[Congressional Record Volume 156, Number 95 (Wednesday, June 23, 2010)]
[Senate]
[Pages S5306-S5309]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2009
Mr. DURBIN. Mr. President, I ask unanimous consent that the Senate
proceed to the consideration of Calendar No. 430, S. 1508.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:
A bill (S. 1508) to amend the Improper Payments Information
Act of 2002 (31 U.S.C. 3321 note) in order to prevent the
loss of billions in taxpayer dollars.
There being no objection, the Senate proceeded to consider the bill,
which had been reported from the Committee on Homeland Security and
Governmental Affairs, with an amendment, as follows:
S. 1508
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Improper Payments
Elimination and Recovery Act of 2009''.
SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOVERY.
(a) Susceptible Programs and Activities.--Section 2 of the
Improper Payments Information Act of 2002 (31 U.S.C. 3321
note) is amended by striking subsection (a) and inserting the
following:
``(a) Identification of Susceptible Programs and
Activities.--
``(1) In general.--The head of each agency shall, in
accordance with guidance prescribed by the Director of the
Office of Management and Budget, periodically review all
programs and activities that the relevant agency head
administers and identify all programs and activities that may
be susceptible to significant improper payments.
``(2) Frequency.--Reviews under paragraph (1) shall be
performed for each program and activity that the relevant
agency head administers during the year after which the
Improper Payments Elimination and Recovery Act of 2009 is
enacted and at least once every 3 fiscal years thereafter.
[[Page S5307]]
``(3) Risk assessments.--
``(A) Definition.--In this subsection the term
`significant' means--
``(i) except as provided under clause (ii), that improper
payments in the program or activity in the preceding fiscal
year may have exceeded--
``(I) $10,000,000 of all program or activity payments made
during that fiscal year reported and 2.5 percent of program
outlays; or
``(II) $100,000,000; and
``(ii) with respect to fiscal years following September
30th of a fiscal year beginning before fiscal year 2013 as
determined by the Office of Management and Budget, that
improper payments in the program or activity in the preceding
fiscal year may have exceeded--
``(I) $10,000,000 of all program or activity payments made
during that fiscal year reported and 1.5 percent of program
outlays; or
``(II) $100,000,000.
``(B) Scope.--In conducting the reviews under paragraph
(1), the head of each agency shall take into account those
risk factors that are likely to contribute to a
susceptibility to significant improper payments, such as--
``(i) whether the program or activity reviewed is new to
the agency;
``(ii) the complexity of the program or activity reviewed;
``(iii) the volume of payments made through the program or
activity reviewed;
``(iv) whether payments or payment eligibility decisions
are made outside of the agency, such as by a State or local
government;
``(v) recent major changes in program funding, authorities,
practices, or procedures;
``(vi) the level and quality of training for personnel
responsible for making program eligibility determinations or
certifying that payments are accurate; and
``(vii) significant deficiencies in the audit report of the
agency or other relevant management findings that might
hinder accurate payment certification.''.
(b) Estimation of Improper Payments.--Section 2 of the
Improper Payments Information Act of 2002 (31 U.S.C. 3321
note) is amended by striking subsection (b) and inserting the
following:
``(b) Estimation of Improper Payments.--With respect to
each program and activity identified under subsection (a),
the head of the relevant agency shall--
``(1) produce a statistically valid or otherwise
appropriate estimate of the improper payments made by each
program and activity; and
``(2) include those estimates in the accompanying materials
to the annual financial statement of the agency required
under section 3515 of title 31, United States Code, or
similar provision of law and applicable guidance of the
Office of Management and Budget.''.
