I 

112TH CONGRESS 

2D SESSION S. 1409 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 2, 2012 

Referred to the Committee on Oversight and Government Reform 

AN ACT 

To intensify efforts to identify, prevent, and recover payment 

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

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


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1 SECTION 1. SHORT TITLE. 

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

3 Elimination and Recovery Improvement Act of 2012’’. 

4 SEC. 2. DEFINITIONS. 

5 In this Act— 

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

7 agency as that term is defined under section 102 of 

8 title 31, United States Code; and 

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

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

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

13 3(a)(1) of this Act. 

14 SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER 

15 PAYMENTS BY FEDERAL AGENCIES. 

16 (a) IN GENERAL.—Section 2 of the Improper Pay17 ments Information Act of 2002 (31 U.S.C. 3321 note) is 

18 amended— 

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

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

21 (2) by inserting after subsection (a) the fol22 lowing: 

23 ‘‘(b) IMPROVING THE DETERMINATION OF IMPROPER

24 PAYMENTS.— 


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

2 of Management and Budget shall on an annual 

3 basis— 

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

5 programs for greater levels of oversight and re6 view— 

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

8 or highest rate of improper payments 

9 occur; or 

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

11 of improper payments; and 

12 ‘‘(B) in coordination with the agency re13 sponsible for administering the high-priority 

14 program, establish annual targets and semi-an15 nual or quarterly actions for reducing improper 

16 payments associated with each high-priority 

17 program. 

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

19 PAYMENTS.— 

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

21 privacy policies and to the extent permitted by 

22 law, each agency with a program identified 

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

24 shall submit to the Inspector General of that 

25 agency, and make available to the public (inVerDate Mar 15 2010 01:01 Aug 03, 2012 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1409.RFH S1409

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1 cluding availability through the Internet), a re2 port on that program. 

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

4 paragraph— 

5 ‘‘(i) shall describe— 

6 ‘‘(I) any action the agency— 

7 ‘‘(aa) has taken or plans to 

8 take to recover improper pay9 ments; and 

10 ‘‘(bb) intends to take to pre11 vent future improper payments; 

12 and 

13 ‘‘(ii) shall not include any referrals 

14 the agency made or anticipates making to 

15 the Department of Justice, or any informa16 tion provided in connection with such re17 ferrals. 

18 ‘‘(C) PUBLIC AVAILABILITY ON CENTRAL

19 WEBSITE.—The Office of Management and 

20 Budget shall make each report submitted under 

21 this paragraph available on a central website. 

22 ‘‘(D) AVAILABILITY OF INFORMATION TO

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

24 shall not prohibit any referral or information 


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1 being made available to an Inspector General as 

2 otherwise provided by law. 

3 ‘‘(E) ASSESSMENT AND RECOMMENDA4 TIONS.—The Inspector General of each agency 

5 that submits a report under this paragraph 

6 shall, for each program of the agency that is 

7 identified under paragraph (1)(A)— 

8 ‘‘(i) review— 

9 ‘‘(I) the assessment of the level 

10 of risk associated with the program, 

11 and the quality of the improper pay12 ment estimates and methodology of 

13 the agency relating to the program; 

14 and 

15 ‘‘(II) the oversight or financial 

16 controls to identify and prevent im17 proper payments under the program; 

18 and 

19 ‘‘(ii) submit to Congress recommenda20 tions, which may be included in another re21 port submitted by the Inspector General to 

22 Congress, for modifying any plans of the 

23 agency relating to the program, including 

24 improvements for improper payments de25 termination and estimation methodology.’’; 


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1 (3) in subsection (d) (as redesignated by para2 graph (1) of this subsection), by striking ‘‘subsection 

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

4 ‘‘subsection (c)’’; 

5 (4) in subsection (e) (as redesignated by para6 graph (1) of this subsection), by striking ‘‘subsection 

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

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

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

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

11 entity’’. 

12 (b) IMPROVED ESTIMATES.— 

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

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

15 of the Office of Management and Budget shall pro16 vide guidance to agencies for improving the esti17 mates of improper payments under the Improper 

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

19 note). 

