I 

110TH CONGRESS 

2D SESSION H. R. 5467 

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. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 14, 2008 

Mr. PATRICK J. MURPHY of Pennsylvania (for himself and Mr. BILBRAY) introduced the following bill; which was referred to the Committee on Oversight and Government Reform 

A BILL 

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, 

3 SECTION 1. SHORT TITLE. 

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

5 Elimination and Recovery Act of 2008’’. 

6 SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOV7 ERY. 

8 (a) SUSCEPTIBLE PROGRAMS AND ACTIVITIES.—Sec9 tion 2 of the Improper Payments Information Act of 2002 


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1 (31 U.S.C. 3321 note) is amended by striking subsection 

2 (a) and inserting the following: 

3 ‘‘(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS

4 AND ACTIVITIES.— 

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

6 shall, in accordance with guidance prescribed by the 

7 Director of the Office of Management and Budget, 

8 annually review all programs and activities that the 

9 relevant agency head administers and identify all 

10 such programs and activities that may be susceptible 

11 to significant improper payments. 

12 ‘‘(2) ANNUAL RISK ASSESSMENT.— 

13 ‘‘(A) DEFINITION.—In this paragraph the 

14 term ‘significant’ means that improper pay15 ments in the program or activity in the pre16 ceding fiscal year exceeded— 

17 ‘‘(i) 2.5 percent of all program or ac18 tivity payments made during that fiscal 

19 year; or 

20 ‘‘(ii) $10,000,000. 

21 ‘‘(B) RISK ASSESSMENT.—The review 

22 under paragraph (1) shall include a risk assess23 ment that includes— 

24 ‘‘(i) a systematic process for pro25 ducing a statistically valid estimate of the 


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1 level of improper payments being made by 

2 the agency; and 

3 ‘‘(ii) an identification of the factors 

4 contributing to each assessment under 

5 clause (i).’’. 

6 (b) REPORTS ON ACTIONS TO REDUCE IMPROPER

7 PAYMENTS.—Section 2 of the Improper Payments Infor8 mation Act of 2002 (31 U.S.C. 3321 note) is amended 

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

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

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

12 an agency with estimated improper payments under sub13 section (b), the head of the agency shall provide with the 

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

15 the agency is taking to reduce any improper payments, 

16 including— 

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

18 payments identified, actions planned or taken to cor19 rect those causes, and the planned or actual comple20 tion date of the actions taken to address those 

21 causes; 

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

23 a level below which further expenditures to reduce 

24 improper payments would cost more than the 

25 amount such expenditures would save in prevented 


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1 or recovered improper payments, a statement of 

2 whether the agency has what is needed with respect 

3 to— 

4 ‘‘(A) the internal controls, including infor5 mation systems; 

6 ‘‘(B) the human capital; and 

7 ‘‘(C) other infrastructure; 

8 ‘‘(3) if the agency does not have sufficient in9 ternal controls under paragraph (2)(A), a descrip10 tion of the resources the agency has requested in its 

11 budget submission to establish such internal con12 trols; 

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

14 taken to ensure that agency managers are held ac15 countable for establishing sufficient internal con16 trols, including an appropriate control environment, 

17 that prevent improper payments from occurring and 

18 promptly detect and recover improper payments 

19 made; and 

20 ‘‘(5) a statement of whether or not the agency 

21 has— 

22 ‘‘(A) developed and implemented improper 

23 payment control plans; and 


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1 ‘‘(B) implemented appropriate improper 

2 payment detection, investigation, reporting, and 

3 data collection procedures and processes.’’. 

4 (c) REPORTS ON RECOVERY ACTIONS AND GOVERN5 MENTWIDE REPORTING.— 

6 (1) IN GENERAL.—Section 2 of the Improper 

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

8 note) is amended— 

9 (A) by striking subsection (e); 

10 (B) by redesignating subsections (d) and 

11 (f) as subsections (f) and (g), respectively; and 

12 (C) by inserting after subsection (c) the 

13 following: 

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

15 PAYMENTS.—With respect to any improper payments 

16 identified in recovery audits conducted under section 2(g) 

17 of the Improper Payments Elimination and Recovery Act 

18 of 2008, the head of the agency shall provide with the 

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

20 the agency is taking to recover improper payments, includ21 ing— 

22 ‘‘(1) the types of errors from which improper 

23 payments resulted; 

24 ‘‘(2) a discussion of the methods used by the 

25 agency to recover improper payments; 


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1 ‘‘(3) the amounts recovered, outstanding, and 

2 determined to not be collectable, including the per3 cent these amounts represent of the total improper 

4 payments of the agency; and 

5 ‘‘(4) an aging schedule of the amounts out6 standing. 

