B-212528, SEP 23, 1985

B-212528, SEP 23, 1985

FEDERAL CLAIMS COLLECTION ACT OF 1966 - DEBT COLLECTION - PRIVATE COUNSEL FOR GOVERNMENT DIGEST: GAO SUPPORTS PROPOSED LEGISLATION WHICH WOULD EXPAND THE FEDERAL CLAIMS COLLECTION ACT OF 1966, AS AMENDED, BY AUTHORIZING AGENCIES TO REFER DEBTS OWED TO THE UNITED STATES TO PRIVATE LAWYERS OR LAW FIRMS WHO COULD REPRESENT THE GOVERNMENT IN THE NEGOTIATION, COMPROMISE, SETTLEMENT, AND LITIGATION OF THOSE DEBTS, SUBJECT TO THE SUPERVISION OF THE DEPARTMENT OF JUSTICE AND THE AGENCY TO WHOM THE DEBT IS OWED. SPECIFIC PERFECTING AMENDMENTS ARE SUGGESTED.

THE HONORABLE PETER W. RODINO, JR.:

CHAIRMAN, COMMITTEE ON THE JUDICIARY

HOUSE OF REPRESENTATIVES

THIS RESPONDS TO YOUR LETTER OF MARCH 20, 1985, WHICH REQUESTED OUR COMMENTS ON H.R. 979, 99TH CONGRESS, A BILL TO AUTHORIZE GOVERNMENT AGENCIES TO REFER DEBTS OWED TO THE UNITED STATES TO PRIVATE LEGAL COUNSEL FOR THE INSTITUTION OF LEGAL ACTION.

WE OF COURSE FAVOR IMPROVING THE GOVERNMENT'S ABILITY TO COLLECT ITS DEBTS, AND WE BELIEVE THAT, PROPERLY SUPERVISED, THE USE OF PRIVATE COUNSEL, PAID ON A CONTINGENCY BASIS, COULD BE A USEFUL AND PROFITABLE COMPLEMENT TO THE COLLECTION TOOLS CURRENTLY AVAILABLE TO THE UNITED STATES UNDER THE FEDERAL CLAIMS COLLECTION ACT OF 1966, AS AMENDED BY THE DEBT COLLECTION ACT OF 1982. FOR THIS REASON, WE SUPPORT THE ENACTMENT OF THIS LEGISLATION.

DURING THE 98TH CONGRESS, BILLS SIMILAR TO H.R. 979 WERE INTRODUCED. GAO WAS ASKED TO COMMENT ON THE HOUSE BILL, H.R. 5196. IN THOSE COMMENTS (B- 212528.2, APR. 24, 1984), WE NOTED THAT THE DEPARTMENT OF JUSTICE HAD ENDORSED THE CONCEPT OF THE LEGISLATION. /1/ WE STATED THAT WE GENERALLY AGREED WITH THE JUSTICE DEPARTMENT'S COMMENTS, AND THAT WE SUPPORTED IMPLEMENTATION OF H.R. 5196 ALONG THE LINES SUGGESTED IN THE JUSTICE DEPARTMENT'S TESTIMONY. IN ADDITION, WE INCLUDED A NUMBER OF SPECIFIC SUGGESTIONS.

MOST OF THE PROVISIONS OF H.R. 979 ARE IDENTICAL TO THOSE OF H.R. 5196. JUST AS WE SUPPORTED H.R. 5196, WE ALSO SUPPORT THE ENACTMENT OF H.R. 979. HOWEVER, AS WITH OUR COMMENTS LAST YEAR, WE HAVE INCLUDED IN THIS LETTER A NUMBER OF SUGGESTED CHANGES THAT WE BELIEVE ARE CONSISTENT WITH THE INTENT OF THE BILL.

THE BILL WOULD AMEND CHAPTER 37 OF TITLE 31 OF THE U.S.C. IN WHICH IS CODIFIED THE FEDERAL CLAIMS COLLECTION ACT OF 1966, AS AMENDED BY THE DEBT COLLECTION ACT OF 1982. UNDER THOSE TWO LAWS, GOVERNMENT AGENCIES ARE REQUIRED TO ATTEMPT TO COLLECT ALL CLAIMS OF THE UNITED STATES FOR MONEY OR PROPERTY THAT ARISE OUT OF THEIR ACTIVITIES, OR ARE REFERRED TO THEM. AGENCY COLLECTION ACTIONS ARE TO BE TAKEN PURSUANT TO REGULATIONS JOINTLY PRESCRIBED BY GAO AND THE DEPARTMENT OF JUSTICE. THOSE REGULATIONS, THE FEDERAL CLAIMS COLLECTION STANDARDS (FCCS), WERE AMENDED LAST YEAR, AND MAY BE FOUND IN 4 C.F.R. CH. II (1985).

