[United States Statutes at Large, Volume 126, 112th Congress, 2nd Session]
[From the U.S. Government Publishing Office, www.gpo.gov]


Public Law 112-248
112th Congress

An Act


 
To intensify efforts to identify, prevent, and recover payment error,
waste, fraud, and abuse within Federal spending. <>

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 Improvement Act of 2012''.
SEC. 2. DEFINITIONS.

In this Act--
(1) the term ``agency'' means an executive agency as that
term is defined under section 102 of title 31, United States
Code;
(2) the term ``improper payment'' has the meaning given that
term in section 2(g) of the Improper Payments Information Act of
2002 (31 U.S.C. 3321 note), as redesignated by section 3(a)(1)
of this Act; and
(3) the term ``State'' means each State of the United
States, the District of Columbia, each territory or possession
of the United States, and each federally recognized Indian
tribe.
SEC. 3. IMPROVING THE DETERMINATION OF IMPROPER PAYMENTS BY
FEDERAL AGENCIES.

(a) In General.--Section 2 of the Improper Payments Information Act
of 2002 (31 U.S.C. 3321 note) is amended--
(1) by redesignating subsections (b) through (g) as
subsections (c) through (h), respectively;
(2) by inserting after subsection (a) the following:

``(b) Improving the Determination of Improper Payments.--
``(1) In general.--The <> Director of the
Office of Management and Budget shall on an annual basis--
``(A) identify a list of high-priority Federal
programs for greater levels of oversight and review--
``(i) in which the highest dollar value or
highest rate of improper payments occur; or
``(ii) for which there is a higher risk of
improper payments; and
``(B) in coordination with the agency responsible
for administering the high-priority program, establish
annual targets and semi-annual or quarterly actions for
reducing improper payments associated with each high-
priority program.
``(2) Report on high-priority improper payments.--

[[Page 2391]]

``(A) <>  In
general.--Subject to Federal privacy policies and to the
extent permitted by law, each agency with a program
identified under paragraph (1)(A) on an annual basis
shall submit to the Inspector General of that agency,
and make available to the public (including availability
through the Internet), a report on that program.
``(B) Contents.--Each report under this paragraph--
``(i) shall describe--
``(I) any action the agency--
``(aa) has taken or plans to
take to recover improper
payments; and
``(bb) intends to take to
prevent future improper
payments; and
``(ii) shall not include any referrals the
agency made or anticipates making to the
Department of Justice, or any information provided
in connection with such referrals.
``(C) Public availability on central website.--The
Office of Management and Budget shall make each report
submitted under this paragraph available on a central
website.
``(D) Availability of information to inspector
general.--Subparagraph (B)(ii) shall not prohibit any
referral or information being made available to an
Inspector General as otherwise provided by law.
``(E) Assessment and recommendations.--The Inspector
General of each agency that submits a report under this
paragraph shall, for each program of the agency that is
identified under paragraph (1)(A)--
``(i) review--
``(I) the assessment of the level of
risk associated with the program, and
the quality of the improper payment
estimates and methodology of the agency
relating to the program; and
``(II) the oversight or financial
controls to identify and prevent
improper payments under the program; and
``(ii) submit to Congress recommendations,
which may be included in another report submitted
by the Inspector General to Congress, for
modifying any plans of the agency relating to the
program, including improvements for improper
payments determination and estimation
methodology.'';
(3) in subsection (d) (as redesignated by paragraph (1) of
this subsection), by striking ``subsection (b)'' each place that
term appears and inserting ``subsection (c)'';
(4) in subsection (e) (as redesignated by paragraph (1) of
this subsection), by striking ``subsection (b)'' and inserting
``subsection (c)''; and
(5) in subsection (g)(3) (as redesignated by paragraph (1)
of this subsection), by inserting ``or a Federal employee''
after ``non-Federal person or entity''.

