[House Report 112-698]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-698
======================================================================
IMPROPER PAYMENTS ELIMINATION AND RECOVERY IMPROVEMENT ACT OF 2012
_______
November 30, 2012.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Issa, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
[To accompany H.R. 4053]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 4053) to intensify efforts to
identify, prevent, and recover payment error, waste, fraud, and
abuse within Federal spending, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Committee Statement and Views.................................... 6
Section-by-Section............................................... 8
Explanation of Amendments........................................ 9
Committee Consideration.......................................... 10
Application of Law to the Legislative Branch..................... 10
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 10
Statement of General Performance Goals and Objectives............ 10
Federal Advisory Committee Act................................... 10
Unfunded Mandate Statement....................................... 10
Earmark Identification........................................... 10
Committee Estimate............................................... 10
Budget Authority and Congressional Budget Office Cost Estimate... 11
Changes in Existing Law Made by the Bill as Reported............. 12
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
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 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)''.
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 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.
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 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.
Committee Statement and Views
PURPOSE AND SUMMARY
Improper payments are ``any payment that should not have
been made or that was made in an incorrect amount (including
overpayments and underpayments) under statutory, contractual,
administrative, or other legally applicable requirements.''\1\
They are the most visible and tangible byproduct of poor
Federal financial management. Programs are particularly
vulnerable to improper payments when agencies fail to maintain
effective internal controls, adequate financial management
systems, or sufficient oversight.
---------------------------------------------------------------------------
\1\31 U.S.C. 3321 note.
---------------------------------------------------------------------------
H.R. 4053, the Improper Payments Elimination and Recovery
Improvement Act of 2012, was introduced on February 16, 2012,
by Representative Edolphus Towns (D-NY) and referred to the
Committee on Oversight and Government Reform. The bill expands
requirements for Federal agencies to identify, prevent and
recover improper payments. It requires the Office of Management
and Budget (OMB) to identify and report on Federal programs at
high risk for improper payments and create a standardized
methodology for estimating improper payments, in order to
achieve consistent reporting across the government. The bill
modifies the Privacy Act of 1974 to allow for multilateral data
sharing between agencies, and mandates a government-wide ``Do
Not Pay Initiative'' to require prepayment and contract award
screening against databases containing relevant payee
eligibility information. It also requires OMB to determine a
plan for curbing improper payments to deceased individuals.
BACKGROUND AND NEED FOR LEGISLATION
Waste and abuse of taxpayer dollars is a severe problem.
Federal agencies made an estimated $115.3 billion in improper
payments in FY 2011.\2\ Improper payments constituted nearly 5
percent of the $2.5 trillion in program spending in fiscal year
2011.\3\ To better address this problem, agencies must take
advantage of new technologies and data sharing capabilities.
H.R. 4053 brings improper payment detection and prevention into
the 21st century by encouraging the use of technology to allow
agencies to easily share data to achieve increased payment
accuracy and accountability. The provisions in H.R. 4053 build
upon the Improper Payments and Elimination Recovery Act of
2010, which expanded reporting frequency and established
methodologies for estimating the risk of improper payments.
---------------------------------------------------------------------------
\2\GAO, ``Improper Payments: Remaining Challenges and Strategies
for Governmentwide Reduction Efforts,'' GAO-12-573T, March 28, 2012.
\3\Ibid.
---------------------------------------------------------------------------
The full Committee and the Subcommittee on Government
Organization, Efficiency and Financial Management held a series
of hearings this Congress on the issuance of improper payments.
The hearings included testimony from leaders at OMB, the
Government Accountability Office (GAO), the Department of
Health and Human Services (HHS) and several policy experts
about the challenge of preventing improper payments. On
February 17, 2011, the full Committee examined the issue of
Federal misspending during a hearing entitled, ``Waste and
Abuse: The Refuse of the Federal Spending Binge.''
On April 15, 2011, the Subcommittee on Government
Organization, Efficiency and Financial Management heard from
agency officials from GAO and OMB about agency internal
controls and common sense solutions to tighten Federal
financial management, including the use of advanced information
technology to prevent wasteful spending.
