[Senate Report 115-445]
[From the U.S. Government Publishing Office]
Calendar No. 736
115th Congress} { Report
SENATE
2d Session } { 115-445
======================================================================
PAYMENT INTEGRITY INFORMATION
ACT OF 2018
__________
R E P O R T
OF THE
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
TO ACCOMPANY
S. 2948
TO IMPROVE EFFORTS TO IDENTIFY AND REDUCE
GOVERNMENTWIDE IMPROPER PAYMENTS, AND FOR OTHER PURPOSES
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
December 19, 2018.--Ordered to be printed
U.S. GOVERNMENT PUBLISHING OFFICE
WASHINGTON : 2018
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana KAMALA D. HARRIS, California
JON KYL, Arizona DOUG JONES, Alabama
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Daniel J. Spino, Research Assistant
Margaret E. Daum, Minority Staff Director
Charles A. Moskowitz, Minority Senior Legislative Counsel
Laura W. Kilbride, Chief Clerk
Calendar No. 736
115th Congress} { Report
SENATE
2d Session } { 115-445
======================================================================
PAYMENT INTEGRITY INFORMATION ACT OF 2018
_______
December 19, 2018.--Ordered to be printed
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 2948]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 2948) to improve
efforts to identify and reduce Governmentwide improper
payments, and for other purposes, having considered the same,
reports favorably thereon with amendments and recommends that
the bill, as amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and the Need for Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................3
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Cost Estimates.......................5
VII. Changes in Existing Law Made by the Bill, as Reported............5
I. Purpose and Summary
The purpose of S. 2948 is to improve efforts to identify
and reduce Government-wide improper payments. S. 2948 moves
previous improper payment laws to one place in statute and
updates and improves them as necessary. Better uniformity and
consistency in these laws will increase agency compliance.
II. Background and the Need for Legislation
Improper payments are ``any payment that should not have
been made or that was made in an incorrect amount.''\1\ In
fiscal year (FY) 2017, the Government Accountability Office
(GAO) estimated that Federal improper payments totaled $141
billion dollars.\2\
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\1\Pub. L. No. 111-204.
\2\U.S. Gov't Accountability Office, GAO-18-377, Improper Payments:
Actions and Guidance Could Help Address Issues and Inconsistencies in
Estimation Processes 1 (2018), https://www.gao.gov/assets/700/
692207.pdf.
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Since 2002, Congress has passed piecemeal bills that, while
incrementally improving statutory authorities, are not well
coordinated. The foundation of improper payments legislation is
the Improper Payments Information Act of 2002 (IPIA), which
first required Federal agencies to identify, prevent, and
report improper payments. IPIA requires Federal agencies to
report on their actions to reduce improper payments on all
programs or activities that exceed ten million dollars.\3\ IPIA
also established definitions for ``payment'' and ``improper
payment.''\4\ Later in 2002, Congress passed the Recovery Audit
Act of 2002, which required agencies that enter into contracts
exceeding five hundred million dollars to conduct proper
oversight of contractor payments and employ recovery audits.\5\
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\3\Pub. L. No. 107-300.
\4\Id.
\5\Pub. L. No. 107-107 at Sec. 3561.
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As IPIA reporting requirements took effect, the number of
agency programs that reported expanded, increasing the total
amount of improper payments from $45 billion in FY2004 to $108
billion in FY2012.\6\ In 2006, GAO recommended that Congress
revise and expand IPIA to reduce improper payments.\7\
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\6\Garrett Hatch, Cong. Research Serv., R42878, Improper Payments
and Recovery Audits: Legislation, Implementation, and Analysis (Oct.
18, 2013).
\7\U.S. Gov't Accountability Office, GAO-06-347, Improper Payments:
Federal and State Coordination Needed to Report National Improper
Payment Estimates on Federal Programs (2006), https://www.gao.gov/
assets/250/249728.pdf.
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In 2010, Congress responded to GAO's recommendation by
passing the Improper Payments Elimination and Recovery Act of
2010 (IPERA). IPERA defines in more detail the types of risk
assessments agencies must complete. IPERA provides a detailed
description of ``significant'' improper payments, which was
previously up to agencies discretion. Although IPERA made
positive changes to improper payment law, GAO identified
additional challenges requiring legislation.\8\
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\8\U.S. Gov't Accountability Office, GAO-12-573T, Improper
Payments: Remaining Challenges and Strategies for Government-wide
Reduction Efforts 11 (2012), https://www.gao.gov/assets/590/589681.pdf.
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Two years later Congress passed the Improper Payments
Elimination and Recovery Improvement Act of 2012 (IPERIA).\9\
In addition to refining definitions and reporting requirements,
IPERIA requires the Office of Management and Budget (OMB)
Director to identify a list of high-priority Federal programs
for greater levels of oversight by the agencies.\10\ IPERIA
also codifies the Do Not Pay Initiative.\11\ The Do Not Pay
Initiative requires agencies to review a list of databases to
verify the validity of a payment or award they are about to
authorize.\12\ To carry out the Do Not Pay Initiative, the
Treasury Department created the Do Not Pay Business Center to
be a centralized analytics service center to help agencies
comply with IPERIA.\13\
---------------------------------------------------------------------------
\9\Pub. L. No. 112-248.
\10\Id.
\11\Id.
\12\Id.
\13\Bureau of the Fiscal Service, Do Not Pay Agency Implementation
Guide For Treasury's Working System (2018), https://donotpay.treas.gov/
DNPAgencyImplementationGuidePublic.pdf.
---------------------------------------------------------------------------
In 2015, the Committee approved and Congress passed the
Fraud Reduction and Data Analytics Act of 2015 to require the
OMB Director and the Comptroller General of the United States
to establish guidelines for agencies to follow based on leading
practices identified by GAO.\14\ The bill requires agencies to
follow best practices established by GAO that focus on
collecting and analyze data from reporting mechanisms, similar
to the Do Not Pay Business Center, to better prevent improper
payments before they happen.\15\
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\14\Pub. L. No. 114-186.
\15\Id.
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While reviewing the history of improper payment
legislation, the Committee found that IPIA, the Recovery Audit
Act of 2002, IPERA, IPERIA, and the Fraud Reduction and Data
Analytics Act of 2015 are not sufficiently coordinated. Under
current law, statutory requirements concerning Federal improper
payments are scattered throughout the U.S. Code, and some of
these statutory requirements were not incorporated into U.S.
Code as positive law.\16\ These statutes, when taken in sum,
lack sufficient coherence, leaving certain aspects up to agency
interpretation. To improve the coherence of improper payments
laws and to improve agency compliance, S. 2948 repeals the
previous improper payment laws and combines the language of
each into a single new subchapter of U.S. Code. The bill omits
areas of duplication, and improves and updates areas that
warrant attention.
---------------------------------------------------------------------------
\16\U.S.H.R., Office of the Law Revision Counsel U.S. Code, The
Term ``Positive Law,'' available at http://uscode.house.gov/
codification/term_positive_law.htm.
---------------------------------------------------------------------------
The Committee worked closely with the GAO and OMB on the
legislation and received letters of support from the Project on
Government Oversight, Americans for Tax Reform, FreedomWorks,
National Taxpayers Union, Taxpayers for Common Sense, and the
Taxpayers Protection Alliance.\17\
---------------------------------------------------------------------------
\17\Letter from Americans for Tax Reform, FreedomWorks, National
Taxpayers Union, Project on Government Oversight, Taxpayers for Common
Sense, and the Taxpayers Protection Alliance to Senator Ron Johnson
(July 3, 2018) (on file with the Committee).
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III. Legislative History
S. 2948 was introduced on May 24, 2018, by Senators Claire
McCaskill (D-MO), Tom Carper (D-DE), and Ron Johnson (R-WI).
The bill was referred to the Committee on Homeland Security and
Governmental Affairs. The Committee considered S. 2948 at a
business meeting on June 13, 2018. S. 2948 passed by voice vote
en bloc with Senators Johnson, Portman, Lankford, Enzi,
McCaskill, Carper, Peters, Hassan, Harris, and Jones present.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section establishes the short title of the bill as the
Payment Integrity Information Act of 2018.
Section 2. Improper payments
This section moves several existing improper payments
statutes to one place in the code. New Subchapter IV of Chapter
33 of Title 31 now houses the IPIA, IPERA, IPERIA, and the
Fraud Reduction and Data Analytics Act of 2015. This section
also makes minor updates to these existing law as described
below.
Section 3352 is a rewrite of IPERA with new subsections and
new definitions. A definition of the term ``scope'' is included
to explain all the factors agencies should consider when
gauging susceptibility to improper payments.
Subsection (c) of 3352 integrates improper payment guidance
from OMB Memorandum M-15-02. This guidance explains how
insufficient documentation errors are to be classified as an
improper payment. Incorporating this memorandum into section
3352 strengthens the definition of the term improper payment.
