In 2010, Congress responded to GAO’s recommendation by passing the Improper Payments Elimination and Recovery Act of 2010 

(IPERA). IPERA defines in more detail the types of risk assessments agencies must complete. IPERA provides a detailed description of ‘‘significant’’ improper payments, which was previously up 

to agencies discretion. Although IPERA made positive changes to 

improper payment law, GAO identified additional challenges requiring legislation.8

Two years later Congress passed the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA).9 In addition to refining definitions and reporting requirements, IPERIA requires the Office of Management and Budget (OMB) Director to 

identify a list of high-priority Federal programs for greater levels 

of oversight by the agencies.10 IPERIA also codifies the Do Not Pay 

Initiative.11 The Do Not Pay Initiative requires agencies to review 

a list of databases to verify the validity of a payment or award they 

are about to authorize.12 To carry out the Do Not Pay Initiative, 

3 

13 Bureau of the Fiscal Service, Do Not Pay Agency Implementation Guide For Treasury’s 

Working System (2018), https://donotpay.treas.gov/DNPAgencyImplementationGuidePublic.pdf. 14Pub. L. No. 114–186. 15 Id. 16 U.S.H.R., Office of the Law Revision Counsel U.S. Code, The Term ‘‘Positive Law,’’ available at http://uscode.house.gov/codification/term_positive_law.htm. 17Letter from Americans for Tax Reform, FreedomWorks, National Taxpayers Union, Project 

on Government Oversight, Taxpayers for Common Sense, and the Taxpayers Protection Alliance 

to Senator Ron Johnson (July 3, 2018) (on file with the Committee). 

the Treasury Department created the Do Not Pay Business Center 

to be a centralized analytics service center to help agencies comply 

with IPERIA.13

In 2015, the Committee approved and Congress passed the 

Fraud Reduction and Data Analytics Act of 2015 to require the 

OMB Director and the Comptroller General of the United States to 

establish guidelines for agencies to follow based on leading practices identified by GAO.14 The bill requires agencies to follow best 

practices established by GAO that focus on collecting and analyze 

data from reporting mechanisms, similar to the Do Not Pay Business Center, to better prevent improper payments before they happen.15

While reviewing the history of improper payment legislation, the 

Committee found that IPIA, the Recovery Audit Act of 2002, 

IPERA, IPERIA, and the Fraud Reduction and Data Analytics Act 

of 2015 are not sufficiently coordinated. Under current law, statutory requirements concerning Federal improper payments are scattered throughout the U.S. Code, and some of these statutory requirements were not incorporated into U.S. Code as positive law.16

These statutes, when taken in sum, lack sufficient coherence, leaving certain aspects up to agency interpretation. To improve the coherence of improper payments laws and to improve agency compliance, S. 2948 repeals the previous improper payment laws and 

combines the language of each into a single new subchapter of U.S. 

Code. The bill omits areas of duplication, and improves and updates areas that warrant attention. 

The Committee worked closely with the GAO and OMB on the 

legislation and received letters of support from the Project on Government Oversight, Americans for Tax Reform, FreedomWorks, National Taxpayers Union, Taxpayers for Common Sense, and the 

Taxpayers Protection Alliance.17

III. LEGISLATIVE HISTORY

S. 2948 was introduced on May 24, 2018, by Senators Claire 

McCaskill (D–MO), Tom Carper (D–DE), and Ron Johnson (R–WI). 

The bill was referred to the Committee on Homeland Security and 

Governmental Affairs. The Committee considered S. 2948 at a business meeting on June 13, 2018. S. 2948 passed by voice vote en 

bloc with Senators Johnson, Portman, Lankford, Enzi, McCaskill, 

Carper, Peters, Hassan, Harris, and Jones present. 

IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title 

This section establishes the short title of the bill as the Payment 

Integrity Information Act of 2018. 

4 

Section 2. Improper payments 

This section moves several existing improper payments statutes 

to one place in the code. New Subchapter IV of Chapter 33 of Title 

31 now houses the IPIA, IPERA, IPERIA, and the Fraud Reduction 

and Data Analytics Act of 2015. This section also makes minor updates to these existing law as described below. 

Section 3352 is a rewrite of IPERA with new subsections and 

new definitions. A definition of the term ‘‘scope’’ is included to explain all the factors agencies should consider when gauging susceptibility to improper payments. 

Subsection (c) of 3352 integrates improper payment guidance 

from OMB Memorandum M–15–02. This guidance explains how insufficient documentation errors are to be classified as an improper 

payment. Incorporating this memorandum into section 3352 

strengthens the definition of the term improper payment. 

Subsection (c) of 3353 is a new addition that gives OMB the option to create one or more pilot programs to test potential accountability measures, incentives, and consequences for compliance and 

the elimination of improper payments. 

Section 3354 establishes the Do Not Pay Initiative, originally authorized in IPERIA. Subsection (e) adds to the Do Not Pay system 

a requirement that Social Security increase the frequency of access 

to the Death Master File to daily, and identify improved methods 

for determining improper payments due to death of the recipient. 

Section 3355 includes requirements of IPERIA, which was in 31 

U.S.C. § 3301 note that requires the Director of OMB to determine 

the rate of improper payments and to set targets for recovering improper payments. 

Section 3356 provides the Director of OMB the authority to modify and update any guidance required by the legislation. 

Section 3357 is the new Fraud Reduction Data Analytics Act of 

2015, with one change allowing OMB to update its guidance as 

needed. 

Section 3358 establishes a new working group that will enable 

Federal agencies to collaborate with each other and non-Federal 

partners, such as state governments. The purpose of this addition 

is to aide in developing strategies to address root causes and driving factors of improper payments, such as fraud and eligibility determinations in state-managed federal benefits programs. 

Section 3. Repeals 

This section repeals the existing improper payment statutes that 

are scattered throughout the U.S. Code, and within notes of U.S. 

Code, that section 2 reconstitutes within a new Subchapter of Title 

31, and makes necessary conforming edits. Repealed statutes include IPIA, IPERA, IPERIA, and the Fraud Reduction and Data 

Analytics Act of 2015. 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this bill and determined that the bill will 

have no regulatory impact within the meaning of the rules. The 

Committee agrees with the Congressional Budget Office’s stateVerDate Sep 11 2014 22:33 Dec 31, 2018 Jkt 089010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR445.XXX SR445
5 

ment that the bill contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandates Reform Act 

(UMRA) and would impose no costs on state, local, or tribal governments. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATES

CBO failed to provide the Committee with a cost estimate in 

time for the final reporting deadline of the 115th Congress. 

VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows: (existing law proposed to be omitted 

is enclosed in brackets, new matter is printed in italic, and existing 

law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

* * * * * * * 

TITLE 5—GOVERNMENT ORGANIZATION 

AND EMPLOYEES 

* * * * * * * 

CHAPTER 57—TRAVEL, TRANSPORTATION, AND 

SUBSISTENCE 

* * * * * * * 

Subchapter I—Travel and Subsistence Expenses; Milage 

Allowances 

* * * * * * * 

SECTION 5701 DEFINITIONS 

* * * * * * * 

HISTORICAL AND REVISION NOTES 

* * * * * * * 

CONSTRUCTION 

* * * * * * * 

(a) EXECUTIVE AGENCY ACCOUNTING.—Nothing in this Act (see 

Short Title of 2012 Amendment note set out under section 101 of 

Title 41, Public Contracts), or the amendments made by this Act, 

shall be construed to excuse the head of an executive agency from 

the responsibilities set out in (section 3512 of title 31, United 

States Code, or in the Improper Payments Information Act of 2002 

(Pub. L. 107–300) (31 U.S.C. 3321 note)) section 3512 or subchapter 

IV of chapter 33 of title 31, United States Code. 

* * * * * * * 

6 

TITLE 6—DOMESTIC SECURITY 

* * * * * * * 

CHAPTER 1—HOMELAND SECURITY ORGANIZATION 

* * * * * * * 

Subchapter XV—Homeland Security Grants 

* * * * * * * 

PART B—GRANTS ADMINISTRATION 

* * * * * * * 

SEC. 612. ACCOUNTABILITY. 

(a) * * * 

(1) * * * 

(A) * * * 

(B) * * * 

(C) * * * 

øConsistent with the Improper Payments Information 

Act of 2002 (31 U.S.C. 3321 note)¿ Consistent with subchapter IV of chapter 33 or title 31, United States Code, for 

each of the grant programs under sections 604 and 605 of 

this title and section 762 of this title, the Administrator 

shall specify policies and procedures for— 

(i) identifying activities funded under any such 

grant program that are susceptible to significant improper payments; and 

(ii) reporting any improper payments to the Department. 

* * * * * * * 

(5) * * * 

The Administrator shall conduct a recovery audit under øsection 2(h) of the Improper Payments Elimination and Recovery 

Act of 2010 (31 U.S.C. 3321 note)¿ section 3352(i) of title 31, 

United States Code for any grant administered by the Depart- ment with a total value of not less than $1,000,000, if the Administrator finds that— 

(A) a financial audit has identified improper payments 

that can be recouped; and 

(B) it is cost effective to conduct a recovery audit to recapture the targeted funds. 

* * * * * * * 

TITLE 31—MONEY AND FINANCE 

* * * * * * * 

Subtitle III—Financial Management 

* * * * * * * 

7 

CHAPTER 33—DEPOSITING, KEEPING, AND PAYING 

MONEY 

* * * * * * * 

Subchapter II—Payments 

* * * * * * * 

§ 3321. Disbursing authority in the executive branch 

* * * * * * * 

Historical and Revision Notes 

* * * * * * * 

øFraud Reduction and Data Analytics 

øSEC. 2. DEFINITIONS. 

øIn this Act.— 

ø(1) the term ‘agency’ has the meaning given the term in section 551 of title 5, United States Code; and 

ø(2) the term ‘improper payment’ has the meaning given the 

term in section 2(g) of the Improper Payments Information Act 

of 2002 [Pub. L. 107–300] (31 U.S.C. 3321 note). 

