[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2583 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2583

To amend the Improper Payments Information Act of 2002 (31 U.S.C. 3321 
  note) in order to prevent the loss of billions in taxpayer dollars.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 31, 2008

 Mr. Carper (for himself and Mrs. McCaskill) introduced the following 
 bill; which was read twice and referred to the Committee on Homeland 
                   Security and Governmental Affairs

_______________________________________________________________________

                                 A BILL


 
To amend the Improper Payments Information Act of 2002 (31 U.S.C. 3321 
  note) in order to prevent the loss of billions in taxpayer dollars.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Improper Payments Elimination and 
Recovery Act of 2008''.

SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOVERY.

    (a) Susceptible Programs and Activities.--Section 2 of the Improper 
Payments Information Act of 2002 (31 U.S.C. 3321 note) is amended by 
striking subsection (a) and inserting the following:
    ``(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, annually review all programs 
        and activities that it administers and identify all such 
        programs and activities that may be susceptible to significant 
        improper payments.
            ``(2) Annual risk assessment.--
                    ``(A) Definition.--In this paragraph the term 
                `significant' means that improper payments in the 
                program or activity in the preceding fiscal year 
                exceeded--
                            ``(i) 2.5 percent of all program or 
                        activity payments made during that fiscal year; 
                        or
                            ``(ii) $10,000,000.
                    ``(B) Risk assessment.--The review under paragraph 
                (1) shall include a risk assessment that includes--
                            ``(i) a systematic process for producing a 
                        statistically valid estimate of the level of 
                        improper payments being made by the agency; and
                            ``(ii) an identification of the risks for 
                        each program and activity resulting from the 
                        estimates made under clause (i).''.
    (b) Reports on Actions To Reduce Improper Payments.--Section 2 of 
the Improper Payments Information Act of 2002 (31 U.S.C. 3321 note) is 
amended by striking subsection (c) and inserting the following:
    ``(c) Reports on Actions To Reduce Improper Payments.--With respect 
to any program or activity of an agency with estimated improper 
payments under subsection (b), the head of the agency shall provide 
with the estimate under subsection (b) a report on what actions the 
agency is taking to reduce the improper payments, including--
            ``(1) a discussion of the causes of the improper payments 
        identified, 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 minimal cost-
        effective levels, a statement of whether the agency has--
                    ``(A) the internal controls, including information 
                systems;
                    ``(B) the human capital; and
                    ``(C) other infrastructure the agency needs;
            ``(3) if the agency does not have the internal controls, a 
        description of the resources the agency has requested in its 
        budget submission to establish the internal controls;
            ``(4) a description of the steps the agency has taken to 
        ensure that agency managers (including the head of the agency) 
        are held accountable for establishing the appropriate internal 
        controls, including an appropriate control environment, that 
        prevent improper payments from occurring and promptly detect 
        and collect improper payments made; and
            ``(5) a statement of whether or not the agency has--
                    ``(A) conducted annual improper payment risk 
                assessments;
                    ``(B) developed and implemented improper payment 
                control plans; and
                    ``(C) implemented appropriate improper payment 
                detection, investigation, reporting, and data 
                collection procedures and processes.''.
    (c) Reports on Recovery Actions and Governmentwide Reporting.--
            (1) In general.--Section 2 of the Improper Payments 
        Information Act of 2002 (31 U.S.C. 3321 note) is amended--
                    (A) by redesignating subsections (d), (e), and (f) 
                as subsections (f), (g), and (h), respectively; and
                    (B) by inserting after subsection (c) the 
                following:
    ``(d) Reports on Actions To Recover Improper Payments.--With 
respect to any improper payments identified in recovery audits 
conducted under section 2(g) of the Improper Payments Elimination and 
Recovery Act of 2008, the head of the agency shall provide with the 
estimate under subsection (b) a report on what actions the agency is 
taking to recover improper payments, including--
            ``(1) the types of errors from which improper payments 
        resulted;
            ``(2) a discussion of the methods used by the agency to 
        recover improper payments;
            ``(3) the amounts recovered, outstanding, and determined to 
        not be collectable; and
            ``(4) an aging schedule of the amounts outstanding.
    ``(e) Governmentwide Reporting of Improper Payments.--
            ``(1) Department of the treasury.--The Secretary of the 
        Treasury shall include in each report submitted under section 
        331(a) of title 31, United States Code, the improper payment 
        information reported by the agencies on a governmentwide basis.
            ``(2) Office of management and budget.--The Director of the 
        Office of Management and Budget shall--
                    ``(A) coordinate with the Secretary of the Treasury 
                in the preparation of the information to be reported 
                under paragraph (1); and
                    ``(B) prescribe regulations for--
                            ``(i) the information required to be 
                        reported; and
                            ``(ii) a format of reporting such 
                        information on a governmentwide basis to be 
                        used by agencies.''.
            (2) Technical and conforming amendment.--Section 331(a) of 