Subsection (c) of 3353 is a new addition that gives OMB the
option to create one or more pilot programs to test potential
accountability measures, incentives, and consequences for
compliance and the elimination of improper payments.
Section 3354 establishes the Do Not Pay Initiative,
originally authorized in IPERIA. Subsection (e) adds to the Do
Not Pay system a requirement that Social Security increase the
frequency of access to the Death Master File to daily, and
identify improved methods for determining improper payments due
to death of the recipient.
Section 3355 includes requirements of IPERIA, which was in
31 U.S.C. Sec. 3301 note that requires the Director of OMB to
determine the rate of improper payments and to set targets for
recovering improper payments.
Section 3356 provides the Director of OMB the authority to
modify and update any guidance required by the legislation.
Section 3357 is the new Fraud Reduction Data Analytics Act
of 2015, with one change allowing OMB to update its guidance as
needed.
Section 3358 establishes a new working group that will
enable Federal agencies to collaborate with each other and non-
Federal partners, such as state governments. The purpose of
this addition is to aide in developing strategies to address
root causes and driving factors of improper payments, such as
fraud and eligibility determinations in state-managed federal
benefits programs.
Section 3. Repeals
This section repeals the existing improper payment statutes
that are scattered throughout the U.S. Code, and within notes
of U.S. Code, that section 2 reconstitutes within a new
Subchapter of Title 31, and makes necessary conforming edits.
Repealed statutes include IPIA, IPERA, IPERIA, and the Fraud
Reduction and Data Analytics Act of 2015.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimates
CBO failed to provide the Committee with a cost estimate in
time for the final reporting deadline of the 115th Congress.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as reported, are shown as follows: (existing law
proposed to be omitted is enclosed in brackets, new matter is
printed in italic, and existing law in which no change is
proposed is shown in roman):
UNITED STATES CODE
* * * * * * *
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
CHAPTER 57--TRAVEL, TRANSPORTATION, AND SUBSISTENCE
* * * * * * *
Subchapter I--Travel and Subsistence Expenses; Milage
Allowances
* * * * * * *
SECTION 5701 DEFINITIONS
* * * * * * *
HISTORICAL AND REVISION NOTES
* * * * * * *
CONSTRUCTION
* * * * * * *
(a) Executive Agency Accounting.--Nothing in this Act (see
Short Title of 2012 Amendment note set out under section 101 of
Title 41, Public Contracts), or the amendments made by this
Act, shall be construed to excuse the head of an executive
agency from the responsibilities set out in (section 3512 of
title 31, United States Code, or in the Improper Payments
Information Act of 2002 (Pub. L. 107-300) (31 U.S.C. 3321
note)) section 3512 or subchapter IV of chapter 33 of title 31,
United States Code.
* * * * * * *
TITLE 6--DOMESTIC SECURITY
* * * * * * *
CHAPTER 1--HOMELAND SECURITY ORGANIZATION
* * * * * * *
Subchapter XV--Homeland Security Grants
* * * * * * *
PART B--GRANTS ADMINISTRATION
* * * * * * *
SEC. 612. ACCOUNTABILITY.
(a) * * *
(1) * * *
(A) * * *
(B) * * *
(C) * * *
[Consistent with the Improper Payments
Information Act of 2002 (31 U.S.C. 3321 note)]
Consistent with subchapter IV of chapter 33 or
title 31, United States Code, for each of the
grant programs under sections 604 and 605 of
this title and section 762 of this title, the
Administrator shall specify policies and
procedures for--
(i) identifying activities funded
under any such grant program that are
susceptible to significant improper
payments; and
(ii) reporting any improper payments
to the Department.
* * * * * * *
(5) * * *
The Administrator shall conduct a recovery audit
under [section 2(h) of the Improper Payments
Elimination and Recovery Act of 2010 (31 U.S.C. 3321
note)] section 3352(i) of title 31, United States Code
for any grant administered by the Department with a
total value of not less than $1,000,000, if the
Administrator finds that--
(A) a financial audit has identified improper
payments that can be recouped; and
(B) it is cost effective to conduct a
recovery audit to recapture the targeted funds.
* * * * * * *
TITLE 31--MONEY AND FINANCE
* * * * * * *
Subtitle III--Financial Management
* * * * * * *
CHAPTER 33--DEPOSITING, KEEPING, AND PAYING MONEY
* * * * * * *
Subchapter II--Payments
* * * * * * *
Sec. 3321. Disbursing authority in the executive branch
* * * * * * *
Historical and Revision Notes
* * * * * * *
[Fraud Reduction and Data Analytics
[SEC. 2. DEFINITIONS.
[In this Act.--
[(1) the term `agency' has the meaning given the term
in section 551 of title 5, United States Code; and
[(2) the term `improper payment' has the meaning
given the term in section 2(g) of the Improper Payments
Information Act of 2002 [Pub. L. 107-300] (31 U.S.C.
3321 note).
[SEC. 3. ESTABLISHMENT OF FINANCIAL AND ADMINISTRATIVE CONTROLS
RELATING TO FRAUD AND IMPROPER PAYMENTS.
[(a) Guidelines.--
[(1) In general.--Not later than 90 days after the
date of enactment of this Act [June 30, 2016], the
Director of the Office of Management and Budget, in
consultation with the Comptroller General of the United
States, shall establish guidelines for agencies to
establish financial and administrative controls to
identify and assess fraud risks and design and
implement control activities in order to prevent,
detect, and respond to fraud, including improper
payments.
[(2) Contents.--The guidelines described in paragraph
(1) shall incorporate the leading practices identified
in the report published by the Government
Accountability Office on July 28, 2015, entitled
`Framework for Managing Fraud Risks in Federal
Programs'.
[(3) Modification.--The Director of the Office of
Management and Budget, in consultation with the
Comptroller General of the United States, may
periodically modify the guidelines described in
paragraph (1) as the Director and Comptroller General
may determine necessary.
[(b) Requirements for Controls.--The financial and
administrative controls required to be established by agencies
under subsection (a) shall include--
[(1) conducting an evaluation of fraud risks and
using a risk-based approach to design and implement
financial and administrative control activities to
mitigate identified fraud risks;
[(2) collecting and analyzing data from reporting
mechanisms on detected fraud to monitor fraud trends
and using that data and information to continuously
improve fraud prevention controls; and
[(3) using the results of monitoring, evaluation,
audits, and investigations to improve fraud prevention,
detection, and response.
[(c) Reports.--
[(1) In general.--Except as provided in paragraph
(2), for each of the first 3 fiscal years beginning
after the date of enactment of this Act, each agency
shall submit to Congress, as part of the annual
financial report of the agency, a report on the
progress of the agency in--
[(A) implementing--
[(i) the financial and administrative
controls required to be established
under subsection (a);
[(ii) the fraud risk principle in the
Standards for Internal Control in the
Federal Government; and
[(iii) Office of Management and
Budget Circular A-123 with respect to
the leading practices for managing
fraud risk;
[(B) identifying risks and vulnerabilities to
fraud, including with respect to payroll,
beneficiary payments, grants, large contracts,
and purchase and travel cards; and
[(C) establishing strategies, procedures, and
other steps to curb fraud.
[(2) First report.--If the date of enactment of this
Act is less than 180 days before the date on which an
agency is required to submit the annual financial
report of the agency, the agency may submit the report
required under paragraph (1) as part of the following
annual financial report of the agency.
[SEC. 4. WORKING GROUP.
[(a) Establishment.--Not later than 180 days after the date
of enactment of this Act [June 30, 2016], the Office of
Management and Budget shall establish a working group to
improve--
[(1) the sharing of financial and administrative
controls established under section 3(a) and other best
practices and techniques for detecting, preventing, and
responding to fraud, including improper payments; and
[(2) the sharing and development of data analytics
techniques.
[(b) Composition.--The working group established under
subsection (a) shall be composed of--
[(1) the Controller of the Office of Management and
Budget, who shall serve as Chairperson;
[(2) the Chief Financial Officer of each agency; and
[(3) any other party determined to be appropriate by
the Director of the Office of Management and Budget,
which may include the Chief Information Officer, the
Chief Procurement Officer, or the Chief Operating
Officer of each agency.
[(c) Consultation.--The working group established under
subsection (a) shall consult with Offices of Inspectors General
and Federal and non-Federal experts on fraud risk assessments,
financial controls, and other relevant matters.
[(d) Meetings.--The working group established under
subsection (a) shall hold not fewer than 4 meetings per year.
[(e) Plan.--Not later than 270 days after the date of
enactment of this Act, the working group established under
subsection (a) shall submit to Congress a plan for the
establishment and use of a Federal interagency library of data
analytics and data sets, which can incorporate or improve upon
existing Federal resources and capacities, for use by agencies
and Offices of Inspectors General to facilitate the detection,
prevention, and recovery of fraud, including improper
payments.]
