111TH CONGRESS 

2D SESSION S. 1508 

AN ACT 

To amend the Improper Payments Information Act of 2002 

(31 U.S.C. 3321 note) in order to prevent the loss of 

billions in taxpayer dollars. 

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 Act of 2010’’. 

4 SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOV5 ERY. 

6 (a) SUSCEPTIBLE PROGRAMS AND ACTIVITIES.—Sec7 tion 2 of the Improper Payments Information Act of 2002 

8 (31 U.S.C. 3321 note) is amended by striking subsection 

9 (a) and inserting the following: 

10 ‘‘(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS

11 AND ACTIVITIES.— 

12 ‘‘(1) IN GENERAL.—The head of each agency 

13 shall, in accordance with guidance prescribed by the 

14 Director of the Office of Management and Budget, 

15 periodically review all programs and activities that 

16 the relevant agency head administers and identify all 

17 programs and activities that may be susceptible to 

18 significant improper payments. 

19 ‘‘(2) FREQUENCY.—Reviews under paragraph 

20 (1) shall be performed for each program and activity 

21 that the relevant agency head administers during the 

22 year after which the Improper Payments Elimi23 nation and Recovery Act of 2010 is enacted and at 

24 least once every 3 fiscal years thereafter. For those 

25 agencies already performing a risk assessment every 

26 3 years, agencies may apply to the Director of the 
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1 Office of Management and Budget for a waiver from 

2 the requirement of the preceding sentence and con3 tinue their 3-year risk assessment cycle. 

4 ‘‘(3) RISK ASSESSMENTS.— 

5 ‘‘(A) DEFINITION.—In this subsection the 

6 term ‘significant’ means— 

7 ‘‘(i) except as provided under clause 

8 (ii), that improper payments in the pro9 gram or activity in the preceding fiscal 

10 year may have exceeded— 

11 ‘‘(I) $10,000,000 of all program 

12 or activity payments made during that 

13 fiscal year reported and 2.5 percent of 

14 program outlays; or 

15 ‘‘(II) $100,000,000; and 

16 ‘‘(ii) with respect to fiscal years fol17 lowing September 30th of a fiscal year be18 ginning before fiscal year 2013 as deter19 mined by the Office of Management and 

20 Budget, that improper payments in the 

21 program or activity in the preceding fiscal 

22 year may have exceeded— 

23 ‘‘(I) $10,000,000 of all program 

24 or activity payments made during that 
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1 fiscal year reported and 1.5 percent of 

2 program outlays; or 

3 ‘‘(II) $100,000,000. 

4 ‘‘(B) SCOPE.—In conducting the reviews 

5 under paragraph (1), the head of each agency 

6 shall take into account those risk factors that 

7 are likely to contribute to a susceptibility to sig8 nificant improper payments, such as— 

9 ‘‘(i) whether the program or activity 

10 reviewed is new to the agency; 

11 ‘‘(ii) the complexity of the program or 

12 activity reviewed; 

13 ‘‘(iii) the volume of payments made 

14 through the program or activity reviewed; 

15 ‘‘(iv) whether payments or payment 

16 eligibility decisions are made outside of the 

17 agency, such as by a State or local govern18 ment; 

19 ‘‘(v) recent major changes in program 

20 funding, authorities, practices, or proce21 dures; 

22 ‘‘(vi) the level, experience, and quality 

23 of training for personnel responsible for 

24 making program eligibility determinations 
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1 or certifying that payments are accurate; 

2 and 

3 ‘‘(vii) significant deficiencies in the 

4 audit report of the agency or other rel5 evant management findings that might 

6 hinder accurate payment certification.’’. 

