Short title

This Act may be cited as the

Pre-Payment Fraud Prevention and Treasury Data Access Act

Pre-payment fraud prevention requirements for agencies

(a)

Establishment of pre-payment agency responsibilities

(1)

Amendment

Chapter 33 of title 31, United States Code, is amended by inserting after section 3325 the following:

3325a.

Agency duties for fraud and improper payment prevention before the issuance of a payment voucher request

(a)

Mandatory actions before issuing a payment voucher

The head of an agency, or an officer or employee described in section 3325(a)(1(B), may not certify a voucher under section 3325 until the following requirements are met: (1)Each pre-certification requirement described in subsection (b) for such payment request. (2)Confirmation is provided that the payment complies with any disbursement requirement and instruction, including any pre-certification requirement, published by the Secretary of the Treasury. (3)Confirmation is provided that any other appropriate payment, account, and payee validation program or service that the Secretary of the Treasury, in consultation with the Director, requires to reduce fraud and an improper payment resulting in financial loss to the Government, including any agency evaluation of the fraud-risk indicator of a program required under section 3352 and agency procedures required under section 3554(b)(1), have been conducted, in accordance with necessary exceptions for statutory, policy, or operational reasons. (b)

Payment verification pre-certification requirements

Not later than 180 days after the date of the enactment of this section, and as needed thereafter, the Secretary of the Treasury shall, in consultation with the Director of the Office of Management and Budget, issue regulations, and guidance as necessary, for the pre-certification requirements of this section, for vouchers certified under section 3325, including any deadline for pre-certification information and related records to be submitted to the requisite Treasury official and disbursing official under subchapter IV of this chapter, before the date of disbursement in order to allow for sufficient time to meet the requirements of this section, including the following: (1)Funds are available at the time the obligation is incurred and if an obligation is incurred when funds are not available, then the agency may not certify the payment voucher. (2)The amount of the payment and the name of the payee on the payment voucher are correct, in conformance with the prescribed standard format. (3)A valid social security number, taxpayer identification number, employer identification number, individual taxpayer identification number, or payee ID number is provided for each payee on the voucher, if applicable. (4)The appropriation or fund from which the payment will be made is available for the purpose described in the voucher and indicated with the appropriate Treasury Account Symbol or Business Event Type Code. (5)A payee is not deceased, if the payment would be improperly made to a deceased payee. (6)The account number, if any, provided on the payment voucher is held at a financial institution and is open, valid, and belongs to the payee or a valid designee of the payee. (7)Any other identifier in conformance with the payment verification pre-certification requirements established by the Secretary of the Treasury, which may include the Procurement Instrument Identified and the Federal Award Identification Number. (c)

Return of payment voucher

The Secretary, in consultation with the Director, shall issue guidance and establish procedures to authorize the Chief Disbursing Officer of the Department of the Treasury, or an agency disbursing official, to return to the relevant agency certifying official, including a notification to the agency, any payment or payment voucher issued under section 3325 which does not comply with pre-certification verification requirements established under this section as determined by the Secretary. (d)

Agency requests for exemptions

The Secretary of the Treasury shall include in the regulations issued under subsection (b), or in other regulations or guidance issued under this chapter, a process for agencies to request exemptions from some or all of the payment verification requirements for specific payments or categories of payments under this section, which shall include a requirement for the agency to provide a plan and reasonable timeframe to remediate the need for the exemption. Any approved exemption shall be documented in any related payment voucher certified under section 3325 for the duration of the exemption.

(2)

Technical and conforming amendment

The table of sections for chapter 33 of title 31, United States Code, is amended by inserting after the item for section 3325 the following:

3325a. Agency duties for fraud and improper payment prevention before the issuance of a payment voucher request.

(b)

Amendment to responsibilities of agency certifying official for payment vouchers

Section 3528(a) of title 31, United States Code, is amended— (1)in paragraph (2), by inserting after of this title the following: , including pre-certification requirements described in section 3325a; (2)by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively; and (3)by inserting after paragraph (3) the following:

(4)Ensuring that— (A)the agency has complied with the requirements of section 3325a and subchapter IV of this title; and (B)a covered recipient is in compliance with the reporting requirements under section 6107.