BY LAW, THE DEPARTMENT OF JUSTICE IS GENERALLY RESPONSIBLE FOR CONDUCTING THE GOVERNMENT'S LITIGATION. /2/ CONSEQUENTLY, UNDER THE FCCS, AGENCIES ARE REQUIRED TO REFER LITIGABLE CLAIMS OF $600 OR MORE TO THE JUSTICE DEPARTMENT FOR LEGAL ACTION. /3/ THE PROBLEM IS THAT THE JUSTICE DEPARTMENT SIMPLY DOES NOT HAVE THE RESOURCES TO LITIGATE ALL OF THE GOVERNMENT'S "LITIGABLE" DEBT CLAIMS. A STUDY BY THE OFFICE OF MANAGEMENT AND BUDGET (OMB) SUGGESTED THE NEED FOR SIGNIFICANT CHANGES IN THE PROCEDURES USED BY JUSTICE AND THE OTHER AGENCIES IN REFERRING AND HANDLING CLAIMS SENT FOR LITIGATION. OMB DEBT COLLECTION PROJECT, REPORT ON STRENGTHENING FEDERAL CREDIT MANAGEMENT AT 76-84 (JAN. 1981). THOSE FINDINGS WERE REINFORCED BY SENATE HEARINGS DURING THE 98TH CONGRESS. SEE 129 CONG.REC. S10616 (JULY 21, 1983) (STATEMENT OF SENATOR D'AMATO). ALLOWING PRIVATE COUNSEL TO LITIGATE CLAIMS MIGHT ALLEVIATE THE REPORTED BACKLOG OF CASES AT THE JUSTICE DEPARTMENT, AND INCREASE THE SPEED AND YIELD OF THE GOVERNMENT'S COLLECTION PROCESSES.

ANOTHER POTENTIAL BENEFIT OF THIS LEGISLATION IS THAT LAW FIRMS MAY AGREE TO ACCEPT CLAIMS OF LESS THAT $600, WHEREAS UNDER THE FCCS, AGENCIES ARE INSTRUCTED NOT TO REFER CLAIMS OF $600 OR LESS TO JUSTICE FOR LITIGATION. THEREFORE, WHEN ALL AVAILABLE ADMINISTRATIVE COLLECTION TACTICS HAVE BEEN EXHAUSTED ON CLAIMS OF $600 OR LESS, AGENCIES HAVE NO CHOICE BUT TO SUSPEND OR TERMINATE COLLECTION OF THOSE DEBTS IN ACCORDANCE WITH THE FCCS. CLEARLY, ALLOWING PRIVATE COUNSEL TO LITIGATE CLAIMS OF $600 OR LESS GIVES THE GOVERNMENT A CHANCE THAT IT WOULD NOT OTHERWISE HAVE TO RECOVER SOME PORTION OF MANY OF THOSE DEBTS THAT ARE PRESENTLY BEING WRITTEN OFF. IF PRIVATE COUNSEL TAKE THESE CASES ON A CONTINGENCY BASIS, THE GOVERNMENT HAS NOTHING TO LOSE.

SECTION-BY-SECTION DISCUSSION

THE BILL WOULD AMEND 31 U.S.C. SEC. 3718 BY STRIKING OUT THE EXISTING SUBSECTION (D), REDESIGNATING THE EXISTING SUBSECTIONS (B) AND (C) AS (D) AND (E), AND ADDING THE NEW SUBSTANTIVE AUTHORITY AS SUBSECTIONS (B) AND (C).

THE EXISTING 31 U.S.C. SEC. 3718(D), WHICH THE BILL WOULD STRIKE OUT, IS THE EXEMPTION MANDATED BY THE DEBT COLLECTION ACT OF 1982 FOR DEBTS ARISING UNDER THE INTERNAL REVENUE CODE OF 1954. IF THE PURPOSE OF DELETING SUBSECTION (D) IS TO MAKE THE NEW AUTHORITY APPLICABLE TO THE INTERNAL REVENUE SERVICE, WE POINT OUT THAT, WITHOUT FURTHER CHANGE, 31 U.S.C. SEC. 3718 WOULD REMAIN INAPPLICABLE TO DEBTS UNDER THE INTERNAL REVENUE CODE BY VIRTUE OF THE EXEMPTION IN 31 U.S.C. SEC. 3701(D).