(c) Reports on Actions To Reduce Improper Payments.--
Section 2 of the Improper Payments Information Act of 2002
(31 U.S.C. 3321 note) is amended by striking subsection (c)
and inserting the following:
``(c) Reports on Actions To Reduce Improper Payments.--With
respect to any program or activity of an agency with
estimated improper payments under subsection (b), the head of
the agency shall provide with the estimate under subsection
(b) a report on what actions the agency is taking to reduce
improper payments, including--
``(1) a description of the causes of the improper payments,
actions planned or taken to correct those causes, and the
planned or actual completion date of the actions taken to
address those causes;
``(2) in order to reduce improper payments to a level below
which further expenditures to reduce improper payments would
cost more than the amount such expenditures would save in
prevented or recovered improper payments, a statement of
whether the agency has what is needed with respect to--
``(A) internal controls;
``(B) human capital; and
``(C) information systems and other infrastructure;
``(3) if the agency does not have sufficient resources to
establish and maintain effective internal controls under
paragraph (2)(A), a description of the resources the agency
has requested in its budget submission to establish and
maintain such internal controls;
``(4) program-specific and activity-specific improper
payments reduction targets that have been approved by the
Director of the Office of Management and Budget; and
``(5) a description of the steps the agency has taken to
ensure that agency managers, programs, and, where
appropriate, States and localities are held accountable
through annual performance appraisal criteria for--
``(A) meeting applicable improper payments reduction
targets; and
``(B) establishing and maintaining sufficient internal
controls, including an appropriate control environment, that
effectively--
``(i) prevent improper payments from being made; and
``(ii) promptly detect and recover improper payments that
are made.''.
(d) Reports on Actions To Recover Improper Payments.--
Section 2 of the Improper Payments Information Act of 2002
(31 U.S.C. 3321 note) is amended--
(1) by striking subsection (e);
(2) by redesignating subsections (d) and (f) as subsections
(f) and (g), respectively; and
(3) by inserting after subsection (c) the following:
``(d) Reports on Actions To Recover Improper Payments.--
With respect to any improper payments identified in recovery
audits conducted under section 2(h) of the Improper Payments
Elimination and Recovery Act of 2009 (31 U.S.C. 3321 note),
the head of the agency shall provide with the estimate under
subsection (b) a report on all actions the agency is taking
to recover improper payments, including--
``(1) a discussion of the methods used by the agency to
recover overpayments;
``(2) the amounts recovered, outstanding, and determined to
not be collectable, including the percent such amounts
represent of the total overpayments of the agency;
``(3) if a determination has been made that certain
overpayments are not collectable, a justification for that
determination;
``(4) an aging schedule of the amounts outstanding;
``(5) a summary of how recovered amounts have been disposed
of;
``(6) a discussion of any conditions giving rise to
improper payments and how those conditions are being
resolved; and
``(7) if the agency has determined under section 2(h) of
the Improper Payments Elimination and Recovery Act of 2009
(31 U.S.C. 3321 note) that performing recovery audits for any
applicable program or activity is not cost effective, a
justification for that determination.
``(e) Governmentwide Reporting of Improper Payments and
Actions To Recover Improper Payments.--
``(1) Report.--Each fiscal year the Director of the Office
of Management and Budget shall submit a report with respect
to the preceding fiscal year on actions agencies have taken
to report information regarding improper payments and actions
to recover improper payments to--
``(A) the Committee on Homeland Security and Governmental
Affairs of the Senate;
``(B) the Committee on Oversight and Government Reform of
the House of Representatives; and
``(C) the Comptroller General.
``(2) Contents.--Each report under this subsection shall
include--
``(A) a summary of the reports of each agency on improper
payments and recovery actions submitted under this section;
``(B) an identification of the compliance status of each
agency to which this Act applies;
``(C) governmentwide improper payment reduction targets;
and
``(D) a discussion of progress made towards meeting
governmentwide improper payment reduction targets.''.
(e) Definitions.--Section 2 of the Improper Payment
Information Act of 2002 (31 U.S.C. 3321 note) is amended by
striking subsections (f) (as redesignated by this section)
and inserting the following:
``(f) Definitions.--In this section:
``(1) Agency.--The term `agency' means an executive agency,
as that term is defined in section 102 of title 31, United
States Code.