* * * * * * *
[IMPROPER PAYMENTS
[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 [Pub. L. 107-300] (31
U.S.C. 3321 note), as re-designated 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.--[Amended Pub. L. 107-300, set out below.]
[(b) Improved Estimates.--
[(1) In general.--Not later than 180 days after the
date of enactment of this Act [Jan. 10, 2013], 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 [Pub. L. 107-300] (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.--[Amended
sections 2(h), 3 of Pub. L. 111-204, set out below.]
[SEC. 4. IMPROPER PAYMENTS INFORMATION.
[[Amended Pub. L. 107-300, set out below.]
[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 records maintained by the
Commissioner of Social Security.
[(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.
[(F) Information regarding incarcerated
individuals maintained by the Commissioner of
Social Security under sections 202(x) and
1611(e) of the Social Security Act [42 U.S.C.
402(x), 1382(e)].
[(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.--
[(A) In general.--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.
[(B) Other entities.--States and any
contractor, subcontractor, or agent of a State,
and the judicial and legislative branches of
the United States (as defined in paragraphs (2)
and (3), respectively, of section 202(e) of
title 18, United States Code), shall have
access to, and use of, the Do Not Pay
Initiative for the purpose of verifying payment
or award eligibility for payments (as defined
in section 2(g)(3) of the Improper Payments
Information Act of 2002 (31 U.S.C. 3321 note))
when, with respect to a State, the Director of
the Office of Management and Budget determines
that the Do Not Pay Initiative is appropriately
established for that State and any contractor,
subcontractor, or agent of the State, and, with
respect to the judicial and legislative
branches of the United States, when the
Director of the Office of Management and Budget
determines that the Do Not Pay Initiative is
appropriately established for the judicial
branch or the legislative branch, as
applicable.
[(C) Consistency with privacy act of 1974.--
To ensure consistency with the principles of
section 552a of title 5, United States Code
(commonly known as the `Privacy Act of 1974'),
the Director of the Office of Management and
Budget may issue guidance that establishes
privacy and other requirements that shall be
incorporated into Do Not Pay Initiative access
agreements with States, including any
contractor, subcontractor, or agent of a State,
and the judicial and legislative branches of
the United States.
[(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 [Jan. 10, 2013], 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;
[(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; and
[(D) may include States and their quasi-
government entities, and the judicial and
legislative branches of the United States (as
defined in paragraphs (2) and (3),
respectively, of section 202(e) of title 18,
United States Code) as users of the system in
accordance with subsection (b)(3).
[(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 of 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.
[(h) Report on Improper Payments Data Analysis.--Not later
than 180 days after the date of enactment of the Federal
Improper Payments Coordination Act of 2015 [Dec. 18, 2015], the
Secretary of the Treasury shall submit to Congress a report
which shall include a description of--
[(1) data analytics performed as part of the Do Not
Pay Business Center operated by the Department of the
Treasury for the purpose of detecting, preventing, and
recovering improper payments through preaward,
postaward prepayment, and postpayment analysis, which
shall include a description of any analysis or
investigations incorporating--
[(A) review and data matching of payments and
beneficiary enrollment lists of State programs
carried out using Federal funds for the
purposes of identifying eligibility
duplication, residency ineligibility, duplicate
payments, or other potential improper payment
issues;
[(B) review of multiple Federal agencies and
programs for which comparison of data could
show payment duplication; and
[(C) review of other information the
Secretary of the Treasury determines could
prove effective for identifying, preventing, or
recovering improper payments, which may include
investigation or review of information from
multiple Federal agencies or programs;
[(2) the metrics used in determining whether the
analytic and investigatory efforts have reduced, or
contributed to the reduction of, improper payments or
improper awards; and
[(3) the target dates for implementing the data
analytics operations performed as part of the Do Not
Pay Business Center[.]
[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
[Pub. L. 111-204] (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.
[SEC. 7. IMPROVING THE USE OF DATA BY GOVERNMENT AGENCIES FOR CURBING
IMPROPER PAYMENTS.
[(a) Prompt Reporting of Death Information by the
Department of State and the Department of Defense.--Not later
than 1 year after the date of enactment of this section [Dec.
18, 2015], the Secretary of State and the Secretary of Defense
shall establish a procedure under which each Secretary shall,
promptly and on a regular basis, submit information relating to
the deaths of individuals to each agency for which the Director
of the Office of Management and Budget determines receiving and
using such information would be relevant and necessary.
[(b) Guidance to Agencies Regarding Data Access and Use for
Improper Payments Purposes.--
[(1) In general.--Not later than 1 year after the
date of enactment of this section, the Director of the
Office of Management and Budget, in consultation with
the Council of the Inspectors General on Integrity and
Efficiency, the heads of other relevant Federal, State,
and local agencies, and Indian tribes and tribal
organizations, as appropriate, shall issue guidance
regarding implementation of the Do Not Pay Initiative
under section 5 to--
[(A) the Department of the Treasury; and
[(B) each agency or component of an agency--
[(i) that operates or maintains a
database of information described in
section 5(a)(2); or
[(ii) for which the Director
determines improved data matching would
be relevant, necessary, or beneficial.
[(2) Requirements.--The guidance issued under
paragraph (1) shall--
[(A) address the implementation of subsection
(a); and
[(B) include the establishment of deadlines
for access to and use of the databases
described in section 5(a)(2) under the Do Not
Pay Initiative.]
* * * * * * *
[IMPROPER PAYMENTS
[SEC. 2. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS TO
REDUCE THEM.
[(a) Identification of Susceptible Programs and
Activities.--
[(1) In general.--The head of each agency shall, in
accordance with guidance prescribed by the Director of
the Office of Management and Budget, periodically
review all programs and activities that the relevant
agency head administers and identify all programs and
activities that may be susceptible to significant
improper payments.
[(2) Frequency.--Reviews under paragraph (1) shall be
performed for each program and activity that the
relevant agency head administers during the year after
which the Improper Payments Elimination and Recovery
Act of 2010 is enacted [July 22, 2010] and at least
once every 3 fiscal years thereafter. For those
agencies already performing a risk assessment every 3
years, agencies may apply to the Director of the Office
of Management and Budget for a waiver from the
requirement of the preceding sentence and continue
their 3-year risk assessment cycle.
[(3) Risk assessments.--
[(A) Definition.--In this subsection the term
`significant' means--
[(i) except as provided under clause
(ii), that improper payments in the
program or activity in the preceding
fiscal year may have exceeded--
[(I) $10,000,000 of all
program or activity payments
made during that fiscal year
reported and 2.5 percent of
program outlays; or
[(II) $100,000,000; and
[(ii) 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) $10,000,000 of all
program or activity payments
made during that fiscal year
reported and 1.5 percent of
program outlays; or
[(II) $100,000,000.
[(B) Scope.--In conducting the reviews under
paragraph (1), the head of each agency shall
take into account those risk factors that are
likely to contribute to a susceptibility to
significant improper payments, such as--
[(i) whether the program or activity
reviewed is new to the agency;
[(ii) the complexity of the program
or activity reviewed;
[(iii) the volume of payments made
through the program or activity
reviewed;
[(iv) whether payments or payment
eligibility decisions are made outside
of the agency, such as by a State or
local government;
[(v) recent major changes in program
funding, authorities, practices, or
procedures;
[(vi) the level, experience, and
quality of training for personnel
responsible for making program
eligibility determinations or
certifying that payments are accurate;
and
[(vii) significant deficiencies in
the audit report of the agency or other
relevant management findings that might
hinder accurate payment certification.
[(b) Estimation of Improper Payments.--With respect to each
program and activity identified under subsection (a), the head
of the relevant agency shall--
[(1) produce a statistically valid estimate, or an
estimate that is otherwise appropriate using a
methodology approved by the Director of the Office of
Management and Budget, of the improper payments made by
each program and activity; and
[(2) include those estimates in the accompanying
materials to the annual financial statement of the
agency required under section 3515 of title 31, United
States Code, or similar provision of law and applicable
guidance of the Office of Management and Budget.