7 ‘‘(e) GOVERNMENTWIDE REPORTING OF IMPROPER

8 PAYMENTS.— 

9 ‘‘(1) DEPARTMENT OF THE TREASURY.—The 

10 Secretary of the Treasury shall include in each re11 port submitted under section 331(a) of title 31, 

12 United States Code, the improper payment informa13 tion reported by the agencies on a governmentwide 

14 basis. 

15 ‘‘(2) OFFICE OF MANAGEMENT AND BUDGET.— 

16 The Director of the Office of Management and 

17 Budget shall— 

18 ‘‘(A) coordinate with the Secretary of the 

19 Treasury in the preparation of the information 

20 to be reported under paragraph (1); and 

21 ‘‘(B) prescribe regulations for— 

22 ‘‘(i) the information required to be re23 ported; and 


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1 ‘‘(ii) a format of reporting such infor2 mation on a governmentwide basis to be 

3 used by agencies.’’. 

4 (2) TECHNICAL AND CONFORMING AMEND5 MENT.—Section 331(a) of title 31, United States 

6 Code, is amended— 

7 (A) in paragraph (6), by striking ‘‘and’’ 

8 after the semicolon; 

9 (B) in paragraph (7), by striking the pe10 riod and inserting ‘‘; and’’; and 

11 (C) by adding at the end the following: 

12 ‘‘(8) the improper payments information re13 quired under section 2(e) of the Improper Payments 

14 Information Act of 2002 (31 U.S.C. 3321 note).’’. 

15 (d) DEFINITIONS.—Section 2 of the Improper Pay16 ment Information Act of 2002 (31 U.S.C. 3321 note) is 

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

18 this section) and inserting the following: 

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

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

21 executive agency, as that term is defined in section 

22 102 of title 31, United States Code. 

23 ‘‘(2) IMPROPER PAYMENT.—The term ‘im24 proper payment’— 


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

2 have been made or that was made in an incor3 rect amount (including overpayments and un4 derpayments) under statutory, contractual, ad5 ministrative, or other legally applicable require6 ments; and 

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

8 recipient, any payment for an ineligible good or 

9 service, any duplicate payment, payments for 

10 services not received, and any payment that 

11 does not account for credit for applicable dis12 counts. 

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

14 any transfer or commitment for future transfer of 

15 cash, in-kind benefits, goods, services, loans and loan 

16 guarantees, insurance subsidies, and other items of 

17 value between Federal agencies and their employees, 

18 vendors, partners, and beneficiaries, and parties to 

19 contracts, grants, leases, cooperative agreements, or 

20 any other procurement mechanism, that is— 

21 ‘‘(A) made by a Federal agency, a Federal 

22 contractor, or a governmental or other organi23 zation administering a Federal program or ac24 tivity; and 


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1 ‘‘(B) derived from Federal funds or other 

2 Federal resources or that will be reimbursed 

3 from Federal funds or other Federal resources. 

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

5 SERVICE.—The term ‘payment for an ineligible good 

6 or service’ shall include a payment for any good or 

7 service that is in violation of any provision of any 

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

9 other procurement mechanism, including any provi10 sion relating to quantity, quality, or timeliness.’’. 

11 (e) GUIDANCE BY THE OFFICE OF MANAGEMENT

12 AND BUDGET.—Section 2 of the Improper Payments In13 formation Act of 2002 (31 U.S.C. 3321 note) is amended 

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

15 and inserting the following: 

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

17 AND BUDGET.— 

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

19 after the date of enactment of the Improper Pay20 ments Elimination and Recovery Act of 2008, the 

21 Director of the Office of Management and Budget 

22 shall prescribe updated guidance to implement and 

23 provide for full compliance with the requirements of 

24 this section. The guidance shall not include any ex25 emptions not specifically authorized by this section. 


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1 ‘‘(2) CONTENTS.—The updated guidance under 

2 paragraph (1) shall prescribe— 

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

4 reduce improper payments, recovery actions, 

5 and governmentwide reporting; and 

6 ‘‘(B) strategies for addressing risks and 

7 establishing appropriate prepayment and 

8 postpayment internal controls.’’. 

