B-246307.2 August 5. 1992

B-246307.2 August 5. 1992

DIGEST

The Honorable Steve Symms United States Senator Boise Office Box 1190 Boise, Idaho 83701

Dear Senator Symms:

We refer to your letter of March 24, 1992, with enclosure, in which you request our consideration and action concerning the claim of Mr. Laurel L. Thompson, a retired Federal Aviation Administration (FAA) employee.

Mr. Thompson's claim concerns the alleged failure of FAA to afford him due process under 4 C.F.R. Part 102 (1992) in withholding his final payroll check and his lump-sum payment for accrued annual leave upon his retirement on December 31, 1988. The administrative offset was based upon evidence received by FAA which indicated that several travel vouchers submitted by Mr. Thompson and paid by the agency prior to his retirement were fraudulent.

In February 1992, FAA concluded an extensive, in-depth investigation of Mr. Thompson's travel vouchers. FAA officials have informed us that copies of the report were mailed to Mr. Thompson and to your Office. Our response is based upon the materials and information furnished this Office by Mr. Thompson and your Office.

In your letter of March 12, 1992, addressed to Mr. Thompson, you state that, after receiving the investigative report, you talked with FAA officials and they reiterated that no further review would be initiated. They consider the latest report as their reconsideration. Mr. Thompson disagrees with the findings and conclusions of the report and contends that it denies him the opportunity to request a hearing under 4 C.F.R. Sec. 102.3(c) (1992). Mr. Thompson alleges that FAA never officially notified him of any adverse action prior to the offset, and that he was not afforded an opportunlty to correct any of the questionable vouchers.

The question of which statutory and regulatory provisions must be followed when collecting debts by administrative offset is often complicated. In this case, because FAA is collecting a travel advance, the resort to administrative offset is governed jointly by 5 U.S.C. Sec. 5705 and 31 U.S.C. Sec. 3716 (1988). The former of these two statutes specifically authorizes the use of offset under these circumstances, while the latter specifies the procedures to be followed. See 64 Comp.Gen. 142 (1984).

Under the provisions of 31 U.S.C. Sec. 3716(a), an agency may collect by administrative offset only after giving the debtor: (1) written notice of the nature and amount of the claim, the agency's intention to collect by administrative offset, and an explanation of the rights of the debtor, (2) an opportunity to inspect and copy agency records pertaining to the claim, (3) an opportunity to obtain review within the agency of the determination of the indebtedness; and (4) an opportunity to enter into a written agreement with the agency to repay the debt. These provisions are implemented in the Federal Claims Collection Standards (FCCS), 4 C.F.R. Parts 101-105.

The FCCS define a debt as "an amount of money or property which has been determined by an appropriate agency official to be owed to the United States." 4 C.F.R. Sec. 101.2(a).

The FCCS generally require agencies to take administrative offset (subject to the prior completion of certain statutorily-mandated due process-styled procedures) on all debts which are "liquidated or certain in amount." 4 C.F.R. Sec. 102.3(a). At the same time, the FCCS also provide that agencies may effect administrative offset against a payment to be made to a debtor prior to the completion of the due process procedures required by 4 C.F.R. Sec. 102.3(b)(2), if failure to take the offset would substantially prejudice the government's ability to collect the debt and the time before the payment is to be made does not reasonably permit the completion of those procedures. 4 C.F.R. Sec. 102.3(b)(5) (1992). However, the standards also provide that "[s]uch prior offset must be promptly followed by the completion of those procedures." Id.

The FAA states that in the fall of 1988 the FAA Western Pacific Regional Accounting Division "had reason to suspect" that during the period from November 24, 1987, through September 30, 1988, Mr. Thompson had submitted ten fraudulent travel vouchers. Travel advances totaling $14,300 had been disbursed to Mr. Thompson during that period. On October 6, 1988, the Accounting Division requested that an investigation of the matter be made by the regional Civil Aviation Security Division. Mr. Thompson applied for retirement on the following day, October 7, 1988. /1/ His retirement was to take effect on December 31, 1988.

Pending the results of the investigation, the Accounting Division suspended payment of two of Mr. Thompson's vouchers. The agency also "tentatively offset" the full amount of Mr. Thompson's final salary check and lump-sum leave payment against his potential debt without prior notice to him. On February 10, 1989, based on a new estimate of how much he might owe, FAA released Mr. Thompson's final paycheck. On December 26, 1989, the requested investigation report was completed and released. It found Mr. Thompson indebted for a number of items in specified amounts. The FAA applied the payments previously withheld towards those items and refunded the balance to Mr. Thompson on February 22, 1990. Finally, on December 14, 1990, FAA notified Mr. Thompson of his rights under 31 U.S.C. Sec. 3716(a).

The FAA explains that, since the report of investigation was not undertaken or completed until after Mr. Thompson had retired, FAA could not know "the nature and amount" of Mr. Thompson's indebtedness, if any, at the time that it took the offset. Nevertheless, the agency contends that failure to take the offset "could have involved the Government in a protracted effort to recover [the indebtedness] from other sources, such as Mr. Thompson's retirement annuity and his federal income tax refunds, thus substantially prejudicing the Government's [ability to collect the debt]."

The FAA admits that it waited for the investigation report before it determined whether and to what extent Mr. Thompson was indebted to the United States and, in is own words, took a "tentative offset" based on its "suspicions." However, FAA believed that the prior offset of Mr. Thompson's final paycheck and lump-sum leave payment was justified under the circumstances in view of the employee's pending retirement. We have no basis to question such offset. But, after effectuating the offset, under the specific language of 4 C.F.R. Sec. 102.3(h)(5), FAA should have promptly completed the due process procedures mandated by 31 U.S.C. Sec. 3716(a).

The law does not specify what consequences, if any, flow from an agency's failure to comply with 31 U.S.C. Sec. 3716(a) or the FCCS. However, the FCCS provide that the failure of an agency to comply with the collection standards "shall not be available as a defense to any debtor." See 4 C.F.R. Sec. 101.8. Nevertheless, in accordance with the requirements contained in 31 U.S.C. Sec. 3716(a), FAA should promptly afford Mr. Thompson a hearing concerning the existence and amount of the debts asserted against him in the recent investigative report. The determination as to the type of hearing, paper or oral, should be governed by the nature of the issues to be decided. See 4 C.F.R. Sec. 102.3(c). The hearing will allow Mr. Thompson to examine and respond to all of the evidence used against him by FAA, and should be conducted by an unbiased agency official in accordance with the FCCS and the FAA's own implementing rules and regulations.

We hope that the foregoing is responsive to your inquiry on behalf of Mr. Thompson.

Sincerely yours,

Seymour Efros for James F. Hinchman General Counsel

1. It is unclear whether this was intentional or coincidental. The record available to us does not specify whether Mr. Thompson was aware of the request for investigation when he filed his application.