7 (b) ESTIMATION OF IMPROPER PAYMENTS.—Section 

8 2 of the Improper Payments Information Act of 2002 (31 

9 U.S.C. 3321 note) is amended by striking subsection (b) 

10 and inserting the following: 

11 ‘‘(b) ESTIMATION OF IMPROPER PAYMENTS.—With 

12 respect to each program and activity identified under sub13 section (a), the head of the relevant agency shall— 

14 ‘‘(1) produce a statistically valid estimate, or an 

15 estimate that is otherwise appropriate using a meth16 odology approved by the Director of the Office of 

17 Management and Budget, of the improper payments 

18 made by each program and activity; and 

19 ‘‘(2) include those estimates in the accom20 panying materials to the annual financial statement 

21 of the agency required under section 3515 of title 

22 31, United States Code, or similar provision of law 

23 and applicable guidance of the Office of Manage24 ment and Budget.’’. 
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1 (c) REPORTS ON ACTIONS TO REDUCE IMPROPER

2 PAYMENTS.—Section 2 of the Improper Payments Infor3 mation Act of 2002 (31 U.S.C. 3321 note) is amended 

4 by striking subsection (c) and inserting the following: 

5 ‘‘(c) REPORTS ON ACTIONS TO REDUCE IMPROPER

6 PAYMENTS.—With respect to any program or activity of 

7 an agency with estimated improper payments under sub8 section (b), the head of the agency shall provide with the 

9 estimate under subsection (b) a report on what actions 

10 the agency is taking to reduce improper payments, includ11 ing— 

12 ‘‘(1) a description of the causes of the improper 

13 payments, actions planned or taken to correct those 

14 causes, and the planned or actual completion date of 

15 the actions taken to address those causes; 

16 ‘‘(2) in order to reduce improper payments to 

17 a level below which further expenditures to reduce 

18 improper payments would cost more than the 

19 amount such expenditures would save in prevented 

20 or recovered improper payments, a statement of 

21 whether the agency has what is needed with respect 

22 to— 

23 ‘‘(A) internal controls; 

24 ‘‘(B) human capital; and 
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1 ‘‘(C) information systems and other infra2 structure; 

3 ‘‘(3) if the agency does not have sufficient re4 sources to establish and maintain effective internal 

5 controls under paragraph (2)(A), a description of 

6 the resources the agency has requested in its budget 

7 submission to establish and maintain such internal 

8 controls; 

9 ‘‘(4) program-specific and activity-specific im10 proper payments reduction targets that have been 

11 approved by the Director of the Office of Manage12 ment and Budget; and 

13 ‘‘(5) a description of the steps the agency has 

14 taken to ensure that agency managers, programs, 

15 and, where appropriate, States and localities are 

16 held accountable through annual performance ap17 praisal criteria for— 

18 ‘‘(A) meeting applicable improper pay19 ments reduction targets; and 

20 ‘‘(B) establishing and maintaining suffi21 cient internal controls, including an appropriate 

22 control environment, that effectively— 

23 ‘‘(i) prevent improper payments from 

24 being made; and 
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1 ‘‘(ii) promptly detect and recover im2 proper payments that are made.’’. 

3 (d) REPORTS ON ACTIONS TO RECOVER IMPROPER

4 PAYMENTS.—Section 2 of the Improper Payments Infor5 mation Act of 2002 (31 U.S.C. 3321 note) is amended— 

6 (1) by striking subsection (e); 

7 (2) by redesignating subsections (d) and (f) as 

8 subsections (f) and (g), respectively; and 

9 (3) by inserting after subsection (c) the fol10 lowing: 

11 ‘‘(d) REPORTS ON ACTIONS TO RECOVER IMPROPER

12 PAYMENTS.—With respect to any improper payments 

13 identified in recovery audits conducted under section 2(h) 

14 of the Improper Payments Elimination and Recovery Act 

15 of 2010 (31 U.S.C. 3321 note), the head of the agency 

16 shall provide with the estimate under subsection (b) a re17 port on all actions the agency is taking to recover im18 proper payments, including— 

19 ‘‘(1) a discussion of the methods used by the 

20 agency to recover overpayments; 

21 ‘‘(2) the amounts recovered, outstanding, and 

22 determined to not be collectable, including the per23 cent such amounts represent of the total overpay24 ments of the agency; 
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1 ‘‘(3) if a determination has been made that cer2 tain overpayments are not collectable, a justification 

3 of that determination; 

4 ‘‘(4) an aging schedule of the amounts out5 standing; 

6 ‘‘(5) a summary of how recovered amounts have 

7 been disposed of; 

8 ‘‘(6) a discussion of any conditions giving rise 

9 to improper payments and how those conditions are 

10 being resolved; and 

11 ‘‘(7) if the agency has determined under section 

12 2(h) of the Improper Payments Elimination and Re13 covery Act of 2010 (31 U.S.C. 3321 note) that per14 forming recovery audits for any applicable program 

15 or activity is not cost-effective, a justification for 

16 that determination. 