(c)

Prepayment requirements of payment disbursing officials

Section 3325 of title 31, United States Code, is amended— (1)in subsection (d) by striking taxpayer identifying number of each person and inserting information required to be submitted under section 3325a(b) of each payee; and (2)by adding at the end the following:

(e) (1)Before certifying a voucher to a disbursing official, the head of an agency or an officer or employee of an agency described in subparagraph (A) or (B) of subsection (a)(1), as applicable, shall take necessary actions to accurately disburse payments to the recipients of those payments, including by— (A)verifying the accuracy of the bank account information to which a payment is to be disbursed, to the extent practicable; and (B)comparing the bank account information of the proposed recipient to other payment records available to the agency, to the extent practicable. (2)The Secretary of the Treasury shall issue guidance to carry out this subsection, which may be carried out through any guidance issued for section 3325a(b).

(d)

Addition of fraud prevention indicators to agency improper payment risk assessments

(1)

Definitions amendments

Section 3351 of title 31, United States Code is amended— (A)in paragraph (3)— (i)in the heading, by striking

initiative

and inserting

system

; (ii)by striking Initiative and inserting System; and (iii)by striking initiative and inserting system; and (B)by adding at the end the following (and by redesignating and moving the paragraphs to appear in alphabetical order):

(9)

Appropriate authorizing and appropriations committees of congress

The term appropriate authorizing and appropriations committees of Congress means the following: (A)The Committees on Appropriations of the Senate and the House of Representatives. (B)The Committee on Homeland Security and Governmental Affairs of the Senate. (C)The Committee on Oversight and Government Reform of the House of Representatives. (D)The Budget Committee of the House of Representatives and the Committee on the Budget of the Senate. (D)Any other relevant congressional committee of jurisdiction. (10)

Director

The term Director means the Director of the Office of Management and Budget. (11)

Fraud-risk indicator

The term fraud-risk indicator means an objective data point or analytic signal that indicates an anomalous payment pattern or increase in the volume of a payment amount, a verified data mismatch, network or behavioral anomaly, or match identified by the Do Not Pay system and any other payment, account, and payee validation program or service provided by the Department of the Treasury that would result in financial loss to the Government.

(2)

Amendment

Section 3352(a)(1) of title 31, United States Code, is amended— (A)in subparagraph (A), by striking ; and and inserting a semicolon; (B)in subparagraph (B), by striking the period at the end and inserting ; and; and (C)by adding at the end the following:

(C)design and apply fraud-risk indicators to the programs identified under paragraph (A).

Treasury do not pay system

(a)

Amendment

Section 3354 of title 31, United States Code, is amended— (1)in the heading, by striking

Initiative

and inserting

system

; (2)in subsection (a)— (A)by amending paragraph (1) to read as follows:

(1)

In general

The head of each executive agency shall establish and maintain appropriate preaward and prepayment procedures to prevent and recover improper payments, including payments resulting in financial loss to the Government, and to prevent financial fraud. Such procedures shall include, at a minimum— (A)screening all persons or entities that receive, or seek to receive, Federal awards or payments against all appropriate Do Not Pay system data assets, including data assets described in paragraph (2)(a), and risk tools before an award is made or a payment request is submitted to the disbursing officer in accordance with section 3325a; and (B)a periodic review of available data assets and notification to the Secretary of any data asset that the agency requires access to, either directly or through the Do Not Pay system.

;

(B)in paragraph (2), by striking At a minimum and before issuing any payment or award, each executive agency shall review as appropriate the following databases to verify eligibility of the payment and award: and inserting the following: Consistent with the routine use authority under section 552a of title 5, and subject to the requirements of paragraphs (3) and (6), the Secretary shall have access to the following data assets for the purposes described in paragraph (1):; and (C)by adding at the end the following:

(3)

Publication of data assets; additional data assets

(A)

Publication of data assets

The Secretary shall publish and maintain a System of Records Notice for the Do Not Pay system that identifies each data asset, the routine uses under which the data asset is disclosed from that system of record, the specific permitted purposes, and the access controls applicable to each data asset. A data asset may not be disclosed from the Do Not Pay system before publication of the applicable routine uses in the relevant System of Records Notice. (B)

