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U.S. Geological Survey Manual

338.4 - Collection of Debts

2/22/91

OPR: Admin/Financial Management

1. Purpose. The purpose of this Chapter is to provide policy and guidelines for the collection of debts due the U.S. Government in accordance with the Federal Claims Collection Act of 1966, 344 DM 1-11, 31 U.S.C. Secs. 3701-3719, 4 CFR Parts 101-105 and Public Law 97-365 dated October 25, 1982.

2. Policy. It is USGS policy to record all debts due the USGS and to systematically and aggressively initiate action for the expeditious collection of such debts.

3. Responsibilities. Pursuant to 4 GAO 68.3, the USGS is responsible for collecting debts as a result of its activities, developing an internal control collection program, and prescribing procedures to ensure an orderly process of collection effort. The USGS is also responsible for aging accounts and loans receivable in delinquent and nondelinquent categories and for maintaining reserves for losses on accounts and loan receivables.

A. The Chief, Office of Financial Management (OFM) is responsible for the establishment and operation of a documented system of controls to ensure aggressive debt collection actions, aging receivables in accordance with TFS-220.9 (see Appendix A), maintaining reserves for losses on uncollected debt, and for determining and assessing interest, administrative costs, and penalties on delinquent debt.

OFM is also responsible for forwarding monthly reports of accounts receivable to each respective division for their review.

B. The Heads of USGS Sales Activities which sell products on a credit basis (maps and product sales, etc.,) are responsible for:

(1) Maintaining adequate control over receivables.

(2) Assuring that billings and demand letters to Public customers contain due dates, interest, administrative costs, and penalties as specified in SM 336.2.1 and SM 338.4.4.

(3) Issuing appropriate demand letters or follow-up statements on delinquent accounts.

(4) Ensuring that all accounts are aged, in accordance with TFS-220.9.

(5) Submitting monthly report TFS-220.9 to OFM by the 4th workday of each month.

C. Division/Office Chiefs are responsible for:

(1) Assuring that all billings are timely, complete, and prepared in accordance with SM 336.1.1 and SM 336.2.1 respectively, and that they contain due dates and policies for charging interest as specified in SM 338.4.4.

(2) Rendering assistance to OFM in the collection of delinquent accounts in connection with their activities.

(3) Reviewing monthly account receivable reports from OFM and for reporting any discrepancies to OFM in a timely manner.

(4) Providing status reports on delinquent receivables as required by OFM and recommending debts for write-off when those debts have been determined to be uncollectible (see SM 338.4.10).

4. Collection Procedures. Every reasonable effort must be made to collect delinquent bills commensurate with the circumstances in each case and the cost entailed. The following are procedures for effecting collections and determining uncollectibility. Collection techniques for unsecured and secured debt are outlined in Appendix B. Procedures for repayment and collection of travel advances are covered by SM 340.11.6G(1).

A. Initial Notification of Indebtedness. Debts due the USGS will be billed in accordance with SM 336.1.1. Each document should inform the debtor of the basis for the indebtedness and the applicable requirements or policies for charging interest and penalties past the payment due date. Due dates for Joint Funding Agreement billings will be 60 days from the initial notification, all other billings will use a due date of 30 days from the initial notification. Due dates must be shown on all billings. See SM 336.2.1, Figure 5 for due date calculation table.

B. Subsequent Demands for Payment. If payment is not received by the due date, three progressively stronger written demand letters will be sent at 30-day intervals by OFM until the efforts result in payment in full, a satisfactory installment plan arrangement, or an administrative determination that the debt is uncollectible through means available to USGS. Sales offices are responsible for issuing demand letters for debts of their activities (see SM 338.4.3B). If settlement or response is not received within 30 days of the second letter, a third and final letter will be sent by OFM to the debtor indicating that the debt may be reported to a commercial credit bureau and/or collection agency if payment is not received within 30 additional days (see SM 338.4.4F,4G).

OFM will respond promptly to communications received from debtors or will request the division or office that prepared the bill to respond. Divisions will inform OFM in writing if there is a change in the status of a bill.

Subsequent demands after the initial notification will be waived if correspondence sent from the Survey is returned marked "Return to Sender" because of an invalid address. Such debts should be referred to IRS or the private collection agency to obtain a current address in order to notify the debtor of amounts owed.

C. Charges for Late Payments. If payment is not received by the due date, interest, penalties and administrative costs will be accrued and added to the principal due.

(1) Interest. Interest will be charged on delinquent debts which are past due, at the percentage rate specified by Treasury, unless otherwise prescribed by statute or regulation (see 344 DM 2.1B). This requirement applies to all Public debts owed USGS by individuals, businesses, and organizations including State and local governments. Interest will accrue from the date of delinquency. Interest will be waived if payment is received by the due date. Interest charges will accrue as "Interest" in fund 141435, Proprietary Interest.