20 (2) GUIDANCE.—Guidance under this sub21 section shall— 

22 (A) strengthen the estimation process of 

23 agencies by setting standards for agencies to 

24 follow in determining the underlying validity of 


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1 sampled payments to ensure amounts being 

2 billed are proper; and 

3 (B) instruct agencies to give the persons or 

4 entities performing improper payments esti5 mates access to all necessary payment data, in6 cluding access to relevant documentation; 

7 (C) explicitly bar agencies from relying on 

8 self-reporting by the recipients of agency pay9 ments as the sole source basis for improper 

10 payments estimates; 

11 (D) require agencies to include all identi12 fied improper payments in the reported esti13 mate, regardless of whether the improper pay14 ment in question has been or is being recovered; 

15 (E) include payments to employees, includ16 ing salary, locality pay, travel pay, purchase 

17 card use, and other employee payments, as sub18 ject to risk assessment and, where appropriate, 

19 improper payment estimation; and 

20 (F) require agencies to tailor their correc21 tive actions for the high-priority programs iden22 tified under section 2(b)(1)(A) of the Improper 

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

24 3321 note) to better reflect the unique procVerDate Mar 15 2010 01:01 Aug 03, 2012 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1409.RFH S1409

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1 esses, procedures, and risks involved in each 

2 specific program. 

3 (c) TECHNICAL AND CONFORMING AMENDMENTS.— 

4 The Improper Payments Elimination and Recovery Act of 

5 2010 (Public Law 111–204; 124 Stat. 2224) is amend6 ed— 

7 (1) in section 2(h)(1) (31 U.S.C. 3321 note), by 

8 striking ‘‘section 2(f)’’ and all that follows and in9 serting ‘‘section 2(g) of the Improper Payments In10 formation Act of 2002 (31 U.S.C. 3321 note).’’; and 

11 (2) in section 3(a) (31 U.S.C. 3321 note)— 

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

13 2(f)’’ and all that follows and inserting ‘‘section 

14 2(g) of the Improper Payments Information Act 

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

16 (B) in paragraph (3)— 

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

18 place it appears and inserting ‘‘section 

19 2(c)’’; and 

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

21 place it appears and inserting ‘‘section 

22 2(d)’’. 

23 SEC. 4. IMPROPER PAYMENTS INFORMATION. 

24 Section 2(a)(3)(A)(ii) of the Improper Payments In25 formation Act of 2002 (31 U.S.C. 3321 note) is amended 


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1 by striking ‘‘with respect to fiscal years following Sep2 tember 30th of a fiscal year beginning before fiscal year 

3 2013 as determined by the Office of Management and 

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

5 and each fiscal year thereafter’’. 

6 SEC. 5. DO NOT PAY INITIATIVE. 

7 (a) PREPAYMENT AND PREAWARD PROCEDURES.— 

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

9 prepayment and preaward procedures and ensure 

10 that a thorough review of available databases with 

11 relevant information on eligibility occurs to deter12 mine program or award eligibility and prevent im13 proper payments before the release of any Federal 

14 funds. 

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

16 issuing any payment and award, each agency shall 

17 review as appropriate the following databases to 

18 verify eligibility of the payment and award: 

19 (A) The Death Master File of the Social 

20 Security Administration. 

21 (B) The General Services Administration’s 

22 Excluded Parties List System. 

23 (C) The Debt Check Database of the De24 partment of the Treasury. 


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1 (D) The Credit Alert System or Credit 

2 Alert Interactive Voice Response System of the 

3 Department of Housing and Urban Develop4 ment. 

5 (E) The List of Excluded Individuals/Enti6 ties of the Office of Inspector General of the 

7 Department of Health and Human Services. 

8 (b) DO NOT PAY INITIATIVE.— 

9 (1) ESTABLISHMENT.—There is established the 

10 Do Not Pay Initiative which shall include— 

11 (A) use of the databases described under 

12 subsection (a)(2); and 

13 (B) use of other databases designated by 

14 the Director of the Office of Management and 

15 Budget in consultation with agencies and in ac16 cordance with paragraph (2). 

17 (2) OTHER DATABASES.—In making designa18 tions of other databases under paragraph (1)(B), the 

