H. R. 4053 
One Hundred Twelfth Congress 
of the 
United States of America 
AT THE SECOND SESSION 
Begun and held at the City of Washington on Tuesday, 
the third day of January, two thousand and twelve 
An Act 
To intensify efforts to identify, prevent, and recover payment error, waste, fraud, 
and abuse within Federal spending. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Improper Payments Elimination 
and Recovery Improvement Act of 2012’’. 
SEC. 2. DEFINITIONS. 
In this Act— 
(1) the term ‘‘agency’’ means an executive agency as that 
term is defined under section 102 of title 31, United States 
Code; 
(2) the term ‘‘improper payment’’ has the meaning given 
that term in section 2(g) of the Improper Payments Information 
Act of 2002 (31 U.S.C. 3321 note), as redesignated by section 
3(a)(1) of this Act; and 
(3) the term ‘‘State’’ means each State of the United States, 
the District of Columbia, each territory or possession of the 
United States, and each federally recognized Indian tribe. 
SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS 
BY FEDERAL AGENCIES. 
(a) IN GENERAL.—Section 2 of the Improper Payments Informa-
tion Act of 2002 (31 U.S.C. 3321 note) is amended— 
(1) by redesignating subsections (b) through (g) as sub-
sections (c) through (h), respectively; 
(2) by inserting after subsection (a) the following: 
‘‘(b) IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS.— 
‘‘(1) IN GENERAL.—The Director of the Office of Manage-
ment and Budget shall on an annual basis— 
‘‘(A) identify a list of high-priority Federal programs 
for greater levels of oversight and review— 
‘‘(i) in which the highest dollar value or highest 
rate of improper payments occur; or 
‘‘(ii) for which there is a higher risk of improper 
payments; and 
‘‘(B) in coordination with the agency responsible for 
administering the high-priority program, establish annual 
targets and semi-annual or quarterly actions for reducing 
improper payments associated with each high-priority pro-
gram. 
‘‘(2) REPORT ON HIGH-PRIORITY IMPROPER PAYMENTS.—
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‘‘(A) IN GENERAL.—Subject to Federal privacy policies 
and to the extent permitted by law, each agency with 
a program identified under paragraph (1)(A) on an annual 
basis shall submit to the Inspector General of that agency, 
and make available to the public (including availability 
through the Internet), a report on that program. 
‘‘(B) CONTENTS.—Each report under this paragraph— 
‘‘(i) shall describe— 
‘‘(I) any action the agency— 
‘‘(aa) has taken or plans to take to recover 
improper payments; and 
‘‘(bb) intends to take to prevent future 
improper payments; and 
‘‘(ii) shall not include any referrals the agency 
made or anticipates making to the Department of Jus-
tice, or any information provided in connection with 
such referrals. 
‘‘(C) PUBLIC AVAILABILITY ON CENTRAL WEBSITE.—The 
Office of Management and Budget shall make each report 
submitted under this paragraph available on a central 
website. 
‘‘(D) AVAILABILITY OF INFORMATION TO INSPECTOR GEN-
ERAL.—Subparagraph (B)(ii) shall not prohibit any referral 
or information being made available to an Inspector Gen-
eral as otherwise provided by law. 
‘‘(E) 
ASSESSMENT
AND
RECOMMENDATIONS.—The 
Inspector General of each agency that submits a report 
under this paragraph shall, for each program of the agency 
that is identified under paragraph (1)(A)— 
‘‘(i) review— 
‘‘(I) the assessment of the level of risk associ-
ated with the program, and the quality of the 
improper payment estimates and methodology of 
the agency relating to the program; and 
‘‘(II) the oversight or financial controls to iden-
tify and prevent improper payments under the 
program; and 
‘‘(ii) submit to Congress recommendations, which 
may be included in another report submitted by the 
Inspector General to Congress, for modifying any plans 
of the agency relating to the program, including 
improvements for improper payments determination 
and estimation methodology.’’; 
(3) in subsection (d) (as redesignated by paragraph (1) 
of this subsection), by striking ‘‘subsection (b)’’ each place that 
term appears and inserting ‘‘subsection (c)’’; 
(4) in subsection (e) (as redesignated by paragraph (1) 
of this subsection), by striking ‘‘subsection (b)’’ and inserting 
‘‘subsection (c)’’; and 
(5) in subsection (g)(3) (as redesignated by paragraph (1) 
of this subsection), by inserting ‘‘or a Federal employee’’ after 
‘‘non-Federal person or entity’’. 
(b) IMPROVED ESTIMATES.— 
(1) IN GENERAL.—Not later than 180 days after the date 
of enactment of this Act, the Director of the Office of Manage-
ment and Budget shall provide guidance to agencies for 
improving the estimates of improper payments under the
H. R. 4053—3 
Improper Payments Information Act of 2002 (31 U.S.C. 3321 
note). 
