II 
112TH CONGRESS 
2D SESSION 
H. R. 4053 
IN THE SENATE OF THE UNITED STATES 
DECEMBER 17, 2012 
Received 
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 Representa-
tives of the United States of America in Congress assembled, 
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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 Im-
proper 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 
federally 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— 
(1) by redesignating subsections (b) through (g) 
as subsections (c) through (h), respectively; 
(2) by inserting after subsection (a) the fol-
lowing: 
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‘‘(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 
program. 
‘‘(2) REPORT
ON
HIGH-PRIORITY
IMPROPER 
PAYMENTS.— 
‘‘(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 
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shall submit to the Inspector General of that 
agency, and make available to the public (in-
cluding availability through the Internet), a re-
port 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 informa-
tion provided in connection with such re-
ferrals. 
‘‘(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
GENERAL.—Subparagraph (B)(ii) 
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shall not prohibit any referral or information 
being made available to an Inspector General as 
otherwise 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 pay-
ment estimates and methodology of 
the agency 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 
Congress, for modifying any plans of the 
agency relating to the program, including 
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improvements for improper payments de-
termination 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 
‘‘subsection (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 
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 Management and Budget shall pro-
vide guidance to agencies for improving the esti-
mates of improper payments under the Improper 
Payments Information Act of 2002 (31 U.S.C. 3321 
note). 
(2) GUIDANCE.—Guidance under this sub-
section shall— 
(A) strengthen the estimation process of 
agencies by setting standards for agencies to 
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follow in determining the underlying validity of 
sampled payments to ensure amounts being 
billed, paid, or obligated for payment are prop-
er; 
(B) instruct agencies to give the persons or 
entities performing improper payments esti-
mates access to all necessary payment data, in-
cluding 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 
payments estimates; 
(D) require agencies to include all identi-
fied improper payments in the reported esti-
mate, regardless of whether the improper pay-
ment 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. 
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3321 note) to better reflect the unique proc-
esses, 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)’’. 
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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 Sep-
tember 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 of available databases with 
relevant information on eligibility occurs to deter-
mine program or award eligibility and prevent im-
proper 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. 
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(C) The Debt Check Database of the De-
partment of the Treasury. 
(D) The Credit Alert System or Credit 
Alert Interactive Voice Response System of the 
Department of Housing and Urban Develop-
ment. 
(E) The List of Excluded Individuals/Enti-
ties 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 ac-
cordance 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 
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(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 
payments, each agency shall have access to, and use 
of, 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 Of-
fice 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— 
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(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. 
(c) DATABASE INTEGRATION PLAN.—Not later than 
60 days after the date of enactment of this Act, the Direc-
tor 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 ac-
cess 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 Management and Budget shall es-
tablish a working system for prepayment and 
preaward review that includes the Do Not Pay Ini-
tiative as described under this section. 
(2) WORKING
SYSTEM.—The working system 
established under paragraph (1)— 
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(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 detec-
tion through analytic technologies and other 
techniques, which may include commercial data-
base 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 sub-
section. 
(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 
described 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 PRE-
VENTION OF IMPROPER PAYMENTS AND FRAUD.— 
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(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 sub-
paragraph (A) has been presented to a Data In-
tegrity Board established under section 552a(u) 
of title 5, United States Code, for consider-
ation, the Data Integrity Board shall respond 
to the proposal. 
(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 
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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 
recipient agency or non-Federal agency or an 
agreement 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 jus-
tification 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 MANAGE-
MENT AND BUDGET.—Not later than 6 months after 
the date of enactment of this Act, and in consulta-
tion with the Council of the Inspectors 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, 
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the Director of the Office of Management and Budg-
et 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 
(iii) prohibiting duplication and re-
disclosure of records in accordance with 
section 552a(o)(1)(H) of title 5, United 
States Code; 
(B) review the procedures of the Data In-
tegrity 
Boards 
established 
under 
section 
552a(u) of title 5, United States Code, and de-
velop 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, 
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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 proce-
dures providing for the correction of data in order 
to ensure— 
(A) compliance with section 552a(p) of 
title 5, United States Code; and 
(B) that corrections are made in any Do 
Not Pay Initiative database and in any relevant 
source databases designated 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 agen-
cy, shall ensure that any information provided to an 
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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 Gen-
eral shall submit to Congress recommendations for in-
creasing 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 programs and fraud. 
(g) PLAN TO CURB FEDERAL IMPROPER PAYMENTS 
TO DECEASED INDIVIDUALS BY IMPROVING THE QUALITY 
AND USE BY FEDERAL AGENCIES OF THE SOCIAL SECU-
RITY ADMINISTRATION DEATH MASTER FILE.— 
(1) ESTABLISHMENT.—In conjunction with the 
Commissioner of Social Security and in consultation 
with relevant stakeholders that have an interest in 
or responsibility for providing the data, and the 
States, the Director of the Office of Management 
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and Budget shall establish a plan for improving the 
quality, accuracy, and timeliness of death data main-
tained by the Social Security Administration, includ-
ing death information 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 established 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 appropriate; 
(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 determining 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 Fed-
eral retirement programs. 
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(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 legislation. 
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 Payments Elimination and Recovery 
Act of 2010 (31 U.S.C. 3301 note). 
(b) REVIEW.—The Director of the Office of Manage-
ment 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 recov-
ered by recovery audit contractors; and 
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(2) targets for recovering improper payments, 
including specific information on amounts and pay-
ments recovered by recovery audit contractors. 
Passed the House of Representatives December 13, 
2012. 
Attest: 
KAREN L. HAAS, 
Clerk. 
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