øSEC. 3. ESTABLISHMENT OF FINANCIAL AND ADMINISTRATIVE CONTROLS RELATING TO FRAUD AND IMPROPER PAYMENTS. 

ø(a) GUIDELINES.— ø(1) IN GENERAL.—Not later than 90 days after the date of 

enactment of this Act [June 30, 2016], the Director of the Office of Management and Budget, in consultation with the 

Comptroller General of the United States, shall establish 

guidelines for agencies to establish financial and administrative controls to identify and assess fraud risks and design and 

implement control activities in order to prevent, detect, and respond to fraud, including improper payments. 

ø(2) CONTENTS.—The guidelines described in paragraph (1) 

shall incorporate the leading practices identified in the report 

published by the Government Accountability Office on July 28, 

2015, entitled ‘Framework for Managing Fraud Risks in Federal Programs’. 

ø(3) MODIFICATION.—The Director of the Office of Management and Budget, in consultation with the Comptroller General of the United States, may periodically modify the guidelines described in paragraph (1) as the Director and Comptroller General may determine necessary. 

ø(b) REQUIREMENTS FOR CONTROLS.—The financial and administrative controls required to be established by agencies under subsection (a) shall include— 

ø(1) conducting an evaluation of fraud risks and using a riskbased approach to design and implement financial and administrative control activities to mitigate identified fraud risks; 

ø(2) collecting and analyzing data from reporting mechanisms on detected fraud to monitor fraud trends and using that 

data and information to continuously improve fraud prevention 

controls; and 

8 

ø(3) using the results of monitoring, evaluation, audits, and 

investigations to improve fraud prevention, detection, and response. 

ø(c) REPORTS.— ø(1) IN GENERAL.—Except as provided in paragraph (2), for 

each of the first 3 fiscal years beginning after the date of enactment of this Act, each agency shall submit to Congress, as 

part of the annual financial report of the agency, a report on 

the progress of the agency in— 

ø(A) implementing— 

ø(i) the financial and administrative controls required to be established under subsection (a); 

ø(ii) the fraud risk principle in the Standards for Internal Control in the Federal Government; and 

ø(iii) Office of Management and Budget Circular A– 

123 with respect to the leading practices for managing 

fraud risk; 

ø(B) identifying risks and vulnerabilities to fraud, including with respect to payroll, beneficiary payments, 

grants, large contracts, and purchase and travel cards; and 

ø(C) establishing strategies, procedures, and other steps 

to curb fraud. 

ø(2) FIRST REPORT.—If the date of enactment of this Act is 

less than 180 days before the date on which an agency is required to submit the annual financial report of the agency, the 

agency may submit the report required under paragraph (1) as 

part of the following annual financial report of the agency. 

øSEC. 4. WORKING GROUP. 

ø(a) ESTABLISHMENT.—Not later than 180 days after the date of 

enactment of this Act [June 30, 2016], the Office of Management 

and Budget shall establish a working group to improve— 

ø(1) the sharing of financial and administrative controls established under section 3(a) and other best practices and techniques for detecting, preventing, and responding to fraud, including improper payments; and 

ø(2) the sharing and development of data analytics techniques. 

ø(b) COMPOSITION.—The working group established under subsection (a) shall be composed of— 

ø(1) the Controller of the Office of Management and Budget, 

who shall serve as Chairperson; 

ø(2) the Chief Financial Officer of each agency; and 

ø(3) any other party determined to be appropriate by the Director of the Office of Management and Budget, which may include the Chief Information Officer, the Chief Procurement Officer, or the Chief Operating Officer of each agency. 

ø(c) CONSULTATION.—The working group established under subsection (a) shall consult with Offices of Inspectors General and Federal and non-Federal experts on fraud risk assessments, financial 

controls, and other relevant matters. 

ø(d) MEETINGS.—The working group established under subsection (a) shall hold not fewer than 4 meetings per year. 

ø(e) PLAN.—Not later than 270 days after the date of enactment 

of this Act, the working group established under subsection (a) 

shall submit to Congress a plan for the establishment and use of 

9 

a Federal interagency library of data analytics and data sets, which 

can incorporate or improve upon existing Federal resources and capacities, for use by agencies and Offices of Inspectors General to facilitate the detection, prevention, and recovery of fraud, including 

improper payments.¿ 

* * * * * * * 

øIMPROPER PAYMENTS 

øSEC. 2. DEFINITIONS. 

øIn this Act— 

ø(1) the term ‘agency’ means an executive agency as that 

term is defined under section 102 of title 31, United States 

Code; 

ø(2) the term ‘improper payment’ has the meaning given that 

term in section 2(g) of the Improper Payments Information Act 

of 2002 [Pub. L. 107–300] (31 U.S.C. 3321 note), as re-designated by section 3(a)(1) of this Act; and 

ø(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. 

øSEC. 3. IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS 

BY FEDERAL AGENCIES. 

ø(a) IN GENERAL.—[Amended Pub. L. 107–300, set out below.] 

ø(b) IMPROVED ESTIMATES.— ø(1) IN GENERAL.—Not later than 180 days after the date of 

enactment of this Act [Jan. 10, 2013], the Director of the Office 

of Management and Budget shall provide guidance to agencies 

for improving the estimates of improper payments under the 

Improper Payments Information Act of 2002 [Pub. L. 107–300] 

(31 U.S.C. 3321 note). 

ø(2) GUIDANCE.—Guidance under this subsection shall— 

ø(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; 

ø(B) instruct agencies to give the persons or entities performing improper payments estimates access to all necessary payment data, including access to relevant documentation; 

ø(C) explicitly bar agencies from relying on self-reporting 

by the recipients of agency payments as the sole source 

basis for improper payments estimates; 

ø(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; 

ø(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 

ø(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 

10 

2002 (31 U.S.C. 3321 note) to better reflect the unique 

processes, procedures, and risks involved in each specific 

program. 

ø(c) TECHNICAL AND CONFORMING AMENDMENTS.—[Amended sections 2(h), 3 of Pub. L. 111–204, set out below.] 

øSEC. 4. IMPROPER PAYMENTS INFORMATION. 

ø[Amended Pub. L. 107–300, set out below.] 

øSEC. 5. DO NOT PAY INITIATIVE. 

ø(a) PREPAYMENT AND PREAWARD PROCEDURES.— 

ø(1) IN GENERAL.—Each agency shall review prepayment and 

preaward procedures and ensure that a thorough review of 

available databases with relevant information on eligibility occurs to determine program or award eligibility and prevent improper payments before the release of any Federal funds. 

ø(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: 

ø(A) The death records maintained by the Commissioner 

of Social Security. 

ø(B) The General Services Administration’s Excluded 

Parties List System. 

ø(C) The Debt Check Database of the Department of the 

Treasury. 

ø(D) The Credit Alert System or Credit Alert Interactive 

Voice Response System of the Department of Housing and 

Urban Development. 

ø(E) The List of Excluded Individuals/Entities of the Office of Inspector General of the Department of Health and 

Human Services. 

ø(F) Information regarding incarcerated individuals 

maintained by the Commissioner of Social Security under 

sections 202(x) and 1611(e) of the Social Security Act [42 

U.S.C. 402(x), 1382(e)]. 

ø(b) DO NOT PAY INITIATIVE.— 

ø(1) ESTABLISHMENT.—There is established the Do Not Pay 

Initiative which shall include— 

ø(A) use of the databases described under subsection 

(a)(2); and 

ø(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). 

ø(2) OTHER DATABASES.—In making designations of other 

databases under paragraph (1)(B), the Director of the Office of 

Management and Budget shall— 

ø(A) consider any database that substantially assists in 

preventing improper payments; and 

ø(B) provide public notice and an opportunity for comment before designating a database under paragraph 

(1)(B). 

ø(3) ACCESS AND REVIEW.— 

ø(A) IN GENERAL.—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 

11 

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. 

ø(B) OTHER ENTITIES.—States and any contractor, subcontractor, or agent of a State, and the judicial and legislative branches of the United States (as defined in paragraphs (2) and (3), respectively, of section 202(e) of title 18, 

United States Code), shall have access to, and use of, the 

Do Not Pay Initiative for the purpose of verifying payment 

or award eligibility for payments (as defined in section 

2(g)(3) of the Improper Payments Information Act of 2002 

(31 U.S.C. 3321 note)) when, with respect to a State, the 

Director of the Office of Management and Budget determines that the Do Not Pay Initiative is appropriately established for that State and any contractor, subcontractor, 

or agent of the State, and, with respect to the judicial and 

legislative branches of the United States, when the Director of the Office of Management and Budget determines 

that the Do Not Pay Initiative is appropriately established 

for the judicial branch or the legislative branch, as applicable. 

ø(C) CONSISTENCY WITH PRIVACY ACT OF 1974.—To ensure 

consistency with the principles of section 552a of title 5, 

United States Code (commonly known as the ‘Privacy Act 

of 1974’), the Director of the Office of Management and 

Budget may issue guidance that establishes privacy and 

other requirements that shall be incorporated into Do Not 

Pay Initiative access agreements with States, including 

any contractor, subcontractor, or agent of a State, and the 

judicial and legislative branches of the United States. 

ø(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. 

ø(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— 

ø(A) include an evaluation of whether the Do Not Pay 

Initiative has reduced improper payments or improper 

awards; and 

ø(B) provide the frequency of corrections or identification 

of incorrect information. 

ø(c) DATABASE INTEGRATION PLAN.—Not later than 60 days after 

the date of enactment of this Act [Jan. 10, 2013], the Director of 

the Office of Management and Budget shall provide to the Congress a plan for— 

ø(1) inclusion of other databases on the Do Not Pay Initiative; 

ø(2) to the extent permitted by law, agency access to the Do 

Not Pay Initiative; and 

12 

ø(3) the data use agreements described under subsection 

(e)(2)(D). 

ø(d) INITIAL WORKING SYSTEM.— ø(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. 