(2) GUIDANCE.—Guidance under this subsection shall— 
(A) strengthen the estimation process of agencies by 
setting standards for agencies to follow in determining 
the underlying validity of sampled payments to ensure 
amounts being billed, paid, or obligated for payment are 
proper; 
(B) instruct agencies to give the persons or entities 
performing improper payments estimates access to all nec-
essary payment data, including access to relevant docu-
mentation; 
(C) explicitly bar agencies from relying on self- 
reporting by the recipients of agency payments as the sole 
source basis for improper payments estimates; 
(D) require agencies to include all identified improper 
payments in the reported estimate, regardless of whether 
the improper payment in question has been or is being 
recovered; 
(E) include payments to employees, including salary, 
locality pay, travel pay, purchase card use, and other 
employee payments, as subject to risk assessment and, 
where appropriate, improper payment estimation; and 
(F) require agencies to tailor their corrective actions 
for the high-priority programs identified under section 
2(b)(1)(A) of the Improper Payments Information Act of 
2002 (31 U.S.C. 3321 note) to better reflect the unique 
processes, procedures, and risks involved in each specific 
program. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.—The Improper 
Payments Elimination and Recovery Act of 2010 (Public Law 111– 
204; 31 U.S.C. 3321 note) is amended— 
(1) in section 2(h)(1), by striking ‘‘section 2(f)’’ and all 
that follows and inserting ‘‘section 2(g) of the Improper Pay-
ments Information Act of 2002 (31 U.S.C. 3321 note).’’; and 
(2) in section 3(a)— 
(A) in paragraph (1), by striking ‘‘section 2(f)’’ and 
all that follows and inserting ‘‘section 2(g) of the Improper 
Payments Information Act of 2002 (31 U.S.C. 3321 note).’’; 
and 
(B) in paragraph (3)— 
(i) by striking ‘‘section 2(b)’’ each place it appears 
and inserting ‘‘section 2(c)’’; and 
(ii) by striking ‘‘section 2(c)’’ each place it appears 
and inserting ‘‘section 2(d)’’. 
SEC. 4. IMPROPER PAYMENTS INFORMATION. 
Section 2(a)(3)(A)(ii) of the Improper Payments Information 
Act of 2002 (31 U.S.C. 3321 note) is amended by striking ‘‘with 
respect to fiscal years following September 30th of a fiscal year 
beginning before fiscal year 2013 as determined by the Office of 
Management and Budget’’ and inserting ‘‘with respect to fiscal 
year 2014 and each fiscal year thereafter’’. 
SEC. 5. DO NOT PAY INITIATIVE. 
(a) PREPAYMENT AND PREAWARD PROCEDURES.— 
(1) IN GENERAL.—Each agency shall review prepayment 
and preaward procedures and ensure that a thorough review
H. R. 4053—4 
of available databases with relevant information on eligibility 
occurs to determine program or award eligibility and prevent 
improper payments before the release of any Federal funds. 
(2) DATABASES.—At a minimum and before issuing any 
payment and award, each agency shall review as appropriate 
the following databases to verify eligibility of the payment 
and award: 
(A) The Death Master File of the Social Security 
Administration. 
(B) The General Services Administration’s Excluded 
Parties List System. 
(C) The Debt Check Database of the Department of 
the Treasury. 
(D) The Credit Alert System or Credit Alert Interactive 
Voice Response System of the Department of Housing and 
Urban Development. 
(E) The List of Excluded Individuals/Entities of the 
Office of Inspector General of the Department of Health 
and Human Services. 
(b) DO NOT PAY INITIATIVE.— 
(1) ESTABLISHMENT.—There is established the Do Not Pay 
Initiative which shall include— 
(A) use of the databases described under subsection 
(a)(2); and 
(B) use of other databases designated by the Director 
of the Office of Management and Budget in consultation 
with agencies and in accordance with paragraph (2). 
(2) OTHER DATABASES.—In making designations of other 
databases under paragraph (1)(B), the Director of the Office 
of Management and Budget shall— 
(A) consider any database that substantially assists 
in preventing improper payments; and 
(B) provide public notice and an opportunity for com-
ment before designating a database under paragraph (1)(B). 
(3) ACCESS
AND
REVIEW
BY
AGENCIES.—For purposes of 
identifying and preventing improper payments, each agency 
shall have access to, and use of, the Do Not Pay Initiative 
to verify payment or award eligibility in accordance with sub-
section (a) when the Director of the Office of Management 
and Budget determines the Do Not Pay Initiative is appro-
priately established for the agency. 
