I
105TH CONGRESS
2D SESSION
H. R. 4243
To reduce waste, fraud, and error in Government programs by making im-
provements with respect to Federal management and debt collection
practices, Federal payment systems, Federal benefit programs, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 16, 1998
Mr. HORN (for himself, Mrs. MALONEY of New York, Mr. SESSIONS, Mr.
SUNUNU, and Mr. KANJORSKI) introduced the following bill; which was
referred to the Committee on Government Reform and Oversight, and in
addition to the Committees on the Judiciary, and Ways and Means, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To reduce waste, fraud, and error in Government programs
by making improvements with respect to Federal man-
agement and debt collection practices, Federal payment
systems, Federal benefit programs, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Government Waste, Fraud, and Error Reduction Act of
1998’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
TITLE I—GENERAL MANAGEMENT IMPROVEMENTS
Sec. 101. Improving financial management.
Sec. 102. Improving travel management.
TITLE II—IMPROVING FEDERAL DEBT COLLECTION PRACTICES
Sec. 201. Miscellaneous technical corrections to subchapter II of chapter 37 of
title 31, United States Code.
Sec. 202. Barring delinquent Federal debtors from obtaining Federal loans or
loan insurance guarantees.
Sec. 203. Collection and compromise and nontax debts and claims.
TITLE III—SALE OF DEBTS OWED TO UNITED STATES
Sec. 301. Authority to sell debts.
Sec. 302. Requirement to sell certain debts.
TITLE IV—TREATMENT OF HIGH VALUE DEBTS
Sec. 401. Annual report on high value debts.
Sec. 402. Debarment from obtaining Federal loans or loan guarantees.
Sec. 403. Inspector General review.
Sec. 404. Requirement to seek seizure and forfeiture of assets securing high
value debt.
TITLE V—FEDERAL PAYMENTS
Sec. 501. Transfer of responsibility to Secretary of the Treasury with respect
to prompt payment.
Sec. 502. Promoting electronic payments.
TITLE VI—FEDERAL BENEFIT VERIFICATION AND INTEGRITY
TESTS
Sec. 601. Short title.
Sec. 602. Purposes.
Sec. 603. Definitions.
Subtitle A—Notification of Federal Benefit Recipients Regarding Data
Verification
Sec. 612. Program agency responsibility to provide correct information.
Subtitle B—Federal Benefit Program Management Improvement Tests
Sec. 621. Tests of practices and techniques for improving Federal benefit pro-
gram management.
Sec. 622. Sharing of information in national directory of new hires.
Sec. 623. Increased penalties and punitive damages under privacy act.
Sec. 624. Establishment of the Federal benefit verification and payment integ-
rity board.
Sec. 625. Implementation of tested information technology practices or tech-
niques.
SEC. 2. PURPOSES.
The purposes of this Act are the following:
(1) Reduce waste, fraud, and error in Federal
benefit programs.
(2) Focus Federal agency management atten-
tion on high-risk programs.
(3) Better collect debts owed to the United
States.
(4) Improve Federal payment systems.
(5) Improve reporting on Government oper-
ations.
TITLE I—GENERAL
MANAGEMENT IMPROVEMENTS
SEC. 101. IMPROVING FINANCIAL MANAGEMENT.
(a) REPEAL.—Section 3515 of title 31, United States
Code, is amended—
(1) in subsection (A)—
(A) by striking ‘‘1997’’ and inserting
‘‘1999’’; and
(B) by inserting ‘‘Congress and’’ after
‘‘submit to’’;
(2) by striking subsection (e); and
(3) by striking subsections (f), (g), and (h).
(b) AUTHORITY
TO
ACCEPT
ELECTRONIC
PAY-
MENT.—
(1) IN GENERAL.—Subject to an agreement be-
tween the head of an executive agency and the appli-
cable financial institution or institutions, the head of
such agency may accept an electronic payment to
satisfy a debt owed to the agency.
(2) GUIDELINES FOR AGREEMENTS REGARDING
PAYMENT.—The Director of the Office of Manage-
ment and Budget shall develop guidelines regarding
agreements between agencies and financial institu-
tions under paragraph (1).
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), this section shall take effect on the date
of the enactment of this Act.
(2) SECRETARY’S
WAIVER
AUTHORITY.—Sub-
section (a)(1) of this section shall take effect March
1, 1998.
SEC. 102. IMPROVING TRAVEL MANAGEMENT.
(a) PAYMENT
OF STATE
AND LOCAL TAXES
ON
TRAVEL EXPENSES.—
(1) IN GENERAL.—The Administrator of Gen-
eral Services shall ensure that employees of execu-
tive agencies are not inappropriately charged State
and local taxes on travel expenses, including trans-
portation, lodging, automobile rental, and other mis-
cellaneous travel expenses.
(2) REPORT.—Not later than March 31, 1999,
the Administrator shall, after consultation with the
heads of executive agencies, submit to Congress a
report describing the steps taken, and proposed to
be taken, to carry out this subsection.