17 ‘‘(e) GOVERNMENTWIDE REPORTING OF IMPROPER

18 PAYMENTS AND ACTIONS TO RECOVER IMPROPER PAY19 MENTS.— 

20 ‘‘(1) REPORT.—Each fiscal year the Director of 

21 the Office of Management and Budget shall submit 

22 a report with respect to the preceding fiscal year on 

23 actions agencies have taken to report information re24 garding improper payments and actions to recover 

25 improper overpayments to— 
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1 ‘‘(A) the Committee on Homeland Security 

2 and Governmental Affairs of the Senate; and 

3 ‘‘(B) the Committee on Oversight and Gov4 ernment Reform of the House of Representa5 tives. 

6 ‘‘(2) CONTENTS.—Each report under this sub7 section shall include— 

8 ‘‘(A) a summary of the reports of each 

9 agency on improper payments and recovery ac10 tions submitted under this section; 

11 ‘‘(B) an identification of the compliance 

12 status of each agency to which this Act applies; 

13 ‘‘(C) governmentwide improper payment 

14 reduction targets; and 

15 ‘‘(D) a discussion of progress made to16 wards meeting governmentwide improper pay17 ment reduction targets.’’. 

18 (e) DEFINITIONS.—Section 2 of the Improper Pay19 ments Information Act of 2002 (31 U.S.C. 3321 note) is 

20 amended by striking subsections (f) (as redesignated by 

21 this section) and inserting the following: 

22 ‘‘(f) DEFINITIONS.—In this section: 

23 ‘‘(1) AGENCY.—The term ‘agency’ means an 

24 executive agency, as that term is defined in section 

25 102 of title 31, United States Code. 
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1 ‘‘(2) IMPROPER PAYMENT.—The term ‘im2 proper payment’— 

3 ‘‘(A) means any payment that should not 

4 have been made or that was made in an incor5 rect amount (including overpayments and un6 derpayments) under statutory, contractual, ad7 ministrative, or other legally applicable require8 ments; and 

9 ‘‘(B) includes any payment to an ineligible 

10 recipient, any payment for an ineligible good or 

11 service, any duplicate payment, any payment 

12 for a good or service not received (except for 

13 such payments where authorized by law), and 

14 any payment that does not account for credit 

15 for applicable discounts. 

16 ‘‘(3) PAYMENT.—The term ‘payment’ means 

17 any transfer or commitment for future transfer of 

18 Federal funds such as cash, securities, loans, loan 

19 guarantees, and insurance subsidies to any non-Fed20 eral person or entity, that is made by a Federal 

21 agency, a Federal contractor, a Federal grantee, or 

22 a governmental or other organization administering 

23 a Federal program or activity. 

24 ‘‘(4) PAYMENT FOR AN INELIGIBLE GOOD OR

25 SERVICE.—The term ‘payment for an ineligible good 
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1 or service’ shall include a payment for any good or 

2 service that is rejected under any provision of any 

3 contract, grant, lease, cooperative agreement, or any 

4 other funding mechanism.’’. 

5 (f) GUIDANCE BY THE OFFICE OF MANAGEMENT

6 AND BUDGET.—Section 2 of the Improper Payments In7 formation Act of 2002 (31 U.S.C. 3321 note) is amended 

8 by striking subsection (g) (as redesignated by this section) 

9 and inserting the following: 

10 ‘‘(g) GUIDANCE BY THE OFFICE OF MANAGEMENT

11 AND BUDGET.— 

12 ‘‘(1) IN GENERAL.—Not later than 6 months 

13 after the date of enactment of the Improper Pay14 ments Elimination and Recovery Act of 2010, the 

15 Director of the Office of Management and Budget 

16 shall prescribe guidance for agencies to implement 

17 the requirements of this section. The guidance shall 

18 not include any exemptions to such requirements not 

19 specifically authorized by this section. 

