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

        H.R.4053

                      One Hundred Twelfth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
            the third day of January, two thousand and twelve


                                 An Act


 
 To intensify efforts to identify, prevent, and recover payment error, 
            waste, fraud, and abuse within Federal spending.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
    This Act may be cited as the ``Improper Payments Elimination and 
Recovery Improvement Act of 2012''.
SEC. 2. DEFINITIONS.
    In this Act--
        (1) the term ``agency'' means an executive agency as that term 
    is defined under section 102 of title 31, United States Code;
        (2) the term ``improper payment'' has the meaning given that 
    term in section 2(g) of the Improper Payments Information Act of 
    2002 (31 U.S.C. 3321 note), as redesignated by section 3(a)(1) of 
    this Act; and
        (3) the term ``State'' means each State of the United States, 
    the District of Columbia, each territory or possession of the 
    United States, and each federally recognized Indian tribe.
SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS BY FEDERAL 
AGENCIES.
    (a) In General.--Section 2 of the Improper Payments Information Act 
of 2002 (31 U.S.C. 3321 note) is amended--
        (1) by redesignating subsections (b) through (g) as subsections 
    (c) through (h), respectively;
        (2) by inserting after subsection (a) the following:
    ``(b) Improving the Determination of Improper Payments.--
        ``(1) In general.--The Director of the Office of Management and 
    Budget shall on an annual basis--
            ``(A) identify a list of high-priority Federal programs for 
        greater levels of oversight and review--
                ``(i) in which the highest dollar value or highest rate 
            of improper payments occur; or
                ``(ii) for which there is a higher risk of improper 
            payments; and
            ``(B) in coordination with the agency responsible for 
        administering the high-priority program, establish annual 
        targets and semi-annual or quarterly actions for reducing 
        improper payments associated with each high-priority program.
        ``(2) Report on high-priority improper payments.--
            ``(A) In general.--Subject to Federal privacy policies and 
        to the extent permitted by law, each agency with a program 
        identified under paragraph (1)(A) on an annual basis shall 
        submit to the Inspector General of that agency, and make 
        available to the public (including availability through the 
        Internet), a report on that program.
            ``(B) Contents.--Each report under this paragraph--
                ``(i) shall describe--

                    ``(I) any action the agency--

                        ``(aa) has taken or plans to take to recover 
                    improper payments; and
                        ``(bb) intends to take to prevent future 
                    improper payments; and
                ``(ii) shall not include any referrals the agency made 
            or anticipates making to the Department of Justice, or any 
            information provided in connection with such referrals.
            ``(C) Public availability on central website.--The Office 
        of Management and Budget shall make each report submitted under 
        this paragraph available on a central website.
            ``(D) Availability of information to inspector general.--
        Subparagraph (B)(ii) shall not prohibit any referral or 
        information being made available to an Inspector General as 
        otherwise provided by law.
            ``(E) Assessment and recommendations.--The Inspector 
        General of each agency that submits a report under this 
        paragraph shall, for each program of the agency that is 
        identified under paragraph (1)(A)--
                ``(i) review--

                    ``(I) the assessment of the level of risk 
                associated with the program, and the quality of the 
                improper payment estimates and methodology of the 
                agency relating to the program; and
                    ``(II) the oversight or financial controls to 
                identify and prevent improper payments under the 
                program; and

