[Congressional Record (Bound Edition), Volume 156 (2010), Part 9]
[House]
[Pages 12913-12918]
[From the U.S. Government Publishing Office, www.gpo.gov]




         IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010

  Mr. DAVIS of Illinois. Mr. Speaker, I move to suspend the rules and 
pass the 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.
  The Clerk read the title of the bill.
  The text of the bill is 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 2010''.

     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 2010 is 
     enacted and at least once every 3 fiscal years thereafter. 
     For those agencies already performing a risk assessment every 
     3 years, agencies may apply to the Director of the Office of 
     Management and Budget for a waiver from the requirement of 
     the preceding sentence and continue their 3-year risk 
     assessment cycle.
       ``(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

[[Page 12914]]

       ``(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, experience, 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 estimate, or an 
     estimate that is otherwise appropriate using a methodology 
     approved by the Director of the Office of Management and 
     Budget, 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 2010 (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 of 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 2010 
     (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 overpayments to--
       ``(A) the Committee on Homeland Security and Governmental 
     Affairs of the Senate; and
       ``(B) the Committee on Oversight and Government Reform of 
     the House of Representatives.
       ``(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 Payments 
     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 funding 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 2010, 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) Determinations of Agency Readiness for Opinion on 
     Internal Control.--Not later than 1 year after the date of 
     enactment

[[Page 12915]]

     of this Act, the Director of the Office of Management and 
     Budget shall develop--
       (1) specific criteria as to when an agency should initially 
     be required to obtain an opinion on internal control over 
     improper payments; and
       (2) criteria for an agency that has demonstrated a 
     stabilized, effective system of internal control over 
     improper payments, whereby the agency would qualify for a 
     multiyear cycle for obtaining an audit opinion on internal 
     control over improper payments, 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 using other 
     departments and agencies of the United States, or by 
     procuring performance of recovery audits by private sector 
     sources 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), and except to the 
     extent such actions are outside the agency's authority, as 
     defined by section 605(a) of the Contract Disputes Act of 
     1978 (41 U.S.C. 605(a)), 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.--
       (i) In general.--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;
       (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; 
     and
       (III) report to the agency credible evidence of fraud or 
     vulnerabilities to fraud, and conduct appropriate training of 
     personnel of the contractor on identification of fraud.

       (ii) Reports on actions taken.--Not later than November 1 
     of each year, each agency shall submit a report on actions 
     taken by the agency during the preceding fiscal year to 
     address the recommendations described under clause (i)(I) 
     to--

       (I) the Office of Management and Budget; and
       (II) Congress.

       (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)(i)(I) or 
     (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. The 
     agency head shall determine the distribution of collected 
     amounts, less amounts needed to fulfill the purposes of 
     section 3562(a) of title 31, United States Code, in 
     accordance with subparagraphs (B), (C), and (D).
       (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 to the head of the agency 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 for the 
     same general purposes as the appropriation or fund from which 
     the overpayment was made;
       (ii) shall remain available for the same period and 
     purposes as the appropriation or fund to which credited; and
       (iii) if the appropriation from which the overpayment was 
     made has expired, shall be newly available for the same time 
     period as the funds were originally available for obligation, 
     except that any amounts that are recovered more than five 
     fiscal years from the last fiscal year in which the funds 
     were available for obligation shall be deposited in the 
     Treasury as miscellaneous receipts, except that in the case 
     of recoveries of overpayments that are made from trust or 
     special fund accounts, such amounts shall revert to those 
     accounts.
       (D) Use for inspector general activities.--Not more than 5 
     percent of the amounts collected by an agency shall be 
     available to the Inspector General of that agency--
       (i) 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; and

       (ii) shall remain available for the same period and 
     purposes as the appropriation or fund to which credited.
       (E) Remainder.--Amounts collected that are not applied in 
     accordance with subparagraph (A), (B), (C), or (D) shall be 
     deposited in the Treasury as miscellaneous receipts, except 
     that in the case of recoveries of overpayments that are made 
     from trust or special fund accounts, such amounts shall 
     revert to those accounts.
       (F) Discretionary amounts.--This paragraph shall apply only 
     to recoveries of overpayments that are made from 
     discretionary appropriations (as that term is defined by 
     paragraph 7 of section 250 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985) and shall not apply to 
     recoveries of overpayments that are made from discretionary 
     amounts that were appropriated prior to enactment of this 
     Act.
       (G) Application.--This paragraph shall not apply to 
     recoveries of overpayments if the appropriation from which 
     the overpayment was made has not expired.
       (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) Privacy protections.--Any nongovernmental entity that, 
     in the course of recovery auditing or recovery activity under 
     this subsection, obtains information that identifies an 
     individual or with respect to which there is a reasonable 
     basis to believe that the information can be used to identify 
     an individual, may not disclose the information for any 
     purpose other than such recovery auditing or recovery 
     activity and governmental oversight of such activity, unless 
     disclosure for that other purpose is authorized by the 
     individual to the executive agency that contracted for the 
     performance of the recovery auditing or recovery activity.
       (6) Other recovery audit requirements.--
       (A) In general.--(i) Except as provided in clause (ii), 
     subchapter VI of chapter 35 of title 31, United States Code, 
     is repealed.
       (ii) Section 3562(a) of title 31, United States Code, shall 
     continue in effect, except that references in such section 
     3562(a) to programs carried out under section 3561 of such 
     title, shall be interpreted to mean programs carried out 
     under section 2(h) of this Act.
       (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 2010 
     (31 U.S.C. 3321 note)''.
       (7) Rule of construction.--Except as provided under 
     paragraph (5), nothing in this