9 (f) INTERNAL CONTROLS.— 

10 (1) REPORT ON EFFECTIVENESS OF A–123 IM11 PLEMENTATION.—The President’s Council on Integ12 rity and Efficiency shall conduct a study of the ef13 fectiveness of implementation of the Office of Man14 agement and Budget’s Circular No. A–123 (revised), 

15 Management’s Responsibility for Internal Control at 

16 preventing improper payments or addressing internal 

17 control problems that contribute to improper pay18 ments, and not later than 1 year after the date of 

19 enactment of this Act, submit a report on the study 

20 to— 

21 (A) the Committee on Homeland Security 

22 and Governmental Affairs of the Senate; 

23 (B) the Committee on Oversight and Gov24 ernment Reform of the House of Representa25 tives; 


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1 (C) the Director of the Office of Manage2 ment and Budget; and 

3 (D) the Comptroller General. 

4 (2) CONSULTATION AND COOPERATION.—The 

5 President’s Council on Integrity and Efficiency shall 

6 consult and cooperate with the committees and di7 rector described under paragraph (1) to ensure the 

8 nature and scope of the study under paragraph (1) 

9 will address the needs on those committees and the 

10 Director of the Office of Management and Budget, 

11 including how the implementation of Circular No. 

12 A–123 (revised) has helped to identify, report, pre13 vent, and recover improper payments. 

14 (3) DETERMINATION OF AGENCY READINESS

15 FOR OPINION ON INTERNAL CONTROL.—Not later 

16 than 1 year after the date of enactment of the Im17 proper Payments Elimination and Recovery Act of 

18 2008, the Director of the Office of Management and 

19 Budget shall develop— 

20 (A) specific criteria as to when an agency 

21 should initially be required to obtain an opinion 

22 on internal control over financial reporting; and 

23 (B) criteria for an agency that has dem24 onstrated a stabilized, effective system of inter25 nal control over financial reporting, whereby the 


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1 agency would qualify for a multiyear cycle for 

2 obtaining an audit opinion on internal control 

3 over financial reporting, rather than an annual 

4 cycle. 

5 (g) RECOVERY AUDITS.—An agency with outlays of 

6 $1,000,000 or more in any fiscal year shall conduct a re7 covery audit (as that term is defined by the Director of 

8 the Office of Management and Budget under section 3561 

9 of title 31, United States Code) of all programs and activi10 ties, if the agency determines that a prior audit has identi11 fied improper payments that can be recouped and it is cost 

12 beneficial for a recovery activity to recapture those funds. 

13 (h) REPORT ON RECOVERY AUDITING.—Not earlier 

14 than 1 year after the date of the enactment of this Act, 

15 the Chief Financial Officers Council established under sec16 tion 302 of the Chief Financial Officers Act of 1990 (31 

17 U.S.C. 901 note) and the President’s Council on Integrity 

18 and Efficiency established under Executive Order 12805 

19 of May 11, 1992, in consultation with recovery audit ex20 perts, shall— 

21 (1) jointly conduct a study of the costs and 

22 benefits of agency recovery audit activities, including 

23 those under subsection (g), and including the effec24 tiveness of using the services of— 

25 (A) private contractors; 


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1 (B) agency employees; 

2 (C) cross-servicing from other agencies; or 

3 (D) any combination of the provision of 

4 services described under subparagraphs (A) 

5 through (C); and 

6 (2) submit a report on the results of the study 

7 to— 

8 (A) the Committee on Homeland Security 

9 and Governmental Affairs of the Senate; 

10 (B) the Committee on Oversight and Gov11 ernment Reform of the House of Representa12 tives; and 

13 (C) the Comptroller General. 

14 SEC. 3. COMPLIANCE. 

15 (a) DEFINITIONS.—In this section: 

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

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

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

19 note) as redesignated by this Act. 

20 (2) COMPLIANCE.—The term ‘‘compliance’’ 

21 means that the agency— 

22 (A) has published a performance report for 

23 the most recent fiscal year and posted that re24 port on the agency website; 


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1 (B) has conducted a program specific risk 

2 assessment for each program or activity that— 

3 (i) is in compliance with section 2(a) 

4 the Improper Payments Information Act of 

5 2002 (31 U.S.C. 3321 note); and 

6 (ii) is included in the performance re7 port; 

8 (C) publishes program specific improper 

9 payments estimates for all programs and activi10 ties identified under section 2(b) of the Im11 proper Payments Information Act of 2002 (31 

12 U.S.C. 3321 note) in the performance report; 

13 (D) publishes programmatic corrective ac14 tion plans prepared under section 2(c) of the 

15 Improper Payments Information Act of 2002 

16 (31 U.S.C. 3321 note) that the agency may 

17 have in the performance report; 

18 (E) publishes Office of Management and 

19 Budget approved improper payments reduction 

20 targets in the performance report for each pro21 gram assessed to be at risk, and is determined 

22 by the Office of Management and Budget to be 

23 actively meeting such targets; and 

24 (F) publishes the compliance report under 

25 subsection (c) in the performance report. 