(b) LIMITED EXCLUSION FROM REQUIREMENT RE-
GARDING OCCUPATION OF QUARTERS.—Section 5911(e)
of title 5, United States Code, is amended by adding at
the end the following new sentence: ‘‘The preceding sen-
tence shall not apply with respect to lodging provided
under chapter 57 of this title.’’.
(c) USE
OF
TRAVEL
MANAGEMENT
CENTERS,
AGENTS, AND ELECTRONIC PAYMENT SYSTEMS.—
(1) REQUIREMENT TO ENCOURAGE USE.—The
head of each executive agency shall, with respect to
travel by employees of the agency in the perform-
ance of the employment duties by the employee, re-
quire, to the maximum extent possible, the use by
such employees of travel management centers, travel
agents authorized for use by such employees, and
electronic reservation and payment systems for the
purpose of improving efficiency and economy regard-
ing travel by employees of the agency.
(2) PLAN FOR IMPLEMENTATION.—(A) The Ad-
ministrator of General Services shall develop a plan
regarding the implementation of this subsection and
shall, after consultation with the heads of executive
agencies, submit to Congress a report describing
such plan and the means by which such agency
heads plan to ensure that employees use travel man-
agement centers, travel agents, and electronic res-
ervation and payment systems as required by this
subsection.
(B) The Administrator shall submit the plan re-
quired under subparagraph (A) not later than March
31, 1999.
TITLE II—IMPROVING FEDERAL
DEBT COLLECTION PRACTICES
SEC. 201. MISCELLANEOUS TECHNICAL CORRECTIONS TO
SUBCHAPTER II OF CHAPTER 37 OF TITLE 31,
UNITED STATES CODE.
(a) 
CHILD
SUPPORT
ENFORCEMENT.—Section
3716(h)(3) of title 31, United States Code, is amended
to read as follows:
‘‘(3) In applying this subsection with respect to any
debt owed to a State, other than past due support being
enforced by the State, subsection (c)(3)(A) shall not
apply.’’.
(b) CHARGES
BY DEBT COLLECTION CONTRAC-
TORS.—
(1) COLLECTION
BY
SECRETARY
OF
THE
TREASURY.—Section 3711(g) of title 31, United
States Code, is amended by adding at the end the
following:
‘‘(11) The amount received by a person for perform-
ance of collection services under this section shall not be
limited by State law.’’.
(2) COLLECTION BY PROGRAM AGENCY.—Sec-
tion 3718 of title 31, United States Code, is amend-
ed by adding at the end the following:
‘‘(h) The amount received by a person for perform-
ance of collection services under this section or section
3711(g) of this title shall not be limited by State law.’’.
(c) DEBT SALES.—Section 3711 of title 31, United
States Code, is amended by striking subsection (i).
(d) GAINSHARING.—Section 3720C(b)(2)(D) of title
31, United States Code, is amended by striking ‘‘delin-
quent loans’’ and inserting ‘‘debts’’.
(e) PROVISIONS RELATING TO PRIVATE COLLECTION
CONTRACTORS.—
(1) COLLECTION
BY
SECRETARY
OF
THE
TREASURY.—Section 3711(g) of title 31, United
States Code, is further amended by adding at the
end the following:
‘‘(12) In attempting to collect under this subsection
any debt owed to the United States, a private collection
contractor shall not be precluded from verifying the debt-
or’s current employer, the location of the payroll office of
the debtor’s current employer, the period the debtor has
been employed by their current employer, and the com-
pensation received by the debtor from their current em-
ployer.
‘‘(13)(A) The Secretary of the Treasury shall provide
that any contract with a private collection contractor
under this subsection shall include a provision that the
contractor shall be subject to penalties under the con-
tract—
‘‘(i) if the contractor fails to comply with any
restrictions under applicable law regarding the col-
lection activities of debt collectors; or
‘‘(ii) if the contractor engages in unreasonable
or abusive debt collection practices in connection
with the collection of debt under the contract.
‘‘(B) Notwithstanding any other provision of law, a
private collection contractor under this subsection—
‘‘(i) shall not be subject to any liability or con-
tract penalties in connection with efforts to collect a
debt pursuant to a contract under this subsection by
reason of actions that are required by the contract
or by applicable law or regulations; and
‘‘(ii) shall not be subject to payment of dam-
ages or attorney’s fees by reason of any action in
connection with efforts to collect such debt, except in
a case of bad faith, intentional misconduct, or un-
reasonable or abusive debt collection practices by the
contractor.
‘‘(14)(A) The Secretary of the Treasury shall provide
that any contract with a private collection contractor
under this subsection shall include a provision—
‘‘(i) that the contractor shall be measured on
performance in collecting delinquent debt under the
contract and compensated based on success in col-
lecting such debt; and
‘‘(ii) that employees of the contractor involved
in the collection of debt under the contract receive
a minimum level of compensation, to be determined
by the Secretary, based on the wage and perform-
ance compensation structure prevalent in the indus-
try in the region in which the contractor is located.
‘‘(B) The Secretary shall have sole responsibility and
authority for enforcing minimum compensation require-
ments included in contracts pursuant to this section.’’.
