Chief Patron: Peace
Co-Patron(s): Landes
OSIG - Automated Enterprise Analytics Process

Item 63 #1h

Language
Page 41, line 35, strike "$6,499,841" and insert "$7,999,841".
Page 41, line 35, strike "$6,508,433" and insert "$8,008,433".
Page 42, line 2, after "B." insert "1."
Page 42, after line 10, insert:
"B.2. Out of this appropriation up to $1,500,000 from the general fund the first year and up to $1,500,000 from the general fund the second year shall be used to develop a pilot project to establish proof of value for an automated enterprise analytics process to conduct performance reviews and detect fraud, waste, and improper payments across state agencies. By October 1, 2014, the State Inspector General shall report to the Joint Legislative Audit and Review Commission and identify the scope and the agency or agencies to be included in the pilot project.
State agencies selected for the pilot project shall grant the Office of the State Inspector General access to any and all data, including confidential consumer and citizen data, related to the delivery of services funded in whole or in part through a general fund appropriation. All consumer and citizen data shall be maintained by the State Inspector General as confidential in the same manner as is required by the agency or provider from which the information was obtained.
B.3. The automated enterprise analytics pilot project shall provide the following capabilities:
(1)  Integration of data from multiple program areas and agencies into a single data store to be used for financial analysis and performance monitoring;
(2)  Exploratory data analysis to allow easy and quick identification of performance audit issues;
(3)  Automated detection and alerting for identification of performance auditing and program integrity issues;
(4)  Continuous monitoring of program transactions and activity with ability to identify program performance, financial anomalies, fraud, and improper payments both prospectively (before the payment is made) and retrospectively (after payments are made);
(5)  Ability to detect nontransactional fraud, such as program eligibility issues and identity theft;
(6)  Use of the latest advanced analytical techniques, including forecasting, predictive modeling, complex pattern analysis, social network analysis, text mining, and geospatial analysis;
(7)  Feedback and self-learning capability to adapt to changing schemes and trends;
(8)  Advanced entity resolution capabilities to create a holistic view of entities across government agencies, programs, and databases; and
(9)  Ability to extend and adapt to all areas of state and local government in the Commonwealth.
In support of the pilot project, the Office of the State Inspector General shall:
(1) Develop a detailed long-range plan to implement an automated fraud
detection system within state agencies;
(2) Determine costs, to include vendor costs, needed to expand the pilot project for a five-year period, beginning July 1, 2015;
(3) Coordinate with state agencies to determine interest in participating in the
project and to identify potential applications that can be included in an initial
request for proposal;
(4) Establish priorities and criteria for identifying and implementing potential applications;
(5) Evaluate savings resulting from each effort;
(6) Coordinate efforts with state agencies and vendors to begin the data integration implementation process; and
(7) Coordinate with participating agencies to ensure that each has the resources
and processes necessary to follow up on incidents of fraud identified by the
vendor.
B.4. By December 1, 2014, and December 1, 2015, the Office of the State Inspector General shall report to the Joint Legislative Audit and Review Commission, House Appropriations Committee, and Senate Finance Committee on the progress of the automated enterprise analytics pilot project. Such report shall include:
(1) Incidents, types, and amounts of fraud identified, by agency;
(2) The amount actually recovered as a result of fraud identification, by agency;
(3) Agency procedural changes resulting from fraud identification and the time
line for implementing each;
(4) State costs for fraud detection for the previous quarter;
(5) Payments to the vendor for the previous quarter; and
(6) Anticipated costs and vendor payments for each of the next two years from
the date of the report."

Explanation
(This amendment provides $1.5 million in each year from the general fund for the Office of the State Inspector General for a pilot project to establish proof of value for an automated enterprise analytics process to conduct performance reviews and detect fraud, waste, and improper payments across state agencies. Currently, the Office of the State Inspector General has limited resources and capacity to analyze the large volumes of data contained in agency databases. By adopting an automated enterprise approach to performance monitoring and fraud analysis, the Office of the State Inspector General can leverage access to agency databases to improve the performance of agency programs and reduce the cost of fraud, waste, and improper payment detection.)