[Congressional Record Volume 145, Number 163 (Wednesday, November 17, 1999)]
[House]
[Pages H12142-H12146]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                GOVERNMENT WASTE CORRECTIONS ACT OF 1999

  Mr. HORN. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 1827) to improve the economy and efficiency of Government 
operations by requiring the use of recovery audits by Federal agencies, 
as amended.
  The Clerk read as follows:

                               H.R. 1827

       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 ``Government Waste Corrections 
     Act of 1999''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds the following:
       (1) Overpayments are a serious problem for Federal 
     agencies, given the magnitude and complexity of Federal 
     operations and documented and widespread financial management 
     weaknesses. Federal agency overpayments waste tax dollars and 
     detract from the efficiency and effectiveness of Federal 
     operations by diverting resources from their intended uses.
       (2) In private industry, overpayments to providers of goods 
     and services occur for a variety of reasons, including 
     duplicate payments, pricing errors, and missed cash 
     discounts, rebates, or other allowances. The identification 
     and recovery of such overpayments. commonly referred to as 
     ``recovery auditing and activity'', is an established private 
     sector business practice with demonstrated large financial 
     returns. On average, recovery auditing and activity in the 
     private sector identify overpayment rates of 0.1 percent of 
     purchases audited and result in the recovery of $1,000,000 
     for each $1,000,000,000 of purchases.
       (3) Recovery auditing and recovery activity already have 
     been employed successfully in limited areas of Federal 
     activity. They have great potential for expansion to many 
     other Federal agencies and activities, thereby resulting in 
     the recovery of substantial amounts of overpayments annually. 
     Limited recovery audits conducted by private contractors to 
     date within the Department of Defense have identified errors 
     averaging 0.4 percent of Federal payments audited, or 
     $4,000,000 for every $1,000,000,000 of payments. If fully 
     implemented within the Federal Government, recovery auditing 
     and recovery activity have the potential to recover billions 
     of dollars in Federal overpayments annually.
       (b) Purposes.--The purposes of this Act are the following:

[[Page H12143]]

       (1) To ensure that overpayments made by the Federal 
     Government that would otherwise remain undetected are 
     identified and recovered.
       (2) To require the use of recovery audit and recovery 
     activity by Federal agencies.
       (3) To provide incentives and resources to improves Federal 
     management practices with the goal of significantly reducing 
     Federal overpayment rates and other waste and error in 
     Federal programs.

     SEC. 3. ESTABLISHMENT OF RECOVERY AUDIT REQUIREMENT.

       (a) Establishment of Requirement.--Chapter 35 of title 31, 
     United States Code, is amended by adding at the end the 
     following:

                    ``SUBCHAPTER VI--RECOVERY AUDITS

     ``Sec. 3561. Definitions

       ``In this subchapter, the following definitions apply:
       ``(1) Director.--The term `Director' means the Director of 
     the Office of Management and Budget.
       ``(2) Disclose.--The term `disclose' means to release, 
     publish, transfer, provide access to, or otherwise divulge 
     individually identifiable information to any person other 
     than the individual who is the subject of the information.
       ``(3) Individually identifiable information.--The term 
     `individually identifiable information' means any 
     information, whether oral or recorded in any form or medium, 
     that identifies the individual, or with respect to which 
     there is a reasonable basis to believe that the information 
     can be used to identify the individual.
       ``(4) Oversight.--The term `oversight' means activities by 
     a Federal, State, or local governmental entity, or by another 
     entity acting on behalf of such a governmental entity, to 
     enforce laws relating to, investigate, or regulate payment 
     activities, recovery activities, and recovery audit 
     activities.
       ``(5) Payment activity.--The term `payment activity' means 
     an executive agency activity that entails making payments to 
     vendors or other nongovernmental entities that provide 
     property or services for the direct benefit and use of an 
     executive agency.
       ``(6) Recovery audit.--The term `recovery audit' means a 
     financial management technique used to identify overpayments 
     made by executive agencies with respect to vendors and other 
     entities in connection with a payment activity, including 
     overpayments that result from any of the following:
       ``(A) Duplicate payments.
       ``(B) Pricing errors.
       ``(C) Failure to provide applicable discounts, rebates, or 
     other allowances.
       ``(D) Inadvertent errors.
       ``(7) Recovery activity.--The term `recovery activity' 
     means activity otherwise authorized by law, including chapter 
     37 of this title, to attempt to collect an identified 
     overpayment--
       ``(A) within 180 days after the date the overpayment is 
     identified; and
       ``(B) through established professional practices.