(2) COLLECTION BY PROGRAM AGENCY.—Sec-
tion 3718 of title 31, United States Code, is further
amended by adding at the end the following:
‘‘(j) In attempting to collect under this subsection
any debt owed to the United States, a private collection
contractor shall not be precluded from verifying the cur-
rent place of employment of the debtor, the location of
the payroll office of the debtor’s current employer, the pe-
riod the debtor has been employed by their current em-
ployer, and the compensation received by the debtor from
their current employer.
‘‘(k)(1) The head of an executive, judicial, or legisla-
tive agency that contracts with a private collection con-
tractor to collect a debt owed to the agency, or a guaranty
agency or institution of higher education that contracts
with a private collection contractor to collect a debt owed
under any loan program authorized under title IV of the
Higher Education Act of 1965, shall include a provision
in the contract that the contractor—
‘‘(A) shall be subject to penalties under the con-
tract if the contractor fails to comply with any re-
strictions imposed under applicable law on the collec-
tion activities of debt collectors; and
‘‘(B) shall be subject to penalties under the
contract if the contractor engages in unreasonable or
abusive debt collection practices in connection with
the collection of debt under the contract.
‘‘(2) Notwithstanding any other provision of law—
‘‘(A) a private collection contractor under this
section shall not be subject to any liability or con-
tract penalties in connection with efforts to collect a
debt owed to an executive, judicial, or legislative
agency, or owed under any loan program authorized
under title IV of the Higher Education Act of 1965,
by reason of actions required by the contract, or by
applicable law or regulations; and
‘‘(B) such a contractor shall not be subject to
payment of damages or attorney’s fees by reason of
any action in connection with efforts to collect such
a debt, except in a case of bad faith, intentional mis-
conduct, or unreasonable or abusive debt collection
practices by the contractor.
‘‘(l)(1) The head of each executive, judicial, or legisla-
tive agency administering a contract with a private collec-
tion contractor under this section shall include in the con-
tract a provision—
‘‘(A) that the contractor is measured based on
performance in collecting delinquent debt owed to
the agency and compensated based on success in col-
lecting such debt; and
‘‘(B) that employees of the contractor involved
in collection of such debt receive a minimum level of
compensation, to be determined by the agency head,
based on the wage and performance compensation
structure prevalent in the industry in the region in
which the contractor is located.
‘‘(2) The head of the agency shall have sole respon-
sibility and authority for enforcing minimum compensa-
tion requirements included in contracts pursuant to this
section.’’.
(f) CLERICAL AMENDMENT.—Section 3720A(h) of
title 31, United States Code, is amended—
(1) beginning in paragraph (3), by striking the
close quotation marks and all that follows through
the matter preceding subsection (i); and
(2) by adding at the end the following:
‘‘For purposes of this subsection, the disbursing official
for the Department of the Treasury is the Secretary of
the Treasury or his or her designee.’’.
(g) CORRECTION
OF REFERENCES
TO FEDERAL
AGENCY.—(1) Sections 3716(c)(6) and 3720A (a), (b),
(c), and (e) of title 31, United States Code, are each
amended by striking ‘‘Federal agency’’ each place it ap-
pears and inserting ‘‘executive, judicial, or legislative
agency’’.
(2) Section 3716(h)(2)(C), of title 31, United States
Code, are each amended by striking ‘‘a Federal agency’’
and inserting ‘‘an executive, judicial, or legislative agen-
cy’’.
(3) Section 3720B of title 31, United States Code,
is amended—
(A) by striking ‘‘a Federal agency’’ each place
it appears and inserting ‘‘an executive, judicial, or
legislative agency’’; and
(B) by striking ‘‘any Federal agency’’ and in-
serting ‘‘any executive, judicial, or legislative agen-
cy’’.
SEC. 202. BARRING DELINQUENT FEDERAL DEBTORS FROM
OBTAINING FEDERAL LOANS OR LOAN IN-
SURANCE GUARANTEES.
(a) IN GENERAL.—Section 3720B of title 31, United
States Code, is amended to read as follows:
nated, in accordance with otherwise applicable statutory
requirements and authorities.
‘‘(B) The head of each executive agency that operates
a debt collection center may enter into an agreement with
the Secretary of the Treasury to carry out the purposes
of this subsection.
‘‘(C) The Secretary of the Treasury shall—
‘‘(i) maintain a schedule of private collection
contractors and debt collection centers operated by
agencies, that are eligible for referral of claims
under this subsection;
‘‘(ii) maximize collections of delinquent debts by
referring delinquent debts promptly;
‘‘(iii) maintain competition between private col-
lection contractors and debt collection centers oper-
ated by agencies;
‘‘(iv) ensure, to the maximum extent prac-
ticable, that a private collection contractor to which
a debt is referred is responsible, to the greatest ex-
tent practicable, for any administrative costs associ-
ated with the contract under which the referral is
made.
‘‘(D) The Secretary may, at the request of a State,
refer to a private collection contractor a child support debt
or claim administered by the State.’’.
