+------------+---------------------------------------------------------+
| **Duty**   | Determine and recover debts from contractors.           |
+------------+---------------------------------------------------------+
| **Co       | Given the terms of a contract and set of circumstances  |
| nditions** | that may require a collection of debt from the          |
|            | contractor.                                             |
+------------+---------------------------------------------------------+
| *          | Recover money due the Government with minimum delay     |
| *Overall** | using available contractual and legal means. Avoid      |
|            | actual monetary loss to Government.                     |
| **Sta      |                                                         |
| ndard(s)** |                                                         |
+------------+---------------------------------------------------------+

+--------+--------+---------------------------------------------------+
| Po     |        |                                                   |
| licies |        |                                                   |
+--------+--------+---------------------------------------------------+
| ***    | ***Age | ***Subject***                                     |
| FAR*** | ncy*** |                                                   |
|        |        |                                                   |
|        | ***Sup |                                                   |
|        | pl.*** |                                                   |
+--------+--------+---------------------------------------------------+
| 32.6   |        | Contract debts.                                   |
+--------+--------+---------------------------------------------------+
| 52     |        | Disputes.                                         |
| .223-1 |        |                                                   |
+--------+--------+---------------------------------------------------+
| 52.    |        | Interest.                                         |
| 232-17 |        |                                                   |
+--------+--------+---------------------------------------------------+

# Other KSA's

1\. Knowledge of business finance, organization and management,
commercial law, and quantitative analysis.

2\. Knowledge of typical reasons for contractor indebtedness.

3\. Knowledge of options or methods of debt collection and the potential
impact on the contractor.

4\. Ability to select and apply the quantitative methods required to
calculate contractor debt, including interest.

5\. Ability to demonstrate tact and empathy in collecting contractor
debt.

6\. Ability to communicate orally and in writing with the contractor and
Government personnel involved in determining the amount of contractor
debt and how that debt will be collected.

7\. Ability to conscientiously complete the detailed process of debt
collection.

8\. Ability to make sound, well-informed, and objective decisions,
including, when appropriate, the decision to terminate or suspend debt
collection efforts.

9\. Ability to maintain the honesty and integrity of the acquisition
process.

  -----------------------------------------------------------------------
  **Other Policies and References (Annotate As Necessary):**

  -----------------------------------------------------------------------

![](media/image1.wmf){width="5.520833333333333in"
height="8.414583333333333in"}

![](media/image2.wmf){width="2.4034722222222222in"
height="3.8756944444444446in"}

