**§1.917 Contracting for collection services.**

\(a\) VA has authority to contract for collection services to recover
delinquent debts, provided that:

\(1\) The authority to resolve disputes, compromise claims, suspend or
terminate collection and refer the matter for litigation shall be
retained by VA;

\(2\) The contractor shall be subject to 38 U.S.C. 5701, and to the
Privacy Act of 1974, as amended, to the extent specified in 5 U.S.C.
552a(m), and to applicable Federal and State laws and regulations
pertaining to debt collection practices, such as the Fair Debt
Collection Practices Act, 15 U.S.C. 1692, *et seq.*

\(3\) The contractor shall be required to strictly account for all
amounts collected;

\(4\) Upon returning an account to VA for subsequent referral to the
Department of Justice for litigation, the contractor must agree to
provide any data contained in its files relating to §1.951.

\(b\) In accordance with 31 U.S.C. 3718(d), or as otherwise permitted by
law, collection service contracts may be funded in the following manner:

\(1\) VA may fund a collection service contract on a fixed-fee basis
(i.e., payment of a fixed fee determined without regard to the amount
actually collected under the contract). Payment of the fee under this
type of contract must be charged to available appropriations;

\(2\) VA may also fund a collection service contract on a contingent-fee
basis (i.e., by including a provision in the contract permitting the
contractor to deduct its fee from amounts collected under the contract).
The fee should be based upon a percentage of the amount collected,
consistent with prevailing commercial practice;

\(3\) VA may enter into a contract under paragraph (b)(1) of this
section only if and to the extent that funding for the contract is
provided for in advance by an appropriation act or other legislation,
except that this requirement does not apply to the use of a revolving
fund authorized by statute;

\(4\) Except as authorized under paragraphs (b)(2) and (b)(5) of this
section, or unless otherwise specifically provided by law, VA shall
deposit all amounts recovered under collection service contracts for
Loan Guaranty debts into the Loan Guaranty Revolving Fund, and for all
other debts in the Treasury as miscellaneous receipts pursuant to 31
U.S.C. 3302.

\(5\) For benefit overpayments recovered under collection service
contract, VA, pursuant to 31 U.S.C. 3302, shall deposit:

\(i\) Amounts equal to the original overpayments in the appropriations
account from which the overpayments were made, and

\(ii\) Amount of interest or administrative costs in the Treasury as
miscellaneous receipts. (Authority: 31 U.S.C. 3718)

\(c\) VA shall use government-wide debt collection contracts to obtain
debt collection services provided by private collection contractors.
However, VA may refer debts to private collection contractors pursuant
to a contract between VA and a private collection contractor only if
such debts are not subject to the requirement to transfer debts to
Treasury for debt collection. See 31 U.S.C. 3711(g), 31 CFR 285.12(e),
and 38 CFR 1.910.

\(d\) VA may enter into contracts for locating and recovering assets of
the United States, such as unclaimed assets.

\(e\) VA may enter into contracts for debtor asset and income search
reports. In accordance with 31 U.S.C. 3718(d), such contracts may
provide that the fee a contractor charges the agency for such services
may be payable from the amounts recovered, unless otherwise prohibited
by statute. (Authority: 31 U.S.C. 3718; 38 U.S.C. 501).

\[52 FR 42107, Nov. 3, 1987; redesignated and amended at 69 FR 62195,
Oct. 25, 2004\]