[Congressional Record Volume 146, Number 25 (Wednesday, March 8, 2000)]
[House]
[Pages H711-H721]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDERATION OF H.R. 1827, GOVERNMENT WASTE CORRECTIONS
ACT OF 1999
Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 426 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 426
Resolved, That at any time after the adoption of this
resolution the Speaker may, pursuant to clause 2(b) of rule
XVIII, declare the House resolved into the Committee of the
Whole House on the state of the Union for consideration of
the bill (H.R. 1827) to improve the economy and efficiency of
Government operations by requiring the use of recovery audits
by Federal agencies. The first reading of the bill shall be
dispensed with. General debate shall be confined to the bill
and shall not exceed one hour equally divided and controlled
by the chairman and ranking minority member of the Committee
on Government Reform. In lieu of the amendment recommended by
the Committee on Government Reform now printed in the bill,
it shall be in order to consider as an original bill for the
purpose of amendment under the five-minute rule the amendment
in the nature of a substitute printed in the report of the
Committee on Rules accompanying this resolution. That
amendment in the nature of a substitute shall be considered
as read. Points of order against that amendment in the nature
of a substitute for failure to comply with clause 4 of rule
XXI are
[[Page H712]]
waived. During consideration of the bill for amendment, the
Chairman of the Committee of the Whole may accord priority in
recognition on the basis of whether the Member offering an
amendment has caused it to be printed in the portion of the
Congressional Record designated for that purpose in clause 8
of rule XVIII. Amendments so printed shall be considered as
read. The Chairman of the Committee of the Whole may: (1)
postpone until a time during further consideration in the
Committee of the Whole a request for a recorded vote on any
amendment; and (2) reduce to five minutes the minimum time
for electronic voting on any postponed question that follows
another electronic vote without intervening business,
provided that the minimum time for electronic voting on the
first in any series of questions shall be 15 minutes. At the
conclusion of consideration of the bill for amendment the
Committee shall rise and report the bill to the House with
such amendments as may have been adopted. Any Member may
demand a separate vote in the House on any amendment adopted
in the Committee of the Whole to the bill or to the amendment
in the nature of a substitute made in order as original text.
The previous question shall be considered as ordered on the
bill and amendments thereto to final passage without
intervening motion except one motion to recommit with or
without instuctions.
The SPEAKER pro tempore. The gentleman from Texas (Mr. Sessions) is
recognized for 1 hour.
Mr. SESSIONS. Mr. Speaker, for purposes of debate only, I yield the
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter),
pending which I yield myself such time as I may consume.
During the consideration of this resolution, all time is yielded for
the purpose of debate only.
Mr. Speaker, House Resolution 426 is an open rule providing for the
consideration of H.R. 1827, the Government Waste Corrections Act. This
rule provides 1 hour of general debate, evenly divided and controlled
by the chairman and ranking member of the Committee on Government
Reform.
The rule provides that, in lieu of the amendment recommended by the
Committee on Government Reform and printed in the bill, that the
amendment in the nature of a substitute printed in the report of the
Committee on Rules accompanying the resolution shall be considered as
the original text for the purpose of amendment.
The rule waives clause 4 of rule XXI against provisions included in
the amendment in the nature of a substitute. The rule provides that the
amendment in the nature of a substitute shall be open for amendment at
any point. The rule accords Members who have preprinted their
amendments in the Record prior to their consideration priority in
recognition to offer their amendment, if otherwise consistent with
House rules.
The rule allows the chairman of the Committee of the Whole to
postpone votes during consideration of the bill, and to reduce voting
time to 5 minutes on a postponed question, if the vote follows a 15-
minute vote. Finally, the rule provides one motion to recommit, with or
without instructions.
Mr. Speaker, when the Republican party became the majority party in
1995, Congress began enacting a series of commonsense reforms. These
reforms have changed the way the Federal government operates and have
saved billions of taxpayer dollars.
One of the first things Congress did was apply all laws that it
passes to itself. Previously, Congress would pass burdensome
regulations on the private sector, but exclude itself from compliance
to these laws. In 1995, Congress passed the Paperwork Reduction Act to
identify and reduce burdensome Federal paperwork requirements on the
private sector, especially small businesses.
Continuing toward a goal of creating a 21st century government, in
1996 Congress passed the Federal Acquisition Reform Act to reduce
bureaucratic requirements within the Federal procurement system.
We have all heard examples of inflated prices, like the 187 screw
sets purchased by the government for $75.60 each. More often than not,
such fleecing of taxpayer dollars is due to the cumbersome Federal
procurement system, not fraud. The Federal Acquisition Reform Act has
streamlined the process of doing business with the Federal government
by significantly reducing such waste.
In 1997, Congress passed the Travel and Transportation Reform Act,
legislation to remedy poor management of the Federal government's
massive travel expenditures. This bill is now law, and has led to a
concerted effort by Federal managers to improve the Federal travel
efficiency and cost effectiveness. The Congressional Budget Office
estimates savings of $80 million per year.
With the passage last year of the Presidential and Executive Office
Financial Accountability Act, Congress created a chief financial
officer for the White House. This nonpartisan CFO position in the
Executive Office of the President will facilitate prevention and early
detection of waste, fraud and abuse. Accordingly, the bill promotes
efficiency and cost reductions within the White House.
Today Congress takes another step toward increasing efficiency and
saving taxpayer dollars with consideration of the Government Waste
Corrections Act.
In private industry, companies routinely audit themselves to
determine if they have overpaid vendors and suppliers. Overpayments are
a fact of life for businesses, government entities, and even our own
households. Overpayments become more likely with larger volumes of
payments.
Overpayments occur for a variety of reasons, including duplicate
payments, pricing errors, and missed discounts or rebates. On average,
private industry recovers $1 million for each $1 billion that is
audited. Overpayments at the Federal level are an especially serious
problem when considering the size and complexity of Federal operations,
as well as the widespread financial management weaknesses of the
Federal government.
Recovery auditing and activity already occurs in limited areas of the
Federal government. Recovery audits of the Department of Defense alone
have identified errors averaging .4 percent of Federal payments
audited, or $4 million out of every $1 billion. Recovery efforts
throughout the entire Federal Government could save billions of dollars
more.
With this in mind, the Government Waste Corrections Act requires
Federal agencies to perform audits if their direct purchases for goods
and services total $500 million or more per fiscal year. Agencies that
must undertake recovery auditing would also be required to institute a
management improvement program to address underlying problems of their
payment systems.
The Government Waste Corrections Act is a commonsense government
reform that incorporates proven, money-saving private sector practices
to the Federal government.
Mr. Speaker, I encourage all Members to support the rule and the
underlying legislation.
Mr. Speaker, I reserve the balance of my time.
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Ms. SLAUGHTER. Mr. Speaker, I thank the gentleman from Texas (Mr.
Sessions) for yielding me the customary 30 minutes, and I yield myself
such time as I may consume.
(Ms. SLAUGHTER asked and was given permission to revise and extend
her remarks.)
Ms. SLAUGHTER. Mr. Speaker, I rise in support of this open rule, and
I urge my colleagues to pass it so that all germane alternatives and
potential improvements to this legislation may be considered.