ø(2) WORKING SYSTEM.—The working system established 

under paragraph (1)— 

ø(A) may be located within an appropriate agency; 

ø(B) shall include not less than 3 agencies as users of 

the system; 

ø(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; and 

ø(D) may include States and their quasi-government entities, and the judicial and legislative branches of the 

United States (as defined in paragraphs (2) and (3), respectively, of section 202(e) of title 18, United States Code) 

as users of the system in accordance with subsection (b)(3). 

ø(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. 

ø(e) FACILITATING DATA ACCESS BY FEDERAL AGENCIES AND OF- FICES OF INSPECTORS GENERAL FOR PURPOSES OF PROGRAM INTEGRITY.— 

ø(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. 

ø(2) COMPUTER MATCHING BY FEDERAL AGENCIES FOR PUR- POSES OF INVESTIGATION AND PREVENTION OF IMPROPER PAY- MENTS AND FRAUD.— ø(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. 

ø(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. 

ø(C) TERMINATION DATE.—An agreement under subparagraph (A)— 

ø(i) shall have a termination date of less than 3 

years; and 

13 

ø(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. 

ø(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). 

ø(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. 

ø(3) GUIDANCE OF THE OFFICE OF MANAGEMENT AND BUDG- ET.—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— 

ø(A) issue guidance for agencies regarding implementing 

this subsection, which shall include standards for— 

ø(i) reimbursement of costs, when necessary, between agencies; 

ø(ii) retention and timely destruction of records in 

accordance with section 552a(o)(1)(F) of title 5, United 

States Code; and 

ø(iii) prohibiting duplication and redisclosure of 

records in accordance with section 552a(o)(1)(H) of 

title 5, United States Code; 

ø(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— 

ø(i) improve the effectiveness and responsiveness of 

the Data Integrity Boards; 

ø(ii) ensure privacy protections in accordance with 

section 552a of title 5, United States Code (commonly 

known as the Privacy Act of 1974); and 

ø(iii) establish standard matching agreements for 

use when appropriate; and 

ø(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. 

ø(4) CORRECTIONS.—The Director of the Office of Management and Budget shall establish procedures providing for the 

correction of data in order to ensure— 

ø(A) compliance with section 552a(p) of title 5, United 

States Code; and 

14 

ø(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). 

ø(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. 

ø(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. 

ø(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. 

ø(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 MAS- TER FILE.— ø(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)). 

ø(2) ADDITIONAL ACTIONS UNDER PLAN.—The plan established under this subsection shall include recommended actions 

by agencies to— 

ø(A) increase the quality and frequency of access to the 

Death Master File and other death data; 

ø(B) achieve a goal of at least daily access as appropriate; 

ø(C) provide for all States and other data providers to 

use improved and electronic means for providing data; 

ø(D) identify improved methods by agencies for determining ineligible payments due to the death of a recipient 

through proactive verification means; and 

ø(E) address improper payments made by agencies to deceased individuals as part of Federal retirement programs. 

ø(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. 

ø(h) REPORT ON IMPROPER PAYMENTS DATA ANALYSIS.—Not later 

than 180 days after the date of enactment of the Federal Improper 

Payments Coordination Act of 2015 [Dec. 18, 2015], the Secretary 

15 

of the Treasury shall submit to Congress a report which shall include a description of— 

ø(1) data analytics performed as part of the Do Not Pay 

Business Center operated by the Department of the Treasury 

for the purpose of detecting, preventing, and recovering improper payments through preaward, postaward prepayment, 

and postpayment analysis, which shall include a description of 

any analysis or investigations incorporating— 

ø(A) review and data matching of payments and beneficiary enrollment lists of State programs carried out using 

Federal funds for the purposes of identifying eligibility duplication, residency ineligibility, duplicate payments, or 

other potential improper payment issues; 

ø(B) review of multiple Federal agencies and programs 

for which comparison of data could show payment duplication; and 

ø(C) review of other information the Secretary of the 

Treasury determines could prove effective for identifying, 

preventing, or recovering improper payments, which may 

include investigation or review of information from multiple Federal agencies or programs; 

ø(2) the metrics used in determining whether the analytic 

and investigatory efforts have reduced, or contributed to the 

reduction of, improper payments or improper awards; and 

ø(3) the target dates for implementing the data analytics operations performed as part of the Do Not Pay Business 

Center[.] 

øSEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

ø(a) DEFINITION.—In this section, the term ‘recovery audit’ 

means a recovery audit described under section 2(h) of the Improper Payments Elimination and Recovery Act of 2010 [Pub. L. 

111–204] (31 U.S.C. 3301 note). 

ø(b) REVIEW.—The Director of the Office of Management and 

Budget shall determine— 

ø(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 

ø(2) targets for recovering improper payments, including specific information on amounts and payments recovered by recovery audit contractors. 

øSEC. 7. IMPROVING THE USE OF DATA BY GOVERNMENT AGENCIES 

FOR CURBING IMPROPER PAYMENTS. 

ø(a) PROMPT REPORTING OF DEATH INFORMATION BY THE DEPARTMENT OF STATE AND THE DEPARTMENT OF DEFENSE.—Not later 

than 1 year after the date of enactment of this section [Dec. 18, 

2015], the Secretary of State and the Secretary of Defense shall establish a procedure under which each Secretary shall, promptly 

and on a regular basis, submit information relating to the deaths 

of individuals to each agency for which the Director of the Office 

16 

of Management and Budget determines receiving and using such 

information would be relevant and necessary. 

ø(b) GUIDANCE TO AGENCIES REGARDING DATA ACCESS AND USE

FOR IMPROPER PAYMENTS PURPOSES.— ø(1) IN GENERAL.—Not later than 1 year after the date of enactment of this section, the Director of the Office of Management and Budget, in consultation with the Council of the Inspectors General on Integrity and Efficiency, the heads of other 

relevant Federal, State, and local agencies, and Indian tribes 

and tribal organizations, as appropriate, shall issue guidance 

regarding implementation of the Do Not Pay Initiative under 

section 5 to— 

ø(A) the Department of the Treasury; and 

ø(B) each agency or component of an agency— 

ø(i) that operates or maintains a database of information described in section 5(a)(2); or 

ø(ii) for which the Director determines improved 

data matching would be relevant, necessary, or beneficial. 

ø(2) REQUIREMENTS.—The guidance issued under paragraph 

(1) shall— 

ø(A) address the implementation of subsection (a); and 

ø(B) include the establishment of deadlines for access to 

and use of the databases described in section 5(a)(2) under 

the Do Not Pay Initiative.¿ 

* * * * * * * 

øIMPROPER PAYMENTS 

øSEC. 2. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS TO REDUCE THEM. 

ø(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS AND ACTIVI- TIES.— ø(1) IN GENERAL.—The head of each agency shall, in accordance with guidance prescribed by the Director of the Office of 

Management and Budget, periodically review all programs and 

activities that the relevant agency head administers and identify all programs and activities that may be susceptible to significant improper payments. 

ø(2) FREQUENCY.—Reviews under paragraph (1) shall be performed for each program and activity that the relevant agency 

head administers during the year after which the Improper 

Payments Elimination and Recovery Act of 2010 is enacted 

[July 22, 2010] and at least once every 3 fiscal years thereafter. For those agencies already performing a risk assessment 

every 3 years, agencies may apply to the Director of the Office 

of Management and Budget for a waiver from the requirement 

of the preceding sentence and continue their 3-year risk assessment cycle. 

ø(3) RISK ASSESSMENTS.— 

ø(A) DEFINITION.—In this subsection the term ‘significant’ means— 

ø(i) except as provided under clause (ii), that improper payments in the program or activity in the preceding fiscal year may have exceeded— 

17 

ø(I) $10,000,000 of all program or activity payments made during that fiscal year reported and 

2.5 percent of program outlays; or 

ø(II) $100,000,000; and 

ø(ii) with respect to fiscal year 2014 and each fiscal 

year thereafter, that improper payments in the program or activity in the preceding fiscal year may have 

exceeded— 

ø(I) $10,000,000 of all program or activity payments made during that fiscal year reported and 

1.5 percent of program outlays; or 

ø(II) $100,000,000. 

ø(B) SCOPE.—In conducting the reviews under paragraph (1), the head of each agency shall take into account 

those risk factors that are likely to contribute to a susceptibility to significant improper payments, such as— 

ø(i) whether the program or activity reviewed is new 

to the agency; 

ø(ii) the complexity of the program or activity reviewed; 

ø(iii) the volume of payments made through the program or activity reviewed; 

ø(iv) whether payments or payment eligibility decisions are made outside of the agency, such as by a 

State or local government; 

ø(v) recent major changes in program funding, authorities, practices, or procedures; 

ø(vi) the level, experience, and quality of training for 

personnel responsible for making program eligibility 

determinations or certifying that payments are accurate; and 

ø(vii) significant deficiencies in the audit report of 

the agency or other relevant management findings 

that might hinder accurate payment certification. 

ø(b) ESTIMATION OF IMPROPER PAYMENTS.—With respect to each 

program and activity identified under subsection (a), the head of 

the relevant agency shall— 

ø(1) produce a statistically valid estimate, or an estimate 

that is otherwise appropriate using a methodology approved by 

the Director of the Office of Management and Budget, of the 

improper payments made by each program and activity; and 

ø(2) include those estimates in the accompanying materials 

to the annual financial statement of the agency required under 

section 3515 of title 31, United States Code, or similar provision of law and applicable guidance of the Office of Management and Budget. 