20 ‘‘(2) CONTENTS.—The guidance under para21 graph (1) shall prescribe— 

22 ‘‘(A) the form of the reports on actions to 

23 reduce improper payments, recovery actions, 

24 and governmentwide reporting; and 
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1 ‘‘(B) strategies for addressing risks and 

2 establishing appropriate prepayment and 

3 postpayment internal controls.’’. 

4 (g) DETERMINATIONS OF AGENCY READINESS FOR

5 OPINION ON INTERNAL CONTROL.—Not later than 1 year 

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

7 the Office of Management and Budget shall develop— 

8 (1) specific criteria as to when an agency 

9 should initially be required to obtain an opinion on 

10 internal control over improper payments; and 

11 (2) criteria for an agency that has dem12 onstrated a stabilized, effective system of internal 

13 control over improper payments, whereby the agency 

14 would qualify for a multiyear cycle for obtaining an 

15 audit opinion on internal control over improper pay16 ments, rather than an annual cycle. 

17 (h) RECOVERY AUDITS.— 

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

19 ‘‘agency’’ has the meaning given under section 2(f) 

20 of the Improper Payments Information Act of 2002 

21 (31 U.S.C. 3321 note) as redesignated by this Act. 

22 (2) IN GENERAL.— 

23 (A) CONDUCT OF AUDITS.—Except as pro24 vided under paragraph (4) and if not prohibited 

25 under any other provision of law, the head of 
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1 each agency shall conduct recovery audits with 

2 respect to each program and activity of the 

3 agency that expends $1,000,000 or more annu4 ally if conducting such audits would be cost-ef5 fective. 

6 (B) PROCEDURES.—In conducting recovery 

7 audits under this subsection, the head of an 

8 agency— 

9 (i) shall give priority to the most re10 cent payments and to payments made in 

11 any program or programs identified as sus12 ceptible to significant improper payments 

13 under section 2(a) of the Improper Pay14 ments Information Act of 2002 (31 U.S.C. 

15 3321 note); 

16 (ii) shall implement this subsection in 

17 a manner designed to ensure the greatest 

18 financial benefit to the Government; and 

19 (iii) may conduct recovery audits di20 rectly, by using other departments and 

21 agencies of the United States, or by pro22 curing performance of recovery audits by 

23 private sector sources by contract (subject 

24 to the availability of appropriations), or by 

25 any combination thereof. 
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1 (C) RECOVERY AUDIT CONTRACTS.—With 

2 respect to recovery audits procured by an agen3 cy by contract— 

4 (i) subject to subparagraph (B)(iii), 

5 and except to the extent such actions are 

6 outside the agency’s authority, as defined 

7 by section 605(a) of the Contract Disputes 

8 Act of 1978 (41 U.S.C. 605(a)), the head 

9 of the agency may authorize the contractor 

10 to notify entities (including persons) of po11 tential overpayments made to such entities, 

12 respond to questions concerning potential 

13 overpayments, and take other administra14 tive actions with respect to overpayment 

15 claims made or to be made by the agency; 

16 and 

17 (ii) such contractor shall have no au18 thority to make final determinations relat19 ing to whether any overpayment occurred 

20 and whether to compromise, settle, or ter21 minate overpayment claims. 

22 (D) CONTRACT TERMS AND CONDITIONS.— 

23 (i) IN GENERAL.—The agency shall 

24 include in each contract for procurement of 
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1 performance of a recovery audit a require2 ment that the contractor shall— 

3 (I) provide to the agency periodic 

4 reports on conditions giving rise to 

5 overpayments identified by the con6 tractor and any recommendations on 

7 how to mitigate such conditions; 

8 (II) notify the agency of any 

9 overpayments identified by the con10 tractor pertaining to the agency or to 

11 any other agency or agencies that are 

12 beyond the scope of the contract; and 

13 (III) report to the agency cred14 ible evidence of fraud or 

15 vulnerabilities to fraud, and conduct 

16 appropriate training of personnel of 

17 the contractor on identification of 

18 fraud. 