(b) LIMITATION ON DISCHARGE BEFORE USE OF
PRIVATE COLLECTION CONTRACTOR OR DEBT COLLEC-
TION CENTER.—Paragraph (9) of section 3711(g) of title
31, United States Code, is amended—
(1) by redesignating subparagraphs (A) through
(H) in order as clauses (i) through (viii);
(2) by inserting ‘‘(A)’’ after ‘‘(9)’’;
(3) in subparagraph (A) (as designated by
paragraph (2) of this subsection) in the matter pre-
ceding clause (i) (as designated by paragraph (1) of
this subsection), by inserting ‘‘and subject to sub-
paragraph (B)’’ after ‘‘as applicable’’; and
(4) by adding at the end the following:
‘‘(B)(i) The head of an executive, judicial, or legisla-
tive agency may not terminate collection action on a debt
unless the debt has been referred to a private collection
contractor or a debt collection center for a period to be
determined by the Secretary of the Treasury.
‘‘(ii) The Secretary of the Treasury may, at the re-
quest of an agency, waive the application of clause (i) to
any debt, or class of debts, if the Secretary of the Treas-
ury determines that the waiver is in the best interest of
the United States.’’.
TITLE III—SALE OF DEBTS OWED
TO UNITED STATES
SEC. 301. AUTHORITY TO SELL DEBTS.
(a) PURPOSE.—The purpose of this section is to pro-
vide that the head of each executive, judicial, or legislative
agency shall establish a program of debt sales in order
to—
(1) minimize the loan and debt portfolios of the
agency;
(2) improve credit management while serving
public needs;
(3) reduce delinquent debts held by the agency;
and
(4) obtain the maximum value for loan and
debt assets.
(b) SALES AUTHORIZED.—(1) The head of an execu-
tive, judicial, or legislative agency may sell, subject to sec-
tion 504(b) of the Federal Credit Reform Act of 1990 (2
U.S.C. 661c(b)) and using competitive procedures, any
nontax debt owed to the United States that is adminis-
tered by the agency.
(2) Costs the agency incurs in selling debt pursuant
to this section may be deducted from the proceeds received
from the sale. Such costs may include, but are not limited
to—
(A) the costs of computer hardware and soft-
ware, processing and telecommunications equipment,
other equipment, supplies, and furniture;
(B) personnel training and travel costs;
(C) other personnel and administrative costs;
(D) the costs of any contract for identification,
billing, or collection services;
(E) the costs of contractors assisting in the sale
of debt;
(F) the fees of appraisers, auctioneers, and re-
alty brokers;
(G) the costs of advertising and surveying; and
(H) other reasonable costs incurred by the
agency.
(3) Sales of debt under this section—
(A) shall be for—
(i) cash; or
(ii) cash and a residuary equity, joint ven-
ture, or profit participation, if the head of the
agency determines that the proceeds will be
greater than the proceeds from a sale solely for
cash;
(B) shall be without recourse against the
United States, but may include the use of guaran-
tees if otherwise authorized by law; and
(C) shall transfer to the purchaser all rights of
the United States to demand payment of the debt,
other than with respect to a residuary equity, joint
venture, or profit participation under subparagraph
(A)(ii).
(c) EXISTING AUTHORITY NOT AFFECTED.—This
section is not intended to limit existing statutory authority
of the head of an executive, judicial, or legislative agency
to sell loans, debts, or other assets.
SEC. 302. REQUIREMENT TO SELL CERTAIN DEBTS.
(a) SALE OF DELINQUENT DEBTS.—The head of
each executive, judicial, or legislative agency shall sell any
nontax debt owed to the United States that is delinquent
for more than one year, pursuant to a schedule determined
by the Secretary of the Treasury to maximize the proceeds
from such sale. Sales under this subsection shall be con-
ducted under the authority in section 301.
(b) SALE OF LOANS.—The head of each executive,
judicial, or legislative agency shall sell each loan obligation
arising from a program administered by the agency, not
later than 6 months after the loan is disbursed, unless
the Secretary of the Treasury determines that a longer
period is necessary to protect the financial interests of the
United States. Sales under this subsection shall be con-
ducted under the authority in section 301.
(c) SALE OF DEBTS AFTER TERMINATION OF COL-
LECTION ACTION.—After terminating collection action,
the head of an executive, judicial, or legislative agency
shall sell, using competitive procedures, any nontax debt
or class of debts owed to the United States, unless the
Secretary of the Treasury determines that the sale is not
in the best interests of the United States.
(d) LIMITATIONS.—(1) The head of an executive, ju-
dicial, or legislative agency shall not, without the approval
of the Attorney General, sell any debt that is the subject
of an allegation of or investigation for fraud, or that has
been referred to the Department of Justice for litigation.
(2) The head of an executive, judicial, or legislative
agency shall not sell debts for less than the net present
value of such debts, as determined pursuant to the Federal
Credit Reform Act of 1990, adjusted by the net present
value of the estimated administrative costs associated with
administering the loan.