ø(c) REPORTS ON ACTIONS TO REDUCE IMPROPER PAYMENTS.— 

With respect to any program or activity of an agency with estimated improper payments under subsection (c), the head of the 

agency shall provide with the estimate under subsection (c) a report on what actions the agency is taking to reduce improper payments, including— 

ø(1) a description of the causes of the improper payments, 

actions planned or taken to correct those causes, and the 

18 

planned or actual completion date of the actions taken to address those causes; 

ø(2) in order to reduce improper payments to a level below 

which further expenditures to reduce improper payments 

would cost more than the amount such expenditures would 

save in prevented or recovered improper payments, a statement of whether the agency has what is needed with respect 

to— 

ø(A) internal controls; 

ø(B) human capital; and 

ø(C) information systems and other infrastructure; 

ø(3) if the agency does not have sufficient resources to establish and maintain effective internal controls under paragraph 

(2)(A), a description of the resources the agency has requested 

in its budget submission to establish and maintain such internal controls; 

ø(4) program-specific and activity-specific improper payments 

reduction targets that have been approved by the Director of 

the Office of Management and Budget; and 

ø(5) a description of the steps the agency has taken to ensure 

that agency managers, programs, and, where appropriate, 

States and localities are held accountable through annual performance appraisal criteria for— 

ø(A) meeting applicable improper payments reduction 

targets; and 

ø(B) establishing and maintaining sufficient internal 

controls, including an appropriate control environment, 

that effectively— 

ø(i) prevent improper payments from being made; 

and 

ø(ii) promptly detect and recover improper payments 

that are made. 

ø(d) REPORTS ON ACTIONS TO RECOVER IMPROPER PAYMENTS.— 

With respect to any improper payments identified in recovery audits conducted under section 2(h) of the Improper Payments Elimination and Recovery Act of 2010 [Pub. L. 111–204] (31 U.S.C. 3321 

note), the head of the agency shall provide with the estimate under 

subsection (c) a report on all actions the agency is taking to recover 

improper payments, including— 

ø(1) a discussion of the methods used by the agency to recover overpayments; 

ø(2) the amounts recovered, outstanding, and determined to 

not be collectable, including the percent such amounts represent of the total overpayments of the agency; 

ø(3) if a determination has been made that certain overpayments are not collectable, a Justification of that determination; 

ø(4) an aging schedule of the amounts outstanding; 

ø(5) a summary of how recovered amounts have been disposed of; 

ø(6) a discussion of any conditions giving rise to improper 

payments and how those conditions are being resolved; and 

ø(7) if the agency has determined under section 2(h) of the 

Improper Payments Elimination and Recovery Act of 2010 (31 

U.S.C. 3321 note) that performing recovery audits for any apVerDate Sep 11 2014 22:33 Dec 31, 2018 Jkt 089010 PO 00000 Frm 00020 Fmt 6659 Sfmt 6602 E:\HR\OC\SR445.XXX SR445
19 

plicable program or activity is not cost-effective, a justification 

for that determination. 

ø(e) GOVERNMENT-WIDE REPORTING OF IMPROPER PAYMENTS AND

ACTIONS TO RECOVER IMPROPER PAYMENTS.— ø(1) REPORT.—Each fiscal year the Director of the Office of 

Management and Budget shall submit a report with respect to 

the preceding fiscal year on actions agencies have taken to report information regarding improper payments and actions to 

recover improper overpayments to— 

ø(A) the Committee on Homeland Security and Governmental Affairs of the Senate; and 

ø(B) the Committee on Oversight and Government Reform of the House of Representatives. 

ø(2) CONTENTS.—Each report under this subsection shall include— 

ø(A) a summary of the reports of each agency on improper payments and recovery actions submitted under 

this section; 

ø(B) an identification of the compliance status of each 

agency to which this Act applies; 

ø(C) government-wide improper payment reduction targets; and 

ø(D) a discussion of progress made towards meeting government-wide improper payment reduction targets. 

ø(f) DEFINITIONS.—In this section— 

ø(1) AGENCY.—The term ‘agency’ means an executive agency, 

as that term is defined in section 102 of title 31, United States 

Code. 

ø(2) IMPROPER PAYMENT.—The term ‘improper payment’— 

ø(A) means any payment that should not have been 

made or that was made in an incorrect amount (including 

overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and 

ø(B) includes any payment to an ineligible recipient, any 

payment for an ineligible good or service, any duplicate 

payment, any payment for a good or service not received 

(except for such payments where authorized by law), and 

any payment that does not account for credit for applicable 

discounts. 

ø(3) PAYMENT.—The term ‘payment’ means any transfer or 

commitment for future transfer of Federal funds such as cash, 

securities, loans, loan guarantees, and insurance subsidies to 

any non-Federal person or entity or a Federal employee, that 

is made by a Federal agency, a Federal contractor, a Federal 

grantee, or a governmental or other organization administering 

a Federal program or activity. 

ø(4) PAYMENT FOR AN INELIGIBLE GOOD OR SERVICE.—The 

term ‘payment for an ineligible good or service’ shall include a 

payment for any good or service that is rejected under any provision of any contract, grant, lease, cooperative agreement, or 

any other funding mechanism. 

ø(g) GUIDANCE BY THE OFFICE OF MANAGEMENT AND BUDGET.— 

ø(1) IN GENERAL.—Not later than 6 months after the date of 

enactment of the Improper Payments Elimination and RecovVerDate Sep 11 2014 22:33 Dec 31, 2018 Jkt 089010 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\SR445.XXX SR445
20 

ery Act of 2010 [July 22, 2010], the Director of the Office of 

Management and Budget shall prescribe guidance for agencies 

to implement the requirements of this section. The guidance 

shall not include any exemptions to such requirements not specifically authorized by this section. 

ø(2) CONTENTS.—The guidance under paragraph (1) shall 

prescribe— 

ø(A) the form of the reports on actions to reduce improper payments, recovery actions, and government-wide 

reporting; and 

ø(B) strategies for addressing risks and establishing appropriate prepayment and post-payment internal controls.’’¿ 

* * * * * * * 

Subchapter IV—Improper Payments 

3351. Definitions. 

3352. Estimates of improper payments and reports on actions to reduce improper 

payments. 

3353. Compliance. 

3354. Do Not Pay Initiative. 

3355. Improving recovery of improper payments. 

3356. Improving the use of data by executive agencies for curbing improper payments. 

3357. Financial and administrative controls relating to fraud and improper payments. 

3358. Interagency working group for Governmentwide payment integrity improvement. 

SEC. 3351. DEFINITIONS. 

In this subchapter: 

(1) ANNUAL FINANCIAL STATEMENT.—The term ‘annual financial statement’ means the annual financial statement required 

under section 3515 of this title or similar provision of law. 

(2) COMPLIANCE.—The term ‘compliance’ means that an executive agency— 

(A) has— 

(i) published improper payments information with 

the annual financial statement of the executive agency 

for the most recent fiscal year; and 

(ii) posted on the website of the executive agency that 

statement and any accompanying materials required 

under guidance of the Office of Management and 

Budget; 

(B) if required, has conducted a program specific risk assessment for each program or activity that conforms with 

the requirements under section 3352(a); 

(C) if required, publishes improper payments estimates 

for all programs and activities identified under section 

3352(a) in the accompanying materials to the annual financial statement; 

(D) publishes programmatic corrective action plans prepared under section 3352(d) that the executive agency may 

have in the accompanying materials to the annual financial statement; 

(E) publishes improper payments reduction targets established under section 3352(d) that the executive agency may 

21 

have in the accompanying materials to the annual financial statement for each program or activity assessed to be 

at risk, and has demonstrated improvements and developed 

a plan to meet the reduction targets, and 

(F) has reported an improper payment rate of less than 

10 percent for each program and activity for which an estimate was published under section 3352(c). 

(3) DO NOT PAY INITIATIVE.—The term ‘Do Not Pay Initiative’ 

means the initiative described in section 3354(b). 

(4) IMPROPER PAYMENT.—The term ‘improper payment’— 

(A) means any payment that should not have been made 

or that was made in an incorrect amount, including an 

overpayment or underpayment, under a statutory, contractual, administrative, or other legally applicable requirement; and 

(B) includes— 

(i) any payment to an ineligible recipient; 

(ii) any payment for an ineligible good or service; 

(iii) any duplicative payment; 

(iv) any payment for a good or service not received, 

except for those payments where authorized by law; 

and 

(v) any payment that does not account for credit for 

applicable discounts. 

(5) PAYMENT.—The term ‘payment’ means any transfer or 

commitment for future transfer of Federal funds such as cash, 

securities, loans, loan guarantees, and insurance subsidies to 

any non-Federal person or entity or a Federal contractor, a Federal grantee, or a governmental or other organization administering a Federal program or activity. 

(6) PAYMENT FOR AN INELIGIBLE GOOD OR SERVICE.—The term 

‘payment for an ineligible good or service’ includes a payment 

for any good or service that is rejected under any provision of 

any contract, grant, lease, cooperative agreement, or other funding mechanism. 

(7) RECOVERY AUDIT.—The term ‘recovery audit’ means a recovery audit described in section 3352(i). 

(8) STATE.—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. 3352. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS TO REDUCE IMPROPER PAYMENTS. 

(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS AND ACTIVITIES.— 

(1) IN GENERAL.—The head of each executive agency shall, in 

accordance with guidance prescribed by the Director of the Office of Management and Budget— 

(A) periodically review all programs and activities that 

the head of the executive agency administers; and 

(B) identify all programs and activities with outlays exceeding the statutory threshold dollar amount described in 

paragraph (3)(A)(i) that may be susceptible to significant 

improper payments. 

(2) FREQUENCY.—A review under paragraph (1) shall be performed for each program and activity that the head of an execuVerDate Sep 11 2014 22:33 Dec 31, 2018 Jkt 089010 PO 00000 Frm 00023 Fmt 6659 Sfmt 6603 E:\HR\OC\SR445.XXX SR445
22 

tive agency administers not less frequently than once every 3 fiscal years. 

(3) RISK ASSESSMENTS.— 

(A) DEFINITION OF SIGNIFICANT.—In this paragraph, the 

term ‘significant’ means that, in the preceding fiscal year, 

the sum of a program or activity’s improper payments and 

payments whose propriety cannot be determined by the executive agency due to lacking or insufficient documentation 

may have exceeded— 

(i) $10,000,000 of all reported program or activity 

payments of the executive agency made during that fiscal year and 1.5 percent of program outlays; or 

(ii) $100,000,000. 