[[Page 12916]]

     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--
       (A) those activities under subsection (h); and
       (B) the effectiveness of using the services of--
       (i) private contractors;
       (ii) agency employees;
       (iii) cross-servicing from other agencies; or
       (iv) any combination of the provision of services described 
     under clauses (i) through (iii); 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); and
       (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 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 and statutory 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 reforms or improvements, if 
     any, 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) jointly 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.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Illinois (Mr. Davis) and the gentleman from Utah (Mr. Chaffetz) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Illinois.


                             General Leave

  Mr. DAVIS of Illinois. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days in which to revise and extend their 
remarks.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Illinois?
  There was no objection.
  Mr. DAVIS of Illinois. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, the Office of Management and Budget recently reported 
that the Federal Government made $98 billion in improper and 
overpayments last year. This is a staggering amount and completely 
unacceptable. No family or business in America would tolerate being 
charged twice or overbilled for anything, and neither should our 
government.
  We need to do everything we can to ensure that the government spends 
every tax dollar in the most responsible way possible. In fact, we have 
an

[[Page 12917]]

obligation to the taxpayers to fight waste, fraud and abuse and to 
ensure that if the government overpays for something, it has the means 
to recover those precious tax dollars.
  The bill we're now considering, S. 1508, the Improper Payments 
Elimination and Recovery Act of 2010, will provide the government with 
the means to fulfill this obligation to the taxpayers.
  Senate 1508 amends the Improper Payments Information Act of 2002 to 
require the head of each Federal agency to review agency programs and 
activities every 3 fiscal years and identify those programs that may be 
susceptible to significant improper payments. If agency heads determine 
that significant overpayments have occurred, they must then recover 
them by following the procedures in the act.
  The bill also requires the agencies which make significant improper 
payments to implement internal controls and other procedures to help 
eliminate any future improper payments.