The underlying bill, H.R. 1827, the Government Waste Corrections Act
of 1999, is designed to address the problem of overpaying vendors that
provide goods and services to Federal agencies. Rooting out this
problem is a worthy goal and one I wholeheartedly support. Our
government has paid through the nose so often it has developed a bad
cold that has resisted a cure. These overpayments waste money of the
taxpayers and divert the Federal resources from their intended use.
Overpayments can occur for a variety of reasons, including duplicate
payments, pricing errors, missed cash discounts, rebates, or other
allowances. But with this bill, we take the first step toward a cure.
The identification and recovery of such overpayments, commonly referred
to as recovery auditing and activity, is an established business
practice with demonstrated large financial returns.
Recovery auditing has already been employed successfully in limited
areas of Federal activity. It has great potential for expansion to many
other Federal agencies and activities, thereby
[[Page H713]]
resulting in the recovery of substantial amounts of overpayments
annually. Congress must ensure that overpayments made by the Federal
Government that would otherwise remain undetected are identified and
recovered.
I understand from Committee on Rules testimony last week that the
underlying bill would not apply to excess Medicare payments. I think
this is a shame, because Medicare is a system that needs looking into.
A measure that I have authored, H.R. 418, the Medicare Universal
Product Number Act of 1999, which I have cosponsored with the gentleman
from New York (Mr. Houghton) would go a long way towards cracking down
on improper federal reimbursements.
I would urge the Committee of Government Reform and Oversight to
continue this effort to crack down on excessive payments and take a
hard look at Medicare in the process. The taxpayers need to know that
Congress means business when it comes to handling their money.
Mr. Speaker, I support this open rule to allow full debate and all
perfecting amendments to this legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, previously I served on the Committee on Government
Reform, and I found that the leadership that was provided by the
chairman of that committee really has had a lot to do with the
provisions of the laws that have changed. I believe that the gentleman
from Indiana (Mr. Burton), perhaps one of the greatest things he has
brought to us is the old axiom that the light of day is the best
disinfectant.
Mr. Speaker, I am delighted to yield such time as he may consume to
the gentleman from Indiana (Mr. Burton), the chairman of the Committee
on Government Reform.
Mr. BURTON of Indiana. Mr. Speaker, I thank the gentleman for his
kind remarks.
Let me just say that the gentleman from Texas (Mr. Sessions), as the
chairman of the Results Caucus, has provided invaluable service to the
country and to this body in working with us to formulate this
legislation.
I would like to also thank the gentleman from Texas (Mr. Turner), the
ranking minority member on the Subcommittee on Government Management,
Information and Technology for his hard work on this. The gentleman
from California (Mr. Ose) and the gentleman from Texas (Mr. Armey) were
very instrumental in helping draft the legislation, bringing it up to
the position we have today, where we can bring it to the floor. I want
to thank them for their participation.
I would like to also thank the gentleman from California (Mr.
Dreier), the chairman of the Committee on Rules, for his expeditious
handling of this bill before the Committee on Rules and bringing it to
the floor, along with the gentleman from California (Mr. Sessions).
I think this is a good rule. It does provide an open rule so Members
can amend the bill if they find it necessary, although I do not expect
many amendments, if any.
Let me just say to the gentlewoman from New York (Ms. Slaughter) who
just spoke. We did consider provisions involving Medicare. Because of
all the aspects of Medicare, we thought that it would encumber the bill
at this time. However, let me just tell my colleagues that that is one
of the things that we ought to be looking at and will be looking at
because Medicare allegedly does waste billions of dollars. I think the
same accounting procedures in the future ought to be considered by the
entire body, and we will work toward that end.
Ms. SLAUGHTER. Mr. Speaker, I yield back the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
The SPEAKER pro tempore (Mr. Sessions). Pursuant to House Resolution
426 and rule XVIII, the Chair declares the House in the Committee of
the Whole House on the State of the Union for the consideration of the
bill, H.R. 1827.
{time} 1250
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the consideration of the bill
(H.R. 1827) to improve the economy and efficiency of Government
operations by requiring the use of recovery audits by Federal agencies,
with Mr. Barrett of Nebraska in the chair.
The Clerk read the title of the bill.
The CHAIRMAN. Pursuant to the rule, the bill is considered as having
been read the first time.
Under the rule, the gentleman from Indiana (Mr. Burton) and the
gentleman from Texas (Mr. Turner) each will control 30 minutes.
The Chair recognizes the gentleman from Indiana (Mr. Burton).
Mr. BURTON of Indiana. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, today we are going to do something that is a little bit
unusual for the Congress. We are going to vote on a bill that will save
taxpayers' money instead of spending their money. Today we are going to
vote on the Government Waste Corrections Act.
The Federal Government is one of the biggest consumers and customers
in the world. Every year, Federal agencies spend hundreds of billions
of dollars buying goods and services, pens, papers, computers, cars,
trucks. You name it, and the government buys it.
Along the way, mistakes are made. Someone punches in the wrong code,
and a vendor gets paid too much, and taxpayers' money gets wasted.
Nobody knows exactly how much money gets wasted each year, but we do
know this, it is not thousands of dollars, and it is not millions of
dollars. The General Accounting Office estimates that billions of
dollars are wasted each year in erroneous overpayments.
Private sector companies are very aggressive about trying to catch
these errors and get their money back. Most Federal agencies do not.
My bill would focus agencies on getting back these millions and
billions of dollars in overpayments. My bill takes a proven private
sector financial management tool called recovery auditing and applies
it to the Federal Government. It is used very successfully by Fortune
500 companies to identify and recover overpayments.
The Congressional Budget Office estimates that if government agencies
use recovery auditing, they will collect back at least $180 million
over the next 5 years. I think it will be a lot more than that. What
will happen with all this money? Well, part of the money can be used to
pay for recovery audits. Part of the money can be used to improve
financial management systems. At least 50 percent of that money will be
returned to the Federal Treasury.
CBO says that this bill will save taxpayers at least $100 million
over the next 5 years. That is probably just the tip of the iceberg.
I remember last fall, we were trying to finalize the Federal budget.
There were negotiations over a 1 percent across-the-board cut in the
Federal budget to try to help balance the budget. We asked all Federal
agencies if they could find 1 percent of their budgets where there was
waste or excess spending that could be eliminated. Well, it seemed like
most of them screamed bloody murder. They accused us of trying to cut
into critical programs. There was nothing that could be cut, not one
penny of waste, many of them said.
Well, we finally agreed on an across-the-board cut of four-tenths,
about four-tenths of 1 percent. When we think about the trillions of
dollars we spend, that is just a drop in the bucket.
Well, there is waste, and there are errors, and there are
overpayments, billions of dollars in overpayments. They can be
recovered. That is what this bill is all about.
Here is a brief explanation of what this bill will do. It requires
agencies to conduct recovery auditing if they spend more than $500
million annually on goods and services, and most of the agencies do.
Recovery auditing uses sophisticated computer software to analyze
billing records and identify overpayments.