[(c) Reports on Actions To Reduce Improper Payments.--With
respect to any program or activity of an agency with estimated
improper payments under subsection (c), the head of the agency
shall provide with the estimate under subsection (c) a report
on what actions the agency is taking to reduce improper
payments, including--
[(1) a description of the causes of the improper
payments, actions planned or taken to correct those
causes, and the planned or actual completion date of
the actions taken to address those causes;
[(2) in order to reduce improper payments to a level
below which further expenditures to reduce improper
payments would cost more than the amount such
expenditures would save in prevented or recovered
improper payments, a statement of whether the agency
has what is needed with respect to--
[(A) internal controls;
[(B) human capital; and
[(C) information systems and other
infrastructure;
[(3) if the agency does not have sufficient resources
to establish and maintain effective internal controls
under paragraph (2)(A), a description of the resources
the agency has requested in its budget submission to
establish and maintain such internal controls;
[(4) program-specific and activity-specific improper
payments reduction targets that have been approved by
the Director of the Office of Management and Budget;
and
[(5) a description of the steps the agency has taken
to ensure that agency managers, programs, and, where
appropriate, States and localities are held accountable
through annual performance appraisal criteria for--
[(A) meeting applicable improper payments
reduction targets; and
[(B) establishing and maintaining sufficient
internal controls, including an appropriate
control environment, that effectively--
[(i) prevent improper payments from
being made; and
[(ii) promptly detect and recover
improper payments that are made.
[(d) 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 [Pub. L. 111-204] (31
U.S.C. 3321 note), the head of the agency shall provide with
the estimate under subsection (c) a report on all actions the
agency is taking to recover improper payments, including--
[(1) a discussion of the methods used by the agency
to recover overpayments;
[(2) the amounts recovered, outstanding, and
determined to not be collectable, including the percent
such amounts represent of the total overpayments of the
agency;
[(3) if a determination has been made that certain
overpayments are not collectable, a Justification of
that determination;
[(4) an aging schedule of the amounts outstanding;
[(5) a summary of how recovered amounts have been
disposed of;
[(6) a discussion of any conditions giving rise to
improper payments and how those conditions are being
resolved; and
[(7) if the agency has determined under section 2(h)
of the Improper Payments Elimination and Recovery Act
of 2010 (31 U.S.C. 3321 note) that performing recovery
audits for any applicable program or activity is not
cost-effective, a justification for that determination.
[(e) Government-Wide Reporting of Improper Payments and
Actions To Recover Improper Payments.--
[(1) Report.--Each fiscal year the Director of the
Office of Management and Budget shall submit a report
with respect to the preceding fiscal year on actions
agencies have taken to report information regarding
improper payments and actions to recover improper
overpayments to--
[(A) the Committee on Homeland Security and
Governmental Affairs of the Senate; and
[(B) the Committee on Oversight and
Government Reform of the House of
Representatives.
[(2) Contents.--Each report under this subsection
shall include--
[(A) a summary of the reports of each agency
on improper payments and recovery actions
submitted under this section;
[(B) an identification of the compliance
status of each agency to which this Act
applies;
[(C) government-wide improper payment
reduction targets; and
[(D) a discussion of progress made towards
meeting government-wide improper payment
reduction targets.
[(f) Definitions.--In this section--
[(1) Agency.--The term `agency' means an executive
agency, as that term is defined in section 102 of title
31, United States Code.
[(2) Improper payment.--The term `improper payment'--
[(A) means 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; and
[(B) includes any payment to an ineligible
recipient, any payment for an ineligible good
or service, any duplicate payment, any payment
for a good or service not received (except for
such payments where authorized by law), and any
payment that does not account for credit for
applicable discounts.
[(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.
[(4) Payment for an ineligible good or service.--The
term `payment for an ineligible good or service' shall
include a payment for any good or service that is
rejected under any provision of any contract, grant,
lease, cooperative agreement, or any other funding
mechanism.
[(g) Guidance by the Office of Management and Budget.--
[(1) In general.--Not later than 6 months after the
date of enactment of the Improper Payments Elimination
and Recovery Act of 2010 [July 22, 2010], the Director
of the Office of Management and Budget shall prescribe
guidance for agencies to implement the requirements of
this section. The guidance shall not include any
exemptions to such requirements not specifically
authorized by this section.
[(2) Contents.--The guidance under paragraph (1)
shall prescribe--
[(A) the form of the reports on actions to
reduce improper payments, recovery actions, and
government-wide reporting; and
[(B) strategies for addressing risks and
establishing appropriate prepayment and post-
payment internal controls.'']
* * * * * * *
Subchapter IV--Improper Payments
3351. Definitions.
3352. Estimates of improper payments and reports on actions to reduce
improper payments.
3353. Compliance.
3354. Do Not Pay Initiative.
3355. Improving recovery of improper payments.
3356. Improving the use of data by executive agencies for curbing
improper payments.
3357. Financial and administrative controls relating to fraud and
improper payments.
3358. Interagency working group for Governmentwide payment integrity
improvement.
SEC. 3351. DEFINITIONS.
In this subchapter:
(1) Annual financial statement.--The term `annual
financial statement' means the annual financial
statement required under section 3515 of this title or
similar provision of law.
(2) Compliance.--The term `compliance' means that an
executive agency--
(A) has--
(i) published improper payments
information with the annual financial
statement of the executive agency for
the most recent fiscal year; and
(ii) posted on the website of the
executive agency that statement and any
accompanying materials required under
guidance of the Office of Management
and Budget;
(B) if required, has conducted a program
specific risk assessment for each program or
activity that conforms with the requirements
under section 3352(a);
(C) if required, publishes improper payments
estimates for all programs and activities
identified under section 3352(a) in the
accompanying materials to the annual financial
statement;
(D) publishes programmatic corrective action
plans prepared under section 3352(d) that the
executive agency may have in the accompanying
materials to the annual financial statement;
(E) publishes improper payments reduction
targets established under section 3352(d) that
the executive agency may have in the
accompanying materials to the annual financial
statement for each program or activity assessed
to be at risk, and has demonstrated
improvements and developed a plan to meet the
reduction 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 3352(c).
(3) Do not pay initiative.--The term `Do Not Pay
Initiative' means the initiative described in section
3354(b).
(4) Improper payment.--The term `improper payment'--
(A) means any payment that should not have
been made or that was made in an incorrect
amount, including an overpayment or
underpayment, under a statutory, contractual,
administrative, or other legally applicable
requirement; and
(B) includes--
(i) any payment to an ineligible
recipient;
(ii) any payment for an ineligible
good or service;
(iii) any duplicative payment;
(iv) any payment for a good or
service not received, except for those
payments where authorized by law; and
(v) any payment that does not account
for credit for applicable discounts.
(5) 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 contractor, a Federal grantee, or a
governmental or other organization administering a
Federal program or activity.
(6) Payment for an ineligible good or service.--The
term `payment for an ineligible good or service'
includes a payment for any good or service that is
rejected under any provision of any contract, grant,
lease, cooperative agreement, or other funding
mechanism.
(7) Recovery audit.--The term `recovery audit' means
a recovery audit described in section 3352(i).
(8) State.--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. 3352. ESTIMATES OF IMPROPER PAYMENTS AND REPORTS ON ACTIONS TO
REDUCE IMPROPER PAYMENTS.
(a) Identification of Susceptible Programs and
Activities.--
(1) In general.--The head of each executive agency
shall, in accordance with guidance prescribed by the
Director of the Office of Management and Budget--
(A) periodically review all programs and
activities that the head of the executive
agency administers; and
(B) identify all programs and activities with
outlays exceeding the statutory threshold
dollar amount described in paragraph (3)(A)(i)
that may be susceptible to significant improper
payments.
(2) Frequency.--A review under paragraph (1) shall be
performed for each program and activity that the head
of an executive agency administers not less frequently
than once every 3 fiscal years.
(3) Risk assessments.--
(A) Definition of significant.--In this
paragraph, the term `significant' means that,
in the preceding fiscal year, the sum of a
program or activity's improper payments and
payments whose propriety cannot be determined
by the executive agency due to lacking or
insufficient documentation may have exceeded--
(i) $10,000,000 of all reported
program or activity payments of the
executive agency made during that
fiscal year and 1.5 percent of program
outlays; or
(ii) $100,000,000.
(B) Scope.--In conducting a review under
paragraph (1), the head of each executive
agency shall take into account those risk
factors that are likely to contribute to a
susceptibility to significant improper
payments, such as--
(i) whether the program or activity
reviewed is new to the executive
agency;
(ii) the complexity of the program or
activity reviewed;
(iii) the volume of payments made
through the program or activity
reviewed;
(iv) whether payments or payment
eligibility decisions are made outside
of the executive agency, such as by a
State or local government;
(v) recent major changes in program
funding, authorities, practices, or
procedures;
(vi) the level, experience, and
quality of training for personnel
responsible for making program
eligibility determinations or
certifying that payments are accurate;
(vii) significant deficiencies in the
audit report of the executive agency or
other relevant management findings that
might hinder accurate payment
certification;
(viii) similarities to other programs
or activities that have reported
improper payment estimates or been
deemed susceptible to significant
improper payments;
(ix) the accuracy and reliability of
improper payment estimates previously
reported for the program or activity,
or other indicator of potential
susceptibility to improper payments
identified by the Inspector General of
the executive agency, the Government
Accountability Office, other audits
performed by or on behalf of the
Federal, State, or local government,
disclosures by the executive agency, or
any other means;
(x) whether the program or activity
lacks information or data systems to
confirm eligibility or provide for
other payment integrity needs; and
(xi) the risk of fraud as assessed by
the executive agency under the
Standards for Internal Control in the
Federal Government published by the
Government Accountability Office
(commonly known as the `Green Book').