                              {time}  1040

  The House passed a companion bill, H.R. 3393, the Improper Payments 
Elimination Act of 2009, introduced by Representative Patrick Murphy on 
April 28, 2010, by a voice vote. S. 1508 has small but important 
changes from the base text in H.R. 3393. S. 1508 strengthens the bill 
by requiring recovery audit contractors to report the fraud they find 
and to conduct appropriate training on the means and methods to do so. 
S. 1508 also requires the agencies to report to Congress and OMB their 
actions and plans to address the recommendations they receive from the 
audit recovery contractors.
  S. 1508 provides the Federal Government with the tools needed to 
prevent mistakes and overpayments in the first place, and recover funds 
that are paid in error. It makes Federal agencies more accountable for 
properly managing taxpayer funds. The bill requires agencies to develop 
and report corrective action plans based on measured error rates, and 
creates incentives for meeting their goals and penalties for failure. 
Importantly, the bill also gives the agency the means to go after the 
funds they have overpaid, which will make the taxpayer, agencies, 
programs, and activities which relied on those appropriations whole.
  We are living in a time when our government is living under extreme 
fiscal demands, and we need to do everything possible to ensure that 
every tax dollar goes to where it is needed. To ensure this takes 
place, we need to provide our Federal agencies with the tools to 
properly manage their spending. We also need to give the agencies the 
ability to follow through with their oversight and provide them with 
the ability to recover erroneous payments. However, we cannot stop 
there. We must do everything we can to ensure that Federal agencies 
that make improper payments fix the problems that allowed the improper 
payments in the first place.
  I would like to thank Representatives Murphy, Bilbray, Towns, and 
Issa for working together in a truly bipartisan manner to get this 
important piece of legislation enacted into law. S. 1508 is a 
commonsense, good government bill, and I encourage my colleagues to 
join me in supporting it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CHAFFETZ. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of Senate bill 1508, the Improper 
Payments Elimination and Recovery Act of 2010. The amount of waste, 
fraud, and abuse of taxpayer dollars by Federal agencies is absolutely 
staggering. The Office of Management and Budget, the OMB, has reported 
that nearly $100 billion is wasted each year as a result of mistakes by 
our Federal agencies when paying for products and services. Last year, 
roughly $98 billion was lost in improper payments, $98 billion, the 
result of fraud or poor financial management. Half of this came from 
Medicare and Medicaid programs alone.
  Ninety-eight billion dollars is more than double the budget of the 
Department of Homeland Security. At a time when our country is facing 
record budget deficits, we cannot afford to lose billions of dollars 
each year to mistakes and fraud.
  Mr. Speaker, in April of this year, the House passed H.R. 3393, the 
companion to Senate bill 1508. The Senate has since made improvements 
to the legislation that will strengthen our ability to eliminate 
improper payments and recover lost funds. Like H.R. 3393, Senate bill 
1508 helps prevent improper payments by requiring agencies to report 
their corrective action plans and improper payment reduction targets 
used to remedy their payment error problems, lowers the reporting 
threshold for improper payments, and expands the use of recovery 
auditing by requiring that all agencies with outlays of more than $1 
million perform recovery audits on their programs and activities to 
increase the recovery of overpayments.
  Senate bill 1508 strengthens H.R. 3393 by requiring additional 
reporting and training related to fraud, and ensures that agencies take 
action to mitigate overpayment vulnerabilities by requiring agencies to 
report to the OMB and the Congress on the measures that they are 
taking.
  Mr. Speaker, I urge all of my colleagues to support this important 
piece of legislation to help stop the waste, fraud, and abuse of the 
taxpayer dollars. We should expect nothing less.
  Mr. Speaker, I yield such time as he may consume to one of the key 
people in the development of this legislation, my colleague from 
California (Mr. Bilbray).
  Mr. BILBRAY. I would like to thank the gentleman from Utah for 
yielding.
  Mr. Speaker, I enjoyed working with Patrick Murphy, the gentleman 
from Pennsylvania, developing this bill, really looking at creating a 
transparent process so the American people can finally see what they 
have been telling Washington for a long time existed.
  While this is a small step, it is a good example of what the American 
people have been demanding over the years, but especially just 
recently. I think all of us that go home and talk to our constituents 
understand that the exchanges with the average citizen for a Member of 
Congress has been let's just say brisk to say the least. And one of the 
greatest things that the American people are upset about is the feeling 
that their money is not being handled appropriately, that the dollars 
and cents that the Federal Government is taking from them after they 
work hard for every dollar and cent is not being handled in an 
appropriate way that they feel confident with.
  Today we are going to take an action that is a small step. It's not 
going to solve the problem, but it is very much an indication of the 
kind of action the American people have been demanding. The fact is 
it's time that the bipartisan forces in this Congress and in future 
Congresses understand that our greatest responsibility and obligation 
is not to the party leaders of either Republican or Democrat, but to 
the taxpayers who pay our salary, but more importantly, trust us with 
their hard-earned money to use it appropriately and responsibly.
  Mr. Speaker, when we talk about this year facing a $1.3 trillion 
deficit, I think that we have got to recognize it's time that we start 
doing what the American people are demanding. Ending improper payments 
is the low-hanging fruit right now. Basically, it's there for the 
picking. And that's probably why we are able to do it today.
  Frankly, according to the Office of Management and Budget, we are 
talking about approximately $98 billion. Now, $98 billion seems to be 
an abstract, but consider the fact that that is almost twice what we 
spend on the homeland security budget. We talk about defending our 
neighborhoods, trying to secure our borders, trying to make sure 
terrorism stays out of our communities, we talk a lot about that. But 
when we recognize that we are now giving away, wrongly, twice as much 
money as we spend on our own homeland security, I think the American 
people have a reason to be outraged, and justifiably so.
  By working in a bipartisan manner, we have been able to get the 
Senate to cooperate and craft a solution for this

[[Page 12918]]