[[Page H714]]
This bill does not apply to programs that make direct payments to
beneficiaries like Medicare or Social Security. It applies to the
purchase of goods and services for the Federal Government. As I said to
the gentlewoman from New York (Ms. Slaughter) a few moments ago in the
colloquy we had, we will be looking at Medicare and waste in that area
down the road.
Agencies can either conduct recovery audits in house, or they can use
private contractors, whichever is the most efficient. At least 50
percent of the amounts recovered must be returned to the Federal
Treasury, and I think that is very good news.
Agencies are allowed to spend up to 25 percent of the recovered funds
for management improvement programs. Lord knows we need to improve
management in most agencies.
Agencies can use a portion of the recovered funds to cover the costs
of the audits. Recovery auditing has been used very successfully in the
demonstration programs at the Defense Department. The Army and the Air
Force exchange systems have used recovery auditing for several years.
The most recent audit recovered $25 million.
In 1996, the Defense Supply Center in Philadelphia began a pilot
program. Potential overpayments there have been estimated at $23
million.
The bill we have before us has a number of technical changes that
have been added since it was passed by the committee. These have been
discussed at length with the minority and Members of the other
interested committees. Several definitions have been added to clarify
our intent.
This bill is designed to get at inadvertent overpayments. To help
clarify this distinction, the definition of facial-discrepancy payment
error has been addressed. Recovery auditors are to identify
overpayments based on what is on the face of the payment records. They
are not authorized to make determinations about the quality or the
value of products provided to the Federal Government.
Many government contractors were concerned that recovery auditors
might come to their offices and demand to go through their files. This
bill does not allow them to do that. Recovery auditors are only allowed
to analyze the agency's records. The manager's amendment explicitly
prohibits a recovery auditor from establishing a physical presence, to
set up shop, so to speak, at any contractor's office.
The bill originally contained a provision allowing OMB to exempt
certain agencies from recovery auditing if it would not be cost
effective. The manager's amendment authorizes agency heads to request
exemptions from OMB based on these same criteria. However, it is my
view that exemptions should be only offered in rare circumstances and
that most agencies would benefit from recovery auditing.
The manager's amendment also stipulates that recovery auditing will
apply to the Defense Department's major weapons systems only after
these contracts have been closed. This change addresses concerns raised
by Members of the Committee on Armed Services, especially the gentleman
from Virginia. Multi-year contracts for major weapons systems are very
complex. They often involve estimated payments that are reconciled in
later billing periods. Conducting recovery audits at the completion of
these contracts will avoid unnecessary confusion.
Mr. Chairman, in essence, this bill does three things that are very
important. First, it eliminates waste. CBO says it will save taxpayers
at least $100 million over the next 5 years. Second, it puts private
sector business practices to work in the Federal Government; and that
is something we should have done a long time ago. Third, it gives
Federal agencies new resources to improve their financial management
programs.
The Government Waste Corrections Act passed through the committee
with bipartisan support. It is supported by the administration.
I want to thank the leadership for scheduling this bill today. I want
to thank the gentleman from California (Mr. Horn), Chairman of the
Subcommittee on Government Management, Information and Technology for
his hard work on this issue, and also the gentleman from California
(Mr. Waxman), my ranking member. I have already said I wanted to thank
the subcommittee ranking member for his hard work as well.
We have all worked together to resolve several issues so that this
bill could get the bipartisan support. So I ask all of my colleagues to
support this bill. It is a good bill. Its time has come. We need to
expand it in the future, but we will look back at that later on.
Mr. Chairman, I reserve the balance of my time.
Mr. TURNER. Mr. Chairman I yield myself such time as I may consume.
Mr. Chairman, I rise in strong support of H.R. 1827, the Government
Waste Corrections Act of 1999. I want to commend the gentleman from
Indiana (Mr. Burton) for his leadership on this issue. I also want to
thank the gentleman from California (Mr. Waxman), ranking member, for
his hard work on the bill, as well as the gentleman from California
(Mr. Horn), chairman of the Subcommittee on Government Management,
Information and Technology.
The gentleman from Indiana (Mr. Burton) stated it very correctly,
this is a bill that will save money for the taxpayers. It is a
wonderful opportunity to have a bill like this before the floor.
{time} 1300
So many times we find ourselves spending money, and this bill,
clearly, will save money for our taxpayers.
This bill requires the use of a technique referred to as recovery
auditing. Recovery auditing is a proven financial tool that has been
used to identify overpayments in the private sector for a number of
years. It has been used by the automobile industry, by the retail
trades industry, and by food services industries. It is a practice
employed by most of the Fortune 500 companies. However, few agencies of
the Federal Government have ever utilized this technique. The
exceptions are the Army and Air Force Exchange Services, which
recovered $25 million in overpayments through the use of recovery
auditing in 1998.
Every year Federal agencies make billions, and I say billions of
dollars in overpayments. No matter how efficient a financial management
system, we must face the fact that overpayments do occur in government.
In fact, the larger the volume of government purchases, the greater
likelihood of mistakes in overpayments.
As an example, the Department of Defense, which contracts for
billions of dollars in goods and services every year, found that
between the years 1994 and 1998 defense contractors in the private
sector voluntarily returned $984 million in overpayments to the
Department of Defense. These returned payments were unknown to the
Department of Defense until the money was returned.
Clearly, there is a need for recovery auditing in the Federal
Government. This legislation requires Federal agencies to conduct
recovery audits on all payment activities over $500 million annually on
goods and services for the use or direct benefit of the agencies.
Recovery audits will be optional for other payment activities.
Agencies would be authorized to conduct recovery audits in-house or
contract with private recovery specialists or use a combination of the
two. At least 50 percent of the overpayments recouped would go back to
the general treasury, and not more than 25 percent of the overpayments
recouped could be used for a management improvement program designed to
prevent future overpayments and waste by the agency. The Congressional
Budget Office estimates that H.R. 1827 will result in collections of at
least $180 million in the first 5 years.
This bill was introduced by the gentleman from Indiana (Mr. Burton)
back in May of 1999. We had a hearing before the Subcommittee on
Government Management, Information and Technology, and the full
committee reported the bill with some amendments. There were a number
of concerns that were discussed at the time of the hearing on the bill,
and these have been addressed.
In full committee, I offered an amendment relating to privacy
protection for individually identifiable information, and the gentleman
from California (Mr. Waxman) offered another amendment which requires
agencies to
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conduct a private-public cost comparison before deciding whether to
contract out in the private sector for recovery auditing services or to
do the task in-house with agency personnel. I appreciate the bipartisan
manner in which the chairman, the gentleman from Indiana (Mr. Burton),
approached both of these amendments; and we are pleased that they were
included in the bill.
In an effort to alleviate other concerns, discovered after the full
committee markup we have clarified the bill's intent by adding several
new definitions and making technical clarification in other parts of
the bill through the amendment in the nature of a substitute offered by
the gentleman from Indiana (Mr. Burton). Under the amendment, agency
heads are now expressly authorized to request an exemption from the
program if it goes against the agency's mission or would not be cost
effective.
And in response to concerns raised by vendors who feared that
recovery auditors might barge into their offices as a part of the
recovery auditing process, the amendment in the nature of a substitute
prohibits a recovery auditor from establishing a physical presence,
that is, setting up shop at the entity that is being audited.