        title 31, United States Code, is amended--
                    (A) in paragraph (6), by striking ``and'' after the 
                semicolon;
                    (B) in paragraph (7), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(8) the improper payments information required under 
        section 2(e) of the Improper Payments Information Act of 2002 
        (31 U.S.C. 3321 note).''.
    (d) Definitions.--Section 2 of the Improper Payment Information Act 
of 2002 (31 U.S.C. 3321 note) is amended by striking subsection (g) (as 
redesignated by this section) and inserting the following:
    ``(g) 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, payments for services 
                not received, 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 cash, in-kind benefits, 
        goods, services, loans and loan guarantees, insurance 
        subsidies, and other items of value between Federal agencies 
        and their employees, vendors, partners, and beneficiaries, and 
        parties to contracts, grants, leases, cooperative agreements, 
        or any other procurement mechanism, that is--
                    ``(A) made by a Federal agency, a Federal 
                contractor, or a governmental or other organization 
                administering a Federal program or activity; and
                    ``(B) derived from Federal funds or other Federal 
                resources or that will be reimbursed from Federal funds 
                or other Federal resources.
            ``(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 in violation of any 
        provision of any contract, grant, lease, cooperative agreement, 
        or any other procurement mechanism, including any provision 
        relating to quantity, quality, or timeliness.''.
    (e) Guidance by the Office of Management and Budget.--Section 2 of 
the Improper Payments Information Act of 2002 (31 U.S.C. 3321 note) is 
amended by striking subsection (h) (as redesignated by this section) 
and inserting the following:
    ``(h) 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 2008, the Director of the Office of Management and 
        Budget shall prescribe updated guidance to implement and 
        provide for full compliance with the requirements of this 
        section. The guidance shall not include any exemptions not 
        specifically authorized by this section.
            ``(2) Contents.--The updated guidance under paragraph (1) 
        shall prescribe--
                    ``(A) the form of the reports on actions to reduce 
                improper payments, recovery actions, and governmentwide 
                reporting; and
                    ``(B) strategies for addressing risks and 
                establishing appropriate prepayment and postpayment 
                internal controls.''.
    (f) Internal Controls.--
            (1) Report on effectiveness of a-123 implementation.--The 
        President's Council on Integrity and Efficiency shall conduct a 
        study of the effectiveness of implementation of the Office of 
        Management and Budget's Circular No. A-123 (revised), 
        Management's Responsibility for Internal Control at preventing 
        improper payments or addressing internal control problems that 
        contribute to improper payments, and not later than 1 year 
        after the date of enactment of this Act, submit a report on the 
        study 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;
                    (C) the Director of the Office of Management and 
                Budget; and
                    (D) the Comptroller General.
            (2) Consultation and cooperation.--The President's Council 
        on Integrity and Efficiency shall consult and cooperate with 
        the committees and director described under paragraph (1) to 
        ensure the nature and scope of the study under paragraph (1) 
        will address the needs on those committees and the Director of 
        the Office of Management and Budget, including how the 
        implementation of Circular No. A-123 (revised) has helped to 
        identify, report, prevent, and recover improper payments.
            (3) Determination of agency readiness for opinion on 
        internal control.--Not later than 1 year after the date of 
        enactment of the Improper Payments Elimination and Recovery Act 
        of 2008, the Director of the Office of Management and Budget 
        shall develop--
                    (A) specific criteria as to when an agency should 
                initially be required to obtain an opinion on internal 
                control over financial reporting; and
                    (B) criteria for an agency that has demonstrated a 
                stabilized, effective system of internal control over 
                financial reporting, whereby the agency would qualify 
                for a multiyear cycle for obtaining an audit opinion on 
                internal control over financial reporting, rather than 
                an annual cycle.
    (g) Recovery Audits.--An agency with outlays of $1,000,000 or more 
in any fiscal year shall conduct a recovery audit (as that term is 
defined by the Director of the Office of Management and Budget under 
section 3561 of title 31, United States Code) of all programs and 
activities, if the agency determines that--
            (1) conducting an internal recovery audit would be 
        effective; or
            (2) a prior audit has identified improper payments that can 
        be recouped and it is cost beneficial for a recovery activity 
        to recapture those funds.
    (h) Report on Recovery Auditing.--Not later than 180 days after the 
date of the enactment of this Act, the Chief Financial Officers Council 
established under section 302 of the Chief Financial Officers Act of 
1990 (31 U.S.C. 901 note) and the President's Council on Integrity and 
Efficiency established under Executive Order 12805 of May 11, 1992, in 
consultation with recovery audit experts, shall--
            (1) jointly conduct a study of the potential costs and 
        benefits of requiring Federal agencies to recover improper 
        payments using the services of--
                    (A) private contractors;
                    (B) agency employees;
                    (C) cross-servicing from other agencies; or
                    (D) any combination of the provision of services 
                described under subparagraphs (A) through (C); and
            (2) submit a report on the results of the study 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.

SEC. 3. COMPLIANCE.