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 1\. Determine the amount of    | Follow FAR, agency policy, or other |
| the contractor's indebtedness  | applicable guidelines in            |
| (if any).                      | calculating the contractor's debt   |
|                                | to the Government. Fairly consider  |
|                                | both the Government's claim and any |
|                                | contract claims by the con­tractor   |
|                                | against the Government.             |
|                                |                                     |
|                                | Typical reasons for indebtedness    |
|                                | include:                            |
|                                |                                     |
|                                | -   Damages or excess costs related |
|                                |     to defaults in performance;     |
|                                |                                     |
|                                | -   Breach of contract obligations  |
|                                |     concerning progress payments,   |
|                                |     advance payments, or Government |
|                                |     furnished property or material; |
|                                |                                     |
|                                | -   Government expense for          |
|                                |     correcting defects;             |
|                                |                                     |
|                                | -   Overpayments related to         |
|                                |     quantity, billing, or quality   |
|                                |     deficiencies;                   |
|                                |                                     |
|                                | -   Retroactive price reductions    |
|                                |     resulting from contract terms   |
|                                |     for price redetermination or    |
|                                |     for determination of prices     |
|                                |     under incentive contracts;      |
|                                |                                     |
|                                | -   Overpayments disclosed by       |
|                                |     quarterly state­ments required   |
|                                |     under price fixed-price         |
|                                |     redetermination or incentive    |
|                                |     contracts;                      |
|                                |                                     |
|                                | -   Delinquency in contractor       |
|                                |     payments due under agreements   |
|                                |     or arrangements for deferral or |
|                                |     postponement; and               |
|                                |                                     |
|                                | -   Notification by another         |
|                                |     Government agency (if for tax   |
|                                |     debts, IRS furnishes            |
|                                |     instructions on debt            |
|                                |     collection).                    |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 2\. Establish a control record | Include, at least, the following    |
| for each con­tract debt.        | information:                        |
|                                |                                     |
|                                | -   The name and address of the     |
|                                |     contractor.                     |
|                                |                                     |
|                                | -   The contract number, if any.    |
|                                |                                     |
|                                | ```{=html}                          |
|                                | <!-- -->                            |
|                                | ```                                 |
|                                | -   A description of the debt.      |
|                                |                                     |
|                                | -   The amount of debt and the      |
|                                |     appropriation to be credited.   |
|                                |                                     |
|                                | -   The date the debt was           |
|                                |     determined.                     |
|                                |                                     |
|                                | -   The date of demand for payment. |
|                                |                                     |
|                                | -   The amounts and dates of        |
|                                |     collections, as they occur.     |
|                                |                                     |
|                                | -   The date of any appeal filed or |
|                                |     action brought in the Court of  |
|                                |     Claims under the Disputes       |
|                                |     clause.                         |
|                                |                                     |
|                                | -   The status of collections, for  |
|                                |     example:                        |
|                                |                                     |
|                                |     -   Actions reported to the     |
|                                |         disbursing officer (name,   |
|                                |         location, and date);        |
|                                |                                     |
|                                |     -   Funds requested to be       |
|                                |         withheld by the disbursing  |
|                                |         officer;                    |
|                                |                                     |
|                                |     -   Funds requested to be       |
|                                |         withheld by other offices   |
|                                |         (date and office);          |
|                                |                                     |
|                                |     -   Deferment or installment    |
|                                |         payment arrangement         |
|                                |         requested;                  |
|                                |                                     |
|                                |     -   Deferment or installment    |
|                                |         request reviewed;           |
|                                |                                     |
|                                |     -   Supplemental information    |
|                                |         requested to support        |
|                                |         deferment requests; or      |
|                                |                                     |
|                                |     -   Actions transferred to the  |
|                                |         contract financing office.  |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 3\. Negotiate with the         | Approach negotiations as the        |
| contractor concerning the      | quickest most amicable method of    |
| amount of debt and repayment   | collecting the debt.                |
| options.                       |                                     |
|                                | -   Schedule negotiations.          |
|                                |                                     |
|                                | -   Develop a negotiation strategy. |
|                                |                                     |
|                                | -   Conduct nego­tiations covering   |
|                                |     such considerations as:         |
|                                |                                     |
|                                |     -   Validity of the debt;       |
|                                |                                     |
|                                |     -   Amount of the debt;         |
|                                |                                     |
|                                |     -   Recognition of tax credit   |
|                                |         under Section 1481 of the   |
|                                |         Internal Revenue Code; and  |
|                                |                                     |
|                                |     -   Re­payment options.          |
|                                |                                     |
|                                |         -   If a refund to the      |
|                                |             Government is agreed    |
|                                |             upon in negotiations    |
|                                |             under a price revision  |
|                                |             type of contract,       |
|                                |             promptly write a        |
|                                |             memorandum to document  |
|                                |             the agreement and the   |
|                                |             contract debt.          |
|                                |                                     |
|                                |         ```{=html}                  |
|                                |         <!-- -->                    |
|                                |         ```                         |
|                                |         -   Negotiators for the     |
|                                |             Government and the      |
|                                |             contractor must sign    |
|                                |             the agreement.          |
|                                |                                     |
|                                |         -   If the procedures of    |
|                                |             either party require    |
|                                |             approval of the         |
|                                |             negotiation results,    |
|                                |             write the memorandum    |
|                                |             without prejudice to    |
|                                |             final pricing.          |
|                                |                                     |
|                                |             -   Compute the amount  |
|                                |                 of refund promptly, |
|                                |                 without waiting for |
|                                |                 itemization of      |
|                                |                 adjustment of past  |
|                                |                 billings,           |
|                                |                 accounting          |
|                                |                 adjustments, or the |
|                                |                 adjusted invoices.  |