Finally, we also stipulated in the amendment in the nature of a
substitute that recovery auditing will apply only to the Department of
Defense's major weapon system programs after the contracts have been
closed. These concerns were expressed to the committee and to the
chairman and myself by the gentleman from Virginia (Mr. Bateman), by
the gentleman from Virginia (Mr. Sisisky), the gentleman from Virginia
(Mr. Scott), and others; and the amendment clarifies the bill in this
regard and addresses those concerns.
Mr. Chairman, this bill clearly represents a significant step forward
in dealing with the billions of dollars in overpayments that are made
by the Federal Government. I am pleased to be a cosponsor of the bill.
It is simply good government. Again, I commend the gentleman from
Indiana (Mr. Burton) for his leadership on the issue.
Mr. Chairman, I reserve the balance of my time.
Mr. BURTON of Indiana. Mr. Chairman, I yield 5 minutes to the
gentleman from California (Mr. Ose), a very valued member of the
committee, and I also thank the gentleman from Texas (Mr. Turner) for
all his hard work on this bill as the ranking member on the
subcommittee.
(Mr. OSE asked and was given permission to revise and extend his
remarks.)
Mr. OSE. Mr. Chairman, today I rise in strong support of this
remarkable piece of legislation, the Government Waste Corrections Act.
I would first like to especially commend my two chairmen on this
committee, that being the gentleman from Indiana (Mr. Burton) and the
gentleman from California (Mr. Horn), for their exceptional work on
this. It is a pleasure to actually have the opportunity to work with
two people of such skill and knowledge and have something fruitful,
such as this, come to the floor. So my compliments to both gentlemen.
To the gentleman from Texas (Mr. Turner), on the minority side, I
appreciate his steady leadership and hand in keeping us on the straight
and narrow, so to speak; and I welcome his bipartisan approach to this
because this is an important issue.
One of the reasons I ran for Congress was to come to this House and
try to instill a private sector mentality into government operations.
The Government Waste Corrections Act does just that. Under this
legislation, agencies will adopt recovery auditing, a practice widely
used in the private sector. Recovery auditing is the process of
reviewing all payment transactions in order to uncover duplicate
payments, vendor pricing mistakes, and missed discounts.
Now, my colleagues may ask, is this bill really needed? Are our
agencies not already careful with taxpayer money? Well, interestingly,
both the General Accounting Office and the inspector generals
throughout our agencies have repeatedly reported and testified that
overpayments to government contractors are a serious, high-risk
problem. However, I want to emphasize one thing here, and that is that
this is not fraud or abuse; these are just mistakes that we are trying
to catch in the process.
A couple of examples of the mistakes that have occurred is that some
agency inspector generals have made that upwards of $15 billion has
erroneously been paid out under our programs for food stamps or housing
programs in a given year. And as the gentleman from Texas (Mr. Turner)
pointed out over at the Department of Defense, private contractors, of
their own volition, have voluntarily returned $984 million in
overpayments to the Department of Defense over the last 4 years. This
may represent only a fraction of the total amount of money that we are
trying to address here.
Now, the gentleman from Indiana has highlighted that this legislation
has been estimated to save $100 million of the taxpayers' money over
the next 5 years. That is a remarkable sum. I happen to think that is
on the low end. I am hopeful that we will be far more successful than
that.
Finally, Mr. Chairman, the Government Waste Corrections Act is
another great example of how we can take management techniques from the
private sector and apply them to the Federal Government's practices
ultimately for the benefit of all Americans and our taxpayers. I urge
my colleagues to support this bill. Let us let the savings begin.
Mr. BURTON of Indiana. Mr. Chairman, I yield 5 minutes to the
gentleman from Virginia (Mr. Bateman), my classmate and a great
American.
Mr. BATEMAN. Mr. Chairman, I thank the gentleman and my good friend
from Indiana for yielding me this time.
Mr. Chairman, I rise today in support of this legislation and
certainly want to commend my colleague for his untiring efforts to
improve the economy and the efficiency of government operations. We are
all in his debt for doing so.
I am rising in support of this bill. However, I do want to point out
that I have some remaining trepidations with the bill and which,
hopefully, can be further improved as it goes through the legislative
process.
In the fiscal year 1996 and 1998 national defense authorization acts,
Congress directed and then expanded a demonstration project to identify
overpayments made to vendors by the Department of Defense. This
initiative and these pilot programs were at the initiative of the
Subcommittee on Military Readiness of the Committee on Armed Services,
which I chair. And certainly I applaud these efforts and know that even
those programs where it has been tried it has been effective and real
savings have been the result.
During the course of this demonstration project, recovery auditing
has proven to be a particularly effective management tool for
identifying and collecting overpayments on contracts that are most
analogous to commercial retail contracts. Indeed, for certain retail
business areas, the Department of Defense has used recovery auditing to
identify and collect overpayments at a higher rate than has been found
in the private sector.
The problem lies in the application of recovery auditing to all
business areas, particularly the procurement of major weapon systems.
Contracts for the procurement of major weapon systems are executed over
several years and are based on unique pricing guidelines. All payments
are subject to routine and extensive contract audit and management
activities designed to ensure accurate payments throughout.
Payments are made periodically and adjusted regularly to account for
contract progress. Therefore, recovery auditing on contracts for the
procurement of major weapon systems will not only be redundant but, in
some cases, may also be virtually impossible to conduct. The bill
before us now attempts to address this issue by providing that recovery
auditing will not apply to major defense system acquisition programs
until they have become closed.
I applaud the sponsors for their efforts to address these concerns. I
am convinced, however, that H.R. 1827 could be further refined to
address the problems I raise today. The Congressional Budget Office
agrees with me and has stated in its cost estimate on
[[Page H716]]
H.R. 1827 that it expects OMB would exempt research, testing and
procurement of military weapons from the requirement of this act.
In closing, Mr. Chairman, let me reiterate that I strongly support
any measure that enhances government efficiency and effectiveness and
reduces the waste of taxpayer dollars, but I do urge caution when doing
so may be redundant and counterproductive.
Mr. TURNER. Mr. Chairman, I yield myself such time as I may consume
to thank the gentleman from Virginia (Mr. Bateman) for his leadership
in trying to clarify the bill. I know the gentleman from Virginia (Mr.
Sisisky) and the gentleman from Virginia (Mr. Scott) had similar
concerns, and through their work we were able to address those
concerns. We certainly hear the request that was made and look forward
to working as this bill moves forward to be sure we have accomplished
the desired result.
Mr. Chairman, I reserve the balance of my time.
Mr. BURTON of Indiana. Mr. Chairman, I yield 5 minutes to the
gentleman from California (Mr. Horn), the subcommittee chairman, and a
very valued member of the Committee on Government Reform.
(Mr. HORN asked and was given permission to revise and extend his
remarks.)
{time} 1315
Mr. HORN. Mr. Chairman, we appreciate the leadership of the gentleman
from Indiana (Mr. Burton) on this. I want to thank the gentleman from
Texas (Mr. Turner), the ranking Democrat on our subcommittee that held
some of these hearings. We have had very strong cooperation from the
gentleman from Texas (Mr. Turner), and I am most grateful.