     ``Sec. 3562. Recovery audit requirement

       ``(a) In General.--Except as exempted by the Director under 
     section 3565(d) of this title, the head of each executive 
     agency--
       ``(1) shall conduct for each fiscal year recovery audits 
     and recovery activity with respect to payment activities of 
     the agency if such payment activities for the fiscal year 
     total $500,000,000 or more (adjusted by the Director annually 
     for inflation); and
       ``(2) may conduct for any fiscal year recovery audits and 
     recovery activity with respect to payment activities of the 
     agency if such payment activities for the fiscal year total 
     less than $500,000,000 adjusted by the Director annually for 
     inflation).
       ``(5) Procedures.--In conducting recovery audits and 
     recovery activity under this section, the head of an 
     executive agency--
       ``(1) shall consult and coordinate with the Chief Financial 
     Officer and the Inspector General of the agency;
       ``(2) shall implement this section in a manner designed to 
     ensure the greatest financial benefit to the Government;
       ``(3) may conduct recovery audits and recovery activity 
     internally in accordance with the standards issued by the 
     Director under section 3565(b)(2) of this title, or by 
     procuring performance of recovery audits, or by any 
     combination there of; and
       ``(4) shall ensure that such recovery audits and recovery 
     activity are carried out consistent with the standards issued 
     by the Director and section 3565(b)(2) of this subchapter.
       ``(c) Scope of Audits.--(1) Each recovery audit of a 
     payment activity under this section shall cover payments made 
     by the payment activity in a fiscal year, except that the 
     first recovery audit of a payment activity shall cover 
     payments made during the 2 consecutive fiscal years preceding 
     the date of the enactment of the Government Waste Corrections 
     Act of 1999.
       ``(2) The head of an executive agency may conduct recovery 
     audits of payment activities for additional preceding fiscal 
     years if determined by the agency head to be practical and 
     cost-effective.
       ``(d) Recovery Audit Contracts.--
       ``(1) Authority to use contingency contracts.--
     Notwithstanding section 3302(b) of this title, as 
     consideration for performance of any recovery audit procured 
     by an executive agency, the executive agency, the executive 
     agency may pay the contractor an amount equal to a percentage 
     of the total amount collected by the United States as a 
     result of overpayments identified by the contractor in the 
     audit.
       ``(2) Additional functions of contractor.--(A) In addition 
     to performance of a recovery audit, a contract for such 
     performance may authorize the contractor (subject to 
     subparagraph (B)) to--
       ``(i) notify any person of possible overpayments made to 
     the person and identified in the recovery audit under the 
     contract; and
       ``(ii) respond to questions concerning such overpayments.
       ``(B) A contract for performance of a recovery audit shall 
     not affect--
       ``(i) the authority of the head of an executive agency 
     under the Contract Disputes Act of 1978 and other applicable 
     laws including the authority to initiate litigation or 
     referrals for litigation or:
       ``(ii) the requirements of sections 3711, 3716, 3718, and 
     3720 of this title that the head of an agency resolve 
     disputes, compromise or terminate overpayment claims, collect 
     by setoff, and otherwise engage recovery activity with 
     respect to overpayments identified by the recovery audit.
       ``(3) Limitation on authority.--Nothing in this subchapter 
     shall be construed to authorize a contractor with an 
     executive agency to require the production of any record or 
     information by any person other than an officer, employee, or 
     agent of the executive agency.
       ``(4) Required contract terms and conditions.--The head of 
     an executive agency shall include in each contract for 
     procurement of performance of a recovery audit requirements 
     that the contractor shall--
       ``(A) protect from disclosure otherwise confidential 
     business information and financial information;
       ``(B) provide to the head of the executive agency and the 
     Inspector General of the executive agency periodic reports on 
     conditions giving rise to overpayments identified by the 
     contractor and any recommendations on how to mitigate such 
     conditions.
       ``(C) notify the head of the executive agency and the 
     agency of any overpayments identified by the contractor 
     pertaining to the executive agency or to another executive 
     agency that are beyond the scope of the contract; and
       ``(D) promptly notify the head of the executive agency and 
     the Inspector General of the executive agency of any 
     indication of fraud or other criminal activity discovered in 
     the course of the audit.
       ``(5) Executive agency action following notification.--The 
     head of an executive agency shall take prompt and appropriate 
     action in response to a notification by a contractor pursuant 
     to the requirements under paragraph (4) including forwarding 
     to other executive agencies any information that applies to 
     them.
       ``(6) Contracting requirements.--Prior to contracting for 
     any recovery audit, head of an executive agency shall conduct 
     a public-private cost comparison process. The outcome of the 
     cost comparison process shall determine whether the recovery 
     audit is performed in-house or by a contractor.
       ``(e) Inspectors General.--Nothing in this subchapter shall 
     be construed as diminishing the authority of any Inspector 
     General, including such authority under the Inspector General 
     Act of 1978.
       ``(f) Privacy Protections.--
       ``(1) Limitation on disclosure of individually identifiable 
     information.--(A) Any non-governmental entity that obtains 
     individually identifiable information through performance of 
     recovery auditing or recovery activity under this chapter may 
     disclose that information only for the purpose of such 
     auditing or activity, respectively, and oversight of such 
     auditing or activity, unless otherwise authorized by the 
     individual that is the subject of the information.
       ``(B) Any person that violates subparagraph (A) shall be 
     liable for any damages (including non-pecuniary damages, 
     costs, and attorneys fees) caused by the violation.
       ``(2) Destruction or return of information.--Upon the 
     conclusion of the matter or need for which individually 
     identifiable information was disclosed in the course of 
     recovery auditing or recovery activity under this chapter 
     performed by a non-governmental entity, the non-governmental 
     entity shall either destroy the individually identifiable 
     information or return it to the person from whom it was 
     obtained, unless another applicable law requires retention of 
     the information.