19 Director of the Office of Management and Budget 

20 shall— 

21 (A) consider any database that substan22 tially assists in preventing improper payments; 

23 and 


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

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

5 purposes of identifying and preventing improper 

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

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

8 award eligibility in accordance with subsection (a) 

9 when the Director of the Office of Management and 

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

12 (4) PAYMENT OTHERWISE REQUIRED.—When 

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

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

16 a recipient, regardless of whether that recipient is 

17 identified as potentially ineligible under the Do Not 

18 Pay Initiative. 

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

21 Congress an annual report, which may be included 

22 as part of another report submitted to Congress by 

23 the Director, regarding the operation of the Do Not 

24 Pay Initiative, which shall— 


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1 (A) include an evaluation of whether the 

2 Do Not Pay Initiative has reduced improper 

3 payments or improper awards; and 

4 (B) provide the frequency of corrections or 

5 identification of incorrect information. 

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

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

9 to the Congress a plan for— 

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

11 Pay Initiative; 

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

14 (3) the multilateral data use agreements de15 scribed under subsection (e). 

16 (d) INITIAL WORKING SYSTEM.— 

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

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

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

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

23 (2) WORKING SYSTEM.—The working system 

24 established under paragraph (1)— 


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1 (A) may be located within an appropriate 

2 agency; 

3 (B) shall include not less than 3 agencies 

4 as users of the system; and 

5 (C) shall include investigation activities for 

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

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

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

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

13 through the system established under this sub14 section. 

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

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

19 ‘‘Inspector General’’ means an Inspector General de20 scribed in subparagraph (A), (B), or (I) of section 

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

22 U.S.C. App.). 

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


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

2 this paragraph, in accordance with section 552a 

3 of title 5, United States Code (commonly known 

4 as the Privacy Act of 1974), each Inspector 

5 General and the head of each agency may enter 

6 into computer matching agreements that allow 

7 ongoing data matching (which shall include 

8 automated data matching) in order to assist in 

9 the detection and prevention of improper pay10 ments. 

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

12 after a proposal for an agreement under sub13 paragraph (A) has been presented to a Data In14 tegrity Board established under section 552a(u) 

15 of title 5, United States Code, for consider16 ation, the Data Integrity Board shall respond 

17 to the proposal. 

18 (C) TERMINATION DATE.—An agreement 

19 under subparagraph (A)— 

20 (i) shall have a termination date of 

21 less than 3 years; and 

22 (ii) during the 3-month period ending 

23 on the date on which the agreement is 

24 scheduled to terminate, may be renewed by 


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1 the agencies entering the agreement for 

2 not more than 3 years. 

3 (D) MULTIPLE AGENCIES.—For purposes 

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

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

7 recipient agency or non-Federal agency or an 

8 agreement governing multiple agencies’’ for 

9 ‘‘between the source agency and the recipient 

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

11 preceding subparagraph (A). 

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

14 United States Code, relating to an agreement 

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

17 the computer matching agreement. 

18 (F) GUIDANCE BY THE OFFICE OF MAN19 AGEMENT AND BUDGET.—Not later than 6 

20 months after the date of enactment of this Act, 

21 and in consultation with the Council of Inspec22 tors General on Integrity and Efficiency, the 

23 Secretary of Health and Human Services, the 

24 Commissioner of Social Security, and the head 


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1 of any other relevant agency, the Director of 

2 the Office of Management and Budget shall— 

3 (i) issue guidance for agencies regard4 ing implementing this paragraph, which 

5 shall include standards for— 

6 (I) reimbursement of costs, when 

7 necessary, between agencies; 

8 (II) retention and timely destruc9 tion of records in accordance with sec10 tion 552a(o)(1)(F) of title 5, United 

11 States Code; 

12 (III) prohibiting duplication and 

13 redisclosure of records in accordance 

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

15 United States Code; 

16 (ii) review the procedures of the Data 

17 Integrity Boards established under section 

18 552a(u) of title 5, United States Code, and 

19 develop new guidance for the Data Integ20 rity Boards to— 

21 (I) improve the effectiveness and 

22 responsiveness of the Data Integrity 

23 Boards; and 

24 (II) ensure privacy protections in 

25 accordance with section 552a of title 


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1 5, United States Code (commonly 

2 known as the Privacy Act of 1974); 

3 and 

4 (III) establish standard matching 

5 agreements for use when appropriate; 

6 and 

7 (iii) establish and clarify rules regard8 ing what constitutes making an agreement 

9 entered under subparagraph (A) available 

10 upon request to the public for purposes of 

11 section 552a(o)(2)(A)(ii) of title 5, United 

12 States Code, which shall include requiring 

13 publication of the agreement on a public 

14 website. 

