CODE OF
FEDERAL REGULATIONS
TITLE 1--GENERAL
PROVISIONS
CHAPTER
III--ADMINISTRATIVE CONFERENCE OF THE UNITED
STATES
PART
305--RECOMMENDATIONS OF THE ADMINISTRATIVE
CONFERENCE OF THE UNITED STATES
1 C.F.R. s 305.87-9
s 305.87-9 Dispute
Procedures in Federal Debt Collection
The Debt Collection Act of
1982 (DCA) [FN1] was passed in response to
concern over the vast amount of delinquent debt
owed to the federal government and the haphazard
collection record of many agencies. While Congress
appears to have been concerned mainly with various
mass loan and loan guarantee programs, most
conspicuously the student loan programs, the
effects of the Act extend well beyond such
programs. The Act included about a dozen provisions
designed to facilitate collection, in many
instances by removing obstacles created by other
federal statutes and case law. It also contained
provisions authorizing the use of collection
agencies, [FN2] charging of interest and
penalty fees, reporting of delinquent debtors to
credit bureaus, and use of IRS information to
locate debtors.
[FN1] 4 U.S. Code
552a (b) and (m), 5514; 18 U.S.C. 2415(i); 31
U.S.C. 3701, 3711(f), 3716-3719; Pub.L. No.
97-365.
[FN2] The Act was
later amended to authorize, on an experimental
basis, contracting with private attorneys to bring
collection actions.
While the purpose of the
DCA was to enhance collection efforts, Congress was
also concerned about the due process rights of
debtors against whom the government was to take
action. In adopting provisions for collection by
offset against salaries and other money owed by the
federal government, Congress provided for
pre-offset opportunities for debtors to contest the
relevant debts. Agencies implementing the offset
authority under the DCA have used advantageously
the latitude afforded under the DCA to develop a
range of procedures. The Act provides two basic
forms of debt collection by offset-- "salary"
offset and "administrative" offset--with differing
procedures for each. A proceeding with an
independent decisionmaker and adversary factfinding
has been required in most salary offsets, and by a
few agencies elsewhere. A range of less formal
models, in which collection offices simply
reconsider their decisions based on debtor-supplied
data and other available information, has been
employed in administrative offsets, i.e., those not
involving the salaries of government employees.
The framework for offset
dispute resolution established by the DCA, Federal
Claims Collection Standards (issued jointly by the
General Accounting Office and Department of
Justice), and the Office of Personnel Management's
Pay Administration Standards make possible
reasonably adequate evaluation of disputes without
seriously impeding collection of general government
debts. No major changes are needed. However, the
procedural requirements of the DCA and the OPM
Standards are overly burdensome when applied to
routine pay adjustments. Moreover, some advice to
agencies on implementing their dispute processes,
reducing uncertainty over the relationship of the
DCA to other statutes (e.g., the Contract Disputes
Act) affecting government claims, and some other
issues raised by the DCA's attempt to integrate due
process with effective debt collection, may be
useful as agencies make greater use of their
authority to collect debts.
Recommendation
1. Agency Procedures Under
the Debt Collection Act
a. In connection with
salary offsets, the General Accounting Office and
Department of Justice should amend the Federal
Claims Collection Standards [FN3] and the
Office of Personnel Management should amend the Pay
Administration Standards [FN4] so as to
reduce the formality of procedures for handling
routine adjustments of pay and travel allowances.
Informal forms of review, including review on a
"class" basis where a single error has a broad
effect, should suffice in most cases involving
computer errors, simple miscalculations, and
similar kinds of mistakes or adjustments.
[FN3] 4 CFR Parts
101-105
[FN4] 5 CFR
550.1101-.1106
b. In connection with
administrative offset, informal types of
intra-agency review procedures appear consistent
with the purposes of the DCA, and can provide a
satisfactory balance between protecting debtors and
assuring effective collection. [FN5]
However, agencies should ensure, where possible,
that the reviewer does not participate in the
initial claims determination, particularly where a
dispute involves substantive issues that go beyond
allegations of mechanical or other simple kinds of
error.
[FN5] This
recommendation should not be read as detracting
from the procedures for resolving disputes relating
to federal grants that were recommended by the
Conference in Recommendation 82.2. 1 CFR 305.82-2.
Where administrative offset issues are addressed at
the same time as post-award grant disputes, the
proceedings should include a notice, an impartial
decisionmaker, an opportunity to present
significant evidence and argument, and a written
decision, as called for in Recommendation 82-2.
c. Procedures with an
independent decisionmaker and adversarial
factfinding may occasionally be desirable in
administrative offset cases where a debtor raises
relatively complex legal or factual issues or where
assessments of credibility are required. However,
these procedures may be needlessly burdensome for
agencies even in some procedurally complex
situations, such as where other proceedings with
respect to the claim may be occurring and
preservation of the government's flexibility is
necessary. Taking into account these factors,
agencies should consider whether to make use of
such procedures even though apparently not required
to do so by the DCA.
d. Agencies should take
steps to enhance the awareness of, and access to,
offset dispute procedures by debtors with limited
ability to present a case in writing or otherwise
cope with offset procedures. These steps may
appropriately be confined to measures that are
inexpensive and do not significantly interfere with
efficient collection activity. Examples might
include follow-up telephone calls to debtors with
vague or inadequate written submissions, review of
agency records to see if they support debtor
allegations, and use of telephone hearings. In
connection with salary offset disputes, these steps
should be taken by independent hearing officials
(or persons associated with them) as well as by
collection staff. Experience should be monitored to
see if measures to enhance accessibility of the
dispute process in fact result in more debtors
asserting meritorious defenses.
e. Some techniques that
have been employed and should be considered to keep
offset procedures expeditious and efficient
are:
(i) Adoption of objective
criteria to assist in making decisions respecting
hardship and other potentially nebulous matters;
and
(ii) Avoiding the need for
oral hearings on issues of credibility by treating
debtors' factual allegations as proven where
(a) Circumstances do not
give rise to significant doubts as to reliability
and
(b) Either the amount in
dispute is small or the issue of credibility is not
critical to the disputed facts.
2. Clarifying the
Act's Relation to Offsets in Government
Contracts
a. Congress should clarify
the applicability of the DCA provision on
administrative offset (31 U.S.C. 3716) to make
clear that government acquisition contracts are not
covered, but that the government retains the right
of offset to collect debts in such cases. At the
same time, Congress should ensure that, under
relevant agency procedures, before a contracting
officer's decision can serve as the basis for
offset under any other authority,
(i) The contractor
receives notice of the proposed government claims
and the basis for them and an informal opportunity
to present its position, and
(ii) The decision is
informally reviewed by an agency official not
directly connected with administering the
contract.
b. The withholding of
funds in connection with a single contract, where
final payment has not occurred, should continue to
be governed by existing law.
[52 FR 49146, Dec. 30,
1987]
Authority: 5 U.S.C.
591-596.
SOURCE: 38 FR 19782, July
23, 1973; 57 FR 61760, 61768, Dec. 29, 1992, unless
otherwise noted.
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