Designation

The Secretary, in consultation with the Director, may designate additional categories of data assets for inclusion in the Do Not Pay system that substantially assist agencies in carrying out the requirements of paragraph (1). (C)

Privacy and notice

In designating data assets that include personally identifiable information, law enforcement sensitive information, or information subject to section 552a of title 5, the Secretary shall— (i)act in coordination with the Director of the Office of Management and Budget; and (ii)provide public notice and an opportunity for comment for not less than 15 days prior to designation. (D)

Database inclusion

Following designation of a category of data assets under subparagraph (B), the Secretary shall provide public notice and an opportunity for comment for not less than 30 days before adding any specific data asset within such category. (E)

Non-sensitive data

Data assets that do not include personally identifiable information, law enforcement sensitive information, or information subject to section 552a of title 5 may be added at the discretion of the Secretary without designation if a list of such data assets is disclosed to the public on a public website maintained by the Department of the Treasury. (4)

Treatment of data matching for purposes of agency use of do not pay system

For purposes of section 552a of title 5, or any other provision of law, a computerized comparison of two or more automated Federal systems of records, or a computerized comparison of a Federal system of records with other records or non-Federal records, carried out by the Secretary to verify payments or identify or recover improper payments under this section shall not be considered a matching program if such match-based inquiry is conducted in strict adherence to the limitations of use under paragraph (5), returns a binary verification response, resulting data is not retained by the agency for more than 30 days in order to address the immediate award eligibility or payment verification determination, and contains not more than 20 discrete record requests at a time for a particular agency program. (5)

Limitation on use

(A)

In general

Information obtained through the Do Not Pay system may be used solely for the purposes described in paragraph (1), or for Federal or State law enforcement or investigative purposes and any officer, employee, contractor, subcontractor, or agent of a Federal or State entity may not publish, examine for a purpose not explicitly authorized under this section, or communicate such information furnished in such data assets other than in fulfillment of the purposes of this section. (B)

Implementation of system

The Do Not Pay system shall be implemented in a manner to strictly provide match-based queries that return only limited responses derived from the data submitted by any individual described in subparagraph (A) with the minimum data exchanged and retained in order to conduct the verification match and any associated responsibility under section 552a(p) of title 5, if— (i)such responses to match-based queries are limited to a confirmation or denial of a match, the level of confidence in a match, the data sources that informed the match, and other administrative metadata or the minimum additional data elements necessary to achieve the purposes described in paragraph (1); and (ii)any individual described in subparagraph (A) is prohibited from retrieving, browsing, making repeated and tailored match-based inquiries with the intention of reconstituting the underlying record in another system, or otherwise accessing any underlying record maintained in the Do Not Pay system under subsection (a)(2) beyond the information necessary to resolve a match-based query solely for the purposes described in paragraph (1). (C)

Individuals accessing information

Any individual described in subparagraph (A)— (i)may not take an adverse action against any individual based solely upon the information obtained under such subparagraph; (ii)shall take additional independent steps to verify the eligibility of a benefit recipient before taking any adverse action, when necessary or appropriate or when required by applicable law; and (iii)shall make an independent judgment regarding the decision to certify a payment for disbursement or pursue recovery of a potentially improper payment. (6)

Confidentiality maintenance

The Secretary shall maintain, with respect to each data asset obtained through the Do Not Pay system, the same level of confidentiality required by the law governing the source of that data asset. Information obtained from a data asset may only be used for purposes for which the source statute authorizes disclosure, and access to such information shall be limited to persons and entities for whom the source statute authorizes access. The Secretary shall document, in the System of Records Notice required under paragraph (2), the specific confidentiality obligations applicable to each data asset and the means by which Treasury ensures compliance. (7)

Penalty for unlawful disclosure

Any individual described in paragraph (5)(A) who knowingly and willfully discloses information in violation of paragraph (5) shall be fined not more than $250,000, imprisoned not more than 5 years, or both. (8)

Exception when payment otherwise required under law

The head of an executive agency may be exempt from the requirements of paragraph (1) if a Federal statute expressly requires that a payment or award be made notwithstanding potential ineligibility, and the agency head notifies the Secretary of the Treasury and the Director of the Office of Management and Budget prior to certification of the payment under section 3325. (9)

Definition

In this section, the term data asset has the meaning given that term in section 3502(17) of title 44.