A July 28, 2011, hearing of the Subcommittee focused on the
Federal program with the highest volume of improper payments--
Medicare. The Committee learned that Medicare funds are often
paid to ineligible recipients, a problem that can be prevented
via the use of data-matching technology.
On February 7, 2012, the Subcommittee heard from agency
experts from OMB, GAO and the Recovery Accountability and
Transparency Board at a hearing entitled, ``Solutions Needed:
Improper Payments Total $115 Billion in Federal Misspending.''
The Subcommittee discussed the Administration's recent efforts
to reduce improper payments, and suggestions for effective
strategies to reduce improper payments.
H.R. 4053 reflects the lessons learned from these hearings
and the Committee's ongoing oversight into Federal financial
management.
LEGISLATIVE HISTORY
H.R. 4053 builds on prior legislation to reduce and prevent
improper payments. A decade ago, the Improper Payments
Information Act of 2002 was signed into law (P.L. 107-300),
compelling agencies to identify payment errors in specific
programs. That 2002 law was updated in 2010 by the Improper
Payments and Elimination Recovery Act (P.L. 111-204), which
required better identification and estimation of improper
payments.
H.R. 4053 was introduced by Representative Towns on
February 16, 2012. The bill was referred to the Oversight and
Government Reform Committee. A companion bill, S. 1409, was
introduced by Senator Carper on July 22, 2011. S. 1409 was
referred to the Senate Homeland Security and Governmental
Affairs Committee, and subsequently reported favorably with an
amendment in the nature of a substitute on October 19, 2011. It
was then placed on the Senate Legislative Calendar on July 12,
2012, and passed under Unanimous Consent on August 1, 2012.
Section-by-Section
Section 1. Short title
This section titles the bill as the ``Improper Payments
Elimination and Recovery Improvement Act of 2012''.
Section 2. Definitions
This section defines the terms ``agency'', ``improper
payment'' and ``State'' for purposes of the Act.
Section 3. Improving the determination of improper payments by federal
agencies
Subsection (a) requires the OMB Director to annually
identify high-priority programs, and to establish annual
targets, and intermediate actions to achieve the targets, for
reducing improper payments. Agencies are required to report
annually to their Inspectors General and make available to the
public a report on any high-dollar improper payments identified
by the agency. These reports are to be made accessible by OMB
on a central, publicly available website. The Inspector General
of each agency is to review the quality and the risk level
associated with the programs.
Subsection (b) requires the OMB Director to provide
guidance to Federal agencies for improving agency estimates of
improper payments not later than 180 days after enactment. This
requirement strengthens the estimation process by having OMB
set standards to ensure the underlying validity of sampled
payments.
Subsection (c) makes technical and conforming amendments to
IPERA.
Section 4. Improper payments information
This section makes a technical correction to IPERA in
conformance with OMB guidance.
Section 5. Do Not Pay Initiative
Subsection (a) requires agencies to conduct prepayment
procedures, including screening against databases containing
relevant information on payees, to verify eligibility and
prevent improper payments.
Subsection (b) requires OMB to establish a Do Not Pay
Initiative comprised of the databases used by agencies in
subsection (a), and other databases as designated by the OMB
Director. This subsection also requires that OMB evaluate the
Do Not Pay Initiative in an annual report to Congress.
Subsection (c) requires that within 60 days of enactment,
the OMB Director provide Congress with a plan for including
other databases in the Do Not Pay Initiative, establishing
lawful agency access to the databases, and creating a
multilateral data use agreement setting parameters for database
access between relevant agencies.
Subsection (d) requires OMB to establish a prepayment
review system that includes the initial Do Not Pay Initiative
system within 90 days of enactment. The initial system may be
located within an appropriate agency, shall include at least
three participating agencies, and must include investigative
activities for fraud and systemic improper payment detection
through analytic technologies. Each agency is required to
review all of its payments and awards through the Do Not Pay
Initiative no later than June 1, 2013.
Subsection (e) requires that within 60 days of enactment,
OMB establish a plan for executing multilateral data use
agreements for the Do Not Pay Initiative. The subsection amends
the Privacy Act to allow for the multilateral data use
agreements between and among Federal agencies. The subsection
requires multilateral data use agreements to include
regulations and guidelines that ensure data access, as well as
transfer and storage of data in a manner consistent with
relevant privacy, security, and disclosure laws.