(3) The Secretary of the Treasury may, after a study
and review, exempt a class of debts from the requirement
in paragraph (2) if the Secretary determines that the sale
of such debts is not in the best financial interests of the
United States.
(4) The head of an executive, judicial, or legislative
agency may exempt from sale any class of debts if—
(A) the head of the agency determines that the
sale would interfere with the mission of the agency
administering the program under which the indebt-
edness was incurred;
(B) the head of the agency provides to the Sec-
retary of the Treasury a certification that such sale
would interfere with the mission of the agency; and
(C) the Secretary of the Treasury concurs with
the head of the agency that such sale would interfere
with the mission of the agency.
TITLE IV—TREATMENT OF HIGH
VALUE NONTAX DEBTS
SEC. 401. ANNUAL REPORT ON HIGH VALUE NONTAX
DEBTS.
(a) IN GENERAL.—Not later than 90 days after the
end of each fiscal year, the head of each agency that ad-
ministers a program that gives rise to a delinquent high
value nontax debt shall submit a report to Congress that
lists each such debt.
(b) CONTENT.—A report under this section shall, for
each debt listed in the report, include the following:
(1) The name of each person liable for the debt.
(2) The amounts of principal, interest, and pen-
alty comprising the debt.
(3) The actions the agency has taken to collect
the debt.
(4) Specification of any portion of the debt that
has been written-down administratively or due to a
bankruptcy proceeding.
(c) DEFINITIONS.—In this subsection:
(1) AGENCY; DEBT.—Each of the terms ‘‘agen-
cy’’ and ‘‘debt’’ has the meaning that term has in
chapter 37 of title 31, United States Code, as
amended by this Act.
(2) HIGH
VALUE
NONTAX
DEBT.—The term
‘‘high value nontax debt’’ means a nontax debt hav-
ing an outstanding value (including principal, inter-
est, and penalties) that exceeds $1,000,000.
SEC. 402. DEBARMENT FROM OBTAINING FEDERAL LOANS
OR LOAN GUARANTEES.
Section 3720B of title 31, United States Code, is
amended—
(1) in subsection (a) by inserting ‘‘(1)’’ after
‘‘(a)’’;
(2) by redesignating subsection (b) as para-
graph (2) of subsection (a);
(3) in subsection (a)(2) (as so redesignated) by
striking ‘‘under subsection (a)’’ and inserting ‘‘under
paragraph (1)’’; and
(4) by adding at the end the following:
‘‘(b)(1) A person may not obtain any Federal finan-
cial assistance in the form of a loan (other than a disaster
loan) or loan insurance or guarantee if the person has an
outstanding high value nontax debt with any Federal
agency which is in a delinquent status, as determined
under standards prescribed by the Secretary of the Treas-
ury. Such a person may obtain additional loans or loan
guarantees only after such delinquency is resolved in ac-
cordance with those standards.
‘‘(2) In this subsection, the term ‘high value nontax
debt’ means a debt having an outstanding value (including
principal, 
interest, 
and 
penalties) 
that 
exceeds
$1,000,000.’’.
SEC. 403. INSPECTOR GENERAL REVIEW.
Section 3718 of title 31, United States Code, is
amended by adding at the end the following:
‘‘(j)(1) The Inspector General of each agency shall
review and report to the Congress and the head of an
agency on each compromise, default, or final resolution in
bankruptcy of a high value nontax debt arising out of the
activities of, or referred to, the agency.
‘‘(2) In each review and report to an agency under
this subsection, the Inspector General shall rate the per-
formance of the head of the agency in seeking to collect
the debt, and recommend any changes in the debt collec-
tion practices of the agency that are appropriate to reduce
the aggregate amount of high value nontax debts that are
resolved finally in whole or in part by compromise, default,
or bankruptcy to less than 1 percent of the aggregate
amount of all high value nontax debts.
‘‘(3) In this subsection, the term ‘high value nontax
debt’ means a debt—
‘‘(A) having an outstanding value (including
principal, interest, and penalties) that exceeds
$1,000,000; and
‘‘(B) that has not been referred to the Depart-
ment of Justice for litigation or to the Department
of the Treasury for collection action.’’.
SEC. 404. REQUIREMENT TO SEEK SEIZURE AND FORFEIT-
URE OF ASSETS SECURING HIGH VALUE
NONTAX DEBT.
The head of an agency authorized to collect a high
value nontax debt that is delinquent shall promptly seek
seizure and forfeiture of assets pledged to the United
States in any transaction giving rise to the nontax debt.
TITLE V—FEDERAL PAYMENTS
SEC. 501. TRANSFER OF RESPONSIBILITY TO SECRETARY
OF 
THE 
TREASURY 
WITH 
RESPECT 
TO
PROMPT PAYMENT.
(a) DEFINITION.—Section 3901(a)(3) of title 31,
United States Code, is amended by striking ‘‘Director of
the Office of Management and Budget’’ and inserting
‘‘Secretary of the Treasury’’.