(C) Annual report.--Each executive agency
shall publish an annual report that includes--
(i) a listing of each program or
activity identified under paragraph
(1), including the date on which the
program or activity was most recently
assessed for risk under paragraph (1);
and
(ii) a listing of any program or
activity for which the executive agency
makes any substantial changes to the
methodologies of the reviews conducted
under paragraph (1).
(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 executive agency
responsible for administering a high priority
program identified under subparagraph (A),
establish annual targets and semi-annual or
quarterly actions for reducing improper
payments associated with the 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 executive agency with a program identified
under paragraph (1)(A) shall on an annual basis
submit to the Inspector General of the
executive agency and the Office of Management
and Budget, and make available to the public,
including through a website, a report on that
program.
(B) Contents.--Each report submitted under
subparagraph (A)--
(i) shall describe any action the
executive agency--
(I) has taken or plans to
take to recover improper
payments, and
(II) intends to take to
prevent future improper
payments; and
(ii) shall not include--
(I) any referrals the
executive agency made or
anticipates making to the
Department of Justice; or
(II) any information provided
in connection with a referral
described in subclause (I).
(C) Public availability on central website.--
The Office of Management and Budget shall make
each report submitted under subparagraph (A)
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 recommendation.--The
Inspector General of each executive agency that
submits a report under subparagraph (A) shall,
for each program of the executive 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
executive 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 the appropriate
authorizing and appropriations
committees of Congress recommendations,
which may be included in another report
submitted by the Inspector General to
Congress, for modifying any plans of
the executive agency relating to the
program, including improvements for
improper payments determination and
estimation methodology.
(F) Annual meeting.--Not less frequently than
once every year, the head of each executive
agency with a program identified under
paragraph (1)(A), or a designee of the head of
the executive agency, shall meet with the
Director of the Office of Management and
Budget, or a designee of the Director, to
report on actions taken during the preceding
year and planned actions to prevent improper
payments.
(c) Estimation of Improper Payments.--
(1) Estimation.--With respect to each program and
activity identified under subsection (a)(1), the head
of the relevant executive agency shall--
(A) produce a statistically valid estimate,
or an estimate that is otherwise appropriate
using a methodology approved by the Director of
the Office of Management and Budget, of the
improper payments made by the program or
activity; and
(B) include the estimates described in
subparagraph (A) in the accompanying materials
to the annual financial statement of the
executive agency and as required in applicable
guidance of the Office of Management and
Budget.
(2) Lacking or insufficient documentation.--
(A) In general.--For the purpose of producing
an estimate under paragraph (1), when the
executive agency cannot determine, due to
lacking or insufficient documentation, whether
a payment is proper or not, the payment shall
be treated as an improper payment.
(B) Separate report.--The head of an
executive agency may report separately on what
portion of the improper payments estimate for a
program or activity of the executive agency
under paragraph (1) is attributable to lacking
or insufficient documentation.
(d) Reports on Actions To Reduce Improper Payments.--With
respect to any program or activity of an executive agency with
estimated improper payments under subsection (c) a report on
what actions the executive agency is taking to reduce improper
payments, including--
(1) a description of the causes of the improper
payments, actions planned or taken to correct those
causes, and the planned or actual completion date of
the actions taken to address those causes;
(2) in order to reduce improper payments to a level
below which further expenditures to reduce improper
payments would cost more than the amount those
expenditures would save in prevented or recovered
improper payments, a statement of whether the executive
agency has what is needed with respect to--
(A) internal controls;
(B) human capital;
(C) information systems and other
infrastructure;
(3) if the executive agency does not have sufficient
resources to establish and maintain effective internal
controls as described in paragraph (2)(A), a
description of the resources the executive agency has
requested in the budget submission of the executive
agency to establish and maintain those internal
controls;
(4) program-specific and activity-specific improper
payments reduction targets that have been approved by
the Director of the Office of Management and Budget;
(5) a description of the steps the executive agency
has taken to ensure that executive agency managers,
programs, and, where appropriate, States and local
governments are held accountable through annual
performance appraisal criteria for--
(A) meeting applicable improper payment
reduction targets; and
(B) establishing and maintaining sufficient
internal controls, including an appropriate
control environment, that effectively--
(i) prevent improper payments from
being made; and
(ii) promptly detect and recover
improper payments that are made; and
(6) a description of how the level of planned or
completed actions by the executive agency to address
the causes of the improper payments matches the level
of improper payments, including a breakdown by category
of improper payments and specific timelines for
completion of those actions.
(e) Reports on Actions To Recover Improper Payments.--With
respect to improper payments identified in a recovery audit,
the head of the executive agency shall provide with the
estimate required under subsection (c) a report on all actions
the executive agency is taking to recover the improper
payments, including--
(1) a discussion of the methods used by the executive
agency to recover improper payments;
(2) the amounts recovered, outstanding, and
determined to not be collectable, including the percent
those amounts represent of the total improper payments
of the executive agency;
(3) if a determination has been made that certain
improper payments are not collectable, a justification
of that determination;
(4) an aging schedule of the amounts outstanding;
(5) a summary of how recovered amounts have been
disposed of;
(6) a discussion of any conditions giving rise to
improper payments and how those conditions are being
resolved; and
(7) if the executive agency has determined under
subsection (i) that performing recovery audits for any
applicable program or activity is not cost-effective, a
justification for that determination.
(f) Governmentwide Reporting of Improper Payments and
Actions To Recover Improper Payments.--
(1) Report.--Each fiscal year, the Director of the
Office of Management and Budget shall submit a report
with respect to the preceding fiscal year on actions
that executive agencies have taken to report
information regarding improper payments and actions to
recover overpayments to--
(A) the Committee on Homeland Security and
Governmental Affairs of the Senate;
(B) the Committee on Oversight and Government
Reform of the House of Representatives; and
(C) the Comptroller General of the United
States.
(2) Contents.--Each report required under paragraph
(1) shall include--
(A) a summary of the reports of each
executive agency on improper payments and
recovery actions submitted under this section;
(B) an identification of the compliance
status of each executive agency, as determined
by the Inspector General of the executive
agency under section 3353, to which this
section applies;
(C) Governmentwide improper payment reduction
targets;
(D) a Governmentwide estimate of improper
payments; and
(E) a discussion of progress made towards
meeting Government-wide improper payment
reduction targets.
(g) Guidance by the Office of Management and Budget.--
(1) In general.--Not later than 1 year after the date
of enactment of this section, the Director of the
Office of Management and Budget shall prescribe
guidance for executive agencies to implement the
requirements of this section, which shall not include
any exemptions to those requirements that are not
specifically authorized by this section.
(2) Contents.--The guidance under paragraph (1) shall
prescribe--
(A) the form of the reports on actions to
reduce improper payments, recovery actions, and
Government wide reporting; and
(B) strategies for addressing risks and
establishing appropriate prepayment and post
payment internal controls.
(h) Determinations of Agency Readiness for Opinion on
Internal Control.--The criteria required to be developed under
section 2(g) of the Improper Payments Elimination and Recovery
Act of 2010, as in effect on the day before the date of
enactment of this section--
(1) shall continue to be in effect on and after the
date of enactment of this section; and
(2) may be modified as determined appropriate by the
Director of the Office of Management and Budget.
(i) Recovery Audits.--
(1) In general.--
(A) Conduct of audits.--Except as provided
under paragraph (3) and if not prohibited under
any other provision of law, the head of each
executive agency shall conduct recovery audits
with respect to each program and activity of
the executive agency that expends $1,000,000 or
more annually if conducting the audits would be
cost effective.
(B) Procedures.--In conducting a recovery
audit under this subsection, the head of an
executive agency--
(i) shall give priority to the most
recent payments and to payments made in
any program identified as susceptible
to significant improper payments under
subsection (a);
(ii) shall implement this subsection
in a manner designed to ensure the
greatest financial benefit to the
Federal Government; and
(iii) may conduct the recovery audit
directly, by using other departments
and agencies of the United States, or
by producing performance of recovery
audits by private sector sources by
contract, subject to the availability
of appropriations, or by any
combination thereof.
(C) Recovery audit contracts.--With respect
to a recovery audit procured by an executive
agency by contract--
(i) subject to subparagraph (B)(iii),
and except to the extent such actions
are outside the authority of the
executive agency under section 7103 of
title 41, the head of the executive
agency may authorize the contractor
to--
(I) notify entities,
including individuals, of
potential overpayments made to
those entities;
(II) respond to questions
concerning potential
overpayments; and
(III) take other
administrative actions with
respect to an overpayment claim
made or to be made by the
executive agency; and
(ii) the contractor shall not have
the authority to make a final
determination relating to whether any
overpayment occurred or whether to
compromise, settle, or terminate an
overpayment claim.