THE PROPOSED NEW 31 U.S.C. SEC. 3718(B)(1) WOULD AUTHORIZE THE ATTORNEY GENERAL TO ENTER INTO CONTRACTS WITH "PRIVATE COUNSEL" IN ORDER TO OBTAIN "LEGAL SERVICES, INCLUDING REPRESENTATION IN NEGOTIATION, COMPROMISE, SETTLEMENT, AND LITIGATION." PARAGRAPH (B)(1) WOULD ALSO PROVIDE THAT THE CONTRACTS SHALL CONTAIN "SUCH TERMS AND CONDITIONS AS THE ATTORNEY GENERAL CONSIDERS NECESSARY AND APPROPRIATE ***." WE SUGGEST THAT THIS LANGUAGE BE AMENDED TO STATE THAT THE CONTRACTS CONTAIN SUCH PROVISIONS AS "THE ATTORNEY GENERAL, IN CONSULTATION WITH THE HEAD OF THE REFERRING AGENCY, CONSIDERS NECESSARY AND APPROPRIATE ***." THIS SUGGESTION IS BASED ON THE FACT THAT EACH AGENCY GENERATES MANY DIFFERENT TYPES OF DEBTS UNDER VARYING PROGRAMS AND CIRCUMSTANCES. THIS VARIETY OF DEBTS, PROGRAMS, AND CIRCUMSTANCES SUGGESTS THAT LITIGATION OF THE VARIOUS AGENCIES' DEBTS MAY REQUIRE SLIGHTLY DIFFERENT APPROACHES IN TERMS OF SUCH FACTORS AS THE EVIDENCE NEEDED, THE SERVICES REQUIRED, THE APPROPRIATENESS OF REFERRAL TO PRIVATE COUNSEL RATHER THAN TO THE JUSTICE DEPARTMENT, AND THE STANDARDS BY WHICH THE EFFECTIVENESS OF PRIVATE COUNSEL MAY BE MEASURED. CONSULTATION WITH THE AGENCY HEAD WILL PROVIDE JUSTICE WITH APPROPRIATE ASSISTANCE IN WEIGHING AND ADDRESSING THESE FACTORS.

AN ALTERNATIVE APPROACH MIGHT BE TO PLACE THE RESPONSIBILITY FOR DRAFTING THE CONTRACTS ON THE REFERRING AGENCIES, SUBJECT TO THE APPROVAL OF THE ATTORNEY GENERAL. THIS ALTERNATIVE WOULD SHIFT THE BURDEN FOR INITIAL DRAFTING OF THE CONTRACTS TO THE VARIOUS AGENCIES AND ALLOW JUSTICE TO REVIEW THEM FOR ADEQUACY, RATHER THAN HAVING TO DRAFT ALL OF THE CONTRACTS. THIS APPROACH WOULD PERMIT THE ATTORNEY GENERAL TO RETAIN ULTIMATE CONTROL, WHILE ALLOCATING SOME OF THE ADMINISTRATIVE BURDEN AMONG THE VARIOUS CREDITOR AGENCIES.

THE BILL WOULD INCLUDE IN THE PROPOSED 31 U.S.C. SEC. 3718(B)(1) TWO PROVISIONS WHICH WERE NOT INCLUDED IN H.R. 5196. THE FIRST OF THESE NEW PROVISIONS STATES THAT FEES PAYABLE TO PRIVATE COUNSEL FOR LEGAL SERVICES FURNISHED PURSUANT TO THIS PROPOSED LEGISLATION COULD NOT EXCEED THE FEES PAID IN THE PRIVATE SECTOR FOR SIMILAR TYPES OF SERVICES. THE BILL WOULD ALSO REQUIRE THE ATTORNEY GENERAL TO "USE HIS BEST EFFORTS" TO OBTAIN CONTRACTS FOR "AT LEAST FOUR" PRIVATE COUNSELS IN EACH JUDICIAL DISTRICT IN WHICH LEGAL SERVICES WILL BE PROVIDED. WE SUPPORT BOTH OF THESE NEW PROVISIONS.