+--------------------------------+-------------------------------------+
| 4\. Modify the contract to     | Execute a bilateral contract        |
| incorporate the agreement.     | modification without delay. Assure  |
|                                | that the modification clearly       |
|                                | establishes the:                    |
|                                |                                     |
|                                | -   Amount of debt;                 |
|                                |                                     |
|                                | -   Method of payment; and          |
|                                |                                     |
|                                | -   Payment terms, such as:         |
|                                |                                     |
|                                | ```{=html}                          |
|                                | <!-- -->                            |
|                                | ```                                 |
|                                | -   Cash payment;                   |
|                                |                                     |
|                                | -   Setoff; or                      |
|                                |                                     |
|                                | -   Deferment.                      |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 5\. Issue a unilateral         | If consistent with the contract,    |
| determination on the amount of | make a unilateral determination if  |
| debt under the Disputes        | the contractor is delinquent in:    |
| clause.                        |                                     |
|                                | -   Furnishing pertinent            |
|                                |     information;                    |
|                                |                                     |
|                                | -   Negotiating expeditiously;      |
|                                |                                     |
|                                | -   Entering into an agreement on a |
|                                |     fair and rea­sonable price       |
|                                |     revision;                       |
|                                |                                     |
|                                | -   Signing the interim memorandum  |
|                                |     evidencing a negotiated pricing |
|                                |     agreement for the refund; or    |
|                                |                                     |
|                                | -   Executing a bilateral contract  |
|                                |     modification reflecting         |
|                                |     negotiation results.            |
|                                |                                     |
|                                | The unilateral debt determination   |
|                                | of amount must:                     |
|                                |                                     |
|                                | -   Be proper based on the merits   |
|                                |     of the case;                    |
|                                |                                     |
|                                | -   Not exceed the amount that      |
|                                |     would have been considered      |
|                                |     acceptable in a negotiated      |
|                                |     agreement; and                  |
|                                |                                     |
|                                | -   Be consistent with the contract |
|                                |     terms.                          |
|                                |                                     |
|                                | Distribute the determination to the |
|                                | contractor and the appropriate      |
|                                | finance office.                     |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 6\. Issue a demand letter.     | Make the demand for payment as soon |
|                                | as the responsible official has     |
|                                | computed the amount of refund due.  |
|                                |                                     |
|                                | The demand letter must include the  |
|                                | following:                          |
|                                |                                     |
|                                | -   A description of the debt,      |
|                                |     including the debt amount.      |
|                                |                                     |
|                                | -   Notification of applicable      |
|                                |     interest in accordance with FAR |
|                                |     32.610(b)(2).                   |
|                                |                                     |
|                                | -   A notification that the         |
|                                |     contractor may submit a         |
|                                |     proposal for deferment of       |
|                                |     collection if immediate payment |
|                                |     is not practicable or if the    |
|                                |     amount is disputed.             |
|                                |                                     |
|                                | -   Identification of the           |
|                                |     responsible official designated |
|                                |     for determining the amount of   |
|                                |     the debt and for its            |
|                                |     collection.                     |
|                                |                                     |
|                                | The demand letter may also include  |
|                                | other relevant information, such as |
|                                | the following:                      |
|                                |                                     |
|                                | -   Any deadline or other           |
|                                |     instructions on submitting      |
|                                |     payment.                        |
|                                |                                     |
|                                | -   Future efforts to collect debt  |
|                                |     (e.g., withholding and offset   |
|                                |     on future invoices).            |
|                                |                                     |
|                                | -   Appeal rights.                  |
|                                |                                     |
|                                | If FAR 52.232-17(b)(3) applies, the |
|                                | demand letter must accompany or be  |
|                                | included in the transmittal         |
|                                | mentioned in the clause.            |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 7\. Consult with the           | If a disbursing officer is notified |
| disbursing officer concerning  | of the debt and has contractor      |
| the use of a routine setoff to | invoices on hand for payment, the   |
| resolve all or part of the     | disbursing officer must:            |
| debt.                          |                                     |
|                                | -   Make an appropriate setoff; and |
|                                |                                     |
|                                | -   Give the contractor an          |
|                                |     explanation of the setoff.      |
|                                |                                     |
|                                | However, during the 30 days         |
|                                | following the issuance of a demand  |
|                                | letter, consider the advisability   |
|                                | of withholding and setoff based on  |
|                                | the circumstances of the individual |
|                                | case.                               |
|                                |                                     |
|                                | -   If payment is not completed     |
|                                |     within 30 days, and deferment   |
|                                |     is not requested, withholding   |
|                                |     of principal and interest must  |
|                                |     be initiated immediately.       |
|                                |                                     |
|                                | -   In the event the contract is    |
|                                |     assigned under the Assignment   |
|                                |     of Claims Act of 1940,          |
|                                |     scrupulously respect the rights |
|                                |     of the assignee. Withholding of |
|                                |     payments must be consistent     |
|                                |     with those rights.              |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 8\. Request any information    | Promptly review the request to see  |
| needed to make a contractor's  | if the information included is      |
| written request for deferment  | adequate for action on the request. |
| of collection adequate for     |                                     |
| action.                        | -   Ask the contractor to furnish   |
|                                |     any needed information that was |
|                                |     not provided.                   |
|                                |                                     |
|                                |     -   If there is an appeal or    |
|                                |         action filed under the      |
|                                |         Disputes clause of the      |
|                                |         contract, the information   |
|                                |         with the request for        |
|                                |         deferment may be limited to |
|                                |         an explanation of the       |
|                                |         contractor's financial      |
|                                |         condition.                  |
|                                |                                     |
|                                |     -   If there is no appeal       |
|                                |         pending or action filed     |
|                                |         under the Disputes clause   |
|                                |         of the contract, the        |
|                                |         following information about |
|                                |         the contractor should be    |
|                                |         submitted with the request: |
|                                |                                     |
|                                |         -   Financial condition.    |
|                                |                                     |