(D) Contract terms and conditions.--
(i) In general.--The executive agency
shall include in each contract for
procurement of performance of a
recovery audit a requirement that the
contractor shall--
(I) provide to the executive
agency periodic reports on
conditions giving rise to
overpayments identified by the
contractor and any
recommendations on how to
mitigate those conditions;
(II) notify the executive
agency of any overpayments
identified by the contractor
pertaining to the executive
agency or to any other
executive agency that are
beyond the scope of the
contract; and
(III) report to the executive
agency credible evidence of
fraud or vulnerabilities to
fraud and conduct appropriate
training of personnel of the
contractor on identification of
fraud.
(ii) Reports on action taken.--Each
executive agency shall, on an annual
basis, include in an annual financial
statement of the executive agency a
report on actions taken by the
executive agency during the preceding
fiscal year to address the
recommendations described in clause
(i)(I).
(E) Agency action following notification.--
Each executive agency shall--
(i) take prompt and appropriate
action in response to a report or
notification by a contractor under
subclause (I) or (II) of subparagraph
(D)(i) to collect an overpayment; and
(ii) forward to other executive
agencies any information that applies
to that executive agency.
(2) Disposition of amounts recovered.--
(A) In general.--Amounts collected by
executive agencies each fiscal year through
recovery audits shall be treated in accordance
with this paragraph.
(B) Distribution.--The head of an executive
agency shall determine the distribution of
collected amounts described in subparagraph
(A), less amounts needed to fulfill the
purposes of section 3562(a) of this title, in
accordance with subparagraphs (C), (D), and
(E).
(C) Use for financial management improvement
program.--Not more than 25 percent of the
amounts collected by an executive agency
through recovery audits--
(i) shall be available to the head of
the executive agency to carry out the
financial management improvement
program of the executive agency under
paragraph (3);
(ii) may be credited, if applicable,
for the purpose described in clause (i)
by the head of an executive agency to
any executive agency appropriations and
funds that are available for obligation
at the time of collection; and
(iii) shall be used to supplement and
not supplant any other amounts
available for the purpose described in
clause (i) and shall remain available
until expended.
(D) Use for original purpose.--Not more than
25 percent of the amounts collected by an
executive agency through recovery audits--
(i) shall be credited to the
appropriation or fund, if any,
available for obligation at the time of
collection for the same general
purposes as the appropriation or fund
from which the overpayment was made;
(ii) shall remain available for the
same period and purposes as the
appropriation or fund to which
credited; and
(iii) if the appropriation from which
an overpayment was made has expired--
(I) in the case of recoveries
of overpayments that are made
from a trust or special fund
account, shall revert to that
account; and
(II) in the case of other
recoveries of overpayments--
(aa) for amounts that
are recovered more than
5 fiscal years from the
last fiscal year in
which the funds were
available for
obligation, shall be
deposited in the
Treasury as
miscellaneous receipts;
and
(bb) for other
amounts, shall be newly
available for the same
time period as the
funds were originally
available for
obligation.
(E) Use for inspector general activities.--
Not more than 5 percent of the amounts
collected by an executive agency through
recovery audits--
(i) shall be available to the
Inspector General of that executive
agency for--
(I) the Inspector General to
carry out this Act; or
(II) any other activities of
the Inspector General relating
to investigating improper
payments or auditing internal
controls associated with
payments; and
(ii) shall remain available for the
same period and purposes as the
appropriation or fund to which
credited.
(F) Remainder.--Amounts collected that are
not applied in accordance with subparagraph
(B), (C), (D), or (E) shall be deposited in the
Treasury as miscellaneous receipts, except that
in the case of recoveries of overpayments that
are made from trust or special fund accounts,
those amounts shall revert to those accounts.
(G) Discretionary amounts.--This paragraph
shall apply only to recoveries of overpayments
that are made from discretionary
appropriations, as defined in section 250(c)(7)
of the Balanced Budget and Emergency Deficit
Control Act of 1985 (2 U.S.C. 900(c)(7)), and
shall not apply to recoveries of overpayments
that are made from discretionary amounts that
were appropriated before the date of enactment
of the Improper Payments Elimination and
Recovery Act of 2010, as in effect on the day
before the date of enactment of this section.
(H) Application.--This paragraph shall not
apply to the recovery of an overpayment if the
appropriation from which the overpayment was
made has not expired.
(3) Financial management improvement program.--
(A) Requirement.--The head of each executive
agency shall conduct a financial management
improvement program consistent with rules
prescribed by the Director of the Office of
Management and Budget.
(B) Program features.--In conducting a
program described in subparagraph (A), the head
of an executive agency--
(i) shall, as the first priority of
the program, address problems that
contribute directly to executive agency
improper payments; and
(ii) may seek to reduce errors and
waste in other executive agency
programs and operations.
(4) Privacy protection.--Any nongovernmental entity
that, in the course of recovery auditing or recovery
activity under this subsection, obtains information
that identifies an individual or with respect to which
there is a reasonable basis to believe that the
information can be used to identify an individual, may
not disclose the information for any purpose other than
the recovery auditing or recovery activity and
governmental oversight of the activity, unless
disclosure for that other purpose is authorized by the
individual to the executive agency that contracted for
the performance of the recovery auditing or recovery
activity.
(5) Rule of construction.--Except as provided under
paragraph (4), nothing in this subsection shall be
construed as terminating or in any way limiting
authorities that are otherwise available to executive
agencies under existing provisions of law to recover
improper payments and use recovered amounts.
SEC. 3353. COMPLIANCE.
(a) Annual Compliance Report by Inspectors General of
Executive Agencies.--
(1) In general.--Each fiscal year, the Inspector
General of each executive agency shall--
(A) determine whether the executive agency is
in compliance; and
(B) submit a report on the determination made
under subparagraph (A) to--
(i) the head of the executive agency;
(ii) the Committee on Homeland
Security and Governmental Affairs of
the Senate;
(iii) the Committee on Oversight and
Governmental Reform of the House of
Representatives; and
(iv) the Comptroller General of the
United States.
(2) Development or use of a central website.--The
Council of the Inspectors General on Integrity and
Efficiency (in this subsection referred to as the
`Council') shall develop a public central website, or
make use of a public central website in existence on
the date of enactment of this section, to contain
individual compliance determination reports issued by
Inspectors General under paragraph (1)(B) and such
additional information as determined by the Council.
(3) OMB guidance.--No later than 180 days after the
date of enactment of this section, the Director of the
Office of Management and Budget, in consultation with
the Council and with consideration given to the
available resources and independence of individual
Offices of Inspectors General, shall develop and
promulgate guidance for the compliance determination
reports issued by the Inspectors General under
paragraph (1)(B), which shall require that--
(A) the reporting format used by the
Inspectors General is consistent;
(B) Inspectors General evaluate and take into
account the adequacy of executive agency risk
assessments, improper payment estimates
methodology, and executive agency action plans
to address the causes of improper payments;
(C) Inspectors General take into account
whether the executive agency has correctly
identified the causes of improper payments and
whether the actions of the executive agency to
address those causes are adequate and
effective;
(D) Inspectors General evaluate the adequacy
of executive agency action plans on how the
executive agency addresses the causes of
improper payments; and
(E) as part of the report, Inspectors General
include an evaluation of executive agency
efforts to prevent and reduce improper payments
and any recommendations for actions to further
improve that prevention and reduction.
(4) CIGIE guidance.--Not later than 180 days after
the date of enactment of this section, the Council
shall, with consideration given to the available
resources and independence of individual Offices of
Inspectors General, develop and promulgate guidance
that specifies procedures for compliance determinations
made by the Inspectors General under paragraph (1)(A),
which shall describe procedures for Inspectors
General--
(A) to make the determinations consistent
regarding compliance; and
(B) to evaluate--
(i) for compliance with the
requirement described in section
3351(2)(B), the risk assessment
methodology of the executive agency,
including whether the audits,
examinations, and legal actions of the
Inspector General indicate a higher
risk of improper payments or actual
improper payments that were not
included in the risk assessments of the
executive agency conducted under
section 3352(a);
(ii) for compliance with the
requirement described in section
3351(2)(C), the accuracy of the rate
estimates and whether the sampling and
estimation plan used is appropriate
given program characteristics;
(iii) for compliance with the
requirement described in section
3351(2)(D), the corrective action plans
and whether the plans are adequate and
focused on the true causes of improper
payments, including whether the
corrective action plans are--
(I) reducing improper
payments;
(II) effectively implemented;
and
(III) prioritized within the
executive agency;
(iv) the adequacy of executive agency
action plans to address the causes of
improper payments;
(v) executive agency efforts to
prevent and reduce improper payments,
and any recommendations for actions to
further improve; and
(vi) whether an executive agency has
published an annual financial statement
in accordance with the requirement
described in section 3351(2)(A).