(4) PAYMENT OTHERWISE REQUIRED.—When using the Do 
Not Pay Initiative, an agency shall recognize that there may 
be circumstances under which the law requires a payment 
or award to be made to a recipient, regardless of whether 
that recipient is identified as potentially ineligible under the 
Do Not Pay Initiative. 
(5) ANNUAL REPORT.—The Director of the Office of Manage-
ment and Budget shall submit to Congress an annual report, 
which may be included as part of another report submitted 
to Congress by the Director, regarding the operation of the 
Do Not Pay Initiative, which shall— 
(A) include an evaluation of whether the Do Not Pay 
Initiative has reduced improper payments or improper 
awards; and 
(B) provide the frequency of corrections or identification 
of incorrect information.
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(c) DATABASE INTEGRATION PLAN.—Not later than 60 days after 
the date of enactment of this Act, the Director of the Office of 
Management and Budget shall provide to the Congress a plan 
for— 
(1) inclusion of other databases on the Do Not Pay Initia-
tive; 
(2) to the extent permitted by law, agency access to the 
Do Not Pay Initiative; and 
(3) the data use agreements described under subsection 
(e)(2)(D). 
(d) INITIAL WORKING SYSTEM.— 
(1) ESTABLISHMENT.—Not later than 90 days after the date 
of enactment of this Act, the Director of the Office of Manage-
ment and Budget shall establish a working system for prepay-
ment and preaward review that includes the Do Not Pay Initia-
tive as described under this section. 
(2) WORKING
SYSTEM.—The working system established 
under paragraph (1)— 
(A) may be located within an appropriate agency; 
(B) shall include not less than 3 agencies as users 
of the system; and 
(C) shall include investigation activities for fraud and 
systemic improper payments detection through analytic 
technologies and other techniques, which may include 
commercial database use or access. 
(3) APPLICATION TO ALL AGENCIES.—Not later than June 
1, 2013, each agency shall review all payments and awards 
for all programs of that agency through the system established 
under this subsection. 
(e) FACILITATING DATA ACCESS
BY FEDERAL AGENCIES
AND 
OFFICES
OF INSPECTORS GENERAL
FOR PURPOSES
OF PROGRAM 
INTEGRITY.— 
(1) DEFINITION.—In this subsection, the term ‘‘Inspector 
General’’ means any Inspector General described in subpara-
graph (A), (B), or (I) of section 11(b)(1) of the Inspector General 
Act of 1978 (5 U.S.C. App.) and any successor Inspector Gen-
eral. 
(2) COMPUTER MATCHING BY FEDERAL AGENCIES FOR PUR-
POSES OF INVESTIGATION AND PREVENTION OF IMPROPER PAY-
MENTS AND FRAUD.— 
(A) IN GENERAL.—Except as provided in this paragraph, 
in accordance with section 552a of title 5, United States 
Code (commonly known as the Privacy Act of 1974), each 
Inspector General and the head of each agency may enter 
into computer matching agreements with other inspectors 
general and agency heads that allow ongoing data matching 
(which shall include automated data matching) in order 
to assist in the detection and prevention of improper pay-
ments. 
(B) REVIEW.—Not later than 60 days after a proposal 
for an agreement under subparagraph (A) has been pre-
sented to a Data Integrity Board established under section 
552a(u) of title 5, United States Code, for consideration, 
the Data Integrity Board shall respond to the proposal. 
(C) TERMINATION DATE.—An agreement under subpara-
graph (A)—
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(i) shall have a termination date of less than 3 
years; and 
(ii) during the 3-month period ending on the date 
on which the agreement is scheduled to terminate, 
may be renewed by the agencies entering the agree-
ment for not more than 3 years. 
(D) MULTIPLE AGENCIES.—For purposes of this para-
graph, section 552a(o)(1) of title 5, United States Code, 
shall be applied by substituting ‘‘between the source agency 
and the recipient agency or non-Federal agency or an agree-
ment governing multiple agencies’’ for ‘‘between the source 
agency and the recipient agency or non-Federal agency’’ 
in the matter preceding subparagraph (A). 
(E) COST-BENEFIT ANALYSIS.—A justification under sec-
tion 552a(o)(1)(B) of title 5, United States Code, relating 
to an agreement under subparagraph (A) is not required 
to contain a specific estimate of any savings under the 
computer matching agreement. 
