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B-3338, MAR. 9, 1966, 45 COMP. GEN. 553

B-3338 Mar 09, 1966
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DEBT COLLECTIONS - ABANDONMENT - SMALL AMOUNTS - COLLECTION EXPENSE EXCESSIVE THE COLLECTION OF CLAIMS NOT WARRANTED WHEN THE AMOUNTS COLLECTED ARE NOT COMMENSURATE WITH THE TOTAL COSTS OF EFFECTING COLLECTION. 1966: FURTHER REFERENCE IS MADE TO LETTER DATED DECEMBER 16. IF THE REQUEST IS APPROVED. THE ASSISTANT SECRETARY ADVISES THAT A CONSIDERABLE VOLUME OF CLAIMS COLLECTION ACTIVITY IS GENERATED BY CERTAIN COMMODITY PURCHASE PROGRAMS ADMINISTERED BY THE ASCS. THAT MANY OF THE CLAIMS ARE FOR RELATIVELY SMALL AMOUNTS. WE HAVE BEEN INFORMALLY ADVISED BY AN ASCS OFFICIAL THAT SUCH CLAIMS COLLECTION ACTIVITY RELATES PRIMARILY TO PURCHASES OF PROCESSED COMMODITIES MADE UNDER SECTION 32 OF THE ACT OF AUGUST 24.

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B-3338, MAR. 9, 1966, 45 COMP. GEN. 553

DEBT COLLECTIONS - ABANDONMENT - SMALL AMOUNTS - COLLECTION EXPENSE EXCESSIVE THE COLLECTION OF CLAIMS NOT WARRANTED WHEN THE AMOUNTS COLLECTED ARE NOT COMMENSURATE WITH THE TOTAL COSTS OF EFFECTING COLLECTION, RULES MAY BE PRESCRIBED TO DISREGARD COLLECTION OF AMOUNTS OF $3 OR LESS, AND AMOUNTS IN EXCESS OF $3 BUT LESS THAN $10, WITH STATED EXCEPTIONS, TO AUTHORIZE THE AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE TO WAIVE COLLECTION ACTION OF CLAIMS GENERATED INCIDENT TO PURCHASE OF PROCESSED COMMODITIES UNDER 7 U.S.C. 612C AND 42 U.S.C. 1755, DUE TO SHORT DELIVERY, LOSS OR DAMAGE IN TRANSIT, AND DEFICIENCIES IN THE COMMODITIES DISCOVERED AFTER DELIVERY, AND THE SAME AUTHORITY MAY BE EXTENDED TO OTHER AGENCIES WITHIN THE DEPARTMENT OF AGRICULTURE, THE GENERAL INCREASE IN PRICE AND WAGE LEVELS JUSTIFYING AN INCREASE IN THE AMOUNTS OF CLAIMS TO BE DISREGARDED, AND THE PROPOSED INSTRUCTIONS SATISFYING THE INTENT OF THE POLICY PRESCRIBED IN THE GENERAL ACCOUNTING OFFICE MANUAL FOR GUIDANCE OF FEDERAL AGENCIES, TITLE 4, SECTION 5040.30, REGARDING THE ESTABLISHMENT OF REALISTIC POINTS OF DIMINISHING RETURNS FOR COLLECTION ACTION BY AN AGENCY. MODIFIES 18 COMP. GEN. 838, AND A-51623, B-3338, DATED MARCH 26, 1941.

TO THE SECRETARY OF AGRICULTURE, MARCH 9, 1966:

FURTHER REFERENCE IS MADE TO LETTER DATED DECEMBER 16, 1965, FROM THE ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF AGRICULTURE, REQUESTING APPROVAL OF PROPOSED INSTRUCTIONS OF THE AGRICULTURAL, STABILIZATION AND CONSERVATION SERVICE (ASCS), DEPARTMENT OF AGRICULTURE, REGARDING THE COLLECTION OF SMALL CLAIMS. ALSO, IF THE REQUEST IS APPROVED, THE ASSISTANT SECRETARY REQUESTS ADVICE AS TO WHETHER THE SAME AUTHORITY MAY BE EXTENDED TO OTHER AGENCIES OF THE DEPARTMENT OF AGRICULTURE HAVING SIMILAR SMALL CLAIMS ACTIVITY.