long-standing problem. And frankly, I think our bill really does set 
the goal that we should try to follow, and that is, let's find out how 
much more we can cooperate, how many more dollars we can save, and how 
much more credibility we can finally start bringing back to this body 
from the American people, for the American people. Our bill is endorsed 
by the budget watchdog organizations liked the National Taxpayers Union 
and the Council on Citizens Against Government Waste.
  Mr. Speaker, I have the privilege of serving as the ranking member 
for the Subcommittee on Procurement. I not only strongly ask my 
colleagues to support this bill, but I would like to leave you with a 
question, a question for Republicans and Democrats, but most 
importantly a question the American people would like to ask. And that 
is, how much more could we save if this Congress was brave enough to 
look deeper into our budget and our expenditures? How much more could 
we be saving for the taxpayer or providing to the citizens if we were 
brave enough to really audit our own books the way we expect the 
private sector and citizens to do every year?
  If we only had the bravery to look in and find the truth and take 
action on it, I think that when we go back to our districts there would 
be a different welcome, a different type of response. And frankly, I 
think the response we have received in the past is one that we have 
deserved. Hopefully, we will earn the right to deserve a more positive 
response from the constituents when we take this action and follow it 
up with more concrete action to make sure that we do maintain the 
trust.
  So again, I ask Congress let's take this as a first step. I 
appreciate the support from my colleague from his great State to be 
able to say let's work together, let's make the move, but let's stop 
being in denial that there isn't more that Congress ought to do to 
maintain the integrity of our budget process.
  Mr. DAVIS of Illinois. Mr. Speaker, at this time I yield such time as 
he may consume to one of the persons who worked extremely hard to bring 
this legislation to the floor and to craft a very excellent piece of 
legislation, Representative Murphy.
  Mr. PATRICK J. MURPHY of Pennsylvania. I thank the gentleman from 
Illinois for the time.
  Mr. Speaker, I do want to thank my colleague from the other side of 
the aisle, Republican Representative Brian Bilbray from California, for 
partnering with me on this bipartisan bill for commitment to fiscal 
responsibility. I also want to thank the other Chamber over in the 
Senate, specifically Senator Tom Carper, for his tireless efforts in 
advancing this legislation over in the other body, and his Republican 
colleague on this bill, Senator John McCain.

                              {time}  1050

  Mr. Speaker, this legislation is proof that good things can happen 
when Democrats and Republicans are willing to work together and put 
their differences aside for commonsense measures to get things done for 
the American taxpayer.
  Now, I am so proud that after 2 years of hard work on this piece of 
legislation, Mr. Bilbray and I, after we vote on this today in this 
House because it just passed in the Senate, will be sending this bill 
to the President of the United States for signature and it will become 
law. In this time of tightened belts and strained budgets, it is more 
important than ever to get our fiscal house in order and to eliminate 
waste from our system and make sure that we earn the trust of the 
American taxpayer.
  Mr. Speaker, my bill, the Improper Payments Elimination and Recovery 
Act, is a bipartisan, commonsense solution to cut waste from the 
Federal budget and streamline the payment systems of Federal agencies.
  Mr. Speaker, I know the American people would be horrified to learn 
that every day the Federal Government either overpays or pays twice the 
amount for products and services than they need to. In fiscal year 2009 
alone, Federal agencies made nearly $98 billion in improper payments. 
These improper payments occur as a result of fraud or from poor 
financial management systems that do not detect or prevent mistakes 
before Federal dollars are already out the door.
  This bill, our bill, will help identify, reduce, and eliminate these 
improper payments. It will cut fraud and abuse by requiring agencies to 
develop action plans to avoid improper payments.
  Mr. Speaker, I think now is the time that we must demand higher 
levels of fiscal management and accountability from each Federal 
agency. There needs to be repercussions of money misspent and wasted. 
That is why this legislation contains strong measures to hold those in 
power accountable for failing the American taxpayer. And perhaps most 
importantly, this legislation would force the Federal Government to 
reclaim more money that was improperly sent out.
  My bill ensures that the Federal Government holds itself to the same 
standard of fiscal responsibility as any hardworking household or any 
business would across America and in my home district in Bucks County, 
Pennsylvania. It will save the American taxpayers billions of dollars 
that would otherwise be lost.
  You know, Mr. Speaker, we already know that this legislation will 
work by setting stricter targets for reducing and recovering improper 
payments. The Office of Management and Budget was able to reduce errors 
in the food stamp program by a little more than half of a percentage 
point. But those stamps and a fraction of a percent saved the American 
taxpayer $330 million just last year. That's one little program and one 
little agency, a half of a percentage point. That's $330 million. 
That's $330 million that can go to pay off our national debt, to 
provide tax relief to middle class families, or make critical 
investments in our future. With this bill, we can replicate that 
success in every single Federal agency and every program within the 
Federal Government.
  Mr. Speaker, quite frankly, after 2 hard years to get this to this 
point today, we all know that this legislation is long overdue. The 
American people are demanding that this kind of action from our 
government today will happen, and it's about time.
  So I want to thank Mr. Bilbray. I want to thank Chairman Towns and 
Ranking Member Darrell Issa. I urge my colleagues to vote ``yes,'' and 
finally, after years of hard work, that we pass this legislation on 
behalf of the American taxpayer.
  Mr. CHAFFETZ. Mr. Speaker, I yield back the balance of my time.
  Mr. DAVIS of Illinois. Mr. Speaker, my father always taught us that a 
penny saved was a penny earned. And, of course, if it's good enough for 
our families, it certainly is good enough for our national government.
  I compliment the gentleman on the development of an excellent piece 
of legislation. I urge its passage.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Illinois (Mr. Davis) that the House suspend the rules 
and pass the bill, S. 1508.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. DAVIS of Illinois. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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