(2) Penalty Charges. A penalty charge of 6 percent per annum will be assessed on the portion of the debt remaining delinquent more than 90 days. This penalty will be charged on the 91st day of delinquency but will accrue from the first day the debt became delinquent. Penalty charges will accrue as "Penalties" in fund 141099, Fines, Penalties & Forfeitures.

(3) Administrative Costs. Administrative charges will be assessed against the debtor to cover the actual administrative and handling costs incurred as a result of the debt becoming delinquent. Such costs include the handling of the debts, generation and mailing of demand letters, the collection fee charged by the collection contractor, and the fixed fee charged by the Department, or Bureau, for handling the referral of debts to the collection contractor. Administrative cost charges will accrue as interest in fund 143220, Miscellaneous Recoveries.

D. Installment Payments. Whenever possible, claims including interest and penalties should be collected in full in one lump sum. If the debtor is financially unable to pay the indebtedness in one lump sum, payment may be accepted in regular installments. The size and frequency of the payments should bear a reasonable relation to the size of the debt and the debtor's ability to pay. Insofar as possible, payment should be sufficient in size and frequency to liquidate the Government's claim in not more than 3 years. Payments of less than $50 should be accepted only in unusual circumstances. When the total amount of deferred installments exceeds $750 and the claim is unsecured, an attempt should be made by OFM (or by NMD in the case of product sales) to obtain an executed confession judgement note in a form similar to the Department of Justice Form USA-70a (Appendix C).

When payments are received on a delinquent account receivable, payment will be applied in the following order:

- Penalties

- Administrative Cost

- Accrued Interest

- Principal

E. Collection by Offset. Collection by offset provides for the collection of amounts due the Survey by means of applying obligations owed by the Survey against delinquent debts. Delinquent State or local government debts are not authorized to be offset under 31 USC 3716. However, unless otherwise provided by contract or law, debts or payments which are not subject to administrative offset under 31 USC 3716 may be collected by administrative offset under the common law or other applicable statutory authority (see 4 CFR 102 and 31 USC 3716). For recovery of debts by offset of amounts owed by employees or former employees, see SM 338.4.8.

(1) Review. Before utilizing the collection by offset, a bureau official with properly delegated authority will examine the debt to see whether the likelihood of collecting the debt, and the best interest of the United States, justify the use of administrative offset.

(a) Disallowed audit costs or other contractual debts which become delinquent should be reviewed by the Office of Procurement and Contracts.

(b) Payroll debts which may be offset against amounts due from the Civil Service Retirement Fund should be reviewed and processed by the Debt Management Section, OFM (see 4 CFR 102.4).

(c) Miscellaneous refunds, such as erroneous payments, credit memos, etc., should be reviewed and processed by the Commercial Payments Branch, OFM.

The determination whether to collect by offset is to be made on a case-by-case basis, including legality and the best interests of the Government (see 4 CFR 102.3).

(2) Written Notice. After the bureau official has examined the debt under the procedures set forth in paragraph (1), a notice will be sent Registered Mail, Return Receipt Requested, advising debtor of:

(a) The nature and amount of the debt determined by the USGS to be due and of the intent to collect by administrative offset.

(b) The debtor's opportunity to inspect and copy the agency records relating to the debt.

(c) The debtor's opportunity to petition for a hearing, within 15 calendar days of receipt of notice by the bureau, with respect to the debt.

(d) The debtor's opportunity to enter into a written agreement with the bureau to repay on the debt. Such agreement may include voluntary, but nonrecoverable, withholding of monies due from the United States to the debtor. Payment in one lump sum is preferred, but provision may be made for a payment in a reasonable number of installments given the nature and amount of the debt and the debtor's financial condition (see SM 338.4.4D).

(3) Final Determination. The debtor may request, within 15 calendar days after receipt of written notice specified in paragraph 3.1A(2), a review with the appropriate bureau as to the existence, the amount of the debt, or the terms of repayment. The review shall be conducted by a designated Survey official not involved in the collection of the debt to determine if the amount of the debt should be reduced, terms of payment through installments should be set, or the amount should be paid in full (see 344 DM 4.IA for guidance on compromise). The official may negotiate with the debtor concerning a written agreement for the repayment of the debt which is satisfactory to the debtor and the bureau. If no written agreement is executed, or the debtor does not request review within the bureau, or the official who conducted the review determines that a debt is due, the administrative offset against monies payable to the United States will be effected.

The Survey official will notify the Chief, Office of Financial Management to effect offset procedures. This notification will be in writing and will include copies of all actions and correspondence regarding the debt.

(4) Collection Authority. The Chief, OFM, is authorized to collect by offset. Offsets should only be used after all other Survey collection procedures have been followed (see 338.4.4A,B).