|                                |         -   Contract backlog.       |
|                                |                                     |
|                                |         -   Projected cash receipts |
|                                |             and requirements.       |
|                                |                                     |
|                                |         -   The feasibility of      |
|                                |             immediate payment of    |
|                                |             the debt.               |
|                                |                                     |
|                                |         -   The probable effect on  |
|                                |             operations of immediate |
|                                |             payment in full.        |
|                                |                                     |
|                                |             -   Suggest any         |
|                                |                 necessary changes   |
|                                |                 to the terms of the |
|                                |                 proposed            |
|                                |                                     |
|                                |               deferment/installment |
|                                |                 agreement.          |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 9\. Determine whether to grant | The responsible official must weigh |
| the deferment.                 | the benefit of demanding immediate  |
|                                | repayment against impact on         |
|                                | contract per­formance and cost.      |
|                                | Consider:                           |
|                                |                                     |
|                                | -   Deferment for a small business  |
|                                |     or a financially weak firm      |
|                                |     based on an evaluation of the   |
|                                |     need for Government security    |
|                                |     vs. the loss and undue hardship |
|                                |     on the contractor;              |
|                                |                                     |
|                                | -   Deferment for an amount under   |
|                                |     the dispute to avoid possible   |
|                                |     over collection; or             |
|                                |                                     |
|                                | -   Deferment/installment payments  |
|                                |     if the contractor is unable to  |
|                                |     pay at once in full or the      |
|                                |     contractor's operations under   |
|                                |     national defense contracts      |
|                                |     would be seriously impaired.    |
|                                |     The arrangement must include    |
|                                |     appropriate covenants and       |
|                                |     securities and should be        |
|                                |     limited to the shortest         |
|                                |     practicable maturity.           |
|                                |                                     |
|                                | In making the determination, confer |
|                                | with other members of the           |
|                                | Government acquisition team (e.g.,  |
|                                | the finance officer) as necessary.  |
|                                | Evaluate the likely effect:         |
|                                |                                     |
|                                | -   On contractor of requiring      |
|                                |     immediate payment.              |
|                                |                                     |
|                                | -   On contract performance.        |
|                                |                                     |
|                                | -   Of reprocuring if contract      |
|                                |     performance would be            |
|                                |     jeopardized, in terms of cost   |
|                                |     and lead time.                  |
|                                |                                     |
|                                | An action filed by a contractor     |
|                                | under the Disputes clause must not  |
|                                | suspend or delay collection. Until  |
|                                | the action is decided, only grant   |
|                                | deferments if, within 30 days after |
|                                | the filing of such action, the      |
|                                | contractor presents a good and      |
|                                | sufficient bond, or other           |
|                                | collateral acceptable to the        |
|                                | responsible official, in the amount |
|                                | of the claim, and approved by the   |
|                                | responsible official.               |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 10\. Prepare the deferment     | The deferment agreement should      |
| agreement.                     | conform to the requirements of FAR  |
|                                | 32.613.                             |
|                                |                                     |
|                                | -   At a minimum, the deferment     |
|                                |     agreement must contain the      |
|                                |     following:                      |
|                                |                                     |
|                                |     -   A description of the debt.  |
|                                |                                     |
|                                |     -   The date of first demand    |
|                                |         for payment.                |
|                                |                                     |
|                                |     -   Notice of the applicable    |
|                                |         interest charge.            |
|                                |                                     |
|                                |     -   Identification of the       |
|                                |         office to which the         |
|                                |         contractor is to send debt  |
|                                |         payments.                   |
|                                |                                     |
|                                |     -   A requirement for the       |
|                                |         contractor to submit        |
|                                |         financial information       |
|                                |         requested by the Government |
|                                |         and for reasonable access   |
|                                |         to the contractor's records |
|                                |         and property by Government  |
|                                |         representatives.            |
|                                |                                     |
|                                |     -   Provision for the           |
|                                |         Government to terminate the |
|                                |         deferment agreement and     |
|                                |         accelerate the maturity of  |
|                                |         the debt if the contractor  |
|                                |         defaults or if bankruptcy   |
|                                |         or insolvency proceedings   |
|                                |         are instituted by or        |
|                                |         against the contractor.     |
|                                |                                     |
|                                |     -   Protective requirements     |
|                                |         that are considered by the  |
|                                |         Government to be prudent    |
|                                |         and feasible in the         |
|                                |         specific circumstances.     |
|                                |                                     |
|                                | ```{=html}                          |
|                                | <!-- -->                            |
|                                | ```                                 |
|                                | -   If a contractor appeal of the   |
|                                |     debt determination is pending,  |
|                                |     the deferment agreement must    |
|                                |     also include a requirement that |
|                                |     the contractor:                 |
|                                |                                     |
|                                | ```{=html}                          |
|                                | <!-- -->                            |
|                                | ```                                 |
|                                | -   Diligently prosecute the        |
|                                |     appeal; and                     |
|                                |                                     |
|                                | -   Pay the debt in full when the   |
|                                |     appeal is decided, or when the  |
|                                |     parties reach agreement on the  |
|                                |     debt amount.                    |
|                                |                                     |
|                                |     -   If the contractor does not  |
|                                |         plan to appeal the debt or  |
|                                |         file an action under the    |
|                                |         Disputes clause of the      |
|                                |         contract, the               |
|                                |         deferment/installment       |
|                                |         agreement must include a    |
|                                |         specific schedule or plan   |
|                                |         for payment.                |
|                                |                                     |
|                                |     -   If desired by the           |
|                                |         contractor, the deferment   |
|                                |         agreement may provide for   |
|                                |         the right to make           |
|                                |         prepayments without         |
|                                |         prejudice, for refund of    |
|                                |         overpayments, and for       |
|                                |         crediting of interest.      |
+--------------------------------+-------------------------------------+