(b) Improved Estimates.--
(1) <>  In general.--Not later
than 180 days after the date of enactment of this Act, the
Director of the Office of Management and Budget shall provide
guidance to agencies for improving the estimates of improper
payments under the

[[Page 2392]]

Improper Payments Information Act of 2002 (31 U.S.C. 3321 note).
(2) Guidance.--Guidance under this subsection shall--
(A) strengthen the estimation process of agencies by
setting standards for agencies to follow in determining
the underlying validity of sampled payments to ensure
amounts being billed, paid, or obligated for payment are
proper;
(B) instruct agencies to give the persons or
entities performing improper payments estimates access
to all necessary payment data, including access to
relevant documentation;
(C) explicitly bar agencies from relying on self-
reporting by the recipients of agency payments as the
sole source basis for improper payments estimates;
(D) require agencies to include all identified
improper payments in the reported estimate, regardless
of whether the improper payment in question has been or
is being recovered;
(E) include payments to employees, including salary,
locality pay, travel pay, purchase card use, and other
employee payments, as subject to risk assessment and,
where appropriate, improper payment estimation; and
(F) require agencies to tailor their corrective
actions for the high-priority programs identified under
section 2(b)(1)(A) of the Improper Payments Information
Act of 2002 (31 U.S.C. 3321 note) to better reflect the
unique processes, procedures, and risks involved in each
specific program.

(c) Technical and Conforming Amendments.--The Improper Payments
Elimination and Recovery Act of 2010 (Public Law 111-204; 31 U.S.C. 3321
note) is amended--
(1) in section 2(h)(1), by striking ``section 2(f)'' and all
that follows and inserting ``section 2(g) of the Improper
Payments Information Act of 2002 (31 U.S.C. 3321 note).''; and
(2) in section 3(a)--
(A) in paragraph (1), by striking ``section 2(f)''
and all that follows and inserting ``section 2(g) of the
Improper Payments Information Act of 2002 (31 U.S.C.
3321 note).''; and
(B) in paragraph (3)--
(i) by striking ``section 2(b)'' each place it
appears and inserting ``section 2(c)''; and
(ii) by striking ``section 2(c)'' each place
it appears and inserting ``section 2(d)''.
SEC. 4. IMPROPER PAYMENTS INFORMATION.

Section 2(a)(3)(A)(ii) of the Improper Payments Information Act of
2002 (31 U.S.C. 3321 note) is amended by striking ``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''
and inserting ``with respect to fiscal year 2014 and each fiscal year
thereafter''.
SEC. 5. DO NOT PAY INITIATIVE.

(a) Prepayment and Preaward Procedures.--
(1) <>  In general.--Each agency shall review
prepayment and preaward procedures and ensure that a thorough
review

[[Page 2393]]

of available databases with relevant information on eligibility
occurs to determine program or award eligibility and prevent
improper payments before the release of any Federal funds.
(2) Databases.--At a minimum and before issuing any payment
and award, each agency shall review as appropriate the following
databases to verify eligibility of the payment and award:
(A) The Death Master File of the Social Security
Administration.
(B) The General Services Administration's Excluded
Parties List System.
(C) The Debt Check Database of the Department of the
Treasury.
(D) The Credit Alert System or Credit Alert
Interactive Voice Response System of the Department of
Housing and Urban Development.
(E) The List of Excluded Individuals/Entities of the
Office of Inspector General of the Department of Health
and Human Services.

(b) Do Not Pay Initiative.--
(1) Establishment.--There is established the Do Not Pay
Initiative which shall include--
(A) use of the databases described under subsection
(a)(2); and
(B) use of other databases designated by the
Director of the Office of Management and Budget in
consultation with agencies and in accordance with
paragraph (2).
(2) Other databases.--In making designations of other
databases under paragraph (1)(B), the Director of the Office of
Management and Budget shall--
(A) consider any database that substantially assists
in preventing improper payments; and
(B) <>  provide public
notice and an opportunity for comment before designating
a database under paragraph (1)(B).
(3) Access and review by agencies.--For purposes of
identifying and preventing improper payments, each agency shall
have access to, and use of, the Do Not Pay Initiative to verify
payment or award eligibility in accordance with subsection (a)
when the Director of the Office of Management and Budget
determines the Do Not Pay Initiative is appropriately
established for the agency.
(4) Payment otherwise required.--When using the Do Not Pay
Initiative, an agency shall recognize that there may be
circumstances under which the law requires a payment or award to
be made to a recipient, regardless of whether that recipient is
identified as potentially ineligible under the Do Not Pay
Initiative.
(5) Annual report.--The Director of the Office of Management
and Budget shall submit to Congress an annual report, which may
be included as part of another report submitted to Congress by
the Director, regarding the operation of the Do Not Pay
Initiative, which shall--
(A) <>  include an evaluation of
whether the Do Not Pay Initiative has reduced improper
payments or improper awards; and
(B) provide the frequency of corrections or
identification of incorrect information.