(5) Collections of Claims Against State and Local Governments by Administrative Offset. Claims against State or local governments may be collected from monies due from the United States to the Government when authorized by a statute (other than 31 U.S.C. 3716) or principles of common law (4 CFR 102.3(b)(4) (see also Comptroller General Opinion B-212222, August 23, 1983 (unpublished)). Prior to utilizing the procedures for collection, the bureau will follow the procedures in 4 CFR 102.3 and this Chapter. Indian tribal government and authorized tribal organizations contracting under the authorities of P.L. 93-638 are exempt.

(6) An offset may be effected against a payment made to a debtor prior to the completion of the procedures required by SM 338.4.4 if (1) failure to take the offset would substantially prejudice the Government's ability to collect the debt, and (2) the time before the payment is to be made does not reasonably permit the completion of those procedures. Amounts recovered by offset but later found not to be owed to the Government shall be promptly refunded.

(7) Records are to be maintained for amounts collected by offset.

F. Reporting Delinquent Debts to Commercial Credit Bureaus. The Office of Financial Management will follow procedures established by the Department and in SM 338.4.4B prior to referral of a debt to a commercial credit bureau.

The Office of Financial Management will not report delinquent debts to commercial credit bureaus unless there has been compliance with the Privacy Act of 1974, as amended. The USGS will adhere to the following conditions when referring a debt to a credit bureau:

(1) The debtor must be given a 60-day notification before referral to a credit bureau.

(2) Include in the Privacy Act System a "routine use" for the disclosure.

(3) Keep an accounting of disclosures and make them available to the debtor.

(4) Provide the credit bureaus with corrections and notations of disagreement by the debtor.

(5) Make reasonable efforts to assure that the information to be reported is accurate, complete, timely, and relevant.

G. Contracting for Collection Services. The USGS will enter into a contract for this purpose when the contract meets funding requirements (see 344 DM 2.4.B).

Also, the following requirements must be followed when entering into a collection contract:

(1) The contract does not duplicate the Department's collection effort, or another collection contract whose services are available to the USGS.

(2) The service supplements but does not replace the basic collection program of the USGS.

(3) The USGS keeps an accounting of disclosures.

(4) The USGS retains authority under the contract to resolve disputes, compromise claims, terminate collection action, and initiate legal action.

(5) The contractor is subject, under the contract, to the Privacy Act of 1974, as amended, and when applicable, to Federal and State laws and regulations pertaining to debt collection practices such as the Fair Debt Collection Practices Act.

(6) The service is cost effective.

H. Analysis of Costs. The collection procedure of the USGS will provide for periodic comparison of costs incurred and amount collected. Data on costs and corresponding recovery rates for debts of different types and in various ranges will be used to compare the cost effectiveness of alternative collection techniques. Guidelines will be established that:

(1) Identify when further collection efforts are unlikely to exceed recoveries.

(2) Assist in evaluating offers in compromise.

(3) Establish minimum amounts below which collection efforts need not be taken.

I. Documentation of Administrative Collection Action. All administrative collection action will be documented and will be the basis for compromise, termination, or suspension of collection action. Such documentation will be retained in the appropriate claims file.

5. Compromise of Claims. The Solicitor has been vested with the authority to compromise claims which do not exceed $20,000 for money or property arising out of activities of USGS prior to the referral of such claims to the General Accounting Office or to the Department of Justice for litigation. The Solicitor has redelegated such authority to the Associate, Regional, and Field Solicitors. Prior to the compromise of any claim, the Solicitor's Office will obtain from the Chief, Office of Financial Management, recommendation concerning the compromise of any claim. Only the Comptroller General or designee may effect the compromise of a claim that arises out of an exception made by the General Accounting Office in the account of an accountable officer, including the claim against the payee, prior to its referral by the Office for litigation (see 344 DM 3.1). Claims may be compromised for the following reasons:

A. Inability to Pay. A claim may be compromised if the Government cannot collect the full amount because of:

(1) The debtor's inability to pay the full amount within a reasonable time.

(2) The refusal of the debtor to pay the claim in full and the Government's inability to enforce collection in full within a reasonable time by enforced collection proceedings.

B. Litigative Probabilities. A claim may be compromised if there is a real doubt concerning the Government's ability to prove its case in court for the full amount claimed either because of the legal issues involved or a bona fide dispute as to the facts.

C. Cost of Collecting Claims. A claim may be compromised if the cost of collecting the claim does not justify the enforced collection of the full amount.

D. Enforcement Pay. Statutory penalties, forfeitures, or debts established as an aid to enforcement and to compel compliance may be compromised pursuant to this Chapter if the Department's enforcement policy in terms of deterrence and securing compliance, both present and future, will be adequately served by acceptance of the sum to be agreed upon. Mere accidental or technical violations may be dealt with less severely than willful and substantial violations.