ONCE THE ATTORNEY GENERAL HAS ENTERED INTO A CONTRACT UNDER SECTION 3718(B)(1), AS AMENDED BY THIS BILL, ACTUAL CASE REFERRALS WOULD BE MADE DIRECTLY BY THE VARIOUS AGENCIES UNDER SECTION 3718(B)(2). WE ASSUME IT IS INTENDED THAT THE USE OF PRIVATE COUNSEL WOULD BE AN ADDITIONAL ELEMENT OF AN AGENCY'S OVERALL DEBT COLLECTION PROGRAM, NOT A SUBSTITUTE FOR TIMELY ADMINISTRATIVE COLLECTION EFFORTS, AND THAT REFERRALS WOULD BE MADE IN ACCORDANCE WITH UNIFORM STANDARDS PROVIDED IN THE FCCS. IT MAY BE DESIRABLE FOR THE LEGISLATIVE HISTORY TO POINT THIS OUT.

WHEN SIMILAR LEGISLATION WAS BEING CONSIDERED LAST YEAR, SOME CONSIDERATION WAS GIVEN TO PERMITTING DEBT COLLECTION CONTRACTORS EMPLOYED UNDER 31 U.S.C. SEC. 3718(A) TO REFER DEBTS DIRECTLY TO PRIVATE COUNSEL. THE SPONSORS LAST YEAR WERE NOT CONVINCED THAT SUCH A PROVISION WOULD BE APPROPRIATE AND WE AGREE. SHOULD SUCH A PROVISION BE SUGGESTED AGAIN THIS YEAR, WE RECOMMEND THAT IT SPECIFY THAT (I) DEBT COLLECTION AGENCIES MAY REFER DEBTS ONLY TO ONE OF THE PRIVATE COUNSEL WHICH HAVE CONTRACTED WITH THE ATTORNEY GENERAL AND WHICH HAVE BEEN DESIGNATED (FOR REFERRALS) BY THE GOVERNMENT AGENCY TO WHICH THE DEBT IS OWED; AND (II) DEBT COLLECTION AGENCIES MAY ONLY MAKE THOSE REFERRALS AFTER THE GOVERNMENT AGENCY HAS DETERMINED THAT IT IS APPROPRIATE TO REFER THE PARTICULAR DEBT (OR CLASS OR DEBTS) TO PRIVATE COUNSEL.

THESE LATTER CHANGES ARE RECOMMENDED IN ORDER TO ASSURE THAT THE GOVERNMENT RETAINS CONTROL OVER THE HANDLING OF ITS CLAIMS AND THE PRIVATE COUNSEL WHO WOULD REPRESENT IT. IN PARTICULAR, THE GOVERNMENT NEEDS TO BE ABLE TO DECIDE FOR ITSELF WHETHER PARTICULAR DEBTS OR CLASSES OF DEBTS SHOULD BE REFERRED FOR LITIGATION; WHETHER THEY SHOULD BE REFERRED TO PRIVATE COUNSEL OR TO THE JUSTICE DEPARTMENT; WHICH PRIVATE COUNSEL, IF ANY, IS BEST QUALIFIED TO HANDLE THE PARTICULAR DEBT OR CLASS OF DEBTS TO BE REFERRED; AND WHETHER THE PRIVATE COUNSEL TO WHICH A DEBT HAS BEEN REFERRED IS PROPERLY HANDLING THE DEBT. WE EXPECT THAT THE AGENCIES' DETERMINATIONS OF THESE MATTERS WOULD BE MADE EITHER BY RESORT TO CASE-BY- CASE REVIEWS, OR BY PROMULGATION OF APPROPRIATE REGULATIONS OR GUIDELINES SPECIFYING THE CRITERIA TO BE FOLLOWED FOR DESIGNATED CLASSES OF DEBTS AND DEBTORS.