(3) GUIDANCE
BY
THE
OFFICE
OF
MANAGEMENT
AND 
BUDGET.—Not later than 6 months after the date of enactment 
of this Act, and in consultation with the Council of the Inspec-
tors General on Integrity and Efficiency, the Secretary of Health 
and Human Services, the Commissioner of Social Security, 
and the head of any other relevant agency, the Director of 
the Office of Management and Budget shall— 
(A) issue guidance for agencies regarding implementing 
this subsection, which shall include standards for— 
(i) reimbursement of costs, when necessary, 
between agencies; 
(ii) retention and timely destruction of records in 
accordance with section 552a(o)(1)(F) of title 5, United 
States Code; and 
(iii) prohibiting duplication and redisclosure of 
records in accordance with section 552a(o)(1)(H) of title 
5, United States Code; 
(B) review the procedures of the Data Integrity Boards 
established under section 552a(u) of title 5, United States 
Code, and develop new guidance for the Data Integrity 
Boards to— 
(i) improve the effectiveness and responsiveness 
of the Data Integrity Boards; 
(ii) ensure privacy protections in accordance with 
section 552a of title 5, United States Code (commonly 
known as the Privacy Act of 1974); and 
(iii) establish standard matching agreements for 
use when appropriate; and 
(C) establish and clarify rules regarding what con-
stitutes making an agreement entered under paragraph 
(2)(A) available upon request to the public for purposes 
of section 552a(o)(2)(A)(ii) of title 5, United States Code, 
which shall include requiring publication of the agreement 
on a public website. 
(4) CORRECTIONS.—The Director of the Office of Manage-
ment and Budget shall establish procedures providing for the 
correction of data in order to ensure— 
(A) compliance with section 552a(p) of title 5, United 
States Code; and
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(B) that corrections are made in any Do Not Pay Initia-
tive database and in any relevant source databases des-
ignated by the Director of the Office of Management and 
Budget under subsection (b)(1). 
(5) COMPLIANCE.—The head of each agency, in consultation 
with the Inspector General of the agency, shall ensure that 
any information provided to an individual or entity under this 
subsection is provided in accordance with protocols established 
under this subsection. 
(6) RULE OF CONSTRUCTION.—Nothing in this subsection 
shall be construed to affect the rights of an individual under 
section 552a(p) of title 5, United States Code. 
(f) DEVELOPMENT AND ACCESS TO A DATABASE OF INCARCERATED 
INDIVIDUALS.—Not later than 1 year after the date of enactment 
of this Act, the Attorney General shall submit to Congress rec-
ommendations for increasing the use of, access to, and the technical 
feasibility of using data on the Federal, State, and local conviction 
and incarceration status of individuals for purposes of identifying 
and preventing improper payments by Federal agencies and pro-
grams and fraud. 
(g) PLAN TO CURB FEDERAL IMPROPER PAYMENTS TO DECEASED 
INDIVIDUALS
BY IMPROVING
THE QUALITY
AND USE
BY FEDERAL 
AGENCIES OF THE SOCIAL SECURITY ADMINISTRATION DEATH MASTER 
FILE.— 
(1) ESTABLISHMENT.—In conjunction with the Commis-
sioner of Social Security and in consultation with relevant 
stakeholders that have an interest in or responsibility for pro-
viding the data, and the States, the Director of the Office 
of Management and Budget shall establish a plan for improving 
the quality, accuracy, and timeliness of death data maintained 
by the Social Security Administration, including death informa-
tion reported to the Commissioner under section 205(r) of the 
Social Security Act (42 U.S.C. 405(r)). 
(2) ADDITIONAL
ACTIONS
UNDER
PLAN.—The plan estab-
lished under this subsection shall include recommended actions 
by agencies to— 
(A) increase the quality and frequency of access to 
the Death Master File and other death data; 
(B) achieve a goal of at least daily access as appro-
priate; 
(C) provide for all States and other data providers 
to use improved and electronic means for providing data; 
(D) identify improved methods by agencies for deter-
mining ineligible payments due to the death of a recipient 
through proactive verification means; and 
(E) address improper payments made by agencies to 
deceased individuals as part of Federal retirement pro-
grams. 
(3) REPORT.—Not later than 120 days after the date of 
enactment of this Act, the Director of the Office of Management 
and Budget shall submit a report to Congress on the plan 
established under this subsection, including recommended legis-
lation. 
SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 
(a) DEFINITION.—In this section, the term ‘‘recovery audit’’ 
means a recovery audit described under section 2(h) of the Improper
H. R. 4053—8 
Payments Elimination and Recovery Act of 2010 (31 U.S.C. 3301 
note). 
(b) REVIEW.—The Director of the Office of Management and 
Budget shall determine— 
(1) current and historical rates and amounts of recovery 
of improper payments (or, in cases in which improper payments 
are identified solely on the basis of a sample, recovery rates 
and amounts estimated on the basis of the applicable sample), 
including a list of agency recovery audit contract programs 
and specific information of amounts and payments recovered 
by recovery audit contractors; and 
(2) targets for recovering improper payments, including 
specific information on amounts and payments recovered by 
recovery audit contractors. 
Speaker of the House of Representatives. 
Vice President of the United States and
President of the Senate.