E. Joint and Several Liability. When two or more debtors are jointly and severally liable, collection action will not be withheld against one such debtor until the other or others pay their proportionate share. No attempt to allocate the burden of paying such claims between the debtors should be made, but the liquidation of the indebtedness should proceed as quickly as possible. Care should be taken that compromise with one such debtor does not release the USGS claim against the remaining debtors. The amount of a compromise with one such debtor will not be considered a precedent or as morally binding in determining the amount which will be required from other debtors jointly and severally liable on the claim.

F. Settlement for a Combination of Reasons. A claim may be compromised for one or for more than one of the reasons authorized in this Chapter.

G. Restrictions. Neither a percentage of a debtor's profits nor stock in a debtor corporation will be accepted in compromise of a claim. In negotiating a compromise with a business concern, consideration should be given to requiring a waiver of the tax-loss-carry-forward and tax-loss-carry-back rights of the debtor.

6. Standards for the Suspending or Terminating Collection Action. The Chief, Office of Financial Management, has been vested with the authority to suspend or terminate collection action with respect to claims which do not exceed $20,000 for money or property arising out of activities of USGS prior to the referral of such claims to the General Accounting Office or to the Department of Justice for litigation. Prior to suspensions or termination of collection action on accounts in excess of $600 (see 4 GAO 70.1), the Chief, Office of Financial Management, will request the advice of the Solicitor concerning such action.

A. Suspensions of Collection Activity. Collection action may be suspended temporarily on a claim when the debtor cannot be located after delinquent effort, and there is reason to believe that future collection action may be insufficiently productive. If the missing debtor has signed a confess-judgement note and is in default, referral of the note for the entry of the judgement should not be delayed because of his/her missing status. Collection action may be suspended temporarily on a claim when the debtor owns no substantial equity in realty and is unable to make payments on the Government's claim or effect a compromise, but his/her future prospects justify retention of the claim for periodic review.

B. Termination of Collection Activity. Collection activity may be terminated and the USGS file on the claim closed under the following standards:

(1) Inability to Collect any Substantial Amount. Collection action may be terminated on a claim when it becomes clear that the Government cannot collect or enforce collection of any significant sum from the debtor having due regard for the judicial remedies available to the Government, the debtor's future financial prospects, and the exemptions available to the debtor under State and Federal law. In determining the debtor's inability to pay, the following factors may be considered: age and health of the debtor; present and potential income; inheritance prospects; the possibility that assets have been concealed or improperly transferred by the debtor; the availability of assets or income which may be realized upon by judicial proceedings.

(2) Inability to Locate Debtor. Collection action may be terminated on a claim when the debtor cannot be located, there is no security remaining to be liquidated, the applicable statute of limitations has run out, and the prospect of collecting by offset notwithstanding the bar of the statute of limitations is too remote to justify retention of the claim.

(3) Cost Will Exceed Recovery. Collection action may be terminated on a claim when it is likely that the cost of further collection action will exceed the amount recoverable.

(4) Claim Legally without Merit. Collection action should be terminated on a claim whenever it is determined that the claim is legally without merit.

(5) Claim Cannot be Substantiated by Evidence. Collection action should be terminated when it is determined that the evidence necessary to prove the claim cannot be produced or the necessary witnesses are unavailable and efforts to induce voluntary payment are unavailing.

C. Transfer of Claims. When there is doubt as to whether collection action should be suspended or terminated on a claim, it may be referred to the General Accounting Office for advice (see 344 DM 4.4). Penalty or forfeiture to judgment, or recovery of a judgment is a prerequisite to the imposition of administrative sanctions, such as the suspension or revocation of a license or the privilege of participating in a Government-sponsored program. The Solicitor may refer such a claim for litigation even though termination of collection activity might otherwise be given consideration under SM 338.4.6. Claims on which USGS holds a judgment by assignment or otherwise will be referred to the Department of Justice by the Solicitor for further action if renewal of the judgement lien or other judicial proceedings are justified under the criteria.

D. Uncollectible Product Sales Account. Field office collection officer's authority to suspend or terminate collection action on debts is $100. If remittance has not been received within 30 days after the third notification of debt, and the debtor owes less than $100, NMD will review each debt to determine if collection action should be suspended or terminated in accordance with SM 338.4.6. If the debtor owes more than $100 the account will be referred to OFM for further action. Debts referred to OFM will contain:

(1) Copy of the original bill.

(2) Copies of all demand letters mailed or follow up account statements.

(3) Copies of any correspondence and records of phone conversations concerning the debt.

(4) Evidence that the order/service was shipped/performed and received.

(5) Current address of the debtor. If the current address is unknown, the last known address will be furnished with a statement of steps taken to locate him/her.