     ``Sec. 3563. Disposition of amounts collected

       ``(a) In General.--Notwithstanding section 3302(b) of this 
     title, the amounts collected annually by the United States as 
     a result or recovery audits by an executive agency under this 
     subchapter shall be treated in accordance with this section.
       ``(b) Use for Recovery Audit Costs.--Amounts referred to in 
     subsection (a) shall be available to the executive agency--
       ``(1) to pay amounts owed to any contractor for performance 
     of the audit; and
       ``(2) to reimburse any applicable appropriation for other 
     recovery audit costs incurred by the executive agency with 
     respect to the audit.
       ``(c) Use for Management Improvement Program.--Of the 
     amount referred to in subsection (a), a sum not to exceed 25 
     percent of such amount--
       ``(1) shall be available to the executive agency to carry 
     out the management improvement program of the agency under 
     section 3564 of this title;
       ``(2) may be credited for that purpose by the agency head 
     to any agency appropriations that are available for 
     obligation at the time of collection; and

[[Page H12144]]

       ``(3) shall remain available for the same period as the 
     appropriations to which credited.
       ``(d) Remainder to Treasury.--Of the amount referred to in 
     subsection (a), there shall be deposited into the Treasury as 
     miscellaneous receipts a sum equal to--
       ``(1) 50 percent of such amount; plus
       ``(2) such other amounts as remain after the application of 
     subsections (b) and (c).
       ``(e) Limitation on Application.--
       ``(1) In general.--This section shall not apply to amounts 
     collected through recovery audits and recovery activity to 
     the extent that such application would be inconsistent with 
     another provision of law that authorizes crediting of the 
     amounts to a non-appropriated fund instrumentality, revolving 
     fund, working capital fund, trust fund, or other fund or 
     account.
       ``(2) Subsections (c) and (d).--Subsections (c) and (d) 
     shall not apply to amounts collected through recovery audits 
     and recovery activity, to the extent that such amounts are 
     derived from an appropriation or fund that remains available 
     for obligation at the time the amounts are collected.

