responsibility, legal authority, quality of services provided, 
and other matters as the Secretary finds pertinent. 
‘‘(3)(A)(i) The Secretary shall develop contract per-
formance requirements to carry out the specific require-
ments applicable under this title to a function described 
in subsection (a)(4) and shall develop standards for meas-
uring the extent to which a contractor has met such re-
quirements. Such requirements shall include specific per-
formance duties expected of a medical director of an ad-
ministrative contractor, including requirements relating to 
professional relations and the availability of such director 
to conduct medical determination activities within the ju-
risdiction of such a contractor. 
‘‘(ii) In developing such performance requirements 
and standards for measurement, the Secretary shall con-
sult with non-Department facilities, veterans service orga-
nizations, and organizations and agencies performing 
functions necessary to carry out the purposes of this sec-
tion with respect to such performance requirements. 
‘‘(iii) The Secretary shall make such performance re-
quirements and measurement standards available to the 
public. 
‘‘(B) The Secretary shall include, as one of the stand-
ards developed under subparagraph (A), non-Department 
facility and veteran satisfaction levels. 
VerDate Sep 11 2014 
03:15 Mar 04, 2016
Jkt 059200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(C) All contractor performance requirements shall 
be set forth in the contract between the Secretary and the 
appropriate administrative contractor. Such performance 
requirements— 
‘‘(i) shall reflect the performance requirements 
published under subparagraph (A), but may include 
additional performance requirements; 
‘‘(ii) shall be used for evaluating contractor per-
formance under the contract; and 
‘‘(iii) shall be consistent with the written state-
ment of work provided under the contract. 
‘‘(4) The Secretary shall not enter into a contract 
with an administrative contractor under this section unless 
the contractor agrees— 
‘‘(A) to furnish to the Secretary such timely in-
formation and reports as the Secretary may find 
necessary in performing the functions of the Sec-
retary under this title; and 
‘‘(B) to maintain such records and afford such 
access thereto as the Secretary finds necessary to 
assure the correctness and verification of the infor-
mation and reports under subparagraph (A) and 
otherwise to carry out the purposes of this title. 
‘‘(5) A contract with an administrative contractor 
under this section may require the administrative con-
VerDate Sep 11 2014 
03:15 Mar 04, 2016
Jkt 059200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS
tractor, and any of its officers or employees certifying pay-
ments or disbursing funds pursuant to the contract, or 
otherwise participating in carrying out the contract, to 
give surety bond to the United States in such amount as 
the Secretary may deem appropriate. 
‘‘(c) TERMS AND CONDITIONS.—A contract with any 
administrative contractor under this section may contain 
such terms and conditions as the Secretary finds necessary 
or appropriate and may provide for advances of funds to 
the administrative contractor for the making of payments 
by it under subsection (a)(4)(B). 
‘‘(d) LIMITATION ON LIABILITY OF ADMINISTRATIVE 
CONTRACTORS AND CERTAIN OFFICERS.—(1) No indi-
vidual designated pursuant to a contract under this sec-
tion as a certifying officer shall, in the absence of the reck-
less disregard of the individual’s obligations or the intent 
by that individual to defraud the United States, be liable 
with respect to any payments certified by the individual 
under this section. 
‘‘(2) No disbursing officer shall, in the absence of the 
reckless disregard of the officer’s obligations or the intent 
by that officer to defraud the United States, be liable with 
respect to any payment by such officer under this section 
if it was based upon an authorization (which meets the 
applicable requirements for such internal controls estab-
VerDate Sep 11 2014 
03:15 Mar 04, 2016
Jkt 059200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS
lished by the Comptroller General of the United States) 
of a certifying officer designated as provided in paragraph 
(1) of this subsection. 
‘‘(3)(A) No administrative contractor shall be liable 
to the United States for a payment by a certifying or dis-
bursing officer unless, in connection with such payment, 
the administrative contractor acted with reckless disregard 
of its obligations under its administrative contract or with 
intent to defraud the United States. 
‘‘(B) Nothing in this subsection shall be construed 
to limit liability for conduct that would constitute a viola-
tion of sections 3729 through 3731 of title 31, United 
States Code. 
‘‘(4)(A) Subject to subparagraphs (B) and (D), in the 
case of an administrative contractor (or a person who is 
a director, officer, or employee of such a contractor or who 
is engaged by the contractor to participate directly in the 
claims administration process) who is made a party to any 
judicial or administrative proceeding arising from or relat-
ing directly to the claims administration process under 
this title, the Secretary may, to the extent the Secretary 
determines to be appropriate and as specified in the con-
tract with the contractor, indemnify the contractor and 
such persons. 