[[Page 2394]]

(c) <>  Database Integration Plan.--Not later than
60 days after the date of enactment of this Act, the Director of the
Office of Management and Budget shall provide to the Congress a plan
for--
(1) inclusion of other databases on the Do Not Pay
Initiative;
(2) to the extent permitted by law, agency access to the Do
Not Pay Initiative; and
(3) the data use agreements described under subsection
(e)(2)(D).

(d) <>  Initial Working System.--
(1) Establishment.--Not later than 90 days after the date of
enactment of this Act, the Director of the Office of Management
and Budget shall establish a working system for prepayment and
preaward review that includes the Do Not Pay Initiative as
described under this section.
(2) Working system.--The working system established under
paragraph (1)--
(A) may be located within an appropriate agency;
(B) shall include not less than 3 agencies as users
of the system; and
(C) shall include investigation activities for fraud
and systemic improper payments detection through
analytic technologies and other techniques, which may
include commercial database use or access.
(3) <>  Application to all agencies.--Not
later than June 1, 2013, each agency shall review all payments
and awards for all programs of that agency through the system
established under this subsection.

(e) Facilitating Data Access by Federal Agencies and Offices of
Inspectors General for Purposes of Program Integrity.--
(1) Definition.--In this subsection, the term ``Inspector
General'' means any Inspector General described in subparagraph
(A), (B), or (I) of section 11(b)(1) of the Inspector General
Act of 1978 (5 U.S.C. App.) and any successor Inspector General.
(2) Computer matching by federal agencies for purposes of
investigation and prevention of improper payments and fraud.--
(A) In general.--Except as provided in this
paragraph, in accordance with section 552a of title 5,
United States Code (commonly known as the Privacy Act of
1974), each Inspector General and the head of each
agency may enter into computer matching agreements with
other inspectors general and agency heads that allow
ongoing data matching (which shall include automated
data matching) in order to assist in the detection and
prevention of improper payments.
(B) <>  Review.--Not later than 60
days after a proposal for an agreement under
subparagraph (A) has been presented to a Data Integrity
Board established under section 552a(u) of title 5,
United States Code, for consideration, the Data
Integrity Board shall respond to the proposal.
(C) Termination date.--An agreement under
subparagraph (A)--

[[Page 2395]]

(i) shall have a termination date of less than
3 years; and
(ii) <>  during the 3-
month period ending on the date on which the
agreement is scheduled to terminate, may be
renewed by the agencies entering the agreement for
not more than 3 years.
(D) <>  Multiple agencies.--
For purposes of this paragraph, section 552a(o)(1) of
title 5, United States Code, shall be applied by
substituting ``between the source agency and the
recipient agency or non-Federal agency or an agreement
governing multiple agencies'' for ``between the source
agency and the recipient agency or non-Federal agency''
in the matter preceding subparagraph (A).
(E) Cost-benefit analysis.--A justification under
section 552a(o)(1)(B) of title 5, United States Code,
relating to an agreement under subparagraph (A) is not
required to contain a specific estimate of any savings
under the computer matching agreement.
(3) Guidance by the office of management and budget.--Not
later than <> 6 months after the date of
enactment of this Act, and in consultation with the Council of
the Inspectors General on Integrity and Efficiency, the
Secretary of Health and Human Services, the Commissioner of
Social Security, and the head of any other relevant agency, the
Director of the Office of Management and Budget shall--
(A) issue guidance for agencies regarding
implementing this subsection, which shall include
standards for--
(i) reimbursement of costs, when necessary,
between agencies;
(ii) retention and timely destruction of
records in accordance with section 552a(o)(1)(F)
of title 5, United States Code; and
(iii) prohibiting duplication and redisclosure
of records in accordance with section
552a(o)(1)(H) of title 5, United States Code;
(B) <>  review the procedures of the
Data Integrity Boards established under section 552a(u)
of title 5, United States Code, and develop new guidance
for the Data Integrity Boards to--
(i) improve the effectiveness and
responsiveness of the Data Integrity Boards;
(ii) ensure privacy protections in accordance
with section 552a of title 5, United States Code
(commonly known as the Privacy Act of 1974); and
(iii) establish standard matching agreements
for use when appropriate; and
(C) <>  establish and clarify rules regarding what
constitutes making an agreement entered under paragraph
(2)(A) available upon request to the public for purposes
of section 552a(o)(2)(A)(ii) of title 5, United States
Code, which shall include requiring publication of the
agreement on a public website.
(4) <>  Corrections.--The Director of the
Office of Management and Budget shall establish procedures
providing for the correction of data in order to ensure--
(A) compliance with section 552a(p) of title 5,
United States Code; and