7. Referral to GAO or for Litigation. The Chief, Office of Financial Management, will designate as "uncollectible" claims not in excess of $20,000 on which collection action, in accordance with SM 338.4, has been unsuccessful and which cannot be compromised or on which collection action cannot be suspended or terminated, and claims of $20,000 or more on which collection action in accordance with SM 338.4 has been unsuccessful.

Such claims will be referred to the General Accounting Office or to the Department of Justice if an exception from referrals to the General Accounting Office has been granted (4 GAO 70.2). Such referrals should be made as early as possible consistent with aggressive collection action and the observance of the regulations contained in this Chapter and within the time limit for bringing a timely suit against the debtor. Referrals to the General Accounting Office will be made by the Chief, Office of Financial Management. Referrals to the Department of Justice will be made by the Solicitor.

A. Referrals made will include the following information:

(1) Referrals of claims to the General Accounting Office will be in accordance with instructions, including monetary limitations, contained in the General Accounting Office Policy and Procedures Manual for Guidance of Federal Agencies.

(2) Every debt reported to the General Accounting Office for collection in accordance with the Federal Claims Collection Standards, as well as all relative correspondence, should contain the identification number of the debtor.

(3) Generally, if the debtor is an individual, the identification number to be used for this purpose is his/her Social Security Number. If the debtor is a business entity, the Employer's Identification Number will be used.

(4) Referrals to the General Accounting Office and to the Department of Justice for litigation will be accompanied by the current address of the debtor or the name and address of the agent for a corporation upon whom service may be made. Reasonable and appropriate steps will be taken to locate missing parties in all cases. Referrals to the General Accounting Office and referrals to the Department of Justice for the institution of foreclosure or other proceedings in which the current address of any party is unknown will be accompanied by a listing of the prior known addresses of such a party and a statement of the steps to locate him/her.

(5) Credit Data.

(a) Claims referred to the General Accounting Office or to the Department of Justice for litigation will be accompanied by reasonably current credit data indicating that there is a reasonable prospect of collecting from the debtor by judicial proceedings having due regard for the exemptions available to the debtor under State and Federal law and the judicial remedies available to the Government.

(b) Such credit data may take the form of:

(i) A commercial credit report;

(ii) An investigative report of a bureau or office showing the debtor's assets, liabilities, income, and expenses;

(iii) The individual debtor's own financial statement executed under penalty of perjury reflecting his/her assets, liabilities, income, and expenses; or

(iv) An audited balance sheet of a corporate debtor.

(c) Such credit data may be omitted if:

(i) A surety bond is available in an amount sufficient to satisfy the claim in full;

(ii) The forced sale value of the security available for application to the Government's claim is sufficient to satisfy its claim in full;

(iii) The USGS wishes to liquidate loan collateral through judicial foreclosure but does not desire a deficiency judgment;

(iv) The debtor is in bankruptcy or receivership; or

(v) The debtor's liability to the Government is fully covered by insurance, in which case the bureau of office will furnish such information as it can develop concerning the identity and address of the insurer and the type and amount of insurance coverage.

B. Report of Prior Collection Actions. A brief summary of the actions previously taken to collect or compromise a claim will be forwarded with the claim upon its referral to the General Accounting Office or to the Department of Justice. If any of the administrative collection actions enumerated in SM 338.4.1-5 have been omitted, the reason for the omission will be given with the referral. The General Accounting Office and the Department of Justice may return or retain claims at their option when there is insufficient justification for the omission of one or more of the administrative collection actions enumerated in SM 338.4.1-5.

C. Preservation of Evidence. Care will be taken to preserve all files, records, and exhibits on claims referred or to be referred to the General Accounting Office or to the Department of Justice for litigation.

D. Minimum Amount of Referrals to the Department of Justice. The Solicitor will not refer claims of less than $600, exclusive of interest, for litigation unless:

(1) Referral is important to a significant enforcement policy, or

(2) The debtor has not only the clear ability to pay the claim but the Government can effectively enforce payment having due regard to the exemptions available to the debtor under State or Federal law and the judicial remedies available to the Government.

E. Debtors Involved in Bankruptcy Proceedings. Claims against debtors involved in bankruptcy proceedings are to be referred through the appropriate Regional Solicitor's Office to the Department of Justice (see 4 GAO 96-100).

F. Statute of Limitations. Public Law 89-505, approved July 18, 1966, 28 U.S.C. 2415, with certain exceptions, provides that every action for the recovery of money erroneously paid to or on behalf of any civilian employee of any agency of the United States or to or on behalf of any member or dependent of any member of the uniformed services of the United States, incident to the employment or services of such employee or member, will be barred unless the complaint is filed within 6 years after the right action accrues (see 344 DM 5.8).