VerDate Sep 11 2014 
03:15 Mar 04, 2016
Jkt 059200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(B) The Secretary may not provide indemnification 
under subparagraph (A) insofar as the liability for such 
costs arises directly from conduct that is determined by 
the judicial proceeding or by the Secretary to be criminal 
in nature, fraudulent, or grossly negligent. If indemnifica-
tion is provided by the Secretary with respect to a con-
tractor before a determination that such costs arose di-
rectly from such conduct, the contractor shall reimburse 
the Secretary for costs of indemnification. 
‘‘(C) Indemnification by the Secretary under sub-
paragraph (A) may include payment of judgments, settle-
ments (subject to subparagraph (D)), awards, and costs 
(including reasonable legal expenses). 
‘‘(D) A contractor or other person described in sub-
paragraph (A) may not propose to negotiate a settlement 
or compromise of a proceeding described in such subpara-
graph without the prior written approval of the Secretary 
to negotiate such settlement or compromise. Any indem-
nification under subparagraph (A) with respect to 
amounts paid under a settlement or compromise of a pro-
ceeding described in such subparagraph are conditioned 
upon prior written approval by the Secretary of the final 
settlement or compromise. 
‘‘(E) Nothing in this paragraph shall be construed— 
VerDate Sep 11 2014 
03:15 Mar 04, 2016
Jkt 059200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(i) to change any common law immunity that 
may be available to an administrative contractor or 
person described in subparagraph (A); or 
‘‘(ii) to permit the payment of costs not other-
wise allowable, reasonable, or allocable under the 
Federal Acquisition Regulation. 
‘‘(e) REQUIREMENTS
FOR
INFORMATION
SECU-
RITY.—(1) An administrative contractor that performs the 
functions referred to in subparagraphs (A) and (B) of sub-
section (a)(4) (relating to determining and making pay-
ments) shall implement a contractor-wide information se-
curity program to provide information security for the op-
eration and assets of the contractor with respect to such 
functions under this title. An information security pro-
gram under this paragraph shall meet the requirements 
for information security programs imposed on Federal 
agencies under paragraphs (1) through (8) of section 
3544(b) of title 44, United States Code (other than the 
requirements under paragraphs (2)(D)(i), (5)(A), and 
(5)(B) of such section). 
‘‘(2)(A) Each year an administrative contractor that 
performs the functions referred to in subparagraphs (A) 
and (B) of subsection (a)(4) (relating to determining and 
making payments) shall undergo an evaluation of the in-
VerDate Sep 11 2014 
03:15 Mar 04, 2016
Jkt 059200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS
formation security of the contractor with respect to such 
functions under this title. The evaluation shall— 
‘‘(i) be performed by an entity that meets such 
requirements for independence as the Inspector Gen-
eral of the Department of Health and Human Serv-
ices may establish; and 
‘‘(ii) test the effectiveness of information secu-
rity control techniques of an appropriate subset of 
the contractor’s information systems (as defined in 
section 3502(8) of title 44, United States Code) re-
lating to such functions under this title and an as-
sessment of compliance with the requirements of this 
subsection and related information security policies, 
procedures, standards and guidelines, including poli-
cies and procedures as may be prescribed by the Di-
rector of the Office of Management and Budget and 
applicable information security standards promul-
gated under section 11331 of title 40, United States 
Code. 
‘‘(B)(i) The results of independent evaluations under 
subparagraph (A) shall be submitted promptly to the In-
spector General of the Department and to the Secretary. 
‘‘(ii) The Inspector General of the Department shall 
submit to Congress annual reports on the results of such 
VerDate Sep 11 2014 
03:15 Mar 04, 2016
Jkt 059200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS
evaluations, including assessments of the scope and suffi-
ciency of such evaluations. 
‘‘(f) INCENTIVES TO IMPROVE CONTRACTOR PER-
FORMANCE IN NON-DEPARTMENT FACILITY EDUCATION 
AND OUTREACH.—The Secretary shall use specific claims 
payment error rates or similar methodology of administra-
tive contractors in the processing or reviewing of claims 
in order to give such contractors an incentive to implement 
effective education and outreach programs for non-De-
partment facilities.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
at the beginning of such chapter is amended by inserting 
after the item relating to section 1725 the following new 
item: 
‘‘1725A. Authority to enter into contracts with administrative contractors.’’. 
Æ 
VerDate Sep 11 2014 
01:55 Mar 05, 2016
Jkt 059200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6301
E:\BILLS\H4689.IH
H4689
rfrederick on DSK6VPTVN1PROD with BILLS