H.R. 1827, the Government Waste Corrections Act, would require
executive branch departments and agencies to use a process called
``recovery auditing'' to review the various payment transactions in
order to check for erroneous overpayments. Some of it is completely
innocent. It is just a process that sometimes does not work.
H.R. 1827 represents a milestone in the effort to reduce the
widespread waste and errors that do exist in various Federal programs
and that are costing taxpayers billions of dollars each year.
Last session, the gentleman from Indiana (Mr. Burton) held hearings
on waste and mismanagement. He had witnesses from the Inspectors
General of Agriculture, Health and Human Services, and Housing and
Urban Development. Each of them testified about various program and
management problems in their departments. One of the most prevalent
involved erroneous payments.
On March 31, 1999, the Subcommittee on Government Management,
Information, and Technology that I chaired examined the government-wide
consolidated financial statement for fiscal year 1998.
The General Accounting Office, which audited these statements on our
behalf, testified that one of the most serious areas of waste and error
throughout the Government were the millions of dollars in improper
payments being made to contractors, vendors, and suppliers.
Most Federal overpayments go undetected because agencies do not track
and report these improper payments. And there is no law requiring them
to do so. Each year, however, this ongoing waste squanders huge amounts
of taxpayer dollars and detracts from the effectiveness of Federal
operations by diverting resources intended for other purposes.
H.R. 1827 addresses the problem of inadvertent overpayments by
requiring that the Government use a successful private sector business
practice, known as recovery auditing.
In a typical recovery audit, an agency's purchases and payments would
be reviewed to identify where overpayments have occurred. Common areas
involve such things as vendor pricing mistakes, missed discounts, or
duplicate payments. Once an error has been identified and verified, the
vendor would be notified. Valid overpayments would be recovered through
direct payments to the agency or by administrative offsets.
Although agencies may already have the authority to contract for
recovery auditing, the process is simply not being utilized government-
wide. And it should be. Agencies may need to consider using the
services of the private sector because the process requires specialized
skills, databases, and software development.
When the gentleman from Indiana (Chairman Burton) introduced this
legislation and it was referred to our subcommittee, we held further
hearings in June of 1999 in which witnesses testified about the
successful use of recovery auditing in the Department of Defense.
The Army and Air Force Exchange Service makes purchases of $5 million
per year. Recently they completed their recovery auditing, and that
yielded almost $25 million, which is not hay.
A witness from the Defense Supply Center of Philadelphia testified
about a recovery audit pilot program being conducted at that supply
center. The supply center expects to recover over $27 million in
overpayments over a 3-year period.
This bill requires agencies to use recovery auditing for purchases of
$500 million or more annually. However, agencies are encouraged to use
recovery auditing for all procurements regardless of the amount of the
transaction. However, the bill only applies recovery auditing to an
agency's spending for direct contracting.
Examples of direct contracting include payments made to a contractor
to build a new Veteran's Administration hospital and the payments the
Defense Department would make for the purchase of a new weapons 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, drug treatment grants, or payments to
intermediaries to administer the Medicare program.
Federal payments in those programs must make their way through a
number of entities, including State and local governments and nonprofit
organizations, before the service is really delivered to the general
population. Those payment systems are often so complex that it is
uncertain at this time where and how the recovery auditing procedure
would best be applied.
Mr. Chairman, it is important to note that this legislation addresses
the problems that cause the overpayments. This bill would require
agencies to use part of the money they recover to improve their
management and financial systems. As a priority, agencies would have to
work toward improving their overpayment error rate.
In addition to the obvious benefits to Federal agencies, the
Congressional Budget Office estimates that this legislation would
result in collections of at least $180 million over the next 5 years.
H.R. 1827 would be a win for the Government and a win for the
American people. I urge all my colleagues to support this legislation.
Mr. TURNER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I want to thank the gentleman from California (Chairman
Horn) for his hard work on this bill. It has been a pleasure to serve
on the subcommittee with him; and, as always, I appreciate the
bipartisan manner in which he conducts his business.
Mr. Chairman, I reserve the balance of my time.
Mr. BURTON of Indiana. Mr. Chairman, I yield such time as he may
consume to the gentleman from Connecticut (Mr. Shays), one of the more
valued members of our committee.
Mr. SHAYS. Mr. Chairman, I thank my esteemed chairman for yielding me
the time. I appreciate the opportunity to address the committee.
Mr. Chairman, I rise in support of the Government Waste Corrections
Act. In my judgment, this is simply common sense legislation. It is
another important step in Congress's ongoing efforts to eliminate
waste, fraud, and abuse in Federal agencies and programs.
I mean, let us face it, in a Federal budget that exceeds $1.7
trillion, there will be some waste, quite a lot in fact. If we focus
our efforts on rooting out this waste, we are better able to focus our
limited resources on otherwise underfunded requirements.
For example, the Department of Defense, which I oversee, will be able
to direct this money to spare parts, training, and other critical
needs. Getting our financial house in order means more than simply
passing a balanced
[[Page H717]]
budget. It means ensuring the money is spent the way it is intended,
not wasted through overpayments and billing errors.
Recovery audits are a way for the Government to better manage its
finances. This is the same tool used by the private sector firms across
this country to assure their expenditures are also in order.
These audits pay for themselves. Because agencies can use a portion
of the amounts collected back to finance their recovery audit costs,
they will not have to appropriate their own limited funds to audit
activities.
Audits are also a way to pass savings on to taxpayers. In fact, this
legislation requires a minimum of 50 percent of the money collected to
be returned back to the U.S. Treasury.
I thank my colleagues for working on this legislation. It is a
pleasure to be on the Committee on Government Reform, and I am happy
they brought out this legislation.
Mr. TURNER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I understand we have a manager's amendment and an
amendment offered by the gentlewoman from Texas (Ms. Jackson-Lee)
which, of course, I support.
Mr. TERRY. Mr. Chairman, I am a cosponsor of H.R. 1827, the
Government Waste Corrections Act. I commend our leadership for bringing
this bill to the floor. At a time when there is a lot of talk about
reducing waste, fraud and abuse in executive branch programs, I am
pleased that the House is taking some action.
I want to express particular concern about HCFA, and that agency's
lax oversight of Medicare contractors. By HCFA's own admission,
billions of dollars are lost through waste and abuse each year.
Testimony from GAO, as well as the Inspector General of the
Department of Health and Human Services, has documented that Medicare
contractors have improperly paid claims and failed to recoup
overpayments to providers.
Recently, GAO has cited ``integrity problems'' and ``pervasive''
fiscal mismanagement among Medicare contractors. This has included such
questionable activity as arbitrarily turning off computer audits of
claims, altering documents that involved questionable claims, and even
falsification of documents and reports to HCFA. Yet these contractors
are the very same companies that are supposed to be HCFA's front line
force for the identification and recovery of Medicare overpayments.
There is an inherent conflict of interest in having Medicare
contractors both pay for provider claims and then audit their own
performance.