8. Collection by Offset From Indebted Government Employees.

A. Purpose. 5 U.S.C. 5514 provides for recovery of debts of employees of the United States by deductions from current salary or from payments of any kind due former employees. (Also see 5 CFR 550.1101-1107 and 370 DM 550.10.)

B. Notification of Employee. If it is determined by OFM that a current employee is indebted to the Government, OFM may recover the debt from salary offsets. Prior to initiating salary offsets, a letter signed by the Chief, OFM giving the employee a 30 day written notice will be sent. The notice must contain the following:

(1) The bureau's determination that a debt is owed, including the origin, nature, and amount of that debt;

(2) The bureau's intention to collect the debt by means of deductions from the employee's current disposable pay account;

(3) The amount, frequency, approximate beginning date, and duration of the intended deductions;

(4) An explanation of the Department's requirements concerning interest, penalties and administrative costs (see 4 CFR 102.13);

(5) The employee's right to inspect and copy Government records on which the bureau is basing its determination that a debt is owed;

(6) The employee's right to enter into a written agreement with the bureau for a repayment schedule differing from that proposed by the bureau as long as the terms of the repayment schedule proposed by the employee are agreeable to the bureau;

(7) The right to a hearing on the existence or amount of the debt or the terms of a repayment schedule conducted by an administrative law judge, or by a hearing official not under the control of the head of the Department, if a request for a hearing is filed (see 370 DM 550.10.8);

(8) The method and time period for requesting a hearing;

(9) That the timely filing of a petition for hearing will stay the commencement of collection proceedings;

(10) That a final decision on the hearing (if one is requested) will be issued at the earliest practical date, but not later than 60 days after the filing of the petition requesting the hearing, unless the employee requests and the hearing official grants a delay in the proceedings;

(11) That any knowingly false or frivolous statements, representations, or evidence may subject the employee to:

(a) Disciplinary procedures appropriate under 5 U.S.C. Chapter 75, and 5 CFR 752, or any other applicable statutes or regulations;

(b) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or any other applicable authority; or

(c) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, or any other applicable statutory authority.

(12) Any other rights and remedies available to the employee under statutes or regulations governing the program for which the collection is being made;

(13) Unless there are applicable contractual or statutory provisions to the contrary, that amounts paid on or deducted for the debt which are later waived or found not owed to the United States will be promptly refunded to the employee; and

(14) The name, address and telephone number of a USGS official who may be contacted if the employee wishes to review the records or to obtain information.

The USGS may recover debts for another federal agency by salary offset from an employee owing a debt to that agency provided that the above notification requirements have been satisfied.

C. Request for Hearing. The employee will be advised in the notification that:

(1) A hearing may be requested by filing a written petition within 15 calendar days of receipt of the notification, addressed to the Director, OHA (Address: Director, Office of Hearings and Appeals, U.S. Department of the Interior, 4015 Wilson Boulevard, Arlington, Virginia 22203) stating the grounds upon which the employee disputes the bureau's proposed collection of the alleged debt.

(2) The petition or statement must identify and explain with reasonable specificity and brevity the facts, evidence and witnesses which the employee believes support his or her position.

(3) A copy of the petition or statement will be sent to the contact person named in the notice provided for in SM 338.4.8B.

(4) The decision of the hearing official shall be final and binding if no other rights or remedies are available to the employee.

D. Method of Collection. A debt will be collected in a lump sum or by installment deductions at officially established pay intervals from an employee's current pay account, unless he or she and the bureau agree to alternative arrangements for repayment. The alternative arrangement will be in writing, signed by both the employee and the bureau and will be documented in the bureau's files.

E. Source of Deductions. Except as provided in SM 338.4.8I and J, the paying agency will make deductions only from basic pay, special pay, incentive pay, retired pay, retained pay, or in the case of an employee not entitled to basic pay, other authorized pay.

F. Duration of Deductions. Debts will be collected in one lump sum where possible, however, if the employee is financially unable to pay in one lump sum or the amount of the debt exceeds 15 percent of disposable pay, collection shall be made in installments. Such installment deductions will be made over a period not greater than the anticipated period of active duty or employment, as the case may be, except as provided in SM 338.4.8I and J.

G. Limitations of Amount of Deductions. The size and frequency of installment deductions will bear a reasonable relation to the size of the debt and ability to pay. However, the amount deducted for any period shall not exceed 15 percent of the disposable pay from which the deduction is made, unless the employee has agreed in writing to the deduction of a greater amount. If possible, the installment payment shall be sufficient in size and frequency to liquidate the debt in 3 years. Installments payments of less than $50 should be accepted only in the most unusual circumstances.

H. When Deductions May Begin.

(1) Deductions to liquidate an employee's debt shall be scheduled to begin by the method and in the amount stated in the bureau's notice of intention to collect from the employee's current pay.