(b) INTEREST.—Section 3902(c)(3) of title 31,
United States Code, is amended by striking ‘‘Director of
the Office of Management and Budget’’ and inserting
‘‘Secretary of the Treasury’’.
(c) REGULATIONS.—Section 3903(a)(1) of title 31,
United States Code, is amended by striking ‘‘Director of
the Office of Management and Budget’’ and inserting
‘‘Secretary of the Treasury’’.
(d) REPORTS.—Section 3906(a) of title 31, United
States Code, is amended by striking ‘‘Director of the Of-
fice of Management and Budget’’ each place it appears
and inserting ‘‘Secretary of the Treasury’’.
SEC. 502. PROMOTING ELECTRONIC PAYMENTS.
Section 3903(a) of title 31, United States Code, is
amended—
(1) by amending paragraph (1) to read as fol-
lows:
‘‘(1) provide that the required payment date
is—
‘‘(A) the date payment is due under the
contract for the item of property or service pro-
vided; or
‘‘(B) no later than 30 days after a proper
invoice for the amount due is received if a spe-
cific payment date is not established by con-
tract;’’; and
(2) by striking ‘‘and’’ after the semicolon at the
end of paragraph (8), by striking the period at the
end of paragraph (9) and inserting a semicolon, and
by adding at the end the following:
‘‘(10) provide that the Secretary of the Treas-
ury may waive the application of requirements under
paragraph (1) to provide for early payment of ven-
dors in cases where an agency will implement an
electronic payment technology which improves agen-
cy cash management and business practice; and
‘‘(11) provide that a vendor is required to pay
interest to the United States on unearned amounts
in its possession.’’.
TITLE 
VI—FEDERAL 
BENEFIT
VERIFICATION 
AND 
INTEG-
RITY TESTS
SEC. 601. SHORT TITLE.
This title may be cited as the ‘‘Federal Benefit Ver-
ification and Integrity Act’’.
SEC. 602. PURPOSES.
The purposes of this title are the following:
(1) To reduce errors in Federal benefit pro-
grams that lead to waste, fraud, or abuse and en-
courage agencies to work together to identify com-
mon sources of errors.
(2) To identify solutions to common problems
that will save money for the taxpayer and dem-
onstrate the Government’s ability to deliver Federal
benefits to the right person, at the right time, for
the right amount.
(3) To focus on increasing accuracy and effi-
ciency for Federal benefit program eligibility, finan-
cial and program management, and debt collection.
(4) To improve the coordination of Government
information resources across Government agencies to
strengthen the delivery of Federal benefits.
(5) To balance the need for data in verifying
eligibility with the paperwork burden and privacy in-
trusion that data sharing imposes.
(6) To emphasize deterring and preventing
fraud in the provision of Federal benefits, rather
than seeking to detect fraud after Federal benefits
have been provided.
(7) To ensure that agencies administering fed-
erally funded benefit programs inform applicants ap-
plying for benefits under those programs that their
data can be shared to verify their eligibility for those
benefits.
(8) To encourage individuals to provide accu-
rate information when applying for benefits under
federally funded benefit programs.
SEC. 603. DEFINITIONS.
In this title:
(1) BOARD.—The term ‘‘Board’’ means the
Federal Benefit Verification and Payment Integrity
Board established under this title.
(2) FEDERAL BENEFIT PROGRAM.—The term
‘‘Federal benefit program’’ means any program ad-
ministered or funded by the Federal Government, or
by any agent or State on behalf of the Federal Gov-
ernment, providing cash assistance or in-kind assist-
ance in the form of payments, grants, loans, or loan
guarantees to or for the benefit of any person.
Subtitle A—Notification of Federal
Benefit 
Recipients 
Regarding
Data Verification
SEC. 612. PROGRAM AGENCY RESPONSIBILITY TO PROVIDE
CORRECT INFORMATION.
(a) IN GENERAL.—An agency that administers a
Federal benefit payment program shall provide notice in-
forming applicants under the program, in information ma-
terial and instructions accompanying program application
forms, that applicants’ data may be verified to the extent
permitted by law.
(b) AGENCY COMPLIANCE.—An agency may comply
with subsection (a) by modifying program materials and
applications to include such notice as part of their normal
reissuance cycle for reprinting forms, but in no case later
than December 31, 2000.
(c) RECORD OF ACKNOWLEDGMENTS.—The head of
each agency that administers a Federal benefit program
shall maintain a record of each applicant’s acknowledg-
ment that the applicant has received notice of the uses
and disclosures to be made of the applicant’s information,
for as long as the applicant receives benefits from or owes
a debt to the Government under the program.
Subtitle B—Federal Benefit Pro-
gram 
Management 
Improve-
ment Tests
SEC. 621. TESTS OF PRACTICES AND TECHNIQUES FOR IM-
PROVING FEDERAL BENEFIT PROGRAM MAN-
AGEMENT.
(a) AUTHORITY TO CONDUCT TESTS.—
(1) IN GENERAL.—A Federal agency that ad-
ministers a Federal benefit program may conduct a
test of information technology practices or tech-
niques to improve income verification, debt collec-
tion, data privacy and integrity protection, and iden-
tification authentication in the administration of the
program, in accordance with a proposal approved by
the Federal Benefit Verification and Payment Integ-
rity Board established by this subtitle.