(B) SCOPE.—In conducting a review under paragraph (1), 

the head of each executive agency shall take into account 

those risk factors that are likely to contribute to a susceptibility to significant improper payments, such as— 

(i) whether the program or activity reviewed is new 

to the executive agency; 

(ii) the complexity of the program or activity reviewed; 

(iii) the volume of payments made through the program or activity reviewed; 

(iv) whether payments or payment eligibility decisions are made outside of the executive agency, such as 

by a State or local government; 

(v) recent major changes in program funding, authorities, practices, or procedures; 

(vi) the level, experience, and quality of training for 

personnel responsible for making program eligibility 

determinations or certifying that payments are accurate; 

(vii) significant deficiencies in the audit report of the 

executive agency or other relevant management findings that might hinder accurate payment certification; 

(viii) similarities to other programs or activities that 

have reported improper payment estimates or been 

deemed susceptible to significant improper payments; 

(ix) the accuracy and reliability of improper payment 

estimates previously reported for the program or activity, or other indicator of potential susceptibility to improper payments identified by the Inspector General of 

the executive agency, the Government Accountability 

Office, other audits performed by or on behalf of the 

Federal, State, or local government, disclosures by the 

executive agency, or any other means; 

(x) whether the program or activity lacks information 

or data systems to confirm eligibility or provide for 

other payment integrity needs; and 

(xi) the risk of fraud as assessed by the executive 

agency under the Standards for Internal Control in the 

Federal Government published by the Government Accountability Office (commonly known as the ‘Green 

Book’). 

23 

(C) ANNUAL REPORT.—Each executive agency shall publish an annual report that includes— 

(i) a listing of each program or activity identified 

under paragraph (1), including the date on which the 

program or activity was most recently assessed for risk 

under paragraph (1); and 

(ii) a listing of any program or activity for which the 

executive agency makes any substantial changes to the 

methodologies of the reviews conducted under paragraph (1). 

(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 executive agency responsible 

for administering a high priority program identified under 

subparagraph (A), establish annual targets and semi-annual or quarterly actions for reducing improper payments 

associated with the high-priority program. 

(2) REPORT ON HIGH-PRIORITY IMPROPER PAYMENTS.— (A) IN GENERAL.—Subject to Federal privacy policies and 

to the extent permitted by law, each executive agency with 

a program identified under paragraph (1)(A) shall on an 

annual basis submit to the Inspector General of the executive agency and the Office of Management and Budget, and 

make available to the public, including through a website, 

a report on that program. 

(B) CONTENTS.—Each report submitted under subparagraph (A)— 

(i) shall describe any action the executive agency— 

(I) has taken or plans to take to recover improper 

payments, and 

(II) intends to take to prevent future improper 

payments; and 

(ii) shall not include— 

(I) any referrals the executive agency made or 

anticipates making to the Department of Justice; 

or 

(II) any information provided in connection with 

a referral described in subclause (I). 

(C) PUBLIC AVAILABILITY ON CENTRAL WEBSITE.—The Office of Management and Budget shall make each report 

submitted under subparagraph (A) available on a central 

website. 

(D) AVAILABILITY OF INFORMATION TO INSPECTOR GEN- ERAL.—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 RECOMMENDATION.—The Inspector 

General of each executive agency that submits a report 

24 

under subparagraph (A) shall, for each program of the executive 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 executive 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 the appropriate authorizing and appropriations committees of Congress recommendations, 

which may be included in another report submitted by 

the Inspector General to Congress, for modifying any 

plans of the executive agency relating to the program, 

including improvements for improper payments determination and estimation methodology. 

(F) ANNUAL MEETING.—Not less frequently than once 

every year, the head of each executive agency with a program identified under paragraph (1)(A), or a designee of 

the head of the executive agency, shall meet with the Director of the Office of Management and Budget, or a designee 

of the Director, to report on actions taken during the preceding year and planned actions to prevent improper payments. 

(c) ESTIMATION OF IMPROPER PAYMENTS.— 

(1) ESTIMATION.—With respect to each program and activity 

identified under subsection (a)(1), the head of the relevant executive agency shall— 

(A) produce a statistically valid estimate, or an estimate 

that is otherwise appropriate using a methodology approved by the Director of the Office of Management and 

Budget, of the improper payments made by the program or 

activity; and 

(B) include the estimates described in subparagraph (A) 

in the accompanying materials to the annual financial 

statement of the executive agency and as required in applicable guidance of the Office of Management and Budget. 

(2) LACKING OR INSUFFICIENT DOCUMENTATION.— 

(A) IN GENERAL.—For the purpose of producing an estimate under paragraph (1), when the executive agency cannot determine, due to lacking or insufficient documentation, 

whether a payment is proper or not, the payment shall be 

treated as an improper payment. 

(B) SEPARATE REPORT.—The head of an executive agency 

may report separately on what portion of the improper payments estimate for a program or activity of the executive 

agency under paragraph (1) is attributable to lacking or insufficient documentation. 

(d) REPORTS ON ACTIONS TO REDUCE IMPROPER PAYMENTS.— 

With respect to any program or activity of an executive agency with 

estimated improper payments under subsection (c) a report on what 

actions the executive agency is taking to reduce improper payments, 

including— 

25 

(1) a description of the causes of the improper payments, actions planned or taken to correct those causes, and the planned 

or actual completion date of the actions taken to address those 

causes; 

(2) in order to reduce improper payments to a level below 

which further expenditures to reduce improper payments would 

cost more than the amount those expenditures would save in 

prevented or recovered improper payments, a statement of 

whether the executive agency has what is needed with respect 

to— 

(A) internal controls; 

(B) human capital; 

(C) information systems and other infrastructure; 

(3) if the executive agency does not have sufficient resources 

to establish and maintain effective internal controls as described in paragraph (2)(A), a description of the resources the 

executive agency has requested in the budget submission of the 

executive agency to establish and maintain those internal controls; 

(4) program-specific and activity-specific improper payments 

reduction targets that have been approved by the Director of the 

Office of Management and Budget; 

(5) a description of the steps the executive agency has taken 

to ensure that executive agency managers, programs, and, 

where appropriate, States and local governments are held accountable through annual performance appraisal criteria for— 

(A) meeting applicable improper payment reduction targets; and 

(B) establishing and maintaining sufficient internal controls, including an appropriate control environment, that 

effectively— 

(i) prevent improper payments from being made; and 

(ii) promptly detect and recover improper payments 

that are made; and 

(6) a description of how the level of planned or completed actions by the executive agency to address the causes of the improper payments matches the level of improper payments, including a breakdown by category of improper payments and 

specific timelines for completion of those actions. 

(e) REPORTS ON ACTIONS TO RECOVER IMPROPER PAYMENTS.— 

With respect to improper payments identified in a recovery audit, 

the head of the executive agency shall provide with the estimate required under subsection (c) a report on all actions the executive 

agency is taking to recover the improper payments, including— 

(1) a discussion of the methods used by the executive agency 

to recover improper payments; 

(2) the amounts recovered, outstanding, and determined to 

not be collectable, including the percent those amounts represent of the total improper payments of the executive agency; 

(3) if a determination has been made that certain improper 

payments are not collectable, a justification of that determination; 

(4) an aging schedule of the amounts outstanding; 

(5) a summary of how recovered amounts have been disposed 

of; 

26 

(6) a discussion of any conditions giving rise to improper payments and how those conditions are being resolved; and 

(7) if the executive agency has determined under subsection (i) 

that performing recovery audits for any applicable program or 

activity is not cost-effective, a justification for that determination. 

(f) GOVERNMENTWIDE REPORTING OF IMPROPER PAYMENTS AND

ACTIONS TO RECOVER IMPROPER PAYMENTS.— (1) REPORT.—Each fiscal year, the Director of the Office of 

Management and Budget shall submit a report with respect to 

the preceding fiscal year on actions that executive agencies have 

taken to report information regarding improper payments and 

actions to recover overpayments to— 

(A) the Committee on Homeland Security and Governmental Affairs of the Senate; 

(B) the Committee on Oversight and Government Reform 

of the House of Representatives; and 

(C) the Comptroller General of the United States. 

(2) CONTENTS.—Each report required under paragraph (1) 

shall include— 

(A) a summary of the reports of each executive agency on 

improper payments and recovery actions submitted under 

this section; 

(B) an identification of the compliance status of each executive agency, as determined by the Inspector General of 

the executive agency under section 3353, to which this section applies; 

(C) Governmentwide improper payment reduction targets; 

(D) a Governmentwide estimate of improper payments; 

and 

(E) a discussion of progress made towards meeting Government-wide improper payment reduction targets. 

(g) GUIDANCE BY THE OFFICE OF MANAGEMENT AND BUDGET.— (1) IN GENERAL.—Not later than 1 year after the date of enactment of this section, the Director of the Office of Management and Budget shall prescribe guidance for executive agencies 

to implement the requirements of this section, which shall not 

include any exemptions to those requirements that are not specifically authorized by this section. 

(2) CONTENTS.—The guidance under paragraph (1) shall prescribe— 

(A) the form of the reports on actions to reduce improper 

payments, recovery actions, and Government wide reporting; and 

(B) strategies for addressing risks and establishing appropriate prepayment and post payment internal controls. 

(h) DETERMINATIONS OF AGENCY READINESS FOR OPINION ON IN- TERNAL CONTROL.—The criteria required to be developed under section 2(g) of the Improper Payments Elimination and Recovery Act 

of 2010, as in effect on the day before the date of enactment of this 

section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

27 

(i) RECOVERY AUDITS.— 

(1) IN GENERAL.— 

(A) CONDUCT OF AUDITS.—Except as provided under 

paragraph (3) and if not prohibited under any other provision of law, the head of each executive agency shall conduct 

recovery audits with respect to each program and activity 

of the executive agency that expends $1,000,000 or more annually if conducting the audits would be cost effective. 