This certainly is not the way that insurance companies in Omaha and
across the country do business. When private resources are at risk,
insurers obtain independent reviews to identify and recover
overpayments. In protecting public resources HCFA would do well to
follow the private example, perhaps turning to some of the same
businesses that have extensive experience in the area.
GAO will report to Congress later this year on the results of a study
HCFA's performance in the identification and collection of Medicare
overpayments. The HHS Inspector General's office also has plans to
compare Medicare overpayment and recovery methods with those of private
insurers. I am hopeful that the result of these studies will be that
HCFA does what the Veterans Administration already has done--that is,
approved use of private firms for cost recovery.
The bill now before us is an important first step recovering the
millions of dollars the federal government over-pays each year. this is
an important bill, and I urge its approval.
Mr. WALDEN of Oregon. Mr. Chairman, I rise today in strong support
for the Government Waste Corrections Act. This bipartisan legislation
will save the taxpayers at least $180 million over the next 5 years by
making the Federal Government less wasteful through adoption of
private-sector solutions to problems with contract payments.
I am a cosponsor of this important piece of legislation because I
believe it is common-sense reform. As a small business owner, I
understand the importance of keeping a close eye on disbursements. If
we treat the funds of our own business with that kind of care, don't
taxpayers deserve the same treatment for their money? I think so, and
I'll bet most Americans you ask think so too.
For some years, the Department of Defense has used a method known as
recovery auditing to cut down on the amount of overpayment to
contractors. The 1996 Defense Authorization Act authorized a recovery
auditing demonstration program at the Defense Supply Center in
Philadelphia. The audit turned up more than $27 million in
overpayments. Due to disputes, only $2.6 million of this amount has
been returned to the Government, but the DOD is optimistic that more
money will be returned soon, and the recovery audit is seen as a
success.
H.R. 1827 would implement this audit method throughout the Federal
Government, saving taxpayers millions more. It would allow agencies to
perform the audit internally or through a contractor, providing
sufficient flexibility to account for differences between agencies. And
it would allow agencies to give cash awards to employees who identify
wasteful spending practices.
Mr. Chairman, I applaud the efforts of Chairman Burton and Chairman
Horn to improve the efficiency of the Federal Government and save
taxpayers money. I urge passage of the common-sense Government Waste
Corrections Act.
Mr. WAXMAN. Mr. Chairman, I rise in support of H.R. 1827, the
Government Waste Correction Act of 2000, which requires agencies to use
a financial management technique known as recovery auditing.
Implementation of recovery auditing has the potential to save
millions of taxpayers' dollars by ensuring that overpayments made by
the federal government are both identified and collected. Just like in
the private sector, the federal government makes overpayments. And just
like in the private sector, efforts should be made to recovery such
overpayments.
These overpayments are often not intentional. Frequently, these are
inadvertent overpayments due to duplicate payments, pricing errors,
missed cash discounts and the like. By requiring the performance of
recovery auditing, we are increasing the efficiency and effectiveness
of the federal government.
Mr. Chairman, I want to highlight two important provisions of H.R.
1827 which ensure (1) fundamental privacy rights and (2) fair treatment
of federal workers. H.R. 1827 requires audits of services that are for
the ``direct benefit and use'' of government agencies. A number of such
services involve the use of individuals' personal information,
including health information. For example, health care services
provided to veterans by community based health clinics under contract
with the federal government may be subject to audits under the bill.
Our colleague, Representative Jim Turner, deserves credit for making
sure these audits won't infringe on legitimate privacy concerns. His
amendment, which was adopted by the Government Reform Committee,
provides essential privacy protections for individually identifiable
information obtained by contractors through recovery audits and
recovery activities under this bill. The Turner amendment adds needed
balance and safeguards to H.R. 1827.
I am also encouraged by the inclusion of my amendment to H.R. 1827
requiring public-private cost comparisons. We should let federal
employees--not private contractors--perform recovery audits when the
federal employees can do a better job at lower cost to the taxpayer
than private contractors. This amendment, which provides for current
Office of Management and Budget (OMB) circular cost comparisons,
ensures that federal workers will not be prevented from doing recovery
auditing work because of any arbitrary federal full time equivalent
ceilings.
Mr. Chairman, recovery auditing is an important tool and should be
used to identify inadvertent overpayments. I urge my colleagues to
support H.R. 1827.
Mr. STERNS. Mr. Chairman, I am here today to express my support for
H.R. 1827, the Government Waste Corrections Act.
Over the years, several studies have focused on the waste and abuse
that occurs within the Federal Government. A few months ago, GAO
reported the financial statement reports of nine federal agencies. Mr.
Speaker, do you want to know what they found? There were improper
payments of $19.1 billion for major programs that these agencies
administered in FY 1998 alone.
These figures are extremely disturbing, but they don't begin to
capture the full extent of the federal government's financial problems.
Neither federal agencies nor GAO has a good estimate of the
overpayments that occur each year. Unfortunately, the extent of
overpayments is expected to be significant due to the poor state of
these federal agencies' financial and accounting records.
This is completely unacceptable, H.R. 1827 will help resolve this
problem, by demanding agencies to give greater attention to identify
and recover overpayments, saving the American taxpayer millions of
dollars. To be more specific, CBO estimates that agencies would collect
back $180 million over five years.
Mr. Chairman, this bill will be truly effective in the fight against
government waste, and I urge its support.
Mr. TURNER. Mr. Chairman, I yield back the balance of my time.
Mr. BURTON of Indiana. Mr. Chairman, we have no more speakers on our
side, and I yield back the balance of my time.
The CHAIRMAN. All time for general debate has expired.
Pursuant to the rule, the amendment in the nature of a substitute
printed in
[[Page H718]]
House Report 106-506 is considered as an original bill for the purpose
of amendment and is considered read.
The text of the amendment in the nature of a substitute is as
follows:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Government Waste Corrections
Act of 2000''.
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:
(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 improve 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) Amounts collected.--The term `amounts collected'
means monies actually received by the United States
Government.
``(2) Chief financial officer.--The term `Chief Financial
Officer' means the official established by section 901 of
this title, or the functional equivalent of such official in
the case of any agency that does not have a Chief Financial
Officer under that section.
``(3) Director.--The term `Director' means the Director of
the Office of Management and Budget.
``(4) 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.
``(5) Facial-discrepancy payment error.--The term `facial-
discrepancy payment error'--
``(A) except as provided in subparagraph (B), means any
payment error that results from, is substantiated by, or is
identified as a result of information contained on any
invoice, delivery order, bill of lading, statement of
account, or other document submitted to the Government by a
supplier of goods or services in the usual and customary
conduct of business, or as required by law or contract to
substantiate payment for such goods or services, including
any such document submitted electronically; and
``(B) does not include payment errors identified,
resulting, or supported from documents that are--
``(i) records of a proprietary nature, maintained solely by
the supplier of goods or services;
``(ii) not specifically required to be provided to the
Government by contract, law, regulation, or to substantiate
payment;
``(iii) submitted to the Government for evaluative purposes
prior to the award of a contract, as part of the evaluation
and award process.