Subsection (f) requires that within one year of enactment,
the Attorney General submit to Congress recommendations for
using Federal, State, and local conviction and incarceration
databases to determine the incarceration status of individuals,
in order to prevent improper payments.
Subsection (g) requires the OMB Director, in consultation
with stakeholders, States, and the Social Security
Administrator, to establish a plan for improving the quality
and timeliness of death data maintained by the Social Security
Administration. The plan must include actions to increase the
quality and frequency of access by agencies, including a goal
of at least once-daily access. Within 120 days of enactment,
the OMB Director must report to Congress on the plan.
Section 6. Improving recovery of improper payments
Subsection (a) requires the OMB Director to determine
current and historical rates and amounts of improper payment
recovery by audit contractors, and identify numerical or
percentage targets for recovering improper payments.
Explanation of Amendments
The Section-by-Section above is a summary explanation of
the provisions of Chairman Issa's amendment in the nature of a
substitute (ANS), which was adopted during the Committee
Business Meeting.
Committee Consideration
On September 20, 2012, the Committee met in open session
and ordered reported favorably the bill, H.R. 4053, as amended,
by roll unanimous consent, a quorum being present.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to the terms and conditions of
employment or access to public services and accommodations.
This bill expands requirements for Federal agencies to
identify, prevent and recover improper payments. As such this
bill does not relate to employment or access to public services
and accommodations.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are reflected in the descriptive portions
of this report.
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of 5 U.S.C. App., Section 5(b).
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandate Reform Act, P.L. 104-4) requires a statement as to
whether the provisions of the reported include unfunded
mandates. In compliance with this requirement the Committee has
received a letter from the Congressional Budget Office included
herein.
Earmark Identification
H.R. 4053 does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Committee Estimate
Clause 3(d)(2) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
H.R. 4053. However, clause 3(d)(3)(B) of that rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act.
Budget Authority and Congressional Budget Office Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following cost estimate for H.R. 4053 from the Director of
the Congressional Budget Office:
October 11, 2012.
Hon. Darrell Issa,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4053, the Improper
Payments Elimination and Recovery Improvement Act of 2012.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 4053--Improper Payments Elimination and Recovery Improvement Act
of 2012
H.R. 4053 would amend federal law to require agencies to
make additional efforts to identify, recover, and prevent
improper payments. Improper federal payments include several
kinds of erroneous disbursements, such as overpayments,
underpayments, payments that were not adequately documented,
and fraudulent payments. Under the legislation, the Office of
Management and Budget (OMB), federal agencies, and their
inspector generals would have additional responsibilities to
better manage payment practices and reduce the incidence of
improper payments. In addition, H.R. 4053 would make changes to
the data-sharing protocols among federal agencies to facilitate
the identification of improper payments.
CBO estimates that implementing H.R. 4053 would have no
significant cost over the next five years. The bill could
affect direct spending by agencies not funded through annual
appropriations; therefore, pay-as-you-go procedures apply. CBO
estimates, however, that any net increase in spending by those
agencies would not be significant. Enacting H.R. 4053 would not
affect revenues.
Most of the provisions of the bill would codify and expand
current practices of the federal government. Executive Order
13520 and various Presidential memorandums have directed OMB
and agencies to take steps to reduce improper payments. OMB has
already drafted guidance on improper payments and created a Do-
Not-Pay list. Consequently, CBO estimates that the additional
responsibilities and reporting requirements to implement this
bill would neither significantly increase administrative costs
to federal agencies nor generate any significant incremental
savings.
H.R. 4053 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
On April 20, 2012, CBO transmitted a cost estimate for S.
1409, the Improper Payments and Recovery Improvement Act of
2011, as ordered reported by the Senate Committee on Homeland
Security and Governmental Affairs on October 19, 2011. Both
pieces of legislation address improper payments but have
different provisions. The Senate bill includes a requirement
for agencies to operate Recovery Audit Contracting programs,
but that provision is not included in H.R. 4053.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by Peter H. Fontaine,
Assistant Director for Budget Analysis.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
IMPROPER PAYMENTS INFORMATION ACT OF 2002
* * * * * * *
SEC. 2. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS TO REDUCE
THEM.