(B) PROCEDURES.—In conducting a recovery audit under 

this subsection, the head of an executive agency— 

(i) shall give priority to the most recent payments 

and to payments made in any program identified as 

susceptible to significant improper payments under 

subsection (a); 

(ii) shall implement this subsection in a manner designed to ensure the greatest financial benefit to the 

Federal Government; and 

(iii) may conduct the recovery audit directly, by using 

other departments and agencies of the United States, 

or by producing performance of recovery audits by private sector sources by contract, subject to the availability of appropriations, or by any combination thereof. 

(C) RECOVERY AUDIT CONTRACTS.—With respect to a recovery audit procured by an executive agency by contract— 

(i) subject to subparagraph (B)(iii), and except to the 

extent such actions are outside the authority of the executive agency under section 7103 of title 41, the head 

of the executive agency may authorize the contractor 

to— 

(I) notify entities, including individuals, of potential overpayments made to those entities; 

(II) respond to questions concerning potential 

overpayments; and 

(III) take other administrative actions with respect to an overpayment claim made or to be made 

by the executive agency; and 

(ii) the contractor shall not have the authority to 

make a final determination relating to whether any 

overpayment occurred or whether to compromise, settle, 

or terminate an overpayment claim. 

(D) CONTRACT TERMS AND CONDITIONS.— 

(i) IN GENERAL.—The executive agency shall include 

in each contract for procurement of performance of a 

recovery audit a requirement that the contractor 

shall— 

(I) provide to the executive agency periodic reports on conditions giving rise to overpayments 

identified by the contractor and any recommendations on how to mitigate those conditions; 

(II) notify the executive agency of any overpayments identified by the contractor pertaining to the 

executive agency or to any other executive agency 

that are beyond the scope of the contract; and 

28 

(III) report to the executive agency credible evidence of fraud or vulnerabilities to fraud and conduct appropriate training of personnel of the contractor on identification of fraud. 

(ii) REPORTS ON ACTION TAKEN.—Each executive 

agency shall, on an annual basis, include in an annual 

financial statement of the executive agency a report on 

actions taken by the executive agency during the preceding fiscal year to address the recommendations described in clause (i)(I). 

(E) AGENCY ACTION FOLLOWING NOTIFICATION.—Each executive agency shall— 

(i) take prompt and appropriate action in response to 

a report or notification by a contractor under subclause 

(I) or (II) of subparagraph (D)(i) to collect an overpayment; and 

(ii) forward to other executive agencies any information that applies to that executive agency. 

(2) DISPOSITION OF AMOUNTS RECOVERED.— 

(A) IN GENERAL.—Amounts collected by executive agencies 

each fiscal year through recovery audits shall be treated in 

accordance with this paragraph. 

(B) DISTRIBUTION.—The head of an executive agency 

shall determine the distribution of collected amounts described in subparagraph (A), less amounts needed to fulfill 

the purposes of section 3562(a) of this title, in accordance 

with subparagraphs (C), (D), and (E). 

(C) USE FOR FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM.—Not more than 25 percent of the amounts collected 

by an executive agency through recovery audits— 

(i) shall be available to the head of the executive 

agency to carry out the financial management improvement program of the executive agency under paragraph 

(3); 

(ii) may be credited, if applicable, for the purpose described in clause (i) by the head of an executive agency 

to any executive agency appropriations and funds that 

are available for obligation at the time of collection; 

and 

(iii) shall be used to supplement and not supplant 

any other amounts available for the purpose described 

in clause (i) and shall remain available until expended. 

(D) USE FOR ORIGINAL PURPOSE.—Not more than 25 percent of the amounts collected by an executive agency 

through recovery audits— 

(i) shall be credited to the appropriation or fund, if 

any, available for obligation at the time of collection 

for the same general purposes as the appropriation or 

fund from which the overpayment was made; 

(ii) shall remain available for the same period and 

purposes as the appropriation or fund to which credited; and 

(iii) if the appropriation from which an overpayment 

was made has expired— 

29 

(I) in the case of recoveries of overpayments that 

are made from a trust or special fund account, 

shall revert to that account; and 

(II) in the case of other recoveries of overpayments— 

(aa) for amounts that are recovered more 

than 5 fiscal years from the last fiscal year in 

which the funds were available for obligation, 

shall be deposited in the Treasury as miscellaneous receipts; and 

(bb) for other amounts, shall be newly available for the same time period as the funds 

were originally available for obligation. 

(E) USE FOR INSPECTOR GENERAL ACTIVITIES.—Not more 

than 5 percent of the amounts collected by an executive 

agency through recovery audits— 

(i) shall be available to the Inspector General of that 

executive agency for— 

(I) the Inspector General to carry out this Act; or 

(II) any other activities of the Inspector General 

relating to investigating improper payments or auditing internal controls associated with payments; 

and 

(ii) shall remain available for the same period and 

purposes as the appropriation or fund to which credited. 

(F) REMAINDER.—Amounts collected that are not applied 

in accordance with subparagraph (B), (C), (D), or (E) shall 

be deposited in the Treasury as miscellaneous receipts, except that in the case of recoveries of overpayments that are 

made from trust or special fund accounts, those amounts 

shall revert to those accounts. 

(G) DISCRETIONARY AMOUNTS.—This paragraph shall 

apply only to recoveries of overpayments that are made 

from discretionary appropriations, as defined in section 

250(c)(7) of the Balanced Budget and Emergency Deficit 

Control Act of 1985 (2 U.S.C. 900(c)(7)), and shall not 

apply to recoveries of overpayments that are made from discretionary amounts that were appropriated before the date 

of enactment of the Improper Payments Elimination and 

Recovery Act of 2010, as in effect on the day before the date 

of enactment of this section. 

(H) APPLICATION.—This paragraph shall not apply to the 

recovery of an overpayment if the appropriation from which 

the overpayment was made has not expired. 

(3) FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM.— 

(A) REQUIREMENT.—The head of each executive agency 

shall conduct a financial management improvement program consistent with rules prescribed by the Director of the 

Office of Management and Budget. 

(B) PROGRAM FEATURES.—In conducting a program described in subparagraph (A), the head of an executive agency— 

30 

(i) shall, as the first priority of the program, address 

problems that contribute directly to executive agency 

improper payments; and 

(ii) may seek to reduce errors and waste in other executive agency programs and operations. 

(4) PRIVACY PROTECTION.—Any nongovernmental entity that, 

in the course of recovery auditing or recovery activity under this 

subsection, obtains information that identifies an individual or 

with respect to which there is a reasonable basis to believe that 

the information can be used to identify an individual, may not 

disclose the information for any purpose other than the recovery 

auditing or recovery activity and governmental oversight of the 

activity, unless disclosure for that other purpose is authorized 

by the individual to the executive agency that contracted for the 

performance of the recovery auditing or recovery activity. 

(5) RULE OF CONSTRUCTION.—Except as provided under paragraph (4), nothing in this subsection shall be construed as terminating or in any way limiting authorities that are otherwise 

available to executive agencies under existing provisions of law 

to recover improper payments and use recovered amounts. 

SEC. 3353. COMPLIANCE. 

(a) ANNUAL COMPLIANCE REPORT BY INSPECTORS GENERAL OF

EXECUTIVE AGENCIES.— (1) IN GENERAL.—Each fiscal year, the Inspector General of 

each executive agency shall— 

(A) determine whether the executive agency is in compliance; and 

(B) submit a report on the determination made under 

subparagraph (A) to— 

(i) the head of the executive agency; 

(ii) the Committee on Homeland Security and Governmental Affairs of the Senate; 

(iii) the Committee on Oversight and Governmental 

Reform of the House of Representatives; and 

(iv) the Comptroller General of the United States. 

(2) DEVELOPMENT OR USE OF A CENTRAL WEBSITE.—The 

Council of the Inspectors General on Integrity and Efficiency (in 

this subsection referred to as the ‘Council’) shall develop a public central website, or make use of a public central website in 

existence on the date of enactment of this section, to contain individual compliance determination reports issued by Inspectors 

General under paragraph (1)(B) and such additional information as determined by the Council. 

(3) OMB GUIDANCE.—No later than 180 days after the date 

of enactment of this section, the Director of the Office of Management and Budget, in consultation with the Council and with 

consideration given to the available resources and independence 

of individual Offices of Inspectors General, shall develop and 

promulgate guidance for the compliance determination reports 

issued by the Inspectors General under paragraph (1)(B), which 

shall require that— 

(A) the reporting format used by the Inspectors General 

is consistent; 

(B) Inspectors General evaluate and take into account the 

adequacy of executive agency risk assessments, improper 

31 

payment estimates methodology, and executive agency action plans to address the causes of improper payments; 

(C) Inspectors General take into account whether the executive agency has correctly identified the causes of improper payments and whether the actions of the executive 

agency to address those causes are adequate and effective; 

(D) Inspectors General evaluate the adequacy of executive 

agency action plans on how the executive agency addresses 

the causes of improper payments; and 

(E) as part of the report, Inspectors General include an 

evaluation of executive agency efforts to prevent and reduce 

improper payments and any recommendations for actions 

to further improve that prevention and reduction. 

(4) CIGIE GUIDANCE.—Not later than 180 days after the date 

of enactment of this section, the Council shall, with consideration given to the available resources and independence of individual Offices of Inspectors General, develop and promulgate 

guidance that specifies procedures for compliance determinations made by the Inspectors General under paragraph (1)(A), 

which shall describe procedures for Inspectors General— 

(A) to make the determinations consistent regarding compliance; and 

(B) to evaluate— 

(i) for compliance with the requirement described in 

section 3351(2)(B), the risk assessment methodology of 

the executive agency, including whether the audits, examinations, and legal actions of the Inspector General 

indicate a higher risk of improper payments or actual 

improper payments that were not included in the risk 

assessments of the executive agency conducted under 

section 3352(a); 

(ii) for compliance with the requirement described in 

section 3351(2)(C), the accuracy of the rate estimates 

and whether the sampling and estimation plan used is 

appropriate given program characteristics; 

(iii) for compliance with the requirement described in 

section 3351(2)(D), the corrective action plans and 

whether the plans are adequate and focused on the true 

causes of improper payments, including whether the 

corrective action plans are— 

(I) reducing improper payments; 

(II) effectively implemented; and 

(III) prioritized within the executive agency; 

(iv) the adequacy of executive agency action plans to 

address the causes of improper payments; 

(v) executive agency efforts to prevent and reduce improper payments, and any recommendations for actions 

to further improve; and 

(vi) whether an executive agency has published an 

annual financial statement in accordance with the requirement described in section 3351(2)(A). 