     ``Sec. 3564. Management improvement program

       ``(a) Conduct of Program.--
       ``(1) Required programs.--The head of each executive agency 
     that is required to conduct recovery audits under section 
     3562 of this title shall conduct a management improvement 
     program under this section, consistent with guidelines 
     prescribed by the Director.
       ``(2) Discretionary programs.--The head of any other 
     executive agency that conducts recovery audits under section 
     3562 that meet the standards issued by the Director under 
     section 3565(b)(2) may conduct a management improvement 
     program under this section.
       ``(b) Program Features.--In conducting the program, the 
     head of the executive agency--
       ``(1) shall, as the first priority of the program, address 
     problems that contribute directly to agency overpayments; and
       ``(2) may seek to reduce errors and waste in other 
     executive agency programs and operations by improving the 
     executive agency's staff capacity, information technology, 
     and financial management.
       ``(c) Integration With Other Activities.--The head of an 
     executive agency--
       ``(1) subject to paragraph (2), may integrate the program 
     under this section, in whole or in part, with other 
     management improvement programs and activities of that agency 
     or other executive agencies; and
       ``(2) must retain the ability to account specifically for 
     the use of amounts made available under section 3563 of this 
     title.

     ``Sec. 3565. Responsibilities of the Office of Management and 
       Budget

       ``(a) In General.--The Director shall coordinate and 
     oversee the implementation of this subchapter.
       ``(b) Guidance.--
       ``(1) In general.--The Director, in consultation with the 
     Chief Financial Officers Council and the President's Council 
     on Integrity and Efficiency, shall issue guidance and provide 
     support to agencies in implementing the subchapter. The 
     Director shall issue initial guidance not later than 180 days 
     after the date of enactment of the Government Waste 
     Corrections Act of 1999.
       ``(2) Recovery audit standards.--The Director shall include 
     in the initial guidance under this subsection standards for 
     the performance of recovery audits under this subchapter, 
     that are developed in consultation with the Comptroller 
     General of the United States and private sector experts on 
     recovery audits.
       ``(c) Fee Limitations.--The Director may limit the 
     percentage amounts that may be paid to contractors under 
     section 3562(d)(1) of this title.
       ``(d) Exemptions.--
       ``(1) In general.--The Director may exempt an executive 
     agency, in whole or in part, from the requirement to conduct 
     recovery audits under section 3562(a)(1) of this title if the 
     Director determines that compliance with such requirement--
       ``(A) would impede the agency's mission; or
       ``(B) would not be cost-effective.
       ``(2) Report to congress.--The Director shall promptly 
     report the basis of any determination and exemption under 
     paragraph (1) to the Committee on Government Reform of the 
     House of Representatives and the Committee on Governmental 
     Affairs of the Senate.
       ``(e) Reports.--
       ``(1) In general.--Not later than 1 year after the date of 
     the enactment of the Government Waste Corrections Act of 
     1999, and annually for each of the 2 years thereafter, the 
     Director shall submit a report on implementation of the 
     subchapter to the President, the Committee on Government 
     Reform of the House of Representatives, the Committee on 
     Governmental Affairs of the Senate, and the Committee on 
     Appropriations of the House of Representatives and of the 
     Senate.
       ``(2) Contents.--Each report shall include--
       ``(A) a general description and evaluation of the steps 
     taken by executive agencies to conduct recovery audits, 
     including an inventory of the programs and activities of each 
     executive agency that are subject to recovery audits.
       ``(B) an assessment of the benefits of recovery auditing 
     and recovery activity, including amounts identified and 
     recovered (including by administrative setoffs).
       ``(C) an identification of best practices that could be 
     applied to future recovery audits and recovery activity.
       ``(D) an identification of any significant problems or 
     barriers to more effective recovery audits and recovery 
     activity;
       ``(E) a description of executive agency expenditures in the 
     recovery audit process.
       ``(F) a description of executive agency management 
     improvement programs under section 3564 of this title; and
       ``(G) any recommendations for changes in executive agency 
     practices or law or other improvements that the Director 
     believes would enhance the effectiveness of executive agency 
     recovery auditing.

