B-117604, JAN 3, 1968

B-117604, JAN 3, 1968

PRECIS-UNAVAILABLE

MR. SECRETARY:

THERE HAS COME TO OUR ATTENTION AN APPARENT MISUNDERSTANDING BY CONSTITUENT AGENCIES OF THE DEPARTMENT OF DEFENSE AS TO THE SCOPE OF THAT PORTION OF SUBSECTION 3(B) OF THE FEDERAL CLAIMS COLLECTION ACT OF 1966, APPROVED JULY 19, 1966, PUB. L. 89-508, 80 STAT. 309, RESTRICTING THE AUTHORITY GRANTED THEREBY TO THE HEAD OF AN AGENCY INSOFAR AS CLAIMS ARISING FROM EXCEPTIONS MADE BY OUR OFFICE ARE CONCERNED.

ARMY REGULATION NO. 27-41, PROMULGATED BY THE DEPARTMENT OF THE ARMY UNDER DATE OF DECEMBER 30, 1966, DISSEMINATES THE STANDARDS PRESCRIBED JOINTLY BY THE ATTORNEY GENERAL AND THE COMPTROLLER GENERAL UNDER THE ACT FOR THE ADMINISTRATIVE COLLECTION, COMPROMISE, SUSPENSION OR TERMINATION OF COLLECTION ACTION, AND REFERRAL TO THE GENERAL ACCOUNTING OFFICE OR THE DEPARTMENT OF JUSTICE OF CIVIL CLAIMS ARISING FROM ARMY ACTIVITIES; ESTABLISHES GENERAL PROCEDURES; AND DELEGATES AUTHORITY WITHIN THE DEPARTMENT OF THE ARMY WITH RESPECT TO SUCH CLAIMS. PARAGRAPH 3(D)(3) OF AR 27-41 SPECIFICALLY PROVIDES THAT THE REGULATION DOES NOT APPLY TO: "CLAIMS ARISING FROM AN EXCEPTION MADE BY THE GENERAL ACCOUNTING OFFICE IN THE ACCOUNT OF AN ACCOUNTABLE OFFICER."

LIKEWISE, INSTRUCTION 7220.4F, PROMULGATED BY THE UNITED STATES NAVY FINANCE CENTER, CLEVELAND, OHIO, PROVIDES GUIDELINES AND ESTABLISHES CRITERIA FOR THE HANDLING OF CLAIMS UNDER THE FEDERAL CLAIMS COLLECTION ACT OF 1966. PARAGRAPH 12(B) THEREOF PROVIDES:

"B. IN ACCORDANCE WITH REFERENCE (C), THE AUTHORITY TO SUSPEND, COMPROMISE, OR TERMINATE COLLECTION ACTION IN PARAGRAPH 12A IS NOT EXTENDED TO THOSE CLAIMS IN WHICH THERE IS INDICATION OF FRAUD, THE PRESENTATION OF A FALSE CLAIM, MISREPRESENTATION ON THE PART OF THE DEBTOR OR INTERESTED PARTIES, OR A CLAIM THAT ARISES FROM A NOTICE OF EXCEPTION MADE BY THE GENERAL ACCOUNTING OFFICE OR ANOTHER AGENCY. THESE CASES WILL BE REPORTED TO THE GENERAL ACCOUNTING OFFICE IN ACCORDANCE WITH REFERENCE (A)."

THUS, AR 27-41 REMOVES ENTIRELY FROM THE SCOPE OF THE ACT "CLAIMS ARISING FROM AN EXCEPTION MADE BY THE GENERAL ACCOUNTING OFFICE IN THE ACCOUNT OF AN ACCOUNTABLE OFFICER," AND NFC INSTRUCTION 7220.4F DENIES THE AUTHORITY OF THE DEPARTMENT OF THE NAVY TO "SUSPEND, COMPROMISE, OR TERMINATE" SUCH CLAIMS. WHILE THE DEPARTMENT OF THE AIR FORCE HAS NOT YET ISSUED ITS REGULATIONS UNDER THE ACT, WE UNDERSTAND THAT SAID DEPARTMENT VIEWS THE ACT IN THE SAME MANNER.