(b) REMEDIATION.— (1) NONCOMPLIANCE.— 

(A) IN GENERAL.—If an executive agency is determined by 

the Inspector General of that executive agency not to be in 

32 

compliance under subsection (a) in a fiscal year with respect to a program or activity, the head of the executive 

agency shall submit to the appropriate authorizing and appropriations committees of Congress a plan describing the 

actions that the executive agency will take to come into 

compliance. 

(B) PLAN.—The plan described in subparagraph (A) shall 

include— 

(i) measurable milestones to be accomplished in 

order to achieve compliance for each program or activity; 

(ii) the designation of a senior executive agency official who shall be accountable for the progress of the executive agency in coming into compliance for each program or activity; and 

(iii) the establishment of an accountability mechanism, such as a performance agreement, with appropriate incentives and consequences tied to the success of 

the official designated under clause (ii) in leading the 

efforts of the executive agency to come into compliance 

for each program or activity. 

(2) NONCOMPLIANCE FOR 2 FISCAL YEARS.— (A) IN GENERAL.—If an executive agency is determined by 

the Inspector General of that executive agency not to be in 

compliance under subsection (a) for 2 consecutive fiscal 

years for the same program or activity, the executive agency 

shall propose to the Director of the Office of Management 

and Budget additional program integrity proposals that 

would help the executive agency come into compliance. 

(B) ADDITIONAL FUNDING— 

(i) IN GENERAL.—If the Director of the Office of Management and Budget determines that additional funding would help the executive agency come into compliance, the head of the executive agency shall obligate 

additional funding, in an amount determined by the 

Director, to intensified compliance efforts. 

(ii) REPROGRAMMING OR TRANSFER AUTHORITY.—In 

providing additional funding under clause (i)— 

(I) the head of an executive agency shall use any 

reprogramming or transfer authority available to 

the executive agency; and 

(II) if after exercising the reprogramming or 

transfer authority described in subclause (I), additional funding is necessary to obligate the full level 

of funding determined by the Director of the Office 

of Management and Budget under clause (i), the 

executive agency shall submit a request to Congress for additional reprogramming or transfer authority. 

(3) REAUTHORIZATION AND STATUTORY PROPOSALS.—If an executive agency is determined by the Inspector General of that 

executive agency not to be in compliance under subsection (a) 

for 3 consecutive fiscal years for the same program or activity, 

the head of the executive agency shall, not later than 30 days 

after the date of that determination, submit to the appropriate 

33 

authorizing and appropriations committees of Congress and the 

Comptroller General of the United States— 

(A)(i) reauthorization proposals for each program or activity that has not been in compliance for 3 or more consecutive fiscal years; and 

(ii) proposed statutory changes necessary to bring the program or activity into compliance; or 

(B) if the head of the executive agency determines that 

clauses (i) and (ii) of subparagraph (A) will not bring the 

program or activity into compliance, a description of the actions that the executive agency is undertaking to bring the 

program or activity into compliance and a timeline of when 

the compliance will be achieved. 

(4) PLAN AND TIMELINE FOR COMPLIANCE.—If an executive 

agency is determined by the Inspector General of that executive 

agency not to be in compliance under subsection (a) for 4 or 

more consecutive fiscal years for the same program or activity, 

the head of the executive agency shall, not later than 30 days 

after such determination, submit to the appropriate authorizing 

and appropriations committees of Congress a report that includes— 

(A) the activities taken to comply with the requirements 

for 1, 2, 3, 4, or more years of noncompliance; 

(B) a description of any requirements that were fulfilled 

for 1, 2, or 3 consecutive years of noncompliance that are 

still relevant and being pursued as a means to bring the 

program or activity into compliance and prevent and reduce improper payments; 

(C) a description of any new corrective actions; and 

(D) a timeline for when the program or activity will 

achieve compliance based on the actions described within 

the report. 

(5) ANNUAL REPORT.—Each executive agency shall submit to 

the appropriate authorizing and appropriations committees of 

Congress and the Comptroller General of the United States— 

(A) a list of each program or activity that was determined 

to not be in compliance under paragraph (1), (2), (3), or (4); 

and 

(B) actions that are planned to bring the program or activity into compliance. 

(c) COMPLIANCE ENFORCEMENT PILOT PROGRAMS.—The Director 

of the Office of Management and Budget may establish 1 or more 

pilot programs that shall test potential accountability mechanisms 

with appropriate incentives and consequences tied to success in ensuring compliance with this section and eliminating improper payments. 

(d) IMPROVED ESTIMATES GUIDANCE.—The guidance required to 

be provided under section 3(b) of the Improper Payments Elimination and Recovery Improvement Act of 2012, as in effect on the 

day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

34 

SEC. 3354. DO NOT PAY INITIATIVE. 

(a) PREPAYMENT AND PREAWARD PROCEDURES.— 

(1) IN GENERAL.—Each executive agency shall review prepayment and preaward procedures and ensure that a thorough review of available databases with relevant information on eligibility occurs to determine program or award eligibility and prevent improper payments before the release of any Federal funds. 

(2) DATABASES.—At a minimum and before issuing any payment and award, each executive agency shall review as appropriate the following databases to verify eligibility of the payment and award: 

(A) The death records maintained by the Commissioner 

of Social Security. 

(B) The System for Award Management Exclusion 

Records, formerly known as the Excluded Parties List System, of the General Services Administration. 

(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. 

(F) Information regarding incarcerated individuals 

maintained by the Commissioner of Social Security under 

sections 202(x) and 1611(e) of the Social Security Act (42 

U.S.C. 402(x), 1382(e)). 

(b) DO NOT PAY INITIATIVE.— 

(1) IN GENERAL.—There is the Do Not Pay Initiative, which 

shall include— 

(A) use of the databases described in subsection (a)(2); 

and 

(B) use of other databases designated by the Director of 

the Office of Management and Budget, or the designee of 

the Director, in consultation with executive 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, or the head of any executive agency 

designated by the Director, 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.— 

(A) IN GENERAL.—For purposes of identifying and preventing improper payments, each executive agency shall 

have access to, and use of, the Do Not Pay Initiative to 

verify payment or award eligibility in accordance with subsection (a). 

(B) MATCHING PROGRAMS.— 

(i) IN GENERAL.—The head of the agency operating 

the Working System may, in consultation with the Office of Management and Budget, waive the requireVerDate Sep 11 2014 22:33 Dec 31, 2018 Jkt 089010 PO 00000 Frm 00036 Fmt 6659 Sfmt 6603 E:\HR\OC\SR445.XXX SR445
35 

ments of section 552a(o) of title 5 in any case or class 

of cases for computer matching activities conducted 

under this section. 

(ii) GUIDANCE.—The Director of the Office of Management and Budget may issue guidance that establishes requirements governing waivers under clause (i). 

(C) OTHER ENTITIES.—Each State and any contractor, 

subcontractor, or agent of a State, including a State auditor or State program responsible for reducing improper 

payments of a federally funded State-administered program, and the judicial and legislative branches of the 

United States, as defined in paragraphs (2) and (3), respectively, of section 202(e) of title 18, shall have access to, and 

use of, the Do Not Pay Initiative for the purpose of verifying 

payment or award eligibility for payments. 

(D) CONSISTENCY WITH PRIVACY ACT OF 1974.—To ensure 

consistency with the principles of section 552a of title 5 

(commonly known as the ‘Privacy Act of 1974’), the Director 

of the Office of Management and Budget may issue guidance that establishes privacy and other requirements that 

shall be incorporated into Do Not Pay Initiative access 

agreements with States, including any contractor, subcontractor, or agent of a State, and the judicial and legislative 

branches of the United States, as defined in paragraphs (2) 

and (3), respectively, of section 202(e) of title 18. 

(4) PAYMENT OTHERWISE REQUIRED.—When using the Do Not 

Pay Initiative, an executive agency shall recognize that there 

may be circumstances under which the law requires a payment 

or award to be made to a recipient, regardless of whether that 

recipient is identified as potentially ineligible under the Do Not 

Pay Initiative. 

(5) ANNUAL REPORT.—The Director of the Office of Management and Budget shall submit to Congress an annual report, 

which may be included as part of another report submitted to 

Congress by the Director, regarding the operation of the Do Not 

Pay Initiative, which shall— 

(A) include an evaluation of whether the Do Not Pay Initiative has reduced improper payments or improper 

awards; and 

(B) provide the frequency of corrections or identification 

of incorrect information. 

(c) INITIAL WORKING SYSTEM.—The working system required to be 

established under section 5(d) of the Improper Payments Elimination and Recovery Improvement Act of 2012, as in effect on the 

day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) shall require each executive agency to review all payments 

and awards for all programs and activities of that executive 

agency through the working system. 

(d) FACILITATING DATA ACCESS BY FEDERAL AGENCIES AND OFFICES OF INSPECTORS GENERAL FOR PURPOSES OF PROGRAM INTEGRITY.— 

36 

(1) COMPUTER MATCHING BY EXECUTIVE AGENCIES FOR PUR- POSES OF INVESTIGATION AND PREVENTION OF IMPROPER PAY- MENTS AND FRAUD.— (A) IN GENERAL.—Except as provided in this paragraph, 

in accordance with section 552a of title 5 (commonly known 

as the ‘Privacy Act of 1974’), the head of each executive 

agency may enter into computer matching agreements with 

other heads of executive agencies 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 the date on 

which a proposal for an agreement under subparagraph (A) 

has been presented to a Data Integrity Board established 

under section 552a(u) of title 5 for consideration, the Data 

Integrity Board shall respond to the proposal. 