     ``Sec. 3566. General Accounting Office reports

       ``Not later than 60 days after issuance of each report 
     under section 3565(e) of this title, the Comptroller General 
     of the United States shall submit a report on the 
     implementation of this subchapter to the Committee on 
     Government Reform of the House of Representatives, the 
     Committee on Governmental Affairs of the Senate, the 
     Committee on Appropriations of the House of Representatives 
     and of the Senate, and the Director.''
       (b) Application to all Executive Agencies.--Section 3501 of 
     title 31, United States code, is amended by inserting ``and 
     subchapter VI of this chapter'' after ``section 3513''.
       (c) Deadline for Initiation of Recovery Audits.--The need 
     of each executive agency shall begin the first recovery audit 
     under section 3562(a)(1) title 31, United States Code, as 
     amended by this section, for each payment activity referred 
     to in those sections by not later than 18 months after the 
     date of the enactment of this Act.
       (d) Clerical Amendment.--The analysis at the beginning of 
     chapter 35 of title 31, United States Code, is amended by 
     adding at the end the following:


                    ``subchapter vi--recovery audits

     ``3561. Definitions.
     ``3562. Recovery audit requirement.
     ``3563. Disposition of amounts collected.
     ``3564. Management improvement program.
     ``3565. Responsibilities of the Office of Management and 
         Budget.
     ``3566. General Accounting Office reports.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. Horn) and the gentleman from Texas (Mr. Turner) each 
will control 20 minutes.
  The Chair recognizes the gentleman from California (Mr. Horn).


                             General Leave

  Mr. HORN. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on H.R. 1827, the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. HORN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, H.R. 1827 would require executive branch departments and 
agencies to use a process called recovery auditing to review Federal 
payment transactions in order to identify erroneous overpayments.
  H.R. 1827, the Government Waste Corrections Act, which was authored 
by the gentleman from Indiana (Mr. Burton), the chairman of the full 
Committee on Government Reform; and he was joined in that by the 
majority leader, the gentleman from Texas (Mr. Armey) and the gentleman 
from California (Mr. Ose), who is an active member of the Subcommittee 
on Government Management, Information and Technology, which I chair.
  This act represents a milestone in the effort to reduce widespread 
fraud, waste and error in Federal programs that cost taxpayers billions 
of dollars every year. At a Committee on Government Reform hearing on 
government waste and mismanagement last February, Inspectors General 
from the Departments of Health and Human Services, Housing and Urban 
Development, and Agriculture testified about their major program and 
management problems. One of the more serious problems they identified 
was that of erroneous payments.
  It is estimated that a total of about $15 billion was erroneously 
paid out of Medicare, food stamps and housing programs in 1 year alone. 
Close to $13 billion of that was in the Medicare program. How much of 
this is due to fraud versus human or technical error is unknown at this 
point.
  In addition, on March 31, 1999, the subcommittee I chair examined the 
government-wide consolidated financial statement for fiscal year 1998. 
The General Accounting Office, which is part of the legislative branch 
and does both programmatic and fiscal auditing, found that among the 
most serious errors of waste were the billions of dollars in improper 
payments the government makes to its contractors, vendors and 
suppliers.