(b) Remediation.--
(1) Noncompliance.--
(A) In general.--If an executive agency is
determined by the Inspector General of that
executive agency not to be in compliance under
subsection (a) in a fiscal year with respect to
a program or activity, the head of the
executive agency shall submit to the
appropriate authorizing and appropriations
committees of Congress a plan describing the
actions that the executive agency will take to
come into compliance.
(B) Plan.--The plan described in subparagraph
(A) shall include--
(i) measurable milestones to be
accomplished in order to achieve
compliance for each program or
activity;
(ii) the designation of a senior
executive agency official who shall be
accountable for the progress of the
executive agency in coming into
compliance for each program or
activity; and
(iii) the establishment of an
accountability mechanism, such as a
performance agreement, with appropriate
incentives and consequences tied to the
success of the official designated
under clause (ii) in leading the
efforts of the executive agency to come
into compliance for each program or
activity.
(2) Noncompliance for 2 fiscal years.--
(A) In general.--If an executive agency is
determined by the Inspector General of that
executive agency not to be in compliance under
subsection (a) for 2 consecutive fiscal years
for the same program or activity, the executive
agency shall propose to the Director of the
Office of Management and Budget additional
program integrity proposals that would help the
executive agency come into compliance.
(B) Additional funding--
(i) In general.--If the Director of
the Office of Management and Budget
determines that additional funding
would help the executive agency come
into compliance, the head of the
executive agency shall obligate
additional funding, in an amount
determined by the Director, to
intensified compliance efforts.
(ii) Reprogramming or transfer
authority.--In providing additional
funding under clause (i)--
(I) the head of an executive
agency shall use any
reprogramming or transfer
authority available to the
executive agency; and
(II) if after exercising the
reprogramming or transfer
authority described in
subclause (I), additional
funding is necessary to
obligate the full level of
funding determined by the
Director of the Office of
Management and Budget under
clause (i), the executive
agency shall submit a request
to Congress for additional
reprogramming or transfer
authority.
(3) Reauthorization and statutory proposals.--If an
executive agency is determined by the Inspector General
of that executive agency not to be in compliance under
subsection (a) for 3 consecutive fiscal years for the
same program or activity, the head of the executive
agency shall, not later than 30 days after the date of
that determination, submit to the appropriate
authorizing and appropriations committees of Congress
and the Comptroller General of the United States--
(A)(i) reauthorization proposals for each
program or activity that has not been in
compliance for 3 or more consecutive fiscal
years; and
(ii) proposed statutory changes necessary to
bring the program or activity into compliance;
or
(B) if the head of the executive agency
determines that clauses (i) and (ii) of
subparagraph (A) will not bring the program or
activity into compliance, a description of the
actions that the executive agency is
undertaking to bring the program or activity
into compliance and a timeline of when the
compliance will be achieved.
(4) Plan and timeline for compliance.--If an
executive agency is determined by the Inspector General
of that executive agency not to be in compliance under
subsection (a) for 4 or more consecutive fiscal years
for the same program or activity, the head of the
executive agency shall, not later than 30 days after
such determination, submit to the appropriate
authorizing and appropriations committees of Congress a
report that includes--
(A) the activities taken to comply with the
requirements for 1, 2, 3, 4, or more years of
noncompliance;
(B) a description of any requirements that
were fulfilled for 1, 2, or 3 consecutive years
of noncompliance that are still relevant and
being pursued as a means to bring the program
or activity into compliance and prevent and
reduce improper payments;
(C) a description of any new corrective
actions; and
(D) a timeline for when the program or
activity will achieve compliance based on the
actions described within the report.
(5) Annual report.--Each executive agency shall
submit to the appropriate authorizing and
appropriations committees of Congress and the
Comptroller General of the United States--
(A) a list of each program or activity that
was determined to not be in compliance under
paragraph (1), (2), (3), or (4); and
(B) actions that are planned to bring the
program or activity into compliance.
(c) Compliance Enforcement Pilot Programs.--The Director of
the Office of Management and Budget may establish 1 or more
pilot programs that shall test potential accountability
mechanisms with appropriate incentives and consequences tied to
success in ensuring compliance with this section and
eliminating improper payments.
(d) Improved Estimates Guidance.--The guidance required to
be provided under section 3(b) of the Improper Payments
Elimination and Recovery Improvement Act of 2012, as in effect
on the day before the date of enactment of this section--
(1) shall continue to be in effect on and after the
date of enactment of this section; and
(2) may be modified as determined appropriate by the
Director of the Office of Management and Budget.
SEC. 3354. DO NOT PAY INITIATIVE.
(a) Prepayment and Preaward Procedures.--
(1) In general.--Each executive 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 executive agency shall review
as appropriate the following databases to verify
eligibility of the payment and award:
(A) The death records maintained by the
Commissioner of Social Security.
(B) The System for Award Management Exclusion
Records, formerly known as the Excluded Parties
List System, of the General Services
Administration.
(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.
(F) Information regarding incarcerated
individuals maintained by the Commissioner of
Social Security under sections 202(x) and
1611(e) of the Social Security Act (42 U.S.C.
402(x), 1382(e)).
(b) Do Not Pay Initiative.--
(1) In general.--There is the Do Not Pay Initiative,
which shall include--
(A) use of the databases described in
subsection (a)(2); and
(B) use of other databases designated by the
Director of the Office of Management and
Budget, or the designee of the Director, in
consultation with executive 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, or the head of any
executive agency designated by the Director, 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.--
(A) In general.--For purposes of identifying
and preventing improper payments, each
executive agency shall have access to, and use
of, the Do Not Pay Initiative to verify payment
or award eligibility in accordance with
subsection (a).
(B) Matching programs.--
(i) In general.--The head of the
agency operating the Working System
may, in consultation with the Office of
Management and Budget, waive the
requirements of section 552a(o) of
title 5 in any case or class of cases
for computer matching activities
conducted under this section.
(ii) Guidance.--The Director of the
Office of Management and Budget may
issue guidance that establishes
requirements governing waivers under
clause (i).
(C) Other entities.--Each State and any
contractor, subcontractor, or agent of a State,
including a State auditor or State program
responsible for reducing improper payments of a
federally funded State-administered program,
and the judicial and legislative branches of
the United States, as defined in paragraphs (2)
and (3), respectively, of section 202(e) of
title 18, shall have access to, and use of, the
Do Not Pay Initiative for the purpose of
verifying payment or award eligibility for
payments.
(D) Consistency with privacy act of 1974.--To
ensure consistency with the principles of
section 552a of title 5 (commonly known as the
`Privacy Act of 1974'), the Director of the
Office of Management and Budget may issue
guidance that establishes privacy and other
requirements that shall be incorporated into Do
Not Pay Initiative access agreements with
States, including any contractor,
subcontractor, or agent of a State, and the
judicial and legislative branches of the United
States, as defined in paragraphs (2) and (3),
respectively, of section 202(e) of title 18.
(4) Payment otherwise required.--When using the Do
Not Pay Initiative, an executive 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) Initial Working System.--The working system required to
be established under section 5(d) of the Improper Payments
Elimination and Recovery Improvement Act of 2012, as in effect
on the day before the date of enactment of this section--
(1) shall continue to be in effect on and after the
date of enactment of this section; and
(2) shall require each executive agency to review all
payments and awards for all programs and activities of
that executive agency through the working system.
(d) Facilitating Data Access by Federal Agencies and
Offices of Inspectors General for Purposes of Program
Integrity.--
(1) Computer matching by executive 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 (commonly known as the `Privacy Act of
1974'), the head of each executive agency may
enter into computer matching agreements with
other heads of executive agencies 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 the
date on which a proposal for an agreement under
subparagraph (A) has been presented to a Data
Integrity Board established under section
552a(u) of title 5 for consideration, the Data
Integrity Board shall respond to the proposal.
(C) Termination date.--An agreement described
in 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 executive 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 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 relating
to an agreement under subparagraph (A) is not
required to contain a specific estimate of any
savings under the computer matching agreement.
(2) Guidance and procedures by the office of
management and budget.--The guidance, rules, and
procedures required to be issued, clarified, and
established under paragraphs (3) and (4) of section
5(e) of the Improper Payments Elimination and Recovery
Improvement Act of 2012, as in effect on the day before
the date of enactment of this section--
(A) shall continue to be in effect on and
after the date of enactment of this section;
and
(B) may be modified as determined appropriate
by the Director of the Office of Management and
Budget.
(3) Compliance.--The head of each executive agency,
in consultation with the Inspector General of the
executive 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.