(2) Deductions shall begin after the notice of intention has been given to the employee, provided a hearing has not been requested on any of the issues for which a hearing is available.

(3) Deductions shall begin after the period to request a hearing has expired.

(4) If the employee filed a petition for hearing with the OHA prior to the expiration of the period provided for in the notice required in 370 DM 550.10.7, deductions shall begin after the hearing official has provided the employee with a hearing, where required, and the final written decision is in favor of the bureau.

(5) Where deductions from current pay are made under statutory authority other than 5 U.S.C. 5514, deductions shall begin after the bureau has provided a notice and an opportunity to be heard as prescribed in the governing statutes or in regulations implementing those statutes.

I. Liquidation From Final Check. If the employee retires or resigns, or if his or her employment or period of active duty ends before collection of the debt is completed, there shall be an administrative offset under 31 U.S.C. 3716 (see 4 CFR 102.3 and 102.4) from subsequent payments of any nature (e.g., final salary payment, lump-sum leave, etc.) due the employee from the paying agency on the date of separation to the extent necessary to liquidate the debt.

J. Recovery From Other Payments Due a Separated Employee. If the debt cannot be liquidated by offset from any final payment due the employee from the paying agency on the date of separation, the bureau shall liquidate the debt by administrative offset pursuant to 31 U.S.C. 3716 from payments of any kind (e.g., retirement fund payment) due the former employee from the United States, where appropriate (see 4 CFR 102.3 and 102.4.). The bureau will also use all available alternative methods to collect the debt, including the use of private collection agencies (see 4 CFR 102).

K. Interest, Penalties and Administrative Costs. The bureau shall assess interest, penalties, and administrative costs on debts being collected under these procedures (see 4 CFR 102.13.).

L. Non-Waiver of Rights by Payments. An employee's payment of all or any portion of an alleged debt being collected pursuant to these procedures shall not be construed as a waiver of any rights which the employee may have under these procedures or any other provision of law, except as otherwise provided by law.

M. Refunds. Amounts paid or deducted pursuant to this Chapter by an employee for a debt which is waived or otherwise found not owed to the United States shall be promptly refunded to the employee.

9. Disallowed Audit Costs.

A. Purpose. OMB Circular A-50, Revised 9/29/82, provides for recovery of disallowed audit costs.

B. Definitions.

(1) Disallowed Audit Costs. An incurred contract cost questioned by an audit organization that the Contracting Officer agrees should not be charged to the Government.

(2) Resolution. The point when the audit follow-up officer determines the matter resolved.

C. Collection of Disallowed Costs. The Contracting Officer, upon resolving the audit findings that disallowed costs have been incurred, issues the initial demand letter to the debtor notifying him/her of the outstanding debt. The Contracting Officer completes Form DI-1040, Bill for Collection, in accordance with SM 336.2 and attaches it to the demand letter.

In addition, Form DI-1040 will include the accounting data (from the contract), the due date (30 days from the billing date), and the following statement:

"A_____*____% late payment charge will be applied for each 30-day period or portion thereof beyond the due date."

* The late payment charges will be based on current value of funds rate established quarterly by the Treasury.

D. Accounting Controls for Disallowed Costs. The contracting officer forwards the demand letter and the DI-1040 to the debtor, with a copy to OFM. Upon receiving their copy, OFM records the disallowed cost as an accounts receivable and records the applicable interest rate. This rate remains fixed for the duration of the debt.

OFM is also responsible for forwarding monthly listings of accounts receivable and receivable activity to each respective Division for their review.

Although resolved disallowed costs are subject to appeal and possible litigation, interest will continue to accrue. Payment of principal and interest will be contingent upon either a final negotiated settlement or court decree. The Contracting Officer will notify OFM concerning the final disposition of the disallowed costs, and possible collection of principal and interest.

An allowance account will be established to reflect the amount of the receivables estimated to be uncollectible.

E. Collection by Offset. As with other debts, amounts owed the Government may be collected by administrative offset, based on the following guidelines (see 344 DM 3.1 and 4 CFR 102.3).

(1) General. The Survey may collect delinquent amounts owed by contractors owing disallowed audit costs, by means of offsets against monies due from the United States. The procedures will not be used if the debtor has executed a written satisfactory agreement with a bureau for the payment of the debt so long as the debtor adheres to the provisions of the agreement. Before utilizing the procedures, the Contracting Officer will examine the debt to see whether the likelihood of collecting the debt and the best interest of the United States justify the use of administrative offset.

