IB 
Union Calendar No. 509 
112TH CONGRESS 
2D SESSION 
H. R. 4053 
[Report No. 112–698] 
To intensify efforts to identify, prevent, and recover payment error, waste, 
fraud, and abuse within Federal spending. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 16, 2012 
Mr. TOWNS (for himself, Mr. PLATTS, Mr. SCHRADER, Mr. CONNOLLY of Vir-
ginia, Mr. ALTMIRE, Mr. BARROW, Mr. BISHOP of Georgia, Mr. BOREN, 
Mr. BOSWELL, Mr. CARDOZA, Mr. COOPER, Mr. DONNELLY of Indiana, 
Mr. HOLDEN, Mr. MATHESON, Mr. MCINTYRE, Mr. MICHAUD, Mr. 
PETERSON, Mr. ROSS of Arkansas, Mr. DAVID SCOTT of Georgia, Mr. 
SHULER, and Mr. THOMPSON of California) introduced the following bill; 
which was referred to the Committee on Oversight and Government Re-
form 
NOVEMBER 30, 2012 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on February 16, 2012] 
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A BILL 
To intensify efforts to identify, prevent, and recover payment 
error, waste, fraud, and abuse within Federal spending. 
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Be it enacted by the Senate and House of Representa-
tives 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 agen-
cy as that term is defined under section 102 of title 
31, United States Code; 
(2) the term ‘‘improper payment’’ has the mean-
ing 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 terri-
tory or possession of the United States, and each fed-
erally recognized Indian tribe. 
SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER 
PAYMENTS BY FEDERAL AGENCIES. 
(a) IN GENERAL.—Section 2 of the Improper Pay-
ments Information Act of 2002 (31 U.S.C. 3321 note) is 
amended— 
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(1) by redesignating subsections (b) through (g) 
as subsections (c) through (h), respectively; 
(2) by inserting after subsection (a) the fol-
lowing: 
‘‘(b) IMPROVING THE DETERMINATION OF IMPROPER 
PAYMENTS.— 
‘‘(1) IN GENERAL.—The Director of the Office of 
Management and Budget shall on an annual basis— 
‘‘(A) identify a list of high-priority Federal 
programs for greater levels of oversight and re-
view— 
‘‘(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 re-
sponsible for administering the high-priority 
program, establish annual targets and semi-an-
nual or quarterly actions for reducing improper 
payments associated with each high-priority pro-
gram. 
‘‘(2) REPORT ON HIGH-PRIORITY IMPROPER PAY-
MENTS.— 
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‘‘(A) IN GENERAL.—Subject to Federal pri-
vacy policies and to the extent permitted by law, 
each agency with a program identified under 
paragraph (1)(A) on an annual basis shall sub-
mit to the Inspector General of that agency, and 
make available to the public (including avail-
ability 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 pay-
ments; and 
‘‘(bb) intends to take to pre-
vent future improper payments; 
and 
‘‘(ii) shall not include any referrals the 
agency made or anticipates making to the 
Department of Justice, or any information 
provided in connection with such referrals. 
‘‘(C) PUBLIC
AVAILABILITY
ON
CENTRAL 
WEBSITE.—The Office of Management and Budg-
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et shall make each report submitted under this 
paragraph available on a central website. 
‘‘(D) AVAILABILITY OF INFORMATION TO IN-
SPECTOR GENERAL.—Subparagraph (B)(ii) shall 
not prohibit any referral or information being 
made available to an Inspector General as other-
wise provided by law. 
‘‘(E) 
ASSESSMENT
AND
RECOMMENDA-
TIONS.—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 associated with the program, and 
the quality of the improper payment 
estimates and methodology of the agen-
cy relating to the program; and 
‘‘(II) the oversight or financial 
controls to identify and prevent im-
proper payments under the program; 
and 
‘‘(ii) submit to Congress recommenda-
tions, which may be included in another re-
port submitted by the Inspector General to 
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Congress, for modifying any plans of the 
agency relating to the program, including 
improvements for improper payments deter-
mination and estimation methodology.’’; 
(3) in subsection (d) (as redesignated by para-
graph (1) of this subsection), by striking ‘‘subsection 
(b)’’ each place that term appears and inserting ‘‘sub-
section (c)’’; 
(4) in subsection (e) (as redesignated by para-
graph (1) of this subsection), by striking ‘‘subsection 
(b)’’ and inserting ‘‘subsection (c)’’; and 
(5) in subsection (g)(3) (as redesignated by para-
graph (1) of this subsection), by inserting ‘‘or a Fed-
eral 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 Management and Budget shall provide guid-
ance to agencies for improving the estimates of im-
proper payments under the Improper Payments In-
formation 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 fol-
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low 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 necessary payment data, including 
access to relevant documentation; 
(C) explicitly bar agencies from relying on 
self-reporting by the recipients of agency pay-
ments as the sole source basis for improper pay-
ments estimates; 
(D) require agencies to include all identified 
improper payments in the reported estimate, re-
gardless of whether the improper payment in 
question has been or is being recovered; 
(E) include payments to employees, includ-
ing salary, locality pay, travel pay, purchase 
card use, and other employee payments, as sub-
ject to risk assessment and, where appropriate, 
improper payment estimation; and 
(F) require agencies to tailor their correc-
tive actions for the high-priority programs iden-
tified 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, 
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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 Payments 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 In-
formation Act of 2002 (31 U.S.C. 3321 note) is amended 
by striking ‘‘with respect to fiscal years following September 
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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 pre-
payment and preaward procedures and ensure that a 
thorough review of available databases with relevant 
information on eligibility occurs to determine pro-
gram or award eligibility and prevent improper pay-
ments 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 Se-
curity Administration. 