Records, documents, price lists, or other vendor material
published and available in the public domain shall not be
considered sources of facial-discrepancy payment errors, but
may be used to substantiate, clarify, or validate facial-
discrepancy payment errors otherwise identified.
``(6) 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.
``(7) 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.
``(8) 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.
``(9) Recovery audit.--The term `recovery audit' means a
financial management technique applied internally by
Government employees, or by private sector contractors, and
used by executive agencies to audit their internal records to
identify facial-discrepancy payment errors made by those
executive agencies to vendors and other entities in
connection with a payment activity, including facial-
discrepancy payment errors that result from any of the
following:
``(A) Duplicate payments.
``(B) Invoice errors.
``(C) Failure to provide applicable discounts, rebates, or
other allowances.
``(D) Any other facial-discrepancy errors resulting in
inaccurate payments.
``(10) Recovery activity.--The term `recovery activity'
means executive agency activity otherwise authorized by law,
including chapter 37 of this title, to attempt to collect an
identified overpayment.
``(11) Recovery audit contractor.--The term `recovery audit
contractor' means any person who has been hired by an
executive agency to perform a recovery audit pursuant to a
recovery audit contract.
``Sec. 3562. Recovery audit requirement
``(a) In General.--Except as exempted 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);
``(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); and
``(3) may request that the Director exempt a payment
activity, in whole or in part, from the requirement to
conduct recovery audits under paragraph (1) if the head of
the executive agency determines and can demonstrate that
compliance with such requirement--
``(A) would impede the agency's mission; or
``(B) would not, or would no longer be, cost-effective.
``(b) 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 to avoid any
duplication of effort;
``(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 thereof; and
``(4) shall ensure that such recovery audits and recovery
activity are carried out consistent with the standards issued
by the Director under section 3565(b)(2) of this subchapter.
``(c) Scope of Audits.--
``(1) In general.--Each recovery audit of a payment
activity under this section shall cover payments made by the
payment activity in the preceding 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 2000.
``(2) Additional fiscal years.--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 subject to any
statute of limitations constraints regarding recordkeeping
under applicable law.
``(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 may pay the
recovery audit 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 recovery audit contractor.--
``(A) In general.--In addition to performance of a recovery
audit, a contract for such performance may authorize the
recovery audit 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.
[[Page H719]]
``(B) Limitation.--A contract for performance of a recovery
audit shall not affect--
``(i) the authority of the head of an executive agency, or
any other person, 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 in 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 recovery audit contractor
with an executive agency--
``(A) to require the production of any record or
information by any person other than an officer, employee, or
agent of the executive agency; and
``(B) to establish, or otherwise have a physical presence
on the property or premises of any private sector entity as
part of its contractual obligations to an 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 improper use, and protect from
disclosure to any person who is internal or external to the
firm of the recovery audit contractor and who is not directly
involved in the identification or recovery of overpayments,
otherwise confidential or proprietary business information
and financial information that may be viewed or obtained in
the course of carrying out a recovery audit for an executive
agency;
``(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
recovery audit contractor and any recommendations on how to
mitigate such conditions;
``(C) notify the head of the executive agency and the
Inspector General of the executive 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 recovery audit
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, the 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 recovery audit
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 nongovernmental 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 nonpecuniary 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 nongovernmental entity, the nongovernmental
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 of 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 recovery audit contractor
for performance of the audit;
``(2) to reimburse any applicable appropriation for other
recovery audit costs incurred by the executive agency with
respect to the audit; and
``(3) to pay any fees authorized under chapter 37 of this
title.
``(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
``(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 nonappropriated 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, or that remain available for recording,
adjusting, and liquidating obligations properly chargeable to
that appropriation or fund 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 programs
and operations of that executive agency 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 2000.
``(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, including such experts who currently use
recovery auditing as part of their financial management
procedures.
``(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, or would no longer 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.
``(3) Exemption of major defense system acquisition
programs.--
``(A) In general.--Unless determined otherwise by the head
of the agency authorized to conduct a Department of Defense
major system acquisition program, the requirements of section
3562(a) of this title shall not apply to such a program
procured with a cost-type contract until the contract has
become a closed contract.
[[Page H720]]
``(B) Department of defense major system acquisition
program defined.--In this paragraph, the term `Department of
Defense major system acquisition program' has the meaning
that term has in Office of Management and Budget Circular A-
109, as in effect on the date of the enactment of the
Government Waste Corrections Act of 2000.
``(e) Reports.--
``(1) In general.--Not later than 1 year after the date the
Director issues initial guidance under subsection (b), 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 head
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 that section 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 V--RECOVERY AUDITS
``Sec.
``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.''.
During consideration of the bill for amendment, the Chair may accord
priority in recognition to a Member offering an amendment that he has
printed in the designated place in the Congressional Record. Those
amendments will be considered read.
The Chairman of the Committee of the Whole may postpone a request for
a recorded vote on any amendment and may reduce to a minimum of 5
minutes the time for voting on any postponed question that immediately
follows another vote, provided that the time for voting on the first
question shall be a minimum of 15 minutes.
Amendment Offered by Mr. Burton of Indiana
Mr. BURTON of Indiana. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
Amendment offered by Mr. Burton of Indiana:
In section 3(a), in the proposed section 3561(1), strike
``actually received'' and inserting ``received or credited,
by any means, including setoff,''.
In section 3(a), in the proposed section 3561(5)--
(1) in subparagraph (A), strike ``document submitted'' the
first place it appears and insert ``submission given'';
(2) in subparagraph (B)(ii), add ``or'' after the
semicolon; and
(3) strike the matter following subparagraph (B)(iii).
In section 3(a), in the proposed section 3562(c)(1), strike
``the 2 consecutive fiscal years'' and all that follows
through the period and insert ``the fiscal year in which the
Government Waste Corrections Act of 2000 is enacted, and
payments made in the preceding fiscal year.''.
In section 3(a), in the proposed section 3562(d)(4)(A),
strike ``and financial information'' and insert ``, and any
financial information,''.
In section 3(a), in the proposed section 3562, after
subsection (e) insert the following (and redesignate the
subsequent subsection as subsection (g)):
``(f) Relationship to Other Audit Authority.--Nothing in
this subchapter shall be construed as diminishing the
authority granted under section 3726 of this title.
In section 3(a), in the proposed section 3562(g) (as so
redesignated), strike paragraph (2) and insert the following:
``(2) Destruction or return of information.--(A) Upon the
date described in subparagraph (B), a nongovernmental entity
having possession of individually identifiable information
disclosed in the course of a recovery audit or recovery
activity under this chapter performed by the nongovernmental
entity shall destroy the information or return it to the
person from whom it was obtained, unless another applicable
law requires retention of the information.
``(B)(i) Except as provided in clause (ii), the date
referred to in subparagraph (A) is the date of conclusion of
the matter or need for which the information was disclosed.
``(ii) If on the date referred to in clause (i) the
nongovernmental entity has actual notice of any oversight of
the recovery auditing or recovery activity, the date referred
to in subparagraph (A) is the date of the conclusion of such
oversight.
In section 3(a), in the proposed section 3563(e)(2), strike
``, or that remain available for recording, adjusting, and
liquidating obligations properly chargeable to that
appropriation or fund''.