``(2) Improper payment.--The term `improper payment'--
``(A) means any payment that should not have been made or
that was made in an incorrect amount (including overpayments
and underpayments) under statutory, contractual,
administrative, or other legally applicable requirements; and
``(B) includes any payment to an ineligible recipient, any
payment for an ineligible good or service, any duplicate
payment, any payment for a good or service not received
(except for such payments where authorized by law), and any
payment that does not account for credit for applicable
discounts.
``(3) Payment.--The term `payment' means any transfer or
commitment for future transfer of Federal funds such as cash,
securities, loans, loan guarantees, and insurance subsidies
to any non-Federal person or entity, that is made by a
Federal agency, a Federal contractor, a Federal grantee, or a
governmental or other organization administering a Federal
program or activity.
``(4) Payment for an ineligible good or service.--The term
`payment for an ineligible good or service' shall include a
payment for any good or service that is rejected under any
provision of any contract, grant, lease, cooperative
agreement, or any other procurement mechanism.''.
(f) Guidance by the Office of Management and Budget.--
Section 2 of the Improper Payments Information Act of 2002
(31 U.S.C. 3321 note) is amended by striking subsection (g)
(as redesignated by this section) and inserting the
following:
``(g) Guidance by the Office of Management and Budget.--
``(1) In general.--Not later than 6 months after the date
of enactment of the Improper Payments Elimination and
Recovery Act of 2009, the Director of the Office of
Management and Budget shall prescribe guidance for agencies
to implement the requirements of this section. The guidance
shall not include any exemptions to such requirements not
specifically authorized by this section.
``(2) Contents.--The guidance under paragraph (1) shall
prescribe--
``(A) the form of the reports on actions to reduce improper
payments, recovery actions, and governmentwide reporting; and
``(B) strategies for addressing risks and establishing
appropriate prepayment and postpayment internal controls.''.
(g) Determination of Agency Readiness for Opinion on
Internal Control.--Not later than 1 year after the date of
enactment of this Act, the Director of the Office of
Management and Budget shall develop--
[[Page S5308]]
(1) specific criteria as to when an agency should initially
be required to obtain an opinion on internal control over
financial reporting; and
(2) criteria for an agency that has demonstrated a
stabilized, effective system of internal control over
financial reporting, whereby the agency would qualify for a
multiyear cycle for obtaining an audit opinion on internal
control over financial reporting, rather than an annual
cycle.
(h) Recovery Audits.--
(1) Definition.--In this subsection, the term ``agency''
has the meaning given under section 2(f) of the Improper
Payments Information Act of 2002 (31 U.S.C. 3321 note) as
redesignated by this Act.
(2) In general.--
(A) Conduct of audits.--Except as provided under paragraph
(4) and if not prohibited under any other provision of law,
the head of each agency shall conduct recovery audits with
respect to each program and activity of the agency that
expends $1,000,000 or more annually if conducting such audits
would be cost-effective.
(B) Procedures.--In conducting recovery audits under this
subsection, the head of an agency--
(i) shall give priority to the most recent payments and to
payments made in any program or programs identified as
susceptible to significant improper payments under section
2(a) of the Improper Payments Information Act of 2002 (31
U.S.C. 3321 note);
(ii) shall implement this subsection in a manner designed
to ensure the greatest financial benefit to the Government;
and
(iii) may conduct recovery audits directly, by procuring
performance of recovery audits by contract (subject to the
availability of appropriations), or by any combination
thereof.
(C) Recovery audit contracts.--With respect to recovery
audits procured by an agency by contract--
(i) subject to subparagraph (B)(iii), the head of the
agency may authorize the contractor to notify entities
(including persons) of potential overpayments made to such
entities, respond to questions concerning potential
overpayments, and take other administrative actions with
respect to overpayment claims made or to be made by the
agency; and
(ii) such contractor shall have no authority to make final
determinations relating to whether any overpayment occurred
and whether to compromise, settle, or terminate overpayment
claims.
