[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4053 Enrolled Bill (ENR)]
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,

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This Act may be cited as the ``Improper Payments Elimination and
Recovery Improvement Act of 2012''.

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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.

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AGENCIES.
(a) In General.--Section 2 of the Improper Payments 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 following:
``(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 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 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 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 Justice, 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 general.--
Subparagraph (B)(ii) shall not prohibit any referral or
information being made available to an Inspector General 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
associated 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
identify 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 Management and
Budget shall provide guidance to agencies for improving the
estimates of improper payments under the 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 necessary
payment data, including access to relevant documentation;
(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 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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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''.

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(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
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 comment
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 subsection (a) when the Director of
the Office of Management and Budget determines the Do Not Pay
Initiative is appropriately 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 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 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 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 Initiative;
(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 Management and
Budget shall establish a working system for prepayment and preaward
review that includes the Do Not Pay Initiative 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 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 agencies for purposes of
investigation and prevention 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
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 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 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 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 substituting ``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 justification under section
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 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, 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 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 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 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 recommendations 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 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
Security 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 and Budget
shall establish a plan for improving the quality, accuracy, and
timeliness of death data maintained by the Social Security
Administration, including 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 Federal retirement programs.
(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.

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(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 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.

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Improper Payments Elimination and Recovery Improvement Act of 2012 — HR. 4053

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