(C) TERMINATION DATE.—An agreement described in subparagraph (A)— 

(i) shall have a termination date of less than 3 years; 

and 

(ii) during the 3-month period ending on the date on 

which the agreement is scheduled to terminate, may be 

renewed by the executive 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 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 relating to an agreement under 

subparagraph (A) is not required to contain a specific estimate of any savings under the computer matching agreement. 

(2) GUIDANCE AND PROCEDURES BY THE OFFICE OF MANAGE- MENT AND BUDGET.—The guidance, rules, and procedures required to be issued, clarified, and established under paragraphs 

(3) and (4) of section 5(e) of the Improper Payments Elimination 

and Recovery Improvement Act of 2012, as in effect on the day 

before the date of enactment of this section— 

(A) shall continue to be in effect on and after the date of 

enactment of this section; and 

(B) may be modified as determined appropriate by the 

Director of the Office of Management and Budget. 

(3) COMPLIANCE.—The head of each executive agency, in consultation with the Inspector General of the executive 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. 

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

shall be construed— 

(A) to affect the rights of an individual under section 

552a(p) of title 5; or 

37 

(B) to impede the exercise of an exemption provided to Inspectors General or by an executive agency in coordination 

with an Inspector General under section 6(j) of the Inspector General Act of 1978 (5 U.S.C. App.). 

(e) 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 AND OTHER DEATH DATA.— 

(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 each State, the Director of the Office of Management and Budget shall conduct a study and update the plan required to be established under section 5(g) of the Improper Payments Elimination and Recovery Improvement Act of 2012, as 

in effect on the day before the date of enactment of this section, 

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 described in 

this subsection shall include recommended actions by executive 

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 executive agencies for 

determining ineligible payments due to the death of a recipient through proactive verification means; and 

(E) address improper payments made by executive agencies to deceased individuals as part of Federal retirement 

programs. 

(3) REPORT.—Not later than 120 days after the date of enactment of this section, the Director of the Office of Management 

and Budget shall submit a report to Congress on the plan described in this subsection, including recommended legislation. 

SEC. 3355. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

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 executive 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. 

38 

SEC. 3356. IMPROVING THE USE OF DATA BY EXECUTIVE AGENCIES 

FOR CURBING IMPROPER PAYMENTS. 

(a) PROMPT REPORTING OF DEATH INFORMATION BY THE DEPARTMENT OF STATE AND THE DEPARTMENT OF DEFENSE.—The procedure required to be established under section 7(a) of the Improper 

Payments Elimination and Recovery Improvement Act of 2012, as in 

effect on the day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

(b) PROMPT REPORTING OF DEATH INFORMATION BY THE DEPARTMENT OF VETERANS AFFAIRS AND THE OFFICE OF PERSONNEL MANAGEMENT.—Not later than 1 year after the date of enactment of this 

section, the Secretary of Veterans Affairs and the Director of the Office of Personnel Management shall establish a procedure under 

which the Secretary and the Director— 

(1) shall promptly and on a regular basis submit information 

relating to the deaths of individuals, including stopped payments data as applicable, to each executive agency for which the 

Director of the Office of Management and Budget determines receiving and using such information would be relevant and necessary; and 

(2) to facilitate the centralized access of death data for the use 

of reducing improper payments, may identify additional Federal sources of death data and direct the data owner to provide 

that data to 1 or more executive agencies for that purpose. 

(c) GUIDANCE TO EXECUTIVE AGENCIES REGARDING DATA ACCESS

AND USE FOR IMPROPER PAYMENTS PURPOSES.—The guidance required to be issued under section 7(b) of the Improper Payments 

Elimination and Recovery Improvement Act of 2012, as in effect on 

the day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be modified as determined appropriate by the Director of the Office of Management and Budget. 

SEC. 3357. FINANCIAL AND ADMINISTRATIVE CONTROLS RELATING TO 

FRAUD AND IMPROPER PAYMENTS. 

(a) DEFINITION.—In this section, the term ‘agency’ has the meaning given the term in section 551 of title 5. 

(b) GUIDELINES.—The guidelines required to be established under 

section 3(a) of the Fraud Reduction and Data Analytics Act of 2015, 

as in effect on the day before the date of enactment of this section— 

(1) shall continue to be in effect on and after the date of enactment of this section; and 

(2) may be periodically modified by the Director of the Office 

of Management and Budget, in consultation with the Comptroller General of the United States, as the Director and Comptroller General may determine necessary. 

(c) REQUIREMENTS FOR CONTROLS.—The guidelines described in 

subsection (b) shall include— 

(1) conducting an evaluation of fraud risks and using a riskbased approach to design and implement financial and administrative control activities to mitigate identified fraud risks; 

39 

(2) collecting and analyzing data from reporting mechanisms 

on detected fraud to monitor fraud trends and using that data 

and information to continuously improve fraud prevention controls; and 

(3) using the results of monitoring, evaluation, audits, and 

investigations to improve fraud prevention, detection, and response. 

(d) REPORT.—For each of fiscal years 2018 and 2019, each agency 

shall submit to Congress, as part of the annual financial report of 

the agency, a report of the agency on— 

(1) implementing— 

(A) the financial and administrative controls described in 

subsection (b); 

(B) the fraud risk principle in the Standards for Internal 

Control in the Federal Government published by the Government Accountability Office (commonly known as the 

‘Green Book’); and 

(C) Office of Management and Budget Circular A–123, or 

any successor thereto, with respect to the leading practices 

for managing fraud risk; 

(2) identifying risks and vulnerabilities to fraud, including 

with respect to payroll, beneficiary payments, grants, large contracts, and purchase and travel cards; and 

(3) establishing strategies, procedures, and other steps to curb 

fraud. 

SEC. 3358. INTERAGENCY WORKING GROUP FOR GOVERNMENTWIDE 

PAYMENT INTEGRITY IMPROVEMENT. 

(a) WORKING GROUP.— 

(1) ESTABLISHMENT.—Not later than 90 days after the date of 

enactment of this section, there is established an interagency 

working group on payment integrity— 

(A) to improve— 

(i) State-administered Federal programs to determine eligibility processes and data sharing practices; 

(ii) the guidelines described in section 3357(b) and 

other best practices and techniques for detecting, preventing, and responding to improper payments, including improper payments that are the result of fraud; 

and 

(iii) the sharing and development of data analytics 

techniques to help prevent and identify potential improper payments, including those that are the result of 

fraud; and 

(B) to identify any additional activities that will improve 

payment integrity of Federal programs. 

(2) COMPOSITION.—The interagency working group established under paragraph (1) shall be composed of— 

(A) the Director of the Office of Management and Budget; 

(B) 1 representative from each of the agencies described 

in paragraphs (1) and (2) of section 901(b) of this title; and 

(C) any other representatives of other executive agencies 

determined appropriate by the Director of the Office of 

Management and Budget, which may include the Chief Information Officer, the Chief Procurement Officer, the Chief 

40 

Risk Officer, or the Chief Operating Officer of an executive 

agency. 

(b) CONSULTATION.—The working group established under subsection (a)(1) may consult with Offices of Inspectors General and 

Federal and non-Federal experts on fraud risk assessments, administrative controls over payment integrity, financial controls, and 

other relevant matters. 

(c) MEETINGS.—The working group established under subsection 

(a)(1) shall hold not fewer than 4 meetings per year. 

(d) REPORT.—Not later than 240 days after the date of enactment 

of this section, the working group established under subsection 

(a)(1) shall submit to Congress a report that includes— 

(1) a plan containing tangible solutions to prevent and reduce 

improper payments; and 

(2) a plan for State agencies to work with Federal agencies 

to regularly review lists of beneficiaries of State-managed Federal programs for duplicate enrollment between States, including how the Do Not Pay Business Center and the data analytics 

initiative of the Department of the Treasury could aid in the detection of duplicate enrollment. 

* * * * * * * 

CHAPTER 35—ACCOUNTING AND COLLECTION 

* * * * * * * 

Subchapter VI—Recovery Audits 

* * * * * * * 

SEC. 3562. DISPOSITION OF RECOVERED FUNDS. 

(a) AVAILABILITY OF FUNDS FOR RECOVERY AUDITS AND ACTIVITIES PROGRAM.—Funds collected under a program carried out by an 

executive agency under øsection 3561¿ section 3352(i) of this title 

shall be available to the executive øagency for the following purposes: 

ø(1) To reimburse¿ agency to reimburse the actual expenses 

incurred by the executive agency in the administration of the 

program. 

(2) To pay contractors for services under the program in accordance with the guidance issued under section 3561(c)(5) of 

this title. 

* * * * * * * 

TITLE 42—THE PUBLIC HEALTH 

SERVICE 

* * * * * * * 

CHAPTER 7—SOCIAL SECURITY 

* * * * * * * 

41 

Subchapter XX—State Children’s Health Insurance Program 

SEC. 1397ee. PAYMENTS TO STATES. 

(a) * * * 

(b) * * * 

(c) * * * 

(1) * * * 

(2) * * * 

(A) * * * 

(B) * * * 

(C) * * * 

(i) * * * 

* * * * * * * 

(iv) PAYMENT ERROR RATE MEASUREMENT (PERM) EXPENDITURES.—Expenditures related to the administration of the payment error rate measurement (PERM) 

requirements applicable to the State child health plan 

in accordance with øthe Improper Payments Information Act of 2002¿ subchapter IV of chapter 33 of title 

31, United States Code and parts 431 and 457 of title 

42, Code of Federal Regulations (or any related or successor guidance or regulations). 

* * * * * * * 

(11) ENHANCED PAYMENTS.—Notwithstanding subsection (b), 

the enhanced FMAP with respect to payments under subsection (a) for expenditures related to the administration of the 

payment error rate measurement (PERM) requirements applicable to the State child health plan in accordance with the 

øImproper Payments Information Act of 2002¿ subchapter IV 

of chapter 33 of title 31, United States Code and parts 431 and 

457 of title 42, Code of Federal Regulations (or any related or 

successor guidance or regulations) shall in no event be less 

than 90 percent. 

* * * * * * * 

Æ