PROPOSED PARAGRAPH (B)(4) OF THIS BILL WOULD REQUIRE CONTRACTS WITH PRIVATE COUNSEL TO INCLUDE CERTAIN PROVISIONS. THE FIRST REQUIRED PROVISION (DESIGNATED AS "(A)") IS A PROVISION "PERMITTING THE ATTORNEY GENERAL TO TERMINATE THE CONTRACT IF THE ATTORNEY GENERAL FINDS THAT TERMINATION OF THE CONTRACT IS IN THE PUBLIC INTEREST." WE THINK IT IS IMPORTANT FOR THE ATTORNEY GENERAL TO BE ABLE TO WITHDRAW PARTICULAR CASES AS WELL AS TERMINATE THE CONTRACT. THERE MAY BE SITUATIONS IN WHICH THE PRIVATE COUNSEL HAS PERFORMED ADEQUATELY, BUT THE ATTORNEY GENERAL NEVERTHELESS FEELS IT INAPPROPRIATE FOR THE UNITED STATES TO BE REPRESENTED BY PRIVATE COUNSEL IN A SPECIFIC CASE OR GROUP OF CASES. THIS MIGHT BE THE CASE, FOR EXAMPLE, IF A DEBTOR RAISED A NOVEL LEGAL ARGUMENT, OR INVOKED A SUBSTANTIAL CONSTITUTIONAL ISSUE. IN SUCH CASES, THE ATTORNEY GENERAL SHOULD BE ABLE TO TAKE ACTION SHORT OF TERMINATING AN ENTIRE CONTRACT. THE PROPOSED SUBPARAGRAPH (B)(4)(B) APPEARS DESIGNED TO ACCOMPLISH THIS, BUT MAY BE CONFUSING IN THAT, UNDER PROPOSED SUBPARAGRAPH (B)(2), CLAIMS WILL GENERALLY BE REFERRED TO PRIVATE COUNSEL DIRECTLY BY THE AGENCIES, NOT BY THE ATTORNEY GENERAL. A SUGGESTED ALTERNATIVE YOU MAY WISH TO CONSIDER IS TO DELETE (4)(B) AND TO CHANGE (4)(A) TO READ "A PROVISION PERMITTING THE ATTORNEY GENERAL TO TERMINATE EITHER THE CONTRACT OR THE PRIVATE COUNSEL'S REPRESENTATION OF THE UNITED STATES IN PARTICULAR CASES, IF THE ATTORNEY GENERAL FINDS THAT SUCH ACTION IS IN THE PUBLIC INTEREST."

THE PROPOSED SUBPARAGRAPH (4)(C) WOULD REQUIRE A PROVISION "PERMITTING" THE REFERRING AGENCY TO RESOLVE DISPUTES, COMPROMISE THE CLAIM, OR TERMINATE COLLECTION ACTION. WE SUGGEST THAT SUBPARAGRAPH (4)(C) BE AMENDED TO REQUIRE RATHER THAN MERELY PERMIT, THE AGENCIES TO RETAIN THIS AUTHORITY. OUR SUGGESTION IS PATTERNED AFTER THE EXISTING PROVISIONS OF 31 U.S.C. SEC. 3718(A). WE BELIEVE THIS CHANGE IS NECESSARY IN ORDER TO ASSURE THAT THE GOVERNMENT RETAINS ULTIMATE CONTROL OVER THE HANDLING AND DISPOSITION OF ITS CLAIMS, AS WELL AS CONTROL OVER THE PRIVATE COUNSEL WHO WOULD REPRESENT IT. HOWEVER, A REQUIREMENT TO RETAIN THE AUTHORITY DOES NOT MEAN THAT THE AGENCY MUST ALWAYS EXERCISE IT ON A CASE-BY-CASE BASIS. AN AGENCY COULD, FOR EXAMPLE, REFER A CLAIM, OR PERHAPS A GROUP OF CLAIMS, TO PRIVATE COUNSEL WITH INSTRUCTIONS THAT IT MAY ACCEPT A COMPROMISE OFFER ABOVE SOME STATED MINIMUMS. OUR CONCERN IS THAT AGENCIES BE ULTIMATELY RESPONSIBLE FOR SETTING THE CRITERIA WHICH GOVERN THE DISPOSITION OF THE GOVERNMENT'S CLAIMS. AGENCIES SHOULD NOT BE ABLE TO SIMPLY DELEGATE THIS TYPE OF AUTHORITY ACROSS THE BOARD.

THE PROVISIONS OF PROPOSED PARAGRAPH (B)(6) OF H.R. 979 WERE NOT CONTAINED IN H.R. 5196. THIS NEW PARAGRAPH STATES THAT "ANY COUNTERCLAIM FILED (IN AN ACTION BROUGHT BY PRIVATE COUNSEL PURSUANT TO THIS LEGISLATION) SHALL NOT BE VALID" UNLESS THE COUNTERCLAIM IS SERVED "DIRECTLY" ON THE ATTORNEY GENERAL OR THE APPLICABLE U.S. ATTORNEY. THIS PARAGRAPH ALSO PROVIDES THAT SERVICE OF THE COUNTERCLAIM SHALL BE MADE IN ACCORDANCE WITH THE RULES OF THE COURT IN WHICH THE ACTION WAS BROUGHT. WE AGREE WITH THE BASIC THRUST OF THIS PROVISION. HOWEVER, WE HAVE PREPARED A SUGGESTED ALTERNATE VERSION WHICH WE THINK OFFERS CERTAIN ADVANTAGES:

"(6)(A) THE UNITED STATES SHALL NOT BE DEEMED TO HAVE WAIVED ITS SOVEREIGN IMMUNITY FROM COUNTERCLAIMS ASSERTED AGAINST IT IN ACTIONS BROUGHT BY PRIVATE COUNSEL PURSUANT TO THIS SECTION, EXCEPT FOR THOSE COUNTERCLAIMS WHICH-- "(I) ARISE OUT OF THE SAME TRANSACTION OR OCCURENCE THAT FORMS THE SUBJECT MATTER OF THE ACTION BROUGHT BY PRIVATE COUNSEL;

"(II) DO NOT REQUIRE FOR THEIR ADJUDICATION THE PRESENCE OF THIRD PARTIES OVER WHOM THE COURT CANNOT ACQUIRE JURISDICTION; AND

"(III) ARE SERVED ON BOTH THE PRIVATE COUNSEL, PURSUANT TO THE RULES OF THE COURT IN WHICH THE ACTION WAS BROUGHT, AND THE UNITED STATES, AND ITS OFFICERS OR AGENCIES, PURSUANT TO RULES 4(D)(4) AND 4(D)(5) OF THE FEDERAL RULES OF CIVIL PROCEDURE.

"(B) THIS SECTION SHALL NOT BE CONSTRUED TO ENLARGE BEYOND THE LIMITS NOW FIXED BY LAW THE RIGHT TO ASSERT COUNTERCLAIMS OR TO CLAIM CREDITS AGAINST THE UNITED STATES OR AN OFFICER OR AGENCY THEREOF."

IT IS NOT CLEAR TO US WHETHER THE TERM "INVALID" IN H.R. 979 IS INTENDED TO REFER TO THE SUFFICIENCY OF THE SERVICE OR THE COUNTERCLAIM ITSELF. WHILE WE ASSUME IT IS THE FORMER, THE AMBIGUITY COULD BECOME A POINT OF CONTENTION. WE HAVE FRAMED OUR SUGGESTED ALTERNATIVE IN TERMS OF THE GOVERNMENT'S WAIVER OF SOVEREIGN IMMUNITY IN ORDER TO DERIVE ADDITIONAL FORCE FROM EXISTING CASE LAW. IN UNITED STATES V. SHAW, FOR EXAMPLE, THE SUPREME COURT OBSERVED: "THE OBJECTION TO A SUIT AGAINST THE UNITED STATES IS FUNDAMENTAL, WHETHER IT BE IN THE FORM OF AN ORIGINAL ACTION, OR A SET- OFF, OR A COUNTERCLAIM. JURISDICTION IN EITHER CASE DOES NOT EXIST, UNLESS THERE IS SPECIFIC CONGRESSIONAL AUTHORITY FOR IT." 309 U.S. 495, 503 (1940) (QUOTING NASSAU SMELTING WORKS V. UNITED STATES, 266 U.S. 101, 106 (1924)). THE COURTS HAVE ALSO HELD THAT WHEN CONGRESS STATUTORILY WAIVES THE GOVERNMENT'S SOVEREIGN IMMUNITY, IT MAY LEGALLY PRESCRIBE SUCH TERMS, CONDITIONS, AND RESTRICTIONS UPON THAT WAIVER AS IT SEES FIT TO IMPOSE. SEE, E.G., MUNRO V. UNITED STATES, 303 U.S. 421, 423 (1938).

OUR SUGGESTED ALTERNATIVE WOULD MAKE CLEAR THAT WHEN SUIT IS BROUGHT IN A STATE COURT, BOTH PRIVATE COUNSEL AND THE JUSTICE DEPARTMENT MUST BE SERVED WITH COUNTERCLAIMS FILED IN THOSE ACTIONS. IN ADDITION, IT WOULD ASSURE THAT THE PROPER FEDERAL OFFICIALS ARE SERVED, IN A MANNER WHICH CONFORMS TO MODERN FEDERAL PRACTICE. REFERENCE TO PROVISIONS OF THE FEDERAL RULES OF CIVIL PROCEDURE WILL STANDARDIZE THE SERVICE OF COUNTERCLAIMS, AND WILL RESOLVE A NUMBER OF RELATIVELY SMALL, BUT ESSENTIAL DETAILS NOT ADDRESSED IN THE BILL (E.G., SERVICE BY MAIL VERSUS PERSONAL DELIVERY; SERVICE ON FEDERAL OFFICIALS, AGENCIES, AND CORPORATION NAMED AS PARTIES; AND SERVICE OF COUNTERCLAIMS ATTACKING THE VALIDITY OF ACTIONS OR ORDERS BY AGENCIES OR PERSONS NOT NAMED AS PARTIES, ETC.).