+--------------------------------+-------------------------------------+
| **Tasks**                      | **Related Standards**               |
+================================+=====================================+
| 11\. Monitor contractor        | Determine interest debt or credit:  |
| compliance with the agreement  |                                     |
| for repaying the debt or       | -   In conformance with FAR 32.614  |
| demand letter; identify and    |     and the contract Interest       |
| notify the contractor of any   |     clause (FAR 52.232-17); or      |
| interest owed the Government.  |                                     |
|                                | -   In the case of debt arising     |
|                                |     from a defective pricing or a   |
|                                |     CAS noncompliance overpayment,  |
|                                |     as prescribed by the applicable |
|                                |     Price Reduction for Defective   |
|                                |     Cost or Pricing Data or CAS     |
|                                |     clause.                         |
|                                |                                     |
|                                | If the Government delays delivery   |
|                                | of the demands or notices required  |
|                                | by the Interest clause (e.g., undue |
|                                | delay after dating at the           |
|                                | originating office or delays in the |
|                                | mail), extend the date of the debt  |
|                                | and accrual of interest to a time   |
|                                | that is fair and reasonable under   |
|                                | the particular circumstances.       |
+--------------------------------+-------------------------------------+
| 12\. Determine whether to      | Compromise the debt when the amount |
| compromise the debt or         | is under \$100,000, excluding       |
| terminate or suspend further   | interest, and further collection is |
| collec­tion action.             | not practicable or would cost more  |
|                                | than the amount of recovery.        |
+--------------------------------+-------------------------------------+
| 13\. Refer noncompliance with  | Take action in accordance with FAR  |
| deferment agreements or demand | and agency guidelines.              |
| letter to the debt collection  |                                     |
| office.                        |                                     |
+--------------------------------+-------------------------------------+