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1 (3) DELINQUENT PROGRAM.—The term ‘‘delin2 quent program’’ means a program which is partially 

3 or wholly responsible for the determination of an 

4 agency being not in compliance. 

5 (4) PERFORMANCE REPORT.—The term ‘‘per6 formance report’’ means the performance and ac7 countability report referred to under section 3516(b) 

8 of title 31, United States Code, or a program per9 formance report under section 1116 of that title. 

10 (b) ANNUAL COMPLIANCE REPORT BY OMB.— 

11 (1) IN GENERAL.—Each year, the Director of 

12 the Office of Management and Budget shall prepare 

13 a report with an identification of— 

14 (A) the compliance status of each agency 

15 under this section; and 

16 (B) the delinquent programs responsible 

17 for that status. 

18 (2) INCLUSION IN BUDGET SUBMISSION.—The 

19 Director of Office of the Management and Budget 

20 shall include the report described under paragraph 

21 (1) in the annual budget submitted under section 

22 1105 of title 31, United States Code. 

23 (c) ANNUAL COMPLIANCE REPORT BY AGENCY IN24 SPECTORS GENERAL.— 


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1 (1) IN GENERAL.—Each fiscal year, the Inspec2 tor General of each agency shall determine whether 

3 the agency is in compliance with the Improper Pay4 ments Information Act of 2002 (31 U.S.C. 3321 

5 note) and this Act and submit a report to the head 

6 of the agency on that determination. 

7 (2) PREPARATION OF REPORT.—The Inspector 

8 General of each agency may enter into contracts and 

9 other arrangements with public agencies and with 

10 private persons for the preparation of financial 

11 statements, studies, analyses, and other services in 

12 preparing the report described under paragraph (1). 

13 (3) INCLUSION IN PERFORMANCE REPORT.— 

14 The head of each agency shall include the report of 

15 the agency Inspector General described under para16 graph (1) in the performance report. 

17 (d) REMEDIATION ASSISTANCE.— 

18 (1) VOLUNTARY REMEDIATION ASSISTANCE.—If 

19 an agency is determined by the agency Inspector 

20 General not to be in compliance under subsection (c) 

21 in a fiscal year, the head of the agency may repro22 gram funds from any available appropriations of 

23 that agency for expenditure on intensified compli24 ance for any delinquent program (notwithstanding 


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1 any appropriations transfer authority limitation in 

2 any other provision of law). 

3 (2) REQUIRED REMEDIATION ASSISTANCE.—If 

4 an agency is determined by the agency Inspector 

5 General not to be in compliance under subsection (c) 

6 for 2 consecutive fiscal years, the head of the agency 

7 shall reprogram funds from any available appropria8 tions of that agency necessary to achieve full compli9 ance (notwithstanding any appropriations transfer 

10 authority limitation in any other provision of law). 

11 (3) REMEDIATION RESCISSION.— 

12 (A) IN GENERAL.—If an agency is deter13 mined by the agency Inspector General not to 

14 be in compliance under subsection (c) for a pe15 riod of 3 consecutive fiscal years and any delin16 quent program is included in the report under 

17 that subsection for 2 consecutive years during 

18 that 3-fiscal year period, the head of the agency 

19 shall transfer 5 percent of the available appro20 priations for each of those delinquent programs, 

21 as determined by the head of the agency, to 

22 miscellaneous receipts of the United States 

23 Treasury. 

24 (B) CONTINUATION OF TRANSFERS.—The 

25 head of an agency shall make transfers at least 


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1 once annually under subparagraph (A) until the 

2 agency is determined to be in compliance under 

3 subsection (b). 

4 (4) STOP-LOSS PROVISION.—If an agency has a 

5 program that reports under section 2(b) of the Im6 proper Payments Information Act of 2002 (31 

7 U.S.C. 3321 note) an improper payment rate great8 er than 15 percent for 3 consecutive fiscal years (re9 gardless of the whether the program is a delinquent 

10 program)— 

11 (A) not later than 30 days after that de12 termination, the head of agency shall submit to 

13 Congress proposals for statutory changes or 

14 other relevant actions determined necessary to 

15 stop the financial loss by the program; and 

16 (B) no further appropriations for such pro17 gram shall be authorized until such time as the 

18 inspector general of that agency submits a cer19 tification to Congress that sufficient changes in 

20 the program (whether those proposed by agency 

21 or otherwise) have been implemented to warrant 

22 resumed authorization of appropriations. 

Æ 


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