In section 3(a), in the proposed section 3565(e)(1), strike
``Not later than 1 year after the date the Director issues
initial guidance under subsection (b),'' and insert ``Not
later than 30 months after the date of the enactment of the
Government Waste Corrections Act of 2000,''.
Mr. BURTON of Indiana (during the reading). Mr. Chairman, I ask
unanimous consent that the amendment be considered as read and printed
in the Record.
The CHAIRMAN. Is there objection to the request of the gentleman from
Indiana?
There was no objection.
Mr. BURTON of Indiana. Mr. Chairman, this amendment contains
technical and clarifying corrections to the legislation that I have
worked out in advance with our ranking member, the gentleman from
California (Mr. Waxman), and the gentleman from Texas (Mr. Turner), the
subcommittee ranking member.
There are eight changes that include such things as correctly
aligning reporting dates and clarifying language used in definitions.
These changes serve to make the intent of the bill as clear as
possible.
I think this is an amendment that everybody will support. It is
technical in nature and has been cleared with the ranking minority
members, as well.
Mr. TURNER. Mr. Chairman, I rise in support of the amendment.
Mr. Chairman, as the gentleman from Indiana (Mr. Burton) stated,
after this bill went to the Committee on Rules, it was discovered that
there was a need for some technical corrections and clarifications.
This amendment does that. It is bipartisan. It is noncontroversial.
I thank the gentleman from Indiana (Mr. Burton), the gentleman from
California (Mr. Waxman), and the gentleman from California (Mr. Horn)
of our subcommittee for the work they did in addressing these concerns.
I urge adoption of the manager's amendment.
The CHAIRMAN. The question is on the amendment offered by the
gentleman from Indiana (Mr. Burton).
The amendment was agreed to.
Amendment Offered by Ms. Jackson-Lee of Texas
Ms. JACKSON-LEE of Texas. Mr. Chairman, I offer an amendment.
The Clerk read as follows:
Amendment offered by Ms. Jackson-Lee of Texas:
At the end of the bill add the following:
SEC. . STUDY.
(a) In General.--The Director of the Office of Management
and Budget shall conduct a study of the effects of recovery
audits conducted by executive agencies, including any
significant problems relating to the provision of improper or
inadequate notice of recovery audits to persons who are the
subjects of such audits.
(b) Report.--The Director shall report to the Congress the
findings, conclusions, and recommendations of the study under
this section.
Ms. JACKSON-LEE of Texas (during the reading). Mr. Chairman, I ask
unanimous consent that the amendment be considered as read and printed
in the Record.
[[Page H721]]
The CHAIRMAN. Is there objection to the request of the gentlewoman
from Texas?
There was no objection.
Ms. JACKSON-LEE of Texas. Mr. Chairman, I thank the gentleman from
Indiana (Chairman Burton); the gentleman from California (Mr. Waxman),
the ranking member; the gentleman from California (Mr. Horn), the
subcommittee chair; and the gentleman from Texas (Mr. Turner) for their
cooperation on the amendment that I am about to offer. I want to
commend my colleagues for their bipartisan fashion on working on this
legislation.
I believe a study should be incorporated to properly assess due
process concerns raised by recovery audits performed on a contingency
basis for their constituency or error identification.
Let me say that the underlying bill I applaud, and I do believe that
it will be an important new vehicle to help save the Government money.
In particular, for example, in purchases such as a new weapons system,
it is extremely important for us to be able to recover overpayments.
However, I think this amendment will provide us with additional
assistance.
The Government Waste Corrections Act focuses on recovery auditing of
an agency spending for direct contracting, the purchase of goods and
services for direct benefit and the use of the Government.
The legislation, appropriately, does not require recovery auditing
for programs that involve payments to third parties. Indeed, this
legislation could include audits of payments to a contractor to build a
new veteran's hospital or other systems. Regretfully, however, the bill
does not contain sufficient explanation of the procedural aspects, such
as due process concerns for those affected of recovery auditing that
will occur on a contingency basis.
For example, notices of payments on demand are very important to
targets of audits. This ensures that everyone understands what is owed.
Recovery auditing may provide the wrong kind of incentives to those
justifiably trying to identify Government waste.
Therefore, I am offering an amendment to require the Office of
Management and Budget to study the effects of recovery audits
authorized by this legislation, including any significant problems
about proper notice to persons who are subjects of such audits.
I think if we do this research, Mr. Chairman, we will be able to
determine whether or not we are giving the appropriate notice so that
those who are the subject of an audit can appropriately respond but, as
well, appropriately refund the monies that may have been overspent by
the Government.
I ask my colleagues to join me in supporting this amendment to a very
good piece of legislation that will address both the issue of
overpayments but, as well, the questions of due process and being fair
to our large, medium, and small businesses that do business with the
United States Government.
Mr. BURTON of Indiana. Mr. Chairman, I rise in support of the
amendment.
Mr. Chairman, there is a reporting requirement in the bill in section
3565(c) of the legislation under the Responsibilities of the Office of
Management and Budget. However, if the gentlewoman from Texas (Ms.
Jackson-Lee) feels like this is necessary to have an additional study,
even though I think that is covered in the bill, we have no objection
to it, and we will accept the amendment.
Mr. TURNER. Mr. Chairman, I move to strike the last word.
Mr. Chairman, I rise in support of the amendment offered by my
colleague from Texas (Ms. Jackson-Lee).
This amendment would require OMB to conduct a study on the adequacies
of the notices on overpayments provided to the companies that are
subject to recovery audits.
Companies that are audited deserve to know detailed information about
the nature of the overpayments that the recovery auditors identify.
{time} 1330
I appreciate the remarks made by the gentleman from Indiana. I think
it is appropriate that we include this in this bill. I want to commend
the gentlewoman from Texas for bringing this amendment forward. I would
urge its adoption.
The CHAIRMAN. The question is on the amendment offered by the
gentlewoman from Texas (Ms. Jackson-Lee).
The amendment was agreed to.
The CHAIRMAN. The question is on the amendment in the nature of a
substitute, as amended.
The amendment in the nature of a substitute, as amended, was agreed
to.
The CHAIRMAN. Under the rule, the Committee rises.
Accordingly, the Committee rose; and the Speaker pro tempore (Mrs.
Fowler) having assumed the chair, Mr. Barrett of Nebraska, Chairman of
the Committee of the Whole House on the State of the Union, reported
that that Committee, having had under consideration the bill (H.R.
1827) to improve the economy and efficiency of Government operations by
requiring the use of recovery audits by Federal agencies, pursuant to
House Resolution 426, he reported the bill back to the House with an
amendment adopted by the Committee of the Whole.
The SPEAKER pro tempore. Under the rule, the previous question is
ordered.
Is a separate vote demanded on any amendment to the amendment in the
nature of a substitute adopted by the Committee of the Whole? If not,
the question is on the amendment.
The amendment was agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. BURTON of Indiana. Madam Speaker, I object to the vote on the
ground that a quorum is not present and make the point of order that a
quorum is not present.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
The point of no quorum is considered withdrawn.
____________________