(a) Identification of Susceptible Programs and Activities.--
(1) * * *
* * * * * * *
(3) Risk assessments.--
(A) Definition.--In this subsection the term
``significant'' means--
(i) * * *
(ii) [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] with respect to
fiscal year 2014 and each fiscal year
thereafter, that improper payments in
the program or activity in the
preceding fiscal year may have
exceeded--
(I) * * *
* * * * * * *
(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.
[(b)] (c) Estimation of Improper Payments.--With respect to
each program and activity identified under subsection (a), the
head of the relevant agency shall--
(1) * * *
* * * * * * *
[(c)] (d) Reports on Actions To Reduce Improper Payments.--
With respect to any program or activity of an agency with
estimated improper payments under [subsection (b)] subsection
(c), the head of the agency shall provide with the estimate
under [subsection (b)] subsection (c) a report on what actions
the agency is taking to reduce improper payments, including--
(1) * * *
* * * * * * *
[(d)] (e) Reports on Actions To Recover Improper Payments.--
With respect to any improper payments identified in recovery
audits conducted under section 2(h) of the Improper Payments
Elimination and Recovery Act of 2010 (31 U.S.C. 3321 note), the
head of the agency shall provide with the estimate under
[subsection (b)] subsection (c) a report on all actions the
agency is taking to recover improper payments, including--
(1) * * *
* * * * * * *
[(e)] (f) Governmentwide Reporting of Improper Payments and
Actions To Recover Improper Payments.--
(1) * * *
* * * * * * *
[(f)] (g) Definitions.--In this section:
(1) * * *
* * * * * * *
(3) Payment.--The term ``payment'' means any transfer
or commitment for future transfer of Federal funds such
as cash, securities, loans, loan guarantees, and
insurance subsidies to any non-Federal person or entity
or a Federal employee, that is made by a Federal
agency, a Federal contractor, a Federal grantee, or a
governmental or other organization administering a
Federal program or activity.
* * * * * * *
[(g)] (h) Guidance by the Office of Management and Budget.--
(1) * * *
* * * * * * *
----------
IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010
* * * * * * *
SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOVERY.
(a) * * *
* * * * * * *
(h) Recovery Audits.--
(1) Definition.--In this subsection, the term
``agency'' has the meaning given under [section 2(f) of
the Improper Payments Information Act of 2002 (31
U.S.C. 3321 note) as redesignated by this Act.] section
2(g) of the Improper Payments Information Act of 2002
(31 U.S.C. 3321 note).
* * * * * * *
SEC. 3. COMPLIANCE.
(a) Definitions.--In this section:
(1) Agency.--The term ``agency'' has the meaning
given under [section 2(f) of the Improper Payments
Information Act of 2002 (31 U.S.C. 3321 note) as
redesignated by this Act.] section 2(g) of the Improper
Payments Information Act of 2002 (31 U.S.C. 3321 note).
* * * * * * *
(3) Compliance.--The term ``compliance'' means that
the agency--
(A) * * *
* * * * * * *
(C) if required, publishes improper payments
estimates for all programs and activities
identified under [section 2(b)] section 2(c) of
the Improper Payments Information Act of 2002
(31 U.S.C. 3321 note) in the accompanying
materials to the annual financial statement;
(D) publishes programmatic corrective action
plans prepared under [section 2(c)] section
2(d) of the Improper Payments Information Act
of 2002 (31 U.S.C. 3321 note) that the agency
may have in the accompanying materials to the
annual financial statement;
(E) publishes improper payments reduction
targets established under [section 2(c)]
section 2(d) of the Improper Payments
Information Act of 2002 (31 U.S.C. 3321 note)
that the agency may have in the accompanying
materials to the annual financial statement for
each program assessed to be at risk, and is
meeting such targets; and
(F) has reported an improper payment rate of
less than 10 percent for each program and
activity for which an estimate was published
under [section 2(b)] section 2(c) of the
Improper Payments Information Act of 2002 (31
U.S.C. 3321 note).
* * * * * * *