(2) WAIVER OF REGULATIONS.—Upon the re-
quest of the Board, the head of an agency may
waive the enforcement of any regulation of the agen-
cy for the purposes of carrying out a test under this
section.
(3) IDENTIFICATION OF TEST AREAS.—The Di-
rector of the Office of Management and Budget and
the Chief Information Officers’ Council shall each
recommend to the Board, within 120 days after the
date of enactment of this Act, various information
technology practices and techniques that should be
tested under this subtitle.
(b) APPROVAL OF AGENCY PROPOSALS.—
(1) IN GENERAL.—The head of a Federal agen-
cy may develop and submit to the Board a proposal
for carrying out a test under this section for a spe-
cific Federal benefit program administered by the
agency. The proposal shall contain specific goals, in-
cluding a schedule, for improving customer service
and error reduction in the program and other infor-
mation requested by the Board.
(2) CONTENTS.—The proposal shall provide for
the testing of information sharing in an integrated
manner where feasible of electronic practices and
techniques for improving Federal benefit program
management, including the following:
(A) Use of encryption and electronic signa-
ture technology consistent with techniques ac-
ceptable to the National Institute of Standards
and Technology, to protect the confidentiality
and integrity of information.
(B) Use of other security controls and
monitoring tools.
(C) Use of risk profiles and risk alert tech-
nologies, including use of Federal, State, and
private databases such as the National Direc-
tory of New Hires, Federal and State tax data,
and credit bureau data.
(D) Establishment of a management
framework for exploring and reducing the infor-
mation security risks associated with Federal
agency operations and technologies, including
risk assessments and disaster recovery plan-
ning.
(3) CONSULTATION.—Any agency whose pro-
posals would require access to another agency’s
database shall consult with that agency prior to sub-
mission of the proposal to the Board.
(4) PRIVACY SAFEGUARDS.—A proposal submit-
ted to the Board must contain a description of ap-
propriate administrative, technical, and physical
safeguards to ensure the security and confidentiality
of records and to protect against any anticipated
threats or hazards to their security or integrity
which could result in substantial harm, embarrass-
ment, inconvenience, or unfairness to any individual
on whom information is maintained. The proposal
shall include, in particular, prohibitions on duplica-
tion and redisclosure of records provided by the
source agency within or outside the recipient entity,
except where required by law or essential to the con-
duct of the test.
(5) AGENCY
REIMBURSEMENT.—The proposal
shall include an estimate for reimbursement that
may be charged by a Federal agency to another
agency in conducting tests under the proposal.
(6) REVIEW OF PROPOSALS.—Not later than 60
days after the date of receipt of a proposal under
this subsection, the Board shall review and rec-
ommend disposition of the proposal to the heads of
the data sharing agencies under the proposal.
(c) COOPERATIVE AGREEMENTS AND CONTRACTS.—
The head of an agency participating in a test under this
section, in consultation with the Board, may enter into
a cooperative agreement with a State or contract with a
private entity under which the State or private entity, re-
spectively, may provide services on behalf of the Federal
agency in carrying out the test.
(d) GENERAL IMPLEMENTATION PLAN.—The Board
shall prepare a plan for the implementation of this section,
including for the coordination of the conduct of tests
under this subtitle and the procedures for submission of
proposals for those tests.
(e) REPORTS ON RESULTS OF TESTS.—
(1) ANNUAL
REPORT.—Beginning not later
than 1 year after the date of enactment of this Act,
the Board shall submit annually to the Congress a
report on the tests conducted under this section.
(2) CONTENT.—The report shall include—
(A) an estimate of potential cost savings
and other impacts demonstrated by the tests;
(B) an analysis of the feasibility of apply-
ing the practices and techniques demonstrated
in each test within the Federal Government, in-
cluding analysis of what was the least amount
of information that was necessary to verify eli-
gibility of applicants under each Federal benefit
program that participated in the tests;
(C) an assessment of the value of State
data in those tests; and
(D) such recommendations as the Board
considers appropriate.
(f) AUTHORITY TO REQUEST TEST.—The Board
may request the head of a Federal agency that administers
a Federal benefit program to conduct a test under this
section, including the preparation and submission of a pro-
posal for such a test in accordance with this section. The
head of an agency shall respond within 30 days by approv-
ing or disapproving such a request of the Board.
(g) USE OF TEST INFORMATION.—Information on
any individual obtained in the course of a test under this
section shall not be used as the exclusive basis of a deci-
sion concerning the rights, benefits, or privileges of any
individual.
SEC. 622. SHARING OF INFORMATION IN NATIONAL DIREC-
TORY OF NEW HIRES.
(a) AVAILABILITY OF INFORMATION.—Notwithstand-
ing section 453(l) of the Social Security Act (42 U.S.C.