(D) Contract terms and conditions.--The agency shall
include in each contract for procurement of performance of a
recovery audit a requirement that the contractor shall--
(i) provide to the agency periodic reports on conditions
giving rise to overpayments identified by the contractor and
any recommendations on how to mitigate such conditions; and
(ii) notify the agency of any overpayments identified by
the contractor pertaining to the agency or to any other
agency or agencies that are beyond the scope of the contract.
(E) Agency action following notification.--An agency shall
take prompt and appropriate action in response to a report or
notification by a contractor under subparagraph (D)(ii), to
collect overpayments and shall forward to other agencies any
information that applies to such agencies.
(3) Disposition of amounts recovered.--
(A) In general.--Amounts collected by agencies each fiscal
year through recovery audits conducted under this subsection
shall be treated in accordance with this paragraph.
(B) Use for financial management improvement program.--Not
more than 25 percent of the amounts collected by an agency
through recovery audits--
(i) shall be available, subject to appropriation, to the
head of the agency or the State or local government
administering the program or activity to carry out the
financial management improvement program of the agency under
paragraph (4);
(ii) may be credited, if applicable, for that purpose by
the head of an agency to any agency appropriations and funds
that are available for obligation at the time of collection;
and
(iii) shall be used to supplement and not supplant any
other amounts available for that purpose and shall remain
available until expended.
(C) Use for original purpose.--Not more than 25 percent of
the amounts collected by an agency--
(i) [shall be credited to the appropriation or fund, if
any, available for obligation at the time of collection]
shall be deposited and available subject to appropriation for
the same general purposes as the appropriation or fund from
which the overpayment was made; and
(ii) shall remain available for the same period and
purposes as the appropriation or fund to which credited.
(D) Use for inspector general activities.--Not more than 5
percent of the amounts collected by an agency shall be
available, subject to appropriation, to the Inspector General
of that agency for--
(i) the Inspector General to carry out this Act; or
(ii) any other activities of the Inspector General relating
to investigating improper payments or auditing internal
controls associated with payments.
(E) Deposit of proceeds.--Funds made available under
subparagraphs (B) and (D) by appropriations shall be--
(i) deposited into the appropriate program integrity
accounts of the agency or the State or local government
administering the program or activity; and
(ii) expended only as authorized in annual appropriations
Acts.
(F) Remainder.--Amounts collected that are not applied in
accordance with subparagraphs (B), (C), or (D) or to meet
obligations to recovery audit contractors shall be deposited
in the Treasury as miscellaneous receipts.
(G) Exceptions relating to entitlement and tax credit
programs.--This paragraph shall not apply to amounts
collected through recovery audits conducted under this
subsection relating to--
(i) entitlement programs under section 3(9) of the
Congressional Budget and Impoundment Control Act of 1974 (2
U.S.C. 622(9)); or
(ii) tax credit programs under the Internal Revenue Code of
1986.
(4) Financial management improvement program.--
(A) Requirement.--The head of each agency shall conduct a
financial management improvement program, consistent with
rules prescribed by the Director of the Office of Management
and Budget.
(B) Program features.--In conducting the program, the head
of the agency--
(i) shall, as the first priority of the program, address
problems that contribute directly to agency improper
payments; and
(ii) may seek to reduce errors and waste in other agency
programs and operations.
(5) Other recovery audit requirements.--
(A) In general.--Subchapter VI of chapter 35 of title 31,
United States Code, is repealed.
(B) Technical and conforming amendments.--
(i) Table of sections.--The table of sections for chapter
35 of title 31, United States Code, is amended by striking
the matter relating to subchapter VI.
(ii) Definition.--Section 3501 of title 31, United States
Code, is amended by striking ``and subchapter VI of this
title''.