19 (ii) REPORTS ON ACTIONS TAKEN.— 

20 Not later than November 1 of each year, 

21 each agency shall submit a report on ac22 tions taken by the agency during the pre23 ceding fiscal year to address the rec24 ommendations described under clause (i)(I) 

25 to— 
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1 (I) the Office of Management 

2 and Budget; and 

3 (II) Congress. 

4 (E) AGENCY ACTION FOLLOWING NOTIFI5 CATION.—An agency shall take prompt and ap6 propriate action in response to a report or noti7 fication by a contractor under subparagraph 

8 (D)(i)(I) or (II), to collect overpayments and 

9 shall forward to other agencies any information 

10 that applies to such agencies. 

11 (3) DISPOSITION OF AMOUNTS RECOVERED.— 

12 (A) IN GENERAL.—Amounts collected by 

13 agencies each fiscal year through recovery au14 dits conducted under this subsection shall be 

15 treated in accordance with this paragraph. The 

16 agency head shall determine the distribution of 

17 collected amounts, less amounts needed to fulfill 

18 the purposes of section 3562(a) of title 31, 

19 United States Code, in accordance with sub20 paragraphs (B), (C), and (D). 

21 (B) USE FOR FINANCIAL MANAGEMENT IM22 PROVEMENT PROGRAM.—Not more than 25 per23 cent of the amounts collected by an agency 

24 through recovery audits— 
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1 (i) shall be available to the head of 

2 the agency to carry out the financial man3 agement improvement program of the 

4 agency under paragraph (4); 

5 (ii) may be credited, if applicable, for 

6 that purpose by the head of an agency to 

7 any agency appropriations and funds that 

8 are available for obligation at the time of 

9 collection; and 

10 (iii) shall be used to supplement and 

11 not supplant any other amounts available 

12 for that purpose and shall remain available 

13 until expended. 

14 (C) USE FOR ORIGINAL PURPOSE.—Not 

15 more than 25 percent of the amounts collected 

16 by an agency— 

17 (i) shall be credited to the appropria18 tion or fund, if any, available for obligation 

19 at the time of collection for the same gen20 eral purposes as the appropriation or fund 

21 from which the overpayment was made; 

22 (ii) shall remain available for the 

23 same period and purposes as the appro24 priation or fund to which credited; and 
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1 (iii) if the appropriation from which 

2 the overpayment was made has expired, 

3 shall be newly available for the same time 

4 period as the funds were originally avail5 able for obligation, except that any 

6 amounts that are recovered more than five 

7 fiscal years from the last fiscal year in 

8 which the funds were available for obliga9 tion shall be deposited in the Treasury as 

10 miscellaneous receipts, except that in the 

11 case of recoveries of overpayments that are 

12 made from trust or special fund accounts, 

13 such amounts shall revert to those ac14 counts. 

15 (D) USE FOR INSPECTOR GENERAL AC16 TIVITIES.—Not more than 5 percent of the 

17 amounts collected by an agency shall be avail18 able to the Inspector General of that agency— 

19 (i) for— 

20 (I) the Inspector General to carry 

21 out this Act; or 

22 (II) any other activities of the In23 spector General relating to inves24 tigating improper payments or audit-
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1 ing internal controls associated with 

2 payments; and 

3 (ii) shall remain available for the 

4 same period and purposes as the appro5 priation or fund to which credited. 

6 (E) REMAINDER.—Amounts collected that 

7 are not applied in accordance with subpara8 graph (A), (B), (C), or (D) shall be deposited 

9 in the Treasury as miscellaneous receipts, ex10 cept that in the case of recoveries of overpay11 ments that are made from trust or special fund 

12 accounts, such amounts shall revert to those ac13 counts. 

