In the nature of a substitute.

This amendment's own text couldn't be picked out of its Congressional Record passage, so the passage is shown in full.

SA 2770. Mr. REID (for Mr. Carper (for himself, Ms. Collins, Mr.
Brown of Massachusetts, and Mr. Coburn)) proposed an amendment to the
bill S. 1409, to intensify efforts to identify, prevent, and recover
payment error, waste, fraud, and abuse within Federal spending.

       In lieu of the matter proposed to be inserted, insert the
     following:

     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; and
       (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.

     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.--
       ``(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
     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 are proper; and
       (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; 124 Stat. 2224) is amended--

[[Page S5892]]

       (1) in section 2(h)(1) (31 U.S.C. 3321 note), 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) (31 U.S.C. 3321 note)--
       (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 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.
       (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 multilateral data use agreements described under
     subsection (e).
       (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 an 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.).
       (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 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)--
       (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.
       (F) 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 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--
       (i) issue guidance for agencies regarding implementing this
     paragraph, 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;
       (III) prohibiting duplication and redisclosure of records
     in accordance with section 552a(o)(1)(H) of title 5, United
     States Code;

       (ii) 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; and
       (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

       (iii) establish and clarify rules regarding what
     constitutes making an agreement entered under subparagraph
     (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.
       (G) Corrections.--The Director of the Office of Management
     and Budget shall establish procedures providing for the
     correction of data in order to ensure--
       (i) compliance with section 552a(p) of title 5, United
     States Code; and
       (ii) 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).
       (H) 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.
       (I) 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,

[[Page S5893]]

     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 Payments Elimination and Recovery Act of
     2010.
       (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.

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