[[Page H12145]]

  Most Federal overpayments go undetected because agencies do not track 
and report their improper payments, and there is currently no law 
requiring them to do so. Every year, however, this problem wastes huge 
amounts of taxpayers' dollars, and that is what we are committed to 
end. Such waste detracts from the efficiency and effectiveness of 
Federal operations by diverting resources from their intended uses.
  H.R. 1827 addresses the problem of inadvertent overpayments using a 
proven private-sector business practice known as recovery auditing to 
identify and recover the overpayments made to private vendors. A 
typical recovery audit works like this: An agency's purchases and 
payments are reviewed, usually by customized software, which is used 
across the country in private business such as those auditing private 
health plans. Firms similar to Blue Shield/Blue Cross, would utilize 
software designated to scan a hospital bill for a particular disease. 
If that disease required certain processes, they ought to be in that 
billing. If other processes not relevant would cause a close 
examination of the bill. So the same with other agencies to identify 
where overpayments may have occurred.
  Typical errors include such things as vendor pricing mistakes, missed 
discounts, duplicate payments and so on down the line. Once an error is 
identified and verified by the agency, a notification letter is sent to 
the vendor for review and response. Recoveries are usually made through 
administrative offsets or direct payments.
  Under H.R. 1827, agencies would be required to use recovery auditing 
if they spend $500 million or more annually for the purchase of goods 
and services for the agency's direct benefit. The bill encourages 
agencies to use recovery auditing for all procurements, regardless of 
the amount of the transaction.
  The bill only applies recovery auditing to an agency's spending for 
direct contracting; in other words, when an agency purchases goods and 
services that directly benefit the agency or will be used by that 
agency. Examples of direct contracting include payments made to a 
contractor to build a new Veterans Hospital or payments made by the 
Defense Department for the purchase of a new weapon system.
  H.R. 1827 would not require recovery auditing for programs that 
involve payments to third parties for the delivery of indirect 
services, such as education or drug treatment grants or payments to 
intermediaries who administer the Medicaid program. In these programs, 
Federal payments must make their way through any number of entities--
including States, localities, and other entities--before the service is 
actually delivered to the general population. These payment systems are 
often so complex that it is uncertain at this time where and how the 
recovery audit procedure would best be applied.
  Mr. Speaker, it is important to note that this legislation addresses 
the problems that cause the overpayments. The bill requires agencies to 
use part of the money they recover to work on improvements to their 
management and financial systems. We had a similar incentive in the 
Debt Collection Act of 1996, which I authored, and it has worked very 
well. The more they do and collect, and they do it efficiently, they 
can use some of the funds to improve their collection services.
  As a priority, departments and agencies would have to work to improve 
overpayment error rates, but the money could also be used to make 
improvements to the agency's staff capacity, information technology and 
financial management functions. The bill would also send at least 50 
percent of recovered overpayments back to The Treasury, making this 
bill a win-win for the government and, even more important, the 
American people the taxpayers.
  Mr. Speaker, H.R. 1827 is a very important step in our efforts to 
increase the accountability of the Federal Government, and I am pleased 
to be here to support this legislation and urge my colleagues to 
support it as well.
  Mr. Speaker, I reserve the balance of my time.
  Mr. TURNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in strong support of H.R. 1827, the 
Government Waste Corrections Act of 1999. I want to first commend the 
chairman of the full committee, the gentleman from Indiana (Mr. 
Burton), and the ranking member, the gentleman from California (Mr. 
Waxman), as well as the chairman of the subcommittee, the gentleman 
from California (Mr. Horn), for their work and leadership in bringing 
this proposal to the floor.
  Mr. Speaker, it was shocking for our committee to learn that every 
year Federal agencies pay out millions of dollars to vendors and to 
government contractors that the agencies do not even owe. For example, 
between 1994 and 1998, private-sector defense contractors voluntarily 
returned to the government almost a billion dollars. Even more alarming 
is the fact that the government, the Department of Defense, did not 
even know that these overpayments had been made.
  No matter how efficient a financial management system is, 
overpayments do occur. And, in fact, the larger the volume of 
purchases, which in the case of the Department of Defense is in the 
billions of dollars, the greater the likelihood of overpayments. This 
legislation addresses this problem by requiring Federal agencies to use 
a financial management tool that is called recovery auditing.
  Recovery auditing is used to identify overpayments due to financial 
system weaknesses, problems with fundamental recordkeeping and 
financial reporting, incomplete documentation, and other weaknesses in 
a financial accounting system. It has been used very successfully by 
the automobile, retail, and food services industries in our country for 
more than 30 years. It is currently employed by the majority of the 
Fortune 500 companies. However, only a very few Federal agencies have 
utilized the process.
  One agency that has used recovery auditing is the Army and Air Force 
Exchange Service, which recovered $25 million in overpayments through 
recovery auditing in 1998.
  H.R. 1827 would require Federal agencies to conduct recovery auditing 
on all payment activities over $500 million annually on goods and 
services for the use or direct benefit of the agency. Recovery audits 
would be optional for other payment activities.
  This bill provides that the contractors simply identify potential 
overpayments. They have no authority to make determinations or to take 
collective action. These functions remain at all times with the agency 
itself. Audits are to be structured to produce the greatest financial 
gain to the government and must comply with a recovery audit standard 
to be set forth by the director of the Office of Management and Budget.
  Agencies would be authorized to conduct recovery audits in house, 
contract with private recovery specialists, or use any combination of 
the two. The agency head would have the authority to use contingency 
contracts, whereby a contractor would be allowed to retain a percentage 
of collections from the overpayments they identify during the audit. 
The agency head would also be free to adopt compensation arrangements 
other than contingency fees. The bill provides the amounts recovered 
will be available to pay for a recovery audit contractor or to 
reimburse appropriations for recovery audit costs incurred by the 
agency.
  At least 50 percent of the overpayments recouped will go back to the 
general treasury of the government. Up to 25 percent of the 
overpayments recouped may be used for a management improvement program 
designed to prevent future overpayments and waste at the agency.
  During the subcommittee markup on this bill, a number of concerns 
were discussed regarding reservations that the health care industry had 
about this bill. At that time, we, as a committee, pledged to work out 
a solution to those concerns before full markup. In keeping with that 
commitment, on November 10 the gentleman from Indiana (Mr. Burton) 
offered an amendment in the nature of a substitute which limited this 
bill to direct services to the government.