;

(3)by striking subsections (b) through (c) and inserting the following:

(b)

Establishment of system

The Secretary of the Treasury shall establish and maintain a Do Not Pay system, which shall be administered and operated by the Fiscal Service of the Department of the Treasury. The Do Not Pay system shall include— (1)the data assets described in subsection (a)(2); and (2)such other data assets as the Secretary of the Treasury may designate, in consultation with the Director of the Office of Management and Budget, to assist agencies in carrying out subsection (a)(1). (c)

State and other governmental use

(1)

In general

Each State and local government administering a federally funded program, and any contractor, subcontractor, or agent thereof, including State and local government auditors, shall have access to the Do Not Pay system to review preaward and prepayment data in order to prevent and recover improper payments, including payments resulting in financial loss to the Government, and to prevent financial fraud if procedures are established regarding— (A)the screening of persons or entities that receive, or seek to receive Federal awards or payments against appropriate Do Not Pay system data assets, including data assets described in subsection (a)(2), and risk tools before an award is made or a payment request is submitted to the disbursing officer; and (B)periodic review of available data assets and notification to the Secretary of any data asset that the agency requires access to, either directly or through the Do Not Pay system. (2)

Other governmental use

The judicial and legislative branches of the United States (as defined in section 202(e) of title 18) shall have access to the Do Not Pay system strictly for purposes of verifying eligibility for payments and preventing fraud and improper payments as authorized under subsection (a)(1). (3)

Privacy requirements

The Director, in coordination with the Secretary, shall issue regulations implementing this section, including establishing privacy and other requirements applicable to such access and disclosure, consistent with section 552a of title 5. (d)

Quarterly report

The Secretary, in consultation with the Director, shall submit to the appropriate authorizing and appropriations committees of Congress quarterly reports on the governmentwide operation of the Do Not Pay system, which may be included as part of another report submitted to Congress by the Secretary, and which shall include the following: (1)Performance measures for monitoring the effectiveness of the system in reducing improper payments. (2)Information on the frequency of corrections and identification of erroneous data. (3)Recommendations for legislative or administrative action to enhance the operations of the system. (4)An assessment of agency, State, and local compliance with the requirements of this section, including a listing of all memorandums established with the head of an agency under subsection (a)(4) that documents agency use of the Do Not Pay system. (e)

Evaluation

Not less than annually, the Evaluation Officer of the agency, as designated under section 313 of title 5, shall provide the appropriate authorization and appropriations committees of Congress an evaluation of the Do Not Pay system, including the best available estimate of the effectiveness of the system in reducing fraud and improper payments that lead to financial loss of the Government in agency programs on a monthly and regional basis for such program. The evaluation shall include an analysis of which data sources maintained by the Do Not Pay system are attributed to identifying or reducing instances of likely fraudulent or improper payments by count and total dollar savings value to the Government. (f)

Continuity and transition

(1)

Continuation of previous system if necessary

The Do Not Pay initiative in effect on the day before the date of the enactment of this section shall continue as necessary to support implementation of the Do Not Pay system. (2)

Guidance, rules, and procedures

Guidance, rules, and procedures in effect before the date of the enactment of this section shall remain in effect until modified by the Secretary or the Director of the Office of Management and Budget. (3)

Rules of construction

Nothing in this subsection may be construed— (A)except as specifically provided in subsection (a)(4), to modify or supersede the requirements of section 552a of title 5, including the requirements for notice in section 552a(e)(12) and for due process rights of an individual under section 552a(p); or (B)to limit any authority of an Inspector General under applicable law.