WE DO NOT SO INTERPRET THE ACT. SUBSECTION 3(A) OF THE ACT REQUIRES THE HEAD OF AN AGENCY OR HIS DESIGNEE TO "ATTEMPT COLLECTION OF ALL CLAIMS OF THE UNITED STATES FOR MONEY OR PROPERTY ARISING OUT OF THE ACTIVITIES OF, OR REFERRED TO, HIS AGENCY." THIS CLEARLY INCLUDES A CLAIM ARISING FROM AN EXCEPTION MADE BY THE GENERAL ACCOUNTING OFFICE IN THE ACCOUNT OF AN ACCOUNTABLE OFFICER. WHILE THE EXCEPTION ARISES FROM THE ACTIVITIES OF THE GENERAL ACCOUNTING OFFICE, THUS GIVING TO THE COMPTROLLER GENERAL THE AUTHORITY OVER SUCH CLAIMS GRANTED TO THE HEAD OF AN AGENCY BY THE ACT WITH RESPECT TO CLAIMS ARISING FROM THE ACTIVITIES OF HIS AGENCY, THE IMPROPER PAYMENT OR LOSS QUESTIONED BY THE EXCEPTION ARISES FROM THE ACTIVITIES OF THE ADMINISTRATIVE AGENCY. MOREOVER, THE SENDING OF THE EXCEPTION TO THE ADMINISTRATIVE AGENCY BY OUR OFFICE CONSTITUTES A "REFERRAL" OF THE CLAIM TO THAT AGENCY WITHIN THE MEANING OF THE ACT. HENCE, THE OBLIGATION PLACED UPON THE HEAD OF AN AGENCY BY SUBSECTION 3(A) OF THE ACT TO ATTEMPT COLLECTION OF CLAIMS, "ARISING OUT OF THE ACTIVITIES OF, OR REFERRED TO, HIS AGENCY," APPLIES TO CLAIMS ARISING FROM EXCEPTIONS STATED BY OUR OFFICE.

SUBSECTION 3(B) OF THE ACT GRANTS TO THE HEAD OF AGENCY, WITH THE EXCEPTIONS CONTAINED IN THE LAST SENTENCE THEREOF, AUTHORITY TO "(1) COMPROMISE ANY SUCH CLAIM (I.E., A CLAIM ARISING OUT OF THE ACTIVITIES OF, OR REFERRED TO, HIS AGENCY), OR (2) CAUSE COLLECTION ACTION ON ANY SUCH CLAIM TO BE TERMINATED OR SUSPENDED WHERE IT APPEARS THAT NO PERSON LIABLE ON THE CLAIM HAS THE PRESENT OR PROSPECTIVE FINANCIAL ABILITY TO PAY ANY SIGNIFICANT SUM THEREON OR THAT THE COST OF COLLECTING THE CLAIM IS LIKELY TO EXCEED THE AMOUNT OF RECOVERY." SUCH AUTHORITY, AS WELL AS THAT CONTAINED IN SUBSECTION 3(A), IS TO BE EXERCISED IN CONFORMITY WITH STANDARDS PROMULGATED JOINTLY BY THE ATTORNEY GENERAL AND THE COMPTROLLER GENERAL. THE LAST SENTENCE OF SUBSECTION 3(B), IN PART HERE PERTINENT, PROVIDES AS FOLLOWS:

" *** NOR SHALL THE HEAD OF AN AGENCY, OTHER THAN THE COMPTROLLER GENERAL OF THE UNITED STATES, HAVE AUTHORITY TO COMPROMISE A CLAIM THAT ARISES FROM AN EXCEPTION MADE BY THE GENERAL ACCOUNTING OFFICE IN THE ACCOUNT OF AN ACCOUNTABLE OFFICER."

IT IS OBVIOUS THAT THE QUOTED PROVISION DENIES TO THE HEAD OF AN AGENCY ONLY THE AUTHORITY TO COMPROMISE A CLAIM ARISING FROM AN EXCEPTION MADE BY OUR OFFICE. THUS, THE ACT PROVIDES THE HEAD OF AN AGENCY WITH AUTHORITY TO TERMINATE OR TO SUSPEND COLLECTION ACTION ON SUCH A CLAIM, IN CONFORMITY WITH THE CRITERIA STATED IN THE ACT ITSELF AND IN THE JOINT STANDARDS PROMULGATED THEREUNDER.