(2) Written Notice. After the bureau official has examined the debt under the procedures set forth in paragraph (1), a notice will be sent by Registered Mail, Return Receipt Requested, advising the debtor of:

(a) The nature and amount of the debt determined by the Department to be due and of the intent to collect by administrative offset,

(b) The debtor's opportunity to inspect and copy the agency records relating to the debt,

(c) The debtor's opportunity to request review, within 15 calendar days of receipt of notice by the bureau with respect to the debt, and

(d) The debtor's opportunity to enter into a written agreement with the bureau to repay the debt. Such an agreement may include voluntary, but nonrecoverable, withholdings of monies due from the United States to the debtor. Payment in one lump sum is preferred, but provisions may be made for a payment in a reasonable number of installments given the nature and amount of the debt and the debtor's financial condition.

(3) Accounting for Collection by Offset. The Chief, Office of Financial Management (OFM), is authorized to make collections for the Survey by administrative offset. The following procedures apply when making collections by administrative offset:

(a) The Chief, Office of Procurement and Contracts (P&C), will make determination that a collection by administration offset is justified and proper, assuring that policies and procedures in 344 DM 3 and revised SM 338.4 are followed.

(b) P&C will notify OFM in writing that collections by offset are to be initiated against the debtor. This notification will include the debtor's name, contract or purchase order number, and invoices to be offset.

(c) OFM will notify P&C of all offset payments applied and the dates of the offsets.

(d) P&C will be responsible for maintaining official files supporting administrative offset payments.

F. Follow-up. Collection procedures will be the responsibility of OFM after judgment in favor of the Government. Generated demand letters will be sent by OFM. If payment is not made within 30 days of the second letter, OFM will contact the Contracting Officer, procedures for further collection activities (collection by offset, reporting the debt to a collection agency, or to GAO or the Department of Justice, etc.,) will be done in accordance with SM 338.4.4-9. OFM and the Contracting Officer will maintain continuous correspondence as to the disposition of each debt arising from disallowed costs based on recommendations from the Contracting Officer.

10. Write-offs. The Chief, OFM is vested with the authority to write off uncollectible debts. The Chief, NMD is authorized to write off debts less than $100 for accounts arising from the sales of NMD products (SM 338.4.6D).

A. Prior Collection Activity. All collection procedures of this Chapter must be followed prior to writing off debts, including:

(1) Proper notification of indebtedness;

(2) Proper subsequent demands for payment;

(3) Review of the debt by the respective division;

(4) Review of possible collection by offset; and

(5) Referral to the contracted collection agent, if applicable.

B. Recommendation for Write-Offs. Debts to be written off must first be reviewed by the office responsible for the debt.

(1) NMD sales activity debts to be written off should be in accordance with SM 338.4.6D.

(2) Billings for nonsales activities are to be reviewed via monthly reports of accounts receivable generated by OFM.

(3) OFM billings for payroll and travel debts are to be reviewed by the Debt Management Section and Travel Section respectively on a continual basis. The decision process located in Appendix E should be followed when determining if a debt qualifies for write-off.

C. Preservation of Evidence. Care will be taken to preserve all files, records, and exhibits on claims referred or to be referred to the General Accounting Office or to the Department of Justice for litigation.

D. Minimum Amount of Referrals to the Department of Justice. The Solicitor will not refer claims of less than $600, exclusive of interest, for litigation unless:

(1) Referral is important to a significant enforcement policy, or

(2) The debtor has not only the clear ability to pay the claim but the Government can effectively enforce payment having due regard to the exemptions available to the debtor under State or Federal law and the judicial remedies available to the Government.

E. Debtors Involved in Bankruptcy Proceedings. Claims against debtors involved in bankruptcy proceedings are to be referred through the Solicitor's Office to the Department of Justice (see 4 GAO 96-100).

F. Statute of Limitations. Public Law 89-505, approved July 18, 1966, 28 U.S.C. 2415, with certain exceptions, provides that every action for the recovery of money erroneously paid to or on behalf of any civilian employee of any agency of the United States, or to or on behalf of any member or dependent of any member of the uniformed services of the United States, incident to the employment or services of such employee or member, will be barred unless the complaint is filed within 6 years after the right of action occurs (see 344 DM 5.8).

11. Disposition of Administratively Uncollectible Debts.

A. Accounting for Uncollectible Claims. Claims which are determined to be uncollectible will be written off in accordance with the provisions of 4 GAO 70.6.

B. Collections Received After Report Rendered to the General Accounting Office. The Claims Division, General Accounting Office, Washington, D.C., should be notified immediately when collections are made by the USGS for application to debts previously reported to the General Accounting Office for further collection action (4 GAO 70.7).

C. Disposition of Collections Made by the General Accounting Office. Collections made by the Claims Division, General Accounting Office, on uncollectible debts referred thereto will be disposed of in accordance with 4 GAO 71.1.


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U.S. Department of the Interior, U.S. Geological Survey, Reston, VA, USA
URL: http://www.usgs.gov/usgs-manual/330/338-4.html
Contact: APS, Office of Policy and Analysis
Last modification: 08-Jan-2013@15:28 (kk)
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