                ``(ii) submit to Congress recommendations, which may be 
            included in another report submitted by the Inspector 
            General to Congress, for modifying any plans of the agency 
            relating to the program, including improvements for 
            improper payments determination and estimation 
            methodology.'';
        (3) in subsection (d) (as redesignated by paragraph (1) of this 
    subsection), by striking ``subsection (b)'' each place that term 
    appears and inserting ``subsection (c)'';
        (4) in subsection (e) (as redesignated by paragraph (1) of this 
    subsection), by striking ``subsection (b)'' and inserting 
    ``subsection (c)''; and
        (5) in subsection (g)(3) (as redesignated by paragraph (1) of 
    this subsection), by inserting ``or a Federal employee'' after 
    ``non-Federal person or entity''.
    (b) Improved Estimates.--
        (1) In general.--Not later than 180 days after the date of 
    enactment of this Act, the Director of the Office of Management and 
    Budget shall provide guidance to agencies for improving the 
    estimates of improper payments under the Improper Payments 
    Information Act of 2002 (31 U.S.C. 3321 note).
        (2) Guidance.--Guidance under this subsection shall--
            (A) strengthen the estimation process of agencies by 
        setting standards for agencies to follow in determining the 
        underlying validity of sampled payments to ensure amounts being 
        billed, paid, or obligated for payment are proper;
            (B) instruct agencies to give the persons or entities 
        performing improper payments estimates access to all necessary 
        payment data, including access to relevant documentation;
            (C) explicitly bar agencies from relying on self-reporting 
        by the recipients of agency payments as the sole source basis 
        for improper payments estimates;
            (D) require agencies to include all identified improper 
        payments in the reported estimate, regardless of whether the 
        improper payment in question has been or is being recovered;
            (E) include payments to employees, including salary, 
        locality pay, travel pay, purchase card use, and other employee 
        payments, as subject to risk assessment and, where appropriate, 
        improper payment estimation; and
            (F) require agencies to tailor their corrective actions for 
        the high-priority programs identified under section 2(b)(1)(A) 
        of the Improper Payments Information Act of 2002 (31 U.S.C. 
        3321 note) to better reflect the unique processes, procedures, 
        and risks involved in each specific program.
    (c) Technical and Conforming Amendments.--The Improper Payments 
Elimination and Recovery Act of 2010 (Public Law 111-204; 31 U.S.C. 
3321 note) is amended--
        (1) in section 2(h)(1), by striking ``section 2(f)'' and all 
    that follows and inserting ``section 2(g) of the Improper Payments 
    Information Act of 2002 (31 U.S.C. 3321 note).''; and
        (2) in section 3(a)--
            (A) in paragraph (1), by striking ``section 2(f)'' and all 
        that follows and inserting ``section 2(g) of the Improper 
        Payments Information Act of 2002 (31 U.S.C. 3321 note).''; and
            (B) in paragraph (3)--
                (i) by striking ``section 2(b)'' each place it appears 
            and inserting ``section 2(c)''; and
                (ii) by striking ``section 2(c)'' each place it appears 
            and inserting ``section 2(d)''.
SEC. 4. IMPROPER PAYMENTS INFORMATION.
    Section 2(a)(3)(A)(ii) of the Improper Payments Information Act of 
2002 (31 U.S.C. 3321 note) is amended by striking ``with respect to 
fiscal years following September 30th of a fiscal year beginning before 
fiscal year 2013 as determined by the Office of Management and Budget'' 
and inserting ``with respect to fiscal year 2014 and each fiscal year 
thereafter''.
SEC. 5. DO NOT PAY INITIATIVE.
    (a) Prepayment and Preaward Procedures.--
        (1) In general.--Each agency shall review prepayment and 
    preaward procedures and ensure that a thorough review of available 
    databases with relevant information on eligibility occurs to 
    determine program or award eligibility and prevent improper 
    payments before the release of any Federal funds.
        (2) Databases.--At a minimum and before issuing any payment and 
    award, each agency shall review as appropriate the following 
    databases to verify eligibility of the payment and award:
            (A) The Death Master File of the Social Security 
        Administration.
            (B) The General Services Administration's Excluded Parties 
        List System.
            (C) The Debt Check Database of the Department of the 
        Treasury.
            (D) The Credit Alert System or Credit Alert Interactive 
        Voice Response System of the Department of Housing and Urban 
        Development.
            (E) The List of Excluded Individuals/Entities of the Office 
        of Inspector General of the Department of Health and Human 
        Services.
    (b) Do Not Pay Initiative.--
        (1) Establishment.--There is established the Do Not Pay 
    Initiative which shall include--
            (A) use of the databases described under subsection (a)(2); 
        and
            (B) use of other databases designated by the Director of 
        the Office of Management and Budget in consultation with 
        agencies and in accordance with paragraph (2).
        (2) Other databases.--In making designations of other databases 
    under paragraph (1)(B), the Director of the Office of Management 
    and Budget shall--
            (A) consider any database that substantially assists in 