THE ASSISTANT SECRETARY ADVISES THAT A CONSIDERABLE VOLUME OF CLAIMS COLLECTION ACTIVITY IS GENERATED BY CERTAIN COMMODITY PURCHASE PROGRAMS ADMINISTERED BY THE ASCS, AND THAT MANY OF THE CLAIMS ARE FOR RELATIVELY SMALL AMOUNTS. WE HAVE BEEN INFORMALLY ADVISED BY AN ASCS OFFICIAL THAT SUCH CLAIMS COLLECTION ACTIVITY RELATES PRIMARILY TO PURCHASES OF PROCESSED COMMODITIES MADE UNDER SECTION 32 OF THE ACT OF AUGUST 24, 1935, AS AMENDED, 7 U.S.C. 612C, AND SECTION 6 OF THE NATIONAL SCHOOL LUNCH ACT, AS AMENDED, 42 U.S.C. 1755. THE ASSISTANT SECRETARY STATES THAT THE CLAIMS GENERALLY INVOLVE SHORT DELIVERY, LOSS OR DAMAGE IN TRANSIT, AND DEFICIENCIES OBSERVED UPON INSPECTION OF THE COMMODITIES AFTER DELIVERY.

IT IS STATED IN THE ASSISTANT SECRETARY'S LETTER THAT THE SMALL AMOUNTS COLLECTED IN MANY OF THE AFOREMENTIONED CLAIMS ARE NOT BELIEVED TO BE COMMENSURATE WITH THE TOTAL COSTS OF EFFECTING COLLECTION. THESE COSTS ARE SAID TO INVOLVE THE (1) DEVELOPING OF NECESSARY SUPPORTING DATA, (2) PREPARATION OF BILLINGS, (3) FOLLOW-UP ON CLAIMS WHERE NECESSARY, (4) RECEIPT AND DEPOSIT OF REMITTANCES, (5) RELATED ENTRIES TO SUBSIDIARY AND CONTROL ACCOUNTS, AND (6) MAINTENANCE OF CLAIMS FILES. IN THIS CONNECTION, THE ASSISTANT SECRETARY REFERS TO THE POLICY PRESCRIBED IN GENERAL ACCOUNTING OFFICE MANUAL FOR GUIDANCE OF FEDERAL AGENCIES, TITLE 4, SECTION 5040.30, REGARDING THE ESTABLISHMENT OF REALISTIC POINTS OF DIMINISHING RETURNS FOR COLLECTION ACTION BY AN AGENCY, AND STATES THAT HE BELIEVES THAT REALISTIC POINTS OF DIMINISHING RETURNS SHOULD BE ESTABLISHED FOR SMALL CLAIMS ACTIVITY. HOWEVER, IN ATTEMPTING TO IMPLEMENT THIS POLICY, THE ASSISTANT SECRETARY STATES THAT THE DEPARTMENT OF AGRICULTURE IS MINDFUL OF TWO PRIOR DECISIONS OF OUR OFFICE, 18 COMP. GEN. 838, AND A-51623, B-3338 DATED MARCH 26, 1941, WHICH GENERALLY LIMIT NONCOLLECTION OF CLAIMS TO AMOUNTS OF LESS THAN $1.

IN VIEW OF THE FOREGOING, APPROVAL IS REQUESTED OF CERTAIN INSTRUCTIONS WHICH THE ASCS PROPOSES TO ISSUE FOR THE GUIDANCE OF ITS OFFICES WHICH SET FORTH CERTAIN RULES UNDER WHICH COLLECTION ACTION MAY BE DISREGARDED ON AMOUNTS OF LESS THAN $10. THE PROPOSED RULES PROVIDE AS FOLLOWS:

A. RULES FOR DISREGARDING AMOUNTS OF $3.00 OR LESS.

1. DISREGARD SUCH CLAIMS WHERE COLLECTION ACTION WILL ACQUIRE PREPARATION AND ISSUANCE OF A CLAIM DETERMINATION.

2. DO NOT COMBINE SUCH ITEMS WITHIN A SINGLE INVOICE CONTAINING LARGER AMOUNTS IF COST OF THE FOLLOWING ACTIONS REQUIRED TO INCLUDE THE ITEM WILL SUBSTANTIALLY EXCEED $3.00:

A. OBTAINING FACTS TO DETERMINE THE BASIS AND EXACT AMOUNT OF LIABILITY.

B. FURNISHING DEBTOR FULL INFORMATION ON THE BASIS AND EXACT AMOUNT OF LIABILITY.

3. DO NOT PREPARE A DETERMINATION OR JUSTIFICATION FOR DISREGARDING THESE ITEMS.

B. RULES FOR DISREGARDING AMOUNTS IN EXCESS OF $3.00 BUT LESS THAN $10.00.

1. DISREGARD SUCH SMALL CLAIMS SUBJECT TO ALL THE FOLLOWING CONDITIONS:

A. ITEMS ARE REFLECTED IN AUDIT OR INVESTIGATION REPORTS, OR RESULT FROM ANALYSIS OF CONTRACT FILES OR OTHER DOCUMENTS FOR THE PURPOSE OF SUBSTANTIATING THE BASIS FOR, AND AMOUNT OF, CLAIMS TO BE FILED.

B. THE COSTS REFERRED TO IN SUBPARAGRAPH A 2 A AND B ABOVE, INCURRED SOLELY FOR THE PURPOSE OF FILING A CLAIM, WILL PROBABLY EXCEED SUCH SMALL AMOUNT.

2. INSERT A BRIEF STATEMENT IN THE CLAIM FILE, WHICH SHOWS THE JUSTIFICATION FOR DISREGARDING THE COLLECTION.

C. EXCEPTIONS.

DO NOT DISREGARD SMALL ITEMS WHERE THE BEST INTERESTS OF ASCS WOULD NOT BE SERVED BY SUCH ACTION, SUCH AS WHERE:

1. THERE IS SUBSTANTIAL EVIDENCE OF VIOLATION OF CRIMINAL LAW OR CIVIL FRAUD STATUTES.

2. PROGRAM OPERATIONS WOULD BE ADVERSELY AFFECTED.

3. SEVERAL SMALL ITEMS INVOLVING THE SAME FACTS OR SAME BASIS OF LIABILITY CAN BE INCLUDED WITHIN A SINGLE BILLING.

THE ASSISTANT SECRETARY STATES THAT IT IS BELIEVED THAT THE ABOVE QUOTED INSTRUCTIONS ARE CONSISTENT WITH THE GUIDES SET FORTH IN 4 GAO 5040.30.

OUR OFFICE RECOGNIZES THAT MUCH HAS TRANSPIRED IN GOVERNMENT FINANCIAL ADMINISTRATION SINCE THE ABOVE-CITED DECISIONS OF THE COMPTROLLER GENERAL WERE ISSUED, AND THAT THE GENERAL INCREASE IN PRICE AND WAGE LEVELS SINCE THAT TIME MAY WELL JUSTIFY A REEVALUATION OF OUR POSITION. IN ADDITION, WE AGREE THAT THE PROPOSED INSTRUCTIONS ARE NOT INCONSISTENT WITH THE INTENT OF 4 GAO 5040.30.

INFORMATION MADE AVAILABLE TO OUR OFFICE BY THE ASCS SHOWS THAT THE TOTAL AMOUNT OF MONEY INVOLVED IN CLAIMS THAT WOULD BE COVERED BY THE PROPOSED INSTRUCTIONS IS RELATIVELY SMALL. ALSO, COST DATA FURNISHED TO US INDICATES THAT THE COST OF PROCESSING SUCH A CLAIM APPARENTLY EXCEEDS $10.

ACCORDINGLY, THE PROPOSED INSTRUCTIONS OF THE ASCS REGARDING SMALL CLAIMS COLLECTION ARE APPROVED. REGARDING THE REQUEST TO EXTEND SUCH AUTHORITY TO OTHER AGENCIES OF THE DEPARTMENT OF AGRICULTURE, WE WOULD HAVE NO OBJECTION TO SUCH EXTENSION TO OTHER AGENCIES OF THE DEPARTMENT OF AGRICULTURE HAVING SIMILAR SMALL CLAIMS ACTIVITY.

THE DECISIONS 18 COMP. GEN. 838 AND A-51623, B-3338, MARCH 26, 1941, ARE MODIFIED ACCORDINGLY.

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