FURTHER SUPPORT FOR THIS VIEW, IF NEEDED, MAY BE FOUND IN PART 103 OF THE JOINT STANDARDS, WHICH ESTABLISHES STANDARDS FOR THE COMPROMISE OF CLAIMS. SECTION 103.1 THEREOF (4 CFR 103.1) STATES IN PERTINENT PART THAT "ONLY THE COMPTROLLER GENERAL OR HIS 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 A CLAIM AGAINST THE PAYEE, PRIOR TO ITS REFERRAL BY THAT OFFICE FOR LITIGATION." SIMILAR RESTRICTION APPEARS IN PART 104, ESTABLISHING STANDARDS FOR SUSPENDING OR TERMINATING COLLECTION ACTION.

LIKEWISE, SECTION 54.1 OF TITLE 4 OF THE GENERAL ACCOUNTING OFFICE POLICY AND PROCEDURES MANUAL FOR GUIDANCE OF FEDERAL AGENCIES (4 GAO 54.1), IN DESCRIBING THE RESPONSIBILITIES OF THE ADMINISTRATIVE AGENCIES UNDER THE FEDERAL CLAIMS COLLECTION ACT OF 1966, STATES:

"THE FEDERAL CLAIMS COLLECTION ACT OF 1966, 31 U.S.C. 951-953, PLACES THE RESPONSIBILITY IN THE ADMINISTRATIVE AGENCIES FOR COLLECTING DEBTS DETERMINED TO BE DUE THE UNITED STATES WHICH ARISE AS A RESULT OF THEIR ACTIVITIES. THIS INCLUDES THE AUTHORITY TO COMPROMISE, TERMINATE OR SUSPEND COLLECTION ACTION. ALSO, THIS RESPONSIBILITY FOR COLLECTION ACTION INCLUDES THOSE DEBTS WHICH ARE DETERMINED TO BE DUE ON ACCOUNT OF ILLEGAL, IMPROPER OR INCORRECT PAYMENTS SHOWN IN GENERAL ACCOUNTING OFFICE NOTICES OF EXCEPTION ISSUED TO CERTIFYING OR DISBURSING OFFICERS, BUT THE AUTHORITY TO COMPROMISE THIS CLASS OF CLAIMS IS EXPRESSLY RESERVED IN THE GENERAL ACCOUNTING OFFICE. FURTHER, EACH AGENCY IS RESPONSIBLE FOR COOPERATING AND ASSISTING IN COLLECTION OF DEBTS KNOWN TO BE DUE THE UNITED STATES ARISING OUT OF THE ACTIVITIES OF OTHER AGENCIES AND THIS RESPONSIBILITY IS NOT LIMITED TO THOSE CASES IN WHICH AMOUNTS DUE DEBTORS ARE AUTHORIZED BY STATUTES TO BE WITHHELD AND APPLIED IN LIQUIDATION OF THEIR DEBTS."

THE QUOTED SECTION CLEARLY STATES THAT ALL THE RESPONSIBILITY AND AUTHORITY CONTAINED IN THE ACT IS APPLICABLE TO CLAIMS ARISING FROM EXCEPTIONS MADE BY OUR OFFICE, AND THAT ONLY THE COMPROMISE AUTHORITY GRANTED THEREBY OVER SUCH CLAIMS IS RESTRICTED TO THE COMPTROLLER GENERAL.

THE DEPARTMENTS OF THE ARMY AND THE NAVY SHOULD BE INSTRUCTED TO REVISE THEIR REGULATIONS AND INSTRUCTIONS CITED TO CONFORM WITH THE ABOVE INTERPRETATION. LIKEWISE, THE DEPARTMENT OF THE AIR FORCE SHOULD BE ADVISED THAT THEIR REGULATIONS, WHEN ISSUED, SHOULD ALSO CONFORM THERETO.