THE BILL WOULD CREATE A NEW 31 U.S.C. SEC. 3718(C)(1) WHICH WOULD REQUIRE THE ATTORNEY GENERAL TO TRANSMIT AN ANNUAL REPORT TO THE CONGRESS CONCERNING THE EFFORTS OF THE JUSTICE DEPARTMENT TO COLLECT DEBTS OWED TO THE UNITED STATES. PROPOSED PARAGRAPH (C)(1) STATES THAT EACH REPORT SHALL INCLUDE "A LIST, BY AGENCY," OF THE TOTAL NUMBER AND AMOUNTS OF CLAIMS REFERRED TO: (A) "THE DEPARTMENT OF JUSTICE AND TO PRIVATE COUNSEL;" (B) "THE DEPARTMENT OF JUSTICE WHICH WERE COLLECTED OR WERE NOT COLLECTED OR OTHERWISE RESOLVED;" AND (C) PRIVATE COUNSEL "(I) WHICH WERE COLLECTED OR WERE NOT COLLECTED OR OTHERWISE RESOLVED ***; (II) WHICH WERE NOT COLLECTED OR OTHERWISE RESOLVED UNDER A CONTRACT TERMINATED BY THE ATTORNEY GENERAL ***; AND (III) ON WHICH THE ATTORNEY GENERAL TERMINATED THE PRIVATE COUNSEL'S REPRESENTATION *** WITHOUT TERMINATING THE CONTRACT WITH THE PRIVATE COUNSEL ***."

WE RECOMMEND THAT THIS PROPOSED PARAGRAPH BE AMENDED TO PROVIDE THAT EACH REPORT SHALL INCLUDE A STATEMENT OF:

"(A) THE TOTAL NUMBER AND AMOUNT OF CLAIMS THAT WERE REFERRED FOR LEGAL SERVICES TO THE DEPARTMENT OF JUSTICE, AND TO PRIVATE COUNSEL, RESPECTIVELY, DURING THE REPORTING PERIOD;

"(B) THE TOTAL NUMBER AND AMOUNT OF CLAIMS THAT WERE NOT COLLECTED OR OTHERWISE DISPOSED OF BY PRIVATE COUNSEL UNDER A CONTRACT WHICH WAS TERMINATED DURING THE REPORTING PERIOD BY THE ATTORNEY GENERAL;

"(C) THE TOTAL NUMBER AND AMOUNT OF CLAIMS REFERRED TO PRIVATE COUNSEL ON WHICH THE ATTORNEY GENERAL TERMINATED THE PRIVATE COUNSEL'S REPRESENTATION DURING THE REPORTING PERIOD WITHOUT TERMINATING THE GOVERNING CONTRACT;

"(D) THE REASONS FOR THE ATTORNEY GENERAL'S TERMINATION DURING THE REPORTING PERIOD OF ANY PRIVATE COUNSEL'S CONTRACT OR ANY PRIVATE COUNSEL'S REPRESENTATION IN PARTICULAR CASES;

"(E) THE RESULTS OF THE EFFORTS MADE BY THE DEPARTMENT OF JUSTICE AND PRIVATE COUNSEL, RESPECTIVELY, TO COLLECT THOSE CLAIMS REFERRED FOR LEGAL SERVICES DURING THE PREVIOUS YEAR, AND THOSE CLAIMS WHICH WERE NOT COLLECTED OR OTHERWISE DISPOSED OF PREVIOUS TO THIS REPORTING PERIOD.

IF THE COMMITTEE DESIRES MORE DETAILED INFORMATION, IT MIGHT ALSO MODIFY THE BILL TO REQUIRE ADDITIONAL INFORMATION ON SUCH THINGS AS FEES AND COSTS, AND THE NUMBERS AND AMOUNTS OF CLAIMS COLLECTED BY PRIVATE COUNSELS, AS COMPARED TO GENERAL PRIVATE SECTOR PRACTICES AND RESULTS. FOR PURPOSES OF CONSISTENCY WITH 31 U.S.C. SEC. 3719(A)(2), IT MAY ALSO BE DESIRABLE TO REQUIRE THAT THIS REPORT BE ORGANIZED BY AGENCY, AND BY PROGRAM OR ACTIVITY FOR EACH AGENCY.