(4) Rule of construction.--Nothing in this subsection
shall be construed--
(A) to affect the rights of an individual
under section 552a(p) of title 5; or
(B) to impede the exercise of an exemption
provided to Inspectors General or by an
executive agency in coordination with an
Inspector General under section 6(j) of the
Inspector General Act of 1978 (5 U.S.C. App.).
(e) 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 and Other Death Data.--
(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 each State,
the Director of the Office of Management and Budget
shall conduct a study and update the plan required to
be established under section 5(g) of the Improper
Payments Elimination and Recovery Improvement Act of
2012, as in effect on the day before the date of
enactment of this section, 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
described in this subsection shall include recommended
actions by executive 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 executive
agencies for determining ineligible payments
due to the death of a recipient through
proactive verification means; and
(E) address improper payments made by
executive agencies to deceased individuals as
part of Federal retirement programs.
(3) Report.--Not later than 120 days after the date
of enactment of this section, the Director of the
Office of Management and Budget shall submit a report
to Congress on the plan described in this subsection,
including recommended legislation.
SEC. 3355. IMPROVING RECOVERY OF IMPROPER PAYMENTS.
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
executive 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.
SEC. 3356. IMPROVING THE USE OF DATA BY EXECUTIVE AGENCIES FOR CURBING
IMPROPER PAYMENTS.
(a) Prompt Reporting of Death Information by the Department
of State and the Department of Defense.--The procedure required
to be established under section 7(a) of the Improper Payments
Elimination and Recovery Improvement Act of 2012, as in effect
on the day before the date of enactment of this section--
(1) shall continue to be in effect on and after the
date of enactment of this section; and
(2) may be modified as determined appropriate by the
Director of the Office of Management and Budget.
(b) Prompt Reporting of Death Information by the Department
of Veterans Affairs and the Office of Personnel Management.--
Not later than 1 year after the date of enactment of this
section, the Secretary of Veterans Affairs and the Director of
the Office of Personnel Management shall establish a procedure
under which the Secretary and the Director--
(1) shall promptly and on a regular basis submit
information relating to the deaths of individuals,
including stopped payments data as applicable, to each
executive agency for which the Director of the Office
of Management and Budget determines receiving and using
such information would be relevant and necessary; and
(2) to facilitate the centralized access of death
data for the use of reducing improper payments, may
identify additional Federal sources of death data and
direct the data owner to provide that data to 1 or more
executive agencies for that purpose.
(c) Guidance to Executive Agencies Regarding Data Access
and Use for Improper Payments Purposes.--The guidance required
to be issued under section 7(b) of the Improper Payments
Elimination and Recovery Improvement Act of 2012, as in effect
on the day before the date of enactment of this section--
(1) shall continue to be in effect on and after the
date of enactment of this section; and
(2) may be modified as determined appropriate by the
Director of the Office of Management and Budget.
SEC. 3357. FINANCIAL AND ADMINISTRATIVE CONTROLS RELATING TO FRAUD AND
IMPROPER PAYMENTS.
(a) Definition.--In this section, the term `agency' has the
meaning given the term in section 551 of title 5.
(b) Guidelines.--The guidelines required to be established
under section 3(a) of the Fraud Reduction and Data Analytics
Act of 2015, as in effect on the day before the date of
enactment of this section--
(1) shall continue to be in effect on and after the
date of enactment of this section; and
(2) may be periodically modified by the Director of
the Office of Management and Budget, in consultation
with the Comptroller General of the United States, as
the Director and Comptroller General may determine
necessary.
(c) Requirements for Controls.--The guidelines described in
subsection (b) shall include--
(1) conducting an evaluation of fraud risks and using
a risk-based approach to design and implement financial
and administrative control activities to mitigate
identified fraud risks;
(2) collecting and analyzing data from reporting
mechanisms on detected fraud to monitor fraud trends
and using that data and information to continuously
improve fraud prevention controls; and
(3) using the results of monitoring, evaluation,
audits, and investigations to improve fraud prevention,
detection, and response.
(d) Report.--For each of fiscal years 2018 and 2019, each
agency shall submit to Congress, as part of the annual
financial report of the agency, a report of the agency on--
(1) implementing--
(A) the financial and administrative controls
described in subsection (b);
(B) the fraud risk principle in the Standards
for Internal Control in the Federal Government
published by the Government Accountability
Office (commonly known as the `Green Book');
and
(C) Office of Management and Budget Circular
A-123, or any successor thereto, with respect
to the leading practices for managing fraud
risk;
(2) identifying risks and vulnerabilities to fraud,
including with respect to payroll, beneficiary
payments, grants, large contracts, and purchase and
travel cards; and
(3) establishing strategies, procedures, and other
steps to curb fraud.
SEC. 3358. INTERAGENCY WORKING GROUP FOR GOVERNMENTWIDE PAYMENT
INTEGRITY IMPROVEMENT.
(a) Working Group.--
(1) Establishment.--Not later than 90 days after the
date of enactment of this section, there is established
an interagency working group on payment integrity--
(A) to improve--
(i) State-administered Federal
programs to determine eligibility
processes and data sharing practices;
(ii) the guidelines described in
section 3357(b) and other best
practices and techniques for detecting,
preventing, and responding to improper
payments, including improper payments
that are the result of fraud; and
(iii) the sharing and development of
data analytics techniques to help
prevent and identify potential improper
payments, including those that are the
result of fraud; and
(B) to identify any additional activities
that will improve payment integrity of Federal
programs.
(2) Composition.--The interagency working group
established under paragraph (1) shall be composed of--
(A) the Director of the Office of Management
and Budget;
(B) 1 representative from each of the
agencies described in paragraphs (1) and (2) of
section 901(b) of this title; and
(C) any other representatives of other
executive agencies determined appropriate by
the Director of the Office of Management and
Budget, which may include the Chief Information
Officer, the Chief Procurement Officer, the
Chief Risk Officer, or the Chief Operating
Officer of an executive agency.
(b) Consultation.--The working group established under
subsection (a)(1) may consult with Offices of Inspectors
General and Federal and non-Federal experts on fraud risk
assessments, administrative controls over payment integrity,
financial controls, and other relevant matters.
(c) Meetings.--The working group established under
subsection (a)(1) shall hold not fewer than 4 meetings per
year.
(d) Report.--Not later than 240 days after the date of
enactment of this section, the working group established under
subsection (a)(1) shall submit to Congress a report that
includes--
(1) a plan containing tangible solutions to prevent
and reduce improper payments; and
(2) a plan for State agencies to work with Federal
agencies to regularly review lists of beneficiaries of
State-managed Federal programs for duplicate enrollment
between States, including how the Do Not Pay Business
Center and the data analytics initiative of the
Department of the Treasury could aid in the detection
of duplicate enrollment.
* * * * * * *
CHAPTER 35--ACCOUNTING AND COLLECTION
* * * * * * *
Subchapter VI--Recovery Audits
* * * * * * *
SEC. 3562. DISPOSITION OF RECOVERED FUNDS.
(a) Availability of Funds for Recovery Audits and
Activities Program.--Funds collected under a program carried
out by an executive agency under [section 3561] section 3352(i)
of this title shall be available to the executive [agency for
the following purposes:
[(1) To reimburse] agency to reimburse the actual
expenses incurred by the executive agency in the
administration of the program.
(2) To pay contractors for services under the program
in accordance with the guidance issued under section
3561(c)(5) of this title.
* * * * * * *
TITLE 42--THE PUBLIC HEALTH SERVICE
* * * * * * *
CHAPTER 7--SOCIAL SECURITY
* * * * * * *
Subchapter XX--State Children's Health Insurance Program
SEC. 1397EE. PAYMENTS TO STATES.
(a) * * *
(b) * * *
(c) * * *
(1) * * *
(2) * * *
(A) * * *
(B) * * *
(C) * * *
(i) * * *
* * * * * * *
(iv) Payment error rate measurement
(perm) expenditures.--Expenditures
related to the administration of the
payment error rate measurement (PERM)
requirements applicable to the State
child health plan in accordance with
[the Improper Payments Information Act
of 2002] subchapter IV of chapter 33 of
title 31, United States Code and parts
431 and 457 of title 42, Code of
Federal Regulations (or any related or
successor guidance or regulations).
* * * * * * *
(11) Enhanced payments.--Notwithstanding subsection
(b), the enhanced FMAP with respect to payments under
subsection (a) for expenditures related to the
administration of the payment error rate measurement
(PERM) requirements applicable to the State child
health plan in accordance with the [Improper Payments
Information Act of 2002] subchapter IV of chapter 33 of
title 31, United States Code and parts 431 and 457 of
title 42, Code of Federal Regulations (or any related
or successor guidance or regulations) shall in no event
be less than 90 percent.
* * * * * * *
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