15 (G) CORRECTIONS.—The Director of the 

16 Office of Management and Budget shall estab17 lish procedures providing for the correction of 

18 data in order to ensure— 

19 (i) compliance with section 552a(p) of 

20 title 5, United States Code; and 

21 (ii) that corrections are made in any 

22 Do Not Pay Initiative database and in any 

23 relevant source databases designated by 

24 the Director of the Office of Management 

25 and Budget under subsection (b)(1). 


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1 (H) COMPLIANCE.—The head of each 

2 agency, in consultation with the Inspector Gen3 eral of the agency, shall ensure that any infor4 mation provided to an individual or entity 

5 under this subsection is provided in accordance 

6 with protocols established under this subsection. 

7 (I) RULE OF CONSTRUCTION.—Nothing in 

8 this subsection shall be construed to affect the 

9 rights of an individual under section 552a(p) of 

10 title 5, United States Code. 

11 (f) DEVELOPMENT AND ACCESS TO A DATABASE OF

12 INCARCERATED INDIVIDUALS.—Not later than 1 year 

13 after the date of enactment of this Act, the Attorney Gen14 eral shall submit to Congress recommendations for in15 creasing the use of, access to, and the technical feasibility 

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

17 and incarceration status of individuals for purposes of 

18 identifying and preventing improper payments by Federal 

19 agencies and programs and fraud. 

20 (g) PLAN TO CURB FEDERAL IMPROPER PAYMENTS

21 TO DECEASED INDIVIDUALS BY IMPROVING THE QUALITY

22 AND USE BY FEDERAL AGENCIES OF THE SOCIAL SECU23 RITY ADMINISTRATION DEATH MASTER FILE.— 

24 (1) ESTABLISHMENT.—In conjunction with the 

25 Commissioner of Social Security and in consultation 


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1 with relevant stakeholders that have an interest in 

2 or responsibility for providing the data, and the 

3 States, the Director of the Office of Management 

4 and Budget shall establish a plan for improving the 

5 quality, accuracy, and timeliness of death data main6 tained by the Social Security Administration, includ7 ing death information reported to the Commissioner 

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

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

10 (2) ADDITIONAL ACTIONS UNDER PLAN.—The 

11 plan established under this subsection shall include 

12 recommended actions by agencies to— 

13 (A) increase the quality and frequency of 

14 access to the Death Master File and other 

15 death data; 

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

17 as appropriate; 

18 (C) provide for all States and other data 

19 providers to use improved and electronic means 

20 for providing data; 

21 (D) identify improved methods by agencies 

22 for determining ineligible payments due to the 

23 death of a recipient through proactive 

24 verification means; and 


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1 (E) address improper payments made by 

2 agencies to deceased individuals as part of Fed3 eral retirement programs. 

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

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

6 the Office of Management and Budget shall submit 

7 a report to Congress on the plan established under 

8 this subsection, including recommended legislation. 

9 SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

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

11 audit’’ means a recovery audit described under section 

12 2(h) of the Improper Payments Elimination and Recovery 

13 Act of 2010. 

14 (b) REVIEW.—The Director of the Office of Manage15 ment and Budget shall determine— 

16 (1) current and historical rates and amounts of 

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

18 improper payments are identified solely on the basis 

19 of a sample, recovery rates and amounts estimated 

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

21 list of agency recovery audit contract programs and 

22 specific information of amounts and payments recov23 ered by recovery audit contractors; and 


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1 (2) targets for recovering improper payments, 

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

Passed the Senate August 1, 2012. 

Attest: NANCY ERICKSON, 

Secretary. 


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