;

(4)in subsection (d)— (A)in paragraph (1)(C)— (i)in clause (i), by striking 3 years and inserting 5 years; and (ii)in clause (ii), by striking 3 years and inserting 5 years; (B)by redesignating paragraphs (2) through (4) as paragraphs (3) through (5), respectively; and (C)by inserting after paragraph (1) the following:

(2)

Voluntary expedited process for computer matching by executive agencies for purposes of using the do not pay system

(A)

In general

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 an expedited process for establishing a computer matching agreement with the head of another executive agency for the purposes of ongoing and automated data matching with the Do Not Pay system for purposes under this section in order to assist in the detection and prevention of fraudulent and improper payments. (B)

Requirement for use of computer matching agreement template

Not later than 180 days after the effective date of this section, the Director, in coordination with the Secretary of the Treasury, shall establish a standard computer matching agreement template for the Do Not Pay system which shall authorize an agency that adopts the standard template to be deemed to have satisfied the requirements of section 552a(o) of title 5 upon execution of the agreement without the need for review by a Data Integrity Board established under section 552a(u) of title 5. (C)

Requirement for federal record notices and publication

The standard computer matching agreement template described under paragraph (B), and any future modification to the template, shall be published in the Federal Register by the Secretary of the Treasury 30-days prior to putting any such template or modification of such template into effect. On a quarterly basis the Secretary of the Treasury shall publish in the Federal Register a consolidated listing of each computer matching agreement using the standardized template under paragraph (B) and maintain on a publicly available website all active computer matching agreements using such template or the process under paragraph (1) that shall include the agency name, data assets covered, authorized purposes, and date of the agreement. The consolidated quarterly listing under this subparagraph shall satisfy the matching program notice requirements of section 552a(e)(12) of title 5 for each computer matching agreement using the standardized template under paragraph (B), and no separate Federal Register publication under section 552a(e)(12) shall be required of any agency participating in such an agreement. (D)

Termination date

An agreement under this paragraph— (i)shall have a termination date of less than 5 years; and (ii)during the 3-month period ending on the date on which the agreement is scheduled to terminate, may be renewed by each executive agency that entered into the agreement for not more than 5 years if the head of the agency attests to the Secretary of the Treasury and the Director of the Office of Management and Budget that the agreement is not being modified. (E)

Requirement for OMB guidance

Not later than 180 days after the effective date of this section, the Director of the Office of Management and Budget, in consultation with the Secretary of the Treasury, shall issue guidance, including the computer matching agreement template, to implement this paragraph. (F)

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).

; and

(5)by striking subsection (e). (b)

Technical and conforming amendment

The item relating to section 3354 in the table of sections for chapter 33 of title 31, United States Code, is amended, by striking Initiative and inserting system.

Single report on first time use of funds by recipient

(a)

Establishment of post-award single report requirement on first-time use of funds by recipient of federal award

Chapter 61 of title 31, United States Code, is amended by adding at the end the following:

6107.

Single report on first time use of funds by recipient

(a)

Federal award reporting requirement

The head of each agency that administers a covered award shall require each covered recipient to, as a condition of receiving amounts under such award, submit to the head of the agency, not later than 180 days after the receipt of such award unless a deadline exception may be applied pursuant to pursuant to regulations promulgated under subsection (b), a one-time report on the use of such amounts that— (1)includes any content required to be included in such report pursuant to subsection (b); and (2)is in the format required under such subsection. (b)

Governmentwide report regulations and guidance

(1)

Contents and format of report

(A)

Promulgation

Not later than 1 year after the date of the enactment of this section, the Director, in coordination with the Secretary of the Treasury and the standard-setting agency designated under section 6402(a)(1), shall promulgate regulations, and any clarifying guidance as may be necessary, to establish governmentwide requirements for the content and format of the report described under subsection (a). (B)

Updates

Any guidance or regulation promulgated under subparagraph (A) shall be updated as necessary, but in any case, shall be updated not less often than once every 5 years. (2)