THE ALTERNATIVE LANGUAGE WHICH WE ARE PROPOSING FOR PARAGRAPH (C)(1) IS DESIGNED TO CLARIFY THIS PROVISION AND ACCOMPLISH WHAT WE UNDERSTAND TO BE THE INTENT OF THE REPORTING REQUIREMENTS, I.E., TO PROVIDE THE CONGRESS WITH SUFFICIENT INFORMATION TO ENABLE IT TO EVALUATE THE EFFICACY OF THE NEW AUTHORITY PROVIDED BY THIS BILL. FINALLY, WE THANK OUR SUGGESTED LANGUAGE IS CONSISTENT WITH AND WOULD EFFECTIVELY COMPLEMENT THE EXISTING REPORTING REQUIREMENTS CONTAINED IN 31 U.S.C. SEC. 3719.

THIS BILL WOULD ALSO CREATE A NEW 31 U.S.C. SEC. 3718(C)(2) WHICH WOULD REQUIRE GAO TO AUDIT THE ACTIONS TAKEN BY THE ATTORNEY GENERAL PURSUANT TO THIS LEGISLATION AND TO REPORT ITS AUDIT FINDINGS TO CONGRESS. THE BILL WOULD REQUIRE THIS AUDIT ONCE EVERY 2 YEARS. UNDER A NUMBER OF PRE- EXISTING STATUTES, GAO ALREADY HAS AMPLE AUTHORITY TO MAKE THE AUDITS THAT THIS PROVISION WOULD REQUIRE. /4/ ALSO, ALTERNATIVE METHODS EXIST FOR CONGRESS TO OBTAIN, AT ITS CONVENIENCE, THIS FIND OF INFORMATION AND ASSISTANCE FROM GAO. FOR EXAMPLE, UNDER SECTION 204 OF THE LEGISLATIVE REORGANIZATION ACT OF 1970, AS AMENDED (31 U.S.C. SEC. 717), CONGRESSIONAL COMMITTEES MAY REQUIRE GAO TO CONDUCT AUDITS ON SUBJECTS WITHIN THEIR AREAS OF OVERSIGHT AUTHORITY. WE BELIEVE THAT THIS TYPE OF ARRANGEMENT (AS OPPOSED TO A SPECIFIC STATUTORY AUDIT REQUIREMENT) IS MORE ADVANTAGEOUS TO CONGRESS. IT PERMITS CONGRESS TO MORE EASILY CONTROL THE SCOPE AND TIMING OF SPECIFIC GAO AUDITS, WHILE SIMULTANEOUSLY TAKING INTO ACCOUNT BOTH GAO'S LIMITED RESOURCES, AND OTHER PROJECTS PLANNED OR UNDERWAY AT THAT TIME. FOR THIS REASON, WE RECOMMEND THAT THIS PROVISION BE DELETED.

WE APPRECIATE THE OPPORTUNITY TO COMMENT ON THIS PROPOSED LEGISLATION AND ARE AVAILABLE SHOULD YOU NEED FURTHER INFORMATION OR ASSISTANCE.

/1/ DEPT. OF JUSTICE, STATEMENT OF ASSISTANT ATTORNEY GENERAL J. PAUL MCGRATH ON AMENDMENTS TO THE DEBT COLLECTION ACT OF 1982, BEFORE SENATE COMM. ON GOVERNMENTAL AFFAIRS, SUBCOMM. ON ENERGY, NUCLEAR PROLIFERATION, AND GOVERNMENTAL PROCESSES (JULY 21, 1983).

/2/ SEE. 28 U.S.C. SECS. 516-519, 547(2).

/3/ 4 C.F.R. PT. 105.

/4/ SEE, E.G., THE BUDGET AND ACCOUNTING ACT OF 1921, AS AMENDED (31 U.S.C. SEC. 712), THE ACCOUNTING AND AUDITING ACT OF 1950, AS AMENDED (31 U.S.C. SEC. 3523), AND THE LEGISLATIVE REORGANIZATION ACT OF 1970, AS AMENDED (31 U.S.C. SEC. 717).