(B) The General Services Administration’s 
Excluded Parties List System. 
(C) The Debt Check Database of the Depart-
ment of the Treasury. 
(D) The Credit Alert System or Credit Alert 
Interactive Voice Response System of the Depart-
ment of Housing and Urban Development. 
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(E) The List of Excluded Individuals/Enti-
ties of the Office of Inspector General of the De-
partment 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 designa-
tions of other databases under paragraph (1)(B), the 
Director of the Office of Management and Budget 
shall— 
(A) consider any database that substan-
tially assists in preventing improper payments; 
and 
(B) provide public notice and an oppor-
tunity for comment before designating a data-
base under paragraph (1)(B). 
(3) ACCESS
AND
REVIEW
BY
AGENCIES.—For 
purposes of identifying and preventing improper pay-
ments, each agency shall have access to, and use of, 
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the Do Not Pay Initiative to verify payment or 
award eligibility in accordance with subsection (a) 
when the Director of the Office of Management and 
Budget determines the Do Not Pay Initiative is ap-
propriately established for the agency. 
(4) PAYMENT
OTHERWISE
REQUIRED.—When 
using the Do Not Pay Initiative, an agency shall rec-
ognize 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 Management 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 pay-
ments or improper awards; and 
(B) provide the frequency of corrections or 
identification of incorrect information. 
(c) DATABASE INTEGRATION PLAN.—Not later than 60 
days after the date of enactment of this Act, the Director 
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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 Initiative; 
(2) to the extent permitted by law, agency access 
to the Do Not Pay Initiative; and 
(3) the data use agreements described under sub-
section (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 Management and Budget shall estab-
lish a working system for prepayment and preaward 
review that includes the Do Not Pay Initiative as de-
scribed under this section. 
(2) WORKING SYSTEM.—The working system es-
tablished 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 tech-
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niques, which may include commercial database 
use or access. 
(3) APPLICATION TO ALL AGENCIES.—Not later 
than June 1, 2013, each agency shall review all pay-
ments and awards for all programs of that agency 
through the system established under this subsection. 
(e) FACILITATING DATA ACCESS BY FEDERAL AGEN-
CIES AND OFFICES OF INSPECTORS GENERAL FOR PUR-
POSES OF PROGRAM INTEGRITY.— 
(1) DEFINITION.—In this subsection, the term 
‘‘Inspector General’’ means any Inspector General de-
scribed in subparagraph (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 General. 
(2) COMPUTER MATCHING BY FEDERAL AGEN-
CIES FOR PURPOSES OF INVESTIGATION AND PREVEN-
TION OF IMPROPER PAYMENTS 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 Gen-
eral and the head of each agency may enter into 
computer matching agreements with other in-
spectors general and agency heads that allow on-
going data matching (which shall include auto-
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mated data matching) in order to assist in the 
detection and prevention of improper payments. 
(B) REVIEW.—Not later than 60 days after 
a proposal for an agreement under subparagraph 
(A) has been presented 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 pro-
posal. 
(C) TERMINATION
DATE.—An agreement 
under subparagraph (A)— 
(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 agreement for not 
more than 3 years. 
(D) MULTIPLE AGENCIES.—For purposes of 
this paragraph, section 552a(o)(1) of title 5, 
United States Code, shall be applied by sub-
stituting ‘‘between the source agency and the re-
cipient agency or non-Federal agency or an 
agreement governing multiple agencies’’ for ‘‘be-
tween the source agency and the recipient agency 
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or non-Federal agency’’ in the matter preceding 
subparagraph (A). 
(E) COST-BENEFIT ANALYSIS.—A justifica-
tion under section 552a(o)(1)(B) of title 5, 
United States Code, relating to an agreement 
under subparagraph (A) is not required to con-
tain 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 Inspectors General on Integrity and 
Efficiency, the Secretary of Health and Human Serv-
ices, 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 in-
clude standards for— 
(i) reimbursement of costs, when nec-
essary, between agencies; 
(ii) retention and timely destruction of 
records 
in 
accordance 
with 
section 
552a(o)(1)(F) of title 5, United States Code; 
and 
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(iii) prohibiting duplication and re-
disclosure of records in accordance with sec-
tion 552a(o)(1)(H) of title 5, United States 
Code; 
(B) review the procedures of the Data Integ-
rity 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 re-
sponsiveness of the Data Integrity Boards; 
(ii) ensure privacy protections in ac-
cordance 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 constitutes 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 
Management and Budget shall establish procedures 
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