        preventing improper payments; and
            (B) provide public notice and an opportunity for comment 
        before designating a database under paragraph (1)(B).
        (3) Access and review by agencies.--For purposes of identifying 
    and preventing improper payments, each agency shall have access to, 
    and use of, the Do Not Pay Initiative to verify payment or award 
    eligibility in accordance with subsection (a) when the Director of 
    the Office of Management and Budget determines the Do Not Pay 
    Initiative is appropriately established for the agency.
        (4) Payment otherwise required.--When using the Do Not Pay 
    Initiative, an agency shall recognize that there may be 
    circumstances under which the law requires a payment or award to be 
    made to a recipient, regardless of whether that recipient is 
    identified as potentially ineligible under the Do Not Pay 
    Initiative.
        (5) Annual report.--The Director of the Office of Management 
    and Budget shall submit to Congress an annual report, which may be 
    included as part of another report submitted to Congress by the 
    Director, regarding the operation of the Do Not Pay Initiative, 
    which shall--
            (A) include an evaluation of whether the Do Not Pay 
        Initiative has reduced improper payments or improper awards; 
        and
            (B) provide the frequency of corrections or identification 
        of incorrect information.
    (c) Database Integration Plan.--Not later than 60 days after the 
date of enactment of this Act, the Director of the Office of Management 
and Budget shall provide to the Congress a plan for--
        (1) inclusion of other databases on the Do Not Pay Initiative;
        (2) to the extent permitted by law, agency access to the Do Not 
    Pay Initiative; and
        (3) the data use agreements described under subsection 
    (e)(2)(D).
    (d) Initial Working System.--
        (1) Establishment.--Not later than 90 days after the date of 
    enactment of this Act, the Director of the Office of Management and 
    Budget shall establish a working system for prepayment and preaward 
    review that includes the Do Not Pay Initiative as described under 
    this section.
        (2) Working system.--The working system established under 
    paragraph (1)--
            (A) may be located within an appropriate agency;
            (B) shall include not less than 3 agencies as users of the 
        system; and
            (C) shall include investigation activities for fraud and 
        systemic improper payments detection through analytic 
        technologies and other techniques, which may include commercial 
        database use or access.
        (3) Application to all agencies.--Not later than June 1, 2013, 
    each agency shall review all payments and awards for all programs 
    of that agency through the system established under this 
    subsection.
    (e) Facilitating Data Access by Federal Agencies and Offices of 
Inspectors General for Purposes of Program Integrity.--
        (1) Definition.--In this subsection, the term ``Inspector 
    General'' means any Inspector General described in subparagraph 
    (A), (B), or (I) of section 11(b)(1) of the Inspector General Act 
    of 1978 (5 U.S.C. App.) and any successor Inspector General.
        (2) Computer matching by federal agencies for purposes of 
    investigation and prevention of improper payments and fraud.--
            (A) In general.--Except as provided in this paragraph, in 
        accordance with section 552a of title 5, United States Code 
        (commonly known as the Privacy Act of 1974), each Inspector 
        General and the head of each agency may enter into computer 
        matching agreements with other inspectors general and agency 
        heads that allow ongoing data matching (which shall include 
        automated data matching) in order to assist in the detection 
        and prevention of improper payments.
            (B) Review.--Not later than 60 days after a proposal for an 
        agreement under subparagraph (A) has been presented to a Data 
        Integrity Board established under section 552a(u) of title 5, 
        United States Code, for consideration, the Data Integrity Board 
        shall respond to the proposal.
            (C) Termination date.--An agreement under subparagraph 
        (A)--
                (i) shall have a termination date of less than 3 years; 
            and
                (ii) during the 3-month period ending on the date on 
            which the agreement is scheduled to terminate, may be 
            renewed by the agencies entering the agreement for not more 
            than 3 years.
            (D) Multiple agencies.--For purposes of this paragraph, 
        section 552a(o)(1) of title 5, United States Code, shall be 
        applied by substituting ``between the source agency and the 
        recipient agency or non-Federal agency or an agreement 
        governing multiple agencies'' for ``between the source agency 
        and the recipient agency or non-Federal agency'' in the matter 
        preceding subparagraph (A).
            (E) Cost-benefit analysis.--A justification under section 
        552a(o)(1)(B) of title 5, United States Code, relating to an 
        agreement under subparagraph (A) is not required to contain a 
        specific estimate of any savings under the computer matching 
        agreement.
        (3) Guidance by the office of management and budget.--Not later 
    than 6 months after the date of enactment of this Act, and in 
    consultation with the Council of the Inspectors General on 
    Integrity and Efficiency, the Secretary of Health and Human 
    Services, the Commissioner of Social Security, and the head of any 
