not received, and any payment that does not ac-
count for credit for applicable discounts. 
(3) PAYMENT.—The term ‘‘payment’’ means 
any payment (including a commitment for future 
payment, such as a loan guarantee) that is—
(A) made by a Federal agency, a Federal 
contractor, or a governmental or other organi-
zation administering a Federal program or ac-
tivity; and 
(B) derived from Federal funds or other 
Federal resources or that will be reimbursed 
from Federal funds or other Federal resources. 
(e) APPLICATION.—This section—
(1) applies with respect to the administration of 
programs, and improper payments under programs, 
in fiscal years after fiscal year 2002; and 
(2) requires the inclusion of estimates under 
subsection (b)(2) only in annual budget submissions 
for fiscal years after fiscal year 2003. 
(f) GUIDANCE BY THE OFFICE OF MANAGEMENT 
AND BUDGET.—The Director of the Office of Manage-
ment and Budget shall prescribe guidance to implement 
the requirements of this section.
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Improper Payments In-
formation Act of 2002’’. 
SEC. 2. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS 
ON ACTIONS TO REDUCE THEM. 
(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS AND 
ACTIVITIES.—The head of each agency shall, in accordance 
with guidance prescribed by the Director of the Office of 
Management and Budget, annually review all programs 
and activities that it administers and identify all such pro-
grams and activities that may be susceptible to significant 
improper payments. 
(b) ESTIMATION OF IMPROPER PAYMENT.—With re-
spect to each program and activity identified under sub-
section (a), the head of the agency concerned shall—
(1) estimate the annual amount of improper 
payments; and 
(2) submit those estimates to Congress before 
March 31 of the following applicable year, with all 
agencies using the same method of reporting, as deter-
mined by the Director of the Office of Management 
and Budget. 
(c) REPORTS ON ACTIONS TO REDUCE IMPROPER PAY-
MENTS.—With respect to any program or activity of an 
agency with estimated improper payments under subsection 
(b) that exceed $10,000,000, the head of the agency shall
provide with the estimate under subsection (b) a report on 
what actions the agency is taking to reduce the improper 
payments, including—
(1) a discussion of the causes of the improper 
payments identified, actions taken to correct those 
causes, and results of the actions taken to address 
those causes; 
(2) a statement of whether the agency has the in-
formation systems and other infrastructure it needs 
in order to reduce improper payments to minimal 
cost-effective levels; 
(3) if the agency does not have such systems and 
infrastructure, a description of the resources the agen-
cy has requested in its budget submission to obtain 
the necessary information systems and infrastructure; 
and 
(4) a description of the steps the agency has 
taken to ensure that agency managers (including the 
agency head) are held accountable for reducing im-
proper payments. 
(d) DEFINITIONS.—For the purposes of this section: 
(1) AGENCY.—The term ‘‘agency’’ means an ex-
ecutive agency, as that term is defined in section 102 
of title 31, United States Code.
(2) IMPROPER PAYMENT.—The term ‘‘improper 
payment’’—
(A) means any payment that should not 
have been made or that was made in an incor-
rect amount (including overpayments and un-
derpayments) under statutory, contractual, ad-
ministrative, or other legally applicable require-
ments; and 
(B) includes any payment to an ineligible 
recipient, any payment for an ineligible service, 
any duplicate payment, payments for services 
not received, and any payment that does not ac-
count for credit for applicable discounts. 
(3) PAYMENT.—The term ‘‘payment’’ means any 
payment (including a commitment for future pay-
ment, such as a loan guarantee) that is—
(A) made by a Federal agency, a Federal 
contractor, or a governmental or other organiza-
tion administering a Federal program or activ-
ity; and 
(B) derived from Federal funds or other 
Federal resources or that will be reimbursed from 
Federal funds or other Federal resources. 
(e) APPLICATION.—This section—
(1) applies with respect to the administration of 
programs, and improper payments under programs, 
in fiscal years after fiscal year 2002; and 
(2) requires the inclusion of estimates under sub-
section (b)(2) only in annual budget submissions for 
fiscal years after fiscal year 2003. 
(f) GUIDANCE BY THE OFFICE OF MANAGEMENT AND 
BUDGET.—Not later than 6 months after the date of enact-
ment of this Act, the Director of the Office of Management 
and Budget shall prescribe guidance to implement the re-
quirements of this section.
Calendar No. 727
107TH CONGRESS 
2D SESSION 
H. R. 4878
AN ACT 
To provide for estimates and reports of improper 
payments by Federal agencies. 
OCTOBER 15, 2002
Reported with an amendment