653(l)), the Secretary of Health and Human Services may
disclose information to another Federal agency from the
National Directory of New Hires established pursuant to
section 453(i) of that Act (42 U.S.C. 653(i)) based on
matches conducted by the Department of Health and
Human Services for purposes of conducting a test under
this subtitle.
(b) AUTHORITY TO DISCLOSE INFORMATION.—The
head of an agency to whom information is disclosed under
this section may disclose the information to another Fed-
eral agency for use by the agency only as specified under
a test proposal under this subtitle. The head of a Federal
agency to whom information is disclosed under this sub-
section may disclose such information to a State agency
administering a federally funded benefit program, a public
housing authority, or a guaranty agency (as that term is
defined in section 435(j) of the Higher Education Act of
1965) only for the purpose of conducting the test.
(c) REDISCLOSURE LIMITATION.—An entity that re-
ceives information for use in a test under this title that
it was not otherwise authorized by law to obtain may not
redisclose the information or use it for any other purpose.
(d) SHARING OF STATE INFORMATION.—The provi-
sion of information pursuant to subsection (a) shall not
affect any determination of whether a State meets the re-
quirements of section 303(h)(1)(C) of the Social Security
Act.
SEC. 623. INCREASED PENALTIES AND PUNITIVE DAMAGES
UNDER PRIVACY ACT.
(a) INCREASED PENALTIES.—Section 552a(i) of title
5, United States Code, is amended in each of paragraphs
(1) and (3) by striking ‘‘shall be guilty’’ and all that fol-
lows through the period and inserting ‘‘shall be fined not
more than $10,000, imprisoned for not more than one
year, or both.’’.
(b) PUNITIVE DAMAGES.—Section 552a(g)(4) of title
5, United States Code, is amended—
(1) by redesignating subparagraphs (A) and
(B) as clauses (i) and (ii), respectively;
(2) by inserting ‘‘(A)’’ after ‘‘(4)’’; and
(3) by adding at the end the following:
‘‘(2) In any such suit in which the court determines that
the agency acted in a manner that was willful and inten-
tional, the court may award punitive damages in addition
to damages and costs referred to in subparagraph (A).’’.
SEC. 624. ESTABLISHMENT OF THE FEDERAL BENEFIT VER-
IFICATION AND PAYMENT INTEGRITY BOARD.
(a) ESTABLISHMENT.—There is hereby established
the Federal Benefit Verification and Payment Integrity
Board.
(b) MEMBERSHIP.—The Board shall be composed of
10 members appointed from among Federal or State em-
ployees, as follows:
(1) 3 members, of whom one shall be appointed
by the head of each of 3 Federal agencies designated
by the Director of the Office of Management and
Budget. The Director shall designate agencies under
this paragraph from among the Federal agencies re-
sponsible for administering Federal benefit pro-
grams.
(2) 2 members appointed by the Director of the
Office of Management and Budget, of whom at least
one shall be a State employee appointed to represent
federally funded State administered benefits pro-
grams.
(3) 1 member appointed by the Secretary of
Health and Human Services.
(4) 1 member appointed by the Secretary of the
Treasury.
(5) 1 member appointed by the Commissioner
of Social Security.
(6) 1 member appointed by the Secretary of
Labor.
(7) 1 member appointed by the Director of the
Office of Management and Budget to address pri-
vacy concerns.
(c) CHAIRPERSON.—The Director of the Office of
Management and Budget shall designate one of the mem-
bers of the Board as the chairperson of the Board.
(d) ADMINISTRATIVE SUPPORT.—The heads of Fed-
eral agencies having a member on the Board may provide
to the Board such administrative and other support serv-
ices and facilities as the Board may require to perform
its functions under this subtitle.
(e) TRAVEL EXPENSES.—Members of the Board
shall receive travel expenses, including per diem, in lieu
of subsistence, in accordance with sections 5702 and 5703
of title 5, United States Code.
(f) REPORTS.—The Board shall periodically report to
the Director of the Office of Management and Budget re-
garding its activities.
SEC. 625. IMPLEMENTATION OF TESTED INFORMATION
TECHNOLOGY PRACTICES OR TECHNIQUES.
(a) RECOMMENDATIONS.—If the Board determines
that any information technology practice, technique, or in-
formation sharing initiative tested under this subtitle was
successfully demonstrated in the test and should be imple-
mented in the administration of a Federal benefit pro-
gram, the Board—
(1) shall recommend regulations or legislation
to implement that practice, technique, or initiative,
if the Board determines that implementation is not
otherwise prohibited under another law; or
(2) include in its annual report to the Congress
under section 621 recommendations for such legisla-
tion as may be necessary to authorize that imple-
mentation.
(b) REQUIREMENTS REGARDING DATA PROCESSING
SYSTEMS.—The Board shall include in any recommenda-
tion of regulations under subsection (a)—
(1) provisions that ensure use of generally ac-
cepted data processing system development meth-
odology; and
(2) provisions that will result in system archi-
tecture that will facilitate information exchange, in-
crease data sharing, and reduce costs, by elimination
of redundancy in development and acquisition of
data processing systems.
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