Report minimum requirements

The regulations and any clarifying guidance promulgated under paragraph (1), shall at a minimum— (A)enable the head of an awarding agency to determine whether amounts provided under a covered award are being used by the recipient required to submit the report, and any sub-recipient or sub-grantee thereof, for the intended purpose of the program, as set forth in statute, regulation, or policies and procedures of the agency; (B)enable fraud prevention, detection, investigation, and mitigation, in future awards of Federal funds to the recipient required to submit the report by identifying relevant fraud-risk indicators that would require a referral for investigation and criminal referral to the appropriate entity of the Federal Government, including any identified effort by a recipient to defraud the Federal Government or violate sections 3729 through 3731 of title 31 (commonly referred to as the False Claims Act); (C)ensure that any sub-recipient or sub-grantee, at any level, of the recipient required to submit the report provide to such recipient such information as may be necessary to enable aggregate reporting on the covered award by the recipient; (D)require the heads of agencies to apply the governmentwide data standards established under chapter 64 with respect to the format and content of the report required to be submitted; (E)align with the Federal award reporting requirements and data standards under the Federal Funding Accountability and Transparency Act of 2006 (Public Law 109–282; 31 U.S.C. 6101 note), to the maximum extent practicable; (F)reduce recipient and agency reporting burdens by avoiding duplication in recipient reporting obligations, to the extent practicable; and (G)provide clarification for agencies to apply a reporting deadline exception under subsection (a)(1), which may be made for an entire program or type of covered award, beyond 180 days when the use of the covered funds by the covered recipient takes place more than 180 days after a receipt of such covered award. (c)

Agency requirements

In accordance with the regulations and any clarifying guidance promulgated under subsection (b), the head of an agency that administers a covered award shall— (1)update the terms and conditions of Federal awards in the agency programs to implement subsection (a) for covered recipients; (2)include a summary of the post-award reporting requirements established under subsection (a), including the required content and reporting format, in the Notice of Funding Opportunity (which has the meaning given the term in section 200.1 of title 2, Code of Federal Regulations) for Federal financial assistance (as defined under section 7501 of this title) in order to assist applicants for such assistance in understanding post-award reporting obligations; (3)to the maximum extent practicable— (A)provide user-friendly and plain language directives for covered recipients to fulfill their reporting obligation under subsection (a); and (B)use existing post-award reporting requirements to reduce the burden of cumulative post-award reporting; and (4)establish procedures within the agency to identify covered recipients that are not in compliance with the reporting requirement under subsection (a). (d)

Noncompliance

For a case in which a covered recipient does not submit the report required by subsection (a), the awarding agency shall— (1)provide a timely written notice of noncompliance to the recipient that— (A)clearly states the reason for noncompliance; (B)notifies the recipient of the obligation of the agency to cease further disbursements to the entity until the covered recipient is in compliance; and (C)provides clear instructions to the covered recipient on how to come back into compliance; and (2)prevent a payment voucher from being issued under section 3325 for a payment to such recipient for funds related to the particular program for which the report was required, until such report is submitted. (e)

Availability of report

Each report submitted under subsection (a) shall be— (1)kept on file by the agency for a period of not less than 5 years after the date on the conclusion of the duration of the award; and (2)made available upon request to— (A)the Director; (B)the Secretary of the Treasury; (C)the Attorney General; (D)the Inspector General of the agency concerned; and (E)the appropriate congressional committees. (f)

Use of information included in report

Information included in the report required by subsection (a) shall be used by the agency in support of improper payment activities of the agency under section 3352 as appropriate and applicable. (g)

Definitions

In this section: (1)

Appropriate congressional committees

The term appropriate congressional committees means— (A)the Committees on Appropriations of the Senate and the House of Representatives; (B)the Committee on Homeland Security and Governmental Affairs of the Senate; (C)the Committee on Oversight and Government Reform of the House of Representatives; and (D)any other relevant congressional committee of jurisdiction. (2)

Covered award

The term covered award means a Federal award (as defined under section 7501) in an amount not less than $50,000 (based on fiscal year 2027 constant dollars). (3)

Covered recipient

The term covered recipient means any entity, including any State, the District of Columbia, and any territory or possession of the United States, including a pass-through entity (as defined under section 7501), that receives the covered award from a particular agency program for the first time in that program’s existence. (4)

Fraud-risk indicator

(b)

Technical and conforming amendment

The table of sections for chapter 61 of title 31, United States Code, is amended, by adding at the end the following:

6107. Single report on first time use of funds by recipient.

(c)

Clarification of application of first reporting deadline

The report required under subsection (a) of section 6107 of title 31, United States Code, as added by subsection (a), shall apply to a covered award made during the fiscal year following the promulgation of regulations or guidance by the Director under subsection (b)(1)(A) of such section.

Effective date

This Act and the amendments made by this Act shall take effect on the date that is 180 days after the date of the enactment of this Act.