14 (F) DISCRETIONARY AMOUNTS.—This 

15 paragraph shall apply only to recoveries of over16 payments that are made from discretionary ap17 propriations (as that term is defined by para18 graph 7 of section 250 of the Balanced Budget 

19 and Emergency Deficit Control Act of 1985) 

20 and shall not apply to recoveries of overpay21 ments that are made from discretionary 

22 amounts that were appropriated prior to enact23 ment of this Act. 

24 (G) APPLICATION.—This paragraph shall 

25 not apply to recoveries of overpayments if the 
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1 appropriation from which the overpayment was 

2 made has not expired. 

3 (4) FINANCIAL MANAGEMENT IMPROVEMENT

4 PROGRAM.— 

5 (A) REQUIREMENT.—The head of each 

6 agency shall conduct a financial management 

7 improvement program, consistent with rules 

8 prescribed by the Director of the Office of Man9 agement and Budget. 

10 (B) PROGRAM FEATURES.—In conducting 

11 the program, the head of the agency— 

12 (i) shall, as the first priority of the 

13 program, address problems that contribute 

14 directly to agency improper payments; and 

15 (ii) may seek to reduce errors and 

16 waste in other agency programs and oper17 ations. 

18 (5) PRIVACY PROTECTIONS.—Any nongovern19 mental entity that, in the course of recovery auditing 

20 or recovery activity under this subsection, obtains in21 formation that identifies an individual or with re22 spect to which there is a reasonable basis to believe 

23 that the information can be used to identify an indi24 vidual, may not disclose the information for any pur25 pose other than such recovery auditing or recovery 
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1 activity and governmental oversight of such activity, 

2 unless disclosure for that other purpose is author3 ized by the individual to the executive agency that 

4 contracted for the performance of the recovery au5 diting or recovery activity. 

6 (6) OTHER RECOVERY AUDIT REQUIRE7 MENTS.— 

8 (A) IN GENERAL.—(i) Except as provided 

9 in clause (ii), subchapter VI of chapter 35 of 

10 title 31, United States Code, is repealed. 

11 (ii) Section 3562(a) of title 31, United 

12 States Code, shall continue in effect, except 

13 that references in such section 3562(a) to pro14 grams carried out under section 3561 of such 

15 title, shall be interpreted to mean programs car16 ried out under section 2(h) of this Act. 

17 (B) TECHNICAL AND CONFORMING AMEND18 MENTS.— 

19 (i) TABLE OF SECTIONS.—The table 

20 of sections for chapter 35 of title 31, 

21 United States Code, is amended by strik22 ing the matter relating to subchapter VI. 

23 (ii) DEFINITION.—Section 3501 of 

24 title 31, United States Code, is amended 
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1 by striking ‘‘and subchapter VI of this 

2 title’’. 

3 (iii) HOMELAND SECURITY GRANTS.— 

4 Section 2022(a)(6) of the Homeland Secu5 rity Act of 2002 (6 U.S.C. 612(a)(6)) is 

6 amended by striking ‘‘(as that term is de7 fined by the Director of the Office of Man8 agement and Budget under section 3561 of 

9 title 31, United States Code)’’ and insert10 ing ‘‘under section 2(h) of the Improper 

11 Payments Elimination and Recovery Act of 

12 2010 (31 U.S.C. 3321 note)’’. 

13 (7) RULE OF CONSTRUCTION.—Except as pro14 vided under paragraph (5), nothing in this section 

15 shall be construed as terminating or in any way lim16 iting authorities that are otherwise available to agen17 cies under existing provisions of law to recover im18 proper payments and use recovered amounts. 

19 (i) REPORT ON RECOVERY AUDITING.—Not later 

20 than 2 years after the date of the enactment of this Act, 

21 the Chief Financial Officers Council established under sec22 tion 302 of the Chief Financial Officers Act of 1990 (31 

23 U.S.C. 901 note), in consultation with the Council of In24 spectors General on Integrity and Efficiency established 

25 under section 7 of the Inspector General Reform Act of 
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1 2009 (Public Law 110–409) and recovery audit experts, 

2 shall conduct a study of— 

3 (1) the implementation of subsection (h); 

4 (2) the costs and benefits of agency recovery 

5 audit activities, including— 

6 (A) those activities under subsection (h); 