(iii) Homeland security grants.--Section 2022(a)(6) of the
Homeland Security Act of 2002 (6 U.S.C. 612(a)(6)) is amended
by striking ``(as that term is defined by the Director of the
Office of Management and Budget under section 3561 of title
31, United States Code)'' and inserting ``under section 2(h)
of the Improper Payments Elimination and Recovery Act of 2009
(31 U.S.C. 3321 note)''.
(6) Rule of construction.--Except as provided under
paragraph (5), nothing in this section shall be construed as
terminating or in any way limiting authorities that are
otherwise available to agencies under existing provisions of
law to recover improper payments and use recovered amounts.
(i) Report on Recovery Auditing.--Not later than 2 years
after the date of the enactment of this Act, the Chief
Financial Officers Council established under section 302 of
the Chief Financial Officers Act of 1990 (31 U.S.C. 901
note), in consultation with the Council of Inspectors General
on Integrity and Efficiency established under section 7 of
the Inspector General Reform Act of 2009 (Public Law 110-409)
and recovery audit experts, shall conduct a study of--
(1) the implementation of subsection (h);
(2) the costs and benefits of agency recovery audit
activities, including those under subsection (h), and
including the effectiveness of using the services of--
(A) private contractors;
(B) agency employees;
(C) cross-servicing from other agencies; or
(D) any combination of the provision of services described
under subparagraphs (A) through (C); and
(3) submit a report on the results of the study to--
(A) the Committee on Homeland Security and Governmental
Affairs of the Senate;
(B) the Committee on Oversight and Government Reform of the
House of Representatives; and
(C) the Comptroller General.
SEC. 3. COMPLIANCE.
(a) Definitions.--In this section:
(1) Agency.--The term ``agency'' has the meaning given
under section 2(f) of the Improper Payments Information Act
of 2002 (31 U.S.C. 3321 note) as redesignated by this Act.
(2) Annual financial statement.--The term ``annual
financial statement'' means the annual financial statement
required under section 3515 of title 31, United States Code,
or similar provision of law.
(3) Compliance.--The term ``compliance'' means that the
agency--
(A) has published an annual financial statement for the
most recent fiscal year and posted that report and any
accompanying materials required under guidance of the Office
of Management and Budget on the agency website;
(B) if required, has conducted a program specific risk
assessment for each program or activity that conforms with
section 2(a) the Improper Payments Information Act of 2002
(31 U.S.C. 3321 note);
(C) if required, publishes improper payments estimates for
all programs and activities identified under section 2(b) of
the Improper Payments Information Act of 2002 (31 U.S.C. 3321
note) in the accompanying materials to the annual financial
statement;
(D) publishes programmatic corrective action plans prepared
under section 2(c) of the Improper Payments Information Act
of 2002 (31 U.S.C. 3321 note) that the agency may
[[Page S5309]]
have in the accompanying materials to the annual financial
statement;
(E) publishes improper payments reduction targets
established under section 2(c) of the Improper Payments
Information Act of 2002 (31 U.S.C. 3321 note) that the agency
may have in the accompanying materials to the annual
financial statement for each program assessed to be at risk,
and is meeting such targets; and
(F) has reported an improper payment rate of less than 10
percent for each program and activity for which an estimate
was published under section 2(b) of the Improper Payments
Information Act of 2002 (31 U.S.C. 3321 note).
(b) Annual Compliance Report by Inspectors General of
Agencies.--Each fiscal year, the Inspector General of each
agency shall determine whether the agency is in compliance
and submit a report on that determination to--
(1) the head of the agency;
(2) the Committee on Homeland Security and Governmental
Affairs of the Senate;
(3) the Committee on Oversight and Governmental Reform of
the House of Representatives; and
(4) the Comptroller General.
(c) Remediation.--
(1) Noncompliance.--
(A) In general.--If an agency is determined by the
Inspector General of that agency not to be in compliance
under subsection (b) in a fiscal year, the head of the agency
shall submit a plan to Congress describing the actions that
the agency will take to come into compliance.