[[Page 2396]]

(B) that corrections are made in any Do Not Pay
Initiative database and in any relevant source databases
designated by the Director of the Office of Management
and Budget under subsection (b)(1).
(5) Compliance.--The head of each agency, in consultation
with the Inspector General of the agency, shall ensure that any
information provided to an individual or entity under this
subsection is provided in accordance with protocols established
under this subsection.
(6) Rule of construction.--Nothing in this subsection shall
be construed to affect the rights of an individual under section
552a(p) of title 5, United States Code.

(f) Development and Access to a Database of Incarcerated
Individuals.--Not later than <> 1
year after the date of enactment of this Act, the Attorney General shall
submit to Congress recommendations for increasing the use of, access to,
and the technical feasibility of using data on the Federal, State, and
local conviction and incarceration status of individuals for purposes of
identifying and preventing improper payments by Federal agencies and
programs and fraud.

(g) Plan To Curb Federal Improper Payments to Deceased Individuals
by Improving the Quality and Use by Federal Agencies of the Social
Security Administration Death Master File.--
(1) Establishment.--In conjunction with the Commissioner of
Social Security and in consultation with relevant stakeholders
that have an interest in or responsibility for providing the
data, and the States, the Director of the Office of Management
and Budget shall establish a plan for improving the quality,
accuracy, and timeliness of death data maintained by the Social
Security Administration, including death information reported to
the Commissioner under section 205(r) of the Social Security Act
(42 U.S.C. 405(r)).
(2) Additional actions under plan.--The plan established
under this subsection shall include recommended actions by
agencies to--
(A) increase the quality and frequency of access to
the Death Master File and other death data;
(B) achieve a goal of at least daily access as
appropriate;
(C) provide for all States and other data providers
to use improved and electronic means for providing data;
(D) identify improved methods by agencies for
determining ineligible payments due to the death of a
recipient through proactive verification means; and
(E) address improper payments made by agencies to
deceased individuals as part of Federal retirement
programs.
(3) Report.--Not later than 120 days 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 plan
established under this subsection, including recommended
legislation.
SEC. 6. IMPROVING RECOVERY OF IMPROPER PAYMENTS.

(a) Definition.--In this section, the term ``recovery audit'' means
a recovery audit described under section 2(h) of the Improper

[[Page 2397]]

Payments Elimination and Recovery Act of 2010 (31 U.S.C. 3301 note).
(b) <>  Review.--The Director of the Office of
Management and Budget shall determine--
(1) current and historical rates and amounts of recovery of
improper payments (or, in cases in which improper payments are
identified solely on the basis of a sample, recovery rates and
amounts estimated on the basis of the applicable sample),
including a list of agency recovery audit contract programs and
specific information of amounts and payments recovered by
recovery audit contractors; and
(2) targets for recovering improper payments, including
specific information on amounts and payments recovered by
recovery audit contractors.

Approved January 10, 2013.

LEGISLATIVE HISTORY--H.R. 4053 (S. 1409):
---------------------------------------------------------------------------

HOUSE REPORTS: No. 112-698 (Comm. on Oversight and Government Reform).
SENATE REPORTS: No. 112-181 (Comm. on Homeland Security and Governmental
Affairs) accompanying S. 1409.
CONGRESSIONAL RECORD, Vol. 158 (2012):
Dec. 13, considered and passed House.
Dec. 20, considered and passed Senate.