7 and 

8 (B) the effectiveness of using the services 

9 of— 

10 (i) private contractors; 

11 (ii) agency employees; 

12 (iii) cross-servicing from other agen13 cies; or 

14 (iv) any combination of the provision 

15 of services described under clauses (i) 

16 through (iii); and 

17 (3) submit a report on the results of the study 

18 to— 

19 (A) the Committee on Homeland Security 

20 and Governmental Affairs of the Senate; 

21 (B) the Committee on Oversight and Gov22 ernment Reform of the House of Representa23 tives; and 

24 (C) the Comptroller General. 
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1 SEC. 3. COMPLIANCE. 

2 (a) DEFINITIONS.—In this section: 

3 (1) AGENCY.—The term ‘‘agency’’ has the 

4 meaning given under section 2(f) of the Improper 

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

6 note) as redesignated by this Act. 

7 (2) ANNUAL FINANCIAL STATEMENT.—The 

8 term ‘‘annual financial statement’’ means the annual 

9 financial statement required under section 3515 of 

10 title 31, United States Code, or similar provision of 

11 law. 

12 (3) COMPLIANCE.—The term ‘‘compliance’’ 

13 means that the agency— 

14 (A) has published an annual financial 

15 statement for the most recent fiscal year and 

16 posted that report and any accompanying mate17 rials required under guidance of the Office of 

18 Management and Budget on the agency 

19 website; 

20 (B) if required, has conducted a program 

21 specific risk assessment for each program or ac22 tivity that conforms with section 2(a) the Im23 proper Payments Information Act of 2002 (31 

24 U.S.C. 3321 note); and 

25 (C) if required, publishes improper pay26 ments estimates for all programs and activities 
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1 identified under section 2(b) of the Improper 

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

3 3321 note) in the accompanying materials to 

4 the annual financial statement; 

5 (D) publishes programmatic corrective ac6 tion plans prepared under section 2(c) of the 

7 Improper Payments Information Act of 2002 

8 (31 U.S.C. 3321 note) that the agency may 

9 have in the accompanying materials to the an10 nual financial statement; 

11 (E) publishes improper payments reduction 

12 targets established under section 2(c) of the 

13 Improper Payments Information Act of 2002 

14 (31 U.S.C. 3321 note) that the agency may 

15 have in the accompanying materials to the an16 nual financial statement for each program as17 sessed to be at risk, and is meeting such tar18 gets; and 

19 (F) has reported an improper payment 

20 rate of less than 10 percent for each program 

21 and activity for which an estimate was pub22 lished under section 2(b) of the Improper Pay23 ments Information Act of 2002 (31 U.S.C. 

24 3321 note). 
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1 (b) ANNUAL COMPLIANCE REPORT BY INSPECTORS

2 GENERAL OF AGENCIES.—Each fiscal year, the Inspector 

3 General of each agency shall determine whether the agen4 cy is in compliance and submit a report on that determina5 tion to— 

6 (1) the head of the agency; 

7 (2) the Committee on Homeland Security and 

8 Governmental Affairs of the Senate; 

9 (3) the Committee on Oversight and Govern10 mental Reform of the House of Representatives; and 

11 (4) the Comptroller General. 

12 (c) REMEDIATION.— 

13 (1) NONCOMPLIANCE.— 

14 (A) IN GENERAL.—If an agency is deter15 mined by the Inspector General of that agency 

16 not to be in compliance under subsection (b) in 

17 a fiscal year, the head of the agency shall sub18 mit a plan to Congress describing the actions 

19 that the agency will take to come into compli20 ance. 

21 (B) PLAN.—The plan described under sub22 paragraph (A) shall include— 

23 (i) measurable milestones to be ac24 complished in order to achieve compliance 

25 for each program or activity; 
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1 (ii) the designation of a senior agency 

2 official who shall be accountable for the 

3 progress of the agency in coming into com4 pliance for each program or activity; and 

5 (iii) the establishment of an account6 ability mechanism, such as a performance 

7 agreement, with appropriate incentives and 

8 consequences tied to the success of the of9 ficial designated under clause (ii) in lead10 ing the efforts of the agency to come into 

11 compliance for each program and activity. 