(B) Plan.--The plan described under subparagraph (A) shall
include--
(i) measurable milestones to be accomplished in order to
achieve compliance for each program or activity;
(ii) the designation of a senior agency official who shall
be accountable for the progress of the agency in coming into
compliance for each program or activity; and
(iii) the establishment of an accountability mechanism,
such as a performance agreement, with appropriate incentives
and consequences tied to the success of the official
designated under clause (ii) in leading the efforts of the
agency to come into compliance for each program and activity.
(2) Noncompliance for 2 fiscal years.--
(A) In general.--If an agency is determined by the
Inspector General of that agency not to be in compliance
under subsection (b) for 2 consecutive fiscal years for the
same program or activity, and the Director of the Office of
Management and Budget determines that additional funding
would help the agency come into compliance, the head of the
agency shall obligate additional funding, in an amount
determined by the Director, to intensified compliance
efforts.
(B) Funding.--In providing additional funding described
under subparagraph (A), the head of an agency shall use any
reprogramming or transfer authority available to the agency.
If after exercising that reprogramming or transfer authority
additional funding is necessary to obligate the full level of
funding determined by the Director of the Office of
Management and Budget under subparagraph (A), the agency
shall submit a request to Congress for additional
reprogramming or transfer authority.
(3) Reauthorization proposals.--If an agency is determined
by the Inspector General of that agency not to be in
compliance under subsection (b) for more than 3 consecutive
fiscal years for the same program or activity, the head of
the agency shall, not later than 30 days after such
determination, submit to Congress--
(A) reauthorization proposals for each program or activity
that has not been in compliance for 3 or more consecutive
fiscal years; or
(B) proposed statutory changes necessary to bring the
program or activity into compliance.
(d) Compliance Enforcement Pilot Programs.--
(1) In general.--The Director of the Office of Management
and Budget may establish 1 or more pilot programs which shall
test potential accountability mechanisms with appropriate
incentives and consequences tied to success in ensuring
compliance with this Act and eliminating improper payments.
(2) Report.--Not later than 5 years after the date of
enactment of this Act, the Director of the Office of
Management and Budget shall submit a report to Congress on
the findings associated with any pilot programs conducted
under paragraph (1). The report shall include any legislative
or other recommendations that the Director determines
necessary.
(e) Report on Chief Financial Officers Act of 1990.--Not
later than 1 year after the date of the enactment of this
Act, the Chief Financial Officers Council established under
section 302 of the Chief Financial Officers Act of 1990 (31
U.S.C. 901 note) and the Council of Inspectors General on
Integrity and Efficiency established under section 7 of the
Inspector General Reform Act of 2009 (Public Law 110-409), in
consultation with a broad cross-section of experts and
stakeholders in Government accounting and financial
management shall--
(1) jointly examine the lessons learned during the first 20
years of implementing the Chief Financial Officers Act of
1990 (31 U.S.C. 901) and identify any reforms or improvements
to the legislative and regulatory compliance framework for
Federal financial management that will optimize Federal
agency efforts to--
(A) publish relevant, timely, and reliable reports on
Government finances; and
(B) implement internal controls that mitigate the risk for
fraud, waste, and error in Government programs; and
(2) submit a report on the results of the examination to--
(A) the Committee on Homeland Security and Governmental
Affairs of the Senate;
(B) the Committee on Oversight and Government Reform of the
House of Representatives; and
(C) the Comptroller General.
Mr. DURBIN. Mr. President, I ask unanimous consent that the
committee-reported amendment be withdrawn; the Carper substitute
amendment, which is at the desk, be agreed to, and the bill, as
amended, be read a third time and passed; the motions to reconsider be
laid upon the table, without intervening action or debate; and that any
statements relating to the bill be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The committee amendment was withdrawn.
The amendment (No. 4392) was agreed to.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
The bill (S. 1508), as amended, was ordered to be engrossed for a
third reading, was read the third time, and passed.
____________________