    (a) Definitions.--In this section:
            (1) Agency.--The term ``agency'' has the meaning given 
        under section 2(f) of the Improper Payments Information Act of 
        2002 (31 U.S.C. 3321 note) as redesignated by this Act.
            (2) Compliance.--The term ``compliance'' means that the 
        agency--
                    (A) has published a performance report for the most 
                recent fiscal year and posted that report on the agency 
                website;
                    (B) has conducted a program specific risk 
                assessment for each program or activity that--
                            (i) is in compliance with section 2(a) the 
                        Improper Payments Information Act of 2002 (31 
                        U.S.C. 3321 note); and
                            (ii) is included in the performance report;
                    (C) publishes program specific improper payments 
                estimates for all programs and activities identified 
                under section 2(b) of the Improper Payments Information 
                Act of 2002 (31 U.S.C. 3321 note) in the performance 
                report;
                    (D) publishes programmatic corrective action plans 
                prepared under section 2(c) of the Improper Payments 
                Information Act of 2002 (31 U.S.C. 3321 note) that the 
                agency may have in the performance report;
                    (E) publishes Office of Management and Budget 
                approved improper payments reduction targets in the 
                performance report for each program assessed to be at 
                risk, and is determined by the Office of Management and 
                Budget to be actively meeting such targets;
                    (F) publishes the compliance report under 
                subsection (c) in the performance report; and
                    (G) is not subject to the subsection (d)(4).
            (3) Delinquent program.--The term ``delinquent program'' 
        means a program which is partially or wholly responsible for 
        the determination of an agency being not in compliance.
            (4) Performance report.--The term ``performance report'' 
        means the performance and accountability report referred to 
        under section 3516(b) of title 31, United States Code, or a 
        program performance report under section 1116 of that title.
    (b) Annual Compliance Report by OMB.--
            (1) In general.--Each year, the Director of the Office of 
        Management and Budget shall prepare a report with an 
        identification of--
                    (A) the compliance status of each agency under this 
                section; and
                    (B) the delinquent programs responsible for that 
                status.
            (2) Inclusion in budget submission.--The Director of Office 
        of the Management and Budget shall include the report described 
        under paragraph (1) in the annual budget submitted under 
        section 1105 of title 31, United States Code.
    (c) Annual Compliance Report by Inspector General.--
            (1) In general.--Each fiscal year, the Inspector General of 
        each agency shall determine whether the agency is in compliance 
        with the Improper Payments Information Act of 2002 (31 U.S.C. 
        3321 note) and this Act and submit a report to the head of the 
        agency on that determination.
            (2) Preparation of report.--The Inspector General of each 
        agency may enter into contracts and other arrangements with 
        public agencies and with private persons for the preparation of 
        financial statements, studies, analyses, and other services in 
        preparing the report described under paragraph (1).
            (3) Inclusion in performance report.--The head of each 
        agency shall include the report of the agency Inspector General 
        described under paragraph (1) in the performance report.
    (d) Remediation Assistance.--
            (1) Voluntary remediation assistance.--If an agency is 
        determined by the agency Inspector General not to be in 
        compliance under subsection (c) in a fiscal year, the head of 
        the agency may transfer funds from any available appropriations 
        of that agency for expenditure on intensified compliance for 
        any delinquent program (notwithstanding any appropriations 
        transfer authority limitation in any other provision of law).
            (2) Required remediation assistance.--If an agency is 
        determined by the agency Inspector General not to be in 
        compliance under subsection (c) for 2 consecutive fiscal years, 
        the head of the agency shall transfer funds from any available 
        appropriations of that agency to expend on intensified 
        compliance (notwithstanding any appropriations transfer 
        authority limitation in any other provision of law).
            (3) Remediation rescission.--
                    (A) In general.--If an agency is determined by the 
                agency Inspector General not to be in compliance under 
                subsection (c) for a period of 3 consecutive fiscal 
                years and any delinquent program is included in the 
                report under that subsection for 2 consecutive years 
                during that 3-fiscal year period, the head of the 
                agency shall transfer 5 percent of the available 
                appropriations for each of those delinquent programs, 
                as determined by the head of the agency, to 
                miscellaneous receipts of the United States Treasury.
                    (B) Continuation of transfers.--The head of an 
                agency shall make transfers under subparagraph (A) 
                until the agency is determined to be in compliance 
                under subsection (b).
            (4) Stop-loss provision.--If an agency is determined under 
        the Improper Payments Information Act of 2002 (31 U.S.C. 3321 
        note) to have an improper payment rate greater than 15 percent 
        for 3 consecutive fiscal years (regardless of the whether the 
        program is a delinquent program)--
                    (A) not later than 30 days after that 
                determination, the head of agency shall submit to 
                Congress proposals for statutory changes or other 
                relevant actions determined necessary to stop the 
                financial loss by the program; and
                    (B) no further appropriations for such program 
                shall be authorized until such time as the inspector 
                general of that agency submits a certification to 
                Congress that sufficient changes in the program 
                (whether those proposed by agency or otherwise) have 
                been implemented to warrant resumed authorization of 
                appropriations.
                                 <all>