                              {time}  1245

  It is my understanding that this substitute alleviated the concerns 
that were expressed by the health care industry.
  Also, at the full committee I offered an amendment which the 
committee

[[Page H12146]]

adopted relating to privacy protections for individually identifiable 
information. This amendment will provide safeguards and remedies to 
people who might have had their records misused by private recovery 
auditing firms.
  Additionally, the gentleman from California (Mr. Waxman), the ranking 
member, offered an amendment which was also adopted by the committee 
which ensures that the agency head will conduct a public-private cost 
comparison before deciding to contract for recovery auditing services 
on the outside.
  I appreciate the bipartisan manner that both of these amendments were 
negotiated under and which H.R. 1827 passed out of the committee on a 
voice vote.
  Mr. Speaker, H.R. 1827 represents a significant step toward dealing 
with the billions of dollars in Federal overpayments that our committee 
discovered were made every year. I am pleased to be a cosponsor. 
Recovery auditing is simply good government.
  I again commend the gentleman from Indiana (Chairman Burton), the 
gentleman from California (Mr. Waxman), and the gentleman from 
California (Chairman Horn) for their leadership on the bill.
  I urge the House to adopt H.R. 1827.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HORN. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Indiana (Mr. Burton).
  Mr. BURTON of Indiana. Mr. Speaker, as the author of the bill, I have 
just been informed that one of our colleagues has some minor problems 
with the bill. In order to accommodate him, what I would like to do, 
with unanimous consent of the House, is to withdraw the bill at this 
time, try to correct any differences that we have, and then bring the 
bill up later today. I think we can do that in a relatively short 
period of time.
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from California 
(Mr. Horn) needs to withdraw the motion.
  Mr. HORN. Mr. Speaker, I ask unanimous consent to withdraw the motion 
to suspend the rules.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. The motion is withdrawn.

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