12 (2) NONCOMPLIANCE FOR 2 FISCAL YEARS.— 

13 (A) IN GENERAL.—If an agency is deter14 mined by the Inspector General of that agency 

15 not to be in compliance under subsection (b) for 

16 2 consecutive fiscal years for the same program 

17 or activity, and the Director of the Office of 

18 Management and Budget determines that addi19 tional funding would help the agency come into 

20 compliance, the head of the agency shall obli21 gate additional funding, in an amount deter22 mined by the Director, to intensified compliance 

23 efforts. 

24 (B) FUNDING.—In providing additional 

25 funding described under subparagraph (A), the 
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1 head of an agency shall use any reprogramming 

2 or transfer authority available to the agency. If 

3 after exercising that reprogramming or transfer 

4 authority additional funding is necessary to ob5 ligate the full level of funding determined by 

6 the Director of the Office of Management and 

7 Budget under subparagraph (A), the agency 

8 shall submit a request to Congress for addi9 tional reprogramming or transfer authority. 

10 (3) REAUTHORIZATION AND STATUTORY PRO11 POSALS.—If an agency is determined by the Inspec12 tor General of that agency not to be in compliance 

13 under subsection (b) for more than 3 consecutive fis14 cal years for the same program or activity, the head 

15 of the agency shall, not later than 30 days after 

16 such determination, submit to Congress— 

17 (A) reauthorization proposals for each pro18 gram or activity that has not been in compli19 ance for 3 or more consecutive fiscal years; or 

20 (B) proposed statutory changes necessary 

21 to bring the program or activity into compli22 ance. 

23 (d) COMPLIANCE ENFORCEMENT PILOT PRO24 GRAMS.— 
30 

†S 1508 ES

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

2 Management and Budget may establish 1 or more 

3 pilot programs which shall test potential account4 ability mechanisms with appropriate incentives and 

5 consequences tied to success in ensuring compliance 

6 with this Act and eliminating improper payments. 

7 (2) REPORT.—Not later than 5 years after the 

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

9 Office of Management and Budget shall submit a re10 port to Congress on the findings associated with any 

11 pilot programs conducted under paragraph (1). The 

12 report shall include any legislative or other rec13 ommendations that the Director determines nec14 essary. 

15 (e) REPORT ON CHIEF FINANCIAL OFFICERS ACT OF

16 1990.—Not later than 1 year after the date of the enact17 ment of this Act, the Chief Financial Officers Council es18 tablished under section 302 of the Chief Financial Officers 

19 Act of 1990 (31 U.S.C. 901 note) and the Council of In20 spectors General on Integrity and Efficiency established 

21 under section 7 of the Inspector General Reform Act of 

22 2009 (Public Law 110–409), in consultation with a broad 

23 cross-section of experts and stakeholders in Government 

24 accounting and financial management shall— 
31 

†S 1508 ES

1 (1) jointly examine the lessons learned during 

2 the first 20 years of implementing the Chief Finan3 cial Officers Act of 1990 (31 U.S.C. 901) and iden4 tify reforms or improvements, if any, to the legisla5 tive and regulatory compliance framework for Fed6 eral financial management that will optimize Federal 

7 agency efforts to— 

8 (A) publish relevant, timely, and reliable 

9 reports on Government finances; and 

10 (B) implement internal controls that miti11 gate the risk for fraud, waste, and error in Gov12 ernment programs; and 

13 (2) jointly submit a report on the results of the 

14 examination to— 

15 (A) the Committee on Homeland Security 

16 and Governmental Affairs of the Senate; 

17 (B) the Committee on Oversight and Gov18 ernment Reform of the House of Representa19 tives; and 

20 (C) the Comptroller General. 

Passed the Senate June 23, 2010. 

Attest: 

Secretary. 
111TH CONGRESS 

2D SESSION S. 1508 

AN ACT 

To amend the Improper Payments Information Act 

vent the loss of billions in taxpayer dollars. of 2002 (31 U.S.C. 3321 note) in order to pre-