    other relevant agency, the Director of the Office of Management and 
    Budget shall--
            (A) issue guidance for agencies regarding implementing this 
        subsection, which shall include standards for--
                (i) reimbursement of costs, when necessary, between 
            agencies;
                (ii) retention and timely destruction of records in 
            accordance with section 552a(o)(1)(F) of title 5, United 
            States Code; and
                (iii) prohibiting duplication and redisclosure of 
            records in accordance with section 552a(o)(1)(H) of title 
            5, United States Code;
            (B) review the procedures of the Data Integrity Boards 
        established under section 552a(u) of title 5, United States 
        Code, and develop new guidance for the Data Integrity Boards 
        to--
                (i) improve the effectiveness and responsiveness of the 
            Data Integrity Boards;
                (ii) ensure privacy protections in accordance with 
            section 552a of title 5, United States Code (commonly known 
            as the Privacy Act of 1974); and
                (iii) establish standard matching agreements for use 
            when appropriate; and
            (C) establish and clarify rules regarding what constitutes 
        making an agreement entered under paragraph (2)(A) available 
        upon request to the public for purposes of section 
        552a(o)(2)(A)(ii) of title 5, United States Code, which shall 
        include requiring publication of the agreement on a public 
        website.
        (4) Corrections.--The Director of the Office of Management and 
    Budget shall establish procedures providing for the correction of 
    data in order to ensure--
            (A) compliance with section 552a(p) of title 5, United 
        States Code; and
            (B) that corrections are made in any Do Not Pay Initiative 
        database and in any relevant source databases designated by the 
        Director of the Office of Management and Budget under 
        subsection (b)(1).
        (5) Compliance.--The head of each agency, in consultation with 
    the Inspector General of the agency, shall ensure that any 
    information provided to an individual or entity under this 
    subsection is provided in accordance with protocols established 
    under this subsection.
        (6) Rule of construction.--Nothing in this subsection shall be 
    construed to affect the rights of an individual under section 
    552a(p) of title 5, United States Code.
    (f) Development and Access to a Database of Incarcerated 
Individuals.--Not later than 1 year after the date of enactment of this 
Act, the Attorney General shall submit to Congress recommendations for 
increasing the use of, access to, and the technical feasibility of 
using data on the Federal, State, and local conviction and 
incarceration status of individuals for purposes of identifying and 
preventing improper payments by Federal agencies and programs and 
fraud.
    (g) Plan To Curb Federal Improper Payments to Deceased Individuals 
by Improving the Quality and Use by Federal Agencies of the Social 
Security Administration Death Master File.--
        (1) Establishment.--In conjunction with the Commissioner of 
    Social Security and in consultation with relevant stakeholders that 
    have an interest in or responsibility for providing the data, and 
    the States, the Director of the Office of Management and Budget 
    shall establish a plan for improving the quality, accuracy, and 
    timeliness of death data maintained by the Social Security 
    Administration, including death information reported to the 
    Commissioner under section 205(r) of the Social Security Act (42 
    U.S.C. 405(r)).
        (2) Additional actions under plan.--The plan established under 
    this subsection shall include recommended actions by agencies to--
            (A) increase the quality and frequency of access to the 
        Death Master File and other death data;
            (B) achieve a goal of at least daily access as appropriate;
            (C) provide for all States and other data providers to use 
        improved and electronic means for providing data;
            (D) identify improved methods by agencies for determining 
        ineligible payments due to the death of a recipient through 
        proactive verification means; and
            (E) address improper payments made by agencies to deceased 
        individuals as part of Federal retirement programs.
        (3) Report.--Not later than 120 days after the date of 
    enactment of this Act, the Director of the Office of Management and 
    Budget shall submit a report to Congress on the plan established 
    under this subsection, including recommended legislation.
SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS.
    (a) Definition.--In this section, the term ``recovery audit'' means 
a recovery audit described under section 2(h) of the Improper Payments 
Elimination and Recovery Act of 2010 (31 U.S.C. 3301 note).
    (b) Review.--The Director of the Office of Management and Budget 
shall determine--
        (1) current and historical rates and amounts of recovery of 
    improper payments (or, in cases in which improper payments are 
    identified solely on the basis of a sample, recovery rates and 
    amounts estimated on the basis of the applicable sample), including 
    a list of agency recovery audit contract programs and specific 
    information of amounts and payments recovered by recovery audit 
    contractors; and
        (2) targets for recovering improper payments, including 
    specific information on amounts and payments recovered by recovery 
    audit contractors.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.